When you talk about how an occupier or owner needs to leave a property for say a change in lease or ownership, it can sound very straight forward at first. They just remove what’s there’s and leave it in an acceptable condition.
However, in reality things can get more complicated, as with a lot of things when managing property interests.
And in particular, knowing what items need to stay or go, which can be a grey area with things that look pretty well part-and-parcel of the property but in actual fact may still need removing (or vice verse).
Introducing Chattels and Fixtures
Hence, let’s introduce two words that have technical legal meanings.
Although you may not come across them all of the time and with straight forward say residential AST lettings, you can get drawn into these issues for larger and more complex say commercial transactions.
Therefore you need to delve into all the documentation at hand. So not only a Schedule of Condition or Inventory that may note the condition and nature of items at stake, but any associated leases and legal documentation.
So, there can be ‘re-instatement’ and ‘yield-up’ clause in a lease that details what a tenant does and does not do when they leave a property in terms of its condition and what items they remove. There may also be side-agreements to consider as well like Licence of Alterations.
This is basically a tenant’s own personal items that are ‘loose’ at the property. This includes anything not actually fixed to the property of course such as their own contents and furniture.
However, it also includes things that are physically attached to the building but designed to be enjoyed only by the tenant and not there to improve the landlord’s property. These can be easily removed and ‘un-fixed’ from the property and re-used without damaging the property.
When you look at what these attached items include, it can be grey area as to what are actually chattels even though at first you might not think so.
Carpets are one, and even though fixed items like a false ceiling and partitions won’t be, something like demountable partitions may well be a tenant’s chattel. Or even kitchen units that are freestanding and an intruder alarm.
In terms of what happens to these, then they’re basically the tenants to do with how they wish. In reality they’ll probably want to take them, but it’s worth being clear which ones they aren’t taking and how to deal with them.
Plus, from a landlord’s and new occupier’s perspective, these remaining chattels must not substantially prevent or interfere with the enjoyment of possessing a substantial part of the property.
It’s best to look at these in two halves, which deal with the chunky pieces of a property like windows, doors, and false ceilings.
The first being an obvious one – permanent landlord fixtures that are classed as part-and-parcel of the property.
So a new tenant can inherit these from a former occupier or landlord, and be left to look after them as they’re still classed as part of the property being demised to them.
However, the second is where an item used to actually be a tenant’s chattel but then becomes a fixture after it is ‘annexed’ and fixed to the property.These might include chattels for trade or what they refer to as ornaments for convenience.
When you look at this from a removability perspective, you need to look at the degree of annexation and more importantly the actual reasons and purpose for this, and not factors such as age or obsolescence.
The key here is to realise that the tenant is entitled to remove these fixtures if they wish, but in actual fact they’re not obliged to which can cause queries. Only if any leases and legal documentation state that they must remove these can things be changed otherwise, and then done correctly with any damage made good.
Getting the Full Story
Therefore, once you begin to see what practically exists at a property and how they fall within the definition of a chattel or fixture, you can then bring in the documentation and see how it all ties together.
After all, it takes just one small clause somewhere that both parties have signed-up to in order to change things.
In actual fact, even spotting those that have not been complied with and what the consequences are can be a problem. So maybe a tenant had to inform the building insurers about their final alterations, failing which the whole basis of these in a Licence of Alterations falls away.
And watch out for new leases being taken by the same tenant, as you can’t unfortunately assume things just continue on the same basis. It’s like a clean new lease and liability, which means they inherit a certain condition and fit-out that they may have assumed they wouldn’t.
Which is why it can get very tactical between different parties, and in some cases deliberately keeping silent in order to not accept any scenario and issues afterwards.
And that’s why it’s certainly worth getting the right advice at the start of any new agreement, not just at the end. Otherwise, it could get expensive.
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