Trade fixture can also be installed in a residential rental property (such as bookcases, lights, stoves), but unless agreed to in advance in writing by the landlord, they become part of the real estate and owned by the landlord.  If there is a written agreement between the tenant and the landlord allowing the tenant to keep the fixtures and take them upon termination of the lease, then the tenant must restore the property to it's original condition.

Legal Tests
While there are standard tests, including looking at the intention of the fixture, to determine whether an item is a permanent fixture or trade fixture or personal property, there is much variation in the decisions that are rendered in a court of law.  Therefore, it is important for sellers, buyers and tenants to identify and agree in writing, in advance, about what items are considered trade fixtures and personal property and what are to be considered permanent fixtures and real property.  Any items of questionable intention should be listed on a Bill of Sale, which will transfer ownership of the personal property items.  (The sale of personal property is done with a bill of sale, possession of real property is transferred by means of a deed or a lease.)

What is considered real vs. personal property varies from area to area. You need to check with your real estate agent, tax and legal advisors when involved in a real estate transaction. 


Below are some example state government lists...

Real vs Personal Property

• Land Improvement - Real

• Buildings - Real

• Retaining walls, piling and mats for general improvement of site, private roads, walks, paved areas, culverts, bridges, viaducts, subways and tunnels, fencing, reservoirs, dikes, dams, ditches, canals and drainage - Real

• Fixed river, lake or tidewater wharves and docks - Real

• Permanent standard gauge railroad trackage, bridges and trestles - Real

• Walls forming storage yards and fire protection dikes - Real

• Note-on-site utility piping - i.e., sanitary and storm sewers, potable water and fire-prevention lines, gas lines, etc. - are considered as on-site improvement cost and are to be valued as on-site improvement costs and are to be valued with the land - Real

• Structural and other improvement to buildings, including their foundations, walls, floors, roof, insulation, stairways, permanent partitions, loading and unloading platforms and canopies, areaway 5, systems for heating, central AC, ventilating, sanitation, fixed fire protection, lighting, plumbing, and drinking water, building elevators and escalators - Real

• Add-on equipment to motor vehicles - Personal

• Air Conditioning - Building air conditioning, for comfort of occupants - Real

• Air Conditioning - Window units - Personal

• Air Conditioning - for special process to maintain controlled temperature and humidity - Personal

• Aluminum Pot lines - Personal

• Anhydrous Ammonia Tanks and Equipment - Personal

• Appliances -(owned by the lessor) located in apartments and other rental units, excluding single family residences - Personal

• Ash handling system, pit and superstructure (see Boilers)

• Asphalt mixing plant and equipment (portable) - Personal

• Auto-call and telephone system - Personal

• Bins - permanently affixed for storage - Real

• Boilers - for service for building and manufacture with primary use for manufacture - Personal

• Boilers - for service of building - Real

• Booths for welding - Personal

• Bowling Alley Lanes - Personal

• Bucket Elevators - Open or enclosed (including casing) - Personal

• Building - Specially constructed storage, poultry, livestock processing buildings - (not including machinery or equipment) - Real

• Bulkheads- making additional land area to be assessed with and as part of the improved land. Car wash equipment including vacuums - Personal

• Carpeting, Commercial - Real or Personal) - The real property assessment includes a finished floor. If carpet is installed over an existing finished floor, then carpeting becomes personal property. If, as in the case of many newer buildings, carpeting has been specified and is the only finished floor, then carpeting is assessed as real property.

• Cistern - Real

• Coal-handling system (see boilers)

• Cold storage - built-in cold storage rooms including refrigeration and related equipment - Real

• Control Booth - Personal

• Conveyor unit including belts, drives, housing, tower structures, and tunnels - Personal

• Coolers - free standing including refrigeration equipment - Personal

• Cooling towers - primary use for manufacture - Personal Cranes - Personal

• Crane runways - bolted to or hung on trusses or supported by columns and foundations, located inside or outside of buildings - Real

• Dock levelers, bumper, and weather seals - Personal

• Drapes - Personal

• Drying rooms structure - Real

• Dust catchers - Personal

• Fence - security - Real

• Fire alarm system - Personal

• Fire walls - masonry - Real

• Floors (raised floors), computer room - Personal

• Foundations for machinery and equipment - Personal

• Fountains Drinking - Real

• Gas lines for equipment or processing - Personal

• Gasoline tanks - (see tanks)

• Grain bins - portable - Personal

• Grain drying equipment - Personal

• Grain elevators (commercial, industrial), storage, silos, tanks, cupolas, workinghouse, headhouse, milling space - Real

• Grain elevator machinery and equipment ( commercial, industrial but not limited to legs (inside or outside), conveyors, spouting, hopper scales, man lifts, aeration systems, grain cleaners, grain dryers, mechanical grain dumping equipment, loading and unloading systems, truck scales, all processing machinery and equipment - Personal

• Gravel Plant - machinery and equipment - Personal

• Greenhouses - benches and heating systems - Personal

• Hoist pits - (see pits)

• Irrigation equipment - Personal

• Kilns - lumber-drying kiln structure - Real

• Kilns - concrete block-drying kiln structure - Real

• Kilns - circular down draft (Beehive) - Real

• Kilns - heating or drying system - Personal

• Laundry stem - generating equipment - Personal

• Lighting - part of decor package - Personal

• Lighting - perimeter and area lighting - Real

• Mixer and mixing houses - Personal

• Monorail crane runways - Real

• Ore bridge foundation - Real

• Ovens - processing - Personal

• Piping - process piping above or below ground - Personal

• Pits for equipment or processing - Personal

• Pneumatic tube systems, and related equipment - Personal

• Plumbing Fixtures - Real

• Pools, swimming (not portable) - Real

• Power lines and auxiliary equipment - see wiring

• Pumps and Motors - Personal

• Pump house (including sub-structure) - Real

• Racks and shelving ("ortable or removable) - Personal

• Railroad siding - Real

• Ready-mix concrete batch plant and equipment - Personal

• Refrigeration equipment - see coolers

• Safe Deposit Boxes - Personal

• Sanitary system - Real

• Security alarm system - Personal

• Scale houses - Real

• Scales - truck or railroad scales including pit - Personal

• Scales - dormant scales - Personal

• Septic system (price with land) - Real

• Sheds or buildings, portable or on skids, including sale site modular buildings - Personal

• Signs - Personal

• Silos- farm storage silos - Real

• Silo equipment - Personal

• Silos - containing a manufacturing process - Personal

• Silos - all storage - Real

• Spray pond piping and equipment - Primary use classification

• Sprinkler system - Real

• Stacks - mounted on boilers (see boilers)

• Stacks - supported individually and servicing heating boilers - Real

• Stacks - servicing personal property units or a process - Personal

• Steam electric generating plant equipment - Personal

• Stone crushing plant - equipment - Personal

• Storage bins, portable - Personal

• Storage facilities - permanent of masonry or wood - Real

• Storage vaults - including bank vaults - Real

• Storage vault doors - including bank vault doors - Personal

• Substation buildings - Real

• Tanks - Bulk storage (large capacity water & fills) above or below ground except as below - Real

• Tanks - welding steel pressure tanks, (i.e. propane, butane, and natural gas storage) - Personal

• Tanks - fuel tanks at service stations - Personal

• Towers - cellular, radio broadcasting and television - Personal

• Transformers - Personal

• Tunnels - Real

• Tunnels - waste heat or processing - Personal

• Unit heaters - non portable - Real

• Unit heaters - portable - Personal

• Unloader runway - Real

• Ventilating - Real

• Ventilating system for manufacturing equipment - Personal

• Walls - Partitions, portable - Personal

• Water lines - for process above or below ground - Personal

• Water pumping station - building and structure - Real

• Water pumps and motors - Personal

• Water treating and softening plant building and structure - Real

• Well pumps, casing, motors and equipment - Personal

• Wiring, power wiring for machinery and equipment - Personal
  
  Provided by the Alabama Department of Revenue

Real Property v. Personal Property
When valuing property for ad valorem taxation purposes, the appraiser must determine if it should be classified as personal property or real property. Depending on the circumstances and the type of property, the classification may not always be easy to determine. First, the appraiser should be aware of the definitions outlined in state law. K.S.A. 79-102 defines real property and personal property in the following manner:

“That the terms “real property,” “real estate,” and “land” … shall include not only the land itself, but all buildings, fixtures, improvements, mines, minerals, quarries, mineral springs and wells, rights and privileges appertaining thereto.”

“The term “personal property” shall include every tangible thing which is the subject of ownership, not forming part or parcel of real property…”

The statute defines personal property by exception, and is not always helpful in making a precise determination. For practical purposes, the county appraiser shall refer to the Kansas Reappraisal Manual for more precise information. The “Kansas Real and Personal Property Reference” section is a guideline for classifying property in the state of Kansas. If we all follow it in general, we will promote uniformity. It lists many types of properties and the classification for each one. Refer to pages iii – vii for excerpts from the Kansas Real and Personal Property
Reference Section.

It is possible that the county appraiser will be faced with a unique situation or property that is not addressed in the Kansas Reappraisal Manual. In that case, the county appraiser shall utilize the 3-pronged fixture law test set forth in Directive 92-011 to determine whether the property is real or personal. However, if the property is a mobile home or a manufactured home, then the special 2-pronged test set forth in K.S.A. 79-340 must be used to determine whether the property is real or personal. See Section I in this guide for information on the 2-pronged test used to determine whether a mobile home is real or personal.

The Kansas Court of Appeals has applied the 3-pronged fixture law test in a case pertaining to the value of property for ad valorem taxation purposes. In re Equalization Appeals of Total Petroleum, Inc., 28 Kan. App. 2d 295, 16 P.3d 981 (2000). This case also illustrates a unique
situation where the 3-pronged fixture law test was applied to determine that massive oil tanks and oil refinery towers were real property (contrast the Kansas Reappraisal Manual).  In Total Petroleum, the court concluded that the tanks and refinery towers were real property after
reviewing (1) annexation, (2) adaptability and (3) intent. The key factors influencing the Total Petroleum court decision included:
1. The massive size of the tanks and towers, and how they were affixed to the land:
♦ The tanks were built on-site by transporting huge pieces of sheet metal by semi-trucks and welding the metal into place until 3” thick.
2005 Personal Property Valuation Guide Page Classification and Assessment Revised 12/2004 Real Property v. Personal Property
ii
♦ The towers were 120’ tall and weighed 175,000 lbs. empty, without trays. They were installed 20’ below ground in concrete and rebar with 1 ½” anchor pedestals, and were built to withstand 100 mph winds.
2. The tanks and towers were not portable and were never moved.
3. The land on which the tanks and towers were affixed was devoted to the placement of an oil refinery. Some of the property associated therewith, including the towers and tanks at issue, were specifically constructed for placement on that particular piece of land.
4. Much of the property (including the tanks and towers) would have to be cut into pieces in order to be removed from the land. Furthermore, the removal would result in environmental contamination of the land, which would have to be treated.

Three-Pronged Fixture Law Test
The determination of whether property is real or personal must be made on a case-by-case basis.
The three tests that comprise the three-pronged fixture law test are: (1) annexation; (2) adaptability; and (3) intent. All three tests must be considered.

Annexation to the realty: How is the item under consideration physically annexed to the real property? Would removing the item cause a reduction in the fair market value of the realty? If so, the item may tend to be viewed as part of the real property. Would the item, once removed,
require a significant amount of time or cost to restore the realty to its original condition? If so, the item may tend to be viewed as part of the real property.

Adaptation to the realty: In the adaptability test, the focus is on whether the property at issue serves the real estate or a production process. For example, a boiler that heats a building is considered real property, but a boiler that is used in the manufacturing process is considered
personal property.

Intent of owner: Intent is not determined simply by what a person verbally expresses. Rather, the courts have stated that it is inferred from the nature of the item affixed; the relation and situation of the party making the annexation; the structure and mode of annexation; and the
purpose or use for which the annexation was made. In other words, the courts will look back at the objective data garnered from the first two tests, or from independent documents (documents prepared for purposes other than for a hearing on the issue of whether the property is real or
personal). For example, a lease agreement may reveal intent. The courts look for objective data to determine whether the owner of the property at issue intended for it to become part of the real property.

When classifying property for assessment purposes, the appraiser should examine all relevant factors and criteria. The information source, its applicability to the Kansas property tax laws and whether it can be used as a credible authority on appeal are all relevant factors to consider.
2005 Personal Property Valuation Guide Page iv Classification and Assessment Excerpt From: Real Property v. Personal Property
State of Kansas Reappraisal Manual.

KANSAS REAL AND PERSONAL PROPERTY REFERENCE
The basic factors for classifying items as real or personal property are its designed use and purpose. Normally, the land and all permanent structures on the land, all mechanical and other features within the structure with a designed use for the safety and comfort of the occupants, and
all permanent land improvements added for the utilization of the land are considered real estate.  An item that is directly used for and whose primary purpose is for a manufacturing process is normally considered personal property. Personal property, by definition, includes all machinery and equipment, furniture, fixtures, and inventory.

Other factors which must be given consideration in classifying items as real or personal property are the manner in which they are affixed and the intention of the party who affixed them. The following is a standard reference for the State of Kansas. It should be recognized that this is a general guideline and that specific listed items may vary under certain conditions. When questions or uncertainties arise, contact the Division of Property Valuation for clarification.

IMPROVEMENTS TO LAND NORMALLY CONSIDERED REAL PROPERTY
Ordinarily include:
Retaining walls, piling and mats for general improvement of the site, private roads, paved areas, culverts, bridges, viaducts, subways, tunnels, fencing, reservoirs, dikes, dams, ditches, canals, private storm and sanitary sewers, private water lines for drinking, sanitary and fire protection,
fixed wharves and docks, permanent standard gauge railroad tracks, and yard lighting.

BUILDING COMPONENTS NORMALLY CONSIDERED REAL PROPERTY
Structural and other improvements to buildings, including:
Foundation, walls, floors, roof, insulation, stairways, catwalks, partitions, loading and unloading platforms and canopies, systems designed for occupant comfort such as heating, lighting, air conditioning, ventilating, sanitation, fixed fire protection, plumbing and drinking water, elevators and escalators.

2005 Personal Property Valuation Guide Page v Classification and Assessment Excerpt From: Real Property v. Personal Property State of Kansas Reappraisal Manual

MISCELLANEOUS Category Item

Building Components
Air Conditioning-Central …………………………....Real
Air Conditioning-Package with Duct Work ………. Real
Air Conditioning-Wall/Window Unit ………….…. ...Personal
Cold Storage-Built-In ………………………………..Real
(where they are the primary function of the structure)
Cold Storage-Movable (knock down type) ……….. Personal
Cold Storage-Display Type ...……………………... Personal
Cold Storage-Free Standing ………...……………..Personal
Refrigeration Equipment ………………………….. .Personal
Door-Automatic (Magic Carpet) ………………….. Real
Elevator ……………………………………………....Real
Escalator ……………………………………………..Real
Dumbwaiter ……………………………………….. ..Real
Man Lift ……………………………………………....Real
Sidewalk Lift ………………………………………...Real
Franklin Stove …………………………………….....Personal
Free Standing Fireplace …………………………...Personal
Sprinkler System …………………………………....Real
Boiler (used primarily to supply heat for bldg.) …... Real
Boiler (used primarily to supply power for mfg.)...... Personal
Machinery and Equipment Covers ………………...Personal
Generator ……………………………………….….. Personal
Hopper Scales ……………………………………... Personal
Loading-Unloading Systems ……………………… Personal
Yard Items
Parking Lot Lighting ………………………………...Real
Scale-Platform …………………………………….. .Personal
Scale-Houses ……………………………………… Real
Scale-Axle Drive-On ………………………………..Real
Sign-Business (attached to building) ……………...Personal
Sign (free standing) ……………………………….. Personal
Sign-Advertising (billboard) ………………………..Personal
Tower-Radio Station ……………………………… Personal
Tower-Television Station …………………………. Personal
Tower-Communication (citizens band) …………...Personal
Tower-Cable TV …………………………………....Personal
Docks and Bulkheads ……………………………...Real
Fencing (security or privacy) ………………………Real
Trackage ……………………………………………Real
Tunnel (pedestrian) ……………………………….. Real
Incinerator ………………………………………… Personal
Overhead Walkway ………………………………. Real
Utility Shed (affixed to slab or foundation) ………. Real
Satellite Dish ……………………………………... Personal
Special Items
Batch Plant-Structure …………………………….. Real
Batch Plant-Equipment ………………………….... Personal
Portable Standing Building & Yard Item …………. Personal
Silo …………………………………………………Real
Tank-Storage ……………………………...………. Personal
Tank-Used in Processing …………………………. Personal
Grain Elevator ……………………………………. Real
Wind Generator …………………………………… Personal
Solar Energy Panel ………………………………... Real
Windmill ………………………………………….. Personal
Automotive Services
Pump ……………………………………………... Personal
Tank-Above Ground, Vertical ……………………. Personal
Tank-Above Ground, Horizontal …………………. Personal
Tank-Underground ……………………………….. Personal
Lift ………………………………………………... Personal
Compressor ………………………………………. Personal
Service Station Yard Lighting …………………….. Real
Banks
Vault ………………………………………………. Real
Vault Door ………………………………………… Real
Safe Deposit Box …………………………………. Personal
Counter …………………………………………… Personal
Night Depository …………………………………. Real
Window-Drive-In …………………………………. Real
Window-Walk-Up ………………………………… Real
Window-Tellervue ………………………………... Personal
Surveillance System …………………………….... Personal
Safe-Built-In ………………………………………. Real
Safe-Moveable ……………………………………..Personal
Money Machine or Mini Bank ………………….… Personal

Beauty & Barber Shops
Basins & Sinks (used in conjunction w/ business) …Real
Toilet Room Facility ………………………………......Real
Bowling Lanes
Lane and Return …………………………………...... Personal
Pinspotter …………………………………………..... Personal
Car Washes
Equipment …………………………………………....Personal
Related Plumbing, Piping & Wiring ………………...Real
Dry Cleaners
Permanent Type Heating …………………………. ..Real
Restaurants and Bars
Sink (used in conjunction w/ business) …………… Real
Equipment ……………………………………….... ...Personal
Indoor Theatres
Equipment ………………………………………... ...Personal
Seats ……………………………………………… ..Personal
Outdoor Theaters
Screen …………………………………………….. ..Real
Speaker, Post, Underground Wiring ……………... Personal
Concession Stand & Other Permanent Bldgs. ……Real
Trailers
Recreational Vehicle …………………………..…... Personal
Mobile Home ………………………………….......... Personal
(in mobile home park or on leased or rented land)
Mobile Home ……………………………………..…Real
(on permanent foundation on private lot)
Trailer Parks.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
Laundry Building, Bath House, Swimming Pool …. Real
Sewer Systems, Water Piping …………………….. Real
Poles and Lighting ………………………………..…Real
Walk, Driveway and Parking Areas ………………. Real

Swimming Pools
Inground ……………………………………..……..…..Real
Above Ground, Prefabricated …………..………..... ..Personal
Commercial Greenhouses
Plastic on Framing …………………………………....Real
Heating System …………………………………… ....Real
Apartments
Carpeting (installed and attached) …………………..Real
Built-Ins (ranges, dishwashers, garbage disposals)..Real
Photo Booths
Photomat, Shutterbug, etc. (portable kiosk) ………..Personal
Docks
Leveler ……………………………………………..... .Real
Oil Bulk & Refining Plants
Oil Storage Tanks …………………………………...Personal
Piping (above ground) …………………………….. .Personal
Loading Rack (frame and canopy)………………… Real
Craneways
Integrated with Building Structure ……………….. ...Real
Independent of Building Structure ……………….. ..Personal
Crane Motor and Mechanism …………………….. .Personal

2005 Personal Property Valuation Guide Page Classification and Assessment
Revised 12/2004 Real Property v. Personal Property
E xcerpt From: State of Kansas Reappraisal Manual

 
 
Sources: Essentials of NJ Real Estate, by Lank and Sobeck; Principles and Practices of NJ Real Estate by F. Kovats.


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