Don't Forget to Give Tenant Proper Notice for Fixture Removal

You may want to negotiate to keep your tenant's fixtures—for example, lights, seating, or shelves that are attached to its space—after it moves out. But what if you change your mind later and want the tenant to remove and take its fixtures with it before it leaves? You can carve out that option in the lease by specifying that you will provide notice to the tenant at a certain point before the term is over that you are requiring it to take its fixtures with it. But it's important to keep the date you've set on your radar.

The owner of Massachusetts restaurant space gave itself the flexibility to keep or get rid of its tenant's fixtures at the end of the lease, but its noncompliance with the notice provisions landed it in court—and with the burden of paying to remove the fixtures later—after an appeals court concluded that the owner's untimely notice relieved the tenant from removing the items.     

There, the owner claimed that its restaurant tenant breached the lease by failing to remove “trade” fixtures before moving out. The tenant argued that it wasn’t required to remove the fixtures because the owner hadn’t complied with the lease terms regarding fixture removal. The owner sued the tenant. The tenant asked a court to dismiss the case. A Massachusetts trial court ruled in favor of the tenant.

The tenant argued that the owner failed to provide it with the 60-day notice of compelled fixture removal required by the lease. The owner had provided it with 11 days’ notice. It said that additionally the owner’s right to hold the tenant responsible for the cost of disposing of the tenant’s abandoned property doesn’t extend to such fixtures anyway. The court agreed.

The court said that the lease was clear that fixtures installed by the tenant become property of the owner upon termination of the lease, and are deemed surrendered to the owner as part of the premises at that time; this applied to “any and all fixtures,” including “trade” fixtures that are attached to the space’s floors, walls, or ceilings. The provision was not intended to exclude any categories of fixtures from its coverage.

The court determined that all fixtures of every type that are attached to the premises belong to the owner, unless the owner “shall notify tenant approximately 60 days prior to the end of the term of the lease whether the owner requires the tenant to remove any or all such additions, improvements, and fixtures from the demised premises.”

Here, because the owner hadn’t provided the required notice, the tenant wasn’t responsible for removing the fixtures or paying for the cost incurred by the owner to remove them [Wilder Cos., Ltd. v. California Pizza Kitchen, Inc., January 2015].