What are Trade Fixtures in Condemnation?

          Trade fixtures are general those personal property improvements installed for business purposes.  In a recent Court of Appeals decision, Matter of City of New York (Kaiser Woodcraft Corp.), 11 NY3d 353 (2008), it was noted that “New York takes a broad view in evaluating what improvements are to be regarded as (trade) fixtures.”  Citing, Rose v State of New York, 24 NY2d 80, 86 (1969).

          The classic definition of a compensable trade fixture is an item added to the premises with the intention that it becomes a permanent accession to the freehold.  But annexation is not itself necessary to render an article a trade fixture.  A trade fixture may be removable.  Further, an item may be a trade fixture if it would suffer substantial damage or lose substantial value upon removal.

          A tenant can file a trade fixture claim.  So can the owner of the fee if the owner was doing business at the premises and installed trade fixtures.

The Unit Rule

          The Unit Rule would include the value of the trade fixtures with the value of the real estate.  It has been long established that the Unit Rule does not apply in New York since an eminent domain taking acquires fee and fixtures, each interest must be compensated separately.  Marraro v State of New York, 12 NY2d 285 (1963).  The Unit Rule has been criticized and said to be in “the shadow land between substance and procedure.”  United States v City of New York, 165 F2d 526, 528 (2d Cir. 1948).

When Trade Fixture Awards May Not Be Appropriate

          If an owner of the fee also owns trade fixtures and the property is valued based on a different highest and best use which would require the destruction of those trade fixtures to achieve the use contemplated in the award for the land, the trade fixtures are not compensated.  Acme Theatres v State of New York, 26 NY2d 385, 388-389 (1970).

Posted in Trade fixtures, Uncategorized, Unit Rule
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