According to a very old law “quicquid plantatur solo, solo cedit” anything which is attached to land becomes part of the land and therefore the owner of that land by consequence, also becomes the owner of the attached item.  Originally the law was developed because in feudal times a landowner could only bequeath his property to his heir (first born male child), but was free to gift away any chattels which might be located on the land to any person he so chose.  In the modern era, the issue of determining whether an item located on the land is a “fixture” or a “chattel” becomes relevant, for the most part, when it comes time for the property to be sold.  This is because a contract for a sale of land quite simply will obligate the Seller to give over to the Buyer both the land and everything which is attached to it.  Anything not attached are deemed to be “chattels” and unless the contract specifically identifies those items as being included as part of the sale, the Seller is free/obligated to remove those items from the property at or before the date of settlement.

Differentiating between items which are fixtures or chattels is done according to a legal principle known as the “doctrine of fixtures” and under this doctrine, two tests are to be applied:

• The degree of annexation; and
• The object of annexation.

Degree of Annexation

Put simply, the greater the degree to which the item is annexed to the property, the more likely it is that the relevant item has become a fixture.  The general “rule of thumb” has emerged that if the goods cannot be removed from the property without damaging either the land to which the goods are attached, or the goods themselves, then unless the item fails the “object of annexation” test, the item is almost certainly to be concluded as a fixture.

Object of Annexation

Here the question is asked, “what was the purpose for which the item was brought onto the land and for which it was joined to the land?”  If it is determined that the item appears to have been attached to the land for the benefit of the building(s) and the users of it from time to time, then under this test, the item is again concluded to be a fixture.  If in the alternative, it is considered that the purpose for which the item was attached was more referable to providing specific enjoyment and comfort and convenience to the particular occupant who attached it, then the item will be considered to have remained a chattel.

By looking at things this way, in one case, the Court was able to decide the valuable tapestries which had been tacked onto a canvas on wooden rails which was then nailed to the wall of a house were considered still to be a chattels because this would be the only way that the owner of the tapestries would have been able to view them.

Does one test trump another and from whose perspective are the tests applied?

Case law says you should first look to the degree of annexation as a preliminary guide as to whether something tends to be more a fixture or a chattel. Ultimately though, it is the object (or intention) of annexation test which carries the greater power. Consequently, by this second (intention) test, it is possible that an item which is seemingly strongly affixed to a property might still remain a chattel, whereas an item which is only loosely affixed to the property (even resting on its own weight) might be considered a fixture.

By way of example of the point, consider a situation where there are blocks of stone placed one on top of the other without any mortar or cement for the purposes of forming a drystone wall. Such a structure when located in a private dwelling would most likely be considered to be a fixture to the particular property. However, if those same stones were deposited in a builder’s yard and for convenience sake were stacked on top of each other in the form of a wall, the stones would in that situation be more likely to remain chattels.

It is important here to note that when working out the relevant intention or purpose behind the affixing of the item to the land, the question is considered from the perspective of what a bystander with knowledge of the relevant facts would assume to have been the intention of the person who affixed it. In other words “intention” is gleaned from an objective not a subjective test. The person who actually affixed the item on the land is of course free to give their own testimony as to what their (subjective) intention actually was but this rarely carries much influence.

Some case examples and a simple check list

Cases where items have been held to be a chattel are venetian blinds and pelmets, a large chandelier that was attached to the roof by a pullie system that was deemed to be a decorative chattel.  In another case, large paintings which were screwed onto the wall of a building were held to be chattels and not fixtures, because the purpose of their attachment was for them to be enjoyed as paintings and not contemplated as part of the architectural design of the room. In one more case, a stand-alone fully self-contained office structure was deemed to remain a chattel because the office was intended to be only erected for a temporary purpose.

In one case, the court attempted to list the items which should be considered as follows:

• Whether removal would destroy the item that was attached to the property;
• Whether the cost of removal would exceed the value of the attached property;
• Whether removal would occasion significant damage to the land or buildings to which the property is attached;
• Whether the attachment was for the better enjoyment of the property, or for the better enjoyment of the land or buildings to which it was attached;
• The nature of the property (the attached item) itself;
• The contemplated use of the property;
• Period of time for which the property was to be in position;
• Function to be observed by the annexation of the property.

This list however, is not said to be exhaustive, it is just one of the factors to be considered.

What if the item attached to the property either did not belong to the land seller, or had money owed against it under some type of chattel secured finance?

In a case where a person “A” owned land and by one means or another, another person “B” comes along and attaches something to that land, but never intends to give “A” ownership of the item and then “A” sells the land to a third party ( say a Mr “C” ) with “B’s” item still attached to it, what happens here?  In any other case where “A” takes possession of an item belonging to “B” and then attempts to sell it, “B” generally has the right to retrieve the item from the person that “A” fraudulently sold it to however, when the item in question has been attached to land, the rule actually reverses and so in this scenario “C” takes good title and full ownership of the item.  In one case, it was expressed in this way:

“If “A” steals “B’s” bricks and builds them into a house on “C’s” land, then “C” becomes the owner of the bricks because they are attached to the land and “B” has only a remedy to sue “A” for the theft of his bricks in the first place.”

In circumstances however where the item actually has some form of secured finance against it, the finance company to whom the advanced monies are owed, still retains a right (in most circumstances) to come onto the relevant property, detach the relevant item and repossess it for sale in the ordinary way. This right however will only exist/subsist for so long as the finance company has registered its security finance interest in the particular item in a special central register, known as the “Personal Property Security Register”.  These rights which are preserved to finance companies exist by operation of special laws which were passed nationwide in 2009 and so this specific (statute) law trumps all of the earlier land and property law principles.

What should Buyers, Sellers and Real Estate Agents do in circumstances of uncertainty/grey areas?

Some of the items that have been known to cause dispute are dishwashers, garden sprinkler systems, water features, statues and even barbecue hotplates.

In circumstances of uncertainty, whilst obviously everyone can have a go at trying to apply the degree of annexation and object of annexation tests, it is suggested that instead, all of the affected parties would be far better advised to simply have a very thorough look around the property for any items that might potentially fall into this grey area (that is they might be capable of being determined to be either fixtures or chattels by application of these tests) and having identified these “grey items”, make it clear in all discussions between Buyer and Seller as to whether the items are being included or excluded and either way, the contract should then specifically mention these items and specifically record what has been agreed.  In other words, is the relevant item agreed to be included in the sale or not, and, if not, then it will be the Seller’s obligation (and indeed right) to remove the item from the property at the point of settlement.

In circumstances where this exercise is either overlooked or done poorly, the end result of disputes between Buyers and Sellers can become very uncomfortable for all players given that the items in dispute usually are of insufficient value to warrant the cost of bringing Court battles to try to resolve the issue and consequently, this usually has the affected parties turning back on the Real Estate Agent and/or the Solicitors who might have been acting in the matter to try and recover their costs/losses from there.

In a recent example a large pool umbrella/awning which was said to be worth around $5,000.00 and which was actually sunk into a hole in the concrete, but was basically resting on its own weight and could be removed without damaging either the hole or the umbrella, was an item that the Seller unilaterally removed on sale.  Even though, according to the object of annexation test, the Buyers had a strong argument to say that the item was an integral part of the pool area and therefore classifiable as a fixture, the cost of running a court battle over the item was ascertained to be more than the umbrella was worth and consequently it was the Real Estate Agent that was put under pressure to make good their loss.

Michael Zande is the Principal of Zande Law Solicitors, with 25 years experience in practice.  Michael and his team have had extensive experience in conveyancing matters.  Please feel free to review our firm and staff profiles at www.zandelaw.com.au

The information in this article is merely a guide and is not a full explanation of the law.  This firm cannot take responsibility for any action readers take based on this information.  When making decisions that could affect your legal rights, please contact us for professional advice.