Is a Lease a Chattel or a Fixture?

Question:

Is a Lease a Chattel or a Fixture?

Answer:

Quite clearly, for over 1,000 years a lease has been a chattel, but it doesn’t come easily to mind.

You will appreciate that a Lease as a Chattel is not your normal, average, everyday chattel. If you sell, you cannot just pick it up and take it away with you.

Categories

So, you have to be aware of the fact that there are actually two categories for chattels:

  1. Chattels real, and
  2. Chattels personal.

The reason for the distinction had to do with the laws of civil procedure in the 12th Century.

You might think that civil procedures today are complex and complicated, but you obviously never lived in the 12th Century. Then, it was a legal nightmare. There were no standard forms. There were no real precedents and everything was just created, made up and original.

A defendant upon receiving a Writ might say: “they can’t do that, can they?” Their lawyer would reply: “maybe they can, but I’ve never seen that before!”

Real Property

There were two issues. Real Estate or the land was important. It was valuable. And, if you wanted to deal with real estate, then you would have to go to a superior court. The Judge there, would have the authority and the delegated powers to make an important decision relating to the land. The Court Order would bind not only the parties, but everyone else in the community. If the Judge said that you were the owner of certain property, then you were, and that was binding against the whole world. This lawsuit would be known as an “action in rem”

Personal Property

The second issue involved chattels which were personal in nature. There was not much value here. So, this was assigned to lower Courts. Less important and qualified people were appointed as Judges. No decision could be made about real property, just personal property. The compensation was money. The object itself would not be ordered to be returned.

Rules or Principles of Protection

Real estate was protected by the legal system by a “property rule” in the higher Courts.

Personal property or chattels were protected by a “liability rule” in the lower Courts.

Chattels Real – The Lease

Somewhat of a crossover is the “lease”. It is now known as a “chattel real”. Initially, the wrongly ousted Tenant had a personal claim against the Landlord.

Eventually, there was a remedy available to an “ousted tenant” through the superior courts. There was an “action of ejectment” as against the Landlord, who was now in possession of the property once again. It only seemed fair. The Tenant worked the land, removed the trees, planted the crops and has a 20 year lease. Improperly, the Landlord took it back usually claiming some sort of damage or non-payment.

The Judge in the higher Court could not only award monetary compensation as between the two parties, but could also order the return of the lands to the Tenant and make a decision that “applied to the whole world”. That Court Order confirmed that the Tenant was lawfully in possession of the property until the expiration of the twenty year lease.

Interestingly, the higher Courts often met at the “castle” , while lower Courts frequently met at the “tavern”. Actually, there was little other choice at the time.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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