When is a Chattel not a Chattel?

FAQ

Q: Can a fixture ever be removed from a property?
A: Only if the contract specifies it or if both parties agree afterwards. Otherwise, removing a fixture can lead to legal disputes.

Q: How do I know if something is a chattel or a fixture?
A: Look at whether the item is attached, the purpose of its attachment, and if it would be damaged by removal. If you need a tool to remove it, it is likely a fixture. When in doubt, consult a real estate lawyer.

Q: Are there clear rules in Canadian law?
A: There are guidelines, but decisions are made case by case and the decisions seem inconsistent. “Clear” would not be how I would define the test.  

Q: What should I include in my contract?
A: Be explicit about what is included as a chattel or fixture to prevent disputes. The Courts have accepted that a contract between two parties can determine what is a chattel and a fixture, at least between the two parties.

I assume the most annoying response you receive from lawyers when asking a question is “it depends”.

That applies to the analysis of whether an item is a chattel or a fixture. The general rule is “if it is attached to the property it is a fixture, if you can simply pick it up and remove it, it is a chattel”. The problem with general rules are that there are exceptions to the rule.

Let us use the example of a back yard above ground pool, which is an actual situation we had. The pool was an above ground pool, one that is easily taken down or put up, and costs around $150.00-$500.00 depending on whether it is on sale (my wife and I bought one at Canadian Tire for $120.00 on sale many years ago for our kids). The pool was not included in the contract as a chattel, but was mentioned in the listing as a feature and highlighted in the photos, but was removed by the seller as it was not included in the contract.

The Buyer’s position was that it was included as a fixture and that the pool needs to be returned or payment of money in lieu.

The law on determining whether an item is a chattel or a fixture is as follows:

1. That articles not otherwise attached to the land than by their own weight are not to be considered as part of the land (a fixture), unless the circumstances are such as show that they were intended to be part of the land;
2. That articles affixed to the land even slightly are to be considered part of the land (a fixture) unless the circumstances are such as to show that they were intended to continue chattels;
3. That the circumstances necessary to be shown to alter the prima facie character of the articles are circumstances which show the degree of annexation and object of such annexation, which are patent to all to see;
4. That the intention of the person affixing the article to the soil is material only so far as it can be presumed from the degree and object of the annexation.  

Talk about making something more confusing.

So, if it is even slightly attached to the property, it is a fixture, unless circumstances show otherwise. Those circumstances are to be the degree of the attachment and the purpose of the attachment.

That test is pulled from a case called La Salle Recreations Limited v. Canadian Camdex Investments Limited, 1969 CanLII 740 (BCCA). The case comments on the object of annexation in an attempt to give further direction:

“In passing upon the object of the annexation, the purposes to which the premises are applied may be regarded; and if the object of setting up the articles is to enhance the value of the premises or improve its usefulness for the purposes for which it is used, and if they are affixed to the freehold even in a slight way, but such as is appropriate to the use of the articles, and showing an intention not of occasional but of permanent affixing, then both as to the degree of annexation and as to the object of it, it may very well be concluded that the articles are become part of the realty, at least in questions as between mortgagor and mortgagee.”

The case of La Salle, dealt with a determination as to whether a runner carpet, for example one that runs down a hallway, was a chattel or a fixture. The carpet was attached to the floor through small nails and placed on top of a ribbed rubber matting that was firmly glued down. The court determined that the degree of annexation was slight and turned the analysis to whether the object of annexation, or more clearly, the “why” it was affixed to the property, and proposed the following question:

“…whether the goods were affixed to the building, though slightly, for the better use of the goods as goods, or for the better use of the building as a hotel building.”

In that case, the court concluded that the carpet was a fixture as it made for better use of the building as a hotel building.  

In a case called Royal Bank of Canada v. Maple Ridge Farmers Market Ltd., 1995 CanLII 896 (BC SC), the court was asked, because of inconsistent decisions by courts in applying the above test, to come up with new rules. At paragraph 5 of that case the court says “the consequence of these ostensibly conflicting decisions is that there are no clear rules for classifying an article as a fixture or as a chattel, and accordingly the parties must come to court for a determination on a case-by-case basis.”

That court tried to set out new rules to provide clarity, which have been followed but are interpreted as clarifying the rules in La Salle as opposed to replacing them:

1. Any item which is unattached to the property, except by its own weight, and can be removed without damage or alterations to the fixtures or land that will need repair, is a chattel.
2. Any item which is plugged in and can be removed without any damage or alteration is a chattel.
3. Any item which is attached even minimally (i.e. it cannot simply be unplugged) is a fixture.
4. If a piece of equipment is attached to a structure, a part of which could be removed but which would be useless without the attached part, then the entire piece of equipment is a fixture. In other words, the item will be a fixture if it losses its essential character because it is of no use unless attached to a permanent and substantial improvement to the premises of which it formed part. The converse is also true. If an item can be detached without damage or alteration, and if the item retains its essential character without the attached part, then it will be a chattel.
5. Where an item is determined to be a fixture, it may nevertheless be removed if it can be shown that it is a tenant fixture. A tenant’s fixture may be removed from the premises during the currency of the tenancy provided that the tenant leaves the premises in exactly the same condition as he or she received them.
6. In very exceptional circumstances not covered by these rules the court should have resort to the purpose test. For example, a mobile home may be resting on the land by its own weight but it may be clearly established that it was intended to be a fixture. These circumstances should only arise rarely and in relation to very large or expensive items.

In my pool situation, the pool was temporary, as the seller would remove it every fall and bring it back every spring, and was not connected to the property in any way, other than being plugged in for the pump. We argued for months, and settled on $200.00 because of a completely different issue.

The point is, the answer to whether something is a chattel or a fixture is “it depends”.

Of course, you can resolve this uncertainty. In drafting the contract, the parties can determine what is a chattel and what is a fixture, at least between themselves, meaning that agreement would not be binding on third parties. If the buyer wants something to be included with the property, and it might not be clear as to whether it is a chattel or a fixture, think a hot tube or a pool in my situation, simply write it in as a chattel to be included. Whether it is legally a chattel or not, it makes it a chattel between the buyer and the seller.

Obviously, you don’t need to do this with every item, like light fixtures or plugs, but if you are unsure, or if it is something unique, just include it in the contract.

Final Thoughts

Let’s go back to the above-ground pool. Our position was that the pool, being portable, easily disassembled, and resting primarily by its own weight, would be characterized as a chattel. Had the pool simply been included as a chattel, there would have been no dispute. The practical application of this means that the clarity of a contract is important. Although courts can resolve these disputes on a case-by-case basis, it can be costly and time-consuming, which is why it is best to consult a real estate lawyer to make sense of your unique situation.

This article is for educational purposes only and is not legal advice. Laws change and vary by location; please consult a real estate lawyer for guidance on your specific situation.