Trade fixtures

When a business runs from leased premises, the buyer and the seller need to agree what stays and what goes: shelving, equipment, displays, signs. Whether an item is a trade fixture or an improvement that belongs to the landlord changes what the buyer is actually getting with the business. The answer sits in the lease, so read it closely before agreeing the asset list.

Fixtures and improvements

BDC defines trade fixtures as items in a leased space that you can take with you when you move out, giving furniture, inventory and computers as examples. It contrasts them with leasehold improvements: unless the lease specifies otherwise, BDC says, an attached improvement usually becomes the landlord’s property. FedDev Ontario says that unless the lease provides otherwise, anything a tenant adds to the property belongs to the landlord when the tenant leaves, and lists air conditioners, light fixtures, shelving, cabinets and manufacturing equipment as examples. See leasehold improvements.

What to check

• Whether the lease defines trade fixtures, and whether it lists exclusions for assets the tenant may remove
• Whether each item on the seller’s equipment list is a trade fixture, an improvement, or owned by someone else
• Whether a work letter says who owns the improvements, as FedDev Ontario describes
• What the lease requires on removal and repair of the space

This entry does not describe how any province’s law treats fixtures; check the lease and the law where the premises are.