As a practical matter, everything found on a given tract of real estate, with the exception of the raw ground, is or at one time was personal property. Buildings and other such improvements are, in essence, amalgams of lumber, cement, bricks, glass, piping, shingles, nails and other building materials. Those materials lose their identity as separate items of personal property when they are combined and become part of the real estate by accession. In contrast, a fixture is an item that retains its separate identity when it becomes part of the realty. In short, a fixture is a former chattel which, while retaining its separate physical identity, is so connected with the realty that a disinterested observer would consider it to be a part therof.

There is no bright-line rule for determining under what conditions a chattel loses its character as personal property and becomes a fixture of the freehold. That determination must be made through an analysis of all the individual facts and circumstances attending the particular case.

In order to ascertain on which side of the real/personal property dividing line an item falls in a given case, there has been a long standing common law test known as the “fixtures test”. This three-prong test requires united consideration of the following:

1. The item’s annexation to the realty;

2. The items’s adaptation to the use of that part of the realty with which it is attached; and

3. The intention of the party making the annexation.

While the consideration of all three tests is generally required, intention of the parties is found most to be relied upon by the courts. Intent is not determined simply by what a person verbally expresses. Rather, it is inferred from the nature of the item affixed; the relation of the party making the annexation; the structure and mode of annexation; and the purpose or use for which the annexation was made.

Silver Oak Advisors’ founders bring over 40 years of Big 4 and Industry property tax experience. Silver Oak was formed to provide taxpayers in need of State and Local Tax (SALT) assistance, former Big 4 and industry experienced professionals with specific industry and/or property expertise in addition to working knowledge and relationships with the specific taxing jurisdictions.

Contact us for a no-cost/no-obligation review of your real and personal property assessments. Silver Oak Advisors does not utilize staff in these areas. These no-cost/no-obligation reviews are handled by our Directors. We believe you deserve 40 years of Big 4 and industry experience in Complex and Industrial properties and a history of results.

We are working Directors allowing us to provide a higher level of service at a cost effective rate, passing on the savings to you. Contact us for more information.

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