What is the definition of a trade fixture?

A trade fixture is best defined as a movable item that is installed by a tenant for the purpose of conducting business. These items are considered personal property rather than real estate, which means they can be removed by the tenant when the lease concludes, provided that their removal does not cause damage to the property. This definition is crucial in distinguishing trade fixtures from other types of fixtures, which are typically considered permanent additions to a property and become part of the real estate.

Trade fixtures are essential in commercial leases, as they allow businesses to customize their space. For instance, a restaurant may install specialized kitchen equipment or shelving units that are necessary for its operations. These installations enhance the functionality of the leased space without permanently altering the property itself. Understanding this concept is vital for both landlords and tenants to navigate lease agreements effectively and to manage expectations regarding property alterations.