National Real Estate Practice Exam

What differentiates trade fixtures from regular fixtures?

1. Trade fixtures are permanent and non-removable

2. Trade fixtures can only be installed by owners

3. Trade fixtures are used for business and are removable by the lessee

4. Trade fixtures require a lease agreement to exist

The correct answer is: Trade fixtures are used for business and are removable by the lessee

The distinction between trade fixtures and regular fixtures primarily lies in their purpose and the rights associated with their installation and removal. Trade fixtures are specialized items that businesses install in rental properties for the purpose of conducting their business operations. Examples include shelving, ovens in a restaurant, or specific machinery in a workshop. The key aspect that makes the choice correct is the fact that trade fixtures are considered personal property of the lessee (the tenant) and can be removed by them when they vacate the premises, as long as the removal does not cause damage to the property. This right to remove trade fixtures is a legal understanding derived from the relationship between landlords and tenants, particularly within commercial leases, where the tenant has a vested interest in the tools necessary for their business operation. The other choices do not accurately reflect the nature of trade fixtures. For example, saying that trade fixtures are permanent and non-removable reflects the nature of regular fixtures, which typically become part of the property. Additionally, suggesting that trade fixtures can only be installed by owners misrepresents tenants’ rights to modify and improve the property for their business needs. Lastly, while a lease agreement often underpins the existence of trade fixtures, it is not a strictly defining characteristic, as trade fixtures relate more