When a restaurant lease expires it is fairly common for disputes to occur between landlords and tenants over what is the landlord’s property and what belongs to the tenant. Disputes may also occur upon a tenant default, where the landlord sues to terminate the lease and recover possession of the premises. However, what constitutes the “premises” is not always clear. For tenants, who spend significant amounts of money on equipment and trade fixtures to build out space, this can be a major issue.
Property is divided into two distinct classes: real property and personal property.
Real property consists of the land and building, whereas personal property is removable and includes the furniture, fixtures, and equipment (FF&E) the tenant uses to operate its business.
FF&E is usually defined as a “trade fixture,” which means the tenant may remove it at...