Most leases (long leases and commercial buildings) contain repairing obligations for tenants in some form or another which are likely to extend to replacement of fixtures, fittings or parts of the property which are beyond repair.
Tenants should not assume, however, that this entitles them to absolute ownership of any parts of the building which are removed and replaced whilst complying with their obligations. Any parts of the building which are removed revert to being chattels whether they are structural (such as bricks, tiles and joists), decorative (eg fireplaces and ceiling roses) or landlord’s fixtures (like boilers).
Ascertaining the ownership of such chattels was the role of the court in The Creative Foundation –v- Dreamland Leisure Limited and others . The case concerned the appearance of a mural known as “Art Buff” on a building in Folkstone which was attributed to the street artist Banksy.
As the lease of the building included the structure and exterior, the tenant (without the landlord’s knowledge or permission) removed the mural for potential sale. The Foundation (having taken an assignment of the landlord’s rights in relation to the artwork) obtained an interim injunction to prevent the sale and sought an order for its return on the basis that, upon removal, the pieces of the wall had become chattels and remained the property of the landlord.
Despite the tenant trying to argue that removal of the mural was necessary to comply with the repairing obligations under the lease, the judge ruled that the tenant could have cleaned the wall or painted over the mural instead.
The court also said that, although it may be possible to imply...
a term into the lease that tenants can dispose of chattels removed during repair if they have no more than scrap or salvage value, chattels that are valuable remain the property of the landlord.
Just because the tenant was complying with its repairing obligations did not imply that, as a result, it would acquire ownership of parts of the building.
Press reports suggested a value of £470,000 for the decorated piece of wall and the judge decided that the landlord had the better right to it. As a result the Foundation was entitled to recover the mural.
Tenants would therefore be wise to consider the value of items removed during repair or fit out and, if necessary, return them to the landlord rather than putting them in a skip.
Article Courtesy of: Gaenor Thomas, Associate Solicitor, in Commercial Property at Hart Brown. http://www.hartbrown.co.uk/©LandlordZONE® – legal content applies primarily to England and is not a definitive statement of the law; always seek professional advice. Legislation changes, so check dates on these articles. If you have questions go to the LandlordZONE® Forums