It’s important to understand each of these three definitions since they may be misleading by nature.
Alterations refers to any improvements/modifications made by the Lessee and are not owned by the Lessor that are not Utility Installations or Trade Fixtures.
Trade Fixtures refers to the Lessee’s machinery and equipment that can be removed without damage to the Premises.
For a commercial tenant to be able to remove a trade fixture, the item in question must be:
- Necessary for the business of the tenant
- Removable without damage to the property
- Removed from the property within a proper time
If the trade fixture does not meet these three requirements, it will become the property of the commercial property owner when the commercial tenant moves out, even if it was installed by the tenant. Therefore, it’s important when creating the lease for the tenant to specify which pieces of machinery or equipment he/she desires to classify as trade fixtures and include them in the lease. They should also specify their intended use for the item (for example, in conducting business or trade on the property).
Utility Installations refers to the systems serving the Premises. Some examples of this include power panels, electrical distribution, security and fire protection systems, lighting fixtures, HAC equipment, plumbing, fencing, and all floor and window coverings.