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§12A-2A-309.
§12A-2A-309.
LESSOR'S AND LESSEE'S RIGHTS WHEN GOODS BECOME FIXTURES
(1) In this section:
(a) goods are "fixtures" when they become so related to particular
real estate that an interest in them arise under real estate law;
(b) a "fixture filing" is the filing, in the office where a mortgage
on the real estate would be filed or recorded, of a financing
statement covering goods that are or are to become fixtures and
conforming to the requirements of subsection (5) of Section 9-402 of
this title, as applicable, and Section 9-401A of this title;
(c) a lease is a "purchase money lease" unless the lessee has
possession or use of the goods or the right to possession or use of
the goods before the lease agreement is enforceable;
(d) a mortgage is a "construction mortgage" to the extent it secures
an obligation incurred for the construction of an improvement on land
including the acquisition cost of the land, if the recorded writing so
indicates; and
(e) "encumbrance" includes real estate mortgages and other liens on
real estate and all other rights in real estate that are not ownership
interests.
(2) Under this article a lease may be of goods that are fixtures or
may continue in goods that become fixtures, but no lease exists under
this article of ordinary building materials incorporated into an
improvement on land.
(3) This article does not prevent creation of a lease of fixtures
pursuant to real estate law.
(4) The perfected interest of a lessor of fixtures has priority over a
conflicting interest of an encumbrancer or owner of the real estate
if:
(a) the lease is a purchase money lease, the conflicting interest of
the encumbrancer or owner arises before the goods become fixtures, the
interest of the lessor is perfected by a fixture filing before the
goods become fixtures or within ten (10) days thereafter, and the
lessee has an interest of record in the real estate or is in
possession of the real estate; or
(b) the interest of the lessor is perfected by a fixture filing before
the interest of the encumbrancer or owner is of record, the lessor's
interest has priority over any conflicting interest of a predecessor
in title of the encumbrancer or owner, and the lessee has an interest
of record in the real estate or is in possession of the real estate.
(5) The interest of a lessor of fixtures, whether or not perfected,
has priority over the conflicting interest of an encumbrancer or owner
of the real estate if:
(a) the fixtures are readily removable factory or office machines,
readily removable equipment that is not primarily used or leased for
use in the operation of the real estate, or readily removable
replacements of domestic appliances that are goods subject to a
consumer lease, and before the goods become fixtures the lease
contract is enforceable; or
(b) the conflicting interest is a lien on the real estate obtained by
legal or equitable proceedings after the lease contract is
enforceable; or
(c) the encumbrancer or owner has consented in writing to the lease or
has disclaimed an interest in the goods as fixtures; or
(d) the lessee has a right to remove the goods as against the
encumbrancer or owner. If the lessee's right to remove terminates, the
priority of the interest of the lessor continues for a reasonable
time.
(6) Notwithstanding paragraph (a) of subsection (4) of this section
but otherwise subject to subsections (4) and (5) of this section, the
interest of a lessor of fixtures, including the lessor's residual
interest, is subordinate to the conflicting interest of an
encumbrancer of the real estate under a construction mortgage recorded
before the goods become fixtures if the goods become fixtures before
the completion of the construction. To the extent given to refinance a
construction mortgage, the conflicting interest of an encumbrancer of
the real estate under a mortgage has this priority to the same extent
as the encumbrancer of the real estate under the construction
mortgage.
(7) In cases other than those described in subsections (1) through (6)
of this section, priority between the interest of a lessor of
fixtures, including the lessor's residual interest, and the
conflicting interest of an encumbrancer or owner of the real estate
who is not the lessee is determined by the priority rules governing
conflicting interests in real estate.
(8) If the interest of a lessor of fixtures, including the lessor's
residual interest, has priority over all conflicting interests of all
owners and encumbrancers of the real estate, the lessor or the lessee
may (i) on default, expiration, termination, or cancellation of the
lease agreement but subject to the lease agreement and this article,
or (ii) if necessary to enforce other rights and remedies of the
lessor or lessee under this article, remove the goods from the real
estate, free and clear of all conflicting interests of all owners and
encumbrancers of the real estate, but the lessor or lessee must
reimburse any encumbrancer or owner of the real estate who is not the
lessee and who has not otherwise agreed for the cost of repair of any
physical injury, but not for any diminution in value of the real
estate caused by the absence of the goods removed or by any necessity
of replacing them. A person entitled to reimbursement may refuse
permission to remove until the party seeking removal gives adequate
security for the performance of this obligation.
(9) Even though the lease agreement does not create a security
interest, the interest of a lessor of fixtures, including the lessor's
residual interest, is perfected by filing a financing statement as a
fixture filing for leased goods that are or are to become fixtures in
accordance with the relevant provisions of the Uniform Commercial Code
- Secured Transactions.
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