Bill leased an apartment from Windmere Apart- ments, Inc. Under the lease agreem

Question

Bill leased an apartment from Windmere Apart- ments, Inc. Under the lease agreement, Bill is per- mitted to remove all fixtures installed on the property. Bill arranged to have custom bookshelves placed along one wall (the shelves are attached to the wall). Bill financed the shelves with Carl’s Cabi- netry, and Carl’s filed a valid financing statement for the fixtures on December 1, 2012. Windmere has had a mortgage on the property since 2006. a. If Bill defaults, may Carl’s remove the shelves? b. What obligations does Carl’s have? c. If Windmere defaults, does its mortgagee get the shelves? d. WhatisthepositionofCarl’sifnofilingismade?

Explanation / Answer

A) Carl can remove the shelves. Carl has the first right to attached fixtures and priority over other real estate encumbrances. This is possible as Bill lease has a clause for removing all fixtures installed on the property.

B) Carl has an obligation to repair any damage caused by the removal of shelves. For example - If by removing the shelves the wall needs to be painted, then Carl needs to pay for the painting of the wall. However, Carl has no obligation for the diminishing of the value of the property. For example - If by removing shelves the cost of property goes down by $1000, Carl is not liable to pay for it.

C) No, the mortgagee does not get the shelves. They can only claim for the apartment value and not the fixtures installed by Carl.

D) The position remains the same. Carl has priority over all real estate encumbrances regardless of the perfection of interest (done by filing) as long as Bill had the right to remove all fixtures.

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.