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California Commercial Code Section 10309

Legal Research Home > California Laws > Commercial Code > California Commercial Code Section 10309

10309.  (a) In this section:
   (1) Goods are "fixtures" when they become so related to particular
real estate that an interest in them arises under real estate law;
   (2) A "fixture filing" is the filing, in the office where a record
of a mortgage on the real estate would be recorded, of a financing
statement covering goods that are or are to become fixtures and
conforming to the requirements of subdivisions (a) and (b) of Section
9502;
   (3) 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;
   (4) 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
   (5) "Encumbrance" includes real estate mortgages and other liens
on real estate and all other rights in real estate that are not
ownership interests.
   (b) Under this division a lease may be of goods that are fixtures
or may continue in goods that become fixtures, but no lease exists
under this division of ordinary building materials incorporated into
an improvement on land.
   (c) This division does not prevent creation of a lease of fixtures
pursuant to real estate law.
   (d) The interest of a lessor of fixtures has priority over a
conflicting interest of an encumbrancer or owner of the real estate
if:
   (1) The lease is a purchase money lease, the conflicting interest
of the encumbrancer or owner arises before the goods become fixtures,
a fixture filing covering the fixtures is filed before the goods
become fixtures or within 20 days thereafter, and the lessee has an
interest of record in the real estate or is in possession of the real
estate;
   (2) A fixture filing covering the fixtures is filed 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;
   (3) 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;
   (4) The conflicting interest is a lien on the real estate obtained
by legal or equitable proceedings after the lease contract is
enforceable;
   (5) The encumbrancer or owner has consented in writing to the
lease or has disclaimed an interest in the goods as fixtures; or
   (6) 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.
   (e) Notwithstanding paragraph (1) of subdivision (d) but otherwise
subject to subdivision (d), 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.
   (f) In cases not within the preceding subdivisions, 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.
   (g) 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 (1) on default, expiration, termination, or cancellation
of the lease agreement but subject to the lease agreement and this
division, or (2) if necessary to enforce other rights and remedies of
the lessor or lessee under this division, 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.

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Last modified: March 17, 2014