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Lessor's and lessee's rights when goods become fixtures - 13 Pa. Cons. Stat. § 2A309

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     § 2A309.  Lessor's and lessee's rights when goods become
                fixtures.
        (a)  Definitions.--As used in this section, the following
     words and phrases shall have the meanings given to them in this
     subsection:
        "Construction mortgage."  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.
        "Encumbrance."  Includes real estate mortgages and other
     liens on real estate and all other rights in real estate that
     are not ownership interests.
        "Fixture filing."  The filing, in the office where a record
     of 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 section 9502(a)
     and (b) (relating to contents of financing statement; record of
     mortgage as financing statement; time of filing financing
     statement).
        "Fixtures."  Goods are fixtures when they become so related
     to particular real estate that an interest in them arises under
     real estate law.
        "Purchase money lease."  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.
        (b)  Lease of goods that are fixtures.--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)  Lease under real estate law.--This division does not
     prevent creation of a lease of fixtures pursuant to real estate
     law.
        (d)  Priority of perfected interest of lessor of fixtures.--
     The perfected 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, the interest of the lessor is perfected by a
        fixture filing before the goods become fixtures or within ten
        days thereafter, and the lessee has an interest of record in
        the real estate or is in possession of the real estate; or
            (2)  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.
        (e)  Priority of interest of lessor of fixtures whether or
     not perfected.--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:
            (1)  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;
            (2)  the conflicting interest is a lien on the real
        estate obtained by legal or equitable proceedings after the
        lease contract is enforceable;
            (3)  the encumbrancer or owner has consented in writing
        to the lease or has disclaimed an interest in the goods as
        fixtures; or
            (4)  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.
        (f)  Subordination to construction mortgage.--Notwithstanding
     subsection (d)(1) but otherwise subject to subsections (d) and
     (e), 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.
        (g)  Priority of interest in other cases.--In cases not
     within the preceding subsections, 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.
        (h)  Removal of goods if interest of lessor has priority.--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.
        (i)  Perfection of interest of lessor.--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 Division 9 (relating
     to secured transactions).
     (June 8, 2001, P.L.123, No.18, eff. July 1, 2001)

        2001 Amendment.  Act 18 amended subsec. (a).
        Cross References.  Section 2A309 is referred to in section
     2A103 of this title.

Last modified: November 27, 2007