The following guidelines are used to define and identify fixtures:A fixture is property that is classified as real property for property tax purposes because it is physically or constructively annexed to the realty with the intent that it remain annexed indefinitely. The phrase "annexed indefinitely" means the item is intended to remain attached to the real property until it is worn out, replaced by a more suitable replacement, or until the use of the real property changes. The weight of the item, method of attachment, and relationship of the item to the property all are factors that are considered when distinguishing between personal property and real property fixtures.
Physical AnnexationProperty is physically annexed if it is attached to, embedded in, or permanently resting on land or improvements. If the property cannot be removed without substantially damaging it or the real property with which it is being used, it is considered to be physically annexed. If the property can be removed without material damage but is actually attached, it is to be classified as a fixture unless there is an intent, as manifested by outward appearance or historic usage, that the item is to be moved and used at other locations. Property may be considered physically annexed if the weight, the size, or both are such that relocation or removal of the property would be so difficult that the item appears to be intended to remain in place indefinitely. Property is not considered physically annexed to realty solely because of attachment to the realty by "quick disconnect" attachments, such as simple wiring and conduit connections.
An extreme example of constructive annexation is a door key. The door cannot perform its function of securing the building if it cannot be locked, and the key has no use or purpose except in conjunction with the door.
Property connected to the realty by quick disconnect conduits which contain power or electronic cable, or allow for heating, cooling, or ventilation service to the connected property is constructively annexed only if it is an integral part of the building itself rather than attached for convenience only.
IntentIntent is the primary test of classification. Intent is measured with, not separately from, the method of attachment or annexation. If the item is intended to remain annexed indefinitely, then the item is a fixture for property tax purposes. Intent is inferred from reasonable outward appearance. An oral or written agreement between parties, such as a contract between lessor and lessee, is not binding for purposes of determining intent.
The phrase "reasonably manifested by outward appearance" means more than simple visual appearance. A reasonable knowledge of the relationship of the item being classified to the realty with which it is being used is required to determine whether physical or constructive annexation has occurred.
Historic usage of a property may be considered in determining whether or not a property is intended to remain annexed indefinitely. "Historic usage" means the normal and continuing use of the property as an item that is annexed either indefinitely or only temporarily.
'Trade' Fixtures vs. Building FixturesAssessors distinguish between 'building fixtures' and 'trade fixtures,' and approach valuation and assessment differently for each type. Building fixtures generally are valued with, or in the same manner, as the building and assessed to the owner or as tenant improvements to the tenant. Examples of building fixtures include interior walls, plumbing fixtures, electrical improvements, and window coverings.
Tracking fixtures in complex properties is very difficult, and errors occur frequently, especially when ownership of the building changes. One method of distinguishing between building fixtures, trade fixtures, and personal property is to identify the function of the building or improvement itself. For example, wall-to-ceiling partitions enable the real property to perform its function of providing economic units of leasable space for use by a tenant. Smaller partitions assist the tenant, not the building. In a similar way, interior improvements to a restaurant building are considered trade fixtures since they enable the occupant or user of the property to perform its business function.
Fixtures vs. Personal Property
Over time, classifications of fixtures change as technology or usages change. For instance, the larger IBM mainframe computers used to be so large that entire buildings were built around them. Those computers were fixtures because they were an integral part of the buildings they occupied, including the wiring, platforms, and associated air conditioning. Today's computers with more power and capacity fit on desks, and are personal property. Telephone systems for large buildings were fixtures and now can also be personal property, since most are portable, move with the tenant rather than the building, and utilize wiring that remains fixtures. Multistory printing presses that occupy whole buildings are fixtures, but large modern web presses and offset presses are personal property, not fixtures.
Physical Attributes of a Specific Property
The physical property is actually defined by facts about the property that clearly identify the composition, construction, or nature of the various significant items found in and on the land itself. In some cases that list of facts can be fairly limited - and the physical property can be described exactly as of a given date. For instance, flat desert land with no known mineral or water resources would only need a limited description of the subsurface and surface geology, the slope of the surface, and any vegetation growing on the land.
The important facts about most California property make a much longer list than the four items above. Some of the major categories of description include soil type, elevation, slope, vegetation, minerals under the surface, type of improvements, size, construction, exterior, interior, color, and utility services on the property. Minor, but potentially important facts include an almost endless list of other words to describe the facts about the physical property.
A property's physical attributes are all the ways to factually describe the components of the real property, and all of these attributes contribute to the assessable value of the property.
Intangible Attributes of Real Property
For instance, events that happened in the past make up the history of the property, and they can add to or detract from an otherwise 'normal' property. Some 'haunted houses' (Realtors are required to mention such information) don't sell well, but occasionally somebody will buy the distressed property and turn it into a tourist attraction.
Under normal circumstances, a McDonald's site is a valuable location - good traffic, valuable improvements, and after a few years of successful operation, customer habit patterns that another restaurant owner could capitalize on, and a quality tenant. An unfortunate incident occurred a few years ago at a McDonald's in San Diego County, when a gunman massacred a group of people. Not long after, the company decided the highest and best use for the property was as a local park, which they created for the people of the area. Clearly, the history of the property outweighed any other facts.
The most important factual attributes of any commercial property are the operating characteristics of the property. Income is the result of current occupancy status or percentage occupancy, which is a fact about the property. Physical construction and external economics combine to create a set of operating costs that affect the possible uses and potential profitability of each property. These costs are unique to the specific property, and are a part of the overall physical real property. For instance, a building that has been well-maintained will cost less to operate in the future, as is normally the case when a building has a history of quality tenants and relatively high occupancy at economic rents. Foreclosure properties, on the other hand, typically have experienced lower occupancies, deferred maintenance, and general mismanagement. Each of those properties will have different factual operating characteristics, future cost requirements, and potential income. These facts are intangible attributes, components of the physical property aspect of real property.
Exterior Influences on Real Property
Fractions and Combinations of Physical Real Property
Land Identification and
Metes and BoundsThe oldest form of legal description is description by metes and bounds. "Metes" means measurements or distances, and "bounds" means boundaries. Metes and bounds is still used, particularly for large and irregular parcels. A metes and bounds description gives the distance and compass direction of each boundary line of the property. It starts at a point of origin known as the "point of beginning" and traces all the way around the property back to that point. The earliest metes and bounds descriptions did not use compass directions or distances, but instead referred to identifiable physical features such as rivers or fences that "bounded" the property in question. Any parcel of land can be described using a metes and bounds description.
Rectangular SurveyIn 1785, the United States Congress approved a method of land description, known as the rectangular survey system, for the purpose of describing and disposing of lands in the public domain. Land description in all states west of the Mississippi (except Texas) and several other states east of the Mississippi is based on this method.
The rectangular survey system is based on principal meridians running north and south and base lines running east and west, which were located by the original surveyors to intersect at established landmarks. Most of the land area of the United States can be described using principal base lines and meridians as primary reference points. (California has three principal base lines and meridians: Humboldt, Mt. Diablo, and San Bernardino.)
Land on each side of a principal meridian is divided into six-mile-wide strips known as ranges, which are numbered consecutively, east or west, from the principal meridian. Range lines run north and south. Lines running parallel to a base line and six miles apart are called township lines. Township lines run east and west. The range and township lines form the basic unit of the system, the township, which is six miles square. Townships are referred to by the intersection of a principal base line and meridian-for example, Township 5 North, Range 3 West. This uniquely describes a quadrant of approximately 36 square-miles. (The area is an approximation because of the curvature of the earth.)
Finally, each township is divided into 36 sections of approximately one-square mile (640 acres). Section 1 is in the northeast corner of the township. Section numbers proceed westward to the boundary of the township, then southward one section, and eastward again. This process continues until all the sections are numbered. Sections may be further divided into fractional portions.
Subdivision MapsA common modern method of legal description is based on recorded subdivision maps. This method is also referred to as description by lot and block or by recorded plat. Most local governments, as part of the development approval process, require the preparation of a subdivision map showing the streets and lots in the new development. A subdivision map divides the property into lots and for larger subdivisions, into blocks of lots. Each block and lot on the map is identified by a number, and the subdivision map itself is also given a number. When the development is approved, the subdivision map is recorded and becomes a part of public record. Recorded maps are filed using a system of books and pages. A legal description using this method contains the lot number, the block number (if applicable), and the number of the subdivision map. A legal description by recorded map is short and easy to understand.
Condominium units are described using a slight variation of the subdivision map method. A condominium map is recorded and filed, dividing the property into condominium units. Each unit is given a number on the condominium map. The map also shows the areas of the project under common ownership. A legal description using this method contains the unit number of the condominium, the number of the condominium map itself, and a reference to the fractional share of the common area which is owned by a particular unit.
Example: Jones Sub. --M.B. 16-86, Lot 16 Blk. 10 (read as: Jones Subdivision, Map Book 16-86, Lot 16 of Block 10)
Spanish Land GrantsWhen the federal government surveyed the land, Spanish land grants were excluded from the survey. Being privately owned when California became part of the United States, only the exterior boundaries of the ranches were surveyed as a necessity of sectionalizing all adjoining land; however, many ranches were sectionalized by the owners who hired private surveyors.
If a Spanish grant has been sectionalized according to the United States system of Surveying the Public Lands, it is not sufficient to describe the property by section, township, and range. Since it was not surveyed under the authority of the United States, it is necessary to give the name of the rancho, such as:
"Rho. El Sobrante Sec. 16 T.8 S., R. 12 W., M. D. B. & M.--640 acres"
The rancho name should always be used in a description of property within a rancho unless the description is by reference to a map.
Official Maps and Owner's MapsOfficial maps are made by the city engineer or county surveyor under the direction of the city council or board of supervisors. Each map must be properly certified and filed. The size and scale of maps are not specified by law.
Owner's maps are filed under the provisions of section 326 by the owner, claimant, or user of the land. They must contain enough information to clearly identify the land and be properly filed with the assessor or the board.
HybridA legal description is sometimes a combination of the above methods. For example, the rectangular survey method works well for describing large agricultural tracts. However, this method is less suitable for use in urban areas, where lot sizes are much smaller. Thus, a legal description of a smaller parcel might use a combination of rectangular survey and metes and bounds. For example, a rectangular survey description might be used to get to the "point of beginning" of the metes and bounds description, which is thereafter employed. In the case of urban lots, a combination of metes and bounds and subdivision description might be used. A metes and bounds description may be used to first describe the boundaries of the entire development or subdivision, with individual lots described using a subdivision map.
A special case arises when individual
parcels or subdivisions are created above the ground and acquired by "air
rights." Condominiums and offices can be constructed using air rights.
Typically, air lots are described by identifying and describing the ground
parcel (e.g., by metes and bounds description), and then noting the vertical
measurements of the airspace above the ground lot. Vertical measurements
refer to a known point of vertical height known as a datum. A subdivision
map could then be based on this description.
Assessment Parcel Identification Systems
All assessors maintain a set of assessor's maps for identifying property. These maps are created from the legal descriptions contained in recorded documents; thus, they are based on the several methods of legal description described above. The assessor's parcel numbering system consists of a map book number, a page number within the map book, a block number, and the parcel number within the block. The assessor's parcel number or "APN" is thereby logged into the geographical areas called map books. By such a system, each county is divided into map books, each map book is in turn divided into geographical areas called map pages, each page is divided into areas known as blocks (in urban areas), and each block is divided into parcels owned and leased. The State Board of Equalization maintains a similar identification system for state-assessed property. However, land may not be described by assessor's parcel map in any deed or conveyance, unless the map has been filed for record with the county recorder.
Differences between the Ownership Unit and the Assessment UnitOccasionally, ownership boundaries will overlap governmental tax rate areas. When this occurs, the assessor will assign multiple parcels to the ownership unit to facilitate taxation by the taxing agencies. Where the same owner owns contiguous parcels that make up one economic unit, the assessor will normally agree to consolidate the pieces into one assessor's parcel.
Expansion of the APN System under Proposition 13After Proposition 13, assessors were required to assess the same parcel more than once a year when a change of ownership occurred, so an expanded numbering system has evolved with numbers added to the end of the basic parcel number to indicate supplemental assessment and escape assessments. In Orange County, for example, the first supplemental assessment for parcel 120-56-08 would be numbered 120-56-08.5010. While the counties' systems vary, they all use a basic map/page/parcel system with expanded numbers to track multiple owners and assessments.