2006 New York Code - Lessor\'s And Lessee\'s Rights When Goods Become Fixtures.

 
  Section 2-A-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 arises 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 Section 9--502
             (a) and (b);
         (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
             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 replacement 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  subsection  (4)(a)  but  otherwise  subject  to
  subsections (4) and (5), 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  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.
    (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
  the  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 the 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  article on secured
  transactions (Article 9).