§ 554.13309 — Lessor’s and lessee’s rights when goods become fixtures

Iowa § 554.13309

• Jurisdiction: Iowa
• Title XIII: COMMERCE
• Ch. 554: UNIFORM COMMERCIAL CODE

Text

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“fixturefiling”isthefiling, intheofficewherearecordofamortgageontherealestate
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 554.9502, subsections 1 and 2;

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 replacements 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, paragraph “a”, but otherwise subject to subsections 4
and5,theinterestofalessoroffixtures,includingthelessor’sresidualinterest,issubordinate
totheconflictinginterestofanencumbranceroftherealestateunderaconstructionmortgage
recordedbeforethegoodsbecomefixturesifthegoodsbecomefixturesbeforethecompletion
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 subsections 1 through 6, 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 on default, expiration, termination, or cancellation of the lease agreement
but subject to the lease agreement and this Article, or if necessary to enforce other rights and
remedies of the lessor or 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 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).