Underground Storage Tanks: Fixtures of Personalty


Legal disputes often arise concerning ownership of underground storage tanks, which have been installed or affixed to real property. Resolution of such underground storage tank issues often depend upon whether the underground storage tanks attached to the realty are chattel and treated as personal property or whether the underground storage tanks are deemed fixtures and thereby treated as part of the real estate.

Pursuant to O.C.G.A. § 44-1-2, "realty" or "real estate" is defined as (I) all lands and buildings thereon; (ii) all things permanently attached to land or to the building thereon; and (iii) any interest existing in, issuing out of, or dependent upon land or the buildings thereon. Pursuant to O.C.G.A. § 44-1-6, a "fixture" is anything, which is intended to remain permanently in its place even if it is not actually attached to the land. A fixture constitutes a part of the realty and would pass with title to the realty. For chattel to become a fixture, there must be an actual or constructive annexation and an intent that the chattel become a fixture.

There has been a great number of cases which have addressed issues related to when personalty becomes a fixture and thereby passes to the real estate owner or transfers with title to the real estate. Courts in resolving these issues have focused upon the nature and contractual relationship between the party who owns the real estate and the party who annexes the personalty to the real property. For example, in the case of Wofford Oil Company v. Weems-Fuller Company, 166 Ga. 173 (1928), filling station fixtures permanently attached to land or the building become prima facie part of the realty, but their status may be changed by agreement between parties.

In absence of an express or implied agreement to the contrary, underground storage tanks, due to their nature, should be deemed fixtures and thereby pass with title to the realty. In the case of Homac, Inc. v. Fort Wayne Mortgage Company, 577 F.Supp. 1065 (N. Dist. Of Ga. 1983), the court set forth a three part test which is applicable to determination of whether personalty becomes a fixture. That three-part test is, first, the court must consider the degree of physical attachment and removability of the article: whether the article can be removed without essential injury to the freehold, or the article itself, it is chattel, otherwise it is a fixture. Second, and even more important, is the intention of the parties with respect to the article status. Finally, a factor that must be considered is whether the requisite unity of title between the personalty and the realty was present at the time the article allegedly became a fixture.

If the resolution of the fixture/personalty issue depends upon the intentions of the party at the time of annexation of the property, intention becomes a question of fact to be determined by a jury.

Many times, issues relating to defining underground storage tanks as fixtures or personalty, can be resolved by application of rules of law pertaining to the relationship between the parties. For example, in the landlord/tenant context, pursuant to O.C.G.A. §44-7-11, a tenant may not remove permanent fixtures at the expiration of its tenancy. However, pursuant to O.C.G.A. § 44-7-12, a tenant can remove trade fixtures erected by it during its tenancy. After the expiration of the term of the lease, any remaining trade fixtures are surrendered with the property, become part of the realty and belong to the landlord. Thus, absent a specific lease term to the contrary, underground storage tanks which are not removed by the tenant prior to the expiration of the term of the lease, would, by surrender and abandonment, become part of the realty and belong to the landlord.

Clearly, the best approach to address the treatment of underground storage tanks as fixtures or personalty is to have an unambiguous written agreement between installer or annexor and the landowner establishing ownership of underground storage tanks, treatment of equipment as fixture or personalty, and rights and obligations to sever or abandon said fixture/personalty from or to the real estate upon the occurrence of certain events.