§ 25-2A-309. Lessor's and lessee's rights when goods become fixtures.
§25‑2A‑309. Lessor's and lessee's rights when goods becomefixtures.
(1) In this section:
(a) goods are"fixtures" when they become so related to particular real estate thatan interest in them arises under real estate law;
(b) a "fixturefiling" is the filing, in the office where a record of a mortgage on thereal estate would be filed or recorded, of a financing statement covering goodsthat are or are to become fixtures and conforming to the requirements of G.S.25‑9‑502(a) and (b);
(c) a lease is a "purchasemoney lease" unless the lessee has possession or use of the goods or theright to possession or use of the goods before the lease agreement isenforceable;
(d) a mortgage is a"construction mortgage" to the extent it secures an obligationincurred for the construction of an improvement on land including theacquisition 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 otherrights in real estate that are not ownership interests.
(2) Under this Articlea lease may be of goods that are fixtures or may continue in goods that becomefixtures, but no lease exists under this Article of ordinary building materialsincorporated into an improvement on land.
(3) This Article doesnot prevent creation of a lease of fixtures pursuant to real estate law.
(4) The perfectedinterest of a lessor of fixtures has priority over a conflicting interest of anencumbrancer or owner of the real estate if:
(a) the lease is a purchasemoney lease, the conflicting interest of the encumbrancer or owner arisesbefore the goods become fixtures, the interest of the lessor is perfected by afixture filing before the goods become fixtures or within 10 days thereafter,and the lessee has an interest of record in the real estate or is in possessionof the real estate; or
(b) the interest of thelessor is perfected by a fixture filing before the interest of the encumbranceror owner is of record, the lessor's interest has priority over any conflictinginterest of a predecessor in title of the encumbrancer or owner, and the lesseehas an interest of record in the real estate or is in possession of realestate.
(5) The interest of alessor of fixtures, whether or not perfected, has priority over the conflictinginterest of an encumbrancer or owner of the real estate if:
(a) the fixtures arereadily removable factory or office machines, readily removable equipment thatis not primarily used or leased for use in the operation of the real estate, orreadily removable replacements of domestic appliances that are goods subject toa consumer lease, and before the goods become fixtures, the lease contract isenforceable; or
(b) the conflictinginterest is a lien on the real estate obtained by legal or equitableproceedings after the lease contract is enforceable; or
(c) the encumbrancer orowner has consented in writing to the lease or has disclaimed an interest inthe goods as fixtures; or
(d) the lessee has aright to remove the goods as against the encumbrancer or owner. If the lessee'sright to remove terminates, the priority of the interest of the lessorcontinues for a reasonable time.
(6) Notwithstandingsubsection (4)(a) of this section but otherwise subject to subsections (4) and(5) of this section, the interest of a lessor of fixtures, including thelessor's residual interest, is subordinate to the conflicting interest of anencumbrancer of the real estate under a construction mortgage recorded beforethe goods become fixtures if the goods become fixtures before the completion ofthe construction. To the extent given to refinance a construction mortgage, theconflicting interest of an encumbrancer of the real estate under a mortgage hasthis priority to the same extent as the encumbrancer of the real estate underthe construction mortgage.
(7) In cases not withinthe preceding subsections, priority between the interest of a lessor offixtures, including the lessor's residual interest, and the conflictinginterest of an encumbrancer or owner of the real estate who is not the lesseeis determined by the priority rules governing conflicting interests in realestate.
(8) If the interest ofa lessor of fixtures, including the lessor's residual interest, has priorityover all conflicting interests of all owners and encumbrancers of the realestate, the lessor or the lessee may (i) on default, expiration, termination,or cancellation of the lease agreement but subject to the lease agreement andthis Article, or (ii) if necessary to enforce other rights and remedies of thelessor or lessee under this Article, remove the goods from the real estate,free and clear of all conflicting interests of all owners and encumbrancers ofthe real estate, but the lessor or lessee must reimburse any encumbrancer orowner of the real estate who is not the lessee and who has not otherwise agreedfor the cost of repair of any physical injury, but not for any diminution invalue of the real estate caused by the absence of the goods removed or by anynecessity of replacing them. A person entitled to reimbursement may refusepermission to remove until the party seeking removal gives adequate securityfor the performance of this obligation.
(9) Even though thelease agreement does not create a security interest, the interest of a lessorof fixtures, including the lessor's residual interest, is perfected by filing afinancing statement as a fixture filing for leased goods that are or are tobecome fixtures in accordance with the relevant provisions of the Article onSecured Transactions (Article 9). (1993, c. 463, s. 1; 2000‑169,s. 16.)