New Jersey § 12a:2a-309

§ 12a:2a-309.

(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 12A: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 chapter a lease may be of goods that are fixtures or may continue in

goods that become fixtures, but no lease exists under this chapter of ordinary building

materials incorporated into an improvement on land. (3) This chapter 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 10 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)(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

chapter, or (ii) if necessary to enforce other rights and remedies of the lessor or

lessee under this chapter, 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 shall 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 chapter on Secured

Transactions (chapter 9).