Legal Question in Business Law in California

As a Franchise Attorney I can say the answer to your question is . . . . Company Z. Seriously, what is your question here? Consult with a good business or franchise attorney in your area for specific advice.

Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.

Franchise Foundations, a Professional Corporation

Maybe franchise attorneys don't know all the answers to lease questions. In reading your question over for the 2nd or 3rd time, it looks to me as though this is an instance where Company B, the lessee, has allowed the leased equipment to become a fixture in the landlord's building. Situations like this are covered by the Uniform Commercial Code ("UCC"), which has been adopted in California and Nevada with substantially the same terms.

Specifically, UCC Division 10 (in California's law) covers leases of personal property, and section 10309 discusses the lessor's and the lessee's rights when the leased goods become fixtures.

Of course, there is a threshold question as to whether the landlord is correct and that the leased goods have become fixtures in its building. The possibility that the lease has been terminated due to Company B defaulting on its lease can be a factor.

Under UCC 10309, the interest of the lessor is superior to the interest of the landlord under any of six conditions set forth in UCC 10309(d)(1) through (6). If Company A's lease meets any of the criteria, it should be allowed to regain possession of the equipment, as against Company B's landlord.

However, much more information would be needed to decide which would win in court, and any party to this dispute is encouraged to contact an attorney with experience in leases under the UCC.