Corporate Center Associates (CCA) leased office space to Total Group Services of Iowa (Total Group) for a five-year term. After Total Group took possession of the premises, Total Group obtained office furniture from Office Outfitters. Total Group and Office Outfitters signed a payment plan agreement. Under this agreement, Total Group (the lessee) would make payments for the furniture for a period of 60 months. The agreement further provided that at the end of 60 months Total Group would have the option to purchase the furniture for the sum of $1. The following year, however, Total Group defaulted on its office lease with CCA and then abandoned the premises permanently, leaving the office furniture behind. CCA sued Total Group for unpaid rent. In addition, CCA sued Office Outfitters and requested the court to determine whether CCA or Office Outfitters had the legal right to take possession of the furniture that was left behind in CCA’s office space.

CASE QUESTIONS

1. Was the transaction in this case a true lease or a secured transaction?

2. Does the answer to the previous question depend on whether CCA or Office Outfitters has the legal right to take possession of the office furniture that Total Group left behind?