When you work in real estate you become familiar with many types of property. But when you’re starting out trying to differentiate between them all can get confusing. Two phrases that you’ll hear right off the bat is real property and personal property.
Wait a second, isn’t real property personal property? Yes and no. Your home is technically your personal property. However, in real estate legal terms, real property and personal property are two different things.
Real property includes land, structures on the land and anything that is physically attached to the structures or the land. That includes trees and other plants that naturally grow on the land. If it’s attached and immovable, it’s real property.
Straightforward, right? Not so fast. There’s a grey area in regards to what people consider “attached.” Technically, if it’s affixed to the land or a structure it’s attached and should be treated like real property. But seasoned real estate agents will tell you that doesn’t stop some sellers from stripping curtains, light fixtures and attachments before a close.
Why is defining what is and isn’t real property so important? Because everything in the real property category should convey with the purchase of a home or business.
Anything that isn’t attached to the home or land is considered personal property. A defining characteristic of personal property is it can be moved around with ease. But this isn’t quite as clear cut as it sounds. For example, items like window treatments that can be removed rather easily are actually real property. Appliances can also be tricky. The oven is considered real property, but not the refrigerator that simply plugs in the wall outlet.
Personal property is also broken down into two categories:
Chattels - A chattel is any type of tangible personal property, which is a very broad categorization. However, if a chattel is affixed to the property it then becomes a fixture and is treated like real property.
Intangibles - As the name suggests, an intangible piece of personal property is any property that doesn’t have a physical form. Instead, intangibles are representative of something that’s owned such as stocks or a copyright. It defines legal right of ownership rather than being indicative of a “thing”.
Personal property doesn’t automatically convey when a home or business is bought. Of course, in real estate everything is negotiable.
Test your newfound knowledge! Check out our (https://www.youtube.com/watch?v=FH92ilFsC5o) to see if you can tell the difference between the two.