There are two types of property. In legal terms, all property will be classified as either personal property or real property. This distinction between types of property comes from English common law, but our modern laws continue to distinguish between the two.
Each type of property is treated differently under the law. There are many different types of laws that specifically pertain to personal property, and many other types of laws that pertain specifically to real property.
Personal property is movable property. It’s anything that can be subject to ownership, except land. Real property is immovable property – it’s land and anything attached to the land.
Normally, a piece of property can be easily classified as either personal property or real property. The difference between the two is usually fairly straightforward. However, sometimes it’s a little harder to categorize property.
Let’s say that I buy lumber and other building supplies, such as a saw, a hammer, and some nails. These supplies are personal property. They’re moveable and they belong to me.
Next, I use these items to build a shed on my land. Is this shed personal property? No. The shed is real property because it’s attached to, and now part of, my land. Any leftover building supplies are still personal property, like my saw and hammer. But anything that’s actually part of the shed is now real property.
Let’s take a closer look at why this is. Let’s look at the types of items that are classified as personal property.
Personal property includes possessions, of really any kind, as long as those possessions are movable and owned by someone. Personal property isn’t affixed to or associated with land. These moveable items are sometimes known as chattels. The law regarding chattels includes those laws covering possession, gifts, lost property, abandoned property, and stolen property.
Having understood what real property is, what then is personal property? Well, think of it as any movable property. Personal property, unlike real property, is not fixed or associated with land. Therefore, if real property is described as land and any property attached to land, then personal property is everything else apart from that.
Personal property, therefore, includes belongings of any kind, as long as they are movable and are owned by someone. Personal property is usually viewed as assets and can be used in defining the net worth of a person. Some examples of personal property include bank accounts, insurance policies, furniture and fixtures in the homes, stocks, vehicles, boats, collectibles, antiques, books and pensions. Adding on the example about farm structures above, farm animals would be personal and not real property. They can be moved from one place or farm to another.
It is important to note that personal property is further divided chattel and intangible property.
It’s helpful to note that personal property includes both tangible and intangible items. A tangible item is an item that can be felt or touched. For a business, tangible personal property includes items the business owns such as:
• Office furniture
• Business equipment
• Business vehicles
• Business goods
An intangible item is simply an item that can’t be felt or touched. For a business, intangible personal property includes items the business owns such as:
• Stocks
• Bonds
• Intellectual property
• Money
The term chattel sometimes refers to all kinds of personal property, but often it refers only to tangible personal property (such as nose flutes and toenail clippers) as opposed to intangible property.
A chattel, such as a furnace, can be affixed to land and become part of the real property. Such chattels are called fixtures.
However, fixtures may retain their quality as separate personal property for certain purposes. For example, at the end of a lease term, the tenant generally has the right to remove fixtures she installed even though she doesn’t have any more right to the real property when the lease ends.
About personal property, the term chattel refers to all kinds of tangible personal properties. Tangible personal property is a property that can be touched or felt. A furnace is a fixture that you can feel and touch. At the end of a lease period, a tenant usually has the right to remove fixtures that he/she installed even when there is no more right to the real property.
Another example let us say that a person buys lumber and other building supplies including a hammer, saw, and some nails. These materials are personal property. They are chattels since they are tangible and are moveable. In a business setting, chattels or tangible personal property can include business equipment, office furniture, business vehicles, business goods and more.
Extending this example, let us also say that this same person uses these tangible items to construct a shed on their land. Can we say that the shed personal property? No. The shed is real property. Because it is attached to and is now part this person’s land. Well, what about the building materials saw, hammer and leftover nails? Those are tangible personal property – they are movable, unlike the shed.
Intangibles are all kinds of personal property that aren’t tangible, that can’t be seen or touched. So, you can say this kind of property doesn’t involve a “thing” at all; it involves only a legal right. The mere existence of such a category of property is a reminder that, in the law, property most accurately refers to legal rights, not to things.
A person can own all sorts of intangible “things,” including the following:
• Bank accounts
• Franchises and licenses
• Insurance policies
• Intellectual property such as patents, copyrights, and trademarks
• Stocks, bonds, promissory notes, and similar documents that aren’t themselves valuable but merely represent intangible rights; currency is sometimes treated as an intangible
• Intangibles personal property is the opposite of tangible property – cannot be seen or touched. It only involves a legal right. The fact that such kind of property exists is a reminder that, as far as the law is concerned, property mostly refers to legal rights and not physical things.
• Intangible properties include bank accounts, insurance policies, franchises and licenses, intellectual property such as copyrights, patents, and trademarks. Bonds, stocks, promissory notes, and other similar documents merely represent intangible rights. Money is also treated as an intangible
Some things can’t be owned at all and therefore can’t be private property. Some of these things, such as light, air, and the high seas, can’t be owned because they naturally seem communal. Other things, such as rivers and coastal waters, can’t be owned because they belong to the public. And some things can’t be owned because they’re illegal, like heroin.
Real property describes land and things that are attached to the land, which is why land is sometimes called real estate or realty. Even though wood, steel, and other building materials aren’t land themselves, when they’re built into structures attached to the land, they become real property, too.
Trees and other plants naturally growing on the land are also part of the real property. But plants that require regular human cultivation and labor, such as grains and vegetables, sometimes aren’t treated as part of the real property.
Real property is immovable property. It describes land and things, such as buildings, that are attached to that land, which is the reason why land is sometimes called real estate. Although steel, wood and other building materials are not land in themselves, when constructed into structures attached to land, they become real property. Trees, as well as other plants that are naturally growing on the land in question, are also part of the real property. However, plants requiring consistent human labor such as vegetables and grains are not treated as part of the real property.
Therefore, when someone remarks real property, what they are talking about is land, a home, building, as well as mineral interests. All the materials used to construct any structure that is attached to a piece of land are also considered real property like mentioned above. Hence, the critical thing to remember is that real property is land and anything else attached to that land. Real property is referred to like real estate and is also fixed property – meaning it cannot be moved. For instance, farm structures in a farm are real property because they are attached to the land.
Now that we have understood the two types of properties, the next thing is to outline the differences between them. Although in trying to explain the meanings of the two types of property many differences have come up, we are going to outline those differences below. How many have you picked from the discussion above? Here are the major differences between personal and real property.
1. Real property is immovable and is permanently attached to the land including a house, walls, blinds, windows, fixtures, doors, and more. On the other hand, personal property can be moved or taken from a home or business including furniture, artwork, light fixtures and more. It is not affixed in any way.
2. Real property is mostly tangible while personal property is both tangible and intangible
3. Real property is long lasting and durable while personal property is not necessarily durable
4. Personal property is easy to understand – If a piece of property is not real property, then it is personal property.
5. In legal considerations, both real and personal property follow different legal procedures.
6. Real property cannot be hidden, but personal property can be hidden
Real property is not only what is on your land, but it also consists of what is below and above it. If you have oil in your backyard, by all means you have the right to dig and acquire that oil.
On the other hand, if your neighbor has that oil, you cannot dig through your yard downward, and then sideways towards the neighbors. With solar heating and cooler units, airspace becomes more demanding because of the sun needed to shine down on the property in order for the heating/cooling to take place.
Personal property deals primarily with movable things, even if they weigh a ton, as long as they are not attached to the land. You might ask yourself, what’s the purpose behind these two classifications? Well, the classifications enable the law to draw a line between the two.
For example, if you are purchasing a house with a swing and slide set in the backyard, if the swing set is not bolted, the seller of the land has all rights to take it with him or her, unless it was highlighted within the contract of sale. If the swing set was bolted, the only way the seller could take that with him or her is if it has been stated on the contract, if not, then the swing set is staying on that land since it is permanently attached.
Looking at the above example comes to display the advantages of being able to decipher between real and personal property. Same thing goes for a shed, regardless of its price, if it is portable and has wheels, it’ll be labeled as personal property, but if it is bolted or cemented, it is clearly labeled real property.
When it comes to purchasing land, some people tend to concentrate more on what is beneath the land, why? Because the minerals below the ground, whether oil, gas or even coal may be worth more than the property itself. With these kinds of minerals below your house, you are the sole owner. That means you can sell or contract those minerals to companies who have a known interest within those minerals.
All in all, Real property can never be taken from you without your permission, unless done so by a governmental agency. A governmental agency can use your property without asking, instead they’ll tell you, this occurs only when the land may be used for the benefit of the state or federal government.
Real property comprises of anything that is attached permanently to land such a home, a garage, shed or even a rose flower. Conversely, if it were movable, then it would be personal property. A rose bush is a real property unless if it is pulled out of its garden, which would make it personal property. That said anything that is movable represents personal property, while the immovable is real property.
Additionally, real property not only includes things that are permanent on your land but also includes whatever that is above or below it. If you have oil in your land, it is real property. You can dig up your land to extract and acquire the oil. Even if it weighs tones, personal property mostly deals with movable things, long as they are not attached to the land.
These rankings enable smooth legal procedures. For instance, if you are looking to buy a home with a swing and slide set in the backyard, the seller of the house has every right to take it if it was not bolted permanently unless it is indicated in the contract as part of the house.
In addition, when buying land, many people have a habit of concentrating more on what is beneath the land. Because the land could be having minerals such as oil, gas, coal or any other below the ground and such minerals could make the land worth more than the property itself. In such a situation, the selling price and the buying prices of that land must change and will be affected. Even the legal policies such as contract agreements will also change.
When you need legal help with real property law or personal property law, please call Ascent Law for your free consultation (801) 676-5506. We want to help you.
Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan , Utah
84088 United States
Telephone: (801) 676-5506
