What’s the difference between Real Property Vs. Personal Property?
When you are getting ready to close on the perfect home, the last thing you want to worry about is what stays with the house and what doesn’t. Which appliances or light fixtures will remain with the home? Will the shed stay? What about those fancy window coverings? While walking through your dream home, it might be challenging to figure out which items stay (real property) and which items go with the owner (personal property). We’re here to unravel this mystery!
Personal property can attach to real estate and become real property. This is called Annexation (and this act creates a fixture, which you will read about in a moment).
But first, let’s distinguish between real property and personal property.
Real Property
Real property refers to land and any improvements fixed to the land. Real property cannot be moved or detached from the land (for reference, land includes the surface of the earth and the space above and below, as well as all natural items such as trees and minerals). If it cannot be removed without damage, if it is part of the land or attached to the house or other structures, it is real property.
Items considered real property are:
- Fructus Naturales- or “the fruits of nature,” will remain with the land as real property. This is plants, flowers, trees, grass, etc.
- Fixtures- a fixture is anything that may have once been moveable (personal property), but is now fixed in a permanent way to the property. An example is a fence, or a chandelier. To know if something is a fixture, look at:
- The method or permanence of its attachment to the property.
- Its adaption (was it adapted or customized to fit this particular property?).
- The relationship of the parties in the transaction (residential renters have a harder time removing a fixture than a commercial renter with a trade fixture, discussed later).
- The intentions- Did the previous owner, or tenant, intend to take this item with them when they left the property? What are the intentions of the item? If the purpose was to enhance the property, it is most likely real property.
- Is there an agreement between the parties? If you have a question about something, clarify it in writing. That is the best protection in making sure an item will remain with the property after closing.
- Bundle of rights- Intangible real property would include all the benefits, interests and rights that come along with owning the physical real estate. These legal rights include the right to possess property, control property within legal limits, enjoy property and use it legally, exclude others from your property, encumber property by lessening your right of ownership in any way, and the right to dispose of the property by sale, will, or transfer.
Real property stays with the real estate property, and personal property stays with the owner. A frequently used term in real estate for any item that “stays” with the real estate property is also to refer to it as “conveying” with the property too.
Personal Property
Personal property is all property that isn’t real property, and is also known as chattel. It goes with the person. It’s moveable and not fixed to any real property. These are your personal possessions (clothes, jewelry, portable electronics and furniture). However, deciding what is personal property and what is real property can get a little tricky in some areas.
For instance, when dealing with appliances, typically if they are built-in, they are considered real property, and if they are free standing, they are personal property. Refrigerators that are not “built in” frequently fall into the personal property category in many states and therefore need to be included in a written addendum if you would like that to be part of your home purchase – “convey with the property.”
In the end, there’s really one very important thing to consider when dealing with personal and real property. When you’re walking through a home and falling in love with it, if you notice items that you really care about including in the purchase make sure you ask your real estate agent to ensure those items items are included in the purchase contract or addendum. This assures that there will be no questions and prevent future legal matters. After all, everything is negotiable in real estate! (But we highly suggest you get everything documented in writing for it to be valid and enforceable.)
Happy Househunting!
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