Real vs Personal Property
Most physical items can normally be classified into either real or personal property. This is an important
distinction in the real estate industry and can translate into serious money.
The quick way to understand the difference between the two types of properties is to think of personal property,
as everything not permanently attached to the real estate.
As noted above, real estate is land (with its included rights) and anything permanently attached to that land.
Personal property is legally called "chattel," most probably because defining the concept of personal property
became a legal need when cattle became big business.
- Attachment. The permanency of an item’s attachment to the real estate determines whether it is real or
personal property. For example, a pile of wooden posts would be considered personal property until
they are driven into the ground to create a fence, at which time, they become part of the real property. - Transfer. Real property is transferred with a deed; personal property is transferred with a bill of sale.
With most home purchases, the deed transfers the land and house, while the bill of sale handles the
transfer of the washer and dryer.
Per the preceding example, personally property can be converted into real property through the process of
attachment. Fixtures are objects that were previously personal property but have been attached to real estate,
thus making them real property. [Note: try not to confuse regular fixtures with trade fixtures; trade fixtures,
sometimes called chattel fixtures, are considered personal property.]
By the same token, real property can be converted into personal property through the process of severance.
