Distinguish between Real Property and Personal Property - dummies

Distinguish between Real Property and Personal Property

By Alan R. Romero

Anything that can be legally owned may be called property. All property can be grouped into two main categories: real property and personal property. Personal property can be further classified as chattels and intangibles.

One reason to know these categories is simply to understand what other property lawyers are talking about. Of course, knowing the categories can also help you decide which rules should apply to a particular item of property and which remedies are available for violations of property rights.

State statutes may define different categories of property for different purposes. So whenever the categorization of property makes a difference in legal rights or remedies, you should first search for relevant statutory definitions.

Real property: Land and buildings

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.

Personal property

Personal property is all property that isn’t real property. That’s a big category. It can be further divided into two subgroups: chattels and intangibles.

Personal property: Chattels

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.

Personal property: Intangibles

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

Property rights: Things that can’t be owned

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.