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Personal Property vs. Real Property: Understand the Difference, Avoid Lawsuits

Let’s take a look at Personal property how does it compare to Real property. This is an issue that comes up a lot when a real estate transaction gets complicated and the two parties (buyer and seller) start arguing about what stays in the house and what doesn’t according to the contract and the law.

Personal property it is defined as any property that can be owned and does not meet the definition of real property. In other words, if it is not real property, then it is personal property. An important distinction between the two is that movable property is movable. Personal property is also known as personal property. For those of you who like to work to expand your vocabulary.

Here are some examples of personal property, including manufactured homes, plants, crops, and accessory classifications.

Prefabricated housing is defined as dwellings that are not built on the site of the home. These are typically trucked and placed on the property. For those of you who analyze the word manufactured and wonder why not all houses are considered manufactured, since they are “manufactured” after all, think of mobile homes as manufactured. Here’s the tricky part, if the manufactured home has been attached to the property then it is REAL property, if it is just sitting there and connected to utilities then it is PERSONAL property. Why would it matter? well, if it’s REAL property, then property taxes are higher because the government considers houses essentially add value to the land they sit on.

Plants and crops: There are two categories here and both have their differences. Trees, perennials, shrubs, and grasses that do not require annual cultivation are considered real estate or real estate. And these are transferred with the sale of the property. On the other hand, crops that are harvested annually are considered emblems. Or personal property and in the sale of the property, the crops that are being produced stay with the seller for that current crop.

Here are some additional details … if an item on land, let’s say a tree (which is real property) is cut down and separated from the land (called layoff), then it becomes personal property. It is also possible to do the same but in reverse. If the tree that was felled is used to build a house on the property, through annexation, it becomes real property.

Accessories – These are often the hot topic when selling a home because sellers often take their accessories with them when they move in, and that goes against the agreement outlined in the contract. Knowing what an accessory is will help you understand what to expect around the house and what not. A fixed item is personal property that has been attached (attached) to the land or building and becomes Real property. Remember that real estate takes the home when it is sold.

How do you test if an item is a fixture or personal property? Here are the three basic tests the court will use to make a decision.

1. Annexation method – How permanent is the attachment method? Can the item be removed without damaging the surrounding property?

2. Adaptation to real estate – Is the item used as real property or personal property? For example, a refrigerator is normally considered personal property because it can be easily removed. However, if the refrigerator has been adapted to the kitchen furniture, it becomes a fixture.

3. Agreement – That the parties agree if the item is real or personal in an offer to purchase.

The general rule of thumb is to determine, what is the purpose of the accessory? Is its function to be personal property or real estate?

Commercial accessories are the exception to the rule. A commercial accessory is a property used in the course of business. It will often be attached to the property and resemble real property. However, if it is something that is used as part of the seller’s trade, it is considered personal property and does not keep the home.

Often times, home buyers will be looking at houses and what attracts them to the house will be certain aspects of the house. Accessories, such as entertainment centers, backyard gazebos, and surround sound speakers, are often considered accessories and real estate that will remain in the home. However, a homeowner may consider such items of great value and may be planning to bring them into their new home. It is very important to identify what accessories you want and hope will remain in the house and to put those items in the purchase agreement so that everyone is on the same page and in agreement from the beginning.


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