Level 1 Chapter 3: Real vs. Personal Property

Question 1

Personal Property

Answer 1

An unattached, moveable asset not considered real estate. During property conveyance: Personal property usually goes with the seller unless otherwise specified in the sales contract. Personal property is conveyed by a bill of sale or bequest. Examples: A hairbrush, dining room furniture, your super-rare collection of bird-themed coffee mugs

Question 2

Real Property

Answer 2

Refers to the land and improvements PLUS the set of rights associated with real estate ownership. Real estate and real property are technically different but are used interchangeably. Most inclusive of all three terms (land, improvements, real estate). Once something becomes real property, it generally goes with the property when it’s sold and is conveyed by deed. Examples: A home, an industrial warehouse, a 10-acre soybean field

Question 3

In Writing

Answer 3

Something is included in an official, printed, signed, bona fide contract. It doesn’t mean writing on a whiteboard or a napkin; it refers to formal documentation. Be sure to list all fixtures in writing

Question 4

Chattel

Answer 4

Another common used term for personal property. “Since personal property is moveable and chattel is personal property, cattle can be chattel.”

Question 5

Fructus Naturales

Answer 5

Are trees, persistent decorative plantings (like perennial landscape plants), and uncultivated plants. They are usually considered real property due to their permanence. For example, if a house is sold with maple trees and viburnums, these plants are part of the real property and should remain with the property after the sale.

Question 6

Fructus Industriales

Answer 6

Also known as emblements, are annually cultivated crops. These crops are considered personal property, even before they are harvested. For example, a watermelon farmer can take the watermelon plants and any grown watermelons with them when selling their property.

Question 7

Fixture(s)

Answer 7

An object that was once personal property but is now firmly attached to the land in such a way that it is considered to be real property. Examples: A ceiling fan - While still in the box, the ceiling fan is personal (and movable) property. Once (permanently) attached to the ceiling, the fan is real property and part of the home (which itself is an improvement attached to the land). Other examples: Chandeliers, Garage door openers, Shelves, Bidets

Question 8

Affixation/Annexation

Answer 8

The process of converting personal property to real property. Example: Attaching a ceiling fan to the ceiling. Can also happen through, Close association, Adoption, Agreement

Question 9

Close Association

Answer 9

Method of affixation/annexation, conceptual linkage to real property. Example, a garage door opener isn’t physically attached to the home but is considered real property because it is closely associated with the garage.

Question 10

Adoption

Answer 10

Method of affixation/annexation, the customization of personal property for use with real property. Example, drapes specifically cut for a unique window shape in a home would be considered real property due to their customization.

Question 11

Agreement

Answer 11

Method of affixation/annexation, a mutual understanding between parties that certain personal property will become real property. For example, if a seller and buyer agree that a custom chandelier will stay with the house, it becomes a fixture through their agreement. This helps avoid any confusion during the property transfer.

Question 12

Trade Fixtures/Chattel Fixture

Answer 12

Not the same as other types of fixtures. The tenant can usually take trade fixtures with them when they leave. Personal property that is owned by and needed for a tenant’s business. It is not subject to the same rules of transfer as fixtures in general. Example: Shelves that a store owner attaches to the wall when leasing a storefront in a strip mall are trade fixtures.
The shelves belong to the tenant. They are fixtures, but the shelves are for the business of the tenant or the tenant’s trade. The tenant is allowed to take the trade fixtures with them when their lease is over. Unlike a tenant in a residence who improves the property, trade fixtures are property of the tenant.

Question 13

Severance

Answer 13

Act of converting real property into personal property. Severance is the opposite of affixation/annexation. Example: Remove the family heirloom chandelier from the dining room, they would be severing the fixture from the home and converting it into personal property. (They would need to clear this ahead of time with all parties to the sales transaction!)

Question 14

MARIA

Answer 14

A mnemonic device to help you remember the tests to determine whether something is a fixture: Method of attachment, Adaptability, Relationship of the parties, Intent, Agreement

Question 15

Method of Attachment

Answer 15

How the potential fixture is installed. Anything that would damage the home to remove? That’s probably a fixture

Question 16

Adaptability

Answer 16

Anything specifically adapted to the home (like window shades) or anything that is integral to the operation of the home (like a box air conditioning unit or a specially-sized door) could be a fixture.

Question 17

Relationship of the Parties

Answer 17

Landlord-tenant relationships. When tenants install things in a home, they are allowed to take them when they leave, like a trade fixture.

Question 18

Intent

Answer 18

Intent the homeowner had when they installed the item in question. If someone installed something intending to take it with them when they left, even if it has to be attached permanently, it might be personal property.

Question 19

Agreement Between the Parties

Answer 19

The contract trumps all, so whatever has been agreed upon by the parties to the transaction (IN WRITING) is what happens.