1.1 Real Property vs. Personal Property

Real Property vs. Personal Property

The national exam opens almost every transaction with one question: what is being conveyed? Real property (also called realty or real estate) is land, everything permanently attached to it, and the bundle of legal rights that goes with ownership. Personal property (also called chattel or personalty) is everything that is movable and not permanently attached.

The difference is not trivia. A signed sales contract that does not list the refrigerator can spark a closing dispute over whether it was a fixture (conveys with the deed) or personal property (stays with the seller).

Land, Real Estate, and Real Property

These three terms are nested, and the exam tests the distinction:

The bundle of rights is often remembered as D-E-E-P-C: the right to Dispose (sell, will, gift), Encumber (mortgage), Exclude others, Possess, and Control (use). Strip away any stick and you still own the rest of the bundle.

Fixtures: When Personal Property Becomes Real Property

A fixture is an item that was once personal property but has been so attached to real estate that it is now part of the realty and conveys with the deed. Courts decide fixture disputes with a test memorized as M-A-R-I-A:

• Method of attachment — how permanently is it affixed? (bolted vs. plugged in)
• Adaptation — is it specially fitted to this property? (custom storm windows)
• Relationship of the parties — tenant/landlord vs. buyer/seller (close calls favor the tenant and the buyer)
• Intention — did the person who attached it intend it to stay? (the most heavily weighted factor)
• Agreement — what does the contract say? (a written agreement controls and overrides the other tests)

Trap: Intention is given the most weight, but a clear written agreement in the sales contract trumps all of it. The cleanest way to avoid a fixture dispute is to list the item in the contract.

Trade Fixtures

A trade fixture is personal property a commercial tenant attaches to a leased space to conduct business — a bakery's ovens, a salon's chairs, a bar's walk-in cooler. Trade fixtures remain the tenant's personal property. The tenant may remove them before the lease ends but must repair any damage.

Trap: If the tenant fails to remove a trade fixture before the lease expires, it becomes the landlord's real property by accession. The exam loves the timing element — ownership flips at lease end, not at a later negotiation.

Severance and Annexation

These two terms describe property changing categories:

• Severance converts real property to personal property. Cutting down a standing tree, harvesting wheat, or removing a built-in cabinet turns realty into chattel.
• Annexation converts personal property to real property. Planting a sapling, pouring a concrete patio, or installing a furnace turns chattel into realty.

Emblements (Fructus Industriales)

Growing crops produced by human labor — corn, soybeans, wheat — are emblements and are treated as personal property, even while still rooted. A farm tenant whose lease ends keeps the right to re-enter and harvest the crop they planted. Contrast this with fructus naturales (trees, perennial grasses), which are real property until severed.

How Each Is Transferred

Worked example: A seller's contract conveys the home and "all fixtures." The seller wants to keep the dining-room chandelier they custom-bought. Because a hard-wired chandelier is a fixture (method of attachment + adaptation), it would convey with the deed unless the seller excludes it in writing in the contract. Verbal side-agreements lose; the written contract controls.

Common Borderline Items

The exam loves items that sit on the fence. Use M.A.R.I.A. to reason rather than memorize a list, but know the defaults:

Why the Distinction Drives Money

The real-property/personal-property line affects four things the exam tests: (1) what the deed conveys versus what needs a bill of sale; (2) whether transfer (recordation) taxes apply; (3) whether an item is covered by the mortgage as collateral; and (4) what title insurance protects. A buyer who assumes the riding lawn mower in the garage conveys with the house is wrong — equipment is chattel and stays with the seller absent a written agreement. The cleanest professional habit, and the safest exam instinct, is to reduce every borderline item to a written contract term so M.A.R.I.A. never has to be litigated.