Real property is anything that’s attached to land. It can include everything from structures like your house, garage, and shed to a pond or mining operation.
It’s important to know the difference between real and personal property because it impacts many areas of law including taxation, bankruptcy, and even what’s covered by your homeowners insurance.
Land
Land refers to property that has an inherent permanence because it is secured to a physical location. Unlike tangible personal property, which is movable, it requires significant time and expense to move land to another location.
A company may buy a piece of land to build a commercial complex. Depending on the laws of that state, the company may consider this land real property.
The definition of land also includes any natural resources on the property, such as minerals, water sources and even scenic beauty. These natural resources can have economic value that affects the valuation of the property. Usually, a landowner will receive substantial amounts of money for the rights to extract these resources. These rights are called estates in land. These can be freehold or nonfreehold.
Buildings
Real property includes the land and any buildings attached to it. However, it does not include structures that do not factor into the property’s overall value, such as a basketball hoop. The distinction is important, because it determines who has ownership interest in the property and who can benefit from the property’s use.
Residential real estate refers to single-family homes and multifamily dwellings, and it can be leased or owner-occupied. Commercial real property has a business focus and includes office buildings, malls and warehouses. Both types of real property are subject to zoning regulations and other legal considerations. They also must meet certain standards for maintenance and upkeep.
Fixtures
Fixtures are movable personal property that have become permanently attached to real property. They can be affixed by bolts, glue, cement or screws and can include anything from ceiling fans to murphy beds. When determining what is a fixture or fitting the law is generally guided by what two people agree upon in a contract of sale.
This is especially true in the case of trade fixtures. A chandelier hung by a tenant during the course of a lease becomes the property of the landlord at the end of the tenancy and would be considered a fixture even if not affixed with any type of permanent attachment. This distinction is important to understand as it can affect the value of a home. This is why most purchase contracts include a clause that expressly defines what items will and won’t be included in the sale.
Equipment
Equipment is anything that a company needs to do its work, like computers, printers, desks and Internet servers. It also includes things that aren’t part of an inherently permanent structure, like duct tape and circular saws.
When companies buy and build equipment, they typically use home improvement stores or similar businesses to get the materials. These purchases are considered personal property, but once the company builds the equipment and it is attached to the land, it becomes real property. You can know more by visiting sellmyhousefastmiamifl.com.
Companies usually have centralized groups that manage real estate and separate ones for equipment. This difference makes it more challenging for them to apply lease accounting to large portfolios of equipment leases. They have to analyze each distinct asset at inception to decide if it is a real property fixture or an equipment lease.
Personal Property
Real property is land and anything affixed to it, including buildings, while personal property is all other possessions. This distinction can affect legal rights as well as tax laws.
It’s important to understand the difference between real and personal property because different rules apply to each. For example, real property can’t be used as collateral for a loan, while personal property can.
The primary characteristic of personal property is that it’s movable, and it can be further categorized as tangible or intangible. Tangible personal property includes things you can touch and hold, such as cars, furniture, collectibles, and even patents and intellectual property. Intangible personal property includes stocks and other investments. Some loans, such as car loans, are secured by real property like vehicles, while others (like mortgages) are secured by personal property.