Traditionally, Ownership of real property is described as a bundle of legal rights. In other words, a purchaser of Real Estate actually buys the rights of Ownership held by the seller. These rights include:
- possession
- control
- enjoyment
- exclusion
- disposition
An important decision between Real Estate and personal property is that personal property is movable. Items of personal property, also referred to as chattels, include such tangibles as chairs, tables, clothing, money, bonds, and bank accounts. Trade fixtures are included in this category. They, too, are frequently referred to as chattels.
An item of real property can become personal by severance. For example, a growing tree is Real Estate until the Owner cuts it down, severing it from the property. Similarly, an apple becomes personal property once it is picked from the tree, and a wheat crop becomes personal property once harvested.
It is also possible to change personal property into real property through annexation. For example, a Landowner buys cement, stones, and sand, mixes them into concrete, and constructs a sidewalk across the land. This Landowner has effectively converted personal property (cement, stones, and sand) into real property (a sidewalk, permanently attached to the land).
Licensees need to know whether property is real or personal for many reasons. An important distinction arises, for instance, when the property is transferred from one Owner to another.
Real property is conveyed by deed.
Personal property is conveyed by a bill of sale.
