Real Property vs Personal Property: What's the difference? Real Estate Exam Prep Concepts

Summary

This video explains key concepts related to real property, including the distinction between real and personal property. It defines real property as land and anything attached to it, with the word 'estate' referring to ownership duration. The script also discusses fixtures, which are personal property that become real property once attached. A helpful acronym 'Maria' is provided to remember the five ways to determine if something is a fixture. Finally, it covers trade fixtures, which, despite being attached to real property, remain personal property due to their business use. Overall, the video aims to clarify these concepts for real estate exam success.

Takeaways

• 😀 Real property includes land and anything attached to it, along with the bundle of rights that come with ownership.
• 😀 Personal property refers to movable items like furniture, jewelry, and household goods.
• 😀 The term 'real' in real estate refers to immovable property, while 'personal' property can be moved.
• 😀 Chattels are another term for personal property; you can remember this by thinking of cattle, which move.
• 😀 A fixture is personal property that becomes real property due to its attachment to land.
• 😀 The acronym M.A.R.I.A. helps identify if an item is a fixture: Method of attachment, Adaptability, Relationship of parties, Intention, and Agreement.
• 😀 Method of attachment refers to how an item is attached, such as with nails, screws, or cement.
• 😀 Adaptability means whether an item has become integral to the home (e.g., a pool cover for a specific pool).
• 😀 The Relationship of the parties may affect whether an item is considered a fixture, with different outcomes for buyers vs. landlords/tenants.
• 😀 Trade fixtures are personal property items used in business that stay with the business owner even if they are attached to the property (e.g., dentist's chair).
• 😀 In real estate, fixtures are typically considered part of the property unless specified otherwise in an agreement between the parties.

Q & A

Why is a real estate license called a real estate license and not a house sales license or a land sales license?

A real estate license is called so because 'real property' refers to land and anything attached to it, as well as the bundle of rights that come with property ownership. The word 'estate' relates to the duration of ownership, and 'real property' includes both immovable and certain movable items.

What is the general definition of real property?

Real property generally refers to land and anything attached to it, including buildings, homes, and even fixtures like pool coverings or window blinds. These are typically immovable items that stay with the property when ownership is transferred.

What distinguishes personal property from real property?

Personal property consists of items that are movable, such as furniture, jewelry, and clothing. Unlike real property, personal property does not stay with the land when ownership is transferred.

What is the significance of the term 'chattel' in real estate?

The term 'chattel' refers to personal property, which is movable. A mnemonic to remember this is 'chattel' sounding like 'cattle,' as cows are movable, similar to how personal property is not fixed to the land.

How can an item that is movable become part of real property?

An item becomes part of real property when it is permanently attached or installed to the land or structure. This is called a 'fixture,' and it is no longer considered personal property once it becomes an integral part of the property.

What is the acronym 'Maria' used for in real estate?

The acronym 'Maria' helps to remember the five factors that determine if an item qualifies as a fixture: M for Method of Attachment, A for Adaptability, R for Relationship of the Parties, I for Intention of the Party, and A for Agreement between the Parties.

How does the method of attachment influence whether an item is a fixture?

The method of attachment refers to how an item is secured to the property. If an item is attached with nails, screws, cement, or glue, it may be considered a fixture because it is permanently attached to the property.

Why is adaptability important in determining if an item is a fixture?

Adaptability refers to how integral an item is to the property's functionality. If an item, like a pool cover, is specifically designed for that particular property and is needed for its operation, it is likely considered a fixture.

What is the difference between a trade fixture and an ordinary fixture?

A trade fixture is an item attached to real property for business use. Unlike ordinary fixtures, which become part of the real property, trade fixtures are considered personal property and can be removed by the owner when they leave the business location.

Can an agreement between parties override other factors when determining if an item is a fixture?

Yes, an agreement between the parties, such as a purchase contract, will override other factors like attachment or adaptability. This agreement defines what items are included in the sale and whether they are considered fixtures.