Real Property vs. Personal Property · Fixtures · Bundle of Legal Rights

Property Ownership · 3 min read

Real Property vs. Personal Property · Fixtures · Bundle of Legal Rights

Real property (also called real estate or realty) consists of land, everything permanently attached to it, and the bundle of legal rights associated with ownership. Personal property (also called personalty or chattels) includes movable items not permanently attached to land.

The distinction matters for conveyancing, taxation, and contract law. Real property transfers by deed; personal property transfers by bill of sale.

Land includes the surface, subsurface extending to the center of the earth, and airspace above the surface to a reasonable height necessary for use and enjoyment (subject to aviation easements).

Improvements are permanent man-made additions to land, including buildings, fences, driveways, and landscaping.

Appurtenances are rights, privileges, or improvements that belong to and pass with the land. Examples include easements, water rights, and air rights.

A fixture is personal property that has been attached to real property in such a manner that it becomes part of the real property. Fixtures transfer with the property unless specifically excluded in the sales contract.

Tests for Determining Fixtures (MARIA)

M – Method of Attachment

How is the item attached? Items permanently attached by cement, nails, bolts, or plumbing are more likely fixtures. Items attached by gravity alone (such as furniture) typically remain personal property.

A – Adaptability

Has the item been specifically adapted for use with the property? Custom-fitted items designed for the specific property are more likely fixtures. Examples include custom blinds, built-in bookcases, and wall-to-wall carpeting.

R – Relationship of the Parties

Courts consider the relationship between buyer and seller, landlord and tenant, or lender and borrower. In disputes between sellers and buyers, courts tend to favor buyers. In disputes between landlords and tenants, courts tend to favor landlords.

I – Intent

What was the intent of the party who attached the item? This is the most important test. Intent is determined by objective evidence, not subjective statements.

A – Agreement

Have the parties agreed in writing whether an item is a fixture or personal property? Written agreements override other tests.

Trade Fixtures

Trade fixtures are items attached to leased property by a commercial tenant for business purposes. Trade fixtures remain personal property and may be removed by the tenant before lease expiration, provided the tenant repairs any damage caused by removal. Examples include restaurant equipment, store shelving, and manufacturing machinery.

If a tenant fails to remove trade fixtures before lease expiration, the fixtures become the landlord's property through the doctrine of accession.

Fee simple ownership includes a bundle of legal rights that can be separated, transferred, or encumbered. The acronym DEEPC describes these rights:

D – Disposition

The right to sell, gift, or will the property to others.

E – Enjoyment

The right to use the property in any legal manner without interference from others.

E – Exclusion

The right to prevent others from entering or using the property.

P – Possession

The right to occupy and control the property.

C – Control

The right to determine how the property is used, subject to legal restrictions.

These rights can be separated. For example, a property owner can lease the right of possession to a tenant while retaining other rights.

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← Exam Overview

Real Property vs. Personal Property · Fixtures · Bundle of Legal Rights

The distinction matters for conveyancing, taxation, and contract law. Real property transfers by deed; personal property transfers by bill of sale.

Land includes the surface, subsurface extending to the center of the earth, and airspace above the surface to a reasonable height necessary for use and enjoyment (subject to aviation easements).

Improvements are permanent man-made additions to land, including buildings, fences, driveways, and landscaping.

Appurtenances are rights, privileges, or improvements that belong to and pass with the land. Examples include easements, water rights, and air rights.

Tests for Determining Fixtures (MARIA)

M – Method of Attachment

A – Adaptability

R – Relationship of the Parties

I – Intent

What was the intent of the party who attached the item? This is the most important test. Intent is determined by objective evidence, not subjective statements.

A – Agreement

Have the parties agreed in writing whether an item is a fixture or personal property? Written agreements override other tests.

Trade Fixtures

If a tenant fails to remove trade fixtures before lease expiration, the fixtures become the landlord's property through the doctrine of accession.

Fee simple ownership includes a bundle of legal rights that can be separated, transferred, or encumbered. The acronym DEEPC describes these rights:

D – Disposition

The right to sell, gift, or will the property to others.

E – Enjoyment

The right to use the property in any legal manner without interference from others.

E – Exclusion

The right to prevent others from entering or using the property.

P – Possession

The right to occupy and control the property.

C – Control

The right to determine how the property is used, subject to legal restrictions.

These rights can be separated. For example, a property owner can lease the right of possession to a tenant while retaining other rights.

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Real Estate Salesperson Exam (PSI)