Personal Property Vs Real Property - Understanding the Difference, Avoiding the Lawsuits

Let's take a look at Personal Property as it compares to Real Property. This is a topic that comes up a lot when a real estate transaction gets difficult and the two parties (buyer and seller) begin to argue over what stays in the house and what doesn't according to the contract and law.

Personal property is defined as all property that can be owned and does not fit the definition of real property. In other words, if it is not real property then it is personal property. An important distinction between the two is that personal property is movable. Personal property is also referred to as chattels. For those of you who like to work on expanding your vocabulary.

Property

Next let's look at some examples of personal property including manufactured housing, plants, crops, and classifications of fixtures.

Manufactured Housing is defined as dwellings that are not constructed at the home site. These are normally trucked in and placed on the property. For those of you breaking down the word manufactured, and wondering why all homes aren't considered manufactured, since they are after all "manufactured" think of mobile homes as manufactured. Here's the tricky part, if the manufactured home has been attached to the property then it is REAL property, if it is just sitting there and hooked up to utilities then it is PERSONAL property. Why would it matter? well, if it is REAL property, then the property taxes are higher because the government sees the homes as essentially adding value to the land it sits on.

Plants and Crops: There are two categories here and both have their differences. Trees, perennials, shrubbery and grass that do not require annual cultivation are considered real property or real estate. And these transfer with the sale of the property. Crops on the other hand that are harvested on an annual basis, are considered emblements. Or personal property and in the sale of the property, the crops that are being produced stay with the seller for that current harvest.

Here are some additional details... if an item on the land, lets say a tree (which is real property) is cut down and separated from the land (called severance), then it becomes personal property. It is also possible to do the same thing but the other way. If the tree that was cut down is used to build a home on the property, through annexation, it become real property.

Fixtures - these are often the hot topic in the sale of a home because sellers often take their fixtures with them when they move, and that is against the agreement set out by the contract. Knowing what a fixture is, will help you understand what to expect stay with the home and what does not. A fixture is personal property that has been affixed (attached) to the land or building and it becomes real property. Remember real property stays with the home when it is sold.

How do you test if an item is a fixture or personal property? Here are the three basic tests the court will use to decide.

1. Method of Annexation - how permanent is the method of attachment? Can the item be removed without damaging the surrounding property?

2. Adaptation to Real Estate - Is the item being used as real property or personal property? For example a fridge is normally considered personal property because it can be removed easily. However if the refrigerator has been adapted to match the kitchen cabinetry, it become a fixture.

3. Agreement - Have the parties agreed on whether the item is real or personal in a purchase offer.

The overall rule is to determine, what is the purpose of the fixture? Is it's function to be personal property or a real property.

Trade Fixtures are the exception to the rule. A trade fixture is property used in the course of business. Often it will be attached to the property and resemble real property. However, if it is something used as part of the seller's trade, it is considered personal property and does not stay with the home.

Often home buyers will be looking at homes and what draws them to the home will be certain aspects of the home. Fixtures such as entertainment centers, backyard gazebos and surround sound speakers are often considered fixtures and real property that will stay with the home. However a home owner may consider those items of great value and may be planning on taking them to their new home. It is very important to identify what fixtures you want and expect to stay in the home and put those items in the purchase agreement so everyone will be on the same page and in agreement from early on.

Personal Property Vs Real Property - Understanding the Difference, Avoiding the Lawsuits

Flinsk Real Estate is a company dedicated to educating home buyers and helping home buyers get the most out of their home buying experience. http://flinskrealestate.com

Freehold Vs Leasehold - The Difference Between Leasehold & Freehold

One of the first problems people come across when buying a house is understanding the difference between leasehold and freehold. Fortunately it's often quite easy to understand though the benefits and value of the different options is sometimes harder to get your head round.

Freehold

Flats

When you are a freeholder you own the exclusive rights to both the building and the land on which it sits. Nobody else has a claim to that land and you can do with it as you please within planning laws and legislation. It's this autonomy that make freehold so appealing, once the property is purchased there are no additional or ongoing costs to and land owner and you can make changes and alterations to the property and land as long as you don't upset anyone in the planning department of the local council.

One downside to this freedom is you have total responsibility for any costs or repairs required for the building, when in a leasehold sometimes this bill can be paid by the freeholder or spilt amongst other leaseholders if you are living in a flat or converted house.

Also it's possible to secure leasehold contracts which last up to a thousand years when you compare a lease of this length with a freehold it's sometimes difficult to account for the additional cost that comes with a freehold property.

Leasehold

When you've purchased a house or flat with leasehold you only own the right to live in that house and flat rather than the land itself. In certain circumstances the clauses in the lease can alter and change what you are able to do with the building and it's often difficult tom compare leases like for like as some are more flexible than others.

Leases last for a set period of time; while most will be over 75 years if yours is shorter you'll find it difficult to secure a mortgage with most well known lenders. Often it's possible to negotiate a lease extension as part of your purchase but be warned this can incur additional costs.

Also once you've purchased a leasehold property you can incur additional costs from the freeholders both as one off events and ongoing charges. These can include ground rent, service charges and other management fees.

There are pros & cons to both options but be sure to fully understand the benefits & costs of both before making your final decision.

Freehold Vs Leasehold - The Difference Between Leasehold & Freehold

Avon Barksdale writes articles for News on the Block a world leading resource for people living in and buying flats. Their magazine and website also contains invaluable infromation about the differences between Leasehold & Freehold [http://www.newsontheblock.com/categories/20060719_3]