Real vs Personal Property

This is one of the most important concepts on the real estate exam.  Real property refers to one of the two main classes of property, personal property being the other. All things attached to the land and all rights inherent with that land generally encompasses real property.  As a general rule real property are things that are immovable.  This is a general rule to help you pass the real estate exam as there are examples of things that are movable and considered real property.


Personal property is a type of property are generally that things that are movable, it is not real estate. Personal property may also be called chattels or personalty. It is distinguished from real property, or real estate. because personal property is generally movable property or movables - any property that can be moved from one location to another.


Personal property may be classified in a variety of ways. Tangible personal property refers to any type of property that can generally be moved (i.e., it is not attached to real property or land), touched or felt. These generally include items such as furniture, clothing, jewelry, art, writings, or household goods. In some cases, there can be formal title documents that show the ownership and transfer rights of that property after a person's death (for example, motor vehicles, boats, etc.) In many cases, however, tangible personal property will not be "titled" in an owner's name and is presumed to be whatever property he or she was in possession of at the time of his or her death.


Severance is changing an item from real property to personal property by detaching it from the land.


Annexation


Annexation is the addition to property by the act of attaching a smaller item to the larger property, as in attaching personal property to real property, thereby creating a fixture. For example, a sink becomes a fixture when it is annexed to the plumbing outlet.


Appurtenances


Appurtenance is a term for what belongs to and goes with something else, with the appurtenance being less significant than what it belongs to.  Appurtenance is something belonging to something else, either attached or not, such as a barn to a house, or an easement to land.  The appurtenance is part of the property and passes with it upon sale or other transfer.


Fixtures


A fixture is personal property that becomes real property, when attached in a permanent manner to real estate, and is incorporated into the land. this comes up on the real estate exam allot.


An example of a fixture would be a chandelier as it is an item that was movable but now is attached to the property.


Personal property that becomes real estate is called a fixture. From a real estate perspective, the principal difference between personal property and a fixture is that personal property stays with the owner when a piece of real estate is sold, and a fixture stays with the property.


Say you have lumber delivered to the house to build a deck. At the time of the delivery, lumber is personal property that goes with you if you sell the house. However, if you build a deck with the lumber the following week and attach it to the back of your house, the lumber now is considered a fixture that, of course, stays with the house when you sell it.


To remember if something is a fixture or not just remember the acronym MARIA


Method of attachment

Adaptability of the item

Relationship of the parties

Intention of the parties

Agreement of the parties involved.


As stated before Saying that real property is immovable and personal property is movable is a general rule, another way to help you remember what is real and what is personal is to keep in mind that personal property goes with the person and real property goes with the real estate. 


Trade Fixture


A Trade fixture is a piece of equipment on or attached to the real estate which is used in a trade or business. Trade fixtures differ from other fixtures in that they may be removed from the real estate (making it personal property even if attached) at the end of the tenancy of the business, while ordinary fixtures attached to the real estate become part of the real estate. The business tenant must compensate the owner for any damages due to removal of trade fixtures or repair such damage. 


It is important that you remember trade fixtures remain the tenant's property, hence they are personal property.  An example of this is the dentists chair would be a trade fixture as the chair is being used for the dentists business. Even though it is attached to the property, the dentists will take that chair with him when he moves to a different location.


Emblements


Emblements are annual crops produced by cultivation legally belonging to the tenant with the implied right for its harvest, and are treated as the tenant's property.   They are considered personal property. A tenant farmer has the right to his crops even when his lease ends before the end of the growing season. Crops grown on property just before it’s sold generally are considered to be the personal property of the seller as well.


This comes into play in the law of landlord and tenant, or in the forclosure of mortgages and other legal situations that place the rights of another party in contention with those of a farmer who has planted a crop yet to be harvested. In these situations, the doctrine of emblements operates to guarantee the farmer's right to reap and carry away the fruits of his labor even if he loses title to the land on which they are grown.


OR-EE rule

On the real estate exam you will here words like

Grantor – Grantee

Lessor – Lessee

Vendor – Vendee

Optionor – Optionee

Trustor – Trustee

Mortgagor – Mortgee

Offoror – Offeree


And the list can go on


The jist of it is, the OR is the giver and the EE receives.


Say this to yourself over and over again


“GrantOR, LessOR, OptionOR, VendOR makes me the givOR of the propetOR for your pleasOR”


So if you see words like

Give

Convey

Sell


That is an OR


And then say  “GrantEE, LessEE, OptionEE, VendEE, gives MEE propertEE which makes me HapEE”


So if you see words like

Receive

Purchase

Acquire

You know it is an EE

It may seem silly, but when you are taking your exam and you see a question that you do not understand but you know one party is giving something and the other party is receiving something you will be thrilled.


For example a vendor sells to a vendee.

The gantor coveys property to a grantee, who receives it.


If on the real estate exam they ask who conveys property?

And you see an option that says Grantor and another option is a Grantee.  You many not know anything about deeds, but you know the answer is Grantor because OR is the conveyor.

Introduction

Bundle of Rights  

License   

Government Rights  

Police Power   

Eminent domain   

Taxation   

Escheat   

Real vs Personal Property

Annexation   

Appurtenances   

Fixtures   

Trade Fixture   

Emblements   

    OR-EE Rule   

Estates

Freehold Estate   

Fee simple absolute   

Fee simple Defeasible   

Life estate   

Less than freehold estate   

Estate for Years   

Periodic Tenancy   

Estate at will   

Estate in sufferance   

Types of Leases   

Gross lease   

Net lease   

Percentage lease   

Lease option   

Property management

Contracts

Essentials of a valid contract   

Capable parties  

Lawful object   

Consideration   

Offer and acceptance   

Types of Contracts   

Valid, Void & Voidable Contracts   

Implied contract   

Bilateral & Unilateral contacts   

Executed & Executory   

Option contract   

Land Contract   

Listings   

Types of Listings contracts   

Exclusive Listing   

Exclusive Authorization and right to sell Listing   

Exclusive Agency Listing   

Open Listing   

Net Listing   

Listings with an option   

Multiple listing service   

Agency   

Universal agent   

General agent   

Special agent   

Attorney in fact   

Principal and Client   

Transaction broker   

Dual or limited agency   

Practice and disclosure   

Stigmatized property   

Puffing   

Fraud   

Actual fraud   

Negative fraud   

Constructive fraud   

Negligence   

Federal Law   

Truth in Lending   

Fair Housing   

Steering   

Blockbusting   

Sherman antitrust laws   

Easement   

Easement in gross   

Implied easement   

Prescriptive easement   

Termination of Easement   

Encroachment   

Zoning

Property Transfer

    Deeds   

    Wills   

Title   

Title insurance   

Forms of ownership   

Tenancy in common   

Joint tenancy   

Community property   

Trust   

Subdivisions   

Condominium   

Cooperative   

Time Shares   

Cluster housing   

Liens   

Appraisal   

Appraisal Principles   

Principle of Highest and Best Use   

Principle of Substitution   

Principle of Conformity   

Principle of Contribution   

Principle of change   

Market Value   

Steps in the appraisal   

Appraisal methodology   

Market data approach   

Capitalization (income) Approach   

Cap Rate   

Cost (replacement) approach   

Gross Rent Multipliers   

Depreciation   

Physical Deterioration   

Functional Obsolescence   

Economic Obsolescence   

Financing   

Lenders   

Primary mortgage   

FHA   

VA   

Types of Loans   

Loans clauses   

Investing   

Construction Terms   

Test Taking Tips