Real Property vs. Personal Property in Real Estate

Understanding the distinction between real vs personal property is crucial for real estate agents, as it directly impacts negotiations and outcomes of property sales. Knowing whether an item is considered a real vs personal property can prevent misunderstandings and ensure smooth transactions. Let's delve deeper into each category and expand on why this knowledge is essential.

What is Real Property?

Real property, also known as real estate, encompasses land and any permanently attached additions, such as houses and other buildings. Items that are permanently affixed to these structures, either directly or via pipes, wires, or nails, are also included. Examples extend beyond the obvious to include items like windows, doors, and built-in appliances. Legal definitions can vary, but the general rule is that if removal of the item would cause damage to the property or require substantial modification, it’s considered real property.

Types of Real Property:

1. Land - The physical ground itself, including any soil, minerals, and water sources contained within the property boundaries.
2. Homes and Buildings - All types of buildings, including residential homes, commercial buildings, and industrial structures that are permanently affixed to the land.
3. Built-in Appliances - Appliances such as dishwashers, ovens, and built-in microwaves that are integrated into the home’s cabinetry and connected to the property’s utility systems.
4. Heating and Cooling Systems - Systems like furnaces, central air conditioning units, and built-in humidifiers that are permanently installed.
5. Plumbing Fixtures - Items such as sinks, toilets, and bathtubs that are attached to the home’s plumbing system.
6. Electrical Fixtures - Hardwired lighting fixtures, ceiling fans, and electrical outlets that are an integral part of the home’s electrical system.
7. Landscaping - Mature trees, perennial plants, and hardscaping like retaining walls and stone patios that are intended to remain permanently in place.
8. Permanent Outdoor Structures - Gazebos, pergolas, decks, and permanent outdoor kitchens.
9. Windows and Doors - Standard windows and doors that are part of the building.
10. Roofing - Materials and structures that make up the roof and are essential to the integrity of the building.
11. Flooring - Installed flooring such as hardwood floors, tile, and carpet that is glued or nailed down.
12. Security Systems - Hardwired systems that include alarms, surveillance cameras, and monitoring equipment.
13. Solar Panels - Panels that are attached to the roof or ground mounts that are intended to remain as a permanent energy solution for the property.
14. Built-in Furniture - Items like bookcases or benches that are custom-built into the property and designed not to be removed.
15. Septic Systems - Any part of a septic system, including tanks and leach fields, that is crucial for waste management on the property.

What is Personal Property?

Personal property refers to items that can be moved easily from place to place without altering the property’s character. This category includes tangible, movable objects not permanently affixed to real estate. It’s often defined by the method of attachment and the intention to keep the item movable. Understanding this helps agents advise clients on what they can expect to take with them after a sale, or what might be expected to stay.

Types  of Personal Property:

1. Furniture - Items such as sofas, chairs, tables, and beds that can be easily moved from one location to another.
2. Appliances - Freestanding appliances like refrigerators, washers, dryers, and microwaves that are not built into the home’s structure.
3. Electronics - Devices such as televisions, computers, and portable speakers that can be unplugged and moved without altering the home’s infrastructure.
4. Decorative Items - Including artworks, lamps, rugs, and curtains that can be removed without impacting the structure of the home.
5. Garden Equipment - Tools like lawnmowers, hoses, and portable barbecues that are not permanently installed.
6. Vehicles - Cars, boats, motorcycles, and bicycles that are not registered as part of the land.
7. Clothing - Personal apparel and accessories.
8. Jewelry and Watches - Valuable personal adornments that are easily transportable.
9. Sporting Goods - Equipment like golf clubs, skis, and gym gear that are portable.
10. Toys and Games - Items that can be easily moved and stored.
11. Portable Heating and Cooling Units - Such as space heaters and window air conditioning units that are not permanently installed.
12. Small Kitchen Appliances - Blenders, toasters, coffee makers, and other countertop appliances.
13. Linens and Bedding - Sheets, blankets, and pillowcases that can be packed and removed.
14. Personal Computers and Mobile Phones - Easily transportable technology devices.
15. Books and CDs - Portable media that can be physically moved.

Special Considerations for Appliances

Appliances highlight a common, and avoidable, area of confusion. Those built-in or otherwise permanently attached to the property's electrical or plumbing systems are generally considered fixtures. However, freestanding items that plug into outlets and can be easily moved without installation work are seen as personal property. Agents must ensure that sale agreements clearly specify which appliances and other personal properties are included in the sale to avoid potential disputes.

Appliance Classification:

Understanding how different appliances are classified in real estate transactions can significantly affect negotiations and client expectations. Let's get into some of the nuances. 

1. Integrated Refrigerators vs. Freestanding Modelssome
   • Integrated Refrigerators: These units are designed to blend seamlessly with the kitchen cabinetry, often featuring paneling that matches the rest of the kitchen. They are typically built into the kitchen layout, making them a fixed part of the property. Since they are hardwired or plumbed directly into the home’s systems, removing an integrated refrigerator would require significant effort and potentially alter the kitchen’s structure.
   • Freestanding Models: These refrigerators are more common and can be easily moved as they stand alone and are not physically secured to the home’s structure. They simply plug into the wall, and while heavy, they do not require uninstallation from cabinetry or disconnection from built-in plumbing.

2. Washer and Dryer Sets: Stackable and Connected vs. Standalone Unitssome
   • Stackable and Connected Units: These are often installed in a manner that integrates them with the building’s plumbing and electrical systems. They are bolted together or to the wall for stability, making them part of the property.
   • Standalone Units: These appliances are not fixed and can be easily moved. They are ideal for rental properties or homeowners who prefer not to modify their space.

3. Custom Cabinetry That Houses Otherwise Movable Appliancessome
   • Custom cabinetry is a significant aspect where built-in structures are designed to house appliances that would normally be considered personal property, like microwaves and mini-fridges. The custom design often means these appliances fit into specific slots, and removing them might not damage the property but could leave unsightly gaps.

What if a Buyer Dislikes a Fixture or Likes a Personal Property? 

The preference of buyers and sellers regarding fixtures and personal property can significantly affect the negotiation process. Agents should guide their clients in understanding the implications of these preferences. 

If sellers wish to keep certain fixtures, they should consider replacing them before showing the house. Buyers should clearly express interest in a specific personal property to include them in the contract, possibly adjusting the offer price to reflect these additions.

If a buyer dislikes an included fixture, understanding that negotiation is possible can be beneficial. While the default assumption is that fixtures remain, agreements can often be reached for their removal or replacement, especially if the fixture significantly impacts the buyer’s satisfaction with the home.

Real vs Personal Property on the Real Estate Exam

Real vs personal property is a classic concept that you will be tested on the real estate exam, no matter which state you’re testing in. That means, you ought to get at least a few questions right after reading this article, right?

Well, you can get a lot more questions right when you use one of the best real estate exam study tools, our online real estate crash course and exam prep package. This package comes with unlimited practice exams that will let you answer questions that are very similar to what you will on the actual exam. 

The practice exams will show you which questions you got wrong and which categories of the exam you should study more. Then, you can use the eBook study guide (which is included) to study up on everything you need to know. It also comes with vocabulary flashcards to drill those vocabulary words.