Pop quiz: Is a light fixture considered real property or personal property? Is it automatically included in the sale of a home or would the sellers take it with them to their new home?
Real estate agents need to know the difference between real property and personal property because it determines which items are part of a real estate transaction and which are not. Understanding real property vs. personal property can help you avoid an embarrassing moment in front of your clients.
So let’s define real property vs. personal property and see some examples of both property types.
What Is Real Property?
Real property is land plus anything growing out of the land, erected on the land (like structures), or attached to the land (like a driveway). Another way to phrase this (as you’ll often hear from your local property tax assessor) is land and improvements.
Real property automatically conveys with the title unless otherwise stated. For example, if the seller planted a lemon tree in the backyard, the lemon tree becomes real property and is expected to be included in the sale.
Simple enough, right?
Well, this quickly gets complicated when you consider the structure of the home. Take the light fixture from our opening pop quiz, for example. It’s not directly attached to the land, but it is fixed to the structure that has been erected on the land. Does this make it real property?
The short answer is yes, as long as the light fixture is attached to the structure. This means buyers can safely expect the fixture to be automatically included in the sales price.
Examples of Real Property
Real property includes:
Land
Any plants growing on the land
Any ground cover (such as wood chips, pebbles, or gravel)
Retaining walls
Gazebos
Tree houses
In-ground pools
Above-ground pools with decking built around it
Driveways and sidewalks
Homes
Garages
Outbuildings
Fences
Mailboxes
Anything fixed to any structure (including items like light fixtures, window shutters, and ceiling fans)
What Is Personal Property?
Personal property is generally considered to be anything in a home or on a property that can be removed without damaging the land or structure. You might also hear personal property referred to as “chattel.”
Personal property is automatically excluded from the sale unless otherwise stated.
Let’s go back to the light fixture example. The fixture that is attached to the structure is real property. But a free-standing floor lamp can simply be unplugged and moved. So the floor lamp would be personal property. The floor lamp would not automatically be included in the sale.
Now, you might be thinking, Wait…you can absolutely remove a light fixture without damaging the structure, so why is it real property? You’re not wrong. However, removing a light fixture would leave unfinished exposed wiring. This would require repair. And that’s why light fixtures are considered to be real property.
Examples of Personal Property
Personal property includes:
Furnishings
Mobile homes
Cars
Swingsets
Above-ground pools without any structure built around it
Linens
Shower curtains
Potted plants
What About Appliances?
In general, appliances attached to the structure by bolts, screws, hard wiring, or pipes, are real property. Appliances that can simply be unplugged and moved are personal property.
A garbage disposal, for example, would be real property while a freestanding microwave would be personal property.
But what about a fridge/freezer? In many cases, this appliance can be unplugged and moved, which would make it personal property, and mean that it’s not automatically included in the sale. However, most people don’t want the hassle of moving a fridge/freezer. So is it included in the sale or not? Luckily, the listing agreement allows sellers to select which appliances are included in the sale. This helps avoid confusion over these hard-to-move personal property items.
What if My Seller Wants to Keep a Piece of the Real Property?
If you’re representing a seller who wants to keep an item of real property (like a light fixture or planted bush, for example), you can recommend that they simply remove and replace the item before listing the house for sale.
What if My Seller Wants to Leave Some Personal Property Behind?
Let’s say your seller has an item they don’t want to move or dispose of (like a free-standing above-ground pool or billiard table). They can simply note in the listing that this item is included in the sale.
What if My Buyer Wants Some of the Personal Property?
If you’re representing a buyer who falls in love with personal property (like furnishings or a swingset), you can ask that the item be included in the sale. Don’t be surprised if the seller expects a higher sales price for the added items.
What if My Buyer Doesn’t Want Some of the Real Property Fixtures?
Let’s say your buyer hates the dated chandelier in the dining room. What are their options? Your buyers could ask if the seller wants to take the fixture with them. But, typically, all real property is conveyed with the sale, so your buyers would be responsible for removing, disposing of, and replacing any real property they don’t like.
Round Out Your Real Estate Knowledge With Aceable
Now that you know about real property and personal property, see if you can tell the difference by taking our online quiz.
Want to increase your knowledge further? Whether you’re a seasoned agent or you’re just starting to think about getting your real estate license, Aceable has informative real estate courses to build your industry expertise.
Explore our convenient online real estate license courses and continuing education courses today!
Updated 11/17/23