Real property refers to land and anything permanently attached to it, including natural resources, buildings and improvements, plus the bundle of legal rights that accompany ownership. Unlike personal property, which is movable, real property is immovable and conveyed via deeds recorded with local authorities.
Three tangible components comprise real property:
When you own real property, you typically control a “bundle of rights,” which may include:
Personal property, also called chattels or personalty, includes movable items not permanently affixed to land. Examples are furniture, vehicles and electronics. Upon sale or transfer, these items pass separately from real estate.
A fixture begins as personal property but becomes part of real property when permanently attached. Examples include built-in cabinets, light fixtures and central air conditioners.
Court decisions assess three factors to determine if an item is a fixture:
Fee simple ownership grants the broadest rights, including possession, enjoyment, control, exclusion of others and right to dispose of the property. Lesser estates, such as life estates or leaseholds, grant a subset of these rights.
Non-possessory interests may burden or benefit real property:
Encumbrances affect title and marketability:
Accurate legal descriptions in contracts and deeds ensure the buyer receives the intended real property. Errors in metes and bounds or lot references can lead to boundary disputes or title defects.
In commercial leases, clear definitions of real property help determine which improvements remain at lease end. Tenants negotiate allowance for fixtures and who bears removal costs.
Lenders require clarity on what constitutes the collateral. They review appraisals, survey reports and title commitments to confirm the scope of real property securing a mortgage.
Each state has statutes and case law defining real property. For example, some states treat growing crops as real property until harvest, while others classify them as personalty immediately.
In common law jurisdictions (U.S., U.K., Canada), property rights evolved through court decisions and statutes. Civil law countries (France, Germany) rely more on codified civil codes to define land rights.
Consult municipal codes, state real estate statutes and key appellate decisions. Local county recorder or registry offices maintain deed and lien records. Online legal databases also provide case law and statutory texts.
Real property is assessed annually for tax purposes based on market value or a government formula. Owners receive a tax bill that funds schools, roads and local services.
Wills and trusts convey real property upon death. A properly executed deed of distribution or trustee’s deed transfers ownership outside of probate or according to the settlor’s instructions.
When you sell real property, capital gains tax applies to the appreciation in value. Investment properties may also be depreciated over time, reducing taxable income subject to recapture on sale.
Examine the granting clause, legal description, exceptions and reservations, and signature acknowledgments. Verify that the parties, property description and any encumbrances are accurately recorded.
A title report discloses recorded liens, easements and ownership history. A survey map shows boundary lines, encroachments and improvements relative to property lines.
If title issues, boundary disputes or complex encumbrances arise, enlist a title agent or real estate attorney. Their expertise ensures clear title and protects your interests in closing documents.
Jane enters a contract to buy a home that includes custom built-in bookshelves. She wonders whether they stay with the property.
Applying the fixture tests—annexation, adaptation and intent—Jane confirms the shelves were permanently affixed, custom-built and intended to remain. They qualify as real property.
If the seller intended to remove certain fixtures, Jane can amend the purchase agreement to specify which items convey. Clear language prevents surprises at closing.
Always include a fixture and personal property addendum. List all items intended to remain or be removed. This protects buyers and sellers by setting clear expectations.
Land, buildings, permanent fixtures and the bundle of rights (possession, use, exclusion, etc.) always qualify as real property.
Not without the buyer’s consent. Fixtures included in the deed are conveyed at closing. Attempting removal may breach the contract and lead to legal disputes.
Easements grant others limited rights on your property (e.g., utility access). They do not transfer ownership but can restrict your use in specific areas.
Consult your state’s real estate statutes and case law. Local title companies and attorneys can clarify jurisdictional nuances and help interpret conflicting definitions.
Real property combines land, improvements and a bundle of rights. Differentiating it from personal property is vital in transactions, financing, taxation and estate planning.
Before buying, selling or leasing, conduct thorough title searches, surveys and fixture reviews. Engage real estate attorneys, title agents and tax advisors to safeguard your interests and ensure compliance with local laws.
