In a legal context, personal property is described as being anything besides land that may be subject to ownership. As such, the defining characteristic of personal property is that it is movable, unlike real property or real estate which is immovable.
Personal property can be further classified as belonging to one of two categories: tangible, and intangible. Tangible property refers to any personal property that can be physically handled, such as:
- Jewelry; and
Intangible personal property refers to property that cannot be physically handled, such as stocks, trust fund accounts, and the like.
Another way to define personal property is that it is any property that is not attached to the land or structures on real estate. Personal property may also be referred to as personalty or chattel. To reiterate, property that is attached or fixed to real estate is known as real property, or realty. Additionally, fixtures that can be removed without damaging the building are sometimes included under the legal definition of personal property.
The distinction between real and personal property is especially important, as property laws may be different depending on whether the item is classified as realty or personalty. Additionally, property laws can vary depending on the jurisdiction in which the property is located.
Because real property is defined as any property that is land, or is attached to/affixed to the land, this includes buildings and crops. There is also an assumption that most real property has a higher value than personal property.
What Are Some Common Legal Applications Of Real Vs. Personal Property?
The difference between the legal definitions of real vs. personal property can be applied in many different areas of law. An example of this would be how in contract law, sales of real property must always be in writing, while not all personal property sales contracts must be written in order to be considered valid. The sale of personal property will be further discussed below.
Another example of the legal implications of real and personal property would be personal property tax consequences. There are forty-two states that place state-wide taxes on personal property, including California, North Carolina, and Massachusetts.
However, while other states may choose to have no state-wide personal property tax, these states may permit other government entities to enact personal property taxes. An example of this would be how Pennsylvania does not tax personal property on a state-wide level, but the state does allow its local governments to levy a personal property tax.
There are a wide variety of personal property that is subject to taxes based on the state in which you live. Additionally, personal property may be taxed if it helps you earn an income, such as your vehicle if you use it to perform a shuttle or taxi service.
To reiterate, personal property can be characterized as being either tangible or intangible. Tangible personal property is transportable and used for a specific purpose, such as furniture and occupational tools. Intangible personal property refers to the non-physical, such as stocks, trademarks, and deeds of trust. Restating this distinction is important because some states tax both tangible and intangible personal property.
Another legal application of real vs. personal property would be personal property contracts. Personal property contracts may be used in order to govern the sale of goods. Although some personal property sales involve items of relatively small value, some personal property sales can involve considerably valuable items. An example of this would be heirloom jewelry and keepsakes.
Regardless of the subject matter of the sale, forming a contract is generally advised so that the parties involved in the sale have a record for the transaction. Additionally, it is always best to put the contract in writing rather than relying on an oral agreement.
Personal property sales contracts generally require the satisfaction of some basic elements in order to be considered legally valid. These can include:
- Subject Matter Of The Sale: The item of personal property that is for sale must be identifiable in the contract;
- Price: This refers to the price that the parties agree upon. While the contract can also make mention of the item’s fair market value at the time of the sale, this is not always necessary; and
- Mutual Agreement: All parties involved in the sale must consent to the terms of the contract.
According to the Statute of Frauds, personal property contracts must be in writing if the item is worth over $500. This is intended to help provide both parties with legal protection for sales transactions which involve relatively valuable items.
Some other examples of common legal applications include:
- Divisions of property in a divorce or legal separation;
- Property distributions in a will or trust;
- Descriptions of property in a title deed; and
- Distributions of property when a business is sold.
This is why it is helpful to know whether property is classified as real or personal. Some “personal” property items may become real property; an example of this would be if an item is attached to a building, or if materials are made into a gate or fence that is attached to the land.
What Are Personal Property Sales?
Simply put, personal property sales involve the transfer of personal property from one party to another. This can be accomplished either through an informal oral agreement, such as at a garage sale, or through a written contract as previously mentioned.
Personal property sales involve the sale of moveable items, such as:
- Appliances and furniture;
- Clothing, drapes, and linen;
- Computers, phones, television sets, and other types of electronics;
- Mechanical and hand tools;
- Jewelry, watches, and other valuables; and
- Fine art and other collectibles.
A personal property sale can be conducted by any person or business entity. In a business setting, the term “personal property sale” refers to the sale of goods that are moveable, regardless of whether a “person” or a business owns the goods that are being sold.
Personal property sales are governed by the same principles found in contract law, as was previously discussed. Although specific requirements may vary, there are three general requirements for a valid personal property sale:
- Subject Matter of the Sale: The item or items of personal property should be clearly identifiable in the contract. Additionally, the property must be deliverable at the time that the sale is completed;
- Price: The price of the personal property must be a definite amount, or be capable of calculation; and
- Mutual Consent: To reiterate, all parties involved must agree upon the price and terms of the sale. Any sale that is achieved through force, coercion, or duress is legally prohibited.
If any of these elements are not satisfied, the sale may not be considered valid under property laws. A written contract can serve as evidence in case a dispute arises regarding the personal property sale.
Do I Need An Attorney For Issues Related To Personal Property?
If you are experiencing issues associated with various property matters, including personal property, you should consult with an area property attorney.
An experienced and local property lawyer can provide you with relevant information regarding your legal rights and options according to your state’s specific laws on the matter. An attorney will also be able to represent you in court, if any legal issues arise.