Personal Property
Personal property is typically referred to as movable property, unlike with real estate or real property. In addition, when used within a common law system, personal property may be referred to as personality or chattels. Whereas, when being used within a civil law system, personal property is commonly referred to as movables or movable property, which covers any property which is able to be moved between locations.
Therefore, personal property is used to refer to any type of property owned that can be moved, and understood when compared to real property or immovable property, such as building structures and/or land. Whereas property located on land can include moveable possessions that reside on land property, but the possession is not sold along with the land.
For example, if a person sells a part of land used for cattle to another party, but did not sell the cattle, the livestock is considered a ‘personal’ possession belonging to the owner and moves with the owner. Furthermore, ‘cattle’ is derived from Old Norman version of Old French ‘chatel’ or ‘chattel’, which historically was used synonymously with generally moveable personal type property. Therefore, when used in common law systems, the originating wording is often used.
Classifications
When referring to personal property, there are many different classifications that moveable objects and possessions can fall under, below are the classifications and a brief description of each:
Tangible Property
Generally, if property is able to be moved it falls under tangible personal property, which means the property is not attached to land or real property. In addition, if property can be felt or touched it usually falls under this classification. For instance, household goods, jewelry, clothing, art, furniture, etc.
There are situations where personal property may have formal title documents written up, indicating the ownership and/or transfer rights of the personal property upon the owner’s death. These types of personal property can include boats, motor vehicles, etc. However, in the majority of situations where personal property falls under tangible will not have ‘titled’ documentation referring an owner and is presumed to be property which the individual has possession of at the time of his/her death.
An example of formal title documentation includes persons living will, where a legal representative (often a lawyer) reads a person’s desire for transfer rights and ownership of their possessions after death.
Intangible Property
This type of personal property is often referred to simply as ‘intangibles’ and covers personal property which cannot be felt, touched or otherwise moved. However, possession of intangible personal property is a representation of something with value, including securities, negotiable instruments, or economics and intangible assets.
For example, if an author has copyrights to his books, this would be considered intangible property. In addition, the founder of a company who owns a trademark also has intangible property (the trademark).
Distinctions
Personal property is distinguished by accountants from real property due to the faster rate of depreciation of personal property compared to that of real property improvements. Additionally, land does not have a depreciable factor. It is the right of the owner to obtain tax benefits associated to chattel. Meanwhile, there are specialized businesses that focus on appraising chattel or personal property.
There are many reasons why the distinction between personal property and real property are important. Generally, an individual’s rights towards movable property will be more attenuated compared to that of real property (immovables). Additionally, the prescriptive periods or statue of limitations associated with movable or personal property is often shorter compared to that of real property.
Rights for real property are often enforceable for longer periods of time in many jurisdictions, whereas immovables and real estate property have been registered within government-sanctioned land registers. Furthermore, there are certain jurisdictions where a lien, or other type of security interests or rights may be registered against moveable or personal property.
It’s possible for real property to have a mortgage placed upon it within a common law system. Mortgages require the owner to make payments or they will be faced with foreclosure. Meanwhile, moveable or personal property can commonly be secured using a similar approach, with a method variously referred to as chattel mortgage, security interests, or trust receipt. Furthermore, in the United States, under the Uniform Commercial Code Article 9, it is required that security interest creation and enforcement within most personal property types are governed, but not all types.
Although, civil law systems do not have a similar approach to a mortgage, but real rights can be secured against property using hypothec. When obtaining real rights, they attached to the property, and follow with the ownership of the property. For example, in a common law system, liens will remain with property, even upon transferring the property rights to another individual. Liens can be equitable or real and cannot be eliminated with alienating the property.
There are various jurisdictions which levy personal property taxes. This is typically an annual tax associated with the privilege of possessing or owning personal property within the jurisdiction’s boundaries. For instance, personal property tax includes registration fees for boat and automotive, a common subset of the personal property tax laws. However, the majority of household goods are not included in the personal property taxes, long as they are maintained and used within the individual household. However, if expensive or valuable personal property is found to be stored outside of the household by the taxing authority, this can result in tax issues.
Finally, distinction between intangible and tangible personal property becomes important within jurisdictions which have imposed laws regarding sales tax. For instance, in Canada federal and provincial sales taxes have been imposed mainly on the sale of tangible personal property, while intangible personal property is typically exempt.
Personal property”. Sir Robert Harry Inglis Palgrave. Dictionary of political economy, Volume 3. 1908. p. 96