Personal Property - Chapter 2
Landmen
Are constantly searching for owners of mineral rights in an attempt to obtain a lease on those rights that can be passed on to oil or gas companies. So, one way to find out who currently owns the mineral rights would be for the seller or the buyer to hire a landman to help with the searching of records. Remember, there are some sellers out there who do not even know what they own when it comes to minerals. They could have a real "Beverly Hillbillies" situation on their hands.
Fructus Naturales vs. Fructus Industriales
To decide whether plants are personal property or real property, one must generally consider their use and the duration of their existence. Trees, persistent decorative plantings, (such as perennial landscape plants) and uncultivated plants are referred to as fructus naturales and are usually considered to be real property because of their permanence. Annually cultivated crops are called fructus industriales, or emblements. They are generally considered to be personal property, even prior to harvesting.
Severance
is the act of separating some element of the real estate from the land. For example, a tree is real estate, but if the owner cuts down the tree, (literally severing it from the earth) the tree is now personal property, which can be carried off. And there it is, your very own personal tree branch! Whatcha gonna do with it?
Improvements
An improvement is any permanent human-made addition that is attached to the land. Buildings, fences, decks, and roads are all examples of improvements. Improvements are considered to be permanently attached to land and therefore are considered real estate. Without improvements, land would just be land. For example, an empty field with no buildings on it is merely considered "land." How boring. So, to describe the land and the improvements as one package, we use the term real estate.
A fixture
is a chattel bound to real estate and refers to an object that was once personal property, but which has now been firmly attached to the land in such a way that it becomes part of the real estate.
Fixtures of a Property
In regards to leasing property: when a tenant makes a physical alteration or permanent addition to the property they are renting, the altered or added object usually belongs to the landlord upon expiration of the lease agreement. In short, if a tenant makes an improvement to a residence, that upgrade stays with the property when the tenant's lease is over.
Oil & Gas Attorneys
Another way to learn who has the mineral rights is to hire an oil and gas attorney who can research the issue and figure out the ownership situation. It's common for owners to have sold their land generations ago but wisely retained their rights to the minerals. But because of situations like that, it is not always easy to find out who owns what. And this can be even more complicated by a family dividing the rights through an inheritance.
Intentions example
Consider the grill mounted in cement in the back yard one more time. The idea of whether that grill is a fixture could possibly be contested if the owner had installed the grill in a different manner. Suppose a larger pipe had been mounted into the cement in the ground and the pipe to which the grill was attached slid into the larger pipe. It could be argued then that the intent was to remove the grill. Therefore, the grill and the smaller pipe would be considered to be personal property and not a fixture. The only part that would be a fixture would be the larger pipe that is mounted into the cement.
a bill of sale.
Ownership to personal property (chattel) transfers by
"personalty"
This distinction corresponds to the way that the terms real estate and realty identify the tangible buildings and trees associated with a parcel of land, in addition to the land itself. You likely won't need to know this distinction in real life, but if you ever find the term on, let's say, an exam, then you'll know it refers to personal property. 👍
Fructus Naturales vs. Fructus Industriales
To decide whether plants are personal property or real property, one must generally consider their use and the duration of their existence. Trees, persistent decorative plantings (such as perennial landscape plants), and uncultivated plants are referred to as fructus naturales and are usually considered to be real property because of their permanence. Fructus industriales are annually cultivated crops. Also known as emblements, they are generally considered to be personal property, even prior to harvesting.
Trade Fixtures: The Exception to the Rule
Trade fixtures are different from other fixtures in that the tenant can usually take trade fixtures with them when they leave. A trade fixture is personal property that is owned by and needed for a tenant's business. (For example, shelves that a store owner attaches to the wall when leasing a storefront in a strip mall.) It is not subject to the same rules of transfer as fixtures in general. The shelves belong to the tenant. They are fixtures, but the shelves are for the business of the tenant or the tenant's trade. The tenant is allowed to take the trade fixtures with them when their lease is over. Unlike a tenant in a residence who improves the property, trade fixtures are property of the tenant.
Accession.
Trade fixtures must be removed before the last day of the lease in order to remain the tenant's personal property. Any trade fixtures left behind after the lease ends becomes the property of the landlord through a process known
Paragraph 2B and 2C of the TREC residential sales contract, the One to Four Family Residential Contract (Resale).
Understanding this section could keep your future self from getting into trouble.
Chattel
is new to most, here's a popular memory tool. Since personal property is moveable, cattle can be considered chattel. Just a little rhyme for ya. Remembering this for a test in the future might be helpful. 😉
The Non-Realty Items Addendum,
A special addendum that must be attached to the sale contracts when this occurs. which you'll learn about in the Promulgated Contracts course) can be used as the bill of sale, and will help to avoid any confusion on what the buyers will receive when they move into the home.
Adaptation
Adaptation refers to the use and modification of a particular item for a specific use in a property. If one can show that an item was custom-designed for a specific use on the property, then it is likely that the item would be considered a fixture rather than a chattel.
Adaptation example
But there are some homes with custom fireplaces and custom screens made only for that fireplace. The screen wouldn't work on any other fireplace. That unique modification would create the expectation that the screen is a fixture and would stay through the sale of the property.
Examples of trade fixtures include:
Check-out stands Coolers Display shelves Display racks Desks
Removing the Fixture
Courts usually conclude that all trade fixtures are the tenant's property, regardless of the method of installation. Nevertheless, it's important to remember that for a tenant to retain ownership of a trade fixture, the tenant must remove the fixture by the last day of the lease. That is to say, a tenant may not leave a trade fixture on a property after the lease has expired and then later request that the landlord relinquish the item.
Fructus industriales or emblements
Cultivated annual crops are personal property; they do NOT convey with the sale of the property.
Some examples of fixtures include:
Elevators Central air conditioning units Garage door openers Chandeliers Ceiling fans Light fixtures
Affixing the object(s) to the real estate examples...
Examples of fixtures are: Elevators Central air conditioning units Garage door openers Ceiling fans
Damage
For fixtures in a home, as well as for trade fixtures, a secondary consideration is how much damage would be cause by moving the item. For example, a large oven may have been installed in a restaurant. If it was built into a wall such that removing it would cause damage to the wall, it could be considered a fixture, even if used for business.
AAI.
How to Spot a Fixture When trying to determine whether or not something is a fixture, we can consider the following issues: annexation, adaptation, and intention. Abbreviated as As in, "AAI yai yai, is this a fixture or what?"
Immobilizing the Mobile Home
If a mobile home is staying on a property being sold, then it is not necessary for an agent to obtain a license from the state to sell mobile homes. Selling an older mobile home that has not been attached to the land properly can be a real learning experience for the license holder. The home's tongue and the axles may have to be cut off and the title to the home sent to the state agency in Austin to consummate the sale.
A deed
Is a written instrument used specifically to transfer real estate, which the owner (sometimes called the grantor) uses to convey ownership in real property to the buyer (or grantee).
Land vs. Real Estate
Land refers to more than a tract of earth. Land includes not only the natural resources seen on the surface of the land, but the minerals below the surface and the air above the surface. So, ownership of land includes the surface, subsurface, and air rights. Real estate includes the land AND and human-made improvements attached to it. Examples of improvements include buildings, sheds, sewers, and fences.
Mobile/Manufactured Homes
Mobile homes are, for the most part, movable. Therefore, mobile homes fall into the personal property category. However, if a mobile home is sold in conjunction with a parcel of land or is permanently attached, then it may be considered real estate. In some states, such as Texas, in order to be considered real property, the home must be connected to utilities and permanently attached to land the owner of the home also owns. Texas requires mobile and manufactured homes to be classified as real property if they are affixed to a permanent foundation. Another thing to note is that mortgage lenders and insurance companies may have special requirements or may not offer services on mobile or manufactured houses.
Annexation
One trait that separates fixtures from non-fixtures is the way the item is annexed, or attached, to the land. Usually, personal property can be removed without the aid of tools or heavy machinery. We can see this in the case of furniture, decorative items, utensils, wall hangings, and the like. With a comparatively minimal amount of effort, one can easily remove, shift, and replace chattel. This is not the case with a fixture, the removal of which generally involves a great deal of effort and can require professional assistance because of its permanent nature.
deed.
Ownership to a parcel of real estate is transferred by a recordable document such as a
Fixtures
Personal property can be turned into real estate. This is accomplished by making that piece of personal property a fixture. A fixture is chattel attached to real estate. It refers to an object that was once personal property, but which has now been firmly attached to the land in such a way that it becomes part of the real estate. If a tenant makes an improvement to a residence they are renting by adding a fixture, that fixture has become part of the real estate and it stays with the property when the tenant's lease is over.
Personal Property
Property can be thought of in two different terms: real or personal. Recall that real estate is the land (including everything on, under, and above the land) + man-made improvements. So, simply put, personal property is all property that is not covered by real estate's definition.
Real Property and 4 legal Rights
Real property is the real estate PLUS the bundle of legal rights associated with real estate ownership. These rights include: The Right of Exclusion The Right of Possession The Right of Disposition The Right of Quiet Enjoyment
Personal Property
Simply put, personal property is all property that is not covered by real estate's definition. Personal property is sometimes also called personalty or chattel. Personal property is transferred through a bill of sale.
Annexation example
Some homes have gas grills in the back yard. Some are on carts with wheels. It is easy to see that a grill on a cart is personal property that is not required to stay with the home upon a sale. However, if that grill is mounted on a post that is set in cement in the ground, then the process used to annex it to the property would make that grill real estate and would normally sell as a part of the property.
Subsurface Rights/Mineral Rights
Subsurface rights relate to everything beneath the surface of a tract of land. The importance of this right lies largely in the fact that it may secure ownership of mineral deposits located under the surface of a property. For this reason, subsurface rights are also commonly referred to as mineral rights.
Personalty is effectively a synonym for personal property,
The actual, tangible object itself, such as a chair. It's also another word for chattel — hey, you know that word now!
Intention
The most important characteristic to consider when deciding whether something is a fixture or not is the owner's intent for that item. Intention is inferred from the nature of the item and blends annexation and adaptation. That might sound a little confusing, but the idea is that we can look at how the item is attached and the way in which it has been modified to suit its purpose or role for that specific property. After looking at these things, we can often infer whether the item was intended to be a fixture or personal property.
Ownership Rights- 4 types
There are four ownership rights associated with real property: Surface rights🌲 Subsurface rights ⛏ Air rights 🌬 Water rights 🌊 It's important to understand that these four different rights may be sold separately, sometimes to different persons, thus creating situations in which multiple people can have an ownership interest in the same piece of property.
Paragraph 2C — Accessories
This section describes the various accessories that are considered part of the real property.
Paragraph 2B — Improvements
This section describes what is considered an improvement, and therefore part of the real property.
Trade Fixtures
Trade Fixtures A trade fixture is personal property that is owned by and needed for a tenant's business. For example, shelves that a store owner attaches to the wall when leasing a storefront in a strip mall. It is not subject to the same rules of transfer as fixtures in general. Unlike a tenant in a residence who improves the property, trade fixtures are property of the tenant.
Nructus naturales
Trees, bushes, and grasses that do NOT require annual cultivation are real estate; they convey with the sale of the property.
Alfalfail.
When selling a farm, part of the negotiations must be about any crops that have not been harvested and whether or not they are part of the sale. Imagine the buyer having expectations of harvesting a beautiful field of alfalfa for extra income after the closing, only to find that the seller removed the crop for their own benefit before the sale. That would be an
Minerals
When substances are still underground, they are considered real estate. But when an owner extracts things from underground and stores them topside, the item is converted from real estate into personal property. Mineral rights were mentioned earlier in this course. And whoever has the ownership of the minerals converts the real estate to personal property when the oil, gas, gold, or other minerals are removed from the property.
A bill of sale is
a written agreement used to sell, reassign, or transfer one's right to or interest in personal property, like furniture or appliances.
Nope. Why? Trade fixtures.
what if a tenant is leasing a commercial retail property in a shopping mall? Are all the shelving, racks, and cash registers that the tenant installs automatically the landlord's property?