Real Property and Personal Property: Definition and Differences

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  • 0:07 Property
  • 1:51 Personal Property
  • 3:09 Real Property
  • 5:38 Summary
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Lesson Transcript
Instructor: Ashley Dugger

Ashley is an attorney. She has taught and written various introductory law courses.

Much of business law deals with property. There are actually two different types of property: personal property and real property. This lesson explains the differences between these two types of property.


There are two types of property. In legal terms, all property will be classified as either personal property or real property. This distinction between types of property comes from English common law, but our modern laws continue to distinguish between the two.

Each type of property is treated differently under the law. There are many different types of laws that specifically pertain to personal property, and many other types of laws that pertain specifically to real property.

Personal property is movable property. It's anything that can be subject to ownership, except land. Real property is immovable property - it's land and anything attached to the land.

Normally, a piece of property can be easily classified as either personal property or real property. The difference between the two is usually fairly straightforward. However, sometimes it's a little harder to categorize property. Let's look at one example.

Let's say that I buy lumber and other building supplies, such as a saw, a hammer, and some nails. These supplies are personal property. They're moveable and they belong to me.

Next, I use these items to build a shed on my land. Is this shed personal property? No. The shed is real property because it's attached to, and now part of, my land. Any leftover building supplies are still personal property, like my saw and hammer. But anything that's actually part of the shed is now real property.

Personal Property

Let's take a closer look at why this is. Let's look at the types of items that are classified as personal property.

Personal property includes possessions, of really any kind, as long as those possessions are movable and owned by someone. Personal property isn't affixed to or associated with land. These moveable items are sometimes known as chattels. The law regarding chattels includes those laws covering possession, gifts, lost property, abandoned property, and stolen property.

It's helpful to note that personal property includes both tangible and intangible items. A tangible item is an item that can be felt or touched. For a business, tangible personal property includes items the business owns such as:

  • Office furniture
  • Business equipment
  • Business vehicles
  • Business goods

An intangible item is simply an item that can't be felt or touched. For a business, intangible personal property includes items the business owns such as:

  • Stocks
  • Bonds
  • Intellectual property
  • Money

Real Property

The key difference between personal property and real property is that real property is fixed permanently to one location. This includes land and anything that is built on the land. It also includes anything that's growing on the land or that exists under the face of the land. For a business, real property includes immovable property that the business owns, such as:

  • Land
  • Buildings
  • Crops
  • Mineral rights

For example, let's say that I'm in the farming business; I own a large piece of land. On the land, I have a house, a barn, a grain silo, and a stable. Each of these items is a piece of real property, because these items are attached to the land.

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