Concepts Definitions

• Real Property (Realty):

    ◦ Definition: Land and anything permanently attached to it, including natural resources (like mineral rights, water rights, and airspace) and man-made improvements (such as buildings, fences, and sidewalks). It also includes the “bundle of rights” associated with ownership, which grants the owner rights to possess, control, enjoy, exclude, and dispose of the property.

    ◦ Easements are specific rights to use another’s real property and are considered an interest in real property.

    ◦ A fixture is personal property that has become permanently attached to land or improvements, thereby becoming part of the real property.

• Personal Property (Personalty or Chattel):

    ◦ Definition: Anything that is not real property; it is generally movable.

    ◦ Examples include household furnishings, jewelry, artwork, and corporate stock.

    ◦ Trade fixtures are a specific type of personal property installed by a tenant for business purposes, generally removable by the tenant.

    ◦ Financial instruments, such as promissory notes (which are secured by mortgages and trust deeds), are also considered personal property because they represent monetary obligations or assets rather than physical land.

    ◦ A lease is also classified as personal property, sometimes referred to as “chattel real,” even though it grants an interest in real property for a period of time.

• Fixture (MARIA Test):

    ◦ To determine whether an item is a temporary personal property or a permanent real property (fixture), five tests, summarized by the acronym “MARIA,” are used:

        ▪ Method of Attachment: How the item is attached. Permanently attached items are generally real property.

        ▪ Adaptability: Whether the item was specifically created or adapted for the property.

        ▪ Relationship of the Parties: In disputes, courts often side with tenants over landlords, buyers over sellers, and lenders over borrowers.

        ▪ Intention: The original intent of the party who attached the item (e.g., whether it was meant to remain permanently).

        ▪ Agreement of the Parties: A written agreement between parties is the most straightforward way to determine the classification.

• Promissory Note:

    ◦ Definition: A written, unconditional promise to pay a certain sum of money either on demand or by a certain date. It is considered a negotiable instrument, meaning it is freely transferable.

    ◦ It serves as evidence of a debt and is fundamentally a financial asset, thus classified as personal property.

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