Property falls into two broad categories: real property and personal property. (Intellectual property has some aspects of both.) Real property, real estate, or realty refers to land and the improvements attached to the land. Buildings, fences, and dams, for example, are included with land as real property. Personal property or personalty is all property other than real property. Automobiles, books, tables, clothes, computers, and corporate stock are examples of personal property.
A fixture is personal property that has been permanently attached to real property, but that could be removed. A dishwasher installed into a kitchen cabinet is a fixture, for example. Fixtures’ hybrid nature subjects them to rules applicable to personal property and sometimes to rules applicable to real property.
Property may change character. For example, trees and crops in the field are real property. When cut or harvested, the cut trees become personal property. Cut trees turned into lumber are personal property but once incorporated into a building, become real property.
Personal property may be tangible personal property or intangible personal property. Tangible personal property includes property of a physical nature. You can see it and touch it. Examples include automobiles, books, clothing, lumber, jewelry, paintings, furniture, and coins. Intangible personal property includes assets that cannot be touched or seen but that have value nonetheless. Examples include stock in corporations, bonds, patents, copyrights, notes or accounts receivable, goodwill, and contract rights. Intangible personal property often is represented by a writing (tangible property) but the asset itself (e.g., a patent, corporate stock, or a note receivable) is an intangible asset. Recently recognized intangible assets are the rights of publicity and privacy that prohibit others from using a person’s name, face, or other attribute of that person for commercial purposes without permission.
As discussed in Chapter 1, the word “property” has multiple connotations. It may be the thing itself; or it may define relationships and priorities, rights, and obligations among persons with respect to a thing. The study of the relationships among persons with respect to personal property is helpful in understanding three basic concepts: possession, relativity of title, and first-in-time.
Possession is the controlling or holding of personal property, with or without a claim of ownership. It has two elements: (1) an intent to possess on the part of the possessor, and (2) his or her actual controlling or holding the property. As to the second element, control is the key. Both the intent and the control elements must be present to acquire the rights of a possessor. A court will manipulate the two elements of possession according to the needs of the case. Possession need not be actual possession. More on this topic will follow.