Many people don’t recognize the distinction between real estate and real property, which is normal as we can say that they are almost identical but not entirely. These terms don’t address a certain audience, especially for “real property” since it is widely used in the field of law. On the other hand, we always come across the term “real estate” pretty much everywhere.
In short, real estate refers to the physical land and any structures that are permanently attached to it. These assets can be land, a commercial building, a house, a villa, or a farmhouse; in a word, immovable assets. While real property term refers to these assets too, they also include the legal rights associated with owning them. These rights can be labeled as the right to own, sell, or use the property. There is another type of property called “personal property” which is used for movable properties. When compared to real estate, personal properties can be carried everywhere without changing the nature of the property. Movable items such as a phone, firearm, money, jewelry, or vehicle are classified as personal properties. Lastly, a person is not obliged to get a certificate of ownership for personal properties, whereas you need a title deed for real estate.
So that we roughly outlined the definitions of real property and real estate, let’s elaborate on and learn every single detail about them.
What is Real Estate?
The term real estate comes from a Latin word that refers to something that is inseparably linked to the earth, both physically and legally. In other words, a structure that cannot move without causing damage.
Real estate is the general term for all types of immovable property such as land, gardens, buildings, apartments, residences, commercial and land properties. Real estate is one of the most preferred investment types of investors as a safe instrument in the long term since it is not affected by economic instabilities and exchange rate fluctuations.
Real estate is often one of the most valuable assets a person can own. Also, the market of real estate has the power to change the economic destiny of a nation, see the real estate crisis of 2007.
Now that we have discussed the definition and importance of real estate, we can move on to the types of real estate. There are four different types of real estate and they all serve a different purpose. These are:
- Residential Real Estate: The most common type of residential real estate is single-family dwellings. Any building where people live alone, with roommates or with their families is included in the residential real estate type. This type of real estate also includes duplex houses, residences, four or five-floored buildings, cooperatives, summer houses, chalets, and municipal buildings. In the simplest terms, residential is a type of real estate that meets the housing needs of people in different ways.
- Commercial Real Estate: Commercial real estate, which is another type of real estate frequently encountered in daily life, is real estate that aims to generate income. These include shopping centers, various offices (law offices, dental clinics, therapy centers), classrooms, courses and educational buildings, pensions, boutique hotels, and hotels.
- Industrial Real Estate: Industrial real estate, which is our third title in real estate types, is called the area where the production of various products sold in commercial real estate is carried out. Structures, buildings, and lands where production, construction, repair, and research are carried out constitute the industrial real estate.
- Land: Plots where all kinds of agricultural products are produced (farms, fruit and vegetable gardens, greenhouses) constitute the agricultural real estate group within the real estate types. It is also possible to leave the plot vacant for future developments or sell it when the value has increased.
What is Real Property?
Real property is a bigger term that comprises the land, everything that is attached to it permanently (whether it is natural or artificial), and all the rights of ownership, such as the right to possess, sell, and lease. So we can say that real property is a broader term that encompasses both the physical asset and the legal rights associated with it.
What is Personal Property?
Personal property refers to items that belong to either a person or an organization, and that can be moved from one location to another. Personal property is different from real property, which includes land and all the structures permanently attached to it. Personal property includes tangible items such as furniture, jewelry, and cars, and intangible items such as stocks, bonds, and patents. As you can carry personal properties with you, they can be called movable properties as well.
Personal property is subject to different laws than real property. For instance, personal property can be sold or transferred more easily than real property. Personal property is also not subject to property taxes.
Ownership of personal property is established by possessing it. This implies that the individual who has physical control over the property is considered the owner. There are exceptions to this, like when stolen or held in trust for someone else.
Some examples of personal properties are;
- Furniture
- Jewelry
- Automobiles
- Clothes
- Electronics
- Stocks
- Patents
What are the Differences Between Personal Property and Real Property?
The primary contrast between personal property and real property is that real property is made up of land and anything permanently attached to it, while personal property encompasses anything else that can be owned. Real property usually incorporates land, houses, and unextracted natural resources. Personal property may contain furniture, jewelry, cars, and stocks.
Personal Property;
- Can be moved.
- Is not attached to land
- Is not subject to property taxes
- Is determined by the law of possession
- Can be used as collateral for a loan
- Can be inherited
Meanwhile Real Property;
- Cannot be moved
- Is permanently attached to the land
- Is subject to property taxes
- Is determined by deed
- Can be used as collateral for a loan
- Can be inherited