Real Estate Vs. Real Estate: What’s the Difference?
You may be more familiar with the concept of real estate than the concept of real estate and for good reason. Real estate describes the parcel of land and the man-made and natural resources attached to it while real estate describes the legal limits and freedoms of an individual on how to use said real estate.
Think of it this way: real estate is tangible land, buildings and garden beds. But real estate ownership is a legal concept that attaches a “set of rights” to property. The bundle of rights is almost universally recognized as:
- The right of possession: The title holder has dominion over the property.
- The right of control: The title holder can make legal changes to the property, as long as they don’t violate any rules of engagement with an association of owners.
- The right to exclude: The title holder has sole authority to enter the property, excluding search warrants.
- The right of use: The holder is entitled to enjoy his property in any (legal) way he wishes.
- The right of disposal: Once the title holder retains all of the equity in the property (which is no longer mortgaged), they can transfer ownership in any way they legally choose.
Its true property rights are critical for owners. After all, what’s the point of investing in real estate without the above legal rights?
Real Estate Vs. Personal Property
If you’re unsure whether something is real or personal property, ask yourself: Is it mobile? If not, it’s probably real estate.
Let’s say you bought a lakeside property and decided to build a wharf. You bought power tools, nails, lumber to build the dock, and anything else you might need. As individual parts, these supplies are your personal property. Once you have built the dock and secured it to the land, it is no longer movable and has become real property. Although the dock is real property, any power tools or items not attached to the land will remain your personal property.
Here is another example. Suppose you build a shed on the property. In the shed you store tools and other personal items. In this case, the shed would be considered real estate. However, items inside the shed that can be easily moved, such as power tools or decoration boxes, are considered personal property.