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Types of Tangible Personal Property
"Goods" are tangible personal property. This term includes machinery, equipment, furniture, fixtures, signs, window air conditioners, supplies, leased, loaned, borrowed or rented equipment used in a business, mobile home attachments on rented land (carport, screened porch, etc.) and furniture and appliances in rental properties. Many states have laws that permit tangible personal property to be taxed. Tax laws often define tangible personal property as "all goods, chattels and other articles of value."
SIDEBAR: "Chattel" is the legal term for an article of tangible personal property. The term is commonly used in the phrase "chattel mortgage" that refers to a loan secured by personal property. Your car loan is an example of chattel mortgage.
Harvested crops are personal property. However, crops still growing are considered to be part of the land until they are separated from it. Timber and hay become personal property when they are cut. Sometimes an owner may lease acreage to other individuals to farm (referred to in the past as sharecroppers). Until those crops are harvested, they belong to the landowner. The sharecropper has no right or title to the crops before they are harvested and he takes possession.
SIDEBAR: In trespass situations, the state laws differ as to whether the trespasser owns the crop he cultivated and harvested or if it belongs to the owner f the land. For example, Missouri law gives ownership to the trespasser, while in New York the trespasser has no rights in the crops against the legal owner of the land, harvested or not.
Fixtures are a special category of tangible personal property that have become attached to real estate. For example, a central air conditioning unit is a fixture and stays with the house if the home is sold. The unit is attached to the house by wiring, tubing and other permanent attachments and cannot be removed easily. However, a window air conditioning unit remains personal property because it can simply be unplugged and taken out of the window.
Fixtures typically become an issue between landlords and tenants. Tenants who have attached items, such as shelving and light fixtures to their rented space have created fixtures. What was previously the tenantís personal property is now part of the underlying real estate.
In general, the rule in a the majority of states is that if the attached property can be detached from the structure without damage to the land or building and keeps its original character as personal property, it is not a fixture. In the central air conditioning unit example, detaching it from the house renders the entire system inoperable. And because there is no air conditioning, the building is damaged.
TIP: When you sell your home, you want to exclude your personal property from the sale. Make sure to include a specific list of items of personal property that are not being sold if you believe there might be a dispute. For instance, curtains typically stay with the home. If you want to take them, include an exclusion for "window coverings" in your sales contract.
If you are the buyer, include the list in the contract so the seller understands exactly what you have purchased. Some items of personal property either the seller or buyer could list as included in the sales contract are:
- floor coverings
- wall hangings
- door mats
- light fittings
- kitchen stove
- dish washer
- washing machine
- clothes dryer
- swimming pool equipment
- movable partitions
- television antenna
- furniture (whether or not attached to walls or floors)
I have added large commercial-grade kitchen appliances to the condominium I am renting. Can I take them with me when I leave?
Yes. The appliances remain your personal property if they only need to be plugged in to operate. However, if you add an appliance such as a commercial oven that requires special venting and exhaust systems, a heat barrier and other safety modifications to the condominium, the oven has become permanently attached to the condominium and is a fixture you cannot remove.
My father-in-law is allowing my wife and I to build a home on his property. Will the home be our personal property or become a fixture?
It will remain your personal property. A structure built by one person on anotherís property, with the property ownerís permission, does not become a part of the real estate. Although typically the home would be considered a permanent part of the property, in this case the house you build falls within the exception and remains the personal property of you and your wife.
I built a boat dock and boathouse at the summer cabin my family rents at the lake. If we decide to rent elsewhere, can I disassemble the dock and boat house and move it off the property?
No. In this case the dock and house are so attached to the property they have become part of it. The structures serve the needs of the lake property rather than your personal purpose. Additionally, assuming the dock and boathouse are constructed on pilings sunk into the lakebed, disassembling the structures will be extremely difficult. The dock and boathouse are fixtures.
TIP: If you intend to make improvements to property you do not own, obtain an agreement in writing from the owner stating that neither party intends the improvements to be permanent. Add a statement that the improvements are the renterís personal property and can be removed and disassembled at her discretion.
Can my mobile home become a fixture on the property I am renting?
Yes, if the mobile home was intended to become part of the property. The following factors tend to show that you intended to make your mobile home a permanent improvement:
- removal of wheels and axles
- connection to electrical, water and septic services
- addition of other structures to the mobile home and land, such as decks, skirting, stairs and porches
- placement on permanent concrete footings or piers
- using the mobile home as your primary residence
Note that there are laws in many states that prohibit mobile or manufactured homes from ever becoming fixtures.
Is the prefabricated metal building I bought and use to store my RV at the home I am leasing a fixture?
No. You can argue that there was never any intention between you and the owner that the building would become a permanent part of the property. Since it was built for the unique purpose of housing your personal vehicle, the building is your personal property. Additionally, prefabricated structures are typically movable, making them less likely to fall within the definition of a fixture.
Is the fence I built around the backyard of my rental house a fixture?
Yes. You have improved the property in a permanent way, absent an agreement with your landlord that allows you to disassemble the fence and take it with you when you move.
I have done a lot of expensive landscaping around my rental home. Can I dig up the plants and trees when I move?
No. Because you planted them in the property, they have become part of it. Unless you had an agreement with the owner that you could dig up the plants and take them with you, you must leave them when you move.
SIDEBAR: The rule of law is that a thing attached to the land by roots, as in the case of trees, vines or shrubs, becomes a fixture.
With my landlordís permission, I installed an underground sprinkler system at my rental house. Do I have to leave it there when I move?
Yes, unless your landlord agreed you could take it with you. The owner gave you permission to install a sprinkler system, which enhanced her property. The sprinkler system is not for your personal use (as opposed to a structure with a special purpose), and it is not your personal property. Additionally, removing the sprinkler system would greatly injure the lawn, landscaping, flowerbeds, etc. The sprinkler system is a fixture.
I had a hole dug and put a modular storm cellar on my rental property. Can I take it with me when I leave?
No. Like the sprinkler system example, it has become a permanent part of the property. Additionally, if you installed the storm cellar without your landlordís permission, it appears you intended to make a permanent improvement on another personís property.
With my landlordís permission I run a computer repair business out of my garage, and I have installed some security doors, special lighting and other computer equipment in the garage. Can I take the equipment with me when I move?
Yes. The equipment you installed is a "trade fixture." The items were installed for the sole purpose of carrying on your business or trade rather than as an overall improvement to the garage.
Courts distinguish between trade fixtures and building fixtures. The tenant can remove trade fixtures, even if they were attached to the property since they were installed to aid in running a business. In other words, the tenant intended to use the items in his business only. On the other hand, a building fixture is an item installed or a modification to a property that is not unique to the tenantís trade.
Courts decide whether an item is a building or trade fixture based on the partiesí intent. In the computer business example, the equipment was installed as part of a separate agreement between the parties concerning the tenant opening a business rather than improvements to the garage in general.