It is important to remember that certain words and
phrases used in concert with real estate transactions have a technical meaning
and a different interpretation than is generally attributed to them by the
layman. The all-inclusive term “property” may be said to be the rights or
interest which a person has in lands (realty) and chattels (personalty) to the
exclusion of all others. However, the term, “real estate”, by definition,
is a comprehensive term which does not distinguish between real and personal
property under common circumstances. In
a literal sense, real estate may be defined as a parcel of unimproved land, but
never as an article of personal property.
The distinction between realty, personalty and real
estate is an important matter under the law that applies to the classes of
property that are for all intents and purposes, radically different. Such
distinction often times rises to the height of exclusion, especially when
controversies arise between parties endeavoring to determine whether certain
articles pass with the sale of real estate.
By example, a tree growing on land is considered realty. When a tree is severed from the soil and milled into so many feet of lumber, the tree has effectively been transformed into personalty. When the lumber is fashioned and into a structure, the tree becomes realty again. The best rule to determine whether an article is realty or personalty is the intention with which the article is affixed to the property. Is it realty or personalty?