This article has been written by Sheetal Rangwar pursuing a Diploma in International Contract Negotiation, Drafting and Enforcement from LawSikho.

This article has been edited and published by Shashwat Kaushik.

Introduction

The term “property” has a broader meaning in the real sense. It includes money, gold, and other things equivalent to value. Also, it includes intangible rights like stocks, land, and other sources of income. An individual has a right to enjoy his interest in the possession/ ownership of certain things. Moreover, the individual can enjoy his rights and interests and be used in an absolute manner, provided that the things do not contradict what is prohibited by law. 

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A property can be anything an individual or a business entity carries as possession/ownership of certain things and enjoys certain rights over them. Examples of properties that are either tangible or intangible include industrial, machinery, automobiles, electric vehicles, furniture, clothes, and real estate.

Some of the property has potential monetary value that can form assets. Similarly, there can be liabilities, such as if a customer receives any injury on the company’s property, the owner is liable to pay for the medical bills for the injured person.

The two most common types of property are real property and personal property. For instance- The real property cannot be moved from its places like land, house, or building, whereas personal property can be movable like a four-wheeler vehicle, furniture, or jewellery. Furthermore, personal property falls into sub-segments of intangible assets like stock, goodwill, songs, music, etc.

Understanding the tangible personal property and intangible personal property

Tangible personal property

This kind of property operates in everybody’s daily lifestyle through different types of business operations or by an individual. Generally, the property is often concluded to have a depreciating value based on an accelerating period or 3-5 years of duration. For example – cars, mobile phones, laptops, jewellery, art, electronics, and furniture. However, it can also be taxed on the actual price ( the difference between the sale and purchase price ) and the depreciating value.

Intangible personal property

This kind of property is related to things that cannot be touched physically. It has no physical size, but it constitutes something of value. Intellectual property is a famous form of intellectual personal property. Some examples are images, social media, reputational capital, and other personal digital assets. Individuals and companies have patents, copyrights, life insurance contracts, securities, investments, and partnership interests. 

The common forms of intangible personal property are goodwill, research and development, capital assets, patents, and trademarks. It is associated with the benefits and value recognition of the business entity or by an individual shown in the financial assessment of a company’s balance sheet. For example- a trademark or patent can be mounted as an asset on the balance sheet.

Primarily, intangible personal property determines the actual price of objects; one must follow up on independent research. Once the value evaluation assists the product, the company waives some incurred costs for making an intangible intellectual product.

Real property meaning in the real estate sense

Real property refers to land and things attached permanently to it, such as buildings, structures, minerals, water, natural resources, plots of land, public squares, farms, factories, commercial industries, and trees. According to real estate law, it provides the right to use, manage, and dispose and things attached to land.

Real property, known as real estate or immovable property, encompasses the portion of land or things attached to it. Real property is subject to property taxes that the local government puts a levy on. In many jurisdictions, taxation is incurred differently on real property and personal property. Real property taxes are inclined towards physical land. At the same time, personal property taxes are closely inclined towards movable or intangible assets with respective rates and parameters.

The assets are duly registered according to law and only hold validation status because they act as proof to the corresponding authority. In personal property registration, movable items like a car are an essential obligation for a person. But a penny thing like furniture is less required. 

Types of real estate property

  • Residential real estate- It comprises houses and undeveloped land 
  • Commercial real estate- It comprises constructions, commercial buildings, and the tertiary sector of the service industry.
  • Industrial real estate- It includes buildings, extensive lands, and plots for agriculture or the manufacturing sector.

Difference between real property and personal property

Difference Real property Personal Property
i) Meaning In real property, tangible or immovable things are permanently attached to the land. Example – buildingIn personal property, movable things are not attached to the land. Example- furniture, car 
ii) Registration and transfer In real property, it is transferred through a deed. Registration is mandatory In personal property, sale,  contracts, bills, agreements, and other methods are transferred. Registering of items is less necessary depending upon the nature of the commodity 
iii) Fixture and fittings These items are initially personal property but when attached to the land or building, they become real property. In personal property, no fixtures and fittings are required as they are not part of real estate or real property.
iv) Possession It involves the possession of land itself, its minerals, natural resources, etc.It includes the possession of goods, which are movable things e
v) ExamplesLand, houses, trees, minerals, etc. Furniture, electric vehicles, jewellery, etc
vi) Rights The person has the right to sell, use, mortgage, and lease the land.  The rights are limited here as compared to real property. Although they have the right to possess, use, and transfer personal property. 
vii) RegulationsThe concerned authorities regulate real estate property laws, exclusive size, tax, and land usage regulations. In personal property, less regulation and no complex legal procedure are there. 
viii) inheritance In real property, the inheritance is operated through probate This type of inheritance is functional either orally or in the form of a written  agreement because the movable items inheritance process runs with ease.
ix) Main focusIn real property, it focuses on the land and their related rightsThe personal property, emphasis is more on possession held by individuals and entities 
x) Importance in law It is highly significant in real estate laws It is highly essential in tort and sales contracts.
xi) Investment and value The investment in real estate increased over time. It has more significant value than personal property.It also has some value in things, but in personal property, depreciation of things occurs quickly.

Features of personal property

  1. Movability: Personal property is movable and can be easily transported from one place to another. For example, you can move your furniture, clothes, and electronics from one apartment to another.
  2. Transferability: Personal property is easily transferable from one owner to another. You can sell, gift, or bequeath personal property without having to go through a lengthy legal process.
  3. Ownership: Personal property can be owned by individuals, businesses, or other legal entities. Ownership of personal property is generally evidenced by a bill of sale or other written document.
  4. Taxes: Personal property is subject to taxation, such as property taxes and sales taxes. The tax rates for personal property vary from jurisdiction to jurisdiction.
  5. Estate planning: Personal property is subject to estate planning laws. You can use a will or trust to distribute your personal property to your heirs after your death.

Features of real estate

  1. Immovability: Real estate is not movable and cannot be easily transported from one place to another. For example, you cannot move a house or a commercial building from one lot to another.
  2. Transferability: Real estate is less transferable than personal property. To transfer real estate, you must go through a legal process known as a real estate transaction. This process involves obtaining a title search, signing a purchase agreement, and recording the deed with the local government.
  3. Ownership: Real estate can be owned by individuals, businesses, or other legal entities. Ownership of real estate is generally evidenced by a deed or other legal document.
  4. Taxes: Real estate is subject to taxation, such as property taxes and transfer taxes. The tax rates for real estate vary from jurisdiction to jurisdiction.
  5. Estate Planning: Real estate is subject to estate planning laws. You can use a will or trust to distribute your real estate to your heirs after your death.

Personal property and real estate are two distinct categories of property with different legal characteristics. Understanding the distinction between personal property and real estate is important for many legal purposes.

Modes of acquisition of property

According to Salmond, there are five types of property that can be obtained. The following are:

Possession

Generally, it means taking custody of physical property. It is prima facie evidence pertaining to the ownership of property. There is little difference between ownership and possession. The person who is said to have possession of an asset is considered the owner of goods or assets on such property unless there is a contract involved. Both de jure and de facto rights occur in property. For example, A landlord gives his house to tenants. The tenant is said to have held possession of the house, but ownership is left with the landlord only. The possession of property or ownership of property in the same house can lie with different persons or individuals.

Prescription

According to Salmond, the prescription shows the effect of time constraints on creating new rights and destroying some old rights. Therefore, it needs to prove that a person is using his rights over real estate for a very prolonged period without any hindrance, interruptions, or continuous exercise of his rights. It is known as a doctrine of prescription. For example- Right to way, sunlight, sewage, etc.

Agreement

The agreement is the most preferred method for acquiring property. It is a process of formal agreement between two persons, that is, the buyer and seller, for an exchange of property concerning the consideration of something of value.

Inheritance

Inheritance is the legal process by which property and assets are passed down from a deceased person (the “decedent”) to their legal heirs or beneficiaries. It involves the identification, valuation, and distribution of the decedent’s estate, including real property, personal property, financial accounts, and other assets.

The rules and procedures governing inheritance vary across jurisdictions, but there are some common principles. In many countries, inheritance is primarily governed by the laws of “intestacy,” which outline how an estate is distributed in the absence of a valid will. These intestacy laws typically specify the order of priority in which different family members inherit, such as surviving spouses, children, parents, siblings, and more distant relatives.

In the presence of a valid will, however, the deceased person’s wishes regarding the distribution of their assets take precedence. A will is a legal document that outlines the decedent’s instructions for how their property should be distributed after their death, including specific bequests or gifts to individuals, organisations, or charities.

The process of administering an estate can be complex and time-consuming, involving tasks such as probate (the legal process of validating a will and authenticating the executor), inventorying the estate’s assets, paying debts and taxes, and distributing the remaining assets to the beneficiaries. In some cases, an executor (or personal representative) is appointed to oversee the administration of the estate and ensure that the deceased person’s wishes are carried out.

Inheritance laws and procedures can have significant implications for individuals and families. Factors such as the presence or absence of a will, the size and complexity of the estate, and the relationships among the beneficiaries can influence the distribution of assets and potential legal disputes.

Estate planning, including drafting a will, can help individuals ensure that their wishes are respected and that their assets are distributed according to their intentions. Seeking legal advice from an estate attorney can provide guidance and support throughout the estate planning and inheritance process.

Gift

As mentioned in Section 122 of the Transfer of Property Act of 1882. It is the most commonly followed for acquiring property offered under love and affection. It is an instrument in which a person’s property is transferred to another without receiving any consideration in return. The essentials must be fulfilled for a valid gift to meet certain criteria: 

  1. True ownership 
  2. Free consent 
  3. Real Property 
  4. Made without any considerations 

Supreme Court’s view

In the case of Suraj Lamp & Industries (P) Ld.Tr.Dir vs. State Of Haryana & Anr, the Indian court held on October 11, 2011, that a power of attorney alone does not constitute a valid transfer of immovable property. The court emphasised that only a deed of conveyance, such as a sale deed, can effectively transfer ownership rights in real estate.

The court’s decision underscores the importance of adhering to legal formalities when transferring immovable property. A power of attorney, while it may authorise an individual to act on behalf of another person, does not convey ownership rights in and of itself. The court reasoned that without a formal transfer deed, no right, title, or interest can be effectively transferred in relation to immovable property.

This ruling aims to protect the interests of both parties involved in real estate transactions and ensure that property ownership is clearly established and documented. By requiring a deed of conveyance, the court ensures that the transfer process is transparent, verifiable, and legally binding.

In the absence of a valid transfer deed, individuals may face legal challenges or complications if disputes arise regarding ownership or rights to the property. The court’s decision emphasises the need for individuals to seek legal counsel and follow proper procedures when engaging in real estate transactions to avoid potential legal issues and protect their rights effectively.

In the landmark case of State of Maharashtra v. Vishwanath Tukaram Umale, the court established a crucial precedent regarding the definition of theft. The court held that the unauthorised transfer of movable property without the consent of the rightful owner constitutes theft, regardless of the duration of possession by the unauthorised party. This ruling has significant implications for property rights and theft-related offences.

According to the court’s interpretation, the essence of theft lies in the unlawful taking and carrying away of movable property without the consent of the owner. This definition encompasses both temporary and permanent dispossession of property. Therefore, even if an individual gains possession of another’s movable property without their consent, intending to return it later, their actions still meet the criteria for theft.

This ruling aims to protect the rights of property owners and ensure that individuals cannot arbitrarily take and use others’ belongings without legal consequences. It recognises that even temporary deprivation of property can cause inconvenience, loss, and potential financial harm to the rightful owner.

The court’s decision in State of Maharashtra v. Vishwanath Tukaram Umale serves as a reminder that individuals must respect the property rights of others and seek their consent before taking or using their movable belongings. This precedent helps to maintain order and fairness in society by deterring unauthorised possession and safeguarding the interests of property owners.

Conclusion

In conclusion, the concept of property is multifaceted, encompassing a wide range of tangible and intangible assets. Whether it is real property, personal property, or intellectual property, individuals and businesses hold various rights and interests over possessions that contribute to their overall value. Tangible personal property, such as cars and electronics, contrasts with intangible personal property, like patents and copyrights, highlighting the diverse nature of assets.

Real property, particularly in real estate, involves land and permanent attachments, subject to distinct regulations and taxation. The differences between real property and personal property extend to aspects such as registration, possession, rights, and inheritance procedures, each playing a crucial role in legal and financial contexts.

Modes of property acquisition, as outlined by legal scholar Salmond, include possession, prescription, agreements, inheritance, and gifts. These modes illustrate the varied ways individuals acquire and transfer ownership of property, reflecting legal, contractual, and familial dynamics.

Understanding the nuances of property, its types, and modes of acquisition is essential for navigating legal frameworks, financial transactions, and estate planning. As individuals and businesses engage with diverse assets, the intricate interplay of tangible and intangible elements underscores the significance of property in shaping legal, economic, and personal landscapes.

References

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