The importance of property in human history can be gleaned from the fact that many ancient legal codes specifically incorporated provisions for the regulation of property. Moreover, even though such codes are far removed from us in time and place, the regulation of property in such codes does not seem particularly strange to us. For instance, the Roman emperor Justinian, who ordered that the laws of Rome be codified in the 6^th century, included the following in his Institutes:

If anyone has bona fide purchased land from another, whom he believed to be the true owner, when in fact he was not, or has bona fide acquired it from such a person by gift or by any other good title, natural reason demands that the fruits which he has gathered shall be his in return for his care and culture.[1]

This is just one example of the vast treatment of property in ancient codes, many more of which may be located through web searching. One thing of which you would become aware as you read through various and sundry laws, including our own, is that the idea of “property” is much more than the “thing” owned by someone. As stated by our own courts:

“Property” in its legal sense means a valuable right or interest in something rather than the thing itself, and is the right to possess, use and dispose of that something in such a manner as is not inconsistent with law.[2]

So, when someone states “This is my property,” there is an entire world of legal relationships being implied. Property law, generally, is the law that describes and regulates the relationship between legal entities (people, businesses, etc.) and things found in the world.

[1] Corpus juris civilis. Institutiones. [from old catalog], and Thomas Collett Sanders. The Institutes of Justinian. 6th ed. London: Longmans, Green, and Co., 1878.

[2] Coutar Remainder I, LLC v. State, 91 N.E.3d 610, 615 (Ind. Ct. App. 2017).

One of the most considerations is the division between “real property” and “personal property”. We will spend most of our time in this book on real property, but it is important to be aware of some concepts concerning personal property, as well.

The meaning of the term “real property” is broad. According to Indiana law, “real property” (here called “land”) is:

[A]ny ground, soil, or earth whatsoever, as meadows, pastures, woods, moors, waters, marshes, furzes, and heath. It has also in its legal signification an indefinite extent, upwards as well as downwards. The word land is comprehensive in its import, and includes many things besides the earth we tread on, as waters, grass, stones, buildings, fences, trees, and the like.[1]

Remember, however, that when paralegals and lawyers consider “real property,” they should consider it not just as the thing itself, but as a bundle of legal relations.

On the other hand, “personal property” is property with a “personal or movable nature as opposed to property of a local or immovable character.”[2] Personal property may also be termed “chattels” or “personalty,” depending on properties such as jurisdiction and age of the document in question. So, for example, cars, pizzas, dogs, and stock certificates are all considered to be “personal property.”

[1] Owens v. Lewis, 46 Ind. 488, 508 (1874)

[2] Lowrance v. Lowrance, 95 Ind. App. 345, 182 N.E. 273, 277 (1932)

Now, you may have noticed in that list that one of those things is not like the others. Can you guess which one it is? That is right, it’s the stock certificate. What makes a stock certificate different is that the value of it is not in the thing itself – a stock certificate, in and of itself, is simply a piece of paper. But it represents something much more valuable than a piece of paper, therefore illustrating another division in property – that between “tangible” and “intangible” property.

Again, “tangible property” is defined in the 1st Edition of Black’s Law Dictionary as:

Property which may be touched; such as is perceptible to the senses; corporeal property, whether real or personal.[1]

“Intangible” property, formally defined, is:

Such property as has no intrinsic and marketable value, but is merely the representative or evidence of value, such as certificates of stock, bonds, promissory notes, and franchises.[2]

While we will not deal much with intangible property generally, some intangibles (such as promissory notes) will be covered later on.

[1] Black, Henry Campbell. Black's Law Dictionary: Definitions of the Terms and Phrases of American and English Jurisprudence, Ancient and Modern. West Pub. Co., 1910;  finding Indiana cases which define these terms is difficult, due to their ancient lineage. Most Indiana cases simply assume the knowledge of the meaning of these terms.

[2] Id.

Fixtures are personal property which has become “part of” real property in some way, and so is considered to be real property, not personal property. In commercial real estate forms and those used by law firms, it is not uncommon to see property purchase agreements which have a line like this:

This Purchase and Sale Agreement covers all fixtures and articles of personal property situated on or attached to the property and owned by Seller, including, but not limited to…

Of course, in most purchase agreements which are not specifically tailored to a transaction, there is no information about what constitutes a “fixture,” and in close cases, such a definition may be difficult to apply with a given item of property.

There is a great deal of case law dealing with at-tempt to distinguish whether an item is personal property or former personal property that has be-come “real” by becoming a fixture. There is a test set forth in Indiana which helps to determine whether a given thing is a fixture, namely:

This test considers: 1) actual or constructive annexation of the article to the realty, 2) adaptation to the use or purpose of that part of the realty with which it is connected, and 3) the intention of the party making the annexation to make the article a permanent accession to the freehold." The third part of the test—the intent—is controlling. Intention may be determined by the nature of the article, relation and situation of the parties making the annexation, and the structure, use, and mode of annexation. If there is doubt as to intent, the property should be regarded as personal.[1]

While this seems obscure, because it is so lengthy, the real question is: IS the item of personal property in question SO attached to the real estate that it is essentially inseparable?

[1] 11438 Highway 50, LLC v. Luttrell, 81 N.E.3d 261, 265 (Ind. Ct. App. 2017)

Practice Note – If in Doubt (or even IF NOT), Get it in Writing

This is an important time to consider the question of “intent” in the fixture test above and how to tell “intent?” It is a poor drafter (whether attorney or paralegal) who leaves all questions of whether personal property is a “fixture” in a real estate sale up to potential lawsuit and post hoc definition by a court. Make sure that when and if you are drafting a purchase agreement for real property, you get a list of more expensive personal property and fixtures that are to remain with the property, and those that the seller is taking with them. Then either include within the purchase agreement, or create a separate bill of sale and transfer, all the personal property and fixtures that are remaining, so that both parties are as clear as possible what they are transferring in addition to the real property. This is equally important when considering sales of business and mergers.

Good fences make good neighbors. Good contracts help set expectations and avoid litigation.