This article provides a brief account of some definitions and terminology used in the property industry. The aim is to highlight the distinction between the terms movable and immovable assets (also referred to as property).
In order to do this we will look at a few definitions as defined by the IVSC.
The definitions from the International Valuation Standards (2013) are reproduced with prior permission obtained (2007) of the International Valuation Standards Council who owns the copyright. No responsibility is accepted by the IVSC for the accuracy of information contained in the text as republished, the English version of the IVSC Standards as published by the IVSC from time to time being the only official version of the IVSC Standards.
The article is divided into two sections. First, there is the terms and definitions section here below that is technical in nature and can be skipped if you are not interested. The second, is the explanation of the difference between movable and immovable property, which is the focus of this article.
Immovable property – legal terms
Real estate is land and all things that are a natural part of the land, e.g. trees, minerals and things that have been attached to the land, e.g. buildings and site improvements and all permanent building attachments, e.g. mechanical and electrical plant providing services to a building, that are both below and above the ground.
Real property is all the rights, interests and benefits related to the ownership of real estate. Real property is a legal concept distinct from real estate, which is a physical asset. There may also be potential limitations upon ownership rights to real property. Personal property is a legal concept referring to all rights, interests, and benefits related to ownership of items other than real estate. Items of personal property can be tangible, such as a chattel, or intangible, such as a debt or patents. Items of tangible personal property typically are not permanently affixed to real estate and are generally characterized by their movability.
Plant and equipment connected with the supply or provision of services to a building are often integrated within the building and once installed are not separable from it. These items will normally form part of the real property interest. For example, a plant with the primary function of supplying electricity, gas, heating, cooling or ventilation to a building and equipment such as elevators.
As per IVS 220 para. 2 as referencing to IVS 101 para. 2(d), plant and equipment is seen as:
- Assets that may be permanently attached to the land and could not be removed without substantial demolition of either the asset or any surrounding structure or building;
- An individual machine may be part of an integrated production line where its functionality is dependent upon other assets.
Moveable assets – legal terms
Personal property is a legal concept referring to all rights, interests, and benefits related to ownership of items other than real estate. Items of personal property can be tangible, such as a chattel, or intangible, such as a debt or patent. Items of tangible personal property typically are not permanently affixed to real estate and are generally characterized by their movability.
Distinguishing between movable and immovable assets – the main aim of this article
In the property industry, especially in South Africa, one will readily find that reference is made to movable property and immovable property. Sometimes even the terms are exchanged to refer to movable assets and immovable property. This is a short-hand way of making reference to certain aspects of real estate and assets characterised by their movability.
For instance, the term immovable property is commonly used to refer to real estate and plant and equipment. Real estate, as seen above, is seen as the land and everything attached to it. Plant and equipment that conforms to the two requirements mentioned above also forms part of the real estate unless specifically stated to contrary in a valuation report.
The term movable property is commonly used to refer to tangible assets that are movable.
For example, computers, paintings, jewellery, vehicles, etc. are all tangible assets that are characterised by their movability i.e. it can be moved around.
One cannot refer to tangible movable assets as personal property as the term refers to the right of ownership and not the actual asset itself. It is a technical distinction just like real property refers to the right of ownership of real estate while the term real estate refers to the actual tract of land with buildings etc. attached to it.
In conclusion, the aim of this article is to highlight the distinction between various terms, but also to clarify the common reference between movable and immovable property. Immovable property, in the sense used, commonly refers to real estate (such as your house, factory, manufacturing plant, etc.) while movable property refers to movable assets (such as your computer, jewellery, vehicles, etc.).
For more definitions and terminology in the property industry read Concepts and principles >