What is property?

Date: Feb 02, 2010
Document Type: Newsletter

When we talk about property we usually use the word in a general sense - meaning anything someone owns. Often we use the word when talking about real estate - "We have a property in Queensland", or referring to a rural farm.

However, in the law there are two distinct types of property, real property and personal property, sometimes referred to as realty and personalty.

Real property is basically about land, and rights attaching to it, and the most obvious example is just that, the ownership of land. Ownership of land also extends to improvements on that land, so if you own land upon which your home stands, you own the home. This does not stop someone else having rights, such as a tenant. Your ownership extends into the ground below and the skies above, although of course government rules are likely to regulate your use of your property.

In many cases the original grant of land by the Crown reserved to the Crown certain minerals such as coal or iron, so you missed out! Real property includes leasehold interests as a tenant, and rights under strata and community title developments.

Personal property covers virtually everything else that you can own. Shares and other investments, your furniture, cars and bank accounts are probably the examples which first come to mind, but personal property can include less tangible items. A right to sue for compensation following an accident is personal property, as is a subscription to a publication, or a debt repayable to you.

There are, however, two situations where no property rights exist, and these can cause confusion. The first is where a family has a family discretionary trust. Unless and until the trustee makes a decision and allocation, none of the possible beneficiaries has any interest - or property rights- in the trust's assets. The position changes as soon as the trustee makes a decision to allocate a certain amount to a beneficiary.

The position is a little different in Family Law , where the courts have held that in that context, the word "property" has a wider meaning than in normal circumstances.

Superannuation is another special case. If you are a member of a super fund, you might think your benefits are your personal property. Think again.

Fund assets are actually owned by the fund trustees, who in most cases can determine who gets what in the event of your death. This is unless your fund permits "binding nominations", when the trustees are obliged to follow your directions.

One point to remember when dealing with property of either kind is that dealings with real property are normally required to be in writing, which is not the case with personalty. However, there may be special laws requiring notification in writing, such as with transfers of vehicle registration. Even here, a change of ownership of a car requires no writing - it is the change in registration which requires writing.

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