Legal Definitions - chattel real

A chattel real refers to an interest in land that is legally considered personal property, rather than real property. While real property typically includes land and anything permanently attached to it (like buildings), and personal property includes movable items, a chattel real is a unique category. It represents a right to use or occupy real estate for a specific, limited period, or under certain conditions, without conferring actual ownership of the land itself. The most common example of a chattel real is a leasehold interest.

Here are some examples to illustrate this concept:

• Residential Apartment Lease: Imagine a person who signs a one-year lease agreement to rent an apartment. During that year, the tenant has the legal right to occupy and use the apartment. This right is an interest in real estate (the apartment building). However, the tenant does not own the apartment or the land it sits on. Because this right is for a fixed, temporary period and is not full ownership, the law classifies the tenant's leasehold interest as personal property. Therefore, this lease is a chattel real for the tenant.

• Commercial Office Space Lease: Consider a small business that leases an office suite in a downtown building for a term of five years. The business has a contractual right to use that specific office space for its operations. This right is clearly tied to real estate (the office building). However, the business does not own the office suite or the building. Since this is a temporary right of occupancy for a defined period, the business's interest in the office space is treated as personal property under the law, making it a chattel real.

• Long-Term Ground Lease for a Cell Tower: A telecommunications company enters into a 20-year agreement with a farmer to lease a small plot of land on the farmer's property. The company intends to build and operate a cell phone tower on this leased plot. The company has a significant interest in that specific piece of land for a long duration, allowing them to construct and maintain their infrastructure. Despite the long term and its connection to real estate, this lease does not transfer ownership of the land to the telecommunications company. Instead, it grants a temporary right to use the land for a specific purpose. For legal purposes, this long-term leasehold is considered personal property for the telecommunications company, thus qualifying as a chattel real.