"Chattel" is the general term for tangible personal property that can be moved from one place to another. It’s used to describe many types of property or possessions, including livestock, furniture, and vehicles. Chattel owners can borrow against the property using a chattel mortgage.
Learn what qualifies as chattel and how they may be used as collateral when securing a loan. Keep reading to discover the key differences between chattel and real property, and how it applies to what you own.
Definition and Example of Chattel
"Chattel" is a catch-all term for movable personal property or possessions, such as electronics, clothing, livestock, or cars. Owners may use chattel as collateral and borrow against it with a chattel mortgage.
Land can’t be considered chattel, nor can any items attached to it or a home. Chattel is the opposite of real property, including immobile property such as homes and buildings. Mobility, tangibility, and fast deprecation are the defining factors of chattel.
For example, most items in your home can be considered chattel—everything from your clothes and electronic devices to furniture and a car or boat parked outside. You can pick most of it up and move it within minutes, and much of it depreciates over time. You may use chattel such as your car as collateral for a chattel mortgage.
How Chattel Works
The term “chattel” originates from the Old French word “chatel,” meaning property, goods, or cattle, which stems from the Latin word “capitale,” referring to property.
Chattel is used to differentiate between types of property. It pertains explicitly to physical property that can be moved. It differs from real property and permanent structures such as homes, buildings, pieces of land, or items attached to land, like a growing tree or concrete driveway.
When you move to a new residence, chattel includes items you can take with you, such as furniture, appliances, electronics, or a car. Home fixtures are not chattel as they can’t be removed from the property.
Items considered chattel usually depreciate over time, and their value can’t increase with improvements, whereas real property’s value can increase with time and renovations.
The most common form of chattel is a manufactured or mobile home. Mobile homes are considered chattel property because they are not attached to the land and can be moved. They’re financed using a chattel mortgage, which only deals with personal movable property, compared with a traditional mortgage.
Businesses may use a chattel mortgage to purchase new equipment, while individual borrowers may use a chattel mortgage to secure a loan by using their personal property (chattel) as collateral. Depending on the lender, personal property such as consumer goods, farm products, vehicles, and property on paper may be used as collateral.
For example, if you bought a mobile home, it would be financed using a chattel mortgage. The mobile home itself serves as collateral to secure the loan. A lien is placed on your home, and ownership rights belong to the lender. If you default on the loan, the lender has the right to take possession of the mobile home and sell it to pay off the loan. The same goes for any other form of collateral you may borrow against.
Chattel vs. Real Property
All property is either personal or real property. The main distinction is whether or not it can be moved.
|Mobile (can be moved)||Immobile (permanently fixed)|
|Depreciates over time; value can’t increase with improvements||Can increase over time, especially with renovations and improvements|
|In real estate, you rent the land the chattel is on||In real estate, you own the land the chattel is on|
Additionally, chattel may become real property if it is attached to the land. For example, wood or other building materials resting on land are considered chattel. However, once they’re connected to the land to build a permanent structure, they become real property.
Types of Chattel
“Chattel” is a general term for many types of personal property. It may be used to refer to the following:
- Chattel mortgage: A loan for moveable personal property such as mobile homes, machinery, or vehicles. The piece of personal property serves as security or collateral for the loan. The lender owns the property until the chattel mortgage is paid off.
- Chattel paper: Similar to a chattel mortgage, but the lender retains an electronic paper, such as a lease or title, to show a monetary obligation and security interest.
- Chattel slavery: Enslavement where a person is owned and considered the legal property of another. This phrase is commonly used to refer to the practices and laws that formed the enslavement of African and indigenous people across North America. These inhumane practices have since been outlawed.
- Chattel refers to personal property or possessions that can be moved from one place to another.
- Manufactured homes, cars, furniture, and livestock are considered chattel.
- Borrowers and businesses may use a chattel mortgage to leverage property as collateral for a loan.
- Chattel depreciates over time, and its value can’t increase with improvements.
- The opposite of chattel is real property.