Chattel

DEFINITION of 'Chattel'

Chattel is movable personal property that can be borrowed against using a chattel mortgage.

In accounting, chattel property and other personal property is tracked separately from land or improvements made to land because it can be depreciated more quickly. Additionally, legal systems consider rights to chattel differently compared to rights afforded to real property, with rights to real property typically having longer statutes of limitations and being harder to overturn.

BREAKING DOWN 'Chattel'

In the financial world, chattel refers to movable personal property such as jewelry or furniture. Immovable property, such as real estate or buildings, is not chattel. Chattel’s value drops rapidly due to depreciation, as seen when buying a car, and typically does not increase with improvements. Real property is different, as it increases in value through improvements and renovations. For this reason, chattel is treated differently than real estate for taxation and other financial assessments. For a deceased person’s estate, chattel is tangible, movable property excluding money, securities or property used for business purposes or investments. For a bill of sale, chattel includes goods, furniture, trade machinery and other movable articles as well as growing crops or fixtures separately assigned or charged.

Examples of Chattel

A chattel mortgage provides freestanding property other than a home as collateral for a loan. This secured transaction is obtained through a financial institution. Movable personal property such as cars, boats, trailers, mobile homes or appliances are used as collateral when buying a movable property. The lender secures a mortgage over the chattel, and legal ownership of the chattel is transferred to the lender. The mortgage is removed when the loan is repaid. For example, companies use chattel mortgages to buy property and authorize operational equipment, vehicles or other company assets as collateral. If the company defaults on the loan, the lender is quickly compensated by selling the movable security.

A chattel paper is a document containing information about a financial obligation pertaining to a security interest held by a creditor. The security is often a lien on a piece of movable property. For example, an equipment rental company rents equipment to a company and retains a lien on the equipment. If the company fails to fulfill the lease payments, the rental company takes the equipment back. Similarly, if goods are sold on credit, a chattel paper is drawn up giving the seller the right to take back the goods if the obligation is not paid according to the contract.

RELATED TERMS
  1. Chattel Mortgage

    A term used to describe a loan arrangement in which an item of ...
  2. Chattel Mortgage Non-Filing Insurance

    An insurance policy covering losses that result from a policyholder ...
  3. Personal Property

    A type of property which, in its most general definition, can ...
  4. Article 9

    An article under the Uniform Commercial Code (UCC) that governs ...
  5. Property Tax

    A tax assessed on real estate by the local government. The tax ...
  6. Replacement Property

    Any property that is received as a replacement for property that ...
Related Articles
  1. Personal Finance

    Can You Get A Mortgage On A Mobile Home?

    You can get a loan for a mobile home, but it may not be a mortgage. These are the choices for funding manufactured housing.
  2. Trading

    Use Real Estate To Put Off Tax Bills

    Find out how you can build wealth and reduce your taxes.
  3. Personal Finance

    What You Should Know About Real Estate Valuation

    Anyone involved in a real transaction can benefit from gaining a basic understanding of the different methods of real estate valuation.
  4. Investing

    The Complete Guide To Calculating Your Net Worth: Important Terms

    When you calculate your net worth, you make a list of your assets and your liabilities; you subtract your liabilities (what you owe) from your assets (what you own) to arrive at your net worth ...
  5. Personal Finance

    Sell Your Rental Property For A Profit

    Being a landlord can be taxing, especially when you want to sell. Find out how to reduce your burden.
  6. Personal Finance

    Getting U.S. Tax Deductions On Foreign Real Estate

    If your home or second home is not in the United States, you can still get U.S. tax deductions. How many and what kind depends on whether you also rent it.
  7. Investing

    How Property Rights Affect Economies

    Property rights are laws governments create that enable investors to control, benefit from, and transfer property.
  8. Personal Finance

    Your Property Tax Assessment: What Does It Mean?

    The amount of a property tax bill is based on the property’s value, the exemptions it qualifies for, its use and the local property tax rate.
  9. Managing Wealth

    How Rental Property Depreciation Works

    It's a bit tricky, but a valuable tool to make your investment pay off.
  10. Personal Finance

    Investing In Property Out Of State

    If you can't afford property close to home, consider taking the real estate plunge elsewhere in the country.
RELATED FAQS
  1. How does securitization play a role in the implementation of PACE financing?

  2. What is the difference between real estate and real property?

    Understand how real estate is legally different from real property and the implications of that difference for each property ... Read Answer >>
  3. What criteria does a property need to meet to be considered an 'investment grade' ...

    Learn what it takes for institutional investors to consider a property "investment grade," such as real estate investment ... Read Answer >>
  4. What do real estate investors look for in a property?

    Profit from real estate investments by either flipping homes or becoming a landlord. Learn best practices for a successful ... Read Answer >>
  5. When did people first start using collateral to secure loans?

    Read about the history of lending and collateral, including a time when an entire nation was pledged as collateral for all ... Read Answer >>
  6. How is Net Operating Income (NOI) used in real estate?

    Find out more about net operating income, what it measures and how it is used to analyze a real estate property's return. Read Answer >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center