What is 'Chattel'

Chattel is movable personal property that is movable. Chattel can be either animate or inanimate property and 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 than 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. Chattel’s value drops rapidly due to depreciation, as often seen with the purchase of 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.

A chattel mortgage provides freestanding property other than a home as collateral for a loan. The lender secures the mortgage on the chattel, and legal ownership of the chattel is transferred to the lender. The mortgage is removed when the loan is repaid. Companies use chattel mortgages to buy property, and they authorize equipment, vehicles, and other assets as the collateral. If the company defaults on the loan, the lender is compensated by selling this collateral. Mobile homes are also financed using chattel mortgages.

A chattel paper is a document containing information about the financial obligation of the borrower and the security interest held by the creditor. Chattel comes from the French word "chatel," which comes from the Latin word "capitale."

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