What is chattel?
Chattel is any piece of personal property that you can move.
In the financial world, chattel stands in stark contrast to another type of personal property known as real property. Real property represents land and buildings.
Due to their contrasting characteristics, the law treats chattel and real property differently in terms of taxation and other financial purposes.
The term chattel refers to personal property that you can transport, such as jewelry, clothing, electronics or vehicles. One characteristic of property that commonly qualifies as chattel is that the value often experiences a sharp decline. Making improvements to chattel usually does not result in a significant increase in its value.
In contrast, real property is immobile. Not only does it retain its value, but improvements can increase its overall worth.
A certain type of mortgage known as a chattel mortgage uses property that qualifies as chattel for loan collateral. Common collateral for these mortgages includes cars, boats and appliances.
The lender owns the chattel until the borrower pays off the mortgage. Should the borrower default for some reason, having ownership rights to the chattel provides the creditor with quick restitution.
Every individual owns numerous types of chattel. Practically anything in your home other than the land or property itself qualifies as chattel.
For example, if you own a new vehicle, it has all of the characteristics of chattel. You can move the vehicle within minutes. It experiences rapid depreciation during the initial years of ownership. If you enhance the vehicle by adding custom rims or a personalized paint job, it does very little to improve the value of the car. You also can use the vehicle to secure a collateral mortgage.