{"id":1539,"date":"2018-02-14T07:11:09","date_gmt":"2018-02-14T07:11:09","guid":{"rendered":"http:\/\/www.realestatewords.com\/?page_id=1539"},"modified":"2022-03-24T13:09:59","modified_gmt":"2022-03-24T13:09:59","slug":"constructive-severance","status":"publish","type":"page","link":"https:\/\/www.realestatewords.com\/constructive-severance\/","title":{"rendered":"Constructive Severance"},"content":{"rendered":"

Constructive Severance Definition<\/h2>\n

Constructive severance<\/strong> is the process by which a part of real property<\/a> is separated from real estate and converting said real property to personal property<\/a> through forming an agreement to establish this type of intent.<\/p>\n

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Explanation<\/h2>\n

Constructive severance allows an individual or company to separate the value and or ownership of their product or service from their real property and convert it to personal property.<\/p>\n

An example would be a farmer who wanted to keep his land for future use and still make profits on his annual crops.<\/p>\n

He formed a constructive severance agreement with a friend to establish a separation of the crops from being a part of his real property to agree to making them personal property to be sold to his friend.<\/p>\n

This allows the farmer to show the profitability of his property and business which can be used to qualify for financing future projects on the property.<\/p>\n

If the farmer was unable to separate his personal property from his real property and he needed to make a profit, he would have to sell his entire farm with the crops.<\/p>\n

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