These are the most important points for you to remember in this unit.
Land, Real Estate, and Real Property
Real property or real estate means any interest or estate in land and any interest in business enterprises or business opportunities, including any assignment, leasehold, subleasehold, or mineral right; however, the term does NOT include cemetery lots nor the renting of a mobile home lot.
Land is all the earth and everything attached to it by nature.
Real estateis land, including airspace above and subsurface space below, and improvements.
Real property(“realty”) includes the real estate plus the “bundle of rights,” which is ownership.
There are three physical components of real property—surface, subsurface, and air.
Surface rights include land rights and water rights. There are two types of water rights:
Riparian rights are those on a moving course of water like a river or a stream.
Littoral rights are those of an owner whose land abuts a lake, ocean, or sea.
Erosion and Accretion related to water rights:
Erosion is the gradual loss of land due to natural forces.
Accretion is the gradual increase in land from natural causes.
Alluvion is the soil which has been added by accretion.
Reliction is the permanent increase in the land resulting from water levels becoming lower.
Subsurface rights are often called “mineral” rights. These rights allow an owner of land to extract petroleum, natural gas, and underground minerals.
Air rights are those above the earth’s surface, and extend as high as a property owner can reasonably use those rights.
Real vs. Personal Property
Real property is land and improvements on the land. If an item is not real property, it is personal property.
Personal property usually consists of items having a limited life, and which are easily movable from one place to another.
Personal property (also called chattel, or personalty) includes any property that is not real property.
Real property may become personal property by severance, such as cutting trees.
Personal property can become real property by attachment (fixtures).
A fixture is an item that was once personal property, but is now legally considered to be real property.
Trade fixtures are fixtures that are used in a business and remain personal property that can be removed before the end of the lease.
Courts apply four tests (IRMA) to determine whether an item is a fixture:
Intent of the parties
Relationship of the Parties
Method of attachment
Adaptability of the item.
A freehold estate is ownership of the land, often called fee, fee simple, and fee simple absolute title.
A life estate conveys ownership only for the life of the owner. At the owner’s death, the property goes either to a remainderman or reverts to the grantor (who would have a “reversion estate.”)
Under homestead law, if the sole owner of a homestead dies without a will (Intestate), the spouse is not on the deed and there are children:
the spouse gets a legal life estate, and
the children are remaindermen.
The constitutional homestead right protects the family home from forced sale (execution) of the homestead by creditors for all debts, including credit card debt.
The amount of homestead property exempt from forced sale is limited to 160 acres outside a city, or ½ acre inside the city.
A nonfreehold estate is also called a leasehold estate.
There are several categories of leasehold estates:
A tenancy for years has a definite date for starting and ending.
A tenancy at will has a starting date but not a specific end date.
A tenancy at sufferance is a holdover tenant, usually at the end of a lease.
Types of Ownership
If only one person owns property, it is called ownership in severalty.
If more than one person owns property, it is co-owned, and is also called concurrent ownership. There are three different ways to hold concurrent ownership:
Tenancy in common
Property can be held in equal or unequal undivided interests. Each concurrent owner may will his or her share.
Two or more persons have an undivided interest in real property.
When one “partner” dies, his/her share automatically passes to the other parties on the deed, because “right of survivorship” is present.if a joint tenant wills the property to his or her heirs, it will have no effect.
A tenancy by the entireties is property ownership by a marriage. Neither owns the property.
The death of one party makes the spouse the immediate owner of the property through survivorship.
if the deceased party has willed the property, the bequest will have no effect, since the property is not included in the estate.
Condominium buyers receive a deed as evidence of ownership.
The owner of the condominium gets a fee simple title to the condominium apartment, and an undivided share of the common elements.
Common areasare undivided fractional shares of the structure and land owned by each unit owner, such as the lobby or the swimming pool.
Owners pay common area expenses based on the percentage that the square footage of their unit bears to the total square footage of all units.
Buyers of newly constructed condominiums may cancel within 15 calendar days after receiving all documents. If it’s a resale condominium, the buyer has 3 business days to cancel.
A private party seller (resale) must give the buyer
the most recent year-end financial reports,
rules of the condominium owner’s association, and
a governance form that describes the duties of the board of directors and the owners’ rights.
Cooperatives are organized as corporations.
Buyers receive stock of the corporation as evidence of ownership.
The buyer gets a proprietary lease that allows the buyer to occupy the property.
A time-share is organized as a condominium.
Buyers receive ownership for a fixed period, typically one week each year.
Three Types of Time-Share Ownership:
Time share estate (interval ownership): The buyer gets a deed.
Time share license: the buyer gets a lease, a license or a membership.
Club membership: gives the owner rights to make reservations in more than one timeshare site.
Salespersons must have a current, valid license if they are paid by commission.