Chapter 2 - Real Property and the Law

Question 1

***How is LAND defined for the real estate professional?

Answer 1

***LAND is defined as the earth’s surface extending downward to the center of the earth and upward to infinity. Land includes naturally attached objects, such as trees, as well as bodies of water found on or under it.

Question 2

***How is REAL ESTATE defined?

Answer 2

***As land plus all human-made improvements to the land that are permanently attached it to.

Question 3

***An IMPROVEMENT to land can be any…

Answer 3

***can be any artificial thing attached on or below ground such as a building, fence, water line or sewer pipe, as well as growing things that are made part of the landscaping. (landscaping is an artificial improvement)

Question 4

***The interests, benefits, and rights that are automatically included in the ownership of real estate is called…

Answer 4

***REAL PROPERTY.
(in many states, the terms real estate and real property are synonymous, and are used to refer to both the physical property and the rights of ownership)

Question 5

The word TITLE, as it relates to real property has two meanings… what are they?

Answer 5

1. The RIGHT to or ownership of the property and
2. EVIDENCE of that ownership by a deed.
   (title and deed)
   (RIGHT = intangible)
   (EVIDENCE = tangible)

Question 6

An APPURTENANCE is a right or privilege associated with the property although not necessarily a physical part of it like….

Answer 6

(something that is transferred with or “runs with” the land).
Like…parking spaces in multiunit buildings, easements, water rights and other improvements. An appurtenance is connected to the property and ownership of the appurtenance normally transfers to the new owner when the property is sold.

Question 7

***Ownership rights in a parcel of real estate that are limited to the surface of the earth are called….

Answer 7

***SURFACE RIGHTS

Question 8

***The rights to the natural resources below the earth’s surface are called…

Answer 8

***SUBSURFACE RIGHTS

Question 9

***The rights to use the space above the earth may are called?

Answer 9

***AIR RIGHTS and may be sold or leased independently, provided the rights have not been limited by law.

Question 10

***WATER RIGHTS are common-law (historical) or statutory rights held by?

Answer 10

***owners of land adjacent to rivers, lakes, or oceans and are restrictions on the rights of land ownership.

Question 11

***RIPARIAN RIGHTS are?

Answer 11

***Common-law rights granted to owners of land that borders on or includes the course of a rippling creak or rolling river, stream, or lake. It’s land that borders a nonnavigable waterway. (body of water unsuitable for commercial boat traffic)

Question 12

***LITTORAL RIGHTS are?

Answer 12

***Land that borders commercially navigable lakes, seas, and oceans.

Question 13

In some states, RIPARIAN AND LITTORAL RIGHTS are appurtenant to (run with the land and cannot…

Answer 13

be retained when the property is sold. The right to use the water belongs to whoever owns the bordering land and that right cannot be retained by a former owner after the land is sold.

Question 14

The amount of land an individual owns may be AFFECTED by the natural action of water.
When land is INCREASED through deposits of soil by the waters action, it’s called …

Answer 14

ACCRETION

An owner is entitled to all land created through ACCRETION

Question 15

The amount of land an individual owns may be AFFECTED by the natural action of water.
When the land gradually and sometimes imperceptibly wears away by natural forces, it’s called…

Answer 15

EROSION
An owner may lose land through the action of
EROSION

Question 16

The amount of land an individual owns may be AFFECTED by the natural action of water.
_________is the sudden removal of soil by an act of nature

Answer 16

AVULSION

Question 17

**PERSONAL PROPERTY, sometimes called personalty, is all the property that can be owned AND that does not fit the definition of REAL PROPERTY. Is personal property movable?

Answer 17

PERSONAL PROPERTY IS MOVABLE. This is an important distinction between Personal property and Real property. Personal property is also called CHATTELS and include such tangibles as chairs, tables, clothing, money, bonds, and band accounts.

Question 18

***A FIXTURE is something that starts out as PERSONAL PROPERTY but has been ATTACHED to the land or a building that, by law, it becomes part of the REAL PROPERTY. What are some examples?

Answer 18

Heating systems, elevator equipment in high-rise buildings, radiators, kitchen cabinets, light fixtures, and plumbing. Almost any item that has been added as a PERMANENT part of a building is considered a fixture.

Question 19

To determine whether an item is a fixture, and thus part of the real estate, the following FIVE basic tests (which can be remembers by the acronym MARIA are:

Answer 19

• *METHOD OF ANNEXATION - how permanent is the method of attachment? can it be moved w/o causing damage?
• *ADAPTABILITY OF ITEM TO LAND’S USE - is the item being used as real property or personal property? (a fridge is usually considered personal property but one that has been adapted to match the kitchen cabinets may be considered a FIXTURE.
• *RELATIONSHIP OF PARTIES - in general a court will favor a tenant over a landlord, and and a buyer over a seller.
• *INTENTION IN PLACING ITEM ON THE LAND - if an installation is intended to be temporary, it should not be attached in a way that appears to be permanent.
• *AGREEMENT OF THE PARTIES - have the parties agreed on whether the item is real or personal property in the contract offer?

Question 20

**TRADE FIXTURES (or business fixtures) INCLUDE property used in the course of business. An article owned by a tenant, attached to a rented space or building and used in conducting a business is a…

Answer 20

**TRADE FIXTURE or a CHATTEL FIXTURE.

Trade fixtures that are not removed become the real property of the landlord. Acquiring the property in this way is known as ACCESSION.

Question 21

***There are 3 PHYSICAL CHARACTERISTICS of LAND. What are they?

Answer 21

• *IMMOBILITY - the geographic location of any given parcel of land can never be changed.
• *INDESTRUCTIBILITY - land is considered indestructible
• *UNIQUENESS - which is also known as NONHOMOGENEITY is the concept that no two parcels of property are exactly the same or in the same location. (no matter how small, each property differs from every other.

Question 22

***There are 4 ECONOMIC CHARACTERISTICS of LAND.

What are they?

Answer 22

• *SCARCITY
• *IMPROVEMENTS
• *PERMANENCE OF INVESTMENT - the capital and labor used to build an improvement represent a large fixed investment.
• *AREA PREFERENCE OR SITUS - commonly referred to as ‘location, location, location’.

Question 23

***What are the 5 types of legal property?

Often called BUNDLE OF LEGAL RIGHTS.

Answer 23

• *RIGHT OF POSSESSION
• • RIGHT TO CONTROL the property
• *RIGHT TO ENJOYMENT - to use the property in any legal manner
• *RIGHT OF EXCLUSION -to keep others from entering or using the property
• • RIGHT OF DISPOSITION - to sell, will, transfer, or otherwise dispose of.