Introduction to Real Estate Flashcards
All things attached to the land and all rights inherent with that land. General rule things that are immovable
Real Property
Property that is movable. That is, the asset is not fixed permanently to one location as with real property such as land or buildings. Examples include vehicles, furniture, boats, collectibles, etc.
Personal Property
Land and anything fixed, immovable, or permanently attached to it such as appurtenances, buildings, fences, fixtures, improvements, roads, shrubs and trees (but not growing crops), sewers, structures, utility systems, and walls.
Real Estate
Normally includes title to air rights, mineral rights, and surface rights which can be bought, leased, sold, or transferred together or separately. Also called real property or realty.
Title to real estate
Why is real estate considered a commodity?
- Utility to most people
2. Marketable in its own specialized area
What composes the real estate commodity?
Physical component > Land > “Dirt”
Physical Component > Improvements (in most cases) - “bricks & sticks”
Legal Component > Bundle of Rights
What is the physical concept of land?
Solid surface of the earth
What is the legal concept of land?
Bundle of rights; or the rights we obtain with owning the land.
Bundle of rights
- Posess
- Use
- Dispose
- Exclude others
What are improvements?
Physical concept: Anything that improves or develops land.
Includes land developments & utilities.
Improvements to the land
things added to the land
Improvements on the land
All things that are attached to property, such as ceiling lights, awnings, window shades and doorknobs.
Fixture
fixture in a a business and considered personal property. Supposed to take with after business is sold
Trade Fixture
How does personal property become a fixture?
Manner of attatchment - if it is screwed in or attached it should go with the property
Adaption of the object - custom built objects (drapes, curtains, entertainment center)
Relation of the parties - tenant has legal right to keep what is in it.
Intent of the parties - put in contract
Legal rights obtained when owning land?
Limits for air rights?
surface right
mineral (subsurface) rights
air rights (no more than 20,000 ft below ground and 1500 above ground).
River or Stream rights.
Riparian rights
Ocean, Seas, and Large lake rights
Littoral rights
Right to make money off your property by leasing it or borrow money on your property by mortgaging it.
Financial rights
Ownership rights
Freehold estate
There must be actual ownership in the land and improvements and the estate must be of unpredictable duration.
Freehold estate
Most complete form of ownership. The most extensive interest in real property that an individual can possess, since it is limited completely to the individual and his or her heirs and assigns forever, and it is not subject to any limitations or conditions.
Fee Simple Estate
If no restrictions are placed on the owner of a fee simple estate through their title, does this mean they can do anything they want with the land?
No zoning by government restirctions
This is ownership that lasts only as long as the owner is alive. The property transfers back to the original owner at death through reversion. The designated future owner has a remainder interest and will eventually own the property fee simple.
Life Estate
Which right of the bundle of rights does this
Dispose
Although there is posession of land there is not ownership of land. The estate is for a definate duration.
Leasehold Estates
Where induviduals can own a fractional interest of the property. For example
Developer invest in a property with differing amounts of equity (cash invested):
- Owner A has 50%
- Owner B has 30%
- Owner C has 20%
Tenancy in common (TIC)
Co-Ownership, has the right to survivorship. Reverts to other owner at death. Each person has a 50 percent ownership of that piece of property. If one person dies, the other person automatically owns 100 percent of the property.
Joint Tenancy
Normal marriage ownership
Tennancy by the entirety
Wifes life estate in the property of her deceased husband.
Dower
Husbands life estate in the property of his deceased wife
Curtesty
Each Spouse has an equal percentage in th property due to the joint effort of marriage. Upon death 1/2 interest goes to the heirs and the other 1/2 stays with the spouse. (some states are changing this law to survivorship).
Community Property
Co-ownership, owns condo, halls are separte
Condominium
People own the whole building and lease the space. Cannot get a mortgage on this form of ownership.
Cooperative
Buy ownership for a limited period of time.
Timeshare
Homogeneous products (to an extent)
National markets with easy product supply and transport
Large supply of buyers and sellers
Public transactions (perfect knowledge)
Products are priced and sold (with few exceptions)
Characteristics of an efficient market
Heterogeneous products
Localized markets with an illiquid product.
Segmented markets with a limited number of buyers and sellers
Proprietary transactions
Sequential bidding (Negotiation)
Characteristics of Real Estate Markets
Real estate professionals
Real Estate Agent, Broker
Mortgage banker, originator, underwriter
Real Estate Appraiser, Tax Assessor
Real Estate Attorney and/or Title Insurer
Property Manager, Asset Manager
Real Estate Developer, General Contractor, Subcontractor
Urban Planner
Real Estate Investors (houses, REITs, land, etc.)Lan
The right of the government to regulate for the purpose of promoting the health, safety, and welfare of the public (zoning, building codes, and subdivision regulations).
Police Power
The right of a government to take property for public use. Just compensation must be paid to the owner. The government exercises the right to take the property by the process of condemnation.
Eminent domain
The right of a governement to charge a property owner
Taxation
Escheat
When a property owner dies intestate, that it, leaves no will and no heirs can be found, the property reverts to the state or county.
Government Powers
- Police Power
- Eminent Domain
- Taxation
- Escheat
