Level 1 Chapter 2: What is Real Estate? Flashcards
Land
Everything naturally associated with its surface, what lies beneath it, and the air above it.
Real Estate
The land plus any human-made improvements (such as buildings). Also referred to as realty.
Improvements
Any nonnatural structure built on or affixed to land. Buildings, fences, decks, and roads are all examples of improvements. A tree or furniture are not examples.
Real Property
Refers to the land and improvements PLUS the set of rights associated with real estate ownership. Real estate and real property are technically different but are used interchangeably. Most inclusive of all three terms (land, improvements, real estate).
Bundle of Rights
Rights that turn real estate into real property (things you can do with the land you own). Rights include:
The right of exclusion, The right of possession, The right of disposition (or transfer), The right of quiet enjoyment, The right of control, The right to encumber.
The Right of Exclusion
Right for owner to tell trespassers (or anyone!) to get off their land.
The Right of Possession
Right to occupy, live, breathe, and do whatever on your property because you own it. Also known as, the right to use.
The Right of Disposition
Right to sell, lease, and/or will a property to anyone you choose (you have the right to transfer all of your property rights or just some of them). This is also called the right to transfer.
The Right of Quiet Enjoyment
Right to (legally) use the property for your enjoyment however you (legally) want, no matter what. In other words, this right covers a lessee’s right to possess a property without interference from a lessor, previous owner, or anyone else with claim to the title.
The Right of Control
Right to alter, change, or improve a property as an owner sees fit.
The Right to Encumber
Right to put a property on the line as collateral for debt.
Property
Any item that may be owned, including the rights associated with ownership
Tangible property
Possessions that physically exist, such as a house or a toasty bagel.
Intangible property
Stocks, patents, and other incorporeal things.
Conveyance of Real Estate
Process of transferring property ownership from one party to another. This can occur between a buyer and seller, landlord and tenant, or through other means. It involves legal documentation, such as deeds, to ensure the transfer is recognized legally.
Asset
When someone buys real estate and real estate is conveyed, real estate is an asset, or item of value. The buyer typically hopes their asset will increase in value, earning them equity
Equity
Portion of a property’s total value owned outright by the holder to title, equal to the difference between the market value and all outstanding debts on the property. In other words, equity is all the value of a property above what an owner owes their lender or other debt-holder.
Legal Title
An abstract concept representing the ownership rights to a property. It includes the bundle of rights associated with the property but is not a physical document.
Deed
A deed is a physical document that transfers ownership of real estate from one party to another. It serves as official proof of ownership, they can even include restrictions on property use.
Regulating Conveyance - Federal Government
Regulates broad issues, such as general land usage, natural disaster reaction, and discrimination. Examples: 1. The federal government controls, regulates, and maintains national parks with the help of the National Park Service. 2. The federal government decides to provide water sanitation services and relief to hurricane victims.
Regulating Conveyance - State Government
Primary regulators of real estate law. They address things such as more specific environmental control of flood zones and waste disposal. Examples: 1. A state governor decides to add protective regulations to a state park with many endangered species. 2. A state government reviews and revises flood zones.
Regulating Conveyance - Local Government
Cover real estate on an even smaller scale, addressing issues such as land use control, taxation, and zoning. city council changes the property taxes in the city.
Example: A local government makes alterations to zoning ordinances around the local school.
Common Law
Rules and principles that arise from court decisions and societal customs rather than written statutes. It governs many aspects of real estate, including conveyance and agency. For example, common law dictates that sellers must disclose known property defects, even under the principle of “buyer beware” (caveat emptor).
Regulating Conveyance - Judicial Government
The branch of government responsible for interpreting laws and administering justice. In real estate, it often involves courts making decisions based on previous cases (common law) and issuing orders that can affect property, such as judgment liens or judicial deeds. Examples: 1. A case is judged according to the verdict of two similar cases tried the previous year. 2. A court’s decision from two years ago regarding property law is applied to a current real estate conflict because of common law practice.
