Property Ownership Flashcards
Trade Fixtures are . . .
- articles of personal property that are necessary for a tenant’s trade or business
- trade fixtures are firmly affixed to real estate but remain the personal property of the tenant
- examples include pizza opens, stoves, and car lifts
Personal Property is . . .
- movable and unattached to land
- tangible -> i.e. jewelry, cars, boats, etc,
- intangible -> i.e. stocks, boats, mortgages
- also known as personality and chattel
Fructus Industriales is . . .
- latin for “fruits of industry”
- like crops
- if sell land the crops may not convey
- example would be a vineyard - seller may come back to harvest even though under new ownership
Real Property is . . .
- “real estate”
- real estate includes:
- land (surface of the earth, the space above, and the space below
- improvements and/or fixtures
- not movable
Real Estate is land + improvements. Improvements include:
- houses (most common improvement)
- Fructus Naturales = landscaping
- Fixtures
Fixtures
- once movable (personal property) but now affixed to real estate (now real property)
- severance is the act of removing a fixture
4 part test courts use to determine if a fixture may be severed (removed):
- Method of Attachment -> The permanence with which an object is attached. The more permanence the less likely an item can be severed.
- Adaptation -> Was an object specially adapted or made to suit a particular feature of a building. Custom bookshelves for the space or a bed.
- Agreement -> Written agreements are the best way to avoid fixture disputes. So an agreement is an agreement between the parties.
- Relationship of the Parties -> Residential renters are less likely than commercial renters with their trade fixtures.
Rights of Real Property includes:
- includes ownership rights in the surface of land, airspace above, and space below (mining rights), any easements (use of land), and use of appurtenant (adjoining) land.
Water Rights:
Property owner’s entitlement (right) to use and maintain water for agricultural, recreational, or personal use.
Most states follow 3 legal doctrines to determine who has the intangible right to use or divert water and how much:
riparian
-> riparian = moves - river
(reasonable use for those with property bordering moving water)
littoral
-> littoral = doesn’t move - lake
(reasonable use for those with property bordering non-moving water)
prior appropriation
-> prior appropriation = first in time first in line
(owner who first diverts water has superior rights to all others)
Prior Appropriation
First in Time. First in Line.
Deed
An instrument (piece of paper) that conveys property.
5 factors affecting Real Estate Supply and Demand
- Demographics
- Unemployment / Income
- Cost / Availability of Credit
- Cost / Availability of Labor and Materials
- Governmental Policies
What controls how property may be used thus influencing it’s value:
Public controls - zoning
Private controls - deed restrictions
What are commonly available property uses:
- residential
- commercial
- industrial
- agricultural
- recreational
- specific purpose (churches, hospitals, colleges, cemeteries)
- public (state, federal, municipal land)
Impact of Supply and Demand on Real Estate Prices
(real estate is different to judge than manufactured commodities because of real estates unique characteristics)
The unique characteristics of the real estate market include:
- Heterogeneous (unique)
- Cannot be moved
- Over-supply / Lower Prices
- Under-supply / Higher Prices
Physical Land Characteristics
Land includes surface, space above, space below (owners may sell or transfer those spaces).
All land has the three physical characteristics that influence value these are:
Immobility
- land cannot be moved
Indestructibility
- cannot be destroyed
- this is the legal basis for not insuring land or being able to depreciate it
- value may change due to changing conditions (rif-raf in neighborhood) but land exists forever
Uniqueness
- aka heterogeneity
- states every parcel of real property is unique
- land differ in size, shape, location, and appearance
- legal basis for specific performance lawsuits (lawsuits that seek to force the sale of land as agreed upon in a valid contract where seller refuses to carry through w/ the sale as promised)
5 non-physical economic characteristics that influence lands value:
- Scarcity
- limited supply of land on earth - Area Preference (situs)
- “location, location, location” - Improvements
- additions make to land intended to increase value - Investment Permanence
- describes the permanence of investment on infrastructure improvements (sewage, drainage, and electricity systems) - Assemblage
- combining two or more contiguous parcels of real estate into a single parcel under the same ownership can increase its overall value (i.e. townhouses versus single family homes)
- any increase in value resulting from assemblage is known as “plottage value”
Methods of locating real estate that is sufficiently accurate for a deed, mortgage, or other formal instruments requires a LEGAL PROPERTY DESCRIPTION.
The 3 principle methods for legally describing real property are:
- Metes and Bounds
- Government Survey
- Lot, Block, and Subdivision
Describe Metes and Bounds:
Method of legally describing real property, which identifies the outer edges of a parcel by establishing a well-marked starting point, called a point of beginning (POB), an then describing in which direction and how far the property boundary runs from the POB.
Metes - measured in inches, feet, yards, miles
Bounds - established using artificial monuments (iron pipes, brass disks, road intersections) and natural monuments (lakes, boulders, trees)
Compass Angles - surveyor uses both precision instruments and known natural and artificial bounds to establish boundaries of a parcel
Describe Government Survey:
Used primarily in the mid-west. Method of surveying land adopted in 1785 in US to facilitate governments sale of land as population expanded west.
Principal Meridians - North to South
Base Lines - East to West
Further Divisions
- Checks (24 square miles)
- Townships (6 square miles in a check)
- Sections (640 acres w/in a township)
How many square feet in an acre?
43,560 square feet in an acre
Describe Lot, Block, and Subdivision (Recorded Plat):
Method of legally describing property, which begins with a large tract of land known as a subdivision plat (map).
Subdivision plat is a large map which notes the layout of lots and their numbers. Subdivision plats are further divided into blocks and lots.
Subdivision plats are pre-approved by local government in charge of zoning.
Mu
An example of a NON legal description of property:
An address
ENCUMBRANCES
- encumbrance = restriction
- interest in land held by someone other than the landowner and may diminish value
- can affect ‘right to use’ and ‘right to convey’
3 As
ASSESSMENT - done by tax assessor by local government then they tax you
APPRAISAL - done by certified and/or licensed appraiser and will vary depending on purpose of appraisal
ANALYSIS - CMA (Certified/Competitive Market Analysis) or BPO (Broker Price Opinion)
Liens
- Encumbrance on property that functions to guaranty payment of debts by using property as collateral
- Creates an impediment to clear title
Effect of Liens on Transfers
- lien does not transfer title to property
- does not prohibit owner from conveying his interest in the property to another (although property may be less marketable)
- if a lien not released prior to sell the buyer buys the property along with the existing lien
Removing Liens–Basic Concepts
- Priority
- describes the lien’s position in line with other liens
- determined by tax law (tax lien), the date it was recorded, or by the date it attached to the property (collateral)
- important to record lien as generally they receive first-in-line, first-in-time treatment
- UNCLE SAM GETS PAID FIRST - real estate property tax liens and assessments take priority over other liens regardless of when recorded - Satisfaction - you paid it off
- Enforcement - requires court order for the lien to be enforced
- Lis Pendens - latin for “action pending”
- lis pendens provides constructive notice that an action affecting particular real estate has been filed
Scope of Liens
Can be general or specific
general lien - i.e. applies to individual debtor and all of his personal and real property
specific lien - i.e. applies to specific property
Common Liens Include:
- Property Tax Lien
- Special Assessment Lien
- Tax Lien
- Mortgage
- Vendor’s Lien
- Mechanic’s Lien
- Judgement Lien
- Attachment Lien
Easements
- Limited right to use the land of anther, which may be voluntarily or involuntarily conveyed
- run with the land
Easements Appurtenant
Limited right of one landowner to use the adjoining land of another for a specific purpose
Dominant Estate - land owned by person that benefits from the easement
Servient Estate - land that is subject to use or burdened by the
use of another - they are SERVING the other estate
Easements in Gross
- sometimes called personal easements in gross
- no dominate estate
- i.e. a winery
License versus Easement
License is a personal privilege granted by one person to use the property of another
- may be revoked at any time
- does not transfer with the land
Creation of Easemetns
Express Grant - conveyed in writing usually through a deed
Express Reservation - seller “reserves” the right to
Necessity - if landlocked it is “necessary” to have an easement
Implication - i.e. if the property is subdivided it is presumed the seller intended to grant the buyer all easement rights necessary to use the property
Prescription - acquired by the adverse, hostile, exclusive, open, uninterrupted, and continued use of another’s property by a prescribed length of time (7-20 years depending) - i.e. your neighbors swing set on your property, or skinny-dipping in Farmer Johnson’s pond
Agreement - created by written consent
Condemnation - from the government
Easements can be terminated
mutual agreement
or
it’s not needed anymore
Encroachments
- unauthorized physical intrusion that encumbers the land of another
- trespass - encroaches on land - i.e. neighbors fence on your land
- nuisance - violates air space - i.e. overhanging deck, branches, noise
An ESTATE describes the degree, quantity, nature, and extent of an ownership interest in real property.
The 4 broad categories of estates are:
Freehold Estates
Future Estates
Non-freehold (leasehold)
Statutory Estates
Freehold Estates:
Estate (ownership interest) in land in which one has both the possession and (indefinite) ownership rights in real property.
2 types of freehold estates:
Fee Estates: Fee Simple - highest and most unrestricted ownership interest in land // Qualified Fee/Defeasible Estate: transfers w/ conditions
Life Estate: conveyed to a person for the duration of their life (i.e. your hot young hubby can live there but when he dies it conveys to your kids)
Seisin
the possession and ownership of a freehold estate
Fee Simple Estate
- exists indefinitely & transfers without restrictions
Life Tenant
holder of life estate - your eye candy gets to stay until he dies
Pur Autre Vie
- French for “for another’s life”
- Give your wife’s kid a house until your wife dies then it come back
Future Estate
Estate (ownership interest) that is certain to arise in the future (present ownership without present possession)
Remaindermen
- Describes the person who holds the remainder of the [future] estate
- the person designated to take title upon the termination of the prior estate
- A remainderman is part ot he Remainder Estate
Reversion Estate
The estate reverts back to the grantor
Non-Freehold Estates
- Leasehold
- Right to possess but not the right of ownership
Statutory Estate
Any estate created by (state) law
- Dower and Curtsy
- Community Property
- Homestead
Sole Ownership
Individual ownership in real property (aka an estate in severalty or several ownership).
- passes to heirs and is subject to probate upon death of the owner
- may be owned by natural persons (individual), corporations (fictitious persons), and partnerships (association of natural persons)
