Unit 2: Real Property and Law

Question 1

Land

Answer 1

Earth’s surface extends downward to the center of the earth and upward to infinity.

Question 2

RE

Answer 2

Land plus all human-made improvements to the land that are permanently attached.

Question 3

Improvement

Answer 3

Land can be any artificial thing attached to or below the ground, such as a building, fence, water line, or sewer pipe, as well as growing things that are made part of the landscape.

Question 4

Real Property

Answer 4

The interests, benefits, and rights that are automatically included in ownership of real estate. In some states, real estate and real property are synonymous.

Question 5

Bundle of Legal Rights

Answer 5

• Right of possession
• Right to control the property within the framework of the law
• Right of enjoyment (to use property lawfully)
• Right of exclusion (to keep others from entering or using the property)
• Right of disposition (to sell, will, transfer, or otherwise dispose of or encumber the property)

Question 6

Surface Rights

Answer 6

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

Question 7

Subsurface Rights

Answer 7

The rights to the natural resources below the earth’s surface.

Question 8

Air Rights

Answer 8

The right to use the space above the earth may be leased or sold independently, provided the rights have not been limited by law. Air rights can be important, particularly in large cities, where air rights over railroads can be purchased for building purposes.

Question 9

Water Rights

Answer 9

Common-law or statutory rights held by owners of land adjacent to rivers, lakes, or oceans and are restrictions on the rights of land ownership.

Question 10

Riparian Rights

Answer 10

Common-law rights granted to owners of land along the course of a river, stream, or similar flowing body of water. Gives the owner full access to the body of water except to alter the flow or contaminate it. This type of right comes with a non-navigable waterway and ownership is granted to the center of the waterway, up until the next lot of land starts.

Question 11

Littoral Rights

Answer 11

Rights go to owners whose land borders commercially navigable lakes, seas, and oceans. Usually means that they own land up until the water starts and the rest is owned by the public.

Question 12

Accretion

Answer 12

An owner is entitled to any land created through accretion.

Question 13

Erosion

Answer 13

Owners may lose land due to erosion, Fortunately, erosion is a slow process that takes up hundreds of years.

Question 14

Avulsion

Answer 14

Losing land by a sudden natural event. Owners can lose land due to earthquakes or mudslides. Most unfortunate.

Question 15

Prior Appropriation

Answer 15

The right to use any water, except for limited domestic use, is controlled by the state rather than by the landowner adjacent to the water.

Question 16

Personal Property

Answer 16

All property that can be owned and that does not fit the definition of real property.

Question 17

Manufactured Housing

Answer 17

Housing is built specifically to the standards of the Department of Housing and Urban Development. (HUD)

Question 18

Emblements

Answer 18

Considered personal property, annually cultivated agriculture.

Question 19

Severance

Answer 19

Act of separating from land

Question 20

Annexation

Answer 20

Act of changing personal property into real property. Ex. Sand, Water, and Rocks into Cement for a sidewalk which turns it into real property.

Question 21

Fixture

Answer 21

Personal property that has been attached to land or a building that, by law, becomes part of the real property. Ex. Cabinets, light fixtures, and plumbing.

Question 22

Legal Tests of a Fixture (M.A.R.I.A)

Answer 22

M.A.R.I.A

Method of annexation: How permanent is the method of attachment? Can the item be removed without causing damage to the surrounding property or if damage can be easily repaired?

Adaptability of the item for the land’s ordinary use: Is the item being used for real or personal property? Ex. A fridge is considered personal but if used to match cabinetry then it can be a fixture.

Relationship of the parties: In general, a court will favor a tenant over a landlord, a buyer, or a seller.

Intention of the person in placing the item on the land: A most important consideration, but the actions of the tenant may not be consistent with the tenant’s earlier intention. If an item looks to be for temporary use then it shouldn’t be made to try and look permanent.

Agreement of parties: Have the parties agreed on whether the item is real or personal property?

Question 23

Trade Fixture

Answer 23

An article owned by a tenant, attached to a rented space or building and used in conducting a business. Ex. Barbers chair in barber shop.

Question 24

Accession

Answer 24

Trade fixtures that are installed and not removed by date of sale.

Question 25

Four Economic Characteristics of Real Estate

Answer 25

Scarcity - Land is rare in that there’s a limited supply and location adds value.

Improvements - Building an improvement on one parcel of land can affect the land’s value.

Permanence of Investment - The capital and labor used to build an improvement represents a large fixed investment.

Area Preference - Also known as situs is commonly known as location, location, location. Preference to a specific location.

Question 26

Three Physical Characteristics of Land

Answer 26

Immobility - The geographical location of any given parcel of land can never be changed. It is fixed and therefore immobile.

Indestructibility - Land is considered indestructible, even though it is subject to both natural and human forces. No matter what changes it can occur, it will still be there.

Uniqueness - Also known as nonhomogeneity, is the concept that no two parcels of land are the same or in the same location.

Question 27

Laws Affecting RE

Answer 27

Contract law

General Property law

Agency law

RE license law

Federal, State, and Local laws and regulations