Unit 2: Real Property and the Law

Question 1

Air Rights

Answer 1

Air rights can be an important part of real estate, particularly in large cities where air rights must be purchased to construct office buildings

The rights to use the space above the earth may be sold or leased independently, provided those rights have not been preempted by law

Question 2

Accession

Answer 2

If trade fixtures are not removed on or before the last day of the lease term, they become the real property of the landlord. Acquiring the property in this way is called accession

Question 3

Annexation

Answer 3

It is possible to change personal property into real property through annexation

For example, a landowner buys cement, stones, and sand, mixes them into concrete, and constructs a sidewalk across her land. This landowner converted personal property (cement, stones, and sand) into real property (sidewalk)

Question 4

Appurtenance

Answer 4

Anything tangible or intangible associated with the property, although not necessarily a direct part of it

Typical appurtenances include parking spaces in multiunit buildings, septic tanks, 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 5

Attachment

Answer 5

Personal property that “turns into” real property does so by attachment

Question 6

Bill of Sale

Answer 6

Personal property is conveyed by a bill of sale

Licensees need to know whether property is real or personal; for example, when the property is transferred from one owner to another

Question 7

Bundle of Legal Rights

Answer 7

Traditionally, ownership of real property is described as carrying a bundle of legal rights.

Bundle of Legal Rights include:
Right of possession
Right to control the property (within the framework of the law)
Right of enjoyment
Right of exclusion
Right of disposition

Memory Tip:
Disposition
Enjoyment
Exclusion
Possession
Control
(DEEPC)

Question 8

Chattel

Answer 8

Items of personal property, including such tangibles as chairs, tables, clothing, money, bonds, and bank accounts. Trade fixtures are also included in the chattels category

Question 9

Deed

Answer 9

Real property is conveyed by deed

Licensees need to know whether property is real or personal; for example, when the property is transferred from one owner to another

Question 10

Emblements

Answer 10

Annually cultivated crops such as wheat, corn, vegetables, and fruit are called emblements

Emblements are generally considered personal property

“Fructus Industriales” = The fruit of one’s effort

Question 11

Fixture

Answer 11

Personal property that has been so affixed to land or a building that, by law, it becomes part of the real property

Examples of fixtures: Heating systems, elevator equipment in highrise buildings, radiators, kitchen cabinets, attached bookcases, light fixtures, doors, and plumbing fixtures

Almost any item that has been added as a permanent part of a building is considered a fixture

Question 12

Improvement

Answer 12

An improvement is any artificial addition to land, such as a building or a fence

Whether the artificial attachment makes the property better-looking, more useful, more or less valuable, the land still is said to be improved

Land also may be improved by streets, utilities, sewers, and other additions that make it suitable for building

Question 13

Land

Answer 13

The earth’s surface extending downward to the center of the earth and upward to infinity

Land includes not only the surface of the earth but also the underlying soil

Land also refers to objects that are naturally attached to the earth’s surface, such as boulders and plants

Land includes the minerals and substances that lie far below the earth’s surface (subsurface), it even includes the air above the earth, all the way up into space (airspace)

Question 14

Manufactured Housing

Answer 14

Dwellings that are built off site and trucked to a building lot where they are installed or assembled. Manufactured housing includes modular, panelized, precut, and mobile homes

Manufactured housing is generally personal property until it becomes permanently affixed to the land, at which point it becomes real property

Question 15

Personal Property

Answer 15

Personal property, also known as personalty, is property that is movable and not affixed to or associated with the land

Personal property includes all property EXCEPT real property

Chattels are items of personal property

Question 16

Real Estate

Answer 16

Land at, above, and below the earth’s surface, plus all things permanently attached to it. Real estate includes the natural land along with all human-made additions/improvements

Question 17

Real Estate License Act of 2000

Answer 17

State law enacted to protect the public from fraud, dishonesty, and incompetence in the purchase and sale of real estate. It was amended in 2011

Question 18

Real Property

Answer 18

Includes both land and real estate. It is the interests, benefits, and rights that are automatically included in the ownership of land and real estate

Real property includes the surface, subsurface, airspace, any improvements, and the bundle of legal rights–the legal rights of ownership that attach to ownership of a parcel of real estate

Real estate + Bundle of Legal Rights

Question 19

Severance

Answer 19

An item of real property can become personal property by severance

For example, a growing tree is real estate until the owner cuts it down, severing it from the property

For example, an apple becomes personal property once it is picked from a tree, and a wheat crop becomes personal property once harvested

Question 20

Situs

Answer 20

Location, location, location!

Question 21

Subsurface Rights

Answer 21

Real property ownership also can include subsurface rights, which are the rights to the natural resources lying below the earth’s surface

The two rights are distinct; an owner may transfer surface rights without transferring the subsurface rights

Question 22

Surface Rights

Answer 22

The right to use the surface of the earth is called surface rights

The two rights are distinct; an owner may transfer surface rights without transferring the subsurface rights

Question 23

Trade Fixture

Answer 23

A special category of fixture includes property used in the course of business. An article owned by a tenant and attached to a rented space or building or used in conducting a business is a trade fixture

Trade fixtures are usually owned and installed by a tenant for the tenant’s use

Trade fixtures are removable

For example, trade fixtures are bowling alleys, store shelves, bars, and restaurant equipment

Trade fixtures must be removed on or before the last day of the lease term; the tenant is responsible for any damage caused by the removal of a trade fixture