The Foundations Of Real Estate
Trade Fixture
A Trade fixture is a piece of equipment on or attached to the real estate which is used in a trade or business. Trade fixtures differ from other fixtures in that they may be removed from the real estate (making it personal property even if attached) at the end of the tenancy of the business, while ordinary fixtures attached to the real estate become part of the real estate. The business tenant must compensate the owner for any damages due to removal of trade fixtures or repair such damage. It is important that you remember trade fixtures remain the tenant's property, hence they are personal property. An example of this is the dentists chair would be a trade fixture as the chair is being used for the dentists business. Even though it is attached to the property, the dentists will take that chair with him when he moves to a different location.
Fixtures
A fixture is personal property that becomes real property, when attached in a permanent manner to real estate, and is incorporated into the land. this comes up on the real estate exam allot. An example of a fixture would be a chandelier as it is an item that was movable but now is attached to the property. Personal property that becomes real estate is called a fixture. From a real estate perspective, the principal difference between personal property and a fixture is that personal property stays with the owner when a piece of real estate is sold, and a fixture stays with the property. Say you have lumber delivered to the house to build a deck. At the time of the delivery, lumber is personal property that goes with you if you sell the house. However, if you build a deck with the lumber the following week and attach it to the back of your house, the lumber now is considered a fixture that, of course, stays with the house when you sell it. To remember if something is a fixture or not just remember the acronym MARIA Method of attachment Adaptability of the item Relationship of the parties Intention of the parties Agreement of the parties involved. As stated before Saying that real property is immovable and personal property is movable is a general rule, another way to help you remember what is real and what is personal is to keep in mind that personal property goes with the person and real property goes with the real estate.
Freehold Estate
A freehold estate is an estate in which ownership is for an undefined length of time. The 3 types of freehold estates are. Fee simple absolute. Fee Simple deafesable And a life estate. Fee simple absolute A fee simple (or fee simple absolute) is an estate in land. This form of ownership can not be defeated by the previous owner or the previous owner's heirs; however it is not free from encumbrances. Fee simple absolute is the greatest interest in a parcel of land that one can possibly own. Sometimes designated simply as "Fee." Fee simple ownership represents absolute ownership of real property but it is limited by the four basic government powers of taxation, eminent domain, police power, and escheat and could also be limited by certain encumbrances or a condition in the deed. Fee simple Defeasible If previous grantors of a fee simple estate do not create any conditions for subsequent grantees to own the conveyed property in fee simple title, which is commonly the case these days, then the title is called fee simple absolute. Other fee simple estates in real property include fee simple defeasible (or fee simple determinable) estates. A defeasible estate is created when a grantor places a condition on a fee simple estate (in the deed). Upon the happening of a specified event, the estate may become void or subject to annulment. Two types of defeasible estates are the fee simple determinable and the fee simple subject to a condition subsequent. If the grantor uses durational language in the condition such as "to A as long as the land is used for a park" then upon the happening of the specified event, the estate will automatically terminate and revert to the grantor or the grantor's estate; this is called a fee simple determinable. If the grantor uses language such as "but if alcohol is served" then the grantor or the heirs have a right of entry, but the estate does not automatically revert to the grantor; this is a fee simple subject to a condition subsequent. In the United States many of these concepts have been modified by statute in some states. Life estate A life estate is an interest in real property, which is held for the duration of the life of a designated person. It may be limited by the life of the person holding it or by the life of another person. For example, Anne can give a property to Dan for the life of Anne. Dan would be the life tenant. A life tenant receives the property and is responsible for maintenance of the property and paying taxes. If a life tenant allows a property to deteriorate it would be committing waste, a life tenant cannot commit waste. A life tenant cannot leave a property to anyone in their will. A life tenant may sell, mortgage or lease the property for the duration of the estate. Thus all contracts would be terminated upon the death of the life tenant For example, if Dan dies and the property were to go back to Anne, Anne would have the estate in Reversion. If Anne dies, then the property would not be Dan's because he had it as long as Anne was alive. Upon Anne's' death the property would go to Lisa, and then Lisa would have the estate in Remainder.
Bundle of Rights
A right is something due to a person by claim or legal guarantee, an interests is a legal share or privilege. Property ownership is subject to the rights or interest of others. Property is accompanied with the bundle of rights, the bundle of rights are rights inherent in ownership of property. The bundle of rights includes the right to use, to sell, to mortgage, to lease, to enter, and to give away, or the right to refuse to exercise any of these rights. The bundle of rights is a common way to explain the complexities of real estate ownership. The bundle of rights is commonly taught to explain how real estate can simultaneously be "owned" by more then one party. Ownership of land is a much more complex proposition than simply acquiring all the rights to it. It is useful to imagine a bundle of rights that can be separated and reassembled. A "Bundle of Straws" - in which each straw represents an individual right - is a common analogy made for the bundle of rights. Any property owner possesses a set of straws related directly to the land. For example, completion of a mechanic's lien takes some, but not all, rights out of the bundle held by the owner. Extinguishing that lien returns those rights or "sticks" to the bundle held by the owner. In the United States (and under common law) the fullest possible title to real estate is called "fee simple absolute." Even the US federal government's ownership of land is restricted in some ways by state property law. In other words, there is always some form of an encumbrance on property.
Estate
An estate is the degree of ownership a person has in real property. Based on what you learned about real property, it should make sense what the term REAL ESTATE means. There are two types of estate that we will discuss. A freehold estate and a less-that free hold estate.
Annexation
Annexation is the addition to property by the act of attaching a smaller item to the larger property, as in attaching personal property to real property, thereby creating a fixture. For example, a sink becomes a fixture when it is annexed to the plumbing outlet.
Appurtenances
Appurtenance is a term for what belongs to and goes with something else, with the appurtenance being less significant than what it belongs to. Appurtenance is something belonging to something else, either attached or not, such as a barn to a house, or an easement to land. The appurtenance is part of the property and passes with it upon sale or other transfer.
Emblements
Emblements are annual crops produced by cultivation legally belonging to the tenant with the implied right for its harvest, and are treated as the tenant's property. They are considered personal property. A tenant farmer has the right to his crops even when his lease ends before the end of the growing season. Crops grown on property just before it's sold generally are considered to be the personal property of the seller as well. This comes into play in the law of landlord and tenant, or in the forclosure of mortgages and other legal situations that place the rights of another party in contention with those of a farmer who has planted a crop yet to be harvested. In these situations, the doctrine of emblements operates to guarantee the farmer's right to reap and carry away the fruits of his labor even if he loses title to the land on which they are grown.
Eminent domain
Eminent domain is the inherent power of the state to seize a citizen's private property, or seize a citizen's rights in property with due monetary compensation, but without the consent of the owner. The property is taken either for government use or by delegation to third parties who will devote it to public or civic use or, in some cases, economic development. The most common uses of property taken by eminent domain are for railroads, public utilities and highways. Some jurisdictions require that the government body offer to purchase the property before resorting to the use of eminent domain. The term "condemnation" is used to describe the formal act of the exercise of the power of eminent domain to transfer title to the property from its private owner to the government. This use of the word should not be confused with its sense of a declaration that real property, generally a building, has become so dilapidated as to be legally unfit for human habitation due to its physical defects. This type of condemnation of buildings (on grounds of health and safety hazards or gross zoning violation) usually does not deprive the owners of the title to the property condemned but requires them to rectify the offending situation or have the government do it for the owner at the latter's expense. Condemnation via eminent domain indicates the government is taking ownership of the property or a lesser interest in it, such as an easement. In most cases the only thing that remains to be decided when a condemnation action is filed is the amount of just compensation, although in some cases the right to take may be challenged by the property owner on the grounds that the attempted taking is not for a public use, or has not been authorized by the legislature, or because the condemnor has not followed the proper procedure required by law. Inverse condemnation is a term that comes on the real estate exam and is used in the law to describe a situation in which the government takes private property but fails to pay the just compensation required by the Constitution. In order to be compensated, the owner must then sue the government. In such cases the owner is the plaintiff and that is why the action is called inverse - the order of parties is reversed, as compared to the usual procedure in direct condemnation where the government is the plaintiff who sues a defendant-owner to take his or her property. An example would be if the city widens a boulevard and thereby taking the entire parking lot of a Market. The city offers to pay for the lot, but the market claims it has lost all its business since no one can park and now it wants the value of the entire parcel, including the market building. In this situation they would file for inverse condemnation The exercise of eminent domain is not limited to real property. Governments may also condemn personal property, such as supplies for the military in wartime, franchises; this includes intangible property such as contract rights, trade secrets, copyrights and patents.
Escheat
Escheat occurs when Property reverts to state ownership when an individual dies without a will and without heirs. When you die without a will you would have died "intestate"
Water Rights
No one has title to water. Property owners whose land adjoins bodies of water have reasonable right to the use of the water Riparian rights allow a property owner to use water from water course such as a river stream or creek. Littoral rights concern properties abutting an ocean, sea or lake rather than a river or stream. Littoral rights are usually concerned with the use and enjoyment of the shore. Correlative use allows a property owner the use of underground water. Or water from a river for irrigation purposes. In states where water is scarce the doctrine of prior appropriation determines the use of the water. Under this doctrine the use of the water is determine by the state. Not the owner whose property is adjacent to the body of water. Accretion occurs when soil is deposited by the natural action of water. And may increase the size of the property When water recedes new land is acquired by reliction. Erosion is the wearing away of land or soil by the action of wind, water, currents or ice. Sudden tearing away of land by violent action of natural causes such as a river or other watercourse is called avulsion. A damn breaking or an earthquake is an example of avulsion.
License
Non-possessory interests in land include profits, water rights and easements. A license is a personal privilege to use the land of another. A license is not considered a true interest in the land because it is revocable at any time, and would not transfer with title. Examples of a license would include parking your car in a parking garage or your ticket to the movie theater A license can be created with an oral agreement such as giving someone permission to fish in your lake.
OR-EE rule
On the real estate exam you will here words like Grantor - Grantee Lessor - Lessee Vendor - Vendee Optionor - Optionee Trustor - Trustee Mortgagor - Mortgee Offoror - Offeree And the list can go on The jist of it is, the OR is the giver and the EE receives. Say this to yourself over and over again "GrantOR, LessOR, OptionOR, VendOR makes me the givOR of the propetOR for your pleasOR" So if you see words like Give Convey Sell That is an OR And then say "GrantEE, LessEE, OptionEE, VendEE, gives MEE propertEE which makes me HapEE" So if you see words like Receive Purchase Acquire You know it is an EE It may seem silly, but when you are taking your exam and you see a question that you do not understand but you know one party is giving something and the other party is receiving something you will be thrilled. For example a vendor sells to a vendee. The grantor coveys property to a grantee, who receives it. If on the real estate exam they ask who conveys property? And you see an option that says Grantor and another option is a Grantee. You many not know anything about deeds, but you know the answer is Grantor because OR is the conveyor.
Police Power
Police power is the state's inherent right to regulate an individual's conduct or property to protect the health, safety, welfare, and morals of the community. Unlike the exercise of eminent domain, no compensation need be paid. *Common examples of police power are Zoning, Building codes and rent control.
Taxation
Taxation is a charge on real estate that is used to pay for services provided by the government.
Real vs Personal Property
This is one of the most important concepts on the real estate exam. Real property refers to one of the two main classes of property, personal property being the other. All things attached to the land and all rights inherent with that land generally encompasses real property. As a general rule real property are things that are immovable. This is a general rule to help you pass the real estate exam as there are examples of things that are movable and considered real property. Personal property is a type of property are generally that things that are movable, it is not real estate. Personal property may also be called chattels or personalty. It is distinguished from real property, or real estate. because personal property is generally movable property or movables - any property that can be moved from one location to another. Personal property may be classified in a variety of ways. Tangible personal property refers to any type of property that can generally be moved (i.e., it is not attached to real property or land), touched or felt. These generally include items such as furniture, clothing, jewelry, art, writings, or household goods. In some cases, there can be formal title documents that show the ownership and transfer rights of that property after a person's death (for example, motor vehicles, boats, etc.) In many cases, however, tangible personal property will not be "titled" in an owner's name and is presumed to be whatever property he or she was in possession of at the time of his or her death. Severance is changing an item from real property to personal property by detaching it from the land.
Government Rights
To remember the government powers that will show up you real estate exam just think of the name PETE. P for Police Power E for Eminent Domain T for Taxation E for Escheat. These are not rights that an individual would have.