Real Estate

Real property

- the land, everything that is permanently attached to the land, and everything that goes with the land

- the land itself the improvements and the interests, benefits, and rights inherit in the ownership of real estate

personal property (personally)

all property that does not fit the definition of real property - primary characteristic is movability

Chattel

an item of movable personal property

Land

the earth's surface extending downward to the center of the earth and upward to infinity, including things permanently attached by nature, i.e. Trees and water. Includes substances below earth's surface and the airspace above to infinity

Parcel

a specific tract of land

Real estate (realty)

land at, above, and below the earth's surface including everything permanently attached (natural and/or artificial) as well as, all human-made permanent improvements on and to the land

The bundle of legal rights

the right to possession and use the right to exclude others, the right to profit from the land and the right to dispose of or encumber the land

Tenements

structures attached to the land

Hereditaments

any interests in real estate capable of being inherited

Economic characteristics of real estate

scarcity, location,improvements, permanence of investments

Physical characteristics of real estate

immobility, indestructibility, uniqueness

nonhomogeneity / heterogeneity

no two parcels of land are exactly the same

Situs

regards location and takes into consideration social factors and economic factors

improvements on the land

Improvements of a private nature i.e. fence

Improvements to the land

improvements of a public nature i.e. Sidewalks

improved land

Land that has been prepared for development

Disadvantage of owning land is that it lacks…

…liquidity

Fixity

the permanence of land and nature of real estate investments → real estate is immobile and has a specific location regardless of changes in the surrounding area

Highest and best use

the use that will give the owners the greatest actual return on their investment

Broker

acts as an intermediary on behalf of others for a fee / commission. One that is licensed to list, lease. Buy, exchange, auction, negotiate or sell interest in real estate for others for a fee

Advantages of real estate investments

well-located and fairly-priced veal estate investments have shown a good rate of return ; most real estate values tend to keep pace with the rate of inflation

Disadvantages of real estate investments

not a liquid asset; it is difficult to invest in real estate without some degree of expert advice; management decisions have to be made; there is a high degree of risk in real estate investments

Brokerage

the business of bringing people together interested in completing a real estate transaction

Commission

a percentage of the amount of the transaction ( can be paid by any party)

Provisional broker

a real estate licensee who preforms real estate activities under the supervision of a licensed real estate B.I.C. Must complete post licensing courses

Appraisal

the process of estimating the value of a parcel

Property management

someone who handles the operations of a property for its owner -basic responsibility is to protect the owners investment and maximize the owner's return on investment

Financing

the business of providing the funds necessary to complete real estate transactions

Property development

includes the work of developers, who purchase raw land, divide it into lots, build roads, and install sewer systems

Counseling

providing competent independent advice and guidance on a variety of real estate problems

Education

the provision of information to both the real estate practitioner and the consumer

Market

a place where goods are bought and sold ,where value of goods are determined, and where it is advantageous for buyers and sellers to trade

Point of equilibrium

where supply and demand are equal

Factors that affect supply

the labor force, construction costs, government controls, and monetary or financial policies

Factors that affect demand

population, demographics, and employment and wage levels

Bundle of legal rights

right of disposition, enjoyment to use in any legal manner, exclusion, possession, and control (DEEP C)

Appurtenance

A right or privilege that goes with the ownership of land

→ subsurface rights, air rights, water rights, improvement to property

Improved land

land that has a structure on it (house)

Improved lot

certain basic required services necessary to utilize it are available (electricity, telephone, street access, water access) improvements

may refer to buildings, fences, sheds, of services

Surface rights

the rights to use the surface of the earth

Subsurface rights

the rights to use the space below ground level and to extract the natural resources lying below the earth's surface (minerals, coal, gas, oil ,water)

Air rights

right to use the air above the land

Riparian rights

rights in land that borders on or includes A stream, river, or lake these rights include access to and use of the water

Littoral rights

owners have unrestricted use of navigable waters but Own the land adjacent to the water only up to the mean high-water mark

Doctrine of prior appropriation (western states)

water rights are determined by priority of beneficial use, the first person to use water or divert water for a beneficial use or purpose can acquire individual rights to the water

Accretion

a gradual increase in land resulting from the deposit of soil by the water

reliction

gradual recession of water which uncovers land that usually belongs to the riparian owner

Erosion

gradual wearing away land of caused by flowing water - may cause an owner to lose land

Evasion

sudden act of nature removes soil - does not change property boundaries -the owner has a right to reclaim lost land

Lateral support

the right to have adjacent property support the natural boundaries of the land

Subjacent support

the support of the surface of land by the land's subsurface - the duty of the owner of subsurface rights to support the surface of the land

Real property (fructus naturales -fruits of nature)

trees, perennial bushes, and grasses that don't require annual cultivation

Personal property (fructus industriales-fruits of industry)

annual crops a.k.a. emblements

Severance

changing an item of real estate to personal property by detaching it from the land

Annexation

process of converting personal property to real property

Fixture

an item that was personal property but has been affixed to land or a building that the law construes it to be part of the real estate

Total circumstances test

legal test applied by the courts to determine whether the item is a fixture or personal property

What is the total circumstances test? (IRMA)

Intention of the annexor

Relationship of the annexor

Method of annexation

Adaptation to real estate

A bill of sale(receipt)

a written instrument that attests to a buyer's purchase of personal property from a seller

Trade (chattel) fixture

an article installed by a tenant under the terms of a lease and removable by the tenant before the lease expires

Agricultural fixtures

a fixture attached to leased property by a tenant farmer is considered the landowner's real property rather than the tenant's personal property

North Carolina uniform commercial code(UCC)

if a homeowner purchases an item on credit and gives the creditor a security agreement, the item remains personal property and may be removed by the creditor in the event of default. when the item has been paid for in full is it real property

Manufactured home

→ if it is still mobile with its own wheels and chassis and has a VIN number registered with the D.M.V. It is considered…

personal property

Manufactured home

→ the moving hitch, wheels, and axels must be removed and the unit must be attached to a permanent foundation on land owned by the owner of the manufactured home the owner then needs to file an affidavit confirming the aforementioned actions

the Home is considered real property and an improvement to the lot

Manufactured buildings (including modular homes)

these units are constructed in factories Off site according to state building codes and contain a state-inspection label with serial numbers certifying compliance once the modular home is assembled on the home site, it is immediately considered to be real property

Estate in land

the amount and kind of interest that a person has in real property

Estate

may be defined as the degree, quantity, nature, and extent of interest one has in real property

Freehold estates

→ passed from grantor to grantee via the deed when title to real estate is conveyed

estates of indeterminable length of ownership

Estates of inheritance

continue for an indefinite period and are inheritable by the heirs of the owner

Estates not of inheritance (measuring life)

terminates on the death of the named person on whose life the estates are based

Nonfreehold (or leasehold) estates

any estate that is not a freehold estate

Leasehold estate

exists on property in addition to a freehold estate when property owner has rented the property to a tenant

Fee simple estate

entitled to all rights in the property, complete ownership

→ estate of inheritance and is always legally transferable

Fee simple absolute

no limitations

Fee simple defensible

may be lost on the occurrence or non occurrence of a specified event

Fee simple subject to a condition subsequent estate

dictates some action or activity that the new owner must not preform

Reversionary right

if the condition is broken the former owner can retake possession of the property through court proceedings

Fee simple defeasible estate (qualified estate)

requires that a specified activity or land use continue

→ the former owners, their heirs, or their successors retain the right of reversion that automatically reacquires full ownership if the special condition ceases to exist

Life estate (partial estate)

a freehold estate in land that is limited in duration to the life of the new owner or to the life or lives of some other designated person or persons

Conventional life estate

created by grant from the current owner of the fee simple estate

Marital life estate

NC law permits that when someone dies without a will, or dies with a will disinheriting a spouse or leaving him/her very little that the surviving spouse may choose an "elective share" of the estate instead

Life estate pur autre vie

the life tenant owns the property and it is owned for the lifetime of some named third party (measuring life)

Remainder interest

a future interest in real estate created by the grantor for some third party that will be enjoyed after the termination of a prior estate, such as when an owner conveys a life estate to one party and the remainder to another

Reversionary interest

a future estate that the grantor holds while granting a life estate to another person

Asestovers

the right to use property resources to maintain the property

Waste

injury to real estate

Homestead

a legal life estate in real estate occupied as the family home

severalty

title is held by only one person

Concurrent

title to one parcel of real estate is vested in two or more persons or entities

Unity of possession

no one owner may possess a portion of the property and not allow access to the other owners

Tenancy in common

a parcel of real estate may be owned by two or more people/ entities

Joint tenancy

ownership shares are usually required to be equal

Right of survivorship

the death of one of the joint tenants does not destroy the ownership unit - it only reduces by one the number of people who hold title to the property

Tenancy by the entirety

concurrent ownership reserved for spouses - right of survivorship is mandatory → makes the surviving spouse owner in severally immediately upon the death of a spouse

Common interest community (hybrid) ownership

contains elements of both ownership in severally and concurrent ownership

Condominium laws

the occupant / owner of each unit holds a fee simple absolute title to the unit (title to airspace)

Cooperative ownership

title to land and building is held by a corporation - the building management sets a price for stock shares for each unit in the building - each tenant purchases stock in the corporation when they pay the agreed-on price for use of a specific apartment - purchaser becomes a shareholder and receives a proprietary lease to the unit for the life of the corporation -no deed because there is no ownership

Town house ownership

similar to condo ownership with one Fundamental difference: the owner of each town house unit also owns the land on which the unit is built

Time-share ownership

any right to occupy a unit of real property during five or more separated time periods over a period of at least five years

→ permits multiple purchasers to buy interests in real estate - each purchaser has a right to use the facility for a specific time period

Trusts

a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary

-A means by which one party transfers ownership of property to another party to hold or manage for the benefit of a third party

→ limit the time and cost of probate