PA Real Estate Pre-licensing Terms

Land

The Earth's surface, down to the center of the earth and upward infinitely into space, that is not covered by water, including any items permanently attached to the land, such as plants

Real Estate

Land, plus all things permanently attached to it, naturally or artificially

Real Property

Real estate, plus the interest, benefits, and rights included with ownership

Personal Property

Property that is movable, may be owned by a person, and is not real property

Improvements

Permanent, man-made attachments that include things such as fencing, buildings, and walkways

The definition of real property includes interests, benefits, and rights. Can you identify what the rights are? (5)

Enjoyment, disposition, possession, exclusion, and control.

What represents Possession?

Right to occupy the property

What represents Control in a property?

Right to determine how others may use the property

What is Enjoyment of a property?

Right to (legally) use the property however the owner desires

What does it mean to implement an Exclusion?

Right to refuse others access to your property

What is a disposition?

Right to determine how, when, and whether the property is to be sold, leased, mortgaged, or transferred

What is the difference between Real Property and Personal Property?

Real property stays, while personal property goes (unless the buyers and sellers negotiate otherwise, which should be captured by the sales contract). When real property stays, we say it conveys with the property, and things that convey with it are called conveyances.

Name 5 examples of Real Property:

Built in microwave, built in fireplace (indoor or outdoor), in-ground pool, TV on wall, light fixtures.

{If these words are used to describe a structure, it's most likely Real Property - Custom, Built-in, Attached, Bracketed, In-ground and Fixture}

Name 5 examples of personal property:

Potted plants, free standing appliances (not built-in), photos, moveable lamps, above ground hot tub.

Regarding commercial properties, what is a Trade Fixture?

A piece of equipment or other item that is on or attached to the real estate and is used in a trade or business. Considered renters personal property. (restaurant appliances, vehicle lifts, etc)

Regarding agricultural properties, what is a Emblement?

Growing crops, such as decorative trees or corn, which are produced annually; usually not considered fixtures, but are the personal property of the person who planted them

In what contract(s) do you specify the Real and Personal Property items?

In the Listing or Sales Agreement

EXAMPLE: When Mrs. Goldman sold her home, she took several rosebushes, the antique light fixtures, two throw rugs, and the custom draperies. Was she within her rights?

If Mrs Goldman removed the items BEFORE the property was listed OR if it's stated in the contract, she's entitled to take them. However, if the items were on the property when she signed a contract, and she didn't negotiate with the buyers to remove them, then she likely should have left them.

What is Severance?

Altering the characteristic of an item from real property to personal property by removing it from the land

What are the 5 tests to determine the Property type?

M.A.R.I.A.

Method of annexation

Adaptability of item to land's use

Relationship of the parties

Intention in placing them on land

Agreement of the parties

What is the Method of Annexation?

Determining whether the item is attached to the property and how permanent the attachment is.

If it CANNOT be removed WITHOUT damaging the property, it's considered Real Property.

How do you use Adaptability of Item to the Lands Use to determine the type of property?

Find how the item is situated or adapted to the real property. Other items that fall under this category are garage door openers or the remote controls of other built-in features permanently attached to the property.

They adapted to the environment and must not be removed.

How can you use the Relationship of the Parties to determine if the property is real or personal?

The involved party's relationship - If there's a dispute between the person who added the item and the person who removed it. Court loves Tenants > Landlords and Buyer > Seller. Use Trade Fixtures as well.

How do you use the Intention in Placing Item on Land method to determine Real vs Personal property?

The intention of the party who installed the item is regarded as the most important consideration in determining whether the item should stay or go. Items can go from temporary to permanent or vice versa.

What occurs during an Agreement of the Parties that helps determine real vs personal property?

If the parties have agreed that an item will stay or go, then that agreement meets the legal test. To be safe, the agreement should be in writing. A bill of sale or agreement in the purchase contract meets these requirements.

What is Fruits of Nature?

Are plants that don't require annual cultivation. These include trees, perennial shrubs, and some grasses. Fruits of nature are considered real estate.

What is Fruits of Industry?

Are plants that require annual cultivation. These include crops of fruits, vegetables, wheat, and corn. Also known as emblements and are considered personal property, even though they're a part of the soil.

What is the opposite of Severance and what is an example?

Annexation. Happens when personal property is attached to real property, making it a fixture. So, when Mrs. Goldman first brought her rose bushes home from the nursery, they were personal property until she planted them or annexed them to the land, making them fixtures and part of the real property.

What's the difference in property regarding Plants in the soil and Plants potted?

Plants in the ground and attached to the soil are considered real property, whereas plants not affixed to the soil, such as potted plants, are considered personal property.

Why do we need an official legal description to describe land?

Bc when transferring ownership in real property street addresses—which can change—are insufficient. Street addresses merely identify location, but not the parameters of the land.

What are the Economic Characteristics of Real Estate?

Scarcity, Situs (preferred area), Permanence or Fixity of Investment, and Improvements or Modifications.

What are the Physical Characteristics or Real Estate?

Immobility, Indestructibility, and Uniqueness.

What is Non-Homogeneity?

Uniqueness, the inability to exactly replicate something.

What is a Deed?

A document that is evidence of legal ownership of a property.

What is the importance of getting a survey?

Obtaining a survey clearly defines a property and can reveal any potential concerns.

What is a Legal Description in terms of methods?

A method of identifying a property in written words that allows for an unambiguous interpretation of a property's boundaries and location

True or False; a survey doesn't include any improvements (like a house) on the property or any encroachments or easements.

False

What are the 3 Methods of Land Description?

Metes and bounds, lot and block, rectangular government survey system.

Metes and Bounds

A survey system using points of reference and directional indicators to identify and locate a property for legal purposes. {is the oldest method and is still used today}

Monument

A natural or man-made permanent landmark that serves as a point of reference in a metes-and-bounds description

How does the Metes and Bounds process work?

Describe property boundaries using precise locations, distances, and compass directions. The direction and distance of a line forming the boundary of the property are described by metes, while bounds refer to the physical features that define the boundaries of the land.

Lot and Block

A legal description that refers to a lot and block number within a subdivision as indicated on a recorded subdivision plat. {used in urban and suburban areas. Large tract of land is surveyed, then divided into smaller parcels.}

Rectangle Survey System (RGSS)

Was originally used to survey federally owned blocks of land. It is regulated by the Bureau of Land Management under the U.S. Department of the Interior and is used in 30 western and southern states. The RGSS isn't used in East Coast states except Florida and Texas.

What is a Mete?

Direction and distance of a line forming the boundary of a property

What is a Bound?

Physical features that define the boundaries of the land

Plat Map

A map which shows the location of a piece of property in context to its adjoining lots, roads and landmarks. It includes lot, street and block identifiers.

The lot and block system includes a two-step measurement process. What happens during each step of the process?

First Step: Either a rectangular or metes and bounds description is referenced.

Second Step: The land is divided into lots with numerical designations of the parcel.

True or False; Either a metes and bounds or a rectangular survey description is always the starting point for a lot and block survey.

True

What describes a Township?

A square that is six miles by six miles (36 square miles) and makes up the principal unit of the rectangular government survey system

How would you define a Section?

In a government survey system, a township is divided into 36 sections, and each section is 1/36th of the township, consisting of 640 acres.

What is the Principal Meridian?

An imaginary line that runs north and south and crosses a base line at a specific point, and used by surveyors of reference to locate and describe land using the rectangular survey system. Runs North-South

What is the Base Line?

An imaginary line that runs east and west and crosses the principal meridian at a specified point; it is used by surveyors as a reference point to locate and describe land under the rectangular survey system. Runs East-West

How do you find out how large a parcel of land is?

Look at the description: S½ SE¼ NW¼ Section 2, Township Clarkson. That tells us the parcel is 1/32 (1/2 × 1/4 × 1/4 = 1/32). Keeping in mind that the entire section is 640 acres, divide the 640 acres by 32 (1/32 × 640 = 20) to get 20 acres. The parcel is 20 acres.

Which direction does the Principal Meridian and the Baseline go to run through the initial point?

PM: North - South

BL: East - West

Which direction does the Range Lines and the Township Lines go to NOT run through the initial point?

RL: North - South

TL: East - West

What is each units' conversion?

1) 5280ft

2) 43,560 sqft

3) One Square mile

4) 3ft x 3ft

1) One mile

2) One acre

3) A section

4) One square yard

If an entire property is usually not considered in the finished square footage measurement, what spaces (3) are/are not included in the square footage?

Included: A finished attic with 7-foot ceilings.

Unincluded: Finished room above the garage with 6-foot ceilings and an unfinished basement. (HINT: Unfinished rooms and/or ceilings with lower than 7 ft of clearance)

Bundle of Rights

The tangible and intangible rights of ownership that come with owning real property; includes the right to sell individual "sticks" in the bundle separately from the land itself. The bundle of rights includes the rights of possession, disposition, enjoyment, exclusion, and control.

What is the Right of Possession?

The right to occupy the property in privacy, which belongs to the legal title holder

What is the Right of Enjoyment?

The right of the owner to use and enjoy the property in any legal manner

Definitions: Right of Control, Right of Disposition, and Right of Exclusion.

Control: The owner controls the use of the property

Disposition: The right to sell or convey the property

Exclusion: The right to decide who may or may not access the property

What's the difference between Littoral and Riparian Rights?

Riparian rights granted to landowners whose land abuts a natural flowing body of water, such as a river or stream. (small waters)

Littoral rights of landowners whose lands border commercially navigable closed bodies of water, such as lakes and oceans. (big waters)

Geology Terms for Water Rights/Ownership:

Accretion

Alluvion

Avulsion

Erosion

Reliction

Accretion - When water carries rock, sand and soil causing land build-ups.

Alluvion - The new creation of land from Accretion.

Avulsion - Loss of land by large changes in water flow.

Erosion - Loss of land due to natural force (water against rock erodes).

Reliction - The receding of water, uncovering new land.

True or False: Landowners adjacent to non-navigable waterways own the land under the water to the center of the waterway.

True

True or False: Littoral water rights are related to land that's next to flowing bodies of water, such as rivers or streams.

False

True or False: Landowners adjacent to a commercially navigable river own the land just to the water's edge.

True

What is the Doctrine of Prior Appropriation?

A legal process that grants water rights to the first individual or entity to take water from a source for beneficial use, such as agriculture or municipal water supplies

Water rights based on the doctrine of prior appropriation are different than other types of water rights, because prior appropriation isn't based on ________.

Location of water

Appurtenances and example of rights?

Automatic rights inherent in property ownership;

Profit, License, Air rights, Subsurface rights, and Water rights.

Profit

a legal term that means the right to take products out of the soil.

License

The permission to do something on another's land without actually possessing any interest or ownership in the land.

What is a Freehold Estate?

Ownership of Real Estate or property; the right of possession.

What is Leasehold Estate?

The right of possession without ownership. Tenants own leasehold estates, while the landlord owns a freehold estate.

What is Fee Simple (absolute)?

This refers to a form of ownership, not tenancy, so the owner of a fee simple estate can will the property and/or a successor can inherit the property. A fee simple absolute estate provides the most complete form of ownership and includes the bundle of rights.

What is Fee Simple - Defeasible?

One that permits the recovery of fee simple ownership if certain conditions aren't met. "Defeasible" means that the grantor (seller) has placed a limitation on the deed.​

What is an example of a Life Estate?

Property possessed for someone's lifetime. Tom Jr inherits his parents house.

What is an example of Fee Simple Determinable?

Tom Jr. can keep the property his parents transferred to him as long as he remains unmarried.

What is an example of Fee On Condition?

Tom Jr. can own the property his parents transferred, but if he develops the land, his ownership will end.

Fill in these examples:

1) She could sign a lease for a period of 12 months, establishing a(n) __

2) She could sign a lease for a period of 12 months, at the end of which the lease is renewed. This is a(n) ____

3) Or she could establish a(n) _______________ by signing a lease for an unspecified period of time, with the stipulation that either she or the landlord may terminate the lease by giving notice to the other.

4) At the end of all this, she could just refuse to leave the property when her lease terminates, creating a(n)

1) Estate for Years

2) Periodic Estate

3) Estate at Will

4) Estate at Sufferance

Remainderman

A life estate with remainder interests refers to a situation in which a remainderman named by the owner when forming the estate receives title to the property upon the death of the life tenant. A school will receive 20 acres upon the death of Teddy.

Act of Waste

An abuse of a property by a person who holds interest through a life estate. Getting the property taken/condemned.

Reversionary Interest

A life estate in which the property title reverts to the owner upon the death of the life tenant. Peter willed 20 acres to Teddy for life. If Teddy dies before Peter, the land goes back to Peter.

What is an example of Tenancy in Common (No right of survivorship)

Jack, John, and Joe are brothers. Their parents die, leaving them the family home. Each holds an undivided interest in the entire property, and there is no right of survivorship If one of them dies, that share will go to whomever he's stipulated in his will. (Tenancy in Common also applies to unmarried couples)

What is an example of Estate in Severalty?

Sergei has just purchased his first house. He owns it; no one else does! No one tells him what he can do with the house. No one shares his house with him or holds interest in the house (except his lender, of course). What ownership type describes Sergei's situation?

The happenin' condo is too much for Sidney. She's looking for something a bit more serene and decides to sell her share of ownership to Rita, who's now ditching the confines of Crusty Acres Retirement Center.

Can Sidney do this?

Yes, Sidney can sell her share to Rita, but Rita won't become a joint tenant with Thelma and Shirley. Instead, Rita is a tenant in common.

Adverse Possession

A person actually and visibly possesses someone else's real property for a statutory length of time and then claims it as his or her own; openly hostile to another's ownership claim

What are the 4 requirements to be eligible for an Adverse Possession?

The possession must be:

Open and Notorious (possession is obvious to onlookers)

Actual (Physical occupation)

Hostile (w/o permission)

Continuous and Uninterrupted

Tacking

The process of adding one adverse possessor's possessory time to the subsequent owner's adverse possession time to meet the statutory requirements

What two things do you need to complete to acquire ownership of your home after you've met all the requirements to qualify for Adverse Possession? BONUS: What is the statue of limitations in PA?

1) Appear in court and move to quiet title

2) Prove that you've met all requirements for the statutory period of time (PA: 21 years, except for single family homes on parcels less than 0.5 acres, it's 10 years)

What is Pur Autre Vie - Life Estate?

Created by a property owner who grants an estate to someone for the duration of another individual's life.

Encumbrance w/ Example

A limitation on a property title, such as a lien or easement (Example; an unpaid property tax lien)

Lien

A creditor's legal right to have their debt paid out of the property of a defaulting debtor, usually by a court sale. This a monetary encumbrance.

Non-Possessory

No right to occupy the property; easements are non-possessory rights

Encroachment vs Easement

An encroachment is a fixed intrusion onto a person's property. Unlike an easement, which is the authorized use of someone else's property for a specific purpose, an encroachment is unauthorized.

What are Covenants, Conditions and Restrictions related to Real Property? (aka CC&Rs)?

Usually referred to as CC&Rs, these are the usage limitations imposed on owners/shareholders of a community housing such as a homeowner's association, cooperative, condominium association. {Similar to a Deed Restriction, but the ownership is not threatened by violation}

Types of Liens

1) Specific

2) General

3) Voluntary

4) Involuntary

1) A lien levied against real property (e.g., mortgages, mechanic's liens, and materialmen's liens)

2) A lien against a person and all the property owned by that person, whether real or personal (e.g., judgment, estate and inheritance tax liens, income tax liens)

3) A lien that is agreed to, such as a mortgage

4) A lien imposed on a property or person by someone else, such as for nonpayment of taxes

Judgement Lien

A general, involuntary lien against a property due to a court decree resulting from a lawsuit

Mortgage Lien

A specific, voluntary lien against a single property that uses the property as collateral for loan repayment

Real Property Tax Lien

A specific, involuntary lien against property owners who have not paid property taxes

Mechanic's Lien

A specific, involuntary lien placed by contractors or subcontractors against a non-paying client's property