Real Estate Study Definitions

Asset

item of value

Bundle of Rights

ownership of land with all of the legal rights of possession, control, quiet enjoyment, exclusion, transfer, and encumber

Common Law

the side of law which arises from judgments and decisions made in courts rather than explicit legislation

Equity

The portion of a property's total value owned outright by the holder to title; the current market value - mortgage debt = ______

Exclusion

a right included in the bundle of legal rights to real property which empowers the owner to allow or deny others' use of the property

Improvement

aka. Fixtures; non-natural structure built on or affixed to land

Land

the surface of the earth, including all permanently attached natural features, extending downwards to the center of the earth and upwards to infinity

Legal Title

complete legal ownership of real property and the bundle of rights associated

Property

any item which may be owned, including the rights associated with ownership

Real estate

land plus all improvements made by humans or nature

Real Property

land from the surface to the center of earth and upward into space, including everything attached by humans or nature as well as the bundle of legal rights of ownership

Possession (aka: Right To Use)

Right to occupy, live, breathe, and do whatever on your property because you own it.

Deposition (aka Right to Transfer)

Right to sell, lease, and/or will a property to anyone you choose (you have the right to transfer all of your property rights or just some of them)

Quit Enjoyment

a lessee's right to possess a property without interference from lessor, previous owner, or anyone else about the claim to the title

Control

Right to alter, change, or improve a property as an owner sees fit.

Encumber

Right to put a property on the line as collateral for debt.

Deal Package (aka Right TO Control)

This is a combination of control and encumber. You have the right to change and put a line of debt on the property.

Types of Properties

Residential, Commercial, Industrial, Agricultural, Special purposes

Chattel

a commonly used term for personal property in the world of real estate

Emblements

aka Fructus Industriales; plants or crops intended for harvest and treated as personal property

Fixture

aka Improvements; an object that was once personal property but is now firmly attached to the land in such a way that it is considered to be real property

Personal Property

any unattached, movable asset on the property not considered real estate (land plus improvements); aka chattel or personalty

Severance

the act of converting real property into personal property

Trade Fixture

aka. chattel fixture; personal property that is owned by and needed for a tenant’s business

Affixation

aka. Annexation; The process of converting personal property to real property

Affixation (aka Annexation) Types:

Close Association, Adaption, Agreement

Close Association

a conceptual linkage to personal property (ex. Garage door opener)

Adaption

The customization of personal property for the use of real property. (ex. Custom drapes) Often times this is considered real property

MARIA

M-Method of attachment, A-Adaptability, R-Relationship of the party, I-Intent, A-Agreement:

M-Method of attachment

Fefers to how the potential fixture is installed

A- Adaptability

Anything that is specifically adapted to the home (ex.window shades) or integral to the operation of the home (ex. Window air unit)

R-Relationship of the party

Landlord tenant relationship. When a tenant leaves they can take anything they installed

I-Intent

Why was it built. Something like a built-in bookshelf could be considered a fixture but if something was built with the intent to take it with them when they left that could be personal property

A-Agreement

Final contract trumps al

Accession

the right to all that one's own property produces, including that which is added, either naturally or by human action, to the property already owned

Accretion

the process that results in the gradual increase in land area through deposits of soil by natural forces

Avulsion

the sudden loss of land by flood or when a stream or river changes course

Erosion

the gradual loss of land over time

Fixity

refers to the fact that real estate exists in a fixed location and cannot be moved; describes this truth about land from an economic viewpoint

Modification

man-made changes to a parcel of land—or to the surrounding area—can significantly increase or decrease its economic value and utility

Illiquidity

the relative difficulty of converting an asset to cash without loss of value

Reliction

a gradual increase in land area when water gradually withdraws

Scarcity

the economic characteristic that informs the economic principle of supply and demand

Situs

the economic significance of a property's location

Land Characteristics

Indestructibility, Immobility, Non-homogeneity

Economic Characteristics of Land

Scarcity, Situs, Modification, Fixity, Illiquidity

Physical traits of land:

Accession, Accretion, Avulsion, Erosion, Reliction

Air Rights

the right to use the airspace above the surface of land

Air Space

the area above ground that is owned along with a property; could include space above a piece of land, or the space owned inside a condominium unit

Appurtenance

rights that run with real property ownership; most often transferred with the property, but possible to sell separately

Doctrine of Prior Appropriation

doctrine granting a state the power to control and regulate all water resources within its borders

Littoral Rights

rights that govern lakefront or oceanfront property and usually allow the property owner to use the water bordering their property

Percolating Water Rights

laws that govern the use and ownership of underground water

Rule of Capture

states that a landowner who drills a well for gas or oil on their land is entitled to all that well produces, even if the gas or oil migrates from beneath a neighbor's property.

Riparian Rights

rights that govern the use of flowing water, such as rivers and streams that pass through or border a property

Subsurface Rights (or mineral rights)

ownership rights to all that is found beneath the surface of the tract of land owned, extending downward to the center of the earth; aka mineral rights

Surface Rights

the rights to access the surface area of a parcel of real property

Water Rights

the right of a property owner on a waterfront to access and use that water

What are the Supporting Rights of Rule of Capture

Lateral support & Subjacent support

Subjacent support

Rule of Capture Supporting Right that comes from the underlying earth

Lateral support

Rule of Capture Supporting Right that is provided by adjacent properties.

Riparian & Littoral

Rights associated with water front properties

Conventional Life Estate

is a life estate in which the measuring life is that of the life tenant; it is an estate created by a deed that lasts for the duration of the tenant's life

Curtesy

the right of a spouse to inherit property held in their spouse's name after that spouse dies; curtesy is the word used for men, dower for women

Dower

the right of a spouse to inherit property held in their spouse's name after that spouse dies; curtesy is the word used for men, dower for women

Elective Share

a statutory right in some states which allows the surviving spouse to claim an interest in a decedent's real and personal property regardless of the provisions established by a will

Encumbrance

a non-possessory interest in a property that burdens the title

Estate

a possessory interest in real property

Fee Simple Absolute

an estate without restrictions that is freely given to heirs

Fee Simple Condition Subsequent

a defeasible fee estate that comes with specific requirements (or conditions)

Fee Simple Defeasible (aka. Defeasible Estate)

a property interest characterized by perpetual ownership on the condition that the property is used for a certain purpose or under specific conditions; ownership reverts back to the original owner if these stipulations are violated

Fee Simple Estate

maximum ownership of real property; is of indefinite duration, freely transferable, and freely inheritable; aka fee or fee simple absolute

Freehold Estate

aka. inheritable freehold estates; a form of ownership with an indeterminate (undefined) length

Freehold Tenant

the owner of a freehold estate

Homestead Laws

laws which protect a homeowner from loss of their principal residence from the claims of most creditors and require both spouses to execute any instruments of conveyance

Legal Life Estate

any life estate created by a function of law as opposed to the actions or desires of a property owner

Life Estate

a type of estate limited to the duration of a measuring life

Pur Autre Vie

a life estate characterized by ownership lasting only for the duration of a designated party's lifetime

Remainder Interest (aka. Remainderman)

the interest in an estate that will pass to another party (other than the grantor) at the death of the person upon whom the life estate is based

Reversionary Interest (aka. Right of Reverter)

the interest in an estate wherein, upon the death of the life estate owner, full ownership reverts back to the original fee simple owner (grantor)

Fee Simple Determinable

a type of fee simple defeasible estate which causes the title to automatically revert to the original owner if the deed requirements regarding property use are violated

Type of Freehold Estates

Fee Simple & Life estate

Absolute (Fee Title)

Zero restriction and handed down to an heir

Type of Simple Estates

Absolute (fee title) & Defeasible

Type of Defeasible Estates

Determinable & Condition Subsequent

Type of Life Estate Interests

Remainder & Reversionary

Act of Waste

Refers to the Remainder Interest, if the current occupant where to cause damage that would effect the next in line they could be held liable