Level 2 Real Property

Q: What is real estate?

A: Land + man-made improvements attached to it (buildings, sheds, fences, sewers).

Q: What is real property?

A: Real estate + bundle of legal rights (possession, exclusion, disposition, quiet enjoyment).

Q: What are surface rights?

A: Rights to access the surface area of a parcel of land.

Q: What are subsurface rights (mineral rights)?

A: Rights to everything beneath the surface of land, including minerals.

Q: What are air rights?

A: Rights to use the airspace above the surface of the land.

Q: What are water rights?

A: Rights to access and use water bordering or passing through a property (riparian/littoral).

Q: What is a fixture?

A: Personal property that is permanently attached to real estate → becomes real property.

Q: Give 3 examples of fixtures.

A: Chandeliers, ceiling fans, garage door openers.

Q: What is a trade fixture?

A: Personal property attached to real estate, owned and used for a tenant’s business.

Q: What happens to trade fixtures left behind after a lease ends?

A: They become property of the landlord through accession.

Q: What is personal property?

A: Unattached, moveable items not considered real estate; also called chattel or personalty.

Q: How is personal property transferred?

A: By a bill of sale.

Q: How is real property transferred?

A: By a deed.

Q: What is severance?

A: Converting real property into personal property (e.g., cutting down a tree).

Q: What is annexation?

A: Converting personal property into real property (e.g., installing a ceiling fan).

Q: Personal vs Real Property: Ceiling fan in box vs attached?

A: In box = personal property, attached = real property.

Q: Who decides if something is a fixture?

A: Based on AAI: Annexation, Adaptation, Intention.

Q: What are fructus naturales?

A: Trees, bushes, grasses, and uncultivated plants → real property due to permanence.

Q: What are fructus industriales (emblements)?

A: Annually cultivated crops → personal property even before harvest.

Q: What is the Non-Realty Items Addendum used for?

A: To specify personal property that will transfer with a real estate sale.

Q: What determines whether a manufactured home is real or personal property?

A: Permanently attached to land + connected to utilities → real property; otherwise → personal property.

Q: What is the difference between modular and manufactured homes?

A: Modular homes → factory-built, assembled on permanent foundation → real property.

Manufactured homes → moveable, may be personal property unless permanently attached.

Q: What is the cheapest way to transfer ownership of personal property?

A: Bill of sale.

Q: What are improvements?

A: Human-made additions to land permanently attached → part of real estate.

Q: What are adaptation and intention in the AAI test for fixtures?

A: Adaptation = customized for property; Intention = owner’s purpose for item to stay.

Q: Example: Seller takes chandelier to new home → process?

A: Severance → real property → personal property.

Q: Example: Shelving attached to wall → process?

A: Annexation → personal property → real property.

Q: Example: Cattle on a ranch → real or personal property?

A: Personal property (chattel).

Subsurface rights

Ownership rights to everything beneath the surface of the land, extending down to the center of the earth; also called mineral rights.

Surface rights

Rights to access and use the surface of a parcel of land, including natural elements and structures built on it.

Improvement

Any permanent human-made addition attached to land, such as buildings, fences, decks, or roads.

Air rights

Rights to use the airspace above a property, which may be sold or leased separately.

Water rights

Rights of a property owner to access and use water bordering or flowing through their property.

Littoral rights

Water rights governing lakefront or oceanfront property, allowing use of the bordering water without altering it.

Riparian right

Water rights governing rivers and streams passing through or bordering property; owners may use but do not own the water.

Real estate

Land plus human-made improvements permanently attached to it.

Real property

Land from the surface to the center of the earth and upward into space, including improvements and the legal bundle of ownership rights.

Land

The earth’s surface, natural resources above and below it, and airspace; excludes human-made improvements.

Bundle of rights

Legal rights of property ownership, including:

• Right of possession – occupy and use the property

• Right of exclusion – keep others off your property

• Right of quiet enjoyment – legally use the property without interference

• Right of disposition – sell, lease, or transfer the property

Bundle of rights

Legal rights of property ownership, including:

Right of possession

– occupy and use the property

Bundle of rights

Legal rights of property ownership, including:

Right of exclusion

– keep others off your property

Bundle of rights

Legal rights of property ownership, including:

Right of quiet enjoyment

– legally use the property without interference

Bundle of rights

Legal rights of property ownership, including:

Right of disposition

– sell, lease, or transfer the property

Riparian

= rivers/streams

Littoral

= lakes/oceans

Real Property Definition

Land + improvements + bundle of legal rights

Personal Property Definition

Moveable, unattached items (chattel/personalty)

Real Property Transfer Document

Deed

Personal Property Transfer Document

Bill of Sale

Real Property Goes with property sale?

Yes, generally

Personal Property Goes with property sale?

Usually stays with seller unless specified

Examples of Real Property

Floorboards, ceiling fans (installed), chandelier (attached)

Examples of Personal Property

Dining room furniture, paintings, dog, unattached ceiling fan

Chattel

= cattle → movable property.

Fructus naturales

Real property

Trees, bushes, grasses (permanent, uncultivated)

Fructus industriales

Personal property

Annual crops/emblements (harvestable)

Mineral Rights

Underground minerals = real property

= real property

Mineral Rights

Extracted minerals

= personal property

Mineral Rights

Texas tip: Mineral rights may be separate from surface rights; buyers often ask about them.

Ceiling fan in box → Personal property

2. Ceiling fan installed → Real property (affixing)

3. Chandelier removed → Severance (real → personal)

4. Shelving attached to wall → Annexation (personal → real)

5. Cattle on a ranch → Personal property (chattel)

→ Personal property

Ceiling fan installed

→ Real property (affixing)

Chandelier removed

→ Severance (real → personal)

Shelving attached to wall

→ Annexation (personal →real)

Cattle on a ranch

→ Personal property (chattel)

personal property

Dining room table

What is the correct method to transfer ownership of personal property?

Bill of sale

A fixture is personal property that has been permanently attached to real estate and becomes part of the real property.

TRUE

example of a trade fixture

Shelving installed by a tenant in a retail store

Scenario:

Seller Mandy unbolts her hot tub from the deck and moves it to her new home. What process just occurred?

A) Annexation

B) Severance

C) Adaptation

D) Accession

Severance

Scenario:

Ricky buys a ceiling fan in a store. It is personal property when he brings it home. He installs it permanently on the ceiling. What process has occurred?

A) Severance

B) Annexation

C) Adaptation

D) Trade fixture

Annexation

Multiple Choice:

Which of the following usually stays with the seller in a property sale unless otherwise specified?

A) Floorboards

B) Wall-to-wall carpet

C) Dining room table

D) Built-in stove

Dining room table

True/False:

Fructus naturales (trees, perennial plants) are considered personal property.

False – they are real property

Multiple Choice:

Which of the following is personal property even before harvest?

A) Oak trees

B) Rose bushes

C) Wheat crops

D) Shrubs in landscaping

C) Wheat crops (fructus industriales/emblements)

Scenario:

A tenant installs custom kitchen cabinets in an apartment. When the lease ends, who owns the cabinets?

A) Tenant

B) Landlord

C) It’s split 50/50

D) Depends on the lease

B) Landlord (because they are fixtures in a residential lease)

Multiple Choice:

Which of the following rights is included in real property?

A) Right of possession

B) Right to sell personal furniture

C) Right to remove crops from another person’s land

D) Right to take the refrigerator from a sold house

A) Right of possession

True/False:

Trade fixtures must be removed before the last day of a lease to remain the tenant’s property.

TRUE

Multiple Choice:

Which of the following would likely be considered a fixture?

A) Free-standing refrigerator

B) Custom drapes for floor-to-ceiling windows

C) Couch

D) Television

B) Custom drapes for floor-to-ceiling windows

Scenario:

A ranch is sold. The buyer assumed the cattle were included. What is true?

A) Cattle are real property

B) Cattle are personal property (chattel)

C) Buyer automatically gets the cattle

D) Cattle are trade fixtures

B) Cattle are personal property (chattel)

Multiple Choice:

What is the main difference between real estate and real property?

A) Real estate includes improvements, real property includes legal rights

B) Real property is movable, real estate is fixed

C) Real estate includes legal rights, real property does not

D) There is no difference

A) Real estate includes improvements, real property includes legal rights

True/False:

Manufactured homes are always considered real property.

False – only if permanently attached to land and utilities.

Scenario:

A grill is mounted into cement in a backyard. The owner wants to take it when selling the home. What determines if they can?

A) Annexation, adaptation, intention (AAI)

B) Only annexation

C) Only intention

D) Severance

A) Annexation, adaptation, intention (AAI)

Multiple Choice:

If a mineral (oil) is removed from the ground, what happens?

A) Remains real property

B) Becomes personal property

C) Becomes trade fixture

D) Is abandoned

B) Becomes personal property

Multiple Choice:

Which is NOT transferred with a deed?

A) Surface rights

B) Minerals in the ground

C) Personal property items like furniture

D) Air rights

C) Personal property items like furniture

True/False:

The Non-Realty Items Addendum can act as a bill of sale for personal property included in a home sale.

TRUE