Real Estate Foundations

Surface Rights

The right to access the surface area of a parcel of real property

Alexis has the right to access the surface area of a parcel of real property she owned. This means she has the right to enter the home built on her property. Alexis’ rights can BEST be described as:

Surface Rights

When an individual owns the mineral rights, they own

subsurface rights

The rule of capture states:

A landowner who drills a well for has or oil on their land is entitled to all that well produces

Supporting Rights

The legal concept of responsibility adjacent landowners share

Lateral Support

Provided by adjacent properties

Subjacent Support

Comes from the underlying earth

Air rights

refers to the right to use the air space above the surface of land

Air space

The area above the ground that is owned along with a property. Can be sold separately

A homeowner sold their mineral rights to a gas company. In extracting the natural gas below the property, the gas company tore up the homeowner's garden and destroyed their prized rose bushes. Which property right did the gas company violate?

surface rights

Prior appropriation is a legal doctrine that applies to

All water resources within a state’s boarders

GA Groundwater Use Act

Dictates how much ground water can be used. States people can’t take more than 100,000 gallons of water per day from a water source

Which right is associated with lakefront or oceanfront property?

littoral

If someone has a river on their property, what type of rights would be associated with it?

riparian

Water Rights

The rights of a property owner on a waterfront to access & use that water

Riparian Rights

Govern the use of flowing water, such as rivers and streams that pass through or boarder a property

Littoral Rights

Govern lakefront or oceanfront properties and usually allow the property owner to use the water boarding their property . Also prohibits an owner from artificially changing the water

Navigable Water

The landowners to each side of the water own the land just to the water’s edge

Non-Navigable Water

Ownership extends to the mid-point beneath the flowing water that divides their property

Percolating Water Rights

refer to the use and ownership of underground water

Appurtenances are:

Rights that run with real property ownership, most often transferred with the property, but POSSIBLE to sell separately

Larry's neighbor is questioning rights related to the lakefront Larry lives on. What kind of rights is Larry's neighbor calling into question?

Littoral Rights

All of the following are part of land’s unique characteristics except:

inherit value

Emanuel and Dennis each own properties that look exactly the same and are the same size. Which of the following is TRUE about their respective properties?

Each property is non-homogenous because each property occupies a different space the Earth

Indestructibility

No matter what land will still exist

Immobility

You cannot move land

Non-Homegous

Every piece of land piece

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, is known as :

accession

The process that results in the gradual increase in land area through deposits of soil by natural forces is known as:

accretion

The gradual loss of land over time is known as:

Erosion

Reliction

A gradual increase in land area when water gradually withdraws

The sudden loss of land by flood or when a stream or river changes course is known as

avulsion

Sandiya owns property by a reservoir, and her property line extends to the edge of the reservoir. In the past 15 years, the area has become dryer, causing the reservoir to gradually shrink, extending her property line farther and farther. What word describes this process?

reliction

The cost of real estate in a metropolitan area has gone up dramatically over the past year because an increasing number of people has been moving to that area, and there are only a finite number of parcels of land that are close to the downtown area. This is an example of:

Scarcity

When Disney World® was built, the farmlands that surrounded the theme park suddenly appreciated in value. This BEST describes an example of the economic power of:

modification

Situs

The location and economic qualities of that area that make it more or less desirable

Fixity

Also known as investment permanence. Refers to the fact that real estate exist in a fixed location and cannot be moved.

The relative difficulty of converting an asset to cash without the loss of value is known as:

illiquidity

Earl just accepted a job overseas and has to report in one month. Broker Jane tells Earl they can likely sell his home by then, but the selling price will probably be adversely affected by trying to convert to cash quickly. What economic characteristic of land is being addressed here?

illiquidity

An investor carefully considers the economic impact of a property’s location before buying, because they know they can’t move the land once they own it

fixity

land cannot be moved

fixity

A new water park opens up in Andrea that was once empty. The land around it becomes more valuable as people want it to build hotels and restaurants

modification

human-made improvements can affect the value of land

modification

A homeowner has to sell their property in two days, so they lowered the price well below market

illiquidity

The supply of land is finite

scarcity

Everyone wants to live downtown, so land there is more expensive

Modification

Real Property

Land + permanent improvements + the set of rights associated with real estate. Conveyed by deed

Personal Property

Also called chattel. An unattached, moveable asset not considered real estate. Covered by gift by bill of sale.

Primary distinction between real and personal property

It is found in the permanence of the property being considered and method of conveyance

Which of these things is an example of personal property?

a car

Emblements

Also known as fructose industrials; Crops intended for harvest and treated as personal property.

Plants that are cultivated and harvested are considered personal property and referred to as:

Emblements

Gil purchases a new light fixture for his dining room. While the light fixture is still new, wrapped in the box, and unattached to ceiling, what is it considered to be?

Personal Property

Ashanti is license holder shower a house to a potential buyer. She is not sure if some of the items in the house are real property or personal property. Which of the following is TRUE about Ashanti’s situation?

Property is a source of confusion, so Ashanti would wise discuss and put in writing what is real property and what is personal property.

Fixtures

An object that was once personal property but is now firmly attached to the land in such a way that is considered to real property

Affixation

Also called annexation. The process of converting personal property to real property.

What is a fixture?

Personal Property that’s transformed into real property

Close Association

A conceptual linkage to real property

When the parties to a contract agree that personal property will remain with the real property, this is known as:

Agreement

What is the definition of a trade fixture?

Personal property attached to real property that is owned by and needed for a tenant’s business

Severance

The act of converting real property into personal property

In reference to the MARIA acronym, all of the following are examples of property that are considered fixtures due to the content of “adaptability” EXCEPT:

a generic washer and dryer set

According to the “I” in MARIA (intent), something that was intended to be permeant, like a built-in bookcase:

Is probably a fixture

M.A.R.I.A

acronym for determining wether an item is real or personal property

Residential Property

A property used for the purpose of habitation

Which of the following is NOT a type of residential real estate?

industrial warehouses

Commercial Properties

Properties that generate revenue for their owners

Commercial properties include all of the following EXCEPT:

Apartments

Industrial Properties

Properties that are typically constructed or remolded with highly specialized needs/features appropriate for: the manufacture of products or materials, operating as distribution facilities, or warehouse

All of the following would likely be considered industril real estate EXCEPT:

restaurants

Agricultural real estate can be defined as:

properties dedicated to the commercial cultivation of food, feed and fiber

Special-Purpose Properties

A property characterized by its, often, limited purpose in mind. The main characteristics of this property are: it’s publicly owned, require substantial reinvestment amounts and do not come up for sale as frequently as other property types

What is a typical characteristic of a special-purpose real estate property?

Publicly owned

What is land?

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

What is real estate?

the land + improvements

Improvement

Any non-natural structure built on or affixed to land

Which of the following is NOT an example of an improvement?

Oak Tree

What is real property?

Land and improvements PLUS the set of rights associated with real estate ownership

Bundle of Rights

A set of legal rights that come with home ownership (exclusion, possession, transfer, quiet enjoyment, control, encumber)

The right of exclusion

Gives the owner the right to tell trespassers (or anyone) to get off their land

Hunter Hal lives on a heavily wooded, large lot with many pine trees and wildlife. As a result, many hunters come onto his land during hunting seasons. What does Hunter Hal have the right to do in this scenario?

The right of exclusion gives an owner the right to tell trespassers (or anyone!) to get off their land.

The right of possession

the right to occupy, live, breath, and do whatever you want on your property because you own it.

The Right of Disposition

The right to sell, lease, or will property to anyone you choose (also called the right to transfer)

When Colby decides to sell his property to Chadwick, he is exercising which right?

Right of Disposition

Quiet Enjoyment

The right to (legally) uses the property however you want, NO MATTER WHAT, without interference from a lessor or previous owner

Right of Control

The right to alter, change, or improve a property as an owner sees fit

Encumber

The right to put a property on the line as collateral for debt

What is property?

Any item that may be owned, including the rights associated with ownership

Tangible vs. Intangible

Tangible - Possessions that physically exist

Intangible = Incorporeal Things

All of the following are examples of tangible property except:

Stocks

When property changes hands, that property is being:

Conveyed

Asset

Item of Value

Equity

All of the value of a property above what an owner owes their lender or debt holder

What is the portion of a property’s total value owned outright by the holder to title, equal to the difference between market value and all outstanding debts on the property?

Equity

Legal Title

The complete legal ownership of real property & the bundle of rights associated. Conveyed by deed.

Common Law

The side of law that arises from judgements and decisions made in courts rather than explicit legislation

An estate can be defined as:

a possessory interest in real property

Which of the following is TRUE of freehold estates?

Ownership is for an undetermined or unspecified (and therefore unlimited) period of time

Jane owns her house. For the duration of her lifetime, she has the right to her property (unless she sells it) and can will her property title to her children after her death. What type of estate does Jane have?

Fee Simple Estate

Defeasible estates are:

any estates conveyed by a grantor with conditions that -if violated - could make them null or void