Real Estate Principles and Practices

Real Property

Consists of land, improvements attached to the land, benefits, rights, and ownership interests that go with the land.

Appurtenance

A right or privilege that is associated with property ownership, such as water rights or easements. Appurtenances are often included in property sales.

Improvements

Man's addition to the land.

Fixture

Item that was personal property but has been attached or installed in a way that it becomes real property (is attached).

Personal Property

A right or interest in something of a temporary or movable nature and includes anything not classed as real property. Also known as chattel or personalty.

Annexation

The process of attaching personal property (e.g., showerhead or ceiling fan).

Severance

The process of a fixture being uninstalled and once again becoming personal property.

Trade Fixture

Fixtures installed by a tenant in order to carry out a business (barber chairs; if left, they become landlord's property).

Emblements

Crops cultivated annually (not sugar cane, yes barley).

Metes and Bounds

Oldest method of land description, uses compass directions, degrees, and minutes. Also uses monuments.

Lot and Block

Most commonly used residential listing agreement; recorded in a map called a plat.

Rectangular Survey System

Known as the government survey system, and takes into consideration baselines meridians townships and sections. In a section (square) there are 640 acres. Each acre contains 43,560 square feet.

Police Power

Given to municipalities to regulate and control the use of property for the public good. Zoning is the most common example.

Eminent Domain

The right of government to take property for the public good. (Processes of Condemnation and reverse condemnation)

Taxation

Ad valorem taxes; property taxes are the highest priority lien on real property.

Escheat

Property reverts to the estate when someone dies without a will and no heirs.

Encumbrance

A limit on a property or a limit on property’s rights that may or may not also be a cloud on the title.

Encroachment

When a structure or improvement overlaps or trespasses onto another property.

Easement

Allows limited use of another's land; use without possession. Created by: implied, grant, agreement, reservation, necessity, condemnation. Terminated by: merger, release, abandonment. Dominant estate: benefits from easement. Servient estate: limited by the easement. Easement in Gross: belongs to a person or corporation; an example is utility easement.

Adverse Possession

Squatter's rights; property is acquired from the rightful owner through the Statute of Limitations.

Tenancy in Common

Ownership by two or more without rights of survivorship.

Joint Tenancy

Ownership by two or more WITH rights of survivorship; poor man’s will.

Tenancy by the Entirety

A specific type of joint tenancy where the co-owners are married to one another; it avoids probate.

Freehold Estate

Is ownership.

Fee Simple

The best type of ownership; the owner has all available rights to the property and can pass it to his or her heirs.

Life Estate

Ownership for the duration of someone’s life. Life Tenant: owner of the life estate. Remainderman: person who gets the property after the life estate is ended. Life Estate with Reversion: life estate setup for the property to go back to the original owner. Life Estate pur autre Vie: when the life estate is based on someone else’s life other than the life tenant.

Leasehold Estate

Created by lease agreement. Estate for years: A lease with a specific starting and ending date. Periodic Tenancy: A lease with a fixed period that is automatically renewed unless the tenant or landlord acts to terminate it (normally month-to-month). Estate at will: Can be terminated by either party at will without notice. Tenancy at sufferance: Occurs when a lease expires, and the tenant refuses to move out.

Gross Lease

Landlord pays all of the expenses; tenant only pays rent.

Net Lease

Tenant pays rent plus some of the expenses of the property.

Percentage Lease

The rent amount is based on the receipts of the tenant’s business (allows the landlord to participate in the tenant’s success).

Lien

A charge against the property as security for a debt (lien is an encumbrance - a limit on your rights). It grants the creditor a right to take possession of the property if the debt is not paid.

Riparian rights

the right to use water from a river or stream that borders your property

Littoral rights

the right to use water from a lake or ocean.

Deed

Legal evidence of ownership.

General Warranty Deed

Most common deed; guarantees and protects against defects.

Special Warranty Deed

Guarantees title only against defects arising under the grantor’s period of ownership.

Quitclaim Deed

Deed that gives NO warranties or guarantees and offers the least protection; it is used to clear a cloud on the title.

Market Value

The most probable price.

DUST

Acronym for the 4 basic characteristics of value.- Demand: there must be a demand for the item and the purchasing power to acquire it. Utility: the item must be needed or wanted. Scarcity: there must be a limited supply. Transferability: the item must be able to be sold; ownership rights must be transferable

Specific Lien

one or more SPECIFIC named properties.

General Lien

. A lien that attaches to all of a debtor's properties, not just a single property.

Voluntary Lien

A lien that is created by the agreement of the property owner, typically as a result of borrowing funds or financing.

Involuntary Lien

A lien that is imposed against a property without the consent of the property owner, often as a result of legal actions such as unpaid taxes or court judgments.