Property Classification: All property can be divided into two main categories:
Real Property: Refers to the land, houses, trees, and any other structures permanently attached to the land, often called fixtures or improvements.
It has its own specific set of rules for transactions such as selling, buying, mortgaging, and investing.
Personal Property: Refers to non-real estate items.
Understanding Land
Characteristics of Land:
Occupies a specific, fixed point on the globe.
Is permanently fixed and immovable.
Is unique; no two pieces of land are exactly the same.
Is used by local governments for assessing taxes.
Key Real Property Terms
Equity: A person's value in a property, calculated by subtracting the amount owed on the property from its current fair market value.
Real Estate Market: Encompasses all buyers, brokers, lenders, sellers, and other participants involved in real estate transactions.
Property Classification by Use
One of the oldest and most easily understood methods of classifying property is according to its use.
Unimproved Land (Raw Land): Land that has no buildings or structures on it.
Residential Property: Land that includes a structure designed for personal living, such as a home.
Commercial Property: Consists of lots and buildings specifically designed for businesses.
Farm/Agricultural Property: Land devoted to the cultivation of crops or livestock.
Recreational Property: Comprises parks owned by federal, state, county, or city governments.
Government Property: Vast acreage in the United States owned by federal or state governments.
Types of Residential Property
Single-Family Homes: Includes various examples:
Standalone residential houses.
Duplexes (2 family units under a single roof).
Triplexes (3 family units).
Four-family homes (4 family units).
Apartments: A type of residential real estate that consists of five or more living units per building.
Condominium: Similar to an apartment but grants the resident an ownership interest in the interior of the dwelling, with no rights to the exterior.
Townhouse: Residents own the entire unit, including both the inside and exterior walls, and also own the land upon which the townhouse is situated.
Cooperatives
Definition: Often involve large tracts of land or working farms in which several persons share an ownership interest.
Can also refer to shared apartment buildings where residents collectively own the property.
Mobile Homes & Manufactured Housing
Mobile Homes:
Can be classified as either real or personal property, often considered personal property.
Classification is highly dependent on state law and various factors.
Oklahoma Law Specifics:
If a mobile home is located on land owned by the owner of the mobile home, it is considered Real Property.
If a mobile home is located on land owned by someone else, it is considered Personal Property.
Manufactured Housing and "Kit" Homes:
Homes where all or some fabrication occurs away from the actual home site.
Classified as personal property until they are permanently attached at the job site.
Types of Commercial Property
Retail Properties: Contain stores and shops.
Wholesale Properties: Consist of warehouses and supply depots used for storing merchandise.
Shopping Centers/Malls: Large commercial areas occupying vast tracts of land, offering a wide variety of items for sale.
Industrial Property: Includes factories, research facilities, and other production facilities.
Industrial Parks: Areas specifically designed to provide businesses with access to major highways, electrical grids, and other essential infrastructure.
Industrial Property Subdivisions
Most areas further subdivide industrial categories into light and heavy industry.
Light Industry: Any manufacturing plant or factory that does not emit excessive odors or machinery noises.
Heavy Industry: Emits noxious odors, loud noises, or uses dangerous chemicals or materials.
Estates in Land: General Concepts
Definition of an Estate: A bundle of rights that accompany title to property, representing a right to use or enjoy real property.
Types of Estates:
Present Estates: Confer an immediate benefit on the owner.
Future Estates: Will only confer a right at some point in the future.
Fee Simple Estates
Fee Simple (also known as Fee Simple Absolute):
Represents the most complete set of rights possible to have in a parcel of real estate.
Rights of Fee Simple Owners:
The right to use and possess the property.
The right to mortgage the property.
The right to lease the property to others.
These rights are still limited by both public and private laws.
How a fee simple estate is created/written:
"To A."
"To A from B"
"From B to A"
Conditional Fee Simple Estates
Two main types:
Fee Simple Determinable:
Created when property is transferred with a stipulation that it must be used in a certain way.
A violation of the use stipulation automatically transfers title back to the grantor or a different designee.
How a fee simple determinable estate is created/written:
"To A as long as the property is used as a farm."
Fee Simple on a Condition Subsequent (also called Fee Simple Subject to a Condition Subsequent):
Similar to fee simple determinable but with a key difference.
A violation of the condition does not automatically transfer title.
Instead, it gives the original grantor or their heirs the right to enforce the condition, often by exercising a right of reentry.
How a fee simple on condition subsequent is created/written:
"To A from B but if the land is no longer used as a farm, then B has a right of reentry."
Life Estates
Definition: Created when an owner leaves property to another person, but only for the duration of that person's life.
Life Tenant: The person who receives the property for life.
Possesses almost all the rights of the original owner.
These rights terminate automatically upon the life tenant's death.
Remainderman: The person who has the right to receive the property in fee simple once the life tenant dies.
Example: "To A for life, then to C." (In this example, A is the life tenant and C is the remainderman).
Historical Context of Life Estates
Policy Reason: Life estates were historically created to provide a mechanism allowing a surviving spouse to retain rights in the marital property after the death of the other spouse.
Dower and Curtesy: Ancient legal concepts under which a surviving spouse had a legal right to a priority claim on a fraction of the marital property.
Most states have abolished these principles, replacing them with other spousal protections in modern law.
Considerations for Life Estates
Waste: Any action taken by the life tenant that adversely affects the quality or value of the estate that will eventually transfer to the remainderman.
A life tenant can be held liable to the remainderman if they allow waste to occur.
Merger: Occurs when the same person is designated as both the remainderman and the life tenant.
In such a case, the life estate is terminated, and the property passes by fee simple to that person.
Life Estate Pur Autre Vie: A unique type of life estate granted to one person but that terminates upon the death of another specified person (not the life tenant).
Example: "To A for C's life, then to D." (A holds the estate for as long as C lives; upon C's death, D receives the property).
Concurrent Ownership
Focus: This area of real estate law addresses the issues that arise when more than one person owns a single tract of real property simultaneously.
Specific Types of Concurrent Ownership
Tenants in Common (TIC):
Inheritability: The ownership interest of each co-tenant transfers to his or her heirs upon death.
Possession and Use: Each tenant has the right to possess and use the entire property.
No Right of Survivorship: This is a key distinguishing feature; unlike joint tenancy, the surviving co-tenants do not automatically inherit the deceased co-tenant's share.
Transferability: Each tenant is free to transfer their individual ownership interest to others during their lifetime.
Shares: The ownership shares of tenants in common do not need to be equal.
Default Assumption: Tenancy in common is usually assumed by default when parties are not specific about the type of concurrent estate they are creating.
How Tenancy in Common is created/written:
"To A and B."
"To A and B as husband and wife." (This language is not specific enough to create a joint tenancy or tenancy by the entirety in most jurisdictions).
Joint Tenancy (also known as Joint Tenancy with Right of Survivorship):
Similarity to TIC: Shares some characteristics with tenancy in common.
Key Difference (Right of Survivorship): Co-tenants have the right of survivorship.
Right of Survivorship: This means that upon the death of one co-tenant, their ownership interest automatically passes to the surviving co-tenant(s) in fee simple, rather than to the deceased's heirs.
Creation Language: Requires very specific language explicitly stating survivorship rights to be established.
How Joint Tenancy is created/written:
"To A and B as joint tenants with right of survivorship."
Tenancy By the Entirety:
Definition: A special form of joint tenancy that was traditionally reserved exclusively for married couples.
Current Status: This form of tenancy largely does not exist anymore in many jurisdictions, having been replaced by other marital property laws.
Tenancy in Partnership:
Doctrine: A legal doctrine that recognizes a specific relationship between business partners regarding property ownership.
Rights: Partners often enjoy a right of survivorship to all business-related property, ensuring the business continues seamlessly.
Governance: The specifics of tenancy in partnership are frequently governed by agreements and paperwork established at the creation of the partnership or LLC.
The Right to Partition
Definition: A legal action that allows for the division of property along the ownership lines among co-owners. It can result in a physical division of the land or a sale of the property with division of proceeds.