Real Estate Principles, Property Rights, and Land Concepts

Fundamentals of Real Estate and Property Types

  • Real Estate defined:

    • Composes physical land ("dirt") and its attachments ("bricks and sticks" in most cases).

    • Functions as a commodity because it possesses utility to most people and is marketable in its own specialized area.

    • Categorized into primary real estate types:

    • Residential

    • Industrial

    • Land

    • Commercial

  • Real Property vs. Personal Property:

    • Real Property refers to the legal rights obtained on real estate (the Legal Component, also known as the Bundle of Rights).

    • Personal Property encompasses things owned that are not attached to the land; these are moveable items.

    • Examples of personal property include a car and furniture.

  • Real Estate Investment Trust (REITS):

    • Investment trust entities associated with real estate rights and holdings.

Physical and Legal Concepts of Land Ownership

  • Physical Concept of Land:

    • The solid surface of the earth ("dirt").

  • Legal Concept of Land Ownership (Bundle of Rights):

    • Defines the legal rights obtained with owning land:

    1. Use it

    2. Sell/dispose it

    3. Possess it / live in it / rent it out

    4. Keep people off of it

Surface, Subsurface, Air, and Water Rights

  • Rights obtained when owning land and improvements:

    • Surface rights: Legal rights on the surface of the land.

    • Mineral (Subsurface) rights: Legal rights below the surface of the land.

    • Air rights: Legal rights to the air above the property.

    • Spatial boundaries and limits:

    • Subsurface limits are usually no more than 20,000 feet20,000\,\text{feet} below ground.

    • Air rights limits are usually no more than 1,500 feet1,500\,\text{feet} above ground.

  • Water Rights:

    • Riparian rights: Rights associated with rivers and streams (mnemonic: "R" for rivers).

    • Littoral rights: Rights associated with lakes, seas, and ponds.

    • Littoral rights convey more rights than Riparian rights.

Land Improvements, Fixtures, and Trade Fixtures

  • Physical Concept of Improvements:

    • Anything that improves or develops land.

    • Improvements to the land: Infrastructure improvements made to the land itself, such as paving and sidewalks.

    • Improvements on the land: Physical structures placed on the land, such as a shed.

  • Fixtures and Trade Fixtures:

    • Fixture: Residential or property items attached to the real estate, such as a fan or a hood.

    • Trade fixture: Commercial and business-related items, such as an assembly line.