RH

Chapter 1: Real Estate Ownership & Land-Use Vocabulary

Introduction to Real Estate

  • Real estate = land + bundle of rights (use, enjoy, lease, share, sell, devise, seize by law, etc.)

  • Title = intangible rights (the bundle)

  • Deed = paper instrument that conveys those rights at closing

  • Three basic ways to transfer title

    • Sale (most common)

    • Will (after death)

    • Adverse possession ("legal theft")

Parties That May Hold Rights in the Same Parcel

  • Government: taxation, eminent domain, police power, escheat

  • Lenders: mortgage lien gives foreclosure right on default

  • Easement holders: railroads, utilities, neighbors, etc.

Land: Definitions & Physical / Economic Characteristics

  • Land = spot on earth from center of earth to infinity above

  • Physical

    • Immovable

    • Indestructible

    • Unique (non-homogeneous)

  • Economic (value-oriented)

    • Location ("location, location, location")

    • Scarcity

    • Improvability

Real Estate vs Personal Property

  • Real estate = land + appurtenances (rights/privileges/improvements that run with the land)

    • Natural appurtenances: trees, streams

    • Man-made appurtenances: houses, sheds, barns

    • Mineral rights (transfer unless reserved)

    • Air rights

    • Water rights

  • Personal property (chattel) = movable items

    • Transfer instrument: bill of sale

    • "Chattel mortgage" = loan secured by personal property

Transformations Between Real & Personal Property

  • Severance: real → personal (tree becomes lumber)

  • Fixture: personal → real (was personal, now attached; presumed to stay)

    • Test for courts: MIA

    • Method of attachment

    • Intention of installer

    • Adaptation to the realty

  • Trade fixture (commercial tenant)

    • Personal property of tenant; must be removed before lease ends or it becomes landlord’s property; tenant must repair damage

  • Emblements: annual crops; belong to the farmer who planted them—even after sale (one harvest only)

Government Rights (Public Limitations)

  1. Taxation (real estate ad valorem taxes; foreclosure if unpaid)

  2. Police Power (zoning, building codes, flood maps)

  3. Eminent Domain (right) / Condemnation (process)

    • Must be for public good, pay fair market value, covers owners & tenants

  4. Escheat: owner dies intestate & without heirs → state takes

Private Rights – Estates in Land

  • Estate = possessory interest

  • Two broad categories

    1. Freehold (ownership; indeterminable duration)

    2. Leasehold (less-than-freehold; definite duration)

Freehold Estates (Ownership)

  1. Fee Estates (inheritable)

    • Fee Simple (absolute): maximum rights

    • Conditional/Defeasible Fee: ownership subject to condition ("must be used as a school"); violation triggers reverter

  2. Life Estates (non-inheritable unless pur autre vie)

    • Life Estate in Reversion: goes back to grantor/heirs when life tenant dies

    • Life Estate in Remainder: goes to third-party remainderman (receives fee simple)

    • Reservation: seller conveys but retains life estate

    • Pur autre vie: based on life of another; can pass to life tenant’s heirs until measuring life dies

    • Legal life estates: Dower (widow), Curtesy (widower), Homestead exemption (protects family home from some judgments)

    • Limitations: may sell, lease, mortgage but not waste or will (unless pur autre vie)

Ways to Take Title (Concurrent Ownership)

  • Severalty: one person/entity (e.g.
    corporation)

  • Tenancy in Common (T C → "to children")

    • Individual, undivided interests (may be unequal)

    • Inheritable; default form

    • Separate deeds; suit to partition available

  • Joint Tenancy (TTIP)

    • Four unities: Time, Title, Interest, Possession

    • Right of survivorship (not inheritable)

    • Voluntary wording in deed required; destroyed if any unity broken (sale, partition)

  • Tenancy by Entireties

    • Joint tenancy for married spouses; survivorship; neither can sue to partition

  • Community Property (in some states)

    • Separate property (before marriage) vs community (acquired during; equal interests)

Leasehold (Less-Than-Freehold) Estates

  • Lessor = landlord (giver); Lessee = tenant (receiver)

  • Reversion: property returns to landlord on lease end

  • Types

    1. Estate for Years: definite start & end (could be a week)

    2. Periodic Tenancy: month-to-month, etc.; requires notice to terminate

    3. Tenancy at Will: no written lease but with permission

    4. Tenancy at Sufferance: holdover without permission; landlord "suffers" → eviction; lowest estate

Encumbrances

Liens (money)

  • Specific Liens (attach to one parcel)

    • Property Tax (priority #1 always)

    • Mortgage (voluntary)

    • Mechanic’s (effective date = date work began; subcontractors/materialmen; expires if not enforced)

  • General Liens (attach to all property)

    • IRS Income Tax

    • Judgments (court-ordered debt) → lis pendens filed to warn buyers; writ of execution orders sheriff sale

Deed Restrictions (Private Use Controls)

  • Aka restrictive covenants; recorded by developers; bind future owners (run with land)

  • Enforced only by courts upon action by interested parties (neighbors/HOA)

  • Illegal if based on race, religion, etc.

Easements & Encroachments

  • Easement = right of ingress/egress; non-possessory "servitude"

    • Appurtenant (dominant vs servient tenement; runs with land; e.g.
      shared driveway, landlocked necessity)

    • In Gross (commercial—utility, railroad, billboard; assignable)

    • Creation: easement deed; prescription (continuous, open, notorious, hostile use for statutory period); necessity (landlocked)

    • Termination: release by dominant (quit-claim), merger, abandonment, purpose ends

  • License = permission; personal, revocable

  • Encroachment = unauthorized intrusion (fence, tree limbs); may ripen into prescriptive easement; detected via stake survey

Water Rights & Natural Processes

  • Riparian: along flowing water; reasonable use; if non-navigable owners to mid-stream

  • Reliction: land exposed by permanent receding water → owner gains

  • Water table: surface to groundwater distance; perc test for septic

  • Erosion (gradual loss) vs Accretion (gradual gain) vs Avulsion (sudden; boundaries stay)

Environmental Issues (Federal)

  • CERCLA / Superfund: cleanup & liability; enforced by EPA (strict liability → current & previous owners)

  • Lead-Based Paint (pre-1978 residences)

    • Disclose known lead; give EPA booklet; 10-day inspection option; keep records 3 yrs

  • Asbestos: cancer causing; best treatment = encapsulation

  • FEMA flood maps → flood insurance requirement for financed sales

  • Radon: naturally occurring radioactive gas; mitigation systems vent soil gases

  • Mold: moisture control & remediation

  • Brownfield: abandoned industrial site with suspected contamination

  • Clean Water Act: regulates discharges to waters; enforced by EPA

Multiple-Owner Properties

Cooperatives (Co-ops)

  • Corporation holds title in severalty

  • Members own stock & receive proprietary lease (personal property, leasehold)

  • Monthly fees pay mortgage, taxes; entire building at risk of foreclosure

Condominiums

  • Individual units: fee simple title (owner pays own mortgage/taxes/HO-6 interior insurance)

  • Common areas: owned tenants in common; HOA dues; master deed + bylaws/charter

Timeshares

  • Fee simple ownership of usage period (e.g.
    1 week/yr) in resort property

Transfer of Title – Voluntary Alienation (Deeds)

  • Grantor (seller) → Grantee (buyer)

  • Deed Types & Seller Promises

    1. General Warranty (5 covenants)

    • Seisin (ownership & right to convey)

    • Quiet Enjoyment (no 3rd-party claims)

    • Against Encumbrances (none undisclosed)

    • Further Assurance (will correct defects)

    • Warranty Forever (money-back guarantee)

    1. Special Warranty: defend only against defects during grantor’s ownership

    2. Bargain & Sale: covenant of seisin only

    3. Quitclaim: no covenants; used to cure clouds, boundary disputes, name misspellings

    4. Court deeds (sheriff’s, executor’s, administrator’s) require court action

Requirements for a Valid Deed (8-point list)

  1. Grantor – legal age, sound mind & signs

  2. Grantee – clearly named; need not be competent

  3. Consideration ("$10 & other good/valuable consideration")

  4. Granting clause + Habendum ("to have & to hold")

  5. Legal description

  6. Exceptions & reservations (liens, easements, CCRs)

  7. Grantor’s signature (grantee does not sign)

  8. Delivery & acceptance (title passes at closing)

Recording

  • Not required for validity, but necessary for constructive notice & establishing priority

  • Most interested party: grantee

  • Must be acknowledged (notarized) before recording

  • Priority: Real estate taxes → then date of recording (or effective date for mechanics liens)

Transfer by Will (Testate)

  • Testator = deceased who made will

  • Devise = gift of real property; Devisee = recipient

  • Bequest/Legacy = gift of personal property; Legatee = recipient

  • Executor (male) / Executrix (female) named in will executes; uses executor’s deed

Involuntary Alienation

  • Descent: intestate succession (probate judge; administrator appointed)

  • Adverse Possession (squatters’ rights) – C O N E: Continuous, Open, Notorious/hostile, Exclusive for statutory period → owner loses title

  • Tax or Sheriff’s deed: foreclosure sale for unpaid taxes or mortgage

  • Natural forces: erosion, accretion, avulsion

  • Quiet Title Suit: court action to resolve clouds if quitclaim insufficient

Evidence of Title

  • Abstract of Title: historical summary; lawyer issues attorney’s opinion; no guarantee

  • Title Insurance

    • Standard policy (owner) covers recorded defects, forgery, undisclosed heirs

    • Extended policy (lender) adds unrecorded matters, survey issues, mechanics liens

    • One-time premium at closing; includes Schedule of Exceptions (zoning, govt.
      rights)

Real Estate Taxes & Special Assessments

  • Ad valorem (general) tax = \text{Assessed Value} \times \text{Tax Rate}

    • Assessed value = \text{Market Value} \times \text{Assessment Rate}

    • Mill rate: 1 mill = \$0.001 (1/1000); 50 mills = 5\%

  • Special assessment: pays for improvements benefiting specific parcels (sewers, sidewalks)

  • Priority: real estate taxes (general or special) always paid first; if two, older prevails

"Power" Math Triangle (Part–Whole–Rate)

  • \text{Part} = \text{Whole} \times \text{Rate}

  • \text{Rate} = \dfrac{\text{Part}}{\text{Whole}}

  • \text{Whole} = \dfrac{\text{Part}}{\text{Rate}}

Zoning & Planning

  • Master plan guides growth; police power enforces zoning, building codes, flood maps

  • Buffer zone: separates incompatible uses; also separates wetlands & development

  • Zoning classifications: residential, commercial, industrial, agricultural, etc.

  • PUD / Overlay / Cluster / Density zoning: mixes uses within planned development

  • Down-zoning: from more to less intensive (e.g.
    multi-family → single-family)

  • Exceptions

    • Non-conforming use (grandfathered; pre-existing)

    • Variance (permission after zoning for small deviation)

    • Spot zoning: single parcel rezoned for different use (must benefit public)

Subdivision Development

  • Government regulations: streets, sewers, lot size, easements before plat approval

  • Subdivider: splits land into salable lots

  • Developer: installs improvements & builds

    • First task = market analysis

  • Private deed restrictions (CC&Rs) by developer; if conflict with zoning, stricter rule prevails

  • Dedication: developer voluntarily conveys land to govt.
    (parks, schools)

These bullet-point notes capture every major and supporting detail from the video transcript, integrate examples, acronyms, statutory references, mathematical formulas, and highlight exam-worthy distinctions and connections to broader principles.