Chapter 2 - Property Ownership

• Real property

  • Land and all things attached to it

  • Is considered fixed, immovable, and indestructible

  • Real property can become personal property by severance (separate/ unattached)

• Land

  • Includes:

    • The surface of the land

    • Free or occupied space above the land

    • Subsurface downward to the center of the earth

  • * Land is not considered scarce 

• Real estate (realthy): real property is the land and all things attached to it

  • Includes:

    • The land

    • The air above it

    • The ground below it

    • Any buildings and structures on it

• Personal property (personalty)

  • Anything one can own that is not real property

  • Other terms for personal  property include:

    • Personal effects

    • Movable property

    • Goods

    • * Chattel

    • * Emblements (annual (year) crops)

    • * Personalty 

• Improvements 

  • Man-made additions to the land including:

    • Buildings

    • Fences

    • Paving

    • Pipelines

    • Bridges 

    • Landscaping

• Appurtenances

  • Rights permanently attached to the land such as:

    • Improvements

    • Right of ways

    • * Easements (the right that one property owner has to cross over another property owner’s property)

• Fixtures

  • Personal property that has been attached to real property

  • Fixtures are included with the sale of real property

• Tests of a fixture

  • 4 tests to determine if certain property is a fixture include:

    • Agreement

    • * Annexation (method of attachment)

    • Adaptation (effects use of property)

    • Intent

• Trade fixture

  • * Trade fixtures are personal property attached to real property by a tenant which is used in trade or business

  • Trade fixtures are owned by and remain the property of the tenant

  • Trade fixtures must be removed and damages repaired prior to lease expiring

• Measuring structures

  • Value is based in large by square footage analysis

  • Mist have accurate square footage to determine accurate value

  • Mist measure houses to verify square footage 

• Measuring land 

  • There are 43,560sf land per acre 

• Real property rights

  • Mineral rights

  • Because landowners also have subsurface rights, they would also own any minerals on the land 

• Water rights

  • * Riparian rights are of landowners bordering a non-navigable stream or river. Ones property line would go to the center of the water way

  • * Littoral rights are of landowners bordering a large navigable body of water such as a river, lake, or ocean. Ones property line would go to the mean (average) high water mark

• * Accretion 

  • The gradual increase or loss of land due to the action of water

• Forms of accretion are:

  • * Alluvion - gaining land when the action of the water deposits soil/ sediments onto your land

  • * Reliction - gaining land due to the recession of the water

  • Accession - additional land that builds up along the river band due to natural deposits or man made deposits. Changes in size over time

  • * Erosion - gradual loss of land due to the action of water

  • * Avulsion - the sudden tearing or stripping away of large chunks of land due to the action of water (ex: mudslide)

• Air rights

  • Property owners also own the air rights above their land

  • Initially, property owners owned unlimited air rights

  • Today, property owners own the air rights that would be considered reasonable or practical 

• Land physical characteristics 

  • * physical characteristics: 

    • Immovable 

    • Indestructible 

    • Unique 

• Land economic characteristics 

  • Economic characteristics:

    • Scarcity 

    • Improvements 

    • Location

• Legal property descriptions 

  • * metes and bounds system (metes - direction, bounds - distance)

    • Must locate the monument (can be natural or manmade point on the earth) which will lead to the point of beginning (POB)

    • The POB is the starting point of a survey

    • * The metes and bounds system must begin and end at the same POB

  • Lot and block system

    • Used by developers when buying large tracts of land

    • Large tracts will be subdivided into lots and blocks

  • * Government rectangular system

    • * Not used in SC or nay of the original 13 colonies 

    • A township contains 36 sections

    • Each section is one mile by one mile

    • * Each section contains 640 acres 

(report to written notes for visual)

• Encumbrances 

  • Renders a property unmarketable

    • Cannot sell or convey property without removing all encumbrances 

• Types of encumbrances 

  • Liens

    • Placed on property by creditors until a certain debt has been paid 

      • * Specific liens: lien that only affects a specific piece of property

      • * General liens: lien that affects all property/everything you own

  • * Specific liens - can only attach to a specific piece of property. Specific liens include:

    • Mortgage liens: security for the debt. One puts their home up as collateral when the sign the mortgage 

    • Tax liens (property taxes) - will always be a first lien and does not need to be recorded

    • Mechanic’s lien - field by contractors for work/ services provided on the property and has not been paid for the work

    • Special assessments - monies charged to make up short falls in budgets. Very common with homeowners associations (HOA’s)

  • * General liens - can affect all property, both real and personal

    • Federal tax liens - created when you do not pay your federal taxes (IRS)

    • State tax liens - created when you do not pay your state taxes

    • Decedent's debt lien - all property must go through probate court when one dies. Prior to property being distributed to heirs, all debts must be paid. Will liquidate all property if needed

  • Priority of liens

    • Priority of liens are established by time and date in which they are recorded. Not executed.

    • All liens will be paid of in order or priority 

• Easements 

  • The right to cross over the property of another for some defined purpose

    • * Dominant tenement - one with the right to cross over the property of another

    • * Servient tenement - one with the easement running across their land 

  • Easement appurtenant 

    • Type of easement when there is a dominant and a servient tenement 

    • * This type of easement must be deeded and rights will convey from one property owner to another

  • Easement in gross

    • Type of easement when there is a servient tenement but no dominant tenement 

    • This type of easement is not deeded and rights will not convey from one property owner to another

• How an easement is created

  • Mutual agreement 

    • * By necessity

      • Typically for property that is landlocked. Cannot be denied access to one's land.

    • By prescription

      • Created when you allow others to cross over your land and you do nothing to prevent it. If it occurs for some period of time, you may not be able to stop it in the future.

    • By condemnation

      • Legal procedure for the state to take private property for public use via eminent domain

    • By dedication

      • When private property owners dedicate (or give) private property to the city or municipality for public use.

    • By implication

      • Once an easement has been created, it must be honored by future property owners

• How easements are terminated 

  • Stated conditions

  • Merger

  • Release

  • Abandonment (easement in gross)

  • Estoppel (judgment lien)

  • Prescription

  • Necessity

  • Condemnation and destruction 

• Encumbrance:

  • Lis pendens - a lawsuit is pending (notice of foreclosure)

  • License - permission to use another’s land for some purpose

  • Profit a prendre - right to remove something from another's land 

  • * encroachment - an illegal instruction of a property owner onto a property of another

• Estates in land 

  • Freehold estate 

    • Ownership

  • Non-freehold estate 

    • Leasehold 

  • * tenancy

    • Freehold - how the land is held - is there one owner or multiple owners 

    • Non-freehold - length of time or duration

  • Interest - includes the right of use, control , possession, and disposition

  • Fee - indicates the estate is inheritable 

  • Title - proof of legal ownership

• Freehold estates 

  • Fee simple absolute 

    • Highest degree of owner recognized in this country 

    • It is inheritable

    • It is uncomplicated or without restrictions 

  • Defeasible fee

    • It is inheritable 

    • * it is complicated and/or has restrictions. Must adhere to certain conditions or lose ownership.

    • Depending on the type of defeasible fee will determine what happens to the estate if the restriction is violated 

  • * Types of defeasible fee estate

    • Fee simple determinable - automatic reversion of interest to grantor when violated 

    • Fee simple subject to a condition subsequent - no automatic reversion of interest, must take action to get back

    • Fee simple with an executory interest - automatic reversion of interest to some third name party 

• Types of freehold tenancies 

  • Tenancy in severalty

    • Onlyone owner

  • * tenancy in common

    • Multiple owners

    • All owners have their own title reflecting their % of interest

    • Estate is inheritable and owner can sell their interest without permission of other owners 

  • * Joint tenancy 

    • Multiple owners

    • One title with all owners listed

    • No division of interest. All owners own the whole property.

    • Comes with the right of survivorship

  • Tenancy by the entirety 

    • Not recognized in SC

    • Can only be entered into by husband and wife

    • Works like joint tenancy 

• Life estates 

  • Life estates are based on the life on somebody

    • Conventional

    • Legal

• Conventional life estates

  • Ordinary life estate

    • Estate is based on the life of the grantee

    • Upon the death of the grantee, the estate will pass back to the grantor or to the grantor’s heirs

  • Estate pur autre vie

    • Estate is based on the life of someone other than the grantee

    • Life estate expires upon the death of some named person other than the grantee

• * future interest in life estates

  • Reversion

    • Estate will revert back to the original owner or the owner’s heirs

  • Remainder

    • A third party name to receive the estate upon the death of the grantee

    • Remainder interest does not have the right to occupy property

• Non-freehold estates

  • Created by lease agreement

  • Upon creating a lease, the tenant will receive a *bundle of legal rights such as:

    • Use

    • Control

    • Possession (exclude others from the property)

    • Disposition

    • Quiet enjoyment

• Non-freehold tenancies 

  • Estate for years

    • Has a definite period of time (expiration date)

    • No notice is required to terminate 

  • Periodic tenancy 

    • Known as period to period

      • Week to week

      • Month to month

      • Year to year

    • Period established by how often one pays rent

  • Tenancy at will

    • Has no certain/definite end date

    • Requires notice by the parties to terminate 

    • Amount of time required to terminate depends on the periodic tenancy 

    • Will automatically terminate upon death of tenant

  • Tenancy by sufferance 

    • Occurs when tenant remains in property after expiration or termination and without the owners permission 

• Descriptions of property

  • Condominium

    • Denied air space

    • Conversion

    • Must be owned in fee simple

    • Cannot sell off common elements separately from the unit

    • Covered under the SC horizontal property act 

  • Cooperative 

    • Owner receives stock in a corporation

    • Owner will receive a proprietary lease but will pay no rent

  • Townhouse 

    • One unit in a row of houses sharing common walls

  • Planned unit development (PUD)

    • Special subdivision that does not comply with standard zoning regulations

    • Residential and nonresidential buildings are combined in overall plan

    • Authorization for a PUD must be submitted to the planning and zoning commission

  • Prefab homes 

    • Home built off site and constructed on the building site

    • Types of prefab homes include:

      • Manufactured homes

      • Modular homes

• Business entities

  • General partnership

    • All partners are totally liable for debts and liabilities of other partners 

  • Limited partnership

    • All partners are liable for debts and liabi;ityies of other partners bit only to the extent of their investment in the partnership

  • Limited liability company (LLC)

    • Provides protection from liability of a corporation without the formalities 

  • S corporation

    • No corporate taxes

  • C corporation

    • Will be double taxes

  • Real estate investment trust (REIT)

    • Purchase certificates in the trust and the trust invests in mortgages or real estate