Property Ownership

I. Real Estate/Real Property

A. Key Points

  • Real property is immovable

  • Real property includes land plus appurtenances that benefit the land

    • appurtenances are attached to and run with the land

      • parking space, multi-unit building

    • All appurtenances, fixtures, improvements, rights, interests, privileges transfer with the land when sold

B. Land

  1. Surface rights

  2. Subsurface rights

  3. Air rights

C. Improvements

  • Items attached to the land with the intent of being permanent

  • Examples: house, fence, road, landscaping

D. Rights

  • Three forms of rights

    1. rights in land (air, water, mineral)

    2. rights of ownership (possess, transfer, and control property)

    3. governmental rights

      1. determine land use

      2. set taxes

      3. take back land (es cheat, eminent domain)

  • Rights in Land

    1. Air rights

      1. rights extend as can reasonably be used

      2. government controls air space

      3. owners may not interfere with these rights

  • Water Rights

    • The government controls water rights and grants permits for the beneficial use of water, such as irrigation, under doctrine of prior approptiation

    • Riparian - flowing water

    • Littoral - standing water

    • Accession - addition to land through natural (accretion) or man made (attachment) causes

    • Avulsion - sudden loss of land through natural causes

    • Erosion - gradual loss of land through natural causes

    • Water rights do NOT include rights of access. The owner of a water right would not have the right to cross another’s property, and would need to obtain an easement to do so

  • Mineral Rights

    • May be transferred when sold or reserved by seller

    • Often held by third party

II. Personal Property (Chattel)

  1. All property that is not real property

    1. movable

    2. is not permanently attached to the land and does not transfer with real estate

  2. transferred by a bill of sale

III. Law of Fixtures

A. Fixture

  • A fixture is an object that was once personal property and has been attached to the land or improvement

  • land is never a fixture

  • once the fixture is attached it becomes and appurtenant

B. Tests for Fixtures (MARIA)

  1. Method of attachment

    • permanence of method

    • built-in = fixture

    • freestanding = personal property

  2. Adaptability

    • Specific to individual property

    • examples: house keys, garage door openers, swimming pool cover

  3. Relationship of parties

    • tenant — presumption it is personal property

    • courts favor tenants over landlords and buyers over seller

  4. Agreement between parties

    • The written agreement is best indication of what is conveyed

    • fixtures must be excluded

    • personal property must be included

C. Exception for Personal Property

  • trade fixtures are tenant installed additions that are a necessary part of the tenant’s trade or business

    • Tenants may remove trade fixtures before the lease termination

    • If not removed by lease termination, the trade fixtures belong to the landlord

  • Emblements are annually cultivated crops that belong to the tenant farmer who planted them, unless otherwise agreed

  • If trade fixtures or emblements are transferred, they will be by a bill of sale

IV Physical/Economic Characteristics of Land

A. Physical characteristics

  • Immobile—can’t be moved

  • Indestructible

  • Unique (nonhomogeneous/heterogeneous)—all parcels differ geographically

B. Economic characteristics

  • Scarcity

    • Although there is a substantial amount of unused land, supply in a given location can be limited.

  • Improvements

    • Placement of an improvement on a parcel of land affects value and use of neighboring parcels.

  • Permanence of investment

    • Sale of a particular parcel of land may take considerable time.

    • Land is not a liquid asset

  • Area preference

    • People’s choices and desires for a given area make one site more desirable than another

V LEGAL/FORMAL METHODS OF LAND DESCRIPTION

A. Most common methods

  1. The three most common are metes and bounds, rectangular (government) survey, and recorded plat.

  2. Legal descriptions do not describe improvements, only the land.

  3. Improvements and appurtenances are automatically included in land descriptions.

  4. Street addresses are informal descriptions that can change, so they are not considered to be legal descriptions that convey ownership, but they may be used in a contract.

B. Survey

  1. a survey is used to create or confirm legal descriptions

    • It is an onsite measurement of property lines and the location of houses, easements, and encroachments

    • It uses monuments, which are visible markers that establish property boundaries

C. Metes and Bounds

  1. Metes: measures in feet, compass degrees

  2. Bounds: shapes and boundaries

  3. Monuments: fixed objects that serve as reference points for the surveyor when

    setting boundaries

  4. Begins and ends at point of beginning (POB)

    • Only description that uses “starting at or commencing at.”

    • must encircle entire property

  5. Measure clockwise direction

  6. Particularly useful for identifying an irregular-shaped parcel

D. Rectangular (government) survey

  1. A rectangular (government) survey is a system developed by the United States government that locates a parcel of land within a grid system, based on its location with reference to meridians and ranges (which run north-south) and baselines and tiers (which run east-west)

  2. Meridian and base lines are large imaginary reference lines.

    • California has 3 intersecting base and meridian lines:

      1. Northern California-Humboldt (HB&M)

      2. Central California-Mt. Diablo (MDB&M)

      3. Southern California-San Bernardino (SBB&M)

  3. A township is a square formed by the meeting of ranges and tiers (6 miles by 6 miles)

  4. A range is a vertical row of townships (that lie in an east-west relationship to

    meridians).

  5. A tier is a horizontal row of townships (that lie in a north-south relationship to

    base lines).

  6. Each township contains 36 sections.

  7. A section is 1 mile by 1 mile square and contains 640 acres

  8. an acre contains 43,560 ft2

E. Recorded Plat Maps

  1. The plat map is also called the “lot, block, subdivision system” or the “lot and block system.”

  2. Plat: a map showing the location and boundaries of individual lots in a land

    subdivision.

  3. Once the final map is approved, but before building, the plat is recorded

    in the county recorder’s office of the county in which the property is located.

  4. This system is most common in urban residential areas.

  5. Dedication of land to the municipality for construction of a park, school, or other public use might be required to obtain permission for the subdivision map approval

VI Government Land Use controls

A. Master (comprehensive or general) development plan

  1. Land surveys show the present and future use of properties.

  2. Economic surveys show the present and future economic base of the area.

  3. Master development plans are used to control growth.

B. Land-use classifications

  1. Residential

  2. Commercial

  3. Industrial/manufacturing

  4. agrigultural

  5. mized

C. Land-use restrictions tied to police power

  1. the purpose of these restrictions is to protect against uncontrolled growth, protect public health, and preserve compatibility

  2. all new construction and most renovations require a building permit

    • building permits are used to ensure that property owners are in compliance with building codes

    • the state sets minimum construction and safety requirements

    • city or county codes may be more restrictive than state code

    • a proposed building must first comply with zoning, or owner will have to seek zoning change

  3. building codes are primarily concerned with the structural integrity and safety of buildings

    • codes determine the types of construction materials that can be used

      • sets standard for types of materials and how they are used

      • separate codes for plumbing, electrical, fires

  4. Certificates of occupancy are obtained after fulfilling all the requirements of the building permit

  5. Setbacks/side-yard/rear-yard restrictions specify the location of improvements in relation to boundaries

  6. building sites have minimum frontage requirements so the government can provide services

  7. floodplains, coastal preservation, and other special use classifications may be regulated at a local, county, state or federal level

  8. flood insurance is typically purchased separately from standard homeowner policy

D. Zoning changes/deviations

  1. zoning laws and ordinances are set at a local(city/county) level

    • They specify the type of construction allowed

      • Single family, multifamily, or mixed use

      • Style, height, types of construction

    • They identify the location and placement of improcements on the property(setbacks)

    • A violation of a building code or zoning law does not become legal or acceptable because a certain amount of time has passed (it is not “grandfathered in”)

    • Buyers should be told to verify that the zoning will meet their needs before closing

  2. An amendment is a zoning change for an entire area

    • An amendment could cause nonconforming use

  3. Nonconforming use allows the owner to continue present use that no longer complies with current zoning

    • The owner may not enlarge improvements or rebuild if damaged

  4. A variance allows an individual owner to vary or deviate from strict compliance with zoning in order to relieve or prevent economic hardship

    • does not change regulation

  5. A conditional use or special use permit allows a particular property to be used for a special purpose that is in the public’s interest

    • example: church or day care center

  6. Overlaying zoning is in addition to basic underlying zoning

    • school, tax, utility districts

    • airport or flight paths

E. Disclosures

  1. Brokers and salespersons should explain that it is the buyer’s responsibility to verify:

    • the current zoning use and rules will meet the buyer’s needs

    • the property is not in a floodplain

    • the property has proper access to and from highways and streets

    • building permits were pulled and completed if required