Unit 1: Real Property & Ownership
- Nature & Description
Land:
1. is a legal term that includes the surface of the earth (soil, plants, water), all the air space
above (airspace), all the subsoil below, extending to the center of the earth (subsurface).
a. Surface Rights: Ownership rights in the land not including the air above or
minerals below it
b. Subsurface Rights: Rights to material below the surface that include mineral
and water rights
c. Air Rights: The rights to the space above the ground surface
i. Each can be sold separately and are considered real property.
ii. Ownership is transferred by deed.
Real Estate:
1. Land and all things permanently attached to it whether natural or man-made.
a. “Appurtenant to the Land” or Appurtenances: When an item is attached to the
land and made a part of the land, it is said to be “Appurtenant to the Land.”
i. Appurtenances may also include rights or privileges which lie outside of
the land but attach to the land, such as water rights, or the right to cross
another’s land, or the right to a specified parking space in a condominium
project.
b. Improvements: All man-made physical items that are attached to the land are
called "improvements".
i. Improvements can be buildings, fences, roads, ditches, or pathways. An
improvement can be thought of as any artificial thing that has been added
to the land. It does not have to increase the value, be beautiful, or be
useful; it just has to be.
c. Personal Property: All items that are moveable are considered "personal
property" and are transferred by a bill of sale, if part of the transaction.
d. Fixture: personal property that becomes real estate by means of permanent
attachment, such as by bolt, screw, or nail.
i. A stove is personal property. But when that stove is built in, to become
part of a kitchen cabinet, the stove becomes a fixture and is automatically
included when the home is sold.
ii. No special itemization is required because fixtures are presumed to be part
of the real-estate sale.
iii. If the stove is free-standing and merely plugs into a wall socket or is
connected by a gas pipe, it remains personal property and is not a fixture
automatically included in a home sale.
Personal Property vs Fixture Tests:
1. Terms:
a. Annexation: the process of attaching personal property by joining or uniting it so
that it becomes a fixture and considered real property.
b. Severance: is used to define the act of removing real property which was attached
to the land causing the real property to become personal property.
2. Method of attachment or Method of Annexation:
a. The most important test of a fixture is its method of attachment to real property.
i. Use of nails, bolts, cement or glue indicates permanent attachment.
ii. If the item can be removed without damage to the structure, such as
unhooking drapes or removing a potted plant, the item is probably not a
fixture that would be automatically included in the sale.
3. Agreement of the Parties:
a. The home buyer and seller can agree by contract that the fixture is not to be
included in the sale.
b. If nothing is said in the contract, the fixture is included because of its method of
permanent attachment.
i. To illustrate, although the dining-room chandelier is permanently attached
to the structure by bolts and wires, the home buyer and seller can agree by
contract that the chandelier is not to be included in the sale.
4. Adaptability for use with the property:
a. When an item is specially built or installed permanently for use with a property,
then it has become a fixture and, hence, part of the real property.
i. Examples: a built-in stereo system and wall-to-wall carpeting.
5. Intent of the parties:
a. An objective test of the intent of the buyer and seller is often used to decide if the
personal property has become a fixture.
i. Example: a metal mailbox hung by a hook near the home's front door. If
the mailbox is easily removable without damage to the house, and if it has
the seller's name engraved on it, the mailbox probably is personal property
and not a fixture.
ii. But if it is permanently nailed or screwed to the house and would leave a
hole or other damage if removed, then the mailbox is probably a fixture.
6. Relationship of the parties:
a. If the previous four tests are not conclusive and the issue winds up in court, the
courts usually favor:
i. Buyer over seller
ii. Tenant over landlord
iii. Lender over borrower.
Exceptions of the Tests:
1. Trade Fixture Rule:
a. If the property is used for business, such as a restaurant or an office.
i. Allows a business owner or tenant to remove his trade fixtures used in his
business operation if he restores the building to its previous condition or
pays for any damage.
1. Restaurant booths, bars, kitchen equipment and counters are
examples of trade fixtures.
2. If a property improver erroneously improves the wrong property.
a. For example, if I mistakenly build a fence 1 foot on your side of our adjoining
property line, the fence does not become a fixture and I can remove it, repairing
any damage.
3. The third fixture-rule exception is made for emblements (the
profit from growing crops that have been sown, regarded as personal property).
a. If a property contains crops which have been sown but not yet harvested, these
crops are considered emblements, and may be harvested by the seller in the
future.
2. Land Descriptions
3. Kind of Interests
4. Forms of Ownership
5. Combined Ownership
Unit 2: Land Use Controls
Unit 3 Taxation and Title
Unit 4: Valuation and Appraisal
Unit 5: Contracts, Agency, Fair Housing
Unit 6: Financing and Settlement
Unit 7: Property Management & Other Topics
Unit 8: Real Estate Math Review