Chapter 2
LEGAL CONSIDERATIONS IN APPRAISAL
CHAPTER TERMS AND CONCEPTS
Acceptance
Government survey
Appurtenance
Intangible property
Base line
Leased fee estate
Bundle of rights
Leasehold estate
Competent parties
Legal description
Consideration
Life estate
Contract
Market restrictions
Dominant tenement
Metes and bounds description
Easement
Mutual obligation
Equity
Offer
Fixture
Partial interests
Government restrictions
Personal property
2
CHAPTER TERMS AND CONCEPTS
Police power
Recorded map
Power of eminent domain
Remainder estate
Power of escheat
Sections
Power of taxation
Servient tenement
Principal meridian line
Statute of Frauds
Private restrictions
Subdivision map
Property
Tangible property
Range lines
Township
Real estate
Township lines
Real property
Tract maps
Recorded lot, block, and tract
Trade fixtures
description
3
LEARNING OUTCOMES
1. Define real estate, real property, and
personal property; give examples; and
describe their differences.
2. Define and give examples of the bundle
of rights.
3. Explain and provide examples of the
three broad categories of restrictions on
the use of real property.
LEARNING OUTCOMES
4. Define
the
four
governmental
restrictions on the private ownership
of all property.
5. List and provide examples of the
major types of legal descriptions.
6. List
and
explain
the
five
requirements for a valid contract.
PROPERTY CLASSIFICATIONS
Tangible Property
Rights to Physical Objects
Intangible Property
Rights to Non-Physical Things
PROPERTY CLASSIFICATIONS
Real Property
Land and Everything Attached To It
Personal Property
Anything That Is Movable
Everything Not Real Property
REAL PROPERTY DEFINED
1. The Land
2. Permanently Affixed
Objects
3. Appurtenant Rights
4. That Which Is Immovable
By Law
TESTS OF A FIXTURE
REAL PROPERTY RIGHTS
Fee ownership includes the following “Bundle of Rights”
 The Right to:
o Occupy
o Sell
o Borrow Against
o Exclude Others
o Convey Ownership by Inheritance
REAL PROPERTY RIGHTS
Partial Interests
o Leased fee estates
o Leasehold estates
o Life Estates
o Undivided interests in commonly held property
o Others
CATEGORIES OF USE RESTRICTIONS
GOVERNMENT RESTRICTIONS
Government Restrictions
Police Power
 Building and Safety
 General Welfare
 Community Planning, etc.
Eminent Domain
 Sovereign body taking back private
property for public use and paying “just
compensation”
Government Restrictions
Taxation
 Sovereign body may imposes taxes as
needed as long as they are fair
Escheat
 The sovereign body will take back the title
to the property if the owner dies or
disappears and leaves no relatives or heirs
TYPES OF LEGAL DESCRIPTIONS
• Recorded Lot, Block & Tract
• Metes and Bounds
• Government Survey
RECORDED SUBDIVISION
FIGURE 2-4 An Example of a Subdivision Map
RECORDED LOT, BLOCK & TRACT
After a Subdivision Map is filed, all Legal
Descriptions Refer to the Recorded Map.
The Legal Description of Lot 3 is:
 Lot 3, Block 4 of Nottingham Forest, Section 7, a subdivision in
the William Hardin Survey, Abstract No. 24, Houston, Harris
County, Texas, Map recorded in Volume 138, Page 1 of the Map
Records of Harris County, Texas
18
Metes and Bounds
Early Example:
• Beginning at Joe’s barn, ten hop skips toward
the old hickory stump on the ridge, then
toward widow Jones’ cabin for a bit, then past
the old flour mill, then back to Joe’s Barn
METES AND BOUNDS
BASE LINES & MERIDIANS
Figure 2.7
Source: Courtesy of the California Department of Real Estate
Government Survey
Figure 2.8 Courtesy of the California Department of Real Estate
TOWNSHIP SHOWING SECTIONS
Figure 2.9 Courtesy of the California Department of Real Estate
MAP OF A SECTION
Figure 2.10 Courtesy of the California Department of Real Estate
CONTRACTS
A Contract is Defined as:
An agreement between two or more
persons which creates an obligation
to do or not to do a particular act.
o
Source: Black’s Law Dictionary, 6th ed., West Publishing Co., St.
Paul, 1990
Essential Elements of a Contract
 The Offer
 The Acceptance
 The Consideration
IMPORTANCE OF CONTRACTS
Listing Contracts
Sale Contracts
Escrow Contracts
Private Restrictions
Statute of Frauds
SUMMARY
The distinction between real estate and real property was
explained.
Real estate is defined as the physical object, whereas real
property refers to the rights gained by owning the object.
Personal property includes all objects on the property that are
not real property. When personal property has been
permanently affixed to the land, it changes into a category of
permanently affixed real property called a fixture.
Real property refers to the many rights associated with real
estate.
SUMMARY
When making an appraisal, it is not enough just to look at a
property and appraise what you see. Rather, you must first
establish what legal rights exist for the property and then
identify which rights are to be included in the appraisal.
The value of land depends on its potential and logical use.
A contract is an agreement between two or more persons,
which creates an obligation to do or not to do a particular act.
Nearly every appraisal assignment will involve reading one or
more contracts.