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Lecture 6

Lecture 6. Real Estate Property Rights. “What is Real Estate?”. Two major physical components Land Improvements and Fixtures Bundle of Legal Rights. Legal Concept of Land.

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Lecture 6

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  1. Lecture 6 Real Estate Property Rights

  2. “What is Real Estate?” • Two major physical components • Land • Improvements and Fixtures • Bundle of Legal Rights

  3. Legal Concept of Land Land ownership contains “land rights.” Rights are referred to as the claim or the interest to which the land owner is justly entitled under law or custom. Common Ownership Rights • Surface (on which improvements are constructed) • Rights to Light • Water Rights (Riparian System) • Improvements and Fixtures • Mineral or Subsurface (from the surface to the Earth’s Core) • Air (extends “to the sky” or “to the heavens”)

  4. Water Rights • Riparian System • Doctrine of Prior Appropriation

  5. Improvements and Fixtures Improvements: Buildings, structures, fences, driveways, retaining walls, etc. Improvements “to the land” – Changes to land (improvements to drainage, grading, filling, water/sewer, stormwater retention, gas lines, electric, etc.). Also referred to as “horizontal development” Improvements “on the land” – Permanently erected man-made structures

  6. Improvements and Fixtures Fixtures: Personal property that is legally considered real estate because it is attached to land or an improvement, which is in itself attached to the land. • Factors Determining a Fixture: Method of attachment, intention of party making the attachment, purpose for which personal property is used.

  7. Legal Concept of Land Mineral: 20,000’ below surface, restricted by land size Air: 1,500’ above surface, restricted by Federal Government for airline use

  8. Mineral and Air Rights AIR RIGHTS 1,000’ SURFACE RIGHTS MINERAL RIGHTS 20,000’

  9. Lecture 6 Transferring Real Property

  10. Deed • Legally conveys real estate interests from one party to another

  11. Legal Descriptions Four Types 1. Lot and Block System (“plat map system”) 2. Metes and Bounds System 3. Government Rectangular System 4. Combination Legal Description (Metes & Bounds plus Government Rectangular System)

  12. Legal Descriptions:Lot and Block System Utilizes Publicly-Recorded Plats Legal Descriptions include specific lots, blocks, and subdivisions

  13. Legal Descriptions:Metes and Bounds System Describes an Exterior Perimeter of a Property Starts with a specified “Point of Beginning”, and ends as a specified “Closure” point

  14. Legal Descriptions:Government Rectangular System Utilizes baselines and principal meridians to identify tracts of land

  15. Lecture 6 Levels of Real Estate Interest

  16. Real Estate Interests Rights of Real Estate Ownership • Right to Use the Property • Right to Possess the Property • Right to Exclude others from the Property • Right to Dispose the Property

  17. Real Estate Interests Freehold Estate (Lifetime Duration) Highest Form of Real Estate Ownership: Fee-Simple -Owner has all four ownership rights

  18. Real Estate Interests Less-Than-Freehold Estate Use, Possession, Exclusion (limited), NOT Disposition Most commonly found in Landlord/Tenant relationships

  19. Real Estate Interests Less-Than-Freehold Estate Leased-Fee Interest: LANDLORD Leasehold Interest: TENANT

  20. Real Estate Interests Four Categories of Less-Than-Freehold Estates • Estate for Years: Continues for a definite period of time • Estate from Year to Year: Continued tenancy after “Estate for Years;” reestablished for a maximum term of one year • Tenancy at Will: Duration not specified; termination of lease agreed by either party (with notice) or death of either party • Tenancy by Sufferance: Tenant retains possession against owner’s wishes

  21. Lecture 6 Non-Possessory Interests in Land

  22. Non-Possessory Interests • Profits • Licenses • Security Interests • Liens • Primary vs. Mechanics Liens • Covenants and Deed Restrictions • Easements

  23. Easements “An easement is the right of one person to use the property of another for a specified purpose and under certain conditions that specify the extent of the allowable usage. The person holding the easement does not possess the property, nor does that person have the right to dispose the property.” Two Types of Easements 1. “Runs with the land” 2. Does not “Run with the land”

  24. Easements Easements which “Run with the Land” (Can be passed from one owner to the next) • Easement Appurtenant: At least two parcels, where one at least one parcel benefits from the use of another parcel • Dominant Estate: Receives benefit from easement use • Servient Estate: Allows use of land to benefit dominant estate • Commercial Easement in Gross: A right-of-way over one piece of land • Railroads, pipelines, municipal utilities Easements which do not “Run with the Land” (Cannot be passed from one owner to the next) • Easement-in-gross: Involves only ONE parcel of real estate; cannot be sold

  25. Easements Creation of Easements 1. Express Agreement: Contractual agreement 2. Necessity of Implication: Circumstances requiring legal efforts; as easement is required for land access

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