Chapter 7 Real Estate Property Rights, Fixtures and Ownership

1. Chapter 7Real Estate Property Rights, Fixtures and Ownership “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

2. Major Topics • What is real property? • Legal methods of Property description • Holding title to the real property • Property owner rights • Surface, Water, Air • Duration of ownership • Fixtures • Subsurface • Forms of ownership “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

3. Real Property Includes More Than Just Land • Surface of Land • Attachments to that surface • Area beneath surface • Rights in the air “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

4. Water Rights • Riparian System • Doctrine of prior appropriation • The state owns the land ownership of land located beneath the river “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

5. Fixtures • Items that are attached to real property and have become integral part of the building’s function • An item classified as fixture is transferred as part of real property • Determining whether an item is a fixture or not: • Intent • Attachment • Uniqueness or adaptation to the property • Ownership “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

6. Subsurface Rights • Mineral Rights • Oil and Gas Air Rights Right to Light “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

7. Legal Description Necessary for Transfer of Property • Importance of legal descriptions • Metes and Bounds System • Rectangular Survey System • Plat Maps and Survey • G.P.S. “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

8. Metes and Bounds “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

9. Rectangular Survey System “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

10. Plat Maps and Survey • Most common in major urban areas, esp. residential • A survey is done to establish the proposed land development • The general shape of the lot is drawn on the plat map • The Plat map is typically recorded in the local county courthouse and a book and plat number assigned “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

11. Plat Map Illustrated 1 2 3 4 5 Casey Hambleton Lane 120.9’ 175.5’ 175.8’ 8 9 10 6 7 120.6’ For Apple Orchid Plat #389 Book# 210 Page 17 “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

12. Geographic Positioning Systems • Latitudes and Longitudes • G.P.S. (Global Positioning System) accuracy of 2 feet “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

13. The Freehold Estates • Fee simple or Fee simple absolute • Fee simple determinable • Fee simple subject to a condition subsequent • Fee simple defensibles • Life estate • Tax benefits “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

14. Co-Ownership & Business Ownership • Tenants in common • Joint tenancy • Tenancy by the entirety • Community Property • Trust • Multi-Unit Ownership • Condominiums and Landominiums • Cooperative • Townhouses or Landominiums • Time Sharing • Business (Investors): • General Partnerships • Limited Partnerships • Corporations and S-Cooperations • Limited Liability Corporations • Real Estate Investment Trusts “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

15. Tenancies in Common • ‘Tenants in common’ hold title together to same property • Each has an individual interest in the property “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

16. Joint Tenancies • Four unities of a joint tenancy: • Time, Title, Interest & Possession • Joint tenants must own equal shares • Joint tenants must have equal right of possession “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

17. Tenancy by the Entirety • A joint tenancy with one additional unity: Marriage • A tenancy by the entirety with right of survivorship between husband and wife • Not recognized by all states of U.S. “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

18. Community Property • A system of marital property ownership (Spanish origin) • Both spouses contribute equally to the benefit of the property as “community property” Trust • Three-party arrangement in which legal and equitable title to property are separated • Owner (trustor) transfers title to trustee with the responsibility of administering the property and distributing income to the beneficiaries of the trust “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

19. Condominiums • A condominium owner holds a ‘fee simple’ interest in the unit he/she occupies • Right to sell, lease, mortgage and convey by will the condominium interest • When the development includes separate fee simple ownership of lots upon which the condominium unit is placed and also shared common areas, the it is referred as “landominium” • Created by CCR “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

20. Cooperatives • The dwellers of a multi-housing own an undivided interest in their unit through their ownership of a corporation (shares) that owns the entire land and building • Cooperative affords existing owners more control over the transfer of the units “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

21. Time-Sharing Properties • A time share interest in real property for a limited duration at a fixed time each year (recreational lease) • Most commonly seen in resort areas to allow the exclusive use of the premises for vacational purposes “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

22. General Partnerships • Partnership (UPA): “voluntary association of two or more persons as co-owners in a business for profit” • Partnership (IRS): “a syndicate, group, pool, joint venture, or other unincorporated association” “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

23. Limited Partnerships • At least one partner has full and complete liability and is known as “general partner” • Liability of other “limited partners” is limited to their capital contribution to the partnership “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

24. Corporations • A corporation is a non-human entity with permanent legal existence and is owned by individual investors S Corporation • Internal Revenue Code permits slight variation on the “double taxation” by flowing its income and losses through its shareholders “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

25. Limited Liability Companies (LLC) • A statutorily-created entity offering limited liability of corporation and flow-through advantage of partnership • Pays no federal taxes on its income. All income and losses flow through owners (members/shareholders) “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

26. REITs • Real Estate Investment Trust: A statutory entity that permits investors to hold diversified real estate holdings by being beneficiaries in a trust • REITs might be “public” or “private” “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

27. Non-Possessory Interests in Land • Easements • Profits • License • Security • Liens • Covenants and Deed Restrictions “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

28. Easements “A right to another’s property” • Easement appurtenant • Easement in gross • Express easement • Implied easement (or Easement by necessity) • Easement by prescription road Easement across A Water Servient Tenement A Dominant Tenement B “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner

29. END “Real Estate Principles for the New Economy”: Norman G. Miller and David M. Geltner