Land, Real Estate, and Real Property

• Land, real estate, and real property are related but distinct terms in real estate.

Land

• Land encompasses the Earth's surface extending downward to the center and upward into space.
• This includes permanent natural objects like trees and water.
• Land includes subsurface (minerals, soils), surface, and airspace.
• Ownership includes air rights, surface rights, and subsurface rights.
• Surface rights allow usage of the land's surface within government limits.
• Subsurface rights include rights to water, minerals, oil, and gas, unless otherwise specified.

Mineral Rights

• Mineral rights are a type of subsurface right.
• Mineral rights transfer with the property unless reserved by the seller.
• Mineral rights can be leased or sold separately and may be held by a third party.
• In Pennsylvania, diverse ownership interests in real estate can exist due to natural resources.

Air Rights

• Air rights extend as high as legally usable, but government controls the airspace.
• Air rights can be sold or leased independently, if not preempted by law.
• Air rights are important for construction, especially for large buildings requiring additional space.
• Courts and Congress allow reasonable interference with air rights as long as land use isn't significantly diminished.
• Blocking sunlight by a new building may be considered an interference, especially for solar-powered buildings.

Water Rights

• Water rights govern water usage.
• Riparian rights apply to land abutting flowing water (rivers).
• Littoral rights apply to land abutting standing water (lakes).
• Both riparian and littoral rights are tied to navigation rights.
• Ownership typically extends to the average high-water mark.
• Public owns the water in the US.
• Water rights don't automatically include waterfront access.
• Access can be obtained from the waterfront owner through an easement.

Water Rights In Scarce States

• In states with water scarcity, water use is determined by the doctrine of prior appropriation.
• The state controls water use, not landowners.
• Landowners must demonstrate beneficial use to a state agency.
• Priority is determined by the oldest recorded permit.
• Water rights are common-law rights held by owners of adjacent land.

Real Estate

• Real estate includes land and permanently attached natural and man-made improvements.
• It is immovable, transferring automatically to the new owner via deed upon sale.
• It comprises land plus appurtenances like improvements, rights, interests, fixtures, and privileges.
• Appurtenances are attached to the land and transfer with it.

Real Property

• Real property encompasses land, real estate, and the associated interests, benefits, and rights.
• Property refers to anything that can be owned.
• It includes surface, subsurface, airspace, permanent attachments, and legal ownership rights.
• Ownership rights are described as a bundle of legal rights.
• Government Rights are land of use controls, taxation eminent domain, and escheat.

Bundle of Rights

• Right of possession
• Right to control property within the law
• Right of enjoyment (legal use)
• Right of exclusion (preventing others from using/entering the property)
• Right of disposition (selling, willing, transferring, or encumbering the property)

Title and Deed

• A title is the right to ownership, while a deed is the physical document serving as evidence of ownership.
• Real estate is often used synonymously with real property.

Personal Property

• Personal property includes movable items, also known as chattels.
• Personal property includes furniture, clothing, money, bonds, and bank accounts.
• Personal property is also called personalty.
• Factory-built housing is typically considered personal property.

Mobile Homes

• 'Mobile homes' was phased out and replaced by " manufactured homes" due to federal regulations.
• Manufactured homes are regulated by HUD and must meet specific criteria.

Manufacturing Housing HUD Specifications

• Nonremovable steel chassis

• At least 8 feet wide and 40 feet long

• At least 320 square feet of living space

• Capable of being lived in with or without a permanent foundation

• Contains a red label indicating that the home has been built in compliance with HUD construction and  safety standards.

• In PA, manufactured homes can be considered real estate if permanently attached to a foundation and registration is canceled.

Trees and Crops Classifications

• Trees, shrubs, and grasses not requiring annual cultivation are fructus naturales and considered real estate.
• Annually cultivated crops are emblements or fructus industriales and considered personal property.
• A farmer selling a farm can harvest annual crops unless the sales contract states otherwise.
• Perennial crops are not personal property and convey with the land.

Severance and Annexation

• Real property can become personal property through severance (e.g., cutting down a tree).
• Personal property can become real property through annexation (e.g., mixing cement to build a sidewalk).
• Real property is conveyed by deed, while personal property is conveyed by a bill of sale or receipt.

Classifying Fixtures

• A fixture is personal property attached to land or a building, becoming real property.
• Examples include heating plants, elevators, kitchen cabinets, and light fixtures.
• Intent determines whether an item is a fixture.

Tests to Determine Fixtures

• Method of annexation: How permanent is the attachment?
• Adaptation to real estate: Is the item used as real or personal property?
• Agreement: Have the parties agreed on the item's status?

Determining Fixtures During Court

• Court decisions classify property as permanently affixed as personal and vice versa.
• Clarify what is sold with the real estate from the start to avoid disputes.
• Sales contracts should list all included articles, like built-in bookcases and chandeliers.
• Commonly disputed items are draperies, light fixtures, and appliances.

Trade Fixtures

• Trade fixtures are articles owned by a tenant and attached to a space for business.
• Examples include bowling alleys, store shelves, and restaurant equipment.
• Agricultural fixtures like chicken coops also fall into this category.
• Trade fixtures must be removed by the last day of the lease.
• Tenants are responsible for damage from removal.
• Unremoved trade fixtures become the landlord's property through accession.

Trade Fixture Differences

• Fixtures belong to the real estate owner; trade fixtures are owned by the tenant.
• Fixtures are permanent; trade fixtures are removable.
• Fixtures are real property, included in sales and mortgages; trade fixtures are personal property, excluded unless agreed otherwise.

Exception to the Rule

• Farmland with agricultural crops: crops are the farmer's personal property.
• If the farm is sold mid-season, the farmer has the right to that season's crops.
• Terms on what is included in the deal protect all parties.

Real Estate Laws

• Real estate is unique and demands a clear understanding of laws for licensees.

Laws Come From

• United States Constitution

• laws passed by Congress

• rules of the regulatory agencies

• state constitutions

• state statutes

• local ordinances

• common law (common usage and court decisions).

• Key areas of law: contracts, property, agency, and real estate license law.

• Federal regulations such as environmental, tax, and land-use laws play a role.

Real Estate Licensees

• Real estate licensees should have basic knowledge of all principles.
• Refer issues to an attorney, who is trained and licensed to prepare documents and give legal advice.
• Licensees must not act as attorneys unless licensed to do so.

Air Rights in PA

• Government and airport authorities often purchase air rights for air traffic.
• PA law lets local authorities obtain air rights over land surrounding airports for safety.

Mining Activities in PA

• Mining can cause mine subsidence, which is downward land shifts from collapsing mine shafts.
• PA law requires providing a Coal Mining Notice to buyers.
• A special insurance covers subsidence damage, not a typical homeowner's policy.

Real Estate License Laws

• Real estate activities are regulated to protect the public from fraud, dishonesty, and incompetence.
• All U.S. states, D.C., and Canadian provinces have licensing laws for brokers and salespeople.
• License laws differ in pre-licensing requirements.

Real Estate in PA

• In Pennsylvania, the Real Estate Licensing and Registration Act and the Rules and Regulations of the State Real Estate Commission govern licensee activities.
• Anyone conducting real estate activities for another for compensation must have a license.
• Licensees must take continuing education courses every two years for renewal.