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Questions and Answers
What are the four types of leasehold estates?
What are the four types of leasehold estates?
What is a freehold estate that lasts forever?
What is a freehold estate that lasts forever?
What is the measuring life in a life estate?
What is the measuring life in a life estate?
What is an example of a life estate?
What is an example of a life estate?
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What is a tenancy for years?
What is a tenancy for years?
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What is an estate in reversion?
What is an estate in reversion?
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What is a freehold estate?
What is a freehold estate?
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What type of lien is granted by a property owner?
What type of lien is granted by a property owner?
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Which type of lien attaches to all real estate owned by a debtor?
Which type of lien attaches to all real estate owned by a debtor?
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What is a nonexclusive right to use someone else's land for a particular purpose?
What is a nonexclusive right to use someone else's land for a particular purpose?
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Study Notes
Real Estate and Property
- Real estate includes surface, subsurface, and airspace above
- Improvements are also called fixtures
Distinguishing Real Estate from Personal Property
- Personal property is defined as “all tangible property that is not real estate”
- Personal property is usually excluded from a real estate appraisal
- Tests to distinguish between real estate and personal property: method of attachment, adaptation, and intention of interested parties
- Trade fixtures (installed by a tenant in connection with a business) are not considered part of the real estate
Real Property
- Real property includes interests, benefits, and rights inherent in ownership of real estate
- Bundle of basic ownership rights: right to use, lease, enjoy, encumber, will, sell, or do nothing
- Appurtenant rights: easements, mineral rights, water rights, etc.
- Possessory interests in real property are estates, while nonpossessory interests are encumbrances
Estates (Possessory Interests)
- Freehold estate: an estate that includes title, with a potentially perpetual duration
- Life estate: terminates automatically upon a designated person’s death
- Leasehold estate: gives possessory rights to a tenant for a period of time
- Types of leasehold estates: tenancy for years, periodic tenancy, tenancy at will, and tenancy at sufferance
Encumbrances and Government Restrictions
- Encumbrances: restrictions on the use of real property, such as liens and easements
- Government restrictions: zoning laws, building codes, and other regulations that limit the use of real property
- Eminent domain: the power of the government to take private property for public use, with compensation to the property owner
Real Estate Financing Industry
- Primary market: individual borrowers and lenders
- Secondary market: loans are treated as investments, packaged into mortgage-backed securities
- Government-sponsored enterprises: Fannie Mae and Freddie Mac
- Depository institutions: banks and other financial institutions that provide financing for real estate transactions
Real Estate Definitions
- Property: anything that can be owned, including real and personal property
- Real estate: an identified parcel or tract of land, including improvements
- Inverted pyramid: a concept illustrating the idea that ownership of land includes everything above and below the surface
Improvements and Fixtures
- Improvements: something that has been added to or becomes part of the land in some way
- Fixtures: movable items that are adapted to the property and become part of the real estate
Real Estate Appraisal and Financing
- A tenancy at sufferance occurs when a tenant remains in possession of a property after the expiration of their lease.
- An individual borrower and lender make up the primary market for real estate financing.
- A fixture is an item that was once personal property but has been attached to real property, such as a shed attached to the land.
Estates and Interests in Real Property
- Real property refers to the land itself, plus any improvements made to it.
- A bundle of rights in real property includes the right to possess, use, enjoy, encumber, will, and sell or transfer the property.
- An appurtenance is something that goes along with the ownership of the land, such as air and water rights or certain types of easements.
Types of Estates
- There are two main categories of interests in land: estates and encumbrances.
- Estates can be further divided into freehold estates, which include title to the property, and leasehold estates, which do not include title.
- Freehold estates can be divided into fee simple estates and life estates.
Liens and Encumbrances
- A voluntary lien is one that is granted by the property owner, while an involuntary lien arises through operation of law.
- A general lien attaches to all of the debtor's real estate, while a specific lien attaches only to a specific piece of property.
Nonfinancial Encumbrances
- Nonfinancial encumbrances affect both the title and use of a property and can include easements, profits, and private restrictions.
- An easement is a nonexclusive right to use someone else's land for a particular purpose and can be classified as an easement appurtenant or easement in gross.
Easements
- An easement appurtenant benefits one piece of land for the benefit of another piece of land and involves two tenements: the dominant tenement and the servient tenement.
- An easement in gross, on the other hand, benefits a particular individual or organization rather than a parcel of land.
Profits
- A profit is a property interest that allows the holder to use someone else's real estate and involves the right to take something away from the land, often involving renewable resources.
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Description
Distinguishing between real estate and personal property, including definitions, tests, and trade fixtures.
