CA Principles 01_Presentation.ppt

Principles of California Real Estate Lesson 1: The Nature of Real Property © 2021 Rockwell Publishing Real vs. Personal Property Two types of property: Real property: Land and everything attached to it. Personal property: Anything not real property (usually movable). © 2021 Rockwell Publishing Rea...

Principles of California Real Estate Lesson 1: The Nature of Real Property © 2021 Rockwell Publishing Real vs. Personal Property Two types of property: Real property: Land and everything attached to it. Personal property: Anything not real property (usually movable). © 2021 Rockwell Publishing Real Property Bundle of rights Real property ownership = A bundle of property rights Rights, privileges, and interests associated with land ownership (such as right to possess or sell) are also considered part of real property. © 2021 Rockwell Publishing Real Property Appurtenances Appurtenance: A right or interest that goes with ownership of land, including air rights, water rights, mineral rights, and support rights. © 2021 Rockwell Publishing Appurtenances Types of appurtenances: air rights water rights mineral rights support rights © 2021 Rockwell Publishing Appurtenances Air rights Air rights: Landowner has right to use airspace above property, within limitations imposed by law. Air rights can be sold separately from the land. © 2021 Rockwell Publishing Appurtenances Water rights Two systems for allocating water rights:  Riparian rights system  Appropriative rights system Either system can be applied to surface or subsurface water. Either system can be applied to surface water and to subsurface water. © 2021 Rockwell Publishing Water Rights Riparian rights system Riparian rights: Landowner has right to reasonable use of water that flows through or is adjacent to property. © 2021 Rockwell Publishing Water Rights Riparian rights system Two types of water in riparian rights system:  Riparian water = flowing water (river/stream)  Littoral water = standing water (lake/ocean) Water may be used only on riparian or littoral property. © 2021 Rockwell Publishing Water Rights Appropriative rights system In California, appropriative rights largely replaced riparian rights system.  Rights obtained through permit process.  Permit holder can use water for specific purpose such as irrigation. © 2021 Rockwell Publishing Water Rights Ground water Ground water is located in underground aquifers.  Overlying rights: Landowners have right to ground water in aquifer beneath their property.  Water table: Natural level at which water can be found underground. © 2021 Rockwell Publishing Water Rights Mutual water company stock Mutual water company: Companies created to secure water supply at reasonable rates for users in particular areas.  Stock in these companies is an appurtenant right that runs with land. © 2021 Rockwell Publishing Mineral Rights Mineral rights: Landowner has right to extract solid minerals located within property’s inverted pyramid. Minerals are:  real property when in the ground  personal property once extracted The right to extract minerals may be sold separately from land. © 2021 Rockwell Publishing Mineral Rights Oil and gas Oil and gas: Rule of capture applies.  Considered fugitive substance. © 2021 Rockwell Publishing Support Rights Support rights: Natural support provided to land by surrounding land.  Subjacent support: Support provided by underlying earth.  Lateral support: Support provided by adjacent land. © 2021 Rockwell Publishing Summary Appurtenances Appurtenances Air rights Water rights Riparian rights Appropriative rights Mineral rights Rule of capture Support rights © 2021 Rockwell Publishing Attachments Attachments: Things that are permanently attached to the land.  May be natural or man-made.  Usually considered part of the real estate. © 2021 Rockwell Publishing Attachments Natural attachments Natural attachments: Includes trees, bushes, crops and other growing things that are attached to the land by roots.  Transfer with land unless otherwise agreed. © 2021 Rockwell Publishing Natural Attachments Personal property When crops or timber are harvested, or sold prior to harvest, they are “severed” from land and considered personal property. © 2021 Rockwell Publishing Natural Attachments Real property When land with crops is sold, ownership of the crops usually passes to buyer of land, unless otherwise agreed. © 2021 Rockwell Publishing Natural Attachments Special rule Doctrine of emblements: The first crop planted by tenant farmer are classified as personal property, even before it is harvested, if tenancy ends before harvest through no fault of the farmer. © 2021 Rockwell Publishing Man-made Attachments Fixtures Fixtures: Man-made attachments to real property. © 2021 Rockwell Publishing Man-made Attachments Fixtures Fixtures were once personal property, but are now attached to real property in a way that makes them part of real property.  Houses, fences, patios, and other manmade improvements are fixtures. © 2021 Rockwell Publishing Attachments Fixtures vs. personal property Five common tests:  Method of attachment  Adaptation of the item  Relationship of the parties  Intention of the parties  Agreement in writing (MARIA) © 2021 Rockwell Publishing Attachments Fixtures vs. personal property Test 1: Agreement in writing  If written agreement exists, it usually determines whether item is fixture or personal property.  If no written agreement, other tests apply. © 2021 Rockwell Publishing Attachments Fixtures vs. personal property Test 2: Method of Attachment  Is item permanently attached?  Is the item movable? © 2021 Rockwell Publishing Attachments Fixtures vs. personal property Test 3: Adaptation Test  Has item been specially adapted to realty in some way, or specially designed for it? © 2021 Rockwell Publishing Attachments Fixtures vs. personal property Test 4: Intention Test  Did person who installed item intend for it to become part of realty?  Each of the other tests is considered in reaching this decision. © 2021 Rockwell Publishing Attachments Fixtures vs. personal property Test 5: Relationship Test  Who installed item? If tenant installed, typically considered personal property. If owner installed, typically considered real property (fixture). © 2021 Rockwell Publishing Attachments Trade fixtures Trade fixtures: Equipment and other items that commercial tenant installs to conduct business.  Trade fixtures can be removed by tenant at end of tenancy, if property is restored to its original condition. © 2021 Rockwell Publishing Attachments Mobile homes Mobile home is personal property until it’s attached to permanent foundation and legal steps are taken to have it certified as real property. © 2021 Rockwell Publishing Attachments Mobile homes A licensee may list and sell unattached mobile home only if it’s registered with Department of Housing and Community Development.  Sale of registered mobile home must be reported to Department within 10 days. © 2021 Rockwell Publishing Personal Property Bill of sale Bill of sale: A document that conveys title to personal property. It must:  be in writing  identify the parties  be signed by the parties © 2021 Rockwell Publishing Summary Attachments Natural attachments Doctrine of emblements Man-made attachments Fixtures Fixture tests Bill of sale © 2021 Rockwell Publishing Land Description Legal description: Precise description used to identify specific piece of real property. Three main methods of legal description:  metes and bounds  government survey  recorded map © 2021 Rockwell Publishing Methods of Legal Description Metes and bounds Metes and bounds: Describes property by specifying its boundaries.  Monuments: Natural or man-made objects that mark a fixed point.  Courses: Compass directions.  Distances: Length of each boundary. © 2021 Rockwell Publishing Methods of Legal Description Metes and bounds Point of beginning must always be described by reference to monument. © 2021 Rockwell Publishing Methods of Legal Description Government survey Government survey: Property is identified by reference to series of grids.  Also called rectangular survey description. © 2021 Rockwell Publishing Government Survey Descriptions Principal meridian & base line Each grid has its own:  Principal meridian (main north-south line)  Base line (main east-west line) © 2021 Rockwell Publishing Government Survey Descriptions Range & township lines Each grid has grid lines running parallel to principal meridian and to base line at intervals of six miles. © 2021 Rockwell Publishing Government Survey Descriptions Range & township lines The north-south lines are called range lines.  Range lines divide land into columns called ranges.  Each range is six miles wide. © 2021 Rockwell Publishing Government Survey Descriptions Range & township lines The east-west lines that parallel the base line are called township lines.  Township lines divide land into rows called township tiers. © 2021 Rockwell Publishing Government Survey Descriptions Townships Each individual square is called a township.  Township is identified by its relationship to base line and principal meridian. Township = 6 miles × 6 miles 36 square miles © 2021 Rockwell Publishing Government Survey Descriptions Sections Each township is divided into 36 sections.  Each section is one mile on each side (one square mile). Each section is 640 acres. (An acre contains 43,560 square feet. One acre that is square will be 208 feet on each side.) There are 5,280 feet in a mile. © 2021 Rockwell Publishing Government Survey Descriptions Sections Sections within township are numbered from 1 to 36. Most parcels of land are only part of a section, so they are described in terms of fractions of a section. © 2021 Rockwell Publishing Government Survey Descriptions Sections A government survey description must include the section, township, and range.  Must also include name of principal meridian. © 2021 Rockwell Publishing Methods of Legal Description Recorded map Recorded map: Standard method for describing property in towns and cities.  Map is recorded by developer when land is subdivided.  Also called the lot and block method or the plat map method. © 2021 Rockwell Publishing Methods of Legal Description Recorded map Subdivision is surveyed and map is created that shows precise location and dimensions of each lot.  Each lot assigned lot number.  Groups of lots separated by streets within the subdivision may also be assigned block numbers. © 2021 Rockwell Publishing Recorded Map Descriptions Plat map Plat: Map showing lots and blocks in a subdivision. Once plat map recorded, parcel can be described by its lot and block numbers, name of subdivision, and county or city in which it is located. © 2021 Rockwell Publishing Methods of Legal Description Other methods Other methods of land description can be used if the property is adequately identified.  Reference to earlier recorded document or survey is adequate.  General description may be adequate.  Street addresses and tax numbers are usually not adequate. © 2021 Rockwell Publishing Summary Land Descriptions Legal description Metes and bounds method Government survey method Recorded map method © 2021 Rockwell Publishing