Chapter 2: Real Estate Fundamentals PDF

Land- The surface of the earth, including all permanently attached natural features, extending downwards to the center of the earth and upwards to infinity. Real estate- The land plus improvements. Improvement- Any non-natural structure built on or affixed to land. Buildings, fences, decks, and road...

Land- The surface of the earth, including all permanently attached natural features, extending downwards to the center of the earth and upwards to infinity. Real estate- The land plus improvements. Improvement- Any non-natural structure built on or affixed to land. Buildings, fences, decks, and roads are all examples of improvements. (Objects such as picnic tables are not improvements, either, as they are not affixed to the land.) Real property- Both Real Estate and the Improvements PLUS the bundle of rights associated with real estate ownership. BUNDLE OF RIGHTS- Exclusion- The right of exclusion gives an owner the right to tell trespassers (or anyone!) to get off their land. Possession- The right of possession is the right to occupy, live, breathe, and do whatever on your property because you own it. This is also known as the right to use. Disposition- The right of disposition is the right to sell, lease, and/or will a property to anyone you choose (you have the right to transfer all of your property rights or just some of them). This is also called the right to transfer. Quiet Enjoyment- The right of quiet enjoyment is the right to (legally) use the property for your enjoyment however you (legally) want, no matter what. In other words, this right covers a lessee's right to possess a property without interference from a lessor, previous owner, or anyone else with claim to the title. Control- The right of control is the right to alter, change, or improve a property as an owner sees fit. Encumber- The right to encumber is the right to put a property on the line as collateral for debt. Package Deal The right to control and right to encumber are often rolled up into one, handy-dandy right, referred to simply as the right to control. Property- is any item that may be owned, including the rights associated with ownership.  ​ Tangible property: Possessions that physically exist, such as a house or a toasty bagel ​ Intangible property: Stocks, patents, and other incorporeal things Asset- When someone buys real estate and real estate is conveyed, real estate is an asset, or item of value. The buyer typically hopes their asset will increase in value, earning them equity. Equity- Equity is the portion of a property's total value owned outright by the holder to title, equal to the difference between the market value and all outstanding debts on the property. In other words, equity is all the value of a property above what an owner owes their lender or other debt-holder. Legal title is the complete legal ownership of real property and the bundle of rights associated. When you officially assume ownership of a property, it's often referred to as taking title. ​ The federal government regulates broad issues, such as general land usage, natural disaster reaction, and discrimination. ​ The state governments are the primary regulators of real estate law. They address things such as more specific environmental control of flood zones and waste disposal. ​ The local governments cover real estate on an even smaller scale, addressing issues such as land use control, taxation, and zoning. ​ But conveyance rules, and the rules of real estate in general, are largely governed by the judicial government and common law, or the side of law that arises from judgments and decisions made in courts rather than explicit legislation. Common Law Think of common law as something that is generally accepted by society. For example, we generally accept that peanut butter is the best complement to jelly when creating a sandwich. In the world of real estate, common law comes from decisions made in court that are then applied to and accepted in real-life scenarios, each and every day.