Ownership - What Is Real Estate 1

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Real Property

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Real estate, or real property, is land and everything that is affixed to the land, also it is the air and water associated with the land both above and below the surface. Real Estate may be owned in the United States by the government and also by private entities. Real estate comes with many rights and obligations, but for now, let's just try to understand what real estate is. First we will take a look at the land.

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Land

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Land: When we think of land, we typically think of the surface of the earth, but it also encompasses everything below the surface, even to the very center of the earth. Land also includes the air above the surface, reaching up to infinity. Any natural thing permanently attached to the earth is also considered land. Remember that land has three unique physical characteristics, it is immobile, indestructible and non-homogeneous (no piece of land is the same). Land also has economic characteristics including scarcity, improvements, permanence of investment, and area preference or location.

Anything that is not permanently attached to the land is personal property, also known as chattel.

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Bundle of Rights

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Along with the actual tangible real estate, owners of real property also enjoy a set of rights to their property. This set of rights is most commonly known as the "bundle of rights." These rights apply to all aspects of real property including the land and any man-made attachments.

The Bundle of Rights Includes:The Right of PossessionThe Right of UseThe Right to TransferThe Right to EncumberThe Right to Exclude

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The Right of Possession

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The right of possession is more simply known as property control, not to be confused with property ownership. An owner of a property may decide to transfer the right of possession to another party through a lease. A tenant would then be in control of the property to whatever extent was decided between the two parties. This right of possession is enjoyed by whoever is in control of the property.

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Adverse Possession

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Adverse Possession essentially is the process of an entity occupying and claiming land that they do not own and taking ownership of the land legally over a period of time.

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In Utah, in order for an entity to have the right to claim ownership rights to a property through adverse possession, they must occupy and claim the property for a period of seven years. They also must pay the property taxes assessed on the property during the same time period.

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The Right of Use

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The right of use is very simple to understand. This right allows the owner to do with the real property what they desire. The property can be used in any legal way that the owner sees fit, so long as it does not violate any zoning regulations, or infringe upon the rights of others to use their own property.

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The Right to Transfer

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The right to transfer is known as a right to sell the property, lease the property, or assign ownership interests to the property in any other way. Keep in mind that the owner may decide to transfer only some of the rights to a property. For example they may sell everything but the mineral rights, or the owner may sell only the air rights of the property.

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The Right to Encumber

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The right to encumber is the right to use the property as collateral for a debt, or to allow other liens to be placed on the property. A lien is something that is placed on the property that is like a guarantee for a promise, meaning that if an owner's property has a lien on it, but the owner doesn't fulfill the associated promise, the lien holder may be entitled to the property.

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The Right to Exclude

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The right to exclude makes the owner of a property able to prohibit others from using or enjoying the property. This right is most commonly seen as owners prevent other people from trespassing on the property. Owners may prosecute trespassers

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Surface, Air and Subsurface Rights

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**Surface Rights: Surface rights are the rights that apply to the surface of the land, these include the ground, and all permanent attachments, whether natural or man-made. Water rights are also in the category of surface rights.

**Air Rights: Air rights are the rights of the space above the surface of the earth extending upward forever. Complications and disputes arise between landowners and the airline industry regarding airplanes crossing into an owner's air rights.

**Subsurface Rights: These are the rights to what lies below the surface of the earth, all of the way to the very center of the earth. Mineral, oil and gas rights are considered subsurface rights.

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Improvements and Fixtures

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Improvements and fixtures are additions to the land. Improvements are additions or changes to the land that typically increase the value of a property.Improvement Examples:Structures and dwellingsPermanent Swimming PoolsLandscaping

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Fixture Examples

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Fixtures are items that were once personal property but have been converted to real property by the process of attachment. All fixtures are included with the sale of the real property unless specified in the purchase contract.Fixture ExamplesWindow ShuttersOutbuildingsFencesBBQ PitTrade Fixtures - Brought by a tenant, and typically removed at the end of the lease. If not removed trade fixtures may become property of the owner by the process of accession. (Freezers, printing presses, etc.)

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Legal Tests of a Fixture

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In determining whether an item is a fixture (real property) or personal property we can question the intention, adaption, and functionally of the item. Intention: What was the original intent of the item? For example, if a tenant brings a ceiling hanging bike rack and attaches it to the carport, you would assume that they would remove it and take it with them upon termination of the lease. In this case, the bike rack is personal property.In the case that the landlord installs bike racks throughout the complex for use by tenants, you would assume the bike racks would stay forever and therefore they would be considered real property. Adaption: If an item is adapted or custom made for a property they are usually real property. A great example would be house keys since they only gain people access to one specific house. Functionality: Anything vital to an operation of a building may be considered a fixture. An example might be a swamp cooler, since a swamp cooler is vital to the operation and comfort of a building, but may be removed and/or detached from the building.