C1 - PA Real Estate Fundamentals
Terms in this set (23)
• the rights to use the open space or vertical plane air above the land.
• Ownership of the land includes the right to all air above the property unless otherwise
• considered to be all property that does not fit the definition of real property; also known as chattel
• i.e. - chairs, tables, clothing, and money.
• the rights, privileges, and improvements that belong to the land.
• they are connected to the real estate and are conveyed when ownership transfers
• often coupled with real property
• land at, above, and below the earth's surface, and all things permanently attached to it, whether natural or artificial
• broader than the term land; includes the natural & permanent manmade improvements
bundle of legal rights
• describes real property ownership
• In other words, a purchaser of real estate is actually buying the rights of ownership held by the seller.
• These rights include the right of possession, control the property within the framework of the law, enjoyment, exclusion, disposition
• the physical land or real estate plus the interests, benefits, and rights that are associated with its ownership.
• the legal rights of ownership (the "bundle of rights") that attach to the physical surface of the land, that which lies above and below it and that which is permanently attached to it
• Items of personal property
• to change an item of real estate to personal property
• For example, a growing tree is real estate until the owner cuts it down, literally severing it from the real estate. Similarly, an apple becomes personal property once it is picked from a tree.
• Annual plantings or crops of wheat, corn, vegetables, and fruit; generally considered personal property.
• As long as an annual crop is growing, it will be transferred as part of the real property (unless otherwise)
• Because a person is entitled to the benefits of his or her labor, the former owner or tenant must be permitted to reenter the land to harvest the crop when it is ready.
• EXAMPLES OF NON EMBLEMENTS:
o Trees, perennial bushes, grasses, and perennial crops
• the rights to the natural resources lying below the earth's surface
• An owner may transfer his or her surface rights without transferring the subsurface rights and vice versa.
• an article that was once personal property but has been affixed to the land or a building in such a way that the law construes it to be a part of the real estate
• almost any item that has been added as a permanent part of a building is considered a fixture.
• rights to use the surface of the earth.
• an owner may transfer his or her surface rights without transferring the subsurface rights and vice versa.
• any artificial thing attached to land, such as a building or fence, or improvements such as streets, utilities, sewers, and other additions that make it suitable for building
• an article that is attached to a rented space or building for use in conducting a business, but is the personal property of the tenant
• they are also called chattel fixtures.
• examples of trade fixtures are bowling alleys, store shelves, bars, and restaurant equipment. Agricultural fixtures such as chicken coops and tool sheds are also included in this definition.
• the earth's surface extending downward to the center of the earth and upward into space, including permanent natural objects such as trees and water.
• refers to the surface of the earth AND the underlying soil and things that are naturally attached to the land, such as boulders and plants.
• land also includes the minerals and substances below the earth's surface, together with the air above the land into space.
Explain the test used to identify and classify fixtures and trade fixtures
a. Did the person who installed the item intend for it to remain permanently or for it to be removable?
2. Method of annexation.
a. How permanent is the method of attachment?
b. Can the item be removed without causing damage to the surrounding property?
3. Adaptation to real estate.
a. What is the character of the item, and is it being used as real property or personal property?
a. Have the parties agreed to treat an item as though it is real or personal property?
Practical Steps to determine real and personal property
1. First, when a property is listed, the owner and the listing salesperson should discuss which items are to be included in the sale.
2. Then, when an agreement of sale is written, the buyer and seller should specify the articles that are to be included in the transaction. Landscaping is expected to remain as is.
Physical Characteristics of Land
1. Land is immobile
a. Although some of the substances of land are removable and topography of land can be changed, the geographic location of any given parcel of land can never be changed. Its location is fixed.
2. Land is indestructible
a. Land can be altered, but it cannot be destroyed.
b. This permanence of land, coupled with the long-term nature of the improvements on it, tends to stabilize investments in land.
c. Does not, however, change the fact that the improvements depreciate and can become obsolete, thereby reducing values—perhaps dramatically.
d. This gradual depreciation should not be confused with the fact that the economic desirability of a given location can change.
3.Land is unique
a.No two parcels of land are ever exactly the same. Although there may be substantial similarity, there is no substitute for an individual parcel.
b.Also referred to as heterogeneity or nonhomogeneity
4.Characteristics Affecting Land Use
a.The physical and economic characteristics of a parcel of real estate affect its desirability for a specific use.
b.Although the real estate could be used in many ways, some are more practical or desirable than others, depending on what is financially feasible, physically possible, and economically productive.
c.The contour and elevation of the land, the prevailing winds, transportation, public improvements, and availability of natural resources (such as water) are factors that affect the use.
Economic Characteristics of Land
a. Although we usually do not think of land as a rare commodity, the total supply of land is in fact fixed. Even though a considerable amount of land remains unused or uninhabited, the availability of land in a given location or of a particular quality is limited.
a. Improvements such as buildings or utilities affect the usefulness of land and, consequently, its value. Building an improvement on one parcel of land also can affect the value and use of neighboring properties as well as the entire community. For example, improving a parcel of real estate by building a shopping center can change the value of land in a large area.
3. Permanence of investment
a. The capital and labor used to build the improvement represent a large fixed investment. Although even a well-built structure can be razed to make way for a newer building or other use of the land, improvements such as drainage, electricity, water, and sewerage remain because they generally cannot be dismantled or removed economically. The return on such investments tends to be long-term and relatively stable.
4. Area preferences
a. This economic characteristic, sometimes called situs, does not refer to a geographical location but rather to people's preferences for a given area. The uniqueness of people's preferences results in different values for similar units. Area preference is the most important economic characteristic of land.
• numerous small portions of the land's surface for the building's foundation supports the developer must purchase to construct a high and large building
• refers to anything that can be owned.
• the common characteristic is that ownership of property provides certain rights, interests, or benefits to the owner.
trade fixtures VERSUS fixtures
• fixtures belong to the owner of the real estate, but trade fixtures are usually owned and installed by a tenant for the tenant's use.
• fixtures are considered a permanent part of a building, but trade fixtures are removable. Trade fixtures may be affixed to a building so as to appear to be fixtures, but the tenant has the right to remove them on or before the last day of the lease. (Otherwise, they become the real property of the landlord by accession.) The rented space must be restored to its original condition, except for reasonable wear and tear.
• legally, fixtures are real property so they are included in any sale or mortgage. Trade fixtures, however, are considered personal property and are not included in the sale or mortgage of real estate except by special agreement.
• the process of converting personal property into real property as they become permament improvement on the land