Real property
In English common law, real property, real estate, realty, or immovable property is land which is the property of some person and all structures integrated with or affixed to the land, including crops, buildings, machinery, wells, dams, ponds, mines, canals, and roads, among other things. The term is historic, arising from the now-discontinued form of action, which distinguished between real property disputes and personal property disputes. Personal property was, and continues to be, all property that is not real property.
In countries with personal ownership of real property, civil law protects the status of real property in real-estate markets, where estate agents work in the market of buying and selling real estate. Scottish civil law calls real property "heritable property", and in French-based law, it is called immobilier.
Historical background
The word "real" derives from Latin res, which was used in Middle English to mean "relating to things, especially real property".In common law, real property was property that could be protected by some form of real action, in contrast to personal property, where a plaintiff would have to resort to another form of action. As a result of this formalist approach, some things the common law deems to be land would not be classified as such by most modern legal systems: for example, an advowson was real property. By contrast the rights of a leaseholder originate in personal actions and so the common law originally treated a leasehold as part of personal property.
The law now broadly distinguishes between real property and personal property. The conceptual difference was between immovable property, which would transfer title along with the land, and movable property, which a person would retain title to.
In modern legal systems derived from English common law, classification of property as real or personal may vary somewhat according to jurisdiction or, even within jurisdictions, according to purpose, as in defining whether and how the property may be taxed.
Bethell contains much information on the historical evolution of real property and property rights.
Identification of real property
To be of any value, a claim to any property must be accompanied by a verifiable and legal property description. Such a description usually makes use of natural or man-made boundaries such as seacoasts, rivers, streams, the crests of ridges, lakeshores, highways, roads, and railroad tracks or purpose-built markers such as cairns, surveyor's posts, iron pins or pipes, concrete monuments, fences, official government surveying marks, and so forth. In many cases, a description refers to one or more lots on a plat, a map of property boundaries kept in public records.These legal descriptions are usually described in two different ways – metes & bounds, and lot & block. A third way is the Public Land Survey System, as used in the United States.
- Metes. The term "metes" refers to a boundary defined by the measurement of each straight run, specified by a distance between the terminal points, and an orientation or direction. A direction may be a simple compass bearing, or a more precise orientation determined by accurate survey methods.
- Bounds. The term "bounds" refers to a more general boundary description, such as along a certain watercourse, a stone wall, an adjoining public roadway, an adjoining property owner, or an existing building. The system is often used to define larger pieces of property, and political subdivisions where precise definition is not required or would be far too expensive, or previously designated boundaries can be incorporated into the description.
- The Lot & Block system is perhaps the simplest of the three main survey systems to understand. For a legal description in the Lot and Block system a description must identify:
- * the individual lot,
- * the block in which the lot is located, if applicable,
- * a reference to a platted subdivision or a phase thereof,
- * a reference to find the cited plat map, and
- * a description of the map's place of official recording.
- The Public Land Survey System is the surveying method developed and used in the United States to divide real property for sale and settling. The PLSS used nominally rectangular shapes to divide. The basic unit in the PLSS is the Section of land, typically 1 mile square. A 6 x 6 mile grid of sections of land form what is referred to as a Township. Townships are laid out east and west of a Principal Meridian, and north and south of a Baseline.
Estates and ownership interests defined
Some important types of estates in land include:
- Fee simple: An estate of indefinite duration, that can be freely transferred. The most common and perhaps most absolute type of estate, under which the tenant enjoys the greatest discretion over the disposal of the property.
- Fee simple conditional: An estate lasting forever as long as one or more conditions stipulated by the deed's grantor does not occur. If such a condition does occur, the property reverts to the grantor, or a remainder interest is passed on to a third party.
- Fee tail: An estate which, upon the death of the tenant, is transferred to his or her heirs.
- Life estate: An estate lasting for the natural life of the grantee, called a "life tenant". If a life estate can be sold, a sale does not change its duration, which is limited by the natural life of the original grantee.
- A life estate pur autre vie is held by one person for the natural life of another person. Such an estate may arise if the original life tenant sells her life estate to another, or if the life estate is originally granted pur autre vie.
- Leasehold: An estate of limited term, as set out in a contract, called a lease, between the party granted the leasehold, called the lessee, and another party, called the lessor, having a longer estate in the property. For example, an apartment-dweller with a one-year lease has a leasehold estate in her apartment. Lessees typically agree to pay a stated rent to the lessor. Though a leasehold relates to real property, the leasehold interest is historically classified as personal property.
- Reversion: A reversion arises when a tenant grants an estate of lesser maximum term than his own. Ownership of the land returns to the original tenant when the grantee's estate expires. The original tenant's future interest is a reversion.
- Remainder: A remainder arises when a tenant with a fee simple grants someone a life estate or conditional fee simple, and specifies a third party to whom the land goes when the life estate ends or the condition occurs. The third party is said to have a remainder. The third party may have a legal right to limit the life tenant's use of the land.
In a joint tenancy with rights of survivorship deed, or JTWROS, the death of one tenant means that the surviving tenants become the sole owners of the estate. Nothing passes to the heirs of the deceased tenant. In some jurisdictions, the specific words "with right of survivorship" must be used, or the tenancy will assumed to be tenants in common without rights of survivorship. The co-owners always take a JTWROS deed in equal shares, so each tenant must own an equal share of the property regardless of any contribution to purchase price. If the property is someday sold or subdivided, the proceeds must be distributed equally with no credits given for any excess than any one co-owner may have contributed to purchase the property.
The death of a co-owner of a tenants in common deed will have a heritable portion of the estate in proportion to his ownership interest which is presumed to be equal among all tenants unless otherwise stated in the transfer deed. However, if TIC property is sold or subdivided, in some States, Provinces, etc., a credit can be automatically made for unequal contributions to the purchase price.
Real property may be owned jointly with several tenants, through devices such as the condominium, housing cooperative, and building cooperative.
Bundle of Rights
Real property is unique because there are multiple rights associated with each piece of property. For example, most U.S. jurisdictions recognized the following rights: right to sell; right to lease; right to acquire minerals, gas, oil, etc. within the land; right to use; right to possess; right to develop; etc. These multiple rights are important because owners of the real property can generally do what they choose with each right. For example, the owner could choose to keep all the rights but lease the right to drill for oil to an oil company, or the owner could choose to keep all the rights but lease the property to a tenant. In other words, the owner can elect to keep, lease or sell the rights to the land.Other Ownership types
- Allodial title: Real property that is independent of any superior landlord. Allodium is "Land held absolutely in one's own right, and not of any lord or superior; land not subject to feudal duties or burdens. An estate held by absolute ownership, without recognizing any superior to whom any duty is due on account thereof."
Jurisdictional peculiarities
Australia and New Zealand
In many countries the Torrens title system of real estate ownership is managed and guaranteed by the government and replaces cumbersome tracing of ownership. The Torrens title system operates on the principle of "title by registration" rather than "registration of title". The system does away with the need for a chain of title and does away with the conveyancing costs of such searches. The State guarantees title and is usually supported by a compensation scheme for those who lose their title due to the State's operation. It has been in practice in all Australian states and in New Zealand since between 1858 and 1875, has more recently been extended to strata title, and has been adopted by many states, provinces and countries, and in modified form in 9 states of the USA.United Kingdom
In the United Kingdom, The Crown is held to be the ultimate owner of all real property in the realm. This fact is material when, for example, property has been disclaimed by its erstwhile owner, in which case the law of escheat applies. In some other jurisdictions, real property is held absolutely.England and Wales
has retained the common law distinction between real property and personal property, whereas the civil law distinguishes between "movable" and "immovable" property. In English law, real property is not confined to the ownership of property and the buildings sited thereonoften referred to as "land". Real property also includes many legal relationships between individuals or owners of land that are purely conceptual. One such relationship is the easement, where the owner of one property has the right to pass over a neighbouring property. Another is the various "incorporeal hereditaments", such as profits-à-prendre, where an individual may have the right to take crops from land that is part of another's estate.English law retains a number of forms of property which are largely unknown in other common law jurisdictions such as the advowson, chancel repair liability and lordships of the manor. These are all classified as real property, as they would have been protected by real actions in the early common law.
United States
Each U.S. State except Louisiana has its own laws governing real property and the estates therein, grounded in the common law. In Arizona, real property is generally defined as land and the things permanently attached to the land. Things that are permanently attached to the land, which also can be referred to as improvements, include homes, garages, and buildings. Manufactured homes can obtain an affidavit of affixture.Economic aspects of real property
Land use, land valuation, and the determination of the incomes of landowners, are among the oldest questions in economic theory. Land is an essential input for agriculture, and agriculture is by far the most important economic activity in pre-industrial societies. With the advent of industrialization, important new uses for land emerge, as sites for factories, warehouses, offices, and urban agglomerations. Also, the value of real property taking the form of man-made structures and machinery increases relative to the value of land alone. The concept of real property eventually comes to encompass effectively all forms of tangible fixed capital. with the rise of extractive industries, real property comes to encompass natural capital. With the rise of tourism and leisure, real property comes to include scenic and other amenity values.Starting in the 1960s, as part of the emerging field of law and economics, economists and legal scholars began to study the property rights enjoyed by tenants under the various estates, and the economic benefits and costs of the various estates. This resulted in a much improved understanding of the:
- Property rights enjoyed by tenants under the various estates. These include the right to:
- *Decide how a piece of real property is used;
- *Exclude others from enjoying the property;
- *Transfer some or all of these rights to others on mutually agreeable terms;
- Nature and consequences of transaction costs when changing and transferring estates.
Overview of real property
- Schram, Joseph F., 2006. Real Estate Appraisal, Rockwell Publishing.
- Moore, Geoff., 2005. Essential Real Property, Psychology Press.
The law of real property
- Stoebuck, W. B., and Dale A. Whitman, 2000. The Law of Property, 3rd. ed. St. Paul MN: West Group Publishing.
- Thomas, David A., ed., 1996. Thompson on Real Property. Charlottesville VA: Michie Co.
Analysis of the law of real property
- Ackerman, B., R. Ellickson, and C.M. Rose, 2002. Perspectives on Property Law, 3rd ed. Aspen Law and Business.
- Tom Bethell, 1998. Noblest Triumph: Property and Prosperity through the Ages. St Martin's Press. For lay people.
- Robert Cooter, and Thomas Ulen, 2003. Law and Economics, 4th. ed. Addison-Wesley. Chpts. 4,5. Easier text.
- Ellickson, Robert, 1993, "," Yale Law Journal 102: 1315–1400.
- Richard Epstein, ed., 2007, Economics of Property Law. Edward Elgar. An anthology of articles, mostly from the law literature.
- Shavell, Steven, 2004. Foundations of Economic Analysis of Law. Harvard Univ. Press. Chpts. 2–5. Harder text; extensive references.
- Jeremy Waldron, 1988. The Right to Private Property. Oxford Univ. Press.
- Oswaldo D. Agcaoili,, ed. 2006, Property Registration Code. Agcaoili. Land Titles and Deeds: Property Law and Cases in the Philippines.