History of Real Estate - English Feudal System
Originally, under English land ownership; the King owned all the land.
King Held Title - Title or ownership was held by the King.
Estate - The King would grant a farmer the right to work the land. This right to use and occupy the land was known as an estate. This estate could be passed down to heirs of the farmer, which was known as an estate of the family. This right to pass an estate onto heirs is still in use today.
Feudal System - Though the farmer had the right to use land as a tenant, he had to provide services to the King. Namely to provide a share of the crop as well as pay rent for the use of the land. This characteristic of leasing real property is still in use today.
Allodial System - By colonial times, the land was individually owned. Ownership of land by individuals was still subject to the King's control, but no services or duties were owed to the King. England's Colonial Government controlled the land. It had the power to impose taxes, regulate use, escheat (obtain title to the land if there were no heirs at death), and condemn the land. All these characteristics are still true today.
Boundaries of Owned Land - The boundaries during this time were not truly known. The land was not surveyed or recorded with the government. Owners simply knew the boundaries of the land from past history.
Transferring Ownership - Ownership from one person to another was simply done by the "passing of a clod" of dirt to the new owner. This procedure was usually done in front of witnesses. This signalized the passing of land ownership to another. Witnessing of the title transfer agreement is still done today by a notary witnessing the signatures of the parties passing ownership.
Modern System After the Revolutionary War
Deed and Title
Ownership and transfer of ownership required a written document. This document was known as title to the land. A "deed" was used to pass title (ownership) to another. This system is what we use today in transferring ownership from one party to another.
Constitutional Right - When the Founding Fathers were forming America's government, they wrote the 5th Amendment to the U.S. Constitution. "No person shall be deprived of life, liberty, or property, without due process of law, nor shall private property be taken for public purpose, without just compensation." Even when property is condemned for public needs, the owner must be given just compensation.
Real Property - Land is real property. It is immovable. It is indestructible. All rights and permanent attachments to the land such as a house are also real property.
Economic Value - Value stems from the demand for the property (scarcity of land, preference of the area, and improvements compared to immediate property).
Real And Personal Property
Real Property - Real estate brokers sell real property. This includes the land, attachments to the land, and use agreements involving the land.
Property is an external thing that can be owned or possessed. Property can be divided into two categories: tangible and intangible. The word tangible refers to something that has a definable physical form that can be felt or touched. The word intangible refers to something that cannot be perceived by the senses.
Tangible property consists of real property and personal property. Real property is property that does not move, such as land and the things that are attached to or built on that land. Personal property is property that can be moved or any other tangible property that can be owned.
Chattel - Personal property is also known as " chattel"; a movable article of personal property or any tangible property other than land and buildings.
What about a mortgage? A mortgage on a house is personal property belonging to the lending institution. It is a written document that is not attached to the land. It is a chattel real that can be sold by a lender to another lender as personal property.
Commercial Trade Fixtures - A tenant leasing a commercial building, installs shelving, displays, advertising props, machinery, cash registers, all used for the purpose of business. The items are considered commercial trade fixtures(personal property) and must be removed when the lease expires.
Real Property Ownership
Real Property Ownership - When a person owns real property (Real Estate), ownership includes the earth's surface, the dirt/minerals extending downward to the center of the earth, and upward into air space above the real property. Ownership would also include all things permanently attached to the property by nature or by man.
Property Becomes Personal Property - Some items of real property can be severed or dismantled and can become personal property.
Personal Property - Movable property. All property that is not Real Property (not attached to the land) is also called personal property. It is called Personal or Chattel.
Farming & Crops
Real and Personal Property - Regarding personal property vs. real property. Some owned property has the unique distinction of being real property at one time and personal property later. Some ownership rights are predicated on property owned by another. These borderline areas are utilized quite extensively by the State examination.
Crops in Farming - Crops during their growing phase would normally be considered real property because they are "in the ground." The field is real property and the crops are stuck in the ground. However, the crops are intended to become personal property when harvested. When crops are harvested and put in storage, they become personal property. They are movable and are sold with a bill of sale.
The Doctrine of Emblements- Annual crops cultivated (worked, labored) by a tenant which are treated as the tenant's property rather than the landowner's. If a tenant loses possession of the land, he or she is still entitled to finish raising the crops and to harvest them. If the land passes to someone else because of the tenant's death, the crops pass to the tenant's heirs. If the crops are annual but did not require labor by the tenant or if the crops are not annual, they are not considered emblements. For this reason planted annual crops are governed by the personal property rules as they were planted "with the intent of harvesting."
Planter Owns Crops - Under the characteristic of emblements, the person who planted the crop has the right of harvesting the crop regardless of who currently owns the land when the crop is ready for harvest.
Emblements are Unique - So as you can see, the expiration of a lease or the sale of the property where annual crops are growing does not terminate the right of harvest.
Water Use - There are two basic terms for the right to use water adjacent to your land. They are called Riparian Rights and the Doctrine of Prior Appropriation. With government expansion over the past 100 years, there have been many changes and refinements by various states, but these basic doctrines are the basis for all government doctrines.
Riparian Rights- This is an old form of law and is only followed by a few states in the eastern part of America where there is an abundance of water available for use. This doctrine is interesting in that it grants an unrestricted right to use the water, but it does not allow ownership of the water.
Can't Alter Flow - Though a person can use the water on an unlimited basis, the owner next to the water cannot alter the flow, interrupt the flow, or contaminate the water.
Flowing Water - We use the term Riparian Right if water is flowing such as a river or a stream.
Littoral Rights - Some States use the term Littoral Rights if water is not flowing, such as a lake or pond. The interesting aspect of Littoral Rights is that sometimes a small lake or pond is entirely on land owned by one person, trust, or corporation. Littoral Rights, unfortunately for the owner, would still limit the alteration of the lake or pond by the owner due to local government doctrine.
State Test Factors - For test purposes, you will be expected to understand Riparian Rights (flowing water) and Littoral Rights (water not flowing).
When discussing the merits of an offer to purchase property, the licensee is correct to say that:
1.a bill of sale is an instrument that conveys title to personal property
2.an installed barbed-wire fence is personal property
A) 1 only
B) 2 only
When personal property is used as consideration in the sale of real property, what is required to convey personal property at closing?
A) Writ of Execution
B) A bill of sale
C) Bulk sales insurance
D) Title insurance
Which of the following is considered personal property?
2. trade fixtures
3. standing timber
A) 1 only
B) 2 only
C) 3 only
D) 1, 2, and 3
Crops grown on land that require annual planting and cultivation are called:
A) 1 only
B) 2 only
If a lease is terminated after a crop has been planted, who has the right to harvest the crop?
1. the landlord (lessor)
2. the tenant(lessee)
A) 1 only
B) 2 only
All of the following property are considered personal property EXCEPT:
A) a portable electric space heater
B) a gas hot water heater
C) a mounted plasma tv
D) a metal storage shed on blocks
A tenant who installed a window air conditioner for their own pleasure and comfort has:
1. converted the air conditioner from an item of personal property to an item of real estate
2. lost the right to remove the air conditioner from the window when vacating the premises
A) 1 only
B) 2 only
When you permanently attach personal property to a building it is best defined as:
A) An attachment
B) A fixture
C) An appurtenance
D) An encumbrance
Which of the following is correct?
A) Property is either real or personal
B) a fixture is personal property
C) a trade fixture is real property
D) only the surface element of land is considered real property
Which of the following go with the land?
A) 1 only
B) 2 only
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