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Flashcards in Chapter 8: Real Property Rights Deck (98)
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Real Property

Although the terms real estate and real property are often used interchangeably by most people, there are important differences in these terms regarding property ownership rights and use.


Real Estate

is physical, tangible, and immobile. It includes the earth’s surface, subsurface, and the air above the surface. It also includes anything growing on the land, anything permanently attached to the land, everything provided by nature such as mineral deposits, wildlife, timber, fish, water, and soil, and all improvements on and to the land. Improvements are anything man-made, such as buildings or other relatively permanent structures attached to or located on the land.



although one may own the air extending above the property, the right to own it is limited. For example, an owner cannot prevent airplanes from flying through his or her airspace.



surface rights allow property owners to use the surface of the land to build buildings, grow crops, and so on.



ownership of the subsurface extends below the surface to the center of the earth in a “V” shape. This includes ownership of natural resources such as coal, oil, and natural gas.


Real Property

includes the physical land and improvements (real estate), together with legal rights to own or use the property. An individual’s property rights are guaranteed and protected by government.


Of special concern are the rights

associated with the use and ownership of water. Water, may be the property of the owner; in other cases, it may be considered to be public domain. A man-made lake on an owner’s property is typically considered to be full owned by the property owner. On the other hand, a natural lake may or may not be. Laws involving the ownership or use of water are complex.


Riparian Rights

are the rights of an owner whose property borders a flowing waterway such as a river or stream. The property owner is not considered to be the owner of the water flowing over or past the property, but has a right of reasonable use of the water. This includes fishing, swimming, and so on, but the property owner is not allowed to divert or pollute the water, thus interfering with the rights of others who have a subsequent right to use the same water.


Littoral Rights

are the rights of owners of property bordering non-flowing water, such as an ocean, sea, or lake. These rights generally give the property owner rights only to the shoreline or high-water mark. In the case of ocean- or gulf-front properties, the ownership extends to the mean high-tide mark.



refers to the loss of soil that is carried away by water washing against a riverbank or a beach.



is an increase in land area as moving water deposits soil in other than its original location. This is the opposite of erosion.



is soil resulting from accretion.



is the exposure of dry land once covered by water when the level in a lake recedes, or a river or stream changes course.


Personal Property

Personal property and chattels are synonymous terms.
Personal property is movable, and includes items such as furniture, automobiles, stocks, bonds, and mortgages.



Something that is tangible has physical existence. Real estate is considered to be tangible.



Something that is intangible has no physical existence, which means that it cannot be touched. Stocks and bonds, for example, are intangible.



A fixture is an item that was once personal property, but has been installed or attached to the land or building in a permanent way that has caused it to become part of real estate. When a residential tenant adds a fixture to a property, it cannot be removed at the expiration of the lease and becomes the property of the landlord.


Trade Fixtures

Trade fixtures are articles of personal property that have been attached to real estate that is rented or leased by a tenant and used in the conduct of business. Personal property installed to conduct a business or trade is not considered part of the real estate and can be removed during or at the termination of a lease.


Distinguishing Between Real and Personal Property

In a real estate transaction, licensees should be careful to distinguish between real and personal property. Unless a contract states otherwise, the sale of real property does not include items of personal property. The potential for conflict between the parties to a real estate transaction can be significantly reduced by clearly identifying in a sales contract those items of personal property that are to be included. It is often wise to also identify items of personal property that are not to be included, but may become the subject of a later disagreement.


If a lawsuit should arise between the parties

to a real estate sales transaction over which items were to be included in the sale and which were not, courts may be called upon to decide. Courts usually employ four legal tests to decide if an item is real or personal property. Since the sale typically only involves the transfer of real property, this can be an extremely important decision.


The four tests used by courts to determine real or personal property are

1. Intent of the parties
2. Relationship of the parties
3. Method of annexation
4. Adaptation of the article


Intent of the parties

by reviewing the listing and sales contracts, the court may be able to decide what was intended. The words and actions of the parties before, during, and after the sale may also be considered in making this decision.


Relationship of the parties

the terms of a lease, for example, may specify that certain improvements made by a tenant during the term of the contract may be removed at the expiration of the lease. This legal relationship may be the basis for the courts decision.


Method of annexation

how an article is attached to the property may very well determine, in the judgment of the court, whether an item should be removed or not. Typically, if tools are required for the removal, and damage may occur to the item or the property from which the article is to be removed, it is classified as part of the real estate. There are exceptions to this general rule.


Adaptation of the article

this test looks to the manner in which the item in dispute is being used. If the item is necessary to fulfill the purpose and utility for which the building was constructed, the court will usually decide the item is real property.


Allodial System

Real property laws in the United States are based on the allodial system, which allows private citizens the right to own land.


Bundle of Rights

The legal rights of ownership are often compared to a bundle of sticks, with each stick representing a separate transferable right. All property rights taken together may be thought of as a bundle of rights with each right representing a separate “stick” in the bundle.


There are five large "sticks" in the bundle of rights

1. Possession
2. Disposition
3. Enjoyment
4. Exclusion
5. Control



an owner has a right to possess or occupy the property.



an owner generally has the right to sell the property, to give it away, or leave it in a will. There are exceptions to this.