Unit 2:1-2 Real Property and the Law

Question 1

Land

Answer 1

Land is defined as the earth’s surface extending downward to the center of the earth and upward to infinity. Land includes not only the surface of the earth but also the underlying soil. Land also refers to objects that are naturally attached to the earth’s surface, such as boulders and plants. Land includes the minerals and substances that lie far below the earth’s surface (subsurface). It even includes the air above the earth, all the way up into space (airspace) (see Distinguishing Land, Real Estate, and Real Property).

Question 2

Real Estate

Answer 2

Real estate is defined as land at, above, and below the earth’s surface, plus all things permanently attached to it. Real estate is similar to land but means much more: Real estate includes the natural land along with all human-made improvements. An improvement is any artificial addition to land, such as a building or a fence.
The term improvement, as used in the real estate industry, refers to any addition to the land. The word is neutral: Whether the artificial attachment makes the property better-looking, more useful, or more or less valuable, the land still is said to be improved. Land also may be improved by streets, utilities, sewers, and other additions that make it suitable for building.

Question 3

Real Property

Answer 3

The term real property is the broadest of all. It includes both land and real estate. Real property is the interests, benefits, and rights that are automatically included in the ownership of land and real estate.
Real property includes the surface, subsurface, airspace, any improvements, and the bundle of legal rights—the legal rights of ownership that attach to ownership of a parcel of real estate.

Question 4

Appurtenance

Answer 4

An appurtenance is anything, tangible or intangible, associated with the property, although not necessarily a direct part of it. Typical appurtenances include parking spaces in multiunit buildings, septic tanks, easements, water rights, and other improvements. An appurtenance is connected to the property, and ownership of the appurtenance normally transfers to the new owner when the property is sold.

Question 5

Surface Rights

Answer 5

The right to use the surface of the earth is called surface rights. However, real property ownership also can include subsurface rights, which are the rights to the natural resources lying below the earth’s surface. The two rights are distinct; an owner may transfer surface rights without transferring the subsurface rights.
FOR EXAMPLE
A landowner sells the rights to any oil and gas found beneath her farm to an oil company. Later, the same landowner sells the remaining interests (the surface, air, and limited subsurface rights) to a buyer, reserving the rights to any coal that may be found in the land. This buyer sells the remaining land to yet another buyer but retains the farmhouse, stable, and pasture. After these sales, the following four parties now have ownership interests in the same real estate:
1. The original landowner owns all the coal.
2. The oil company owns all the oil and gas.
3. The first buyer owns the farmhouse, stable, and pasture.
4. The second buyer owns the rights to the remaining real estate.

Question 6

Air Rights

Answer 6

The rights to use the space above the earth may be sold or leased independently, provided those rights have not been preempted by law. Air rights can be an important part of real estate, particularly in large cities where air rights must be purchased to construct office buildings. Examples of construction based on air rights include the MetLife Building in New York City and One Prudential Plaza in Chicago. To construct such a building, the developer must purchase not only the air rights but also numerous small portions of the land’s subsurface for the building’s foundation supports.

Question 7

What rights may be sold or leased independently regarding space above the earth?

Answer 7

Air rights

Air rights can be crucial in real estate, especially in urban areas.

Question 8

Why are air rights important in large cities?

Answer 8

They must be purchased to construct office buildings

Examples include the MetLife Building and One Prudential Plaza.

Question 9

What must a developer purchase to construct a building using air rights?

Answer 9

Air rights and portions of the land’s subsurface for foundation supports

This is crucial for structural integrity.

Question 10

How were air rights viewed before air travel became common?

Answer 10

They were considered unlimited, extending into outer space

This perspective changed with the advent of air travel.

Question 11

What limits have been placed on air rights by Congress and the courts?

Answer 11

Limits on reasonable interference with air rights for aircraft

This is to ensure the owner’s rights are not unduly lessened.

Question 12

Who often purchases adjacent air rights and why?

Answer 12

Governments and airport authorities to provide approach patterns for air traffic

This is important for maintaining safe air travel.

Question 13

What new rights are being examined by the courts alongside air rights?

Answer 13

Solar rights and view rights

These rights are becoming significant with the rise of solar power.

Question 14

What issue may arise when a proposed tall building blocks sunlight?

Answer 14

It may interfere with an existing building’s right to sunlight

This is especially relevant for solar-powered buildings.

Question 15

What is the definition of real estate?

Answer 15

Real estate is defined as land at, above, and below the earth’s surface, plus all things permanently attached to it.

Question 16

How does real estate differ from land?

Answer 16

Real estate includes the natural land along with all human-made improvements.

Question 17

What is an improvement in the context of real estate?

Answer 17

An improvement is any artificial addition to land, such as a building or a fence.

Question 18

Is the term ‘improvement’ in real estate positive or negative?

Answer 18

The term improvement is neutral; it does not specify whether the addition makes the property better-looking, more useful, or more or less valuable.

Question 19

What are some examples of improvements to land?

Answer 19

Improvements to land may include:
* Streets
* Utilities
* Sewers
* Other additions that make it suitable for building.

Question 20

Fill in the blank: Real estate includes land along with all _______.

Answer 20

[human-made improvements]

Question 21

True or False: An improvement must always increase the value of the property.

Answer 21

False

Question 22

What is the primary characteristic that defines real estate?

Answer 22

It includes all things permanently attached to land.

Question 23

What is land defined as?

Answer 23

The earth’s surface extending downward to the center of the earth and upward to infinity

Question 24

What does land include aside from the surface of the earth?

Answer 24

The underlying soil

Question 25

What are objects that are naturally attached to the earth's surface considered as part of land?

Answer 25

Boulders and plants

Question 26

What does land encompass in terms of subsurface elements?

Answer 26

Minerals and substances that lie far below the earth's surface

Question 27

What is included in the definition of land regarding air?

Answer 27

The air above the earth, all the way up into space (airspace)

Question 28

Fill in the blank: Land includes not only the surface of the earth but also the _______.

Answer 28

underlying soil

Question 29

True or False: Land is limited to the physical surface of the earth.

Answer 29

False

Question 30

What term refers to the space above the earth included in the definition of land?

Answer 30

Airspace

Question 31

What is the broadest term that includes both land and real estate?

Answer 31

Real property ## Footnote Real property encompasses various interests, benefits, and rights associated with land and real estate ownership.

Question 32

What are the components included in real property?

Answer 32

* Surface * Subsurface * Airspace * Any improvements * Bundle of legal rights ## Footnote The bundle of legal rights refers to the legal rights of ownership attached to a parcel of real estate.

Question 33

True or False: Real property only includes the surface of the land.

Answer 33

False ## Footnote Real property includes surface, subsurface, airspace, improvements, and legal rights.

Question 34

Fill in the blank: Real property includes the interests, benefits, and rights that are automatically included in the ownership of _______.

Answer 34

land and real estate ## Footnote This definition highlights the comprehensive nature of real property.

Question 35

What is meant by the 'bundle of legal rights' in real property?

Answer 35

The legal rights of ownership that attach to ownership of a parcel of real estate ## Footnote These rights can include the right to sell, lease, or use the property.

Question 36

What is an appurtenance?

Answer 36

Anything, tangible or intangible, associated with the property, although not necessarily a direct part of it. ## Footnote Examples include parking spaces, septic tanks, easements, and water rights.

Question 37

Give three examples of typical appurtenances.

Answer 37

* Parking spaces in multiunit buildings * Septic tanks * Easements

Question 38

True or False: An appurtenance must be a direct part of the property.

Answer 38

False

Question 39

What happens to the ownership of an appurtenance when the property is sold?

Answer 39

Ownership of the appurtenance normally transfers to the new owner.

Question 40

Fill in the blank: An appurtenance is connected to the property and may include _______.

Answer 40

[tangible or intangible items associated with the property]

Question 41

What is the term for the right to use the surface of the earth?

Answer 41

Surface rights ## Footnote Surface rights pertain to the ownership and use of the land above ground.

Question 42

What are subsurface rights?

Answer 42

Rights to the natural resources lying below the earth's surface ## Footnote Subsurface rights can include minerals, oil, gas, and other natural resources.

Question 43

True or False: Surface rights and subsurface rights can be transferred independently.

Answer 43

True ## Footnote An owner may transfer surface rights without transferring subsurface rights.

Question 44

What happens when a landowner sells the rights to oil and gas found beneath their property?

Answer 44

The oil company owns all the oil and gas ## Footnote This transaction separates the subsurface rights from the surface rights.

Question 45

Fill in the blank: After selling subsurface rights, the original landowner may still own _______.

Answer 45

Coal ## Footnote The landowner can reserve certain subsurface rights while selling others.

Question 46

Who owns the farmhouse, stable, and pasture after the series of sales?

Answer 46

The first buyer ## Footnote The first buyer retains ownership of the surface structures after the transactions.

Question 47

What does the second buyer own after the sales?

Answer 47

The rights to the remaining real estate ## Footnote This includes the land but not the structures or subsurface resources.

Question 48

List the four parties with ownership interests in the real estate after the transactions.

Answer 48

* The original landowner owns all the coal * The oil company owns all the oil and gas * The first buyer owns the farmhouse, stable, and pasture * The second buyer owns the rights to the remaining real estate ## Footnote Each party has distinct rights based on the transactions.

Question 50

What are the two broad categories of real estate characteristics?

Answer 50

Economic and physical characteristics

Question 51

What are the four economic characteristics of land?

Answer 51

* Scarcity * Improvements * Permanence of investment * Location (situs)

Question 52

Define scarcity in the context of real estate.

Answer 52

The total available supply of land is not limitless

Question 53

How can improvements affect land value?

Answer 53

Building an improvement can affect the land's value and use, as well as that of neighboring tracts and communities

Question 54

What does permanence of investment refer to?

Answer 54

The capital and labor used to build an improvement represent a large fixed investment

Question 55

What is the economic characteristic of location also known as?

Answer 55

Situs

Question 56

What is the most important economic characteristic of land?

Answer 56

Location

Question 57

What are the three main physical characteristics of land?

Answer 57

* Immobility * Indestructibility * Uniqueness

Question 58

Define immobility in relation to land.

Answer 58

The geographic location of any given parcel of land can never be changed

Question 59

What does indestructibility mean in the context of land?

Answer 59

Land is permanent and cannot be destroyed

Question 60

What is uniqueness in terms of real estate?

Answer 60

No two parcels of land are ever exactly the same

Question 61

Fill in the blank: Ownership of real property is described as carrying a bundle of _______.

Answer 61

[legal rights]

Question 62

List the rights included in the bundle of legal rights.

Answer 62

* Right of possession * Right to control the property * Right of enjoyment * Right of exclusion * Right of disposition

Question 63

What historical practice symbolizes the transfer of property ownership?

Answer 63

Giving the purchaser a handful of earth or a bundle of bound sticks

Question 64

True or False: The rights of ownership can be separated and individually transferred.

Answer 64

True

Question 65

What does the right of exclusion allow an owner to do?

Answer 65

Keep others from entering or using the property

Question 66

What does the right of disposition allow an owner to do?

Answer 66

Sell, will, transfer, or otherwise dispose of or encumber the property

Question 67

The Bundle of Legal Rights DEEP C

Answer 67

Question 68

Situs refers to a geographic location of land. * True * False

Answer 68

Explanation This statement is true. Situs is legally the distinct location of a property, which because of desirability, or lack thereof, will have an economic effect on the consumer.

Question 69

The right of exclusion is among the rights of ownership of real property. * True * False

Answer 69

Explanation The statement is true. Ownership of real property carries a bundle of legal rights, including right of possession, right to control the property, right of enjoyment, right of exclusion, and right of disposition.