PRINCIPLES OF REAL

ESTATE DEVELOPMENT-
NOTES

CONTENTS - PG-NO
1. INTRODUCTION 2
2. CHARACTERISTICS OF LAND 15
3. CONCEPTS OF OWNERSHIP 23
4. TRANSFER OF TITLE 31
5. REAL ESTATE FINANCE 45
6. LAND USE AND CONTROL 52
7. ROLE PLAYERS IN REAL ESTATE
DEVELOPMENT 60

DIVYA YADAV.R
10Q17ATO13
8TH SEM A SEC
SIGN: 15ARC8.8
1
 1. INTRODUCTION

DEFINITION OF REAL ESTATE

The term 'Real Estate' is defined as
land, including the air above it and
the ground below it, and any buildings
or structures on it.
● Real estate is the property,
land, buildings, air rights above
the land and underground
rights below the land.
● The term real estate means
real, or physical, property. “
Real” comes from the Latin
word res, or things meaning
real.

2
What is an example of real
estate?
● Vacant land and residential lots, plus the
houses, outbuildings, decks, trees sewers and
fixtures within the boundaries of the property
are examples of real estate.
● Furniture, cars, paintings, jewelry and boats
are examples of personal property rather than
real estate.

Why is it called real estate?

● The term “Real estate” is first recorded in
the 1660s and holds the oldest English
sense of the word. It is derived from the
Latin. Real is the meaning of existing,
“actual” or “genuine,” and estate refers to
the Land.
● Real estate refers to the property consisting
of houses or Land.
3
What are the four types of real
estate?
There are four types of real
estate:
● Residential real estate: These includes both
new construction and resale homes. ...
● Commercial real estate: These includes
shopping centers and strip malls, A strip mall
is a type of shopping center common in North
America where the stores are arranged in a
row, with a sidewalk in front. Strip malls are
typically developed as a unit and have large
parking lots in front. medical and educational
buildings, hotels and offices. ...
● Industrial real estate includes manufacturing
buildings and property, as well as
warehouses. The buildings can be used for
research, production, storage, and
distribution of goods.
● Land: includes vacant land, working farms,
and ranches. The subcategories within vacant
land include undeveloped, early development
4
or reuse.
What is real estate in
India?
● Real estate sector is one of the most globally
recognized sectors.
● It comprises of four sub sectors –
● Housing,
● Retail,
● Hospitality, and
● Commercial.
● The growth of this sector is well complimented
by the growth in the corporate environment and
the demand for office space as well as urban
and semi-urban accommodations.

ECONOMIC IMPORTANCE OF
REAL ESTATE
● Real estate is one of the most important
sectors in the economy.
● The affordability of real estate and rental
prices and changes in those prices have a
direct impact on the wealth of property
owners and tenants and their consumer
spending. 5
 four economic characteristics
of land as follows:
● 1 – Scarcity. Scarce means there isn't much of
something around. ... Land is not limitless. This
can have a significant impact on the value of a
property. Especially in highly populous areas. The
more scarce the land, the higher the price. It is a
supply and demand concept.
● 2 – Improvements. ... The economic characteristic
of improvements (also known as modification),
states that improvements to a piece of land can
have either a positive or negative impact on its
value. Adding a pool and landscaping to a home
will increase its value. If a nuclear power plant is
built, the surrounding land values will decline.

6
● 3 – Permanence of investment. ... Permanence of
investment is also known as fixity and means
investments in real estate are long-term. This is
due to the physical characteristics of
indestructibility and immobility. Since land is
immobile, investment in property becomes fixed.
Land cannot be moved if the market becomes
better in another location. Since real estate
transactions are complex and large amounts of
money are involved, they are not made very
frequently. As a result, a real estate investment
is a long-term investment.
● 4 – Area preference…… Area preference (or situs
- the place to which, for purposes of legal
jurisdiction or taxation, a property belongs.) is the
most important economic characteristics of land.
Situs is based on many factors, such as history,
convenience, and reputation. A home in a
neighborhood with great schools and a low crime
rate will generally command a higher price. A
house in a high crime neighborhood with poor
schooling would be priced lower.

7
How does housing impact the
economy?
An increase in housing value encourages
homeowners to spend more than they do at other
times for a variety of reasons, including higher
confidence in the economy, increased equity for
homeowners (Equity is the difference between
what you owe on your mortgage and what your
home is currently worth. If you owe $150,000 on
your mortgage loan and your home is worth
$200,000, you have $50,000 of equity in your
home. ... As you pay down your mortgage, the
amount of equity in your home will rise.) to borrow
against, and higher rental income. A decrease in
prices results in the opposite.

Mortgage : is a legal agreement by which a

bank, building society, etc. lends money at
interest in exchange for taking title of the debtor's
property, with the condition that the conveyance
of title becomes void upon the payment of the
debt.

8
Are high house prices good for
the economy?
In most areas of economic life inflation - rising prices - is
considered an ill. ... High house prices tend to cut the
rate at which the nation saves. When homeowners feel
confident that they are sitting on a profit they save less
and spend more. High house prices thus fuel consumer
spending.

What are the three most

important things in real estate?
The three most important factors when buying a home
are location, location, and location.

What is the economic

importance of real estate?
Real estate is one of the most important sectors in the
economy. The affordability of real estate and rental prices
and changes in those prices have a direct impact on the
wealth of property owners and tenants and their
consumer spending. Residential real estate provides
housing for families. It's the greatest source of wealth and
savings. Commercial real estate, which includes
apartment buildings, creates jobs and spaces for retail,
offices, and manufacturing.
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1 - Real estate is an enabler of economic
activity. By offering the space for
businesses to operate it effectively
provides the business infrastructure
without which an advanced economy
could not operate.

2 - Real estate plays a vital role in the

provision of infrastructure. It is easy to
see that infrastructure creates the
conditions for property development, but
it should not be forgotten that this is a
two-way relationship. Schools, hospitals,
and so on are all examples of projects
whose viability can be highly dependent
on associated real estate development.

3 - Real estate is a source of employment

in all sorts of areas; not only for
architects, builders and engineers, but
also for legal and financial advisors,
surveyors, facilities managers and all
those that provide for the construction
industry. 10
 OVERVIEW OF REAL ESTATE
INDUSTRY
Let’s explore how the industry works and what
the major jobs and careers are. The real estate
industry can be divided into several different
areas:

● Development
● Sales and marketing
● Brokerage
● Property management
● Lending
● Professional services
(law, accounting,)

11
Development
● Real estate development is a process that
involves the purchase of raw land, rezoning,
construction and renovation of buildings,
and sale or leaset(is a contract by which
one party conveys land, property, services,
etc. to another for a specified time, usually
in return for a periodic payment.) to end
users.
● Developers earn a profit by adding value to
the land (creating buildings or
improvements, rezoning, etc.) and taking
the risk of financing a project. Development
firms create a new product
Sales and marketing
● Sales and marketing firms work with
developers to sell the buildings and units
they create.
● These firms earn a commission for creating
all marketing material and using their sales
agents to sell the inventory of completed
units.
● These firms typically focus on new units.

12
Brokerage
● A real estate brokerage is a firm that employs a team
of real state agents (realtors) who help facilitate a
transaction between the buyers and sellers of
property. Their job is to represent either party and
help them achieve a purchase or sale with the best
possible terms.
Property management
● Property management firms help real estate owners
rent out the units in their buildings. Their jobs
include collecting rent, showing units, fixing
deficiencies, performing repairs, and managing
tenants .They charge a fee, typically a percentage of
the rent, to property owners.
Real estate lending
● Lenders play a major role in the industry as virtually
all properties and developments use leverage (debt)
to finance their business. Lenders can include banks,
credit unions, private lenders, and government
institutions.
Professional services
● There are a variety of real estate professionals who
work in the industry and help make it function. The
most common examples (other than the ones listed
above) are accountants, lawyers, interior designers,
stagers, general contractors, construction workers,
and tradespeople.
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Professional services
● There are a variety of real estate
professionals who work in the industry
and help make it function. The most
common examples (other than the ones
listed above) are accountants, lawyers,
interior designers, stagers, general
contractors, construction workers, and
tradespeople.

14
2. CHARACTERISTICS OF LAND / REAL ESTATE

Characteristics of Land
● The term ‘Land’ in economics is often used
in a wider sense. It does not mean only the
surface of the soil, but it also includes all
those natural resources which are the free
gifts of nature.
● It, therefore, means all the free gifts of
nature. These natural gifts include:
1. rivers, forests, mountains and oceans;
2. heat of sun, light, climate, weather, rainfall,
etc. which are above the surface of land;
3. minerals under the surface of the earth
such as iron, coal, copper, water, etc.

“By land is meant… materials and

forces which nature gives freely for
man’s aid in land, water, air, light and
heat.” Therefore, land is a stock of free
gifts of nature.

15
What are the Economic
Characteristics of land?
There are four economic characteristics of land
as follows:

1 – Scarcity
Scarce means there isn’t much of something
around. Well, scarcity means the same thing.
Land is not limitless. Yeah, about a quarter of
the earth’s surface is land, but once it’s gone,
it’s gone. This can have a significant impact on
the value of a property. Especially in highly
populous areas, such as Long Island. The more
scarce the land, the higher the price. It is a
supply and demand concept.

2 – Improvements
The economic characteristic of improvements
(also known as modification), states that
improvements to a piece of land can have either
a positive or negative impact on its value.
Adding a pool and landscaping to a home will
increase its value. If a nuclear power plant is
built, the surrounding land values will decline. 16
3 – Permanence of investment
Permanence of investment is also known as
fixity and means investments in real estate
are long-term. This is due to the physical
characteristics of indestructibility and
immobility. Since land is immobile,
investment in property becomes fixed. Land
cannot be moved if the market becomes
better in another location.
Since real estate transactions are complex
and large amounts of money are involved,
they are not made very frequently. As a
result, a real estate investment is a long-term
investment.

4 – Area preference
Area preference (or situs) is the most
important economic characteristics of land.
Situs is based on many factors, such as
history, convenience, and reputation. A home
in a neighborhood with great schools and a
low crime rate will generally command a
higher price. A house in a high crime
neighborhood with poor schooling would be
priced lower.
17
Physical Characteristics of Land
There are three physical characteristics of land as
follows:
1 – Immobility
Immobility is an important and unique characteristic
of land, which has a significant impact on its value.
Since land cannot be moved, where the land is
located will have an enormous influence on its value.
Additionally, property taxes levied on land can vary
significantly from location to location.
2 – Indestructibility (durability)
Did you know property insurance doesn’t cover land?
It only covers the improvements to the land. Why?
Indestructibility. If a house burns down, the land is
still there, and the house can be rebuilt.
3 – Non homogeneity
Just like a fingerprint, no two pieces of land are the
same. That’s non homogeneity. They may look the
same, but they are not. For one thing, their location
is different. Additionally, the type of buildings
located on the land are probably different, as is the
size and shape of the property. Other terms used to
describe this physical characteristic of land are
heterogeneity and uniqueness.
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Personal Property
● Personal property is property that
is movable.
● Any property that can be moved
from one location to another.
● In civil law systems, personal
property is often called movable
property or movables.
● Personal property is a class of
property that can include any
asset other than real estate.
● The distinguishing factor between
personal property and real estate,
or real property, is that personal
property is movable; t
● hat is, it isn't fixed permanently
to one particular location Real
property cannot be moved and is
anything that is attached to land.

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Tangible & Intangible
Personal Property
● Intangible personal property is an item
of individual value that cannot be
touched or held. ...
● Conversely, tangible personal property,
such as machinery, vehicles, jewelry,
electronics, and other items can be
physically touched and have some
level of value assigned to them.
What is tangible and
intangible personal
property?
● Intangible personal property is an item
of individual value that cannot be
touched or held. ... Conversely,
tangible personal property, such as
machinery, vehicles, jewelry,
electronics, and other items can be
physically touched and have some
level of value assigned to them. 20
Tangible Personal Property
● To be considered tangible personal
property, an item must be something you
can physically handle. ...
● For an individual, this would include
nearly all of your personal possessions,
excluding a home or any other kind of
real estate.
● Tangible personal property is physical
property that can be touched, such as
furniture, clothing, and vehicles. It's
distinct from the other major class of
property, real property (or real estate), in
that you can move it from one location to
another; real property is permanently
attached to a single location.
● “Tangible personal property” exists
physically (i.e., you can touch it) and can
be used or consumed. Clothing, vehicles,
jewellery, and business equipment are
examples of tangible personal property. ...
Paper assets that represent value, such
as stock certificates, bonds, and
franchises, are not tangible property.
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Intangible Personal Property
● Intangible property, also known as
incorporeal property, describes
something which a person or
corporation can have ownership of
and can transfer ownership to
another person or corporation, but
has no physical substance, for
example brand identity or
knowledge/intellectual property.
● Intangible personal property is an
item of individual value that cannot
be touched or held.
● Intangible personal property can
include any item of worth that is not
physical in nature but instead
represents something else of value. ...
Companies also have intangible
property, such as goodwill and
patents.

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 3. CONCEPTS OF OWNERSHIP

Forms of Ownership-
The three types of property ownership are:-

● individual ownership / sole

ownership of property

● joint ownership /
co-ownership of property

● ownership by way of
nomination.

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Individual Ownership / Sole
Ownership of Property
● When a property is bought and registered in the
name of one individual, she / he alone holds the
ownership title of the property.
● This form of ownership is known as sole
ownership or individual ownership. It is
pertinent to note that even if other parties have
helped the owner to arrange funds for the
purchase, they do not have any right in the
property, if the sale deed is registered only in
the name of the principal buyer.
● Individual ownership is beneficial for the title
holder in many ways. They hold the sole right,
to decide if they want to sell the property.
● No permission from any other party would be
required for the same.
● The division of such a property is also easier,
because of the limited number of owners.
● When the owner dies, his property would be
transferred under the provisions made in his
will.
● If there is no will, specific inheritance laws
would apply and the property would accordingly
be transferred among the legal heirs of the late
24
owner.
Joint Ownership /
Co-ownership of Property
● When a property is registered in the name
of more than one individual, the immovable
asset is deemed to be under joint
ownership.
● Those holding the title to the property in
such ownership, are known as joint owners
or co-owners of the immovable asset

There are several ways to own a property jointly.

These include:
● Joint tenancy: When the title deed of the
property provides each joint owner equal
share in the property, the ownership is
known as joint tenancy.
● Tenancy in entirety: This form of joint
ownership is nothing but joint tenancy
between married people.
● Tenancy in common: When two or more
people jointly hold a property without
holding equal rights, the joint ownership
would be known as tenancy in common.

25
Coparcenary

● (joint heirship) is, a person at the top of a

line of descent, and his three lineal
descendants — sons, grandsons and
great-grandsons.
● Coparcenary is a term used in matters
related to Hindu Succession Law.
● It refers to a person who has the capacity to
assume a legal right in his ancestral property
by birth.
● Hindu Succession Act, 1956, establishes the
coparcenary form of ownership among
members of Hindu Undivided Families
(HUFs).
● In a coparcenary property, every coparcener
acquires an interest by birth.
● This concept, which is somewhat similar to
joint tenancy, allows an unborn child to have
an equal share in an HUF property.
● The properties of the paternal ancestors
should be sold only with the consent of the
successors. Without consent, these
properties cannot be sold.
26
Property ownership by
nomination
● Nomination is a process under which a property
owner can give someone the right over his
immovable property and other assets, in the
event of his death.
● Property nomination has also become a
common practice among owners, because by
way of this, the landlord can ensure that the
property does not remain unclaimed after his
demise.
● However, a nominee does not become the legal
owner of the said property, because it has been
transferred in his name and he has the
possession.
● A nominee is a ’trustee of the property‘ and is
liable to hand it over to the late owner’s legal
heirs.
● This means a nominee would have no say in the
sale and distribution of the property.
● Buyers of property must, hence, ensure that the
seller is not a nominee but an actual owner,
before entering into transactions in order to
avoid any legal complications in future.
27
Physical Rights of Ownership
of land
When you own real property, you have certain
rights that go along with that ownership,
including:

● Right to possession
● Right to control
● Right to use and quiet
enjoyment
● Right to allow others a
right to use (licenses and
leases)
● Right to privacy and to
exclude others

28
● Right to disposition or to transfer the
property to someone else by selling,
gifting or inheritance

● Right to use property as collateral

something pledged as security for
repayment of a loan, to be forfeited in
the event of a default. through a
mortgage

● Your ownership rights to real property

include the right to use the surface of
the land, called “surface rights.”

● You also have a right to use what is

under the surface, such as oil, gas, and
minerals. These are called “subsurface
rights.”

● Your ownership rights include “water

rights” or “riparian rights” which are the
rights to any water on your property, and
the right to make reasonable use of
flowing water that passes through or by
your property.

29
● In addition, you have a right to use the space
above the land, including the right not to have
the air directly over your property blocked by
buildings on adjacent properties. When you
acquire property, you must be careful to
determine if any of these rights, such as air
rights, have been sold or pledged.

● Your ownership rights to real property also

include a right to make improvements to your
property, such as erecting buildings.

● In most jurisdictions the right of a property owner

to make improvements is subject to limitations
under local restrictions regarding the size,
configuration and use of real property (“zoning
laws”), and ordinances which control both the
way the construction is to performed and the
minimum standards the buildings must comply
with (“building codes”).

● Zoning laws which are enacted in cities permit

the owner of a property which is not fully
developed under the zoning law to sell the
property’s unused development potential to the
owners of neighbouring properties who want to
construct buildings that are larger than the
30
zoning law would otherwise permit
 4. TRANSFER OF TITTLE

Tittle
Tittle to Real Estate is the right to ownership of the
land & the associated rights.
Tittle also serves as the evidence of the ownership.
Voluntary and Involuntary Transfer of Property
Involuntary Transfer
● In the involuntary transfer of property, the
owner transfer property without his/her consent
as per the judgment of a federal court. OR
Involuntary Alienation happens when the court
attaches the property of a person. An
attachment is a court order seizing specific
property.
● Courts often attach debtors' property to help
pay their creditors, either by directly
transferring the property to the creditors, or by
selling it and giving the creditors the proceeds.
Voluntary transfer
In the voluntary transfer of property, the owner will
divide the property willingly to a new owner by ways
of:
for consideration in exchange of something e.g. by
lease, mortgage, sale, or exchange,
by gift, and
by Will 31
Voluntary Transfer of Property
● Voluntary conveyance is the intentional
transfer of a title to a property from one
individual to another through a deed.

● At the point when the owner of property

transfers it willingly, it is voluntary transfer.
voluntary implies freedom and spontaneity
of choice or action without external
compulsion.

● It might be done in following ways:

(i) for consideration payment or

money or consideration is a benefit
which must be bargained for between
the parties, and is the essential
reason for a party entering into a
contract. e.g. by mortgage, sale, lease
or exchange,
(ii) by gift, and
(iii) by will 32
Five Different ways of
Acquiring or Transferring Real
Estate Assets
● Through inheritance or WILL
● Through relinquishment of the property
in a land
● Through SETTLEMENT Or Partition of
Properties
● Through GIFT
● By purchasing the ownership of the
property

Transfer of Property Through a

Will
A transfer of any property can also be made by way
of execution of a will but the vesting of the property
will take effect, after the death of the person
executing the will. As per the prevalent laws, a will
is neither required to be stamped, nor is it required
to be registered. 33
Transferring Real Estate by
Relinquishment
This basically means that an owner of a
property will relinquish or give up or gift his or
her rights in the property in favour of another
person. This relinquishment deed or the gift
deed, as the case may be, should be
adequately stamped and registered with the
concerned sub-registrar of properties.

Transferring Real Estate

Through Settlement
In settlement deed, the executant called
Settlor transfers the property directly to the
claimant called settlee, who shall be absolute
owners of the property subject to the
conditions if any.
The settlement document must be signed by
all the family members involved.

34
Transferring Real Estate
Through Gift Deed
You can transfer immovable property through a
gift deed. A commonly used method, especially
when transferring to a family member or friend, is
executing a gift deed in favour of the recipient.
Though no monetary transaction is involved, it is
still necessary to register the gift deed to make
the transfer valid.
A gift deed contains details of the property, the
transferrer and recipient.

Transferring Real Estate

Through Sale Deed
The sale deed, from the seller to the buyer, is the
primary document evidencing ownership to the
property. Hence, the buyer is advised to scrutinize
the terms of the sale deed carefully, to ensure
that his rights are protected and absolute title to
the property is conveyed.
A crucial requirement for a sale deed to be valid,
binding and enforceable is that the document
being signed by both parties, should be stamped
appropriately as required
35
Types of Deeds
There are various kinds of common legal deeds
in India:
● General Warranty Deed.
● Special Warranty Deed.
● Quitclaim Deed.
● Bargain and Sale Deed.
● Grant Deed.
● Fiduciary Deed.
● Trust Deed.
● Court Order Deed.

36
 General Warranty Deed

● A warranty deed is a type of deed where the

grantor guarantees that he or she holds clear
title to a piece of real estate and has a right
to sell it to the grantee

● A general warranty deed provides the buyer

with the highest form of protection.

● It pledges or warrants that the owner owns

the property free and clear of any
outstanding liens, mortgages, or other
encumbrances against it.

● The two parties involved in a warranty deed

are the seller or owner, also known as the
grantor, and the buyer or the grantee. Either
party can be an individual or a business, and
are often strangers to each other.

37
 Special Warranty Deed

● a special warranty deed is a deed to

real estate where the seller of the
property known as the grantor.

● warrants only against that occurred

during their physical ownership.

● in other words, the grantor doesn’t

guarantee against any defects in clear
title that existed before they took
possession of the property

● special warranty deeds are most

commonly used with commercial
property transactions.

● special warranty deeds go by many

names in different states including
covenant deed,grant deede, and
limited warranty deed.

38
 Quitclaim Deed.
● A quitclaim deed is a legal instrument that is
used to transfer interest in real property. The
entity transferring its interest is called the
grantor, and when the quitclaim deed is properly
completed and executed, it transfers any interest
the grantor has in the property to a recipient,
called the grantee.

● A quitclaim deed is often used if the grantor is

not sure of the status of the title (whether it
contains any defects)

● The drawback, quite simply, is that quitclaim

deeds offer the grantee/recipient no protection
or guarantees whatsoever about the property or
their ownership of it. Maybe the grantor did not
own the property at all, or maybe they only had
partial ownership

● Using a quitclaim bill of sale can have benefits

for both seller and buyer. A seller is able to sell
the property without having to ensure the title is
clear. They sell it without guarantees, so if, for
example, there is a lien against the property, that
lien passes with the property to the buyer.
39
 Bargain and Sale Deed.

● A bargain and sale deed is a deed

"conveying real property without
covenants (covenant is a provision, or
promise, contained in a deed to land.

● Land may be subject to a covenant

which affects or limits its use.)

● A bargain and sale deed includes a

warranty that the grantor has title to the
property but does not guarantee that
the property is free of claims. This is
known as a bargain and sale deed
without covenants.

● The bargain and sale deed has no

guarantee that the land being sold is
free of encumbrances — the only
implication is that the grantor has title,
and not one that is necessarily free of
defects.

40
 Grant Deed.

● In exchange for an agreed price, a grant

certificate transfers the interest in an
estate from the seller to the buyer.

● It guarantees that the seller owns the

property free from all debts.

● The grant deed is written proof that an

individual owns a property.

● The grant deed also provides title

guarantees to the new owner — insurance
that the property title is free of claims or
liens and the new owner has the right to
sell or transfer the property to another.

41
 Fiduciary Deed

● One can use a fiduciary deed when the

grantor is a fiduciary (A fiduciary is a
person or organization that acts on behalf
of another person or persons, putting
their clients' interest ahead of their own,
with a duty to preserve good faith and
trust.

● Being a fiduciary thus requires being

bound both legally and ethically to act in
the other's best interests.)such as a
trustee to transfer the land.

● This act ensures only that the trustee has

the power and authority it has delegated.

● This type is used to transfer property

such as real estate when the owner can't
sign a deed for legal or other reasons. ...
The fiduciary is a person authorized to
sign in place of the person or entity that
owns the property.

42
 Trust Deed
● Charitable, Religious and Hospitality &
Rehabilitation institutions can be formed by
executing a Trust Deed.
● Trust deed is executed between the settlor
and the trustees. A settlor is a person who
creates the trust for some charitable or
religious or hospitality & rehabilitation
purposes.
● Whereas the trustees are the people who
manage the trust.
● The settlor generally appoints the trustees
who can effectively run and work according
to the objects of the trust.
● Under trust deed, the settlor transfers the
identifiable property to the trustees and
makes it obligatory for the trustees to work
and manage the trust as per the terms and
conditions specified in the trust deed.

Court Order Deed.

● The court carries out these deeds without
the owner's consent. One makes these deed
during circumstances where the sellers are
no longer able to pay for the house. Thus,
the court executes the deed without their
43
permission
 Legal Conveyance

● “Conveyancing” is the legal process for

transfer of ownership of property from seller
to the buyer and this term is used in both
buying and selling of immovable property

● Conveyance deed is a legal document that is

used to transfer the title of property from
one person to another as a gift, an exchange,
a lease, a mortgage, etc.

● A gift deed, mortgage deed, lease deed or

sale deed can also be called as a
conveyance deed.

● Conveyancing is a necessary process in both

buying or selling property.

● A professional conveyancer or conveyancing

solicitor helps with the settlement and title
transfer process by ensuring that their client
is meeting all legal obligations and that their
client's rights are protected during this
transaction 44
 5. Real estate finance

Real Estate Finance-

Real estate financing is generally used to

describe an investor's method of securing funds
for an impending deal. As its name suggests,
this method will have investors secure capital
from an outside source to buy and renovate a
property

Sources of Finance for Real

Estate
3 Sources of Finance for Real Estate

● Development Projects
● Mainstream Lending
● Private Lending
● Joint Venture.
A lien is a legal right or claim against a property
by a creditor.

45
Real Estate Finance: Sources
One of the biggest misconceptions of real estate
investing is that you need to have a lot of money
to get started, which isn’t true. However, the
secret that many professionals don’t understand
is that there are many different real estate
financing options available to fund every
investment.

Cash Financing:
Great for investors who have access to a
significant amount of capital, either personally or
through their network, and wish to purchase
properties free and clear. There are times when
paying cash for a property makes sense and other
times you should take advantage of financing.

Hard Money Lenders:

Accessible to investors who have
less-than-perfect credit or financial history, and
are in need of a short-term loan. Funded by
private businesses and individuals, hard money
lenders provide short-term, high-rate loans for
real estate investors.
46
Private Money Lenders:
Investors who are well-connected can often tap
into capital from personal connections, borrowing
money at a specified interest rate and payback
period. Private money lenders will provide
investors with cash to purchase real estate
properties in exchange for a specific interest rate
and with a specified payback period – anywhere
from six months to a year.

Seller Financing
There are some scenarios when both an investor
and a seller can strike up a mutually-beneficial
financing deal. In seller financing, the property
buyer will make payments directly to the seller of
the property, rather than going through a bank.
This can help a seller, sell the property more
quickly. The investor can avoid traditional
mortgage lending hurdles. Together, the buyer and
seller can often enjoy a faster transaction process
and avoid many costs and fees associated with
the closing process.

47
Peer-to-Peer Lending
is a form of funding used to raise loans for
people who need to borrow, from people who
want to invest. ... The main idea is savers get
higher interest by lending out their money
instead of saving it, and borrowers getting funds
at comparatively low interest rates.

Funding Techniques for Real

Estate
● This refers to ways through which
finances can be acquired for envisaging
into a real estate investment whether
development or redevelopment.
● Financing can be a very important
component of investing in real estate.
● In general, when investors desire to
obtain financing, they usually pledge, their
ownership of real estate as a condition for
obtaining loans.
● In many cases, investors also pledge
personal property to obtain loans.
● The major funding techniques are equity or
debt financing techniques 48
Equity financing
● Equity financing is an arrangement
between the owner and investors that
contribute cash towards the purchase
of the property in exchange for equity
share in the property.

● Equity financing can be 100% or just a

portion of the financing

● Equity is the difference between the

market value of your home and the
amount you owe the lender who holds
the mortgage.

● Put simply, it's the amount of money

you'd receive after paying off the
mortgage if you were to sell the home.

● Mortgage is a loan – provided by a

mortgage lender or a bank. ... While it's
possible to take out loans to cover the
entire cost of a home, it's more
common to secure a loan for about 80%
of the home's value.
49
Debt Financing
● Debt financing means you're borrowing
money from an outside source and
promising to pay it back with interest by
a set date in the future.

● Debt financing is when you as anowner/

investor borrow to finance the purchase
of a property This involves the raising of
funds from banks and other lenders
where the lender will benefit by interest
charges and the repayment of capital.

● "Debt" involves borrowing money to be

repaid, plus interest, while "equity"
involves raising money by selling
interests in the company. Essentially
you will have to decide whether you
want to pay back a loan or give
shareholders stock in your company.

50
Equity and Debt Financing

● Real estate financing typically

involves a combination of debt and
equity.

● It may involve more than one source

of equity and more than one source
of debt.

● If a person were to acquire real

estate for cash, without debt or
borrowing of any kind, the value of
the real estate would all be
considered equity.

● If a person acquired real estate by

borrowing the entire purchase price
of the property and pledging the real
estate as collateral for the loan, the
person would not have any equity in
the property.

51
 6. Land use and control

Introduction
● The primary private land-use control is
deed restrictions, limiting what can be
done on the property by the owner.
● The primary purpose of land-use
controls is to limit population density,
noise, pollution, and to maintain the
aesthetics of the neighborhood.
● Land use is the characterization of land
based on what can be built on it and
what the land can be used for. ...
● One definition of land use is “the
total of arrangements, activities and
inputs that people undertake in a certain
land cover type.”
● Land use, as the name suggests, is
associated with planning, control, and
rights of property.
● Zoning, on the other hand, is the
allocation of land in a municipality by
dividing them into different zones.
● The purpose of zoning is to protect and
conserve the value of land use.
52
Public Control of Private
Property
● Private property is a legal designation for the
ownership of property by non-governmental
legal entities.
● Private property is distinguishable from public
property, which is owned by a state entity.
● The government does take private property
for a public purpose, it must fairly compensate
the owner for the loss.
● The government provides the landowner a fair
price, and the landowner yields the property to
public use.

Zonal Laws
● Zoning laws are laws of local municipal
governments or other local authorities that dictate
the use of land and construction of buildings.
● In zoning, authorities divide areas of land in to
different zones where different land use patterns
are enforced.
● Zoning ordinances are the written laws that
provide the specifications for the use of real
estate in different zones. These laws prohibit the
construction of a commercial real estate in a
residential zone. Zoning ensures that lands are
prudently demarcated for a particular purpose.
53
Enforcement of Zoning Laws
● Zoning laws exist in most parts of the world.
Zoning restrictions are intended to prevent
certain patterns of land use in certain
neighbourhoods. For instance, zoning laws may
prevent a commercial outlet from operating in a
residential area.
● Zoning law, in some regions, also restrict the
height of buildings.
● Zoning laws may also stipulate the green
spaces, building density, the usage of lots and
the types of businesses allowed in a certain
region.
● Zoning laws may also restrict the number of
pets, and the type of animals a household can
own. For instance, in an urban residential area,
zoning restrictions may not allow cows or
buffaloes as pets but, in a rural area they may.
● A major argument against zoning restrictions is
that land use patterns are more efficient when
they are decided by the market. When they are
decided by the market, for example, high-rise
buildings would be built where the demand for
real estate is the highest, and industrial outlets
would be built where it makes the most
economic sense to build them 54
Urban Development Emerging
Patterns of Urban Land Use
● Essentially ‘urban’ means a built up area
such as a town or city.

● Urban land use

● comprises which activities are taking place

where and their level of spatial
accumulation, which indicates their density,
intensity, and concentration.

● Increased urbanization results in a growth in

urban population and urban land, with a
decrease in rural population and agricultural
land. ... This effect means that the economic
benefits of urban land use is higher than
that in rural areas.

55
Stages of Urban
Development
● This theory describes four stages of
urban development: urbanization,
suburbanization, de-urbanization, and
re-urbanization through the processes
of concentration/ de-concentration and
growth/ decline of entire functional
urban regions.

7 types of land use

Categorized land use into seven types:

residential area,institutional
area, road greenbelt,
roadside,park, and forest.

56
Characteristics of Urban
Places-
● Aside from the population, urban places
also have common characteristics.

● Think of ‘urban’ and many people think of

roads, buildings and infrastructure like
electricity cables and sewage systems.

● Others will think of shops, offices and busy

transport hubs.

Site
● As urban areas have grown, site factors
have become less important. For
example, most cities do not source their
water locally (from springs and rivers) but
receive it in pipes from elsewhere.
● In the modern age, most urban areas are
still found in places that have good ‘site’
features, but this is not because of the
features of the site itself.

57
Situation
● Situation refers to the location of the
settlement in relation to what is around it.
For example, a city might be located along
a coastline, at the end of a river valley, at
the other end of which is a coalfield.
● These features would all make a good place
for a modern settlement
● In reality, a combination of good site and
situation features are needed for a
settlement to grow into a large urban area.
Function
● Function refers to ‘what the place does’, or
‘the reason the city is there’. Almost all
settlements have more than one function, and
the larger the urban area the more functions it
is likely to have.
● Functions are both cause and effect of a city’s
growth. For example, Hong Kong grew to its
current population of over 7 million because it
had a historical administrative function, as
well as a transport function as a sea port.
● Over time it has grown into a financial centre,
a retail centre and an airline transport hub.
● This is a good example of cumulative
causation. 58
Land Use
● Land use in urban areas is easily
identifiable as not rural meaning there
is little agricultural land use. (There
are no farms.)
● Land use is often closely linked to the
function.
● In almost all urban areas, residential
is the main land use.
● In industrial centres, industrial land
use will be common, and so on.

59
7. Role players in real estate development

Introduction

● Real estate development is a process that

involves the purchase of raw land, rezoning,
construction and renovation of buildings, and
sale or lease of the finished product to end
users.
● Developers earn a profit by adding value to
the land (creating buildings or improvements,
rezoning, etc.)

Role of a Real Estate

Developer

● Developers buy land, finance real estate

deals, build or have builders build projects,
create, imagine, control, and orchestrate the
process of development from the beginning
to end.
● Developers usually take the greatest risk in
the creation or renovation of real estate—and
receive the greatest rewards. 60
● Successful developers of real estate properties
are characterized as creative individuals as
they're always looking ahead at what demand
might occur in the future.

● A successful real estate developer steps

outside the box and comes up with exciting
designs, new building materials, and
cutting-edge construction methods.

Players in the real estate

market

● The main participants in real estate

markets are: Users:

● These people are both owners and tenants.

● They purchase houses or commercial

property as an investment and also to live
in or utilize as a business.

● Businesses may or may not require

buildings to use land. 61
Stages in Real Estate
Development
● Real estate development is a multi-step
process that can be complicated, lengthy
and risky.
● It can take years to bring a project from
the initial planning stage through
construction to final completion, and there
are plenty of obstacles that can pop up
along the way.
● Yet development projects also can be
highly profitable investment opportunities

Developing any real estate project is a

complex process which you can be
brakedown into 3 typical stages:
● pre-development,
● construction, and
● project completion.

62
 Pre - Development

● In the early stages of a project, you

mainly focus on due diligence,
research, planning, and permitting.

● It is often the most variable in

duration.

● Investing at this stage carries the

greatest and most varied risks;
because there are many unknowns
you must first assess, the local
community plans, bylaws,
development and planning policies.

● All of these documents are freely

accessible on the municipal web site,
or alternatively you can visit their
offices and ask to see a hard copy in
the planning department.
63
 Construction

● The middle stage involves construction

and improvements.

● Since the pre-development tasks have

been completed, the project risks at
this stage are greatly reduced but
certainly not eliminated.

● Finally you get on site and start

building your project, although this
stage can last anywhere between six
and twelve months, depending on the
size of the project, it’s the most
exciting aspect of the development as
you see all of your hard work coming
to fruition.

64
 Project Completion
● The final stage of the development
process is project completion, and
in other words, this is the first
stage of the building’s life.

● While the pre-development and

construction risks may be removed
by this point, selling the property,
or obtaining tenants is still a risk.

● The occupancy permit generally

marks the end of the construction
phase and allows for the
commencement of completion
stage.

● As with the building permit, it is

based on construction quality and
is a fairly administrative process.

65
PRINCIPLES OF REAL
ESTATE DEVELOPMENT-
NOTES

THANKYOU-

DIVYA YADAV.R
10Q17ATO13
8TH SEM A SEC
15ARC8.8
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