Lecture 6

Real Estate
Property Rights
“What is Real Estate?”

1) Two major physical components

- Land
- Improvements and Fixtures

2) Bundle of Legal Rights

Legal Concept of Land
Land ownership contains “land rights.” Rights are
referred to as the claim or the interest to which the
land owner is justly entitled under law or custom.

Common Ownership Rights

1. Surface (on which improvements are constructed)
2. Rights to Light
3. Water Rights (Riparian System)
4. Improvements and Fixtures
5. Mineral or Subsurface (from the surface to the Earth’s Core)
6. Air (extends “to the sky” or “to the heavens”)
Water Rights

1) Riparian System

2) Doctrine of Prior Appropriation

Improvements and Fixtures

Improvements: Buildings, structures, fences,

driveways, retaining walls, etc.
Improvements “to the land” – Changes to land
(improvements to drainage, grading, filling, water/sewer,
stormwater retention, gas lines, electric, etc.). Also
referred to as “horizontal development”

Improvements “on the land” – Permanently erected man-

made structures
Improvements and Fixtures

Fixtures: Personal property that is legally

considered real estate because it is attached to
land or an improvement, which is in itself
attached to the land.
 Factors Determining a Fixture: Method of attachment,
intention of party making the attachment, purpose for which
personal property is used.
Legal Concept of Land

Mineral: 20,000’ below surface, restricted by land size

Air: 1,500’ above surface, restricted by Federal

Government for airline use
Mineral and Air Rights

AIR RIGHTS
1,000’

SURFACE
RIGHTS
MINERAL
RIGHTS
20,000’
Lecture 6

Transferring
Real Property
Deed

 Legally conveys real estate interests from one

party to another
Legal Descriptions

Four Types

1. Lot and Block System (“plat map system”)

2. Metes and Bounds System
3. Government Rectangular System
4. Combination Legal Description (Metes & Bounds plus
Government Rectangular System)
Legal Descriptions:
Lot and Block System

Utilizes Publicly-Recorded Plats

Legal Descriptions include specific lots, blocks,

and subdivisions
Legal Descriptions:
Metes and Bounds System

Describes an Exterior Perimeter of a Property

Starts with a specified “Point of Beginning”, and

ends as a specified “Closure” point
Legal Descriptions:
Government Rectangular System

Utilizes baselines and principal meridians to

identify tracts of land
Lecture 6

Levels of Real
Estate Interest
Real Estate Interests

Rights of Real Estate Ownership

1. Right to Use the Property

2. Right to Possess the Property
3. Right to Exclude others from the Property
4. Right to Dispose the Property
Real Estate Interests

Freehold Estate (Lifetime Duration)

Highest Form of Real Estate Ownership: Fee-

Simple
-Owner has all four ownership rights
Real Estate Interests

Less-Than-Freehold Estate

Use, Possession, Exclusion (limited), NOT Disposition

Most commonly found in Landlord/Tenant relationships

Real Estate Interests

Less-Than-Freehold Estate

Leased-Fee Interest: LANDLORD

Leasehold Interest: TENANT

Real Estate Interests
Four Categories of Less-Than-Freehold Estates

1. Estate for Years: Continues for a definite period of time

2. Estate from Year to Year: Continued tenancy after “Estate for Years;”
reestablished for a maximum term of one year

3. Tenancy at Will: Duration not specified; termination of lease agreed by

either party (with notice) or death of either party

4. Tenancy by Sufferance: Tenant retains possession against owner’s

wishes
Lecture 6

Non-Possessory
Interests in Land
Non-Possessory Interests

 Profits
 Licenses
 Security Interests
 Liens
– Primary vs. Mechanics Liens
 Covenants and Deed Restrictions
 Easements
Easements
“An easement is the right of one person to use the property of
another for a specified purpose and under certain conditions that
specify the extent of the allowable usage. The person holding
the easement does not possess the property, nor does that
person have the right to dispose the property.”

Two Types of Easements

1. “Runs with the land”

2. Does not “Run with the land”
Easements
Easements which “Run with the Land”
(Can be passed from one owner to the next)
 Easement Appurtenant: At least two parcels, where one at least one parcel benefits
from the use of another parcel
– Dominant Estate: Receives benefit from easement use
– Servient Estate: Allows use of land to benefit dominant estate
 Commercial Easement in Gross: A right-of-way over one piece of land
– Railroads, pipelines, municipal utilities

Easements which do not “Run with the Land”

(Cannot be passed from one owner to the next)
 Easement-in-gross: Involves only ONE parcel of real estate; cannot be sold
Easements
Creation of Easements

1. Express Agreement: Contractual agreement

2. Necessity of Implication: Circumstances requiring legal efforts;

as easement is required for land access