Principles of California Real Estate Lesson 1: The Nature of Real Property Lesson 1: The Nature of...

Principles of California Real Estate

Lesson 1: Lesson 1:

The Nature of The Nature of

Real PropertyReal Property

Lesson 1: Lesson 1:

The Nature of The Nature of

Real PropertyReal Property

Real Property vs.

Personal Property

Two types of property: Real property (“realty”) Personal property (“chattels” or

“personalty”)

Real PropertyBundle of rights

= A bundle of A bundle of property rightsproperty rights

Real property Real property ownershipownership

Possess Use Enjoy Encumber

Will Sell Do nothing at all

Real PropertyInverted pyramid

Imagine a parcel of land as an inverted pyramid

Summary Basic Concepts

Real property Personal property Bundle of rights Inverted pyramid

Real PropertyAppurtenances

Appurtenance: Something that goes with or pertains to ownership of a piece of real property, but isn’t necessarily a physical part of the property.

Appurtenances

Air rightsAir rights

Water rights

Mineral rights

Support rights

AppurtenancesAir rights

Air rights: Landowner has the right to use the airspace above the property, within limitations imposed by law.

AppurtenancesAir rights

Air rights: Landowner has the right to use the airspace above the property, within limitations imposed by law.

Example: Aircraft flight paths

Air RightsRestrictions on air rights

Federal aviation laws Local laws and private restrictions

Air Rights

Air rights can be sold separately from the land (makes condominiums possible).

Air rights Water rightsWater rights Mineral rights Support rights

Appurtenances

AppurtenancesWater rights

Two systems for allocating water rights:


Two systems for allocating water rights: Riparian rights system


Two systems for allocating water rights: Riparian rights system Prior appropriation system


Two systems for allocating water rights: Riparian rights system Prior appropriation system

Either system can be applied both to surface water and to subsurface water.

Water RightsRiparian rights system

Riparian rights: Landowner has the right to use the water that touches her property.


Two types of water in riparian rights system: Riparian water = flowing water Littoral water = standing water


Two types of water in riparian rights system: Riparian water = flowing water Littoral water = standing water

Water may be used only on the riparian or littoral property itself.

Water RightsPrior appropriation system

Prior appropriation system was developed to address needs that were not served by the riparian system, particularly in arid areas.


Prior appropriation system was developed to address needs that were not served by the riparian system, particularly in arid areas.

In some states, including California, it has largely replaced the riparian rights system.


Permit required for appropriative rights.


Permit required for appropriative rights.

Permit holder can take or divert water from a particular source for a specified reasonable and beneficial use.

Example: Irrigation

Air rights Water rights Mineral rightsMineral rights Support rights

Appurtenances

AppurtenancesMineral rights

Mineral rights: A landowner has the right to extract any solid minerals located within the property’s inverted pyramid.

Mineral Rights

Minerals are: Real property when in the ground

Mineral Rights

Minerals are: Real property when in the ground Personal property once extracted and

brought to the surface

Mineral RightsOil and gas

Special rule for oil and gas:

Rule of capture

Air rights

Water rights

Mineral rights

Support rightsSupport rights

Appurtenances

AppurtenancesSupport rights

Support rights: Natural support provided to a piece of land by the surrounding land.


Support rights: Natural support provided to a piece of land by the surrounding land.Subjacent support – provided by

the underlying earth.


Support rights: Natural support provided to a piece of land by the surrounding land.Subjacent support – provided by

the underlying earth.Lateral support – provided by the

neighboring land.

SummaryAppurtenances

Appurtenance Air rights Water rights Riparian rights Littoral rights

Prior appropriation Mineral rights Rule of capture Support rights

Attachments

Attachments: Things that are permanently attached to the land.

Attachments

May be natural or manmade


Attachments

May be natural or manmade Are considered part of the real estate


AttachmentsNatural attachments

Natural attachments: Includes trees, bushes, and other plants: growing things that are attached to the land by roots.

Natural AttachmentsDoctrine of emblements

Doctrine of emblements: Crops produced by cultivated plants are classified as personal property, even before they are harvested.

Natural AttachmentsDoctrine of emblements

Doctrine of emblements: Crops produced by cultivated plants are classified as personal property, even before they are harvested.

Applies to crops planted by a tenant farmer.

Natural AttachmentsSeverance

Severance: Natural attachments can be “severed” from the land and sold separately.

AttachmentsFixtures

Fixtures: Manmade attachments to real property.

AttachmentsFixtures


Items that were once personal property.

AttachmentsFixtures


Items that were once personal property.

Now attached to or connected with real property in such a way that they have become part of the real property.

AttachmentsDistinguishing fixtures from

personal property

Four common legal tests: Method of attachment Adaptation of the item Intention of the parties Relationship of the parties

AttachmentsDistinguishing fixtures from

personal property

Four common legal tests: Method of attachment Adaptation of the item Intention of the parties Relationship of the parties

If a written agreement exists, it normally controls whether an item

is considered a fixture.

Fixture TestsMethod of attachment test

Test 1: Is the item attached to the realty in some

way, and if so, how? Is the item movable?

Fixture TestsAdaptation test

Test 2: Has the item been specially adapted to the

realty in some way, or specially designed for it?

Fixture TestsIntention test

Test 3: Did the person who installed the item intend

it to become part of the realty?

Fixture TestsRelationship test

Test 4: Did the person who installed the item own

the property, or was he just a tenant?

Fixture TestsRelationship test

Test 4: Did the person who installed the item own

the property, or was he just a tenant?An item installed by a tenant is typically

considered personal propertyAn item installed by an owner is typically

considered real property

Fixture TestsTrade fixtures

Trade fixtures: Equipment and other items that a commercial tenant installs to carry on a business.

Fixture TestsTrade fixtures

Trade fixtures: Equipment and other items that a commercial tenant installs to carry on a business.

Trade fixtures aren’t considered part of the real property, no matter how they’re attached.

FixturesMobile homes

A mobile home is personal property until permanently attached to a piece of real estate.

FixturesMobile homes

A mobile home is personal property until permanently attached to a piece of real estate.

Once attached to a piece of real estate, a mobile home is a fixture and part of the real property.

SummaryAttachments

Attachments Natural attachments Doctrine of emblements Fixtures Fixture tests Severance

Methods of Legal Description

Legal descriptions allow precise identification of a piece of real property.

Methods of Legal Description

Metes and bounds (most difficult to use) Government survey Recorded map

Legal descriptions allow precise identification of a piece of real property.

Three main methods of legal description:

Methods of Legal DescriptionMetes and Bounds

Metes and bounds description: Describes a piece of land by specifying its boundaries.


Metes and bounds description: Describes a piece of land by specifying its boundaries.Monuments – Natural or manmade

objects that mark a fixed point.



objects that mark a fixed point.Courses – Compass directions.



objects that mark a fixed point.Courses – Compass directions.Distances – Length of each boundary.

Most difficult method to use when describing property



objects that mark a fixed point.Courses – Compass directions.Distances – Length of each boundary.Most difficult method to use when

describing propertyThe point of beginning must always be described by reference to a monument.

Reading aMetes and Bounds Description

Starts with the point of beginning, then gives the course (direction) and distance for each leg of the boundary, until it has described the full circuit and arrived back at the point of beginning.

A description of this property would read: “Beginning at the old oak tree, go South 15° East 200 feet. Then go North 90° West 310 feet, more or less, to the centerline of Smith Creek. Then go northwesterly along the centerline of Smith Creek to a point due west of the old oak tree. Then go North 90° East 430 feet, more or less, to the point of beginning.”

Methods of Legal DescriptionGovernment survey

Government survey description: Property is identified by its location in a particular section, township, and range on a U.S. government survey map.

Also called a rectangular survey description.

The government survey system is made up of a series of very large survey grids covering much of the United States, including California.

Government Survey DescriptionsPrincipal meridian & base line

Each of the grids has its own: Principal meridian (main north-south line) Base line (main east-west line)

In California: Humboldt Meridian Mount Diablo Meridian San Bernardino Meridian

Survey grids are identified by the name of the principal meridian.

Government Survey DescriptionsRange & township lines

Each grid has grid lines running parallel to the principal meridian and to the base line at intervals of six miles.

Range lines divide the land into columns called ranges.

Each range is six miles wide.

The north-south lines are called range lines.

Township lines divide the land into rows called township tiers.

The east-west lines that parallel the base line are called township lines.

Government Survey DescriptionsTownships

Each individual square is called a township. A particular township is identified by its

position in relation to the base line and the principal meridian.

6 miles 6 miles × 6 miles× 6 miles

36 square miles36 square miles

Township =Township =

The location of the township on the screen is “Township 4 North, Range 5 East.”

It is the township created by the intersection of the fourth township tier north of the base line and the fifth range east of the principal meridian.

Government Survey DescriptionsSections

Each township is divided into 36 sections. Each section is one mile on each side, or

one square mile. Each section is 640 acres. (An acre

contains 43,560 square feet.)

The sections within a township are numbered from 1 to 36. Most individual parcels are only part of a section, so they are described in terms of fractions, such as quarter sections or quarter-quarter sections.

A complete government survey description must include the section, township, and range.

It must also include the name of the principal meridian, to identify the grid.

Methods of Legal DescriptionRecorded map

Recorded map description: The standard method for describing property in towns and cities.


The map is recorded by the developer when the land is subdivided.



The map is recorded by the developer when the land is subdivided.

Also called the lot and block method or the plat map method.


The subdivision is surveyed and a map is drawn up that shows the precise location and dimensions of each lot.



Each lot is assigned a lot number.



Each lot is assigned a lot number.

Groups of lots separated by streets within the subdivision may also be assigned block numbers.


Recorded Map DescriptionsPlat map

Plat: A map showing the lots and blocks in a subdivision.

Recorded Map DescriptionsPlat map

Plat: A map showing the lots and blocks in a subdivision.

Once the plat map is recorded, a parcel can be described by its lot and block numbers, the name of the subdivision, and the county or city in which it is located.

Typical recorded map description:

“Lot 7, Block 2, in the Lowland Heights subdivision, according to the plat thereof recorded at Vol. 22, Page 16, in the records of Alameda County, State of California.”

Recorded Map DescriptionsExample

Methods of Legal DescriptionOther methods

Other methods of describing land: A reference to a description in an earlier

recorded document.



recorded document. A reference to a survey or tax assessor’s

map that has been recorded.




map that has been recorded. A generalized description, such as “all my

land in Orange County.”




map that has been recorded. A generalized description, such as “all my

land in Orange County.”

Street addresses should never be used to describe land.

SummaryLegal Descriptions

Legal description Metes and bounds method Government survey method Recorded map method

Principles of California Real Estate Lesson 1: The Nature of Real Property Lesson 1: The Nature of...

Documents

Transcript of Principles of California Real Estate Lesson 1: The Nature of Real Property Lesson 1: The Nature of...