Real property is a legal term referring to real estate (permanent, immovable property) and its ownership interests. In the most general sense, the term real property refers to land, meaning not only the earth but everything of a permanent nature over or under it including structures and minerals. The opposite of real property is personal property. In modern legal systems, classification of property as real or personal may vary somewhat according to jurisdiction or, even within jurisdictions, according to purpose, and determines whether and how the property may be taxed.
Real property is not just the ownership of property and buildings — it includes many legal relationships between owners of real estate. Real property can be held in various ways. In some jurisdictions, real property is held absolutely (free of any encumbrances or superior ownership interests), while under English common law it may still be considered to be owned by the Crown. Such distinctions can be important in determining who inherits the real property upon the death or insolvency of the owner
An important aspect of real property law is the various definitions of estates in land. In the law of almost every country, it is the State that is the true owner of all land within its territory, because it is the sovereign, or supreme, lawmaking authority over such land. Individuals don’t “own” the land, but rather “estates” in the land (also known as “equitable interests”) such as the transferable right to use and exclude others from use.
Estate law and ownership interests
The law recognizes different types of ownership interests in real property. These different interests, called “estates,” encompass different rights. The type of estate held by a landowner is generally determined by the language of the grant through which the landowner acquired the land.
Two differentiating characteristics of estates in land are their duration and transferability. Some important types of estates include:
Fee simple: This is the most common estate which lasts forever and can be freely transferred. This type of estate (sometimes called “fee simple absolute” or “fee tail”) signifies that the owner has the right to dispose of the property as she sees fit and is a form of estate in which an individual has ownership for an indefinite period of time (sometimes referred to as “freehold estates”).
Life estate: This is another form of freehold estate in which the individual (“grantee” or “life tenant”) retains possession of the land for the duration of his or her life. Though it can generally be sold, sale does not change its duration, which remains limited by the original grantee’s life. Upon the individual’s death, possession reverts back to the grantor.
Leasehold: Leasehold estates are estates of limited duration. For example, an apartment-dweller with a one year lease has a leasehold estate in his apartment. Often, leasehold tenants must pay rent. Different terminology is used to distinguish between various forms of leasehold estates, including tenancy for years, tenancy at will, and tenancy at sufferance.
If an estate is of limited duration, whoever will take ownership of the land upon its termination has a “future interest.” Two important types of future interests are:
Reversion: A reversion arises when a tenant grants an estate of lesser maximum duration than his own. Ownership of the land returns to the original tenant when the grantee’s estate expires. The original tenant’s future interest is a reversion.
Remainder: A remainder arises when a tenant with a fee simple grants someone a life estate, and specifies a third party to whom the land goes when the life estate ends. The third party is said to have a remainder. The third party may have some legal rights to limit the life tenant’s use of the land.
Concurrent Estates exist when property is owned or possessed by two or more individuals simultaneously. Estates may be held jointly as joint tenants with rights of survivorship or as tenants in common. The difference in these two types of joint ownership of an estate in land is basically the inheritability of the estate. In joint tenancy (sometimes called tenancy of the entirety s the tenants are married to each other) the surviving tenant (or tenants) become the sole owner (or owners) of the estate. Nothing passes to the heirs of the deceased tenant. In some jurisdictions the phrase “with right of survivorship” must be used or the tenancy will assumed to be tenants in common. Tenants in common will have an inheritable portion of the estate in proportion to their ownership interest which is presumed to be equal amongst tenants unless otherwise stated in the transfer deed.
Real property may also be owned jointly through the device of the condominium or cooperative. A condominium is an apartment house, office building, or other multiple-unit complex, the units of which are individually owned, each owner receiving a recordable deed to the individual unit purchased, including the right to sell, mortgage, or even lease that unit and sharing in joint ownership of any common grounds or passageways. A cooperative is a building owned and managed by a corporation in which shares are sold, entitling the shareholders to occupy individual units in the building.
Real estate transactions
In many countries, professional organizations may also provide further guidelines. For example, in the United States, the Federal Fair Housing Act prohibits discrimination in real estate transactions on account of race, color, religion, sex, or national origin. The agreement to sell between a buyer and seller of real estate, often referred to as the purchase agreement, is governed by the general principles of contract law. It is a common requirement that any contract for real property be in writing.
Another common requirement in real estate contracts is that the title to the property sold be marketable. This requires that the seller have proof of title to all the property he or she is selling and that third parties do not have undisclosed interests in the title. A title insurance company or an attorney is often employed by the buyer to investigate whether the title is, indeed, marketable. Title insurance companies also insure the buyer against losses caused by the title being invalid.
In order to pass title, a deed with a proper description of the land must be executed and delivered. Some states require that the deed be officially recorded to establish ownership of the property and/or provide notice of its transfer to subsequent purchasers. The most common method of financing real estate transactions is through a mortgage, or arrangements by individuals and businesses wishing to make large value purchases of real estate without paying the entire value of the purchase up front. Under such an arrangement, the borrower is obliged to pay back the amount borrowed to the lender with a predetermined set of payments.
Real property law in practice
Lawyers working with real property have a wide variety of duties. Such lawyers are often requested to assisting with all aspects of real estate transactions. Although it is licensed brokers (usually non-lawyers) who normally represent buyers and sellers of real estate, real property lawyers are sometimes requested to assist in the negotiation or review of the closing documents or the sale purchase agreement. With respect to litigation and arbitration, real property lawyers often find themselves represented either wronged tenants/buyers or landlords/sellers accused of wrongdoing. Real property lawyers may also be involved, or cooperate with brokers, in financing and the arranging of suitable mortgages. Finally, such lawyers are often requested to assist in estate or trust distribution where necessary.
Real Estate Agent Forum
Real Estate Law in England and Wales
The law of real estate and transactions
American Bar Association – Real Property Section
Latest news in real property law
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