BUNDLE OF RIGHTS
• Possession - Right to inhabit.
• Enjoyment - Right to keep others off property to have a quiet existence.
• Use - Right to utilize within the law.
• Transfer - Right to dispose through gift or sale (will)
• Encumber - Right to use home as security for a loan.
TYPES OF ESTATES IN REAL PROPERTY
Estate = ownership in real property. i.e. Real estate means ownership. 2 main kinds of estate, freehold and leasehold. These terms will define the degree of ownership.
Freehold Estates
Highest form of ownership from medieval England meaning free from demands/restrictions of the lord. In some instances can have a time limit. 2 kinds of freehold:
Fee Simple Estate
Gives the owner the largest bundle of rights. Own for unlimited period. Also know as estate of inheritance, as it can be passed on in a will.
A fee simple with no restrictions is called fee simple absolute.
A fee simple with restrictions is called fee simple qualified or fee simple defeasible. Use can be limited to certain restrictions and ownership can be revoked.
Life Estate
The estate if offered for the life of the new owner or measuring life (the life of original owner or 3rd party). At death, the property will revert back.
Same rights as freehold with the exception of being able to pass along to heirs. Property can be sold but has to maintain ‘life’ clause. (revert back to original owner). All taxes and profits are applicable to new owner, but anything extending beyond their life becomes invalid.
When the property reverts to ORIGINAL owner, it’s called a reversion. At death the property can even transfer to a 3rd party for the life of the estate, this person is called the remainderman.
Leasehold Estates
Contains fewer bundles of rights, owners are called renters or tenants and have exclusive rights within the conditions of the lease. Considered ‘chattel real’ or personal property because cannot convey.
• Tenants/Lesees holds a property by exclusive right of possession under conditions of a lease.
• Landlord owns the title of the property or reversion during the lease.
• The tenant will pay rent to landlord at predetermined time, for property use.
Four different types of lease:
Estate for years
This will continue for a set period of time. Time can extend up to 99 years. Can be described in any way from years to days. Can be terminated at anytime by either party.
Estate from period to period
This continues for a specific period and then resets for the same period (usually years or months) unless terminated by either party. Most periodic are month-to-month and need 1 month notice.
Estate at will
This is uncommon and is for indeterminate amount of time with no obvious payment for tenancy.
estate at sufferance
When a tenant remains in the property and the lease has run out or the tenant has given notice, but failed to vacate. This has fewest bundles of rights as the landlord may start eviction or the tenant may leave without notice.
A written contract is needed if the lease extends for more than one year, or end more than 1 year in the future. Written agreements are a good idea as they limit confusion.
Characteristics of Every Lease
• All leases are contracts wether in written or oral form. Landlord must sign, but tenant needed as occupancy signifies agreement.
• Contracts must be clear for both parties, backed by ‘consideration’ (rent).
• Once in writing cannot be altered verbally.
REAL PROPERTY
Property is anything that can be owned. Real property is land, but not just land, anything immovable in relation to it. Mineral rights, air space easements, buildings, etc.
Airspace
Airspace above a building to a certain height is real property. Even condominium owners have control over the air is it’s being abused.
Minerals
Minerals are considered real property, while still in the ground. After extracted they revert to simple property. Oil is not as it is liquid, when pumped out it is your property.
Water Rights
Water is real property, but cannot be owned, damed or collected for personal use under Doctrine of Correlative User may take reasonable share.
Different rights:
• Littoral: Rights of land owner who owns land boarding water.
• Surface: Rain runoff rights.
• Riparian: Rights to fair use water under DoCU
• Underground: Right to use underwater under Right of Appropriation allows non-riparian property the right to water… like irrigation.
Permanent Attachments
Reffers to permanent structures affixed to the land. These include:
• Buildings and structures resting on the land
• Growing plants attached to the ground with roots.
• Permanently fixed (fixtures) on or in a house.
Growing plants are real property. Farm crops are too until harvested, when they become personal property.
Emblements
The ‘growing plant’ exception to the rule. Crops can be owned by the landlord or tenant. e.g. Peach orchard. Peaches are personal property, but the trees are real property.
Appurtenances
Anything used with the land. Easement or stock in mutual company. These things are considered real property.
Immovable by Law
When selling an orchard the trees come with. The produce can be negotiated.
PERSONAL PROPERTY
Personal property is considered movable. Any property not considered ‘real is ‘personal’. Personal items are traded using a bill of sale. All personal items leave with seller when real estate is sold.
An item can change its designation, like a tree. When a tree it is real property. When cut down it’s personal property. If the lumber is used to build a house it becomes real property again. When the house is pulled-down it becomes personal property again.
FIXTURES
Fixtures start out as personal property and become real property. e.g. Refrigerator.
To determine a fixture using the acronym MARIA
• Method of attachment or degree of permanence
The greater degree of attachment, the more likely it is a fixture. e.g Ceiling fan wired to the electrical of a house.
• Adaptability
The more an item is adapted to a room or place. e.g. The ceiling fan was purchased for a purpose to fit a room size, color and decor.
• Relationship of the parties
IF the item does not depend on the relationship of the buyer-seller/landlord-tenant or if the seller/landlord has recently installed a fixture, it will transfer with the property.
• Intention of the person who attached it
If the seller/tenant wishes to take property upon sale, he/she should not attach it to the property. Most important test. If the tenant is taking the ceiling fan, it should be considered personal property.
Agreement between parties
Parties should put their intentions into writing to avoid confusion.
TRADE FIXTURES
Personal property attached to real property for trade. These can be removed as long as they do not damage property. Tenants must be careful when installing fixtures they want to remove later.
Examples:
• Built-in work benches
• Dividing screens or temporary walls
• Cash registers
DESCRIPTIONS OF LAND
No 2 pieces of land are the same. In cities we use street addresses to differentiate different lots. In rural areas it’s not so easy. So we use legal descriptions of land. These are needed to sell the property. There are 3 ways:
• Lot, block and tract system
Also the subdivision system using the plat map showing the tracts, blocks and lot number.
• Metes and bounds
Used when the other forms are impractical and used to define irregular shaped lots. Describes a property using measurements between landmarks using distance and angle. Metes = measurements between points. Bounds = boundaries or points. Bounds can be man-made of natural. Road vs. tree. Start a 1 point and go from point to point until back again.
Can be dicey as natural landmarks can shift or weather. Also was used to claim land and some overlap. Best to place boundary markers with compass directions and distances (coordinate geometery).
• US government section and township survey
Government section, most widely used in 30 of 50 states. When rectangular called Public Land Survey (PLS), Northwest Land Ordinance of 1785
Township starts with coordinate system. Meridians form north to south and baselines run east and west. Baselines are given a name to identify parcel.
California has 3 main meridian/baseline pairs.
• San Bernadino (SoCal)
• Mount Diablo (most NorCal)
• Humbolt Meridian (Norwest Cal)
To work out a position on a map:
• Start at intersection of meridian and baseline
• Townships spread from this point in 6 mile increments
• East/West direction is named ‘Ranges’
• North/South are names ‘Townships’
• Sections are numbered 1-36 starting at NE corner and snaking to the SE (36)
• Further divided into chapter 2 sections 1/2, 1/4 and 1/8.
(Each township is divided into 36 sections of 1 sq mile each)
Property descriptions must include township, section and fraction of section.
e.g. SW1/2 of SE1/4, Section 4, Township 87 N, Range 34 E, 6th Principal Meridian
Not a perfect system due to geography and lines not always being N,S,E,W creating irregular lots less than 1 square mile. These are called government lots.
Sources of irregular lots:
• Meridians converge to the north, E/W lines were sometimes re-aligned to match up with other townships.
• In treacherous terrain caused lined to be inaccurate. Once drawn, seldom corrected and remain that way.