To begin learning about real estate, we need to have a basic understanding of property. There are two basic classifications of property, REAL PROPERTY and PERSONAL PROPERTY. Real property refers to land, all things permanently attached and the rights that are included along with ownership of that property. Any property that does not fit this definition is personal property. Each of these can be broken down further into smaller categories.
We’ll start with real property, and to do that, we need to first know the definition of LAND. Land can be defined as the earth's surface extending downward to the center of the earth and upward to infinity, including those things permanently attached by nature, such as trees and rocks.
REAL ESTATE includes everything included in the definition of land, plus ALL things permanently attached, WHETHER BY NATURE OR MAN. That would include any improvements, such as houses, fences, sidewalks or sewer lines.
REAL PROPERTY, which can also be called REALTY, includes everything included in Real Estate, plus the legal rights that go along with ownership of property, referred to as “the bundle of legal rights.” The first legal right is DISPOSITION. This means you have the right to dispose of your property, meaning you can transfer the property to someone else. You can sell it, will it to someone or give it away. The next legal right is EXCLUSION, meaning you can exclude people from your property. You have the right to keep people out. Next is ENJOYMENT. You can do any legal activity on the property. Next is POSSESSION, meaning you have the right to possess the property or take possession of the property. The last legal right is CONTROL, meaning you can do anything legal TO the property. If you wanted to build a garage onto your house, you could probably do it if zoning laws allowed that. The bundle of legal rights can be remembered by the acronym DEEP C.
The terms land, real estate are often used interchangeably in casual conversation, but they do have slightly different meanings, and it is important to understand the differences between them.
Since land includes everything below the surface, and the air above the surface, the ownership rights to the subsurface and the air above would be included in ownership of real property. Those rights can be sold off separately. Someone could sell off the mineral rights to their property, or even break it down further and sell coal rights to one party, oil rights to someone else, and diamond rights to a third party. There can also be rights for underground utilities and lumber rights on the surface.
Above the property, air rights might be sold to a local airport to allow aircraft to fly over the property as they approach the runways. The courts have put some limitations on air rights. Once an aircraft is at it’s normal flight altitude, that is generally not considered to be interfering with a person’s property rights when it flies overhead.
Air rights could also include a building that is built over top of something else, like railroad tracks. The railroad would own the property where the tracks are located, but the developer or building owner would have the air rights above the railroad tracks, along with small pieces of land to place the supports for the building.
Without looking back, answer the following question:
The “Bundle of Legal Rights” includes:
If you got it wrong you can look back through the lesson.