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1. A. Property Ownership: Real Vs. Personal Property

 
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Real Property

Any land and things permanently attached to the land. It consists of minerals, oil, mines, or quarries. When you own real estate, you own from the center of the Earth and up unto infinity. You own airspace above the land.

Real Estate

Land plus all improvements (things permanently attached to it), running from the Earth’s center up through the sky

Land plus all improvements (things permanently attached to it) and includes the bundle of rights–interests, benefits, and rights inherent of ownership.

 

Examples of Real Property include buildings, fixtures attached to the building, fences, structures, fruit, nut, and ornamental trees and bushes. Standing timber and a vineyard are real property.

The bundle of legal rights/sticks includes the rights of real estate ownership

  • Possession
  • Control
  • Enjoyment
  • Exclusion
  • Disposition
  • Encumbrance
 

Transferring Real and Personal Property

Real Property

Deed

REAL PROPERTY MUST BE DELIVERED IN THE SAME CONDITION TO THE BUYER THAT IT WAS IN WHEN THERE WAS THE MEETING OF THE MINDS.

Personal Property

Bill of Sale

 
 

When property transfers from the seller to the buyer, UNLESS indicated, all real property must remain.

When you own real estate, you own from the center of the Earth up into infinity.

Real Estate

The land and all things permanently attached to it by either nature or by man (improvements). 

It can be sold or leased to others.

 

Fixtures

  • Those things are attached to the structure attached to the land, such as doors, water heaters, built-in air conditioners, sinks, faucets, and ceiling lamps.
  • Fixtures include; buildings, standing timber, pear trees, apple trees, orange trees, fences, doors, faucets, plumbing fixtures, washer-less faucets, hot water heaters, fences, landscape shrubs, and in-ground swimming pools.
  • When articles of personal property, including landscaping, are permanently attached to the improvements or land, they become Fixtures.
  • Fixtures are the real estate owner’s personal property, which is attached (annexed) to his real property. Fixtures are the Landlord’s Property.
  • Legal tests of a fixture: the comprehensive test is the intention of the annexor.
 

Test for Fixtures

The test for a fixture (MARIA)

  1. Method of annexation
  2. Agreement between the parties
  3. Relationship of the parties – lessor/lessee
  4. The intention of the annexor (If ivy growing in a free-standing pot attached to the front of a building, is it real Property? NO)
  5. Adaptation of the article to real estate

Land is not a fixture.  The land is real property.  Fixtures are attached to the land or the building attached to the land. 

(Trees, fences, shrubs or an attached door, doorknob, window, awning, faucet, sink.)

The landscaping at your house is real property.

 
 
 

Annexation and Severance

  • Personal Property can be annexed to real property.
  • Real Property can be severed from real estate.
  • Personal property that has been attached (annexed) to the real property becomes real property. Such as doors, windows, moldings…. They are called fixtures.
  • A fixture severed from the real property becomes personal property. Such as doors, windows, moldings….
  • An item of real property may be changed to personal property. It is severed from the real property.

The intention of the party who annexed a fixture to real property is the most critical factor in determining if something is real or personal. (Example: Was the freestanding refrigerator enclosed into the cabinets meant to be a permanent fixture? The intention of the owners who moved it into place and installed it will determine the answer.   

A homeowner ordered bricks and had a pallet of them delivered to his driveway. 

While the bricks are on the driveway, they are personal property. 

He spent seven days placing the bricks down and carefully leveling them by his front door.  He poured sand between the bricks to stabilize them. 

When that job was completed he moved patio furniture on the completed patio.  Are those bricks real or personal?

ANSWER: The bricks are real because his intention was to build a permanent patio.

 
 

Most Popular Real Estate

  • Residential

single-family and multifamily

  • Commercial

office space, shopping centers, stores, theaters, hotels, parking facilities

  • Mixed-use

commercial and residential uses in the same building

  • Industrial

warehouses, factories, land in industrial districts, power plants

  • Agricultural

farms, timberland, ranches, orchards

  • Special-purpose

schools, places of worship, cemeteries, government-held property

 
 
 

An Appletree and a Vineyard are real property.

Personal property is movable.

Example: Once planted, oranges, grapes, pears, figs, avocados, apple trees and other natural fruit of the land are real estate.

If the fruit falls from the tree, it becomes personal property.  

Standing timber is real property.

 

Fructus Naturales

The natural fruit of the land. Appletree, orange tree, olive tree

Fructus Industrials:

crops (as wheat, corn) produced by labor on man’s part for industry.

 

Appurtenances

The rights, privileges, and improvements go with a transfer of the land even though they may not be part of it. Examples are water rights, rights-of-way, and easements.

 
 

Surface rights = The land.

Subsurface rights = under the land.

Air rights/Air lots = Above the land.

 
 
 

Mineral Rights

Mineral rights are property rights to exploit an area for the minerals it harbors.

Mineral rights can be separate from land and air property ownership.

Subsurface rights may be leased or sold.

If a landowner wants to keep the mineral rights but sell the land he owns, the landowner must expressly reserve the mineral rights, or they will automatically pass to the buyer. 

Mineral Acres

Acres where the mineral interests have been retained in whole or in part.

 

Air Rights/Air Lots

 

Drones in Real Estate

What do you think the effect of drones have on real estate?

Air Rights are also known as air lots. Those ownership rights, not including surface rights or subsurface rights, allow you to use the open vertical space above a property.

 
 

Water Rights – Three of them

 

1. Riparian Water Rights

Riparian water rights (or simply riparian rights) is a system for allocating water among those who possess land along its path.

Adjacent to a waterway

All landowners whose properties adjoin a body of water have the right to make reasonable use of it as it flows through or over their properties. If there is not enough water to satisfy all users, allotments are generally fixed in proportion to frontage on the water source. These rights cannot be sold or transferred other than with the adjoining land and only in reasonable quantities associated with that land.

 

Reasonable use

Riparian rights also depend upon “reasonable use” as it relates to other riparian owners to ensure that the rights of one riparian owner are weighed fairly and equitably with the rights of adjacent riparian owners.

Riparian water rights include such things as the right to access for swimming, boating and fishing; the right to wharf out to a point of navigability; the right to erect structures such as docks, piers, and boat lifts; the right to use the water for domestic purposes; the right to accretions caused by water level fluctuations; the right to exclusive use if the waterbody is non-navigable.

An adjacent landowners rights to a creek, stream, pond, or adjacent small body of water. It gives all owners of land contiguous to the same body of surface water equal reasonable rights to the water whether a landowner uses the water or not.

 

Riparian right, in property law, doctrine about properties adjacent to a waterway that

  1. governs the use of surface water and
  2. gives all owners of land contiguous to streams, lakes, and ponds equal rights to the water, whether the request is exercised or not.

The riparian right is usufructuary, meaning that the landowner does not own the water itself but instead enjoys a right to use the water and its surface.

Riparian water rights, therefore, occur as a result of land ownership.

A landowner who owns land that physically touches a river, stream, pond, or lake has an equal right to water use from that source.

The water may be used as it passes through the landowner’s property, but it cannot be unreasonably detained or diverted, and it must be returned to the stream from which it was obtained.

The use of riparian water rights is generally regulated by “reasonable use.” Reasonable use allows for consumptive water use, but what constitutes fair use has varied widely from state to state and continues to evolve.

Riparian water rights cannot be lost through non-use and are indefinite in duration. Therefore, a riparian landowner does not lose their riparian right by not putting the water to use. However, the courts tend to provide more excellent protection for existing uses than for potential future uses.

Riparian rights can, however, be lost through prescription. Prescription is a process of involuntary transfer from one party to another. Under prescription, a party making open water use for a reasonable time gains title to the water right superior to that of the original holder.

 

2. Littoral Water Rights

Littoral rights are rights concerning properties that abut stagnant water like an ocean, bay, delta, sea or lake. Littoral rights are usually concerned with the use and enjoyment of the shore, but also may include rights to use the water.

Navigable Waterways

An owner whose property abuts tidal waters (i.e. oceanfront) owns the land to the mean low water line or 100 rods below mean high water, whichever is less. The land between low water and high water is reserved for the use of the public by state law and is regulated by the state. 

 

3. Prior Appropriation

Prior appropriation water rights is the legal doctrine that the first person to take a quantity of water from a water source for “beneficial use” (agricultural, industrial or household) has the right to continue to use that quantity of water for that purpose.

Subsequent users can take the remaining water for their own beneficial use if they do not impinge on the rights of previous users.

The doctrine developed in the Western United States and is different from riparian water rights, which are applied in the rest of the United States. Water is very scarce in the West and so must be allocated sparingly, based on the productivity of its use. The right is also allotted to those who are “first in time of use.

 

Prior Appropriation

The doctrine of Prior Appropriation

The theory governs water rights in many states. The right to divert the unappropriated waters of any natural stream (surface or underground) to beneficial use shall never be denied. 

Priority is determined by time of claim and follows domestic, agricultural, manufacturing, and recreational uses.

Western United States

The prior appropriation doctrine, or “first in time – first” in the right, was developed in the western United States in response to water scarcity in the region. 

The doctrine evolved during the California gold rush when miners in California needed to divert water from the stream to locations needed to process ore. 

A simple priority rule resolved customs and principles relating to water diversion developed in the mining camps. 

Non-Use

Unlike a riparian right, an appropriative right exists without regard to the relationship between the land and water. 

An appropriative right depends upon continued use of the water and maybe lost through non-use. 

Unlike riparian rights, these rights can generally be sold or transferred, and long-term storage is not only permissible but common.

Four Essential Elements

  1. Intent 
  2. Diversion 
  3. Beneficial Use
  4. Priority

Intent

In all states with the prior appropriation doctrine, the acquisition of water requires that the appropriator demonstrate an intent to appropriate the water, divert the water, and apply it to beneficial use.  

Diversion

A point of diversion is an essential element of the consumptive use of water rights.

Beneficial Use

Beneficial use is perhaps the essential characteristic in defining a prior appropriation water right. The practical use is used to determine whether a particular water use will be recognized and protected by law against later appropriations. The justification for beneficial use criteria is to prevent waste. Since water is a scarce resource in the west, states must determine what water uses are acceptable. Practical benefits of water have been the subject of great debate, and each western state has an evolving system for evaluating what services of water are considered “beneficial.”

Priority

The first appropriator on a water source can use all the water in the system necessary to fulfill his water right. A junior appropriator cannot use water to satisfy his water right if it injures the senior appropriator. A senior appropriator may “place a call” on the river. A call requires that the institution manages the water source shut down a junior diverter to satisfy the senior right.

However, senior appropriators cannot change any component of the water right if it injures a junior appropriator. Therefore, if a senior wants to change his place of use, and this change will adversely affect a junior’s interest, the junior can stop the senior from changing the water right.

Any change of a water right (time of use, place of use, the purpose of use, point of diversion, etc.) cannot harm another water user, regardless of priority.

 
 

The Breakdown

Riparian

Small river or stream.

The rights of an adjacent landowner to a creek, stream, pond or adjacent small body of water. It gives all owners of land contiguous to the same body of surface water equal reasonable rights to the water whether a landowner uses the water or not.

 

A landowner cannot deny another landowner downstream from the water by rerouting the water or damming it. If the water right is attached (appurtenant) to the land, it runs with the deed and transfers to the next owner.

Riparian Owners own the real estate up to the middle of the river or stream

Littoral

Large body of water and tidal waters.  Navigable

 

Tidal Water Littoral rights give the homeowner shoreline rights.

The land in between the high tide and low tide is set aside for the use and enjoyment of the public.

Prior Appropriation

With prior appropriation, the first person to take water for a beneficial purpose has the right to continue with the use of taking of the water.

Other landowners may take water as long as it does not infringe on the first user. “Fist in time of use.”

Prior Appropriation is used where water is scarce or limited.

Government Granted

Western States where water is scarce.

 

Water Words

Accretion

The process of increasing land through deposits of mud or sand (alluvion) by water action. The opposite of erosion.

Alluvion

The mud or soil is carried by a river or stream and adds to the volume of land over time in a process called accretion.

Avulsion

When land is washed away by a sudden act of nature contrasted with erosion, land loss over a long period.

Dryland

The land which is above the mean or ordinary high tide line; fast lands or uplands.

Erosion

A gradual loss of soil due to nature–winds, rainfall, currents, etc.

Flood plain

The low area adjacent to waterways and subject to flooding if inundated.

Groundwater

Non-flowing water below the surface. (Such as groundwater aquifers)

Reliction

An increase in land due to the gradual recession of water from its average level.

The special common-law right held by owners of land adjacent to rivers, lakes, or oceans and restriction the rights of land ownership.

Well Permit

Authorization to use well water for single-family residences. The permit will state the amount and uses (no watering of garden etc.).

Submerged Land or Submerged Water Bottoms

Lands which remain covered by waters, where the tides ebb and flow, at ordinary low tides.

Tidelands

Those lands that are daily covered and uncovered by water by the tides’ action, up to the mean line of the ordinary high tides.

Upland

The land which is above the mean high tide line; dry land or fast land.

Wetland

A wetland is an area of ground that is saturated with water either permanently or seasonally.

 
 

Personal Property

 
  • Personal property is movable. Things not permanently attached to the land are personal property. Personal property is movable.
  • All property that does not fit the definition of real property.
  • Personal property – “Personality” can be called chattel.
  • Chattel is the French word for cattle. Cattle are movable.
  • Personal property (chattel) includes movable items, such as a chair or a sofa.
  • Bill of Sale conveys personal property.
 

The price of a fixture does not determine if it is real or personal.

 

Crops planted yearly are personal Property and called emblements. (chattel)

 
 
 
 
 
 
 
 
 
  • Manufactured homes can be personal property unless permanently affixed to the land.
  • Bricks placed on the driveway before they are built into a patio are personal property.
  • When an orange falls from its tree, it is personal property.
 
 

Trade Fixtures

  • An article owned by a tenant, attached to a rented space, is used in conducting business. Example (Dining booths at a restaurant)
  • Personal property is attached by a commercial tenant to assist in a trade or business. If the tenant does not remove trade fixtures within a reasonable time after the lease expires, they become the landlord’s property.

Trade Fixtures – Attached shelves in a bookstore

Shelves are used for business.

Trade Fixtures – Bowling Alley

A bowling alley is the most trade fixture business.

Trade fixtures are personal Property. Trade Fixtures are a commercial tenant’s personal property. A trade fixture is a renter’s personal property attached to the landlord’s real property. At the end of the lease, the tenant removes the trade fixture and takes it with him. 

If the tenant leaves behind a trade fixture, the landlord will acquire this property by accession.

A trade fixture will transfer to the real property owner if the tenant leaves it behind after moving out of the leased property. When the landlord takes possession of the trade fixture left behind through accession, it becomes the landlord’s real property.

 

Fixtures

Landlord property 

REAL Property

Trade Fixtures

Tenant property 

PERSONAL Property

 

A farmer is entitled to the fruits of his labor.

If a tenant farmer gets evicted; he is allowed to cultivate and harvest the crops. Emblements are personal property.

 

A seller and an agent discussed a contract for the agent to be the listing agent. There was no deal, and the agent sold the property. The agent had no warranty and did not have to be paid.

The seller may take the two oversized planters outside of his front door even if he needed a forklift to remove them. They were not attached to the property. They were personal property.

The seller can be held responsible for returning the window boxes he removed from the home after meeting the minds. He can be sued for specific performance.

Land can never be a fixture.

When a seller built a bookcase that fits perfectly into an alcove in the home, it is considered personal property. It was not attached to the property. The seller can take it with him.

A personal property loan document is called a Chattel Mortgage. (Chattel is the French word for cattle. Cattle are movable.

Inventory and equipment are personal Property.  A “Bill of Sale transfers Personal Property.

Courtesy of Jack

Which of the following is an appurtenance?

A          a car in the driveway

B          land (not correct because an appurtenance is something that attaches to and thus runs with the land)

C          beer in the refrigerator

D         a tree in the yard 📍📍📍

Lesson Content
 
 
Real or Personal