Question What is the difference between real estate and real property?
Answer Real estate refers to the physical land and improvements constructed on the land,
while real property refers to the ownership rights associated with the real estate.
Question What is meant by an estate? Why are estates important in real estate finance?
Answer Estate is used to denote a possessory or potentially possessory interest in real
estate. However, not all interests in real property are estates. Ownership can be
quite different from possession and a variety of legal factors affect the ownership
rights associated with real estate. The economic benefits expected by lenders,
investors, and other parties in real estate transaction are affected by these legal
factors.
Question How can a leased fee estate have a value that could be transferred to another
party?
Answer The original fee owner can give up some property rights to a lessee. The value of
the leased fee estate will depend on the amount of lease payments expected during
the term of the lease plus the value of the property when the lease terminates and
the original owner receives the reversionary interest.
Question What is an abstract of title?
Answer An abstract of title is a historical summary of the publicly recorded documents
that affect title.
Question Name the three general methods of title assurance and briefly describe each.
Which would you recommend to a friend purchasing a home? Why?
Answer i. General Warranty Deed - the grantor warrants that the title he/she conveys to
the property is free and clear of all encumbrances, other than those that are
specifically listed in the deed.
ii. Special Warranty Deed - makes the same warranties as a general warranty deed
except that it limits their application to defects and encumbrances which occurred
only while the grantor held title to the property.
iii. Quitclaim Deed - offers the grantee the least protection in that it simply
conveys to the grantee whatever rights, interests, and title that the grantor may
have in the property. No warranties are made about the nature of these rights and
interests or of the quality of the grantor’s title to the property.
Would recommend the General Warranty Deed, because it offers the most
comprehensive warranties about the quality of the title.
Question Would it be legal for you to give a quitclaim deed for the Statue of Liberty to
your friend?
Answer Yes, the quitclaim deed simply says that the grantor “quits” whatever claim he
has in the property (which may well be none) in favor of the grantee.
Question What is Real Estate?
Answer Real estate is defined as land at, above, and below the earth’s surface, plus
all things permanently attached to it, whether natural or artificial
Mineral rights relate to everything below the surface
The rights to extract minerals are often sold
Subsurface rights may also be acquired to construct subways and other
underground structures
Air rights relate to control of everything above the surface
Solar and “view” rights are an evolving area of real estate law
Although unlimited in principle, mineral rights constrained by legal and
technological restrictions
Real Property vs. Personal Property
Ownership of real estate entails more than just the physical possession of
land and buildings.
Real property refers to the interests, benefits, and rights that are included
in the ownership of real estate.
A legal interests in any other type of property is called personal property.
Items that can be moved, such as cars, furniture, appliances, and clothing,
are personal property.
Tests for Fixture Status
When conflicts arise as to whether an item of personal property is a
fixture, the courts apply several tests to determine if an item is a fixture
Intent Test: Did the person who installed the item intend it to remain
permanently with the real estate?
Test of Attachment: Was the item permanently attached to the real estate?
Can it be removed without causing damage to the surrounding property?
Test of Adaptability: Has the item been specifically adapted for use with
the real estate? Would removal of the item substantially alter the
usefulness of the remaining real estate?
Each owner’s interest must reflect the same legal estate (e.g., fee simple)
