The Definition of Real Estate
August 27, 2020
What is Real Estate?
Let's begin by answering the question, what is real estate? When you own real estate, what you actually have or possess is what is called a bundle of rights. The bundle of rights would include basic rights, such as the right to sell your property, or lease your property, or maybe even mortgage your property. So, when you own property, if you have this bundle of rights, what is the function of a deed? The deed is a document that is used to transfer these rights from a seller to a buyer at closing. Real estate consists of two basic items: land plus all appurtenances. Land is defined as a spot on the earth that goes down to the center and up to infinity. So, when you own land, you would own mineral rights below as well as air rights above. An appurtenance is a right, privilege or improvement that passes with the land. In other words, it runs with the land. When you sell real estate, these things go along with the sale of the land automatically. Natural appurtenances would be things like trees and streams. Manmade appurtenances would be houses, fences and barns, etc. Mineral rights, oil, and natural gas, etc would also pass with the sale of land unless otherwise noted in the sale itself.
In legal terms, all property can be classified as either personal property or real property. Personal property is movable property. It's anything that can be subject to ownership, except land. Real property is immovable property - its land and anything attached to the land. Personal property is property other than land and buildings attached to land. It is defined as simply something that is easily moveable, such as a chair or a desk. Cars, bank accounts, wages, securities, a small business, furniture, insurance policies, jewelry, patents, pets, and season baseball tickets are all examples of personal property. Another word for personal property is the word chattel. So, if we have a shadow mortgage involved in a real estate transaction, that simply means that the property being used to security for the loan would be personal property. A bill of sale is a document used to transfer personal property. Whereas we use a deed to transfer real property.
Can changes be made to real estate or personal property? The answer is yes. Let's first off talk about a fixture. A fixture by definition is real estate. A fixture at one time was personal property, but when it is attached to a house, for example, it becomes real estate or a fixture. Let's say you go down to the hardware store and buy a ceiling fan. That starts off as personal property. But when you attach the fan to the house, it now becomes a fixture or real estate. That simply means when the house is sold, the ceiling fan would go along with the sale of the property.
Let's contrast a fixture with what is called a trade fixture. A trade fixture by definition is personal property. This is an item installed by a commercial tenant for their business, such as a restaurant who is leasing out a space and wants to install tables and workstations for their restaurant. Since the tenant did the installing, when the lease expires, the tenant can take those tables and the workstations with them because those items would be considered personal property.
And finally, emblements are growing crops in the field and are also considered personal property. If a farmer owns a property and plants an annual corn crop in the spring, it won't be ready for harvest until the fall. However, in the summertime, let's assume our farmer wants to sell the farm. What that means is even though the property has been sold in the summertime, the farmer can still come back and harvest that corn crop one time in the fall because the crop would be considered emblements, which again are personal property.
Changes in Contracts
November 9, 2020
In this article, we take a look at some of the changes that can be made in real estate contracts after or before a home sale. We explain what happens when there is a breach of real estate contract, when a party resends an agreement when there is novation, and we’ll cover addendums to contracts.
Classification of Contracts
November 9, 2020
Here, we cover the different types of contracts. We cover the difference between express and implied basis, and we take a look at unilateral and bilateral contracts and discuss the different uses of each.