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Real Estate Practices Presentation

Text of Ch01 Slides

  • Introduction to Real EstateChapter 1

  • Chapter 1Trace the history of real property ownership in CaliforniaList the 4 parts for the definition of real propertyExplain the bundle of rightsList the 5 legal tests for a fixture

  • California History1. Native Americans2. Explorer Balboa (1513)3. SPANISH rule (1542-1822)San Diego: lst settlement, by Cabrillo4. Spanish developments (1769)Forts = presidios Villages = pueblosLand grants = ranchos 21 Missions5. MEXICAN rule (1822)6. Mexican-American War (1846-1848)7. UNITED STATES rule Treaty of Guadalupe Hidalgo (1848)Statehood (September 9, 1850)

  • California Real EstateBoard of Land CommissionersFormed to settle private land claimsRecording system adopted for landCalifornia legal systemFormerly Spanish Civil CodeEnglish common law enactedRetained Spanish community property lawsModern California Urban/suburban residentsPopulation centers: Greater LA, San Diego, Sacramento, San Francisco/Oakland

  • Real EstateReal estate is the physical , + plus the legal rights of ownership. = the Bundle of Rights.Real estate in a physical sense is land and buildings, things you can touch.

  • BUNDLE OF RIGHTS*Include the right to:Own and possessUseEnjoyEncumber or borrow against DisposeExclude others who do not share ownership*Subject to government controls

  • Sample Test QuestionUnder the bundle of rights, a property owner has the right to all except which of the following:A. encumberB. destroyC. dispose D. alienate

  • Property Rights Do NOT Include the Right to:


    Value to neighboring property (vacant lot)Health & safety issues on tear downs (environment)Why?

  • Property OwnershipIs not absoluteIs subject to government controls, such as:Zoning and building codesFair housing and antidiscriminationHealth & safety regulationsPolice powerPermits and licensesPublic interest issues

  • Definition: Real EstateLAND




  • REAL PROPERTY is LAND:LAND includes:

    Earths surface lateral supportsubjacent support

    Materials under the surfaceSubstances, including waterMinerals, oil & gas

  • Air rights: above the surface

    From earthssurfaceto theFederalAviation(FAA) floor

  • Mineral RightsOil and Gas RightsRule of CaptureRule of Extraction

  • Water RightsRiparianPrior AppropriationUnderground water Concept of Reasonable UseRiparian borders steam or lakeLittoral borders shore of sea or ocean

  • REAL PROPERTY is WATER:Different states have different laws:

    - Appropriation water rightOwner has exclusive right to take all water for specific beneficial use of the land.The state grants permission to non-riparian owner.

    Correlative water rightOwner entitled to take only a reasonable amount of water for benefit to the land (irrigation)

  • Property Affixed to the land:Affixed Building improvementsAppurtenances Landscaping attached by rootsIncidental Utility pipesAttachments FenceEasements Right of wayFixtures Patio coverStock in a mutual water companyImmovable, by law

  • AppurtenancesRunning with the landAffixed resting on the land (building)Annexed attached naturally (trees)Transferable attached by manEasements that run with the land Stock in a mutual water company

  • PERSONAL PROPERTY is everything that is NOT real propertyChattel - ChoseMovable goodsPaper Documents about real property: money, stocks, contracts, deed, lease, promissory note.Transferred by a Bill of SaleEMBLEMENTSAnnual cultivated crop

  • Real OR Personal property?REAL Property

    PERSONAL PropertyReal property can become personal property. Personal property can become real property.

  • TEST OF A FIXTURENOTE: The law favors the borrower over a lender, a buyer over a seller, and the tenant over the landlord.

    Method of AttachmentAdaptability for Ordinary UseRelationship of the PartiesIntent of the PartiesAgreement Between the Parties


    Personal property of a business affixed or annexed to the real propertyConsidered personal property (cash register/safe)Tenant may remove before the lease ends but must repair any damage to the real propertyLandlord owns abandoned trade fixtures

  • Balance Sheet: Assets (Accounts receivable, personal property, goodwill/patronage, inventory) Liabilities What the business owes others(Accounts payable, debts, loans)(unremitted taxes)= Net Worth (owners equity, retained earnings)

    State Board of Equalization clearance receipt or successors liability

    Income Statement: Profit & Loss Statement (P&L): IncomeProfitability of the business- ExpensesFor a specific period of time= Profit

    Business Opportunity

  • Liquor LicenseAlcoholic Beverage and Liquor LicensesRelated by Alcoholic Beverage Control Act (ABC)Types of licensesOn-SaleOff-SaleBeer and Wine onlyAll alcoholic Beverages (General license)New general license sold by state = $6,0001st 5 years: Resale limited = $6,000Cannot be transferred intercountyBulk Sales: Involves inventory of a business.

  • 1.Airspace above a parcel of land is:real property (b) personal property(c) an encumbrance (d) a fixture

    2. Zoning regulations have the greatest impact on which right?right to encumber (b) right to possess(c) right to use (d) right to exclude

    Review Quiz Chapter One - Introduction to Real Estate

  • Review Quiz Chapter One Introduction to Real Estate3. All of the following are real property except:fruit trees (b) chattels(c) stock in a mutual water company (d) built-in stove

    4. In a dispute over fixtures, courts tend to favor(a) sellers over buyers (b) landlords over tenants(c) lenders over borrowers (d) grantors over grantees

  • 5. The right of a land owner along a river to take water is called:(a) percolating rights(b) river water rights(c) user rights (d) riparian rights6. Which of the following is a test of a fixture?(a) attachment (b) chose (c) appropriation (d) restrictions

    Review Quiz Chapter One Introduction to Real Estate

  • Review Quiz Chapter One Introduction to Real Estate7 California became a state in:1803 (b) 1848 (c) 1849 (d) 1850

    8.Shelves in a retail store are an example of:(a) real estate (b) encumbrances (c) trade fixtures (d) real property

  • Review Quiz Chapter One Introduction to Real Estate9.All of the following "run with the land," except:(a) easements (b) private deed restrictions(c) water rights (d) current harvest rights10.Which real estate term is the most inclusive? (a) real estate (b) real property

  • Answers to Chapter 1 Review Quiz A6. A

    C7. D

    B8. C

    C9. D

    D10. B

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