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
AFFIXED TO LAND
APPURTENANT TO LAND
IMMOVABLE BY LAW
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
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