Principles of California Real Estate Lesson 1 The

Principles of California Real Estate Lesson 1: The Nature of Real Property

Real Property vs. Personal Property Two types of property: » Real property (“realty”) » Personal property (“chattels” or “personalty”)

Real Property Bundle of rights Real property ownership = A bundle of property rights » Possess » Will » Use » Sell » Enjoy » Do nothing at all » Encumber

Real Property Inverted pyramid Imagine a parcel of land as an inverted pyramid

Summary Basic Concepts » Real property » Personal property » Bundle of rights » Inverted pyramid

Real Property Appurtenances Appurtenance: Something that goes with or pertains to ownership of a piece of real property, but isn’t necessarily a physical part of the property.

Appurtenances » Air rights » Water rights » Mineral rights » Support rights

Appurtenances Air rights: Landowner has the right to use the airspace above the property, within limitations imposed by law.

Appurtenances Air rights: Landowner has the right to use the airspace above the property, within limitations imposed by law. Example: Aircraft flight paths

Air Rights Restrictions on air rights » Federal aviation laws » Local laws and private restrictions

Air Rights Air rights can be sold separately from the land (makes condominiums possible).

Appurtenances » Air rights » Water rights » Mineral rights » Support rights

Appurtenances Water rights Two systems for allocating water rights:

Appurtenances Water rights Two systems for allocating water rights: » Riparian rights system

Appurtenances Water rights Two systems for allocating water rights: » Riparian rights system » Prior appropriation system

Appurtenances Water rights Two systems for allocating water rights: » Riparian rights system » Prior appropriation system Either system can be applied both to surface water and to subsurface water.

Water Rights Riparian rights system Riparian rights: Landowner has the right to use the water that touches her property.

Water Rights Riparian rights system Two types of water in riparian rights system: » Riparian water = flowing water » Littoral water = standing water

Water Rights Riparian rights system Two types of water in riparian rights system: » Riparian water = flowing water » Littoral water = standing water Water may be used only on the riparian or littoral property itself.

Water Rights Prior appropriation system » Prior appropriation system was developed to address needs that were not served by the riparian system, particularly in arid areas.

Water Rights Prior appropriation system » Prior appropriation system was developed to address needs that were not served by the riparian system, particularly in arid areas. » In some states, including California, it has largely replaced the riparian rights system.

Water Rights Prior appropriation system » Permit required for appropriative rights.

Water Rights Prior appropriation system » Permit required for appropriative rights. » Permit holder can take or divert water from a particular source for a specified reasonable and beneficial use. Example: Irrigation

Appurtenances » Air rights » Water rights » Mineral rights » Support rights

Appurtenances Mineral rights: A landowner has the right to extract any solid minerals located within the property’s inverted pyramid.

Mineral Rights Minerals are: » Real property when in the ground

Mineral Rights Minerals are: » Real property when in the ground » Personal property once extracted and brought to the surface

Mineral Rights Oil and gas Special rule for oil and gas: Rule of capture

Appurtenances » Air rights » Water rights » Mineral rights » Support rights

Appurtenances Support rights: Natural support provided to a piece of land by the surrounding land.

Appurtenances Support rights: Natural support provided to a piece of land by the surrounding land. Subjacent support – provided by the underlying earth.

Appurtenances Support rights: Natural support provided to a piece of land by the surrounding land. Subjacent support – provided by the underlying earth. Lateral support – provided by the neighboring land.

Summary Appurtenances » Appurtenance » Prior appropriation » Air rights » Mineral rights » Water rights » Rule of capture » Riparian rights » Support rights » Littoral rights

Attachments: Things that are permanently attached to the land.

Attachments: Things that are permanently attached to the land. » May be natural or manmade

Attachments: Things that are permanently attached to the land. » May be natural or manmade » Are considered part of the real estate

Attachments Natural attachments: Includes trees, bushes, and other plants: growing things that are attached to the land by roots.

Natural Attachments Doctrine of emblements: Crops produced by cultivated plants are classified as personal property, even before they are harvested.

Natural Attachments Doctrine of emblements: Crops produced by cultivated plants are classified as personal property, even before they are harvested. Applies to crops planted by a tenant farmer.

Natural Attachments Severance: Natural attachments can be “severed” from the land sold separately.

Attachments Fixtures: Manmade attachments to real property.

Attachments Fixtures: Manmade attachments to real property. Items that were once personal property.

Attachments Fixtures: Manmade attachments to real property. Items that were once personal property. Now attached to or connected with real property in such a way that they have become part of the real property.

Attachments Distinguishing fixtures from personal property Four common legal tests: » Method of attachment » Adaptation of the item » Intention of the parties » Relationship of the parties

Attachments Distinguishing fixtures from personal property Four common legal tests: » Method of attachment » Adaptation of the item » Intention of the parties » Relationship of the parties If a written agreement exists, it normally controls whether an item is considered a fixture.

Fixture Tests Method of attachment test Test 1: » Is the item attached to the realty in some way, and if so, how? » Is the item movable?

Fixture Tests Adaptation test Test 2: » Has the item been specially adapted to the realty in some way, or specially designed for it?

Fixture Tests Intention test Test 3: » Did the person who installed the item intend it to become part of the realty?

Fixture Tests Relationship test Test 4: » Did the person who installed the item own the property, or was he just a tenant?

Fixture Tests Relationship test Test 4: » Did the person who installed the item own the property, or was he just a tenant? An item installed by a tenant is typically considered personal property An item installed by an owner is typically considered real property

Fixture Tests Trade fixtures: Equipment and other items that a commercial tenant installs to carry on a business.

Fixture Tests Trade fixtures: Equipment and other items that a commercial tenant installs to carry on a business. Trade fixtures aren’t considered part of the real property, no matter how they’re attached.

Fixtures Mobile homes » A mobile home is personal property until permanently attached to a piece of real estate.

Fixtures Mobile homes » A mobile home is personal property until permanently attached to a piece of real estate. » Once attached to a piece of real estate, a mobile home is a fixture and part of the real property.

Summary Attachments » Natural attachments » Doctrine of emblements » Fixture tests » Severance

Methods of Legal Description Legal descriptions allow precise identification of a piece of real property.

Methods of Legal Description Legal descriptions allow precise identification of a piece of real property. Three main methods of legal description: » Metes and bounds (most difficult to use) » Government survey » Recorded map

Methods of Legal Description Metes and Bounds Metes and bounds description: Describes a piece of land by specifying its boundaries.

Methods of Legal Description Metes and Bounds Metes and bounds description: Describes a piece of land by specifying its boundaries. Monuments – Natural or manmade objects that mark a fixed point.

Methods of Legal Description Metes and Bounds Metes and bounds description: Describes a piece of land by specifying its boundaries. Monuments – Natural or manmade objects that mark a fixed point. Courses – Compass directions.

Methods of Legal Description Metes and Bounds Metes and bounds description: Describes a piece of land by specifying its boundaries. Monuments – Natural or manmade objects that mark a fixed point. Courses – Compass directions. Distances – Length of each boundary. Most difficult method to use when describing property

Methods of Legal Description Metes and Bounds Metes and bounds description: Describes a piece of land by specifying its boundaries. Monuments – Natural or manmade objects that mark a fixed point. Courses – Compass directions. Distances – Length of each boundary. Most difficult method to use when describing property The point of beginning must always be described by reference to a monument.

Reading a Metes and Bounds Description Starts with the point of beginning, then gives the course (direction) and distance for each leg of the boundary, until it has described the full circuit and arrived back at the point of beginning.

A description of this property would read: “Beginning at the old oak tree, go South 15° East 200 feet. Then go North 90° West 310 feet, more or less, to the centerline of Smith Creek. Then go northwesterly along the centerline of Smith Creek to a point due west of the old oak tree. Then go North 90° East 430 feet, more or less, to the point of beginning. ”

Methods of Legal Description Government survey description: Property is identified by its location in a particular section, township, and range on a U. S. government survey map. » Also called a rectangular survey description.

The government survey system is made up of a series of very large survey grids covering much of the United States, including California.

Government Survey Descriptions Principal meridian & base line Each of the grids has its own: » Principal meridian (main north-south line) » Base line (main east-west line)

Survey grids are identified by the name of the principal meridian. In California: » Humboldt Meridian » Mount Diablo Meridian » San Bernardino Meridian

Government Survey Descriptions Range & township lines Each grid has grid lines running parallel to the principal meridian and to the base line at intervals of six miles.

The north-south lines are called range lines. » Range lines divide the land into columns called ranges. » Each range is six miles wide.

The east-west lines that parallel the base line are called township lines. » Township lines divide the land into rows called township tiers.

Government Survey Descriptions Townships » Each individual square is called a township. » A particular township is identified by its position in relation to the base line and the principal meridian. Township = 6 miles × 6 miles 36 square miles

The location of the township on the screen is “Township 4 North, Range 5 East. ” It is the township created by the intersection of the fourth township tier north of the base line and the fifth range east of the principal meridian.

Government Survey Descriptions Sections » Each township is divided into 36 sections. » Each section is one mile on each side, or one square mile. Each section is 640 acres. (An acre contains 43, 560 square feet. )

The sections within a township are numbered from 1 to 36. Most individual parcels are only part of a section, so they are described in terms of fractions, such as quarter sections or quarter-quarter sections.

A complete government survey description must include the section, township, and range. It must also include the name of the principal meridian, to identify the grid.

Methods of Legal Description Recorded map description: The standard method for describing property in towns and cities.

Methods of Legal Description Recorded map description: The standard method for describing property in towns and cities. » The map is recorded by the developer when the land is subdivided.

Methods of Legal Description Recorded map description: The standard method for describing property in towns and cities. » The map is recorded by the developer when the land is subdivided. » Also called the lot and block method or the plat map method.

Methods of Legal Description Recorded map » The subdivision is surveyed and a map is drawn up that shows the precise location and dimensions of each lot.

Methods of Legal Description Recorded map » The subdivision is surveyed and a map is drawn up that shows the precise location and dimensions of each lot. » Each lot is assigned a lot number.

Methods of Legal Description Recorded map » The subdivision is surveyed and a map is drawn up that shows the precise location and dimensions of each lot. » Each lot is assigned a lot number. » Groups of lots separated by streets within the subdivision may also be assigned block numbers.

Recorded Map Descriptions Plat map Plat: A map showing the lots and blocks in a subdivision.

Recorded Map Descriptions Plat map Plat: A map showing the lots and blocks in a subdivision. Once the plat map is recorded, a parcel can be described by its lot and block numbers, the name of the subdivision, and the county or city in which it is located.

Recorded Map Descriptions Example Typical recorded map description: “Lot 7, Block 2, in the Lowland Heights subdivision, according to the plat thereof recorded at Vol. 22, Page 16, in the records of Alameda County, State of California. ”

Methods of Legal Description Other methods of describing land: » A reference to a description in an earlier recorded document.

Methods of Legal Description Other methods of describing land: » A reference to a description in an earlier recorded document. » A reference to a survey or tax assessor’s map that has been recorded.

Methods of Legal Description Other methods of describing land: » A reference to a description in an earlier recorded document. » A reference to a survey or tax assessor’s map that has been recorded. » A generalized description, such as “all my land in Orange County. ”

Methods of Legal Description Other methods of describing land: » A reference to a description in an earlier recorded document. » A reference to a survey or tax assessor’s map that has been recorded. » A generalized description, such as “all my land in Orange County. ” Street addresses should never be used to describe land.

Summary Legal Descriptions » Legal description » Metes and bounds method » Government survey method » Recorded map method