Real Estate: land and the buildings and natural resources attached to it
Real Property: Real estate and the accompanying ownership rights; usually refers to immovable property like homes and buildings
Personal Property: any property not designated real property including chattels, movable objects like furniture, and intangibles like bonds or intellectual property
Fixtures: personal property that becomes real property when attached to real property, usually a building; example: solar panels or an awning adding to a building
Statute of frauds: Requirement that virtually all agreements on real property be in writing in order to be enforceable in court
Property Rights:
Ownership right = right to own property
Possession right = right to occupy property like a tenant’s right to occupy a house
Use right = right to exercise control over a plot of land such as driving car on shared driveway
Freehold Estate: estate holder owns estate
Fee Simple Absolute (“Fee Simple” or “Fee”): highest level of ownership and most common; owner can sell the property, bequeath it to his/her beneficiaries, or make changes to the property
Life Estate: Owner only owns property for his/her lifetime and can not sell or bequeath the property
Leasehold Estate: Gives tenant/lessee right to posses and use property for a set time period; a lease longer than a year must be in writing to be enforced under the Statute of Frauds
Future Estate: right to future ownership
Reversion interest: the grantor (holder of an estate) gives estate to a third party (grantee) and retains the right to take back property; example: a Dad gives his son a property that the Dad can take back if concerts performed on property
Remainder interest: an interest (property right) in an estate left after another interest ends, such as full title after owner of life estate dies; example: Sally’s parent deed her sister Martha the Barker Ranch for her full life with the condition that the ranch go to Sally’s heirs upon Martha’s death; Sally’s heirs have a remainder
Easement: non-ownership, non-possessory rights to access land owned or leased by someone else; example: two houses, A and B, share a driveway and the owner of house A grants B an easement to use, but not control, the driveway he/she owns
Abstract of Title: historical summary of public documents that impact a title to real property
Security Interest: Borrower/Trustor/Mortgagor signs a Deed of Trust/Mortgage that gives a Lender/Mortgagee/Beneficiary the right to posses part or all of a property to repay the loan
Title: who owns the property
Deed: Document that transfers title to real property from a grantor to a grantee; some deed restrictions not enforceable under non-discrimination laws
General Warranty Deed: most common and most desirable for buyer; grantor guarantees he/she owns the property, no one else has an ownership interest, all imperfections in title like easements and liens are noted, and grantor liable if grantee incurs loss due to title imperfections
Quitclaim Deed: Weakest protection for buyer; transfers grantor’s rights in a property, if they even have any, to grantee
Assurance of Title
Method 1: A lawyer examines public records relating to the property title and concludes if the title is valid. However, if public records incomplete, lawyer not liable for a grantee’s loss if title found invalid later.
Method 2: Title insurance company ensures title valid and compensates new owner for financial losses due to title defects in exchange for a one time premium
Two Types of Title Insurance
Owner’s Policy: insures owner’s interest for time owner owns property
Lender’s Policy: insures lender’s interest in property (often value of loan) for life of loan
Recording Acts: laws in every state that resolve priority claims among parties with competing interest and give public constructive notice, notice of changes in interest or rights in real estate, via documents impacting claims
Mechanic’s Liens: document giving unpaid contractors, material providers, and workers a legal claim against property they improved or remodeled so that they can secure payment for their work; may be recorded up to 90 days after work completed or materials supplied in CA
