8/31/2017. Legal Foundations to Value. Claims that the government is obligated to enforce. Non-revocable. Enduring

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1 Legal Foundations to Value What do we mean by rights What are property rights What is real property What is personal property What do we do when the difference is unclear Claims that the government is obligated to enforce Non-revocable Enduring Personal rights Freedoms guaranteed by Constitution Supreme Court interpretations of Constitution Property rights Exclusive possession Enjoyment of the use or benefit: Use, collect rents, harvest. Freedom to dispose as one pleases (within the limits of safety): sell, convert, rebuild, etc. Real property: Rights in land and its permanent structures Surface of the earth and improvements Air, up to reserved air space or tallest structure Beneath the earth as far as technology allows: Minerals, oil and gas, water Personal property: All other property Personal and household goods Intellectual property Music

2 Real Versus Personal Property

3 Fixture: Real property that formerly was personal property Rules for determining when something becomes a fixture: Attachment Character of the article and manner of adaption Intention of the parties (dominant rule) Trade Fixtures In every real estate transfer the question of fixtures lurks. Fixtures automatically go with the real property You must be careful to identify possible fixtures You should explicitly state whether they stay with the property or not Interest: Any set of rights in real property Estate: A real property interest that includes the right of exclusive possession Nonpossessory interests: Easements Restrictive covenants Liens 2-16 Tenancy for years Periodic tenancy

4 Establishes a more equitable relationship between landlords and tenants Complete Removal Eminent Domain Division of Restrictions Use or Share in On Use Possession Value Police Regulatory Power Taxation Easement: The right to use land for a specific and limited purpose Can be active like a driveway or passive like a view shed Easements are omnipresent in developed areas Liens Deed Restrictionss Easementss Leases Has a Dominant and Servient parcel 2. Runs with the land Example driveway easement

5 Right to use land, unrelated to any other parcel Extract minerals or oil and gas Build a roadway or railway Lay a pipeline, power line, or cable Run an irrigation ditch Place and maintain a billboard or communications tower Harvest timber or crops Conservation easement for wetlands preservation Hunt, fish, snowmobile Transferable separately from land title or ownership No dominant parcel only servient parcels Covenants that impose restrictions on land use Created at conveyance of land to a new owner Examples:

6 Two methods of creation: Restriction in a deed conveying a single parcel of land to a new owner Restrictions imposed on an entire subdivision at its creation Often a subdivision has CCR s that go with it. (see website for example) Enforcement by court injunction Enforcement only by parties at interest Courts reluctant to enforce in case of: Mandatory retirement in some states Lien: An interest in property as security for an obligation Usually a debt General Liens: Arise from events unrelated to the property Specific liens: Arise from ownership and use of the property

7 General Partnership Limited Partnership Entity holds title Ownership passes through the entity Undivided interest Limited Liability Co. Corporation (Co-op) Trust

8 Example: A house with multiple owners All share the right of exclusive possession Cannot obstruct each other s use May hold different sizes of shares Tenancy in common: Default form except in special cases Multiple owners of same fee simple interest Each owner can sell or mortgage their interest independently Joint tenancy Right of survivorship restricts inheritance to heirs of the last surviving owner Tenancy by the entirety Tenancy by the Entireties Joint Tenancy (Survivorship) Tenancy in Common Condominium Combines single ownership and tenancy in common Created by condominium declaration Bylaws define owner rights: Creates additional level of (private) government History of owners not understanding the restrictions and obligations Undivided Ownership of Common Elements Through Tenancy in Common Fee Simple Fee Simple Fee Simple Price Amenities Security, both when you are in residence, or away Others do the maintenance and upkeep Interesting social context and/or location

9 Design and construction Noise issues Privacy Parking and storage limits Rules that may be frustrating Exterior decoration and use of patio or balcony Guest policies Right to rent out Quality of management (amateur or professional) Property reputation Community property One-half interest in all property acquired out of the fruits of the marriage Not property owned before the marriage Not gifts or inheritances to one spouse Texas is a community property state 2-50 Rights carry implied easement for removal In some states, mineral rights imply ownership of the space minerals occupy Oil rights have two forms Ownership states: Oil is simply another mineral Law of capture states: Oil flows, and is not owned until removed. Traditional rule of capture (If you could remove it, it was yours) is being limited due to extensive secondary recovery methods There is real property and personal property.and the problem of fixtures Real estate is a bundle of rights: Exclusive possession Enjoyment Disposition This bundle has many variations Estates freehold or leasehold Non-possessory interests easements, restrictive covenants, liens There can be more than one direct owner Tenancy in common, joint tenancy, tenancy by the entirety Condominium There can be automatic marital coownership Community property End of Chapter 2 9