Modern Real Estate Practice in Illinois Ninth Edition. Unit 2: Real Property and the Law
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1 Modern Real Estate Practice in Illinois Ninth Edition Unit 2: Real Property and the Law
2 Land, Real Estate, and Real Property Land defined as the earth s surface extending downward to the center of the earth and upward to infinity Real estate defined as land at, above, and below the earth s surface, plus all things permanently attached to it, whether natural or artificial (improvements)
3 Land, Real Estate, and Real Property Real property defined as the interests, benefits, and rights that are automatically included in the ownership of land and real estate
4 Ownership of Real Property Right of possession Right to control of the property within the framework of the law Right of enjoyment Right of exclusion Right of disposition
5 Real Property vs. Personal Property Real Property vs Personal Property Personal property (chattels, personalty) all property that does not fit the definition of real estate Real Property is transferred by Deed Personal Property is transferred by Bill of Sale. Manufactured housing defined as dwellings that are not constructed at the site but are built off site and trucked to a location where they are installed or assembled Includes modular, panelized, precut, and mobile homes
6 Real Property vs. Personal Property Plants may be either real or personal property Not requiring cultivation real property Includes trees, perennial shrubbery, and grasses Cultivated crops personal property Are called emblements. As long as an annual crop is growing, it will be transferred as part of the real property unless other provisions are made in the sales contract. Includes annual plantings or crops of wheat, corn, vegetables, and fruit
7 Severance and Attachment Severance process by which real property can become personal property Attachment Example: a growing tree is real estate until it is cut down, severing it from property process by which personal property can become real property Example: cement, stones, and sand are mixed into concrete that is used to construct a sidewalk on a landowner s property
8 Classifications of Fixtures A fixture is personal property that has been so attached to land or a building that, by law, it becomes part of the real estate
9 Legal Tests of a Fixture The overall test that is used in determining whether an item is a fixture or personal property is a question of intent. To determine intent, courts use 3 tests: 1. Method of attachment 2. Adaptation to real estate 3. Agreement
10 Trade Fixtures An article owned by a tenant and attached to a rented space or building or used in conducting a business is a trade fixture. Accession trade fixtures become property of the building owner if not removed by midnight of the end of the lease.
11 Trade Fixtures vs. Other Fixtures Fixtures belong to the owner of the real estate; trade fixtures are usually owned and installed by a tenant for the tenant s use. Fixtures are permanent parts of a building; trade fixtures are removable. Fixtures are real property, included in any sale or mortgage; trade fixtures are personal property, included only by special agreement.
12 Characteristics of Real Estate Economic Scarcity Improvements Permanence of investment Location (Situs) Physical Immobility Indestructibility Uniqueness
13 Laws Affecting Real Estate Types of real estate laws Contract law General property law Agency law Real estate license law Federal regulations Federal, state, and local tax laws Zoning and land use laws Environmental regulations
14 Seven Sources of Law United States Constitution Laws passed by Congress Rules of the regulatory agencies State constitutions State statutes Local ordinances Common law
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