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

Real vs. Personal Property Two types of property: Real property: land and everything attached to it. Personal property: anything not real property (usually movable).

Real Property Bundle of rights = A bundle of property rights Real property ownership Rights, privileges, and interests associated with land ownership (such as right to possess or sell) are also considered part of real property.

Real Property Appurtenances Appurtenance: A right or interest that goes with ownership of land, including air rights, water rights, mineral rights, and support rights.

Types of appurtenances: air rights water rights mineral rights support rights Appurtenances

Air rights: Landowner has right to use airspace above property, within limitations imposed by law. Air rights can be sold separately from the land. Appurtenances Air rights

Appurtenances Water rights Two systems for allocating water rights: Riparian rights system Appropriative rights system Either system can be applied to surface or subsurface water. Either system can be applied to surface water and to subsurface water.

Water Rights Riparian rights system Riparian rights: Landowner has right to use water that flows through or is adjacent to property.

Water Rights Riparian rights system Two types of water in riparian rights system: Riparian water = flowing water (river/stream) Littoral water = standing water (lake/ocean) Water may be used only on riparian or littoral property.

Water Rights Appropriative rights system In California, appropriative rights largely replaced riparian rights system. Rights obtained through permit process. Permit holder can use water for specific purpose such as irrigation.

Water Rights Ground water Ground water is located in underground aquifers. Water table: natural level at which water can be found underground.

Water Rights Mutual water company stock Companies are created to secure water supply at reasonable rates for users in particular areas. Stock in these companies is an appurtenant right that runs with land.

Mineral Rights Mineral rights: Landowner has right to extract solid minerals located within property’s inverted pyramid. Minerals are: real property when in the ground personal property once extracted The right to extract minerals may be sold separately from land.

Mineral Rights Oil and gas Oil and gas: rule of capture applies.

Support Rights Support rights: Natural support provided to land by surrounding land. Subjacent support: Support provided by underlying earth. Lateral support: Support provided by adjacent land.

Summary Appurtenances Appurtenances Air rights Water rights Riparian rights Appropriative rights Mineral rights Rule of Capture Support rights

Attachments Attachments: Things that are permanently attached to the land. May be natural or man-made. Usually considered part of the real estate.

Attachments Natural attachments Natural attachments: Includes trees, bushes, crops and other growing things that are attached to the land by roots. Transfer with land unless otherwise agreed.

Natural Attachments Personal property When crops or timber are harvested, or sold prior to harvest, they are “severed” from land and considered personal property.

Natural Attachments Real property When land with crops is sold, ownership of the crops usually passes to buyer of land, unless otherwise agreed.

Natural Attachments Special rule Doctrine of emblements: Crops planted by tenant farmer are classified as personal property, even before they are harvested.

Man-made Attachments Fixtures Fixtures: Man-made attachments to real property.

Man-made Attachments Fixtures Fixtures were once personal property, but are now attached to real property in a way that makes them part of real property. Houses, fences, patios, and other man- made improvements are fixtures.

Attachments Fixtures vs. personal property Five common tests: Method of attachment Adaptation of the item Relationship of the parties Intention of the parties Agreement in writing (MARIA)

Attachments Fixtures vs. personal property Test 1: Agreement in writing If written agreement exists, it usually determines whether item is fixture or personal property. If no written agreement, other tests apply.

Attachments Fixtures vs. personal property Test 2: Method of Attachment Is item permanently attached? Is the item movable?

Attachments Fixtures vs. personal property Test 3: Adaptation Test Has item been specially adapted to realty in some way, or specially designed for it?

Attachments Fixtures vs. personal property Test 4: Intention Test Did person who installed item intend for it to become part of realty? Each of the other tests is considered in reaching this decision.

Attachments Fixtures vs. personal property Test 5: Relationship Test Who installed item? If tenant installed, typically considered personal property. If owner installed, typically considered real property (fixture).

Attachments Trade fixtures Trade fixtures: Equipment and other items that commercial tenant installs to conduct business. Trade fixtures can be removed by tenant at end of tenancy, if property is restored to its original condition.

Attachments Mobile homes Mobile home is personal property until it’s attached to permanent foundation and legal steps are taken to have it certified as real property.

Attachments Mobile homes A licensee may list and sell unattached mobile home only if it’s registered with Department of Housing and Community Development. Sale of registered mobile home must be reported to Department within 10 days.

Personal Property Bill of sale Bill of sale: A document that conveys title to personal property. It must: be in writing identify the parties be signed by the parties

Personal Property No public records While it is easy to trace title to real property by searching public records, there is little comparable information available about title to personal property.

Summary Attachments Natural attachments Doctrine of emblements Man-made attachments Fixtures Fixture tests Bill of sale

Land Description Legal description: Precise description used to identify specific piece of real property. Three main methods of legal description: metes and bounds government survey recorded map

Methods of Legal Description Metes and bounds Describes property by specifying its boundaries. Monuments – Natural or man-made objects that mark a fixed point. Courses – Compass directions. Distances – Length of each boundary.

Methods of Legal Description Metes and bounds Point of beginning must always be described by reference to monument.

Methods of Legal Description Government survey Property is identified by reference to series of grids. Also called a rectangular survey description.

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

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

Government Survey Descriptions Range & township lines The north-south lines are called range lines. Range lines divide 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 land into rows called township tiers. Government Survey Descriptions Range & township lines

Government Survey Descriptions Townships Each individual square is called a township. Township is identified by its relationship to base line and principal meridian. 6 miles × 6 miles 6 miles × 6 miles 36 square miles 36 square miles Township =

Government Survey Descriptions Sections Each township is divided into 36 sections. Each section is one mile on each side (one square mile). Each section is 640 acres. (An acre contains 43,560 square feet.) There are 5,280 feet in a mile.

Government Survey Descriptions Sections Sections within township are numbered from 1 to 36. Most parcels of land are only part of a section, so they are described in terms of fractions of a section.

Government Survey Descriptions Sections A government survey description must include the section, township, and range. Must also include name of principal meridian.

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

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

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

Methods of Legal Description Other methods Other methods of land description can be used if the property is adequately identified. Reference to earlier recorded document or survey is adequate. General description may be adequate. Street addresses and tax numbers are usually not adequate.

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