Real Estate Principles Tenth Edition Real Estate: An Introduction to the Profession Tenth Edition

Chapter 3 Rights and Interests in Land ____________________________

Exclusive Right to Use of Land Feudal System Allodial System

The Fee Simple Bundle of Rights Real estate ownership is, in actuality, the ownership of rights to land. The largest bundle available for private ownership is called “fee simple.”

Real Estate as a Bundle of Property Rights Property rights are what gives value to the real estate. Private property rights are subject to limitations imposed by government. Thus, this can limit the value of the investment.

Government Limitations The right of government to regulate private property for the protection of the general public’s health, morals, and welfare. Further discussion in Chapter 25 Police Power

Government Limitations (continued) The right of government to take private property for public use upon payment of just compensation. Eminent Domain

Government Limitations (continued) The right of government to tax private property Further discussion in Chapter 15. Taxation

Government Limitations (continued) Ownership of property passes to the government if there is no will or no heirs. Escheat

Removing Sticks from the Fee Simple Bundle Note that the fee simple bundle shrinks as an owner voluntarily removes rights from it.

Real Estate as a Bundle of Property Rights Right or BenefitStick in Bundle Control Mortgage Lease Impose covenants or conditions Grant easement Grant license Build or remove structures Use & Enjoy Occupy as residence Use as place of business Farm Mine/drill for oil, etc. Place of recreation Exclusion Maintain privacy Non-trespass Disposition Sell or refuse to sell Give Will Abandon

Commonly Found Easements

Commonly Found Encroachments

Other Estates Qualified Fee Estates Life Estates Statutory Estates Freehold Estates Leasehold Estates

Rights and Interests in Land

Cross Section of Estates and Rights in Land

Cross Section of Estates and Rights in Land (continued)

Checkpoint In the absence of any other factors, which bundle of rights has a higher value?

Key Terms Chattel Easement Eminent domain Encroachment Encumbrance Estate Fee simple Lien Title