1. Modern Real Estate Practice in Pennsylvania 12th Edition Chapter 1: Real Property and the Law 1

2. 2 ©2012 Kaplan, Inc. 1Real Property and the Law Learning objectives –Identify the rights that convey with ownership of real property and the characteristics of real estate –Describe the difference between real and personal property –Explain the types of laws that affect real estate –Distinguish between the concepts of land, real estate, and real property –Define key terms

3. 3 ©2012 Kaplan, Inc. 1Real Property and the Law Land: the earth’s surface extending downward to the center of the earth and upward to infinity, including permanent natural objects Real estate: land at, above, and below the earth’s surface, plus all things permanently attached to it, whether natural or artificial Real property: the interests, benefits, and rights that are automatically included in the ownership of land and real estate

4. 4 ©2012 Kaplan, Inc. 1Real Property and the Law Land Earth’s surface to the center of the earth and the airspace above the land, including the trees and water Real Estate Land plus permanent human-made additions Real Property Real estate plus “bundle of legal rights” Air Rights Surface Rights Subsurface Rights Physical Improvements The Bundle of Rights

5. 5 ©2012 Kaplan, Inc. Bundle of Legal Rights 1Real Property and the Law

6. Bundle of rights –Right of possession –Right to control the property –Right of enjoyment –Right of exclusion –Right of disposition 6 ©2012 Kaplan, Inc.

7. 1Real Property and the Law Real property rights –Surface rights –Subsurface rights –Air rights –Water rights 7 ©2012 Kaplan, Inc.

8. 8 1Real Property and the Law Subsurface rights –Natural resources below earth’s surface –Multiple owners have interest in same parcel Coal owner Natural gas owner Farmhouse and stable owner Other rights

9. 1 Real Property and the Law Mine subsidence –Downward land shifts –Due to collapse of underground mine shafts and underground water flows –Creates sinkholes or troughs –Damage Functional Cosmetic Structural ©2012 Kaplan, Inc. 9

10. 10 ©2012 Kaplan, Inc. 1Real Property and the Law Personal property (all property that does not fit the definition of real property) Factory-built housing –Mobile homes –Manufactured homes

11. In Pennsylvania: Manufactured Housing Manufactured Homes Nonremoveable steel chassis Minimum: 8 feet x 40 feet (320 square feet) Capable of being lived in without a permanent foundation Contains a red label indicating compliance with Department of Housing and Urban Development (HUD) standards ©2012 Kaplan, Inc. 11

12. In Pennsylvania Real Estate Brokers may legally broker resale of mobile and manufactured homes if the following conditions exist: –“Land lease” assigned or land transferred –Mobile home permanently attached to foundation –Registration as vehicle cancelled ©2012 Kaplan, Inc. 12

13. 1.2 ©2012 Kaplan, Inc. 13

14. 14 ©2012 Kaplan, Inc. 1Real Property and the Law Plants Fixtures –Intent –Method of annexation –Adaptation to real estate –Agreement

15. 1 Real Property and the Law Trade fixtures: owned and installed by tenant for business use –Are removable –Are personal property. –Are removed before the end of the lease After lease termination, become property of landlord Agriculture: personal property –Chicken coops –Tool sheds 15 ©2012 Kaplan, Inc.

16. 16 ©2012 Kaplan, Inc. 1Real Property and the Law Characteristics of real property –Economic characteristics Scarcity Improvements Permanence of investment Area preference or location –Physical characteristics Immobility Indestructibility Uniqueness

17. 17 ©2012 Kaplan, Inc. 1Real Property and the Law Laws affecting real estate –Contract law –General property law –Agency law –Real estate license law –Federal regulations –Federal, state, and local tax laws –Zoning and land use laws –Federal, state, and local environmental regulations