1. South-Western Publishing©2002 By Charles J. Jacobus Real Estate Principles Ninth Edition Real Estate: An Introduction to the Profession Ninth Edition South-Western Publishing©2002

2. Chapter 3 Rights and Interests in Land _______________________________________

3. South-Western Publishing©2002 Exclusive Right to Use of Land Feudal System Allodial System

4. South-Western Publishing©2002 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”.

5. South-Western Publishing©2002 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.

6. South-Western Publishing©2002 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

7. South-Western Publishing©2002 Government Limitations The right of government to take private property for public use upon payment of just compensation Eminent Domain

8. South-Western Publishing©2002 Government Limitations The right of government to tax private property Further discussion in chapter 15 Taxation

9. South-Western Publishing©2002 Government Limitations Ownership of property passes to the government if there is no will or no heirs. Escheat

10. South-Western Publishing©2002 Removing Sticks from the Fee Simple Bundle Note that the fee simple bundle shrinks as an owner voluntarily removes rights from it.

11. South-Western Publishing©2002 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

12. South-Western Publishing©2002 Commonly Found Easements

13. South-Western Publishing©2002 Commonly Found Encroachments

14. South-Western Publishing©2002 Other Estates Qualified Fee Estates Life Estates Statutory Estates Freehold Estates Leasehold Estates

15. South-Western Publishing©2002 Rights and Interests in Land

16. South-Western Publishing©2002 Cross Section of Estates and Rights in Land

17. South-Western Publishing©2002 Cross Section of Estates and Rights in Land (continued)

18. South-Western Publishing©2002 Checkpoint In the absence of any other factors, which bundle of rights has a higher value?

19. South-Western Publishing©2002 Key Terms Chattel Easement Eminent Domain Encroachment Encumbrance Estate Fee simple Lien Title