Slide 1Sec. 1: The Nature of PropertyU.S. Constitution: 5th AmendmentProperty ClassificationsProperty ClassificationsProperty ClassificationsProperty LawProperty LawSec. 2: Ownership and Other Interests in Real PropertyOwnership in Fee SimpleLife EstatesExampleConcurrent OwnershipTenancy in CommonJoint TenancyTenancy by the EntiretyReal Property Estates: LeaseholdLeased PropertyLeased Property: TenanciesSlide 20Sec. 3: Transfers of OwnershipTransfer of Real Property OwnershipAdverse PossessionAdverse PossessionSec. 4: Limitations on the Rights of Property Owners1Real PropertyChapter 262Sec. 1: The Nature of Property Property ownership confers certain legally protected rights that give the owner the right to possess, control, use or transfer property.Property rights violations may result in civil actions and/or criminal charges.Property ownership is a long-standing value in the U.S., which is protected by the Constitution’s due process and taking clauses in the 5th & 14th amendments.U.S. Constitution: 5th Amendment“Due process clause”: “….nor [shall any person] be deprived of life, liberty, or property, without due process of law…”“Takings clause” “…nor shall private property be taken for public use, without just compensation.”Similar provisions in the 14th Amendment limit state actions against private property.34Property ClassificationsPersonal property (“personalty”): moveable property, which may be tangible or intangible“Tangible” personal property exists in physical form (e.g., chair, computer).“Intangible” personal property represents rights that don’t exist in physical form but have a legal reality (e.g., copyrights, trademarks, stock).Sales of most personal property are relatively easy and require little formality (e.g., equipment, furniture, clothes).5Property ClassificationsReal property (“realty”): immovable property--land and everything permanently attached.Includes land, buildings, trees and vegetation, airspace, subsurface (mineral rights), fixtures.Different parties may own the surface rights and the subsurface rights.A subsurface owner has the right to go on the land to remove minerals, and is strictly liable if excavation causes the surface to collapse .6Property ClassificationsA fixture is an item of personal property that has been permanently attached to real property with the intent that it will become part of the real property (e.g., kitchen counters, bathtub, hardwood floors, sinks). Key factors in determining whether an item is a fixture include (i) whether the item can be removed without cause material damage to the building or land, and (ii) the intention of the party who attached the item.Personal property that is located on real property (e.g., sofa, lamp, table) remains the property of the person who puts it there, but fixtures become the property of the real estate owner--and are transferred with the real property when it is sold.7Property LawProperty rights are generally governed by state law, including some UCC statutes.Federal law governs trademark, copyright and patent property rights.Property rights may be restricted by other laws (e.g., zoning, criminal, tort)Property may be taxed (e.g., real estate taxes; personal property taxes)8Property LawHaving the “title” to property indicates ownership. Title transfers from seller to buyer when a sale occurs. “Title documents” are only required for certain property (rules vary by state).Title to real property is evidenced by a written deed, which should be recorded in the county where the land is located (types of deeds covered in later slides).Title documents for certain items of personal property may have to be registered under state law (e.g., autos, boats)9Sec. 2: Ownership and Other Interests in Real PropertyOwnership of real property is a bundle of rights that may include the rights to possess, sell, give, bequeath, lease, or destroy the property.Depending on what rights one has, one may have an “Estate” or an “Interest” in the real property. The owner’s legal interest in real property is called an “estate in land.”A landowner can transfer some or all of his rights in land to a third party. It is important to know what type of estate one has, because and owner can only transfer the rights he has.10Ownership in Fee SimpleA “fee simple absolute” estate (also called a “fee simple”) is a present possessory estate that gives an owner the greatest aggregation of rights, powers and privileges. A fee simple absolute estate can be transferred by an owner during his life by deed, or upon death via a will (or to the owner’s heirs at law if no will exists). Owner can use the land however he wants (subject to applicable laws and zoning restrictions), but cannot unreasonably interfere with a neighboring property owner’s rights. Case in Point 26.1: “One landowner may not use his land so as to unreasonably annoy, inconvenience, or harm others.”11Life EstatesA “life estate” is a present possessory estate typically created by a grant of property in a deed that states to “A for his life, and then to B.” As a “life tenant” A’s rights in the property cease on the day of his death. Upon A’s death, possession of the land passes to B.Life tenant can possess, use, and take the fruits/income of the estate, but cannot waste (damage) the property. Life tenant must maintain the property, and pay taxes.A life estate owner can transfer the life estate during his life, but the life estate terminates at his death--so a purchaser of a life estate would have no further interest.12ExampleJoe purchases a fee simple estate in farmland and house. When he dies, his will provides that his wife, Martha, will have a life estate in the property, and that upon her death the property will pass to their oldest son, John (who has a “remainder” interest as long as Martha is alive). Martha has a life estate in the property. Martha can possess and use the land during her life. Upon her death, John can take possession of the property, in which he has a fee simple absolute estate.13Concurrent OwnershipConcurrent ownership means that two or more persons share ownership of real property simultaneously. The owners may or may not be related to each other.Three primary forms of concurrent ownership of real property covered in