Week One Thursday January 10 2013 12 36 PM REAL4000 Potential Gross Income PGI minus Vacancy collection loss effective gross income minus operating expensed Commercial Real Estates generally cash flows are monthly exception insurance and real estate tax apartment regional malls strip centers industrial hotels offices Operating cash flows CF from commercial real estate EGI OE net operating income capital expenditures property before tax cash flow debt service equity taxes Reversion of CF from commercial real estate Selling price selling expenses net sale price outstanding balance before equity reversion taxes after tax equity reversion The nature land and fixtures Land is original immobile fixed positions of space indestructible The nature land and fixtures land is original immobile fixture positions of space indestructible fixture is permanently attached to land ex House Tests is it a fixture custom built will it cause damage if it is removed Must be noted in a contract to remove fixture Why is real estate different Uniqueness heterogeneous market Spatial aspect use and value are influenced by surrounding parcels called situs Specialized rights ex Every state has a statue of frauds Specific performance Long gestation period timely process Long lived how long the structure sticks around Real estate transactions are LARGE Long term in nature investment by a particular individuals 2 markets Asset Space Legal concepts of property Allodial system vs Feudalism Allodial Absolute owner AIR RIGHTS PICTURE land above the surface REAL4000 Test 1 Page 1 Note long TERM and long LIVED are DIFFERENT Note long TERM and long LIVED are DIFFERENT Riparian rights creeks rivers small lakes use water without limitation as long as you don t contaminate or divert the flow Littoral rights large lakes and oceans right to use water but the use is only permitted to the high water mark Prior appropriation western US AKA Colorado Doctrine amount of water that can be used is regulated grantor convey grantee receives Control and Enjoyment deals with USE of the property Possession deals more with ownership rather than actual use Water rights Estates in Possession 1 Free hold estates Allodial system vs Feudalism Allodial Absolute owner Feudalism Escheat Simultaneous rights on a single parcel Full bundle of rights Fee simple ownership Possession occupy property free of exclusion from others right of possession a Free rider problem anyone coming onto the property and using it for any reason Control right to physically alter the property Enjoyment right to be free from interference from others others other people in general AS WELL AS previous owners neighbors Disposition convey your interest and benefit from the proceeds 1 2 3 4 a b Fee simple absolute includes the full bundle of rights Defeasible fee interests fee simple as long as i ii Fee simple determinable fee simple ownership automatically terminates when that stated as long as happens you can use this land as long as alcohol is not sold if alcohol is sold fee simple reverts to the grantor Fee simple subject to condition subsequent some condition if it happens the property potentially reverts back to the grantor grantor must exercise right of reentry c Life estate fee ownership defined in terms of duration of either i ii Leasehold estates Grantee life tenant Some 3rd party 2 a b c d Tenancy estate for years leasehold interest with fixed commencement and expiration date specified period of time i When date arrives the lease is terminated Periodic tenancy month to month year to year Estate at will can be an oral agreement in some states Estate at sufferance 3 Adverse possession someone who is not the rightful owner of the property can gain fee simple interest in the property create incentive against absentee owners 5 conditions a Hostile and under a claim of right i ii rightful owner cant be endorsing this actions Person on property believes it is his property b c d e Actual Possession has to be of normal use Open and notorious not trying to hide use of land not trying to hide possession in any way Continuous possession of land has to be uninterrupted GA 20 years Exclusive cant share with an owner or neighbor Leasor landlord Leasee tenant Lease Conveyance and contract Identification of the parties tenant and landlord Identification of premises Specify rent Specifiy term Commencement exp date Rights and duties of tenant and landlord REAL4000 Test 1 Page 2 Week Two Tuesday January 15 2013 10 15 AM Non possessory interest don t include the right of possession 1 Lien interest in real property as a security for an obligation a General unrelated to property i Ex Court judgment someone sues you and they re able to go after your property but the actual judgment has nothing to do with property b Specific related to property Real estate taxes Real estate assessment Mechanics liens when someone contracts for a house to be built but never pay for the construction mortgage loan i ii iii iv 2 Easement right to use property for a specific purpose a Easement appurtenant benefit a parcel run with the land benefit land owner today and future Easements vs license vs profit a prendre Easement right to use property for a specific person Cannot be granted orally License permission Revocable at anytime by the grantor May be granted orally Profit a prendre implied easement right to take subsurface minerals Broad term to extract minerals from a property i ii iii iv i ii iii iv i ii iii iv v vi i ii iii iv v i ii iii iv v vi vii dominant parcel who benefits from the easement servient parcel who is burdened by easement Ex Driveway easement Affirmative vs negative easements Easement in gross benefits a party no dominant parcel just servient parcel Ex Right to run cable lines across your property b c Conservation easement holder of easement is land trust Promising to keep the property in current use Giving away development rights Future owners are similarly bound How to create an easement Express in writing Implied easement ex Profit Easement by necessity parcels that are landlocked Easement by prescription equivalent of adverse possession in easement world d How to terminate an easement Fulfillment of purpose Abandonment Can also terminate with easement by perscription openly present use of parcel for a statutory period of time Merger Expiration date Mutual agreement 3 4 Restrictive covenants restrict use of land in a subdivision Tend not to be enforceable Must hire lawyer to enforce