The nature land and fixtures-land is… original, immobile (fixture positions of space), indestructibleTests: is it a fixture? --> custom built, will it cause damage if it is removed?,Must be noted in a contract to remove fixture-fixture is… permanently attached to land (ex. House)Uniqueness - heterogeneous market-Spatial aspect - use and value are influenced by surrounding parcels (called situs)-Specific performance○Long gestation period - timely process○Specialized rights -- ex. Every state has a statue of frauds-Long lived - how long the structure sticks around-Real estate transactions are LARGE -Long term in nature - investment by a particular individuals-Asset○Space○2 markets-Why is real estate different?AIR RIGHTS PICTURE (land above the surface)Note: long TERM and long LIVED are DIFFERENTLegal concepts of propertyAllodial system vs. Feudalism-Absolute owner○Allodial:-REAL4000Commercial 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 estatePotential Gross Income (PGI)-(minus)- Vacancy & collection loss _____________________________effective gross income EGI – OE = net operating income - capital expenditures = property before tax cash flow – debt service = equity – taxes =--(minus)- operating expensedReversion of CF from commercial real estateSelling price – selling expenses = net sale price* - outstanding balance = before equity reversion – taxes = after tax equity reversionLand is original, immobile (fixed positions of space), indestructible-The nature land and fixturesWeek OneThursday, January 10, 201312:36 PM REAL4000 - Test 1 Page 1Note: long TERM and long LIVED are DIFFERENTAllodial system vs. Feudalism-Absolute owner○Allodial:-Escheat○Simultaneous rights on a single parcel○Feudalism:-Full bundle of rights -- Fee simple ownership-Free rider problem - anyone coming onto the property and using it for any reasona.Possession - occupy property free of exclusion from others (right of possession)1.Control - right to physically alter the property2.Enjoyment - right to be free from interference from others -- (others- other people in general AS WELL AS previous owners/neighbors)3.Disposition - convey your interest and benefit from the proceeds4.Water rights•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-Fee simple absolute - includes the full bundle of rightsa.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 grantori.grantor must exercise right of reentry-Fee simple subject to condition subsequent - some condition, if it happens, the property potentially reverts back to the grantor ii.Defeasible fee interests - fee simple… "as long as" b.Grantee (life tenant)i.Some 3rd partyii.Life estate - fee ownership defined in terms of duration of either…c.Free hold estates 1.When date arrives, the lease is terminated i.Tenancy/estate for years - leasehold interest with fixed commencement and expiration date; specified period of timea.Periodic tenancy - month to month, year to yearb.Estate at will - can be an oral agreement in some statesc.Estate at sufferance -d.Leasehold estates2.rightful owner cant be endorsing this actionsi.Person on property believes it is his propertyii.Hostile and under a claim of right -a.Actual - Possession has to be of normal useb.Open and notorious - not trying to hide use of land; not trying to hide possession in any wayc.Continuous - possession of land has to be uninterrupted (GA = 20 years)d.Exclusive - cant share with an owner or neighbore.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 conditions3.Estates in Possession--Control and Enjoyment - deals with USE of the property-Possession - deals more with ownership rather than actual use-grantor - convey-grantee- receivesLeasor - landlordLeasee - tenantLease:Conveyance and contractIdentification of the parties (tenant and landlord)Identification of premisesSpecify rent Specifiy termCommencement/exp date Rights and duties of tenant and landlord REAL4000 - Test 1 Page 2Ex. Court judgment - someone sues you and they're able to go after your property but the actual judgment has nothing to do with propertyi.General - unrelated to property a.Real estate taxesi.Real estate assessment ii.Mechanics liens - when someone contracts for a house to be built but never pay for the constructioniii.*mortgage - loaniv.Specific - related to propertyb.Lien - interest in real property as a security for an obligation1.dominant parcel who benefits from the easement i.servient parcel who is burdened by easementii.Ex. Driveway easementAffirmative vs. negative easementsiii.Easement in gross (benefits a party) - no dominant parcel; just servient parceliv.Ex. Right to run cable lines across your propertyEasement appurtenant (benefit a parcel)- "run with the land" - benefit land owner today and futurea.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.b.Express - in writingi.Implied easement - ex. Profitii.Easement by necessity - parcels that are landlocked iii.Easement by prescription - (equivalent of adverse possession in "easement world")iv.How to create an easement:c.Fulfillment of purposei.Abandonmentii.Can also terminate with easement by perscription - openly present use of parcel for a statutory period of timeiii.Merger iv.Expiration datev.Mutual agreementvi.How to terminate an easementd.Easement - right to use property for a specific purpose2.Restrictive covenants - restrict use of land in a subdivision. Tend not to be enforceable. Must hire lawyer to enforce them. 3.In condo, you have right to selli.Default mortgage, no consequencesii.Sell at market valueiii.Upon death, heir takes ownershipiv.Condo association has right of