REE3043 Exam 3 Study Guide Study For Exam Chapter 18 Real Property Rights Real Property Rights o Real estate owners receive a bundle of rights which includes physical and legal rights o Physical real property rights include The Surface e g improvements on and to the land Includes the House and Sidewalks DOES NOT INCLUDE a storage shed The Subsurface e g mineral oil and gas rights You own all the way to the core of the earth but a previous owner could have deeded your subsurface rights away The Air Rights e g rights to air space to the height of the tallest man made improvements Public Fly Over Rights e g rights above private air rights Real Property and Personal Property o Real Property Realty Refers to the land and anything permanently affixed to the land o Personal Property Refers to all other tangible property o Fixtures Refers to something that was once personal property but has become a part of some real property Tests to Determine Fixtures Include Intent Test Annexation Test Adaptation Test Relationship Of The Parties Test o Trade Fixtures Personal property consisting of display counters cabinets mobile partitions and the like in commercial buildings such as shopping centers and office buildings Belong to the tenant Legal Rights of Real Estate Ownership o The Right Of Exclusive Possession And Control Owners have the legal right to control entry to their property to collect damages in the event of trespass and to use the property as collateral for a loan o The Right Of Quiet Enjoyment Owners have a legal claim to their property without unfounded disturbances from those claiming defects in the title o The Right Of Disposition Allows owners to transfer ownership to others Estates In Real Property o The term estate refers to the a party holds in real property interest o Estates in Severalty occur when only one party owns real estate The owner s interest is severed from other owners interests o Concurrent Estates involve real property ownership by more than one owner Married couples o Freehold Estates are held for an indefinite duration ex Home ownership o Non Freehold Estates have a duration set by private contract ex Apartment rental Freehold Estates of Inheritance o Fee Simple Absolute The BEST title you can get for land o Determinable Fee i e possibility of a REVERTER o Fee Simple Subject to Condition Subsequent i e Right To Reentry Freehold Estates Not of Inheritance o Ordinary Life Estate i e Remainder Interests o Legal Life Estate Homestead Spouse can remain on property after being widowed regardless of whether her name is on the deed o Legal Life Estate Dower and Curtesy Non Free Hold Estate o Estate for Years o Periodic Tenancy o Tenancy at Will o Tenancy at Sufferance Concurrent Estates o Direct Co ownership Leasehold and Leased Fee Estates have a definite beginning and end Leasehold refers to the Tenant s rights Leased Fee refers to the Landlord s rights Can roll over Periodic Rent Ex Hotel licenses you to be there you can stay as long as you want A month to month lease at the landlords consent A month to month lease without the landlords consent Joint Tenancy Do this with people you like like your wife or daughter Two or more parties owning property together Joint tenancy includes the Right of Survivorship For Joint Ownership To Exist There Must Be o Unity of Time Ownership rights must begin at the same time o Unity of Title Ownership rights must be transferred under the same title Tenancy By The Entireties Protect your vacation home Use only if you are married A form of concurrent ownership existing in some states for husbands and wives Protects real estate from creditor s claims against one s spouse Requires Unity of Person The owners must be married Tenancy In Common Co Owners have an unequal interest Have separate titles to the property Have rights that began at different periods Have equal use of the property There are NO RIGHTS OF SURVIVORSHIP among tenants in common Limits On Property Rights o Government Limitations Police Power The inherent right of government to control the activities of people and companies to protect the health safety moral character and general welfare Taxation The power of local governments to levy ad valorem toward value real estate taxes represents a limitation on real property rights 72 of the State of Florida s Income comes from taxes Eminent Domain Governments and their agencies have the right to acquire private property for a public use The property owner is entitled to just compensation for the property Escheat The right of government to claim ownership to property for which the owner died intestate and there are no known heirs Chapter 19 Real Property Taxation The Tax on Real Property o The largest single source of revenue for most local governments Cities Counties School Districts Fire Departments etc o Taxes are levied ad valorem i e according to value o Unlike many countries the U S Constitution prohibits a Federal Property Tax o U S Tax system was derived from the English System Mechanics of Property Tax o Determining a Jurisdictions Budget and Tax Base Each parcel is periodically appraised and an Assessed Value placed on it The Taxable Value is the assessed value less any exemptions The Tax Base is the aggregate taxable value of all properties in a community The Tax Rate is generally stated as a millage rate tax dollar 1 000 of value Tax Exempt Properties o Government owned Properties o Schools o Hospitals o Places of Worship Partial Exemptions Usually 25K 50K o Homestead Exemptions o Agricultural Property Exemptions o Senior Veteran and Disabled owned Property Exemptions Calculating Tax Liability Market Value Assessed Value 90 of MV assumed less Homestead Exemption Taxable Value 139 500 125 550 25 000 100 550 If tax rate is 22 65 mills then tax is 22 64 x 100 55 2 276 45 The Effective Tax Rate o The Actual Tax Paid divided by the Property s Market Value o Effective Tax Rate 2 276 45 125 550 1 813 Tax Burden Analysis o Used to evaluate the tax consistency of a particular property relative to comparable properties Comparable Tax Liability 1997 Recent sale price Effective tax rate A B 1 150 C 1 000 975 92 500 112 000 98 000 1 08 1 03 0 99 D 1 050 105 000 1 00 Mean effective tax rate 1 03 Special Assessments o Taxes charged to property owners to pay for local improvements that directly benefit a parcel NOT assessed according to the value of the property Generally a one time charge o Special Taxing Districts may levy special