What is Real Property?

August 1, 2022by REDOC0

I know you would be thinking, what’s the difference between real estate and real property?  Yes, they both sound very similar, and the two concepts have a lot to do with each other, but there are subtle differences between them. 

Having a proper understanding of these differences can help understand the nuances of the land or estates you own and how you own it.

KEY TAKEAWAYS

  • Real Estate is defined as the land and any permanent structures, like a home, or improvements attached to the land, whether natural or man-made.
  • Real Property may be classified according to general use as residential, commercial, agriculture, industrial and special purpose.
  • Difference between Real property and personal property
  • Different types of Estate Property

 What Real Property is?

Real property can be defined as a parcel of land and everything that is permanently attached to the land. The owner of real property has all of the rights of ownership, including the responsibility to possess, sell, lease, and enjoy the land.

Understanding Real Property 

To have a proper understanding of what Real property is, we need to first understand the definition of land and real estate

alt- land
shalom landed property

What is Land?

The land is the surface of the earth’s crust, which extend down to the center of the earth and upward to beyond the sky human being can see. This includes everything that is permanently attached by nature, such as trees, air, and water

The land also includes mineral resources below the earth’s crust, which are normally extracted for processing by engineers for different purposes.

What is a Real estate?

Real estate is defined as the land and any permanent structures, like a home, or improvements attached to the land, whether natural or man-made. Including everything that’s permanently attached to it whether natural or artificial.

Real Property

Real estate is a broader term than real estate, as it encompasses the interests, benefits, and rights inherent in the ownership of the real estate.

The broader term real property includes the physical land (the surface that lies below and above it), everything that is permanently attached to it – whether natural or artificial – plus all the rights of ownership, including the right to possess, sell, lease, and enjoy the land.

Example of Real Property are building, canals and minerals

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Estates in Real Property

The amount and kind of interest a person has in real estate is called an “estate in Land”. There are two major classifications of Estate in Land

          Freehold 

          Non – freehold

 Freehold

Freehold property is a type of real property, which comes with indefinite ownership and you can easily pass on forever. There are three types of Freehold estate

Fee simple Absolute

Fee simple and fee simple absolute are often used interchangeably. In this case, the owner has a complete property without restriction; there is no limit on the length of time you can own the real estate. You can also pass it down to your heir.

This is the most common type of property ownership

Fee simple Defeasible

A fee simple defeasible is a form of freehold estate that puts more limitations on the owner compared to a fee simple absolute. With this real estate, owning the land comes with certain conditions.

For example, you may have to use the property for a specific purpose, if you don’t follow through, you could lose ownership

Important: every property will come with its parameters, so its own unique set of parameters, so it’s important to review any documents before purchase.

Life estate

A life estate, a type of freehold estate, is something to consider during estate planning. Often people want to give their homes to their heirs after they pass. Through Life estate, a homeowner can make that transition process easier.

The original owner, otherwise known as a life tenant, can live out their lives in the home. While the life tenant stays there, though, they share joint ownership with the inheritor.

Once the life tenant passes, they no longer hold rights to the property. Instead, the beneficiary takes ownership, allowing them to inherit without the need of a probate court.

Non – freehold

Non–freehold estates are the type of real property that has a limited right to use or occupy but doesn’t own. In effect, you lease the property without holding any ownership over it.  For example, a non–freehold estate may include a condo you rent.

They cannot be passed down to an heir and they exist without ownership. Also known as leasehold estate, non–freehold is created through written and oral leases and rental agreements.

Tenancy For years

Tenancy for years is a type of estate created by a lease. When the tenant enters this type of lease agreement, they have it for a fixed amount of time. The contract outlines the beginning and end of the tenancy. Because of this, neither the tenant nor the landlord has to notify each other about the termination of the lease. The documentation already specifies the dates. At the end of the term, the tenant either moves out of the property or renews it.

You may also hear a tenancy for years referred to as an estate for years or tenancy for a definite term.

Tenancy At Will

You may hear of a tenancy at will referred to alternatively as an estate at will. Under this type of agreement, either the owner or the tenant can terminate it at any time.

The two parties do not use a binding contract or lease. The agreement also doesn’t typically specify the occupancy’s time length or the ways the tenant pays. Instead of a contract, local and state govern the tenure. People often seek this out when they want to flexibly move rentals without breaking any contracts.

Tenancy from period to period

Tenancies from period to period, or periodic tenancies, are leases that do not have a defined end date. The agreement may still identify a length of time for the occupancy. However, the landlord and tenant can extend the tenant’s stay, renewing indefinitely.

Both parties can also agree that notice is necessary before the lease’s termination. Although, the contract should note that, along with the time needed for the notice.

Tenancy At Sufferance

A tenancy at sufferance works somewhat similarly to a tenancy at will. Like the latter, it does not occur under a contract or lease. Instead, it is a type of tenancy that takes place after the tenant’s lease expires but before they leave the property.

So., it occurs without a lease, under the landlord’s permission. However, the tenant still has to adhere to the contract original conditions, such as rent payments. If the landlord does not comply, the landlord can evict the tenant without any notice.

Tenancy at sufferance is also called estate at sufferance and is the lowest form of an estate known to law.

 

Real property vs Real estate

Real estate is land at, above, and below the earth’s surface, including everything permanently attached to it, whether natural or artificial, while real property is everything included in real estate, plus the rights of ownership, including the right to possess, sell, lease, and enjoy the land.

Conclusion

Every homeowner is looking for a property that matches their needs. With the information provided above I believe, anybody looking to buy a property will be able to decide the kind of estate to obtain.

With the many characteristics, it’s essential to research the rights you have over a property. Also, consider speaking to your real estate agent if you have any concerns about whether a property is right for you.

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