Real and Personal Property Objective 09.02
Compare the legal rights of acquisition, transferal and renting/leasing of real or personal property.
PROPERTY OWNERSHIP
Real Property
• Land and anything permanently attached, including:
– – – – – Buildings, structures, fixtures Water, water rights Minerals on and below the surface of the earth. Trees & crops Air space above the surface
Personal Property
• Anything other than real property, including:
– – – – – Clothing, jewelry, furniture, appliances in a home Automobiles, ATVs, lawnmowers Equipment & machinery used in business Copyrights, patents, trademarks Software, stocks, loans, mutual funds
• Must be delivered in order to transfer ownership. • May be tangible or intangible.
Rights of Ownership
• Possess, use and enjoy the property • Dispose of, sell, consume, modify, insure or destroy the property • Give the property away by will after death • Lease the property to a tenant
Intellectual Property
• Includes copyrights, patents, trademarks and trade secrets • Is an original work fixed in a tangible medium of expression. • Examples: literature, computer software, musical scores and lyrics, choreography, dramatic works, unique product or process, symbols or word that identify a product, commercially valuable information that is kept secret
Methods to Acquire Property
• • • • • • • Purchase contract – earn money and use it to buy Gift – includes intent, delivery and acceptance Intellectual labor – creation of property Inheritance – wills and trusts Accession – farm animals naturally increase Found property – lost or mislaid Occupancy – possession of property that belongs to no one else
Real Property Transfers
• Grantor - conveys a deed to real property • Grantee – receives the deed
Types of Deed
• Quitclaim
– Transfers a seller’s interest in a property but doesn’t warrant that the seller owns any interest
• General Warranty Deed
– Warrants the title – Most desirable for the buyer
• Bargain and Sale Deed
– Transfers title to property without giving warranties
Personal Property Transfers
• Transfer of title (ownership) to property • Not all transfers require written titles
– Purchases of goods from a retail store
• Certain transfers have formal titles-Vehicles
– – – – Are registered with the state MUST BE NOTARIZED Require odometer reading disclosure statements Require damage disclosure statements
Limits on Use of Property
• • • • • • • • Police powers by government Nuisance ordinances enacted by cities Zoning ordinances enacted by cities to regulate Health and public safety issues Certain physical rights Eminant domain Deed restrictions Easements
Property Rights
• Physical rights apply to:
– Surface (the right to occupy the land, and develop it with buildings, etc.) – Subterranean Minerals or Water (rights to remove or conserve) – Air (right extends into upper atmosphere-but cannot exclude aircraft from flying over property)
Eminent Domain
• Right to make private property into public if it is for the public good. • When highways are widened, private property is taken by eminent domain. • Owners are paid the fair market value of the property, but they cannot refuse to release property.
Limits on Use of Property
• Restrictive Covenants
– Deed restrictions – Example- a homeowners association restricts parking cars in the street
• Easements for limited use
– Example- Gas lines end at my driveway but a neighbor wants to build a new home on an adjacent lot. I can sign an easement release so the utility company can continue the line to his new home by crossing my property.
Why buy a home?
• Rent = Zero Ownership • Home = Equity • Equity = Value of Home - Principle of Loan, or • Equity = Market Value - Debt in Property • Home = Personal Asset Accumulation
Why rent an apartment?
• • • • • • No large down payment required No long term commitment to location No upkeep to grounds and property Not ready to own Bad credit, cannot get a loan More freedom to move
• NEGATIVE: NO ASSET ACCUMULATION
How to Increase Equity
• Options:
– Pay off or reduce loan amount – Increase value of home
• Your home is not only a place to live but also a major investment and asset for the family.
Foreclosure
• Right of mortgage holder to seize property for payment of debt that is past due • Comparable to repossession of personal property