Chapter 3 Rights and Interests in Land

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Chapter 3 Rights and Interests in Land

• ____________________________

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Exclusive Right to Use of Land

• Feudal System
• Allodial System

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The Fee Simple Bundle of Rights
Real estate ownership is, in actuality, the
ownership of rights to land. The largest bundle
available for private ownership is called fee
simple.
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Real Estate as a Bundle of Property Rights

• Property rights are what gives value to the real
  estate.
• Private property rights are subject to
  limitations imposed by government. Thus, this
  can limit the value of the investment.

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Government Limitations
Police Power

• The right of government to regulate private
  property for the protection of the general
  publics health, morals, and welfare.
• Further discussion in Chapter 25

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Government Limitations (continued)
Eminent Domain
The right of government to take private
propertyfor public use upon payment of just
compensation.
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Government Limitations (continued)
Taxation

• The right of government to tax private property
• Further discussion in Chapter 15.

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Government Limitations (continued)
Escheat

• Ownership of property passes to the government
  if there is no will or no heirs.

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Removing Sticks from the Fee Simple Bundle
Note that the fee simple bundle shrinks as an
owner voluntarily removes rights from it.
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Real Estate as a Bundle of Property Rights
Right or Benefit Stick in Bundle
Control Mortgage Lease Impose covenants
or conditions Grant easement Grant
license Build or remove structures
Use Enjoy Occupy as residence Use as place
of business Farm Mine/drill for oil,
etc. Place of recreation
Exclusion Maintain privacy Non-trespass
Disposition Sell or refuse to sell Give Wil
l Abandon
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Commonly Found Easements
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Commonly Found Encroachments
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Other Estates

• Qualified Fee Estates
• Life Estates
• Statutory Estates
• Freehold Estates
• Leasehold Estates

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Rights and Interests in Land
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Cross Section of Estates and Rights in Land
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Cross Section of Estates and Rights in Land
(continued)
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Checkpoint
In the absence of any other factors, which bundle
of rights has a higher value?
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Key Terms

• Chattel
• Easement
• Eminent domain
• Encroachment

• Encumbrance
• Estate
• Fee simple
• Lien
• Title