What Is Real Property?
Real property is land and any property attached directly to it, including any subset of land that has been improved through legal human actions. Examples of real properties can include buildings, ponds, canals, roads, and machinery, among other things. In land law, where the term is most commonly used, real property also entails the right of use, control, and disposition of the land and its attached objects.
- Real property is land or anything attached to that land that is immovable.
- In a general sense, real estate and real property are the same thing.
- Depending on the type of estate owned, certain real estate rights apply to each individual property.
- Each state has different laws regarding what is real property and how to handle their sales.
Understanding Real Property
Real property, sometimes referred to as real estate, realty or immovable property, is composed of any designated portion of land and anything permanently placed on or under it. The elements on or under the land can include natural resources and/or human-made structures.
In the legal sense, owning real property involves the bundle of rights transferred from seller to buyer upon the sale of a property. These rights typically dictate the use, transfer and/or sale of real properties. These real estate rights include the right of possession, control, exclusion, enjoyment, and disposition.
Types of Estates Associated With Real Property
Different types of estates, which are recognized by law, further define the real estate rights associated with property ownership. The kind of estate depends on the terms of the lease, deed, will, land grant and/or bill of sale through which the estate was received.
- Fee Simple: Fee simple ownership, also called the fee simple absolute, is the most common type of freehold ownership on real property. This is the highest possible type of ownership interest that can be owned by a real property holder. Those who own properties under this type of ownership have the right to sell the house, leave it to their beneficiaries or make changes, even if they still owe money on their mortgage. These rights are bounded by government powers of compulsory purchase, taxation, escheat and police power.
- Life Estate: Life estate ownership implies the owner may only own and use the involved properties during his lifetime. The owner may not give away, sell or leave the property to someone else. Owners of life estates are called “life tenants."
- Future Interest: Future interest ownership belongs to those who will own properties in the future. The rights of owners of future interest do not include the ownership, use, and enjoyment of the involved properties in the present. Current possessors of properties may create a term of a deed or an irrevocable trust that allows the future interest owner to inherit the involved properties when the current owner passes away.
- Contingent Interest: In contingent interest, the involved properties are not passed to designated inheritors unless one or more conditions of the current owner are fulfilled. If these conditions are not met, the properties are passed to someone else.
- Lienholder: Lienholders are holders of a mortgage, judgment lien, deed of trust and/or mechanic’s lien on real estate. Lienholders have an ownership interest in the involved real properties.
Real Property vs. Personal Property
Modern law makes a clear distinction between real property (examples of real property include land and anything affixed to it) and personal property (clothing, furniture, money, etc.). Property that cannot be separated from what is considered real property would be considered wholly real property.
Real Property vs. Real Estate
Since real property is land and anything that is immovable upon it, there can be somewhat of a grey area when it comes to real estate. The definition of real estate is "property in buildings and land," which makes it real property. However, there are some legal issues that can take place when a landowner decides a piece of real property does not apply to the sale price of real estate or vice versa.
Special Considerations: Real Property Law
Every U.S. state, except Louisiana, has specific real property laws governing real property and the estates they include. These laws apply to land, as well as anything that is fixed to the land, such as buildings or attached equipment. In some states, whatever lies under a plot of land is part of that real property. In other states, whatever lies beneath, or passes through, a property may be subject to different laws, with separate ownership. This could include ore, precious gems, metals, and even water.
To be legitimate, a claim to any real property must be accompanied by a verifiable and legal property description. Such a description usually makes use of natural or manmade boundaries, such as seacoasts, rivers, streams, the crests of ridges, lakeshores, highways, or purpose-built markers such as cairns, surveyor's posts, fences, and official government surveying marks. (For related reading, see "Real Estate vs. Real Property: What's the Difference?")