What is 'Real Property'

Real property, also referred to as real estate, realty or immovable property, is any property attached directly to land as well as the land itself. It is any subset of land that has been improved through legal human actions. Real properties include buildings, ponds, canals, roads and machinery, among other things.

BREAKING DOWN 'Real Property'

Real property is composed of any designated portion of land and anything permanently placed on or under it. The elements on or under the land include natural resources and/or human-made structures.

Owning real properties involves different types of estates, which define the rights of the owner to use, transfer and/or sell his real properties. These estates are recognized by the law. 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 a 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. 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, judgement lien, deed of trust and/or mechanic’s lien on real estate. Lienholders have an ownership interest in the involved real properties.

RELATED TERMS
  1. Property Tax

    A tax assessed on real estate by the local government. The tax ...
  2. Real Estate

    Land plus anything on it, including buildings and natural resources.
  3. Investment Property

    A real estate property that has been purchased with the intention ...
  4. Tax Deed

    A legal document that grants ownership of a property to a government ...
  5. Personal Property

    A type of property which, in its most general definition, can ...
  6. Property Manager

    An individual or company responsible for the day-to-day functioning ...
Related Articles
  1. Investing

    What You Should Know About Real Estate Valuation

    Anyone involved in a real transaction can benefit from gaining a basic understanding of the different methods of real estate valuation.
  2. Investing

    A Guide to Real Estate Investing

    Investing in real estate is a popular choice for good reasons, but it's more complicated than owning your typical stocks and bonds.
  3. Investing

    How You Make Money In Real Estate

    If you're interested in the real estate game, make sure you know what factors will affect whether you make money or not.
  4. Investing

    Investing in Property Out of State

    If you can't afford property close to home, consider taking the real estate plunge elsewhere in the country.
  5. Investing

    Use Real Estate To Put Off Tax Bills

    Find out how you can build wealth and reduce your taxes.
  6. Investing

    7 Steps to A Hot Commercial Real Estate Deal

    For savvy real estate investors, times of lower prices reveal investment opportunity.
  7. Investing

    3 Reasons to Invest in Multi-family Real Estate

    Here are three reasons to consider investing in multi-family real estate.
  8. Investing

    Costs New Investors in Real Estate Do Not Consider

    As lucrative as real estate investment can be, there are a multitude of costs that new real estate investors must consider.
  9. Investing

    Real Estate Vs. Stocks: Which One's Right For You?

    There are ups and downs for both real estate and stock investments, so before diving in, know the differences between the two.
RELATED FAQS
  1. What is the difference between real estate and real property?

    Understand how real estate is legally different from real property and the implications of that difference for each property ... Read Answer >>
Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin account. In the context of the NYSE and FINRA, after an ...
  3. Salvage Value

    The estimated value that an asset will realize upon its sale at the end of its useful life. The value is used in accounting ...
  4. Cryptocurrency

    A digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of ...
  5. Promissory Note

    A financial instrument that contains a written promise by one party to pay another party a definite sum of money either on ...
  6. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
Trading Center