What is Real Property
Real property is land and any property attached directly to it. It is any subset of land that has been improved through legal human actions. 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 properties can include buildings, ponds, canals, roads and machinery, among other things.
BREAKING DOWN 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.
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.
Types of Estates Associated With Real Property
- 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.
- Lien holder: Lien holders are holders of a mortgage, judgment lien, deed of trust and/or mechanic’s lien on real estate. Lien holders have an ownership interest in the involved real properties.