MGT 374Real Estate Analysis
College of BusinessAlfaisal
UNIVERSITY
Povertyis a lack of
Rights
What is Real Estate?physical, bundle, industry
Three marketsuser, capital, property
Review
IRVIncome, Rate, Value
Differentheterogeneous (age, building,
design), immobile,illiquid, localized, segmented,private complex negotiations
Chapter 2
Legal Foundations to Value
Chapter 2
Legal Foundations to Value
Value is a function of rights
no rights = no value
Rightsgovernment protected claim
non-revocableenduring
Rights
claims the government
enforces
Rights
non-revocable
Two kinds of Rights
PersonalProperty
Personal or Civillife
expression assemblyothers
Property
Exclusive PossessionEnjoy UseDispose
Two kinds of property Rights
PersonalReal
Realrights in land and permanent
structures
Personaleverything else
Surface
Buildable Air Space
Subsurface
Air Traffic Space
oil, gas, mines,water
MetLife BuildingNew York City
Build above the railroad right-
of-way entering Grand Central
Station
Subsurface rights can be extremely valuable
Fixtures
personal property that has become
real property
Four Fixture Rulesattachmentadaptationintentionrelation
Sale Contracts
must be clear what are personal
fixtures
Bundle of Rights
Interests
Can separate interests
different people can hold
Possessory InterestsEstates
fee simple absolutetenancy at sufferance
Fee Simple Absolutecompletelimited by
government and prior owners
Fee Simple Conditional
fee simple as long as …
Life Estatefee simple
until someone dies
Remainder Estate
Legal Life Estate
special rules for couples with children
Leaseholdslimited in timeno disposition
no titletemporary right
Estatesowner
freeholdrenter
leasehold
Ownership Estates
with inheritance without inheritance
Ownership with inheritance
fee simple absolute
conditional with reverter interest
Ownership without inheritance
life estate
legal with remainder interest
Leasehold Estatestenancy for yearsperiodic tenancytenancy at will:
tenancy at sufferance
Tenant at Sufferance
a former tenant does not leave
Leasing Lawsrepair
right of entrydeposits
notifications
Non-possessoryInterests
rights that do not include possession
Non-possessoryInterests
easementsrestrictive covenants
liens
Easementright to use land for a specific and limited
purpose
EasementRight
LicensePermit
Easement Appurtenant
dominant - servientruns with the land
DrivewayEasement
DominantParcel
ServientParcel
Easement
Easement Appurtenant
drivewayswater, sewer, power,
phone parking
Restrictive Covenants
clause in the deedlimit uses
Lien
security for an obligation
Would you build if you didn’t own the land?
Would you loan someone the money to build if you could not get the property if they
failed to repay?
property rights
provide incentives to create wealth
Lientaxes
mortgagemechanic’s
courtorder
Co-Ownership
business entitytenancy in common
joint tenancy
Condominium
fee simple to areacommon to elements
can mortgage
Condominium
create a little government for your
building