Real property

The word "real" derives from Latin res ("thing"), which was used in Middle English to mean "relating to things, especially real property".[1]

In common law, real property was property that could be protected by some form of real action,[2] in contrast to personal property, where a plaintiff would have to resort to another form of action. As a result of this formalist approach, some things the common law deems to be land would not be classified as such by most modern legal systems: for example, an advowson (the right to nominate a priest) was real property. By contrast the rights of a leaseholder originate in personal actions and so the common law originally treated a leasehold as part of personal property.[3]

The law now broadly distinguishes between real property (land and anything affixed to it) and personal property (everything else, e.g., clothing, furniture, money). The conceptual difference was between immovable property, which would transfer title along with the land, and movable property, which a person would retain title to.

In modern legal systems derived from English common law, classification of property as real or personal may vary somewhat according to jurisdiction or, even within jurisdictions, according to purpose, as in defining whether and how the property may be taxed.

Bethell (1998) contains much information on the historical evolution of real property and property rights.

To be of any value, a claim to any property must be accompanied by a verifiable and legal property description. Such a description usually makes use of natural or man-made boundaries such as seacoasts, rivers, streams, the crests of ridges, lakeshores, highways, roads, and railroad tracks or purpose-built markers such as cairns, surveyor's posts, iron pins or pipes, concrete monuments, fences, official government surveying marks (such as ones affixed by the National Geodetic Survey), and so forth. In many cases, a description refers to one or more lots on a plat, a map of property boundaries kept in public records.

These legal descriptions are usually described in two different ways – metes & bounds, and lot & block. A third way is the Public Land Survey System,[4] as used in the United States.

• Metes. The term "metes" refers to a boundary defined by the measurement of each straight run, specified by a distance between the terminal points, and an orientation or direction. A direction may be a simple compass bearing (magnetic), or a more precise orientation determined by accurate survey methods.
• Bounds. The term "bounds" refers to a more general boundary description, the abuttals and boundaries, such as along a certain watercourse, a stone wall, an adjoining public roadway, an adjoining property owner, or an existing building. The system is often used to define larger pieces of property (e.g. farms), and political subdivisions (e.g. town boundaries) where precise definition is not required or would be far too expensive, or previously designated boundaries can be incorporated into the description.
• The Lot & Block system is perhaps the simplest of the three main survey systems to understand. For a legal description in the Lot and Block system a description must identify:
  • the individual lot,
  • the block in which the lot is located, if applicable,
  • a reference to a platted subdivision or a phase thereof,
  • a reference to find the cited plat map (i.e., a page and/or volume number), and
  • a description of the map's place of official recording (e.g., recorded in the files of the County Engineer).
• 

  Principal meridians and Baselines governing the United States Public Land Survey System.
  The Public Land Survey System (PLSS) is the surveying method developed and used in the United States to divide real property for sale and settling. The PLSS used nominally rectangular shapes to divide. The basic unit in the PLSS is the Section of land, typically 1 mile square. A 6 x 6 mile grid of sections of land form what is referred to as a Township. Townships are laid out east and west of a Principal Meridian, and north and south of a Baseline.

The law recognizes different sorts of interests called estates, in real property. The type of estate is generally determined by the language of the deed, lease, bill of sale, will, land grant, etc., through which the estate was acquired. Estates are distinguished by the varying property rights that vest in each, and that determine the duration and transferability of the various estates. A party enjoying an estate is called a "tenant".

Some important types of estates in land include:

• Fee simple: An estate of indefinite duration, that can be freely transferred. The most common and perhaps most absolute type of estate, under which the tenant enjoys the greatest discretion over the disposal of the property.
• Fee simple conditional: An estate lasting forever as long as one or more conditions stipulated by the deed's grantor does not occur. If such a condition does occur, the property reverts to the grantor, or a remainder interest is passed on to a third party.
• Fee tail: An estate which, upon the death of the tenant, is transferred to his or her heirs.
• Life estate: An estate lasting for the natural life of the grantee, called a "life tenant". If a life estate can be sold, a sale does not change its duration, which is limited by the natural life of the original grantee.
• A life estate pur autre vie is held by one person for the natural life of another person. Such an estate may arise if the original life tenant sells her life estate to another, or if the life estate is originally granted pur autre vie.
• Leasehold: An estate of limited term, as set out in a contract, called a lease, between the party granted the leasehold, called the lessee, and another party, called the lessor, having a longer estate in the property. For example, an apartment-dweller with a one-year lease has a leasehold estate in her apartment. Lessees typically agree to pay a stated rent to the lessor. Though a leasehold relates to real property, the leasehold interest is historically classified as personal property.

A tenant enjoying an undivided estate in some property after the termination of some estate of limited term, is said to have a "future interest". Two important types of future interests are:

• Reversion: A reversion arises when a tenant grants an estate of lesser maximum term than his own. Ownership of the land returns to the original tenant when the grantee's estate expires. The original tenant's future interest is a reversion.
• Remainder: A remainder arises when a tenant with a fee simple grants someone a life estate or conditional fee simple, and specifies a third party to whom the land goes when the life estate ends or the condition occurs. The third party is said to have a remainder. The third party may have a legal right to limit the life tenant's use of the land.

Estates may be held jointly as joint tenants with rights of survivorship or as tenants in common. The difference in these two types of joint ownership of an estate in land is basically the inheritability of the estate and the shares of interest that each tenant owns.

In a joint tenancy with rights of survivorship deed, or JTWROS, the death of one tenant means that the surviving tenants become the sole owners of the estate. Nothing passes to the heirs of the deceased tenant. In some jurisdictions, the specific words "with right of survivorship" must be used, or the tenancy will assumed to be tenants in common without rights of survivorship. The co-owners always take a JTWROS deed in equal shares, so each tenant must own an equal share of the property regardless of any contribution to purchase price. If the property is someday sold or subdivided, the proceeds must be distributed equally with no credits given for any excess than any one co-owner may have contributed to purchase the property.

The death of a co-owner of a tenants in common (TIC) deed will have a heritable portion of the estate in proportion to his ownership interest which is presumed to be equal among all tenants unless otherwise stated in the transfer deed. However, if TIC property is sold or subdivided, in some States, Provinces, etc., a credit can be automatically made for unequal contributions to the purchase price (unlike a partition of a JTWROS deed).

Real property may be owned jointly with several tenants, through devices such as the condominium, housing cooperative, and building cooperative.

In the law of almost every country, the state is the ultimate owner of all land under its jurisdiction, because it is the sovereign, or supreme lawmaking authority. Physical and corporate persons do not have allodial title; they do not own land but only enjoy estates in the land, also known as "equitable interests".

Land use, land valuation, and the determination of the incomes of landowners, are among the oldest questions in economic theory. Land is an essential input (factor of production) for agriculture, and agriculture is by far the most important economic activity in pre-industrial societies. With the advent of industrialization, important new uses for land emerge, as sites for factories, warehouses, offices, and urban agglomerations. Also, the value of real property taking the form of man-made structures and machinery increases relative to the value of land alone. The concept of real property eventually comes to encompass effectively all forms of tangible fixed capital. with the rise of extractive industries, real property comes to encompass natural capital. With the rise of tourism and leisure, real property comes to include scenic and other amenity values.

Starting in the 1960s, as part of the emerging field of law and economics, economists and legal scholars began to study the property rights enjoyed by tenants under the various estates, and the economic benefits and costs of the various estates. This resulted in a much improved understanding of the:

• Property rights enjoyed by tenants under the various estates. These include the right to:
  • Decide how a piece of real property is used;
  • Exclude others from enjoying the property;
  • Transfer (alienate) some or all of these rights to others on mutually agreeable terms;
• Nature and consequences of transaction costs when changing and transferring estates.

For an introduction to the economic analysis of property law, see Shavell (2004), and Cooter and Ulen (2003). For a collection of related scholarly articles, see Epstein (2007). Ellickson (1993) broadens the economic analysis of real property with a variety of facts drawn from history and ethnography.

• Benefice
• Fiefdom
• Land ownership in Canada
• Land tenure
• Landlord
• Mesne assignment
• Mineral rights
• Real estate
• The Land Report