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Introduction to Property Law
This chapter explores the legal concept of property, property interests, and ownership. It explains the role of government in the recognition of property rights and the justification for doing so. It introduces several types or classifications of property and rights of possession. It explains the legal system for recording ownership interests in real and personal property. It also explains the relationship between individuals holding or claiming an interest in property. Lastly, it identifies the government’s authority to affect an individual’s property rights. For further written and video explanation, discussion and practice questions, see Property Law (Intro)
Tangible and Intangible Property
Tangible and Intangible Property - Tangible refers to physical property. That is, tangible property is anything that can be physically touched. Intangible property refers to non-physical property. That is, intangible property is any property that cannot be physically touched. For further written and video explanation, discussion and practice questions, see Tangible and Intangible property?
Real and Personal Property
Real and Personal Property - Property is further broken down into personal property and real property. Real property is land and anything permanently attached to it. Personal property is anything other than real property. For further written and video explanation, discussion and practice questions, see Real and Personal Property?
What are “Fixtures”?
A fixture is personal property that is converted into real property by physical annexation to (attachment to or close association with) the land or its buildings. For further written and video explanation, discussion and practice questions, see Fixtures?
What is “Ownership”?
Ownership of property refers to the legal right to exclude others from the specific thing owned. So property is a bundle of rights associated with all physical and non-physical things. Aside from the right to exclude others from using property, ownership rights often include the right to possess, to use, to transfer, and to commercialize the property. Any of these rights, however, are subject to modification by the owner of the property. For further written and video explanation, discussion and practice questions, see What is "ownership"?
Role of Government in Property Law
The government establishes laws concerning property. More specifically, ownership of property depends upon legal recognition of ownership rights. The government establishes and enforces property ownership rights through a formalized system for recording and disclosure that puts others on notice of those rights. Without government recognition and enforcement of property rights, ownership rights would be synonymous with possession or control of the property. Those capable of obtaining and maintaining possession or control through any means (such as force or coercion) would own all available property. For further written and video explanation, discussion and practice questions, see Role of Government in ownership of property?
Property as Economic Incentive
Property as Incentive - The ability to possess property for one’s benefit and to exclude others is understood as a desire or want of many individuals. Research has shown that individuals will expend effort to acquire resources that meet a need or want. Providing a system whereby individuals may acquire property incentivizes those individuals to work toward that end. That is, people will expend effort to acquire property if they have the knowledge that they will be able to retain the property for their personal use and without the threat of forfeiting the property to others. They will undertake work that they were not otherwise willing to undertake in the absence of acquiring new property. Some individuals are willing to work longer and harder incentivized by the amount of property they are able to acquire as a result of their efforts. This tendency often results in greater efficiency in effort and overall economic productivity. Increased productivity of individuals is linked to increases in total economic output in an economy. Capital Formation - Property ownership rights allow individuals to possess and demonstrate the results of their own efforts. Individuals are then able to employ that property toward creating additional property. That is, individuals can use their acquired property (or provide it to others) with the intention of generating or acquiring ownership rights in more property. In furtherance of capital formation, the nature of property allows ownership rights in any resource to be divided among individuals. As such, individuals can employ their resources collectively in the creation or acquisition of new property. For further written and video explanation, discussion and practice questions, see Role of property rights in economic activity?
What is “Accession”?
Accession refers to additions to existing property to modify it in a way that results in new property. Accession is very similar to creation of something new. That is, if you add something to raw materials, you own the product that you make from the raw material. For further written and video explanation, discussion and practice questions, see Accession?
What is “Rule of First Possession?”
The first person to reduce previously un-owned things to her possession becomes its owner. In reality, there are few things that have never been previously possessed or owned. For further written and video explanation, discussion and practice questions, see Rule of First Possession?
What is a “Lost or Mislaid” item?
These include situations in which an individual loses ownership rights to another person: Lost Items, Mislaid Items, Abandonment. For further written and video explanation, discussion and practice questions, see Lost or Mislaid Items?
What is “Adverse Possession”?
Adverse Possession is a situation where someone legally gains ownership or title to someone else’s property by wrongfully claiming rights of use or possession of that person’s land. There are several elements that must be present to claim an ownership interest in property through adverse possession: Continuous, Hostile, Open, Actual, Notorious, Exclusive, and Statutory Period. The recognition of ownership through adverse possession seeks to promote beneficial use and ownership of property. If property lays dormant for a period that is sufficient to allow for adverse possession, it is not being beneficially used. This harms economic productivity and is contrary to the public good. For further written and video explanation, discussion and practice questions, see Adverse Possession?
Ownership by “Contract”
Contract law provides rules under which people agree to exchange value. Contracts, express and implied, are the dominant manner by which individuals exchange real and personal property. Contract law is a staple of a developed rule of law system. Enforceable contract rights provide confidence in undertaking economic activity with others. Increased confidence drives economic productivity. For further written and video explanation, discussion and practice questions, see Contracts?
Ownership by “Gift”
A gift is a transfer of ownership from one party to another without the consideration (mutual exchange of value) necessary to establish an enforceable contract. A gift may, however, transfer ownership of property. A gift normally transfers ownership at the time that the owner expresses intent to transfer the property and physically surrenders the property to someone else who accepts it. The individual receiving the gift must act to accept the gift to make the transfer final. For further written and video explanation, discussion and practice questions, see Gift?
Ownership through “Confusion”
In some cases, individuals will combine their property in ways that makes it indistinguishable. In this situation, there is an amalgam of property to which the contributors have a claim. If a contributor seeks to withdraw her property, she will not receive the exact same property contributed. For further written and video explanation, discussion and practice questions, see Confusion?
Transferring Real Property
Interests in real property are subject to an instrument of title. A deed is the primary manner of establishing ownership and transferring an interest in land. The deed contains a precise legal description of the land and specifies the exact location and boundaries according to a mapping or surveying system. Some types of property interest, such as an easement, can be created through a legal document other than a deed; however, a deed is still required to subsequently transfer an established ownership interest in the property. There are several types of property deeds: Warranty Deed (General and Specialty); Grant Deed; Quitclaim Deed. For further written and video explanation, discussion and practice questions, see Establishing and transferring ownership in real property?
What is “Fee Simple?”
Fee simple is the term used to represent the maximum ownership interest in real property that is allowed under law. It can be referred to as complete ownership. A fee simple owner has full legal rights and powers to possess, use, and transfer the land. There are, however, certain limitations that can be placed on fee simple ownership, including: Fee Simple Absolute and Fee Simple Defeasible. These characteristics of a fee simple interest are important tools for individuals when determining the extent of property interest to transfer. For further written and video explanation, discussion and practice questions, see What is a "fee simple" interest in real property?
What is a “Life Estate in Real Property?
A life estate is a temporary transfer of an ownership interest in real property. The transfer is good for the life of the transferee or some other third-party identified in the deed of transfer. Reversion – At the end of the life estate, the land reverts back to the original owner who has a reversion interest. Remainder – At the end of the life estate, the person to whom the property returns has a remainder interest. The holder of a life estate has the ability to fully use and enjoy the property. The holder cannot, however, cause extraordinary changes to the property or knowingly deplete the property of non-renewable resources (such as digging up minerals). The holder may, however, build new structures or cut timber from the land. Any improvements to the land revert or transfer along with the property at the end of the life estate. For further written and video explanation, discussion and practice questions, see What is a "life estate" in real property?
What is a Leasehold Estate in Real Property?
A leasehold estate, commonly called a lease, is the property right granted to a tenant by a landlord. The lessor has limited rights similar to that of an owner, but for a limited term. The renter cannot materially change the property without the landlord’s consent. Any material changes to the property (such as installation of fixtures) become the property of the landlord upon termination of the lease. For further written and video explanation, discussion and practice questions, see What is a "leasehold estate" in real property?
Types of Co-Ownership of Real Property
It is very common for individuals (particularly family members) and businesses to own property collectively. The most common forms of co-ownership of property are as follows: Joint Tenancy; Tenancy in Common; Tenants by the Entirety. For further written and video explanation, discussion and practice questions, see What are common types of co-ownership relationships in real property?
”Community Property” and “Separate Marital Property”
This property designation further concerns the ownership of real property by legally married couples. It applies to real and personal property. As explained above, ownership of property as tenants by the entirety would control with regard to real property. Generally, property held by a married couple is either classified as “marital property” or “separate property”. Marital Property - Is owned equally by both spouses and each spouse’s consent must be present to legally sell the property. Separate Property - Belongs to one spouse or the other. It does not require the consent of both spouses to sell or transfer. There are two systems in the United States for determining whether property is marital or separate. One system follows the “common law” rule and the other follows the “community property” rule. Common Law Rules - Common law states that marital or separate property is determined by whose name is on the title, who purchases the property, or who receives it as a gift. Community Property Rules - In states observing community property rules, all property acquired during the marriage is considered marital property, with the exception of property acquired before marriage, property inherited, or received as a gift. This rule is analogous to the concept of property owned as tenants by the entirety. This rule becomes important in the event of divorce between the parties. The court will be forced to determine who owns property. For further written and video explanation, discussion and practice questions, see Community Property and Separate Marital Property?
What is a “Easement”?
An easement is a limited interest in real property. It involves a particular right to use the subject property in a particular manner, but does not necessarily create a right to possess the property. Generally, the easement rights exist at the same time as the rights of other property interest holders. An easement may arise with a number of characteristics, as follows: Express Easement, Affirmative & Negative Easements, Appurtenant and In-Gross Easements, Natural Easement (Easement by Necessity), Easement by Prescription (Adverse Possession). For further written and video explanation, discussion and practice questions, see What is an "easement" interest in real property?
License of Property
A license is a grant of the right to use real or personal property. It is not a true property interest. A license of real property will be limited to a particular holder and it will have a definite (limited) term. Because it allows for use (without possession) of the real property, it is similar to an easement in gross. An easement, however, must be in writing. An oral grant of permission to use real of personal property would be considered a license. For further written and video explanation, discussion and practice questions, see What is a license of real or personal property?
What is a “Bailment”?
A bailment is a situation where the owner of personal property gives the property to another person to hold or to use in a specific manner. The owner of the property is called the “bailor” and the person receiving the property is called the “bailee”. A bailment can be express (pursuant to agreement by the bailor and bailee) or implied (simply a result of the parties’ conduct). For further written and video explanation, discussion and practice questions, see What is a "bailment"?
Unilateral vs Mutual Benefit Bailments
A bailment can be made to benefit either party or both parties. Unilateral Benefit Bailment - A unilateral benefit bailment is a situation where either the bailor or the bailee receives a benefit from the bailment, while the other party does not. This situation may arise as a gift or favor by one party to the other. Mutual Benefit Bailment - A mutual-benefit bailment provides a benefit to the bailor and bailee. Generally, a mutual benefit bailment is pursuant to an enforceable contract, as there is an exchange of value that is the impetus of the relationship. Rights - The bailor and bailee have specific rights in the bailment relationship. Duties - The bailor and bailee owe specific duties to each other in the bailment relationship. Standard of Care in Duties - The bailor and bailee owe duties of care to each other in the bailment relationship. Numerous special bailment relationships exist that may entail higher levels of care for the bailee. For further written and video explanation, discussion and practice questions, see What are the rights and duties in "unilateral-benefit" and "mutual benefit" bailments?
Limits on Property Rights
The US Constitution protects individual ownership rights in property. The concept of property allows the owner to exclude others from possessing or using that property. Nonetheless, laws may limit property by regulating when and how a person can use her property. In general, owners are prohibited from using their resources in ways that harm or injure others. The Federal Government limits the use of property through its power to regulate interstate commerce. State and local governments regulate the use of property pursuant to their police power to protect the health, safety, morals, and general welfare of its citizens. For further written and video explanation, discussion and practice questions, see What are the limitations on property ownership rights?
What is “Nuisance”?
Nuisance is the use of one’s property in a manner that creates a substantial, unreasonable interference with the use or enjoyment of another person’s property. Public Nuisance - Public nuisance arises from use of land that causes a substantial interference with the use and enjoyment of the property by the public at large. Private Nuisance - Private nuisance arises when a person uses her property to substantially interfere with the use and enjoyment of another person’s property. For further written and video explanation, discussion and practice questions, see What is nuisance?
What is “Zoning”?
Zoning refers to local (city or county) ordinances controlling how property within specific areas can be used. Zoning ordinances generally divide areas of counties or municipalities into districts designated for residential, commercial, or industrial use. The local government will charge anyone using her property in violation of the ordinance with an infraction. For further written and video explanation, discussion and practice questions, see What is Zoning?
What is “Eminent Domain”?
Eminent domain is the power granted local, state, and federal governments under the Takings Clause of the 5th Amendment. This clause allows the various levels of government to take away property from private owners under certain conditions. Generally, the taking must be for a “public purpose” and the government must provide “just compensation” to the landowner for the taking. A taking refers to a physical seizure of the land as well as unduly burdening an individual’s use and enjoyment of her property. For further written and video explanation, discussion and practice questions, see What is Eminent Domain?
What is “Property Taxation”?
Property taxes are a form of direct tax on the real and personal property owned by individuals or businesses. Property taxes (primarily on real estate) often fund local schools, police, and county administration. A common tax on personal property is a tax on the value of one’s personal vehicle, commonly known as “ad valorem” taxes or business equipment and inventory. For further written and video explanation, discussion and practice questions, see What is Property Taxation?
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