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

Rights

enduring

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