Links / October 23rd, 2014
to RealEstatePedia-- The Real Estate Encyclopedia.
Real estate is a legal term (in some jurisdictions, such as the USA, United Kingdom, Canada, Australia and The Bahamas) that encompasses land along with improvements to the land, such as buildings,fences, wells and other site improvements that are fixed in location -- immovable. Real estate law is the body of regulations and legal codes which pertain to such matters under a particular jurisdiction and include things such as commercial and residential real property transactions. Real estate is often considered synonymous with real property (sometimes called realty), in contrast with personal property (sometimes called chattel or personalty under chattel law or personal property law).
However, in some situations the term "real estate" refers to the land and fixtures together, as distinguished from "real property," referring to ownership of land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof. Real property is typically considered to be Immovable property The terms real estate and real property are used primarily in common law, while civil law jurisdictions refer instead to immovable property.
In law, the word real means relating to a thing as distinguished from a person. Thus the law 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. The oldest use of the term "Real Estate" that has been preserved in historical records was in 1666. This use of "real" also reflects the ancient and feudal preference for land, and the ownership (and owners) thereof.
Some have claimed that the word real in this sense is descended (like French royal and Spanish real) from the Latin word for 'king'. In the feudal system (which has left many traces in the common law) the king was the owner of all land, and everyone who occupied land paid him rent directly or indirectly (through lords who in turn paid the king), in cash, goods or services (including military service). Property tax, paid to the state, can be seen as a relic of that system, as is the term fee simple. However, this derivation of real is a misconception.
Residential Real Estate:
The legal arrangement for the right to occupy a dwelling is known as the housing tenure. Types of housing tenure include owner occupancy, Tenancy, housing cooperative, condominiums (individually parceled properties in a single building), public housing, squatting, and cohousing.
When one or more tenants live together, they may choose to split the cost of residency through a net lease. To save money having a residence, tenants may have the option to have a net lease. The only cost of this would be having to share the residence with another tenant. Net leases come in many different forms including: single, double, and triple net leases; depending on how many tenants are sharing the net lease.
Residences can be classified by, if, and how they are connected to neighboring residences and land. Different types of housing tenure can be used for the same physical type. For example, connected residents might be owned by a single entity and leased out, or owned separately with an agreement covering the relationship between units and common areas and concerns.
Mortgages in Real Estate:
In recent years, many economists have recognized that the lack of effective real estate laws can be a significant barrier to investment in many developing countries. In most societies, rich and poor, a significant fraction of the total wealth is in the form of land and buildings.
In most advanced economies, the main source of capital used by individuals and small companies to purchase and improve land and buildings is mortgage loans (or other instruments). These are loans for which the real property itself constitutes collateral. Banks are willing to make such loans at favorable rates in large part because, if the borrower does not make payments, the lender can foreclose by filing a court action which allows them to take back the property and sell it to get their money back. For investors, profitability can be enhanced by using an off plan or pre-construction strategy to purchase at a lower price which is often the case in the pre-construction phase of development.
But in many developing countries there is no effective means by which a lender could foreclose, so the mortgage loan industry, as such, either does not exist at all or is only available to members of privileged social classes.