What is Real Property?
Real property encompasses land and structures that are permanently attached to it. As an owner, you possess all associated rights, including the ability to own, sell, lease, and enjoy the property.
Classifications of Real Property
Real property can be categorized based on its general use, such as:
- Residential
- Commercial
- Agricultural
- Industrial
- Special Purpose
Understanding your rights in connection with your property is crucial if you intend to sell or lease it.
Key Takeaways
- Real Estate Covered: Land at, above, and below the Earth’s surface, including all permanently attached structures.
- Real Estate vs. Real Property: Essentially, they are synonymous, but real property includes the ownership rights.
- Personal Property: Movables like clothes, cars, and furniture that do not qualify as real property.
Defining Real Property
To grasp what constitutes real property, let’s first discuss land and real estate.
Land
Land extends from the Earth’s surface downward to its center and upward to infinity, including everything permanently attached by nature, such as trees and water bodies.
Real Estate
Real Estate comprises land at, above, and below the surface, along with all permanent artificial additions like streets, utilities, and buildings.
Real Property
Real Property broadens the concept of real estate to include the interests, benefits, and inherent rights of ownership. It covers the physical land, all permanent attachments, and ownership rights such as possessing, selling, leasing, and using the land.
Legal Nuances
State-specific laws govern what constitutes real property and its sale. Real estate generally does not cross state borders, making it mostly exempt from federal regulations.
Estates in Real Property
Freehold Estates
Ownership-based estates that have indefinite durations:
- Fee Simple: Highest form of ownership with unlimited duration, transferred to heirs upon the owner’s death.
- Life Estate: Lasts for the lifetime of the owner or designated person(s). Unlike fee simple, it isn’t inheritable.
Non-Freehold Estates
Lease-based estates that cannot be bequeathed and exist without ownership:
- Tenancy for Years: Defined beginning and end dates. Lease ends automatically.
- Tenancy from Period to Period: Automatically renews unless terminated by owner or tenant.
- Tenancy at Will: Either party can terminate at any time.
- Tenancy at Sufferance: Occurs when a tenant stays beyond the terms of the lease without legal right, bordering on trespassing.
Distinction Between Real and Personal Property
Real Property
Immovable entities such as the land, attached structures, and the rights associated with them.
Personal Property
Movable items like clothing, furniture, and cars.
Real Estate vs. Real Property
Both cover land and attached structures, but real property also includes ownership rights — possession, selling, leasing, and using the land.
Examples of Real Property
Structures like houses and garages, and innate natural features such as hills or ponds fall under real property. Ownership enables you to manage, use, or dispose of both the land and the structures on it, subject to local laws.
Is a Car Real Property?
No, a car is considered tangible personal property because it is movable. Like most tangible personal property, a car can also secure a loan, akin to how a mortgage secures a house.
The Bottom Line
Real property covers land and all permanent attachments, plus ownership rights. Different types of estates exist within real property. While ‘real estate’ and ‘real property’ are nearly identical terms, personal property includes items like clothing and vehicles.
Related Terms: Real Estate, Personal Property, Freehold Estates, Non-Freehold Estates.
References
- New York Bar Association. “Definition of Real Property”.
- Rocket Mortgage. “Freehold Estate: A Guide On Freehold Estates: Different Types And How They Work”.
- Law Library-American Law and Legal Information. “Estate-Nonfreehold Estates”.
- Clear Tax. “Real Property”.
