The Bundle of Legal Rights

When real property is purchased, actually a bundle of legal rights is passed from the seller to the buyer. They include the following:

• The right of possession.
• The right to control the property within the law.
• The right of enjoyment, to use the property in any legal manner.
• The right to exclude others, within the law.
• The right of disposition, to sell, lease, give, will.

When a buyer receives this bundle of rights, it is subject to any rights the seller retains and also to any other rights that other persons have or acquire. Rights are restricted by certain powers of the government.

Land, Real Estate, Real Property

Although these terms are often used interchangeably, there are differences:

Land

Not only the surface of the earth, but the soil, minerals, substances below the surface, together with things naturally attached to the land and the airspace above.

Real Estate

More inclusive than land, including not only the space above and below the ground found below the surface, but all permanent improvements on and to the land. Improvements include things like buildings, streets, curbs, gutters, utilities, buildings, fences, landscaping, etc.

Real Property

Real estate plus the bundle of legal rights. Ownership of real property usually includes subsurface rights (rights to the ground below the surface) and air rights (rights to the space above the earth). Rights to either or both could be retained by the seller, or sold or leased separately.

Personal Property

Personal property, or chattel, is all property that does not fit the definition of real property and is moveable. It is not always easy to differentiate between real property and personal property.

Fructus Naturales

Fruits of Nature. Trees, perennial flowers & shrubs, and grasses are considered real property.

Fructus Industriales

Fruits of Labor. Annual flowers, crops, fruit, etc., are personal property and known as emblements. If the annual crop is still in the ground, and the purchase contract does not address it, it usually remains with the personal property.

Fixtures

A fixture is an item of property, which under some circumstances, may be treated legally as personal property, but which has become so attached to the land or buildings or is used in such close association with the land or buildings, that the item is regarded as part of the land and therefore is treated as real property.

Tests of a Fixture

Four legal tests are applied to determine whether an item is a fixture, and part of the real property, or is personal property:

• Is the article physically attached to the premises? How permanently is it attached? Can it be removed without causing damage?
• Is there any special adaptation between the article and the premises? Is the item being used as real property or personal property?
• What is the intention of the annexor? Did the person who installed it intend it to remain permanently or to be removable?
• Is there an agreement? Did the parties agree as to whether the item was real property or personal property? How does the community view the item.

Trade Fixtures

Trade fixtures refer to commercial or agricultural properties. When a tenant attaches private property to a rented space or building for use in conducting a business, that item becomes a trade fixture. Trade fixtures differ from fixtures.

• Fixtures are personal property installed and owned by the owner of the property. Fixtures are considered part of the real property.
• Trade fixtures are personal property installed and owned by the tenant for use in running a business. Tenants must remove trade fixtures before the end of the lease term, and must restore the premises to approximately its original condition.
• Because fixtures are considered to be part of the real property, they are included in the sale or mortgage of the real property. However, trade fixtures are not included, except by special agreement.

Changing Status

Property may be changed from personal to real property, or from real property to personal property. Accession can occur in a residential lease when the tenant attaches an item of personal property so that the property cannot be restored to its original condition without damage. The terms attachment and annexation are also used. Severance can occur when an item of real property is removed from the land or building, and converts it to personal property.