© 2010 by cengage learning chapter 3 ________________ rights and interests in land

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Chapter 3

________________ Rights and Interests in Land

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Exclusive Right to Use of LandFeudal SystemAllodial System

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The Fee Simple Bundle of Rights

Real estate ownership is, in actuality, the ownership of rights to land. The largest bundle available for private ownership is called “fee simple.”

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Real Estate as a Bundle of Property Rights• Property rights are what gives value to the real

estate.• Private property rights are subject to

limitations imposed by government. Thus, this can limit the value of the investment.

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Government Limitations

• The right of government to regulate private property for the protection of the general public’s health, morals, and welfare.

Police Power

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Government Limitations

Eminent Domain

• The right of government to take private property for public use upon payment of just compensation.

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Government Limitations

Taxation• The right of government to tax private property• Further discussion in Chapter 15.

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Government Limitations

Escheat• Ownership of property passes to the

government if there is no will or no heirs.

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Removing Sticks from the Fee Simple Bundle

Note that the fee simple bundle shrinks as an owner voluntarily removes rights from it.

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Control MortgageLeaseImpose covenants or conditionsGrant easementGrant licenseBuild or remove structures

Use & Enjoy Occupy as residenceUse as place of businessFarmMine/drill for oil, etc.Place of recreation

Exclusion Maintain privacyNon-trespass

Disposition Sell or refuse to sellGiveWillAbandon

Right or Benefit Stick in Bundle

Real Estate as a Bundle of Property Rights

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Commonly Found Easements

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Commonly Found Encroachments

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Other EstatesQualified Fee EstatesLife EstatesStatutory EstatesFreehold EstatesLeasehold Estates

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Rights and Interests in Land

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Cross Section of Estates and Rights in Land

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Cross Section of Estates and Rights in Land (continued)

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Checkpoint

In the absence of any other factors, which bundle of rights has a higher value?

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Key Terms Chattel Easement Eminent domain Encroachment

Encumbrance Estate Fee simple Lien Title