Second Post

Real Estate versus Real Property

Most people do not truly understand the difference between real estate and real property. First let's take a look at some definitions:

• Real Estate is the combination of land and its man made improvements
• Real Property is the combination of real estate and the "Bundle of Rights."

So what is this bundle of rights that makes real property different?
The bundle of rights includes the rights to possess, control, enjoy, exclude, and lastly dispose.
Basically, real property includes intangibles which are not defined when valuing real estate.

A Real Life Property Dispute

Kenneth Robinson from Flower Mound, Texas was able to claim property that did not originally belong to him. The owner who had originally abandoned his property for over ten years was notified of this predicament, and via "adverse possession" lost the dispute and the property. This process can be an eye opener for Texas residents.

Private Restrictions

Private restrictions on real estate are not created by government agencies, but rather by land developers. These restrictions can be viewed as beneficial and a hindrance at the same time. These restrictions are divided into subgroups called conditions and covenants. Conditions are promises to NOT DO something, whereas covenants are promises TO DO something. The difference has to do with who enforces the restriction in the case of a breach. 

So why are they viewed as beneficial and hindrances? Well, one signs into the deal for a reason. For instance, someone may want to live in a neighborhood with many trees. The hindrance would be the inability to cut down a certain number of trees on one's own property, however the benefit would be the lovely view that is only possible when everyone in the vicinity abides by the restriction.

Other examples of private restrictions which I did not dive into are as follows:

• Liens
• Easements
• Profit a prendre
• Encroachments

A Real Life Private Restriction

Most people are familiar with the famous case in which an army veteran could not post an American flag outside of his house. This man must not have scrutinized the private restrictions he signed into when he bought the house. While most people dislike the anti-patriotism blatant in this example, a contract is a contract until a judge intervenes. The benefits may be hard to see in this example, but the idea could have been that it is not necessary for individuals to put flag poles around their homes because it would clutter the view of the neighborhood. Instead, the neighborhood could post their own grandiose flagpole at an entrance for example. This may or not have been the case in this example, as the media more or less exploded on this instance making it difficult to discern right from wrong. 

Public encumbrances

A public encumbrance differs from a private encumbrance in the fact that it is enforced by a public domain. This includes actions such as:

• Eminent domain
• Zoning
• Taxing
• Escheat

Eminent domain is the most controversial of all public encumbrances. Most people understand it to be extremely negative, but for some it can be the exact opposite. Eminent domain is when a government entity takes one's land under the preface that the government technically owns everyone's land in the country. In a time of need, the government may take this land under eminent domain.

Real Life Example

Most people are familiar with Minute Maid Park in Houston, Texas. This stadium brings in millions of dollars for the communities and has boosted the economy in the region. The region in which it was built was rejuvenated because of this government act. Some people lost their homes, but they were repaid and this economy booster has inevitably caused many others to NOT lose their homes in the long-run.