2011 Cengage Learning

California Real Estate

Principles

Chapter 1
Introduction to Real Estate
2011 Cengage Learning

Chapter 1
Trace the history of real property

ownership in California
List the 4 parts for the definition of
real property & distinguish
between Real & Personal
Property
Explain the bundle of rights
List the 5 legal tests for a fixture
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California History
1. Native Americans
2. Explorer Balboa (1513)
3. SPANISH rule (1542-1822)
San Diego: lst settlement, by Cabrillo

4. Spanish developments (1769)

Forts = presidios Villages = pueblos
Land grants = ranchos 21 Missions

5. MEXICAN rule (1822)

6. Mexican-American War (1846-1848)
7. UNITED STATES rule
Treaty of Guadalupe Hidalgo (1848)
Statehood (September 9, 1850)

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California Real Estate

Board of Land Commissioners
Formed to settle private land claims
Recording system adopted for land

California legal system

Formerly Spanish Civil Code
English common law enacted
Retained Spanish community property laws

Modern California
Urban/suburban residents
Population centers: Greater LA,

San Diego, Sacramento, San Francisco/Oakland

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Real Estate
Real estate in a physical sense is land and
buildings, things you can touch.
Real property is the physical

+ plus the legal

rights of ownership = the Bundle of Rights

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BUNDLE OF RIGHTS*
Include the right to:
1.
2.
3.
4.
5.
6.

Own and possess

Use
Enjoy
Encumber or borrow
against
Dispose
Exclude others who do
not share ownership

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*Subject to
government controls

Sample Test Question

Under todays concept of the bundle of rights, a

property owner has the right to all EXCEPT which

of the following:
A. encumber
B. destroy
C. possess
D. alienate

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Property Rights Do NOT Include the

Right to:

Destroy
Why?
Value to neighboring property (vacant lot)
Health & safety issues on tear downs (environment)

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Property Ownership
Is not absolute
Is subject to government controls, such as:
Zoning and building codes
Fair housing and antidiscrimination
Health & safety regulations
Police power
Permits and licenses
Public interest issues

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Definition: Real Estate

LAND
AFFIXED TO LAND
APPURTENANT TO LAND
IMMOVABLE BY LAW

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REAL PROPERTY is LAND:

LAND includes:
Earths surface
lateral support
subjacent support

Materials under the surface

Substances, including water
Minerals, oil & gas

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Air rights: above the surface

From

earths
surface
to the
Federal
Aviation
(FAA)
floor
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Mineral Rights
Oil and Gas Rights
Rule of Capture
Rule of Extraction

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Water Rights
Riparian
Prior Appropriation

Underground water

Concept of
Reasonable Use
Riparian borders

steam or lake
Littoral borders
shore of sea or ocean

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Water Rights:
Different states have different laws:

- Appropriation water right

Owner has exclusive right to take
all water for specific beneficial
use of the land
The state grants permission to
non-riparian owner.
Correlative water right
Owner entitled to take only a reasonable amount
of water for benefit to the land (irrigation)
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Property Affixed to the land:

Affixed Building improvements
Appurtenances Landscaping attached by roots
Incidental Utility pipes
Attachments Fence
Easements Right of way
Fixtures Patio cover
Stock in a mutual water company
Immovable, by law

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Appurtenances
Easements

Stock in a mutual water company

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PERSONAL PROPERTY is
everything that is NOT real property
Chattel - Chose
Movable goods
Paper Documents about real property: money,

stocks, contracts, deed, lease, promissory note

Transferred by a Bill of Sale
EMBLEMENTS
Annual cultivated crop

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Real OR Personal property?

Real property can become personal property
Personal property can become real property
REAL Property

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PERSONAL Property

TEST OF A FIXTURE
M ethod of Attachment
A daptability for Ordinary Use
R elationship of the Parties
I ntent of the Parties
A greement Between the Parties
NOTE: The law favors the borrower over a lender, a buyer over a
seller, and the tenant over the landlord.
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TRADE FIXTURE

Personal property of a business affixed or annexed

to the real property

Considered personal property (cash register/safe)
Tenant may remove before the lease ends but
must repair any damage to the real property
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California Domestic Partnership Law

Effective January 1, 2005 registered domestic

partners have many of the same California

constitutional real estate rights as husbands &
wives
Not recognized by federal laws & regulations
Other states also do not recognize this law

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Review Quiz Chapter One Introduction to Real Estate

1. Airspace above a parcel of land is:
(a) real property
(b) personal property
(c) an encumbrance
(d) a fixture
2. Zoning regulations have the greatest impact
on which right?
(a) right to encumber
(b) right to possess
(c) right to use
(d) right to exclude
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Review Quiz Chapter One

Introduction to Real Estate
3. All of the following are real property except:
(a) fruit trees
(b) chattels
(c) stock in a mutual water company
(d) built-in stove
4. In a dispute over fixtures, courts tend to favor
(a) sellers over buyers
(b) landlords over tenants
(c) lenders over borrowers
(d) grantors over grantees
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Review Quiz Chapter One

Introduction to Real Estate
5. The right of a land owner along a river to take water
is called:
(a) percolating rights
(b) river water rights
(c) user rights
(d) riparian rights
6. Which of the following is a test of a fixture?
(a) attachment
(b) chose
(c) appropriation
(d) restrictions
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Review Quiz Chapter One

Introduction to Real Estate
7. California became a state in:
(a) 1803
(b) 1848
(c) 1849
(d) 1850
8. Shelves in a retail store are an example of:
(a) real estate
(b) encumbrances
(c) trade fixtures
(d) real property
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Review Quiz Chapter One

Introduction to Real Estate
9. All of the following "run with the land," except:
(a) easements
(b) private deed restrictions
(c) water rights
(d) current harvest rights
10. Which real estate term is the most inclusive?
(a) real estate
(b) real property

2011 Cengage Learning

Answers to Chapter 1 Review Quiz

1.

6. A

2.

7. D

3.

8. C

4.

9. D

5.

10. B

2011 Cengage Learning