LEGAL CONSIDERATIONS IN APPRAISAL Chapter 2. CHAPTER TERMS AND CONCEPTS Acceptance Appurtenance Base line Bundle of rights Competent parties Consideration.

LEGAL CONSIDERATIONS IN APPRAISAL

Chapter 2

CHAPTER TERMS AND CONCEPTS

Acceptance

Appurtenance

Base line

Bundle of rights

Competent parties

Consideration

Contract

Dominant tenement

Easement

Equity

Fixture

Government restrictions

Government survey

Intangible property

Leased fee estate

Leasehold estate

Legal description

Life estate

Market restrictions

Metes and bounds description

Mutual obligation

Offer

Partial interests

Personal property

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CHAPTER TERMS AND CONCEPTS

Police power

Power of eminent domain

Power of escheat

Power of taxation

Principal meridian line

Private restrictions

Property

Range lines

Real estate

Real property

Recorded lot, block, and tract

description

Recorded map

Remainder estate

Sections

Servient tenement

Statute of Frauds

Subdivision map

Tangible property

Township

Township lines

Tract maps

Trade fixtures

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LEARNING OUTCOMES

1. Define real estate, real property, and personal property; give examples; and describe their differences.

2. Define and give examples of the bundle of rights.

3. Explain and provide examples of the three broad categories of restrictions on the use of real property.

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LEARNING OUTCOMES

4. Define the four governmental restrictions on the private ownership of all property.

5. List and provide examples of the major types of legal descriptions.

6. List and explain the five requirements for a valid contract.

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PROPERTY CLASSIFICATIONS

Tangible PropertyRights to Physical Objects

Intangible PropertyRights to Non-Physical Things

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PROPERTY CLASSIFICATIONS

Real PropertyLand and Everything Attached To It

Personal PropertyAnything That Is MovableEverything Not Real Property

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REAL PROPERTY DEFINED

1. The Land

2. Permanently Affixed Objects

3. Appurtenant Rights

4. That Which Is Immovable By Law

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TESTS OF A FIXTURE

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REAL PROPERTY RIGHTS

Fee ownership includes the following “Bundle of Rights” The Right to:

o Occupyo Sello Borrow Againsto Exclude Otherso Convey Ownership by Inheritance

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REAL PROPERTY RIGHTS

Partial Interestso Leased fee estateso Leasehold estateso Life Estateso Undivided interests in commonly held propertyo Others

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CATEGORIES OF USE RESTRICTIONS

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GOVERNMENT RESTRICTIONS

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Government Restrictions

Police Power Building and Safety General Welfare Community Planning, etc.

Eminent Domain Sovereign body taking back private

property for public use and paying “just compensation”

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Government Restrictions

Taxation Sovereign body may imposes taxes as

needed as long as they are fair

Escheat The sovereign body will take back the title

to the property if the owner dies or disappears and leaves no relatives or heirs

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TYPES OF LEGAL DESCRIPTIONS

• Recorded Lot, Block & Tract• Metes and Bounds• Government Survey

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RECORDED SUBDIVISION

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FIGURE 2-4 An Example of a Subdivision Map

RECORDED LOT, BLOCK & TRACT

After a Subdivision Map is filed, all Legal Descriptions Refer to the Recorded Map.

The Legal Description of Lot 3 is: Lot 3, Block 4 of Nottingham Forest, Section 7, a subdivision in

the William Hardin Survey, Abstract No. 24, Houston, Harris County, Texas, Map recorded in Volume 138, Page 1 of the Map Records of Harris County, Texas

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Metes and Bounds

Early Example:• Beginning at Joe’s barn, ten hop skips toward

the old hickory stump on the ridge, then toward widow Jones’ cabin for a bit, then past the old flour mill, then back to Joe’s Barn

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METES AND BOUNDS

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BASE LINES & MERIDIANS

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Source: Courtesy of the California Department of Real Estate

Figure 2.7

Government Survey

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Figure 2.8 Courtesy of the California Department of Real Estate

TOWNSHIP SHOWING SECTIONS

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Figure 2.9 Courtesy of the California Department of Real Estate

MAP OF A SECTION

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Figure 2.10 Courtesy of the California Department of Real Estate

CONTRACTS

A Contract is Defined as:An agreement between two or more

persons which creates an obligation to do or not to do a particular act. o Source: Black’s Law Dictionary, 6th ed., West Publishing Co., St.

Paul, 1990

Essential Elements of a Contract The Offer The Acceptance The Consideration

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IMPORTANCE OF CONTRACTS

Listing Contracts

Sale Contracts

Escrow Contracts

Private Restrictions

Statute of Frauds

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SUMMARY

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The distinction between real estate and real property was explained.

Real estate is defined as the physical object, whereas real property refers to the rights gained by owning the object. Personal property includes all objects on the property that are not real property. When personal property has been permanently affixed to the land, it changes into a category of permanently affixed real property called a fixture.

Real property refers to the many rights associated with real estate.

SUMMARY

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When making an appraisal, it is not enough just to look at a property and appraise what you see. Rather, you must first establish what legal rights exist for the property and then identify which rights are to be included in the appraisal.

The value of land depends on its potential and logical use.

A contract is an agreement between two or more persons, which creates an obligation to do or not to do a particular act. Nearly every appraisal assignment will involve reading one or more contracts.