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Chapter 3: Rights and Interests in Land
Exclusive Right to Use of Land
Feudal SystemAllodial System
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Government Rights
Property Tax• The right of government to tax private property.
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Government Rights
Eminent Domain
• The right of government to take private property for public use upon payment of just compensation.
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Government Rights
• 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 Rights
Escheat• When a person dies and leaves no heirs and
no instructions as to how to dispose of real and personal property.
• Ownership of property passes to the government
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The largest, most complete bundle of rights one can hold in land; land ownership.
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Fee Simple
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.” © OnCourse Learning
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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Removing Sticks from the Fee Simple Bundle
Note that the fee simple bundle shrinks as an owner voluntarily removes rights.
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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 Estates
Qualified 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
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