It is important for Real Estate Investors to have an
understanding of some of the basics of real estate so you
can be a more-informed investor.
In real estate, there are two categories of property, real
and personal. Real property is defined as the land and
whatever is attached to it, known as improvements. Personal
property is everything that is not attached to land or
buildings. This is often known as chattel.
A fixture is an item of personal property that has been
converted to real property by permanently attaching it. Two
examples include chandeliers and cabinets. When they were
at the store, they were personal property. Once they are
attached to the property, they become real property.
A listing agreement and an agreement of sale specify what
is considered as a fixture. If you are purchasing a
property, you should carefully inspect this clause to see
what you are getting and what you are not getting.
When you purchase real property, you get what are known as
a "bundle of rights". These are the rights of ownership.
They include the right to occupy, to use, to allow others
to use, to rent, to restrict, to construct buildings, to
keep others off, to leave and abandon, to convey ownership
and to encumber.
A freehold estate refers to an ownership interest in
property for an undetermined period of time. It is a form
of ownership that you get when you purchase a property.
There are various types of freehold estates, with the most
preferred type being called fee simple. It is the highest
and most complete form of ownership possible. It gives you
the full bundle of rights, including the right to pass your
ownership interest on to your heirs when you die.
There are different forms of taking ownership to a
property, and it is a good idea to understand each one and
what it means. They are severalty, tenancy by the entirety,
joint tenancy and tenancy in common.
Ownership of real property can also be held in a trust. A
trust is a legal instrument that is used to protect family
ownership interests. A trust has three parties, a trustor,
a trustee and a beneficiary. The trustor conveys ownership
of the property into the trust, which is then held by the
trustee. Based on some event according to the terms of the
trust the property is eventually conveyed to the
beneficiary.
Title is the right of ownership of property. There are five
basic kinds of title - naked possession, color of title,
right of possession, good title and complete good title.
The purchase of title insurance will insure a "good" title.
A title company, or abstract company, will do a complete
title search to discover if there are any "clouds on the
title".
A deed is a written document that conveys title of real
property to an owner. The person who gives or grants the
deed is called the grantor. The person who receives the
deed is the grantee.
There is a difference between title and deed. Title is the
right of ownership of property. A deed is a written
document that conveys title to the property. Title is a
right. A deed is a document. The two most basic types of
deeds are the quitclaim deed and the warranty deed.
A general warranty deed provides a guarantee of good title
not only by the seller, but back through the chain of title
through all the previous owners of the property. It
provides the strongest title protection to the grantee, or
buyer.
It is important that every Real Estate Owner and Investor
understands these basic principles before purchasing Real
Estate.
----------------------------------------------------
Chris Parks is a Real Estate Investor who has been involved
in Real Estate in one capacity or another since the mid
1980s. As a member of a small group of Real Estate
Investors & Entrepreneurs, and always having the knack for
explaining Real Estate Basics in an easy to understand
manner, Chris created REI for Newbies in order to teach &
assist new Real Estate Investors in a step-by-step,
easy-to-understand manner. http://www.REIforNewbies.com
No comments:
Post a Comment