What Is Real Property?
Let me explain real property directly: it's land and the permanent structures on it, but it goes beyond that to include ownership rights that aren't always part of real estate. If you're buying a home or business, you need to grasp this because those rights can make or break your purchase, especially if things like mineral or water rights matter to you.
How Real Property Works
Start with real estate, which is the tangible stuff: land, buildings, trees, creeks, boulders, and any fixed improvements like fences or utilities. Real property builds on that by adding intangible ownership rights—the interests you have to sell, lease, or profit from it all, including things like mineral rights. Remember, some rights can be sold separately, so when you're eyeing land, confirm the seller hasn't parted with any key ones.
Real property isn't the same as personal property; the latter covers movable items like your car or furniture, while real property stays put. And versus real estate, real property adds those decision-making powers—if you lack the rights, you can't truly control leasing or selling.
Examples of Real Property vs. Real Estate
- Real Property: Land with a pond including fishing rights; a home with land and full ownership rights; rental units on land you own with rights to manage them.
- Real Estate: Land with a creek but no water rights; commercial property on leased land; rental units on leased industrial real estate.
Types of Real Property
Your rights depend on the type of real property. We call your interest an 'estate in land,' and there are key classifications: freehold estates, nonfreehold estates, and concurrent estates.
Freehold estates give you rights that last a lifetime or indefinitely—you might hold them for your life or pass them to heirs in what's called fee simple absolute. Nonfreehold estates, or leaseholds, mean you're essentially leasing without ownership to pass on; types include estate for years (fixed-term lease), estate from year to year (ongoing until terminated), tenancy at will (endable anytime), and tenancy at sufferance (staying without permission after terms end).
Concurrent estates mean shared ownership with others, like tenancy in common or joint tenancy.
Real Property Rights
With real property, you get privileges like owning and using it, controlling it, licensing or leasing it, privacy to exclude others, selling or gifting it, or using it as collateral for a mortgage. These are what set real property apart.
The Bottom Line
In essence, real property is real estate plus ownership rights, covering land, homes, and features with varying rights types. If you're buying, research thoroughly to understand usage and inheritance—consult a financial advisor if the terms confuse you.
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