According to English Common law, real property refers to land owned by a particular person including all fixtures, structures or improvements affixed to or linked with the land, such as buildings, fences, wells, dams, crops, machinery, canals, mines, ponds, roads, and others. Also referred to as realty, immovable property, or real estate, real property consists of a designated portion of land and any elements permanently fixed on or beneath it, whether they are man-made structures, natural resources, or both.
The term “real property” came from “form of action” which differentiated between personal property conflicts and real property conflicts. Personal property referred to and still refers to any property other than real property. Personal property is any element which is not built onto, nailed down, or dug into the land, for instance, a living room set is not real property but a house is. With ownership of real property comes various kinds of estates which determine the prerogative of the owner of the property to use the property as he or she deems fit, whether it’s to transfer, sell, or use it for any legal purpose whatsoever.
Civil law preserves the standing of real property in countries where personal ownership of real property applies. French-based law refers to real property as “immobilier” which translates to “immovable property”, and in Scottish civil law, real property is referred to as “heritable property”.
The term “real” is taken from the Latin word “res”, which translates to “thing”. In Middle English, the word was used to imply “relating to things, particularly real property”.
Common law regarded real property as property which could be preserved by a real action, unlike personal property which would involve a plaintiff having to fall back on some other sort of action. Due to this formalist outlook, certain things which would have been classified as land in common law will not be deemed so according to many legal systems today. For instance, an advowson, which gives one the prerogative to present a nominee for priesthood, was considered real property.
Meanwhile, since a leaseholder’s rights stem from personal actions, common law regarded leasehold as included in personal property. Modern law now widely differentiates between personal property and real property.
In addition to the most obvious distinction between real property and personal property, that is, real property is immovable while personal property is not, there are a number of other differences between both concepts. Real property is transferred from an ancestor to the heir in the case that the owner dies, as opposed to the property being transferred to an administrator or executor. While a personal property can be handed to another party without the widow having a claim, a real property is dependent on the widow’s dower.
Real estate refers simply to a portion of land and any artificial and/or natural structures, improvements or resources on or in the land; essentially anything that would typically be understood as being part of the land. On the other hand, real property which is a less commonly used and understood term, comprises real estate as well as a bundle of rights which is composed of the rights or prerogatives of the property owner to do with the property whatever he or she would like. This means real property is composed of both common law rights and physical objects, while real estate is strictly concerned with physical objects.
A bundle of rights is a general phrase classifying property rights specifically as they pertain to real estate, and is composed of five distinct rights the owner of the property is entitled to. These rights include:
The right to control; which means the owner has the prerogative to specify the uses and interests for others.
The right to possess; which means the owner has the prerogative to occupy or inhabit the property.
The right to dispose; which means the owner has the prerogative to specify if and in what manner the property is transferred or sold to another party.
The right to enjoy; which means the owner has the right to make use of the property with no external disruption or interference.
The right to exclude; which means the owner has the prerogative to prevent another party’s uses or interests for the property.
While there are a number of complex restrictions and exceptions which apply to these rights, the distinction between real property and real estate is essentially the inclusion or exclusion of the bundle of rights as the case may be.
The legal system identifies various kinds of interests or estates within the concept of real property. The type of estate will be based on the terms of the deed, lease, will, bill of sale, or land grant through which the owner obtained his or her right to the land. An estate is differentiated from another by the different property rights defining it, and that ascertain its transferability and duration. The following are some of the principal kinds of estates:
Fee simple refers to an estate that can be transferred without constraint, and has an unlimited duration. The tenant will benefit from the highest level of discretion regarding the use of the property.
Conditional Fee simple refers to an estate which lasts forever provided that whatever conditions specified by the grantor of the deed do not occur.
Fee tail refers to an estate which will be transferred to the heirs of the tenant once he or she dies.
Life estate refers to an estate which lasts for as long as the grantee (life tenant) lives. Meanwhile, a life estate pur autre vie refers to an estate which one person holds for the lifetime of a different person.
Leasehold refers to an estate which lasts for a limited time as prescribed in a contract or lease. This contract is between the lessee who is granted the leasehold, and the lessor whose estate on the property is longer.