Real Property: Definition And Examples

If you’ve ever bought a home, then you’re already familiar with the concept of real estate and buying land, but equally important for home buyers is the term “real property.”

What Is Real Property In Real Estate?

Real property is the land and any structures attached to it that would factor into the property value. For example, a basketball hoop in the driveway is removable and does nothing to increase property value, so it’s not considered real property. On the other hand, a fixed basketball court would sell as part of the property, which qualifies it as real property.

Real property refers not only to the real estate and land you’ve purchased, but it includes any legal rights attached to that property. Real property is what gives you the right to own, lease, sell and use the property in any way you see fit.

It’s always important before you buy a home to understand your property rights and the transfer of ownership that takes place. If you’re in the process of buying a home, your real estate agent can help interpret ownership rights.

Types Of Real Property

The topic of real property may sound straightforward, but several classifications of ownership exist. Below are some common examples of real property.

Freehold Estates

A freehold estate refers to a person who owns real estate for which their ownership lasts an indefinite amount of time. To meet the criteria for a freehold estate, the asset(s) must be immovable. An example would be land and anything permanently attached to it like a house or storage shed.

These are the primary types of freehold estates:

• Fee simple absolute: Fee simple refers to absolute, unrestricted ownership. As the property owner, you can use the land in any way you deem fit. As long as you pay your mortgage and taxes, you can own the property forever.
• Fee simple defeasible: This type of freehold estate refers to conditional ownership of land. For instance, you may encounter conditions stating the land can only be used for specific purposes.
• Life estate: A life estate grants homeowners interest in the property for as long as they live. The property holder is responsible for maintaining the property and keeping it in good condition.

Nonfreehold Estates

Unlike a freehold estate, nonfreehold estates deal with leased land or rental agreements. Also known as “leasehold estates,” this sort of interest in property is a step below freehold estates because the interested parties do not own the property or properties. Here are a few examples of nonfreehold estates:

• Tenancy for years: A type of lease agreement where a tenant has an interest in a rental property for a specified period of time. A specified beginning and end date are outlined in the contract.
• Tenancy at will: Tenancy at will is a lease agreement that can be ended at any time, assuming a reasonable amount of notice is given. Typically, the tenant will be given a certain time frame for when the leasing agreement concludes – after which the tenant faces eviction.
• Tenancy at sufferance: This type of tenancy is created when someone remains on the property without the legal right to do so and without the property owner’s consent. This can happen when a tenant stays at the property beyond the terms of their lease agreement.

Concurrent Estates

In a concurrent estate, property ownership is divided among multiple owners. These are the different types of concurrent estates:

• Joint tenancy: Joint tenancy means that multiple people acquire real property and have equal ownership of the property.
• Tenancy by the entirety: In tenancy by the entirety, spouses can jointly own the property as one legal entity.
• Tenancy in common: Tenancy in common refers to an agreement where two or more people share ownership of real property. If one tenant dies, the property rights pass on to that person’s estate.

Concurrent Estates

In a concurrent estate, property ownership is divided among multiple owners. These are the different types of concurrent estates:

• Joint tenancy: In joint tenancy, multiple people acquire real property and have equal ownership of the property.
• Tenancy by the entirety: In tenancy by the entirety, spouses can jointly own the property as one legal entity.
• Tenancy in common: Tenancy in common refers to an agreement where two or more people share ownership of real property. If one tenant dies, the property rights pass on to that person’s estate.

Personal Property Vs. Real Property: Meanings And Examples

All property is either personal property or real property. The determining factor is whether you can move the object or not. Real property is land and anything permanently attached to it, while personal property (sometimes referred to as “chattel”) refers to anything the tenant has the right to take with them when they move off the land. Below are some examples of what’s considered real versus personal property.

What Is The Difference Between Real Estate and Real Property?

Real property is any physical structure on a piece of land and all the rights of ownership associated with the property. Real estate refers to the land the permanent structures are attached to, as well as the structures themselves. When you buy or sell a piece of real estate, like a house or a piece of land, you’re actually buying or selling real property, including the rights of ownership to the land and the physical structures built on it.

The Bottom Line: Real Property Helps Define Ownership Rights

Real property is a concept that defines what you own and your legal rights. Homeowners must be clear about what their legal rights are and any caveats associated with owning property. If you’re unsure about what your rights are, you should consult a real estate attorney – especially if you are in the market for buying real estate. Consider starting your homeownership journey with Rocket Mortgage^®  by starting the preapproval process today.