Real estate is a legal term (in some jurisdictions, such as the USA
, United Kingdom
, Canada
, Australia and The Bahamas
) that encompasses land along with improvements to
the land, such as buildings,fences, wells
and other site improvements that are fixed in location --
immovable. Real estate law is the body of
regulations and legal codes which pertain to such matters under a
particular
jurisdiction and include
things such as commercial and residential real property
transactions. Real estate is often considered synonymous with
real property
(sometimes called
realty), in contrast with
personal property (sometimes called
chattel or
personalty under
chattel law
or
personal property law).
However, in some situations the term "real estate" refers to the
land and
fixture together,
as distinguished from "
real property,"
referring to ownership of land and
appurtenances, including anything of a
permanent nature such as structures, trees, minerals, and the
interest, benefits, and inherent rights thereof.
Real property is typically considered to be
Immovable property"Real Estate
and Mortgage Glossary / Definitions - terms beginning with "R""
Real Estate ABC - Information on Buying and Selling A Home. Web. 10
Aug. 2009. /www.realestateabc.com/glossary/glossaryR.htm>.The
terms
real estate and
real property are used
primarily in
common law, while
civil law jurisdictions refer instead to
immovable property.
Etymology
In law, the word
real means relating to a thing
(
res/rei, thing, from O.Fr.
reel, from L.L.
realis "actual," from Latin.
res, "matter, thing"), as distinguished from a person.
Thus the law broadly distinguishes between "real" property (land
and anything affixed to it) and "personal" property (everything
else,
e.g., clothing, furniture, money). The conceptual
difference was between immovable property, which would transfer
title along with the land, and movable property, which a person
would retain title to. The oldest use of the term "Real Estate"
that has been preserved in historical records was in 1666. This use
of "real" also reflects the ancient and
feudal preference for
land, and the ownership (and owners)
thereof.
Some have claimed that the word
real in this sense is
descended (like French
royal and Spanish
real)
from the Latin word for 'king'. In the
feudal
system (which has left many traces in the
common law) the king was the owner of all land,
and everyone who occupied land paid him rent directly or indirectly
(through lords who in turn paid the king), in cash, goods or
services (including military service).
Property tax, paid to the state, can be seen as
a relic of that system, as is the term
fee
simple. However, this derivation of
real is a
misconception.
Real estate terminology and practice outside the United States
(around the world)
Real estate as "real property" in the U.K.
In
British usage, “real property”,
often shortened to just “property”, generally refers to land and
fixtures, while the term “real estate” is used mostly in the
context of
probate law, and means all
interests in land held by a deceased person at
death, excluding interests in
money arising under a trust for sale of or charged on
land.
See Real property for a definition
and Estate agent for a description of
the practice in the UK.
Real estate in Mexico and Central America
The real estate business in Mexico and Central America is different
from the way that it is conducted in the United States.
Some similarities include a variety of legal formalities (with
professionals such as real estate agents generally employed to
assist the buyer); taxes need to be paid (but typically less than
those in U.S.); legal paperwork will ensure title; and a neutral
party such as a title company will handle documentation and monies
in order to make the smooth exchange between the parties.
Increasingly, U.S. title companies are doing work for U.S. buyers
in Mexico and Central America.
Prices are often much cheaper than most areas of the U.S., but in
many locations, prices of houses and lots are as expensive as the
U.S., one example being Mexico City. U.S. banks have begun to give
home loans for properties in Mexico, but, so far, not for other
Latin American countries.
One important difference from the United States is that each
country has rules regarding where foreigners can buy. For example,
in Mexico, foreigners cannot buy land or homes within 50 km of
the coast or 100 km from a border unless they hold title in a
Mexican Corporation or a Fideicomiso (a Mexican trust). In
Honduras, however, they may buy beach front property directly in
their name. There are different rules regarding certain types of
property:
ejidal land communally held farm property can
only be sold after a lengthy entitlement process, but that does not
prevent them from being offered for sale.
In
Costa
Rica
, real estate agents do not need a license to
operate, but the transfer of property requires a
lawyer.
Business sector
With the development of private
property
ownership, real estate has become a major
area of
business. Purchasing real estate
requires a significant investment, and each parcel of land has
unique characteristics, so the real estate industry has evolved
into several distinct fields. Specialists are often called on to
valuate real estate and facilitate transactions. Some kinds of real
estate businesses include:
Within each field, a business may specialize in a particular type
of real estate, such as residential, commercial, or industrial
property. In addition, almost all
construction business effectively has a
connection to real estate.
"
Internet real estate" is a
term coined by the internet investment community relating to
ownership of domain names and the similarities between high quality
internet domain names and real-world, prime real estate.
Residential real estate
The legal arrangement for the right to occupy a dwelling is known
as the
housing tenure. Types of
housing tenure include
owner
occupancy,
Tenancy,
housing cooperative,
condominiums (individually parceled properties
in a single building),
public
housing,
squatting, and
cohousing.
When one or more
tenants live together, they
may choose to split the cost of residency through a
net lease. To save money having a
residence,
tenants may have
the option to have a net lease. The only cost of this would be
having to share the residence with another tenant. Net leases come
in many different forms including: single, double, and triple net
leases; depending on how many tenants are sharing the net
lease.
Residences can be classified by, if, and how they are connected to
neighboring residences and land. Different types of housing tenure
can be used for the same physical type. For example, connected
residents might be owned by a single entity and leased out, or
owned separately with an agreement covering the relationship
between units and common areas and concerns.
'Single-family detached home'
Major physical categories in North America and Europe
include:
- Attached / multi-unit dwellings
- Apartment - An individual unit in a
multi-unit building. The boundaries of the apartment are generally
defined by a perimeter of locked or lockable doors. Often seen in
multi-story apartment
buildings.
- Multi-family house -
Often seen in multi-story detached buildings, where each floor is a
separate apartment or unit.
- Terraced house (a.k.a.
townhouse or rowhouse) - A number of single or
multi-unit buildings in a continuous row with shared walls and no
intervening space.
- Condominium - Building or complex,
similar to apartments, owned by individuals. Common grounds are
owned and shared jointly. There are townhouse or
rowhouse style condominiums as well.
- Semi-detached dwellings
- Duplex - Two units with one
shared wall.
- Single-family detached
home
- Portable dwellings
- Mobile homes - Potentially a
full-time residence which can be (might not in practice be) movable
on wheels.
- Houseboats - A floating home
- Tents - Usually very temporary, with roof
and walls consisting only of fabric-like material.
The size of an apartment or house can be described in
square feet or
meters. In the United States, this includes the
area of "living space", excluding the garage and other non-living
spaces. The "square meters" figure of a house in Europe may report
the total area of the walls enclosing the home, thus including any
attached garage and non-living spaces, which makes it important to
inquire what kind of surface definition has been used.
It can be described more roughly by the number of rooms. A
studio apartment has a single bedroom with
no living room (possibly a separate kitchen). A one-bedroom
apartment has a living or dining room separate from the bedroom.
Two bedroom, three bedroom, and larger units are common. (A bedroom
is defined as a room with a closet for clothes storage.)
See
List of house types for a
complete listing of housing types and layouts,
real estate trends for shifts in the
market and
house or
home
for more general information.
Market sector value
According to
The Economist,
"
developed economies'" assets at
the end of 2002 were the following:
That makes real estate assets 54% and financial assets 46% of total
stocks, bonds, and real estate assets. Assets not counted here are
bank deposits,
insurance "reserve" assets, and
human assets. It is not clear if all
debt and
equity
investments are counted in the categories equities and bonds.
Mortgages in real estate
In recent years, many economists have recognized that the lack of
effective real estate laws can be a significant barrier to
investment in many developing countries. In most societies, rich
and poor, a significant fraction of the total wealth is in the form
of land and buildings.
In most advanced economies, the main source of capital used by
individuals and small companies to purchase and improve land and
buildings is
mortgage loans (or other
instruments). These are loans for which the real property itself
constitutes collateral. Banks are willing to make such loans at
favorable rates in large part because, if the borrower does not
make payments, the lender can
foreclose
by filing a court action which allows them to take back the
property and sell it to get their money back. For investors,
profitability can be enhanced by using an
off
plan or pre-construction strategy to purchase at a lower price
which is often the case in the pre-construction phase of
development.
But in many developing countries there is no effective means by
which a lender could foreclose, so the mortgage loan industry, as
such, either does not exist at all or is only available to members
of privileged social classes.
See also
References
- "Real estate" The American Heritage Dictionary of the
English Language, Fourth Edition. Houghton Mifflin Company,
2004. Dictionary.com Retrieved July 12, 2008
- "Real" Online Etymological Dictionary
Retrieved July 12, 2008
- "Real" The American Heritage Dictionary of the English
Language, Fourth Edition. Houghton Mifflin Company, 2004.
Dictionary.com Retrieved July 12, 2008
- Oxford Dictionary of Law (4th edition), New York:
Oxford University Press, 1997; See also Estate in land
External links
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