An estate in land is an interest in real property that allows possession for a specific or unlimited period of time. Real property consists of a designated portion of land and anything located on or under that land, which would include natural resources such as ponds, lakes, and oil as well as any buildings that are permanently attached. Real property is owned by an in individual based on specific property rights, which includes the ability to transfer title to such property as desired. Estates in land can be divided into categories – two of those types being: freehold estates and leasehold estates.
A freehold estate is a right of title to land that is characterized by two essential elements: immobility, meaning that the property involved is either land or an interest that is attached to or has been derived from land, and indeterminate duration, which means there is no fixed duration of ownership. There are three kinds of freehold estates:
1.) Fee simple – A fee simple (or fee simple absolute) is an estate in land. Ownership cannot be defeated by the previous owner or the previous owner’s heirs; however, it is not free from encumbrances. Fee simple absolute is the greatest interest in a parcel of land that one can possibly own. Sometimes it is designated simply as "fee." It is the most common way real estate is owned in common law countries and is ordinarily the most complete ownership interest that can be had in real property, short of absolute title.
2.) Fee simple defeasible – A defeasible estate is created when a grantor places a condition on a fee simple estate (in the deed). Upon the occurrence of a specified event, the estate may be lost. Two types of defeasible estates are the fee simple determinable and the fee simple subject to a condition subsequent.
If the grantor uses durational language in the condition such as "to A, as long as the land is used for a park," then upon the happening of the specified event (the land being used for something other than a park), the estate will automatically terminate and revert to the grantor or the grantor's estate; this is called a fee simple determinable.
If there is a condition such as "no alcohol to be served," then that would be a condition subsequent, as you can lose the title if you serve alcohol.
3.) Life estate – A life estate is an interest in real property which is held for the duration of the life of a designated person. It may be limited by the life of the person holding it or by the life of another person. A life tenant receives the property and is responsible for maintenance of the property and paying taxes. If a life tenant allows a property to deteriorate, it would be committing waste; a life tenant cannot commit waste. A life tenant cannot leave a property to anyone in their will. However, a life tenant may sell, mortgage or lease the property for the duration of the estate, and thus all contracts would be terminated upon the death of the life tenant.
A leasehold estate is less than freehold estate. This estate is held by one who rents or leases property. The key element of a less than freehold estate is the limitation of time. As lease is a legal estate, leasehold estate can be bought and sold on the open market. Classifications of a leasehold estate include:
1.) An estate for years – An estate for years is a leasehold interest in land for a fixed period of time. It is often called a tenancy for years. An example of an estate for years would be a summer rental, as it has a defined beginning and end date. No notice to be terminated is needed, as the end of the lease is established at the conception of the rental. Therefore a lease for 6 months would be an estate for years, and a lease with a given beginning and end date would be an estate for years as well.
2.) Periodic tenancy – Periodic tenancy, which is also known as an estate from years to years, is a tenancy that is not bound to a lease with a fixed period like an estate for years. A periodic tenancy follows a period such as month-to-month, week-to-week, or year to year. Proper notice must be given to terminate this lease.
3.) Estate at will – An estate at sufferance arises when the tenant wrongfully holds over after the expiration of his term. This is often called a tenancy at sufferance. An example of an estate at sufferance would be a tenant who does not pay rent. In simple terms, the landlord is suffering. This is not a form of trespass, as at one point the tenant had the right to be on the property. The landlord would have to legally evict the tenant when a tenancy at sufferance is created.
4.) Estate at sufferance – Estate at will means that it can be ended at any time. An estate at will gives the lessee the right to possession until the estate is terminated by either party; the term of this estate is indefinite. This is not allowed in many states.
Section 1
#2
In the world of buying and selling real estate, the various types of deeds alone are enough to cause confusion. One size does not fit all when it comes to deeds like warranty deeds and trustee deeds. It is important to know which deed is appropriate when selling or otherwise transferring the title. The uses for warranty deeds and trustee deeds are the largest difference between the two documents.
Trustee deeds are wherein legal title in real property is transferred to a trustee, which holds it as security for a loan between a borrower and lender. This is used to convey ownership of real estate that is being held in trust. Transactions involving trustee deeds are normally structured so that the lender gives the borrower the money to buy the property, the borrower tenders the money to the seller, the seller executes a grant deed giving the property to the borrower, and the borrower immediately executes a trustee deed giving the property to the trustee to be held in trust for the lender. If there is no trust involved, a trustee deed cannot be used.
Unlike trustee deeds, warranty deeds provide a warranty on the title of the property to the grantee from the grantor. While both trustee deeds and warranty deeds essentially sign over ownership, warranty deeds are extremely thorough in promising that the title is currently clear, and if complications on the title come to light in the future, the grantor guarantees that he will be responsible for clearing up the problems or compensating the grantee. Because of the different functions of warranty deeds versus trustee deeds, there's a difference in who executes each one. Warranty deeds are a transaction between a grantor and a grantee, in most cases a buyer and seller. Trustee deeds can be executed only by the trustee of the trust that holds the real estate being conveyed. Lastly, as previously mentioned, a trustee deed cannot be used if there is no trust involved. However, in a case where real estate is being held in trust, either a trustee deed or a warranty deed can be used. A trustee deed is still the typical, preferred document to be used when property in a trust is sold or transferred, but if the sales contract specifies that a warranty deed is the desired document to convey ownership, the trustee can sign the warranty deed. It is essential that the sales contract and the warranty deed clearly state that the trustee is acting under the authority of his role as trustee of a particular trust.
Section 1
#3
The Texas Real Estate Commission is an agency that oversees real estate practices in Texas. The agency consists of nine members appointed by the Governor for six-year terms. Six members a required to be licensed real estate brokers. Three members are required to be members of the general public who are not regulated by the Commission. The Governor entitles a member to serve as the Chair of the Commission. Currently, the Governor is Greg Abbott and the Chair of the Commission is Avis Wukasch.
The Texas Real Estate Commission is responsible for licensing real estate service providers in Texas to ensure they are qualified to advise consumers about transactions. TREC enforces the laws and rules which administer sales agents and brokers. TREC has the ability to take action against a licensed broker or sales agent who is not in fulfillment with the rules and laws of Texas. They must inform the client of any material information about the property or the transaction received by the broker, answer the client’s questions and present any offer to or counter offer from the client, and treat all parties to a real estate transaction honestly and fairly. Additionally, license holders are required to provide certain consumer notices. Brokers or agents are required to provide you with a form called the “Information About Brokerage Services,” which describes the different ways a professional can represent you, the minimum services they must provide to you and key business names, licenses and contact information for the sales agent, their sponsoring broker, and any delegated supervisor.
Licensed brokers and agents are meant to put the interest of their client above all others, including their own. You won’t have to worry about being offered advice or recommendations which exceed the level of expertise of these brokers or agents. All of these requirements are for the protection of consumers. To better gain the trust of homebuyers and sellers, there is a tool available to check out licensed sales agents or brokers using TREC’S License Holder Lookup tool. TREC is an agency that believes they will best meet their client’s needs and they strive to do so.
Section 1
#4
The size and scale of real estate has grown immensely. Real Estate is such a large industry in the United States. There are several factors that have impacted the real estate market and the variety of investments that are now available. These factors go way back to almost half of human history. Our ancestors abandoned the hunter-gatherer lifestyle and eventually transitioned to an agrarian society. This transition of society was the start of home ownership and real estate.
Many agrarian systems progressed because tribal leaders developed, and those who had the approval of the tribe would disperse lands, settle disputes and require a payment from all his subjects. The shift toward more powerful tribal leaders culminated in a pooling of labor. This pooling of labor resulted in irrigation channels being dug, strongholds being built, improved farming methods, and temples were erected. With all of this land improvement, populations began to explode. Therefore, larger populations meant increased available laborers to continue improving land.
Hunter-gatherers followed a tribal system, but scarcity meant that a tribe could only support two or three extended families. However, farmers on the other hand were not able to name everyone in their large tribe. In return for the sacrifice of familiarity, people living in small societies gained the safety of numbers. A well-fed “army” easily repelled any desperate raiders. In return for this security, the people all paid homage to the lord or king who claimed ownership of the land – which was the first system of rent. Families began to spread their wealth to friends, signing away titles and deeds to lands that allowed the holders to collect the rent produced by the peasants living there. On top of this rent, all the people within a ruler's realm were generally required to pay a tax. Many other demands were made by ruling leader, such as military service, and they were met because these rulers owned the land not only by birthright, but by military might also.
Mortgages have existed for a long time as an exclusive loan given only to nobility. After the industrial revolution, the wealth of the world increased to the point where banks opened themselves to "higher-risk" mortgage loans to common people. This allowed individuals to own their own homes and become landlords themselves. It took 30,000 years, but home ownership is now open to many people.
In conclusion, land ownership was the basis of all the investment opportunities there are today. Without a stable population and a set location, trade and commerce between groups is limited. Ownership has moved from being established by strength to being something you can buy, sell, trade and rent. There has always been a tradeoff for tenancy – a fee paid to the "owner" for the land and its protection. This responsibility was first afforded to tribal leaders, then to kings and finally to landlords. Now we have the power to own our homes, a move that has changed the way people live.
Section 1
#5
Judicial foreclosure is the process where a home is sold to pay off an unpaid debt. Usually foreclosures happen when a homeowner falls behind in home loan payments. With a judicial foreclosure, the foreclosing party files a lawsuit in the county where the property is located and requests that the court grant a judgment allowing the home to be sold to satisfy the debt. Judicial foreclosures usually take longer than nonjudicial foreclosures, generally lasting from about six months to just over three years, depending on the state.
Judicial foreclosure cannot begin until at least 120 days of delinquent payments. Once there have been at least four missed payments, a breach letter will be sent out letting you know that you are in default on the mortgage. If you still do not pay back the full amount after receiving the letter, the foreclosing party will file a lawsuit in state court. If you want to object to the foreclosure, you must file your “answer” to the complaint with the court within the applicable time period. If you don't respond to the lawsuit, the foreclosing party will most likely get a default judgment authorizing the sale of the home. On the other hand, if you file an answer with the court, the foreclosing party can’t get a default judgment. Instead, the court will likely grant judgment in favor of the foreclosing party if there is no dispute as to the important facts of the case. If the court denies summary judgment, the case will go to trial. The court will enter a judgment of foreclosure against you unless you have some defense or counterclaim that justifies or excuses your delinquent payments. After the court issues a judgment, a foreclosure sale is set.
Most foreclosures in Texas are nonjudicial. The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the "Power of Sale Foreclosure Guidelines".
If the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, then the specified procedure must be followed. Otherwise, the non-judicial power of sale foreclosure is carried out as follows:
1.) Prior to proceeding with a foreclosure, Texas laws state that the lender must mail the borrower a letter of demand, informing the buyer he has 20 days to pay the delinquent payments or foreclosure proceedings will begin.
2.) At some point after the borrowers 20 days have expired, but at least twenty one (21) days before the foreclosure sale, a foreclosure notice must be: 1) filed with the county clerk; 2) mailed to the borrower at their last known address; and 3) posted on the county courthouse door.
3.) The foreclosure sale must take place on the first Tuesday of any month, even if said Tuesday falls on a legal holiday, but only after the proper preliminary notices have been given. The sale is on the courthouse steps by auction to the highest bidder for cash. Anyone may bid, including the lender, who bids by canceling out the balance due on the note, or some part of it.
Lenders may obtain deficiency judgments, but they are limited to the difference between the fair market value of the property at the time of sale and the balance of the loan in default.
Section 2
Differentiating economic and physical characteristics can be complicated. The intuitive reason behind economic aspects of land are consequences of its physical aspects. These transactions depend on the following economic characteristics of real estate:
• Economic scarcity
• Alteration
• Fixity
• Situs
Economic scarcity
Economic scarcity is created by demand for land in particular areas. Land is most valuable when it is in short supply and in high demand, and some land is more desirable than other parts. The economic scarcity of land changes over time, even if the physical amount of available land does not change. For example, land in densely populated cities or on tropical beachfronts is scarce. However, this economic scarcity is only due to the high demand for land in that particular geographical region, not because some geological catastrophe destroyed large parcels of earth and made land physically scarce.
Technology can also affect the economic scarcity of land. For example, new farming techniques may make food production possible on previously unusable land. This could make the previously useless land now economically scarce, even if there is the same physical quantity of land as before.
Alteration
Additionally, the economic worth of land depends heavily on alteration; how it is altered by building and other developments. A neighborhood that was once undesirable due to its inaccessibility or lack of amenities, but has seen improved roads, schools and hospitals built may now become more desirable and the prices for the homes increase. Conversely, if a sewage treatment plant is built next to a neighborhood, they are likely to see their home values decrease. Alteration is one reason real estate prices may fluctuate.
Fixity
The investment permanence of land, also known as fixity, refers to the idea that real estate and improvements to real estate take many years to recoup their cost. Before anyone invests large amounts of money in any one parcel, they must consider whether the land will still be useful years down the line when the property is finally paid off. This level of commitment on the part of the investor is not a physical characteristic of the land. It’s created with economic conventions. For this reason, real estate investments are sometimes referred to as sunk costs because the cost has already been expended and is gone no matter the number of years you sell it in.
Situs
Situs is an economic preference for a particular location and not a geographic one. For residential areas, the ambiance of a neighborhood is important and therefore parks and friendly neighbors are a factor. When looking for a site to build an industrial park, ambiance is not important, but access to transportation and inexpensive land to build large warehouses are. Situs is an economic preference for a certain location or characteristic that affects land and value. The preference is a social convention that creates part of the value of a particular tract is why situs is an economic characteristic rather than a physical one.