LAND REAL ESTATE AND REAL PROPERTY

Land, real estate and real property: what do they mean?

Jack inherited green gardens from his uncle. The first action Jack took on his vacant land was to remove all of the topsoil, which he sold to a land scaping company. Jack then removed a thick layer of limestone, and sold it to a construction company. Finally, Jack dug forty feet into the bedrock and sold it for gravel.

When jack died, he left green gardens to his daughter Pam. What exactly do you think the daughter inherited?

While people often use land real estate and real property interchangeably, the reality is that these three refer to different aspects of the same idea. If you are going to deal in real estate and the laws that affect it, then you must be knowledgeable about these subtle yet important differences in meaning.

What is land?

Land doesn’t just mean surface of land, it extends to underlying soil surface. Land is defined as the earth’s surface extending downward to the centre of the earth and upward to infinity, this will include natural objects such as tress and water.

When you acquire land, what you have acquired will include things that are naturally attached to it such as plants, boulder, minerals and substance that lie below the earth’s surface. This will also include the air space, although certain laws regulate how much of the air space you actually own. Think of land as the surface, subsurface and the air space.

What about real estate?

Real estate means slightly more than land. In addition to the natural components of the land, it also includes all man made improvements. In this context improvement refers to any artificial thing attached to the land, which means all the buildings or even just fence. Basically improvement is a neutral term referring to any artificial addition whether such make the property better or otherwise. So a real estate agent can say land is improved because it has streets or even a sewer system.

Regarding real property

Real property is defined as the interest, benefits and rights that are automatically included in the ownership of land and real estate.

In its broadest sense real property will include both land and real estate meaning, surface, subsurface, airspace, improvements and bundle of legal rights, that is, legal rights of ownership that attach to ownership of a parcel of real estate, things like surface right, subsurface rights and air rights, all of which can be owned by different individuals

For example

Jane sells the rights to any oil and gas found beneath her farm to an oil company. Later, she sells the remaining interests (the surface, air and limited subsurface rights) to Bob, reserving the rights to any coal that may be found in the land. Bob sells the remaining land to Caren, but retains the farmhouse, stable and pasture. So from these sales we have:

1. The oil company owns all the oil and gas
2. Jane owns all the coal
3. Bob owns the farmhouse, stable and pasture
4. Caren owns the right to the remaining real estate

The point is investing in land real estate and real property doesn’t mean the same thing to parties involved. Like in the example we started with at the beginning of this article, Pam will be inheriting a large hole in the ground but it is still green gardens down to the centre of the earth.