This document provides an overview of real estate law concepts covered in Chapter 5 of a real estate principles and practices course. It defines key terms and discusses the differences between real and personal property. It also covers various possessory interests in real estate like estates and leaseholds. Nonpossessory interests like easements and liens are explained. The document concludes with a quiz testing understanding of the concepts.

1. Real Estate Principles &
Practices
Module 3
March 2015

2. Chapter 5
Overview of Real Estate
Law
March 2015

3. Key Terms
• Appurtenance
• Easement
• Encumbrance
• Fixture
• Freehold Estate
• Leasehold Estate
• License
• Lien
• Lis Pendens
• Possessory
Interest
• Restrictive
Covenant
• Trade Fixture
March 2015

4. Real vs. Personal Property
• Real Property: Land and everything
intended to remain with it
• Personal Property: Any property that is
moveable and not intended to remain with
the land
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5. Real Property Rights
• Real property rights are defined in terms of
a bundle of rights conferred by
ownership:
– Right of use
– Right of enjoyment
– Right of disposal
• Trespassing, encroachment, and
nuisances may interfere with a property
owner’s bundle of rights
March 2015

6. Attachments
• Generally considered real property
• Natural attachments
– Plants growing on the land (naturally occurring or
planted). Considered real property while growing and
personal property when removed (e.g., crops)
• Man-made attachments are called fixtures:
– Items of personal property that may or may not be
attached to real property but are closely associated with
it in such a way that they are, and are intended to,
become part of the real property
March 2015

7. Attachments: Intention and Purpose
• The most important considerations are the:
– Intention of the annexer (person who owned the item as
personal property and brought it onto the real property)
– Purpose of the annexation
• Manner of annexation (actual or constructive)
• Relation of the parties
• Written agreement
• Trade fixtures
March 2015

8. Appurtenances
• Rights that go along with real property:
– Air rights
– Water rights (riparian littoral, appropriative)
– Mineral rights
– Support rights (lateral, subjacent)
– Accession (by annexation or forces of nature)
March 2015

9. Possessory Interests: Estates
• An estate is a possessory interest, which
entitles the holder to possession of the
property, either now (present interest) or
in the future (future interest)
March 2015

10. Fee Simple Estates
• Fee Simple Absolute
– The fullest freehold estate interest that can
exist in real property
– If A owns land in feel simple absolute and
deeds it “to B” without any limiting language,
B will then own the land in fee simple absolute
March 2015

11. Fee Simple Estates
• Fee Simple Defeasible: Any type of real
property ownership that may be defeated
or undone if certain events occur or certain
conditions are not met
– Fee simple determinable: Terminated
automatically if certain conditions occur
– Fee simple conditional: May be terminated by
the owner if conditions stated in the deed are
not met
(cont.)
March 2015

12. Life Estates
• A freehold estate that lasts only as long as
a specified person lives
– If A owns property in fee simple, she could
deed it “to B for life.” B would have the right to
occupy and use the property for the rest of his
life. But when B died, the life estate would
terminate
• Created to simplify division of property in a
will and to keep property from being
probated after death
March 2015

13. Dower
• A special real property interest that the law
provides as a statutory life estate to a
spouse when a married person owns real
property in Ohio and attempts to sell or
otherwise transfer an interest in that real
property
– Inchoate (contingent or incomplete) dower
rights
– Choate (active or complete) dower rights
March 2015

14. Leasehold Estates
• An interest that gives the holder a
temporary right to possession of the
estate, without title
• Also called a less-than-freehold estate
• Three main types:
– Estate for years
– Periodic tenancy
– Tenancy at will
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15. Tenancy at Sufferance
• Used to describe possession of property
by a holdover tenant
– Someone who came into possession of
property under a valid lease, but stays on
after the lease expires, without the landlord’s
permission
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16. Eviction
• Dispossessing or expelling someone from
real property
• Legal eviction process:
– Notice to vacate
– Forcible entry and detainer action
– Writ of execution
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17. Nonpossessory Interests: Encumbrances
• Two types discussed in this chapter:
– Easements
– Liens
March 2015

18. Easements
• A right to use another person’s real
property for a particular purpose
– Appurtenant easement: Burdens one piece
of land for the benefit of another piece of
land
– Easement in gross: Benefits a person only
and not the land
March 2015

19. Creation of Easements
• Easement by express reservation
• Easement by express grant
• Easement by implication
• Easement by necessity
• Easement by prescription
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20. Termination of Easements
• Release
• Merger
• Abandonment
• Prescription
• Destruction
• Failure of purpose
March 2015

21. Liens (Financial Encumbrances)
• A nonpossessory (financial) interest in
property
– Voluntary liens (mortgages)
– Involuntary liens—general or specific
(vendor’s liens, mechanic’s liens, tax liens,
special assessments, judgment liens,
attachment liens
March 2015

22. Lien Priority
• General rule:
– Liens are given priority according to the order
in which they attached to the property
– Exception—A property tax lien is superior to
all other liens on the property.
March 2015

23. Adverse Possession
• Acquiring title to someone else’s real property
by possession of it.
• In Ohio, possession and use of property can
mature into title of the claimant’s possession
is:
– Open and notorious
– Hostile and adverse
– Exclusive
– Continuous for more than 21 years
March 2015

24. Land Use Restrictions
• Public
– Zoning ordinances, building codes,
subdivision regulations, environmental laws
• Private
– Conditions, covenants
March 2015

25. Zoning Ordinances
• Exceptions:
– Nonconforming uses
– Variances
– Conditional Uses
March 2015

26. Conditions and Covenants
• Conditions: Provisions on a deed (or
other document) that make the parties’
rights and obligations depend on the
occurrence (or non-occurrence) of a
particular event
• Covenants: Promises or guarantees,
either express or implied, in a deed or
other document.
March 2015

27. Chapter 5 Quiz
1.) Which rights are NOT transferred with
real property?
a. disposal rights
b. easements
c. encroachments
d. support rights
March 2015

28. Chapter 5 Quiz
2.) Chris owns land next to a lake and near a
mountain and needs to quickly come up with
some money for a stock investment. Which
would NOT be an appropriate option for Chris?
a. sell air rights
b. sell appropriative rights
c. sell an easement
d. sell mineral rights
March 2015

29. Chapter 5 Quiz
3.) A buyer and seller cannot agree on whether a
particular item should be included in the sale of
the house. What consideration will the court weigh
most heavily?
a. how complete the house will look without the
item
b. the intention of the annexer and the purpose of
the annexation
c. the opinion of the real estate agent
d. that, after closing, the annexer said she always
intended to remove the item.
March 2015

30. Chapter 5 Quiz
4.) Which is NOT considered a fixture to
real property?
a. built-in washer that is at the repair shop on
the day of closing
b. curio cabinet in the living room that the
buyer thought looked perfect with the room
décor
c. keys to the house
d. white picket fence around the house
March 2015

31. Chapter 5 Quiz
5.) A candy maker has a five-year lease and
installs a marble counter to roll candy on.
When the lease is up, the candy maker may
a. not remove the counter because he did not ask
the owner if he could install it.
b. not remove the counter because it is a fixture.
c. not remove the counter because of a verbal
agreement.
d. remove the counter because it is a trade fixture.
March 2015

32. Chapter 5 Quiz
6.) Which does not describe a real
property interest for a limited period of
time?
a. defeasible fee estate
b. leasehold estate
c. life estate
d. life estate pur autre vie
March 2015

33. Chapter 5 Quiz
7.) A fee simple absolute estate is NOT
a. conditional.
b. inheritable.
c. perpetual.
d. transferable.
March 2015

34. Chapter 5 Quiz
8.) Which is NOT a valid time period for
an estate for years?
a. two weeks
b. two months
c. two years
d. until all inventory is sold
March 2015

35. Chapter 5 Quiz
9.) Which is NOT an encumbrance on real
property?
a. appurtenant easement
b. judgment lien
c. personal license
d. restrictive covenant
March 2015

36. Chapter 5 Quiz
10.) In deciding who will be paid from a
foreclosure sale, which is first in lien
priority?
a. first lien recorded
b. mechanic who filed a mechanic’s lien
c. mortgagee or original lender
d. state’s lien for real property taxes
March 2015

37. Chapter 5 Quiz
11.) JJ gets a personal easement in gross to hunt on
CC's land. Later, CC changes her mind. How can
CC terminate the easement?
a. buy JJ’s property
b. post a “No Trespassing” sign on her property
c. prove in court that there is no remaining wildlife
to hunt on her land
d. record a release from JJ that he will not hunt on
her land anymore
March 2015

38. Chapter 5 Quiz
12.) Jerry operates a farm in a suburb of Urbana,
Ohio. Later, the city expands and Jerry's farm is
now in the middle of an R-1 residential zoned
neighborhood. Jerry
a. can continue to operate the farm as a
nonconforming use.
b. can keep his house, but he needs to tear down
his silos and barn within the next five years.
c. cannot consider subdividing his farm because of
the zoning change.
d. must sell his farm and move.
March 2015

39. Chapter 5 Quiz
13.) Pat is buying a house from Terry, subject to
an existing mortgage. What will happen if Pat
cannot make the payments?
a. The lender will sue Pat to try and collect the debt
because buying the house subject to the existing
mortgage was the same as an assumption.
b. Pat will lose the equity in the home, but will not be
liable to repay any other money for the debt.
c. Pat will lose the house and have to pay the entire debt.
d. Since Pat bought the house subject to the existing
mortgage, the old mortgage is of no concern and Pat
can continue to live there.
March 2015

40. Chapter 5 Quiz
14.) Which is NOT a possessory interest
in real estate?
a. fee simple absolute
b. fee simple defeasible
c. fee simple indeterminable
d. life estate
March 2015

41. Chapter 6
Brokers, Salespeople,
and the Agency
Relationship
March 2015

42. The Broker-Salesperson Relationship
• An agent is a licensed salesperson who
represents another in a real estate
transaction or a person authorized to
represent the principal in dealings with
third parties
• A salesperson is an agent of his broker
• The broker-salesperson relationship is
also an agency relationship
March 2015

43. Creating an Agency Relationship
• An agent’s authority always comes from
the principal
• Depending on the scope of authority, an
agent may be classified as:
– Universal
– General
– Special
March 2015

44. Authority
• Actual authority (listing agreement)
• Express authority
• Implied authority
March 2015

45. Real Estate Agency Relationships
• Principal/client
• Customer
• Subagent
• Buyer broker
• Salespeople are subagents of the broker’s
client
• It is illegal for a salesperson to represent a
client directly, without a broker
March 2015

46. Ohio’s Agency Law
• Ohio Agency Law no longer presumes that
brokers represent sellers
• Pro for buyers because they now have an
advocate
• Pro for sellers and listing agents because
they don’t need to worry about liability for
representations made by the buyer’s
agent/broker because that person is no
longer their subagent
March 2015

47. Agency Relationships
• Under Ohio’s Agency Law, there are four types of
agency relationships that may be entered into:
– Agency relationship between a licensee and a seller
– Agency relationship between a licensee and a
buyer
– Dual agency relationship between a licensee and
both seller and buyer
– In-company or “split” agency relationship between
two licensees in the same brokerage
March 2015

48. Agency Relationships
• The four types of agency relationships, in different
combinations, offer brokers five models of
business under which a brokerage may operate:
– Brokerage practicing split agency and dual agency
– Brokerage practicing dual agency for all in-house
transactions
– Brokerage practicing exclusive buyer agency only
– Brokerage practicing exclusive seller agency only
– Brokerage practicing split agency but no dual
agency
(cont.)
March 2015

49. Agency Relationships
• Management-level licensees
– A licensee who is employed by or affiliated with
a real estate broker and who has supervisory
responsibility over other licensees employed by
or affiliated with that real estate broker
• Split Agency
– When two salesperson-level licensees in the
same brokerage represent two different parties
in the same transaction, with only their broker
considered a dual agent
(cont.)
March 2015

50. End Module 3
March 2015