real Property

Financial Dictionary -> Mortgages -> real Property

Real Property is generally a term used in law to refer to land and real estate and their value. It can be defined as the property that is physically "real" and not items or decorations that might improve its value aesthetically. An example of this would be a nice pair of curtains. This is not real property or part of the sale or value of a house, yet may inspire the buyer to purchase the house because they lighten up the room.

Real property is the land, buildings and anything physically built in or nailed to the land or buildings. If the land is sold, all real property is taken in to account. A house, its fences and any extensions are real property, whereas a pair of curtains a TV or a bed are classed as personal possessions and aren't part of the sale price. Although some people do, all personal property should not be left behind after a sale. Real property is often called "reality" and personal property is often called "personality."

In some cases items that may ordinarily be considered as personal property can be considered real property if it is contractually laid out before a sale. In some cases property has been part of the estate for so long, that it has become an heirloom and is sold with the property. This usually occurs with special buildings outside the realms of the normal purchase of a house, such as tourist attractions. There's nothing actually stopping somebody including a personal item in the sale of a house, but it is a rare occurrence that muddies the true value of a property.

Some real property, despite being similar has far greater differences in value due to the way the land is used. For example a 30 acre garden has a lot less value than the same amount of land which was used for farming.

Estates may have different types of "interests" defined by the deed. The most common type of estate is a "fee simple" estate where it can be freely and "simply" bought and sold. Your house may be a "fee simple" estate.

Other estates may be on a lease to a tenant, who then pays rent to the owner. Others may be on a "life estate" granting them ownership until they die and so on.