Chapter 1-23 Solutions to Questions—Chapter 1 An Introduction to Real estate Investment: Legal Concepts Question 1-1 What is the difference between real property and personal property? Real property refers to the ownership rights associated with realty. Realty refers to land and all things permanently attached. Personal property refers to ownership rights associated with personalty. Personalty are all things, tangible, intangible that are movable. This includes all things that are not realty. Question 1-2 What is meant by an estate? Estate is used to denote a possessory or potentially possessory interest in real estate. However, not all interests in real property are estates. Ownership can be quite different from possession and a variety of legal factors affect the ownership rights associated with real estate. The economic benefits expected by lenders, investors, and other parties in a real estate transaction are affected by these legal factors. Question 1-3 How can a leased fee estate have a value that could be transferred to another party? The original fee owner can give up some property rights to a lessee. The value of the leased fee estate will depend on the amount of lease payments expected during the term of the lease plus the value of the property when the lease terminates, and the original owner receives the reversionary interest. Question 1-4 What are title records? What is an abstract of title? Title records (sometimes referred to as deeds and conveyances records and/or real property records) are created and maintained usually at the county level. These records identify all properties in a county, including location, present ownership and any liens or encumbrances affecting each property. These records are critical to investors who want to identify the owner of specific tracts or land, existing buildings, etc. These records are also important because they contain evidence of encumbrances such as mortgage liens, tax liens (to be covered in later chapters), etc. Example: a prospective investor sees a vacant tract of land that he is interested in purchasing. Because there is no signage or any improvements on the land, how can the land owner be identified and contacted? By going to the county records office (deeds and conveyancers department) the investor can use the address to locate a property (usually in plat books), then the current owner. These records are used to link a precise property to its owner. At some point, if this investor continues to be interested in purchasing the land, he will likely retain an attorney or abstractor to do a title search and abstract of title. The latter is done to not only