Real Estate Law

Real Estate Law

Real estate is a term that encompasses land as well as anything permanently affixed to the land. In some jurisdictions the term “real estate” refers to the land and fixtures together, referring to ownership of land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof. While in some other jurisdictions ownership of land and that of appurtenances can be different. Real estate is “real” property and should be distinguished from “personal” property. “Real” property happens to be immovable, which would transfer title along with land until statute provide otherwise. But personal property is movable and there is no automatic transfer of title along with land. 

Real estate law is the body of regulations and legal codes which pertain to real estate matters under a particular jurisdiction and include things such as commercial and residential real estate transactions. Real estate transactions are governed by a wide body of federal statutes and state statutory and common law. The requirements established by state law often differ significantly from one state to other.

Real estate transactions and related statutes:

Real estate transactions are heavily regulated. All states require real estate agents and brokers to be licensed. To get a license, a person must have a high school diploma, be at least eighteen years old, and pass a written test on real estate principles and law.

Process of real estate transaction begins with the appointment of real estate brokers as the agent of the seller in order to obtain a buyer. Real estate agent has to sign a contract with the seller that is termed as listing agreement. The agreement may be an open agreement whereby the broker earns a commission only if he finds a buyer. Such agreement can be done with more than one real estate broker. But, the listing
agreement may be exclusive wherein the broker is the only agent entitled to a commission for finding a buyer and he would be entitled to a payment even if the seller finds the buyer without his aid. 

Since the 1970s, real estate buyers have been given additional protection under the law. Many states and municipalities require a seller of real estate to file a truth-in-housing statement. A seller needs to disclose all problems with the real estate, such as a wet basement or the presence of termites, on the form. Failure to disclose this information can result in the revocation of the purchase agreement or a lawsuit by the buyers against the seller for fraud. In addition, some laws require an inspector to visit the property to determine if there are any problems.

The federal government enacted the Real Estate Settlement Procedure Act of 1974 (RESPA) to ensure that the buyer of residential real estate is made aware of the many costs associated with the sale. RESPA mandates that a federally insured lending institution give the buyer advance notice of all the costs to be paid on the date of closing the transactions. These costs typically include the cost of property surveys, appraisals, title searches, brokers’ fees, and administrative and processing charges.

There is a federal enactment known as “The Federal Fair Housing Act” that prohibits discrimination in real estate transactions on account of race, color, religion, sex or national origin. Real estate brokers are specifically prohibited from discriminating by the act.

The agreement to sell between a buyer and seller of real estate is governed by the general principles of contract law.

It is required in real estate contracts that the title to the property be marketable. This requires that the seller have sufficient proof of title to all the property he is selling and that third parties not have undisclosed interests in the title. A title insurance company or an attorney is can be employed by the buyer to investigate whether the title is, indeed, marketable. Title insurance companies also insure the buyer against losses caused by the title being invalid.

In
order to pass title, a deed with a proper description of the land must be executed and delivered. Some states require that the deed be officially recorded to establish ownership of the property and/or provide notice of its transfer to subsequent purchasers.

Common forms of real estate ownership:

There are a variety of forms of real estate ownership. Some of them include:

1. Sole Ownership – In sole ownership entire ownership vested in one person that is individual or corporation.

2. Joint Tenancy
- In joint tenancy, each joint tenant has an undivided right to possess the whole property. When one joint tenant dies, his interest automatically vests in the surviving joint tenant(s) by operation of law. All state does not allow this form of ownership.

3. Tenants in Common
- In this type of ownership, real estate is owned by two or more persons at the same time. The proportionate interests and right to
possess and enjoy the property between the tenants in common do not have to be equal. Upon death, the decedent’s interest passes to his/her heirs named in the will who then become new tenants in common with the surviving tenants in common. 

4. Tenancy in the Entirety
- Some states have a special form of joint tenancy when the joint tenants are husband and wife with each owning one-half. Neither spouse can sell the property without the consent of the other. 

5. Community Property
- A few states recognize community property, a special form of joint tenancy between husband and wife, each owning one-half. Upon death, the decedent’s interest passes in a manner similar to tenants in common.

Restrictions imposed by law on use of real estate:

There
is a myriad of federal, state, county and local laws which restrict on use of real estate. Enforcement of these laws typically resides with various governmental agencies which are responsible for keeping owner of residential estate in compliance with the laws. Following are some common restrictions imposed by government:

1. Zone restrictions – There can be restriction on the use of the property as to residential, industrial, agricultural, or commercial purposes, etc.

2. Environmental hazards storage restrictions
- There can be government regulation on the hazardous materials like asbestos, lead paint, petro-chemicals, radon and toxic wastes, etc. that can be stored on the real estate.

3. Public easement
- Government can impose such condition on the real estate so as to provide a portion to be left open for others to use. Easements and right of way are used to allow access to other property, to provide for roads and sidewalks, and to enable electric/gas/telephone/sewer lines to be installed. 

Violation of government law can result in fines, penalties, injunctions and even criminal prosecution resulting in you being sent to prison.

Non-government restrictions on use of real estate:

In addition to restrictions on use of real estate that are imposed by law and government regulations, there may also be private party agreements and other restrictions controlling use of real estate. For example, a real estate developer may sell homes in a subdivision or condominiums subject to restrictive covenants in the purchase contract.

In
addition to the right of owning real estate, it is important to recognize that there are responsibilities and potential liabilities to others which also result through ownership of real estate. For example:

1. Ownership of real estate may be subject to a mortgage and failure to pay the mortgage may result in the lender to take over the real estate.

2. Similarly a lien (such as a “mechanic’s lien” or “judgment lien”) for payment of a debt can be placed against real estate.

3. In case of negligent use of real estate, if someone is injured the owner may be held liable to the injured person for all damages. 

Real estate ownership through adverse possession:

Traditional
common law provided rule of adverse possession whereby someone could obtain title to real estate through uninterrupted use for long time. The common law rules for adverse possession have been codified under both federal and state statutes. Hence, a person to gets title of real estate from the actual owner simply by using the land. There are several elements needed for adverse possession to result in title:

1. The length of time required for adverse possession in title varies – it could be as short as a few years or could run for twenty years or more. Typically public entities must establish a longer period of possession than individuals. Some states have adopted a rule which requires the adverse possessor to pay taxes each year on the land.

2. The possession must be open for all to see.

3. The possession must be exclusive to him.

4. The possession must be hostile to the actual owner of the land.

To gain title to land through adverse possession requires strict compliance with the law, but can have dramatic impact upon land ownership rights.

An encroachment could result in title of real estate being transferred to an adverse possessor if action of trespass is not brought in time.

Recording of Title:

The
conveyance of real estate is not complete until the written document (called “the deed”) stating transfer of ownership is exchange usually for a specified amount of money is not given. The same should be recorded with the county recorder in the county where the property is located. The purpose of recording the deed is to give “notice to the world” that you now have an ownership interest in that particular piece of real property.

Recording also tracks the chronological chain of title. Anyone who wants to know who owns a particular real estate can check the records of the county recorder for the county where the property is located. 

Attorneys specializing in real estate laws:

Attorneys
specializing in real estate laws must have insight and knowledge in areas such as common laws, federal and state real estate statues, mortgage law, documentation, etc. Real estate attorneys can help clients in transferring clear title of real estate or getting mortgage of the real estate. He can suggest on legal restrictions on use of real estate, tax to be paid to government, ways to safeguard ownership of the real estate, etc. Besides he is expert to represent clients in court if any matter is committed to court. He may also try to get out of court settlement. 

Individuals
looking for an attorney specializing in real estate laws need to find someone who is well versed in law of torts common laws, federal and state real estate statues, mortgage law, documentation, etc. 

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