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BBM 411: Real Estate Finance Notes

Institution: Moi University

Course: Bachelor of Business Management

Content Category: Lecture Notes

Posted By: Jackline mbuya

Document Type: DOCX

Number of Pages: 67

Price: KES 100
 
    

Views: 894     Downloads: 36

Summary

REAL ESTATE FINANCE

1.0 INTRODUCTION TO REAL ESTATE
The term estate means “all that a person owns.” Real estate is used to refer to things that are not movable such as land and improvements permanently attached to the land, and ownership rights associated with the real estate are referred to as real property. The term estates in real property is used to describe the extent to which rights and interests in real estate are owned. A system of modifiers has evolved, based on English property law that describes the nature or collection of rights and interests being described as a part of a transaction.
BUNDLE OF RIGHTS IN REAL ESTATE
Owning real estate carries with it a traditional "bundle of legal rights" transferred with the property from seller to buyer. These are the recognized rights of the holder of title to the property and include:
• the right of possession - the property is owned by whomever holds title;
• the right of control - within the laws, the owner controls the use of the property;
• the right of exclusion - others can be excluded from using or entering the property;
• the right of enjoyment - the owner can enjoy the use of the property in any legal manner; and
• the right of disposition - the title holder can sell, rent or transfer ownership or use of the property at will
• Ownership of land is holding "title" to it. The evidence of that title is the deed. The seller executes a deed to transfer title to real property and the bundle of rights that go with it.

Assignment 1: Explain some of the limitations that can be placed on property rights. Hypothesize on the motives behind these limitations.

1.1 Interest and easements
• Interest refers to the broad legal term used to denote a property right. The holder enjoys some rights or degree of control or use and in turn may receive payments for the sale of such an interest.
• Value is viewed as the total price individuals are willing to pay for the flow of benefits associated with all of these rights. One needs not to own to have rights to some of the benefits of real estate e.g. In a lease, the lessee has right to exclusive use of the property for a period of time.
• Interest in real estate refers to the right or claim on real property, its revenues or production. Interest are created by the owner and conveyed to another party usually in exchange for rent or other consideration.
In real estate an interest is usually thought to be less important than an estate eg mortgage loan in which lender gets secured interest but not possession, use, etc.
• Easements – refers to a non-possessory interest in land. It is the right to use the land owned or leased by someone else for some special purpose. An easement entails only a limited user privilege and not privileges associated with ownership.
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