What Is Real Property? Definition and Types

If you’ve ever bought a home, then you’re already familiar with the concept of real estate and buying land. But equally important for home buyers is the term “real property.”

Real property refers not only to the home you’ve purchased, but it determines who has ownership interest and can benefit from that property. As a home buyer, it’s essential to take a closer look at what real property is and explore the different types of real property before you start the home buying process.

What Is Real Property In Real Estate?

Real property is the land and any structures attached to it that would factor into the property value. For example, a basketball hoop in the driveway is removable and does nothing to increase property value, so it’s not considered real property. On the other hand, a fixed basketball court would sell as part of the property, which qualifies it as real property.

Real property refers not only to the real estate and land you’ve purchased, but it includes any legal rights attached to that property. Real property is what gives you the right to own, lease, sell and use the property in any way you see fit.

It’s always important before you buy a home to understand your property rights and the transfer of ownership that takes place. If you’re in the process of buying a home, your real estate agent can help interpret ownership rights.

Types Of Real Property

The topic of real property may sound straightforward, but several classifications of ownership actually exist. Below are some common examples of real property.

Freehold Estates

A freehold estate refers to a person who owns real estate, and this ownership lasts an indefinite amount of time. But to meet the criteria for a freehold estate, the asset must be immovable. An example would be land and anything permanently attached to it like a house or storage shed, and there can’t be any timeline when ownership is set to expire.

The following three are primary types of freehold estates:

• Fee simple absolute: Fee simple refers to absolute, unrestricted ownership. As the property owner, you can use the land in any way you deem fit. As long as you pay your mortgage and taxes, you can own the property forever.
• Fee simple defeasible: This type of freehold estate refers to conditional ownership of land. For instance, you may encounter conditions stating the land can only be used for specific purposes.
• Life estate: A life estate grants homeowners interest in the property for as long as they live. The property holder is responsible for maintaining the property and keeping it in good condition.

Nonfreehold Estates

A nonfreehold estate refers to an interest in a property that’s less than a freehold estate. It’s also known as a leasehold estate and typically refers to leased land or rental agreements. Here are a few examples of nonfreehold estates:

• Tenancy for years: This is a type of lease agreement where a tenant has an interest in a rental property for a specified period of time. A specified beginning and end date are outlined in the contract.
• Tenancy at will: Tenancy at will is a lease agreement that can be ended at any time, assuming a reasonable amount of notice is given. Typically, the tenant will be given a certain time frame for when the leasing agreement concludes – after which the tenant faces eviction.
• Tenancy at sufferance: This type of tenancy is created when someone remains on the property without the legal right to do so and without the property owner’s consent. This can happen when a tenant stays at the property beyond the terms of their lease agreement.

Concurrent Estates

In a concurrent estate, property ownership is divided among multiple owners. These are the different types of concurrent estates:

• Joint tenancy: In joint tenancy, multiple people acquire real property and have equal ownership of the property.
• Tenancy by the entirety: In tenancy by the entirety, spouses can jointly own the property as one legal entity.
• Tenancy in common: Tenancy in common refers to an agreement where two or more people share ownership of real property. If one tenant dies, the property rights pass on to that person’s estate.

Personal Property Vs. Real Property: Meanings And Examples

All property is either personal property or real property, and the determining factor is whether you can move the object. Real property is land and anything permanently attached to it, while personal property (sometimes referred to as “chattel”) refers to anything the tenant has the right to take with them when they move off the land. Below are some examples of what’s considered real versus personal property.

Real Estate Vs. Real Property Meanings

Real property is any physical structure on a piece of land and all the rights of ownership associated with the property. Real estate refers to the land the permanent structures are attached to, as well as the structures themselves. When you buy or sell a piece of real estate, like a house or a piece of land, you’re actually buying or selling real property, including the rights of ownership to the land and the physical structures built on it.

The Bottom Line: Understand What Defines Real Property Before Buying A Home

If you’re looking to buy a home, it’s important to understand your rights concerning real property. These rights determine your ability to utilize the land at your discretion, and they give you the legal right to eventually sell the property to new homeowners.

Of course, understanding your rights is just one part of the homeownership journey. You’ll also need to make sure you can afford your new home and find a lender you can trust to help you finance the purchase.

Once you’ve taken the previous steps, you can start your mortgage application with Rocket Mortgage^® today. You can also give our Home Loan Experts a call at (833) 326-6018.