FIN3351_Ch.2_Notes - Chapter 2 Legal Foundations to Value I...

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Chapter 2: Legal Foundations to Value I. The Nature of Property o The Nature of Rights (Personal vs. Property Rights) Real estate – Rights to land and its permanent structures Characteristics of Rights Claims that the government is obligated to enforce Derived from the constitution and different from raw power (raw power isn’t obligated) Nonrevocable – can’t be taken away, but can be reduced in the interest of health, safety, and welfare. Enduring – can’t be nullified by the gov’t; not limited to the memory of owners or others. Personal rights – aka personal freedoms; rights derived from the Bill or Rights (U.S. Constitution); Supreme Court interpretations of the Constitution. Property rights – rights to things both tangible and intangible, derive from ancient times, and are as old as the notion of law itself. The principle rights include: (1) Exclusive possession (prevent others from using it), (2) Use and Enjoyment, and (3) Disposition (within the limits of safety) o Real Property and Personal Property: The Problem of Fixtures Real property – rights in land and its permanent structures. Land – includes (1) the surface of the Earth and improvements, (2) the air up to reserved air space or the tallest structure, and (3) beneath the earth as far as technology allows (oil mines, gold, etc.) Personal property – the rest; simply rights in any other kind of subject (personal and household goods), including intellectual matters (intellectual property, music, copyrights, etc.) Fixture – an object that formerly was personal property but has become real property Rules for determining whether an object has become a fixture: 1. Manner of attachment – removal of the object results in damage to the property 2. Character of the article and Manner of adaption – items that have been custom designed or fitted tend to be regarded as fixtures 3. Intention of the Parties – refers to the facts of the situation and the intention that an observer would reasonably conclude from them, NOT the private intention of the parties. 4. Relation of the parties – for landlord and tenant relationships, special versions of the rule of intention have evolved in determining fixtures:
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Trade fixtures – always considered personal property of the tenant. Agricultural fixtures – also considered personal property of the tenant.
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FIN3351_Ch.2_Notes - Chapter 2 Legal Foundations to Value I...

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