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February 02, 2017

Why Real Estate is Covered by Special Laws

Why Real Estate Is Covered by Special Laws

Of course you know that buying a condo and buying a Cutlass aren’t really comparable. Besides all the obvious differences, they are treated differently by the law.

Why is buying or selling a home more complicated than buying or selling an expensive car or boat?

Boats and cars can be expensive, and taxes and financing considerations can affect buying or selling them. But under the law, these items are considered personal property. Real estate, on the other hand, is considered real property. The law treats each type of property differently.

Personal property is usually easily moved and often owned for just a short period Possession of personal property also is a strong indicator of ownership. With real estate, on the other hand, the property cannot be moved and possession does not necessarily mean ownership. For example, unless property is fenced in, it may be difficult to distinguish a neighbor's property from your own. And, while you may own real estate, you may not have possession of it, if, for example, you are renting the property to someone else.

Other factors that distinguish real estate from personal property are:

  • many different people can have an interest in the same real property;
  • foreclosing on real property is much more difficult than repossessing a car; and
  • real estate is taxed differently than personal property.

How can different people have an interest in the same property?

Real property can include:

  • the land and everything under it, including minerals and water;
  • anything of value on the land such as crops or timber;
  • the airspace over the land;
  • improvements on the land such as buildings, for example a garage, barn, or fence.

Ownership of these elements may be separate or shared and may also be subject to legal claims or liens. (A lien is a claim against property representing an unpaid debt of the owner or an unpaid judgment entered against the owner by a court of law.)