Download Property Law: Understanding Real and Personal Property Rights - Prof. Janine S. Hiller and more Study notes Finance in PDF only on Docsity! AN INTRODUCTION TO PROPERTY LAW Legal Environment of Business Professor Janine Hiller Black’s Law Dictionary (the ultimate law dictionary) defines property as “an aggregate of rights which are guaranteed and protected by the government, ” and “everything which is the subject of ownership.” This definition would follow the jurisprudence of positivism; property is what is defined and protected by the sovereign. But another way to look at property is through the lens of natural law; John Locke’s famous phrase is that “life, liberty and property” are the three most important aspects of man’s natural rights (and should be protected by the government). Notice how this phrase was modified by Thomas Jefferson (life, liberty and the pursuit of happiness) in the U.S. Constitution. Thinking critically, you can certainly understand how our economic system of capitalism is inextricably connected to private property law and you could find many modern theories relating to this. Property is divided into real property and personal property. Real property is land and everything “permanently” attached to land; basically personal property is everything else. Personal property can also be divided into the tangible and intangible; tangible property includes that which exists as a physical object (for example, a car), whereas intangible property represents rights that do not exist separately in physical form (for example, stock ownership, copyrights, etc.) Real property law in the United States is steeped in historical anachronism. It is connected by legal history to the feudal system, and still uses the phrases of “tenancy,” “freehold” and “estates.” Covenants can “run with the land” and ownership may be “vested.” So, when you are involved in real property transactions you will run into odd sounding language and it is important to involve a legal professional to help guide you through the maze. For example, a deed may grant you a “fee simple absolute,” and as your eyes glaze over, it is good to have it explained that these three words are among the most important ones for property owners; it means you own the whole “bundle of rights.” Having that bundle of rights means that you have all the ownership rights possible. You can possess that property, exclude others, use it as you wish (see zoning laws) and you can give, sell, bequeath (at your death in a will), or lease it. See how much easier it would be to simply say those 3 magic words, fee simple absolute instead of listing all those rights? Leases (a kind of contract), and contracts for the sale of real property, deserve a special note for business study. Because the land itself, the actual dirt that could grow crops and support wildlife, was valued in the feudal days, the common law did not recognize rights relating to the dwelling or building. So, if the house you rented was inhabitable, so what? Most states now have statutes that protect residential renters, but many do NOT extend the same protections to businesses. If your business wants to have access to hot running water, make sure that it is in the lease. When a business buys real estate, if it is necessary that the buildings meet standards or requirements, it is important to make sure this is part of the real estate sales contract. Here are some real property terms that will useful for you to know as a business professional: Caveat Emptor- “Let the buyer beware.” A phrase that describes that there are no promises about the real estate you are buying or leasing. So inspect well and think about the contract terms. Joint Tenants- holding ownership of real property as undivided (they act as one owner) equal owners.
