Title and Types of Property Ownership

Property ownership is more involved than just having a key and a mortgage to pay.  This article will provide an overview of basic terms and rights that define property ownership in the United States.

Property law defines Title as a bundle of rights in a piece of property.  A deed is a formal document that serves as evidence of ownership.

Real Property

A house is commonly referred to as real estate, but according to the definition of real property, what we are actually recognizing is the land and structures integrated or affixed to the land.  So the title to Real Property provides the owner with various rights including possession, use, the right to buy and sell it, as well as water rights, mineral rights, farming rights, and air rights to name a few.

Fee Simple Ownership

Fee Simple Ownership is the type of ownership that most people think of when they buy a home.  This ownership type allows you to purchase the Real Property defined as the land, and everything permanently attached to it, and all of the interest, benefits, and rights inherent in the ownership of real estate.

Condo or Co-op

The other ways that you can purchase a dwelling is through a Condo or Co-op.  Purchasing a condo, or condominium, is closest to having Fee Simple Ownership of the property, where the owner holds title to a piece of real estate, but typically a condo purchase only buys you an individual unit in a community or apartment building of other units where the condo owners jointly share common areas, it does not convey the land under the dwelling.

Purchasing a Co-op (cooperative) is not the purchase of Real Property, it is actually the purchase of a share in a corporation that collectively owns the building where the dwelling is located.  The share then entitles its owner to the use of the unit and a say in how the building corporation is run.

Lease

The above methods to own or hold property are distinct from a lease where some of the Real Property rights, such as possession, are conveyed to the tenant while the rest are maintained by the owner or landlord.

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Next week we’ll talk about how broker commissions work and who typically pays.