Real estate or real property? While both real estate investing terms have much in common, a key difference sets them apart. Let’s consider real estate versus real property and get some clarity on these two concepts.
What is real estate?
Real estate refers to a plot of land along with any attachments or improvements, whether natural or man-made, that may be present on that land. Natural attachments may include water, trees, minerals, and oil. Man-made or artificial attachments include houses, buildings, sidewalks, and other features built to enhance the land for residential or commercial use.
Residential real estate includes properties intended to be sold to a buyer or rented to a tenant; these include houses, townhouses, and apartment buildings. Commercial real estate also deals with land and buildings, but it has a distinct focus on business tenancy, which includes offices, restaurants, and retail establishments. There’s also a subcategory of commercial real estate known as industrial real estate, which includes investment properties like warehouses that are used in large-scale manufacturing and production.
What is real property?
Real property is not exactly the same as real estate. It’s similar in that the term refers to the land and any additions or improvements made to it. But behind the physical nature of the real estate, real property also includes the owner’s rights of use and enjoyment of that property.
What is the bundle of rights?
There are five property rights — known collectively as the bundle of rights — granted to those who have ownership interest in a real property:
The right to possess: This means an owner or investor has the title and is therefore allowed to occupy the property.
The right to control: This means a property owner, landlord, or real estate investor is allowed full usage of the property — as long as they don’t break any laws doing so.
The right of exclusion: This means the title owner is allowed to prevent other parties from entering the property. This right, however, is superseded by a property search warrant by law enforcement. Another scenario would involve a utility company needing access to the property, in which case an easement might be used to waive this right.
The right of enjoyment: Just as with the right to control, the title holder is allowed to use the property at their own discretion, as long as they are not breaking the law.
The right of disposition: This right allows the current owner to transfer property ownership (fee simple) to another party, whether temporarily or permanently. This right is enjoyed only when the property is free of a mortgage, lien, or other encumbrance.
A word about semantics
You might be thinking, “Well, of course a property transaction includes the land and the buildings on it.” Or, “Real property? Does that mean there’s fake property?”
Even when the details of the property in question seem obvious, making assumptions in real estate isn’t wise. Contracts are vital, and getting their language right is everything, so it’s important to know when we’re talking about the land and building alone or the ownership rights that go along with it.
The Millionacres bottom line
It’s easy for the terms “real estate” and “real property” to be used interchangeably when referring to the real estate market. However, real property refers to the entire experience of being a property owner, not just the land and structures on it.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
