What is the Difference between Real Estate and Real Property?

While discussing investments, you might have come across the terms real estate and real property. It looks like both are the same. Right? Real property includes real estate and a bundle of rights. So, what exactly are real estate and real property?

Real Estate and Real Property

Real Estate:

Real estate means land, and any human-made structure permanently attached to the land. Real estate also includes all the natural resources under the land. If you take a farm as an example, the land, the farmhouse, barns and other permanent structures on the land are all part of real estate. Even the crop and trees on the land are part of real estate. The animals, however, are not real-estate as they are not attached to the land in any way.

Real Property:

Real Estate is a lesser-known term, and most people are ignorant of the legal implication of the term. Real property includes a real estate, and it consists of a bundle of rights. Bundle of rights refers to the rights of a property owner. Therefore, real property includes both physical objects and legal rights. However, real estate merely applies to the physical property. So what are the rights that we are talking about for Real property?

Bundle of Rights:

The bundle of Rights comprises of five different rights of the property owner.

1. The Right of possession:

The right to possession is given to the titleholder of property. The titleholder is considered the owner of the property. This right is usually not limited barring a few exceptions like the titleholders failure to pay property taxes.

2. The Right of Control:

The right of control allows the titleholder to use the property in any manner he pleases without breaking the law.

3. The Right of Enjoyment:

The right of Enjoyment enables the titleholder to indulge in any activity he finds pleasurable while he is on the property.    However such actions should not be illegal.

4. The Right of exclusion:

The Right of Exclusion allows the titleholder to decide who can or cannot enter the property.

5. The Right of Disposition:

The Right of Disposition enables the titleholder transfer ownership either permanently or temporarily to another qualified party.

Real Property Vs. Personal Property:

We have discussed real property and its significance. All those properties which are not real property are personal property.

Sometimes a personal property can become a real property. For example, if a house owner buys a Jacuzzi, it becomes a personal property. However, when he installs the Jacuzzi it becomes attached to the land, and it becomes a fixture, which is real property. This process of converting personal property to real property is called annexation. Likewise, a real property becomes a personal property when it is dismantled from the land.

In summary, real estate is land and everything attached to the land, including the resources below the soil. Real property is real estate along with the bundle of rights that protect the rights of titleholder.

What is the Difference between Real Estate and Real Property?