Fundamentals of Property Ownership – SIMPLIFIED

FUNDAMENTALS OF PROPERTY OWNERSHIP

LAND, REAL ESTATE AND REAL PROPERTY:

These words land, real estate and real property are often used interchangeably.  To be able to have a clear understanding of the nature of real estate, licensees or brokers need to be aware of the subtle yet important difference in meaning.

Land –              is defined as the earth surface extending downward to the center of the earth and upward to infinity, including things permanently attached by nature such as trees, water.  It also refers not only to the surface of the earth but also to the underlying solid and things that are naturally attached to land such as boulders, minerals and substances under the surface of the earth.

Real Estate   – is defined as land at above and below the earth’s surface, including all things permanently attached to it, whether natural or artificial.  The term real estate is therefore broader that the term LAND and includes not only the physical components of land provided by nature but all permanent improvements constructed on the land.  An improvement is any artificial things attached to the land, such as buildings, fence, road, sewers, and underground drainage system and other additions to make it suitable for building.

Real Property – is defined as the INTEREST, BENEFITS, and RIGHTS inherent in the ownership of real estate.  The term real property is thus broader still.  It includes the physical surface of the land, what lies below it, what lies above it and what is permanently attached to it, as well as the BUNDLE OF LEGAL RIGHTS.

LAND	PHYSICAL IMPROVEMENTS REAL ESTATE	THE BUNDLE OF RIGHTS REAL PROPERTY
Earth’s surface to the center of the earth and air space above the land including the trees and water.	Land plus permanent man-made additions	Real plus the Bundle of Rights

CONCEPT OF OWNERSHIP

Ownership is the independent right of a person to the exclusive enjoyment and control of a property including its disposition and recovery subject only to the restrictions established by law and rights of others.

THEORIES OF REAL PROPERTY:

There are two concepts of real estate that licensees or brokers should know.  First, is the LEGAL CONCEPT OF REAL ESTATE and second, the “BUNDLE OF RIGHTS” concept.

Legal Concept of Real Estate –  Land includes not only the ground or soil, but everything that is attached to earth, whether by course of nature, such as trees and herbage, or by the hands of man, such as houses, roads, buildings. It includes not only the surface of the earth, but everything under it and over it.

The following definitions are derived from the above concept:

Real Estate – Is defined as the physical land and appurtenances, including structures affixed thereto;

Real Property – Are the interest, benefits and rights inherent in the ownership of real estate such as FEE SIMPLE ownership and the “Bundle of Rights”.

Personal Property – Is defined as the movable items not permanently fixed to real estate.  Generally, but with exemptions, items remain personal property if they can be removed without sort us injury to the real estate or the items themselves.

RIGHTS INCLUDED IN OWNERSHIP

Origin of Bundle of Right Concept?

The concept of bundle of rights comes from the old English law.  When the populace could not commonly read and write, a seller transferred property by giving a purchaser a bundle of sticks from a tree on the property sold.  This process was referred to a “LIVERY SEISIN”.  The purchaser who hold the bundles also owner the tree from which the sticks came and the land to which the tree was attached.  Because the rights of ownership can be separated and individually transferred, the sticks become symbolic to these rights.

Fee Simple Defined:  is defined as the absolute right of ownership without limitations to any particular class of heirs or restrictions, but subject to the limitation of the ESCHEAT, POLICE POWER, EMINENT DOMAIN & TAXATION

Fee simple consists of the so – called “bundle of rights” which are inherent in or appurtenant to ownership, without any limitations or restrictions other than those imposed by law or contract.

The bundle of rights include the following:

1.       Right to posses (Jus-Possidendi)

2.       Right to use (Jus-Utendi) and abuse (Jus-Abutendi)

3.       Right to the fruits (Jus-Fruendi)

4.       Right to dispose (Jus-Disponendi)

5.       Right to vindicate or recover (Jus-Vindicandi)

The rights incident to ownership are, the right:

1.       to enjoy and dispose of a property without other limitations than those established by law;

2.       to file action against third parties to recover ownership;

3.       to use force as may be reasonably necessary to repeal or prevent an actual or threatened unlawful invasion or usurpation of his property (Art. 429, NCC, relate to Art. 312 RPC);

4.       the right to enclose or fence property – walls ditches, live or dead hedges – or by any other means without detriment of servitudes constituted thereon;

5.       the demand indemnity for damages cause to property;

6.       the right to compensation in the event of expropriation;

7.       the right to be restored possession in case of unlawful dispossession;

8.       the right to the surface and subsurface of the land, right o construct thereon any works, plantation and excavation without detriment to servitude and subject to special laws and without right to complain o the reasonable requirements of aerial navigation;

9.       the right to hidden treasure;

10.   the right to accession and fruits o the property;

11.   the right to “quiet title” to real property or any interest therein.

LIMITATIONS OR RESTRICTIONS OR REAL PROPERTY OWNERSHIP:

While the legal definition of land or property implies complete ownership of land and everything attached to it, under it, and over it, legal title to land in fact does not convey absolute fee simple title to property and the unrestricted exercise of the entire bundle of rights.

LIMITATIONS ON RIGHT OF OWNERSHIP

1.       Those imposed in general by the State in the exercise of the following

a.       Police Power –  The government retains the right to relate property for promoting the public safety, health, morals and general welfare.  Zoning regulations or ordinances, building codes, traffic regulations and sanitary regulations are based upon the police power of the government;

 

b.       Eminent Domain – This is the right reserved by the government for public use/benefit upon payment of just compensation.  Or the right reserved by government to take by expropriation/condemnation private property for public use upon payment of just compensation;

c.       Taxation – The government exercise power of taxation on real properties to raise funds for its operations and services that protect and otherwise benefit citizenry. Services or benefits most provided are schools, police and fire protection, parks, libraries, street maintenance, garbage collection and welfare payment to elderly and needy.

d.       Escheat – It is the reversion or automatic conveyance of realty to the government, upon owner’s death, due to the absence of a will, heirs or other legal claimants ascertainable on the face of the title;  or when the owner does not pay his taxes.

2.       Those imposed by law such as legal casement, requirement of legitimate in succession, zoning, building code, rent control, urban and agrarian reform, subdivision regulations, escheat.

3.       Those imposed by the grantor of the property on the grantee by contract, such as donation, last will, usufruct.

4.       Those imposed by the owner himself, such as voluntary casement, lease, mortgage.

 

SURFACE, SUBSURFACE AND AIR RIGHT

Land, in its legal signification, extends from the surface downwards to the enter of the earth and extends upwards indefinitely to the skies.

The surface and subsurface of rights of an owner entitle him to construct thereon any works or make any plantations and excavations without detriment to servitudes and special laws.

Air right is the right of an owner to use and control the air space over his land subject to the requirements of aerial navigation, laws, or contract.

MEANING OF TITLE

“Title” is not synonymous with Torrens Certificate of Title.  Rather, it is a generic word which means proof, evidence, or monument of ownership, such as tax declaration, realty tax receipts, deed of sale, and Torrens Certificate of Title.  But, of course, the best title or best evidence of ownership is the Torrens Title because it is indefeasible, imprescriptible, and binding against the whole world.

MODES OF ACQUIRING TITLE

1.       Private Grant – voluntary transfer or conveyance of private property by a private owner, such as sale or donation.

2.       Public Grant – acquisition of alienable lands of the public domain by homestead patent, free patent, sales patent, or other government awards.

3.       Involuntary Grant – acquisition of private party against the consent of the former owners, such as foreclosure sale, expropriation, execution sale, or tax sale.

4.       Descent or Divise – Descent may be acquired by virtue of hereditary succession to the estate of the deceased owner. This requires a certain degree of relationship. In Divise, succession need not be in favor of a relative. Title to the property is transferred by way of a will executed by the testator (owner of the property)

5.       Reclamation – filling of submerged land, subject to existing laws and government regulations.

6.       Accretion – acquisition of more lands adjoining the banks of rivers due to the gradual deposit of soil as a result of the river current.

7.       Prescription (Adverse Possession) – acquisition of title by actual, open, continuous, and uninterrupted possession in the concept of owner for the period required by law.

8.       Emancipation Patent – the grant of agricultural land to tenant-farmers in the implementation of the land reform program of the government.

RIGHT TO OWN

1.       General Rule – Only Filipino citizens and corporations at least sixty percent of the capital of which is owned by Filipinos are entitled to acquire and own land in the Philippines

2.       Exceptions to General Rule – Alien acquisition of real estate in the Philippines is allowed in the following cases:

a)       Acquisition before the 1935 Constitution

b)       Acquisition thru hereditary succession if the acquiree is a legal heir.

c)       Purchase of not more than forty percent interest in a condominium project. (RA 4726)

d)       Purchase by former natural born Filipino citizens subject to limitations prescribed by B.P. 185 (residential lot)  and R.A. 8179 (commercial lot).

3.       A Filipina  who marries an alien retains her Philippine citizenship (unless the law of her husband’s country makes her assume the citizenship of her husband because of such marriage) and can therefore acquire real estate in the Philippines.

ACQUISITION BY FORMER NATURAL BORN FILIPINO CITIZENS

1.       Mode of acquisition is not limited to voluntary deeds (such as sale or donation) but includes involuntary deeds (such as foreclosure, execution or tax delinquency sale).

2.       Maximum area that may be acquired.

a.               BP 185 – residential purpose – 1,000 square meters of urban land or one hectare of rural land.

b.               RA 8179 – business purpose – 5,000 square meters of urban land or 3 hectares of rural land.

“Business purpose” refers to the use of land primarily, directly, and actually in the conduct of business or commercial activities in the broad areas of agriculture, industry and services, including the lease of land but excluding the buying and selling thereof.

3.       In case of married couple where both spouses are former natural born Filipino citizens, both of them may avail of the right provided that the total acquisition shall not exceed the maximum area allowed.

4.       A transferee who acquired urban or rural land for residential purpose while still a Filipino citizen may acquire additional urban or rural land for residential purpose which, when added to that already owned by him, shall not exceed the maximum area allowed by law.

The same right applies to a transferee who already owns urban or rural land for business purpose while still a Filipino citizen.

5.       A transferee who has already acquired urban land for residential purpose shall be disqualified to acquire rural land for residential purpose and vice versa.  The same rule applies to a transferee of land for business purpose.

However, a transferee of residential land under B. P. 185 may still avail of the right to acquire land for business purpose under R. A. 8179.

LANDS OF THE PUBLIC DOMAIN

1.       Under the Constitution, lands of the public domain are classified into agricultural, forest or timber, mineral, and national parks.

2.       Alienable lands of the public domain shall be limited to agricultural lands.

3.       Filipino citizens may acquire alienable lands of the public domain not more than twelve hectares by purchase, homestead, or patent; or lease not more than 500 hectares.

Private corporations cannot acquire, but may only lease alienable lands of the public domain for a period not exceeding twenty-five years, renewable for the same term, and not exceed 1,000 hectares.

Stewardship concept of property ownership

A legal doctrine that the property is supposed to be held by the individual only as trustee for the people in general, and as a mere steward, the property owner must exercise his right to the property not just for his own exclusive and selfish benefit or interest but for the good and general welfare of the nation as a whole.

REGALIAN DOCTRINE on property ownership

A principle in law that all natural wealth – agricultural, forest or timber and mineral lands of the public domain and all other natural resources belong to the state. Thus, even if a private person owns the property where minerals are discovered, his ownership for such does not give him the right to extract or utilized said minerals without permission from the state to which such minerals belong.

What are Easements & Servitudes

EASEMENT refers to right of use over the property of another (dominant estate). Traditionally, the permitted kinds of uses were limited, the most important being rights of way and rights concerning flowing waters. The easement was normally for the benefit of adjoining lands, no matter who the owner was, rather than for the benefit of a specific individual. While;

SERVITUDE is a burden imposed upon another (servient estate). Servitudes are also classified as positive and negative. A positive servitude is one which obliges the owner of a servient estate to permit or suffer something to be done on his property by another. A negative servitude is one which des not bind the servient proprietor to permit something to be done upon his property by another, but merely restrains him from making a certain use of his property which would impair the easement enjoyed by the dominant tenement. It is stated in the law that a person has a right (easement) to impose a burden (servitude) upon another in cases provided for by law.

Requirements for a compulsory easement of right of way

a.   Property is surrounded by other properties and there is no adequate exit to the public   highway;

b.   Payment of the proper indemnity (just compensation)

c.   The isolation was not due to owner’s own act.

d.   The right of way claimed is at the point least prejudicial to the grantor