Dear Straight Dope:
Why is it called "real estate"? Is this a specific legal term, or is this something that was dreamed up by real estate agents because it sounds better than "land" or "property"?
It’s a specific legal term.
What, you want more? Well, first of all, “real estate” is not just another word for “land” or “property”; the three are all distinguished from one another, if rather minutely. Most real estate textbooks will start off with an intro like “Under all is the land.” This is meant both literally, as in, “hey, we’re walking on the land”, and metaphorically, as in, all other concepts in real estate law are based upon it. Land, legally, is defined just how you would think, i.e. “hey, the land is this stuff we’re walking on”.
Now, “property” can be defined as ANY thing that someone owns. Therefore, it is convenient to divide property into two types: portable and fixed. Portable property is typically called “personal” property in the law. Fixed property is also termed “real” property, as it can always be found, and touched, by anyone in the right location. Real property includes the land and anything attached to it, including man-made improvements and natural resources.
OK, what’s an estate? Broadly, an estate is any right or interest in property of any kind. When dealing with real property, just about any of the property owner’s rights can be granted for consideration (i.e. sold, rented, or exchanged), leading to such terms as “leasehold estate,” which is the right to occupy a property for a certain period of time (the lease); “leased fee estate,” or the right to collect money from a tenant, but not to occupy the property; or an “estate of inheritance,” which is the right to dictate who gets your property (real or personal) after your death. The most familiar situation, when a property owner occupies their own estate and holds all of the rights of ownership (subject, as always, to governmental jurisdiction), is called fee simple estate.
Which brings us to a good, working definition of real estate. Simply put, it is the putting together of all of the “bundle of rights” inherent in the property. In a leased property, the real estate is the sum of the tenant’s rights and the landlord’s rights; while in a fee simple situation, the real estate is held by one entity, unencumbered by any other interest or estate. In other words, real estate is defined as the land, the stuff permanently attached to it, and most importantly, the right to use it.
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