Public Restrictions on Ownership

Public restrictions on ownership of real estate are restrictions enforced by the government. Some examples of this are taxes, eminent domain, police power, and escheat. Personally, I think the most important public restriction to real estate owners is taxation, because every homeowner is affected by it. The amount of property tax an owner pays varies widely from place to place. For instance, my parents live in Dallas. The city property tax for Dallas residents is at least one percentage point higher than a suburb, Richardson, that is only two miles from my parent's house. Not to mention, they also pay a county tax and a school district tax. Property taxes should definitely be considered when deciding the location on your new home!

In this article, an amendment to property taxes in Tallahassee, Florida is soon to be voted on. If approved, property taxes would be lowered for targeted groups, such as first time homeowners and disabled veterans. I like the idea of instead of rallying for lower property taxes across the board, we can begin with lowering taxes for targeted groups. It makes sense that the government would lower property taxes for first time homeowners as an incentive to buy houses! The housing market is very low right now, and I agree with anything that will help stimulate the market.
http://www.newschief.com/article/20120917/NEWS/209175001

Property Rights and Legal Descriptions

Property rights are a lot more than simply owning a piece of land and the building on it. There are seperate rights to the surface, subsurface or minerals, water, and air, and all can be held by seperate people! When one party has absolute ownership of property unencumbered by any other interest, it is called a "fee simple estate". In class, I learned that it is the person with the subsurface rights that has the most power on the property. This is because in order to get below the surface of the land, you must be granted access  onto the surface.

When it is time to transfer title of real estate, a precise legal description is necessary. The original way to achieve formal legal description of the exact boundaries of the land was in a metes and bounds description. Below is an example of one:

 



Another formal way to describe land is a method called the rectangular survey system. Fun fact for all you Texans: Every state west of the Mississippi EXCEPT Texas describes land based on this system! Below is an example of the rectangular survey system:

Private Restrictions on Ownership

Private restrictions on ownership limit what the owner can do with their property, even if they own the fee simple rights. These restrictions are called encumbrances. It is extremely important as a potential home owner to be knowledgeable of the encumbrances that run with the land as they may adversely affect the value of the property. Examples of an encumberance are liens, easements, and deed restrictions.

An easement is the right given to one party by the landowner to use their land in a certain manner. I found an article that discusses one situation that is common for some Texas homeowners - dealing with oil & gas companies drilling on your land. If an oil company ever contacts me about drilling on my land, I hope I own the mineral rights to it! Unfortunately, that is not the case for most people. If the landowner does not own the mineral rights to the land, he is still owed compensation from the company for  using the surface of the land. It's not nearly as much as mineral right royalties, but it's still an important right that should be exercised. This is where it is important to understand how an easement comes into play. The proposed contract by the company describing the easement is negotiable. The landowner should limit the company to what is necessary to drill the oil from the land and nothing more. Furthermore, the landowner should be compensated for the fair market value of the easement and any damages to the land incurred.  
http://recenter.tamu.edu/news/pdf/NewsRel18-0312.pdf

The Importance of Real Estate

The importance of real estate on our economy cannot be stressed enough. Land is an asset that has always been of great value and always will be. Investing in real estate is something anyone and any business should do if they are looking for a long term investment that has a great return on your money. This is because, in general, land and the structures attached to it increase in value over time!

The real estate market today is more exciting than ever, while housing costs and mortgage rates are at record lows. The article below states that mortgage rates are on average just 3.5%! Now, more than ever, is the time to stop renting property and to buy a home. If you have money saved up and are credity-worthy, the wise financial decision would be to invest in real estate in the near future. The market is on the rebound and prices are sure to bounce back. If I wasn't a poor college student, I would definitely consider buying a house!
http://www.marketwatch.com/story/its-now-cheaper-to-buy-than-rent-trulia-2012-09-13

While it is true that in general real estate appreciates in value, that is not a guarantee! I like the article below, because it takes a realistic look at owning property, both positive and negative. One downside to owning property is the amount of time and effort it takes for upkeep. Before buying a house, the owner should make sure he is aware of the amount of time and money it takes to deal with water leaks, electric problems, bad neighbors, etc. This article also brought to my attention that not all properties are good investments. Trendy downtown condos, beach houses, and prime locations aren't going to appreciate in value very much, if at all, in the amount of time many people are planning on holding the property.
http://homes.yahoo.com/news/add-real-estate-investment-portfolio-205713777.html