It’s helpful for California real estate professionals, investors and owners to understand the difference between real estate and real property. The concepts are closely related to each other, but there are some important differences between them.
Real estate vs. real property
Real estate refers to a piece of land and all natural and artificial resources that are attached to it. Natural resources are supplied by the land and include assets like trees, water, gas and mineral deposits. Artificial resources are man-made additions to the land and include assets like buildings, sidewalks and fences.
On the other hand, real property refers to a piece of land, its resources and a bundle of legal rights associated with the land. These rights, which are bestowed upon the title holder of the land, generally include:
- The right to possess and occupy the property
- The right to control how the property is used
- The right to enjoy the property without outside interference
- The right to exclude others from using the property
- The right to dispose of the property by selling it or giving it away
Property owners have the option to give up one or more real property rights as necessary. For example, landlords can give up the right to exclude others from their land if they choose to rent out a home. Local zoning laws and other restrictions can also limit certain rights. For instance, many cities and communities prohibit property owners from opening businesses in residential areas.
Disputes involving real property rights can be stressful and disruptive. Some California property owners may be forced to pursue litigation to ensure their rights are protected.