Public Restrictions on Ownership

Now you don't just have to worry about private restrictions, you have to worry about public restrictions too. There are tons of public restrictions from zoning regulations to subdivision regulation to building codes. Government can also create limitations on the ownership of real estate. These limitations come from the governments power of taxation, eminent domain, police power, and escheat. 

One example of eminent domain that may hit close to home involves a Canadian company trying to build a pipeline to the Texas Gulf Coast. The article Texas Rice Farmers Object to Pipeline Plan, explains that some Texas farmers are outraged at the possibility that they might lose land to a Canadian company to build a pipeline. Although President Obama has rejected the company's proposal, it is continuing to redesign the plan in hopes that they can get their plan approves. In a case like this, if the Canadian Company get permission to build to the Texas Gulf coast, there isn't much more the farmers can do. This type of government restriction can be very controversial seeing as many property owners are not okay with getting their land taken from them.

The video above provides a detailed account of how the Plano Building Inspections Department works. From this video you can see how tedious and complex the process is just to get your building approved for construction. There are a lot of steps to go through before a new building is complete. 

Another type of public land restriction is zoning. Most major cities have a zoning ordinance, but here in Texas we like to be different. Houston, Texas, is the only major city in the United States without a zoning ordinance. In the article Pros and Cons of Zoning in Houston Texas, some interesting points are made as to why Houston should or should not start zoning. Those against zoning claim that keeping Houston free of zoning "gives owners the ability to choose how their land is used, maximizes a property's potential, and allows for mixed use development." Those for zoning claim that Houston would be better off because zoning "give the community more control over how the land is used, preserves existing neighborhoods, and provides a citywide planning vehicle." Either way zoning is definitely a controversial topic and not only in Houston, Texas. 

So I've given a few examples of government and public restrictions but for a more in-depth explanation of different restrictions click here!

Private Restrictions on Ownership

Private restrictions, also known as private encumbrances, are restrictions and limitations on the fee simple ownership rights that generally run with the land. There are several types of private restrictions including covenants, conditions, and restrictions (CC&Rs), liens, easements, profit a prendre, adverse possession, and encroachments. 

The article Residents of Eastern Travis County Taking Advantage of New Easement Program is a good example of how an easement can work. Farzad Mashhood reports that residents in Travis County, Austin are being paid by the government to permanently restrict development on certain lots. The main goal is to protect some of the land in Travis County so that it isn't all developed.  This type of easement is known as a conservation easement which prevents specific uses of the real estate by the owner. 

In the article Restrictions-What you can't see can affect you, author Rona Fischman explains how many home buyers will 
move into a property expecting that they can do that every they want with it. She give two specific examples of private restrictions that can stop homeowners from doing what they wish with their property-zoning and deed restrictions. Zoning can restrict owners from expanding or modifying their homes. It can stop you from doing something as simple as putting up a fence. The other example Fischman mentions is deed restrictions. Deed restrictions are placed by sellers to make sure the property they are selling is used or certain way or not used a certain way. For example, if you buy a large lot with the intent to build several houses on it, but the deed restriction says that it is to remain one lot with one house, then your plans are ruined and you can no longer use the land as you planned. 

So how can private restrictions affect real estate owners? Well they can sometimes surprise owners, and they are usually never good surprises. It's very important to know before hand how you can and can't use your property and what you can do with it. You don't want your plans for some property to get ruined because you didn't bother to ask about restrictions a head of time. 

Property Rights and Legal Descriptions

What is a property right? 

According to "The Concise Encyclopedia of Economics," property rights are "the exclusive authority to determine how a resource is used, whether that resource is owned by government or by individuals." 

This may sounds simple enough, but property rights are much more complex than they seem. You have to worry land rights, mineral rights, water rights, air rights, and so much more. Property rights affect what you can do with your property, what you can't do with your property, and what others can do with your property. 

In the video The Power of Property Rights, Professor Tom W. Bell of Chapman University School of Law does a fantastic job of explaining property rights and how they affect society as a whole and as individuals. Basically he "explains that property rights allow people to live together in peace, prosperity, and freedom. They prevent conflicts over scarce resources, encourage productive labor, and discourage waste," and I completely agree with him. When it isn't clear who own certain property, it isn't in anyone's interest to preserve and protect it which leads to neglect and waste. Such is the case with many foreclosed homes. This video gives a clear picture of why property rights are so important.

Next topic, legal descriptions. What are they? 

Legal descriptions is a way to define or accurately pinpoint where a particular piece of property is located. There are different kinds of legal descriptions. Right is an example of a Metes-and-Bounds Description. 

Metes= Distance used in description

Bounds= directions of boundaries enclosing a piece of land

Another type of legal description is the Rectangular Survey System. This system includes principal meridians (running north and south) and baselines (running east and west). The picture to the left shows all the principal meridians and base lines in the United States. Sections and townships are two other terms associated with this type of legal description. Townships are 6 square miles consisting of 36 sections (640 acres in each section). This type of description can get a bit confusing. Visit How To Read Legal Descriptions to get a better understanding of how to read different legal descriptions as well as tons of examples of each! 

Is Real Estate Important?

Of course it is! I'm about to discuss why real estate is so important and what effects it has on the economy.

First things first. Why is real estate so important? Well there's only so much Earth to go around, don't you want to own some of it? Whether you own, rent, leave, or sell, real estate is a part of every person's life. Don Phelan's article Why are Real Estate Values so Important? does a terrific job of explaining how real estate affects everyone. Basically, Phelan explains to a high school business class why one of the students was working less hours than he had three years ago. The student stated that he worked at a restaurant for the past three years where most of the customers worked in construction. Phelan went on to say that "because it costs less for home buyers to buy a foreclosed property really inexpensively and renovate it themselves", trade workers are now out of work because they don't have any homes to build. Because they don't have jobs, they don't have money to come to the restaurant anymore. This is a perfect example of how real estate can affect you even if you're not the one buying or selling a home.

Another reason real estate is so important is it's ability to affect the economy. In the article Homes and Cars Point the Way for the U.S. by Justin Lahart, he discusses why the housing market might be a "brighter spot" in the U.S. Economy. Sales forecasts have increased  since January of this year. Even though these improvements haven't "fed through to other areas of the economy," I believe that in the long run if this trend continues, it will have positive effects on other areas of the economy as well as continued improvement in the housing market.

As we all know, real estate doesn't always 
positively affect the economy. In the article Fed's Q1 Flow of Funds: Household Real Estate Value Increased in Q1 by Bill McBride, he summarizes important points from the Federal Reserve's Flow of Funds Report. The chart that stands out to me most is the Household Real Estate Percent Equity chart (pictured right). As you can see, the biggest decline happened right at the start of 2009, right after the housing bubble burst at the end of 2007. but "in Q1 2012, household percent of equity (of household real estate) was at 40.7%- up rom Q4 and the highest since 2008.

Basically, real estate is important to everyone, whether they know it or not. It might affect how many hours you work, or how well the economy is doing, but no matter what it's affecting, it's ALWAYS affecting you.

Now Let Me Introduce Myself

Carmen Skok, Age 21.

Howdy! I'm Carmen and I am a senior finance major from Houston, Texas. Technically I live about two minutes outside the Houston city limits, but for all intents and purposes I'll just say Houston. 

First things first, I am the proud mother of a beautiful pomeranian. Her name is Muñeca (it means babydoll in Spanish) and she is the love of my life. Some of my friends might tell you that I have an obsession with taking pictures of her, but who wouldn't with a face like that? 

Now you might be wondering where I came up with her name. My mother is actually from Nicaragua, so she decided to give her a name in Spanish. This leads me to my next point. 

Although I may be one of the palest people you will ever meet, I am actually half hispanic (my dad's from Ohio, so I blame him for my whiteness). As I said before my mother is from Nicaragua. Her and my dad met there while he was working with the State Department. Many people don't know where Nicaragua is, but I can tell you it is one of the most beautiful places you will ever go (see picture). I have been going to Nicaragua every summer since I was 8 and I will never get tired of the blue waters, the white sands, or the wonderful culture. Did I mention Nicaragua has the only salt lake in the world with sharks? Also a couple of active volcanoes, but I think I've made my point. 

So basically my hobbies include playing with my dog and traveling. That about sums me up.