The real estate industry is one of the most important sectors in the USA making up as much as 6.2% of the national GDP. The housing market, however, is a highly regulated system with many legal processes governing the transfer, sale, and management of different types of property.
This article looks at what real estate means and what can be classified under this definition. It also studies the numerous different types of real estate that can be purchased and what legal documents may be necessary for their handling.
What Is the Definition of Real Estate?
Real estate is so named as it deals with tangible, therefore “real” property. This in practice normally comprises buildings and land. In its full definition, however, it covers any land that has been purchased by the deed holder and also any constructions, structures that have been developed on it or flora or fauna that naturally exist upon it.
How Many Types of Real Estate Are There?
There are in fact numerous kinds of real estate that can be purchased by an individual. These are classified into different types and consist of 4 separate classes that can be used for varying purposes depending on their nature and use.
Occasionally, there are some overlaps between these 4 groups. Nevertheless, most buildings will fall directly into one of these categories.
Residential Real Estate
This refers to property that is both newly built or pre-existing that can be used for domestic living. This includes most homes on the housing industry covering:
- Vacation homes
Commercial Real Estate
Commercial real estate focuses more on structures and buildings that serve a business function. This can include any of the following:
- Shopping centers
- Educational buildings
Industrial Real Estate
Industrial real estate relates to highly specialized buildings that are used for manufacturing, packaging, transport, and the extraction or processing of raw materials. Those fitting these criteria include:
- Business parks
- Train Stations
Land Real Estate
Real estate can also be classified in terms of empty land and lots. In this situation, anything preexisting on the land such as plants, natural minerals, etc, also becomes the property of the owner too. Land real estate broadly falls into one of the following:
- Undeveloped land
- Land available for reuse
- Partially developed land
The Benefits of Investing in Real Estate
Real estate is often considered a very valuable investment for many reasons. Historically in the early days of US independence, the constitution only allowed those owning property to vote.
That thankfully isn’t the case today, although getting involved in the housing market is still considered a worthy venture. Beyond the high relative prices of homes and property, it also offers great potential for appreciation in the value of the asset over time.
What Legal Documents May Be Required in Handling Real Estate Property?
There are a number of legal instruments that may be necessary for the sale, transfer of ownership, or management of a property. These can be absolutely essential to securely and safely handle the many requirements of real estate ownership and purchasing.
Managing Real Estate Under a Power of Attorney
Many Power of Attorney (POA) documents empower an agent (also known as an Attorney-in-Fact) to handle the real estate of an appointing principal. This allows the agent to sell, manage, and acquire property on behalf of the individual.
There are some limitations to this, however. For example, agents may not transfer property ownership to themselves. Additionally, in cases where the principal’s spouse is the Attorney-in-Fact, some states will not automatically permit them to sell or transfer real estate with an active Power of Attorney. If this happens, a co-agent may need to be appointed.
Transferring Ownership With A Quitclaim Deed
In the event that you want or need to transfer ownership of a property to a trusted friend, family member, or business entity, a Quitclaim Deed allows you to renounce your control of the asset and to transfer it.
This is quite often used by separated couples as part of divorce settlements. Alternatively, it can also be used to gift property to family members. As there is little protection for the grantee, this is normally only used in situations where the owner and beneficiary know each other well.
Letting Out Your Property With a Lease Agreement
Property owners that seek to let their property to tenants can create a Lease Agreement as a rental contract. This allows you as the deed-holder to set expectations for the tenant as to what they can and can’t do when living in the property.
Removing Tenants With an Eviction Notice
Sometimes due to disagreements, misuse of the property, or lack of payments, it may be necessary to serve a warning of eviction to a tenant. In order to do this properly, they must first be served with an Eviction Notice.
This legal form indicates in writing what breach of the rental agreement has been committed as well as formally setting in motion the eviction process. This also allows you to specify what action the lessee must take in order to avoid being asked to vacate the property.