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What Is Real Property In Utah?

Federal law classifies all property as either real property or personal property. Real Property is defined as the physical land and everything attached to it, plus the rights of ownership (bundle of rights) in real estate. Real property is also called realty. Personal property is defined as tangible items not permanently attached to, or part of, the real estate. Personal property is also called chattel.

People tend to think of the land itself when they hear the term “real property”. The term refers to much more than rocks and dirt, however. It also encompasses items attached to the land (attachments or improvements), rights that go with ownership of the land (appurtenances), and limitations on the use of land (public and private restrictions). These are important because homeowners must be aware of issues and distinctions that may impact value for property they are considering as collateral for a loan.

The distinction between real property and personal property becomes important whenever the ownership or possession of land is transferred. Unless otherwise agreed, the law says that all of the real property is included in the transfer, but personal property that happens to be on the land is not included. Because of this legal doctrine, buyers and sellers, landlord and tenants, owners and foreclosing lenders often disagree about whether something is real property or personal property. Determining what type of property certain items are can sometimes lead to serious disputes and court battles.

For example, a built-in dishwasher would be considered part of the house but a refrigerator would most likely be considered a personal items and therefore not included in the sale. Built-in bookcases are considered real property but a sofa is personal property. An in-ground pool is real property, but an above ground pool is not. Lenders must be aware of this because the presence or absence of built-in items might affect the value of the property, but personal items should not influence value.

One less clear-cut example to contemplate is carpeting. Wall-to-wall carpeting would be considered real property, unless there are hardwood floors underneath. The idea behind that is that removing carpet and leaving hardwood floors does not diminish the value of the property, whereas leaving unfinished sub-flooring would. Often, disputes arise over things like storage sheds, satellite dishes, and chandeliers. Potential buyers and sellers of real estate should always discuss these things openly with their real estate agents and have issues resolved clearly before settlement to avoid potential problems and disputes. When necessary, property that will be staying in the house and used by a new buyer should be specifically stated as such in the purchase agreement.

The legal definition of real estate or real property is land and the buildings on it. Real estate law governs who may own and use the land. This simple concept includes a wide range of different legal disciplines. First, real estate may be either residential or commercial. It can be owned by one person but used by another through rental arrangements. Land can be bought or sold, and due to its high value, there are many local laws that ensure real estate transactions are properly performed and recorded. Land may also pass between family members through estate planning or may be owned by more than one person.

Finally, state and local governments have rules concerning the purposes for which land may be used — for example, each plot of land must be used according to local zoning laws, and landowners may not damage the surrounding environment.

Terms to Know

  • Title: A legal term describing who officially owns the land.
  • Mortgage: A loan that covers the price of a house. The new homeowner must give the lender partial ownership of the house as collateral.
  • Foreclosure: The process by which the lender takes control of a house if the owner fails to pay back the mortgage.
  • Closing: The meeting in which ownership of real estate is officially transferred.
  • Escrow: Money or property held by a third, disinterested party for safekeeping.
  • Real Estate Agent: A professional licensed to negotiate and conduct real estate transactions.

Real Estate attorneys are not legally required at every transaction, however, hiring one can be very useful for the average homebuyers. First, real estate attorneys can review the house’s transaction history and title to ensure that the house is able to be sold and that no past owners will come back claiming to still own the house. Second, many attorneys can advise homeowners regarding their mortgaging options. Third, attorneys can help review the contract of sale to make sure there it is fair to all parties. Most real estate attorneys charge an hourly fee, although some charge a flat fee for their services.

Related Practice Areas

  • Tax Law: Having real estate, particularly real estate that is mortgaged, has a big impact on most family’s taxes. Understanding the tax code can prevent families from overpaying on their taxes.
  • Landlord Tenant Law: Landlord tenant law covers the law of renting real estate, including leases, rent, and eviction for both residential and commercial tenants. Many lawyers consider it a part of real estate law.
  • Accidents and Injuries: Homeowners may be liable for injuries sustained on their property.
  • Estate Planning: Some people are very concerned about keeping real estate within the family. Estate planning attorneys can help them achieve that goal.
  • Insurance Law: Most landowners have homeowner’s insurance, which protects their property against various types of damage.

Marital Property Versus Separate Property

Marital property is something that is capable of being divided by the court during a divorce. It would include any property acquired by one or both of the parties during a marriage, unless it was a specific gift to them from someone else, an inheritance, or one of the parties owned the property prior to the marriage. If one parties does own separate property, that separate property may lose its separate status if it is comingled with marital property to the point where it is difficult to separate which portion of the asset is marital and which portion is separate.

For example, if one party has a marital home with $50,000 of equity, gets married, and adds their new spouse to the title of the home (or even if they do not add their new spouse to the title on the home), any increase in equity to that home might be considered marital property, particularly if both parties were contributing to the increase in that equity. The court may say that the original $50,000 in equity would be the separate property of the spouse who brought it into the marriage. However, if that equity is extracted, for example, through a home equity line of credit, which is then used by the parties during the marriage, the court might find that the $50,000 was used jointly for marital purposes and therefore, lost its separate character. If a party wishes to preserve the separate character of their premarital or separate property, they should take care not to comingle the asset with marital funds, efforts, or contributions.

How Does The Court Generally Divide Real Property In A Divorce?

In Utah, the courts will begin with the assumption that each spouse should receive a roughly equal share of the marital property. That said, the court does not have to split each item down the middle. Rather, it can give one piece of property to one party and another piece of property of roughly equal value to the other, in order to equalize. Each party is presumed to be entitled to all of his or her separate property and 50% of the marital property.

In dividing real property, the court can award a piece of real property to one side outright, even if it is legally owned by the other party. It can order that the property be sold and the equity divided. It can also order one party to refinance the real property and pay to the other party a portion of the equity that has been built in that real property. Whether the court chooses to order the sale of the piece of property or the refinance depends on a variety of factors, including whether the party who is awarded ownership of the real property has the ability to make payments on any mortgage or debt thereon. If the court determines that neither party has the financial resources to make the mortgage payment, the court will likely order the property sold and any equity divided.

How Will Courts Divide Property and Debt in a Divorce?

Depending on state law, courts normally use one of two approaches to divide marital property and debt: community property or equitable (common law) distribution.

  • Community property. Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Utah, Washington, and Wisconsin are all community property states. Under community property laws, a judge must classify all marital property—property acquired during the marriage—as either community property (owned by both spouses) or separate property. The judge will divide community property equally between the spouses, and each spouse will keep his or her own separate property. (A few states, including Alaska and Tennessee, offer a hybrid form of community property division under which couples can agree to treat marital property as community property.)
  • Equitable distribution (“common law”). In all non-community property states, judges must first determine what property is marital property and what property is separate property. The judge will then divide all marital property equitably (fairly)—but not necessarily equally—in order to make the settlement fair to both spouses. Division of property doesn’t necessarily mean a physical division. Instead, the court might award each spouse a percentage of the total value of the property. Each spouse will get personal property, assets, and debts whose worth adds up to a fair percentage. (It is illegal to hide assets in order to shield them from property division.)

Difference Between Community Property and Separate Property

If you live in a community property state or have opted to treat some or all of your property as community property (possible in only a few states), the general rule is that spouses equally own all property either one acquires during the marriage. However, there are exceptions to the general rule—some property is classified as separate property or commingled property. The following general descriptions can help you classify your property.

Community property includes:

  • all income earned by either spouse during the marriage
  • all items purchased with money either spouse earns during the marriage
  • separate property that has been mixed with community property to the point that it can’t be split out, and
  • all debts incurred during the marriage, even when only one spouse signed the paperwork for the debt.

Separate Property

Separate property belongs to only one spouse. It can include property acquired before and during marriage. It includes:

  • money held by one spouse before marriage
  • property owned by one spouse before marriage
  • gifts made to only one spouse during the marriage
  • inheritances received by one spouse during the marriage
  • personal injury awards received by one spouse during the marriage
  • pension proceeds that vested (that the spouse became legally entitled to receive) before marriage
  • property purchased with separate funds
  • any business owned by one spouse before the marriage (a court might find that a portion of the business is community property if it increased in value during the marriage or both spouses worked in the business), and
  • commingled separate property (separate property that is mixed with community property during the marriage).

Commingled Separate Property

Commingled separate property is made up of both separate and community property. When a spouse mixes separate property with community property during the marriage, the separate property can become partially or wholly community property. For example, when one spouse puts separate property money into a checking account used by both spouses, the separate property funds likely become community property. On the other hand, a court might consider property purchased with a combination of separate and community funds as part community and part separate property, so long as a spouse can demonstrate that separate property funds were used to make the purchase.

Who Gets to Stay in the House During a Divorce?

Which spouse remains in the family home depends on the circumstances. Although judges will look to see who holds the title to the house, the name on the title doesn’t determine who will stay in the family house.

  • If you don’t have children and the house is in one spouse’s name: If you are in a community property state and the house is the separate property of one spouse, the owner spouse will generally be able to keep the house and has the legal right to ask the other to leave. In all states, though, if the spouse whose name isn’t on the deed can show that shared funds were used to pay for the house or makes another compelling argument why the house is shared, the judge will make a determination based on what’s fair or equitable.
  • If the house was acquired during marriage: In most cases neither spouse has a greater claim to the house than the other. One spouse can request that the other leave, but neither can force the other to leave. While the divorce is pending, either spouse can ask the court to issue a temporary order on who can remain in the house. Ultimately, if the spouses can’t agree on who gets to stay in the house, the court will decide how to divide it.
  • If you have minor children: Often, a judge’s consideration of what’s in the best interests of the children weighs in favor of allowing the children’s primary caregiver to remain in the marital home during and after the divorce.

When allowing one spouse to remain in the family home is unfair to the other spouse or results in an uneven distribution of property, judges often will award the home to one spouse on the condition that the spouse pay the other to make up for the imbalance (a “buy-out”).

Can We Divide Property on Our Own?

Couples can maintain control over how marital property and debts are divided by negotiating a settlement agreement. Some couples might be able to work together on their own to divide property. For couples who need help to reach a settlement, though, divorce mediation is a great option. Courts often require divorcing spouses to participate in (free or low-cost) mediation. Alternatively, spouses can hire a private mediator to assist them.

In mediation, the spouses work with a mediator, who is a neutral third party, to discuss any unresolved divorce issues. Mediation can occur in person or online. During mediation, the mediator will guide the couple through the topics that need to be addressed and suggest. The mediator doesn’t provide legal advice or make any decisions. If the spouses reach an agreement on how to divide their property and debt, the mediator will normally create a property settlement agreement for them to sign and submit to the judge. If mediation fails and the couple can’t agree on how to divide property and debts, either spouse can request help from the judge. Because mediation is confidential, neither spouse can use any of the statements or discussions that occurred in the unsuccessful mediation against the other.

Why Do You Need an Attorney For the Purchase Or Sale of Real Property?

In order to purchase or sell real property you must enter into a written contract. A lawyer is needed to review and approve the contract. He will make sure the parties to the contract are the ones buying or selling the property. He also make sure the property being sold is adequately identified and that the use of the property is specified in the contract, such as single family residential.

An important element for the purchaser is the mortgage contingency paragraph. A lawyer can explain what is needed to meet the contingency within the time frame set out in the contract.

If representing the purchaser he should recommend an owner’s policy of Title Insurance.

The lender’s attorneys represent the bank and not the purchaser or seller. Most often a mortgage commitment will require Title Insurance in the amount of the loan with the lender as the insured. This does not insure the purchaser’s interest in the property.

If representing the seller the lawyer will review title to make sure it is marketable and/or insurable. This protects the seller who is warranting title to the property.

Structural, Pest and Radon Inspections should be made. If there is a problem with any of these it is important to be represented by an attorney who can advocate on your behalf so as to resolve any issues. If you are selling property, it is important to have an attorney who will prepare the deed and other necessary documents in order to transfer title to the purchaser. Conversely, if you are purchasing property, your attorney will review the closing documents and title to ensure you are being transferred good title free of any liens or encumbrances.

At closing the attorney will provide a closing statement which will include the costs and credits adjusted as of the date of closing for such items as taxes, water, sewer, fuel etc. That’s why you should be represented by an attorney whether you are purchasing or selling real property.


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