Yes, dirt is what is behind your ear and soil is what we grow crops upon. The alliteration of soil is special is catchy but not quite as catchy as dirt is different. We treat landownership and its disposition in estate plans differently than we do cash, the family shoe factory or even the family dog. Understanding how property works is an essential knowledge component for the landowner, the potential heirs or the prospective new buyers. Every state’s property system is different, and this will focus on Iowa’s.
Property ownership is often described as a “bundle of sticks”. I grab a wad of pens to demonstrate each stick. Each of these “sticks” represents an individual right. Sometimes an owner might have the entire bundle of sticks. The occupant usually has most of the sticks. Sometimes, a life tenant might have another one, a mortgage company might have another one, the REC might have one for a power easement, or the city might have another stick due to zoning requirements. Yep, the government retains some rights, like police power, eminent domain, taxation, and reclamation of “dead” properties (when nobody else can claim it, the government makes sure it can).
- Real property includes the land, water rights, subsurface rights, and air rights:
- The land will include all things permanently attached to the land (i.e., buildings, trees, boulders, cemented concrete silage bunkers, etc.).
- Water rights (also known as riparian rights) are a whole separate topic.
- Subsurface rights include oil rights, mineral rights and other natural resources that can be transferred separately from the surface rights. An owner may be granted subsurface rights to a third party, but that third party has the right to use the surface for the purpose of extracting mineral and gas but cannot destroy the surface. Landowners may also owe the duty of lateral and sub-adjacent support to his neighbors, that is your activities can’t cause damage to the underground support of your neighbors.
- Air rights can become an issue with possible nuisance claims from aircraft. Airports are increasingly purchasing navigation easements from neighbors to avoid nuisance (or even takings) claims. In some circumstances, aircraft flying over land may amount to a physical invasion to the extent that there is a measurable decrease in the property’s market value and as a result, a government taking has been deemed to occur. Federal law establishes a ceiling where they have exclusive jurisdiction.
To keep track of the rights, in Iowa we utilize an abstract & title opinion system. Most of the states and international holdings use a system developed by an Englishmen in Australia, the Torrens system and it is coupled with a title insurance requirement. An abstract of title (a/k/a abstract) is prepared which summarizes any recorded or filed instruments affecting title like mortgages and judgments. It is a history of the property. An abstract can only provide information about recorded instruments as they are shown on their face. Some problems are not revealed from an abstract (i.e., forged signature, seller was incompetent, etc.).
An attorney reviews the abstract and issues a title opinion that states the legal descriptions, the titleholder(s) and any objections (which may be defects to be corrected such as tax liens or may be issues of notice such as presumably acceptable utility easements). It is like a book report on the history. Unlike a title insurance system where defects are routinely insured over, Iowa’s system requires that any defects must be resolved before closing can occur. It is illegal to sell title insurance in Iowa, so the state has a title insurance equivalent (that is far cheaper) to make sure Iowans can get nationally marketed mortgage products.