Real Estate & Government Powers
The government plays an important role
in the regulation of real property.
According to “Real Estate Analysis”, the government should control the
money supply; enforce law, order, and property rights’ take action on certain
technical monopolies and externalities. The four rights that the government
possesses on real property are Police Powers, Eminent Domain, Taxation, and
Escheat.
Police Powers are a government’s right
to regulate private property for the health, safety and welfare of the public. The police powers are patrolled by private
citizens and government, and enforced by government officials, judges, and
sometime by the actual police officers.
Zoning, subdivision codes, building and fire codes and general health
and safety codes are all examples of police powers in real estate.
Eminent Domain is a government’s right to
take private property for the benefit of the public. Through the process of condemnation, the
government eminent domain rights must meet two specific requirements: just compensation
and a public use.
Escheat is a state government’s right to
take unclaimed property from a deceased person dying intestate and without any
heirs or anyone to take over the property.
State governments are the ultimate property owners. Property needs to be maintained physically
and financially.
Taxation is the government’s right to
make a financial claim on real property to fund governmental needs and
services. There are many different taxes
and they all fall under income, sales and property. Income tax is collected by the IRS and is
used for funding programs like social security, medicare, highways and other
federal programs. The sales tax is used
to fund most state expenses such as departments, state roads and state-run
programs. The property tax is the main
source of funding for needs of the local government. These are used to fund public schools, libraries,
and hospitals.
There
are three main reasons that the government infringes on private property. First, for the creation of regulations to
manage the impact of externalities and anything that influences the use and
value of a property. Secondly, the government enforcement of regulations. And third, for the creation and maintenance
of public infrastructure. It is
important for the government to maintain a healthy and safe environment for the
public.
Source: Real Estate Analysis Textbook, http://realestatestudyguides.com/RealEstateStudyGuide/Government_rights_and_powers_-_Real_Estate_Exam_Content.html
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