Tuesday, April 16, 2013
Real Estate & Government Powers by Elviz De Alba
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