The Origins of Real Estate: Why It's Called 'Real' and What It Really Means

A great friend of mine asked me, "Why is it called 'Real Estate'?" Here's a brief explanation:

In the Middle Ages, issues were resolved by distinguishing between matters of the person and matters of things. These were known as Matter in "Personam" (personal matters) and Matter in "Res" (matters of things). Anything related to a person or their possessions fell under Matter in Personam.

Matter in Res (with "Res" meaning "matter of things itself") evolved over time. Latin "Res" became Late Latin "Realis," then the French word "Reel," and finally, the early modern English "Real." Matter in Res referred to anything not owned by an individual but involving them.

In those days, land was owned by the Lords, not individuals. Thus, Real Estate (Res Estate) became a term for royal grants of land from the King of England, through smaller Lords. Real Estate (Matter in Res) referred to land not personally owned but rented or borrowed.

Fast forward to today, the meaning of Real Estate hasn’t changed much. Even now, land is essentially rented from the modern-day Lord (the government).

A simple way to test the true meaning of Real Estate (Matter in Res) is to stop paying your taxes and see how quickly the IRS (the government’s representatives) takes over your property and auctions it off to recover the unpaid taxes.

The term "Real" was meant to be real for the Lords and the wealthy, not for ordinary people. It is called Real Estate because the estate is ultimately owned by the government (Matter in Res, the estate owned by the Lords).

In modern times, while individuals can own property, their ownership is still subject to government regulations, property taxes, and eminent domain. This means that true, absolute ownership is a bit of a myth, as the government retains ultimate authority over the land. Understanding this historical context helps us appreciate the complex nature of property rights today and the ongoing influence of ancient concepts on contemporary real estate.

Nathan

Licensed Real Estate Advisor in VA, MD, DC, PA