The general rule governing real or immovable property is that such property is subject to the laws of the place within which it is situated. Therefore, the lex loci rei sitae, the law of the place where it is situated, governs the disposition of immovable property, whether by deed, descent or in any other mode[i]. This universal rule includes all rules which govern the descent, alienation, and transfer of such property and the validity, effect, and construction of wills and other conveyances.
The lex rei sitae, as a general principle, governs in the case of any attempted transfer, whether it is voluntary or involuntary. Likewise, the law of the situs of the land governs the incidence of inheritance tax on the death of the owner[ii]. However, if a matter concerns real property incidentally and which is of a personal nature, it is not determined by the local law.
Similarly, contracts or executory contracts relating to immovable property are governed by the law of the jurisdiction or place where the property is located. However, which, while relating to real property, do not directly affect the title to or an interest in the property itself and are purely personal are governed by the usual rules of contract. In the absence of an effective choice of law by the parties, the validity of a contract is determined by the local law of the state where the land is located unless, with respect to the particular issue, some other state had a more significant relationship under choice-of-law principles to the transaction and the parties, in which case the local law of the other state applies.
Generally, contracts relating to the sale of realty, including executory contracts are governed by the law of the jurisdiction in which the property is situated. However, in some jurisdictions, the validity and the effect of an executory contract for the sale of land are governed by the law of the place where the contract is made and is to be performed, and not by the law of the place where the land is situated. In the case of breach or termination of contract relating to immovable property also law of the place in which the property is situated is the governing law. All instruments affecting the title to real estate, no matter what their nature, must be governed, as to their execution, construction, and validity, exclusively by the laws of the state in which the real estate is situated. The validity of conveyance is also governed by the law of the state in which the land is situated. The validity of a lien on land is also determined by the law of the state in which the land is situated.
[i] Fuhrhop v. Austin, 385 Ill. 149 (Ill. 1943)