3. Legal Consideration Flashcards
Non possessory interest
One that cannot present be exercises today but which may or will become possessory in the future or under appropriate circumstances
Usually future interest
Possessory interest
Present right to physically occupy land and to exclude others from that same land
Usually present interest
Estates are possessory interests in real property
Estate
Interest that is (or may become) possessory and can be measure on duration-infinite or definite.
Owner=freehold estate
Tenant=less that freehold estate
Freehold estate
Most complete form of ownership.
Types: fee estate and life estate
Life estate
Present interest that gives its owner a possessory Interest for the length of a measuring life.
Aka. Estate in reversion, in reminder, grant reserving a life estate
The value of the estate estimated based in capitalization or comparison and reconciled with its expected duration
Less than freehold estate
Owner= lessor Tenant= lessee
Gross lease
Tenants pay a fixed amount of rent and the owner pays all the expenses, taxes, etc.
Net lease
Tenant pays rent and some other expenses
Percentage lease
Rent + a percentage of the gross receipts from the business
Graduated lease
Contains an escalator clause that allows for increases in rent bases on increase in consumer price index or other economic factors
Encumbrance
Interest in real peppery that is held by someone who is not the owner
Anything that uses the title or the property
Two types. Financial. And non financial
Lien
A legal obligation to pay
Uses property as a security for a payment of debt
Security instrument
A legal document that is given by the borrower to pledge real property to the lender as collateral for a loan.
Lender has security Interest and the borrower has possession as long as payments are made
Deed of trust
Three parties
Borrow (trustor)
Lender (beneficiary)
Neutral third party (trustee)
Mortgage
Two parties
Mortgagors (borrower)
Mortgagee (lender)
