7. Estates and Interests Flashcards
Land
= surface of the earth, area below surface, above surface and structures attached to surface, air above surface
Real Property
= land, it’s attachments and all of the rights
Real estate
= physical land and everything permanently attached to it - man made and natural
Personal Property
= Chattel
- items not attached to property and movable (vehicle, furniture, boat etc )
- tangible = can be touched
- intangible= can not be touched(rights, savings account)
- can be transferred via bill of sale or by bequest (will)
Real Estate classifications
- Agriculture: land /land improvements used for agricultural production. Everything on the land used for production is agricultural property: house animal, feed animals, barns, etc. except: owners private residence, owners garage, owners shed
- Commercial:office space, industrial property, apartment complexes etc.
- Industrial: storage facility, warehouse, purchased by investor
- Residential: single family, multi family, condo, co-op, mobile home
- Special purpose:school building, gold course, religious facility, sports club, publically owned
Bundle of legal rights
= real property rights transferred with sale
- if owner has all rights he is said to have a fee simple title / ownership without limitations/restrictions
1. Right of possession: right to possess, occupy or own property and use land in any way legally
2. Right of quiet enjoyment: use land without interference from other people, you can do anything on the property you enjoy doing
3. Right of Disposition: right to sell, gift rent (jeopardized by lien)
4. Right of exclusion: right top decide who enters (expect: easements rights , legal search, rental right)
5.Right of control: right to physical alter or change property
Fee simple
- Fee simple= if owner has all rights he is said to have a fee simple title / ownership without limitations/restrictions
Right of possession
= right to possess, occupy or own property and use land in any way legally
Right of quiet enjoyment
=use land without interference from other people, you can do anything on the property you enjoy doing
Right of Disposition
= right to sell, gift rent (jeopardized by lien)
Right of exclusion
= right top decide who enters (expect: easements rights , legal search, rental right)
Right of control
= right to physical alter or change property
Interferences with Real Property Rights
- Trespassing: physical invasion of land by another person
- Encroachments: physical invasion of land by an object (tree growing over)
- Nuisance: interferes with quiet enjoyment from outside caused- loud music, odor. continuing unreasonable use of land by neighbor
Appurtenances
= rights that go with real property
- can be sold separately and can be limited by past transactions
1. Air rights
2. Mineral rights
3. Water rights
Water rights
- Littoral Water Rights: water has ebb and flow ( ocean, large lake) , owner owns land up to mean high water mark
- Riparian Water Rights: water os flowing (river, stream), non navigable stream: owner owns land under the water to the middle; navigable stream: owner owns to edge of water
- Appropriate Water Rights: government granted water rights independent of land ownership, can not interfere with land
- Percolating Water Rights: groundwater, don’t own but are granted to install well to gather water for personal use
Mineral Rights
- landowner owns all solid minerals in and under surface, considered real property until extracted from earth
- liquid minerals follow rule of capture- first person to capture has ownership BUT property owner has Supportive rights: Lateral support= support from adjacent land and subjacent support =support from underlying earth
Attachments
= things attached to the land, natural or man made (=improvements)
- buildings, roads, fences etc
- Trees, fruit
Fixtures
= personal property permanently attached to property
- personal property that becomes real property through:
1. Annexation: item becomes physically attached to real property (custom bookshelf)
2. Close Association: items becomes attached to property bc of association (keys)
3. Adoption: item will not work any where else, custom drapes
4. Agreement: negotiated and transferred in sale
Severance: fixtures can be detached and revert back to personal property
Trade Fixtures
= equipment or personal property a tenant installs for business purposes (pizza oven)
Interest
= person with a property right or claim against property has an interest in property
- can be financial interest (mortgage), right to use land (easement) or possessor interest: ESTATE (=entitles to possession now or in future)
Freehold Estates
= possessory interest of uncertain duration (#Leasehold Estate)
- Types:
1. Fee Simple Estate/ Fee title /Fee absolut
2. Qualified Fee Estate/ Fee Simple Determinable/defeasible
3. Qualified Fee Estate/Fee on Condition
4. Life Estate
Fee Simple Estate (Freehold Estate)
= Fee title /Fee absolut= highest form of ownership, no conditions on the title, can transfer, sell, lease
Qualified Fee Estate (Freehold Estate)
= Fee Simple Determinable/defeasible
= grantor puts condition in deed. When condition is not met it goes back to grantor, creates encumbrance on title because it runs with the land
Fee on Condition (Freehold Estate)
= condition in deed gives grantor right for reentry but must go through court, or condition where grantor retains title until certain time if certain condition (if heir marries before 25)
Life Estate (Freehold Estate)
= last as long measuring life (life tenant) lives
- can be sold, mortgaged
- conventional: measuring life = life tenant, - life estate pur auto vie: measuring life #life tenant
- Revision: property goes back to grantor after death
- Remainder: grantor grants estate to someone else (remainderman)
Estate
= possessor interest in property
- entitles to possession now or in future
Leasehold Estate
= temporary possessory interest without title (#Freehold Estate)
- tenant/ landlord
- reversionary (goes back to landlord after end of lease)
Ownership
= title to property
- created via deed, devise(will) or descent(without will)
2 forms:
1. Ownership in Severalty
2. Co- ownership
Ownership in Severalty
=only one person or entity holds title to property
Co- Ownership
=2 or more persons or entities share title, each has undivided interest in property (= interest in whole property)
- 3 Forms:
1. Tenancy in Common
2. Joint Tenancy
3. Tenancy by entirety
Tenancy in Common
- most common from of co-ownership
- requires 1 unity of possession: possession (all hold the same right to possess)
- NO right of survivorship (interest goes to heirs not co-owners)
- ONLY ONE: can be owned in unequal portions
- NOTE: joint tenant and tenants in common can end co ownership via right of participation
Right of survivorship
= property passes automatically to other co- owners when one dies)
Joint Tenancy
- Each has equal interest
- 4 unities of possession are present: interest, possession, time and title
+ right of survivorship - can only be conveyed through deed NOT through will: if one joint tenant sells his interest to an outsider (tenant in common) that person only keeps the part he bought, if someone in the group dies tenant in common is not entitled to survivorship
- NOTE: in NY deed must say “ joint tenancy with right of survivorship”
-NOTE: joint tenant and tenants in common can end co ownership via right of participation
Tenancy by Entirety
- Co- owners must be legal spouses
- Each spouse has equal undivided share
- 5 unities of possession: interest, possession, time, title and person (spouses are considered one person)
+ Right of Survivorship - Can be terminated if one dies, if they agree to end tenancy and sign new deed or divorce
- NOTE: In NY law mandates equitable distribution during divorce : may or may not be equal distribution
Sole Proprietorship
- Business owned by single individual in severalty or owned by legal spouses
- Personally responsible for business debt
Partnerships
- 2 or more co-owners
- Can obtain title to property: tenants in partnership: gives each partner an equal undivided interest in property. Property can be owned by the partnership or each individual partner as tenants in common or joint tenants
-If one wants to sell other partners need to agree - Types:
1. general partnership= all partners share financially liability individually and as member of partnership, Equal unless stated otherwise
2. Limited Partnership= one or more general partners and one or more limited partners, silent partner not involved in day to day, partners liability limited to their, investment common for real estate purchases
Corporations
- Can be public, private for profit, private nonprofit
=corporations are legal entities separate from individual stockholders, who are not personable liable - Property owns in severalty
- Types:
1. C Corporation: required, to pay corporate income tax and shareholders pay income tax, creates double taxation,
2. Subchapter S Corporation: no corporate income tax, corporations income and losses divided among shareholder, shareholders must report income gain and loss (NOTE; not recognized in NY State, if formed must pay NYC corporate taxes)
Condominiums Cooperatives and Townhomes
- Condominiums: each co owner has a separate fee simple interest in individual unit and undivided interest in common areas of property – common areas are owned as tenants in common
- Cooperatives: building owned by corporations, with residents as shareholders, who receive proprietary lease on individual unit and right to use common areas, title held by corporation
- Townhomes: each co owner has a separate fee simple interest in individual unit, including roof and basement and undivided interest in common area
Ownership by businesses
5 forms:
Sole proprietorship
Partnerships
Corporations
Condominiums/Cooperatives/Townhouses
Business for owning Real Estate
Business for owning Real Estate
- Syndicate= temporary alliance of businesses that join together to manage large transaction, not recognized as legal entity
- Joint venture=parties join to combine resources for certain business but not ongoing business
- Real estate investment trust/REIT=at least 100 investors, one or more trustee manages the real property for all beneficiaries
