Bus. Law: Misc. Bus. Law

Question 1

When the grantor of a trust dies and s/he has no no named income beneficiaries remain…

Answer 1

the trust immediately terminates and the principal is paid to the remaindermen (the principal beneficiaries).

Question 2

State law requirements for a will to be considered valid:

Answer 2

A will must be witnessed by two (or three) persons who can verify that the testator signed the will and that the testator had capacity.

Question 3

exception to state law formality requirements for a will

Answer 3

holographic will

Question 4

holographic will

Answer 4

A will that is entirely in the handwriting of the testator; which must state the testator’’s intention and be signed.

Question 5

testamentary trust

Answer 5

1. Created in a will.
2. A trust can designate the same persons both trustee and beneficiary as long as not all trustees and beneficiaries are not one in the same.
3. Inability of the trustees to serve does not invalidate the trust.

Question 6

trust

Answer 6

artificial entity that holds legal title to property for the benefit of beneficiaries.

Question 7

Real Estate Investment Trust (REIT)

Answer 7

1. An entity that receives special tax considerations by virtue of being required to distribute to its owners (100+) most of its income each year.
2. REITs may be listed on public stock exchanges and its shares traded just as common stock in other companies.

Question 8

spendthrift trust

Answer 8

one which prohibits the beneficiary from invading the principal of the trust.

Question 9

cy pres doctrine

Answer 9

operates to save a trust which has been established for charitable purposes, but might otherwise fail due to the beneficiary no longer being in existence

Question 10

inter vivos trust

Answer 10

one which comes into existence during the life of its creator

Question 11

requirements for creating a valid inter vivos trust

Answer 11

1. Grantor/settlor.
2. Intent.
3. Trust res (trust property).
4. Separate beneficiaries.
5. AND a lawful purpose.

Question 12

With respect to accounting for principal, income, and expenses of the trust…

Answer 12

1. Disbursements relating to real estate special assessments are treated as reductions to principal.
2. Roof repair and real estate taxes are treated as reductions to income.
3. Rental receipts are considered trust income.

Question 13

When a blanket mortgage in favor of A is recorded prior to B’s mortgage…

Answer 13

A’s mortgage has priority.

Question 14

assume a loan

Answer 14

Promising to make timely payments on a real estate loan.

Question 15

When B assumes a loan from A, is A still liable to the loaning bank for the loan balance?

Answer 15

Yes.

Question 16

pure race jurisdiction

Answer 16

1. means a state which gives priority to the first to record, regardless whether they were aware of unrecorded claims.

Question 17

Does recordation ensure that heirs will get a property?

Answer 17

No.

1. An heir’s claim to the property does not take priority over an unrecorded mortgage because recordation is only required to protect against bona fide purchasers (or lenders) for value.
2. An heir gives no value, so takes subject to recorded and unrecorded mortgages.

Question 18

recordation

Answer 18

required to protect against bona fide purchasers (or lenders) for value.

Question 19

buy a building subject to existing mortgage

Answer 19

make no promise to pay the mortgage; smarter move

Question 20

assume a mortgage/enter a novation

Answer 20

promise to pay mortgage

Question 21

novation

Answer 21

1. leaves the existing mortgage in place, saving costs of recordation as well as other costs (e.g., survey) incurred in connection with a new mortgage.
2. In a novation, the original borrower is released and a new obligor is substituted.
3. Good move for someone who wants to retain mortgage but be released from liability for payments.

Question 22

A general warranty deed includes all of the following title warranties:

Answer 22

1. The conveyor of the deed is the true owner.
2. No mineral rights claims against the property.
3. The conveyee will have quiet enjoyment of the property.

Question 23

Which party wins in a race-notice jurisdiction?

Answer 23

In a race-notice jurisdiction the party who is first to record will prevail against all other claims except those of which he was aware at the time of recording.

Question 24

prescriptive easement

Answer 24

1. arises when one passes over the property of another continuously and openly for a period designated by statute - usually 15 years.
2. After continuous use for the statutory period, the adverse user obtains an easement to continue such use and this easement arises without the filing of a deed or of any instrument of record.

Question 25

Is an easement created when A uses’s B’s property with permission?

Answer 25

No. No instrument is required in connection with an easement by prescription.

Question 26

easement by agreement

Answer 26

easement created by a deed

Question 27

easement by necessity

Answer 27

easement created because it is necessary for A to use B’s property

Question 28

prescriptive easement for descendants

Answer 28

This can only occur if both the parent and the child use B’s property adversely.

Question 29

Can joint tenants convey their share of property to someone else w/out the consent of the other tenants?

Answer 29

Yes. If A, B, and C start as joint tenants, but C conveys the property to D, then A and B own 2/3 as joint tenants, and D owns 1/3 as a tenant in common.

Question 30

Can tenants by the entirety convey their share of property to someone else w/out the consent of the other tenants?

Answer 30

No.

Question 31

In a tenants by the entirety situation, are the tenants subject to a judgment against one tenant?

Answer 31

1. If A and B still own the property as tenants in entirety, the judgment has no effect on the title.
2. If, however, A ends up with the property alone, the judgment is effective against A.

Question 32

Can tenants in common convey their share of property to someone else w/out the consent of the other tenants?

Answer 32

Yes. There are also no survivorship rights, so, when A dies, his share passes to his heirs.

Question 33

A will is ambulatory in nature. What does this mean?

Answer 33

1. The will has no force or effect until the testator dies.

2. Consequently, the will can be changed at any time as long as the testator retains testamentary capacity.

Question 34

Is consideration required for a deed of gift?

Answer 34

No.

Question 35

Who must sign the deed for it to be valid?

Answer 35

Only the grantor has to sign.

Question 36

Does the deed have to be recorded to be valid?

Answer 36

No.

Question 37

Can a minor execute a valid deed given a lack of capacity to enter into a contract?

Answer 37

Yes.

Question 38

gift causa mortis

Answer 38

1. conditional gift made in contemplation of death.
2. It is automatically revoked if the donor does not die of the impending illness or crisis.
3. Such gifts can only be made when the donor is in a terminal condition.

Question 39

How long do the following intangible properties last:

1. Utility patents?
2. Design patents?
3. Trademarks?
4. Copyrights?
5. Copyrights owned by a publishing house?

Answer 39

1. UPs last 20 years.
2. DPs last 14 years.
3. Ts can be renewed periodically indefinitely.
4. Cs- life of author plus 70 years.
5. Cs from pub- shorter of 95 yrs from publication or 120 yrs from creation.