CH 2 Ownership, Estates, Rights and Interest Flashcards
estate in severalty
tenancy in severalty, or sole ownership.
This can be ownership by one individual or one business entity such as a corporation or a
partnership. Corporations or Partnerships often hold title this way. If only one signature is
required to sell a piece of property, then there is only one owner.
tenancy in common
Ownership by two or more without rights of survivorship
joint tenancy
Ownership by two or more with rights of survivorship
Tenancy by the entirety
is a specific type of joint tenancy where the co-owners are married
to one another: husband/wife, spouse/spouse. One advantage of this type of ownership is
that it avoids probate. (This is also true of joint tenancy.)
Time Shares
give an individual part ownership of a property coupled with the right to exclusive use
of it for a specified number of days per year, without the responsibility of full ownership. This can be
called “interval ownership.” It is tenancy in common ownership. This is most often used for resort
or vacation properties.
Cooperative or “Co-ops”
are an investment for residents. The land and buildings are owned by a
corporation. Residents must buy shares in the corporation in exchange for a “proprietary lease” on
their unit. The corporation pays for the mortgage, property taxes, and maintenance of the building.
The residents have a personal property interest in their units and the common areas.
Condominiums
are established under laws referred to as horizontal property acts. Each unit is a
separate legal ownership, and each owner arranges his or her own financing. Along with unit ownership comes a tenancy in common interest in all the common areas. Property taxes are assessed on
each unit separately and are based on the assessed value of the unit plus the share of the common
areas. It is not necessary for the taxing authority to assess and tax the common areas separately.
Monthly condominium fees are not for taxes. They pay for the maintenance of the complex and the
salary of the manager. Condominium managers work for resident owners, and their main responsibility is to preserve property value
freehold estate
is ownership
All the legal rights that attach to the ownership of real property
Bundle of
Rights. Disposition, exclusion, possession, quiet enjoyment
disposition
the right to sell, will to heirs, encumber or lease
exclusion
the right to exclude others
possession
the right to use, enjoy, occupy
quiet enjoyment
the right to use uninterrupted by former owners
Fee simple defeasible
is ownership with conditions or terms, which, if violated, could cause the
ownership interest to be defeated or terminated. When the ownership is defeated, it reverts or goes
back to the original grantor or the grantor’s heirs
life estate
is ownership for the duration of someone’s life. The owner is called the life tenant.
The life tenant has all the rights and duties of an owner, except the right to choose who will get the property upon his or her death
remainderman
The person who gets the property after the life estate is ended is the
a life estate with reversion
If the life estate is set up so that at the end of the life estate, the property goes back to the original
owner
life estate
pur autre vie.
If the life estate is based on the life of someone other than the life tenant, this is called a
Lease agreements create the leasehold estate
the lease is personal property, but the right to possession that the lease gives is real property. There are four leasehold estates, and each gives possession
without ownership. estate for years, periodic tenancy, estate at will, tenancy at sufferance
estate for years
is a lease with a specific starting and ending date. This lease survives
death and/or the sale of the property. No notice is required to terminate.
estate at will
or tenancy at will is a lease that can be terminated by either party at will
without notice
tenancy at sufferance
occurs when a lease expires, and the tenant refuses to move out
periodic tenancy
y is a lease with a fixed period that is automatically renewed unless the
tenant or landlord acts to terminate it. A month-to-month lease is this type. Notice to
terminate is usually required, typically 30 days’ notice
Gross Lease
the landlord pays all the expenses of the property. The tenant pays only rent
Net Lease
the tenant pays rent plus some of the expenses of the property.
Percentage Lease
lease in which all or part of the rent amount is based on the receipts of the
tenant’s business (Typical shopping center lease). This lease allows the landlord to participate in the
tenant’s success
Graduated Lease
– a lease with scheduled rent increases often based on expected business growth
Lease with an option to buy
- gives a tenant the right to purchase at a future date. The price is set
when the agreement is negotiated. It is advantageous to the tenant-buyer
Lease purchase agreement
an agreement in which part of the rent payment is applicable toward a
set purchase price. Title is transferred from lessor to lessee when the lessor receives the prearranged
total price.
Ground Lease
the tenant is usually making a long-term commitment, up to 99 years. This lease
is more often for industrial or commercial land use. The tenant will build on the leased property
Oil and Gas Lease
this lease gives the tenant the right to extract oil and gas from a specific property. NOTE: On a federal level, for the National portion of the exam, the EPA will be the best
answer for any questions regarding what department of the government regulates oil and gas leases.
Lien
is a charge against property as security for a debt. The lien is an encumbrance – a limit on
your rights. It is also, usually, a cloud on the title. This means title cannot be conveyed or transferred
to another until the lien is removed. The legal method of removing an encumbrance is to release it
or get a release.
Specific lien
A specific lien attaches to one or more specific or named properties
(Example: a mortgage)
General lien
A general lien attaches to all the property of the debtor, not exempt from forced sale (Example: a judgment or IRS lien)
voluntary lien
is created by the lienee’s or borrower’s actions, like taking out a mortgage or home
improvement loan. Filing or recording the mortgage creates a lien. A mortgage is not effective or
enforceable until it is recorded. When the mortgage is recorded, if it is the first recorded claim, it
will be the first priority lien
involuntary lien
is created by law and can be statutory or equitable (common law). (NOTE:
Statutory law always takes precedence over common law.) Examples of statutory liens include federal
tax liens, ad valorem (according to value) tax liens, judgment liens, and mechanics and materialmens’
(m&m) liens
Voluntary alienation
occurs when an owner transfers title to another. Voluntary alienation usually
involves a written document called a conveyance. A conveyance is any instrument or document that
transfers an interest in real property. Ownership is most often transferred by deed, patent, power of
attorney, or will.
Involuntary alienation
usually happens in court as in foreclosure, bankruptcy, condemnation,
escheat, adverse possession, reversion of defeasible fee, partition, or inheritance without a will
Types of deeds include:
General Warranty Deed, Special Warranty Deed, Bargain and Sale Deed, Quitclaim Deed,
General Warranty Deed
guarantees and protects against defects. It offers the buyer the best
protection. It warrants title to the sovereignty of the soil. It is the most common deed. A buyer
who wishes to ensure that the seller is conveying good title should request a General Warranty
Deed.
Special Warranty Deed
guarantees title only against defects arising under the grantor’s
period of ownership. Defects existing before that time are not covered.
Bargain and Sale Deed
a deed with only one covenant. (Trustees, executors, sheriffs, and
officers of the court use this.) This deed does not provide any warranties about the condition
of the title but only promises the grantor has the right to convey the title.
Quitclaim Deed
a deed that gives NO warranties or guarantees and offers the least protection. It is used to clear a cloud on the title or to cure a defect in tit
The covenant of seizin
the grantor claims to be the owner with the right to sell the property
The covenant of quiet enjoyment
the grantor promises the new owner will not be disturbed with claims against the property
The covenant of further assurance
the grantor is responsible for any documentation
needed to ensure title is transferred to the grantee
The covenant against encumbrances
– the grantor promises that all encumbrances have
been disclosed
The covenant of warranty forever
the grantor’s promises have no expiration date.
dedication
When a developer turns over
the streets in a subdivision to the local government
WILL:
WILL:
TESTATE
EXECUTOR
TITLE BY DEVISE
BENEFICIAR
NO WILL:
NO WILL:
INTESTATE
ADMINISTRATOR
LAWS OF DESCENT AND
DISTRIBUTION
TITLE BY DESCENT
probate
The judicial process to prove or confirm a will or to settle the estate of a party who dies intestate
deed in lieu of foreclosure
is deed in lieu of foreclosure. This is sometimes called “friendly foreclosure” or “voluntary deed.” The lender accepts a deed from the borrower. The lender must also
accept any junior liens on the property. This would be the fastest way for the lender to get title to
the property
Redemption
At any time up to the moment of the foreclosure, the borrower has the right to step
in and pay what is owed and reclaim property forfeited due to mortgage default. This is his or her
The lender must
send the notice of foreclosure by certified mail __ days before the foreclosure sale
21, There is no
requirement that the borrower receive the notice, only that the lender sends it. The notice of foreclosure must be posted at the door of the county courthouse and filed in the County Clerk’s office.
With a traditional mortgage (not a Deed of Trust), the foreclosure will be recorded as a lis pendens.
Short Sale
A sale of secured real property that produces less money than is owed the lender
subrogation clause
This clause allows the title company to
assume the rights of a buyer with respect to any claim against a seller if the title company has
made payments to that buyer to satisfy that claim. The property owner cannot collect from
both the title company and the seller for one problem
chain of title
a list of
all owners from the first until today
abstract of title
An abstract is a complete history of title
