Ch. 3 - Interests and Estates

Question 1

What are the 5 rights included in the bundle of rights in an ownership interest of real estate?

Answer 1

1) possess
2) use
3) transfer
4) encumber
5) exclude

Question 2

What is an undivided interest?

hint: an owner’s interest in a property in which ___ __ ___ _____ ____ _____

Answer 2

An owner’s interest in a property in which 2 or more parties share ownership

Question 3

Is an undivided or indivisible interest a fractional part of the entire estate or a physical portion of the real property itself?

Answer 3

A fractional part of the entire estate (not a physical portion of the real property itself)

Question 4

If an interest-holder enjoys the right of possession, the party is considered to have an _____ __ _____.

If a private interest-holder does not have the right to possess, the interest is an _____. If the interest-holder is not private, such as a gov’t entity, and does not have the right to possess, the interest is some form of _____ _____.

Answer 4

Estate in land (or estate)

Encumbrance; Public interest

Question 5

Tax liens, mortgages, easements, and encroachments are examples of what?

Answer 5

An encumbrance (enables a non-owning party to restrict the owner’s bundle of rights)

Question 6

Police power, or the right of the local or county gov’t to zone, and eminent domain are examples of what?

Answer 6

Public interest (zoning is a non-possessory interest; eminent domain is a way to acquire ownership)

Question 7

Is an estate in land (which includes the right to possession) a freehold or leasehold estate?

Answer 7

It could be either

Question 8

In a _____ _____ the duration of the owner’s rights cannot be determined (they may endure for a lifetime, less than a lifetime, or for generations beyond the owner’s lifetime)

A _____ _____ is distinguished by its specific duration, as represented by the lease term.

Answer 8

Freehold estate

Leasehold estate

Question 9

Both freehold estates and leasehold estates are referred to as what?

Answer 9

Tenancies (the owner of a freehold estate is the freehold tenant and the renter, or lessee, is the leasehold tenant)

Question 10

A freehold estate of potentially unlimited duration is called what?

An estate limited to the life of the owner is called what?

Answer 10

A fee simple estate

A life estate

Question 11

What is the highest form of ownership interest?

Answer 11

The fee simple freehold estate (it includes the complete bundle of rights and the tenancy is unlimited, with certain exceptions)

Question 12

What are the 2 forms of fee simple estate?

Answer 12

Absolute and defeasible

Question 13

What is a perpetual estate that is not conditioned by stipulated or restricted uses called?

How does it pass?

Answer 13

Fee simple absolute (most desirable and most common)

Freely to heirs

Question 14

What is the estate that is perpetual, provided the usage confirms to stated conditions called?

Answer 14

Fee simple defeasible
(the property must be used for a certain purpose or under certain conditions, and if the use changes or if prohibited conditions are present the estate reverts to the previous grantor of the estate)

Question 15

What are the 2 types of fee simple defeasible?

Answer 15

1) determinable

2) condition subsequent

Question 16

The deed to what type of estate states usage limitations, where if the restrictions are violated, the estate automatically reverts to the grantor or heirs?

(hint: it’s a type of fee simple defeasible estate)

Answer 16

Determinable

Question 17

What type of estate is it where if any condition is violated, the previous owner may repossess the property, but reversion is not automatic: the grantor must re-take physical possession within a certain time frame?

(hint: it’s a type of fee simple defeasible)

Answer 17

Condition subsequent

Question 18

What is the name of a Freehold Estate that is limited in duration to the life of the owner or other named person?

Answer 18

Life Estate

Question 19

In a Life Estate, what happens to the estate upon death of the owner or other named person?

Answer 19

It passes to the original owner or another named party.

Question 20

What is the holder of a Life Estate called?

Answer 20

A life tenant.

Question 21

Does the owner of a Life Estate enjoy full ownership rights during the estate period?

Answer 21

Yes

Question 22

What do the holders of a future interest in a Life Estate own?

(Hint: either a _____ or _____ interest)

Answer 22

Either a reversionary or remainder interest.

Question 23

What are the 2 ways a Life Estate can be created?

Answer 23

1) by agreement between private parties

2) by law under prescribed circumstances

Question 24

What is the interest called when a Life Estate names a 3rd party to receive title to the property upon termination of the life estate?

(Hint: _____ _____ or (same) _____)

Answer 24

Remainder interest or Remainder estate

Question 25

What is the holder of a Remainder interest or Remainder estate in a Life Estate called?

Answer 25

A Remainderman.

Question 26

What is the interest in a Life Estate called where no remainder estate is established and the estate reverts to the original owner or his heirs?

(Hint: a _____ _____ or _____)

Answer 26

A reversionary interest or estate.

Question 27

What are the 2 types of Life Estates called?

Answer 27

1) Conventional life estate

2) Legal life estate

Question 28

Begin with life estates at the top of p. 34

Answer 28

Finished p. 33