Ch 7 not on test Flashcards
Absolute
We can legally seek police or courts to protect some
resource or you can’t
Property AKA Ownership
Legal right to exclude others from resources that are
possessed or acquired without force, theft or fraud
Property is not infinite
Can’t use resources to harm another’s resources
Examples of resources that aren’t protected by our legal system?
Marijuana, sale of proscription drugs, sale of bald eagle
feathers
Property is the necessary foundation for…
Private enterprise and market in the modern nation
Communism
State requires citizens produce according to their abilities
And share according to needs of everyone else
Private property laws
Recognizes and enforces an individual’s rights to acquire,
Possess, use and transfer scarce resources
3 types of property
Private, public and common
Private property
Protects private persons and allows them to exclude others
Including in most instances the state from interfering with
Resources
Public property
The states right to exclude people from state monuments,
Buildings, equipment, land and other public resources
2 meanings of common property?
1 right to common resources: air, rivers, oceans
2 private ownership by 2 or more people
Rule of law
All members of society must have equal guarantee
Property promotes incentive
Allowing people to keep and benefit from what they produce,
Property motivates effort in way natural to human beings
People expend more effort when they have protected
Property
How does property generate prosperity? 3.
1 promotes incentive
2 capital formation
3 divisibility of resources
Capital formation
Quality of resources that produces new and different
resources
Allows for borrowing money and investing
Mortgage
Agreement to put up house to secure loans
Lenders are willing to loan money at affordable rates because property law guarantees 3 things?
1 borrower’s house is identifiable piece of land recognized
By the state
2 state recognizes borrower’s claim to house
3 state permits lenders to enforce mortgage agreement
Through courts and sell borrower’s house to satisfy loan
Borrower fails to repay
Securities markets are vital for…
Capital formation and prosperity in modern nations
Divisibility
Relates to capital formation
Refers to how property permits resources to be broken into
parts and used in many ways while owner retains property
Interest in each part
Examples of divisibility of property 6
1 sell land for cash
2 sell another part of it on credit
3 hold mortgage to ensure payment
4 have tenants pay rent
5 incorporate part of it and sell shares to investors
6 secure loan against property and start business
2 basic legal divisions of property
1 real property
2 personal property
Real property law
2 Personal property law
Applies ownership to land and interests in land such as
Meaning rights or leases
2 all other resources are protected under personal
Property law
Real estate AKA Realty
Land ownership
Fixture
Object of personal property that has become object of
Real property
2 ways objects become fixtures
1 physical annexation (attachment) to land or it’s building
2 use has become closely associated with the use land Is put (fixtures go to land with buyers unless written agreement)
2 examples of fixtures
Carpet is fixture when nailed to the floor
Manufacturing equipment is fixture when sold along with
Manufacturing plant
Rules of contract
Rules under which people exchange resources in property
System
Make exchange of resources between owners legally
Binding
What do contracts allow 3 things?
1 allow owners to commit to future exchange of resources
2 make it possible for 1 owner to sue another if exchange
Of resources are broken by 1 of the owners
3 allow lawsuits against those not adequately performing
their agreements
Single most important factor to see if country’s economy is ready for international trade?
Observing legally enforceable contracts
Ownership: rule of first possession
1 first person to reduce previously unowned things to
possession becomes their owner
Ownership: Intent
Measure whether previous owner intended to abandon
Something
Lawsuits may follow if unclear whether previous owner
Abandoned possession
Possession of lost items
The finder must turn item over to police and place ads for
Certain period of time
If original owner doesn’t come forward to claim item during
Period, the finder becomes the new owner
Adverse possession
Gives ownership of land under state statute
5 requirements of state statute for adverse possession?
1 open and notorious 2 actual and exclusive 3 continuos 4 wrongful 5 prescribed period of time
Adverse possession: open and notorious
Possessor must occupy land in such way to put true owner
Of land on notice
Adverse possession: actual and exclusive
Possessor must physically occupy land
Fences and buildings constitute occupation of land
Adverse possession: continuous
Possession must be uninterrupted
Adverse possession: wrongful
Possessor must not have owner’s permission to be on
Land
Adverse possession: for prescribed period of time
Most state specify 10 to 20 years before possessor becomes
New owner
Ownership through confusion
Arises when fungible goods (goods that are identical)
Are mixed together
If no evidence is there when identical goods are sold,
everyone is entitled to an equal share
Doctrine of accession
When owner of old airplane engine has built and restored an airplane, the owner of the engine owns the whole airplane
Gift
Receiving a gift is way of acquiring ownership
Testamentary gift
Gift made through a will
4 different types of ownership?
1 Fee simple
2 life estate
3 leasehold estate
4 concurrent ownership
Estate
Bundle of rights and powers of land ownership
Fee simple
Maximum estate allowed under law
Owner has fullest legal rights and powers to possess, use
And transfer land
Fee simple absolute estate
No limitations or conditions attached
Fee simple defensible
May have condition attached to estate’s transfer
Ex. Seller may convey land to buyer if they develop land
For agricultural purposes
Conveyance
Transfer
Life estate
Grants ownership in land for lifetime of specified person
When specified person dies, original grantor keeps reversion
Interest in the la d
Life estate: remainder interest
Land goes to another person other than grantor after
Death of specified person
Leasehold estate
Property right granted to tenants by landlords
Concurrent ownership
More than one person owns the same thing
Tenancy in common
2 joint tenancy
Tenants in common can own different shares of resources
2 tenants have equal ownership shares
Joint tenancy: right of survivorship
One of joint tents dies, the other becomes the sole owner
Of entire resource
Tenants
Have qualified possession, use and transfer of land
They can’t damage it by law
Doctrine of partition
Allows owners or creditors of joint tenancy or tenancy in
Common to force separation of concurrent ownerships
Title
Registration of ownership of property
Deed
Document of title that transfers ownership of land
Contains precise legal description of land that specifies
Exact location and boundaries according to mapping
And surveying system
Grantor
2) grantee
Seller
2 buyer
Warranty deed
Promises buyer that grantor has good ownership and
Full power to convey it
Quitclaim deed
Makes no guarantee other than grantor surrenders all claim
Against land
Registration statutes
Protect buyers and lenders
Law enables buyers to register their deeds to land and
Lenders to register mortgage claims against land
Easement
Right of passage to cross over land
Bailment
2 bailor
3 bailee
Owner puts object protected by personal property into
Intentional possession of another person with understanding
It will be returned
2 owner
3 possessor of object
2 types of security interests
1 mortgages
2 secured transactions
Secured transactions
Legal fence that protects holder of security interest from
General claims of all other persons
Can be seized from debtor if they are unable to make their
Payments
3 types of security interests in land
1 mortgages
2 deeds of trust
3 land sales contracts
Under the Deed of trust
Borrower signs note, which shows borrower’s debt to
Lender
Signs deed of trust which grants lender security interest in
Land and building put up to secure the loan
Deed of trust: Trustee
Third party that holds full ownership of land under deed of
trust until the debtor repays the entire deed
Land sales contract
Owner of land sells it by contract subject to condition that
Seller retains title of land until buyer pays purchase price
Until that time, buyer has legal right to possess and use
Land and is responsible for insurance and taxes
Motgagees
2 mortgagors
Creditors
2 debtors
Recording statutes
If mortgagees fail to record mortgages, new buyers of
Lands who are unaware of mortgages will take lands
Free and clear of mortgages
Foreclosure
Creditor must go through court system to ensure procedure
Is properly followed before debtor’s lose home and land
Deficiency
Balance owed to mortgagee by mortgagor
Right of redemption
Before actual foreclosure allows mortgagor to get back land
Upon payment of full amount of debt including all interest
Costs
