chapter 2 Flashcards
national section
What is ownership by one individual or business entity called?
Estate in severalty, tenancy in severalty, or sole ownership
This type of ownership requires only one signature to sell a piece of property.
What type of ownership involves two or more parties without rights of survivorship?
Tenancy in common
This is the most common type of joint ownership and allows unequal shares and individual sales without permission.
What happens to a share in tenancy in common upon the owner’s death?
It goes to the owner’s heirs at probate
In the absence of instructions, the title company assumes equal shares.
What is ownership by two or more parties with rights of survivorship called?
Joint tenancy
This type of ownership allows shares to pass to surviving co-owners immediately upon death.
What are the four unities required for joint tenancy?
- Time
- Title
- Interest
- Possession
All owners must acquire their interest at the same time from the same legal document.
What is the term for the procedure to divide co-tenants’ interests in real property?
Partition
This can be done through court action or by agreement, and may result in selling the property if it cannot be physically divided.
What is tenancy by the entirety?
A specific type of joint tenancy for married couples
This ownership type avoids probate, similar to joint tenancy.
What does it mean if property is held in trust?
It is held by one party for the benefit of another
This involves a trustee managing the property for the beneficiary.
What do we call a group that joins together to create and operate a real estate investment?
Syndicate
This term refers to a collaborative effort in real estate investment.
True or False: Joint tenancy is considered an estate of inheritance.
False
Joint tenancy overrides a will, making it not an estate of inheritance.
Fill in the blank: A _______ allows unequal shares and individual sales without permission in joint ownership.
Tenancy in common
This is the most common type of joint ownership.
What is a Time Share?
An individual part ownership of a property with the right to exclusive use for a specified number of days per year
Also known as interval ownership and typically used for resort or vacation properties.
What type of ownership does a Cooperative (Co-op) represent?
An investment for residents where land and buildings are owned by a corporation
Residents buy shares in the corporation in exchange for a proprietary lease on their unit.
What is the main financial responsibility of a corporation in a Co-op?
The corporation pays for the mortgage, property taxes, and maintenance of the building.
How is ownership structured in a Condominium?
Each unit is a separate legal ownership with a fee simple, undivided interest in the common areas
Owners arrange their own financing and property taxes are assessed separately.
What is the role of a Condominium manager?
To preserve property values and manage the complex on behalf of resident owners.
What is an estate in real property?
An interest in real property.
What defines a freehold estate?
Ownership.
What are the components of the Bundle of Rights?
- The right to sell, will to heirs, encumber or lease (disposition)
- The right to exclude others (exclusion)
- The right to use, enjoy, occupy (possession)
- The right to use uninterrupted by former owners (quiet enjoyment)
What is the best type of ownership called?
Fee Simple or Fee Simple Absolute.
What does Fee Simple defeasible entail?
Ownership with conditions or terms that could cause the ownership interest to be defeated or terminated.
What happens to ownership in Fee Simple defeasible if conditions are violated?
It reverts to the original grantor or the grantor’s heirs.
What is the difference between determinable and condition subsequent in Fee Simple defeasible?
Determinable ownership automatically reverts to the grantor upon violation; condition subsequent requires the grantor to take action within a reasonable time.
What is a life estate with reversion?
A life estate where, at the end of the life estate, the property goes back to the original owner
The original owner has a reversionary interest in the property.
Who is the remainderman in a life estate?
The original owner
If there is no remainderman, the property escheats to the state.
What is a life estate pur autre vie?
A life estate based on the life of someone other than the life tenant
The life upon which this estate is based is called the measuring life.
What creates a leasehold estate?
Lease agreements
The lease is personal property, but the right to possession that the lease gives is real property.
What is an estate for years?
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.
Define periodic tenancy.
A lease with a fixed period that is automatically renewed unless terminated
Notice to terminate is usually required, typically 30 days’ notice.
What is an estate at will?
A lease that can be terminated by either party at will without notice
Also known as tenancy at will.
What occurs in a tenancy at sufferance?
When a lease expires and the tenant refuses to move out
The landlord is not receiving rent and the holdover tenant has no right to be there.
What is a gross lease?
A lease where the landlord pays all the expenses of the property
The tenant pays only rent.
Define net lease.
A lease where the tenant pays rent plus some expenses of the property
What characterizes a percentage lease?
A lease in which rent is based on the receipts of the tenant’s business
This is typical for shopping center leases.
What is a graduated lease?
A lease with scheduled rent increases often based on expected business growth
What does a lease with an option to buy entail?
Gives a tenant the right to purchase at a future date
The price is set when the agreement is negotiated.
What is a lease purchase agreement?
An agreement where part of the rent payment goes toward a set purchase price
Title transfers when the total price is received by the lessor.
What is a ground lease?
A long-term lease, often up to 99 years
Typically used for industrial or commercial land use where the tenant builds on the property.
What is a life estate?
Ownership for the duration of someone’s life.
Who is the owner of a life estate called?
Life tenant.
What rights does a life tenant have?
All the rights and duties of an owner, except the right to choose who will get the property upon death.
Who receives the property after the life estate ends?
Remainderman.
What type of ownership does the remainderman receive?
Fee simple.
What is an Oil and Gas Lease?
This lease gives the tenant the right to extract oil and gas from a specific property.
In Texas, the Texas Railroad Commission regulates oil and gas leases, while the EPA regulates them on a Federal level.
What does the Covenant of Quiet Enjoyment entail?
A landlord is prohibited from entering leased property unless there is a need for maintenance, inspections, or emergency response.
What is the Right of First Refusal?
The tenant has the right to match or better any offer before the property is sold to someone else.
What is Subletting?
The transfer of some or all of the rights and/or leased space under a lease to another, with liability remaining with the original tenant.
What is Assignment in lease terms?
The transfer of all rights and liabilities to a new tenant under an existing lease.
What is Forcible Entry and Detainer?
The legal term for eviction, used by a landlord.
What does Expiration refer to in lease terms?
When the lease comes to the end of the negotiated term or lease period.
What is Termination in the context of a lease?
When the time period on a lease ends or is cut short.
What is Mutual Rescission?
When a lease is terminated by agreement of the parties, with no default, no breach, and no injured party.
What is Constructive Eviction?
Occurs when a landlord allows property conditions to deteriorate to the point that the building is uninhabitable, forcing tenants to leave.
What is Sale and Leaseback?
A property owner sells property to an investor or lender and then leases it back, occupying the property after closing.
What is a lien?
A charge against property as security for a debt, functioning as an encumbrance.
What are specific and general liens?
Specific liens attach to one or more specific properties (e.g., a mortgage), while general liens attach to all property of the debtor (e.g., a judgment lien).
What is a Voluntary Lien?
A lien created by the lienee’s or borrower’s actions, such as taking out a mortgage.
What is an Involuntary Lien?
A lien created by law, including statutory and common law liens.
What are examples of statutory liens?
- Federal tax liens
- Ad valorem tax liens
- Judgment liens
- Mechanics and materialman’s liens
What must occur for a mortgage to be effective or enforceable?
The mortgage must be recorded.
What happens when a mortgage is the first recorded claim?
It will be the first priority lien.
Fill in the blank: A lien is an encumbrance that limits your _______.
[rights]
True or False: Lack of hot water makes a property uninhabitable.
False
