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AZ Real Estate > Chapter 2 (A-2) Real Estate Interests & Ownership > Flashcards

Chapter 2 (A-2) Real Estate Interests & Ownership Flashcards

1
Q

Estate Classifications

A

A. Freehold (Indefinite duration) = Ownership interest = Fee

B. Less than Freehold (Definite duration) = non-freehold (leases) = Leasehold

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2
Q

What type of estate can be inherited?

A

Fee estate (freehold).

Includes fee simple absolute and desfeasible fee estates.

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3
Q

What are the two types of Fee Estates (Freehold)

A
  1. Fee simple absolute - offers highest degree of ownership. Full bundle of rights.
  2. Defeasible fee - conditions on the estates that can end the fee (determinable or conditional)
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4
Q

What is a fee determinable estate?

A

A type of Defeasible Fee Estate (Freehold) that has a date associated with it.

Transfer is automatic. Ex. If child stays in AZ until 2016, gets the property.

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5
Q

What is a fee conditional estate?

A

A type of Defeasible Fee Estate (Freehold) that has a condition associated with it.

Transfer is NOT automatic transfer. Ex. Child can have estate if the property remains a horse ranch.

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6
Q

In Defeasible Fee estates, what is the future estate called?

A

Reversionary Estate and have a revertor & revertee.

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7
Q

What type of estate cannot be inherited?

A

Life Estate - Freehold

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8
Q

What is a habendum clause associated with and what is it for?

A

Limiting clause in a Life Estate (Freehold).

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9
Q

What is a Life Estate

A

A non-inheritable estate that is
a. ordinary or conventional
b. Less than fee simple
c. An estate for the life of some stated person (Grantee)
or someone other than Grantee (pur autre vie - for the life of another). Ex. Grandpa can stay in house as long as Grandma is alive.

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10
Q

In a Life Estate, what is the future estate called and what are details around it?

A

A Life Estate always has a second (future estate).

The future estate is the Reversion estate and reverts back to the Grantor.
The Remainderman gets the deed if the deed holder passes away.

Two types of Remaindermans - vested (will) and contingent (no will)

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11
Q

What are the two types of remainder in a Life Estate?

A

Vested - named in will

Contingent - no will

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12
Q

Statutory Law for Life Estates Includes the

A

Homestead Exemption of $150K.

Does protect home owner from creditors and judgments.

Does not protect from foreclosure or Mechanic’s Lien.

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13
Q

What is a Leasehold Estate?

A

It is less than a freehold estate.

Lessor is owner/landlord.

Lessee has right to real property. Has leasehold.

Lease itself is Chattel Real - personal property with interest in real property.

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14
Q

What is an estate for years?

A

A type of leasehold estate that has a beginning date and an end date.

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15
Q

What is an estate from period-to-period?

A

A type of leasehold estate that is from month-to-month, year-to-year, week-to-week.

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16
Q

What is an estate at will?

A

A type of leasehold estate that is oral, handshake agreement. Allowed on lease of one year or less.

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17
Q

What is an estate at Sufferance?

A

A type of leasehold estate that has a holdover tenant, tenant doesn’t pay; landlord must go thru eviction process.

18
Q

What is required for a lease to be considered valid?

A
  1. Statute of Frauds requires it be in writing if greater than one year.
  2. Lessor must sign.
  3. Statement of intent of lessor to ‘let & demise’ (lease & convey property).
  4. Stated consideration for right to occupy (rent amount).
  5. Adequate description of property (address).
  6. State a time period for occupancy.
  7. Be delivered and accepted (when tenant takes possession, acceptance is implied).
19
Q

What is gross lease?

A

Landlord pays expenses.

20
Q

What is net lease?

A

Lessee pays expenses.

21
Q

What is percentage lease?

A

Fixed rent + portion of gross sales. Good for restaurants, hair salons, art galleries, new businesses.

22
Q

What is index lease?

A

Has an escalator clause. Tied to rate of inflation.

23
Q

What is graduated lease?

A

Step up lease. Good for new biz getting established, low rent initially, that increases over time.

24
Q

What is ground lease?

A

Own land, let someone build on the land.

25
Q

What is a sale & leaseback lease?

A

Buy, build, sell, rent back.

26
Q

Another term for subletting?

A

Sandwich lease.

27
Q

Estoppel Certificate is used for?

A

To determine the value of a property before sale. Tenants verify the terms and conditions of their lease in lease situation. Benefits the investor.

28
Q

What is contract rent?

A

Lease amount stated on the face of the lease.

29
Q

What is economic rent?

A

What the current market will bear.

30
Q

What is positive leasehold?

A

Paying less for rent than economic rent.

31
Q

What is negative leasehold?

A

Paying more for rent than economic rent.

32
Q

Difference between license and easement?

A

License - no interest in property & is revokable.

Easement - cannot be revoked, does encumber another’s property.

33
Q

What is an easement

A

Right to use another’s land for special purpose. Is a right or interest to use; it is NOT ownership interest.

34
Q

Types of easements?

A
  1. Easement Appurtenant - right to use another’s property and transfers with the sale of property. Always involves multiple properties. Most common. Not a personal right.
  2. Easement in Gross - Involves one parcel of land and is a personal interest therefore is not appurtenant to the land. Cannot be transferred by natural person. If held by a corporation (legal persons) may mortgage or sell the easement in gross.
  3. Easement by Prescription - Created by open and continuous and exclusive use under claim of right. Right is lost after five years of non-use. Open, hostile, continuos use.
  4. Easement by Necessity - Indispensable to the enjoyment of the dominant estate. Must be actual and real and reasonable as distinguished from inconvenience, but it need not be absolute.
35
Q

What is tenancy?

A

How you hold title. Mode, manner, quality way that owernship of an estate is held by a person, persons or legal entity. What’s on the deed?

36
Q

Types of tenancies?

A
  1. Sole & Separate - In severality one owner or entity.

2. Co-ownership - concurrent - two or more persons.

37
Q

Types of Co-ownership Tenancies?

A
  1. Community property
  2. Tenancy in common
  3. Joint tenancy
  4. Community property with rights of survivorship (CPRS)
  5. Tenancy by the Entirety
38
Q

Community Property Tenancy - Describe how create, ownership & what happens on death.

A
  1. Created by marriage
  2. 50 - 50 ownership
  3. On death passes to heirs.
  4. If spouse wants to be removed from ownership must sign a Disclaimer Deed.
39
Q

Tenancy in Common - Describe how create, ownership & what happens on death, how to split?

A
  1. Created by two or more adults, biz, condo common areas
  2. Ownership need not be equal
  3. On death goes to Probate and heirs.
  4. Partition Action - Divided co-interest. Split to become separate owners. Only Tenancy that allows this action.
40
Q

Joint Tenancy - Describe how create, ownership & what happens on death

A

Also called JTROS - Joint Tenancy Right of Survivorship

  1. 2 or more natural people on deed.
  2. Own equal share.
  3. On death share goes to survivors. No probate required.
  4. Four unities required - possession, time, interest, title
41
Q

Community Property with Rights of Survivorship (CPROS) -Describe how create, ownership & what happens on death

A
  1. Married couples.
  2. Own equal share.
  3. On death share goes to survivor. No probate required.
42
Q

Tenancy by Entirety -Describe how create, ownership & what happens on death

A
  1. Like CPROS but not in AZ. Marriage, Both owners have 100% ownership, on death goes to survivor.

AZ Real Estate (5 decks)

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