Chapter 4 Forms Of Real Estate Ownership Flashcards
Estate in Common (Hill 80)
In Massachusetts, it is presumed that when a deed conveys land to two or more people or to a husband and a wife—except if it is a mortgage, a devise, or a conveyance in trust—it is conveying ownership as an estate in common, unless there is evidence that another form of ownership was intended. Tenants in common do not have a right of survivorship between owners and may sell or give away their ownership interest. Another distinction of tenants in common is that the ownership interest does not need to be equal. Upon the death of a tenant in common, the estate is probated in order to transfer ownership interest.
Joint Tenancy
Four main elements indicate a joint tenancy ownership:
The joint tenants own an undivided interest in the property as a whole, and each share is equal.
All joint tenants own for exactly the same period of time—in this case, the tenants’ lifetime.
The joint tenants received and maintain their ownership under the same title.
All joint tenants enjoy the same rights until one of them dies.
Under the right of survivorship, the death of one joint tenant automatically transfers the remainder of the property in equal parts to the survivors. When only one joint tenant is left alive, he receives the entire estate.
Tenancy by the Entirety (Hill 81)
A tenancy by the entirety is created when
the conveying deed expressly transfers the property “to X and Y as tenants by the entirety”; and
the conveyance is to a married couple.
It is important to note that there must be an express statement that a tenancy by the entirety is being created. The mere fact that a property’s owners are married does not automatically mean it is held by the entirety.
In Practice
In Massachusetts, property is presumed to be held as an estate in common unless the deed explicitly states otherwise.
An advantage of tenancies by the entirety created after February 1980 is that a creditor of either spouse cannot take action against property that is used as their home because the ownership is indivisible. The disadvantage of this form of ownership, and the reason why some couples choose joint tenancy, is that neither individual may sell the share without destroying the tenancy by the entirety. (Hill 81)
Just remember that this form of ownership is limited to two married persons who cannot convey or partition their interest without destroying the tenancy. (Hill 81)
Partnership Ownership (Hill 81)
Partnership ownership results if partnership funds are used in the purchase of property by persons who are partners. Massachusetts has adopted the Uniform Partnership Act, under the terms of which a partner may purchase property with partnership funds in his own individual name. The property does not have to be in the partnership’s name. (Hill 81)
Cooperative Housing Corporations (Hill 81)
To foster the development of safe, decent, and affordable housing, the state encourages the establishment of multiple-family housing cooperative associations. Following statutory requirements, a special kind of corporation is established in which individual unit residents own stock in the corporation and receive a proprietary lease entitling her to occupy a specific unit in the building and to use the common areas. (Hill 81)
Condominiums M.G.L. c. 183A (Hill 82)
Condominium ownership is a real-property interest combining mixed forms of ownership (e.g., joint tenancy with an estate in common). Condominium means to “exercise dominion with others.” (Hill 82)
Condominium Conversion (Hill 82)
The notice must contain the following three items:
The owner has filed or intends to file a master deed converting the property to a condominium.
The tenant shall be given a period of time to vacate based on status as elderly, low to moderate income, handicapped, or other.
The tenant shall be given a chance to purchase the unit he occupied at terms equal to or better than those offered to the general public. (Hill 82)
Condominium Closing Requirements (Hill 82)
In addition to normal property closing requirements, a condominium requires two items:
6D Certificate. This is a statement, obtained from the Condominium Association Management Office, stating whether there are any unpaid condominium fees due from the current unit owner. A 6D Certificate showing that all fees have been paid to date is necessary to provide a unit title that is free of any condominium fee lien. It is usually the responsibility of the broker or salesperson to obtain the 6D Certificate. This document called a 6D Certificate is identified as such from its definition under M.G.L. c. 183A § 6 (d).
Master Insurance Policy. Most lending institutions require that a statement covering the overall condominium building or buildings be prepared showing amounts of coverage, the new unit owner, and the new unit owner’s bank as the loss payee in the event of damage. A copy of the master insurance policy is obtained from the insurance company handling the policy, and it is usually the responsibility of the broker or salesperson to obtain the policy.
(Hill 82-83)
Condominium Financing (Hill 83)
Condominium buyers are often surprised to find their bank will allow them to buy a house that costs more than a condominium. In calculating how much a buyer can afford, most lenders will include the condominium fee as a monthly expense. Therefore, when calculating how much of a buyer’s monthly income is available to carry a mortgage, include the condominium fee. (Hill 83)
Condominium Super Lien. M.G.L. c. 183A § 6 (c) (Hill 83)
The Massachusetts Condominium Super Lien improves a condominium association’s right to collect unpaid condominium fees in the case of foreclosure. It allows the condominium association to collect up to six months of overdue condominium fees after taxes and municipal debts have been paid but before any mortgage obligations are paid. This is true even if the condominium association lien is recorded after the mortgage at the Registry of Deeds (Hill 83)
Time-Share Ownership M.G.L. c. 183B (Hill 83)
Massachusetts has adopted the Model Real Estate Time-Share Act that establishes uniform laws and procedures governing time-share estates.
In a time-share arrangement, a parcel is held by several owners in common. Each owner has the right to use the property for a certain period of time, which may be either fixed or variable. In Massachusetts, an ownership interest in a unit that includes the right of possession during a potentially infinite number of separate periods is an estate in fee simple, and it includes all the rights of common law fee ownership. An interest in a unit that includes the right of possession during five or more separate time periods over a limited number of years that is greater than five, including extension and renewal options, is a common law estate for years (Hill 83)
