Chapter 4 - Ownership Flashcards
Three people have identical rights but unequal shares in a property, share an indivisible interest, and may sell or transfer their interest without consent of the others. This type of ownership is…
tenancy in common
A unique feature of a land trust is that…
the identity of the beneficiary may not be identified
A _____ may hold an owner liable for the unpaid operating expenses of other owners
cooperative
One of the benefits offered by ownership in tenancy by the entireties is
the estate is subject to foreclosure only for jointly incurred debts
When a tenant in common dies, what happens to the tenant’s interest in the estate?
It passes by probate to the deceased tenant’s heirs.
The owner of a cooperative owns
shares in a corporation or association and a proprietary lease in a physical unit
In a cooperative, real property is owned by
the corporate entity of the cooperative association
A tenant in common can
sell, encumber, or transfer his or her interest to an outside party without the consent of the other tenants in common
Sole ownership
a single party owns the fee or life estate, the ownership is a tenancy in severalty
aka: ownership in severalty, estate in severalty
Co-ownership
if more than one person, or legal entity such as a corporations, owns an estate in land, the estate is held in some form of co-ownership
co-owners are also called cotenants
Tenancy in common
also known as the state in common, is the most common form of co-ownership when the owners are not married
Defining characteristics of a tenancy in common
-two or more owners
-identical rights - co-tenants share an indivisible interest in the estate
-interests individually owned - co-tenants may sell, encumber, or transfer their interests without obstruction or consent from the other owners
-Electable ownership shares - tenants in common determine among themselves what share of the estate each party will own (40/25/35 or 50/25/25)
-no survivorship - a deceased co-tenant’s estate passes by probate to the decedent’s heirs
-no unity of time - a new co-tenant may enter into a pre-existing tenancy in common
Joint tenancy
two or more persons collectively own a property as if they were a single person.
rights and interests are indivisible an equal: each has a shared interest in the whole property which cannot be divided up
Defining characteristics of a joint tenancy
-unity of ownership - hold a single title to the property
-equal ownership (50/50; 25/25/25/25)
-transfer of interest - joint tenant may transfer their interest in the property to an outside party, but only as a tenancy in common
-survivorship-if a joint tenant dies, all interests and rights pass to the surviving joint tenants
Creation of joint tenancy
all owners must acquire the property at the same time, use the same deed, acquire equal interests, and share in equal rights of possession
What are the four unities of joint tenancy
unity of time, unity of title, unity of interest, unity of posession
Termination by partition suit
the legal avenue for an owner who wants to dispose of his or her interest against the wishes of other co-owners
Tenancy by the entireties
is a form of ownership traditionally reserved for married couples
Characteristics of a tenacy by the entireties
-survivorship - upon death the interest passes automatically to the other spouse
-equal, undivided interest
-no foreclosure for individual debts
-termination - may be terminated by divorce, death, mutual agreement
Community property
defines property right of legal spouses before, during and after their marriage as well as after the death of either spouse
Community property law distinguishes real and personal property into
separate and community property
Separate property consists of
-property owned by either spouse at the time of marriage
-property acquired by either spouse through inheritance or gift
-property acquired with separate-property funds
-income from separate property
Community property consists of
all other property earned or acquired by either party during the marriage
Tenancy in partnership
ownership held by business partners, as provided by the uniform partnership act
Estate in trust
a fee owner (grantor or trustor) transfers legal title to a fiduciary (the trustee) who holds and manages the estate for the benefit of another party, the beneficiary
Living trust
allows the trustor, during their lifetime, to convey title to a trustee for the benefit of the third party
Testamentary trust
is structurally and mechanically the same as a living trust, except that it takes effect only when the trustor dies
Land trust
a land trust allows the trustor to convey the fee estate to the trustee and to name himself or herself the beneficiary
Deed in trust
grants the beneficiary the rights to possess and use the property, and to exercise control over the actions of the trustee
Conventional trust structure
the trustee holds legal title and has conventional fiduciary duties
Distinguishing features of a land trust
-beneficiary controls property
-beneficiary controls trustee
-beneficiary identity not on record
-limited-term (must be renewed)
The beneficiary’s interest in a land trust is
personal property, not real property
Corporation
is a legal entity owned by stockholders
Partnership
two or more persons agree to work together and share profits
LLC
limited liability company, combines features of the corporation and the limited partnership
Condominium ownership
a hybrid form of ownership of a multi-unit residential or commercial properties
it combines ownership of a fee simple interest in the airspace within a unity with ownership of an undivided share, as a tenant in common, of the entire property’s common elements, such as lobbies, hallways, and pools
A condominium unit
is one airspace unit together with the associated interest in the common elements
Common elements
are all portions of the property that are necessary for the existence, operation, and maintenance of the condo units
Common elements include
-the land
-structural components of the building
-physical operating systems
-recreational facilities
-building and ground areas used non-exclusively (halls, stairways, laundry rooms)
Condominium interests and rights
-possession, use an exclusion - unit owners exclusively posses their apartment space, but must share common areas with other owners
-transfer and encumbrance - condo units can be individually sold, mortgaged, or otherwise encumbered without interference from other unity owners
-condo units are individually taxed
Condominium creation
condo properties are created by excuting and recording a condo declaration and master deed
the party creating the declaration is referred to as the developer
Condo declaration may be required to include:
-a legal description/ name of property
-a survey of land, common elements, and all units
-plat maps of land and building, floorplans
-provisions for common area easements
-an identification of each unit’s share of ownership
-voting rights, membership status, and liability for expenses of individual owners
-covenants and restrictions regarding uses and transfer of units
Condo organization
condo declarations typically provide for the creation of an owner’s association to enforce bylaws and manage the overall property
Condo management
have extensive management requirements, including maintenance, sales and leasing, accounting, owner services, sanitation, security, trash removal, etc..
Condo owner responsibilities
-maintaining internal systems
-maintaining the property condition
-insuring the contents of the unit
Cooperative ownership
or co-op one owns shares in a non-profit corporation or cooperative association, which in turn acquires and owns an apartment building as its principal asset.
the shareholder acquires a proprietary lease
____ establishes what portions of the property’s expenses the owner must pay
the ratio of the unit’s value to total value
Co-op interests, rights and obligations
co-op association’s interest - the corporate entity of the co-op association is the only part in the co-op with real property interest
-shareholder’s interest - owning stock and a lease, the unit is personal property that is subject to control by the corporation
-proprietary lease - the co-op lease is called a proprietary lease because the tenant is an owner (proprietor) of the corp that owns the property
-expense liability - failure of individual shareholders to pay monthly expense easements puts all proprietors on the hook
-transfer - interest is transferred by assigning both the stock certificate and lease to the buyer
Co-op organization and management
a developer creates a cooperative by forming the cooperative association, which subsequently buys the cooperative property
cooperative associations control the use and ownership of individual apartment units.
Time-share ownership
is a fee or leasehold interest in a property whose owners or tenants agree to use the property on a periodic, non-overlapping basis
Time-share lease
(lease hold time share) the tenant agrees to rent the property on a scheduled basis or under any pre-arranged system of reservation, according to the terms of the lease
Time-share freehold
or interval ownership estate, tenants in common own undivided interest in the property
