Chapter 49 - Real Property

Question 1

Real Property

Answer 1

1) land and anything attached to it
2) includes fixtures (anything movable that becomes atttached to the land)
3) item is atttached if its removal would hinder the functioning of the structure
4) items not permanently attached but essential to the use of the building have been ruled to be rule property

Question 2

Fixtures

Answer 2

1) originally personal property but becomes attached to the real prop and then part of the real prop
2) exceptions
a) written agreement that specific features will be treated as personal prop
b) personal prop attached to realty for businesss uses – trade fixtures – ex chairs for barber

Question 3

Extent of Real Property Rights / Ownership

Answer 3

1) airspace rights - rights to air above land until atmosphere , ex tree branches, walkways across buildings
2) water rights - legal ability to use water flowing across or underneath the property, Cannot deprive landowners downstream of use of water by diverting it elsewhere
3) mineral rights/subsurface rights - legal ability to dig or mine material from the earth below the surface and may sell/give to another + right to enter property to remove minerals

Question 4

Types of Estate

Answer 4

1) Fee-Simple-Absolute Estate
2) Conditional Estate
3) Life Estate
4) Leasehold Estate

Question 5

Fee-Simple-Absolute Estate

Answer 5

1) most complete ownership f estate
2) exclusive rights to ownership and possession of the land
3) interest passes to heirs when the owner dies

Question 6

Conditional Estate

Answer 6

1) rights to own and possess the property, like a fee simple absolute but subject to the happening or nonhappening of a conditon
2) should condition not be met, interest terminated and estate will revert to the original owner or be transferred in accordance with the deed (conveys real prop)

Question 7

Life Estate

Answer 7

1) granted for the lifetime of an individual
2) upon death of owner, grantor decides who acquires the property (future owner)
3) future owner may bring damages against life holder if life holder wastes the propety
4) Waste - when the holder of a life estate uses the property in a way that reduces the value of the estate that the future holder will receive, commits negligence, damages estate, etc

Question 8

Future Interest

Answer 8

1) present right to property ownership and future right to possession
2) usually exits in conjunction with a life estate or a lease hold estate
3) Future Holder has rights against current holder for waste and negligence

Question 9

Leasehold Estate

Answer 9

1) right to possess property for an agreed-on period of time / possessory but not an ownership interest
2) tranferred from owner (lessor/landlord) to tenant (lessee) by contract - lease - signed by both
3) lease includes:
- property
- amount of rent and when due
- duration
- special rights and duties of either party
4) some sates require that landlords keep prop in good condition for tenants use - if not tenant may withhold payment
5) landlord not allowed to enter the property except in an emergency or when tenant has given permission for repairs (may enter at end of lease to show prop to new lessees)
6) subleasing allowed unless prohibited in lease but original tenant is liable for throughout entire term fo payment to the landlord

Question 10

Nonpossesory estates

Answer 10

1) easements and profits

2) licenses

Question 11

Easements and Profits

Answer 11

1) neither ownership nor possessory interests
2) easement - an irrevocable right to use some part of another’s land for a specific purpose without taking anything from it
3) profit - right to go onto someone’s land and take part or a product of it away from the land
4) appurtenant easement/profit – runs adjacent with land on property on which it exists
5) in gross easement/profit – not dependent on owning prop adjacent to the land on which nonpossessory interest exists

Question 12

Transferring of Easements and Profits

Answer 12

1) can be transferred by express agreement, inheritance, necessity, implication, or prescription
2) express agreement - land owner expressly grants the agreed-on use of the land to the holder of the easement
- recorded in county office or described on the deed to protect holder of the easement
3) inheritance - incorporated into property owner’s will
4) prescription - created by state law when certain conditions are met, portion of land has been openly occupied for 25 years in most states
5) Necessity - if a property owner become landlocked they get an easement to cross over other’s land or need to use the other parcel by necessity

Question 13

License

Answer 13

1) a temporary and revocable right to use someone’s property w/ no property interest ex: lift ticket

Question 14

Co-Ownership

Answer 14

1) occurs when two or more people have the same property rights.
2) ownership rights determined by co-ownership type
- tenancy in common
- joint tenancy
- tenancy by the entirety

Question 15

Tenancy in Common

Answer 15

1) most common
2) gives each co-owner right to sell interest without consent of others
3) each co-owner has ability to have unequal share of the property
4) each co-owner has right to have a creditor attach their interest
5) heirs receive their tenancy at the tenants death

Question 16

Joint Tenancy

Answer 16

Joint tenants may:

1) sell their share without consent of other tenants
2) have creditor attach their interest

3) Joint tenants all have EQUAL shares of property
4) at death property divided equally between the surviving joint owners

Question 17

Tenancy by the Entirety

Answer 17

1) Applies to married couples
2) one owner cannot sell interest without the other’s consent
3) creditors of one owner cannot attach the property
4) if one dies other owner receives full ownership
5) if divorce –> interest becomes tenancy in common

Question 18

Condominium Interest

Answer 18

1) type of joint tenancy
2) Gives holder exclusive ownership rights of a unit of the condominium and tenancy in common with other unit owners over land, buildings, improvements on common areas
3) Regulated by a condominium association which can levy and assess against owners
4) Association is directed by a Declaration of Covenants, Conditions and Restrictions (CC&R) filed when condominium is formed

Question 19

Cooperative

Answer 19

1) joint tenancy
2) investor resident is a shareholder in the corporation owning (usually) an apartment complexadn receives a permanent lease on one unit of the complex upon acquiring stock
3) all unit owners governed by a board of directors (usually elected from owners) to manage and establish the rules for the owners
4) rules violated = eviction and unit repurchase
5) board often approves unit buyer

Question 20

Voluntary transfer of real property - Req

Answer 20

1) following steps:
execution, delivery, acceptance, and recording (to protect recipient of the property)
2) following procedure results in a conveyance of a fee simple absolute, unless contrary is stated

Question 21

Transfer Req - Execution

Answer 21

1) initiates the voluntary transfer of real property
2) preparation and signing of the deed (instrument of conveyance)
3) deed mus contain:
a) Identification of the grantor (person conveying the prop ) and the grantee (person receiving the prop)
b) an expression of the grantor’s intent to convey the property
c) a legally sufficient description of the property, including its physical boundaries and any easements
d) any warranties or promises made by the grantor in conjunction with conveyance
4) may need to be notarized by county office

Question 22

General Warranty Deed

Answer 22

1) most common type of deed
2) contains certain warranties or promises by the grantor - in General:
a) grantor owns the interest they or conveying
b) grantor has right to convey the property
c) there are no mortgages or liens against the property unless otherwise stated
d) the grantee will not be disturbed by anyone who has a better claim to the title in the property and the grantor will defend the grantee against such claims or reimburse any money spent in defense
e) grantor will provide any additional documents the grantee needs to perfect his or her title to the property

Question 23

Special Warranty Deed

Answer 23

1) only promises that grantor has not done anything to lessen the value of the estate
2) Comes about when grantor is uncomfortable making a general warranty deed

Question 24

Quitclaim Deed

Answer 24

1) least desirable for grantee
2) carries no warranties - could be defective deed
3) grantor simply convey whatever interest they hold

Question 25

Delivery

Answer 25

1) step after execution in transferring property

2) deed delivered to grantee by third party or directly

Question 26

Acceptance

Answer 26

1) grantee’s expression to possess the property

2) assumed if grantee retains the deed

Question 27

Recording

Answer 27

1) filing the deed with appropriate county office giving official notice of the transfer
2) not required but protects grantee’s rights in property– if two deeds convey same property many states give property to the first recorded deed

Question 28

Steps of Transferring Ownership

Answer 28

1) execution
2) delivery
3) acceptance
4) recording

Question 29

Negotiation of a sales contract

Answer 29

1) generally person seeking to sell will contact a real estate agent or a broker (licensed by state)
2) broker advertises property in exchange for a commission on its sale
3) in most states broker cannot work for buyer and seller (they can in CA and earn double commission)
4) buyer finds property and puts up earnest money (sig down payment to convey seriousness)
5) Earnest money applied to purchase price - if buyer changes mind, they lose the earnest money - if seller rejects, money is refunded
6) failure to accept in reasonable time is a rejection

Question 30

Sales Contract

Answer 30

1) drawn up in accordance with the offer’s terms
2) includes
- description of the property
- names and addresses of the parties
- purchase price
- type of deed
- who will bear the loss if property is destroyed before the sale is completed
3) Generally requires the buyer puts the money into an escrow account maintained by a neutral third party until transfer can be completed (deposit varies but around 10% of purchase price)
4) money in escrow account turned over to seller at closing (when transfer is completed)

Question 31

Seller’s duty to disclose

Answer 31

Most states require that seller warn the buyer about any known defects that
1) the reasonable buyer could not discover through a thorough examination of the property
2) affect the property’s material value
If seller fails to disclose, buyer can sue for fraud or misrepresentation
Most states enforce an implied warrant of habitability - house is of sound construction and everything is in reasonable working order- if not buyer can sell for breach

Question 32

Marketable Title

Answer 32

1) A title free of misrepresentation (seller actually has legal title), liens, and restrictions of which the buyer is unaware
2) if material defect found in the title search not disclosed in sales contract, buyer can file to rescind the agreement, obtain damages, or get an order for specific performance with a price reduction
3) title insurance protects buyer from losses resulting from a defect in the title

Question 33

Financing

Answer 33

1) mortgage - secured interest on the property in exchange for a loan to purchase the home
2) while mortgage payments are made, lender holds title to the property and can sell it if payments aren’t made

Question 34

Closing

Answer 34

Transfer of title takes place, delivery and acceptance are carried out. mortgage executed (if necessary)

Question 35

Involuntary Transfer of Real Property

Answer 35

can occur through adverse possession or condemnation

Question 36

Adverse Possession

Answer 36

1) a person takes possession of real property by treating it as his own, without protest or permission of the owner
2) after 25 year –> ownership interest
3) Adverse possession must be:
- actual (person lives/uses like owner would)
- open (not secretive)
- notorious (without owner’s permission)
4) in some states must have performed some actions ex property taxes in others adverse possessor must operate “under the color of title” – assumption that they held the title to the land

Question 37

Condemnation

Answer 37

1) legal process by which transfer of property is done against the will of the owner
2) Government may seize bc eminent domain and pay market price - if dispute over price court decision

Question 38

Restrictive Covenants

Answer 38

1) promises to use or not use their land in certain ways
2) must be lawful
3) successors to the original covenant must always have notice of it
4) most common I’m planned communities —> homeowners associations etc
5) enforced as long as reasonable

Question 39

Zoning

Answer 39

1) restricts the type of use on land –> industrial, residential, commercial, ag etc or intensity, size or placement - single family etc
2) Noncomformity - allowed exception for particular property
3) variance - allowance to use land in prohibited manner
Zoning illegal if
a) encroaches on the rights of landowners without a subatantial relationship to government purpose – public welfare, safety, health, etc
b) no reasonable relationship between the ends and the means to obtain them