Chapter 9 Mastering Real Estate

Question 1

Define severalty.

Answer 1

It is the same as sole owner.

Question 2

Define Joint Tenancy.

Answer 2

Ownership by two or more people with the right of survivorship.

Question 3

Compare Joint Tenancy and Tenants in Common in terms of ownership, creation, and survivorship.

Answer 3

Joint Tenants
Equal owners
Expressly created
Right of survivorship

TIC
Different ownership percentages
Assumed
Transfers to heirs

Question 4

What is the right of partition?

Answer 4

All joint tenants own it - they can go to court and force the tenancy to be dissolved.

Question 5

What is the difference between tenants in common interest and ownership?

Answer 5

They hold an undivided interest because they have unity of possession, but they may hold different percentages of ownership in the property.

Question 6

How is a TIC dissolved?

Answer 6

Voluntarily agreement by parties
Suit of partition
Operation of law

Question 7

What is tenancy by the entirety?

Answer 7

Special form of joint tenancy that exists only between husband and wife.

Question 8

What are the five unities of tenancy by the entirety?

Answer 8

Possession
Person
Interest
Time
Title

Question 9

How did a deed in joint tenancy conveyed?

Answer 9

Both parties must sign.

Question 10

What is community property?

Answer 10

Property acquired by the joint efforts of husband and wife.

Question 11

How much of the community property does the spouse get if the other one passes?

Answer 11

There is NO right of survivorship. They get half.

Question 12

How is community property conveyed?

Answer 12

By consent of BOTH parties.

Question 13

Name the main advantage and disadvantage of a general partnership.

Answer 13

The partners have the right to participate in mgmt, but they are liable for all debts of the partnership.

Question 14

How is a limited partner protected from liability?

Answer 14

Only liable to the extent of their investment.

Question 15

What is a corporation?

Answer 15

An artificial person created by a charter.

Question 16

Name the 3 advantages and 2 disadvantages of a corporation.

Answer 16

Continuity of life
Limited liability
Ease of transferring ownership

Disadvantages
Double Taxation
Inability to pass along losses

Question 17

What is an S corp?

Answer 17

It combines corporation and partnership. There is the limited liability of a partnership and no double taxation of the corp.

Question 18

What is an LLC?

Answer 18

There is limited liability and less stringent requirements on administrative matters. no double taxation. No restriction on who is in them.

Question 19

What is a syndication?

Answer 19

Formed by two or more people to operate a real estate investment. (Usually a limited partnership)

Question 20

What is a joint venture?

Answer 20

Usually created for a single project. Can take any ownership form.

Question 21

What assets can be held in a trust?

Answer 21

Any assets, including real estate.

Question 22

Who is the trustor?

Answer 22

The party who transfer the property into the trust.

Question 23

Who is the trustee?

Answer 23

The party who holds the legal title to the assets of the trust and manages it.

Question 24

Who is the beneficiary?

Answer 24

The party who benefits from the trust.

Question 25

What a living trust?

Answer 25

Created by the owner in their lifetime. The trustor and beneficiary can be the same person.

Question 26

What is a testamentary trust?

Answer 26

It is created by a will after the owner’s death.

Question 27

What are the benefits of a land trust?

Answer 27

Provides privacy
Simplifies transferring ownership benefits
Protects from encumbrance
Limits personal liability
Avoids questions of martial rights

Question 28

What are the 3 requirements of a REIT?

Answer 28

Trust owned by at least 100 investors, no fewer than 5 owning >50%
95% of trust income must be from investments
75% must be from real estate investments
95% must be distributed in the year earned as dividends

Question 29

What is a cooperative?

Answer 29

Where the tenants own the building; done by articles of incorporation

Question 30

What is condomimium ownership?

Answer 30

All tenants own separate property; the DECLARATION is the master deed.

Question 31

What is the first right of refusal?

Answer 31

Where a condo is offered for sale to the association before the general public. May not be used to discriminate.

Question 32

What is time-sharing?

Answer 32

Someone can own/lease a specified time interval in a property.