Chp. 8 Estates and Interests Flashcards
Real Estate
Air, water, land and everything affixed to land
Bundle of rights
- Right to quiet enjoyment
- Right to give away
- Right to sell by deed
- Right to will
- Right to exclude
- Right to control what’s allowed by law
Tangible
physical, visible and material (home, car, boat, furniture)
Intangible
Abstract with no physical existence (stocks and checking account)
land
Includes minerals and water below the earths surface, air and plants, trees and grass
parcel/tract
section of land defined by boundaries
3 characteristics of land
- immobile/permanent
- Indestructible
- Non-homogeneous/unique
Improvements
man-made structures attached to land (fences, streets, building, wells, sewers, sidewalks and piers)
Property classification
- Real property
2. Personal property
Real Property
ownership of real estate and bundle of rights associated with owning real estate
Personal property/personalty chattels
ownership of anything NOT real estate (moveable from one location to another)
chattel real
property such as land or a building that is held for a limited amount of time, as on a lease (an agreement to use property for a fixed period of time)
Real property rights
- Right to use
- Right to transfer
- Right to encumber - to mortgage property as collateral for debt
- Right to exclude - keep others off property and prosecute trespassers
- Air rights - restricted to allow planes to fly over person’s property
- Surface rights - all natural things affixed to ground, improvements, and water rights
Subsurface rights
land beneath the surface downward to the center of the earth (landowner could decide to sell or lease the rights to any gas or oil found in the land)
parcel of land could be owned by a number of persons or entities
water rights
right to own and use water found in lakes, streams, rivers, and the ocean
Littoral rights
border bodies of water that are not moving like lakes, bays, seas and oceans
own the land up to the high water mark DO NOT own the water or land under the water.
EXCEPTION: If body of water like lake or pond is entirely contained within the boundaries of owner’s property they would own the water as well as unrestricted right to use it
Littoral rights attach to the property. They can’t be sold separately or kept when property is sold.
Riparian rights
moving water such as streams and rivers.
non-navigable stream - owner has unrestricted use of the water and owns land beneath stream to midpoint
navigable stream - public use and owner’s property extend to high-water mark
Accretions
increase in land mass resulting from deposit of soil by water/wind
Erosion
lose land mass by the change in stream’s channel
Fixture
personal property that is permanently attached to land or building (toilets, water pumps, septic tank)
Note: Fixtures not included in the sale must be listed and excluded in the sale contract
Legal Test of fixture
- Method of annexation (how item is attached to the building - central AC versus window AC)
- Adaptability - custom designed item for property
- Intention
- Existence of agreement
Trade fixtures/chattel fixtures
items tenant’s personal property temporarily attached to real property to conduct business (food freezers, clothes rack)
Emblements
plants and crops that need human involvement and labor considered personal property
Types and uses of real property
- Residential property
- Industrial property
- Commercial property
- Agricultural property
- Special purpose real estate - unique use such as church, hospital, school, government buildings
5 economic characteristics affect value of real property
- Improvements - adds value and use
- Location
- Supply and demand
- Scarcity
- Permanence of investment - real property requires large capital and labor investment and suffers from illiquidity (not easily converted to cash)
Undivided interest
two or more parties share ownership
Estate in land
interest holder has the right of possession
Encumbrance
interest holder does not have the right to possess (enables non-owning party to restrict owner’s bundle of rights with tax liens, mortgages etc…)
Freehold estate
own the property and no end date. Types of freehold estates:
- Fee simple
- Fee simple absolute
- Fee simple defeasible
- Fee simple on condition
- Qualified fee simple
Leasehold estate
rent the property and there is a definite end date. Type s of leasehold estates:
- Estates for years
- Periodic estate
- Estate at will
- Estate at sufferance
Fee simple/fee interest
highest form of ownership one can acquire (complete bundle of rights and unlimited tenancy)
Fee simple absolute
No condition or restricted use. Most common and desireable estate that can be obtained in residential real estate
Fee simple defeasible
Indefinite ownership if the use of the property meets certain STATED CONDITIONS
Qualified fee simple
deed specifies property must be used for a specific purpose or will automatically terminate and revert to owner and heir
Fee simple on condition
infinite term provided the condition is met and reversion the estate back to the original grantor is not automatic
Reversionary
estate reverts to the original owner or the owners heirs
Remainder
If life estate names a third party to receive title to the property upon death of the tenant
2 types of conventional life estates
- ordinary life estate - death of life estate owner pass back to the original owners of their heirs
- Pur Autre Vie - passes from the tenant holder to the original grantor or a third party
Legal life estates
created by state law and protects rights of surviving family members upon death
- Homestead - protects family against losing their home to creditors (NY DOESNT RECOGNIZE).
- Dower and Curtesy - when husband or wife dies surviving partner can claim portion of the decedent’s property (NY DOESNT RECOGNIZE).
Act of waste
life tenant has responsibility to protect property and not injure property in any way (causing fire, not paying property tax, activities decrease value of the property)
Forms of ownership
- In severalty (sole ownership or tenancy in severalty) - single party owns life estate
- In co-ownership - owned by 2 or more people
- In-trust
3 types of co-ownership
- Tenancy in common (estate in common) - most common form of co-ownership when owners are not married and share undivided possession or unity of possession
- Joint tenancy - 2 or more persons collectively own a property as if they were single person. Rights and interest are indivisible and equal
- tenancy by the entirety - reserved for husband and wife. In NY transfer of property to married couple is automatically tenancy by entirety unless the deed says otherwise.
Transfer of interest
joint tenant can transfer their interest in property to an outside party
Survivorship
In NY if a joint tenant dies, all interest and rights pass to the surviving join tenants
Partition suite
terminates a joint tenancy or tenancy in common (foreclosure and bankruptcy can terminate automatically)
Community property law
consists of all property earned or acquired during the marriage (DOESN’T EXIST IN NY)
Estate in trust
fee owner transfer legal title to a fiduciary who holds and manages the estate
Business are organized in several ways:
- Sole proprietorship - one person owns the whole business (easy to organize and operate)
- Partnership - 2 or more people share in the profits of business
- Limited partnerships - partners have limited liability and only liable to the extent of their investment
- Joint ventures
- Corporation - separate legal entity
- LLC - characteristics of both corporation and partnership. Provide limited liability protection of corporations without regulations associated with corporations
escheat
law doctrine that ensures property is not left in limbo and without owners
