Estates and Methods of Holding Title

Question 1

Estate

Answer 1

Refers to the degree of interest a person has in the land

Question 2

Freehold Estate

Answer 2

Interest in real property of indeterminable (not fixed or certain) duration. The holder of this estate is usually called an owner. This can be fee simple or a life estate.

Question 3

Fee Simple Estate

Answer 3

Also referred to as “fee simple absolute” or “fee estate” and it is the greatest estate in land. Infinite duration and includes the whole bundle of rights: inheritable and transferable.

Question 4

Defeasible Fee Estate

Answer 4

A defeasible fee estate is a
legal interest in land that is
subject to one or more limitations placed on the estate by
the grantor (former owner). This could be that the property is required to be used as a church, or another use. This is also known as “qualified fee” “possibility of reverter” or “right of re-entry”

Question 5

Life Estate

Answer 5

A life estate is a freehold estate, since it is a
possessory estate of indefinite duration. But it is not an estate of inheritance. This interest lasts only for the lifetime of the specified person.

Question 6

Life Tenant

Answer 6

The person who owns the property with the life estate.

Question 7

Estate in Reversion

Answer 7

Life estate that returns to the grantor on the death of the measuring life.

Question 8

Measuring Life

Answer 8

The person whose life is used to measure the length of the life estate. If the measuring life is someone other than the life tenant, the life estate is called a life estate pur autre vie.

Question 9

Estate in Remainder

Answer 9

Life estate that passes to a third party on the death of the measuring life. The person who the estate passes to is the “remainderman” and receives a fee-simple interest in the property.

Question 10

Leasehold Estate and Leased Fee Estate

Answer 10

The landlord’s (lessor’s) interest is called a leased fee estate. The tenant’s (lessee’s) interest is called a leasehold estate

Question 11

Waste

Answer 11

Improper use or abuse of real property by a person in possession who owns less than a fee-simple interest. Acts that permanently damage the property and harm the interests of the reversionary or remainder estate (in the case of a life tenant)

Question 12

Is a lease personal or real property?

Answer 12

A lease is both a contract and
a transfer of an interest in
property.
Even though a lease
concerns real property, the
lease itself is considered
personal property.

Question 13

Estate for Years

Answer 13

Estate for years (or term tenancy) is a tenancy for a fixed period of time. Must be formed through an express agreement and lease terminates automatically at the end of the term or on mutual consent of the parties.

Question 14

Periodic tenancy

Answer 14

Periodic tenancies may be
created by express agreement,
but they are often created by
implication. For example, at
the end of a 12-month estate
for years, the tenant continues
to make monthly payments
and the landlord accepts them

Question 15

Estate at Will

Answer 15

Parties have no agreement, but the tenant remains in possession at the will of the landlord. The estate terminates when either party gives notice of termination, or on the death of either the landlord or tenant.

Question 16

Tenancy at sufferance

Answer 16

A tenant at sufferance (or holdover tenant) is one who comes into possession of land lawfully, but who holds over after the lease ends, at the “sufferance” of the landlord. The tenant is not a trespasser because she originally entered the land with the landlord’s permission.

Question 17

Ownership in Severalty

Answer 17

When someone or an entity (corporation) owns title to the property individually (as opposed to jointly).

Question 18

Concurrent Ownership

Answer 18

When two or more people hold title to the property at the same time: tenancy in common, joint tenancy, community property.

Question 19

Tenancy in common

Answer 19

Two or more individuals have an undivided interest in the property (unity of possession). They can have unequal interests, and can will the interest to an heir.

Question 20

Joint Teneancy

Answer 20

Two or more tenants hold interest in the property. Must have unity of interest, title, time and possession. Terminates automatically if one of the elements is destroyed. Interest in a joint tenant cannot be willed – it automatically goes to the other joint tenants.

Question 21

Community property

Answer 21

Washington is a community property state. Property a spouse acquires during the marriage is community property and each spouse has an undivided one-half interest in the common property. Property acquired before the marriage or by inheritance, will or gift is separate property.

Question 22

Tenancy by the Entireties

Answer 22

For non-community property states. This is similar to joint tenancy, but is restricted to married couples. Tenants by the entireties have survivorship rights, but do not have the right of partition

Question 23

General Partnership

Answer 23

Formed by contract (can be oral). Each partner shares equally in profits, responsibilities and liability. Partners are taxed individually. Partners have equal rights to use partnership property but cannot transfer interest.

Question 24

Limited Partnership

Answer 24

Formed by contract, must be in writing. Has at least one general partner and one limited partner. General partners are liable for debts and obligations, limited partners have limited liability.

Question 25

Corporations

Answer 25

Owned by shareholders, can incur debts, are subject to double taxation. Shares are securities. Stockholders elect a corporations management board of directors.

Question 26

Limited Liability Company

Answer 26

Insulates co-owners (members) from liabilities of the company’s debts.

Question 27

Security

Answer 27

Security: an ownership
interest representing an
investment over which the
investor has no managerial
control.

State laws regulating the sale
of securities are often called
“blue sky laws.”

A licensed securities broker,
not a real estate broker,
handles transactions
involving securities.

Question 28

Joint Venture

Answer 28

Similar to a partnership but created only temporarily, such as for a specific transaction.

Question 29

REIT

Answer 29

Real estate investment trust. Must have a minimum of 100 investors and are subject to federal securities laws.

Not subject to double-taxation. Liability is limited to the amount of their investment.

Question 30

Common Elements

Answer 30

Common elements typically
include the land, exterior walls,
elevators, swimming pools,
parking lots, roof, clubhouses,
and other shared amenities on
the property.

A limited common element
is appurtenant to a particular
unit even though it is
physically outside the unit.

Question 31

Condominium

Answer 31

A fee-simple interest in an airspace inside a unit in severalty with shared ownership in the common elements as tenants in common.

Question 32

Cooperatives

Answer 32

Ownership of an entire project vested in a single entity, usually a corporation. Residents own shares proportionate to their own interest, and receive a proprietary leasehold estate. They pay rent to the corporation (pro-rata share of mortgage, taxes, op-ex, etc)

Question 33

Timeshares

Answer 33

Interval ownership. Fractional ownership interest in the property for a certain period each year.