Estates/Ownerships Flashcards
A purchaser requests a general warranty deed as a condition of purchasing a property. The title the purchaser would most likely receive is:
A. Conditional fee
B. Fee simple absolute
C. Life estates
D. Quiet title
B. Fee simple absolute
• Freehold
– Fee – I own it
– Simple – forever
– Absolute – to use however I want
– Conditional/determinable – “so long as”
– Life estate – only so long as someone is alive
– Freeholds are estates of indefinite length
A buyer should expect a fee simple absolute when they get a general warranty deed.
A fee simple property owner deeds title to the property to a church group as long as they conduct religious services. The type of ownership interest held by the church group is
A. fee simple.
B. life estate.
C. defeasible fee.
D. homestead.
C. defeasible fee.
• Fee simple defeasible estate
– “Can be defeated”
– Includes stipulations that, if not adhered to by grantee
– Can result in property reverting to grantor.
Example, a property designated for “so long as it is used for religious purposes” becomes a GYM, the condition is violated and the property reverts to the GRANTOR (heirs) automatically without court action.
A property owner gives a family member the right to reside in a property for the duration of the family member’s life. When the family member dies, the property will go back to the property owner. This describes:
- Fee simple determinable
- Life estate with remainder interest
- Life estate with reversionary interest
- Life estate per autre vie
- Life estate with reversionary interest - can sell, lease, borrow money, or encumber property, but can’t pass it to heirs or damage it.
- Reversion – Goes back to Grantor or Grantor’s Heirs
- Remainder – Goes to a party named by the Grantor upon the death of the measuring life person.
- Ordinary life estate – Established by the Grantor for a life tenant.
- Pur autre vie – To you for the life of another
Remember: In a life estate, the measuring life never changes!
- Life estate is a freehold estate lasting as long as measuring life lives. Can be ordinary or statutory.
- Life tenant is holder of life estate.
- May use and profit from property
- May sell or lease property to someone else; cannot will it
- May not transfer greater interest than life tenant possesses
- May not impair value of land (waste)
- Life tenant is holder of life estate.
- Life tenant holds present interest.
- Person who possesses land upon death of measuring life holds future interest.
- Life estate in reversion. Upon death of life tenant, life estate ends, and ownership reverts back to grantor or grantor’s heirs.
Janet conveys a life estate to Heather, upon Heather’s death, property goes to Charlene automatically. Charlene interest is called:
A. Fee simple estate
B. Life estate
C. Defeasible fee
D. Estate in Remainder
D. Estate in Remainder
• Life estate in remainder.
A concurrent future estate created by grantor for third party remainderman.
– Charlene’s interest is called vested remainder.
Ma Kettle grants her home to her son Arlo, reserving a life estate for herself.
Arlo’s has a
A. Reversionary Interest
B. Life estate
C. Defeasible fee Estate
D. Estate in Remainder
A. Reversionary Interest
• Ma Kettle grants her home to her son Arlo, reserving a life estate for herself.
She is both the life tenant and measuring life.
• Arlo has a reversionary interest in the property.
• When Ma dies, the fee simple property reverts to Arlo.
• The reversion of the property is not considered an inheritance.
Jim gave a life estate on his $30 Million Malibu beach front home to Bob for the life of Mary. Jim is Mary’s brother. Mary was recently married to Bob. Mary is 25 years older than Bob. Upon Mary’s death, the property will go to Jim’s son Tyson.
Tyson has holds a A. Reversionary Interest B. Life Estate pur autre vie C. Defeasible fee Estate D. Remainder Interest
D. Remainder Interest
• Life estate pur autre vie (for the life of another) is measured by the life of someone other than life tenant.
- Bob is the life tenant. Mary is the measuring life.
- Bob would have a life estate for as long as Mary lives.
- When Mary dies, the estate would end and either revert to Jim or go to a named vested remainderman.
- Life estate can be set up in reversion or in remainder.
Albert is in a car accident and it was his fault. He forgot to make his insurance payment, so he was not covered. Albert is sued by Carol, the injured plaintiff and wins $50,000. Albert cannot pay and Carol puts a lien on Albert’s home and forecloses on it. House has an outstanding loan balance of $400,000. House at the foreclosure auction for $500,000.
Carol will get A. Nothing. Can’t foreclose, it is homestead protected. B. $25,000 C. $50,000 D. $50,000 plus court costs.
B. $25,000
Homestead exemption - Only Statutory Life Estate recognized in California.
• In effect a lien that protects a certain amount of equity in a person’s home.
• Limits the amount of liability for certain debts against which a home can be used to satisfy a judgment.
• The amount protected varies depending on the age, marital status, and income of the property owner.
• Its purpose is to ensure that the homeowner receives the amount of the exemption before the creditors are paid from the sale proceeds.
• A homestead exemption does NOT stop the sale of the property.
• Are subject to the general rule regarding liens that “first in time is first in right”
• Not effective against – prior liens, such as a purchase money deed of trust or mortgage.
– specific liens - property tax liens, mechanic’s liens
– Judgment liens for child, family, or spousal support.
• Homestead property can be sold if the sale proceeds are sufficient to pay:
– All existing liens on the property.
– Off all mortgages and loans secured by the equity in the home.
– The foreclosure costs of selling the home.
• Allow the homeowner to keep equity in the amount protected by the homestead exemption.
• Homestead is automatic.
• Anyone living in his or her home has an automatic homestead exemption protecting the equity.
• A declaration of homestead does not need to be filed.
• Only applies on the forced sale of the property.
• The homeowner must live continuously on the property from the date the judgment creditor’s lien attaches until the date the court determines that the dwelling is a homestead.
• A dwelling is the place where a person resides.
• Homestead Exemptions
• Changed on January 1, 2021.
• Varies County to County based on Median Home Price
• Minimum $300,000
• Maximum $600,000
An unmarried couple elects to purchase a home together. If they provide no instructions as to how they wish to take title to the property, they will take title as:
- Tenants in common
- Joint tenants
- Community Property
- Joint tenants with the right of survivorship
- Tenants in common – Default in California for Unmarried people
Tenancy in common is
• co-ownership without the right of survivorship
• the only form that can be held unequally.
• the form of co-ownership the law presumes for unmarried persons or entities
• Joint tenants
– Key Component the right of survivorship
Mary, Pete, and Fred take title to a property as Joint Tenants. Fred is married to Sally. Fred dies.
Who owns the property?
- Mary, Pete, and Sally as Joint Tenants
- Mary and Pete
- Mary, Pete, & Sally as Tenants in Common
- Mary, Pete, and Fred’s Heirs
- Mary and Pete - When Fred dies, his wife Mary does NOT get Fred’s ownership when he entered into the ownership as a joint tenant with Pete and Mary.
Joint Tenancy – Right of Survivorship
• Right of survivorship means that if one of the joint tenants dies, the surviving joint tenant (s) automatically becomes sole owner of the property.
• The share of the deceased does not go to his or her
estate or heirs, but becomes the property of the cotenant without becoming involved in probate.
• The surviving joint tenant (s) is not liable to creditors
of the deceased who hold liens on the joint tenancy
property.
Joint Tenancy – Right of Survivorship
• The Four Unities of Joint Tenancy (T-Tip)
- Time - become joint tenants at the same time
- Title - take title on the same deed
- Interest - have an EQUAL undivided interest in the property
- Possession - have equal right of possession
Mary, Pete, and Fred take title to a property as Joint Tenants. Fred is married to Sally. Fred dies. One-week later Mary dies.
Who owns the property and how?
- Pete, with Mary’s and Sally as Joint Tenants
- Property will be sold in probate
- Pete with Mary’s heirs and Sally as T in C
- Pete in severalty
- Pete in severalty
One-week later Mary dies. Nothing changed to allow Mary to leave her ownership to anyone else, so Pete owns the property in Severalty.
Mary, Pete, and Courtney take title to a property as Joint Tenants. Courtney sells her ownership to Tom.
How do they hold title?
- Pete and Mary have 2/3 interest as Joint Tenants and Tom has 1/3 interest as tenants in common.
- Pete, Mary and Tom as Tenants in Common
- Pete, Mary and Tom as Joint Tenants
- Pete and Mary have 50% interest as Joint Tenants and Tom has 50% interest
- Pete and Mary have 2/3 interest as Joint Tenants and Tom has 1/3 interest as tenants in common.
Mary, Pete, and Courtney take title to a property as Joint Tenants. Courtney sells her ownership to Tom.
One month later Pete dies. How do they hold title?
A. Pete with Mary’s heirs have 2/3 interest as Joint Tenants and Tom has 1/3 interest
B. Pete and Tom 50% interest each as Tenants in Common
C. Pete and Tom as Joint Tenants
D. Mary has a 2/3 and Tom has 1/3 interest as Tenants in Common
D. Mary has a 2/3 and Tom has 1/3 interest as Tenants in Common
Mary automatically gets Pete’s share when he dies as a joint tenant. She now owns 2/3 ownership and Tom has 1/3 ownership as tenants in common
Nathan is married to Justine and they buy a home in
Mountain View and do not state their title interest.
Nathan dies and left a will leaving his assets to his son
Trevor.
Nathan’s share of the home will
A. go to Justine as the property was acquired during their marriage.
B. go to his son Trevor as stated in the will.
C. be determined in probate court because of intestate succession laws.
D. automatically go to Justine once probate court releases the property
B. go to his son Trevor as stated in the will.
- All property acquired by spouses during a valid Marriage, except for certain separate property, is called community property.
- Any income, including wages from either spouse, is considered community property, unless it is income derived from separate property.
- Has one unity—equal interest, with each spouse owning 50%.
Key Provisions
• Community property cannot be sold or encumbered by only one of the partners.
• Either spouse may lease community property for up to one year or may sign a listing agreement to put a property on the market.
Title: Inheritance
• Either party may will one-half of the community property.
• If there is no will, the surviving spouse inherits all community property by intestate succession.
• This is important to know, particularly with multiple marriages, for estate planning.
The unities of time, title, interest, and possession are associated with which form of ownership?
- Ownership in severalty
- Tenancy in common
- Joint tenancy
- Tenancy by the entireties
- Joint tenancy – Right of Survivorship
• Joint tenancy— Ownership of fractional interests in real estate by two or more individuals each holding an equal share with the right of survivorship. When a joint tenant dies, their interest is eliminated and the surviving joint tenants share the remaining ownership equally. Joint tenants take title together on the same deed, at the same time, hold equal shares in the ownership of the property, and each has the right to possess the entire property, known as the four unities.
- Tenancy in common - Tenants in common may have varying percentages of ownership in a property, may take title at different times, and have centralized rights of possession. If a joint tenant conveys their interest in the property to another person, that person takes title as a tenant in common. A tenant in common may will their interest in the property to others on their death since a tenancy in common interest carries no right of survivorship with it.
- Tenancy in common is the form of coownership the law presumes (default)
Right of survivorship
• means that if one of the joint tenants dies, the surviving joint tenant (s) automatically becomes sole owner of the property.
• The share of the deceased does not go to his or her estate or heirs, but becomes the property of the co-tenant without becoming involved in probate.
• The surviving joint tenant (s) is not liable to creditors of the deceased who hold liens on the joint tenancy property.
An owner wishes to convey land to two grantees on a one-third, two-thirds basis.
The new owners would take title as:
- Tenants in common
- Joint tenants
- Tenants at sufferance
- Tenants by the entireties
- Tenants in common
• Tenancy in common — may have varying percentages of ownership in a property, may take title at different times, and have centralized rights of possession. If a joint tenant conveys their interest in the property to another person, that person takes title as a tenant in common. A tenant in common may will their interest in the property to others on their death since a tenancy in common interest carries no right of survivorship with it.
• Joint tenancy
– Is with right of survivorship
– All things must be equal between tenants
