From Principles Workbook Unit 3 Flashcards
title to real property is held by one person or entity
ownership in severalty. can be owned by one individual or by a single entity (a corp, partnership, LLC or REIT)
when two or more people own a property
called concurrent ownerships or co-ownership. two most common forms are tenancy in common or joint tenancy
difference between tenants in common and joint tenancy
joint tenancy has right of survivorship… TIC doe snot
what is a cooperative?
building owned by a corporation. each resident owns shares of stock in the corp and has a proprietary lease in the individual unit
a deed is the document used to
transfer real property
a valid deed must identify:
- the parties
- have a competent grantor
- contain words of conveyance
- contain a legal description of the property
- state teh consideration that was given
- be properly executed
- be delivered and accepted
- must be in writing
what are the three main types of deeds?
- grant deed
gift deed
quitclaim deed
grant deed implies
certain implied (unwritten) warranties. this deed provides the greatest protection for a grantee(typically the buyer who is receivign title to real property)
quitclaim deed conveys
no warranties of any kind. it simply conveys whatever itnerest the grantor has when the deed is delivered. a quitclaim deed may be used as a “problem solveR’ to clear clouds on the title
adverse possession must be
open, continuous, exclusive, actual, and notorious (Hostile) for a period of 5 years
ownership by married couples or couples registered under domestic partnership law
community partnership
act of conveyign real estate ownership
alienation
private grant
is from individuals, using a deed
public grant
is from the government to individuals, using a land patent
dedication
is from individuals to teh government.
purpose of a deed
the voluntary transfer of an interest in property between the giver/grantor and the receiver/grantee
a seller of real property will always be required to provide a
written deed
every deed conveys
whatever interest is held by the grantor, unless it specifically states that it is conveying a lesser interest
competent grantor is
18 years old and sane and sober
seller is
grantor
buyer is
grantee
essential elements of a valid deed are:
- competent grantor
- execution by the grantor (all parties)
- identifiable grantee (need not be competent)
- delivery to and acceptance by the grantee
- description of land (prop description)
- consideration
- words of conveyance
when does title pass?
upon acceptance of the grantee
what does a deed need to be effective and transfer title?
Delivered & accepted!
what are the four voluntary deeds?
- grant deed
- quitclaim deed
- gift deed
- warranty deed
waht are three involuntary deeds?
- sheriff’s deed
- tax deed
- trustee’s deed
characteristics of grant deed
- implied warranties
- most common in CA
- grantor has disclosed all encumbrances
- conveys after-acquired title
characteristics of quitclaim deed
- best for the grantor
- no covenants or warranties “what i’ve got you got”
- used to clear clouds on title (problem-solver)
- used when grantor wants no future claims or liability
a trustee or sheriff’s deed transfers title at
the end of a foreclosure proceeding or statutory redemption period
a reconveyance deed is used
to restore the title to the trustor when they pay off a loan secured by a deed of trust
a warranty deed has
expressed (written) warranties. it is used in some states instead of title insurance.
testate
transfer by will
devise is the act of
transferring a deceased person’s interest in real estate to another
bequest is the act of
transferring a deceased person’s interest in personal property to another
three types of wills are:
- holographic will
- nuncupative will is an oral will made in contemplation of death
- a witnessed will
will written in testator’s own hand writing
holographic will
an oral will made in contemplation of death
nuncupative will
witnessed by two disintersted third parties
witnessed will
intestate succession
no will & determined by State of CA
adverse possion - five key elements
- open and notorious
- hostile to ethe true owner’s title
- under claim of right of color of title
- continuous and uninterrupted for a period of five yeras
- payment of all real property taxes for a period of five yeras
easement by prescription terminates
after non-use for five years
transfer tax is
55 cents per $500. paid on total purchase price less any existing loans that are assumed
subordination is a clause in a
mortgage/deed of trust or agreement in which an existin glender permits the lender’s right of priority to tak ea subordinate (lower) position to future encumbrances against the property.
chain of title is
a history of successive ownership documents linked together
when is title clouded?
when errors or missing documents are found in a title search (a broken chain)
title insurance is
the best method for insuring marketable title
Owner’s CLTA
California Land Title Association (Title Insurance)
extended title policy
Owner’s ALTA (American Land Title Association)
alta policy is typically required by
lenders
alta policies cover
- unrecorded tax, assessment, and mechanics’liens and easements
- water rights and mining claims
- items that are not a matter of public record but would be revealed by a physical inspection (rights of parties in possession, encumbrances, encroachments, adverse possession
Process for Suit to Quite Title
- a court hearing to determine ownership, recognize other valid claims and “quiet” invalid claims.
- used to clear clouded title
- establishes ownership under adverse possession
- notice sent to interested parties (lis pendens) - recorded notice of a pending lawsuite affecting title to a property
- cour hears and judges claims - once the court order is recorded, title is cleared.
What kinds of deducations are there for a first or second residence?
- property taxes
- mortgage interest
- points paid on laons used to improve or acquire
- Some loan origination fees (points, originatoin, interest and taxes are deductible)
Short term gains on property held fo r12 months or less is taxed at
ratepayer’s ordinary income tax
long term gain on property held fo rmore than 12 months is taxes
at a different rate than ordinary income
Taxation of gain on asle of principal residence
gain can be excluded from taxation - $250K maximum if single taxpayer, $500K if married or filing jointly.
tax payer must own and occupy for at least 2 of the 5 years before the sale - doesn’t have to be sequential.
Depreciation is
a tax advantage of owning business and investment real estate may be depreciation on personal taxes. this offsets the lack of liquidity in real estate
Does land depreciate?
no!
Resdiential rental property dpreication allowance is
27.5 years
commercial property depreciation allowance is
39 years
the amount of depreciation is determined by
straight line
1031 exchanges are used by investors and bus property owners to
defer payment of capital gains taxes on investment properties
california property taxes are
- limited by prop 13
- 1% of assessed value, plus voter-approved indebtedness
assessment increases are limited to a maximum of
2% per year unless a reassessment occurs
what are reassessment events?
- ownership changes
- property improvements
property tax calendar is based on
the fiscal year and runsf rom July 1 to June 30
taxes become a lien on
January 1 preceding the tax year
property taxes are paid in
2 installments
the first property tax installment is due on
november 1
the first installment is delinquent on
december 10
the second installment is due on
february 1
the second installment is delinquent on
april 10
do deeds need to be recorded to be valid?
No
Conveyance of title occurs at the moment the A) deed is accepted by the grantee B) Deed is recorded C) Grantor receives teh consideration D) Deed is signed by the grantor
A) deed is accepted by the grantee
In a condominum, all unit owners are
tenants in common
A deed that has not been recorded may NOT provide: A. Competent parties B. Constructive Notice C. Actual Notice D. A valid document
B. Constructive Notice
A deed that has not been recorded lacks constructive notice, which is also known as legal notice.
