Interests in Real Estate Flashcards
interests
also known as estates or tenancies. Refer to the extent of someone’s rights in real estate
Freehold interests
confer ownership
non-freehold interests
refer to possessory rights that don’t include ownership (usually a rental).
Fee simple absolute
is the default type of ownership. The owner is entitled to their entire bundle of rights to the property. These interests are intended to be indefinite, and only limited by public and private restrictions (e.g. zoning and building codes).
Fee Simple Defeasible
interest in real estate that is limited in some way, and can be lost if some limitation is violated or a condition is triggered.
Two forms of Fee simple defeasible
fee simple determinable, which is automatically lost when the limitation is violated,
fee simple subject to a condition subsequent, which is lost when legal action is brought pursuant to the violation of the limitation.
Life Estates
Life estates are freehold interests that only exist as long as the owner of the property (the “life tenant”) is alive. The life tenant’s deed will state who receives the life estate (usually a “remainderman”) upon their death in a habendum clause.
Types of Life Estates
Life estate in reversion – A life estate where, when the life tenant dies, legal title (ownership) will transfer back to the original grantor.
Life estate in remainder – A life estate where, when the life tenant dies, legal title will transfer to some third party originally named by the grantor (the third party is the remainderman).
Pur Autre Vie – Old French meaning, “for another’s life.” A life estate that is based not on the life tenant’s term of life, but on some arbitrary third party’s life as named by the original grantor.
Legal Life Estate – A life estate created by law, often in cases of dower rights (where a surviving husband or wife is granted a life estate for real property that was not willed to them, but that was owned by their spouse at their spouse’s time of death). In Massachusetts dower rights have been abolished, but in many states a surviving spouse is entitled to up to a 1/3rd interest in their deceased spouse’s real estate, in lieu of what was left in the will. The right is inchoate, or inactive, before the spouse’s death.
Homestead – A legal life estate granted to the owners of a family home. It often provides protections from the forced sale of the home to satisfy debts up to a certain amount. Usually you can only have one homestead at a time.
Severalty
A freehold interest (ownership) held by only ONE person.
Co-ownership
any freehold interest (ownership) shared by two or more persons, including corporations.
Tenancy in Common
Tenancy in Common is the default form of co-ownership. Co-owners who purchase property without specifying a type of ownership own in common. Ownership interests may be equal or unequal, but all co-owners have an interest in the entire property that cannot be compromised. It is inheritable.
Joint Tenancy
Joint Tenancy is a type of co-ownership that must be chosen by all co-owners, and specified in the deed. All owners must hold four unities: the unity of possession (all have equal right of possession), unity of time (all purchase the property at the same time), unity of interest (all have equal interests in the property) and unity of title (all acquire in the same deed), to create a joint tenancy. Once created, it creates a right of survivorship. Survivorship means that, if one of the co-owners dies, their interest is divided amongst the surviving co-owners. It is therefore not inheritable. It can be terminated by the sale of one of the joint tenants, agreement (voluntary partition), or court action (partition action).
Tenancy by the Entirety
joint tenancy for married couples. It works the same as joint tenancy, but includes creditor protections: a limitation on forced sale of the property to satisfy the debts of one spouse only (debts must be in the couple’s name for the home to be sold), and an automatic homestead protection for $500,000 in Massachusetts. On divorce, it defaults back to a tenancy in common unless the couple chooses otherwise. In separate property states (including Massachusetts), tenants by the entirety may sell or devise separately, similar to joint tenants. In community property states, on the other hand, the property acquired during marriage cannot be sold or devised without the consent of both spouses, since it is treated as the property of both spouses (even if only one actually bought it).
Condominiums
way to subdivide a building into separate units, creating fee simple ownership of an individual units, and shared ownership of the common areas (hallways, elevators, a roof deck, etc.) as tenants in common. Most states have condominium laws referred to as a horizontal property act.
Master deed Unit Deed Condo association- governs common areas (lobby) Declaration of trust Bylaws of the association (common laws)
Condo Fees
In not paying the condo fees, you can get a lien for up to 6 months of condo fees
♣ Super-priority lien statute
♣ Run with land
♣ 6D certificate- issued when there are no condo fees due. If fees are not paid, the association can foreclose
