Kap Real Estate Chapter 2: Property Ownership and Interest Flashcards
bundle of legal rights
This is a “legal relationship” between the owner and the property. In other words, a purchaser of real estate is actually buying the rights of ownership held by the seller.
The rights of ownership or Bundle of Legal Rights include the:
- right of disposition (to sell, will, transfer, or otherwise dispose of or encumber the property);
- right of enjoyment to use in any legal manner (to uninterrupted use of the property without interference of any third party claiming superior title);
- right of exclusion (to keep others from entering or using the property);
- right of possession (to use or occupy); and
- right of control (of the property and its profits within the framework of the law).
An appurtenance is defined as
a right or privilege that goes with the ownership of land.
Examples of these rights include subsurface rights (such as mineral rights), air rights, and water rights.
improved land usually refers to
land that has a structure on it, for example a house
An improved lot usually means
that certain basic required services necessary to utilize it are available, such as electricity, telephone, street access, or water access.
Surface rights are
simply the rights to use the surface of the earth
subsurface rights
which are the rights to use the space below ground level and to extract the natural resources lying below the earth’s surface. Such natural resources might include minerals, coal, gas, oil, or water.
A transfer of surface rights may, however, be accomplished without the transfer of _________ rights. For example, a landowner could sell the rights to any oil and gas found in the land to an oil company. The landowner then could sell his remaining interest. After the sale, the new buyer would own all the property except the oil and gas rights, which would be held by a third party: the oil company.
-subsurface
1) What are Riparian rights?
2) What restrictions apply?
- are granted to owners of land located along the course of a river or stream.
- Such an owner has the unrestricted right to use the water, provided such use does not harm owners upstream or downstream by interrupting or altering the flow of the water or by contaminating it
In addition, an owner of land that borders a non-navigable waterway owns the land _______ the water to the exact _______ of the waterway
- under
- center
In North Carolina, the ownership of water and the land adjacent to it is determined by the doctrine of riparian rights. Land adjoining navigable rivers is owned only to the banks of the river in North Carolina
(NO question)
littoral rights
unrestricted use of navigable waters but own the land adjacent to the water only up to the mean high-water mark. All land below this point is owned by the government.
**(The strip of land between high and low tide lines, called the foreshore, belongs to the state of North Carolina.) This makes a portion of every beach in North Carolina a public beach under the public trust doctrine.
Western states follow the doctrine of prior appropriation which states
that water rights are determined by priority of beneficial use. This means that the first person to use water or divert water for a beneficial use or purpose can acquire individual rights to the water. Thus property owners may have land that borders water but no rights to use that water.
accretion is
a gradual increase in land resulting from the deposit of soil by the water.
If water gradually recedes or disappears permanently, new land is acquired by
reliction
When a sudden act of nature such as a flood or avalanche removes soil, this is known as ______. Loss of land by _________ does not change the property boundaries, so the owner has the right to reclaim the lost land.
avulsion
avulsion
The Total Circumstances Test is
a legal test applied by the courts to determine whether an item is a fixture (and, therefore, part of the real property) or personal property.
The Four test of the Total Circumstances Test are
Intention of the annexor: Did the person who installed the item intend it to remain permanently or be removable? (The courts look at objective evidence of the party’s intent, not the party’s subjective intent. In other words, the courts look at the facts surrounding the situation and determine what a reasonable person would have intended by them.)
Relationship of the annexor: Is the person making the attachment an owner or a tenant? It is presumed that an owner intends a permanent attachment (the item becomes a fixture), while a tenant intends a temporary attachment (the item remains personal property). The greater the legal relationship the annexor has to the real property, the greater the likelihood the item will be declared a fixture.
Method of annexation: How permanently was the item attached? Can it be removed without causing damage? To what degree has there been customization of the space around the item? For example, built-in refrigerators and microwave ovens are often surrounded by cabinetry, making them more likely to be considered a fixture.
Adaptation to real estate: Has either the item or the property been tailored to facilitate working together? Has it been customized or built in to the property? For example, if a gas station owner sells his business, it would be the buyer’s expectation that the underground gas storage tanks would remain with the property since the tanks are necessary for the business to function.
Trade fixtures that are not removed at the end of the lease
become the real property of the landlord. Acquiring the items in this way is known as accession.
Trade fixtures differ from other types of fixtures in three ways:
- Fixtures are part of the real property and belong to the owner of that property. Trade fixtures are usually owned and installed by a tenant for personal use and remain the tenant’s personal property.
- Fixtures are considered a permanent addition to a building, but trade fixtures are removable. Trade fixtures may be attached to a building in the same manner as other fixtures. However, due to the relationship of the parties (landlord and tenant), the law gives a tenant the right to remove trade fixtures, provided the removal is completed before the term of the lease expires and the rented space is restored to approximately its original condition.
- Because fixtures are legally construed to be real property, they are included in any sale or mortgage of the real property. Trade fixtures are not included in the sale or mortgage of real property except by special agreement because they are considered to be personal property of the commercial tenant.
There is a special class of fixtures in North Carolina called
Agricultural fixtures
While fixtures used in a farming operation would seem to fall into the category of trade fixtures, agricultural fixtures are considered real property rather than personal property.
North Carolina Uniform Commercial Code (UCC)
if a homeowner purchases an item on credit (a dishwasher, for example) and gives the creditor a security agreement, that item remains personal property and may be removed by the creditor in the event of default. When the item has been paid for in full, it becomes real property.
**Suppose the homeowner decides to sell her home before the dishwasher has been paid for. She could remove the dishwasher when she moves out of the house because it is still her personal property. On the other hand, she may leave the dishwasher behind and the buyer might assume that it is real property that was included in the purchase price. The buyer may be surprised to learn that he must pay the secured creditor the outstanding balance or risk having the appliance repossessed. All home buyers should make sure there are no security agreements filed on items within the home. This is normally included in the title search, which the buyer’s lawyer will perform. The filing of the security agreement in effect makes the potential fixture an item of personal property until it is paid for in full.
A manufactured home, sometimes referred to as a mobile home or house trailer, can be either personal property or real property.
1) When is a mobile home personal property?
2) When is a mobile home real property?
While the manufactured home is still mobile with its own wheels and chassis, it has a Vehicle Identification Number registered with the North Carolina Department of Motor Vehicles and is considered personal property.
Manufactured housing is not considered real property just because the unit was placed on a residential lot. To convert the home into real property, the moving hitch, wheels, and axles must be removed and the unit must be attached to a permanent foundation on land owned by the owner of the manufactured home. Once the owner files an affidavit confirming the aforementioned actions, the home is considered real property and an improvement to the lot.
An estate may be defined as
the degree, quantity, nature, and extent of interest one has in real property.
Estates in land are divided into two major classifications:
(1) nonfreehold estates or leasehold estates (those involving tenants’ rights of possession)
(2) freehold estates (those involving rights of ownership)
1) Freehold estates are
2) How are they passed?
1) estates of indeterminable length of ownership, such as those existing for a lifetime or forever.
2) Freehold estates are passed from grantor to grantee via the deed when title to real estate is conveyed.
The types of freehold estates that can be transferred include:
- fee simple estate (can pass by inheritance),
- defeasible fee estate (can pass by inheritance),
- pur autre vie estate (estate for the life of another) with remainder or reversion (can pass by inheritance), and
- ordinary conventional life estate with remainder or reversion (does not pass by inheritance).
1) Nonfreehold, or leasehold, estates include
2) How do leasehold estates operate?
1) include any estate that is not a freehold estate.
2) A leasehold estate exists on property in addition to a freehold estate when the property owner has rented the property to a tenant.
The four types of leasehold estates are the:
1) estate for years,
2) estate from year to year,
3) estate at will, and
4) estate at sufferance.
A fee simple estate is an estate of inheritance and is always legally _________, but it is not always free of __________.
transferable
encumbrances
There are two major types of fee simple estates and how do they work?
fee simple absolute that basically has no ownership limitation
fee simple defeasible where the ownership can be terminated due to the actions of the current owner
1) Fee simple/Fee Simple Absolute is
2) When are restriction applied to a Fee Simple Absolute?
1) A fee simple ownership on which there are no limitations (other than governmental restrictions) is a fee simple absolute estate.
2) Owners of a fee simple estate can do whatever they wish with the property as long as the use does not violate public land use regulations, deed restrictions, or the rights of others.
1) What is a Fee simple defeasible?
2) Also known as
1) A fee simple defeasible (or defeasible fee) estate may be lost (or defeated) on the occurrence or nonoccurrence of a specified event. The new owner must stay qualified to own the estate by obeying deed restrictions imposed on the estate by a previous owner. Whether the restriction prohibits an activity or requires a specified land use will dictate which type of defeasible fee estate has been granted.
2) a qualified fee estate
A fee simple subject to a condition subsequent estate dictates
some action or activity that the new owner must not perform
