Legal Aspects of RE - Chpt 3 - Estates and Ownership Flashcards
Fee Simple Estate
A freehold estate of potentially unlimited duration is a fee simple estate: an estate limited to the life of the owner is a life estate.
Fee Simple Absolute
The fee simple absolute estate is a perpetual estate that is not conditioned by stipulated or restricted uses. It may also be freely passed on to heirs. For these reasons, the fee simple absolute estate is the most desirable estate that can be obtained in residential real estate. It is also the most common.
Fee Simple Defeasible
The defeasible fee estate is perpetual, provided the usage conforms to stated conditions. Essential characteristics are:
the property must be used for a certain purpose, or under certain conditions
if the use changes or if prohibited conditions are present, the estate reverts to the previous grantor of the estate
The three types of fee simple defeasible are determinable, condition subsequent, and executory interest.
Determinable. The deed to the determinable estate states usage limitations. If the restrictions are violated, the estate automatically reverts to the grantor or heirs.
Condition subsequent. If any condition is breached, the previous owner may repossess the property. However, reversion of the estate is not automatic; the grantor must re-take physical possession within a certain time frame.
Executory interest. If a specific condition is violated, the property goes to a third party, not the grantor or heirs.
What is meant by the term “undivided interest”?
An owner’s interest in a property in which two or more parties share ownership
For what reasons might the government or a public utility take private property for public use and what is this called?
Some examples would be to widen roadways, easements, or develop a highway. This is called eminent domain.
What is the highest form of ownership interest one can acquire in real estate?
Fee simple freehold estate
What are the two forms of fee simple estate and what do they mean?
The fee simple absolute is a perpetual estate that is not conditioned by stipulated or restricted uses.
The defeasible fee estate is perpetual, provided the usage conforms to stated conditions.
Ordinary life estate
An ordinary life estate ends with the death of the life estate owner and may pass back to the original owners or their heirs (reversion) or to a named third party (remainder).
For example, John King grants a life estate in a property to Mary Brown, to endure over Mary’s lifetime. John establishes that when Mary dies, the property will revert to him.
Pur autre vie
A pur autre vie life estate endures over the lifetime of a third person, after which the property passes from the tenant holder to the original grantor (reversion) or a third party (remainderman).
For example, Yvonne grants a life estate to Ryan, to endure over the lifetime of Yvonne’s husband Steve. Upon Steve’s death, Yvonne establishes that her mother, Rose, will receive the property.
Dower and Curtesy
Dower is a wife’s life estate interest in the husband’s property. When the husband dies, the wife can make a claim to portions of the decedent’s property. Curtesy is the identical right enjoyed by the husband in a deceased wife’s property. Property acquired under dower laws is owned by the surviving spouse for the duration of his or her lifetime.
Elective Share
Elective share is a state-level statute enabling a surviving spouse to make a minimum claim to the deceased spouse’s real and personal property in place of the provisions for such property in the decedent’s will.
For example, if a husband’s will excludes the wife from any property inheritance, the wife may, upon the husband’s death, make the elective share claim.
Homestead
A homestead is one’s principal residence. Homestead laws protect family members against losing their homes to general creditors attempting to collect on debts. Homestead laws usually exempt all or a portion of one’s homestead from a forced sale in an attempt to collect general debts.
Estate for Years
The estate for years is a leasehold estate for a definite period of time, with a beginning date and an ending date. The estate for years may endure for any length of term. At the end of the term, the estate automatically terminates, without any requirement of notice.
For example, a landlord grants a tenant a three-year lease. After the three years, the leasehold terminates and the landlord may re-possess the premises, renew the lease, or lease to someone else.
Estate from Period-to-Period
In an estate from period-to-period, also called a periodic tenancy, the tenancy period automatically renews for an indefinite period of time, subject to timely payment of rent. At the end of a tenancy period, if the landlord accepts another regular payment of rent, the leasehold is considered to be renewed for another period.
For example, a two-year lease expires and the landlord grants a six-month lease that is automatically renewable, provided the monthly rent is received on time. At the end of the six months, the tenant pays, and the landlord accepts another monthly rent payment. The acceptance of the rent automatically extends the leasehold for another six months.
Estate at Will
The estate at will, also called a tenancy at will, has no definite expiration date and hence no “renewal” cycle. The landlord and tenant agree that the tenancy will have no specified termination date, provided rent is paid on time and other lease conditions are met.
For example, a son leases a house to his father and mother “forever” or until they want to move.
The estate at will is terminated by proper notice, or by the death of either party.
Estate at Sufferance
In an estate at sufferance, a tenant occupies the premises without consent of the landlord or other legal agreement with the landlord. Usually such an estate involves a tenant who fails to vacate at the expiration of the lease, continuing occupancy without any right to do so.
For example, a tenant violates the provisions of a lease and is evicted. The tenant protests and refuses to leave despite the eviction order.
What is a life estate?
A freehold estate that is limited in duration to the life of the owner or other named person. Upon the death of the owner or other named individual, the estate passes to the original owner or another named party.
What are the major forms of legal life estate?
Dower and curtesy
Elective share
Homestead
What are leasehold tenants entitled to?
They are entitled to possess and use the leased premises during the lease term in the manner prescribed in the lease.
What are the four types of leasehold estates and which of the four has no definite expiration date?
Estate for Years Estate from Period-to-Period Estate at Will Estate at Sufferance Estate at will has no definite expiration date.
Encumbrances
An encumbrance is an interest in and right to real property that limits the legal owner’s freehold interest. In effect, an encumbrance is another’s right to use or take possession of a legal owner’s property, or to prevent the legal owner from enjoying the full bundle of rights in the estate.
An encumbrance does not include the right of possession and is therefore a lesser interest than the owner’s freehold interest. For that reason, encumbrances are not considered estates. However, an encumbrance can lead to the owner’s loss of ownership of the property.
Easements and liens are the most common types of encumbrance.
Easement
An easement, such as a utility easement, enables others to use the property, regardless of the owner’s desires
A lien
A lien, such as a tax lien, can be placed on the property’s title, thereby restricting the owner’s ability to transfer clear title to another party.
Easement Appurtenant
An easement appurtenant gives a property owner a right of usage to portions of an adjoining property owned by another party. The property enjoying the usage right is called the dominant tenement, or dominant estate. The property containing the physical easement itself is the servient tenement, since it must serve the easement use.
Transfer.
Easement appurtenant rights and obligations automatically transfer with the property upon transfer of either the dominant or servient estate, whether mentioned in the deed or not. For example, John grants Mary the right to share his driveway at any time over a five-year period, and the grant is duly recorded. If Mary sells her property in two years, the easement right transfers to the buyer as part of the estate.
Non-exclusive use.
The servient tenement, as well as the dominant tenement, may use the easement area, provided the use does not unreasonably obstruct the dominant use.
Easement by Necessity
An easement by necessity is an easement appurtenant granted by a court of law to a property owner because of a circumstance of necessity, most commonly the need for access to a property. Since property cannot be legally landlocked, or without legal access to a public thoroughfare, a court will grant an owner of a landlocked property an easement by necessity over an adjoining property that has access to a thoroughfare. Necessity and not just convenience must be shown when granting an easement by necessity. The landlocked party becomes the dominant tenement, and the property containing the easement is the servient tenement.
Party Wall Easement
A party wall is a common wall shared by two separate structures along a property boundary. Party wall agreements generally provide for severalty ownership of half of the wall by each owner, or at least some fraction of the width of the wall. In addition, the agreement grants a negative easement appurtenant to each owner in the other’s wall. This is to prevent unlimited use of the wall, in particular, a destructive use that would jeopardize the adjacent property owner’s building. The agreement also establishes responsibilities and obligations for maintenance and repair of the wall.
Easement in Gross
An easement in gross is apersonal right that one party grants to another to use the grantor’s real property. The right does not attach to the grantor’s estate. It involves only one property, and, consequently, does not benefit any property owned by the easement owner. There are no dominant or servient estates in an easement ingross. An easement in gross may be personal or commercial.
Personal Easement
A personal easement in gross is granted for the grantee’s lifetime. The right is irrevocable during this period, but terminates on the grantee’s death. It may not be sold, assigned, transferred, or willed. A personal gross easement differs from a license in that the grantor of a license may revoke the usage right.
Commercial Easement
A commercial easement in gross is granted to a business entity, rather than a private party. The duration of the commercial easement is not tied to anyone’s lifetime. The right may by assigned, transferred, or willed.
Examples of commercial gross easements include:
a marina’s right-of-way to a boat ramp
a utility company’s right-of-way across a lot owner’s property to install and maintain telephone lines
Easement Creation - Voluntary
A property owner may create a voluntary easement by express grant in a sale contract, or as a reserved right expressed in a deed.
Easement Creation - Necessity
A court decree creates an easement by necessity to provide access to a landlocked property.
Easement Creation - Easement by prescription
If someone uses another’s property as an easement without permission for a statutory period of time (the period of time in California is 5 years) and under certain conditions, a court order may give the user the easement right by prescription, regardless of the owner’s desires.
Note: An easement by prescription cannot be obtained against a state, federal, or local entity.
Easements terminate by
express release of the right by the easement holder
merger, as when a dominant tenement acquires the servient property, or vice versa
purposeful abandonment by the dominant tenement
condemnation through eminent domain
change or cessation of the purpose for the easement
destruction of an easement structure, such as a party fence
non-use of an easement by prescription
What is an encumbrance?
An interest in and right to real property that limits the legal owner’s freehold interest
What are the primary differences between an easement appurtenant and an easement in gross?
The easement in gross does not attach to the grantor’s estate; it involves only one property, and does not benefit any property owned by the easement owner. The easement appurtenant involves more than one property, transfers when any of the affected properties is transferred, and benefits the property owned by the easement owner.
What is an easement by necessity?
An easement appurtenant granted by a court of law to a property owner because of a circumstance of necessity, most commonly the need for access to a property, since property cannot be legally landlocked
