Lesson 2 Part 1 - Estate and Limitations on Ownership

Question 1

What is an Estate?

Answer 1

Estate refers to the legal rights to sell, lease, encumber, use, enjoy, exclude and pass on real properties by will. Estate therefore is the legal rights to the bundle of rights. Estate is the legal rights of ownership to that property.

Question 2

To be an estate…..

Answer 2

1. Possessive in Nature - Possession can incur now or in the future
2. Have a length of time duration - each estate is defined primarily by the time duration of ownership

Question 3

Interest vs. Estate

Lien Holder or an Easement

Answer 3

A mortgage lien or an easement is an interest but not an estate. The lien holder holds an interest in the property but does not possess the property.
An easement, or the right to use real property of another, is also not an estate because it does not give the user the possession of the real property.

Question 4

Freehold Estate definition….

Answer 4

A freehold estate is defined as an estate in real property with an uncertain termination date of ownership.
* Duration is uncertain, not limited

Question 5

2 Types of Freehold Estates

Answer 5

1. Fee Simple - can will

2. Life Estates - can “NOT” will

Question 6

Fee Simple Absolute

Answer 6

The highest and best form of ownership - can do everything except gov’t restrictions

Question 7

Fee Simple Determinable

Answer 7

Ownership can be defeated

1. Condition Subsequent
2. Condition Precedent
   - Characterized by “so long as” “while” or “during the period”
   - Continues until an event should or should not occur
   - If the event occurs contrary to stated, the estate is lost
   - Sometimes referred to as “Base, Qualified, Defeasible”
   - Can do everything except gov’t restrictions

Question 8

Life Estate Ordinary

Answer 8

• “Life tenant is owner”

- All 4 life estates cancel the life estates owner rights and leases upon death of grantee OR other named party

Question 9

Life Estate Reversionary Interest

Answer 9

• Grantor or heirs get realty back when grantee dies

Question 10

Life Estate “Pur Autre Vie” Reversionary Interest

Answer 10

• Grantor or heirs get back realty if party named other then grantee dies
• ” for the life of another”

Question 11

Life Estate Remainder Interest

Answer 11

• When the grantee dies, the third party named receives a fee absolute or defeasible estate

Question 12

Life Estate “Pur Autre Vie” Remainder Interest

Answer 12

• When the person other than the grantee dies, the third party named other than the grantor gets a fee absolute or defeasible estate.

Question 13

Life Estate Legal - 3 Groups

Answer 13

1. Dower - Wife’s right to realty in a non community property state
2. Curtsy - Husband’s right to realty in a non community property state
   3 .Homestead - An owner of realty who is an owner occupant is protected from involuntary debts in some states. For “ Family Home”

Question 14

Restrictions on Realty - 2 Types

Answer 14

1. Government Restrictions - P.E.TE

2. Social Restrictions - CCR’s

Question 15

Police Powers

Answer 15

• Zoning Ordinances

- Agricultural, Residential, Commercial and Industrial

Question 16

Assessments

Answer 16

• Police Power
• Used to pay for improvements
• Charged by amount of front footage of property owned by the individuals next to the improvement
• SIDS / LIDS
• “Improvement District”

Question 17

Amendments

Answer 17

• Police Power
• Property rezoned for greater use ie: residential to commercial
• “Up Zoning”
• Ag > Res > Comm > Ind

Question 18

Down Zoning

Answer 18

• Police Power
• Property rezoned to a lesser use ie: commercial to a residential
  Ind > Comm > Res > Ag

Question 19

Buffer Zone

Answer 19

• Police Power
• Between zones like a park or a fence
• ” Green belt area”
• ” Garden Terrace Apartments”

Question 20

Non-Conforming Use

Answer 20

• Police Power
• Right to continue use after change in zoning
• “Grandfather Clause” : creates an exemption from application of a new law due to previously existing circumstance
• Will change to conform with
  1. Sale 2. Expansion 3. Destroy/Rebuild 4. Change use

Question 21

Conditional Use Permit

Answer 21

• Police Power

- Allows a person to use the property which is inconsistent with zoning in the area

Question 22

Variance

Answer 22

• Police Power
• An exception or exemption for undue hardship on the current zoning. “Set back’s”
  1. Hardship
  2. Land Exception
  3. Go forward through a sale

Question 23

Spot Zone

Answer 23

• Police Power
• Allowing for a parcel of realty to be used for a different purpose, however, once use is gone it reverts to original zoning.
• “Special Use Property will transfer with sale”

Question 24

Escheat

Answer 24

• Realty reverts to the state if a person dies intestate and has no heirs.

Question 25

Taxation

Answer 25

• Process of imposing monetary contribution on realty for support of the government and the people.
• Only taxed on “AV” Assessed Value
• Failure to pay property tax will result in foreclosure
• Takes priority over all other liens

Question 26

Eminent Domain

Answer 26

• Constitutionally granted power to consider taking realty for public use
• Just compensation must be given to owner and must be for public good

Question 27

2 Types of Eminent Domain

Answer 27

“Act of” or “Process”

1. Actual Condemnation - actual taking of private person’s realty
2. Inverse Condemnation - Realty owner forcing the government to take property left because of government action

Question 28

Social Restrictions

Answer 28

• CC&R’s (Conditions, Covenants, Restrictions) HOA rules on realty
• If gov’t & social restrictions are different, the more severe applies

Question 29

Intestate

Answer 29

Die with no will

Question 30

Testate

Answer 30

To die with Will

Question 31

Determine Property Tax

Answer 31

FMV - Fair Market Value
AR - Assessment Ratio
AV - Assessed Value
Tax Rate - in mills
FMV ------> $300,000.00
AR    ------> X\_\_\_\_\_\_35%
AV    ------> = $105,000.00
Tax Rate -> X\_\_\_\_\_\_.026
Yearly Rate = $2730.00 per year