Part 2: Real Estate Ownership Flashcards
System in the US that allows anyone to purchase and own land
Allodial System
Type and degree of interest (ownership) in real estate
Estate
2 categories of estates
1) Leasehold Estates
2) Freehold Estates
A person’s hold on a property is limited by a lease
Leasehold Estate
Free from a hold by anyone other than the owner and lasts for an unknown period of time
Freehold Estate
Complete ownership; the highest form of ownership recognized by law (common home ownership)
Fee Simple Absolute
Ownership is subject to a condition and can be taken away if the condition is not met; condition stays with the land even if the property is sold
Fee Simple Defeasible Estate, or “Qualified Fee”
When the property ownership is directly reversed due to a condition not being met
Reversion
Naming a 3rd party to have a remainder interest in a property in case of reversion
Remainder
2 types of conditions
1) Condition Subsequent
2) Condition Precedent
Condition- We never have so you never will
Condition Subsequent, or “Fee Simple Conditional”
Condition- We always have so you always will
Condition Precedent, or “Fee Simple Determinable”
A freehold estate based on someone’s life; Not inheritable
Life Estate
A life estate created voluntarily by a grantor (the property owner)
Conventional Life Estate
Type of conventional life estate where the measuring life is the life of the life tenant
Ordinary Life Estate
Type of conventional life estate where the measuring life is the life of someone other than the life tenant
Pur Autre Vie Life Estate
Statutory life estate created automatically by law, not by someone’s choice
Established to protect people from becoming homeless due to certain legal circumstances impacting their property
Legal Life Estate
Legal life estate for the husband in his deceased wife’s property
Curtesy
Legal life estate for the wife in her deceased husband’s property
Dower
Legal life estate that protects a family from certain debts, allowing them to continue living in the home
Homestead
Water rights that pertain to land bordering streams or rivers
Riparian Rights
Water rights that pertain to land bordering lakes or oceans
Littoral Rights
Rights that protect people’s rights related to the use of water by other people
Prior Appropriation Rights
The process of gradual addition of land
Accretion
The actual new deposits of land
Alluvion
The gradual loss of land
Erosion
The sudden removal of land
Avulsion
The gradual subsiding of water, leaving additional land
Reliction
Type of estate created by a lease agreement; limited duration
Leasehold Estate
The owner of the property who leases it
Lessor
The renter
Lessee
Leasehold estate for a stated period
Estate for years
Leasehold estate without a specified time frame or number of months; “period-to-period estate”
Periodic Estate
Tenancy until an unknown time in the future
Tenancy at will
Holdover tenancy; tenant wrongfully remains on the premises after their right to possess it has ended
Tenancy (Estate) at Sufferance
Common type of residential lease where the tenant pays a set amount & the landlord pays building operating expenses
Gross Lease
Type of lease where the tenant pays a set amount plus some or all of the building’s operating expenses
Net Lease
Type of lease where the tenant pays a fixed monthly amount plus a percentage above a base amount
Percentage lease
Type of lease that allows for future changes in the amount of rent related to a business
Variable lease
2 types of variable leases
1) Graduated lease
2) Index lease
Type of variable lease that indicates increasing predetermined amounts of lease
Graduated lease
Type of variable lease that doesn’t state a specific amount of increase because the increase will be based on a common index
Index lease
Type of lease for undeveloped land long term in which a corporate headquarters is then built and operated by the tenant; after the lease is up, the land and building go to the land owner
Ground lease
One-time lease payment to allow for drilling, then a royalty for any gas or oil found. If none, flat rent is charged.
Oil and Gas lease
Leasing with the intent to purchase at a later date
Lease-Purchase
Investor buys a building from a company and then leases it back to them
Sale-Leaseback
A renewal option for a lease
Lease option
Option that allows the tenant to purchase the property during a specified period
Lease with option to buy
Legislation that protects both the landlord and the tenant
Uniform Residential Landlord and Tenant Act
Sole ownership
Ownership in severalty
Ownership of 2 or more people with the right of survivorship
Joint Tenancy
If a co-owner dies, his shares automatically go to the surviving co-owners
Right of Survivorship
4 Unities of Tenancy
1) Unity of Time (acquire ownership at the same time)
2) Unity of Title (ownership is created by the same deed)
3) Unity of Interest (own equal percentages)
4) Unity of Possession (equal rights to access and possess the property)
When a co-owner sells their share of the property, the new owner is called…
Tenant in Common
Right of a tenant in common or joint tenants to legally force the end of the tenancy
Right to partition
Form of joint tenancy that exists between husband and wife & includes Unity of Person
Tenancy by the Entirety
Property acquired during a marriage; each spouse owns 1/2
Common property
Business partners have a right to manage the partnership equally but they have unlimited liability for debts
General partnership
At least 1 general partner and 1 or more limited partners that are only liable to the extent of their investments and don’t run the business
Limited partnerships
Artificial person created by a charter that is run by a board of directors, have shareholders that invest and are paid dividends, can hold title to real estate, and pays income taxes
Corporation
Combines general corporation and a partnership, so shareholders have limited liability and avoid double taxation
S Corporation
Best form of business ownership for small businesses
Limited Liability Company (LLC)
2 or more people who operate a real estate investment, usually a limited partnership
Syndication
3 parties to a trust
1) Trustor
2) Trustee
3) Beneficiary
Party to a trust that transfers property into a trust
Trustor
Party to a trust that manages the trust and holds legal title to the assets in the trust
Trustee
Party to a trust that benefits from the trust
Beneficiary
Type of trust that is created by a property owner during their life and automatically goes to the beneficiary when the owner dies
Living trust
Type of trust that is set up after the property owner’s death in accordance to their will
Testamentary trust
Type of trust that holds only real property (real estate & rights of ownership)
Land trust
Document that transfers real property in a land trust
Deed in trust
Document that transfers real property out of a land trust
Trustee’s deed
Type of business organization for small investors who pool their money and participate in large real estate projects
Real Estate Investment Trust (REIT)
Tenants form a nonprofit corporation that purchases a building and holds title; tenants own shares of stock giving them long-term proprietary lease to occupy the building
Cooperative
Multi-unit building in which all occupants own separate property as tenants in common of the common elements and pay maintenance fees for the common elements
Condominium
Master document of the HOA that establishes the condominium, the covenants and restrictions, board of directors power & procedures, all fees, and legal description & recorded plat of each unit
Declaration
States all rights, responsibilities, governance procedures and fees for a condominium
Condominium bylaws
Type of ownership in which someone owns or leases a specified time in a property, usually a week
Time-Share
Fee simple interest in a unit is purchased for the same period each year in perpertuity
Time-Share Estate
Contracted right to use a property for the same period each year for a certain number of years
Time-Share Use
