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Real Estate Exam (National) > Property Ownership > Flashcards

Property Ownership Flashcards

1
Q

Bundle of Rights

A

The rights/interests that come with property ownership.

These include the right to:
Use
Give away
Sell
Mortgage
Lease
Rent
Enter
Refuse to exercise any of these rights

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2
Q

Fee simple absolute

A

The fullest possible title to real estate

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3
Q

Encumberance

A

Restrictions on a property

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4
Q

Real property

A

All things attached to the land and all rights inherent with that land. Usually anything immovable.

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5
Q

Personal property

A

Things that are generally movable.
Chattels

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6
Q

Severance

A

Changing an item from real (immovable) to personal property (movable) by detaching it from the land.

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7
Q

Annexation

A

Adding to property by attaching an item to the property (attaching personal/movable property to real/immovable property)

This creates a fixture.

The manner in which chattel/personal property is joined to a property.

E.g. a sink becomes a fixture when it is annexed to the plumbing outlet and is therefore real (now) real property)

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8
Q

Fixture

A

Personal property (movable) that becomes real property (immovable)

Remember MARIA

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9
Q

How to know something is a fixture:
MARIA
Method
Adaptability
Relationship
Intention
Agreement

A

Method - Is the item permanently affixed to the wall, ceiling or flooring using nails, glue, cement, pipes, wires, or screws?

Adaptability - If the item becomes an integral part of the home, it cannot be removed.

Relationship - If there is a dispute between buyer and seller, the buyer is likely to win; landlord vs tenant, the tenant is likely to win

Intention of party when the item was attached - When the installation took place, was the intention to make a permanent attachment? If so, then it’s a fixture.

Agreement between the parties - What two people agree upon would trump all the other rules about a fixture

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10
Q

Emblements

A

Annual crops which have been legally cultivated and belong to the tenant. The tenant has an implied right to its harvest, so emblements are treated as tenant’s property.

They are considered personal property.

A tenant farmer has the right to his crops even after his lease ends until the end of the growing season.

Crops grown on property just before it is sold are also generally considered personal property of the seller.

Remember that PERSONAL PROPERTY GOES WITH THE PERSON.

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11
Q

Trade fixture

A

A piece of equipment on or attached to the real estate which is used in a trade or business.

Trade fixtures may be removed at the end of the business tenancy.

The business tenant must compensate the owner for any damages due to removal of trade fixtures or else repair the damage.

TRADE FIXTURES REMAIN THE TENANTS PROPERTY.

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12
Q

Appurtenance

A

A term for what belongs to and goes with something else. The appurtenance is always less important than what it belongs to.

Pertenece (Spanish)

The appurtenance is part of the property and passes with it upon sale or other transfer.

It can be attached or not.

E.g. a barn to a house; an easement to land

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13
Q

Encroachment

A

When a structure or improvement on one person’s land physically INTRUDES on the land of another person.

E.g. a fence, driveway, or tree hanging over another property

An encroachment may be found by a survey.

It is a form of trespass, so when it occurs an owner can sue for trespassing.

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14
Q

Water Rights (1/2)

A

Riparian rights = River/Stream, moving; use of water

Littoral Rights = Lake/Ocean/Sea, fixed; enjoyment of the shore

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15
Q

Water Rights (2/2)

A

Correlative use - owner use of underground water or water form a river for irrigation

Doctrine of prior appropriation - states where water is scarce; use determined by state NOT the owner whose property is next to the water

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16
Q

Accretion (+)

A

Happens when soil is brought by water and increases the size of the property.

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17
Q

Reliction (+)

A

When water moves back and new land is acquired

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18
Q

Erosion (-)

A

When land or soul is worn away by wind, water, currents, or ice.

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19
Q

Avulsion (-)

A

If natural causes tear away land in a violent way

e.g. A dam breaking; earthquake

20
Q

Conveyance

A

A voluntary transfer of real property interests.

21
Q

Legal descriptions

A

A description of a parcel of property which accurately locates and identifies the boundaries of the subject parcel to a degree acceptable by local courts of law.

Metes and bounds; Lot and block; government survey

22
Q

Metes and bounds

A

A method of legally describing property which utilizes physical boundary markers and compass directions for describing the perimeter boundaries of a parcel.

23
Q

Lot and block

A

A method for legally describing property in a subdivision where lots are identified by block and number. A recorded metes and bounds or rectangular survey description of the subdivision underlies the lot and block system.

= Plat Map

24
Q

Government Survey

A

A method of legally describing real property which uses longitude and latitude lines to identify ranges, tiers, and townships.

= rectangular survey system

25
Q

Which legal system is used in PA?

A

Metes & Bounds AND Lot & Block

26
Q

Mineral Rights

A

Separable subsurface rights to mineral deposits; transferrable by sale or lease to other parties.

27
Q

Air rights

A

Rights in real property as they apply to the property’s airspace, or all space above the surface within the parcel’s legal boundaries.

28
Q

Encumbrance

A

An interest, right or intrusion that limits the freehold interest of an owner of real property or otherwise adversely effects the marketability of title.

Encumbrances against real estate may be in the form of liens, a monetary charge against the property, deed restrictions, easements, licenses, and encroachments.

29
Q

Liens

A

a creditor’s claim against personal or real property as security for a debt of the property owner. If the owner defaults, the lien gives the creditor the right to force the sale of the property to satisfy the debt.

30
Q

Lien: Legal Features

A

1) A lien does not convey ownership under one exception (mortgage lien)

2) A lien attaches to property

3) A property may be subject to multiple liens

4) A lien terminates on payment of the debt and recording of documents

31
Q

Lien Types: Voluntary & Involuntary

A

Voluntary - A property owner may create a voluntary lien to borrow money or some other asset secured by a mortgage.

Involuntary - An involuntary lien is one that a legal process places against a property regardless of the owner’s desires.

32
Q

Lien Types: General & Specific

A

General lien - is one placed against any and all real and personal property owned by a particular debtor.

An example is an inheritance tax lien placed against all property owned by the heir.

Specific lien - attaches to a single item of real or personal property, and does not affect other property owned by the debtor.

A conventional mortgage lien is an example, where the property is the only asset attached by the lien.

33
Q

Lien Types: Superior & Inferior

A

The category of superior, or senior, liens ranks above the category of inferior, or junior, liens, meaning that superior liens receive first payment from the proceeds of a foreclosure.

The superior category includes liens for real estate tax, special assessments, and inheritance tax.

Other liens, including income tax liens, are inferior.

34
Q

Lien Priority

A

Two factors primarily determine lien priority:
1) the lien’s categorization as superior or junior
2) the date of recordation of the lien

35
Q

Superior Liens in Rank Order

A
  1. Real estate tax liens
  2. Special assessment liens
  3. Federal estate tax liens
  4. State inheritance tax liens
36
Q

Junior liens: priority by date of recording

A

Federal income tax liens
State corporate income tax liens
State intangible tax liens
Judgment liens
Mortgage liens
Vendor’s liens
Mechanic’s liens (priority by date work was performed)

37
Q

Real Estate Tax Lien (Most Superior)

A

A lien placed by the local legal taxing authority annually against properties as security for payment of the annual property tax.

The amount of a particular lien is based on the taxed property’s assessed value and the local tax rate.

= ad valorem tax lien

38
Q

Special assessment lien (Superior)

A

Local government entities place assessment liens against certain properties to ensure payment for local improvement projects such as new roads, schools, sewers, or libraries.

An assessment lien applies only to properties that are expected to benefit from the municipal improvement.

39
Q

Federal and state inheritance tax liens (Superior)

A

Inheritance tax liens arise from taxes owed by a decedent’s estate. The lien amount is determined through probate and attaches to both real and personal property.

40
Q

Tax liens (Junior)

A

All tax liens other than those for ad valorem, assessment, and estate tax are junior liens. They include:

  1. Federal income tax lien
    placed on a taxpayer’s real and personal property for failure to pay income taxes
  2. State corporate income tax lien
    filed against corporate property for failure to pay taxes
  3. State intangible tax lien filed for non-payment of taxes on intangible property
  4. State corporation franchise tax lien
    filed to ensure collection of fees to do business within a state
41
Q

Judgement lien (Junior)

A

A court decision resulting from a lawsuit. If a creditor sues to collect a debt, a favorable ruling is followed by a judgment lien against the defaulting borrower’s property.

42
Q

Mortgage and trust deed lien (Junior)

A

In lien-theory states, mortgages and trust deeds secure loans made on real property. In these states, the lender records a lien as soon as possible after disbursing the funds in order to establish lien priority.

43
Q

Vendor’s lien (Junior)

A

Also called a seller’s lien, secures a purchase money mortgage, a seller’s loan to a buyer to finance the sale of a property.

44
Q

Municipal utility lien (Junior)

A

A municipality may place a utility lien against a resident’s real property for failure to pay utility bills

45
Q

Mechanic’s lien (Junior)

A

A mechanic’s lien secures the costs of labor, materials, and supplies incurred in the repair or construction of real property improvements. If a property owner fails to pay for work performed or materials supplied, a worker or supplier can file a lien to force the sale of the property and collect the debt.

Time to file eventually expires.

In contrast to other junior liens, the priority of a mechanic’s lien dates from the time when the work was begun or completed

46
Q

Foreclosure

A

A procedure for forcing sale of a secured property to satisfy a lienholder’s claim

Real Estate Exam (National) (12 decks)

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