Property Ownership

Question 1

Tenancy Severalty
Sole Ownership
Ownership in Severalty
Estate in Severalty

Answer 1

When a single party owns the fee or life estate. The estate passes of a deceased tenant in severalty passes to heirs by probate.

Question 2

Co-Ownership
Co-Tenants

Answer 2

If more than one person owns an estate in land.

Question 3

Estate in Common
Tenancy in Common

Answer 3

Most common form of co-ownership when owners are not married.

Question 4

Two or More Owners

Answer 4

Any number of people may be co-owners in a single property

Question 5

Identical Rights

Answer 5

Co-tenants share an indivisible interest in the estate, all have equal rights to possess and use the property subject to the rights of the other co-tenants. No co-tenant may claim to own any physical portion of the property exclusively. They share undivided possession or unity of possession.

Question 6

Interests Individually Owned

Answer 6

All tenants in common have distinct and separable ownership of their respective interests. Co-tenants may sell, encumber or transfer their interests without obstruction or consent from other owners. (A co-tenant may not, however, encumber the entire property)

Question 7

Electable Ownership Shares

Answer 7

Tenants in common determine among themselves what share of the estate each party will own. For example, three co-tenants may own 40%, 35%, and 25% interests in a property, respectively. In absence of stated ownership shares, it is assumed that each has a share equal to that of the others.

Question 8

No Survivorship

Answer 8

A deceased co-tenant’s estate passes by probate to the decedent’s heirs and devisees rather than to the other tenants in common. Any number of heirs can share in the ownership of a willed tenancy.

Question 9

No Unity of Time

Answer 9

It is not necessary for tenants in common to acquire their interests at the same time. A new co-tenant may enter into a pre-existing tenancy in common.

Question 10

Joint Tenancy

Answer 10

Two or more persons collectively own a property as if they were a single person. Rights and interests are indivisible and equal. Each has a shared interest in the whole property which cannot be divided up. May only convey their interests to outside parties as tenant-in-common interests.

Question 11

Joint Tenancy Characteristics

Answer 11

Unity of Ownership
Equal Ownership
Transfer of Interest
Survivorship

Question 12

Unity of Ownership

Answer 12

Joint tenants hold a single title to the property

Question 13

Equal Ownership

Answer 13

Joint tenants own equal shares in the property, without exception.

Question 14

Tenancy in Common Characteristics

Answer 14

• Two or more owners
• Identical Rights
• Interests individually owned
• Electable Ownership Shares
• No survivorship
• No unity of time

Question 15

Transfer of Interest

Answer 15

A joint tenant may transfer their interest in the property to an outside party, but only as a tenancy in common interest. The remaining joint tenants continue to own an undivided interest in the property, less the new co-tenant’s share.

Question 16

Survivorship

Answer 16

In most states, joint tenants enjoy rights of survivorship: if a joint tenant dies, all interests and rights pass to the surviving joint tenants free from any claims of creditors or heirs. In other states, joint tenancy does not inherently include survivorship, survivorship must be expressly stated. When only one joint tenant survives, the survivor’s interest becomes an estate in severalty and joint tenancy is terminated.

Question 17

Creation of Joint Tenancy

Answer 17

The Four Unities:
- Unity of Time: all parties must acquire the joint interest at the same time
- Unity of Title: all parties must acquire the property in the same deed of conveyance
- Unity of Interest: all parties must receive equal undivided interests
- Unity of Possession: all parties must receive the same rights of possession

Question 18

Termination By Partition Suit

Answer 18

Can terminate a joint tenancy or tenancy in common. A legal avenue for an owner who wants to dispose of their interest against the wishes of other co-owners. The suit petitions the court to divide the property physically, according to the owner’s respective rights and interests.

Question 19

Tenancy by the Entireties

Answer 19

A form of ownership traditionally reserved for husband and wife, though now available for same-sex spouses in some states. It features survivorship, equal interests and limited exposure to foreclosure.

Question 20

Community Property

Answer 20

A form of ownership that defines property rights of legal spouses before, during, and after their marriage, as well as after the death of either spouse. Community property consists of all property earned or acquired by either party during the marriage.

Question 21

Separate Property

Answer 21

Belongs to one spouse and consists of property owned by either spouse at the time of the marriage; property acquired by either spouse through inheritance or gift during marriage; property acquired with separate property funds; income from separate property

Question 22

Tenancy in Partnership

Answer 22

A form of ownership held by business partners, as provided by the Uniform Partnership Act. The partnership tenancy grants equal rights to all partners, but the property must be used in connection with the partnership’s business. Individual rights are not assignable.

Question 23

Grantor
Trustor

Answer 23

A fee owner transfers legal title to a fiduciary (the trustee)

Question 24

Trustee

Answer 24

Holds and manages the estate for the benefit of another party (the beneficiary)

Question 25

Living Trust

Answer 25

Allows the trustor, during their lifetime, to convey title to a trustee for the benefit of a third party. The trustor charges the trustee with all necessary responsibilities for managing the property, protecting its value, and securing whatever income it may produce. The trustee may also be ordered to sell the property at a given point. The beneficiary receives all income and proceeds, net of the trustee’s fees.

Question 26

Testamentary Trust

Answer 26

Like a living trust, except it takes effect only when the trustor dies. Provisions of the decedent’s will establish the trust.

Question 27

Land Trust

Answer 27

Allows the trustor to convey the fee estate to the trustee and to name themselves the beneficiary. The deed in trust grants the beneficiary the rights to possess and use the property, and to exercise control over the actions of the trustee

Question 28

Conventional Trust Structure

Answer 28

The trustee holds legal title and has conventional fiduciary duties. The trustor must be a living person, but the beneficiary may be a corporation.

Question 29

Features of a Land Trust

Answer 29

• Beneficiary controls property: this includes occupancy & control of rents and sale proceeds
• Beneficiary controls trustee: the trustee is empowered to sell or encumber the property, but generally only with beneficiary’s approval
• Beneficiary identity not on record: public records do not identify the beneficiary, they own & enjoys the property in secrecy
• Limited term: term of land trust is limited and must be renewed or else the trustee is obligated to sell the property and distribute the proceeds

Question 30

Beneficial Interest in Land Trust

Answer 30

Is personal property, not real property. Offers certain advantages in:
- Transferring: the beneficiary may transfer the interest by assignment instead of by deed
- Encumbering: the beneficiary may pledge the property as security for debt by collateral assignment rather than by recorded mortgage
- Probating: the property interests are probated in the state where the beneficiary resides at the time of death rather than the state where the property is located

Question 31

Corporation

Answer 31

A legal entity owned by stockholders. An elected board of directors oversees the business. Offices & managers conduct day-to-day activities. Officers & directors may be held fully liable for the corporation’s actions, while shareholders are liable only to the extent of the value of their shares. Corporations may own real estate in severalty or as tenants in common.

Question 32

Partnership

Answer 32

Two or more persons agree to work together and share profits. Not a distinct legal entity, all partners bear full liability for debts and obligations. Has two or more partners, one or more being general partners and others limited partners. General partners run the business and are liable for debts and obligations. Limited partners are only liable only to the extent of their investment in the partnership. Both may own real estate.

Question 33

Limited Liability Company (LLC)

Answer 33

Combines features of the corporation and the limited partnership. Offers its members limited liability like a corporation, but income is passed directly to the members and is taxed to them as individual income. The management structure is flexible. May own real estate.

Question 34

Condominium

Answer 34

A hybrid form of ownership of multi-unit residential or commercial properties. Combines ownership of a fee simple interest in the airspace within a unit with ownership of an undivided share, as a tenant in common, of the entire property’s common elements.

Question 35

Condominium Interests & Rights

Answer 35

• Possession, Use, Exclusion: unit owners exclusively possess their apartment space, but must share common areas with other owners.
• Transfer & Encumbrance: Condominium units can be individually sold, mortgaged, or otherwise encumbered without interference from other unit owners. As a distinct entity, the condominium unit may also be foreclosed and liquidated. An owner may not sell interests in the apartment separately from the interest in the common elements.

Question 36

Cooperative

Answer 36

One owns shares in a non-profit corporation or cooperative association, which in turn acquires and owns an apartment building as a principal asset. Along with this stock, the shareholder acquires a propriety lease to occupy one of the apartment units.

Question 37

Cooperative Association’s Interest

Answer 37

The corporate entity that is the only party in the cooperative with a real property interest. The association’s interest is an undivided interest in the entire property. There is no ownership interest in individual units.

Question 38

Shareholder’s Interest

Answer 38

In owning stock and a lease, a co-op unit owner’s interest is personal property that is subject to control by the corporation.

Question 39

Propriety Lease

Answer 39

A co-op lease. The tenant is an owner of the corporation that owns the property. The lease has no stated or fixed rent. Instead, the tenant is responsible for the unit’s pro-rata share of the corporation’s expenses in supporting the cooperative. Unit owners pay monthly assessments.

Question 40

Expense Liability

Answer 40

The failure of individual shareholders to pay monthly expense assessments can destroy the investment of all the other co-op owners if the co-op cannot pay the bills by other means.

Question 41

Time-share Ownership

Answer 41

A fee or leasehold interest in a property whose owners or tenants agree to use the property on a periodic, non-overlapping basis. This type of ownership usually concerns vacation & resort properties. Arrangements provide for equal sharing of the property’s expenses among others.

Question 42

Time-share Lease

Answer 42

The tenant agrees to rent the property on a scheduled basis or under any pre-arranged system of reservation, according to the terms of the lease. Generally, the scheduled use is denominated in weeks or months over the duration of the lease, a specified number of years.

Question 43

Time-share Freehold
Interval Ownership Estate

Answer 43

Tenants in common own undivided interests in the property. Expense prorations and rules governing interval usage are established by separate agreement when the estate is acquired.