Real Estate and Property Flashcards
What are the types of property and the sources of law through which they are regulated?
Real Property = land and rights pertaining to land
Personal Property = all property not considered real property, sometimes referred to as chattel, tangible and unattached to real property but also includes some intangible rights like trademarks or intellectual property
Sources of Law = feudal interests and common law, since modified by statutory law and case law
What is a Bundle of Rights and how does it apply to the various types of property ownership?
Bundle of Rights = one of the oldest concepts in real property law, aka a bundle of sticks, includes rights to :
- Possess Property = owner’s rights to control, occupy, and have custody of property, right to possess is limited by state’s police power (building code enforcement may terminate right to occupy property if falls into disrepair)
- Lease or Permit Another Party to Posses Property = oral or written lease but zoning regulations may prevent owner from diving up property to lease it, building codes may regulate leasing by requiring construction & safety standards, and Statute of Frauds requires certain leases to be in writing
- Mortgage Property = pledge property as collateral or security for repayment of loan; limited by state statutes governing type of mortgage lien that may be granted, whether a mortgage or deed of trust and federal government regulates banks and lenders
- Convey Property = transfer title in property to another party by deed, will, or other written instrument, right to convey owner’s interest in property to another party but courts in partition suit and zoning regulations such as lot size requirements may limit rights
- Use & Enjoy Property = may be limited by zoning regulations, such as the prohibition of residential neighborhoods for commercial purposes
- Exclude Others from Property = right to exclude/remove another party from their property; limited by government’s police power with regulations controlling how and when an owner or occupant may use lethal force against a trespasser
What are Freehold Estates, Non-freehold Estates, and Other Interests?
Freehold Estates = parties receiving an ownership interest in real property, aka seisin, alinable (can be sold or inherited), indefinite duration (ending date of such estate is not known), can grant tenants limited rights to use or possess such property, freehold estates held by more than one owner, owners’ interests are referred to as concurrent
- Joint Tenancy with Right of Survivorship = 2+ with equal interest in real property at the same time, right of survivorship (if one dies, remaining inherit equally), may convey interest to third party/parties but those grantees are tenants in common
- Tenancy in Common = tenants may take interest at different times through different conveyances, and may have unequal interests in property, no right of survivorship (if one dies, remaining don’t inherit equally - the interest is inherited by the decedent’s heirs rather than by the other property’s co-owners)
- Tenancy by the Entirety = form of joint tenancy with additional requirement that co-owners be a married couple and married couple’s treated as single entity
Non-freehold Estates = estates of possession but now ownership or seisin (possession of freehold estate) - includes tenacy for term, periodic tenacy, tenacy at will, and tenancy at sufferance
Other Interests = water (riparian) rights, oil, gas, and mineral rights, rights to subsurface and lateral support, and airspace rights; historically, owner’s property was from surface to sky and from surface to center of earth, but subsurface and air rights can be severed by private agreement and or limited by public policy
What are the Duties and Rights held by Landlords and Tenants?
Duty of a Landlord - provide tenant with:
- possession of leased premises
- right to enjoy the premises without interference (right of quiet enjoyment)
- premises that is physically habitable
Duty of a Tenant:
- pay the landlord the amount of rent agreed upon for the agreed upon period of time - this obligation will remain in effect during that period of time unless it’s terminated by eviction
What are the Servitudes and other Limitations on Property Rights?
What is the Role of Private Restrictions and how are they distinguished from Public Restrictions?
Servitudes = burdens on the ownership of real property which exist for the benefit of a party other than the owner, limitation on the use of the property by the owner and an interest in such property that’s possessed by another party such as easements, licenses, and profits
- Easements = nonpossessory right of one party to use property owned by another for a particular purpose, can be granted by property owner or taken under powers of eminent domain
- Licenses = right to enter into the land of another in a manner which would otherwise be a trespass (ex. hiking license), can be revoked at any time by the grantor and terminate upon death of holder or sale of property by grantor, cannot be transferred to another party
- Profits = easement permitting holder to both enter the property of the servient estate and remove something from the property (such as timber or to hunt/fish), if benefits certain tract of land it runs with the land; if benefits particular person, it could be revoked by grantor or terminate upon grantee’s death
Other Limitations on Property Rights:
- Covenants = agreement or promise to engage in certain acts such as paying dues (affirmative covenants) or refrain from engaging in certain acts such as parking boat in one’s driveway (negative covenants) - aka HOAs or Declarations of Covenants, Conditions, and Restrictions (CCRs)
Role of Private Restrictions = deed restrictions and CCRs are enforced privately
Public Restrictions = other restrictions on the use or ownership of property which are enforced under the police power of government such as land use restrictions
What are the Methods of Voluntarily Conveying Freehold Estates & Non-Freehold Estates, and Other Interests in Property?
What is the Process by which such Interests may be Taken Involuntary by Public or Private Parties?
Voluntarily Methods of Conveying Freehold/Non-Freehold Estates & Other Interests in Property: - voluntary sale or lease (most typical method)
- to beneficiary by will
- to heir via intestate statutes upon death of property owner
- to grantee by gift
- to government/other organization by dedication
- by voluntary partition (divide property)
Involuntarily Methods of Taking Interests:
- Partition = court partitions the property due to co-owners dispute
- Quiet Title Action = courts declare which party holds title when there is a dispute as to which party is the owner
- Adverse Possession = owner fails to eject trespasser for period of time longer than state of limitations in state in which property’s located; if claimant’s possession or use of disputed property meets all other required elements, claimant gains title to property
- Eminent Domain
- Condemnation
- Foreclosure
What is the Due Diligence Process and its Role in Assessing the Legal, Physical, and Economic Status of Property?
What are the Reports to be Obtained and Reviewed during the Due Diligence Stage of Property Transactions?
Due Diligence Process = proper amount & type of steadfast inquiry, process of obtaining information relevant to evaluate a transaction, such as sale of real or personal property
Due Diligence’s Role in Assessing the Legal, Physical, and Economic Status of Property = provides information that assists parties in understanding what the real outcomes from transaction might be - provides buyer with clear understanding of value & characteristics of real property being purchased, assists lender in determining whether property will provide adequate security for the loan
Reports to be Obtained & Reviewed during Due Diligence:
- Title Review
- Survey
- Appraisal
- Environmental Report
- Zoning Certification or Letter
- Flood Certificate or Letter
- UCC Financing Statements
What are the Most Typical Documents used to Convey Estates and to Provide Notice of Interests in Property?
What are the Statutory Requirements for the Preparation and Recording of such Documents?
Most Typical Documents used to Convey Estates and to Provide Notice of Interests in Property:
- Purchase Agreement = real estate purchase contract
- Bill of Sale = document used to convey personal property
- Deed = conveys freehold estates in real property - seller/grantor makes certain covenants or warranties such as seisin (legal ownership of property, right to convey, encumbrances, quiet enjoyment, and further assurances)
- Leases = agreement between property owner (as lessor) and another party (as lessee) in which lessor grants lessee possession and use of the leased property and lessee convents to pay rent and, in some cases, other expenses (single net lease, double net lease, triple net lease, gross lease, modified gross lease)
Statutory Requirements for the Preparation and Recording of such Documents:
- Statute of Frauds = certain types of contracts need to be in writing, signed by parties, and contain sufficient content to evidence the contract (such as mortgages & deeds)
- Recording - provide notice of grantee’s ownership or security interest in estate or other interest in property
- Liens can also be filed or recorded against real or personal property
What is the least commonly used type of freehold estate today?
A - Fee simple estate
B - Life estate
C - Fee tail estate
D - Trust
C - Fee tail estate (was used in feudal times but not permitted today)
A - Fee simple estate (most common - includes all rights)
B - Life estate (rarely used now)
D - Trust (often used)
Which is an example of a non-freehold estate?
A - Life estate
B - Investment in a real estate investment trust
C - Membership in a real estate cooperative
D - Long-term ground lease
D - Long-term ground lease (has fixed term so it’s a non-freehold estate; unlike freehold estates which have an indefinite duration)
Elizabeth is negotiating a lease for 1,000 square feet of office space. She plans to expand her premises after a few years of business into the neighboring 500-square-foot space. Which provision should Elizabeth request the landlord include in her lease?
A - Option to lease
B - Renewal option
C - Option to purchase
D - Right of first refusal
A - Option to lease (because she’s signing a lease, not purchasing, or renewing)
In which type of deed does the grantor provide warranties of title limited to those claiming under the grantor?
A - Quit claim deed
B - Sheriff’s deed
C - General warranty deed
D - Special warranty deed
D - Special warranty deed (limits warranties to acts of seller only)
A - Quit claim deed (no warranties)
B - Sheriff’s deed (conveys title following foreclosure)
C - General warranty deed (convents for grantor’s own acts and all predecessors in title)
Hunter executed a general warranty deed conveying his farm to Ginger. Ginger later discovers a mortgage recorded against the real property. Which of the covenants included in the deed would be violated by the existence of the mortgage?
A - Right to convey
B - Against encumbrances
C - Warranty
D - Quiet Enjoyment
B - Against encumbrances (property is free from encumbrances except as set forth in the deed)
A - Right to convey (grantor affirms that has power to convey property)
C - Warranty (another term for covenant, not a covenant itself)
D - Quiet Enjoyment (grantee shall have right to quiet enjoyment of property without interference from third parties)
Under which type of lease does landlord charge an all-inclusive rental payment which covers all costs of renting the real property?
A - Triple net lease
B - Gross lease
C - Modified gross lease
D - Single net lease
B - Gross lease (full-service lease, fixed amount and all-inclusive to include all property expenses)
A - Triple net lease (base rate plus pro-rata share of three nets - property taxes, insurance, CAM)
C - Modified gross lease (fixed amount but utilities and other services aren’t included in rent)
D - Single net lease (base rate plus pro-rata share of property tax)
Rachel’s negotiating lease for music store in retail center. She’d prefer if no other music stores open in retail center since they’d compete with her business - which provision should she ask landlord to include in leases of other tenants in the center?
A - Right of first refusal
B - Option to lease
C - Use restriction
D - Termination clause
C - Use restriction
