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Real Estate > Section 1 Unit 3 > Flashcards

Section 1 Unit 3 Flashcards

1
Q

An interest(rights) in real estate is ownership of any combination of the bundle of rights to real property, including the rights to

A 
possess
use
transfer
encumber
exclude
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2
Q

An undivided interest is

A

an owner’s interest(rights) in a property in which two or more parties share ownership. The terms “undivided” and “indivisible” signify that the owner’s interest is in a fractional part of the entire estate, not in a physical portion of the real property itself.

If two co-owners have an undivided equal interest, one owner may not lay claim to the northern half of the property for his or her exclusive use.

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3
Q

Examples of interests include:

A

an owner who enjoys the complete bundle of rights
a tenant who temporarily enjoys the right to use and exclude
a lender who enjoys the right to encumber the property over the life of a mortgage loan
a repairman who encumbers the property when the owner fails to pay for services
a buyer who prevents an owner from selling the property to another party under the terms of the sale contract
a mining company which temporarily owns the right to extract minerals from the property’s subsurface
a local municipality which has the right to control how an owner uses the property
a utility company which claims access to the property in accordance with an easement

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4
Q

Interests differ according to:

A

how long a person may enjoy the interest
what portion of the land, air, or subsurface the interest applies to
whether the interest is public or private
whether the interest includes legal ownership of the property

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5
Q

Interests are principally distinguished by

A

whether they include possession.

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6
Q

Estate in land, or, familiarly an estate

A

is the party considered the interest-holder enjoys the right of possession

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7
Q

Encumbrance

A

a private interest-holder does not have the right to possess

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8
Q

Public Interest

A

interest-holder is not private, such as a government entity, and does not have the right to possess

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9
Q

An encumbrance enables a non-owning party to restrict:

A

the owner’s bundle of rights.

Ex. Tax liens, mortgages, easements, and encroachments

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10
Q

The public interest is police power, or the right of the local or county government to zone are:

A

government entities also have non-possessory interests in real estate which act to control land use for the public good within the entity’s jurisdiction.

Ex. example of public interest is the right to acquire ownership through the power of eminent domain.

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11
Q

Estate in land

A

an interest that includes the right of possession.

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12
Q

Freehold estate

A

the duration of the owner’s rights cannot be determined: the rights may endure for a lifetime, for less than a lifetime, or for generations beyond the owner’s lifetime.

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13
Q

Leasehold estate

A

is distinguished by its specific duration, as represented by the lease term.

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14
Q

Ownership of a freehold estate is commonly equated with ownership of the property, whereas ownership of a leasehold estate is not so considered because the leaseholder’s rights are temporary.

A

Both leasehold and freehold estates are referred to as tenancies. The owner of the freehold estate is the freehold tenant, and the renter, or lessee, is the leasehold tenant.

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15
Q

Freehold estates differ primarily according to the duration of the estate and what happens to the estate when the owner dies.

A

A freehold estate of potentially unlimited duration is a fee simple estate: an estate limited to the life of the owner is a life estate.

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16
Q

Fee simple freehold estate

A

is the highest form of ownership interest one can acquire in real estate. It includes the complete bundle of rights, and the tenancy is unlimited, with certain exceptions indicated below. The fee simple interest is also called the “fee interest,” or simply, the “fee.” The owner of the fee simple interest is called the fee tenant.

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17
Q

Fee simple estates

A

remain subject to government restrictions and private interests, like all estates.

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18
Q

There are two forms of fee simple estate:

A

absolute and defeasible.

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19
Q

Fee Simple Absolute.

A

a perpetual estate that is not conditioned by stipulated or restricted uses. It may also be freely passed on to heirs

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20
Q

What is the most desirable and common estate that can be obtained in residential real estate?

A

the fee simple absolute estate

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21
Q

The defeasible fee estate is perpetual, provided the usage conforms to stated conditions. Essential characteristics are:

A

the property must be used for a certain purpose
or under certain conditions
if the use changes or if prohibited conditions are present,
the estate reverts to the previous grantor of the estate.

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22
Q

The two types of fee simple defeasible are

A

determinable and condition subsequent.

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23
Q

Determinable

A

The deed to the determinable estate states usage limitations. If the restrictions are violated, the estate automatically reverts to the grantor or heirs.

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24
Q

Condition subsequent

A

If any condition is violated, the previous owner may repossess the property. However, reversion of the estate is not automatic: the grantor must re-take physical possession within a certain time frame.

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25
Q

Life estate

A

a freehold estate that is limited in duration to the life of the owner or other named person. Upon the death of the owner or other named individual, the estate passes to the original owner or another named party. The holder of a life estate is called the life tenant.

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26
Q

The distinguishing characteristics of the life estate are::

A

the owner enjoys full ownership rights during
the estate period
holders of the future interest own either a reversionary or a remainder interest
the estate may be created by agreement between private parties, or it may be created by law under prescribed circumstances.

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27
Q

Remainder

A

If a life estate names a third party to receive title to the property upon termination of the life estate, the party enjoys a future interest called a remainder interest or a remainder estate. The holder of a remainder interest is called a remainderman.

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28
Q

Reversion

A

If no remainder estate is established, the estate reverts to the original owner or the owner’s heirs. In this situation, the original owner retains a reversionary interest or estate.

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29
Q

The two types of life estates are:

A

the conventional and the legal life estate.

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30
Q

Conventional life estate

A

is created by grant from a fee simple property owner to the grantee, the life tenant. Following the termination of the estate, rights pass to a remainderman or revert to the previous owner.

31
Q

During the life estate period, the owner enjoys all ownership rights, provided he or she does not infringe on the rights of the remainder or reversion interest holders, such as by damaging the property or jeopardizing its value.

A

Should such actions occur, holders of the future interest may take legal action against the property owners.

32
Q

The two types of conventional life estate are:

A

the ordinary and the pur autre vie life estate.

33
Q

Ordinary life estate

A

ends with the death of the life estate owner and may pass back to the original owners or their heirs (reversion) or to a named third party (remainder).

For example, John King grants a life estate in a property to Mary Brown, to endure over Mary’s lifetime. John establishes that when Mary dies, the property will revert to himself.

34
Q

Pur autre vie

A

A pur autre vie life estate endures over the lifetime of a third person, after which the property passes from the tenant holder to the original grantor (reversion) or a third party (remainderman).

For example, Yvonne grants a life estate to Ryan, to endure over the lifetime of Yvonne’s husband Steve. Upon Steve’s death, Yvonne establishes that her mother, Rose, will receive the property.

35
Q

Legal life estate

A

Created by state law as opposed to being created by a property owner’s agreement. Provisions vary from state to state. The focus of a legal life estate is defining and protecting the property rights of surviving family members upon the death of the husband or wife.

36
Q

The major forms of legal life estate are:

A

the homestead, dower and curtesy, and elective share.

37
Q

Homestead

A

A homestead is one’s principal residence. Homestead laws protect family members against losing their homes to general creditors attempting to collect on debts.

38
Q

Homestead laws generally provide that:

A

all or portions of one’s homestead are exempt from a forced sale executed for the collection of general debts (judgment liens). The various states place different limits on this exemption.
tax debts, seller financing debt, debts for home improvement,
and mortgage debt are not exempt
the family must occupy the homestead
the homestead interest cannot be conveyed by one spouse;
both spouses must sign the deed conveying homestead property
the homestead exemption and restrictions endure over the life of the head of the household, and pass on to children under legal age. State laws define specifically how the interest transfers upon the death of the household head
homestead interests in a property are extinguished if the
property is sold or abandoned
in some states the exemption is automatic; in others, homeowners must file for the exemption.

39
Q

The homestead exemption from certain debts:

A

should not be confused with the homestead tax exemption, which exempts a portion of the property’s value from taxation.

40
Q

Dower and curtesy

A

Dower is a wife’s life estate interest in the husband’s property. When the husband dies, the wife can make a claim to portions of the decedent’s property. Curtesy is the identical right enjoyed by the husband in a deceased wife’s property. Property acquired under dower laws is owned by the surviving spouse for the duration of his or her lifetime.

41
Q

To transfer property within dower and curtesy states, the husband (or wife) must obtain a release of the dower interest from the other spouse in order to convey clear title to another party. If both parties sign the conveyance, the dower right is automatically extinguished.

A

Dower and curtesy laws have been largely supplanted by community property laws and elective share laws.

42
Q

Elective share

A

is a state-level statute enabling a surviving spouse to make a minimum claim to the deceased spouse’s real and personal property in place of the provisions for such property in the decedent’s will.

For example, if a husband’s will excludes the wife from any property inheritance, the wife may, upon the husband’s death make the elective share claim.

43
Q

Elective share laws generally provide that:

A

the surviving spouse is entitled to a percent of the deceased spouse’s property, excepting homestead property and property the decedent owned exclusively
the surviving spouse must file for the elective share within a limited time period
if the spouse fails to file, the estate passes on according to the will or the state’s laws of descent
the elective share right pertains only to the surviving spouse and is not transferrable.

44
Q

Leasehold estate, or leasehold

A

arises from the execution of a lease by a fee owner—the lessor, or landlord—to a lessee, or tenant. Since tenants do not own the fee interest, a leasehold estate is technically an item of personal property for the tenant.

Leasehold tenants are entitled to possess and use the leased premises during the lease term in the manner prescribed in the lease. They also have restricted rights to exclusion.

45
Q

Estate for years

A

The estate for years is a leasehold estate for a definite period of time, with a beginning date and an ending date. The estate for years may endure for any length of term. At the end of the term, the estate automatically terminates, without any requirement of notice.

For example, a landlord grants a tenant a three-year lease. After the three years, the leasehold terminates, and the landlord may re-possess the premises, renew the lease, or lease to someone else.

46
Q

Estate from period-to-period

A

In an estate from period-to-period, also called a periodic tenancy, the tenancy period automatically renews for an indefinite period of time, subject to timely payment of rent. At the end of a tenancy period, if the landlord accepts another regular payment of rent, the leasehold is considered to be renewed for another period.

For example, a two-year lease expires, and the landlord grants a six-month lease that is automatically renewable, provided the monthly rent is received on time. At the end of the six months, the tenant pays, and the landlord accepts another monthly rent payment. The acceptance of the rent automatically extends the leasehold for another six months.

The most common form of periodic tenancy is the month-to-month lease, which may exist without any written agreement.

Either party may terminate a periodic tenancy by giving proper notice to the other party. Proper notice is defined by state law.

47
Q

Estate at will

A

The estate at will, also called a tenancy at will, has no definite expiration date and hence no “renewal” cycle. The landlord and tenant agree that the tenancy will have no specified termination date, provided rent is paid on time and other lease conditions are met.

For example, a son leases a house to his father and mother “forever,” or until they want to move.

The estate at will is terminated by proper notice, or by the death of either party.

48
Q

Estate at sufferance

A

In an estate at sufferance, a tenant occupies the premises without consent of the landlord or other legal agreement with the landlord. Usually such an estate involves a tenant who fails to vacate at the expiration of the lease, continuing occupancy without any right to do so.

For example, a tenant violates the provisions of a lease and is evicted. The tenant protests and refuses to leave despite the eviction order.

49
Q

Interests

A
  • any combination of bundle of rights

* estates, encumbrances, police powers

50
Q

Estates in Land

A
  • include right of possession; also called tenancies
  • leaseholds: of limited duration
  • freeholds: duration is not necessarily limited
51
Q

FREEHOLD ESTATES

A

implies “ownership” in contrast to leasehold

52
Q

Fee simple estate

A
  • also “fee”; most common form of estate; not limited by one’s lifetime
  • fee simple absolute: highest form of ownership interest
  • defeasible: can revert to previous owner for violation of conditions
53
Q

Life estate

A

fee estate passes to another upon death of a named party

remainder: interest of a named party to receive estate after holder’s death
reversion: interest of previous owner to receive estate after holder’s death

54
Q

Conventional life estate

A

full ownership interest, limited to lifetime of life tenant or another named party
created by agreements between parties
ordinary: on death of life tenant, passes to remainderman or previous owner
pur autre vie: on death of another; passes to remainderman or previous owner

55
Q

Legal life estate

A

automatic creation of estate through operation of law
designed to protect family survivors
homestead: rights to one’s principal residence
laws protect homestead from certain creditors
dower and curtesy: a life estate interest of a widow(er) in the real property
elective share: right to claim deceased spouse’s property in lieu of will

56
Q

LEASEHOLD ESTATES

A

non-ownership possessory estates of limited duration

57
Q

Estate for years

A

specific, stated duration, per lease

58
Q

Estate from period-to-period

A

lease term renews automatically upon acceptance of monthly or periodic rent

59
Q

Estate at will

A

tenancy for indefinite period subject to rent payment; cancelable with notice

60
Q

Estate at sufferance

A

tenancy against landlord’s will and without an agreement

61
Q

The highest form of ownership interest one can acquire in real estate is the:

A

absolute fee simple estate.

62
Q

Which of the following life estates is created by someone other than the owner?

A

Legal life estate

63
Q

How is a conventional life estate created?

A

A fee simple owner grants the life estate to a life tenant

64
Q

A one-year lease on a house has expired, but the tenant continues sending monthly rent checks to the owner, and the owner accepts them. What kind of leasehold estate exists?

A

Estate from period to period

65
Q

Encumbrances and police powers are

A

interests that do not include possession

66
Q

An interest in real estate is best defined as ownership of

A

one or more of the bundle of rights to real property.

67
Q

Upon the death of the owner, a life estate passes to

A

the original owner or other named person.

68
Q

Which of the following is true of a homestead?

A

A homestead interest cannot be conveyed by one spouse

69
Q

The distinguishing feature of a defeasible fee simple estate is that

A

the estate may revert to a grantor or heirs if the prescribed use changes.

70
Q

What distinguishes a freehold estate from a leasehold estate?

A

A leasehold endures only for a specific period of time.

71
Q

Which of the following is an illustration of the legal concept of elective share?

A

A widow who was excluded from a will makes a claim to a portion of the couple’s principal residence.

72
Q

Dower refers to

A

a wife’s life estate interest in her husband’s property

73
Q

What distinguishes a pur autre vie life estate from an ordinary life estate?

A

The pur autre vie estate endures only for the lifetime of a person other than the grantee

Real Estate (16 decks)

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