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Real Estate > Session 7: Real Estate Owner Concepts > Flashcards

Session 7: Real Estate Owner Concepts Flashcards

1
Q

ownership in severality

A

taking ownership by one person or possibly one entity

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2
Q

What is the easiest form of ownership in transferring property?

A

Severalty

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3
Q

Forms of co-ownership

A 
Tenancy in common
Joint tenancy
Tenancy by the entirety  
Community property
Community property with right of survivorship
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4
Q

Which form of co-ownership is not recognized in AZ?

A

tenancy by the entirety

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5
Q

Which form of co-ownership is the default in AZ?

A

Community property

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6
Q

Tenancy in Common

A
  • form of co-ownership between two or more persons with NO RIGHT OF SURVIVORSHIP (can leave shares in will)
  • each owner has fractional ownership with an undivided interest in the whole and can encumber their share of ownership without needing the consent of the other owners
  • hold different percentages of ownership in the property, but if not determined then the court will decide
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7
Q

Partition suit

A
  • legal way to dissolve the co-ownership if the parties can’t agree on how to do so themselves.
  • courts will decide as fairly as possible for all owners
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8
Q

No right of survivorship

A

can leave your share in will

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9
Q

right of survivorship

A

cannot leave your share in will

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10
Q

Encumber

A

can do what you want with your share

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11
Q

joint tenancy

A

-form of co-ownership between two or more persons which includes right of survivorship

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12
Q

PITT test for joint tenancy

A

Possession
Interest
Time
Title

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13
Q

possession

A

all owners have the right of possession

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14
Q

interest

A

all owners have the same interest without being divided

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15
Q

time

A

all owners acquire their interest at the same time

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16
Q

title

A

all owners acquire their interest by the same document

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17
Q

terminating joint tenancy

A
  • when any of the four unities are terminated there could no longer be joint tenancy
  • a joint tenant is free to convey their interest in the property to another individual but this destroys the unity time and title
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18
Q

what do joint tenancy and tenancy in common have in common?

A

ownership

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19
Q

tenancy by the entirety

A

ownership for husband and wife with each having an equal, undivided interest in the property including right of survivorship. Not recognized in AZ

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20
Q

Community property

A
  • husband and wife become equal partners in the property 50/50
  • when one spouse dies, the remaining spouse retains their one-half interest in the community property while the deceased half is divided according to their will
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21
Q

how can property remain sole and separate?

A

-if it was acquired before marriage
-if it was a gifted inheritance
(both of these only work as long as a “joint” account isn’t used to pay for anything for it)

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22
Q

community property with right of survivorship

A

when one spouse dies, the other spouse acquires the deceased spouse’s one-half of the community property and there is no probate

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23
Q

Do community property states recognize dower or curtesy rights?

A

NO

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24
Q

disclaimer deed

A

one spouse wants to buy real estate but doesn’t want the other spouse on the title (investment groups that only one spouse is a part of)

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25
Q

trust

A

created by a legal document such as a will or deed of trust

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26
Q

how many parties are involved in a trust?

A

3

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27
Q

What are the parties involved in a trust?

A

Trustor
Trustee
Beneficiary

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28
Q

Trustor

A

the borrower who conveys the legal title to the property

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29
Q

Trustee

A

The neutral party that holds the legal title (bare and naked title)

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30
Q

Beneficiary

A

The party who will benefit from the trust (lender)

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31
Q

Living trust (inter vivos)

A

the trustor transfers the property to a trustee who manages the property and the beneficiary will be the one receiving the income or other benefits generated by the trust

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32
Q

In a living trust, can the beneficiary and the trustor be the same person?

A

Yes

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33
Q

What is one benefit of a living trust?

A

Avoids probate

34
Q

testamentary trust

A

created upon the grantor’s death through a will

35
Q

Real Estate Investment Trust (REIT)

A

type of company that lets investors pool their money to invest in a collection of properties or other real estate assets

36
Q

What is the tax status for REITs?

A

They have to pay out at least 90% of their income as dividends
This way they aren’t taxed as a corporation

37
Q

What conditions must be met to qualify for a REIT?

A
  • at least 100 shareholders
  • no five shareholders can own more than 50% of the shares
  • at least 75% of assets must be invested in real estate, cash, or treasuries
  • 75% of gross income must be derived from real estate
38
Q

In a REIT do you hold a title?

A

No only stock

39
Q

Who do REITs need to be registered with?

A

SEC

40
Q

What type of license do you need to sell REITs?

A

Security license

41
Q

In REITs who are the trustors, trustees, and beneficiaries?

A

Trustor (stock) - investor
Trustee (title) - Holds real estate
Beneficiary - when stock is sold

42
Q

Condominiums

A

owner has a fee simple ownership in the unit (interior four walls) and tenant in common with all other owners in all common areas. Each owner pays taxes on their individual unit and a share of taxes on the common areas

43
Q

How can a condominium be created?

A

Recording a declaration in the same manner as a deed in each county where a portion of the condominium is located

44
Q

What is another name for condominiums?

A

Horizontal property act

45
Q

Cooperatives

A
  • The owner rents their unity with a proprietary lease and owns shares of stock in the corporation which owns the building
  • Stock is considered personal property so there are tax benefits in this form of ownership
  • The coop is governed by a board of directors who generally retain first right of refusal so the stock would be offered to them first before being offered to the public
46
Q

town-home

A

owner has complete ownership of the individual unit that is shared with a common wall and ownership in the land which includes surface, sub-surface, and air

47
Q

time-share

A
  • purchaser has fee-simple ownership of the real property for a specified time frame each year
  • all common expenses are prorated among all the owners
  • many states require a person to have a real estate license to sell time-share ownership
48
Q

What is the recission period on a timeshare in AZ?

A

10 calendar days

49
Q

How long can a developer keep you in a presentation with awarding you for attending?

A

120 min

50
Q

Does a licensed agent need to be in the room when telemarketers are making calls for timeshares?

A

Yes

51
Q

If you don’t get your award after you attend the presentation, how long does the developer have to deliver?

A

15 days to get you the award, or monetary value of the award

52
Q

Corporation

A
  • company or group of people authorized to act as a single entity
  • managed by a board of directors that provide its shareholders with limited liability
  • double taxation
53
Q

s-corporation

A
  • small domestic corporation that is treated more like a partnership for tax purposes
  • allows a business to operate in corporate form and not pay a corporate tax
  • no double taxation
54
Q

limited liability company (LLC)

A
  • business entity that combines features and benefits of a partnership and corporation
  • limited personal liability for the debts of the business
55
Q

pass-through entity

A
  • business structure that is used to reduce the effects of double taxation
  • don’t pay income taxes at the corporate level
  • corporate income is allocated among the owners and income taxes are only levied at the individual owner’s level
56
Q

pass-through entity examples

A

Sole proprietorship
Partnership
LLC
S-corp

57
Q

Professional Limited Liability (PLLC)

A

salespersons are able to become PLLCs

  • offers members limited liability status except in an instance of malpractice
  • only lose what you put in
58
Q

Partnership

A

association of two or more people who carry on a business as co-owners as defined by the Uniform Partnership Act

59
Q

General partnership

A

all partners share equally in the partnership and share full liability

60
Q

Limited partnership

A

One or more general partner who manages the business while the limited partners are only liable up to their investment

61
Q

Real Estate Investment Syndication

A
  • business venture in which two or more individuals invest their monies in a real estate project
  • once the project is over they can stay together and invest in more projects
62
Q

Joint venture

A
  • a group of investors who come together for one business project.
  • once that business project is completed the joint venture is finished and they would have to form another joint venture to do more projects
63
Q

The one common element that both tenancy in common and joint tenancy share is

a. time
b. title
c. interest
d. possession

A

possession

64
Q

In order to form a REIT, you need a minimum of how many investors?

a. 1
b. 10
c. 100
d. 175

A

100

65
Q

Joint tenants are allowed to do all of the following except

a. encumber their interest
b. leave their interest in a will
c. sell their interest
d. give away their interest

A

leave their interest in a will

66
Q

The purchaser of any of the following units could have a fee-simple interest except for the purchase of a

a. time-share
b. cooperative
c. condominium
d. townhouse

A

cooperative

67
Q

What type of ownership does the horizontal property act regulate?

a. condominiums
b. cooperatives
c. apartments
d. timeshares

A

condominiums

68
Q

What type of ownership is given when one person transfers their ownership to someone else to hold and manage for them

a. joint venture
b. joint tenancy
c. severalty
d. trust

A

trust

69
Q

A borrower paid $42 in interest at the end of three months. If the annual interest rate was 6%, what was the amount of the loan?

a. $1,400
b. $1,725
c. $2,800
d. $3,00

A

42 x 4 = 168

168 / .06 = 2800

70
Q

Bob, Julie, and Lynn were co-owners of a parcel of real estate. Bob died, and his interest in the property was passed according to his will. Bob was a

a. joint tenant
b. limited partner
c. tenant by the entirety
d. tenant in common

A

tenant in common

71
Q

If a husband and wife own property as joint tenants and the husband conveys his interest to his son, the wife and son will own the property as

a. tenants in common
b. joint tenants
c. tenants in severalty
d. tenants by trust

A

tenants in common

72
Q

What form of financing is controlled by Federal Securities Law:

a. ARM
b. REIT
c. GPM
d. ARMLS

A

REIT

73
Q

A passive investor in a real estate venture would most likely be a:

a. beneficiary
b. limited partner
c. trustee
d. general partner

A

limited partner

74
Q

Which form of ownership creates the most liability for an investor?

a. a corporation
b. a syndicate
c. a general partnership
d. a limited partnership

A

a general partnership

75
Q

Which of the following refers to ownership by one person?

a. tenancy in common
b. tenancy by the entirety
c. severalty
d. trust

A

severalty

76
Q

A seller wants to net $175,000 after deducting a broker commission of 7% and $3,400 in closing costs. How much should he sell the property for?

a. $175,000
b. $187,050
c. $192,000
d. $191,828

A

175000+3400=178400
100-7=93
178400/93=191828

77
Q

A trust is a legal arrangement in which title to property is held for the benefit of a third party known as a

a. beneficiary
b. trustor
c. trustee
d. tenant

A

beneficiary

78
Q

A trust that is established after the death of an owner is called

a. inter vivos trust
b. testamentary trust
c. living trust
d. trust by will

A

testamentary trust

79
Q

Which type of ownership gives the owner a fee simple estate for only one month out of the year?

a. cooperative
b. condominium
c. time-share estate
d. planned unit development

A

timeshare estate

80
Q

A special business structure that is used to reduce the effects of double taxation where the owners are directly taxed individually on the income, taking into account their share of the profits and losses. This is called a

a. Real estate investment trust
b. joint venture
c. pass-through entity
d. time-share

A

pass-through entity

81
Q

Real estate licensees and other professionals can create the following which offers members limited liability status except in an instance of malpractice

a. general partnership
b. limited partnership
c. real estate investment trust
d. professional limited liability company

A

professional limited liability company

82
Q

In Arizona the recission period on a time-share sale is how many days?

a. 10 calendar days
b. 10 business days
c. 7 calendar days
d. 7 business days

A

10 calendar days

Real Estate (20 decks)

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