Tenancies Flashcards
Types of Tenancies
We know what can be owned.
How rights can be split up, tenancies are the options of holding estates.
Severalty
Tenancy in Severalty or Estate in severalty
Severalty ownership of real estate means sole owner ship by one person or one entity.
That person can be a natural person, or a legal person or entity ( corporation)
In an estate in severalty derives from the word sever.
Can be deeded to others or hold it until death. Upon his death, the estate would be probated, it would pass to his
Devises if he died restate, leaving a will. Or
Hears through descent and succession if he died intestate (without a will)
Concurrent Ownership. 2 or more people own same property at same time as co-owners, they have a concurrent ownership.
Depending on state law, persons with concurrent ownership may hold title as:
Tenants in common Joint tenants with right of survivorship Community property Tenants by the Entirety Tenants in Partnership
Not all states recognize
Community property
Tenants by entirety
Join tenancy
In concurrent Ownership
Co-owners have Undivided interest in the property
Equal rights of possession
Undivided Interest: each co-owner has a right to possession of the entire property. Each owner has an interest in the land.
Unity of Possession: all co-owners cannot be excluded from occupancy. No rent is paid unless there is an agreement. All co-owners participate in maintenance and upkeep
Tenancy in common: occurs when two or more people hold an undivided interest in an estate that is passable to their heirs or devisees. They can be unrelated or husband and wife or even corporations. They have no right of survivorship.
A right of survivorship exists in a JOINT TENANCY OR TENANCY BY THE ENTIRETY, means when one owner dies, the surviving owners acquire that persons interest.
Tenancy in Common, his interest passes to his devisees, if he leaves a will or to his heirs if he does not.
Then his devisee or heir will become tenants in common with the original co-tenants.
In Teanancy in Commo , the co owners share right of possessions but their interests can be:
Acquired at different times
Acquired in different ways ( some by deed or by will)
Equal or unequal amounts . While they have undivided interests, they do not have equal interests
A tenant in common is free to sell,transfer convey or encumber his interest w/out consent of any of the other co-owners.
A tenant in common who wants to sell but is unable,may file suit to partition the property.
A partition Suit forces a division of property or a sale of the property with the proceeds being divided among co-owners.
Joint Tenancy: 2 or more people are joint and equal owners of an undivided interest in property and have right of survivorship. When one of the co-owners dies, it is divided equally between the remaining co- tenants.
The heirs of a joint tenant has no interest in the property. Joint tenants cannot will his interest.
Disadvantage: a joint tenancy cannot change his mind and leave his interest to heirs.
Advantage: property will pass to surviving joint tenants w/out going thru probate.
Surviving co-owners need only record the proper death certificate to show they have acquired the interest.
In order to create a joint tenancy , there are 4 unities that must exist.
1, equal right of possession
2, equal interest
3. Acquire title at same time
4. Acquire title in the same deed or will.
If a co-owner sold , encumbered or leased his interest, the purchaser would become a tenancy in common with the other joint tenants.
when a joint tenant incurs debt using his interest to secure a loan . The creditor could force the sale of the tenant’s interest during the life of the tenant if the debt were not paid.
However if the joint tenant dies before loan is paid off or interest is sold, the surviving joint tenants receive his interest free and clear of encumbrances.
Community Property.
Only 8 states where this form of ownership is legal.. all property acquired during marriage in any of those states, neither spouse alone can sell, convey or encumber the community property alone. Any contracts for such purposes require the signatures of both spouses to be valid.
Separate Property not acquired during marriage may be conveyed individually by husband or wife without spouse’s signature
It includes:
1. Property owned before marriage
Rents and profits from separate property
Property acquired with proceeds from separate property
Property acquired by devise, inheritance or gift.
Tenancy by the Entirety is a common law tenancy that can only be created by husband and wife.
Main advantage is right of survivorship. With this right when one spouse dies, the other spouse owns whole property without probate free and clear of spouses debt but not free of debts incurred jointly by both spouses.
A tenancy by entirety may be terminated in a number of ways:
Sale or gift by one souse to the other
Divorce upon which they become tenants in common
Death of a spouse upon which the survivor becomes tenant in severalty
Sale by both parties ( joint conveyance)
Dower and Curtesy. Common law concept of legal life estates created to benefit of spouse.
Was done is one spouse did not share in ownership of the property, it allowed a means of support.
Bothe dower and curtesy provide the surviving spouse is entitled to one-third life estate of property owned during the marriage by the deceased spouse.
Dower is the right of wife to life estate in deceased husband’s property.
Curtesy is the husband’s right to a life estate in the deceased wife’s property, provided they had 1 child.
Syndication is a group of investors who join together to make and operate a real estate investment
Syndicates can be created through various forms of organizations including general or limited partnership, corporation, trust, tenancy in common, joint tenancy, joint venture or LLC.
Partnership is an association of two or more persons to operate as co owners of a business for profit.
It can be a general partnership or a limited partnership.
General Partnership. All
Partners are co-equals in ownership and management and have full authority to act on behalf of the partnership and other partners. Each partner is entitled to share of profits and is jointly and severalty liable for debts of the partnership.
All partners may be sued severally or jointly; therefore personal assets of each partner may be claimed to pay partnership debts.
If a partner dies, withdraws or declares bankruptcy, the partnership is dissolved.
It may then be reorganized or closed down.
Limited Partnership. One general partner who manages and has personal liability for all partnership debts. There are limited partners who are liable for no more than amount contributed.
In event of death or withdrawal of the general partner. The limited partnership may be dissolved or continued based on terms of the limited partnership agreement.
Death of a limited partner has no affect on th limited partnership.
The advantage of a limited partnership to investors is that partnerships are not taxable entities.
All profits and losses are passed onto the partners for their own tax reporting.
The disadvantages are:
Partnership interests are not easy to sell
A general partner has full and unlimited liability for partnership debts ( whether it is a general or limited partnership)
Limited partners have no control over management of the partnership
Corporation. Is a legal entity can hold title in severalty, if it is a sole owner.
A corporation may hold title with other corporations or individuals as a tenant in common or as a tenant in partnership.
Because of its perpetual existence, it cannot be a joint tenant,
Advantages of a corporation:
The corporation exists in perpetuity . Deaths of owners, directors or stockholders does not affect corporation’s ownership of property.
Corporations has ways of raising money not available to individuals. In addition to loans from a lender, it can issue promissory notes and bonds and issue and sell stock.
Stockholders have limited liability. They can only lose what they have invested.
Stockholders’s shares of stock are usually more,liquid than interests in other types of businesses.
