Unit 2: Property, Estates & Ownership

Question 1

Acknowledgement

Answer 1

A formal declaration before a notary public or certain public officials, by the person (grantor) who signed (executed) the instrument (deed) that he or she did in fact execute (sign) the document. Acknowledgment acts as a safeguard against forgery and once acknowledged, a document is accepted as prima facie (on its face) evidence in court. A deed must be acknowledged to be recorded.

Question 2

Appurtenance

Answer 2

Anything used with the land for its benefit.

Question 3

Bundle of Rights

Answer 3

An ownership concept describing all the legal rights that attach to the ownership of the real property. These are the rights to use, possess, transfer, encumber, and enjoy.

Question 4

Chattel

Answer 4

Personal property

Question 5

Constructive Notice

Answer 5

Notice given by recording a document or taking possession of the property. Even the act of taking possession of an unrecorded deed gives constructive notice. A buyer should always check that no one is living on the property who might have a prior claim to ownership. It is the buyer’s duty to conduct proper inquiry before purchasing any property. Failure to do so does not relieve the buyer of that responsibility.

Question 6

Easement

Answer 6

Interest owned by one person in the land of another person.

Question 7

Emblements

Answer 7

Annual crops produced for sale by tenant farmers.

Question 8

Estate

Answer 8

The ownership interest or claim a person has in real property.

Question 9

Estate in Fee

Answer 9

Sometimes also known as a fee simple estate. It is unqualified, of indefinite duration and inheritable. It is known as an estate of inheritance or perpetual estate because the owner may dispose of it in his or her lifetime or after death by will.

Question 10

Fee Simple Absolute

Answer 10

This occurs when the property is transferred or sold with no conditions or limitations on its use.

Question 11

Fee Simple Qualified

Answer 11

A fee simple estate that is subject to limitations by the grantor.

Question 12

Fixture

Answer 12

Anything that is permanently attached to real property. It also includes anything permanently attached to the fixture, such as the door to a cabinet. Any growing thing attached by roots, such as trees, shrubs and flowers are real property except emblements. The five tests to determine a fixture are method of attachment, adaptation, relationship of the parties, intent of the parties and agreement of the parties.

Question 13

Freehold Estate

Answer 13

An estate with indefinite duration or that is measured by the length of someone’s life.

Question 14

Nonfreehold Estate/Less-Than-Freehold Estates/Leasehold

Answer 14

An estate with a fixed or determinable duration. Leaseholds are also called chattels real because the lease is personal property (chattel) that concerns real property (real).

Question 15

Life Estate

Answer 15

One that is limited in duration of a measuring life. The measuring life is usually the grantee’s life—but it does not have to be. It can even be created on the life of a designated person who has no interest in the property as the measuring life—knows as pur autre vie, meaning for another’s life.

Question 16

Littoral

Answer 16

Bordering a lake.

Question 17

Patents

Answer 17

A government authority or license conferring a right or title for a set period, especially the sole right to exclude others from making, using or selling an invention.

Question 18

Personal Property

Answer 18

Everything other than real property and is often referred to as movable property, personalty or chattel.

Question 19

Prescription

Answer 19

The process of acquiring an interest, not ownership, in a certain property.

Question 20

Quiet Enjoyment

Answer 20

The right of an owner or tenant to the use of the property without interference from the acts or claims of third parties.

Question 21

Real Property

Answer 21

The land, anything permanently attached to the land(attachments), anything appurtenant to the land(appurtenances) and anything immovable by law.

Question 22

Riparian Rights

Answer 22

The rights of a landowner whose land is next to a natural watercourse to reasonable use of whatever water flows past the property.

Question 23

Severalty

Answer 23

Ownership of real property by one person or entity.

Question 24

Title

Answer 24

The evidence that the owner of land is in lawful possession. It is the proof of ownership, such as a grant deed. Separate ownership and concurrent ownership are the two ways a person or other entity can take title to or own real estate.

Question 25

Trade Fixture

Answer 25

Items of personal property, such as shelves, commercial own ovens or room partitions that are attached to real estate by a tenant, usually used to conduct a business. Tenants retain ownership of the items as personal property when they vacate the premises, but are responsible for repairing any damage that results from replacing the trade fixtures.

Question 26

Land

Answer 26

Three-dimensional. Includes the surface, limited quantities of airspace above the surface and the materials and minerals beneath the surface to the center of the earth.

Question 27

Surface Rights

Answer 27

Include the right to build on the land, grow crops, hunt, fish and the basic enjoyment of the land. They also include the right to drill or mine through the surface when subsurface rights are involved.

Question 28

Defined Channel

Answer 28

Any natural watercourse, even if it is dry.

Question 29

Floodwater

Answer 29

Water that overflows a defined channel.

Question 30

Water Rights

Answer 30

Certain water rights that go with the land are considered real property. A person’s water rights do not exceed the amount reasonably needed for one’s own personal use. Water cannot be owned, nor can it be channeled or dammed for the benefit of one landowner to the detriment of other property owners.

Question 31

Correlative-Rights Doctrine

Answer 31

States that an owner may take only a reasonable share of underground waters (not to exclude adjoining owners).

Question 32

High Tide Mark

Answer 32

The boundary line of land touching the ocean.

Question 33

Appropriation

Answer 33

The right to use water for a beneficial use by diverting surface water.

Question 34

Air Rights

Answer 34

The rights an owner of real property has to the airspace above the property to a reasonable height. As real property, air rights can be sold, leased or encumbered separately from the land.

Question 35

Subsurface Rights

Answer 35

The rights to the natural resources, such as minerals, oil and gas below the surface. Minerals are owned as real property unless they are fugitive substances, that is, non-solid, migratory materials such as oil or gas. Oil and gas may not be owned until taken from the ground, at which time they become the personal property of whoever removed them. The rights to minerals, oil and gas can be sold or leased separately.

Question 36

Attachments

Answer 36

Items permanently attached to the land, are real property and belong to the owner. These items include improvements, fixtures and natural attachments.

Question 37

Improvements

Answer 37

Anything such as houses, garages, fences, swimming pools or anything resting on the land to become permanent are owned as part of the property.

Question 38

Natural Attachments

Answer 38

Growing plants attached by its roots, such as trees, shrubs and flowers. The two types of natural attachments are fructus naturales and fructus industriales.

Question 39

Fructus Naturales

Answer 39

Naturally occurring plant growth, such as grasses, trees and shrubs. They are considered part of the real property.

Question 40

Fructus Industriales

Answer 40

Annual crops produced by human labor, such as fruits, nuts, vegetables and grains. The main difference between cultivated and wild plants is that cultivated plants are considered personal property even before they are harvested. Established trees are considered immovable by law and must be sold with the property.

Question 41

Emblements

Answer 41

Annual crops produced by tenant farmers and sharecroppers. The crops are the personal property of the farmer—not the landowner. The farmer has an irrevocable license to enter the land to care for and harvest the crop. If a large tract of farmland is being sold, it is important to have a written agreement stating who will retain ownership of the crops that are growing in the field. The emblements rule does not apply to ornamental trees, rose bushes or any other type of perennial growth.

Question 42

Fee Simple Subject to Condition Subsequent

Answer 42

Any fee estate containing a condition that if violated, could lead to the termination of the estate and give the grantor a right of entry. [C.C. S885.020]

Question 43

Life Tenant

Answer 43

The holder of a life estate. They have all the rights that go with fee ownership except disposing of the estate by will. They may collect all rents and keep all profits for the duration of the life estate. Any interest the life estate holders may create in the property—extending beyond the life of the person used to measure the estate—will become invalid when that designated person dies.

Question 44

Estate in Reversion

Answer 44

Property reverts back to grantor in the event of the life tenant’s death.
Example: Amy grants Bob a life estate with the provision that upon Bob’s death, the property reverts to Amy. Bob is then the life tenant and the designated party on whom the life estate is based. Amy holds an estate in reversion.

Question 45

Reserving a Life Estate

Answer 45

Buying a property and reserving it to receive it upon the death of the seller.
Example: An elderly couple sells their property to a developer reserving the right to live on the property until their death when the developer will be able to take possession of the property. This is called reserving a life estate.

Question 46

Pur Autre Vie

Answer 46

Tom grants a life estate to Susan for the life of Elizabeth, with the provision that it goes to Laura when Elizabeth dies. Susan may enjoy the benefits of the life estate as long as Elizabeth is alive. Upon Elizabeth’s death, the estate goes to Laura or her heirs.

Question 47

Estate in Remainder

Answer 47

Instead of keeping a reversionary interest, the grantor can instead identify someone to receive the property when the life tenant dies. That interest is known as a remainder and the person identified in the instrument creating the interest is known as the remainderman.
Example: Tom grants a life estate to Susan for the life of Elizabeth, with the provision that it goes to Laura when Elizabeth dies. Susan may enjoy the benefits of the life estate as long as Elizabeth is alive. Upon Elizabeth’s death, the estate goes to Laura or her heirs.

Question 48

Remainder

Answer 48

A future interest that takes effect upon the expiration of a life estate when the life tenant dies.

Question 49

Lease

Answer 49

A movable document describing the temporary possession and use of the property, and thus is personal property. The owner of the leasehold (tenant) has exclusive possession and use of real property for a fixed amount of time. This includes the right to use and quiet enjoyment of the premises during the term of the lease. They have the right to the exclusive use of the rented property, and to live quietly without privacy invasion.

Question 50

Tenancy

Answer 50

A leasehold interest in real estate and its duration. Also refers to mode or method or ownership or holding title to property. The types of tenancy are tenancy for years, periodic tenancy and tenancy at sufferance.

Question 51

Tenancy for Years

Answer 51

For a fixed term and definite end date. It is not automatically renewable and does not require notice to quit at the end of the lease (must be negotiated). It is a less-than-freehold estate. The benefit of a tenancy for years to the landlord is that a desirable, long-term tenant may be attracted to the apartment or house. The benefit to the tenant is the assurance that the rent will remain the same over the period of the lease. At the expiration of the lease, terms must be mutually renegotiated.

Question 52

Periodic Tenancy (Estate from Period-to-Period)

Answer 52

Refers to a leasehold interest that is for an indefinite period of time—usually month to month. This kind of tenancy requires 30-days notice to quit. It automatically renews itself unless terminated by landlord or tenant.

Question 53

Tenancy at Will

Answer 53

Created when a tenant obtains possession of the property with the owner’s permission, but without a rental agreement. The tenancy may be ended by the unilateral decision of either party. There is no agreed-upon termination date; however, and either party must give 30-days notice before ending the tenancy.

Question 54

Tenancy at Sufferance (Holdover Tenancy)

Answer 54

Occurs when the tenant originally obtained possession lawfully, but the tenant’s right to remain has expired (as when a lease ends and there is no agreement for an extension or the conversion of that lease to a month-to-month tenancy. If the tenant does not leave, the owner must commence eviction proceedings to remove the tenant.

Question 55

Separate Ownership

Answer 55

Ownership by one person or entity, such as a city or corporation. Property owned by one person or entity is known as sole or separate, or ownership in severalty. With separate ownership, the ownership rights are severed from everyone else.

Question 56

Concurrent Ownership (Co-ownership)

Answer 56

When property is owned by two or more persons or entities at the same time. The title is held jointly and severally. It has several forms, such as joint tenancy, tenancy in common, community property and tenancy in partnership.

Question 57

Tenancy in Common

Answer 57

When two or more persons, whose interests are not necessarily equal, are owners of undivided interests in a single estate. Co-owners take title as a tenancy in common unless some other form of ownership or vesting is mentioned specifically in the deed. The only requirement of unity (equality) for tenants in common is the equal right of possession or undivided interest, as it is called. Any tenant in common may sell, encumber or will his or her interest, with heirs simply becoming a tenant in common among the others. One tenant in common cannot create an easement on the property without the consent of the other co-owners. A tenant in common must pay a proportionate share of any expenses incurred on the property, including money spent for repairs, taxes, loan payments and insurance. When tenants in common do not agree on matters pertaining to the property, any of the co-owners may file a partition action asking the court to decide the fate of the investment.

Question 58

Undivided Interest

Answer 58

Each owner has a certain equitable interest in the property (such as one-half interest or one-fourth interest), but has the right to use the whole property. None of the owners maybe exclude any co-owner from the property, nor claim any portion of the property for exclusive use.

Question 59

Four Characteristics of Tenancy in Common

Answer 59

1. Tenants in common may take title at different times.
2. Tenants in common may take title on separate deeds.
3. Tenants in common may have unequal interests.
4. Tenants in common have an undivided interest or equal right of possession (one unity).

Question 60

Joint Tenancy

Answer 60

Two or more parties own real property as co-owners, with the right of survivorship. In order to have a joint tenancy, the four unities—time, title, interest and possession—must exist. If any are missing, a tenancy in common is created. Co-owners may sell their interest, give it away or borrow money against it, without consent of the other joint tenants. A joint tenant may sever his or her interest in the joint tenancy by selling it. The new co-owner would become a tenant in common with the remaining joint tenants. The joint tenancy is not severed (broken) if a lien is put against the interest of one of the co-owners. However, a foreclosure on the lien would sever that interest from the joint tenancy. Due to the right of survivorship, a joint tenant may not will his or her share. Joint tenancy is terminated when any one of the four unities ends, such as by sale, gift or by mutual agreement.

Question 61

Right of Survivorship

Answer 61

If one of the joint tenants dies, the surviving joint tenant automatically becomes sole owner of the property. The surviving joint tenant is also not liable to creditors of the deceased who hold liens on the joint tenancy property.

Question 62

Four Unities of Joint Tenancy (T-Tip)

Answer 62

Time - become joint tenants at the same time.
Title - take title on the same deed.
Interest - have an equal undivided interest in the property.
Possession - have equal right of possession.
ALL FOUR ITEMS MUST OCCUR TO HAVE A JOINT TENANCY.

Question 63

Community Property

Answer 63

All property acquired by spouses during a valid marriage—except for certain separate property. Since January 1, 2017 the term spouse now refers to registered domestic partners, and replaces “husband and wife” in California law as required by Section 297.5 of the Family Code. It excludes any property acquired before marriage or during marriage by gift or inheritance. Any income, including wages from either spouse, is considered community property, unless it is derived from separate property. Community property has one unity—equal interest, with each spouse earning 50%. That is its one similarity to joint tenancy. In 2001, California enacted a law allowing spouses to hold title to their property as community property with right of survivorship. Holding title as com- munity property provides a stepped-up tax basis for both halves of the property upon the death of the first spouse. Holding title as joint tenants provides for the immediate and automatic transfer of title to the surviving spouse upon the death of the first spouse. This form of holding title combines the desirable tax features of community property with the right of survivorship of joint tenancy. [CA Civil Code §682.1]. If community property funds are used to offset the negative cash flow of an apartment building that is separate property, the apartment building will become community property. Community property cannot be sold or encumbered by only one of the partners. Either spouse may lease community property for up to one year or may sign a listing agreement to put a property on the market. Although a listing agreement signed by one spouse is enforceable, both must accept and sign any contract to sell the community property (deposit receipt). Either spouse may buy real or personal property without the consent of the other; both are bound by the contract made by either one, unless the new property is bought specifically as separate property with funds from a separate property account. When title is taken simply as community property, either party may will one-half of the community property. When vesting is community property, if there is no will, the surviving spouse inherits all community property by intestate succession. This is important to know, particularly with multiple marriages, for estate planning. Property may be owned with the intention that it go to one’s children, only to learn after the parent’s death that children of the first marriage are no longer natural heirs. If there is a subsequent spouse and no will has been made, the new spouse will become the natural heir to any property owned or community property.

Question 64

Intestate Succession

Answer 64

If there is no will when vesting in community property, the surviving spouse inherits all community property. This is important to know, particularly with multiple marriages, for estate planning. Property may be owned with the intention that it go to one’s children, only to learn after the parent’s death that children of the first marriage are no longer natural heirs. If there is a subsequent spouse and no will has been made, the new spouse will become the natural heir to any property owned or community property. Regarding separate property, if there is no will, the surviving spouse gets one-half and one child gets one-half. If there is more than one child, the surviving spouse gets one-third and the children get two-thirds.

Question 65

Do all states recognize community property law?

Answer 65

Nine states—Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin—use the community property system to determine the interest of a spouse in property acquired during marriage. If you now live or previously lived in one of these states, you should be aware that some special rules apply to community property. Any property you may have acquired while living in one of these nine states is probably community property even today.

Question 66

Tenancy in Partnership

Answer 66

Ownership by tow or more persons who form a partnership for business purposes. The rights of each of the partners are subject to a partnership agreement and are described therein.

Question 67

Recording

Answer 67

Recording allows (rather than requires) documents that affect title to real property to be filed. Whenever an interest in real property is transferred voluntarily or involuntarily, the owner should record the transfer instrument to protect his or her legal interests. The Recording Act of California provides that, after acknowledgment, any instrument or abstract of judgment affecting the title to—or possession of—real property may be recorded. A deed must be acknowledged to be recorded. The process consists of copying the instrument to be recorded in the proper index, and filing it in alphabetical order, under the names of the parties, immediately. To be valid, documents must be recorded by the county recorder in the county within which the property is located. When the recorder receives a document to be filed, he or she notes the time and date of filing and at whose request it was filed. After the contents of the document are copied into the record, the original document is marked “filed for record”, stamped with the proper time and date of recording, and returned to the person who requested the recording.

Question 68

Actual Notice

Answer 68

When a person has direct, express information about the ownership interest of a property. Actual notice is a fact, such as seeing the grant deed or knowing that a person inherited a property by will.

Question 69

Priorities in Recording

Answer 69

The first valid deed that is recorded determines the owner, unless that person, prior to recording, had either actual or constructive notice of the rights of others. Other information that might influence ownership can be recorded also, such as liens and other encumbrances. Priority means the order in which deeds are recorded. Whether it is a grant deed, trust deed or some other evidence of a lien or encumbrance, the priority is determined by the date stamped in the upper right-hand corner of the document by the county recorder. To obtain priority through recording, a buyer must be a good faith purchaser, for a valuable consideration, and record the deed first.
If several grant deeds are recorded against the property, the one recorded first is valid. If several trust deeds are recorded against a property, no mention will be made about which one is the first trust deed, which is the second, and so forth. A person inquiring about the priority of the deeds should look at the time and date the deed was recorded for that information. You will see, as we proceed in our study, the importance of the date and time of recording.
There are certain instruments not affected by the priority of recording rule. Certain liens, such as tax liens and mechanic’s liens, take priority even though they are recorded after a deed.