Unit 2: Property Ownership and Interests

Question 1

Accretion:

Answer 1

A gradual increase in land resulting from the deposit of soil by the water.

Question 2

Agricultural Fixtures

Answer 2

Special class of fixtures in NC:
- Considered real property rather than personal property.
- In NC, if a tenant farmer installs feeding troughs, they would be considered real property and could not be removed unless special agreement.

Question 3

Air rights:

Answer 3

Rights to use the air above the land, which may be sold or leased independently of the land.

Question 4

Appurtenance:

Answer 4

A right or privilege associated with real property that normally transfers along with the property to a new owner when the property is sold.

Question 5

Avulsion

Answer 5

Sudden separation of land from one property and its attachment to another, especially by flooding or a change in the course of a river.
- Doesn’t change property boundaries.
- Owners have right to reclaim lost land.

Question 6

Bundle of Legal Rights

Answer 6

DEEPC:

Right of disposition (to sell, will, transfer or otherwise dispose of or encumber the property)

Right of enjoyment to use in any legal manner

Right of exclusion

Right of possession

Right of control (of the property and its profits within the framework of the law)

Question 7

Concurrent Ownership

Answer 7

When title to one parcel of RE is vested in two or more persons or entities, those parties are said to be concurrent owners, or co-owners, of the property.

Important aspect: unity of possession, which means no one owner may possess a portion of the property and not allow access to other owners.
All owners have equal rights to the property.

Three forms of concurrent ownership:

Tenancy in common
Join tenancy
Tenancy by the entirety

Question 7

Common Elements

Answer 7

Shared areas of building and land

Question 7

Common Interest Community (Hybrid) Ownership

Answer 7

Contain elements of both ownership in severalty and concurrent ownership.

Owners of individual units can hold title to their units in any way

Owners must legally support maintenance of common areas through HOA membership and payments of dues.

Question 8

Condominium Ownership

Answer 8

The condo owner holds fee simple title to the airspace of a unit, as well as an undivided share in the remainder of the building and land, known as the common elements.

Common elements are owned by condo unit owners as tenants in common. Limited common elements refer to assigned amenities, such as storage lockers, car storage, etc.

The condo is administered by an owners’ association of unit owners that may decide to hire an outside property management firm.

Maintenance of common elements is funded by fees charged to each unit owner.

Unit owners have no right to partition common elements.

Condo units may be mortgaged; default on payment does not affect other unit owners.

NC Condo Act of 1986 requires disclosures and allows 7 day rescission on purchase of new units.

Question 9

Cooperative Ownership

Answer 9

In a Coop, title to the land and the building is held by a corporation, which sells shares of stock to prospective tenants:

A purchaser of stock becomes a shareholder in the corporation and receives a proprietary lease to the apartment for the life of the corporation.

Stock is owned as personal property and not real estate.

The lender may accept stock as collateral for financing, which expands the pool of potential owners.

The IRS treats coops the same as houses or condos for tax purposes.

Question 10

Doctrine of Prior Appropriation

Answer 10

States that water rights are determined by priority of beneficial use.

The first person to use water or divert water for beneficial use or purpose can acquire individual rights to the water.

Property owners may have land rights that border water but no rights to use that water.

Question 11

Emblements

Answer 11

Fructus Industriales – annual plantings or crops of grains, vegetables, fruits, on someone else’s land (personal property).

Question 12

Erosion

Answer 12

The gradual wearing away of land cause by flowing water or other natural forces

May cause an owner to lose land.

Question 13

Fee Simple Absolute

Answer 13

A fee simple ownership in which there are no limitations (except govt restrictions)

Highest form of land ownership

Question 14

Fee Simple Defeasible

Answer 14

May be lost on the occurrence or nonoccurrence of a specified event.

Qualified fee event: the new owner must stay qualified to won the estate by obeying the deed restrictions imposed on the estate by a previous owner.

Types:
Fee simple subject to a condition subsequent
Fee simple determinable

Question 15

Fee Simple Determinable

Answer 15

Requires that a specific activity or land use continue.
Ownership is held “so long as” or “during the period” the condition or limitation is maintained.

Full ownership to former owners or heirs automatic – don’t need courts

Use of land predetermined, penalty for noncompliance predetermined

Question 16

Fixture

Answer 16

Personal property that has been affixed to the land or to a building so that by law it becomes part of the real property:

Modular homes immediately become part of the real estate.

Fructus naturales are considered real property.

Question 17

Freehold Estates

Answer 17

Estates of indeterminable length of ownership, such as a lifetime or forever.

Passed from guarantor to grantee via the deed when title to RE is conveyed

Types:

Fee simple estate (can pass by inheritance)

Defeasible fee estate (can pass by inheritance)

Pur autre vie estate (estate for the life of another) with remained or reversion (can pass by inheritance)

Ordinary conventional life estate with remainder or reversion (does NOT pass by inheritance)

Question 18

Fructus Industriales

Answer 18

Perennial crops, orchards, and vineyards

Question 19

Fructus Naturales

Answer 19

Naturally attached to the land, such as trees and crops that do not need cultivation

Question 20

Future Interests

Answer 20

The right of re-entry and the possibility of reversion (because take effect some time in the future)

Question 21

Homeowners Association (HOA)

Answer 21

A nonprofit entity that maintains common areas for the neighborhood, building, etc.

Question 22

Homestead

Answer 22

legal life estate in real estate occupied as the family home.

The home or part of it is protected from most creditors during occupant’s lifetime.

In states with homestead exemption laws, portion of property exempt from certain debts.

In most states, homestead exemption reserves certain amount of money for household in event of a court sale.

Once sale occurs, all debts are paid and household receives amount reserved by the homestead exemption.

Whatever remains is applied to household debts.

Question 23

Improvement

Answer 23

Any addition or change to land or a building that affects the property’s value.

Improvements on the land: improvements of a private nature (the house, fencing, etc.)

Improvements to the land: improvements of a public nature (sidewalks, sewer systems, curbing, etc.)

Question 24

Improved Land

Answer 24

refers to land that has a structure on it (a house)

Question 25

Improved Lot

Answer 25

certain basic required services necessary to utilize it are available (electricity, telephone, street access, water access)

Question 26

Joint Tenancy

Answer 26

The ownership shares are usually required to be equal.

Main distinguishing feature:

Right of survivorship: the death of one of the joint tenants does not destroy the ownership unit, only reduces by one the number of people who hold title to the property.

Requires joint tenants to have equal possession, equal shares, and title to be taken at the same time.

Question 27

Lateral Support

Answer 27

the right to have adjacent property support the natural boundaries of the land.

Construction on a neighboring property shouldn’t cause the soil on the owner’s property to subside.

Question 28

Life estate

Answer 28

A freehold estate in land that is limited in duration to the life of the new owner or to the life or lives of some other designated persons.

Sometimes called a partial estate bc it doesn’t last forever.

Question 29

Life Tenant

Answer 29

a person who has a beneficial interest in an estate or property that is limited in duration to their or another’s lifespan

Question 30

Limited Common Elements

Answer 30

common elements for some tenants, not others. (balcony for only certain tenants, etc.)

Question 31

Littoral Rights

Answer 31

Owners whose land borders oceans and large, navigable lakes.

Owners enjoy unrestricted use of navigable waters but own the land adjacent to the water only up to the mean high-water mark.

All land below this point is owned by the government.

Foreshore: strip of land between high and low tide lines is owned by the state of NC

This makes a portion of every beach in NC a public beach under the public trust doctrine.

Question 32

Manufactured Home

Answer 32

A manufactured home is built according to the US Dept of Housing and Urban Dev construction standards.

AKA mobile home or house trailer

Can be either personal property or real property.
Considered personal property because mobile and has vehicle ID number.

Not considered real property until moving hitch, wheels, axel all removed and must be attached to permanent foundation on land of owner of manufactured home.

Question 33

Marital Life Estate

Answer 33

When someone dies without a will or wills their spouse little, NC allows surviving spouse to choose an “elective share” of the estate instead.

Question 34

Modular Home

Answer 34

Manufactured buildings, including modular homes, are constructed in factories off site according to state building codes and contact state inspection labels certifying compliance.

Once assembles on the home site, immediately considered real property.

Question 35

Nonfreehold (Leasehold) Estate

Answer 35

any estate that is not a freehold estate.

Leasehold estates exists on property in addition to a freehold estate when the property owner has rented the property to a tenant.

Types:
Estate for years
Estate from year to year
Estate at will
Estate at sufferance

Question 36

NC Uniform Commercial Code (UCC)

Answer 36

An item bought on credit remains personal property until paid for; and

A creditor can repossess the item in event of default

Question 36

NC Condominium Act of 1986

Answer 36

Specifies that a condo is created and established when the developer of the property executes and records a declaration of its creation in the county where the property is located.

Must include covenants, conditions, restrictions, plan of property, by-laws

Question 37

Probate

Answer 37

a legal process that takes place after someone dies and can be quite costly to heirs.

Proving in court that a deceased person’s will is valid, identifying and inventorying person’s property, having the property appraised, paying debts and taxes, distributing property.

Question 38

Proprietary Lease

Answer 38

In a Coop, title to the land and the building is held by a corporation, which sells shares of stock to prospective tenants:

A purchaser of stock becomes a shareholder in the corporation and receives a proprietary lease to the apartment for the life of the corporation.

Question 39

Pur Autre Vie

Answer 39

Estate for the life of another.

As with conventional life estate, the life tenant owns the property and then owned for the lifetime of some name third party (the measuring life).

Measuring life has no present or future ownership – serves as the yardstick for the term of the life tenant’s ownership.

Upon death of measuring life, estate would revert back to original owner or remainderman.

If owner dies before measuring life, heirs get property ownership.

Question 40

Reliction

Answer 40

New land is acquired if water gradually recedes or disappears permanently

Question 41

Remainder interest

Answer 41

Future interest in real estate that is transferred to the transferee or remainderman.

Grantor names someone other than the grantor to receive title to the property when the life estate terminates.

Remainer interest is nonpossessory estate – a future interest, and can be sold.

Example: Children got house after grandma died. Originally belonged to father.

Question 42

Remainderman

Answer 42

A person who inherits or is entitled to inherit property upon the termination of the estate of the former owner.

Question 43

Reversionary Interest

Answer 43

If the grantor does not name a remainderman, ownership returns to the grantor when the life estate terminates.

If grantor is dead when life estate ends, property goes to grantor’s heirs.

Also a future interest.

Question 44

Right of Survivorship

Answer 44

the death of one of the joint tenants does not destroy the ownership unit, only reduces by one the number of people who hold title to the property.

Question 45

Riparian Rights

Answer 45

common-law rights granted to owners of land along rivers, streams, or similar bodies of water

Question 46

Severalty

Answer 46

title held by one individual/entity which may be a single individual or an artificial person, such as a corporation, has the following characteristics:

Sole rights to ownership

Sole discretion to transfer part of all ownership rights to another person

Question 47

Subjacent Support

Answer 47

When owners sever subsurface rights and sell then, property owner is entitled to subjacent support for the surface of the property from the owner of the subsurface rights.

Example: underground mining project must assure continued support on the earth’s surface.

Question 48

Subsurface Rights

Answer 48

the rights to use the space below ground level and to extract the natural resources lying below the earth’s surface (mineral, coal, gas, oil, water)

Question 49

Tenancy by the Entirety

Answer 49

Used in many states in which the tenants must be spouses.

Each spouse has an equal, undivided interest in the property – in essence, each owns the entire estate.

On death of spouse, full title automatically goes to other spouse.

Question 50

Tenancy in Common

Answer 50

Each tenant holds an undivided fractional interest;

Co-owners have unity of possession – right to occupy entire property;

Each interest can be sold, conveyed, mortgaged, or transferred; and

Interest passes by will when a co-owner dies and right of survivorship is not possible.

Question 51

Time-Share Ownership

Answer 51

A time-share permits the sale of a leasehold interest (time-share use) or deeded ownership (time share estate) that allows occupancy during a specific period of time, typically weekly.

Time-share transactions are governed by the NC Time Share Act:

Time-share ownership permits multiple purchasers to buy interests in real estate, a form of ownership most commonly found with resort property.

Question 52

Total Circumstances Test

Answer 52

IRMA

Intention of the annexor - was it meant to go or stay?
Relationship of annexor - owner or tenant
Method of annexation - not easily removeable
Adaption to real estate - ordinarily considered permanent addition

Question 53

Town House Ownership

Answer 53

In a town house, a horizontal form of ownership in which houses share vertical walls, titles to individual unites include a fractional interest in common areas.

Some land, (directly under the individual unit) is owned by the individual unit owner and is not part of the common area.

The common areas are owned by the town house HOA.

Question 54

Trade Fixture

Answer 54

include property attached to the structure but used in the course of business:

Personal property, if removed by tenant, and the premises are returned to original condition before the lease expires; and

Real property if left behind by the tenant. The landlord can acquire this type of property by accession.P

Question 55

Trust

Answer 55

A fiduciary arrangement that allows a third party, or trustee, to hold assets, such as real estate, on behalf of a beneficiary.

Question 56

Waste

Answer 56

When life tenants encroach on the rights of future owners by injuring land or property