Unit #3 - Ownership of Real Property Vocab

Question 1

Beneficiary

Answer 1

A person who derives advantage from something, especially a trust, will, or life insurance policy.

Question 2

Commingling

Answer 2

A violation of Real Estate Laws. Placing the licensee’s own money in the same account with the money of others (clients). Maximum of $200 is allowed to cover account fees.

Question 3

Community Property

Answer 3

Property aquired by spouses during marriage

Question 4

Community Property with right of survivorship

Answer 4

With the right of survivorship, title passes ot the surviving spouse without probate, just as if it were held in joint tenancy. Prior to the death of either spouse, the right of survivorship can be terminated.

Question 5

Concurrent Ownership

Answer 5

Two or more people that share the unity of posession. Meaning each tenant has the right to use the entire property.

Question 6

Condition Subsequent

Answer 6

A fee simple estate subject to a condition subsequent, there is some action or activity that the fee simple owner must NOT perform. If the condition is broken the former owner can retake possession of the property

Question 7

Corporation

Answer 7

Every state has specific laws regulating the formation, corporation, and dissolution of corporations. Owners of a corporation are called shareholders

Question 8

Estate

Answer 8

An extensive area of land in the country, usually with a large house, owned by one person, family, or organization.

Question 9

Estates of Tenancy

Answer 9

Instead of an ownership interest, the tenant has the right to use the property for the stated period. The length of the lease term determines the type of tenancy.

Question 10

Fee Simple Absolute

Answer 10

The highest form of ownership in real property us the estate in fee simple absolute. Owned completely, without any limitations or conditions.

Question 11

Fee Simple Estate

Answer 11

termed a “present, possessory interest.” Carries the maximum bundle of rights. The owner of the fee simple estate has the right to use the property right now and for an indefinite period in the future.

Question 12

Freehold Estate

Answer 12

In medieval England this was the highest form of land ownership. The owner of a freehold estate in land could use the property in any way, without being subject to the demands of the overlord.

Todays owner of real estate also enjoys a freehold estate but there usually are some restraints on how the land may be used.

Question 13

General Partnership

Answer 13

Established when two or more persons carry on a business for profit as co-owners. Property owned by the partnership is owned by the individual partners as a tenancy in partnership.

Question 14

Inter Vivos Trust

Answer 14

Also known as the living trust is an increasingly popular form of property ownership. A living trust can be used to hold title property during the lifetime of the trustor, who is also named as the trustee of the trust.

Question 15

Joint Tenancy

Answer 15

Special form of co-ownership. It requires that all co-owners take title to the property at the same time, by the same document. In addition each must have an equal share of the property.

T - unity of time
T - unity of title
I - unity of interest
P - unity of possession

Question 16

Leaseholds

Answer 16

Or estates of tenancy. Instead of an ownership of interest, the tenant has the right to use the property for the stated period.

Question 17

Life Estate

Answer 17

A life estate refers to property owned by an individual during their lifetime and prevents beneficiaries from selling the property before death.

Question 18

Life Tenant

Answer 18

The person who holds the life estate is the life tenant. The life tenant may have the right to occupy a residential property and/or the right to income from property that is rented or leased to others. Unless specially restricted, a life estate can be sold, leased or mortgaged.

Question 19

Limited Liability Company (LLC)

Answer 19

Almost all states permit property ownership by a limited liability company. In California an LLC is created by filing a one page form with the secretary of state. LLC members are not required to have a written operating agreement setting out their rights and responsibilities although one is advisable. No restriction on number of shareholders. Higher taxes due to limited liability.

Question 20

Limited Partnership

Answer 20

To avoid unlimited liability of being a general partner, an investor can take part in a limited partnership. This can be created only in compliance with state law. By law limited partners can take NO part in the management pf the partnership. If they do they will become general partners and will lose their limited liability

Question 21

Living Trust

Answer 21

Like a will, a living trust is a legal document that lets you distribute your possessions to people and organizations after you die. A living trust “owns” the property you put into it, while still allowing you to maintain control. You can put most types of assets into a living trust, as long as they have value.

Question 22

Measuring Life

Answer 22

The measuring life is that of the holder of the life estate. Typically,property is given or left by will to someone to use “for and during their natural lifetime”and then the document specifies who gets the property afterward.

Question 23

Ownership in Severalty

Answer 23

Also called separate ownership or sole ownership is ownership by one person. Also the one responsible to pay the taxes.

Question 24

Partition Action

Answer 24

Partition actions are when one party to jointly-owned property or a business wants to sell their ownership rights. Business litigation and partnership disputes happen all the time and the remedy is a partition action that occurs in a court of law. Parties owning property usually sell the property.

Question 25

Partners

Answer 25

Two or more persons carry on a business for profit as co-owners. Property owned by the individual partners as a tenancy in partnership.

Question 26

Partnership

Answer 26

An association of two or more persons to carry on a business as co-owners for profit.

Question 27

Power of Termination

Answer 27

Or condition subsequent may be lost on breach of a limitation or restriction. Power of termination means the power to terminate a fee simple estate in real property to enforce a restriction in the form of a condition subsequent to which the fee simple estate is subject.

Question 28

Quasi Community Property

Answer 28

Essentially, quasi-community property is any asset that was acquired by one-half of a couple while they were living in another state that would have been considered marital property had it been acquired in California.

For example, maybe your spouse bought a condo in New Jersey just after you were first married. You were a student at the time, so you paid nothing on the property. It’s titled solely in their name — and they claim that makes the condo their separate property. Under this state’s laws, however, that’s quasi-community property and is subject to division in your divorce.

Question 29

Real Estate Investment Trust (REIT)

Answer 29

Holds various forms of real estate or mortgages for the benefit of investors who own shares of the trust. REIT shares may be publicly traded.

Question 30

Real Estate Syndicate

Answer 30

This can be a form of a REIT corporation, general partnership, or other entity but is usually formed as a limited partnership.

In California real estate syndicates are popular methods of investment for both corporations and individuals.

Question 31

Registered Domestic Partner

Answer 31

The rights and responsibilities of Registered Domestic Partners are the same as spouses under California law. Existing law defines domestic partners as two adults who have chosen to share one another’s lives in an intimate and committed relationship of mutual caring. A domestic partnership is formed when persons file a Declaration of Domestic Partnership with the Secretary of State.

Question 32

Remainder

Answer 32

If the right of possession goes to a third person when the life ends that person has a remainder.

Question 33

Reversion

Answer 33

A future interest in property left in the control of a grantor or the grantor’s successor.

Question 34

Right of Survivorship

Answer 34

This means when a cotenant dies the survivors received the deceased’s share. As a result, however the joint tenant cannot will (name an heir to) his/her share of the property. As long as joint tenancy exists, the right of survivorship in the other joint tenant takes precedence.

Question 35

S Corporation

Answer 35

Under this partnership income is allowed to flow directly to shareholders, avoiding double taxation. But all shareholders must be individuals rather than other corporations.

Question 36

Separate Property

Answer 36

Property owned by only one individual. Both real property and personal property can be separate property.

Question 37

Sole Proprietorship

Answer 37

A sole proprietorship or sole trader is an unincorporated business with a single owner who pays personal income tax on profits earned from the business. Property can be owned under the business or personal name.

Question 38

Successor Trustee

Answer 38

The person who property is passed to through trust documents when a trustor passes away.

Question 39

Tenancy in Common

Answer 39

Is created when it is specified by name. It also is created when more than one person takes title, they are not married to each other, and no other method of taking title is specified.

Question 40

Tenancy in Partnership

Answer 40

A tenancy in partnership is a form of co-ownership in which all partners have an undivided interest in the property, but no rights to transfer their interests outside of the partnership. A partnership is a legal arrangement that can be formed between two or more different parties.

Question 41

Testamentary Trust

Answer 41

Generally, testamentary trusts are created for young children, relatives with disabilities, or others who may inherit a large sum of money that enters the estate upon the testator’s death.

Question 42

Trust

Answer 42

This can be a form of property ownership. If the trustee’s powers generally are defined by rge document establishing the trust. Usually created through a will.

Question 43

Trustee

Answer 43

The person recieving the trust for the trustor

Question 44

Trustor

Answer 44

The person who writes the document specifying what the trustee will receive and the conditions around that.

Question 45

Unity of Possession

Answer 45

Requires the right of each co-owner of the property to have an equal use and possession of the property. The “unity of time” requires that the interests of the co-tenants must commence or vest at the same moment in time.

Question 46

Vesting of Title

Answer 46

Title vesting is simply taking ownership and the official rights of the title on a property. It is necessary when more than one individual appears as the property owner on the title.