unit 4 Flashcards
Who decides how title to real estate will be held (what type of ownership)?
The grantee or buyer decides. The seller decides the type of estate transferred.
What are the primary differences between tenancy in severalty and co-ownership?
The primary difference is the number of owners—one vs. two or more. Secondarily, the treatment of the estate on the death of an owner. In a severalty, the estate passes to heirs by probate. In a co-ownership, the estate may pass to heirs (tenancy in common) or to surviving co-owners (joint tenancy, tenancy by the entireties, tenancy in partnership) or to a combination (community property).
What are the primary differences between tenancy in common and joint tenancy?
Title– only one title in a joint tenancy, multiple titles in tenancy in common; ownership share– equal shares in joint tenancy, electable in tenancy in common; transferability– tenant in common may sell, encumber, etc., his or her share, but joint tenant’s interest becomes a tenancy in common interest if sold; survivorship– joint tenant’s interest goes to other joint tenants on death, but tenant in common’s interest goes to heirs; creation– joint tenancy requires the four unities, otherwise a tenancy in common results
What are the primary differences between tenancy by the entireties and joint tenancy?
Tenancy by the entireties requires co-owners to be married; tenancy by the entireties can have only two owners; a tenant by the entireties cannot convey their interests separately to an outside party.
Describe the main features of the concept of community property.
Applies to legally married spouses; distinguishes between community property and separately-owned property; protects each spouse’s ownership of the whole community property while spouses live; preserves half of community property for surviving spouse.
What are some of the apparent advantages of a land trust as a way of owning property?
Anonymity; ease of transfer; ease of use as collateral; potential benefits in treatment of estate on death of beneficiary (grantor).
What are the primary differences between a condominium and a cooperative as forms of ownership?
Condo owner actually owns real property airspace and share in common elements, while co-op owner owns shares in a corporation and proprietary lease; condo unit can be transferred, encumbered or foreclosed as an entity, while co-op interest cannot be so handled, but only as an interest in the corporation; entire property, is endangered by default of co-op shareholder, but only individual unit is endangered by default of a condo owner.
Describe the main differences between deeded time-share ownership and vacation interval ownership as forms of ownership.
The deeded time-share owner owns real property; the interval owner owns personal property; the deeded owner acquires the rights to use (a unit at a specific time), rent, sell, exchange or bequeath the interest; the interval acquires a right-to-use (no particular unit, at a specific time) and may have other rights to sell, exchange, etc., if allowed by the resort owner.
Sole ownership
if a single party owns the fee or life estate, the ownership is a tenancy in severalty.
Tenancy in common
Two or more owners
Identical rights
Interests individually owned
Electable ownership shares
No survivorship
No unity of time
Partition suit
Joint tenancy
Unity of ownership
Equal ownership
Transfer of interest
Survivorship
To create a joint tenancy,
all owners must acquire the property at the same time, use the same deed, acquire equal interests, and share in equal rights of possession.
Termination
sale of an interest, bankruptcy, foreclosure or partition suit
Tenancy by the entireties
Survivorship
Equal, undivided interest
No foreclosure for individual debts
Termination: death of either spouse, divorce, mutual agreement or foreclosure.
Community property
Defines property rights of legal spouses before, during, and after their marriage, as well as after the death of either spouse.
Separate property belongs to ______; community property belongs to ______
one spouse ; both spouses equally.
A spouse may gain an equitable interest in separate property if:
The value of the separate property increases during the marriage
Community property funds were used to discharge any debt on the separate property
Tenancy in partnership
The rules of the UPA apply to partnership formation, asset ownership, fiduciary duties, dispute resolution, and partnership termination.
The property must be used in connection with the partnership’s business. Individual rights are not assignable.
Estates in trust
A fee owner (grantor or trustor) transfers legal title to a fiduciary (trustee) who manages the estate for the benefit of the beneficiary. The trust may be created by a deed, will, or trust agreement.
The trustee has fiduciary duties to the trustor and the beneficiary to maintain the condition and value of the property.
living trust
allows the trustor, during their lifetime, to convey title to a trustee for the benefit of a third party. Established by a written agreement appointing a trustee to manage the trustor’s property.
testamentary trust
is structurally and mechanically the same as a living trust, except that it takes effect only when the trustor dies.
land trust
allows the trustor to convey the fee estate to the trustee and to name himself or herself the beneficiary. Applies only to real property.
Beneficiary controls property
Beneficiary controls trustee
Beneficiary identity not on record
Limited term
The beneficiary’s interest in a land trust is______. This offers advantages in ___ ____ ____ the beneficiary’s interest.
personal property. ; transferring, encumbering, and probating
Condominiums
Combines ownership of a fee simple interest in the airspace within a unit with ownership of an undivided share, and as a tenant in common, of the entire property’s common elements.
Unit owners exclusively possess their apartment space but must share common areas with other owners.
Units can be individually encumbered without interference from other unit owners.
Condos are created by executing and recording a condominium declaration and a __ ___. The party creating the declaration is referred to as the _____.
master deed ; developer
owners’ association
to enforce the bylaws and manage the overall property.
Owner responsibilities
include maintaining internal systems/property condition and insuring contents of the unit.
Unit owners bear the costs of all other property expenses. An annual operating budget totals the expenses and passes them through as ______ to unit owners.
assessments
Cooperatives
One owns shares in a cooperative association and acquires an apartment building as its principal asset. Along with this stock, the shareholder acquires a proprietary lease to occupy one of the apartment units.
The corporate entity of the cooperative association is the only party with a real property ______.
interest
In owning stock and a lease, a co-op unit owner’s interest is _______ that is subject to control by the corporation.
personal property
The co-op lease is called a ____ ______ because the tenant is an owner (proprietor) of the corporation that owns the property. The lease has no stated or fixed rent.
proprietary lease
The co-op interest is ______ by assigning both the stock certificates and lease to the buyer.
transferred
A developer creates a cooperative by forming the ____ ____, which subsequently buys the cooperative property.
cooperative association
Time-shares
A fee or leasehold interest in a property whose owners or tenants agree to use the property on a periodic, non-overlapping basis.
Deeded time-share ownership
Vacation interval option
Time-share lease
The tenant agrees to rent the property on a scheduled basis according to the terms of the lease.
Allows the leaseholder to use the property year after year without incurring the obligations of paying property taxes or closing costs.
Time-share freehold
Tenants in common own undivided interests in the property.
Interval owners usually waive the right of partition, which would enable an owner to force the sale of the entire property.
What are the two basic types of easement and what is the difference?
Easement appurtenant – attaches to the estate and transfers with it unless specifically stated otherwise in the transaction documents
Easement in gross – a personal right to use that does not attach to the grantor’s estate.
What is a common example of an easement by necessity?
The need for access to a property so that it is not landlocked.
How are easements created?
Voluntary action
Necessity
Prescriptive operation of law
Grant or reservation
Implication
Government power of eminent domain (condemnation)
Define encroachment and give an example.
An encroachment is the unauthorized, physical intrusion of one owner’s real property into that of another. An example would be a driveway extending beyond the lot line onto the neighbor’s land.
How is a license different from a personal easement in gross?
A license may be informal and is revocable at any time. Revocation of a personal easement in gross may require the death of the grantee or express release of the easement by the grantee.
How are the two types of deed restriction created?
A deed condition is created in the transfer documents. A deed covenant is created by mutual agreement of the owner and others.
Most liens do not convey ownership. What is the one exception to that rule?
A mortgage lien conveys legal title to the lender.
What type of lien takes priority over all other liens?
Real property tax lien
What factors determine lien priority?
The lien’s categorization as superior or junior
The date the lien was recorded
How can the priority order of a junior lien be changed?
A lienor can change the priority of a junior lien by voluntarily agreeing to subordinate, or lower, the lien’s position in the hierarchy.
What is a judgment lien and how long does it last?
A judgment lien results from a lawsuit. It attaches to real and personal property as a result of a money judgment issued by a court in favor of a creditor. It lasts for ten years, unless the period is extended as provided within the code.
What is a mechanic’s lien?
If a property owner fails to pay for work performed or materials supplied, a worker or supplier can file a mechanic’s lien to force the sale of the property and collect the debt.
An encumbrance
is another’s right to use or take possession of a legal owner’s property, or to prevent the legal owner from enjoying the full bundle of rights in the estate. They are not considered estates.
An easement
is an interest in real property that gives the holder the right to use portions of the legal owner’s real property in a defined way. It is a non-possessory interest in property owned by someone else. May be affirmative or negative.
One cannot own an easement over one’s own property.
An easement pertains to a specified physical area within the property boundaries.
Easement appurtenant
Gives a property owner a right of usage to portions of an adjoining property owned by another party.
Rights and obligations automatically transfer with the property upon transfer of the dominant or servient estate, whether mentioned in the deed or not.
The servient and the dominant tenement may use the easement area, if it does not unreasonably obstruct the dominant use.
An easement by necessity
is granted because of a circumstance of necessity, most commonly the need for access to a property.
Must have been a common grantor of the dominant and servient estates.
Must be a reasonable necessity for the easement, not just for convenience.
An easement for light and air should be in writing.
Party wall agreements
generally provide for severalty ownership of half of the wall by each owner, or at least some fraction of the width of the wall.
Easement in gross
A personal right that one party grants to another to use the grantor’s real property. Dominant or servient estates. May be personal or commercial.
Easements may be created by:
Voluntary action
Necessity
Prescriptive operation of law
Grant or reservation
Implication
Government power of eminent domain (condemnation)
Easements terminate by:
Express release of the right by the easement holder
Purposeful abandonment by the dominant tenement
Condemnation through eminent domain
An encroachment
is the unauthorized, physical intrusion of one owner’s real property into that of another. Cause infringements on the rights of the trespassed owner and may diminish the property’s value, particularly when the property is to be sold.
A license
is a personal right that a property owner grants to another to use the property for a specific purpose. Licenses are not transferrable and do not attach to the land. They cease on the death of either party, or on the sale of the property.
A deed restriction
is a limitation imposed on a buyer’s use of a property by stipulation in the deed of conveyance or recorded subdivision plat. They are covenants or conditions.
A developer may place restrictions on all properties within a recorded
subdivision plat.
Liens
If the owner defaults, the lien gives the creditor the right to force the sale of the property to satisfy the debt.
A recorded lien effectively reduces the owner’s equity in the property in an amount equal to the lien amount.
Effects on title
- if a property is being sold, all liens should be paid in full before the property transfers ownership.
Legal features:
Does not convey ownership, with one exception.
Attaches to the property.
A property may be subject to multiple liens.
Terminates on payment of the debt and recording of documents.
Voluntary and involuntary
- if statutory law imposes an involuntary lien, the lien is a statutory lien. If court action imposes an involuntary lien, the lien is an equitable lien.
A _— lien is placed against real and personal property owned by a particular debtor. A —— lien attaches to a single item of real or personal property and does not affect other property owned by the debtor.
general ; specific
Superior liens
receive first payment from the proceeds of a foreclosure.
All ____ take precedence over all junior liens regardless of recording date, but the earlier the recording date of the lien, the higher its priority.
superior liens
A lienor can change the priority of a junior lien by voluntarily agreeing to ___-, or lower, the lien’s position in the hierarchy.
subordinate
All tax liens other than those for ad valorem, assessment, and estate tax are junior liens. They include:
Federal income tax lien
State corporate income tax lien
State intangible tax lien
State corporation franchise tax lien
After paying the debt from the sale proceeds, the debtor may obtain a______ to clear the title records on other real property that remains unsold.
satisfaction of judgment
The creditor may obtain a writ of___. The plaintiff creditor may secure a writ of____.
execution ; attachment
Homestead property and joint tenancy estates are___ from judgment liens
exempt
Mortgage and trust deed lien
If a mortgagor defaults, the lender forecloses and the property is put up for sale to satisfy the debt on the mortgage.
The lien is removed when the property is fully paid for.
vendor’s lien
secures a purchase money mortgage, a seller’s loan to a buyer to finance the sale of a property.
A vendee’s lien
may be placed by a buyer when the seller has not delivered the title after all other terms of the contract have been satisfied.
A municipality may place a____ against a resident’s real property for failure to pay utility bills
utility lien
A surety bail bond lien
is recorded if the owner can prove that they have a net worth of at least twice the amount of the bail. Homestead property cannot be levied against for surety bail bond lien
If an employer owes back wages to an employee, a ____ can be set against all real and personal property of the employer
wage lien
Mechanic’s lien
Secures the costs of labor, materials, and supplies incurred in the repair or construction of real property improvements.
The priority of a mechanic’s lien dates from the time when the work was begun or completed.
