UNIT 5 FORMS OF RE OWNERSHIP

Question 1

Ownership in severalty

Answer 1

Ownership in severalty occurs when property is owned by one individual, corpo- ration, or other entity. The term comes from the fact that a sole owner is severed or cut off from other owners. The owner in severalty has sole rights to the property and sole discretion to sell, will, lease, or otherwise transfer part or all of the owner- ship rights to another person.

Question 2

co-ownership

Answer 2

When title to a parcel of real estate is held by two or more individuals, those par- ties are called co-owners or concurrent owners. Most states commonly recognize various forms of co-ownership.

Question 3

tenancy in common (TIC)

Answer 3

n a tenancy in common (TIC), each tenant holds an undivided interest in the property. The co-owners have unity of possession, meaning that each owner is entitled to possession and use of the entire property, even though each holds only a fractional ownership interest. If there are two co-owners of a property, for instance, and no other division is specified in the deed conveying the property, each owns a one-half interest. It is the ownership interest, not the property, that is divided.

Question 4

To create a joint tenancy

Answer 4

To create a joint tenancy, four elements or unities are needed, which can be remembered as PITT: possession, interest, time, and title.
■■ Unity of possession—all joint tenants hold an undivided right to possession.
■■ Unity of interest—all joint tenants hold an equal ownership interest.
■■ Unity of time—all joint tenants acquire their interests at the same time.
■■ Unity of title—all joint tenants acquire their interests by the same document.

Question 5

Partition

Answer 5

is a legal way to dissolve the relationship between co-owners of real estate when the parties do not voluntarily agree to its termination.

Question 6

Tenancy by the entirety

Answer 6

Tenancy by the entirety is a special form of co-ownership used in some states that allows a spouse to inherit the other spouse’s ownership interest upon death.Spouses who are tenants by the entirety have the right of survivorship. During their lives, they can convey title only by a deed signed by both parties. One party cannot convey a one-half interest, and generally they have no right to partition or divide the property.

Question 7

Community property

Answer 7

Community property laws are based on the idea that spouses, rather than merging into one entity, are equal partners in the mar- riage. Under community property laws, any property acquired during a marriage is considered to be obtained by mutual effort.

Question 8

Separate property

Answer 8

Separate property generally is real or personal property that was owned solely by either spouse before the marriage, acquired by gift or inheritance by one spouse during the marriage, or purchased with separate funds during the marriage. Any income earned from a spouse’s separate property remains part of that spouse’s sepa- rate property. Separate property can be mortgaged or conveyed by the owning spouse without the signature of the nonowning spouse.

Question 9

Tenancy in Common

Answer 9

Each tenant holds a fractional undivided interest with unity of possession onlyThe tenants can convey or will their individual interest, but not the entire interest.

Question 10

Joint Tenancy

Answer 10

Unity of ownership. Created by intentional act; unities of possession, interest, time, titleRight of survivorship; cannot be conveyed to heirs.

Question 11

Tenants by the Entirety

Answer 11

Spouses each have equal undivided interest in propertyRight of survivorship; conveys by deed signed by both parties. One party can’t convey one-half interest.

Question 12

Community Property

Answer 12

Spouses are equal partners in marriage. Real or personal property acquired during marriage is community propertyConveyance requires signature of both spouses. No right of survivorship; when one spouse dies, survivor owns one-half of community property. Other one-half is distributed according to will or, if no will, according to state law.

Question 13

A trust

Answer 13

A trust is a device by which one person transfers ownership of property to someone else to hold or manage for the benefit of a third party.

Question 14

trus- tor

Answer 14

trus- tor—the person who creates the trust

Question 15

beneficiary

Answer 15

beneficiary—the person who benefits from the trust.

Question 16

Trustee

Answer 16

Trustee—the party who holds legal title to the property and is entrusted with carrying out the trustor’s instructions regarding the purpose of the trustThe trustee’s power and authority are limited by the terms of the trust agreement. A trust can be established during the trustor’s lifetime, or by will to take effect at the trustor’s death.

Question 17

fiduciary

Answer 17

fiduciary, a person who acts in confidence or trust and has a special legal relationship with the beneficiary.

Question 18

In a general partnership

Answer 18

In a general partnership, all the partners par- ticipate in the operation and management of the business and share full liability for business losses and obligations.

Question 19

A limited partnership

Answer 19

A limited partnership consists of one or more general partners, as well as limited partners. The business is run by the general partner or partners. The limited partners are not legally permitted to participate, with the result that each can be held liable for business losses only to the amount invested. The limited partnership is a popular method of organizing investors because it permits investors with small amounts of capital to participate in large real estate projects with minimum personal risk.

Question 20

A corporation

Answer 20

A corporation is a legal entity—an artificial person—created under the authority of the laws of the state from which it receives its charter. A corporation is managed and operated by its board of directors, who are selected by the owners of the corporation—its shareholders

Question 21

Common elements

Answer 21

Common elements typically include such items as land, courtyards, lobbies, the exterior structure, hallways, elevators, stairways, and the roof, as well as recreational facili- ties such as swimming pools, tennis courts, and golf course

Question 22

cooperative

Answer 22

In a cooperative, a corporation holds title to the land and the building. The corpo- ration then offers shares of stock to prospective tenants. The price the corporation sets for each apartment becomes the price of the stock. The purchaser becomes a shareholder in the corporation by virtue of stock ownership and receives a pro- prietary lease to the apartment for the life of the corporation. Because stock is personal property, the cooperative tenant-owners do not own real estate, as is the case with condominiums. Instead, they own an interest in a corporation that has only one asset: the building.

Question 23

Time-share

Answer 23

Time-share ownership permits multiple purchasers to buy relatively small inter- ests in real estate, typically resort properties. Each purchaser receives the right to occupy the facilities for a certain period. A time-share estate includes a real prop- erty interest in a specified unit for a particular period of the year, or it can be a designated share of ownership of the property expressed as a fractional interest or number of points. A time-share use is a contract right under which the developer owns the real estate. The owner of the time-share use has the right to occupy the facilities for the designated period each year, but only for a certain number of years. At the end of that time, the owner’s rights in the property terminate.