Unit 7: Forms of Real Estate Ownership Flashcards
(49 cards)
What are the 3 basic ways a fee simple estate may be held?
- In severalty, where title is held by one individual or corporation
- In co-ownershp, where title is held by two or more individuals
- In trust, where a neutral individual holds title for the benefit of another
Ownership in Severalty
Ownership of real property by one person only, also called sole ownership. The term comes from the fact that a sole owner is severed or cut off from other owners.
Co-ownership (Concurrent Owners)
Title ownership held by two or more persons.
Tenancy in Common
A form of co-ownershp by which the owners individually hold an undivided interest in real property as if sole owner. Each individual owner has the right to partition. Unlike joint tenants, tenants in common have right of inheritance.
When two or more new owners acquire title to a parcel of real estate in PA and the deed does not stipulate tenancy, how will they acquire title?
They acquire title, by operation or rule of law, as tenants in common. But if the conveyance is made to husband and wife with no further explanation, in PA a tenancy by the entirety is created.
Joint Tenancy
Ownership of real estate between two or more parties who have been named in one conveyance as joint tenants. Upon the death of a joint tenant, the dependent’s interest passes to the surviving joint tenant or tenants by the right of survivorship. To establish a joint tenancy with right of survivorship, the intentions of the parties must be stated clearly.
Right of Survivorship
Ownership of real estate between two or more parties who have been named in one conveyance as joint tenants. Upon the death of a join tenant, the dependent’s interest passes to the surviving joint tenant or tenants by the right of survivorship.
How is a Joint Tenancy created?
A joint tenancy can be created only by the intentional act of conveying a deed or giving the property by will or living trust. It cannot be implied or created by operation of law. The deed must specifically state the parties’ intention to create a joint tenancy, and the parties must be explicitly identified as joint tenants.
List the 4 groups or unities needed to create a Joint Tenancy (PITT).
- Unity of Possession - all joint tenants hold an undivided right to possession
- Unity of Interest - all joint tenants hold equal ownership interests
- Unity of Time - all joint tenants acquire their interest at the same time
- Unity of Title - all joint tenants acquire their interest by the same document
List the 4 requirements for unities.
- Title is acquired by one document or deed
- The deed is executed and delivered at one time
- The deed conveys equal interests to all of the parties
- The parties hold undivided possession of the property as joint tenants
Unity of Possession
(Joint Tenancy) All joint tenants hold an undivided right to possession
Unity of Interest
(Joint Tenancy) The deed is executed and delivered at one time
Unity of Time
(Joint Tenancy) All joint tenants acquire their interest at the same time
Unity of Title
(Joint Tenancy) All joint tenants acquire their interest by the same document
How is a Joint Tenancy terminated?
A joint tenancy is destroyed when any one of the 4 unities of joint tenancy is terminated. The new owner will own an undivided interest in severalty as tenant in common with the remaining joint tenants.
How is the disposition of the deceased joint tenant’s ownership governed in PA?
The disposition of the deceased tenant’s ownership is governed by the joint tenancy with right of survivorship rather than by the person’s will or the state’s inheritance laws (although a dangerous substitute, joint tenancy is sometimes referred to as “the poor man’s will”). PA law requires that the right of survivorship be clearly state for survivorship to occur. For example, the document would say, “A and B as Joint Tenants with Right of Survivorship and not as Tenants in Common.”
Partition
The division of co-tenants’ interests in real property when the parties do not all voluntarily agree to terminate the co-ownership; takes place through court procedures.
Tenancy by Entirety
The joint ownership, recognized in some states, of property acquired by husband and wife during marriage. Upon the death of one spouse, the survivor becomes the owner of the property. During their lives, they can convey title only by a deed signed by both parties.
List 4 ways a Tenancy by Entirety can be terminated.
- Death of one spouse
- An agreement between both parties (through the execution of a new deed)
- A Divorce (which leaves the parties as tenants in common)
- A court-ordered sale of the property to satisfy a judgment against the husband and wife as joint debtors (the tenancy is dissolved so that the property can be sold to pay the judgment)
Separate Property
Under community property law, property owned solely by either spouse before the marriage, acquired by gift or inheritance after the marriage, or purchased with separate funds after the marriage.
Community Property
A system of property ownership based on the theory that each spouse has an equal interest in the property acquired by the efforts of either spouse during marriage. A holdover of Spanish law, found predominately in western states, the system was unknown under English common law.
Consists of real and personal property acquired by either spouse during the marriage. Any conveyance or encumbrance of community property requires the signatures of both spouses. Spouses can will their half of the community property to whomever they desire, but upon the death of one spouse, the surviving spouse automatically owns one-half of the remaining property. If one spouse dies without a will, the other half is inherited by the surviving spouse or by the decendent’s other heirs, depending on state law. Community property does not provide an automatic right of survivorship as joint tenancy does.
Trust
A fiduciary arrangement whereby property is conveyed to a person or institution, called a trustee, to be held and administered on behalf of another person, called a beneficiary. The one who conveys the trust is called the trustor.
Can real estate be held in trust?
Yes, depending on the type of trust and its purpose, the trustor, trustee, and beneficiary can all be either people or legal entities, such as corporations. Trust companies are corporations set up for this specific purpose. Real estate can be owned under living or testamentary trusts and land trusts. It can also be held by investors in a real estate investment trust (REIT).
Living Trust
A trust created by agreement during a property owner’s lifetime