California Real Estate Chapter 2

Term Tenancy

"(Estate for years)—A leasehold estate with a fixed term." A term tenancy (or an estate for years) is a lease for a fixed term, which ends automatically when the term is over. The parties may mutually agree to end the tenancy sooner by surrender. A term tenancy is assignable to a third party. A term tenancy is a leasehold estate that lasts for any fixed term. The term may be a specified number of years, months, weeks, or days. A term tenancy is sometimes called an estate for years. This name is misleading, because the term doesn't need to be a year or several years; the term only needs to be a fixed period of time. For example, suppose you agree to lease some warehouse space to Leon from April 1 through September 30. Even though the term of the lease is only six months, Leon has a term tenancy, since the lease is for a fixed period. "Estate for years, is a tenancy for a fixed term. The name "estate for years" is misleading, in the sense that the duration need not be for a year or a period of years; it just has to be for some fixed term." "Bob rents a cabin in the mountains from Clark for a period from June 1 through September 15. Bob has a term tenancy because the rental term is fixed." "Can be created only by express agreement." "It terminates automatically when the agreed term expires; neither party has to give notice of termination."

Domestic corporation

"A corporation formed under California law"

What can a life tenant do?

"A life tenant may transfer or lease his interest in the property. But keep in mind that a life tenant can give, sell, or lease only what he has." "However, if a life tenant leases or mortgages the property and later dies, but the life estate continues because the person designated as the measuring life is still alive, the lease or mortgage remains in force."

Foreign corporations

"All other corporations, incorporated in other states or foreign countries" "Foreign corporations may conduct business in California, but they must obtain a certificate of qualification from the Secretary of State and abide by any conditions or limitations imposed."

Partnerships

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

Joint Tenancy

"Joint ownership with right of survivorship." "Second form of concurrent ownership" "Two or more individuals are joint and equal owners of the property. "

Leasehold Estates

"Less-than-freehold estates" "(In certain legal contexts, they're sometimes called "chattels real.")" "The holder of a leasehold estate is the tenant, who does not own the property, but rather has a right to exclusive possession of the property for a specified period."

Termination of a Tenancy in Common

"May be terminated by a partition suit, a legal action that divides the interests in the property and destroys the unity of possession. If possible, a court will actually divide the property into separate parcels. If a fair physical division isn't possible, the court will order the property to be sold and the proceeds divided among the former co-tenants in accordance with their fractional interests."

Trusts

"One or more trustees manage property for the benefit of one or more beneficiaries. A trust instrument vests title to the property in the trustees, who have only the powers expressly granted in the instrument. Trusts are sometimes used as a form of business ownership. "

Waste

"Permanent damage to real property caused by the party in possession, harming the interests of other estate holders." "The life tenant must not engage in acts that will permanently damage the property and harm the interests of the reversionary or remainder estate. Mismanaging or using up the property's resources (cutting down all of the trees on timberland)"

Tenancy by the entirety

"Resembles a joint tenancy, but is limited to married couples. Tenancy by the entirety is not recognized in community property states such as California, and it has been abolished in a number of other states as well."

Ownership in severalty

"Sole ownership of property." "Title to real property may be held by one person" "Title to real property can be held in severalty or concurrently. In California, the methods of concurrent ownership are joint tenancy, tenancy in common, and community property."

In 2005, California's community property laws

"Were extended to apply to registered domestic partners as well as married couples. Domestic partners may now hold title to property as community property, or as community property with right of survivorship." "In some states that do not have a community property system, married couples may hold title to property as tenants by the entirety."

Transfers title by deed

"When a fee simple owner transfers title by deed, it is presumed that the grantee (the new owner) receives a fee simple absolute estate, unless the deed includes language that indicates an intent to confer a lesser estate (such as a life estate)."

Privity

"When two or more parties have interests in the same property, their mutual relationship is referred to as "privity."

Estate

Also called Tenancy. An interest in land that is or may become possessory. "A possessory interest in real property. Someone who has a freehold estate has title to the property and is considered an owner. Someone who has a leasehold (less-than-freehold) estate has possession of the property, but does not have title."

Two types of partnerships

General & Limited

Types of estates

The duration & The time of possession

True or False. Can both types of estates exist in the same piece of property at the same time?

True. "The owner of a freehold estate may lease the property to a tenant, who then has a leasehold estate in the same property."

"Because someone else has a future interest in the property, a life tenant must not commit ___ "

Waste

The time of possession

Whether the estate holder has the right to possess the property right now, or not until sometime in the future

"Fee simple estate is a perpetual estate, the life estate is a lesser estate because it is ___ ___ ___ ."

limited in duration

Securities

"Shares in a corporation" "A security is an ownership interest that represents only an investment in an enterprise, without managerial control over it. Securities are regulated by the federal government through the Securities and Exchange Commission."

Concurrent ownership

"(Also called co-ownership)" "Title to real property may be held by two or more persons at the same time" "Exists when two or more people share title to a piece of property simultaneously."

Common elements

"(Common areas) are aspects of the condominium property that all of the unit owners have the right to use, such as the driveway, lobby, courtyard, or elevator. The land itself, the roof, and shared recreational facilities are also considered common elements."

Limited Liability Companies

"(LLC) can be seen as the best of both worlds. "A form of business entity that offers limited liability and tax benefits." It combines many of the advantages of a corporation with many of the advantages of a partnership. To create an LLC, two or more business owners draw up an LLC operating agreement and file articles of organization with the Secretary of State. LLC agreements can be quite flexible; the owners (referred to as members) can choose virtually any manner of allocating income, losses, or appreciation among themselves. Once the LLC is created, annual statements must be filed with the state and an annual fee must be paid. LLC members have the flexibility of a general partnership when it comes to managing the business. Certain members may be appointed to manage the company, or all of the members may manage the company. All managing members can bind the LLC with their actions. However, unlike general partners in a partnership, an LLC's managing members are not personally liable for the company's debts and obligations. All LLC members have the same type of limited liability enjoyed by corporate stockholders or limited partners. Regardless of their level of participation in the company, LLC members risk only their initial investment in the company." "Income earned by an LLC is taxed at only one level—the member level. LLC income is taxed only as the personal income of each member, in the same manner as partnership income."

Tenant

"(The lessee), the party with the right of possession"

Landlord

"(The lessor), who is the owner of the property"

Syndicate

"A group of individuals who come together and pool their resources to carry out an enterprise. The syndicate, as such, isn't a recognized legal entity. A syndicate may be a business association or a nonprofit organization" "The parties who create a syndicate usually decide which form of organization to use based on tax consequences and other considerations, such as the members' personal liability for the syndicate's debts. The form of organization affects how a syndicate holds title to real property." "Real property can be owned by a syndicate, which may be organized as a general or limited partnership, a corporation, a limited liability company, a joint venture, or a real estate investment trust."

"Rights and Duties of Life Tenants"

"A life tenant has the same rights as a fee simple owner, including the right to profits or rents, and the right to lease or mortgage the property." And "Has to pay taxes, assessments, and liens."

Condominiums

"A property that has been developed so that individual unit owners have separate title to their own units, but share ownership of the common elements as tenants in common." "Someone who buys a unit in a condominium owns the unit itself in severalty, but shares ownership of the common elements with other unit owners as tenants in common" "Each unit is separately owned, and all the unit owners own the common elements as tenants in common."

Cooperatives

"A property that is owned by a corporation and tenanted by shareholders in the corporation who have proprietary leases for their units." "Ownership of the property is vested in a single entity—usually a corporation. The residents of the cooperative building own shares in the corporation, rather than owning the property itself." "To establish a cooperative, the corporation gets a mortgage loan to buy or construct the building, and other funds are raised by selling shares in the corporation to prospective tenants. The rent that each tenant pays to the corporation is a pro rata share of the mortgage, taxes, operating expenses, and other debts for the whole property. The cooperative corporation is managed by an elected board of directors. In many cooperatives, a tenant cannot transfer stock or assign her proprietary lease without the consent of the governing board or a majority of the members. This approval process is used to screen out undesirable tenants; however, discrimination in violation of fair housing laws is not allowed " "Like condominiums, cooperatives are generally regulated as subdivisions. The tenant protection rules that apply to condominium conversions generally also apply when an apartment building is converted into a cooperative." "Owned by a corporation; a resident owns shares in the corporation, and has a proprietary lease for a particular unit."

Corporations

"An artificial person; a legal entity separate from its shareholders." "Owned by its shareholders, individuals who purchase shares of stock in the company as an investment. But the corporation is legally a separate entity from its shareholders. In the eyes of the law, a corporation is an "artificial person." It can enter into contracts, own property, and incur debts and liabilities, just like a natural person (a human individual)." "Capable of perpetual existence; the death of a shareholder does not affect its operation. Corporate property is owned by the corporation in severalty, not by the shareholders. The shareholders own only a right to share in the profits of the business. They have limited liability." "The main drawback to the corporate form of organization is double taxation. First the corporation must pay income taxes on any profits it generates. Then, if the profits are distributed to shareholders as dividends, the same money is taxed again as the personal income of the shareholders. Business investors can avoid double taxation by choosing a different form of organization, such as a partnership or a trust." "A corporation cannot co-own property in joint tenancy. Since a corporation has a potentially perpetual existence, the other joint tenant could not really have a right of survivorship. Thus, when a corporation co-owns real property with another entity or person, they hold title as tenants in common."

Termination of a Joint Tenancy

"Can be terminated through a partition suit. But a joint tenancy also terminates automatically if any one of the four unities is destroyed. A joint tenant is free to convey her interest in the property to someone else. However, a conveyance destroys the unities of time and title. This terminates the joint tenancy with respect to the ownership of the conveying joint tenant." "Example: Aaron, Bob, and Carrie own a piece of property as joint tenants. If Aaron conveys his interest to Alice, that terminates the joint tenancy with respect to that one-third interest. Since Alice didn't receive title through the same deed or at the same time as Bob and Carrie, Alice can't be a joint tenant. Bob and Carrie are still joint tenants in relation to one another, but Alice holds title as a tenant in common." "However, if a joint tenant executes a mortgage against her interest, that doesn't break the unity of title. The joint tenancy remains intact and valid."

Creating a Tenancy in Common

"Created when a deed specifies that the grantees are taking title to the property as tenants in common. Also, if a deed transferring property to two or more unmarried individuals doesn't indicate how they are taking title, they take title as tenants in common. In that situation, tenancy in common is the default. (If the grantees are a married couple, the default is community property, which we'll discuss shortly.) Unless the deed that creates a tenancy in common states each co-tenant's fractional interest, the law presumes that the interests are equal."

Unlimited liability

"Each general partner has unlimited liability, which means that a partner can be held personally liable for the debts of the partnership. In other words, if the business is unable to pay its debts, its creditors can collect the money owed from an individual partner's personal assets."

Estate of inheritance

"Fee simple estate is freely transferable from one owner to another. It is also inheritable by the owner's heirs when she dies, so it is sometimes referred to as the estate of inheritance. " "A fee simple estate has no set termination point, and theoretically can be owned forever by the titleholder and her heirs."

General Partnerships

"Formed by contract. Although the contract isn't legally required to be in writing, it's advisable to spell out all the terms in a written agreement. In California, if the agreement isn't in writing, the partnership will be governed by the terms of the Uniform Partnership Act. If the agreement is in writing, the terms of the written agreement will govern, instead of the Uniform Partnership Act." "The partners in a general partnership all share in the profits and management of the partnership. Unless otherwise agreed, each one has an equal share of the profits and losses, and each has an equal voice in management and control of the business." "Each partner is both a principal for and an agent of the general partnership for business purposes. Thus, the authorized acts of one partner (including the execution of legal documents) are binding on the partnership. A partnership is a fiduciary relationship; all the partners have a duty to act with utmost good faith toward one another. "

Since 2001, California law

"Has allowed married couples to hold property as community property with right of survivorship" "As in a joint tenancy, the right of survivorship means that title passes directly to the surviving spouse, rather than according to the terms of the will. This prevents a married person from willing his or her half interest in the community property to someone other than the spouse. " "Community property with right of survivorship offers certain tax benefits over a joint tenancy."

"Catalina gives a parcel of property to Howard for the life of Charlie. Howard has a life estate which will end when Charlie dies."

"Howard is the life tenant; Charlie's life is the measuring life."

Estate in Remainder

"If the grantor stipulates that the property should go to a person other than the grantor at the end of the measuring life, that other person has an estate in remainder and is called the remainderman."

Estate in Reversion

"If the grantor stipulates that the property will revert back to her at the end of the measuring life, the grantor holds an estate in reversion."

Comparison of Condos & Co-ops

"In a condominium, each unit is owned individually. In a cooperative, a corporation owns the whole project; the tenants own shares in the corporation and have proprietary leases on their units. In a condominium, each unit owner obtains individual financing to buy the unit. In a cooperative, the corporation takes out one blanket loan for the entire project. One advantage of condominiums over cooperatives is that a condominium owner is not responsible for any default on another unit owner's loan. In a cooperative, if one tenant defaults on his share of the mortgage payments, the other tenants must cure the default or risk having the mortgage on the entire project foreclosed on. This is also true for tax assessments and other liens. A condominium owner can usually sell her unit to anyone she chooses. In a co-op, the corporation usually must approve of the proposed purchaser."

Future interests

"In granting a life estate, a fee simple owner transfers only part of what he owns, so there must be something left over after the life estate terminates. What remains is either an estate in reversion or an estate in remainder."

Freehold estate

"Interest in real property that has an indeterminable (not fixed or certain) duration. The holder of such an estate is usually referred to as an owner." "Include the fee simple absolute, the fee simple defeasible, and the life estate. A life estate lasts only as long as a specified person is alive; then the property either reverts to the grantor or else passes to the remainderman."

Tenancy in Common

"Joint ownership where there is no right of survivorship." "Most basic form of concurrent ownership. Two or more individuals each have an undivided interest in a single piece of property. You can think of it as the default category. A co-ownership arrangement that doesn't fit into one of the other categories is a tenancy in common. This means that each tenant in common has a right to share possession of the whole property, not just a specified part of it. This is referred to as unity of possession." "May have equal or unequal interests" "But no matter how small a tenant in common's ownership interest is, he is still entitled to share possession of the whole property." "A tenant in common may deed his interest to someone else, without obtaining the consent of the other co-tenants. A tenant in common may also mortgage his interest without the others' consent. At death, a tenant in common's interest is transferred according to the terms of his will, or to his legal heirs."

Limited Partnerships

"Many real estate syndicates in California " "A limited partnership has one or more general partners and one or more limited partners. Limited partnerships must strictly conform to the statutory requirements of the California Uniform Limited Partnership Act, and there must be a written limited partnership agreement." "The general partners in a limited partnership have unlimited liability for the partnership's debts and obligations, and they have the exclusive right to manage the business. By contrast, the limited partners have limited liability (that is, they cannot be held personally liable for the partnership's debts and obligations), and they have no voice in management. In fact, if a limited partner took part in the day-to-day control of the business, she could be held liable to the same extent as a general partner."

Partnership property

"Property acquired for the partnership's business" "Title to partnership property may be held in the partnership's name. Alternatively, it may be held in the name of one or more of the partners, as long as the deed makes reference to the partnership." "Unless otherwise agreed, each partner has an equal right to possess and use all partnership property for partnership purposes. However, a partner is not a co-owner of the partnership property and has no transferable interest in it. Partnership property is not subject to the claims of creditors of individual partners; it can be reached only by creditors of the partnership." "When title to partnership property is held in the partnership's name, it must also be conveyed in the partnership's name. Since each partner is an agent for the partnership, any authorized partner can sign the deed."

Community Property

"Property owned jointly by husband and wife (in California and other community property states)." "System of ownership is of Spanish origin; for historical reasons, it is used in several western states, including California. In those states, all the property owned by a married couple is classified either as the separate property of one spouse or as the community property of husband and wife. A spouse's separate property is the property he or she owned before the marriage, and any property he or she acquires during the marriage by inheritance, will, or gift. All other property the husband or wife acquires during the marriage is community property. " "Wages earned by either spouse during the marriage are community property, and so is any property purchased with those wages. Each spouse has an undivided one-half interest in all of the community property." "Separate property of either spouse is free from the interests and claims of the other spouse; it may be transferred or encumbered without the approval or interference of the other spouse." "A conveyance or encumbrance of community real property, however, requires the approval of both spouses. (Under California law, spousal approval isn't required for the transfer of community personal property, unless it's clothing, household furnishings, or a personal property residence, such as a mobile home or a live-aboard boat.)" "When a married person dies, his or her separate property and a one-half interest in the community property are distributed according to the terms of his or her will. The other one-half interest in the community property belongs to the surviving spouse. (If no will exists, the property is distributed according to the rules of intestate succession)"

Condominiums and Cooperatives

"Provide alternatives to ownership of a traditional single-family home. In a sense, condos and co-ops combine aspects of individual ownership with aspects of concurrent ownership. They are popular because of their efficient use of increasingly valuable land."

Limited common elements

"Reserved for the owners of certain units. For example, an assigned parking space would be a limited common element. A feature such as a balcony, which is designed for use with a particular unit but is outside of the unit itself, would also be a limited common element." "Each unit owner obtains separate financing to buy his unit, receives an individual property tax bill, and may acquire a title insurance policy for the unit. A lien can attach to a single unit, so that the unit can be foreclosed on separately, without affecting the other units in the condominium." "An elected governing board usually manages the condominium, collecting regular and special assessments from the unit owners for maintenance, repair, and insurance of the common elements. The regular assessments, typically collected on a monthly basis, are often referred to as condo fees or dues." "Sale of an individual unit in a condominium ordinarily doesn't require the approval of the other unit owners. The seller's interest in the common elements passes to the buyer. When selling a condominium unit, the seller is generally required to give prospective buyers a copy of the bylaws, the latest financial statement, and the CC&Rs (covenants, conditions, and restrictions) of the condominium project." "A condominium usually involves one or more multifamily residential buildings, but commercial and industrial properties can also be developed as condos. To establish a condominium, the developer must record a condominium plan and declaration. Condominium projects are generally regulated as subdivisions" "Sometimes the owner of an apartment complex will find it profitable to change the complex into a condominium. This process, called conversion, is regulated to protect renters who will be displaced. For instance, they must be given 180 days' advance written notice before termination of their tenancies. They must also be given an opportunity to buy their units before the units are placed on the open market."

Reversioner

"She has a future possessory interest in the property. Upon the death of the person whose life the estate is measured by, the property will revert to the reversioner—to the grantor or her heirs."

Joint Ventures

"Similar to a partnership, except that it is created for a single business transaction or for a series of individual transactions. It is not intended to be an ongoing business of indefinite duration. Joint ventures are generally governed by the same rules as partnerships. An example of a joint venture would be a property owner, an architect, and a building contractor joining together to design and construct a particular building."

Surrender

"Termination of a lease by mutual consent" "If either the landlord or the tenant wants to terminate a term tenancy before the end of the lease period, he or she may do so only if the other party consents. " "Unless the lease includes a no-assignment clause, a term tenancy is assignable—that is, the tenant can assign her interest to another person"

Remainderman

"That other person has an estate in remainder"

Lease

"The leasehold is created with a lease." "The lease creates the relationship of landlord and tenant. It grants the tenant the right of exclusive possession, with a reversion of the possessory rights to the landlord at the end of the rental period." "a contract and its provisions are interpreted under contract law."

"The difference between reversion and remainder estates"

"The only difference between reversion and remainder estates is that the former is held by the grantor and the latter by a third party. (If the grantor doesn't name a remainderman, an estate in reversion is created.) The interest that will pass to the designated party when the life estate ends is a fee simple estate." "Ann deeds her property "to Barbara for life, and then to Colin." Colin is the remainderman, and he will own the property in fee simple when Barbara dies and the life estate ends. If Ann had simply deeded the property "to Barbara for life," without naming a remainderman, then fee simple ownership of the property would revert to Ann (or, if Ann has died in the meantime, to Ann's heirs) upon Barbara's death."

Right of survivorship

"The right by which, upon the death of a co-owner, the surviving co-owner(s) acquire his interest in the property." "Key feature that distinguishes joint tenancy from tenancy in common" "If one of the joint tenants dies, her interest passes automatically, by operation of law, to the other joint tenant(s)." A, B, & C owned property as tenants in common. Then C died, and her heirs inheried her share of the property. Now the property is owned by A, B, & C's heirs as tenants in common. A, B, & C owned property as joint tenants, each with 1/3 interest. Then C died. Now, by the right of survivorship A & B own the property as joint tenants, each with 1/2 interest.

Proprietary leases

"They are tenants with long-term proprietary leases on their units; they do not hold title to their units. In other words, they have leasehold estates in the property."

Creating a Joint Tenancy

"four unities of title" must exist. These unities are: 1. unity of interest, 2. unity of title, 3. unity of time, and 4. unity of possession. These four unities signify that each joint tenant has an equal interest in the property (unity of interest), that each received title through the same deed or will (unity of title), which was executed and delivered at a single time (unity of time), and that each is entitled to undivided possession of the property (unity of possession). If any one of these unities does not exist when the tenancy is created, a joint tenancy is not established. Since title passes directly to the other joint tenant(s) upon the death of one joint tenant (because of the right of survivorship), property held in joint tenancy can't be willed. The heirs of a deceased joint tenant have no interest in the joint tenancy property. Example: Jim, Sue, and Bill own property as joint tenants. Jim dies. Sue and Bill now own the entire property fifty-fifty. Jim's heirs cannot make any legal claim to the property. On his death, it ceased to be a part of his estate. Accordingly, the property is not subject to probate and could not have been willed by Jim." "The survivors hold the property free from the claims of the deceased tenant's creditors and from any liens against his interest. The main disadvantage is that a joint tenant gives up the right to dispose of his property by will."

Lien

(A mortgage) is an interest in property, but it's not an estate The lender who holds the lien doesn't have the right to take possession of the property.

Real estate investment trust

(REIT) One form of business ownership "A real estate investment business that qualifies for tax advantages if certain requirements are met." "Investors form REITs to finance large real estate projects. REITs qualify for tax advantages if they meet certain requirements set by the IRS. For example, they must have at least 100 investors, and at least 75% of their investment assets must be in real estate. A qualifying REIT avoids double taxation. As long as at least 90% of its income is distributed to the investors, the trust pays taxes only on the earnings it retains. Yet the investors, like corporate shareholders, are shielded from liability for the REIT's debts. Shares in REITs are securities, subject to federal regulation."

Forms of Business Ownership

1. Ownership by individuals, whether in severalty or concurrently. 2. Real property can also be owned by business entities.

"Under California law, three forms of concurrent ownership are recognized:"

1. Tenancy in common 2. Joint tenancy 3. Community property

Syndicate Organized as a:

1. partnership, 2. corporation, 3. limited liability company, 4. joint venture, 5. trust.

Four Type of Leasehold Estates

1. term tenancy (estate for years) 2. periodic tenancy, 3. tenancy at will, and 4. tenancy at sufferance.

Fee Simple

A fee simple estate is the highest and most complete form of real property ownership. It is perpetual, transferable, and inheritable. A fee simple is classified either as a fee simple absolute or as a fee simple defeasible. The Greatest Estate "Fee simple absolute is the greatest estate that can exist in land, the highest and most complete form of ownership. It is of potentially infinite duration and represents the whole "bundle of rights."

Leasehold estate

A leasehold estate gives a tenant exclusive possession and use of the property for a limited period. The tenant does not have title. "All other possessory interests are leasehold (less-than-freehold) estates." "Has a limited duration (a one-year lease is an example). The holder of a leasehold estate is referred to as a tenant; a tenant has possession of the property but not title." "Include the term tenancy, the periodic tenancy, and the tenancy at will. (The tenancy at sufferance, which arises when a tenant holds over without the landlord's permission, is not really an estate.)"

Life Estate

A life estate is an ownership interest that lasts only as long as a specified person, the measuring life, lives. When that person dies, the property reverts to the reversioners or passes to the remainderman. "A freehold estate whose duration is measured by the lifetime of one or more persons." "Estate for life is a freehold estate whose duration is limited to the lifetime of a specified person or persons."

Interest in real property

A right concerning the property or a claim against it

Holdover tenant

A tenant at sufferance

A real estate investment trust is required to: A. invest at least 75% of its assets in real estate B. have at least 150 participating investors C. have investors accept liability for the trust's acts D. retain at least 50% of its income

A. invest at least 75% of its assets in real estate

Jones and Adams signed an agreement for the use and possession of real estate, for a period of 120 days. This is a: A. term tenancy B. tenancy at sufferance C. periodic tenancy D. tenancy at will

A. term tenancy

Tenancy at Sufferance

Although a tenancy at sufferance is sometimes called an estate at sufferance, this is inaccurate. Techically, it's not a true estate at all. A tenancy at sufferance arises when a tenant who lawfully took possession of the property stays on after the lease ends, without the permission of the landlord. It arises when a tenant comes into possession of the property under a valid lease, but holds over after the tenancy has expired, staying on against the landlord's wishes. A tenant at sufferance is sometimes called a holdover tenant. No notice of termination is required, because the tenant no longer has legal possession of the property. "Lowest type of estate; in fact, though it's sometimes called an "estate at sufferance," technically it isn't an estate at all. A tenancy at sufferance arises when a tenant who came into possession of the property lawfully, under a valid lease, stays on after the lease has expired without the consent of the landlord. A tenant at sufferance is also called a holdover tenant." "Someone who entered into possession of the property legally, but no longer has a right to possession, and a trespasser, who never had permission to enter the land in the first place. Because a tenant at sufferance does not hold an estate (a possessory interest in the property), the landlord is not required to give the tenant notice of termination. Even so, the tenant at sufferance cannot simply be forced off the property; the landlord is required to follow the proper legal procedures for eviction."

Demise

Any conveyance of a leasehold estate A lease often makes reference to the "demised premises." Most leasehold estates can be inherited by the tenant's heirs.

All of the following statements about a corporation are true, except: A. A corporation has a potentially perpetual existence B. Each shareholder is individually liable for the corporation's acts C. Corporations are subject to double taxation D. A corporation can enter into contracts in essentially the same way as an individual person

B. Each shareholder is individually liable for the corporation's acts

Lewis was given real property for the term of his natural life. Which of the following statements is incorrect? A. Lewis has a freehold estate B. Lewis has a fee simple estate C. Lewis is the life tenant D. If Lewis leases the property to someone else, the lease will terminate if Lewis dies during its term"

B. Lewis has a fee simple estate

Johnston, a life tenant, decides to cut down all the trees on the ten-acre property and sell them as timber. Mendez, the remainderman, can stop Johnston's actions because: A. a life tenant is never permitted to cut down any trees on the property for any reason B. a life tenant cannot commit waste C. Mendez's interest is superior to Johnston's, since it is a possessory estate D. None of the above; Mendez has no legal grounds for stopping Johnston

B. a life tenant cannot commit waste

A unit in a cooperative is owned: A. in severalty by its resident B. by the corporation that owns the building, in which the resident owns shares C. in tenancy in common among all residents of the building D. in partnership among all residents of the building

B. by the corporation that owns the building, in which the resident owns shares

A conveyance of title with the condition that the land shall not be used for the sale of intoxicating beverages creates a: A. less-than-freehold estate B. fee simple defeasible C. life estate D. reservation

B. fee simple defeasible

Which of the following is incorrect? Joint tenants always have: A. equal rights to possession of the property B. the right to will good title to heirs C. the right of survivorship D. equal interests in the property

B. the right to will good title to heirs

A, B, and C own property as joint tenants. C dies, and then B sells her interest in the property to D. The property is now owned: A.as joint tenants by A, D, and C's widow E, his sole heir B. by A and D as joint tenants C. by A and D as tenants in common D. None of the above

C. by A and D as tenants in common

In a condominium: A. individual units are owned in severalty, while common elements are owned in joint tenancy B. individual units are owned in joint tenancy, while common elements are owned in severalty C. individual units are owned in severalty, while com"mon elements are owned in tenancy in common D. the entire building is owned in tenancy in common, with residents owning shares

C. individual units are owned in severalty, while com"mon elements are owned in tenancy in common

A fee simple title in real estate is of indefinite duration, and can be: A. freely transferred B. encumbered C. inherited D. All of the above

D. All of the above

Baker sold a property to Lane, but reserved a life estate for himself and remained in possession. Later Baker sells his life estate to Clark and surrenders possession to Clark. Lane then demands immediate possession as fee owner. Which of the following is true? A. Lane is entitled to possession B. Clark should sue Baker for return of the purchase price C. Baker is liable for damages D. Clark can retain possession during Baker's lifetime

D. Clark can retain possession during Baker's lifetime

Cobb owns a property in fee simple; he deeds it to Smith for the life of Jones. Which of the following is true? A. Jones holds a life estate; Smith holds an estate in reversion B. Smith holds a life estate; Cobb holds an estate in remainder C. Smith holds a fee simple estate; Jones holds a life estate D. Smith holds a life estate; Cobb holds an estate in reversion

D. Smith holds a life estate; Cobb holds an estate in reversion

Asher and Blake own real property together. Asher has a one-third interest and Blake has a two-thirds interest. How do they hold title? A. Community property B. Tenancy at will C. Joint tenancy D. Tenancy in common

D. Tenancy in common

The four unities of title, time, interest, and possession are necessary for a: A. tenancy in common B. partnership C. mortgage D. joint tenancy

D. joint tenancy

Unity of possession.

Each tenant in common has a right to share possession of the whole property, not just a specified part of it.

"Freehold estates can be subdivided into ___ ___ ___ and ___ ___."

Fee Simple Absolute & Fee Simple Defeasible

Fee Simple Absolute

Fee simple absolute is fee title without conditions or qualifications of any kind. Title is presumed to be conveyed in fee simple absolute unless the grantor makes it clear that she intends otherwise. "The highest and most complete form of ownership, which is of potentially infinite duration." "Often just called the fee simple, or the fee."

Freehold Estates

Freehold estates include fee simple estates and life estates. In contrast to someone with a leasehold estate, someone with a freehold estate has title to the property. The two main categories of freehold estates are fee simple estates and life estates. "Originally referred to the holdings of a freeman under the English feudal system."

Real property owners have what?

Full title to the property and full possession of it"

Fee Simple Defeasible

Has stipulations. A fee simple defeasible estate includes all of the same rights of ownership as a fee simple absolute, but it may terminate if a condition or event specified in the deed occurs. At that point, title reverts to the original grantor or his heirs. In California, the grantor must file a legal action to recover the property if the condition is breached. "A fee simple estate that carries a qualification, so that ownership may revert to the grantor if a specified event occurs or a condition is not met. Also called a defeasible fee." "In a deed, the grantor may specify that the grantee's estate will continue only as long as a certain condition is met ("on the condition that the property is used as low-cost housing"), or until a certain event occurs ("until Aunt Jolene has a daughter")." "If the requirement is not met, or if the event occurs, the new owner could forfeit title to the property. " Subject to termination. "Abolished in California, however. The only type of defeasible estate now recognized in California is called a fee simple subject to a condition subsequent (also called a conditional fee)." "Estate does not end automatically when the condition is breached. Instead, the grantor must file a lawsuit to get the property back."

The duration

How long the estate holder has the right of possession

Avoiding the delay and cost of probate proceedings is one of the primary advantages of ___ ___.

Joint tenancy

Severalty

Ownership by one individual is called ownership in severalty. You'll often hear it called "separate" or "sole" ownership. "When one person holds title to property individually The term is derived from the word "sever," which means to keep separate or apart. If you own property in severalty, you own it separately, apart from anyone else. Property can be owned in severalty either by a natural person (a human being) or by an artificial person—a legal entity such as a business, a city, or a state government. A sole owner is free to dispose of the property at will. Real property may be owned in severalty by a natural person (a human being) or an artificial person (such as a corporation, a city, or a state)."

Possessory

Someone has, or may have in the future, the right to possess the property—the right to exclusively occupy and use it.

Tenancy at Will

The third kind of leasehold estate is called a tenancy at will (or estate at will). It can be terminated at any time by either the landlord or the tenant. It has no specified termination date and no regular rental period. In some cases, rent is paid on an irregular basis; in other cases, no monetary rent is paid. A tenancy at will has no specific term or rental interval. Rent is not paid on a regular basis, or else it takes some form other than money. California law requires 30 days' notice to terminate a tenancy at will. Under the common law definition of a tenancy at will, no advance notice is required to terminate the tenancy. However, under California law, terminating a tenancy at will requires 30 days' notice from one party to the other. A typical tenancy at will occurs when a tenant provides maintenance services to the landlord, instead of paying rent. For example, if Dave is a gardener, you might agree to let him stay at your house in exchange for landscaping the yard. You don't require him to pay you any rent, and his stay is for an uncertain length of time because you don't know when he'll be done with the work. If you decide you want Dave to move out before then, you're legally required to give him notice of termination. "A leasehold estate that may arise after a periodic tenancy or a term tenancy terminates. Also called an estate at will." Unlike a term tenancy or a periodic tenancy, a tenancy at will cannot be assigned to someone else. Also, a tenancy at will automatically ends upon the death of either party (which isn't true of the other two leasehold estates). Cannot be assigned Ends upon death of either party "Tenant has possession of the property with the landlord's consent for an indefinite period. A tenancy at will is created by mutual agreement between the parties and can be terminated at will by either one." "Arises when a lease has expired and the parties are in the process of negotiating the terms of a new lease. Since the term of the tenancy at will is indefinite, it will continue until either party gives proper notice of termination. In California, 30 days' notice is required to terminate a tenancy at will."

Periodic Tenancy

When a tenancy is not limited to a specific term, it is called a periodic tenancy (or periodic estate). A periodic tenancy continues from rent period to rent period until one of the parties gives the other party notice of termination. Uncertain duration Most periodic tenancies are month-to-month, but there are also week-to-week and year-to-year tenancies. In any case, a periodic tenancy has no set termination date, so if either party to the lease wants to terminate it, proper notice must be given. The traditional rule is that the required notice period is the same length as the rental period. For instance, a week-to-week tenancy requires a week's notice, a month-to-month requires one month's notice, and so on. If neither party gives notice of termination, the periodic tenancy automatically renews itself at the end of each rental period. "A leasehold estate that is renewed at the end of each period unless one party gives notice of termination. Also called a periodic estate." "Periodic estate, has no fixed termination date. It lasts for a specific period (for example, one year, one month, or one week) and continues for successive similar periods (another year, month, or week) until either party gives the other proper notice of termination. A month-to-month tenancy is the most common example." "Automatically renews itself at the end of each period, unless one of the parties gives notice. Failure to give proper notice of termination results in the automatic extension of the lease for an additional period." "Assignable unless assignment is prohibited by the terms of the lease agreement."