Forms of Real Estate Ownership: Unit 5

LLC offers

-tax advantages of a partnership—income flows directly to the member of the LLC, instead of being subject to the double taxation of a corporation, with income taxed when received by the corporation, and then taxed again when received as dividends by the shareholders -lexible management structure without the complicated requirements of a corporation or the restrictions of a limited partnership

severalty relationships and examples

1. man singularly holds title to hs own property 2. large corporation holds title to land on which its headquarters is built 3. title held by one individual or corporation

forms of ownership available are controlled by state law, real estate may be held in one of three basic ways

1. ownership in severalty (one owner), 2. ownership (more than one owner) 3. ownership by a trust (property held for the benefit of another)

example of trust realtionships or examples

1. title heald by a netural individual fo the benefit of another 2. title heald by minor's aunt until the minor reaches legal age

examples of co-ownership relationships

1. title held by two or more perople 2. husband and wife have title 3. brother and sister have title for beach property

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

1/2 interest

TRUE OR FALSE: in tenancy in common, each tenant holds a divided fractional interest in the property

FALSE

True or False: the forms of real estate ownership are controlled on a national level to promote unidormity throughtout the country

FALSE

True or false: public entities generaly own real property in trust

FALSE

Ownership of real estate between two or more parties who have been named in one conveyance as joint tenants.

Joint tenancy

to create a joint tenancy what four elements or unitties are needed?

Possession, Interest, Time and titile PITT

A form of co-ownership by which each owner holds an undivided interest in real property as if each were sole owner. Each individual owner has the right to partition. Unlike joint tenants, tenants in common have the right of inheritance.

Tenancy in common ( TIC)

provides for the continuation of the existing business even under these circumstances.

Uniform Partnership Act

When one co-owner dies, the tenant's undivided interest passes

according to the decedent's will, to the heirs identified by statute if there is no will, or by the terms of the decedent's living trust, if one was established prior to death.

unity of interest

all joing tenants hold an equal ownership interest

unity of title

all joint tenants acquire their interest by the same document

unity of time

all joint tenants acquire their interests at the same time

unity of possession

all joint tenants hold a undivided right to posession

Formation of a TIC requires use of

an attorney to clarify the terms of ownership

time share transfer

an interest in a time- share estate may be conveyed by deed or will by the owner. an interest in time-share use is personal property that may or may not be transferable according to the contract

a joint tenancy is destroyed when

any one of the four unities of joint tenancy is terminated

person who benefits from the trust

beneficiary

A corporation is managed and operated by its

board of directors, who are selected by the owners of the corporation—its shareholders The members of the board of directors then usually select the officers who are responsible for the day-to-day operation of the corporation.

legal entity that exists independently of its members.

business organization

goverance cooperative

bylaws of the corportation and board of directors elected by shareholders

if co-owners are married or in a recognized civil union they may

co-own property as tenants by the entirety or as community property

when a titille to a parcel of real estate is held by two or more people is called

co-owners (concurrent owners) -co-ownership

laws based on the idea that spouses, rather than merging into one entity, are equal partners in the marriage.

community property

real and personal property acquired by either spouse during the marriage

community property

Land trusts are frequently created for

conservation of farmland, forests and other wildlife habitats, coastal land, and scenic vistas

In a limited partnership, the partnership agreement may provide for

continuation of the organization after the death or withdrawal of one of the partners.

-the death of one owner never affects title to the proeprty -ms. M and Ms. N are owners of a business. the titile is never affected is ms. M or Ms. N dises

corporation

legal entity—an artificial person—created under the authority of the laws of the state from which it receives its charter.

corporation

goverance condominium

declaration of condominium and board of directors elected by homeowners

unity of possession

each owner is entitled to possession and use of the entire propery, even though each holds only a fractional ownership interest

The beneficial interest in property can be pledged as

ecurity for a loan without having a mortgage recorded

No individual tenant may transfer the ownership of the

entire property

if no fractions are stated the tenants are presumed to hold

equal shares

time share ownership

estate is a fee simple interest. time share use agreement is personal property that expiers after a certain period

a person who acts in confidence or trust and has a special legal realtionship with the beneficiary

fiduciary

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

-dissolved trust must be reorganized if one owner dies -mr. A and Mr. B are partners in a business. Mr. A dies and Mr. B must therefore dissolve and reorganize the partnership

general partnership

all the partners participate in the operation and management of the business and share full liability for business losses and obligations

general partnership

The downside of a co-owner's TIC interest is that

it may not be as easy to sell as property held in a different form of ownership

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.

partition

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

combines the most attractive features of limited partnerships and corporations.

limited liability company

combines the most attractive features of limited partnerships and corporations

limited liability compnay

-the death of an owner may not affect titile if provided in the agreement -the partnership agreement may provide fo the continuation of the organization after the death or withdrawl of one of the partners

limited partnership

consists of one or more general partners, as well as limited partners

limited partnership

trust created by agreement during property owners lifetiem

living trust

Ownership by a business organization makes it possible for

many people to hold an interest in the same parcel of real estate

In recent years, living trusts have become a major estate planning tool used

minimize the time and cost of probate

time-share

multipule purchasers uy interests in real estate- usually resoty or hotel propery. each purchaser has right to use unit for set time each year or a number of susage points

can a joint tenancy be implied or created by operation of law

nopeee`

The death of one of the officers or directors does

not affect title to property owned by the corporation.

Under community property laws, any property acquired during a marriage is considered

obtained by mutual effort

If the court determines that the property cannot be divided physically into separate parcels without destroying its value, the court will

order the real estate sold....The proceeds of the sale will then be divided among the co-owners according to their fractional interests.

condominium ownership

owners have free titile to interor space of units and share title to common areas

severalty

ownership of real property by one person only; also called sole ownership

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

partnership

it is the ownership interest that is divided not the

property

severalty occurs when

property is owned by one individual, corporation or other entitiy

ne of the distinguishing characteristics of a land trust is

public records usually do not name the beneficiary

only asset of a land trust

real estate

distinguishing feature of a join tenancy is

right os survivorship

A land trust may be used for

secrecy when assembling separate parcels

Because the co-owners own separate interests, they can

sell, convey, mortgage, or transfer their individual interests in the TIC without the consent of the other co-owners

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

separate property

Because the corporation is a legal entity, it can own real estate in

severalty or as a tenant in common with other natural or artificial persons

copperatie transfer

shares are personal property. shareholders may sell or transfer shares. transfer od shares may be restiricted by laws

Any conveyance or encumbrance of community property requires

signitures of both spouses

copperative

single units are located in lowrise and highrise complexes

condominium

single units are located in lowrise and highrise complexes as town houses or stand alone units

condominum transfer

single units are transferred by deed, will or living trust

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 ownership rights to another person

A beneficial interest can be transferred by

ssignment, making the formalities of a deed unnecessary

Spouses who are tenants by the entirety have the right of

survivorship

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.

tenancy by the entirety

cooperative ownership

tenants own shares in a corporation, partnership or trust that holds title to the building. tenants have proprietary leases and the right to ocupy their respective units

trustees power and authority are limited by the

terms of the trust agreement

trust established by will after the owners death

testamentary trust

A share owned by a married couple can be transferred only with

the agreement of both parties.

Community property does not provide

the automatic right of survivorship that joint tenancy does

A joint tenancy can be created only by

the intentional act of conveying a deed or giving the property by will or living trust

When two or more single individuals or couples acquire title to real estate and the form of ownership is not indicated

the new owners are usually determined to have acquired title as tenants in common

the four requirements or unities are met when

the right to possession of a property is acquired by all of the joint owners by means of a single instrument that conveys an equal, undivided interest to all of them, stipulating that they are to be joint owners with the right of survivorship

A land trust ordinarily continues for a definite term, such as 20 years. If the beneficiary does not extend the trust term when it expires,

the trustee is usually obligated to sell the real estate and return the net proceeds to the beneficiary.

If the joint tenancy had more than two owners to begin with, and one of them conveys that interest,

there will still be a joint tenancy, but only as to the interests held by the remaining joint tenants; the new owner is a tenant in common.

If a partner in a general partnership dies, withdraws, or goes bankrupt, the traditional common law result would be

to dissolve the partnership, which could be reorganized as a partnership of the surviving partners in order to conduct business

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

trust

party who holds legal purpose of the trust

trustee

who is in the role of a fiduciary

trustee

person who creates the trust

trustor

a trust can be established during the

trustors lifetime or by will to take effect after trustirs death

in a tenancy in common each tenant holds an

undivided interest in the property

the co owners have

unity of possesion

each owner is entitiled to possession and use of the entire property, even though each holds only a fractional ownership interest.

unity of possession

Upon the death of a joint tenant, the decedent's interest

usually passes to the surviving joint tenant or tenants by the right of survivorship.

can a parcel of real estate be ownerd by two or more people as tenants in common?

yes