Module 2 - Interests and Ownership in Real Estate

Limited Partnership

A business arrangement whereby the operation is administered by one or more general partners and funded, by and large, by limited or silent partners, who are by law responsible for losses only to the extent of their investments and have no operational involvement or authority.

Partition

A court suit whereby tenants-in-common or joint tenants terminate their co-ownership and divide their interests when the parties do not all agree to its termination.

Town house

A dwelling unit usually with two or three floors and common walls.

Fee Simple Determinable

A fee simple estate qualified by a special limitation. Language used to describe limitation. Language used to describe limitation includes the words, "so long as" or "while" or "during."

Trust

A fiduciary arrangement whereby property is conveyed by a trustor to a person or institution, called a trustee, to be held and administered on behalf of another person, called a beneficiary.

Tenancy in Common

A form of co-ownership by which each owner holds a physically undivided interest in real property as if he or she were sole owner. Unlike joint tenants, tenants in common have rights of inheritance.

REIT - Real Estate Investment Trust

A group of hundred investors or more in a trust ownership of real estate where the profits are distributed back to the investors.

Curtesy

A life estate, usually a fractional interest, given by some states to the surviving husband in real estate owned by his deceased wife.

Future Interest

A person's present right in real property that will not result in use, possession or enjoyment until sometime in the future.

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. This is not used in Indiana.

Leasehold Estate

A tenant's right to occupy real estate during the term of the lease.

Undivided interest

A unit of possession among co-owners of real estate, whether held under a tenancy in common or a joint tenancy.

Undivided Interests

A unit of possession among co-owners of real estate, whether held under tenancy in common or joint tenancy.

Tacking

Adding or combining successive periods of continuous occupation of real property by adverse possessors. This concept enables someone who has not been in possession for the entire statutory period to establish a claim of adverse possession.

Partnership

An association of two or more individuals who carry on a continuing business for profit as co-owners; regarded by law as a group of individuals rather than as a single business entity.

General partnership

An association of two or more individuals who carry on a continuing business for profit; all co-owners are general partners and share full liability for any debts and losses and any general partner can legally commit all partners. (See Partnership)

Corporation

An entity or organization, created by operation of law, whose rights of doing business are essentially the same as those of an individual. The entity has continuous existence until it is dissolved according to legal procedures. They can in theory exist forever.

Fee Simple Defeasible

An estate in land where the holder of the estate has fee simple title that may be divested on the occurrence or nonoccurrence of a specified event. There are two categories of defeasible fee estates: determinable fee and fee simple subject to a condition subsequent.

Freehold Estate

An estate in land which ownership is for an indeterminable length of time.

Life Estate

An interest in real or personal property that is limited in duration to the lifetime of the owner or some other designated person.

Limited Liability Company (LLC)

Business entity that combines the concepts of a partnership and corporation. It offers limited liability to the members and allows for flexibility in distribution of assets and liabilities.

Time-share

Fee simple ownership allocated to a specific calendar period. Ownership interest that may include an estate interest in real property and that allows use of the property- usually a resort hotel or condominium - for a fixed or variable period of time.

Separate property

In states that operate under community property laws, property that is owned solely by either spouse before the marriage or is acquired by gift or inheritance during the marriage.

Homestead

Land that is owned and occupied as the family home. In many states, a portion of the area or value of this land is protected or exempt from judgements for unsecured debts.

Legal Life Estate

Life estate created by state statute.

Cooperative

Normally a residential multi-unit building whose title is held by a trust or corporation that is owned by and operated for the benefit of persons living within the building, who are the beneficial owners of the trust or stockholders of the corporation, each holding a proprietary lease. It could be any type of real estate.

Right of Survivorship

One of the distinguishing characteristics of joint tenancy; provides that as each successive joint tenant dies, the surviving tenant or tenants acquire the interest of the deceased tenant.

Co-ownership

Ownership of one parcel of real estate that is vested in more than one owner concurrently with each having the "right of possession".

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 one tenant, his or her, interest automatically passes to the surviving joint tenant or tenants (hence survivorship interest), which means their interest cannot be left to anyone else upon death.

Severalty

Ownership of real property by one person only; sole ownership.

Common elements

Parts of a property that are necessary for or convenient to the existence, maintenance and safety of a condominium or are normally in common use by all condominium residents; each condominium owner has an undivided interest in such areas.

Condominium

The absolute ownership of an apartment or unit based on the legal description of airspace the unit actually occupies, plus an undivided interest in the common elements, which are owned jointly with the other unit owners.

Actual cash value

The amount in dollars paid for the asset.

Estate in Land

The degree, quantity, nature and extent of interest that a person has in real property; an estate always involves possession, presently or in the future.

Police power

The government's right to impose laws, statutes and ordinances, including zoning ordinances and building codes, to protect the public health, safety and welfare.

Fee Simple (Absolute)

The highest interest in real estate recognized by the law; the holder is entitled to all rights to the property.

Equity

The interest or value that an owner has in his or her property over and above any mortgage indebtedness.

Tenancy by the 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.

Dower

The legal right or interest, recognized by some states, that a wife acquires in the property her husband held or acquired during their marriage.

Fee Simple Absolute

The maximum possible estate or right of ownership in real property; continuing forever.

Trustor

The party who deeds his property to trustee as security for repayment of a loan (the borrower under a deed of trust).

Trustee

The party who is appointed, or required by law to execute a trust. Holds title to real property under the terms of a deed of trust.

Beneficiary

The person for whom a trust operates or in whose behalf the income from a trust estate is drawn.

Taxation

The process by which a government or quasi-municipal body raises monies to fund its operations.

Capital gain

The profit or the difference between the amount an asset sold for and what it was purchased for.

Remainder interest

The remnant of an estate that has been conveyed to take effect and be enjoyed after the termination of a prior estate, such as when an owner conveys a life estate to one party and the remainder to another (a remainderman).

Reversionary interest

The remnant of an estate that the grantor holds after granting a life estate to another person.

License

The revocable permission for a temporary use of land - a personal right that cannot be sold or assigned to another.

Undivided Interests (Estate)

Two or more parties share ownership.

Joint venture

Two or more persons or entities entering into a common venture.