NATIONAL QUIZ BANK "Forms of Ownership"

A tenant is renting a residential apartment unit. The term is month to month. When the tenant pays the rent, the leasehold tenancy renews automatically. If either party wants to terminate the arrangement, advance notice must be given to the other party. Which of the following describes the lessee's estate?

A periodic tenancy

Which of these about a condominium is FALSE?

Each owner has a proprietary lease with the association for her own unit. In a condominium, each owner has fee simple title to the unit. Owners of cooperatives have proprietary leases. In a condominium, each owner owns the common elements as tenants in common with all other unit owners. Each owner receives a separate real estate tax statement. Each owner of a condominium unit must carry her own property casualty insurance on the individual unit based on the condominium declaration. The association carries insurance for the common elements.

A property owner conveys a life estate to her uncle and names her son as remainderman. On the death of the uncle, the son will have what type of estate?

Fee simple absolute estate The son holds a remainder interest in the property and will have a fee simple absolute estate upon the death of the uncle, the life tenant. A qualified fee estate is limited by specific deed conditions created by the deed. A reversionary interest exists when a life estate will revert to the original owner at the death of the life estate owner or some other person. The son as the remainderman holds a remainder interest during the uncle's life.

Which of these BEST describes a fee simple absolute estate?

It is the maximum estate in land and lasts forever. Fee simple absolute estates, which have the largest (maximum) bundle of rights, are typically transferred from one owner to another when title is passed, so they continue on forever. A deed condition would create a fee simple defeasible or qualified estate.

The four unities of possession, interest, time, and title are associated with which of these?

Joint tenancy A joint tenancy can only be created by an intentional act and requires the four unities—equal possession, interest, and title which must all occur at the same time (PITT)—to be present. Severalty ownership is the sole possession of a property by one owner without a need for any unity of interests with other parties. Tenants in common have undivided fractional interests in a property and their fractional interests may be different. Community property is one of the ways married couples may own property together.

A property is owned by three cousins as tenants in common. If one of the cousins dies without a will, to whom will his interest pass?

The deceased cousin's heirs Death of a tenant in common would usually cause property to pass according to the decedent's will. Because the cousin died with no will, his property will pass to those persons identified in his state's laws of descent as heirs. The property would not pass to the state. The other two cousins will retain their own fractional interests in the property and remain tenants in common with the deceased cousin's heirs.

Who holds the leased fee estate?

The lessor A fee estate is an estate of ownership. The owner of the leased property holds a leased fee estate. The right of possession will revert from the lessee (the tenant) to the lessor (landlord) when the lease is over.

A property owner conveys a life estate to his cousin for the duration of the life of the cousin's grandfather. If the cousin were to die before his grandfather, how long may his heirs have possession of the property?

Until the grandfather dies The cousin's life estate is a life estate pur autre vie, a life estate based on the lifetime of another person, his grandfather. The cousin's heirs may possess the property until the grandfather dies. On the grandfather's death, the life estate ends.

Because a couple no longer needs their large house, they decide to sell it and move into a cooperative apartment building. In a cooperative, they will

become shareholders in a corporation. In a cooperative, a corporation holds title to the land and building and offers shares of stock to inhabitants of the cooperative's units. Owners in a cooperative occupy their units through proprietary leases, and their interests are treated as personal property. If the couple were to move to a condominium complex, they would own and finance their individual unit. Condominium ownership provides fee simple title to each individual unit, while a cooperative is ownership in the corporation, which owns the property.

The owner of a unit in a cooperative receives

a proprietary lease to the unit. In a cooperative, each tenant-owner receives shares in the cooperative and a proprietary lease to the owner's unit for the life of the cooperative. Cooperative owners do not own real estate and do not have fee simple interest in their units. Cooperative owners pay their portion of taxes assessed on the cooperative. A right of first refusal refers to the right of a person to have the first opportunity to lease or purchase real property. Cooperative owners own their shares as personal property.

An owner conveys a life estate to her grandson and stipulates that on her death the estate will pass to her son-in-law. The son-in-law has

a remainder interest. The owner's death will end the life estate conveyed to her grandson, which will then mean the holder of the remainder interest, the son-in-law, will have fee simple absolute ownership of the property. An estate for years is a leasehold estate that continues for any definite period. A legal life estate is a freehold estate created out of a provision.

The freehold estates of fee simple absolute, fee simple defeasible, and a life estate have all of the same attributes EXCEPT

all owners may convey title via a will to their heirs. The owners of a life estate may not transfer their ownership after death because their ownership is limited to a lifetime. All freehold estates are created in the deed, and because the holders then own the property, they are obligated to pay the expenses and taxes. All owners may lease the property; a life tenant's lease would last only as long as the life estate lasts.

A joint tenancy with right of survivorship is created

by a deed. Joint tenancy, like all ownership, is not implied by law or through any action. All tenancy is created when the deed in conveyed to the grantee. To create joint tenancy, the deed must specifically identify the parties as joint tenants. When a deed does not indicate the form of tenancy and two or more people acquire title to property, the new owners are presumed to be tenants in common. Joint tenancy is the right to survivorship, so that when an owner dies, the interest transfers directly to the surviving cotenants, not heirs. Signature by spouses does not create joint tenancy.

In a limited partnership,

each limited partner is liable for no more than his investment. In a limited partnership, each limited partner can be held liable for losses only to the extent of his investment. There is no limitation on the number of investors in the partnership. The limited partners are not legally permitted to participate in the running of the business.

In a joint tenancy, all of these are true EXCEPT

each partner has a divided share of the property. Each partner has an undivided share in the property, which gives all owners equal rights of possession. To create a joint tenancy, the unities of possession, interest, time, and title must be present. Upon the death of one joint tenant, that interest in the property is extinguished, and the other tenants hold title as the remaining joint tenants. Marriage is not a requirement of joint tenancy.

A homeowner may be allowed certain protection from the judgments of creditors as a result of a state's

homestead rights. A homestead is land that is owned and occupied as a family home. In many states, homestead rights protect or exempt a portion of the area or value of the land from judgments or debts. Littoral and prior appropriation rights, both water rights, are the rights of a homeowner to land bordering on the shore of a sea or ocean. Fee simple rights are tied to fee simple absolute ownership.

A seller sold a buyer a single-family residence. The buyer's estate was the highest form of ownership known under the law. After the close of escrow, the new owner rented out the single-family residence to a tenant. The lease was for one year, and one week after the termination of the lease, the tenant was still on the property without the permission of the new owner. What was the lessee's estate in the property?

An estate at sufferance A tenant who stays past the end of the lease without the permission of the landlord has an estate called an estate at sufferance (a.k.a. a tenancy at sufferance). This person is called a holdover tenant. Remember the holder of an estate at sufferance is the tenant, the party suffering is the property owner (because the tenant stayed beyond the termination of the lease). There are three types of freehold estates of ownership: fee simple absolute, fee simple defeasible, and a life estate. The test question focuses on the estate held by the tenant, not the owner.

A woman owns one of 20 town houses in a new development in fee simple, along with a 5% ownership share in the parking facilities, recreation center, and grounds. What type of property does she own?

Condominium When a person owns a unit in fee simple and a percentage of the rest of the development in common with the other unit owners, he holds ownership to a condominium. In a cooperative, a person does not own in fee simple but holds a proprietary lease on a unit and shares of stock in the cooperative corporation. A time-share is a real property interest with the right to use the facilities for a specified period (usually a week). In a land trust, title to real estate is conveyed to a trustee while a beneficiary retains management and control of the property.

An owner has purchased a fee simple interest in a lakefront cottage along with 6% ownership of the parking lot, laundry room, and boathouse. What kind of ownership interest has the owner bought?

Condominium unit Condominium owners have a fee simple interest in their property, along with an undivided interest in the common elements as a tenant in common of the condominium. In a time-share, the owners own a right of possession for a specified period of time, usually on a weekly basis. In a cooperative unit, the tenant-owners have a share in the cooperative and proprietary leases to their units.

Two men are co-owners in fee simple of a small office building. One of the men dies intestate and leaves nothing to be distributed to his heirs. The surviving owner is related to neither the deceased owner nor his creditor. What would explain how the surviving owner acquired the deceased owner's interest in the office building?

Joint tenancy Upon the death of an owner in a joint tenancy, all remaining interests do not pass to the heirs of the deceased owner or according to the will but to the surviving joint tenant or tenants. Reversionary rights and remainder interests refer to the future right to an estate in real property. Adverse possession occurs when a person acquires title to another's property by means of open, hostile, and continuous possession over time.

A parcel of property was purchased by two friends. The deed they received from the seller at closing conveyed the property by name to each of the two friends, with equal shares and interest. Upon death of either owner, the interest and shares will automatically become those of the other co-owner. What form of title and ownership do the friends have?

Joint tenants The deed clearly stated the requirements of joint tenancy—equal possession, interests, title all taken at the same time (PITT). Once this is established, the rights of survivorship are created. If joint tenancy is not clearly stated in the deed, grantees would take title as tenants in common. Friends are unable to hold community property or be tenants by the entirety because those forms of ownership are available only for married couples

Which of these is NOT a form of co-ownership?

Ownership in severalty Ownership in severalty occurs when a property is owned by one individual or corporation. In a tenancy in common, each cotenant owns an undivided fractional interest in a property. Tenancy by the entirety is a form of joint ownership by a married couple that allows the surviving spouse to acquire full ownership of the property upon the death of one of the spouses. Community property consists of personal and real property acquired by either spouse in a marriage and belonging to both parties to the marriage.

Under the old common law, who could terminate an estate at will?

The lessor and the lessee Under traditional common law rules, either the landlord (lessor) or the tenant (lessee) could terminate an estate at will at any time. An estate at will is a leasehold estate of possession. Note: Some states now either prohibit this type of leasehold estate or impose notice requirements for its termination. The legal document called a will sets forth how someone wants their assets distributed following death. A devisor is a person who is leaving real estate via a will. The devisee is the person who will inherit the real estate via a will, after the devisor dies.

An owner purchased an interest in a house in a resort beach community. The owner is entitled to the right of possession only between July 10 and August 4 of each year. Which type of ownership MOST likely has been purchased?

Time-share The owner holds an interest in property for a stated time each year, sharing the property according to a specified time plan. The owner's interest is a time-share. The owner of a condominium or a cooperative has a right of possession for as long as the ownership is not transferred. An individual does not own property through a trust because a trust holds title to the real estate.

Does a holdover tenant have an estate in leasehold property after the lease is over?

Yes, a less-than-freehold estate at sufferance A holdover tenant—still on the property after the lease is over—has a less-than-freehold estate at sufferance. This is the lowest estate in real property known under the law. A freehold estate in land is an estate of ownership. A fee simple defeasible estate is an estate of ownership where a violated condition might result in the loss of title to the property.

A person who owns one unit in a multiunit structure together with a specified undivided interest in the common elements as a tenant in common owns

a condominium A person who holds a fee simple title to a unit and a specified share of the undivided interest in the common elements as a tenant in common owns a condominium. In a real estate investment trust (REIT), investors own shares in an investment group fund but not in an individual property. In a cooperative, tenants own shares in a corporation, partnership, or trust that holds title to the building, with tenants having the right to occupy their own units. A time-share is a real property interest with the right to use the facilities for a specified period of time (usually a week).

A woman grants a parcel of land to a religious organization for as long as the parcel is used for religious purposes. The religious organization's ownership rights to the parcel constitute

a fee simple defeasible estate. The religious organization's ownership of the land is qualified by the limitation that the land be used for religious purposes. The limitation creates a fee simple defeasible or qualified fee estate. If the religious organization decides to use the property for some other purpose, title to the property may revert back to the woman or her heirs. A fee simple absolute estate is the highest form of real estate ownership. A life estate is limited to the life of the estate owner or some other designated person. A leasehold estate is an estate of possession only granted from the property owner to a tenant and lasts for a fixed period.

A person who has complete control of a parcel of real estate is said to own

a fee simple estate. The highest interest in real estate recognized by law is the fee simple or fee simple absolute estate, in which the holder is entitled to all rights of the property. In a fee simple estate, the property may pass to the owner's heirs upon the death of its owner. A tenant's right to possess a property for the term of a lease is called a leasehold estate. A life estate is an interest in real property that ends when the owner dies. A defeasible fee estate is a fee simple estate that can exist as long as a certain use continues or provided that the property is used for a specific purpose.

A purchaser of real estate learns that his ownership rights could continue forever and that no other person claims to be the owner or has any ownership control over the property. This person owns

a fee simple interest. Fee simple is an absolute ownership, an inheritable interest "with no strings attached." A life estate is a noninheritable freehold estate that ends with the death of the owner or the death of some other designated person. A remainder interest is tied to a life estate. A qualified fee estate exists as long as a determined use of the property continues.

A tenant who rents an apartment from the owner of the property holds

a leasehold interest. A leasehold interest is an estate of possession with limited duration. A person renting an apartment holds a leasehold interest. A license is a personal right that can be revoked and is not considered an interest in property. A freehold interest, unlike a leasehold interest, is ownership for an indeterminate period of time. An easement is the right to use the land of another person for a particular purpose, but it does not give the holder any ownership interest in the land.

Lessor and lessee negotiated the terms of a lease for a commercial office building. Both parties agreed that the start of the lease would be June 1, 2015, and the termination date of the lease would be September 1, 2015. This estate of the lessee created by the lease was

a less-than-freehold estate for years. A lessor is the technical term for landlord. A lessee is the technical term for tenant. Expect to see a lot of OR/EE terms on your exam (e.g., lessor/lessee, mortgagor/mortgagee, optionor/optionee, grantor/grantee, etc.). A good memory aid is the OR party gives and the EE party receives. The lessor gives the right to possess the leasehold property to the lessee. The lessee receives the right to possess the leasehold property from the lessor.

When defining ownership estates, the term estate refers to

a person's legal rights in the land or property. With respect to property ownership, the word estate refers to a person's legal use or the bundle of rights in land, which, depending upon the type of estate, include the right to possess, transfer, encumber, et cetera. Estates are not tied to the physical quantity or the value of the land itself. A fee simple estate is the highest estate one can hold in land because it has the most or maximum rights to the land.

A property owner conveys the ownership of his house to his mother and stipulates that on her death, ownership will revert to him. The interest the owner has in the property is

a reversionary interest. Until the mother dies, the son holds a reversionary interest. Upon death of the life tenant, the mother, the holder of the reversionary interest will return to having a fee simple absolute estate. A qualified fee estate is held as long as the owner maintains the deed condition. A homestead is protection for a primary property against certain creditors. A remainder interest belongs to a person named as a remainderman, the person—other than the creator of the estate—to whom the life estate will pass when the estate ends.

A married couple owns a farm together, with the right of survivorship. Their ownership is MOST likely

a tenancy by the entirety. A married couple, in certain states, may use a special form of co-ownership called tenancy by the entirety. Each spouse has an equal, undivided interest in the property, with the right of survivorship. Severalty ownership occurs when real estate is owned by one person only. Tenancy in common and community property forms of ownership do not include the right of survivorship.

Three friends were concurrent owners of a parcel of real estate. One of the friends died, and his interest passed according to his will to become part of his estate. The deceased friend was

a tenant in common. In a tenancy in common, the property of a deceased owner may pass to the heirs according to the will. If the deceased owner had been a joint tenant, the property would not have passed according to the will because in a joint tenancy, the property interests would have transferred directly to the other two friends (cotenants). The deceased owner was not a tenant by the entirety, a category reserved for married couples. Nor was the deceased owner a severalty owner because that form of ownership requires property to be held by only one person.

An ownership interest that is based on occupancy during a specified period is

a time-share. A real property interest with the right to use the facilities for a certain period is called a time-share. While a time-share may be sold as a leasehold or a freehold interest, time-share intervals are usually shorter intervals of time, typically weekly intervals. A leasehold interest occurs when a tenant leases a property from an owner but usually for an extended longer period of time (such as one year). A condominium owner holds a fee simple absolute ownership to the unit and owns the common elements as tenants in common with the other owners. In a cooperative, tenants own shares in a corporation, partnership, or trust that holds title to the building, with tenants having the right to occupy their own units but not having a deed.

Two women own a property together. One dies and the other now owns the property with the co-owner's heirs. The two women owned the property

as tenants in common. Under tenancy in common, when a cotenant dies, the tenant's undivided interest passes according to the will. In this case, either the deceased owner died intestate and the state law of decent gave her interest to her heirs, or she willed her undivided interest in the property to her heirs. In a joint tenancy, if one of the women died, the other would enjoy the right of survivorship and own the property in severalty. If the two original owners had formed a corporation to own the property, the death of one would not affect title to the property, which would belong to the corporation. Only married couples are allowed to own property as tenants by the entirety, and the question did not state the woman were married.

The holder of a reversionary interest in a qualified fee estate might be able to obtain title to the property

if the holder of the qualified fee estate breaks the deed condition. The holder of a reversionary interest retains the right to repossess a property if a deed condition is not met or broken. If the condition is broken, the holder of the reversionary interest can go to court to try and obtain ownership of the property. If a remainderman dies, the remainder interest in a life estate passes to the heirs. The holder of a reversionary interest does not have the right to change the conditions of a qualified fee estate. A holder of a qualified fee estate may sell the property so long as the conditions or limitations of the qualified fee estate continue.

A corporation takes title to real property

in severalty. A corporation is legally treated as a single person and may own property in severalty. A corporation, though not human, is an artificial person in the eyes of the law. A corporation is not a partnership or a trust. It does not own property with the right of survivorship established through a joint te

The major difference between joint tenancy and tenants in common is that

joint tenancy requires all ownership rights to be acquired at the same time. Joint tenancy, which offers the right of survivorship, requires possession, equal interests, title all occur at the same time (PITT). Tenants in common owners have equal rights of possession but may have unequal rights of ownership. All owners, regardless of how ownership is taken, share one deed, which conveys legal title.

A life estate conveys to the life tenant

ownership for life A conventional life estate is a freehold estate that lasts as long as the life of the life tenant. A conventional life estate occurs by a voluntary agreement of two parties. A legal life estate arises out of law, such as a spouse's dowry rights when the other spouse dies. A periodic tenancy is a less-than-freehold estate that creates the right of possession of a property from year to year. A reversionary interest exists when the creator of a life estate reserves for himself a fee simple estate once a life estate ends.

The difference between a freehold and a leasehold estate is

ownership versus possession. Freehold estates are estates of ownership, while in a leasehold estate, the property owner gives the tenant possession of the property. Tenants may agree to pay all the property expenses or share them with the owner, or the owner can pay them all. The right to purchase is not a requirement for leasehold, and there is no right of survivorship.

To create joint tenancy in the ownership of real estate, there must be unities of

possession, interest, time, and title. The equal interests of possession, interest, and title must all occur at the same time (PITT) for joint tenancy to be created.

In receiving a gift of a parcel of real estate, one of the two new owners was given an undivided 60% share, and the other received an undivided 40% share. They now hold title as

tenants in common. Tenants in common hold property with undivided fractional interests, and the shares do not have to be equal. In a joint tenancy, each owner holds equal shares and interests to the property. Community property consists of personal or real property acquired by either party in a marriage and belonging to both parties to the marriage. In a cooperative, owners own shares in a corporation, partnership, or trust, which owns a property, with each owner holding a proprietary lease and the right to occupy the unit.

Which of these is TRUE of condominium ownership?

the common elements cannot be sold separately. Although an individual unit owner owns an interest in the common elements as a tenant in common, the common elements may not be sold separately by a unit owner; unit owners do not have the same right to partition that other tenants in common have. Individual owners pay the real estate taxes for their units. Condominium owners may will or mortgage their fee simple ownership in a condominium.

A condominium form of ownership is officially established when

the developer records a declaration in the public record When a developer declares in the public record the existence of a condominium, the condominium is officially established. The declaration includes survey, legal description, bylaws, restrictive covenants, and architectural drawings. Construction of improvements, the establishment of an owners association, and the sale of individual units follow the establishment of the condominium.

Four friends decide to purchase an investment property as co-owners and take title as joint tenants. All of these are true EXCEPT

the four friends will each receive a separate deed for their share All concurrent ownership is created by one deed, which will establish either joint tenancy or tenants in common. Additionally, joint tenancy requires that four unities must be present: possession, interest, title, and time (PITT).

When property is owned in severalty,

the property owner may sell, will, or lease the property to another person. Property owned in severalty is owned by one person. The owner may be an individual or a corporation and has sole discretion to transfer the use or ownership of the property to another person. Spouses may own separate property in severalty.

Tenancy with survivorship means

the tenancy interest will pass to the surviving tenants upon the death of a co-tenant. Tenancy with survivorship, joint tenancy, means that the entire ownership remains with the surviving joint tenant or tenants. In a tenancy in common, deceased tenants' interests may be passed on to their heirs. Joint tenancy does not require a new deed upon the death of one of the tenants.