Chapter 5: Interests in Real Estate

Leases Can be Discharged Due To:

- Lease can come to an end - Property is destroyed - Subleasing - original tenant is still involved - Process of assignment - new tenant assumes all responsibility.

Avulsion

A SUDDEN and perceptible loss of land by the action of water as by a sudden change in the course of a river.

Lease

A contract between an owner and tenant, setting forth conditions upon which the tenant may occupy and use the property and the term of the occupancy. Valid Lease contract includes: Offer and Acceptance, and consideration (rent payment).

Lien

A form of encumbrance which usually makes specific property security for the payment of a debt or discharge of an obligation. Types: General, Specific, Voluntary, involuntary.

Net Lease

A lease requiring the tenant to pay not only rent but also costs incurred in maintaining the property, including taxes, insurance, utilities, and repairs. 3 Types: - Single Net Lease = Tenant pays rent + property taxes - Double Net Lease = Rent + property taxes + insurance - Triple Net Lease = Rent + property taxes + insurance + maintenance

Graduated Lease

A lease which provides for a varying rental rate, often based upon a future determination; sometimes rent is based upon the result of periodic appraisals; used largely in long-term leases.

Judgment Lien / Equitable Lien

A legal claim on all of the property of a judgment debtor which enables the judgment creditor to have the property sold for payment of the amount of the judgment.

Confession of Judgment Clauses

A legal device - usually a clause within a contract - in which a debtor agrees to allow a creditor, upon the nonoccurrence of a payment, to obtain a judgment against the debtor, often without advanced notice or a hearing.

Mechanic's Lien (Statutory Lien)

A lien created by statute which exists against real property in favor of persons who have performed work or furnished materials for the improvement of the real property.

Involuntary Lien

A lien imposed against property without consent of an owner.

Tax Lein (Statutory Lien)

A lien imposed by law upon a property to secure the payment of taxes.

General Lien

A lien on all the property of a debtor

Specific Lien

A lien that attaches to one specific property only.

Dominant Tenement

A parcel of real property that has an easement over another piece of property (the servient estate).

Servient Tenement

A parcel of real property that is encumbered by an easement of a dominant estate.

Remainderman

A person who inherits or is entitled to inherit property upon the termination of the estate of the former owner.

Easement

A right, privilege or interest limited to a specific purpose which one party has in the land of another.

Leasehold Estate

A tenant's right to occupy real estate during the term of the lease. This is a personal property interest. (4 Types) Estate for Years Periodic Estate Estate at Will Estate at Sufferance

Fee Simple Estate

Absolute ownership with all the rights associated with ownership of real property

Accretion

Accession by natural forces, e.g., alluvium.

Leasehold Improvements

Alterations or improvements to leased property such as partitions and storefronts. Must be made with Landlord permission.

Accession

An addition to property through the efforts of man or by natural forces.

Ground Lease

An agreement for the use of the land only, sometimes secured by improvements placed on the land by the user. CAN BE BUILT UPON. Many corporations like b/c less capital is needed to get the land so they can put more into constructing and running their business. Responsible for all construction costs and all other costs.

Subleasing

An arrangement in which the original tenant leases the property to another tenant.

Easement by Condemnation

An easement created by the government or government agency that has exercised its right under eminent domain.

Easement by Implication

An easement that is not created by express statements between the parties; but as a result of surrounding circumstances that dictate that an easement must have been intended by the parties.

Estate at Sufferance

An estate arising when the tenant wrongfully holds over after the expiration of the term. The landlord has the choice of evicting the tenant as a trespasser or accepting such tenant for a similar term and under the condition of the tenant's previous lease agreement. Also called a tenancy at sufferance.

Life Estate

An estate or interest in real property, which is held for the duration of the life of some certain person. It may be limited by the life of the person holding it or by the life of some other person. per autre vie = life estate based on somebody else's life When that person passes, property will be transferred back to grantor if no remaindermen are specified.

Remainder

An estate which takes effect after the termination of the prior estate, such as a life estate. A future possessory interest in real estate.

Fee Simple Absolute

An inheritable estate in land providing the greatest interest of any form of title. Alienable - Right to transfer owner's rights/sell Devisable - Owner has a right to create a will that grants ownership top somebody after they pass. Descendible - The rights of fee simple absolute ownership are inheritable

Periodic Estate

An interest in land where there is no definite termination date but the rental period is fixed at a certain sum per week, month, or year. Also called an estate from period to period. To end lease, either party needs to provide notice.

Estate for Years

An interest in lands by virtue of a contract of a contract for the possession of them for a definite and limited period of time. May be for a year or less. A lease may be said to be an estate for years.

Lessor

An owner who enters into a lease agreement with a tenant; a landlord.

Encroachment

An unlawful intrusion onto another's adjacent property by improvements to real property, e.g., a swimming pool built across a property line.

Constructive Eviction

Any disturbance of the tenant's possession of the lease premises by the landlord whereby the premises are rendered unfit or unsuitable for the purpose for which they were leased.

Voluntary Lien

Any lien placed on property with consent of, or as a result of, the voluntary act of the owner.

Encumbrance

Anything which affects or limits the fee simple title to or value of property, e.g., mortgages or easements.

Taxation

Enforced charge extracted of personal, corporations and organizations by the government to be used to support government services and programs.

Oil and Gas Lease

Gives the tenant the right to extract oil and gas from a specific property. Often include royalties to the owner.

Easement by Prescription

Implied easements granted after the dominant estate has used the property in a hostile, continuous, and open manner for a statutorily prescribed number of years.

Uniform Residential Landlord and Tenant Act (URLTA)

Law that provides rules and regulations for tenant and landlord

1/12 (One Twelfth)

Lenders can include this much of the estimated annual property tax bill with each month's mortgage payment. Money is set aside in an escrow account and the lender handles sending the tax payment to the county on a semi-annual/annual basis. SAME PROCESS WITH INS If no money is in escrow, owners are responsible for tax amounts in full (i.e when there is no mortgage).

Deed Restrictions

Limitations in the deed to a property that dictate certain uses that may or may not be made of the property.

Lessee

One who contracts to rent, occupy, and use property under a lease agreement; a tenant.

The PA Landlord/Tenant Act

Only requires leases longer than 3 years to be in writing A landlord cannot require a security deposit higher than 2 months of rent; has to be placed in an escrow account and reserved to pay for damages. If no damage has occurred in the first year, the money is returned to the tenant.

Four Governmental Powers in RE

P.E.T.E Police Power - Make/Enforce Laws; Rent Controls, Zoning laws, Building codes. Eminent Domain (Condemnation, Expropriation, Appropriation) - The right of the government to take private land for public use/economic development. Taxation - Federal govt cannot tax real property; state/local govts can however. Escheat - Property that was publicly owned being reverted to the state when the owner dies and there are no heirs. ONLY STATE GOVTS CAN USE ESCHEAT AUTHORITY.

Easement by Necessity

Parcels without access to a public way may have an easement of access over adjacent land if crossing that land is absolutely necessary to reach the landlocked parcel and there has been some original intent to provide the lot with access.

Percentage Lease

Rent amount is based on how much business the tenant brings in at that location on a monthly/annual basis.

License

Special permission to access someone else's real property for a specific purpose. Not a property right. Do not need to be in writing. Terminate when the real property is sold.

Condemnation (Eminent Domain)

THE ACTUAL ACT of taking private property for public use by a political subdivision upon payment to owner of just compensation.

Eminent Domain

THE RIGHT of the government to acquire property for necessary public or quasi-public use by condition; the owner must be fairly compensated.

Gross Lease

Tenant pays rents, landlord pays all expenses of property; most common form of residential lease. Can be modified to where tenant pays utilities.

Covenants, Conditions, and Restrictions (CC&Rs)

The basic rules establishing the rights and obligations of owners of real property within a subdivision or other tract of land in relation to other owners within the same subdivision or tract and in relation to an association of owners organized for the purpose of operating and maintaining property commonly owned by the individual owners.

Easement by Grant

The creation of an easement by one party expressly transferring the easement to another party.

Alluvium

The gradual increase of the earth on a shore on an ocean or bank of a stream resulting from the action of the water.

Life Tenant

The holder of a life estate. Does not have the right to do anything that could impact the interest of the remaindermen. (i.e cannot sell w/o remaindermen approval).

Reversionary Interest

The interest which a person has in lands or other property, upon the termination of the preceding estate. A future interest.

Estate at Will

The occupation of lands and tenements by a tenant for an indefinite period, terminable by one or both parties. No formal lease agreement in place. Rather, providing a favor for somebody.

Priority of Lien

The order in which liens are given legal precedence or preference.

Right of First Refusal

The property will be offered to the tenant before it is offered to anyone else for sale.

Actual Eviction

The removal of a tenant by the landlord because the tenant breached a condition of a lease or another rental contract.

Riparian Rights

The right of a landowner whose land borders on a stream or watercourse to use and enjoy the water which is adjacent to or flows over the owner's land provided such use does not injure other riparian owners. "R" - Riparian/River

Littoral Rights

The right of a property owner whose land borders on a body of water, such as a lake, ocean or sea, to reasonable use and enjoyment of the shore and water the property borders on. "L" - Littoral/Lake

Police Power

The right of the State to enact laws and enforce them for the order, safety, health, morals and general welfare of the public.

Freehold Estate

The right to own land with no fixed time period associated with the ownership.

Fee Simple Determinable/Defeasible

The rights to use and enjoy real property end when a pre-defined event or condition occurs. At that point, full ownership reverts back to the grantor (Or the grantor's heirs).

Erosion

The wearing away of land by the act of water, wind, or glacial ice.

Rent Controls

When a local government limits the amount of rent certain tenants can be charged by their landlords

Easement Appurtenant

a right of use that continues from owner to owner that involves a relationship between two parcels of land: a dominant parcel that benefits from a servient parcel Affirmative - Allows the dominant tenement to physically cross the servient estate Negative - Does not allow for physical crossing

Warranty of Habitability

the obligation of a landlord to make repairs necessary to keep the premises fit to live in. Housing codes may prescribe in detail the required conditions of property If the landlord doesn't make repairs in a reasonable time frame; tenant has 3 options: - Cancel the lease and move - Make repairs/ hire someone to make the repairs and deduct cost from rent - Withhold some/all of the rent pending resolution of the issue.

Easements in Gross

utility easements; does not terminate with transfer of title.