Aceable Agent Level 1 - Chapter 6

What are Land Trusts?

- A kind of trust in which land is purchased to be held for a long period of time for the benefit of a named party. - A trustor transfers title of a property to a trustee, and names themselves the beneficiary. - The beneficiary advises the trustee in the management of the property.

Co-ops Continued: What is the Primary Advantage of the housing cooperative?

- A primary advantage of the housing cooperative is the pooling of the member's resources so buying power is leveraged. - This lowers the cost per member in all the services and products associated with home ownership. - Ex: Members of a co-op all pooling their money together to buy a pool to lower cost per member.

What is a Testamentary Trust?

- A trust created by will or testament. - Takes effect upon the passing of the trustor. - Because this trust takes effect upon the passing of the trustor, the trustor will never play the roles of trustee or beneficiary. - Other than that, testamentary trusts serve the same function as living trusts do; transferring assets to the ultimate beneficiary.

Type of Common Ownership Property: What are Planned Unit Developments?

- Also know as PUD, planned unit developments can consist of attached townhouses or unattached homes, but they are differentiated from condos by the fact that a buyer purchases both the structure itself AND the land it sits on. - As with condos, common elements are shared. - Unlike condos, PUD ownership includes the land beneath the dwelling and the outside of the dwelling.

Type of ownership: What is Ownership in Severalty?

- Also known as tenancy in severalty. - One person exclusively owns the property. - Think of the word severed, to remember that owners are separated from sharing.

Condos Continued: Who owns the common areas and who pays for its maintenance?

- Any common areas outside the unit are owned collectively by all unit owners. - These areas, such as swimming pools and laundry rooms, are often called common elements. - Condo owners pay homeowner association dues (HOA dues) to pay for the maintenance of the common elements.

What are CC&Rs?

- CC&R stands for covenants, conditions, and restrictions. - They are used by many common ownership properties to regulate the use, appearance, and maintenance of property.

Type of co-ownership: What is Tenancy in Common?

- Co-ownership featuring individual and undivided interest in the property, including rights of inheritance rather than survivorship. - Not intended for ownership by legal spouses. - Only requires one unity: the unity of possession. - Interest in property can be owned in unequal shares. - Termination can be accomplished through death or partition (divide estate by court oder).

Type of co-ownership: What is Joint Tenancy?

- Co-ownership in which the parties have an equal and undivided interest in the property. - It includes the right of survivorship rather than inheritance. - Requires all four unities. - Only transferable by deed (a formal, legal document). - Termination can be accomplished through death or partition (divide estate by court oder).

Type of Common Ownership Property: What are Condominiums (or Condos)?

- Dwellings that may or may not share walls with other housing units. - Condo owners do NOT own the land on which their unit stands, nor do they own the exterior of the building (not in the way that townhouse owners do). - Condo owners own the inside of their residential unit. - Ex: Jim owns Unit 147 in building A, he owns the inside of Unit 147, but he does not own the hallway in which he walks to his unit.

Type of Common Ownership Property: What are Co-ops (cooperatives)?

- Formed when a legal entity, usually a corporation, owns real estate consisting of one or more residential buildings. - The corporation is membership-based, with membership granted by way of a share purchase (stock) in the corporation that owns the building(s).

Type of co-ownership: What is Tenancy by the Entirety?

- Legal spouses each hold an equal and undivided interest in the property. - Can not be conveyed or encumbered (restricted) without consent of the other. - Co-owners are a single and indivisible unit... requires the fifth unity, unity of person, and all four unities. - Termination can be accomplished through death, agreement, or divorce. - If by divorce, their tenancy by the entirety automatically becomes a tenancy in common.

Do Tenancy in Common and Joint Tenancy both require equal ownership?

- Owners under tenancy in common can own different percentages of ownership. - Owners under joint tenancy must share equal ownership.

Does Tenancy in Common include rights of inheritance or rights of survivorship? How about Joint Tenancy?

- Tenancy in common includes rights of inheritance. - Joint tenancy includes the right of survivorship.

Planned Unit Developments Continued: Which parts of the PUD are shared and which parts are privately owned?

- The PUD owner may exclusively own their own roofs, garages, and private yards or patios. - As part of the offering documents, the developer will outline which parts of the PUD are shared and which parts are privately owned. - Like condo and co-op owners, PUD owners pay HOA dues for maintenance of the common elements. - Like with any development, PUDs can come with CC&Rs, or deed restrictions, that are attached to each home's deed; restrictions are enforced by the HOA.

Type of Common Ownership Property: What are Timeshares?

- Timeshares are a form of shared property ownership, sometimes referred to as interval ownership. - In a timeshare, multiple owners have the right to use a property for a specified period each year. - Commonly located in a desirable vacation spot. - Usually, an owner has the right of exclusive use of the unit during the same time each year. - Each timeshare unit is considered an estate or interest in real property, separate and distinct from all other timeshare estates in the same unit or any other unit. Therefor, estates may be separately conveyed and encumbered.

What does Undivided Interest mean?

- Undivided interest is a type of interest that gives each co-owner the right of possession of the whole property, not simply a portion of it. - It is a shared interest.

What is Severalty?

- Undivided ownership of an estate, with an interest that is exclusive from other owners. - Another way to say ownership in severalty or tenancy in severalty.

If a married couple gets divorced, who gets how much of the jointly owned assets?

- Usually the decision of who gets how much of the jointly owned assets is something the ex-couples work out in mediation or court. - Generally, judges try to make the split equitable, if not 50-50.

What are the four types of Common Ownership Properties?

1. Co-ops (cooperatives) 2. Condos 3. Planned Unit Developments (PUDs) 4. Timeshares

What are the three ways to convey (transfer) property?

1. Deed 2. Devise 3. Descent

Planned Unit Developments Continued: What are the two forms of PUD Ownership?

1. Fee simple interest ownership of the individual unit; including the roof, garage, private yard or patio, and the land beneath all of that. 2. Tenancy in common ownership of all common areas.

Condos Continued: What are the two forms of Condominium Ownership?

1. Fee simple interest ownership of the interior of the individual unit. 2. Tenancy in common ownership (undivided interest) of all common areas.

What are the three forms of Ownership?

1. Ownership in severalty 2. Co-ownership 3. Trusts

What are the three types of Co-Ownership?

1. Tenancy in common 2. Joint tenancy 3. Tenancy by the entirety

Who are the three parties involved in a Trust?

1. Trustor: The creator of the trust. 2. Trustee: The person entrusted to hold and manage the trust assets while carrying out the trustor's wishes. *Think of the trustee as the "trusty helper" taking care of the title until the property can be transferred. 3. Beneficiary: The individual who ultimately receives the benefits or assets of the trust.

What are the Four Unities (conditions) that help identify form of Co-Ownership?

1. Unity of possession 2. Unity of interest 3. Unity of time 4. Unity of title *The fifth unity: Unity of person

If a trustor of a living trust decides to name themselves as the trustee in order to maintain control of the trust while still alive, what will need to be designated in the event of death or mental incapacitation?

Backup trustees and beneficiaries

What is the Unity of Possession?

Each co-owner has an equal right to enjoy the possession and use of the whole of the property.

What is the Unity of Interest?

Each co-owner is required to own an identical percentage of the interest in the property, and each must have an identical estate.

Common Ownership Properties: What do Co-ops, Condos, and PUDs have in common?

Each offer some combination of individual ownership AND an undivided interest or right to use common areas of a property.

What is The Fifth Unity, Unity of Person?

For legal purposes relative to ownership of the property, the co-owners are a single, indivisible unit.

What kind of ownership do married couples have over property they purchase together?

In Michigan, married couples own property they purchase together as tenancy by the entirety.

What is the Unity of Time?

Speaks to the requirement of co-owners to acquire their ownership or interests at the same time. No additional owners can be brought into the original agreement at a later date unless a completely new contact is created.

Type of ownership: What is Co-Ownership?

Two or more individuals or entities share a title and an undivided interest in real property.

What are Common Ownership Properties?

Types of property where an owner has some shared ownership with neighbors, other investors, or someone else.

What does Community Property describe?

What is joint property and what is individual property in property co-ownership.

What is a Living Trust?

- A financial planning instrument used to document and make known the intent and wishes of the trustor while the trustor is still alive. - It serves as the trustee's guide in the management of the trust's assets, keeping in mind the ultimate best interests of the beneficiary.

Type of Ownership: What are Trusts?

- "Vehicles of ownership transference." - A legal instrument through which a party can structure how they wish to transfer assets, including property, to another party. - Typically require the assistance of legal experts. - Often used as a way to reduce taxes or direct an estate.

What is Community Property?

A system of property co-ownership, most commonly applied to married couples, which describes what is joint property and what is individual property. *Michigan is not a community property state (still a term to be aware of).

Co-ops Continued: What do co-op owners purchase in exchange for the proprietary right to occupy/lease one housing unit?

As opposed to condominiums and townhome's, cooperative owners purchase stock or shares of the cooperative; they do not purchase a housing unit. However they do have to pay assessments to fund the costs of repairs and maintenance (like condo owners do).

What is the Unity of Title?

Requires co-owners to acquire their property from the same transaction, and hold their title under the same document.

What is a Partition Suit?

Legal action brought with the purpose of terminating the ownership interest of a co-owner to real property.

What is the Right of Survivorship?

The right of survivorship states that when one co-owner dies, their ownership interest reverts to the surviving co-owner.

If a married couple wants to get divorced, what kind of ownership will the property (they purchased together) become once they get divorced?

Their ownership will become tenancy in common unless the judge or their divorce agreement specifies otherwise.