Chapter 8

Bundle of Rights

These rights have both tangible and intangible components. The tangible components are fairly obvious. They include such things as the land, the improvements, the fixtures, the trees and the plants. § e intangible rights that are part of the bundle include the rights to sell, lease, encumber, use, enjoy, exclude, devise by will, occupy, cultivate, explore, license, dedicate, give away, share, mortgage, trade, and exchange.

Homestead

A homestead is one's principal residence. Homestead laws protect family members against losing their homes to general creditors attempting to collect on debts. New York does not recognize a homestead estate.

Life Estate

A life estate is a freehold estate that is limited in duration to the life of the owner or other named person. Upon the death of the owner or other named individual, the estate passes to the original owner or another named party. The holder of a life estate is called the life tenant. The life tenant does not have the right to pass ownership to his or her heirs. o The distinguishing characteristics of the life estate are: The owner enjoys full ownership rights during the estate period. Holders of the future interest own either a reversionary or a remainder interest. The estate may be created by agreement between private parties, or it may be created by law under prescribed circumstances.

Act of Waste

A life tenant has the responsibility to protect the property for the remainderman or the reversionary interest. He or she may not do injury to the property in any way. If the life tenant damages or misuses the property, it is known as an act of waste. Some examples of acts of waste would include: Using the property for something other than was intended; Causing a fire that destroys the home; Neglecting to pay property taxes; Conducting activities that would decrease the value of the property.

Parcel

A parcel, or tract, of land is a section of land defined by boundaries

Partition

A partition suit can terminate a joint tenancy or a tenancy in common. Foreclosure and bankruptcy can also terminate these estates. A partition suit is a legal way for an owner to dispose of his or her interest against the wishes of other co-owners. The suit petitions the court to divide, or partition, the property physically, according to the owner's respective rights and interests. If this can't be done, the court may order the property sold and the proceeds divided among the co-owners.

Fixture

A personal property item that has been permanently attached to land or a building is called a fixture and it becomes part of the real estate. Typical examples are toilets, water pumps, septic tanks and window shutters. The owner of real property essentially owns all fixtures belonging to the real property. When the owner sells the property, the buyer gets the rights to all fixtures. Note: Fixtures not included in the sale must be listed and excluded in the sale contract.

Real Estate

A simple definition of real estate is that it is air, water, land, and everything affixed to the land. When someone owns a parcel of real estate, he or she also has a set of legal rights that are attached to the ownership of that parcel. These rights have value and can be sold. In general, when a buyer purchases real estate, he or she is buying the rights that were held by the previous owner, the seller. Real estate is not only made up of land, but also all of the man-made structures that are "permanently" attached to the land. Real estate would then include, in addition to land, such things as fences, streets, buildings, wells, sewers, utilities, sidewalks and piers. Such man-made structures attached to the land are called improvements. The phrase "permanently attached" refers primarily to the intention of the person who attached the item. We can now define real estate as the physical land at the earth's surface, extending downward to the center of the earth and upward into space, PLUS all the items permanently attached to that land by nature or humans.

Air Rights

Air rights apply to the space above the surface boundaries of the land, outlined by imaginary vertical lines that extend to infinity. In many large cities, air rights over railroads have been purchased to build large office buildings. This was the case with the Met-Life Building in New York City. Since the beginning of airplane flight, air rights have been restricted to allow planes to fly over a person's property, as long as the flights do not interfere with the owner's use and enjoyment of the property. Governments and airports often purchase air rights next to an airport to allow for their glide patterns.

Estate for Years

An estate for years is a type of leasehold estate that lasts for a specific period of time. The beginning and ending dates are specified in the lease, along with the amount paid in rent. No notice is required to vacate, as the tenant is expected to vacate at the end of the lease.

Undivided Interest

An undivided interest is an owner's interest in a property in which two or more parties share ownership. The terms "undivided" and "indivisible" signify that the owner's interest is in a fractional part of the entire estate, not in a physical portion of the real property itself. If two co-owners have an undivided equal interest, one owner may not claim the northern half of the property for his or her exclusive use.

Curtsey/Dower

Dower is a wife's life estate interest in the husband's property. When the husband dies, the wife can make a claim to portions of the decedent's property. Curtesy is the identical right enjoyed by the husband in a deceased wife's property. Property acquired under dower laws is owned by the surviving spouse for the duration of his or her lifetime. New York no longer recognizes dower and curtesy

Escheat

Escheat is a common law doctrine that operates to ensure that property is not left in limbo and without an owner. It originally referred to a number of situations where a legal interest in land was destroyed by operation of law, so that the ownership of the land reverted to the immediately superior feudal lord. Today, the term is applied to the transfer of the title to a person's property to the state when the person dies intestate without any other person capable of taking the property as heir. In some jurisdictions, escheat can also occur when an entity (such as a bank) holds money or property (such as an account in that bank) and the property goes unclaimed. In many jurisdictions, if the owner cannot be located, such property can be escheated to the government.

Remainder Interests/Remainderman

If a life estate names a third party to receive title to the property upon the death of the life tenant, the party enjoys a future interest called a remainder interest or a remainder estate.

Severalty

Held by only one owner. If a single party owns the fee or life estate, the ownership is an estate (ownership) in severalty. Synonyms are sole ownership and tenancy in severalty. This type of ownership severs or separates from any form of coownership. When the sole owner is a husband or wife, the property is separate property. The owning spouse holds the title separately from his or her spouse. The estate of a deceased tenant in severalty passes to heirs by probate.

Reversionary Interest

If no remainder estate is established, the estate reverts to the original owner or the owner's heirs. For example, Mr. Smith gives his home to his ill cousin Jim with the stipulation that when Jim dies, the home will revert to Mr. Smith or his heirs. In this situation, Mr. Smith owns a reversionary interest.

Right of Survivorship

In New York, joint tenants enjoy rights of survivorship. That means if a joint tenant dies, all interests and rights pass to the surviving joint tenants free from any claims of creditors or heirs. When only one joint tenant survives, the survivor's interest becomes an estate in severalty, and the joint tenancy is terminated. The estate will then be probated upon the severalty owner's death. The survivorship feature of joint tenancy presents an advantage to tenancy in common, in that interests pass without probate proceedings. On the other hand, joint tenants relinquish any ability to will their interest to parties outside of the tenancy

Joint Tenancy

In a joint tenancy, two or more persons collectively own a property as if they were a single person. Rights and interests are indivisible and equal. Each has a shared interest in the whole property which cannot be divided up. Joint tenants may only convey their interests to outside parties as tenant-incommon interests. One cannot convey a joint tenant interest. The defining characteristics and requirements of joint tenancy are: unity of ownership, equal ownership, transfer of interest, and survivorship. To create a joint tenancy, all owners must acquire the property at the same time, use the same deed, acquire equal interests, and share in equal rights of possession. These are referred to as the four unities: unity of time, unity of title, unity of interest, and unity of possession.

Beneficiary

In an estate in trust, a fee owner—the grantor or trustor—transfers legal title to a fiduciary—the trustee—who holds and manages the estate for the benefit of another party, the beneficiary. The trust may be created by a deed, will, or trust agreement. The trustee has fiduciary duties to the trustor and the beneficiary to maintain the condition and value of the property. The specific responsibilities and authorities are set forth in the trust agreement.

Trustee/Trustor

In an estate in trust, a fee owner—the grantor or trustor—transfers legal title to a fiduciary—the trustee—who holds and manages the estate for the benefit of another party, the beneficiary. The trust may be created by a deed, will, or trust agreement. The trustee has fiduciary duties to the trustor and the beneficiary to maintain the condition and value of the property. The specific responsibilities and authorities are set forth in the trust agreement.

Joint Venture

Joint ventures are partnerships for a single undertaking rather than a continuing business. Because the joint venture is set up for a limited purpose, the implied authority of the members is more limited than in general partnerships. A joint venture can take on a number of different partnership forms. The most common is the limited partnership. As is the case with all partnerships, there must be at least one general partner and any number of limited partners. Generally, in real estate, limited partners are the investors that provide most of the equity capital, while general partners are usually responsible for managing the partnership assets and they may contribute a relatively small amount of the required capital. Limited partners are generally very restricted in the management of a joint venture. A member of a joint venture partnership does not necessarily have the power to bind the other joint venture partners. Since a joint venture is considered a partnership, it is taxed in the same way as a partnership; that is, the individual joint venture members are responsible for paying the taxes. Joint venture members also have the joint and several liability of partners with regard to third parties. However, unlike a partnership, one joint venture member can sue the joint venture. Also, while the death of a partner in a partnership automatically terminates the partnership, the death of a joint venture member does not necessarily dissolve the joint venture. A managing partner typically has control of the joint venture

Littoral Rights

Littoral rights concern properties that border bodies of water that are not moving, such as lakes, bays, seas and oceans. Owners of properties bordering a navigable, non-moving body of water enjoy the littoral right of unrestricted use but own the land only up to the high water mark. They do not own the water or the land under the water. The water and land beneath it are public property owned by the state. However, if a body of water, such as a lake or pond, is entirely contained within the boundaries of an owner's property, he or she would own the water as well as the unrestricted right to use it. Littoral rights attach to the property. That means, unlike subsurface or air rights, they cannot be sold separately or kept when the property is sold. When the property is sold, the littoral rights transfer with the property to the new owner

Chattel

Personal property is sometimes referred to as chattels or personalty. This word evolved from the word cattle, one of man's earliest important possessions. Chattels real are annexed to real estate, whereas chattels personal are movable. Chattels are transferred by means of a bill of sale. The Uniform Commercial Code regulates the transfer of chattels and the use of chattels as security for debts.

Special Purpose Real Estate

Property that does not fall into one of the above categories. It has a unique use to the persons who own and use it, such as churches, hospitals, schools and government buildings. Other types of property that fall into the special use category include: Public open space—usually owned by private persons or the government and includes undeveloped shorelines, public parks and lakes; Recreational areas, such as parks, water access areas, trails and shorelines. These are usually preserved for ecological or educational reasons. In New York, these areas are supervised by the local government, the Department of Environmental Conservation (DEC), and/or the Office of Parks, Recreation and Historic Preservation (OPRHP).

Illiquidity

Real estate suffers from illiquidity—meaning that it is not quickly or easily converted to cash, as short-term investments in stocks are.

Riparian Rights

Riparian rights concern properties that border moving water such as streams and rivers. If a property borders a stream or river, the owner's riparian rights are determined by whether the water is navigable or not navigable. If the property borders a non-navigable stream, the owner enjoys unrestricted use of the water and owns the land beneath the stream to the stream's midpoint. If the property borders a navigable stream, the stream is considered to be a public easement. In such a case, the owner's property extends to the high water mark as opposed to the midpoint of the stream. The state owns the land beneath the water. Riparian rights to use flowing water are subject to the following conditions: The usage is reasonable and does not infringe on the riparian rights of other owners downstream; The usage does not pollute the water; The usage does not impede or alter the course of the water flow. Like littoral rights, riparian rights attach to the property.

Tenancy by the Entirety

Tenancy by the entirety is a form of ownership reserved exclusively for husband and wife. It features survivorship, equal interests, and limited exposure to foreclosure. In New York, the transfer of property to a married couple is automatically a tenancy by entirety unless the deed says otherwise. If a couple divorces, the tenancy by entirety dissolves and the individuals become tenants in common.

Fee Simple Estate

The fee simple estate is the highest form of ownership interest one can acquire in real estate. It includes the complete bundle of rights and the tenancy is unlimited. The fee simple interest is also called the "fee interest," or simply the "fee." The owner of the fee simple interest is called the fee tenant.

Personal Property

The ownership of anything which is not real estate, along with the rights associated with owning the personal property item. Unlike real property, personal property is readily movable from one location to another. Personal property is sometimes referred to as chattels or personalty. This word evolved from the word cattle, one of man's earliest important possessions. Chattels real are annexed to real estate, whereas chattels personal are movable. Chattels are transferred by means of a bill of sale. The Uniform Commercial Code regulates the transfer of chattels and the use of chattels as security for debts

Real Property

The ownership of real estate and the bundle of rights associated with owning the real estate.

Unities of Interest, Possession, Time, and Title

To create a joint tenancy, all owners must acquire the property at the same time, use the same deed, acquire equal interests, and share in equal rights of possession. These are referred to as the four unities: Unity of Time- All parties must acquire the joint interest at the same time; Unity of Title- All parties must acquire the property in the same deed of conveyance; Unity of Interest- All parties must receive equal undivided interests; Unity of Possession- All parties must receive the same rights of possession.

Trade Fixtures

Trade fixtures, or chattel fixtures, are items of a tenant's personal property that the tenant has temporarily attached to a landlord's real property in order to conduct business. Trade fixtures may be detached and removed before the lease is up or at the time the tenant vacates the property. If the tenant fails to remove a trade fixture, it may become the property of the landlord through accession. From that point on, the fixture is considered real property. Examples of trade fixtures include a grocer's food freezers, a merchant's clothes racks, a tavern owner's bar, a dairy's milking machines and a printer's printing press.