Property and Business Organizations.

Three different types of property:

1. Real property. 2. Personal property. 3. Intellectual property.

Advantages of a sole proprietorship: a. No organizational fees. b. The sole owner makes all decisions and has full control of business. c. The sole proprietor owns all of the business and has the right to receive all of the business's profits. d. Net earnings are not subject to business tax but are taxed as personal income. e. A sole proprietorship can be easily transferred or sold if and when the owner desires to do so.

Disadvantages of a sole proprietorship: a. Unlimited personal liability b. Debts c. No limitations to risk d. Investment capital is limited to the sole proprietor and any loans they can obtain. e. The sole proprietor is legally responsible for the business's contracts and the torts committed by the proprietor.

Franchising

Established when one party licenses another party to use the franchisor's trade name, trademarks, commercial symbols, patents, copyrights, and other property in the distribution and selling of goods and services. Franchisor- The party granting the franchise. Franchisee - The person to whom the franchise is granted.

Negligence Business Judgment Rule

Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business Directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment

Formation of a Partnership: a. A partnership is a voluntary association b. Partnership name c. The partnership agreement d. Right to participate in management e. Right to an accounting f. Partners' rights to share in profits g. Tort liability

Partnership Agreement: a. May be oral, written, or implied from the conduct of the parties. b. A written partnership agreement is called a partnership agreement or articles of partnership. c. Partners can agree to anything, except terms that are illegal.

Cooperations

Separate legal entity and known as legal person. Can sue or be sued in their own name, enter and enforce contracts, hold title to and transfer property as well as be found liable for violation of a criminal or civil nature. Include shareholders, board of directors, corporate officers and employees.

Classification of Corporations

>>Domestic- corporation in the state in which it is formed. >>Foreign- corporation in any state or jurisdiction other than the one it is formed in. >>Corporation that is incorporated in New Jersey does buisiness in New York. >>Alien corporation- incorporated in another country

Co-ops / Cooperative

A Cooperative is a form of co-ownership of a multiple-dwelling building in which a corporation owns the building and the residents own shares in the corporation. >>Each Cooperative owner leases a unit in the building from the corporation under a renewable, long-term, proprietary lease. >>Cooperative owners may not sell their shares or sublease their units without approval from the other owners.

Personal Property

Personal Property consists of everything that is not real property. Examples: furniture, pictures, other portable household items. Personal Property that is permanently affixed to land or buildings is called a Fixture. *Examples: heating systems and storm windows.

Intellectual Property

Personal property that includes knowledge way of doing things and expressions of ideas.

General partnership

Pooling of capital resources and the business or professional talents of two or more individuals with the goal of making a profit. >>General partners, or partners are personally liable for the debts and obligations of the partnership. >>Rights and duties are established in the partnership agreement and by law.

Real Property

Real Property includes the land itself, as well as the buildings, trees, soil, minerals, timber, plants, and any other property that is permanently attached to it, such as: a.Land and Buildings b.Subsurface Rights (mineral rights) c.Air Rights (the air above the building) d.Plant Life and Vegetation (natural and cultivated) e.Fixtures

Duty of care

A duty that corporate directors and officers have to use CARE and DILIGENCE when acting on behalf of the corporation.

Duty of Loyalty

A duty that directors and officers have: >>Not to act adversely to the interests of the corporation, and >>To subordinate their personal interests to those of the corporation and its shareholders. Breach of the duty of loyalty usually occurs because of intentional conduct.

Limited liability partnership

A partnership in which at least one partner has a liability limited to the loss of capital contribution made to the partnership.

Adverse possession * Property owned by federal and state governments are not subject to Adverse Possession.

A person who wrongfully possesses someone else's real property obtains title to that property if certain statutory requirements are met.

Limited partnership

A type of partnership that has two types of partners: a. General Partners - who invest capital, manage the business, and are personally liable for partnership debts. b. Limited Partners - who invest capital but do not participate in management and are not personally liable for partnership debts beyond their capital contribution.

Easements

An Easement is an interest in land that gives the holder the right to make limited use of another's property without taking anything from it. *Examples of Easements include: driveways, party walls, and rights-of-way. Easements may be expressly created: a.By a Grant, where an owner gives another party an easement across his or her property. b.By a Reservation, where an owner sells land that he or she owns but reserves an easement of the land.

Licensing

An arrangement whereby a party that owns rights to intellectual property - such as software, a novel, or animated characters. >>Contracts with another party to allow that party to use the licensed rights. Licensor - Party that grants the license. Licensee - Party who receives the license.

Limited liability company

An incorporated business entity that combines the most favorable attributes of general partnerships, limited partnerships, and corporations.

Concurrent Ownership

Concurrent or Co-Ownership is when two or more people own a piece of real property. Forms of Co-Ownership: a. Joint Tenancy b. Tenancy in Common c. Tenancy by the Entirety d. Community Property e. Condominium f. Cooperative

Condominiums

Condominiums are a form of ownership in multiple-dwelling buildings. Purchasers of a Condominium: a. Have title to their individual units. b. Own the common areas (hallways, elevators, parking lots, recreational facilities) as tenants in common with the other owners. c. May sell or mortgage their units without the permission of the other owners.

Sole proprietorship

Sole proprietorship is the simplest business form also known as a Individual proprietorship. The business is not a separate legal entity. Sole proprietorships are the most common form of business organization in the United States. Examples: a. Local flower shops b. Artists c. Musicians

Formation Agreement of LLC.

a. An agreement that regulates affairs of the company and the conduct of its business and governs relations among the members, managers, and company. b. The operating agreement may be amended by the approval of all the members unless otherwise provided in the agreement. c. May be oral, but usually written.

Formation of a Corporation

a. Corporations are creatures of statute b. Select a state for incorporation followed by submitting forms to a government official. c. Corporations may conduct business in states other than the incorporated state. d. Article of incorporation outlines basic rights of owners and structure of the company. e. Upon filing appropriate documentation, an organizational meeting must be held. f. The directors adopt the bylaws, elect corporate officers and conduct other business necessary for the corporation.

S Corporations C Corporations

a. Corporations usually pay corporate income taxes to federal and state governments. b. To avoid double taxation, corporations may elect to be an S corporation which does not pay income tax at the corporate level. a. Does not qualify to be taxed as an S Corporation. b. Corporations with more than 75 shareholders is a C corporation.

Two Types of Easements

a. Easements Appurtenant: created when the owner of one piece of land is given an easement over an adjacent piece of land. >>The land over which the Easement is granted is called the Servient Estate >>The land that benefits from the Easement is called the Dominant Estate. >> Elements of an Easement Appurtenant (PING) - Prescription, Implication, Necessity, Grant. b. Easements in Gross: authorizes a person who does not own adjacent land the right to use another's land. >>Examples of Easements in Gross - those granted to run power, telephone, and cable lines across an owner's property. >>The Easement Holder owes a duty to maintain and repair the Easement.

Rights associated with property ownership

a. Possess it (means you have the right to occupy the land and structures on it) b. Use it (the owner can building things on it, keeping personal property on it and doing whatever it is you do) c. Exclude others from it (keep others off your land) d. Transfer it to someone else

The different types of business entities

a. Sole Proprietorships b. General Partnerships c. Limited Partnerships d. Limited Liability Partnerships e. Limited Liability Company f. Franchising g. Licensing h. Cooperations

Formation of Limited Partnership:

a. The creation of limited partnerships is formal and requires public disclosure. b. The entity must comply with the statutory requirements of the RULPA or other state statute. c. Certificate of Limited Partnership - a document that two or more persons must execute and sign that makes the limited partnership legal and binding. d. Limited Partnership Agreement - a document that sets forth: >>The rights and duties of the general and limited partners; and >>The terms and conditions regarding the operation, dissolution, and termination of the limited partnership.

Under Adverse Possession, the transfer of property is involuntary and does not require the delivery of a deed. To obtain title under adverse possession, the wrongful possession must be:

a.For a statutorily prescribed period of time (usually between 10 and 20 years). b.Open, visible, and notorious (the adverse possessor must occupy the property so as to put the owner on notice of the possession). c.Actual and exclusive (the adverse possessor must physically occupy the premises). d.Continuous and peaceful (the occupancy must be uninterrupted for the required statutory period; any break in normal occupancy terminates adverse possession). e.Hostile and adverse (the possessor must occupy the property without the express or implied permission of the owner).