Chapter 3a

Uses of Real Property

-Residential: This means condominiums, apartment buildings, brownstones, actual homes -Commercial Retail stores, offices -Industrial Property: Specially zones property. Zoned for a specific industrial use such as manufacturing. -Vacant Land: Often sold to developers, be it a piece of land or a property with an abandoned house that one will knock down.

Land Rights

-Subsurface Rights: Minerals, oil/natural gas wells, Aquifers, anything found underneath the land itself. Has the right to sell, lease, do anything. -Air Rights: Rights from the top of the building to the sky. Tends to be important in densely populated areas and cities. Rights include build able sq footage, views, cell towers, etc. -They can lease and sell that space ex. lease space to cell towers. -Riparian rights (Water/river rights): Typically flowing, such as the ocean or a river. -Beaches do contain easements. Even if its private, people do get the right to walk across your part of the beach sometimes. -Littoral Rights- Usually still water such as a lake or pond. Owners do have the right to put a dock or boat in the water. All owners get to use the water.

The owner of a fee simple may:

1- Pledge the property as security for a debt (mortgage) 2- Convey the property to another 3- Convey a leasehold to another party 4- Grant an easement 5- Grant a license/permission to conduct some activity on the land

Joint Tenancy

50/50 or even 100% ownership in some areas of the law. Both owners can make changes, either one can rent out the property. -With "right of survivorship" -When one owner dies the entire portion of that persons estate goes to the other owner, NOT the dead persons estate.

Joint Venture

A business agreement in which the parties agree to develop, for a finite time, a new entity and new assets by contributing equity

Qualified Personal Residence Trust

A complicated trust to gift a large value property to their kids which saves tax dollars. -A property is given to a trust via a life estate. the parents must outline the terms of the trust to get the true tax savings.

Cooperative/Condo Ownership

A cooperative is a cooperation. -What is unique is that when bought, an owner does NOT get a deed or a piece of real property. An owner is getting a piece of stock, and a proprietary lease (right to live there). -New York requires one have an attorney when forming a cooperative.

Curtesy

A husband's interest upon the death of his wife in the real property of an estate that she either solely owned or inherited provided they bore a child capable of inheriting the estate is known as what...?

Estate for Years

A leasehold estate for any specific period of time. An estate for years is not automatically renewed.

Trustor

A person who conveys title to a trustee

Parcel

A piece of land under one ownership.

Offering Plan

A plan homeowners can look to to see what the plans for vacant property are. -For "air right", Lot line window which dictates if a building is being constructed, you have to cement over your windows.

Change of deed

A settlement of who gets what written into the deed after a couple owning a property splits up. They go down to the city department of finance and record it on record.

Rent stabilized tenant

A tenant has a lease like a normal renter would, but the landlord has a series of restrictions given by the government in regards to what they can and can't do. -Restriction on how much rent can be raised at a time. -Restriction on terms of eviction. -Protected from sharp increases in rent and have the right to renew their leases as long as they have paid on time and are in good standing. In other words, a landlord can't kick them out because they have someone who will pay more. -Common practice in New York City.

Trade fixture

A trade fixture is an improvement to a piece of real property. -An example is a restaurant lease- the ovens, countertops, sinks, improved the space but have become a part of the building. They will stay with the building.

Estate for Years

A traditional leasing situation in which a contract is drawn for a set amount of time and after that both parties must agree to renew it.

Trust

A trust is an arrangement whereby a person (a trustee) holds property as its nominal owner for the good of one or more beneficiaries. -An estate planning vehicle.

Subsurface Rights

A type of land right meaning, minerals, oil/natural gas wells, Aquifers, anything found underneath the land itself. Has the right to sell, lease, do anything.

Fee Simple Estate

Absolute ownership of real property; a person has this type of estate where the person is entitled to the entire property with unconditional power of disposition during the person's life and descending to the person's heirs or distributees. It includes the deed, the house, everything that comes in the house, the fixtures(appliances, chandeliers)

Personal Property is...

All of samples property except land and those interests in land that pass to their heirs. -It means someones cell phone, someones art work hung on a wall. -Can be taken with you when leaving a leasehold.

Revocable Trust

Allows the owner of a property to take a property out of a trust if they wish to.

LLC for Taxes

An LLC can serve as a pass-through tax entity, meaning any profits earned by the company are passed through the LLC and paid at the personal level.

Tendency in common

An ownership of reality by two or more persons, each of whom has an undivided interest, without the "right of survivorship". Meaning when one owner dies their share goes to the dead owners estate, NOT the other owner. -When siblings or friends own a property jointly, and split it 50/50.

Tenancy in Common

An ownership of realty by two or more persons, each of whom has an undivided interest, without the "right of survivorship". When one person dies, his share therefore goes to his estate.

Trustee

Any person who holds property, authority, or a position of trust and responsibility for the benefit of another.

Personal Property

Any property which is not real property

Banks typically do not grant mortgages on a cooperative...

Because it is NOT real property and owners do NOT get deeds of ownership. -Banks instead give notes of approval and a security agreement.

Banks typically don't lend money to an "irrevocable trust"...

Because when one transfers a full titles and rights to a property to a trust, they often can't tell how is on the hook should something happen and they need to collect on that loan.

Owners of cooperatives are limited...

Because while if an owner puts a house up for sale normally none would care because they have the right to. In a cooperative, there is a board who approves all sales and does due diligence before any action can be taken. -What can and can't be done in and to the building. Examples, Major remodels and renovation, even smoking cigarettes. An owner can not smoke inside if the board dis allows it.

Fee Simple Defeasible vs. Qualified Fee Simple

Both have qualities contingent on a certain set of conditions that if violated, makes the deed of a property in question revert back to its original owner. -The difference is that in Fee Simple Defeasible, there is a process and a court hearing. For a Qualified Fee Simple, the reversion is automatic and no court action is required.

Condominiums

Buying a building of condominiums is more expensive because owners have all the rights associated with ownership. -With more rights comes higher prices. Worth more than co-op. -Board of directors will look over a potential buyers financial capabilities to make sure they can afford the mortgages, taxes and things without default or foreclosure, but generally won't care as much as a co-op would.

C-Corp

C-Corp is always taxed at 35% and there is the concept of double taxation.

Act of Waste

Describes a cause of action that can be brought in court to address a change in condition of a property brought about by a current tenant that damages or destroys the value of that property

Estate at Will

Doesn't have a term or time limit of expression. "You are my tenant" until one or both decides to end the lease.

A fee simple estate is also known as...

Fee Simple Absolute

Fee simple ownership=

Fee simple absolute

At the end of a lease a landlord does not have to...

Give notice of termination or that a lease will not be extended.

Special Purpose

Land designated for a unique reason, for example, land for parks, recreational locations, schools, churches etc. -Falls into a zoning restriction that are taken seriously in New York. Has the ability to change the real-estate world and the cost of property.

Real Estate / Real Property

Land, and generally whatever is erected upon or affixed thereto. Some examples- Condominiums, brownstones, residential buildings, everything that has a "bundle of sticks"

A Cooperative generally sells...

Less per square foot since it comes with a limited bundle of rights. -Cheaper than a brownstone or even house, because a buyer is not getting a full bindle of sticks.

Life Estate =

Lesser interest. The least amount of sticks that can be had.

LLC

Limited Liability Company -A hybrid of an S-corp or a personally held corporation, and a traditional C-corp, or held by many. -Usually used to protect a company's assets from liability. For example, is one company makes up 10% of wealth, an LLC will limit liability to that 10% only. NOT the rest of the wealth. -Good for investment properties.

Q-Tip Trust

Often plays out in situations of second marriages. A husband has a second wife who he wants to leave assets to but doesn't trust her kids. He will set up a life estate for the wife so she can live in the estate for the remainder of her life and after her death, the house will go to HIS kids, not hers.

Freehold Estates

Old rules that play out in practical ways. Some examples: Fee simple- full bindle of sticks, comes with a full set of rights, meaning you can smoke in a house, you can liquidate a house, you can gift a property or leave it in a will or trust. -Indefinite (you have the power for life) -Most power that can be had in the freehold estates Fee Simple Defeasible- The owner of the property holds a fee simple title contingent upon certain conditions. If those conditions are not met, the deed will go back to its original owner or a designated third party. -The title has conditions. For example, a wealthy person gives land to a church to build a school. The church can not use that land for anything other than building a school or else the deed will go back to its original owner. Qualified Fee Simple: The qualification is listed on the deed just like a condition would be in a Fee Simple Defeasible. if the qualification is violated, the fee simple is destroyed, though the reversion is automatic and no court action is required. . -For example: one gives a house saying a specific person can't live there. If that person is found to be one the property, the fee simple is destroyed.

Irrevocable Trust

Once an owner puts a property into a trust they can't get it out, it is then in the hand of the trustee and eventually to the beneficiaries.

With a life estate...

One can live on a property but they have no actual deed or rights to a property. Example: Often seen with parents who are elderly. They sign the deed of the house over to the kids, but keep the rights to live on the property for their whole lives. -Life estates are often built into trusts.

Severalty

Ownership by only a single individual

Leasehold Estates

Ownership of a temporary right to hold land or property in which a lessee or a tenant holds rights of real property by some form of title from a lessor or landlord. Although a tenant does hold rights to real property, a leasehold estate is typically considered personal property

Joint Tenancy

Ownership of realty by two or more persons, each of whom has an undivided interest with the "right of survivorship". This means when a co-owner dies, their share share goes to the other owners NOT the estate.

Periodic Estate

Parodic tenancy, a term, 30 days, month to month lease.

Everything that is NOT considered real property is legally known as....

Personal Property

Fixture / Trade Fixture

Personal property so attached to the land or improvements as to become part of the real property.

Chattel

Personal property, such as household goods, think of cattle, actually things and property being sold. -In a house this is a phone, a painting

Special Purpose Real Estate

Property that is appropriate for one type of use or limited use. This type of property has unique design or layout, uses special construction materials, or other features that limit the property's utility for purposes other than the one for which it was built. For example, a church, theater, or school.

Tenancy by the Entirety

Pursumed in most states for a husband and a wife. When one spouse dies, the entire bundle of sticks goes to the spouse.

Difference between real estate and real property?

Real estate includes a full bundle or rights, all the sticks. - Owners can control the property as whole. Real property itself is just the property, the house NOT tangible property (meaning the appliances, things inside the house). Real property is just the house itself.

Real Property Definition

Real property is immobile (location specific) and illiquid. -For example it is a very rare occurrence when you see someone actually move a house. -Real property is influenced by supply, demand and scarcity. In New York City, there is no available property, so costs are very high. influenced by supply and demand.

Right of Survivorship

Right of the surviving joint owner to succeed to the interests of the deceased joint owner, distinguishing feature of a joint tenancy or tenancy by entirety. This means if a building has 4 owners and one dies, the rest of the surviving owners get his 1/3rd share. It does NOT go to the 4th owners estate.

Air Rights

Rights in real property to use the space above the surface of the land

Air Rights

Rights in real property to use the space above the surface of the land.

Banks do lend for "revocable trusts" because...

Some of the rights stay with the true owner and he can be held responsible for the loan. -Same with a co-op. With assessments and monthly costs being collected, if an owner retains some sticks they know who to hold accountable for a loan.

The deeds "bindle of rights" (Fee simple) is...

Stronger than the "Contract rights"

Illiquidity

The concept that property is an illiquid asset because it cannot easily be sold or exchanged for cash

Life Estate

The conveyance of title property for the duration of the life of the grantee

Life Estate

The conveyance of title property for the duration of the life of the grantee. -Must always come with a term of years. It is required.

Partition

The division which is made of real property between those who own it in undivided shares

Partition

The division which is made of real property between those who own it in undivided shares.

Partition

The division which is made of real property between those who own it in undivided shares. Handled by a judge.

Eminent domain

The government uses their constitutional right to buy private land. Use it to build a bridge a for instance.

Undivided Interest

The interest in property owned by tenants whereby each tenant has an equal right to enjoy the entire property.

Reversionary Interest

The interest which a grantor has in lands or other property upon the termination of the preceding estate. In other words, the grantor donates a piece of land but has the option of taking it back if the ones gifted use it in a way he doesn't like. -He can also set time and have a property returned after a set amount of time.

Remainder Interests / Remainderman

The person who is to receive the property after the termination of the prior estate.

Remainderman

The person who is to receive the property after the termination of the proper estate. -For example, if one were to create a life estate to a younger brother for an alloted 10 years. After those ten years one must give the fee simple of the estate over to his son. His son is the Remainderman. These dealings are required an non-negotiable. -For the life estate to be valid, the enjoyer must follow the rules. If the fee simple says it must be given to his son, he can't give it to his daughter. It must follow the conditions of the trust.

Beneficiary

The person who receives or is to receive the benefits resulting from certain acts

Bundle of Rights

The premise that the ownership of real estate consists of the ownership of various rights associated with it. These rights include the right to use and/or occupy, the right to sell in whole or in part, the right to lease, the right to bequeath and the right to do none of the foregoing

Bundle of Rights

The premise that the ownership of real estate consists of the ownership of various rights associated with it. These rights include the right to use and/or occupy, the right to sell in whole or in part, the right to lease, the right to bequeath and the right to do none of the foregoing.

Escheat

The reversion to the State of property in event the owner thereof abandons it or dies, without leaving a will and has no distributees to whom the property may pass by lawful descent. -Will always look for "next of kin" first, then if none found, the property will go to the state.

Riparian Rights

The right of a property owner whose land borders a natural water course, such as a river, to reasonable use and enjoyment of the water that flows past the property. Riparian literally means "riverbank"

Riparian Rights

The right of a property owner whose land borders a natural water course, such as a river, to reasonable use and enjoyment of the water that flows past the property. Riparian literally means "riverbank".

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.

Termination of a joint tenancy

This can be done in the deed, but after ends up being determined by a partition. Example: Two women chose not to get married and each put different values into a unit. After renting out the unit, they split up. Both names are on the deed, and need help litigating who gets what. -Judge will order a sale and will the determine who gets what.

Vesting

Vesting gives a beneficiary a full bundle of sticks. -Defined as a time for paperwork to process that will when finished give a beneficiary a full bundle of rights.

Tendency at sufferance

When a lease ends but the tenant doesn't move out. The landlord can take them to court to get them evicted. A tenant in this situation is also referred to a a holdover tenant.

Do you ever give some sticks away?

Yes, when you own a house your doing all the work. Your painting the walls, cleaning the stairs etc. But an owner of a condo gives some of these rights (sticks) to the board. They maintain the hallways, the paint the walls etc.