Section 7, Unit 2: Interest and Ownership REAL ESTATE

Real property Does not include

- Anything that isn't real property -Personal Property

Real Property

- Earth, Soil, air, trees -Fixtures -Bundle of rights

Real Property Characteristics

- Permanent - Illiquid - Immovable - Scare

Bundle of Rights

- Right to mortgage and encumber - Right to profit - Right to use and possess - Right to exclude others - Right to dispose - Air, water, minerals, crops, fixtures

Condos

A condo is homeownership in a convenient, secure package. It's a single-family dwelling, but there's no yard work, no shoveling snow in the winter, and no salesperson or politic canvasser knocking on your on your door just when you sit down to the game. That's because the building is secure, and the upkeep and maintenance of the common areas are somebody else's headache. *** because they're so low-maintenance, condos and also make good investments - in the right market. Some condos allow you to lease out your unit to non-owner tenants. You could buy it, and then rent it out to someone else while you go elsewhere. Many owners like that condominium ownership in real property - ownership rights are free and simple, which is the biggest and broadcast form of ownership available. The buyer completes an application and arranges financing, just like the purchase of other types of real property. With a condo, you own real estate- basically, the unit, and all of the space inside the unit, belong to you, and you also share ownership in the common areas.

Curtesy

A form of legal life estate that refers to a husband interest in the real estate owned by her deceased husband.

Dower

A form of legal life estate that refers to a wife's interest in the real estate owned by her deceased husband. Dower isn't recognized in all states.

General Partnerships

A general partnership conveys personal liability to partnership that exceed the partnership assets. General partners are jointly and separately liable for these debts. So if you are in business with one of your partners and he absconds with all of the partnership funds, leaving behind creditors, you are liable to those creditors, as are any and all partners. Creditors don't care who took the money - they will hold all partners responsible.

Reversionary Interest

A life estate in which the property title reverts to the owner upon the death of the life tenant.

Remainderman

A life estate with remainder interests refers to a situation in which a remainder man named by the owner when forming the estate receives tittle to the property upon the death of the life tenant.

A limited partnership

A limited partnership always has one or more general partners who assume liability. The other partners are limited in their liability related to the amount of money they have contributed. Limited partners are also limited in authority. To protect their immunity from partnership debts, they may not participate in managing the partnership. Limited partners who participate in managing the partnership may become generally liable. Limited partnerships are common form of holding real estate. Usually, the general partner is the one who discovers the investment opportunity and brings in limited partners will profit or see a loss from their investment according to the partnership agreement, and the success or failure of the project. Principals in an LLC may select many different tittles such as president, CEO, Owner as long as the tittle is not untrue or misleading.

Partnership

A partnership doesn't necessarily mean just two people. It may be business organization owned by two or more partners and could include thousands of people (though such a large number would likely require a more structure format). There is no requirement for all partners to have an equal interest in the business.

Sole Proprietorship

A sole proprietor is a familiar business model - you are one! While you may hang your license with your broker, unless you are on salary, you are an independent contractor- a business of one. When sole proprietors want to conduct business, they can use their own name, or their name in combination with a business name. For example, if your name is Jane Smith, you can call your business "Jane Smith, doing business as (DBA) Wonder Woman." You could not do business as "Wonder Woman" or hold title to property as "Wonder Woman," or any business name other than your own without also using your name. When only one person owns a piece of poverty and title is that persons' name, this is ownership in severalty because ownership interest is several from all others.

Estate at will (or tenancy at will)

A tenancy for an unknown period of time. Either party can terminate the lease by giving notice to the other party.

Estate at sufferance (or tenancy at sufferance)

A tenancy in which the tenants stays in possession after the lease has expired

What is a trust?

A trust is a special relationship called a fiduciary relationship that is between the trustee and the trustor. The trustor is the person who creates the trust. The trustee is the person who carries out the trustor's wishes. Why can't this happen to his or her own buying and selling? There are many reasons a person may want to set up a trust. Often, it's because the beneficiary (the one who benefits from the trust) is a minor or infirm. Quite often, parents will set up a trust to benefit their offspring. Trusts are very common and very accommodating. Any assets may be held in a trust, and anyone may set up a trust naming anyone, including the person who sets up the trust, as beneficiary, trustee or both. A trustor, grantor, or settlor conveys title to a trustee.

Fee simple determinable estate

A type of fee simple defeasible estate, an an inheritable freehold estate, where the title remains with the new owner as long as the conditions of ownership are being met. If the buyer commits a specific prohibited act, title to the property may automatically be returned to the owner or the owner's successors.

States that recognize tenancy the entirety ownership

Alaska Arkansas Delaware District of Columbia Florida Hawaii Indiana Kentucky Maryland Massachusetts Michigan Mississippi Missouri New Jersey New York North Carolina Ohio Oklahoma Oregon Pennsylvania Rhode Island Tennessee Vermont Virginia Wyoming

Estate in severalty

Although the name sounds like "several," don't let that fool you. The root word, "server," means one person owns property, and all other interest are severed.

Estate for years

An estate for a specified period of time; e.g., a one-year lease or a six-month lease.

Life estate

An estate that includes ownership, possession, and control of for someone's (the life tenant's) lifetime.

Fee Simple (or fee simple obsolete) estate

An inheritable freehold estate. "Fee simple" refers to a form of ownership not tenancy, so the owner of a fee simple estate can will the property and / or a successor can inherit the ported. A fee simple absolute estate provides the most complete form of ownership and includes the bundle of rights.

Fee on condition (or fee simple subject to a condition subsequent) estate

Another type of fee simple defeasible estate that is also inheritable and recognizable when the words "but if" appear in the deed. The estate continues unless a specific event occurs, in which case ownership may revert to the owner or the owner's successors.

Fee absolute

Broadcast form of ownership conveying all of the bundle of rights

Trustee

Carries out beneficiaries wishes

What are community property Rights?

Contrary to common belief, community property doesn't have to be titled in both spouses' names. In states that have community property rights, all property acquired by either spouse during their marriage (with the exceptions of property that was gifted, inherited, and in some cases the result of personal injury recovery, which are all considered "separate property") is considered community property, regardless of which spouse's name is on the title. Both partners may also have other properties purchased before the marriage that they own individually (in severalty), but any property purchased during the marriage is owned equally, regardless of whether one or both spouses are on the title. Nine states have community property rights: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

Trustor

Conveys titel to trustee

Corporations

Corporations are defined by law. If someone said to you "Quick! Touch that Corporation!" You wouldn't be able to comply. Corporations do not exist in bricks, mortar, or even people, but are intangible, taxable. Recognized legal entity. Corporations have tax rates separate from individual tax rates. The articles of incorporation is a document that creates the corporation. Corporation can receive, hold, and transfer title to real property, and may give, or hold a mortgage to secure a debt owed to the corporation. Property owned by a corporation is owned in severalty, which you may recall is also how property is owned by a sole proprietorship. The corporation bylaws authority to named individuals who may sign documents on its behalf. Corporations may be subchapter S (permitted to function as a corporation be taxed as a partnership), or a C corporation, which must pay corporate income tax to the IRS. The shareholders in a C corporation see double taxation: once at the corporation level and again at the shareholder level. Subchapter S corporations do not pay corporate income taxes representing their share of the corporation's losses.

Pur autre vie life estate

Created by a property owner who grants an estate to someone for the duration of another individual's life.

Beneficiary

Creates trust for their own interest

Act of Waste

Diminishing value of real property as a life tenant

Tenancy in the entirety

Each hold individual interest, right of survivorship.

Tenancy common

Each person is entitled to possession of the whole. If one dies, that person's ownership is inheritable and doesn't necessarily passes to the other owner(s).

Tenancy in common

If you and your best friend buy a parcel of real estate, you may choose to won it as partnership under a tenancy in common agreement. With a tenancy in common, either of you may sell your interest, or your interest may be passed down to heirs. This type of ownership does not have the right of survivorship, which means that the other owners don't automatically get your share of ownership upon your death.

Termination of joint tenancies

Joint tenants may sell their personal share of ownership; however, the buyer of that share does not become a joint tenant, because the required four unities do not exist. The new buyer didn't receive a title at the same time as the other tenants, so the unity of time is destroyed. Therefore, the new owner is a tenant in common. The remaining tenants continue as joint tenants, with the right of survivorship shared between them. The new buyer, as a tenant in common, has an inheritable share.

Joint Venture

Joint ventures are not a business enterprise, per se, but a temporary organization formed by two or more parties to invest in real estates (or other investment). Participants may be corporations, partnerships, LLCs, or other entities. The parties may hold titles as joint tenants or tenants in common.

Uniform partnership Act

New York has a Uniform Partnership Act, which allows a partnership to hold title to real property in the partnership's name as "tenancy in partnership." If the partnership is using an assumed business name, it must file that name with the country clerk where its business is located. partners may also hold to real porter in the names of the individual partners. So a partnership with the assumed business name of Whompalooza with partners whose names were Jane Smith and Paul Jones could hold the partnership as either of the following: - Whompalooza, tenancy in partnership. -Jane Smith and Paul Jones, tenancy in partnership

What are co-ops?

On the face of it, co-ops may look just like condos. They've often in the same type of buildings a day even be on the same street or in the same block as a condo complex. The main difference between the two types of properties is in how residents own them. With co-op ownership, a non-profit cooperative corporation owns the land, building, and all rights and interest in the corporation. Individuals shareholders (unit owners/ residents) don't own real estate, they don't hold title to the property, and they don't receive a deed for the unit. Instead, they won corporate shares, which are considered personal property. Online shares in a stock, however, owners can't just divest themselves of their shares. It's a bit more complicated than that. This arrangement means co-op ownership isn't fee simple ownership, like condo ownership would be, or a traditional real estate purchase. Residents each have a proprietary lease (a lease from the corporation) for the units they occupy the lease provides unit owners with the right to use the poetry, to live there, and to amenities similar to condominium buildings. Residents usually pay a monthly or annual maintenance fee to the board of directors that manages the cooperative. The board is responding for all corporate financial and policy decisions but may choose to hire an outside management company. Co-ops boards operate like most corporations boards. They must follow the rules established in the bylaws and the articles of incorporation, and they have to be good steward of the shareholder's money and interest.

Fee simple defeasible (or qualified fee) estate

One that permits the recovery of fee simple ownership if certain conditions aren't meant. "defeasible" means that the grantor (seller) has placed a limitation on the deed.

Periodic estates (Or estate from period to period)

One that renews itself automatically at the end of each lease period unless one of the parties to the lease terminates it. This type of lease often results when an estate for yours ends. If period to period may result in a month-to-month lease is a period estate.

Qualified fee

Ownership based on a condition

Freehold

Ownership length undetermined

Leasehold (non freehold)

Possession for a predetermined length of time.

Life estate

Possession for someone's lifetime (not inheritable)

Co-ownership

Property with ownership by more than one person, also called concurrent ownership.

Freehold estate

Refers to ownership and provides home ownership for an undermined length of time.

Leasehold estate

Refers to tenancy and provides an interest in real estate for a limited time.

Termination of co-ownership by partition

Remember that in a tenancy in common, each person is entitled to possession of the whole. But what if you hate your co-tenant(s)? In that case, you may want to bring legal action to have the property partitioned, which would allow each tenant to have a specific, divided portion (partition) of the property exclusively. In the case of an equitably divided piece of land, each tenant would receive title to a separate tract according to that person's share of interest. In cases where it's impossible to do an equitable split, a court may order the sale of the property and determine the appropriate share of proceeds to be distributed to the tenants in common.

Life tenant

Responsible for reasonable property maintenance, property taxes, repairs, etc

Implied Rights

Selling mineral rights implies the right to drill or dig for minerals on one's property

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Sometimes, co-op residents share the same interests and values. Co-ops are rare in many parts of the United States, so to help you better understand the co-op form of ownership, let's look at an example: The Greener Grass Co-op is a group of people enjoying a co-housing community in a lovely older neighborhood in the city. They are individuals, couples, and families of varied backgrounds and ages - from one-year-old to 70-plus-who live in a community where the members act as an extended family to one another whole honoring personal needs for privacy and independence. Greener Grass Co-op is a dense urban village with a physical design that encourages social interaction. Individual homes have most of the features of conventional homes, and the residents also enjoy extensive common facilities. Because GGC cares deeply about the environment, it incorporates environmentally sustainable practices in construction, in its community, and in day-to-day living. GGC is owned commonly as personal property, not as real property. Members/residents purchase shares of ownership and help with the organization, day-to-day functioning, and maintenance of the community. Periodic workdays are scheduled, highly delegated teams are organized, and community meetings are held. The membership votes on rules guidelines. There is very little turnover at GGC, but residents sign a voluntary agreement that they will not sell or lease their unity to a person or persons who do not wish to fully participate in the community. The seller must also offer his or her home for purchase by the community or to an individual or individuals within the community before putting it on the open market.

Escheat

State claims the property of someone who dies without a will

Syndicate

Syndicates are groups of investors pooling their money in pursuit of single investment goal, such as buying an office building. The syndicate is organized by a sponsor who does the investment legwork and property management and who asks many investors to join the real estate investment, with everyone sharing in the profits. The sponsor can be an individual or a business organization. Syndicates sometimes mee the definition of "dealing in securities" and therefore must adhere to the rules and regulation of the Securities and Exchange Commission. An investment is a security, as defined by the Federal Securities Act of 1933 it is: - An investment of money - A group enterprise -Intended to make a profit, and that profit is solely from the management effort of others. So if you are a "silent partner" in a group investment where the intention is to make profit, and you sit back while others manage the project, this may well meet the definition of a syndicate.

Estate of sufferance

Tenant stays after lease terminates

Remainder interests

The remainderman's right to fee simple tittle upon the death of the life tenant.

Escheat

The state's power to claim property when an owner dies without will and without heirs or creditors.

Joint Tenancy

This is defined as equal ownership with undivided rights of possession and requires unity of four separate conditions: all owners must have the same type of interest in the property, all must have the right to undivided possession in the property. Joint tenancy includes the right of survivorship, meaning when one joint tenant dies, that person's share automatically goes to the other surviving joint tenants(s). When there are only two joint tenant left, the death of one of the owners terminates the joint tenancy, and the survivor takes tittle in severalty (sole ownership).

Tenancy by the entirety

This type of tenancy also has the right of survivorship. Only available to married couples, this form of ownership also includes unity of time, title, interest, possession, and marriage. key to this form of ownership is that creditors of one spouse can't attach liens to or sell the interest of the debtor spouse. Only credits with claims against the couple may attract and sell the interest of property owned in this manner. Also, one spouse can't transfer interest to the property without the consent of the other spouse. Tenancy by the entirety can't be reduced to tenancy in common or joint tenancy. Such a change of ownership would require divorce, an annulment, or for the couple to amend the title.

Reversionary Interest

Title reverts back on death of life tenant

Joint tenants

Which would include the right of survivorship. If you die, your partner gets full ownership, or if your partner dies, you get full ownership.

Homestead

a type of estate that gives the owner special protections in poverty used as a family home. Not all states recognize the homestead concept.

Act of waste

an abuse of property by a person who holds interest through a life estate.

Limited Liability companies (LLCs) and Limited Liability Partnerships (LLPs)

are favorable forms of business in terms of taxation of liability. Owners of the LLC or LLP (who are called members, not shareholders) are not personally liable for LLC/LLP obligations, taxed as partnerships, and do not require a general partner.

Fee simple

inherited freehold estate

Remainderman

receiver tittle after the death of a life tenants.

4 Unities of ownership

time, title, interest, possession