Final FBE 427: Real Estate Law

Adverse Possession Requirements

(1) Adverse (not permissive) and hostile to that of the landowner (2) Actual and exclusive possession (3) Open, visible, and notorious (4) Continuous use for the statutory period (5)+ in California - pay taxes

Rental Rates: Types

(1) Gross lease -tenant pays a fixed amount paid each month -No operating expenses are aiid -Modified Gross Lease: where landlord required tenant pay utility costs (2) Percentage Lease -tenant pays a fixed base rent + a percentage of revenue from the business; define what constitutes revenue carefully (3) Triple Net Lease (NNN) -tenant pays landlord a fixed amount + operating expenses (property taxes, property insurance, property maintenance) (4)Common Area maintenance -common area fee

Intestacy: Miscellaneous Issues

(1) Murdering Heir -killer is treated as if he predeceased the decedent (i.e. not entitled to intestate share that would normally be distributed) -Killer's issue can still inherit (2) Simultaneous Deaths -must survive the decedent for 120 hours (5 days) to inherit -if not met (i.e. all simultaneous deaths) then property of each spouse is distributed as if the other spouse predeceased them

Intestacy: Children Questions

(1) Non-marital children (illegitimate) -Marital status is irrelevant to distributions as long as maternity or paternity can be established (2) Adopted Children -treated same as biological children (3) Posthumous children -children born after decedent's death; usually treated as heirs

Intestacy: Distributions

(1) Per Stirpes -parties take by representation of their parent's share; LOOK AT SLIDE EXAMPLES (2) Per Capita -Living lineal descendants equally share

Will Requirements

(1) Writing -must be in writing, Oral not recognized (2) Capacity -Age Capacity: must be at least 18 years old; Mental Capacity: must be able to understand the nature or extent of his/her property, what persons are the natural recipients, general understanding of purpose (3) Testator's Signature -testator must sign the will or direct someone else to sign; if direct testator must acknowledge the will and have conscious presence of the signature; signature can be anywhere, signing with "x" or nicknames ok (4) Witnesses -California requires at least 2 disinterested witnesses; are without a beneficial interest, if one is an interested beneficiary- will is still valid (will receive amount up to which would from interstate succession) -witnesses must be present at same time testator signs or acknowledges the will; sign before testator dies

Stoping Adverse Possession

(1) bring action for trespass (or quiet title action) against adverse possessor (2) Give permission to use the property (defeats adverse element)

Duties of the Insured

(1) notify the insurer after the occurrence of an insured event within the time period stated in the policy (2) cooperate with the insurer in investigating claims made (3) mitigate by taking steps to avoid incurring expenses or unnecessary costs

Condominiums

-Form of housing where owner owns a fee simple interest in a unit and a tenant in common interest in the common areas; the exterior of the building, land and development amenities are part of the common area -Transfer rights: owner can sell, lease, transfer, mortgage individual unit (fee simple ownership); no land interest is conveyed -common areas cannot be mortgaged, or pledged to creditors

Community Property

-available to H&W or same sex domestic partners -Spouses provide for the "community" Absent an agreement to the contrary, all property acquired during marriage (or by registered domestic partners), by the labor of either spouse, is presumed community property Both spouses have equal ownership and equal control of community assets They both must agree and execute documents to transfer title Upon death of either spouse: The surviving spouse retains interest in ½ of property Decedent's ½ passes according to a decedent's will

Security Deposit

-must be returned within 3 weeks vacating premises; some states require interest if in interest bearing bank account; maximum amount of a security deposit is 2 months for unfurnished and 3 months for furnished

**will be question on Joint tenancy diagram for final, most likely a short answer so know**

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Tenancy by Entirety

4 Unities of JT+ marriage between tenants -Time -Title -Interest -Possession -Person (marriage requirement); married at time couple acquired property There is a right of survivorship; spouses can't dispose of property by will; requires both spouses agree to terminate tenancy

Homeowners' Insurance

A comprehensive insurance policy; covers damages to home and homeowner's personal property and personal liability + a few others; protects only insured's personal activities does NOT cover earthquake

Cooperatives

A form of housing where unit owners own stock in a corporation with a right to occupy the unit -one person owns the whole structure, when you buy a condo you are buying shares that give you the exclusive right to occupy a particular unit; known as proprietary lease Ownership: -the entire building is owned by a single cooperative corporation (one tax bill); shareholders given exclusive right to occupy a particular unit Creation: -since cooperative is really ownership of a corporation, follow incorporation provisions

Implied Warranty of Habitability

A leased residential premises must be fit, safe, and suitable for basic human habitation -bare living requirements met -cannot waive this implied warranty -Violation is a material breach of lease -tenants may terminate and abandon the premises, or, tenant may continue the lease and sue for damages

Wills

A legal instrument which dictates how a person's property is to be disposed upon death; can not change characteristic of property (void if do) Issue -Descendants (children, grandchildren, etc.)

Adverse Possession

A method of acquiring property without "purchasing" it -known as "squatter's rights" -only available for private owned property Adverse possessor receives titles -No closing deed or conveyance -Title awarded by court action

Exculpatory Clauses

A provision that releases a party from some or all liability for their negligent acts; usually invalid for residential, but usually held valid for commercial -when enforced, both parties have equal bargaining power;

Probate: Administration

A representative of the estate is appointed to administer the estate -Administrator= If decendent died intestate -Executor= If decedent died testate Appointed party is responsible for all transfers, payments, and distributions of the estate Inventory and Appraisal of assets -representative takes inventory and have appraisal completed of assets to be distributed; inventory filed with probate court and notice sent to all heirs and beneficiaries Determination and Payment of all valid debts

Tenancy at Will

A tenancy for no fixed period of duration with no express provision for rent How created: -may be craeted expressly or may be implied Termination: -may be terminated at any time by either party -Death by either party terminates tenancy at will -CA- Requires 30 days notice terminate

Periodic Tenancy

A tenancy with no definite end date; tenancy continually renews itself for like periods of time until terminated by one party; no mention of duration is given, oral lease in terms of years is in violation statute of frauds, not enforceable How created: -Express: to files on month to month basis -Implied: lease with no mention of duration; but payment of rent at set intervals, holdover tenant where rent is accepted Continuous Renewal: Lease automatically renews for like periods of time unless notice of termination is provided Termination: notice of termination is required; notice of termination at least equal to the length of the tenancy period

Condominium Advantages vs. Disadvantages

Advantages: -no maintenance of building exterior; benefits of community amenities with costs shared by all unit members Disadvantages: -allows for higher density; increased costs for association fees, maintenance fees -more regulations and restrictions than single family homes

Adverse Possession: Continuous use for statutory period

Adverse possessor must be in continuous possession for the requisite statutory period w/o being evicted either physically or through court action; takes into account nature of the property (beach home) Tacking: -periods of possession by successive adverse possessors may be added to obtain the statutory period, so long as there is privity Privity: possession is passed by contract, will, deed, etc. - no privity where this is an ouster (i.e. forcing someone off the property)

Adverse Possession: Taxes

Adverse possessor must pay all taxes levied and assessed (i.e. property taxes) during the five year period

Assignments: Rights and Duties

Assignee -acquires all rights and duties that the assignor possessed; landlord can enforce duties against assignee Assignor -remains liable to landlord if assignee defaults in terms of lease -Landlord may agree to release assignor from all liability (novation)

Lease Provisions: Miscellaneous

Attorneys' Fees -allows the prevailing party attorneys' fees in the evvent of a dispute related to the lease; no general right to attorney's fees unless an attorney's fees clause in the lease Operation hours -in a commercial lease, landlord can dictate when you are open and what days you have to be close -Noncompetition Clauses: not allowing a competing business within certain radius to increase ales of that store

Adverse Possesion: Adverse

Averse possessor takes possession without the owner's permission (1) don't need a specific intent to take someone's property (2)Boundary line dispute: if you utilize someone else's property, you can take possession of it (3) If you don't allow co-tenant co-possession, you actually start the clock for adverse possession since you weren't given possession

How is TIC created? What are some Issues?

By transfer or death; when one tenant dies her share goes to her heirs, not to a survivor Where the intentions of the party are not clear; the default form of holding title where the intention of the parties is unclear; e.g. " To A and B" Potential Issues- equal possession to property even though can be uneven ownership in property; since ownership is transferable and inheritable can be split into small percentages

Lease Provisions: Required Disclosures in California

Carcinogenic material -if landlord has 10+ employees must disclose existence of known carcinogenic material Lead Based Paint -pre-1978 built unit; Lead paint warning statement, provide tenant with federally approved pamphlet Deaths -landlords must inform prospective tenants of any death (and the manner of death) occurring in a unit within the past 3 years

Will: change, revoke, Disinheritance limitations

Change a will through Codicil; same manner as will made 3 methods to revoke (1) subsequent codicil (2) physical destruction (3) Operation by law (divorce or annulment) Limitations -prenuptial or postnuptial agreements are valid -Children born before execution of will take nothing, born after receives intestate share

Joint Tenancy (JT)

Characteristics: ownership by 2 or more persons a form of concurrent ownership with survivorship each person owns equal share in the whole equal right to possession

Condominium: Declaration (CC&Rs)

Contains: -legal descriptions, mailing addresses of each unit -description of common areas and limitations of use -structure for the board of directors and voting details and procedures -methods to amend the declaration

HOAs: Creation & CCRs

Creation: -through a declaration recorded by the developer prior to the sale of the first lot of the community Declarations contain covenant's, conditions, and restrictions (CCR's): -Legal binding contract with anyone who chooses to purchase property within community -Day to day operations are covered; can create committees to enforce the rules

Tenancy by Entirety Interest Pledged

Debt must both husband's and wife's debt Creditor of one spouse only - does not touch tenancy

Intestate Succession

Dictates how property is distributed: (1) when a person dies without a will (2) will is invalid (3) property was not included in a will Excludes: -Community property, Joint Tenancy, life estates. They're distributed automatically by law Rules: (1) if there is a surviving spouse: -typically all property goes to surviving spouse (2) if no surviving spouse follow this distribution to descendants -Children (or issue of children) -Parent(s) -Brother(s) and Sister(s) -Grandparents inherit with (1/2 to paternal grandparents and issue AND 1/2 to maternal grandparents and issue -Escheats to state

Duties of the Insurer

Duties to Indemnify -insurer has a duty to pay covered claims up to the limits of the policy, reimbursement is limited to losses actual suffered Duties to Defend -insurer promises to pay for the costs involved in defending against a covered claim Duty to Settle Claims -insurer owes duty to settle a claim when it is reasonable to do so up to the policy limits Not to Act in Bad Faith -must not unjustifiably refuse to defend its insured

Community Property Interest Pledged

Each spouse is personally responsible for 50% of the debt

Time-Shares

Fee simple Interest with right of possession limited in time on a periodic basis Ownership interest: -Interest is often (1) fee simple interst, (2) a lease, or (3) a license; (usually) pay annual maintenance fees Transfer rights: -subject to terms of timeshare agreement; usually transferable either inter vivos or by will or interstate succession

Causa Mortis gifts

Gifts made in contemplation of death are typically revocable They are irrevocable if: (1) a gift is made and delivered in anticipation of impending death, and (2) Donor dies from the sickness or peril without having revoked the gift

Inter Vivos Gifts

Gifts made while donor is alive; becomes an irrevocable transfers of ownership (once 3 elements are met)

HOAs: Liabilities

HOAs typically face 3 types of litigation: (1)Rules enforcement -permissable if rules are based on CCRs or state statute -substance of enforcement must be valid -Tools for HOA enforement: fines to owner; Lien against real propery; foreclosure -if involuntary lien not timely paid, HOA may judicially foreclose on property and be paid through sale proceeds, can't foreclose unless totals $1,800 or assessments are more than 12 months delinquent (2)Appearance/modification issues -declarations may limit what can put/add on your house (3)Constitutional questions -might prohibit laws and are unlawful Board member liability: -board members own fiduciary duties (must act with utmost loyalty and good faith) to all the members of the assocation -Protection: Reasonableness Review -reasonable rules adopted will be upheld -courts defer to HOA boards for action

Townhomes

Horizontally attached houses (usually 2 or 3) sharing a common wall -Own the land on which the townhouse is located & joint interest in common areas Creation: formed in same manner with condominiums; created by following statutory processes; transfer rights same as condominiums Same CCRs, regulations, and rules as condominiums: -once recorded: all owners have constructive knowledge of its contents

Joint Tenancy Interest Pledged

If the debtor JT predeceases other JT's (before creditor forecloses) - security is lost If a joint tenant defaults and creditor forecloses, creditor severs unities creating a TIC with remaining JT's (if any)

HOA: Tort Liabilities

Individual units/homes -Homeowners are liable for torts within the uni/home (e.g. slip&fall) Common Area -associations should carry liability insurance to protect against liability for injuries and damages to third parties -CA: if the association carries a specified minimum liability coverage then the individual owners will not be held liabile; 2 million for 100 or less units, 3 million for more

Lease Provisions: Landlord's Right to Access the Premises

Landlords have a limited right of entry -reasonable notice of intent to enter must be given in writing; notice waived if for purpose of making repairs or supplying services; also in case of an emergency Covenant of Quiet Enjoyment: -has the right to exclusive use and enjoyment of the premises without landlord's interference during period of tenancy

Tenancy for Years

Leasehold interest lasting for a fixed,determined period of time specified in the lease -when you have the termination date from the star, you have tenancy for years -under statute of frauds: must be in writing Termination: -lease terminates automatically at specified end date; No notice for termination is required

Condominium Policies

Often a condominium association insures the building walls, roof and floors while condominium owner insures the personal property inside the unit

Additional Insured

Party unrelated to the named insured who receives the benefits of the insurance policy without having to pay premiums -insurer owes the additional insured the same duties it owes to the named insurer

Named Insured

Policy owner (usually person purchasing insurance)

Adverse Possession: Open, Visible, and Notorious

Possession must be sufficiently apparent to put the true owner on notice that there is occupation by another; 3rd party walking by would think actually have title to the property

Rights and Duties of Co-Tenants

Rent Non-possessing co-tenants cannot collect rent from the possessing co-tenant Rents collected from third parties must be shared with the other co-tenants. Expenses & Necessary repairs Carrying costs (e.g. property taxes, mortgage payments) and necessary repairs (roof leaks, etc.) each co-tenant responsible for his/her fair share Ordinary repairs? not enforceable Improvements Made at the discretion of the improving co-tenant No right to contribution from other co-tenants

Cooperatives: Required Documents & Transfer Rights

Required documents: -Articles of Incorporation: corporation begins its existence when its articles of incorporation are filed with secretary of state -Bylaws: specify operating procedures, meetings, voting rights, use restrictions, transferring ownership rights; are not filed with Secretate of State, but provided to each stock owner in the coorperative Cooperative Transfer Rights: -transfer restrictions ofen apply (may be required to obtain cooperative board approval) -existing owners can refuse prospective buyers for any reason (so long as no it does not fair housing laws or a state statute)

Insurable Interest

Required in order to secure insurance and recover in the event of a covered loss -anyone who would suffer a financial or other loss from the damage or destruction of real property has a an insurable interest -ownership of property creates insurable interest -persons who hold a security interest (mortgages, lienholders) have an insurable interest -tenants have insurable interest in property Insurable interest must exist at the time of the loss to recover

Community Property 2

Separate property- a couple's separate property before marriage remains separate property; Includes: property owned before marriage; property required during marriage by gift or inheritance; any income earned by separate property (interest, capital gains)

Individual Ownership

Sole proprietorship

Sublease: Rights and Duties

Subtenant -becomes a tenant to the original lessee -No rights against landlord Landlord -rights only against tenant Tenant -rights and duties are governed by the agreement between tenant and subtenant

Tenancy in Common Interest Pledged

TIC can pledge only his portion of the property as security not entire property Can foreclose only on that portion of property

Sublease

Tenant transfers only a portion of their leasehold estate -tenant may freely sublease his/her leasehold interest, unless lease states otherwise

Probate

The court-supervised administration of a decedent's estate (therefore open for public view -Validates wills & determines heris for intestate succession -Debts and taxes are paid, estate is distributed pursuant to the will, or state intestacy statute Probate court -a specialized state court that oversees the administration and settlement of estates; opens when an application or petition is filed -any party with an interest in estate can open probate

Cooperative: Proprietary lease

The exclusive right to occupy a particular unit; similar to an ordinary lease, but: -Length: usually the end date is tied to the tranfer of the tenant's interest in the cooperative -Rent: no provision for rent of unit, But all of the tenants owners pay a maintenance fee to the cooperative board (pays for common areas). Price increases are permitted

Condominium: Title & Conversions

Title to the common areas usually held by a corporate entity -each unit owner has an ownership share in the corporation -allows for governance of CCRs through shareholder voting & limiting liability of common area Condo conversions in California: -Written notice to tenants: 60+ days prior to filing of a tentative map; 180 days notice of intent to convert prior to termination of tenancy -Typically takes 1-2 years to complete

Eviction

Unlawful detainer is the way in which your landlord will evict you; must be doing something that they're not supposed to be doing; landlord has to serve you a 3 day notice when tenant is in breach of some covenant; tenant has 5 days to respond, but the 5th day cannot fall on a weekend Constructive Eviction: -Can leave without liability if: there is substantial interference with tenant's use of previsions

Owners' Associations (HOAs')

Where found: -they are necessities in condominiums, cooperatives, townhomes; frequently used in gated communities and master planned communities Common Association Powers: -tax members through regular and special assessments for maintenance; maintain common areas; protects neighborhood aesthetics

Eminent Domain

Where government (federal, state, county, city) can take private property for public use if "just compensation" is paid Three Requirements: (1) There is a taking of private property; deny landowner of all economic uses of the property (2) Taking is for public purpose (3) Just compensation was paid to owner

Lease Provisions: Tenant's Remidies

Withhold rent -allows the tenant to withhold rent until the landlord fulfills its obligations under lease or statute Repair and deduct rent -repair the defect and apply up to 1 month's rent toward the repair Abate the rent -pay only a fair value for use of property that is in violation with housing laws

Lease Provisions & Covenants

Writing Requirement: -if greater than a year, needs to be in writing -writing can be informal Writing must include: -names and signatures of the parties -a description of property -names and signatures of parties -the term of the lease -the amount of rent

Creditors Rights

a creditors rights are limited by the extent of debtor's interest

Holographic Will

a handwritten will - must be signed by the testator; material portions must be in testator's own handwriting; no witness is required; no date required (dated will will take precedent over others

Adverse Possession: Actual and Exclusive

adverse possessor must actually occupy the property in a manner consistent with its nature and use Adverse possessor cannot share possession with legal titleholder or with the general public; however can have co adverse possessors

Tenancy in Common (TIC)

allows for separate interests in a single piece of property can be equal or unequal shares can acquire interests at different times Interest can be sold, leased, or mortgaged at any time each tenant is entitled to equal possession (but not equal share in appreciation of property)

Hotel Condos

building where a portion of the hotel is owned as condominium units, which can also be used by hotel guests -common area is managed by the hotel operator Limitations: -owners may be required to make the unit available for rent when not occupying it; use either developer's sponsored rental program, hire an independent rental agent or rent the unit themselves Benefit: -you typically receive a portion of the revenue collected when rented

Comdominiums: Creation

created by following state statutes. Most require: Declaration (CCRs) and Bylaws California requires: a declaration (CCRs), a condominium plan, a final map or parcel map for the common interest development

Creation of Joint Tenancy

definitive language + four unities creates joint tenants or marriage + four unities Four Unities 1.) Time- joint tenants must take title in a property at the same time 2.) Title- JT must acquire title in the same deed or will 3.) Interest- JT must have equal interest in the property 4.) Possession- parties have equal rights to possession

Community Property with Right of Survivorship (CPWROS)

hybrid of joint tenancy and community property; decedents 1/2 interest passes automatically to survivor

Broad property insurance

includes all the items covered under a basic policy, as well as glass breakage; damaged caused by falling objects damage from the weight of snow, ice or sleet; water damage; and additional collapse coverage

Commercial General Liability (CGL)

insures bodily injury, property damage, and personal liability arising from the operation of a business

Lease Provisions: Rent

landlord has right to collect rent, even if rent is not stated in the lease (e.g. holdover tenant) Date rent is due -absent an agreement to contrary, rent is due at the end of the rental period

Implied Covenant of Repair

landlord must keep leased premises in repair Tenant has no general duty to repair defects on the premises -at termination of tenancy tenant must return premises in same condition as commencement

Extra Credit Question: translate USC Latin motto on the seal

let whomever earns the palm bear it

Per se retaliation

many states have a period of time after tenant exercises its right where any eviction proceedings from a landlord are deemed a retaliatory eviction

Dower

o Protects widows from disinheritance by entitling widow to a life estate of 1/3 of deceased spouse's property o Exists in few states

Curtisy

o Surviving husband received life estate in all of decedent spouse's property o Only available where children were born during marriage o Exists in same states that Dower exists

Rent Control

price regulation imposed upon landlords -legal as long as landlord can receive a reasonable rate of return on its investment Common rent control limitations: -how much rent can be increased -how often rent can be increased -limit late fees -Limit the total amount that can be charged for tenants

Americans with Disabilities Act (ADA)

prohibits discrimination against individuals who are disabled in a place of public accommodation Requirements: -reasonable modifications necessary to afford services to those with disabilities -removal of barriers and paths of entry for those with a disability -new construction and improvements must be in compliance with ADA; exception Undue burden Landlord's can shit liability to tenants for compliance of ADA

Joint Tenancy Transferability

property transfers automatically at the death of a co-tenant to the other co-tenants -If all JT's die at same time, treated as a TIC -a transfer of a joint tenancy interest by one co-tenant (other than by death) severs only that joint tenancy interest into TIC

Builder's Risk Insurance

protects loss or damage to a building while it is under construction; policies normally written for a specific dollar amount

Fire Insurance

protects real and personal property damage from a fire (and certain other perils); no coverage for personal injury on the premises

Umbrella Policy

provides insurance in exess of basic liability (CGL, homeowners, etc.) Insures all policies underneath them, policy pays only if the other insurance policy limits have been exhausted; often cheaper to purchase than increasing the limits to the underling policies

Seller's Warranties Policy

provides insurance to guarantee the representations made by sellers in real estate contracts

Errors and Omissions Policies

provides insurance to real estate brokers sued for negligence related to real estate transactions

Renters Insurance

provides insurance to tenants personal property

Earthquake property insurance

special or all-risk insurance does not provide coverage for earthquake damage. Most lenders do not require earthquake coverage, even if the property is located in a earthquake-prone area

Special property insurance

the insurer indemnifies the insured from losses from any perils except those specifically excluded. The insurer bears the burden of proving that the loss was caused by an excluded peril. Virtually any physical loss to the insured property is potentially covered by an all-risk property policy

Basic property insurance

under this coverage, the insurer indemnifies the insured only from losses specifically listed in the policy, such as fire, flood, or design liability. Anything not specifically named in the policy is not covered

Transfer by Gift

voluntary transfer of property without consideration Requires: (1) Intent by the donor or grantor (2) Delivery of the gift -actual delivery: hand the person the deed; Constructive Delivery- given to a 3rd party w/ no way to regain (i.e. safety deposit key) (3) Acceptance of the gift; can't be refused

Tenancy at Sufferance

when a tenant remains in possession of the property after the tenancy period has terminated -tenancy right provides lessor the ability to collect rent where there is no lease agreement -CA- tenant becomes a trespasser because tenant has no right/permission to remain on the property Termination: -either by eviction or creation of a new tenancy term

Assignments

when a tenant transfers their entire unexpired leasehold interest to a third party -tenant may freely assign his/her leasehold interest, unless lease states otherwise Rule in Dumpor's Case: if landlord consented to one assignment, all other assignments are deemed valid

Partition

• Physical division of a co-owned property • Results in separate owners of adjoining parcels of land • Required when: o One tenant has disposed the other co-tenants and refuses to allow access o When a tenant refuses to contribute for necessary expenditures o When a tenant refuses to distribute rents and profits earned; or o Appropriate circumstances • When it is impossible to partition= property is sold

Prenuptial Agreements

• What are they? o Contracts entered into before marriage which limit or waive a spouse's right to marital property • Requirements in CA o No consideration required o Must be in writing, signed by both parties o Cannot limit or waive child support o May not promote divorce o Must be signed voluntarily o Cannot be unconscionable when made • Fully, fairly, and reasonably disclose all assets • What can be limited in CA o Each party's salary and wages can remain that party's separate property o The agreements can govern the disposition of property on separation, divorce or death, including the making of a will or trust and the disposition of life insurance policies o Can deal with any other matter including their personal rights and obligations o Example • Incentivize someone not using illegal activities, not promoting divorce, so it is okay • Can have cheating bonuses; get additional money