Forms of Real Estate Ownership: Unit 5
LLC offers
-tax advantages of a partnership—income flows directly to the member of the LLC, instead of being subject to the double taxation of a corporation, with income taxed when received by the corporation, and then taxed again when received as dividends by the shareholders -lexible management structure without the complicated requirements of a corporation or the restrictions of a limited partnership
severalty relationships and examples
1. man singularly holds title to hs own property 2. large corporation holds title to land on which its headquarters is built 3. title held by one individual or corporation
forms of ownership available are controlled by state law, real estate may be held in one of three basic ways
1. ownership in severalty (one owner), 2. ownership (more than one owner) 3. ownership by a trust (property held for the benefit of another)
example of trust realtionships or examples
1. title heald by a netural individual fo the benefit of another 2. title heald by minor's aunt until the minor reaches legal age
examples of co-ownership relationships
1. title held by two or more perople 2. husband and wife have title 3. brother and sister have title for beach property
If there are two co-owners of a property, for instance, and no other division is specified in the deed conveying the property, each owns
1/2 interest
TRUE OR FALSE: in tenancy in common, each tenant holds a divided fractional interest in the property
FALSE
True or False: the forms of real estate ownership are controlled on a national level to promote unidormity throughtout the country
FALSE
True or false: public entities generaly own real property in trust
FALSE
Ownership of real estate between two or more parties who have been named in one conveyance as joint tenants.
Joint tenancy
to create a joint tenancy what four elements or unitties are needed?
Possession, Interest, Time and titile PITT
A form of co-ownership by which each owner holds an undivided interest in real property as if each were sole owner. Each individual owner has the right to partition. Unlike joint tenants, tenants in common have the right of inheritance.
Tenancy in common ( TIC)
provides for the continuation of the existing business even under these circumstances.
Uniform Partnership Act
When one co-owner dies, the tenant's undivided interest passes
according to the decedent's will, to the heirs identified by statute if there is no will, or by the terms of the decedent's living trust, if one was established prior to death.
unity of interest
all joing tenants hold an equal ownership interest
unity of title
all joint tenants acquire their interest by the same document
unity of time
all joint tenants acquire their interests at the same time
unity of possession
all joint tenants hold a undivided right to posession
Formation of a TIC requires use of
an attorney to clarify the terms of ownership
time share transfer
an interest in a time- share estate may be conveyed by deed or will by the owner. an interest in time-share use is personal property that may or may not be transferable according to the contract
a joint tenancy is destroyed when
any one of the four unities of joint tenancy is terminated
person who benefits from the trust
beneficiary
A corporation is managed and operated by its
board of directors, who are selected by the owners of the corporation—its shareholders The members of the board of directors then usually select the officers who are responsible for the day-to-day operation of the corporation.
legal entity that exists independently of its members.
business organization
goverance cooperative
bylaws of the corportation and board of directors elected by shareholders
if co-owners are married or in a recognized civil union they may
co-own property as tenants by the entirety or as community property
when a titille to a parcel of real estate is held by two or more people is called
co-owners (concurrent owners) -co-ownership
laws based on the idea that spouses, rather than merging into one entity, are equal partners in the marriage.
community property
real and personal property acquired by either spouse during the marriage
community property
Land trusts are frequently created for
conservation of farmland, forests and other wildlife habitats, coastal land, and scenic vistas
In a limited partnership, the partnership agreement may provide for
continuation of the organization after the death or withdrawal of one of the partners.
-the death of one owner never affects title to the proeprty -ms. M and Ms. N are owners of a business. the titile is never affected is ms. M or Ms. N dises
corporation
legal entity—an artificial person—created under the authority of the laws of the state from which it receives its charter.
corporation
goverance condominium
declaration of condominium and board of directors elected by homeowners
unity of possession
each owner is entitled to possession and use of the entire propery, even though each holds only a fractional ownership interest
The beneficial interest in property can be pledged as
ecurity for a loan without having a mortgage recorded
No individual tenant may transfer the ownership of the
entire property
if no fractions are stated the tenants are presumed to hold
equal shares
time share ownership
estate is a fee simple interest. time share use agreement is personal property that expiers after a certain period
a person who acts in confidence or trust and has a special legal realtionship with the beneficiary
fiduciary
The business is run by the
general partner or partners. The limited partners are not legally permitted to participate, with the result that each can be held liable for business losses only to the amount invested
-dissolved trust must be reorganized if one owner dies -mr. A and Mr. B are partners in a business. Mr. A dies and Mr. B must therefore dissolve and reorganize the partnership
general partnership
all the partners participate in the operation and management of the business and share full liability for business losses and obligations
general partnership
The downside of a co-owner's TIC interest is that
it may not be as easy to sell as property held in a different form of ownership
The limited partnership is a popular method of organizing investors because
it permits investors with small amounts of capital to participate in large real estate projects with minimum personal risk.
partition
legal way to dissolve the relationship between co-owners of real estate when the parties do not voluntarily agree to its termination
combines the most attractive features of limited partnerships and corporations.
limited liability company
combines the most attractive features of limited partnerships and corporations
limited liability compnay
-the death of an owner may not affect titile if provided in the agreement -the partnership agreement may provide fo the continuation of the organization after the death or withdrawl of one of the partners
limited partnership
consists of one or more general partners, as well as limited partners
limited partnership
trust created by agreement during property owners lifetiem
living trust
Ownership by a business organization makes it possible for
many people to hold an interest in the same parcel of real estate
In recent years, living trusts have become a major estate planning tool used
minimize the time and cost of probate
time-share
multipule purchasers uy interests in real estate- usually resoty or hotel propery. each purchaser has right to use unit for set time each year or a number of susage points
can a joint tenancy be implied or created by operation of law
nopeee`
The death of one of the officers or directors does
not affect title to property owned by the corporation.
Under community property laws, any property acquired during a marriage is considered
obtained by mutual effort
If the court determines that the property cannot be divided physically into separate parcels without destroying its value, the court will
order the real estate sold....The proceeds of the sale will then be divided among the co-owners according to their fractional interests.
condominium ownership
owners have free titile to interor space of units and share title to common areas
severalty
ownership of real property by one person only; also called sole ownership
association of two or more persons who carry on a business for profit as co-owners
partnership
it is the ownership interest that is divided not the
property
severalty occurs when
property is owned by one individual, corporation or other entitiy
ne of the distinguishing characteristics of a land trust is
public records usually do not name the beneficiary
only asset of a land trust
real estate
distinguishing feature of a join tenancy is
right os survivorship
A land trust may be used for
secrecy when assembling separate parcels
Because the co-owners own separate interests, they can
sell, convey, mortgage, or transfer their individual interests in the TIC without the consent of the other co-owners
real or personal property that was owned solely by either spouse before the marriage, acquired by gift or inheritance by one spouse during the marriage, or purchased with separate funds during the marriage
separate property
Because the corporation is a legal entity, it can own real estate in
severalty or as a tenant in common with other natural or artificial persons
copperatie transfer
shares are personal property. shareholders may sell or transfer shares. transfer od shares may be restiricted by laws
Any conveyance or encumbrance of community property requires
signitures of both spouses
copperative
single units are located in lowrise and highrise complexes
condominium
single units are located in lowrise and highrise complexes as town houses or stand alone units
condominum transfer
single units are transferred by deed, will or living trust
the owner in severalty has
sole rights to the property and sole discretion to sell, will, lease or otherwise transfer part or all of the ownership rights to another person
A beneficial interest can be transferred by
ssignment, making the formalities of a deed unnecessary
Spouses who are tenants by the entirety have the right of
survivorship
The joint ownership, recognized in some states, of property acquired by husband and wife during marriage. Upon the death of one spouse, the survivor becomes the owner of the property.
tenancy by the entirety
cooperative ownership
tenants own shares in a corporation, partnership or trust that holds title to the building. tenants have proprietary leases and the right to ocupy their respective units
trustees power and authority are limited by the
terms of the trust agreement
trust established by will after the owners death
testamentary trust
A share owned by a married couple can be transferred only with
the agreement of both parties.
Community property does not provide
the automatic right of survivorship that joint tenancy does
A joint tenancy can be created only by
the intentional act of conveying a deed or giving the property by will or living trust
When two or more single individuals or couples acquire title to real estate and the form of ownership is not indicated
the new owners are usually determined to have acquired title as tenants in common
the four requirements or unities are met when
the right to possession of a property is acquired by all of the joint owners by means of a single instrument that conveys an equal, undivided interest to all of them, stipulating that they are to be joint owners with the right of survivorship
A land trust ordinarily continues for a definite term, such as 20 years. If the beneficiary does not extend the trust term when it expires,
the trustee is usually obligated to sell the real estate and return the net proceeds to the beneficiary.
If the joint tenancy had more than two owners to begin with, and one of them conveys that interest,
there will still be a joint tenancy, but only as to the interests held by the remaining joint tenants; the new owner is a tenant in common.
If a partner in a general partnership dies, withdraws, or goes bankrupt, the traditional common law result would be
to dissolve the partnership, which could be reorganized as a partnership of the surviving partners in order to conduct business
device by which one person transfers ownership of property to someone else to hold or manage for the benefit of a third party.
trust
party who holds legal purpose of the trust
trustee
who is in the role of a fiduciary
trustee
person who creates the trust
trustor
a trust can be established during the
trustors lifetime or by will to take effect after trustirs death
in a tenancy in common each tenant holds an
undivided interest in the property
the co owners have
unity of possesion
each owner is entitiled to possession and use of the entire property, even though each holds only a fractional ownership interest.
unity of possession
Upon the death of a joint tenant, the decedent's interest
usually passes to the surviving joint tenant or tenants by the right of survivorship.
can a parcel of real estate be ownerd by two or more people as tenants in common?
yes