Law 2 final

breach of contract: liability of clients

- can be sued for this when an accountant fails to perform - the courts consider damages to be the expenses the client incurs in securing another accountant to perform the needed services as well as any fines or penalties incurred by the client for missed deadlines, lost opportunities, and such

Fraud: liability to clients

- client can being a civl lawsuit and recover any damages proximately caused - punitive damages may be awarded in cases of actual fraud

special types of wills

- holographic wills - nuncupative wills

SEC Section 16 rules

- it defines officer to include only executive officers who perform policy-making functions. officers who run day-to-day operations are not responsible for policy decisions are not included - it relieves insiders of liability for transactions that occur within six months before becoming an insider - it provides that insiders are liable for transactions that occur within six months of the last transaction engaged in while an insider

special bailments

- warehouse companies - common carriers - innkeepers

transfer of ownership of real property

-sale -tax sales -gift -will -inheritance -adverse possession

common carriers are not liable to loss, damage, or destruction of goods caused by

1. an act of God (tornado) 2. an act of public enemy (terrorists) 3. an order of the government (statutes, regulations) 4. an act of the shipper (improper packaging) 5. the inherent nature of the goods (perishability)

3 most common ways of assuring marketable title are:

1. attorney's opinion 2. torrens system 3. title insurance

elements necessary to create a bailment

1. bailment of personal property 2. delivery of possession 3. Bailment agreement

two types of easements

1. easements appurtenant 2. easements in gross

to obtain title under adverse possession the wrongful possession must be

1. for a statutorily prescribed period of time (b/w 10-20 yrs) 2. open visible and notorious 3. actual and exclusive 4. continuous and peaceful 5. hostile and adverse

insiders under section 10b

1. officers, directors, and employees at all levels of a company 2. lawyers, accountants, consultants and agents and representatives who are hired by the company on a temporary and non-employee basis to provide service or work to the company 3. other who owe a fiduciary duty to the company

methods of acquiring property

1. possession or capture 2. purchasing 3. production 4. gift

delivery of possession

1. the bailee must have exclusive control over the personal property and 2. the bailee must knowingly accept the personal property

a totten trust is tentative because

1. the trustee can add or withdraw funds from the account 2. the trust can be revoked at any time prior to the trustee's death or prior to completing delivery of the funds to the beneficiary

there are three major rules of liability that a state can adopt in determining whether an accountant is liable in negligence in third parties:

1. the ultramares doctrine 2. section 552 of the restatement (second) of torts 3. the foreseeability standard

Insider trading sanctions act

A federal statute that permits the SEC to obtain a civil penalty of up to three times the illegal benefits received from insider trading - the fine is payable to the US treasury

Securities Exchange Act of 1934

A federal statute that primarily regulates trading in securities that requires: - registration of certain companies with the SEC - the continuous filing of periodic reports by these companies with the SEC - the regulation of securities exchanges, brokers, and dealers

Section 10b of the Securities Exchange Act of 1934

A provision of the Securities Exchange Act of 1934 that prohibits the use of manipulative and deceptive devices in the purchase or sale of securities in contravention of the rules and regulations prescribed by the SEC - requires scienter to be in violation

misappropriation theory

A rule that imposes liability under section 10b and rule 10b-5 on an outsider who misappropriates information about a company, in violation of his or her fiduciary duty, and then trades in the securities of that company

Section 11a of the securities act of 1933

A section of the securities act of 1933 that imposes civil liability on accountants and other for 1. making misstatements or omissions of material facts in a registration statement 2. or failing to find such misstatements or omissions

SEC rule 10b5-1

An SEC rule that prohibits the trading in the security of any issuer on the basis of material non-public information obtained in a breach of duty of trust or confidence owed to the person who is the source of the information

Dodd-Frank wall street reform and consumer act

a 2010 federal statute that regulates hedge funds and derivatives and provides protection to consumers regarding financial products and services

warehouser or warehouse company

a bailee engaged in the business of storing personal property for compensation. - warehouse is bailee - party that stores is bailor - owe a duty of ordinary care - liable only for damage caused by their own negligence

bailment for a fixed term

a bailment that terminates at the end of the term or sooner by mutual consent of the parties

bailment at will

a bailment without a fixed term, can be terminated at any time by either party

condominiums

a common form of ownership in a multiple ownership in a multiple dwelling building in which the purchaser has title to the individual unit and owns the common areas as a tenant in common with the other condominium owners

duty of strict liability

a common law rule that makes innkeepers strictly liable to transient guests for personal property that is lost or stolen from the innkeeper's premises even if the loss was not the innkeeper's fault

will

a declaration of how a person wants his or her property to be distributed upon death

quitclaim deed

a deed in which the grantor transfers only whatever interest he has in the real property to the grantee - grantor does not guarantee that he owns the property

general warranty deed

a deed that protects a grantee of real property from defects in title caused by the grantor and prior owners of the property - highest level of protection

per capita distribution

a distribution of an estate in which each grandchild and great grandchild of the deceased inherits equally with the children of the deceased

per stirpes distribution

a distribution of an estate in which grandchildren and great grand children of the deceased inherit by representation of their parent

abatement

a doctrine that says if the property a testator leaves is not sufficient to satisfy all the beneficiaries named in a will and there are both general and residuary bequests, the residuary bequest is abated first (paid last)

bill of lading

a document of title issued by a common carrier stating that the bailor has title to the bailed goods

warehouse receipt

a document of title issued by a company that is engaged in the business of storing goods for hire, such as warehouse or storage company, that states that the bailor has title to the goods

license

a document that grants a person the right to enter upon another's property for a specified and usually short period of time

profit a prendre

a document that grants a person the right to remove something from another's real property

Sarbanes Oxley act of 2002

a federal act that imposes new rules that affect public accountants. The act: - created the public company accounting oversight board PCAOB - requires public accounting firms to register with the PCAOB - separates audit services and certain non audit services provided by accountants to clients - requires an audit partner of the accounting firm to supervise an audit and approve an audit report prepared by the firm and requires a second partner of the accounting firm to review and approve the audit report - prohibits employment of an accountant by a previous audit client for certain positions for a period of one year following the audit - requires a public company to have an audit committee of independent members of the board of directors that employs and oversees a public accounting firm

racketeer influenced and corrupt organizations act (RICO)

a federal act that provides for criminal and civil penalties for securities fraud - persons injured by a RICO can bring private action and win triple damages - but to bring a private civil RICO based on securities fraud, the defendant must be criminally convicted in connection with securities fraud - a third party must have participated in the operation or management of the enterprise to be liable for civil RICO

private securities litigation reform act of 1995

a federal statute that change the liability of accountants: - the act imposes pleading and procedural requirements that make it more difficult to bring class action securities lawsuits - the act replaces joint and several liability of defendants with proportionate liability

cooperative

a form of a co-ownership of a multiple dwelling building in which a corporation owns the building and the residents own shares in the corporation

tenancy in common

a form of co-ownership in which the interest of a surviving tenant in common passes to the deceased tenant's estate and not to the co-tenants

tenancy by the entirety

a form of co-ownership of real property that can be used only by married couples

joint tenancy

a form of co-ownership that includes the right of survivorship

title insurance

a form of insurance obtained from a title insurer who agrees to reimburse the insured for losses caused by undiscovered defects in title

community property

a form of ownership in which each spouse owns an equal one half share of the income of both spouses and the assets acquired during the marriage

engagement

a formal entrance into a contract between a client and an accountant

specific gift

a gift of a specifically named piece of property

residuary gift

a gift of an estate left after debts, taxes, and specific and general gifts have been given

bequest

a gift of personal property of will

devise

a gift of real estate by will

general gift

a gift that does not identify the specific property from which the gift is to be made

easement

a given or required right to make limited use of someone else's land without owning or leasing it - can be expressly created by grant or reservation - can be implied by 1. implication - where an owner subdivides a piece of property with a well, path, road or other beneficial appurtenant that serves the entire parcel 2. necessity 3. adverse possession

bailment for the sole benefit of the bailor

a gratuitous bailment that benefits only the bailor. the bailee owes only a duty of slight care to protect the bailed property

bailment for the sole benefit of the bailee

a gratuitous bailment that solely benefits the bailee. The bailee owes a duty of utmost care to protect the bailed property

bailee

a holder of goods who is not a seller or a buyer (e.g warehouse, common carrier)

deed

a instrument that describes a person's ownership interest in a piece of real property

Section 10A of the SE act of 1934

a law that imposes a duty on auditors to detect and report illegal acts committed by their clients

trusts

a legal arrangement established when one person transfers title to property to another person to be held and used for the benefit of a third person

right of survivorship

a legal rule that provides upon the death of one joint tenant the deceased person's interest in the real property automatically passes to the surviving joint tenant or joint tenants

estate pour autre vie

a life estate may also be measured by the life of a third liability

torrens system

a method of determining title to real property in a judicial proceeding at which everyone is claiming an interest in the property can appear and be heard. after the evidence is heard the court issues a certificate of title to the person who is determined to be the rightful owner

possession or capture

a person can acquire ownership in unowned personal property by taking possession of it or capturing it.

trustee of a living trust

a person named in a living will to administer the trust assets. this is usually the grantor

trustee

a person or an entity that holds legal title to a trust corpus and manages the trust for the benefit of the beneficiary or beneficiaries

income beneficiary of a trust

a person or an entity to be paid income from a trust

remainder beneficiary of a trust

a person or an entity to receive the trust corpus upon the termination of a trust

beneficiary of a will

a person or an organization designated in a will to receive all or a portion of the testator's property at the time of the testator's death

consignor (shipper)

a person shipping goods, the bailor

consignee

a person to whom the bailed goods are the be delivered

settlor (trustor)

a person who creates a trust also know as a transferor

Tipper

a person who discloses material nonpublic information to another person

statutory insider

a person who is an executive officer, a director, or a 10% shareholder of an equity security of a reporting company

testator/testatrix

a person who makes a will

remainder beneficiary

a person who possesses the right to the property in a remainder

tippee

a person who receives material nonpublic information from a tipper

remainder beneficiary of a living trust

a person who receives the assets of a living trust upond the death of the grantor

income beneficiary of a living trust

a person who receives the income from a living trust during his or her life

ademption

a principle that says if a testator leaves a specific devise of property to a beneficiary, but the property is no longer in the estate when the testator dies, the beneficiary receives nothing

remainder

a right of possession that returns to a third party upon the expiration of a limited or contingent estate.

reversion

a right of possession that returns to the grantor after the expiration of a limited or contingent estate

SEC rule 10b-5

a rule adopted by the SEC to clarify the reach of section 10b against deceptive and fraudulent activities in the purchase and sale of securities - all transfers of securities (whether made on the stock exchange in the over the counter market, in a private sale, or in connection with a merger) are subject to this rule - US supreme court has held that only conduct involving scienter qualifies

proportionate liability

a rule that limits a defendant's liability to his or her proportionate degree of fault

foreseeability standard

a rule that says that an accountant is liable for negligence to third parties who are foreseeable users of the client's financial statements. It provides the broadest standard for holding accountants liable to third parties for negligence.

Section 552 of the Restatement (second) of torts

a rule that says that an accountant is liable only for negligence to third parties who are members of a limited class of intended users of the client's financial statements. It provides a broader standard for holding accountants liable to third parties for negligence than does the ultramares doctrine.

section 18a of the SE act of 1934

a section of the SE act of 1934 that imposes civil liability on any person who makes false or misleading statements in any application, report or document filed with the SEC two ways an accountant or another defendant can defeat the imposition of liability under section 18a 1. the defendant can show that he or she acted in good faith 2. he or she can show that the plaintiff had knowledge of the false or misleading statement when the securities were purchased or sold

codicil

a separate document that must be executed to amend a will. it must be executed with the same formalities as a will

easement appurtenant

a situation created when the owner of one piece of land is given an easement over an adjacent piece of land

adverse possession

a situation in which a person who wrongfully possesses someone else's real property obtains title to that property if certain statutory requirements are met

insider trading

a situation in which an insider makes a profit by personally purchasing shares of the corporation prior to public release of favorable information or by selling shares of the corporation prior to the public disclosure of unfavorable information

undue influence

a situation in which one person takes advantage of another person's mental, emotional, or physical weakness and unduly persuades that person to make a will; the persuasion by the wrongdoer must overcome the free will of the testador

probate court

a specialized state court that supervises the administration and settlement of estates.

work product immunity

a state law that provides an accountant's work papers cannot be used against a client in a court action

accountant-client privilege

a state law that provides that an accountant cannot be called as a witness against a client in a court action

statue of wills

a state statute that establishes the requirements for making a valid will: 1. testamentary capacity - legal age/sound mind 2. writing 3. testator's signature

recording statute

a state statute that requires a mortgage or deed of trust to be recorded in the country recorder's office of the county in which the real property is located - intended to prevent fraud and to establish certainty in the ownership and transfer of property

intestacy statute

a state statute that specifies how a deceased's property will be distributed if he or she dies without a will or if the last will declared void and there no prior valid will

estray statute

a statute that permits a finder of mislaid or lost property to clear title to the property if certain prescribed legal formalities are met

tipper-tippee liability

a tippee is liable for acting on material information that he or she knew or should have known was not public. The tipper is liable for the profits made by the tippee - both tippers and tippees are liable

bailment

a transaction in which an owner transfers his or her personal property to be held, stored, or delivered or for some other purpose. *Title to the property does not transfer

testamentary trust

a trust created by will; the trust comes into existence when the settlor dies

inter vivos trust

a trust that is created while the settlor is alive

resulting trust

a trust that is implied from the conduct of the parties

fee simple defeasible (qualified fee)

a type of ownership of real property that grants the owner all the incident of a fee absolute except that it may be taken away if a specified condition occurs or does not occur

fee simple absolute (or fee simple)

a type of ownership of real property that grants the owner the fullest bundle of legal rights that a person can hold in real property

audit

a verification of a company's books and records pursuant to federal securities laws state laws, and stock exchange rules that must be performed by an independent CPA

joint will

a will that is executed by two or more testators

formal will

a will that meets the requirements of the statute of wills

uniform gifts to minors act and uniform transfers to minor act

acts that establish procedures for adults to make gifts of money and securities to minors

State securities laws

aka blue sky laws (bc they help prevent investors from purchasing a piece of the blue sky) state laws that regulate the issuance and trading of securities.

sale of real estate

aka conveyance the passing of title from a seller to a buyer for a price

living trust

aka grantor's trust or revocable trust a method for holding property during a persons lifetime and distributing the property upon that person's death

special warranty deed

aka limited warranty deed a deed that protects a grantee of real property from defects in title caused by the grantor - a seller is not liable for defects in title that existed before the seller obtained the property

mutual wills

aka reciprocal wills a situation in which two or more testators execute separate wills that leave their property to each other on the condition that the survivor leave the remaining property on his or her death as agreed by the testators

probate

aka settlement of estate the process of - a deceased's property being collected - debts and taxes being paid - and the remainder of the estate being distrubted

tangible property

all real property and physically defined personal property such as buildings, goods, animals, and minerals

limited liability partnership LLP

all the partners are limited partners who lose only their capital contribution in the LLP if the LLP fails, aka limited partners - not personally liable for the debts and obligations of the LLP - a limited partner whose negligent or intentional conduct causes injury is personally liable for his or her own conduct

civil liability under SE act of 1934

although section 10b and rule 10b-5 do not expressly provide for a private right of action, courts have the implied right - a private plaintiff may bring a civil action and seek rescission of the securities contract or recover damages - private securities fraud claims must be brought within 2 years after discovery or 5 years after the violation occurs, whichever is shorter

due diligence defense

an accountant avoids liability if he or she had, after reasonable investigation, reasonable grounds to believe and did believe, at the time the registration statement became effective, that the statements made therein were true and there was no omission of a material fact that would make the statements misleading

certified public accountant CPA

an accountant who has met certain educational requirements, has passed the CPA exam, and has had a certain number of years of auditing experience

tax reform act of 1976

an act that imposes criminal liability on accountants and others who prepare federal tax returns if they 1. willfuly understate a client's tax liability 2. negligently understate the tax liability or 3. air or assist in the preparation of a false return

uniform simultaneous death act

an act that provides that if people who would inherit property from each other die simultaneously, each person's property is distributed as though he or she had survived

quiet title action

an action brought by a party, seeking an order of the court declaring who has title to disputed property. the court "quiets title" by its decision

attorney's opinion

an attorney examines an abstract of title and renders an opinion concerning the status of the title. the attorney can be sued for any losses caused by his or her negligence in rendering the opinion

qualified opinion

an auditor's opinion that states that the financial statements are fairly represented except for, or subject to, a departure from GAAPs. a change in accounting principles, or material uncertainty

unqualified opinion

an auditor's opinion that the company's financial statements fairly represent the company's financial position, the results of its operation and the change in cash flows for the period under audit, in conformity with GAAP

easement in gross

an easement that authorizes a person who does not own adjacent land to use another's land

constructive trust

an equitable trust that is implied by law to avoid fraud, unjust enrichment and injustice

freehold estate

an estate in which the owner has a present possessory interest in the real property

accession

an increase in the value of personal property because it is added to or improved by natural or manufactured means - if it occurs naturally it belongs to the owner - if an improvement is made wrongfully, the owner acquires title of the improved property and does not have to pay the improver for the value of the improvements - if an improvement is mistakenly made by an improver and the improvement can be easily separated from the original article, the improver must remove the improvement and pay any damages caused by such removal - if an improvement is mistakenly made by an improver, and the improvement from the original article, the owner owns title to the improved property and does not have to pay the improver for the improvement

life estate

an interest in real property for a person's lifetime upon that person's death, the interest is transferred to another party

auditor's opinion

an opinion of an auditor about - how fairly the financial statements of the client company represent the company's financial position - results of operations - and change in cash flows may be unqualified, qualified, or adverse

ordinary bailments

bailment for the sole benefit of the bailor, bailment for the sole benefit of the bailee and mutual benefit bailment

mutual benefit bailment

bailment that benefits both parties. The bailee owes a duty of ordinary care to protect the bailed property

accountants may be found liable to clients that hire them under several legal theories including

breach of contract, fraud and negligence

express bailments

can be either written or oral

lineal descendants

children, grandchildren, great grandchildren and so on of a testator - per stirpes - per capita

concurrent ownership

co ownership a situation in which two or more persons own a piece of real property - joint tenancy - tenancy in common - tenancy in the entirety - community property - condominiums - cooperatives

common carrier

companies that offer transportation services to the public, such as airlines, railroads and trucking firms - held to a duty of strict liability

Uniform securities act

coordinates state securities law with federal securities laws

charitable trust

created for the benefit of a segment of society or society in general

totten trust

created when a person deposits money in a bank account in his or her own name and holds it as a trustee for the benefit of another person

ultramares doctrine

defined in ultramares corporation v. touche case - a rule that says that an accountant is liable only for negligence to third parties who are in privity of contract or in privity like relationship with the accountant. it provides a narrow standard for holding accountants liable to third parties for negligence

Section 16a of the SE act of 1934

defines a statutory insider

spendthrift trust

designed to prevent a beneficiary's personal creditors from reaching his or her trust interest

adverse opinion

determines that the financial statements do not fairly represent the company's financial position, results of operations or change in cash flows in conformity of GAAPs

duty of slight care

duty owed by a bailee not to be grossly negligent in caring for the bailed goods

duty of ordinary care

duty owed by a bailee not to be ordinarily negligent in caring for the bailed goods

duty of utmost care

duty owed by a bailee not to be slightly negligent in caring for the bailed goods

duty of strict liability of a common carrier

duty owed by a common carrier whereby if the bailed goods are lost, damaged, destroyed or stolen the common carrier is liable even if the loss or damage was not its fault

holographic wills

entirely handwritten and signed by the testator - writing may be in ink pencil crayon or some other medium

real estate sales contract

executed once the parties have negotiated all the terms of the sale - required to be in writing

Bailment agreement

express or implied must be in writing if it is for more than one year

disclaimer of opinion

expresses the auditor's inability to draw a conclusion about the accuracy of the company's financial records - when the auditor lacks sufficient evidence

GAAP

generally accepted accounting principals - standards for the preparation and presentation of financial statements

GAAS

generally accepted auditing standards - specify the methods and procedures that are to be used by public accountants when conducting external audits of company financial statements - set by the AICPA - contain general standards of proficiency, independence, and professional care

fixtures

goods that are affixed to real estate so as to become part thereof

fungible goods

goods that are exactly alike

fraud: liability to third parties

if an accountant engages in actual or constructive fraud, a third party that relies on the accountant's fraud and is injured thereby may bring a tort action against the accountant to recover damages

confusion

if fungible goods are commingled, the owners share title to the commingled goods in proportion to the amount of of goods contributed

scienter

intentional conduct - negligent conduct is not a violation of 10b or 10b-5

actual fraud

intentional misrepresentation or omission of a material fact that is relied on by the client and causes the client damage - rare

section 101 of the uniform securities act

makes it a criminal offense for accountants and others to willfully falsify financial statements and other reports

section 24 of the securities act of 1933

makes it a criminal offense for any person to 1. willfully make any untrue statement of material fact in a registration statement filed with the SEC 2. omit any material fact necessary to ensure that the statements made in the registration statement are not misleading 3. willfully violate any other provision of the securities act of 1933 or rule or regulation adopted thereunder

section 32a of the securities exchange act of 1934

makes it a criminal offense for any person willfully and knowingly to make or cause to be made any false or misleading statement in application, report or other document required to be filed with the SEC pursuant to the SE act of 1934 or any rule or regulation adopted thereunder - if convicted, may be fined or imprisoned or both

Section 32 of the SE act of 1934

makes it a criminal offense to willfully violate the provisions of the act or rules or regulation - can be fined up to $5 million or imprisoned for up to 25 years or both - a corporation or another entity may be fined up to $2.5 million

Accounting malpractice (negligence): liability of clients

negligence where the accountant breaches the duty of reasonable care, knowledge, skill, and judgment that he or she owes to a client when providing auditing and other accounting services to the client - violations of GAAPs or GAASs or IFRSs are prima facie evidence of negligence

constructive fraud

occurs when the accountant acts with "reckless disregard" for the truth or the consequences of his or her actions. - sometimes classified as gross negligence

subsurface rights

or mineral rights rights to the earth located beneath the surface of the land

nuncupative wills

oral wills that are made before witnesses sometimes called dying declarations or deathbed wills because they are usually only valid if they are made during the testator's last illness and is about to die

estates in land (estate)

ownership rights in real property; the bundle of legal rights that the owner has to possess, use, and enjoy the property

aiders and abettors

parties who knowingly assist principal actors in the commission of securities fraud

fixture

personal property that is permanently affixed to land or buildings

short-swing profits

profits that are made by statutory insiders on trades involving equity securities of their corporation that occur within six months of each other

trust corpus

property and assets held in trust

mislaid property

property that an owner voluntarily places somewhere and then inadvertently forgets - the owner of the premises where the property is mislaid is entitled to the property against all except the rightful owner

abandoned property

property that the owner has discarded with the intent to relinquish his or her rights in it and mislaid or lost property that the owner has given up any further attempts to locate

lost property

property that the owner leaves somewhere due to negligence, carelessness, or inadvertence

section 16b of the SE act of 1934

requires that any profits made by a statutory insider on transactions involving short-swing profits belong to the corporation - the corporation may bring a legal action to recover these profits

intangible property

rights that cannot be reduced to physical form, such as stock certificates, certificates of deposit, bonds and copyrights

innkeeper's statues

state statutes that limit an innkeeper's common law liability. An innkeeper can avoid liability for loss caused to a guest's property if 1. a safe is provided in which the guest's valuable may be kept and 2. the guest is notified of this fact

constructive delivery

symbolic delivery and can be accepted as sufficient for transferring property

personal property

tangible property such as automobiles, furniture, and equipment and intangible property such as securities, patents and copy rights

revocation

termination of a will

in the matter of Cady, Roberts & company

the SEC announced that the duty of an insider who possesses material non public information is to either 1. abstain from trading in the securities of the company or 2. disclose the information to the person on the other side of the transaction before the insider purchases the securities or sells the securities to him or her

SEC/SE act of 1934

the SEC may investigate suspected violations of the SE act of 1934, they may - enter into consent decrees with defendants - seek injunctions in federal district court - or seek court orders requiring defendants to disgorge illegally gained profits

attestation

the action of a will being witnessed by two or three objective and competent people

future interest

the interest that a grantor retains for himself or herself or a third party - reversion - remainder

Real property

the land itself as well as buildings, trees, soil, minerals, timber, plants and other things permanently affixed to the land

servient estate

the land over which an easement is granted

dominant estate

the land that benefits from an easement

donor

the one giving the gift

donee

the one receiving the gift

innkeeper

the owner of a facility that provides lodging to the public for compensation. They owe a duty of strict liability regarding loss caused to the personal property of transient guests

bailor

the owner of property in a bailment

air rights

the owners of land may sell or lease air space parcels above their land

grantee

the party to whom an interest in real property is transferred

grantor

the party who transfers ownership interest in real property

life tenant

the person who is given the estate

heir

the receiver of property under intestacy statutes

surface rights

the rights to occupy, usually applied to land the owner may use, enjoy, and develop the property as he or she sees fit, subject to any applicable government regulation

intestate

the state of having died without leaving a will

privity of contract

the state of two specified parties being in a contract

gift

the voluntary transfer of title to property without payment of consideration by the donee. To be valid, three elements must be shown 1. donative intent 2. delivery 3. acceptance

breach of contract: liability to third parties

third parties usually cannot sue accountants for breach of contract because the third parties are merely incidental beneficiaries who do not acquire any rights under the accountant-client contract - they are not in privity of contract with accountants

marketable title

title to real property that is free from any encumbrances or other defects that are not disclosed but would affect the value of the property

joint and several liability of defendants

where one party of several at fault parties could be made to pay all of a judgment