RE174 Ch 8 Ownership of Real Property

Limited partnership names must end with

'A California Limited Partnership'. agreement must be in writing, and a formal certificate of limited partnership must be filed. A limited partner cannot allow her name to be used in a manner that would indicate she is a general partner.

Real Estate Investment Trust - REIT is an unincorporated trust or association managed by a trustee that meets the following criteria:

1. It cannot hold property for sale to customers in the ordinary course of business. 2. It must be owned by at least 100 investors. 3. 5 people or fewer cannot hold more than 50% interest 4. Interests must be in the form of transferable shares or certificates. California requires that each share carry with t an equivalent vote in determining trust policy. 5. At least 75% of assets must be invested in real estate or cash. 6. Investments must account for at least 90% of the trust's gross income 7. Up to 75% of the trust's gross income may result from real estate-related sources.

S Corporations must meet the following criteria:

1. It must have fewer than 100 shareholders 2. Only 1 category of stock may be issued 3. All stockholders must be individuals, not corporations 4. The business cannot receive more than 20% of its income from interest, rents, dividends, and royalties. This excludes many real estate related businesses. 5. The corporation cannot be affiliated with any other corporation. it must be independent. 6. It must be incorporated in the United States.

Multiple Housing Developments: Under the Subdivided Lands Law, the division of property into 5 or more parcels for the purpose of sale, lease, or financing is considered a subdivision. Subdivision classifications include the following:

1. Standard subdivision: is a land division with no common areas 2. Common interest subdivisions: A common interest is a division whereby owners own their unit, separate interests, and an area in common with other owners. Common interests include condos, planned developments, stock coops, community apartment projects, and time-share projects. 3. Undivided interest subdivisions: is a development in which owners are tenants in common with all other owners without an exclusive right of ownership of a particular lot or unit. An example would be many of the large, member=owned recreational vehicle parks. Purchasers in an undivided interest subdivision have a 3 day right of rescission. There are several types of ownership forms for common-interest and undivided-interest subdivisions.

For title purposes, when a joint tenant dies, the survivors should record, in the county where the property is located, either

1. a certified copy of a court decree determining the fact of death and describing the property or 2. a certified copy of the death certificate, an affidavit identifying the deceased as one of the joint tenants in described property, and an affidavit of survivorship normally would be attached.

To comply with the fictitious name statutes, the partnership must

1. file within 40 days of beginning business, a fictitious name statement with the county clerk that identifies the principals, the business, and its fictitious name 2. publish, within 30 days of filing, the fictitious name statement in a newspaper of general circulation within the county where the principal place of business is located, once a week for 4 successive weeks. expired within 5 years from Dec 3 of year filed, renewal statements filed but no advertisement.

In California, excluded from the equal ownership of community property are

1. property separately owned by husband or wife before marriage 2. rents and profits from separate property 3. property acquired by either spouse by gift or inheritance 4. property acquired with separate property funds 5. damages received for personal injuries and 6. earnings and accumulations of a spouse while living separate and apart, includes legal separation

There are 2 basic disadvantages of cooperatives

1. the stockholder does not have ownership of a unit, so borrowing on equity can be more difficult. 2. there could only be one tax bill. if tax payments are not made by all owners, a lien can be placed on the entire property. If there is only one deed of trust, the failure of one or more owners to make their share of the payment also could result in the entire cooperative's being foreclosed unless the other owners pay the defaulting owner's share.

Two couples could own property as tenants in common, with each couple's interest a joint tenancy. A deed could express this through language such as 'Tom and Helen Smith, as joint tenants, as tenants in common with Frank and Ethyl Jones, as joint tenants,' Also required to create a joint tenancy are the four unities of

1. time 2. title 3. interest, and 4. possession Memory Tool: TTIP

Tenancy in Common

A tenancy in common is undivided ownership, of real or personal property, by more than one party without the right of survivorship.

There are 9 community property states

Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

Real estate brokers are authorized by the Corporation Code to sell real estate security interests without having to obtain a broker/dealer license from the

Division of Corporations

TTIP: Title

Joint tenants must acquire their interests by the same document.

TTIP: Time

Joint tenants must get their interests at the same time. A joint tenancy can be created by an owner simply deeding the property to himself and the other party or parties as joint tenants.

TTIP: Interest

Joint tenants, unlike tenants in common, must have equal interests. A grant that provides for unequal interests will create a tenancy in common even if it states that the property being conveyed will be owned in joint tenancy.

While it takes at least two members to form a limited partnership, one person can form an

LLC.

Limited Liability Companies - LLC

LLCs provide the limited liability protection of corporations without the regulations associated with S corporations. The advantages offered by an LLC have resulted in fewer decisions to form S corporations or limited partnerships.

Ownership in Severalty

Ownership by one individual or corporation. It is singular ownership with no other party or parties having a common ownership interest. A city, municipal corporation, would own city property in severalty, as would an individual owning property by himself.

TTIP: Possession

Possession is the only one of the 4 unities that is also applicable to tenants in common. The joint tenant's rights as to use and contributions are identical with those of tenants in common.

Termination of the Joint Tenancy

The sale or transfer by a joint tenant of an interest terminates the joint tenancy as it applies to that interest. The transferee has an undivided interest (1/3 if 3 original joint tenants) as a tenant in common. If one of the original two dies, the one original left will take interest by survivorship, and will be a tenant in common with the transferee. The survivor of the joint tenancy will have an undivided 2/3 interest as a tenant in common with transferee who will be a tenant in common with an undivided 1/3 interest.

CPRS Community Property with Right of Survivorship, after July 2001

To be effective, CPRS ownership must be expressly declared on the deed. When one spouse dies, the surviving spouse, as in joint tenancy, takes title regardless of any will. avoids probate costs and delays. Before death either or both spouses can terminate the tenancy by executing and recording a new deed as to their interests.

If the real estate investment trust distributes 90% or more of its ordinary earnings to shareholders, it is taxed only on its retained earnings at the corporate rate. True or False

True, if the REIT distributes 90+% of its ordinary earnings to shareholders, it is taxed only on its retained earnings at the corp rate.

Fictitious Name

a name that does not include the surname of every partner.

Planned Developments, or Planned Unit Development - PUD, is a division with the unit and the land under it owned by the individual unit. The major difference between a planned development and a condominium is that in a planned development, owners actually own their own land and not just blank.

airspace.

Name a correct statement concerning a real estate investment trust REIT

an REIT must be owned by at least 100 investors

taxation of partnerships

an advantage that partnerships have over corps is that partnerships do not pay income tax.

One or more members can file articles of organization with the secretary of state to engage in any lawful business activity. They must also file blank statements.

annual.

Neither spouse can partition community real property by selling their one-half interest to blank.

another

Neither spouse can encumber or sell the furniture or furnishings of the home without the other spouse. Neither spouse can sell the clothes of the other spouse or of the minor children without the other's blank

approval

Syndicates

are generally limited partnerships. Real estate syndicates fall under the jurisdiction of the Division of Corporations.

Limited Partnerships

are partnerships in which the limited partners have limited liability rather than unlimited liability of a general partnership.

Before transfer of title, owners of condos, community apartment projects, cooperatives, and planned developments must provide purchasers with a copy of restrictions, bylaws, and articles of incorporation, plus an owners' association financial statement including any delinquent blank and costs.

assessments

Trusts property may be held in the name of a trust for a specific purpose, such as for a charitable purpose. Living trusts, revocable, are used for estate planning purposes, because probate can be blank.

avoided. Community property placed in a living trust would still entitle each spouse to community property interests.

Joint ventures

because a joint venture is set up for a limited purpose, the implied authority of its members is more limited than in a general partnership.

A condo is really a vertical subdivision, with the unit owner having a separate deed showing ownership of the airspace in fee simple but owning the common areas, including the land, as a tenant in blank with the other owners.

common.

A married person cannot use community property funds to forma joint tenancy with a 3rd person. Despite the language of the deed, a tenancy in blank would be formed, with the married person and spouse owning their shares as community property.

common.

The courts will not allow the murderer to profit by survivorship. They will view the victim as being a tenant in blank, and the interest will pass to the heirs.

common.

Upon the death of a tenant in common, his interest does not pass by survivorship to the other tenants in

common. the interest passes by will or intestate succession to the heirs of the decedent.

Ownership where neither spouse can will their portion to a third party is called

community property with right of survivorship

An interest in real property consisting of a parcel together with a separate interest in space describes a

condominium.

An unincorporated association can convey property by a deed executed by the president and secretary or others as authorized by the bylaws. Recording a verified certificate listing the names of officers and other people authorized to convey would be conclusive proof that a deed so executed was a properly executed blank.

conveyance.

In lending on a joint tenants interests, a lender would want to couple the loan with a life insurance policy that would pay off the loan in the event of the borrower's blank.

death. If the borrower dies, the surviving joint tenant or tenants will get the interest free and clear.

Because of survivorship, the property interest as Joint Tenants passes to the surviving joint tenants free of claims of the personal creditors of the blank.

deceased. Upon the death of a joint tenant, the interest the deceased joint tenant held ceases to exist.

Unincorporated association is a nonprofit organization that under common law could not hold title because it is not an blank.

entity.

Joint tenancy and tenancy in common are similar as to

equality of possession.

LLCs have operating agreements that are similar to corporate bylaws, but unlike corporations, they do not have perpetual blank

existence.

Community property is property owned by

husband and wife. Community property, originally a Spanish concept, holds that property acquired by a husband and wife during marriage is owned equally by the husband and wife.

Bankruptcy of a joint tenant terminates the joint tenancy as it applies to the bankrupt party's blank

interest.

Unlike syndicate interests, which are often difficult to resell, many REITs are listed on major stock exchanges so that blank are more readily salable.

interests

Limited partners are liable only to the extent of their

investment. However, a limited partnership must have at least one general partner who has unlimited liability.

Because corporations can live forever, which would defeat survivorship, corporations cannot hold title as

joint tenants.

Partnerships for a single undertaking rather than a continuing business are called

joint ventures

In California, members of such associations , unincorporated, are not personally liable for leases or purchases of property used by the association unless they agree to blank in writing.

liability

Joint Tenancy

like tenancy in common, is an undivided interest in either real or personal property, or both. Unlike a tenancy in common, however, joint tenancy has the right of survivorship.

Real estate investment trusts allow smaller investors to pool their resources for quality investments with blank blank

limited liability.

An investor in a real estate syndicate has the advantage of the blank liability of a corporation investor.

limited. That is, the investor's liability is limited to the amount invested.

Community property is divided equally upon dissolution of blank

marriage.

In California, unincorporated associations for religious, scientific, social, educational, recreational, or benevolent purposes may hold title to real property necessary for their purposes int he name of the blank.

organization. Property nonessential to the operation of the organization cannot be held for more than 10 years.

a joint venture is generally considered a

partnership. one joint venturer can sue the joint venture, unlike partnership. Control of the joint venture is normally given to a managing partner.

In a limited partnership, one person can form an LLC. In a limited partnership, a limited partner would lose the liability protection by actively engaging in business matters. In an LLC, member activity does not affect the protection from blank liability.

persona.

A type of subdivision where the individual unit owner owns the unit and the land under it is called a

planned unit development, PUD

In the event of the simultaneous deaths of all of the joint tenants, the Uniform Simultaneous Death Act will treat the interest of the individual joint tenants as if they had survived the other(s). This would result in separate blank of each of their interests.

probates.

An owners association must furnish the owner with a copy of the latest version of documents within 10 days of a request by an owner. A reasonable fee for doing this may be charged. A homeowners association cannot charge a transfer fee when units are sold that exceed their actual cost of changing their ownership blank.

records.

An owner of real property owes no duty of care to keep the premises safe for entry by others for

recreational purposes. An owner of an interest in real property owes no duty of care to keep the premises safe for entry by others for recreational purposes or to give warning of hazardous conditions. This does not apply to willful or malicious failure to guard or warn against a known dangerous condition, use, structure, or activity that is not obvious.

An unincorporated association is a nonprofit organization that under common law could not hold title because it is not an entity. An exception to this in California would be for

religious, social or recreational purposes. In California, unincorporated associations for religious, scientific, social, educational, recreational, or benevolent purposes may hold title to real property necessary for their purposes in the name of the organization.

The right of the other co-owners to receive one co-owner's interest upon his death is referred to as

right of survivorship. Upon the death of a tenant in common, there is no right of survivorship, his interest does not pass by survivorship to the other tenants in common.

Comdominium is an interest in real property consisting of an undivided interest in common in a portion of a parcel, together with a separate interest in space. The property can be residential, commercial, or industrial. Most condo owners own their unit in fee blank.

simple.

If the tenant in common dies intestate, without a will, and leaves no heirs, the interest will escheat, pass, to the

state. Unmarried partners who live together will often choose tenancy in common as their form of ownership when the survivorship feature is not desired.

Unlike a tenancy in common, joint tenancy has the right of

survivorship.

S Corporations are similar to partnerships as to

taxation.

A judgment against one joint tenant does not sever the joint tenancy, but levying execution against the property and having a sale does end the joint blank

tenancy. If the joint tenant dies before the execution of the judgment against the property, the property will pass free and clear of the debt to the surviving joint tenants.

The interest is capable of being transferred by will or by intestate succession. The surviving joint tenants receive the interest of the deceased joint blank.

tenant.

The conveying instrument must expressly state the ownership will be held in joint tenancy; otherwise any conveyance to two or more people, other than spouses, will be considered a conveyance to

tenants in common. conveying instrument

Under federal law the best defense of a landowner against a claim for clean-up liability for hazardous waste would be that

the owner made proper inquiry when purchasing the property and had no knowledge of the material. Under federal law, landowners may raise the defense of innocence when they conducted appropriate inquiry before acquiring the property. Because California law requires prior owner and lessee disclosure, the defense of innocence will likely be removed if any disclosure was made.

the right of survivorship means

the right of other co-owners to receive one co-owner's interest upon his death.

Undivided interest

the tenant in common has a share in the whole and not ownership of a separate portion. For example, a tenant in common having a one-half interest in 10 acres of land would have a one-half in the entire 10 acres and not one-half of the land , 5 acres.

A stock cooperative is a corporation formed for the purpose of holding title to an improved property. Each shareholder has the exclusive right to the occupancy of a unit through a proprietary lease with the elected governing body. The blank of shares also transfers occupancy by a sublease.

transfer

An owner's liability could extend to

trespassers or neighbors. an owner's liability could extend to trespassers as well as neighbors who are injured because of dangerous conditions on the property.

The trustee in a REIT must have exclusive power to manage the blank.

trust. Trusts are either equity trusts, real estate; mortgage trusts, investments in mortgages and trust deeds; or hybrid trusts, investments in both real estate and mortgages.

An agreement to sell community real property, signed by one spouse only is

unenforceable. Community real property transfers, as well as leases for more than one year, require the signature of both spouses. Neither spouse alone can encumber or obligate community real property.

A general partner is an active partner in the partnership who has

unlimited personal liability for the debts of the partnership

Premarital agreements about property rights generally are

valid.

Because community property actually is owned equally by both spouses, either spouse can transfer their one-half interest by blank.

will.