Chapter 11 - How Home Ownership is Held

Irrevocable living trust

A trust in which the grantor gives up the right to revoke or terminate the trust.

Co-ownership in a property can be terminated by which of the following...?

Foreclosure

Four Unities of Joint Tenancy

Unity of Time Unity of Title Unity of Interest Unity of Possession

Limited Liability Company (LLC)

A business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. Employees, members, and managers are not reliable for company debts. No restriction on shareholders.

Partition Suit

A court process where property owned concurrently can be divided into distinct portions so each co-owner may hold his or her portion in severalty. The court may order the property sold.

Community Property Right of Survivorship

A declaration made by husband and wife that community property will go to the survivor upon the death of one party; eliminates probate

Partition

A division of real or personal property or the proceeds therefrom among co-owners.

S corporation (S-Corp)

A form of corporation that avoids double taxation by having its income taxed as if it were a partnership. Cannot have more than 75 shareholders

Trusts

A legal device whereby one person transfers ownership of property to someone else to hold or manage for the benefit of a third party.

Limited Partnership

A partnership consisting of a general partner or partners and limited partners in which the general partners manage and control the business affairs of the partnership while limited partners are essentially investors taking no part in the management of the partnership and having no liability for the debts of the partnership in excess of their invested capital.

Land trust

A trust in which property is conveyed, and in which real estate is the only asset. Owner is typically trustor and beneficiary. Beneficiaries are not included in public records.

Revocable Living Trust

A trust in which the grantor reserves the right to revoke the trust and regain trust property. The grantor can serve as the initial trustee. Substitute for a will. Privacy and taxation benefits.

Testamentary Trust

A trust that is created by will and therefore does not take effect until the death of the trustor.

A joint tenancy is terminated when which of the following ceases to exist...? All of the above Interest Possession Title

All of the above

Each spouse in a community property has equal rights to which of the following...? Alienation Management Testamentary disposition All of the above

All of the above

Real property can be owned in which of the following forms...? Severalty Co-ownership In trust All of the above

All of the above

Which of the following is an example of co-ownership...? Tenancy in common Joint tenancy Community property All of the above

All of the above

Limited Liability Partnership (LLP)

All partners are limited partners and not responsible for the debts and other liabilities of other partners. Must file name with secretary of state.

Living Trust

An agreement where the trustee holds legal possession of a fund or assets that belong to another person, the beneficiary, and it is created while the person is alive.

General Partnership

An arrangement by which partners conducting a business jointly have unlimited liability, which means their personal assets are liable to the partnership's obligations.

Partnership

An association of two or more people who operate a business as co-owners and share in the business profits and losses.

Corporation

An entity established and treated by law as an individual or unit with rights and liabilities, or both, distinct and apart from those of the persons composing it. A corporation is a creature of law having certain powers and duties of a natural person. Being created by law it may continue for any length of time the law prescribes. Double taxation

Tenancy in Common

An ownership of realty by two or more persons, each of whom has an undivided interest, without the "right of survivorship". Assumed to have equal interest unless specified otherwise. One owner can sell their rights without permission from other owners. Interest of deceased tenant does not pass to other tenant, but their heir. Ex: Two owners do not own left and right side of property individually. Both own the whole piece of land.

One entitled to the benefit of a trust is referred to as the...? Devisee Beneficiary Trustor Primary owner

Beneficiary

Tenants by Entirety

Co-ownership form that can only be used by married couples. Created by express wording. Surviving spouse has right of survivorship. Neither spouse may sell, gift, devise, or otherwise transfer property without permission of other spouse.

An entity established and treated by law as an individual or unit with rights and liabilities, or both, distinct and apart from those of the persons composing it is referred to as a...?

Corporation

In this type of arrangement, partners conducting a business jointly have unlimited liability, which means their personal assets are liable to the partnership's obligations...?

General partnership

Trustee

Holds legal title to trust. A fiduciary who holds or controls property for the benefit of beneficiary. Authority is limited by trust agreement.

Undivided ownership of a property interest by two or more persons each of whom has a right to an equal share in the interest and a right of survivorship is known as...?

Joint tenancy

This business structure combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation...?

Limited Liability Company

An agreement where the trustee holds legal possession of a fund or assets that belong to another person, the beneficiary, and it is created while the person is alive is referred to as a/an...? Living partition Escheat Living escrow Living trust

Living trust

Severalty Ownership

Owned by one person only. Sole ownership.

How is ownership in a community property between a husband and wife divided...?

Ownership is divided equally among the owners

Trustor

Person who creates a trust

Community Property

Property acquired by husband and/or wife during a marriage when not acquired as the separate property of either spouse. Each spouse had equal rights of management, alienation, and testamentary disposition of community property. Not considered one entity, but equal partners.

The right of a surviving tenant or tenants to succeed to the entire interest of the deceased tenant is known as...?

Right of survivorship

When someone is the sole owner of a property, they are said to have this type of ownership...?

Severalty Ownership

assumed name

Sometimes called a "doing business as" (DBA) name, this is the name of the business to be started. Brokers must notify TREC within 30 days of their assumed name. Must be filed in county clerk.

Right of Survivorship

The right of a surviving tenant or tenants to succeed to the entire interest of the deceased tenant; the distinguishing feature of a joint tenancy.

Joint Tenancy

Two or more natural persons own that comes with a special benefit called the right of survivorship. Undivided ownership of a property interest by two or more persons each of whom has a right to an equal share in the interest and a right of survivorship. Do not need permission to sell share.

Separate Property

Under community property law, property owned solely by either spouse before the marriage, acquired by gift or inheritance after the marriage, or purchased with separate funds after the marriage.

Joint Tenancy is destroyed when

any one of the four unities of joint tenancy is terminated

Beneficiary

one entitled to the benefit of a trust.