UNIT 2 Property Ownership and Interests
littoral rights (term)
(1) A landowner's claim to use water in large navigable lakes and oceans adjacent to the property. (2) The ownership rights to land bordering these bodies of water up to the average high-water mark.
Improvement
(1) Any structure, usually privately owned, erected on a site to enhance the value of the property—for example, a fence or a driveway. (2) A publicly owned structure added to or benefiting land, such as a curb, sidewalk, street, or sewer.
Estates in land are divided into two major classifications:
(1) nonfreehold estates or leasehold estates (those involving tenants' rights of possession) and (2) freehold estates (those involving rights of ownership)
Ownership may be held in
(1) severalty, which means that title is held by one owner (sometimes referred to as sole ownership), or (2) co-ownership, co-tenancy, or concurrent ownership, where title is held by two or more persons at the same time.
The manner in which the property title is held is important to the real estate broker for two reasons:
(1) the form of ownership existing when a property is sold determines who must sign the various documents involved (listing contract, acceptance of offer to purchase or sales contract, and deed), and (2) the purchaser must determine in what form to take title.
right of survivorship
(See tenancy by the entirety); A concurrent form of ownership reserved for property owned by spouses. Right of survivorship is mandatory; making the surviving spouse owner in severalty immediately upon the death of a spouse.
the trustor
(also called grantor or settler) is the individual who creates the trust.
North Carolina Uniform Commercial Code (UCC) on items purchased with credit
, if a homeowner purchases an item on credit (a dishwasher, for example) and gives the creditor a security agreement, that item remains personal property and may be removed by the creditor in the event of default. When the item has been paid for in full, it becomes real property. if an item is left behind by the seller that still owes money, the buyer might assume that it is real property that was included in the purchase price. The buyer may be surprised to learn that he must pay the secured creditor the outstanding balance or risk having the appliance repossessed. All home buyers should make sure there are no security agreements filed on items within the home. This is normally included in the title search, which the buyer's lawyer will perform. The filing of the security agreement in effect makes the potential fixture an item of personal property until it is paid for in full.
A freehold estate:
- lasts for an indeterminable length of time - Fee simple is the highest estate recognized by law. - Fee simple defeasible is a qualified estate. - Fee simple subject to a condition subsequent is a nonoccurrence of some specified event. - Fee simple determinable is automatic ownership reversion if specified action stops. - Pur autre vie estate is based on the lifetime of another person. - Life estate is based on the lifetime of owner. When a spouse dies intestate, the surviving spouse may receive an "elective share," also known as a marital life estate.
Total Circumstances Test (IRMA)
1. Intention of the annexor 2. Relationship of the annexor (tenant or owner making attachment) 3. Method of annexation (how it is attached 4. Adaptation to real estate (item or property been tailored to facilitate each other)
The four types of leasehold (nonefreedhold) estates are the
1. estate for years, 2. estate from year to year, 3. estate at will, and 4. estate at sufferance.
The three forms of concurrent ownership are
1. tenancy in common, 2. joint tenancy, and 3. tenancy by the entirety.
Reversionary interest
: If the grantor does not name a remainderman, then ownership returns to the grantor when the life estate terminates. . If the grantor is deceased when the life estate terminates, the property goes to the grantor's heirs or devisees. This interest or estate is called a reversion and is also a future interest.
North Carolina Uniform Commercial Code (UCC)
A North Carolina statute which may protect the buyers from a seller's unpaid debts; however, if a homeowner purchases an item on credit and gives the creditor a security agreement, that item remains personal property and may be removed by the creditor in the event of default.
tenancy in common
A concurrent form of ownership in which each owner holds an undivided interest in the real property. Ownership interests can be unequal and the right of survivorship is not allowed.
joint tenancy (term)
A concurrent form of ownership of real estate between two or more parties who have been named in one conveyance as joint tenants. Ownership interest may be unequal. Right of survivorship is not automatic in North Carolina but can be added by an attorney
tenancy by the entirety
A concurrent form of ownership reserved for property owned by spouses. Right of survivorship is mandatory; making the surviving spouse owner in severalty immediately upon the death of a spouse.
modular home
A dwelling consisting of a series of rooms or units built off site according to the North Carolina State Building Code; is considered real property as soon as it is assembled on the land. May be multistoried.
manufactured home
A dwelling, also known as a mobile home or house trailer; built under HUD regulations with a permanent chassis. It is considered personal property until the moving hitch, wheels and axles are removed, the unit is attached to a permanent foundation on land owned by the owner of the manufactured home, and an affidavit attesting to these actions has been filed with the Dept. of Motor Vehicles.
A buyer contracts to purchase real property with the intention of having title transfer to her children upon her death. Which of the following is the BEST way for the buyer to take title to the purchased property?
A fee estate
Trust
A fiduciary arrangement whereby property is conveyed to a person or an institution, called a trustee, to be held and administered on behalf of another person, called a beneficiary. The one who conveys the trust is called the trustor.
reversionary interest
A future estate that the grantor holds while granting a life estate to another person.
remainder interest
A future interest in real estate created by the grantor for some third party that will be enjoyed after the termination of a prior estate, such as when an owner conveys a life estate to one party and the remainder to another.
town house ownership
A hybrid form of ownership where the owner holds fee title to their unit and the ground beneath; horizontal ownership. Frequent use of party walls; row houses. Common areas are usually owned and maintained with other unit owners through a homeowners association
proprietary lease
A lease given by the corporation that owns a cooperative apartment building to the shareholder for the shareholder's right as a tenant to an individual apartment.
Probate
A legal process by which a court determines who will inherit a decedent's property and what the estate's assets are.
improved lot (term)
A lot that certain basic required services necessary to utilize it are available, such as electricity, telephone, street access, or water access.
Total Circumstances Test
A method used by judges to determine whether an item is a fixture or personal property
Tenancy in common (1 of 3 forms of concurrent ownership)
A parcel of real estate may be owned by two or more people/entities co-owners have unity of possession, they may have unequal shares The deed creating a tenancy in common may or may not state the fractional shares held by each co-owner; if no fractions are stated, the tenants are presumed to hold equal shares. that each owner holds an undivided interest in severalty and can sell, convey, mortgage, or transfer that interest through the right of partition. On the death of a co-owner, that tenant's undivided interest passes to the heirs through a probate proceeding. The interest of a deceased tenant in common does not pass to another co-owner tenant in common
life tenant (term)
A person in possession of a life estate
future interests
A person's present right to an interest in real property that will not result in possession or enjoyment until sometime in the future, such as a reversion or right of reentry.
cooperative ownership
A residential multiunit building whose title is held by a trust or corporation that is owned by and operated for the benefit of persons living within the building, who are the beneficial owners of the trust or stockholders of the corporation, each possessing a proprietary lease to a specific apartment in the building.
Appurtenance
A right, a privilege, or an improvement belonging to, and passing with, the land.
A manufactured HOME (mobile home/house trailer) is built according to the United States Department of Housing and Urban Development (HUD) construction standards and is defined by North Carolina General Statute §143-143.9(6) as:
A structure, transportable in one or more sections and which is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities can be either personal property or real property personal property if the moving hitch, wheels and axle remain, and is not attached to a permanent foundation on land owned by the owner of the manufactured home. real property if the moving hitch, wheels and axle are removed and it is permanently attached to land owned by the owner of the manufactured home and the owner files an affidavit confirming the aforementioned actions.
nonfreehold (leasehold) estate
A tenant's right to occupy real estate during the term of a lease, generally considered a personal property interest; nonfreehold estate.
trade fixture
An article installed by a tenant under the terms of a lease and removable by the tenant before the lease expires.
freehold estates
An estate in land in which ownership is for an indeterminate length of time, in contrast to a leasehold estate.
fee simple determinable
An estate in real estate that continues "so long as" a prescribed land use continues. Estate ends automatically upon the termination of the prescribed use; no lawsuit is necessary for reversion.
fee simple with condition subsequent
An estate in real estate that prohibits a specific condition on the property. Grantor has the right to re-enter the property and reclaim ownership through legal proceedings.
fee simple defeasible
An estate in which the holder has a fee simple title that may be terminated upon the occurrence or nonoccurrence of a specified event. Two categories of defeasible fee estates exist: fee simple determinable and fee simple on condition subsequent.
Waste
An improper use or abuse of a property by a possessor who holds less than fee ownership, such as a tenant, life tenant, mortgagor, or vendee. Such waste ordinarily impairs the value of the land or the interest of the person holding the title or the reversionary rights.
life estate
An interest in real or personal property that is limited in duration to the lifetime of its owner or some other designated person or persons.
Fixture (term)
An item of personal property that has been converted to real property by being permanently affixed to the realty
fixture
An item that was once personal property but has been so affixed (or attached) to land or a building that the law construes it to be part of the real estate. If an item is a fixture, it automatically transfers with the property unless excluded by either party to the contract. As a matter of fact, almost any item that has been added as a permanent part of a building is considered a fixture.
homeowners association (HOA)
An organization of property owners in a subdivision, planned community, or condominium that makes and enforces rules for the properties within its jurisdiction.
riparian rights
An owner's rights in land that borders on or includes a stream, river, or lake. These rights include access to and use of the water.
time-share ownership
Any right to occupy a unit of real property during five or more separated time periods over a period of at least five years.
limited common elements
Common elements of a condominium project reserved for the exclusive use of one or more units, such as parking spaces or storage areas.
Condominium ownership
Condominium laws, often called common interest ownership acts or horizontal property acts, have been enacted in every state, including North Carolina. Under these laws, the occupant/owner of each unit holds a fee simple absolute title to the unit (which is often called title to airspace). Each unit owner also owns a share of the common elements, such as the pool, hallways, and other amenities. These elements are owned and held by the unit owner as a tenant in common with the other unit owners in the complex individual unit owners in a condominium own and use these common elements together as tenants in common. The individual unit owners pay their own separate property taxes and mortgage payments and typically belong to an owners' association that manages the common elements of the condominium complex and determines the homeowners association dues or fees.
trade fixtures vs fixtures
Fixtures are part of the real property and belong to the owner of that property. Trade fixtures are usually owned and installed by a tenant for personal use and remain the tenant's personal property. Fixtures are considered a permanent addition to a building, but trade fixtures are removable. Trade fixtures may be attached to a building in the same manner as other fixtures. However, due to the relationship of the parties (landlord and tenant), the law gives a tenant the right to remove trade fixtures, provided the removal is completed before the term of the lease expires and the rented space is restored to approximately its original condition. Because fixtures are legally construed to be real property, they are included in any sale or mortgage of the real property. Trade fixtures are not included in the sale or mortgage of real property except by special agreement because they are considered to be personal property of the commercial tenant. Trade fixtures that are not removed at the end of the lease become the real property of the landlord. Acquiring the items in this way is known as accession.
doctrine of prior appropriation
Followed primarily by Western states, this doctrine contends that water rights are determined by priority of beneficial use. The first person to use water or divert water for a beneficial use or purpose can acquire individual rights to the water. In these states, property owners may have land that borders water but no rights to use that water.
pur autre vie
For the life of another. A life estate pur autre vie is a life estate that is measured by the life of a person other than the grantee.
Reliction
Gradual recession of water which uncovers land that usually belongs to the riparian owner
Emblements
Growing crops, such as grapes and corn, that are produced annually through labor and industry; also called fructus industriales. Usually considered to be personal property
Concerning concurrent ownership, which of the following statements is/are TRUE? I. Tenancy in common is not available to a married couple holding title on a property. II. Joint tenants may hold title to the property with equal, undivided interests.
II only
public trust doctorine (navigatable water/with a tide)
In NC all land below the mean high-water mark is owned by the government. (The strip of land between high and low tide lines, called the foreshore, belongs to the state of North Carolina.) This makes a portion of every beach in North Carolina a public beach under the public trust doctrine.
agricultural fixtures
In North Carolina, a fixture attached to leased property by a tenant farmer is considered the landowner's real property rather than the tenant's personal property.
leash vs sales contract for crops
In a lease situation, a tenant may re-enter the land after lease termination, if necessary, to harvest crops that result from the tenant's labor. But in a sales transaction, if an annual crop is growing, it will be transferred as part of the real property if no special provision is made in the sales contract.
In North Carolina, the ownership of water and the land adjacent to it is determined by the doctrine of riparian rights (lakes, rivers, and streams)
Land adjoining navigable rivers is owned only to the banks of the river in North Carolina (see Riparian Rights). Navigable waters are considered public highways on which the public has an easement or a right to travel
improved land (term)
Land that has a building or buildings on it or land that has been prepared for development, such as with grading, installation of utilities, et cetera.
Homestead
Land that is owned and occupied as the family home. In many states, a portion of the area or value of this land is protected for exempt from judgments for debts.
marital life estate
North Carolina law permits that when someone dies without a will, or dies with a will disinheriting a spouse or leaving him or her very little that the surviving spouse may choose an "elective share" of the estate instead.
Remainderman
One entitled to receive a remainder interest in some estate sometime in the future.
concurrent ownership
Ownership involving two or more owners.
surface rights
Ownership rights in a parcel of real estate that are limited to the surface of the property and do not include the air above it (air rights) or the minerals below the surface (subsurface rights).
subsurface rights
Ownership rights in a parcel of real estate to the water, minerals, gas, oil, and so forth that lie beneath the surface of the property.
common interest community (hybrid) ownership
Ownership that contains elements of both ownership in severalty and concurrent ownership.
common elements
Parts of a prop common use by all of the condominium residents. Each condominium owner has an undivided ownership interest in the common elements.
A fee simple owner who creates a life estate must consider the future ownership of the property after the termination of the life estate. The future interest may take one of two forms:
Remainder and reversion
North Carolina Condominium Act of 1986
Specifies that a condominium is created and established when the developer of the property executes and records a declaration of its creation in the county where the property is located. The declaration must include any covenants, conditions, or restrictions on the use of the property. Other requirements include disclosure and other consumer protection measures in connection with new residential condominium unit sales.
What form of concurrent ownership can only be held by spouses?
Tenants by the entirety
condominium ownership
The absolute ownership of a unit in a multiunit building based on a legal description of the airspace the unit actually occupies, plus an undivided interest in the ownership of the common elements, which are owned jointly with the other condominium unit owners.
estate in land
The amount and kind of interest that a person has in real property
A seller spent $5,000 to have custom-made awnings installed over her backyard patio. According to the NCBA/NCAR 2-T Offer to Purchase and Contract, what is the status of the awnings?
The awnings are considered real property and must stay.
A buyer and a seller/developer executed a purchase contract for a new condominium on May 6 with the buyer giving $5,000 in earnest money. The buyer changed her mind and notified the seller on May 11 that she was rescinding the contract. Which of the following is TRUE?
The buyer can legally cancel the contract and have all the earnest money refunded.
bundle of legal rights
The concept of land ownership that includes ownership of all legal rights to the land (i.e. disposition, exclusion, enjoyment, possession and control).
The North Carolina law also requires disclosure and other consumer protection measures in connection with new residential condominium unit sales in the form of public offering statements.
The developer must disclose all ownership and other appropriate documents to the purchaser before the purchase contract is signed The purchaser then has a seven-day rescission period, which begins after the purchase contract is signed. At any time during that seven-day period, the purchaser can cancel the sale and receive a full refund of any monies paid. On a resale unit (a sale of a condominium other than the original sale from the developer), a resale certificate detailing the monthly dues assessment and any other fees payable by a unit owner must be given to a purchaser prior to conveyance. There is no right to cancel in resale transactions.
Erosion (term)
The gradual wearing away of land by water, wind, or other natural forces; the diminishing of property by the elements may cause loss of ownership.
Remainder interest
The grantor names someone other than the grantor to receive title to the property when the life estate terminates. A remainder interest is a nonpossessory estate—a future interest. This interest can be sold.
Accretion
The increase or addition of land by the deposit of sand or soil washed up naturally from a river, lake, or sea.
Which of the following items would normally convey as a fixture with the property?
The large mirror bolted over the fireplace mantel
manufactured vs modular homes
The main difference between manufactured and modular homes is that manufactured homes are built to the national HUD code, while modular homes are built to all applicable state and local building codes. This is similar to the way traditional site-built homes are constructed. modular homes are held to the same local, state and regional building codes required for on-site homes, while manufactured homes are held to a federal code set by the Department of Housing and Urban Development (HUD). Once a modular home is assembled, it's treated exactly like a site-built home so it can be financed through a regular mortgage. While there are some lenders that may finance manufactured homes, they may charge high interest rates because the risk they take on is higher.
fee simple absolute
The maximum possible estate in real property; most complete and absolute ownership; indefinite in duration, freely transferable and inheritable.
Severalty
The ownership of real property by only one person or entity; also called sole ownership.
air rights
The right to use the open space above a property, usually allowing the surface to be used for another purpose.
Avulsion
The sudden tearing away of land, as by earthquake, flood, volcanic action, or the sudden change in the course of a stream. The loss of land may not result in loss of title to the property.
lateral support
The support a parcel of land receives from adjacent land; a neighbor's duty to support adjoining land in its natural state.
subjacent support
The support of the surface of land by the land's subsurface; duty of the owner of subsurface rights to support the surface of the land.
A prospective client wishes to list his property with a broker and states that the property is held in a trust. Which party should the real estate broker contact in order to proceed with listing and marketing the property?
The trustee
Manufactured BUILDINGS, which include single-family modular homes, are governed by North Carolina General Statute §143-139.1.
These units are constructed in factories off site according to state building codes and contain a state-inspection label with serial numbers certifying compliance. Once the modular home is assembled on the home site, it is immediately considered to be real property.
Town house ownership
Town house projects are typically a group of two-story or three-story units that are horizontally attached to each other; that is, they share party walls and are sometimes called row houses. Each town house unit is individually owned; all unit owners have membership in the homeowner association that owns the common areas. The homeowners association will pay real property taxes on the common areas, while each individual unit owner will pay the real property taxes on the unit the individual owns. Town house ownership is similar to condominium ownership with one fundamental difference: the owner of each town house unit also owns the land on which that unit is built.
accession
Trade fixtures that are not removed at the end of the lease become the real property of the landlord
Which of the following associations is FALSE? A) Trustee—the individual who creates the trust B) Trustee—the fiduciary who exercises control of the subject property C) Trustor—grantor or settler D) Trustor—the individual who creates the trust
Trustee—the individual who creates the trust
concurrent owners, or co-owners, of the property
When title to one parcel of real estate is vested in two or more persons or entities
Ownership in Severalty
When title to real estate is vested in (presently owned by) one person or a single entity, such as a corporation, or limited liability company (LLC), that person or entity is said to own the property in severalty. This person or entity is also referred to as the sole owner.
Agricultural fixtures
While fixtures used in a farming operation would seem to fall into the category of trade fixtures, agricultural fixtures are considered real property rather than personal property. Therefore, in North Carolina, if a tenant farmer installed feeding troughs during the tenancy, they would be considered real property and could not be removed by the tenant at the end of the lease without special written agreement.
a trust is
a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries. A trust is a means by which one party transfers ownership of property to another party, or parties, to hold or manage for the benefit of a third party. The trustor (also called grantor or settler) is the individual who creates the trust. The beneficiary is the person or entity that benefits from the trust. Land trusts are sometimes used to keep the identity of the Property owner private since public records do not usually name the beneficiary. The land trust beneficiary is usually the trustor. The beneficial interest in the trust is considered personal property that may be transferred by assignment versus a deed. A land trust usually has a definite term (e.g., 20 years), which can be extended. Assets transfer to the beneficiary upon specified terms of the trust agreement. Trust dissolution may occur when the beneficiary reaches a certain age, at the death of the beneficiary or the trustor, or when other conditions are met. real estate professionals should be dealing with the trustees and not the beneficiaries regarding the possible disposition of the asset because a beneficiary does not have ownership of the property yet, while the trustee has control
accretion
a gradual increase in land resulting from the deposit of soil by the water An owner is entitled to all land created by accretion
In a town house
a horizontal form of ownership in which houses share common vertical walls, titles to individual units include a fractional interest in common areas. Some land (e.g., directly under the individual unit) is owned by the individual unit owner and is not part of the common area. The common areas are owned by the town house HOA.
homestead is a
a legal life estate in real estate occupied as the family home. In effect, the home (or at least some part of it) is protected from most creditors during the occupant's lifetime. In states that have homestead exemption laws, a portion of the acreage or value of the property occupied as the family home is exempt from certain judgments for debts, such as charge accounts and personal loans. The homestead is not protected from real estate taxes billed against the property or a mortgage for the purchase or cost of improvements; that is, if the debt is secured by the property, the property cannot be exempt from a judgment on that debt.
appurtenance
a right or privilege that goes with the ownership of land Examples of these rights include subsurface rights (such as mineral rights), air rights, and water rights The land may benefit from an appurtenant easement An improvement to the property, whether utility lines or a residential dwelling, is also considered an appurtenance
avulsion
a sudden act of nature such as a flood or avalanche removes soil Loss of land by avulsion does not change the property boundaries, so the owner has the right to reclaim the lost land.
A trust is a fiduciary arrangement that allows
a third party, or trustee, to hold assets, such as real estate, on behalf of a beneficiary.
Why would property owners consider conveying property in a life estate?
a transfer of real estate from individual or joint ownership to a life estate form of ownership may be an estate planning device used to avoid probate of the property may avoid some of the disadvantages of an outright gift of the property to the heirs
trade fixture (chattel fixture)
an article owned by a tenant, attached to a rented space or building, and used in conducting a business
fruits of industry (emblements) personal property
annual crops, such as wheat, corn, vegtables, and fruit
Appurtenance is a right or privilege
associated with real property that normally transfers along with the property to the new owner when the property is sold. An appurtenance could include such rights as an improvement to the property like a building or a parking space in a multiunit building, an easement, or water rights.
future investments
because they will take effect only at some time in the future, if at all, the right of re-entry and the possiblity of reversion are called
fee simple estate
can pass by inheritance holder is entitled to all rights in the property highest type of interest in real estate recognized by law is complete ownership is of potentially unlimited duration not always free of encumbrances 2 major types: 1. fee simple absolute (no ownership limitation), and 2. fee simple defeasible (ownership can be terminated due to actions of the current owner)
fee simple defeasible (1 of 2 types of fee simple estates) aka defeasible fee estate
can pass by inheritance may be lost on the occurence or nonoccurence of a specified event aka qualified fee estate, the new owner must stay qualified 2 types: 1. fee simple subject to a condition subsequent- action/activity that must NOT be performed; former owner retains the re-entry called a revisionary right; requires court proceedings 2. fee simple determinable- requires a activity or land use continue; ownership is held "so long as" or "during the period" the condition or limitation is maintained; former owner/heirs retain right of reversion; no lawsuit necessary for reversion
pur autre vie estate (estate for the life of another) with REMAINDER or REVERSION
can pass by inheritance the life tenant owns the property until the death of the measuring life can be inherited by life tenant heirs up until the death of the measuring life the measuring life has no present or future ownership; serves as a yardstick for the term of the life tenants ownership; is a third party if measuring life dies, the estate would either revert to original owners OR become property of the named remainderman if the life tenant dies before measuring life, heirs of the life tenant will inherit estate
differences between condos and town homes
condo unit owners own the inside of their units. Town house owners own the complete unit, including exterior surfaces and the land on which the unit is built. Every condo or town house development also has common areas of the property such as recreation areas, sidewalks, and parking lots. Condo owners share ownership of the common areas with other owners, while common areas in town house developments are usually owned by the homeowners association for the benefit and use of unit owners. Either way, owners typically pay dues to a homeowners association to cover the costs of maintaining the common areas, as well as other common expenses.
Common interest community ownerships include
condominium, town house, cooperative, and time-share ownerships
Ownership of real estate
defines who will hold the title and what form the ownership will take.
conventional life estate with REMAINDER or REVERSION
does not pass by inheritance; terminates on the death who's life the estates are based; measuring life (life tenant) created by grant from the current owner of the fee simple estate current owner retains a revisionary interest or name a remainderman that will receive the fee simple absolute title limited to the lifetime of the new owner (life tenant) of life estate ends with the death of the person whom it was granted possible to have successive life estates
tenancy by the entirety (1 of 3 forms of concurrent ownership)
entirety is a special form of tenancy used in many states in which the owners must be spouses. Each spouse has an equal, undivided interest in the property; each, in essence, owns the entire estate. On the death of one spouse, full title automatically passes to the surviving spouse through the right of survivorship without a probate hearing. The transfer of the interest of the deceased spouse may be recorded by filing a certificate of death, an affidavit, or a certificate of transfer, as provided by law. In North Carolina, any conveyance to spouses by deed or by will creates a tenancy by the entirety by default unless specifically stated otherwise. A tenancy by the entirety may be terminated by the death of either spouse, divorce (leaving the parties as tenants in common), or the mutual agreement of both spouses. Note that spouses can choose another form of ownership for property that is owned during marriage—tenancy by the entirety is not the only available option; tenants in common or joint tenancy can be used. property that is jointly owned before marriage (or owned in severalty by one of the spouses) does not automatically become a tenancy by the entirety simply by virtue of the fact of marriage.
When the life estate terminates, the holder of the future interest (the remainder or reversion) will be the owner of a
fee simple absolute estate
A property owner wanted to donate to the hospital a vacant lot she owned adjacent to a hospital for expansion purposes. She wanted to make sure the land was used as she intended, so her attorney prepared the deed to convey ownership of the lot to the hospital "so long as it is used for hospital purposes." Upon receipt of the gift, the hospital owned a
fee simple determinable estate.
A purchaser of real estate learns that her ownership rights will continue forever and that no other person has any ownership control over the property. This person owns a
fee simple interest.
fructus industrials
fruit of industry; Growing crops, such as grapes and corn, that are produced annually through labor and industry; also called fructus industriales. Usually considered to be personal property.
fructus naturales
fruits of nature; Plants that do not require annual cultivation and are considered real property
Riparian rights
granted to owners of land located along the course of a river, stream, or lake Such an owner has the unrestricted right to use the water, provided such use does not harm owners upstream or downstream by interrupting or altering the flow of the water or by contaminating it an owner of land that borders a non-navigable waterway owns the land under the water to the exact center of the waterway
If property is held by two or more owners as tenants in common, the interest of a deceased co-owner will pass to the
heirs of the deceased owner.
In NC, the right to survivorship can be created for a joint tenancy if
if the deed is worded in exact compliance with North Carolina court decisions, making it clear that the right of survivorship is intended. Otherwise, North Carolina statutes provide that on the death of a joint tenant, the decedent's estate does not pass to the surviving joint tenant but instead goes to the heirs in the same manner as estates held by tenancy in common.
Nonfreehold, or leasehold, estates
include any estate that is not a freehold estate. A leasehold estate exists on property in addition to a freehold estate when the property owner has rented the property to a tenant.
Freehold estates are estates of
indeterminable length of ownership, such as those existing for a lifetime or forever. Freehold estates are passed from grantor to grantee via the deed when title to real estate is conveyed.
rights of life tenants
interest in real property is a true ownership not answerable to the holder of future interest as long as the property is maintained entitled to all income and profits arising from the property obligated to pay property taxes and insurance may use property resources to maintain property aka "asestovers" sell or mortgage a life tenancy (very few interested in buying or financing though) pay real estate ad valorem taxes and special assessments that arise during tenancy pay interest, but not principal, on pre-existing debt secured by property can not perform any act that would permenantly injure the land or property (waste); those with future interest can seek legal action
Total Cirumstances Test
is a legal test applied by the courts to determine whether an item is a fixture (and, therefore, part of the real property) or personal property. All four parts of the test must be applied, but intention is the major part of the test.
Time-share ownership
is any right to occupy a unit of real property during five or more separated time periods (usually consisting of one or two weeks) over a period of at least five years. sharing permits multiple purchasers to buy interests in real estate—usually a unit of a resort hotel, an apartment, or a condominium—with each purchaser having a right to use the facility for a specific time period. , the North Carolina Time Share Act (G.S. 93A, Article 4) was passed to regulate the development and sale of time-shares.: - all time-share projects must be registered with the state; - all developers selling or offering to sell time shares must renew their registrations on or before June 30 of each year. - Developers must give prospective purchasers public offering statements prior to contract; and purchasers have a five-day cancellation or rescission period during which they can cancel the purchase without penalty. - Any payments received by a time-share developer or broker must be deposited in a trust or escrow account in an insured bank or savings and loan in North Carolina and remain in such account for 10 days or upon cancellation by the purchaser, whichever occurs first. - Time-share salespeople must be active real estate brokers operating under a project broker, who are subject to disciplinary action by the North Carolina Real Estate Commission. There is no separate license for individuals selling time-shares. Individuals who sell time-shares must be properly licensed North Carolina brokers.
The probate process
is required if the party died testate.
the trustee
is the fiduciary who exercises control over the subject property to the instructions of the trustor in the trust agreement. A trustee can be a bank, attorney, or other entity set up for this purpose. Sometimes the trustee is the same individual as the trustor. The trustee's power and authority is limited by the terms of the trust agreement and law, but typically the job of the trustee is to take care of the trust's assets. After payment of trust expenses and trustee's fee, income may be paid to or used on behalf of the beneficiary. The trustee may be able to transfer assets into and out of the trust per trust agreement terms.
the beneficiary
is the person or entity that benefits from the trust.
fee simple absolute (1 of 2 types of fee simple estates) aka fee simple estate
no limitations "fee" and "fee simple" are used interchangeably with fee simple absolute deed in most real estate transations
An important aspect to concurrent ownership is the unity of possession, which means
no one owner may possess a portion of the property and not allow access to the other owners All owners have equal rights to all the property.
1. Tenancy by the entirety, recognized by North Carolina, has the following characteristics:
o Only available to spouses (married gay couples can take title in a tenancy by the entirety) o Title conveyed only by deed signed by both o Carries right of survivorship (survivor becomes owner in severalty)
1. Joint tenancy is where tenants enjoy the following four unities (PITT):
o Unity of possession—all joint tenants have undivided right to possession. o Unity of interest—all joint tenants usually own an equal interest. o Unity of time—all joint tenants acquire their interest at the same time. o Unity of title—title is conveyed to all joint tenants by the same document.
1. Tenancy in common is where
o each tenant holds an undivided fractional interest; o co-owners have unity of possession—right to occupy entire property; o each interest can be sold, conveyed, mortgaged, or transferred; and o interest passes by will when a co-owner dies and right of survivorship not possible.
littoral rights
owners whose land borders oceans and large, navigable lakes that have a tide
Agricultural fixtures, improvements made to North Carolina farms by tenants farmers, become
real property
Concurrent ownership, title held by two or more individuals, may be one of three forms:
tenancy in common, joint tenancy, or tenancy by the entirety.
Riparian and littoral rights are appurtenant (attached) to the land and cannot be retained when the property is sold. This means that
that the right to use the water belongs to whoever owns the bordering land and cannot be retained by a former owner after the land is sold.
One advantage of a trust is
the assets of the trust may be able to pass outside of probate.
An estate may be defined as
the degree, quantity, nature, and extent of interest one has in real property.
Each co-owner of real estate has an absolute right to force a partition of the land by voluntary action and agreement, which will divide a co-owner's real estate according to his or her interests. When a division among co-owners cannot be agreed on voluntarily,
the division can be ordered by a court in a suit for partition. The court may actually divide the land into pro rata parcels or, if this cannot be done, may order the property sold and the proceeds divided proportionately among the owners.
Erosion
the gradual wearing away of land caused by flowing water or other natural forces, may cause an owner to lose land
Joint tenancy (1 of 3 forms of concurrent ownership)
the ownership shares are usually required to be equal The main feature that distinguishes joint tenancy from tenancy in common is the right of survivorship. With survivorship, the death of one of the joint tenants does not destroy the ownership unit; it only reduces by one the number of people who hold title to the property. As each successive joint tenant dies, the surviving joint tenant(s) will acquire the interest of the deceased joint tenant. The joint tenancy continues until there is only one owner, who then holds title in severalty. The last surviving joint tenant has the same rights to dispose of the property as any sole owner. This type of ownership also requires that the joint tenants have equal possession, equal interests (shares), and that title be taken at the same time. This means all owners have unity of possession, all ownership shares are equal, title to the property was taken together at the same time, and names of all joint tenants appear on the deed. if one conveys interest to an outside party, the new owner will hold interest as a tenant in common with the remaining joint tenants. The original remaining joint tenants will still hold their undivided interests as joint tenants among themselves
right to lateral support
the right to have adjacent property support the natural boundaries of the land. Therefore, construction or excavation on a neighboring property should not cause the soil on the owner's property to subside.
Common Interest Community Ownership
they contain elements of both ownership in severalty and concurrent ownership. Owners of individual units may hold title to their unit in any legal way previously discussed (severalty, tenants in common, joint tenancy, or tenancy by the entireties). owners of the individual units must also legally support the maintenance of the common areas through membership in a homeowners association (HOA) and payment of periodic dues.
Cooperative ownership
title to land and building is held by a corporation (or partnership or land trust). building management sets a price for stock shares for each unit in the building. Each tenant of a unit in the building purchases stock in the corporation when the tenant pays the agreed-on price for use of a specific apartment. The purchaser then becomes a shareholder of the corporation and, by virtue of that stock ownership, receives a proprietary lease to the unit for the life of the corporation; there is no deed because there is no ownership of the individual unit. cooperative building's real estate taxes are assessed against the corporation as owner. Generally, the mortgage is signed by the corporation, creating one lien on the entire parcel of real estate. Taxes, mortgage interest, and principal, plus operating and maintenance expenses, are shared by the tenants/shareholders in the form of monthly assessments. While the cooperative tenants/owners do not actually own an interest in real estate (they own stock, which is personal property), for all practical purposes, they control the property through their stock ownership and their voice in the management of the corporation. The bylaws of the corporation generally provide that each prospective purchaser of an apartment lease must be approved by an administrative board. This hybrid form of ownership has not enjoyed much popularity in North Carolina to date.
In North Carolina, joint tenancy interests will be presumed
to be equal unless clearly marked as unequal
fruits of nature considered real property
trees, perennial bushes, and grass
trusts
trusts have been using major estate planning tools to limit the time and cost of probate. (Probate involves proving in court that a deceased person's will is valid, identifying and inventorying the deceased person's property, having the property appraised, paying debts and taxes, and distributing the remaining property as the will (or state law, if there's no will) directs.) If individuals put their assets in a trust, those assets may be able to pass to the heirs outside of probate, not only saving time and money but also potentially reducing estate taxes. Creating a trust allows individuals to specify the terms of the trust precisely, controlling when and to whom distribution is made. They may also, for example, set up a revocable trust so that the trust assets remain accessible to them during their lifetimes while designating to whom the remaining assets will pass thereafter
Owners with littoral rights enjoy
unrestricted use of navigable waters but own the land adjacent to the water only up to the mean high-water mark (see Littoral Rights).
The North Carolina owner of a secluded area adjacent to the Atlantic Ocean noticed that people from town walked along the shore in front of this property. The owner learned that the local citizens had been walking along this beach for years. The owner went to court to try to stop people from walking along the water's edge in front of the property. The owner is likely to be
unsuccessful, because the owner's property extends only to the high-water mark and the public can use the land beyond this point.
improved lot
usually means that certain basic required services necessary to utilize it are available, such as electricity, telephone, street access, or water access
improved land
usually refers to land that has a structure on it, for example a house
Western states follow the doctrine of prior appropriation rather than the riparian doctrine of water use. Prior appropriation doctrine states that
water rights are determined by priority of beneficial use. This means that the first person to use water or divert water for a beneficial use or purpose can acquire individual rights to the water. Thus property owners may have land that borders water but no rights to use that water.
In a cooperative, title to the land and the building is held by a corporation, which sells shares of stock to prospective tenants:
· A purchaser of stock becomes a shareholder in the corporation and receives a proprietary lease to the apartment for the life of the corporation. · Stock is owned as personal property and not real estate. · The lender may accept stock as collateral for financing, which expands the pool of potential owners. · The IRS treats a cooperative the same as houses or condominiums for tax purposes.
Legal tests for a fixture (Total Circumstances Test) include the following:
· Intent of annexor—was it meant to go or stay? · Relationship of annexor—owner or tenant · Method of annexation—not easily removable · Adaptation to real estate—ordinarily considered a permanent addition
A fixture is personal property that has been affixed to the land or to a building so that by law it becomes part of the real property:
· Modular homes immediately become part of the real estate. · Fructus naturales are considered real property.
Water rights are determined by common law and statute:
· Riparian rights are common-law rights granted to owners of land along rivers, streams, or similar bodies of water. · Littoral rights belong to owners of land that borders commercially navigable lakes, seas, and oceans.
Ownership in severalty, title held by one individual/entity which may be a single individual or an artificial person, such as a corporation has the following characteristics:
· Sole rights to ownership · Sole discretion to transfer part or all ownership rights to another person
Condominium laws of each state define the following:
· The condominium owner holds fee simple title to the airspace of a unit as well as an undivided share in the remainder of the building and land, known as the common elements. · Common elements are owned by condominium unit owners as tenants in common. Limited common elements refer to assigned amenities, such as storage lockers/bins and car storage. · The condominium is administered by an owners' association of unit owners that may decide to hire an outside property management firm. · Maintenance of common elements is funded by fees charged to each unit owner. · Unit owners have no right to partition common elements. · Condominium units may be mortgaged; default on payment does not affect other unit owners. · North Carolina Condominium Act of 1986 requires disclosures and allows seven-day rescission on purchase of new units.
distinguishing characteristics of tenancy by the entirety are
· The owners must be spouses when title is received. · The owners have rights of survivorship. · During the owners' lives, title can be conveyed only by a deed signed by both parties (one party cannot convey a one-half interest). · There is generally no right to partition.
A time-share permits the sale of a leasehold interest (time-share use) or deeded ownership (time-share estate) that allows occupancy during a specific period of time, typically weekly. Time-share transactions are governed by the North Carolina Time Share Act:
· Time-share ownership permits multiple purchasers to buy interests in real estate, a form of ownership most commonly found with resort property.
Per the Uniform Commercial Code (UCC),
· an item bought on credit remains personal property until paid for, and · a creditor can repossess the item in event of default.
Termination of joint tenancy is by
· death of all but one joint tenant, who then owns the property in severalty; · conveyance of a joint tenant's interest, but only as to that interest; or · partition, which can be brought to force division or sale of property.
The types of freehold estates that can be transferred include
· fee simple estate (can pass by inheritance), · defeasible fee estate (can pass by inheritance), · pur autre vie estate (estate for the life of another) with remainder or reversion (can pass by inheritance), and · ordinary conventional life estate with remainder or reversion (does not pass by inheritance).
Personal property chattel or personalty) includes
· movable items, such as a chair or a sofa; · emblements (fructus industriales), annual plantings or crops of grains, vegetables, and fruit; · items of real property that can become personal property by severance; · items of personal property that can become real property by attachment or annexation (construction materials); and · manufactured homes that are personal property until permanently affixed to land.
Trade fixtures include property attached to the structure but used in the course of business:
· personal property, if removed by tenant, and the premises are returned to original condition before the lease expires; and · real property if left behind by tenant. The landlord can acquire this type of property by accession.
Bundle of Rights
· right of disposition (to sell, will, transfer, or otherwise dispose of or encumber the property); · right of enjoyment to use in any legal manner (to uninterrupted use of the property without interference of any third party claiming superior title); · right of exclusion (to keep others from entering or using the property); · right of possession (to use or occupy); and · right of control (of the property and its profits within the framework of the law).
bundle of legal rights includes the
· right of disposition, · right to enjoyment, · right of exclusion, · right of possession, and · right of control.
one parcel of real property may be owned by many people, each holding a separate right to a different part of the real estate. These rights may be severed by separate conveyance. For example, while highly unlikely, there could exist, at the same time, an owner of the
· surface rights, · subsurface gas and oil rights, and · air rights.
The North Carolina Condominium Act of 1986 specifies that a condominium is created and established when the developer of the property executes and records a declaration of its creation in the county where the property is located. The declaration must include any covenants, conditions, or restrictions on the use of the property. The developer must file a plat map or plan of the condominium property, buildings, and any other improvements. The developer also must prepare a set of bylaws. The bylaws usually provide for
· the creation of a unit owners' association giving a vote to each unit owner, · the election of a board of managers from among the unit owners, · the duties of the board of managers, · the compensation of its members, · their method of election and removal, · whether a professional manager is to be engaged, and · the method of collecting the unit owners' association monthly dues from each member to cover the costs of management and maintenance of the common areas.
With the North Carolina Time Share Act (part of the North Carolina Real Estate License Law),
· there must be at least five separated periods of use over at least five years; · the buyer has a five-day right of rescission; · any deposits must be held in trust for at least 10 days to allow for receipt of rescission notice; · NCREC can fine a time-share developer $500 per violation of the act; and · the time-share sales people must be actively licensed real estate brokers.
