chapter 1 1: real property and ownership

1: Real Property and Ownership

CHAPTER 1: REAL PROPERTY AND OWNERSHIP

Preview Owning real estate has always been every American’s dream. Real estate investment is probably one of the most important investments in a homeowner’s life. No other investment, even buying a car or investing in stocks, is as important as buying a home. Homeowners enjoy many benefits by owning real estate property. Some of these are:

Right to use, right to encumber, right to dispose of, etc. ♦

♦

♦

♦

♦

♦

♦

Future appreciation.

Tax advantages with deductibility of mortgage interest payments and tax benefit of depreciation of the property.

In this chapter, the following will be discussed:

Differences between personal and real property.

Real estate components.

Various types of estates.

Various forms of real estate ownership. REAL OR PERSONAL PROPERTY Property is either personal property or real property.

1-2 Licensing School for CPA, Tax, Insurance, Real Estate, Appraisal, Contractors, Notary, Nurse, Food Handlers and Securities


PERSONAL PROPERTY (MOVABLE)

Personal property is generally movable by law. The law states any property that is not real property is considered personal property. Personal property is also known as chose or chattel. Examples of personal property are cloth, jewelry, automobiles, furniture, stocks, money, contracts and mortgages. Trade fixtures, discussed below, are also included in this category. There is another distinction between personal and real property. When personal property is sold, one usually uses a bill of sale to transfer the title. When real property is sold, the title is transferred by the delivery of a deed. Deeds will be further discussed in later chapters.

In a real estate sale, the seller removes all personal property unless otherwise negotiated.

REAL PROPERTY (IMMOVABLE) The law defines real property as “rights, interests and benefits (a bundle of rights), which are automatically in the ownership of the land or real estate the owner owns.” Real property is generally immovable by law. BUNDLE OF RIGHTS (BENEFITS, INTERESTS AND RIGHTS) The bundle of rights theory views property ownership rights as a large bundle of sticks, in which each stick is a property right. Individually, these rights represent various, specific forms of ownership; the more of these rights one holds, the more completely one owns the property. So if an individual leases property to someone, he or she gives up a stick, or the right to possess. The basic rights include the following:

The right to possess (possession), the right to use. ♦

♦

♦

♦

♦

The right to enjoy (enjoyment).

The right to encumber (encumbrance) or borrow money.

The right to dispose (disposition) or lease.

The right to exclude (exclusion) subject to claims of others (easements, leases, trust deeds, etc.). The rights of ownership can be disposed of in whole or they can be separately and individually transferred.

All ownership rights are subject to governmental limitations and restrictions.



REAL ESTATE

The law defines real estate as “land, at, above and below the earth’s surface, plus all things permanently attached to it, such as buildings, trees, whether natural or artificial.” The term real estate is similar to the term land, but it means much more. Real estate includes not only the natural components of the land, but also all man-made improvements. An improvement is any artificial thing attached to the land, such as a building or a fence. Streets, utilities, sewers and other additions that make it suitable for building may improve land. Real estate is the physical substance of the real property and consists of:

Land. ♦

♦

♦

♦

♦

Anything that is affixed to land.

Anything that is appurtenant (runs with) to land, and which is immovable by law.

REAL ESTATE COMPONENT 1: LAND Land is defined as the material of the earth, whether it is soil, rock, or another substance. This includes the surface of the land; the air space above the land; and natural resources beneath the surface to the center of the earth, including minerals, oil, gas and water. These are known respectively as surface rights, air rights and subsurface rights. Surface Rights Surface is defined as the living space on the surface of the earth. This includes lateral and subjacent support (support from adjoining land and underlying strata).

Land bordering a stream is owned to the middle of the stream.

Tidal waters are owned to the mean high tide line.

Dynasty School (www.dynastySchool.com) 1-3

Real Estate Principles

Air Rights Generally speaking, an owner of real property owns a reasonable amount of air space above the land, with the remainder being public highway. Landowners have the right to prevent the use of air space if it would interfere with their use of the land. Subsurface Rights Solid minerals contained in the land such as coal, iron or gold are real property, until they are taken from the ground, at which time they become personal property. A landowner that deals the land to another conveys the minerals contained in the land, unless otherwise stated. Oil and gas are a special class of minerals, and because of their fugitive (fluid) nature, they cannot be isolated and are incapable of absolute ownership until reduced to possession. The right to drill for oil and gas rests with the surface landowner or the owner on the mineral rights. It is important to note that surface rights and subsurface rights are distinct; an owner may transfer his or her surface rights without transferring the subsurface rights. Water Rights Water rights include:

Riparian water rights. ♦

♦

♦

♦

♦

Littoral rights.

Underground water rights.

Right of appropriation.

Surface water rights.

Riparian Rights (Right to Use Water) Riparian rights are the rights of each owner of the land bordering a river or watercourse to have reasonable use of the water. No owner has absolute ownership of the water, but each has a right along with others to an equal amount of water in proportion to the amount of land owned.



Littoral Rights Littoral rights are the rights of the owner of the land bordering a lake or the ocean to have reasonable usage. Underground (Percolating) Waters Under the Doctrine of Correlative Users, a landowner has the right of correlative use to take, in common with other owners, only his or her share of underground (percolating) waters for beneficial use. Right of Appropriation / Allocation The right given to the state to give permission to a nonriparian owner to take surplus underground water for beneficial use. Surface Water Rights The runoff from rain not confined to the channel may not be diverted to the property of another. REAL ESTATE COMPONENT 2: ANYTHING AFFIXED / ATTACHED TO THE LAND These are the items regarded as a permanent part of the land. They include:

Things permanently resting upon it, such as buildings. ♦ ♦ Growing things attached to the land by roots, such as trees. Types of growing things are:

1. Natural growth (trees, shrubs and vines) is real property until severed. 2. Industrial crops (those produced by annual labor) are real property until severed,

mortgaged, or sold. Emblements are growing crops (fruits, vegetables). They are considered personal property (chattels); also denote the right of the lessee (tenant) to harvest crops after his or her tenancy has ended. Note: The term used in the law for plants that do not require annual cultivation is fruits of

nature, emblements are known in the law as fruits of industry.



FIXTURES (REAL PROPERTY) Fixtures are things that were originally personal property, but have been attached and have become part of the real property. Test of Fixtures (MARIA) There are five tests used to determine if an item is a fixture or not, known as MARIA.

1. Method of attachment or degree of permanence: The greater the degree of permanence, the more likely that it is a fixture.

2. Adaptability of the personal property: The better adapted, the more likely it will be

considered a fixture. A ceiling fan attached permanently to the ceiling it is probably a fixture. On the other hand, a portable fan attached only by a wall plug would be considered personal property.

3. Relationship between parties: For example, lessor vs. lessee, buyer vs. seller. If a seller

of land affixes something to it, it will be considered a fixture in the absence of an agreement to the contrary.

4. Intention of the person who attached it: This is the most important consideration. If an

item of personal property is to be removed, it should not be permanently attached to the land.

5. Agreements establish who has the right to the fixture: Parties can avoid ambiguities

by specifying whether various items are fixtures or personal property. Remember, when in doubt, put it in writing.

Cost is not a test for fixtures. Trade Fixtures (Removable, Personal Property) Trade fixtures are personal property used in the normal course of business. Trade fixtures are often considered personal property. If a fixture is attached by a lessee (tenant) and is used for his or her trade, manufacture, ornament or domestic use, it may be removed if done without damage to the premises and it can be considered personal property.



REAL ESTATE COMPONENT 3: APPURTENANT OR INCIDENTAL TO LAND Appurtenance is something that is outside the property itself, but is considered a part of the property that, by right, is used by the land for its benefit. It goes with the land and adds to its greater enjoyment. Examples of appurtenance are easements and stock in mutual water company. Easements (Right to Use Other’s Land) Easements are usually the right to cross a person’s land, or passages for air from or across the land of another. Details of easements will be discussed in Chapter 3. Stock in a Mutual Water Company A mutual water company is a nonprofit company organized by or for water users in a specific district to develop and furnish water to its stockholders at reasonable rates. It is usually a corporation wherein the owner of each parcel of land is given a share of stock. The share is considered to be appurtenant to a specific piece of real property and cannot be sold separately. It transfers with the property. This enables the water company to develop uniformity and prevents speculation in the shares of stock.

Stock in a mutual water company is appurtenant to the land; it is real property. Change of Status of Property (Personal Property Real Property) The status of property can change between real property and personal property. Example: Kitchen cabinets before being attached to a wall are personal property, and

after they are affixed to a wall become real property. Characteristics of Real Estate Land has certain characteristics: immobility, indestructibility and uniqueness. Immobility It is true that some of the substances of land are removable and the topography can be changed, but the geographic location of any given parcel can never be changed. It is fixed.



Indestructibility Land is also indestructible. This permanence of land, coupled with the long-term nature of improvements, tends to stabilize investments in real estate. Uniqueness No two parcels of land are ever exactly the same. Although they may be substantially similar, all parcels differ geographically because each parcel has its own location. The uniqueness of land is also referred to as its heterogeneity or nonhomogeneity.

In real estate, no two properties are alike.

ESTATES (DEGREES OF INTEREST) An estate is an interest in property. An estate in land defines the degree, quantity, nature and extent of an owner’s interest in real property. If the estate is in real property, one has a real estate interest. However, not all interests in real estate are estates. To be an estate in land, an interest must allow possession (which can be now or in the future) and must be measurable by duration. Lesser degrees of interests such as easements, which allow use but not possession, are not estates. Estates are classified by duration, and fall into two major classifications: freehold estates and less-than-freehold estates. The following figures illustrate the different ownerships in estates.

ESTATES Freehold Less-Than-Freehold Estates

FREEHOLD ESTATES LESS-THAN-FREEHOLD ESTATES Fee Estate Life Estate Estate For

Years Estate From Period

to Period Estate At

Will Estate At

Sufferance



FEE ESTATES LIFE ESTATES

Fee Simple Absolute

Fee Simple Defeasible

Estate in Reversion Estate in Remainder

FEE SIMPLE DEFEASIBLE Subject to condition subsequent Qualified by special condition

Figure 1-1 Types of Estates

FREEHOLD ESTATES (HIGHEST INTEREST) Historically, the freehold estate was the highest form of land ownership. It is one’s interest as an owner of real property. The owner of a freehold estate in land could use the property in any way. It is an estate that endures for a period that is not fixed or ascertained by a specified or limited time. Freehold estates can be a fee estate or a life estate. FEE ESTATE (ESTATE OF INHERITANCE) A fee estate is sometimes known as the fee simple estate. It is the greatest interest a person can have in land. It is what may be termed a present, possessory interest. The owner has the right to use the property now and for an indefinite duration of time. It can be disposed of during the owner’s life or upon death. It is also referred to as an estate of inheritance or a perpetual estate, and has two types: fee simple absolute and fee simple defeasible. Fee Simple Absolute (Without Condition) In a fee simple absolute, the owner holds title without any qualifications or limitations. It is indefinite in duration and can be conveyed during life or upon death. This is the highest form of interest an owner can have. Fee Simple Defeasible (With Condition) In a fee simple defeasible, the owner holds it subject to a limitation or special conditions that the property holder must (or must not) perform. It is also called fee simple qualified. If conditions are breached, the title goes back to the original owner. In other words, it is defeated.



Two types of defeasible estates exist:

1. Those subject to a condition subsequent. 2. Those qualified by a special limitation.

A fee simple estate may be subject to a condition subsequent. This means that the new owner must not perform some action or activity. The former owner retains a right of reentry, so that if the condition is broken, the former owner can retake possession of the property through legal action. Example: A grant of land “on the condition that” there be no consumption of alcohol

on the premises is a fee simple subject to a condition subsequent. If alcohol is consumed on the property, the former owner has the right to reacquire full ownership.

It will be necessary for the grantor to go to court to assert that right, however. A fee simple estate may also be qualified by a special limitation. The estate ends automatically upon the current owner’s failure to comply with the limitation. If the limitation is violated, the former owner reacquires full ownership, with no need to reenter the land or go to court. It is also called a fee simple determinable, because it ends automatically.

Example: A grant of land from an owner to a church “so long as the land is used only for religious purposes” is a fee simple with a special limitation. If the church decides to

use the land for a nonreligious purpose, the title will revert to the previous owner. LIFE ESTATE (LIMITED DURATION) Life estate is a freehold estate with a limited duration based upon someone’s lifetime. This can be the lifetime of the person granting the estate or any other person so designated. If the designated person dies, the estate ends, and all rights including any tenant rights, revert to the original owner. Life estates are normally created by deed or will. Life estates can be either estate in reversion or estate in remainder.



The holder of life estate:

Has the right of possession. ♦

♦

♦

♦

♦

♦

Has the right to all rents and profits.

Is duty bound to keep improvements repaired.

Must pay taxes and the just proportion of assessments.

Must pay interest on any encumbrance.

May lease, sell or encumber it for the duration of the life estate.

A person holding a life estate cannot grant more rights than he or she holds. Estate in Reversion (Revert to Grantor) If title to a property is to return (revert) to the original grantor following the death of the designated person on whose life the estate depends, the grantor (original party) holds an estate in reversion.

Example: Robert deeds a life estate to Susan for Susan’s life, with the provision that when Susan dies, the title reverts back to Robert. Susan holds a life estate. Robert holds

the estate in reversion.

Example: Tim deeds a life estate to Lisa for Mark’s life. Lisa holds a life estate (life tenant), but the measuring life is Mark’s. When Mark dies, the life estate ends, and the title reverts to Tim. When Lisa dies, while Mark is still alive, Lisa’s heirs may inherit the life estate. When Tim dies, and Lisa and Mark are still alive, Lisa still holds life

estate. It is until Mark dies that the title reverts back to Tim’s heirs. Estate in Remainder (Remainder Person Will Take Over Title) If title to a property is to pass on to a third person (remainder person) upon the death of a designated person on whose life the estate depends, the third person holds an estate in remainder during the life of the holder of the life estate. Example: Mary deeds a life estate to Rodney for the life of Rodney. When Rodney dies, the

property passes to Matt. Rodney holds a life estate. Matt holds the estate in remainder. The holder of an estate in remainder or estate in reversion has no right to the use and enjoyment of the property until the current life tenant dies.



LESS-THAN-FREEHOLD ESTATES (LEASEHOLD) These are interests held by tenants who rent or lease property. With less-than-freehold estates, there is no direct ownership of real estate. They are chattel real estates, commonly called lease, leasehold or estates of tenancy. In a leasehold, the lessor is the owner of a fee estate, or a holder of a life estate who gives up possession to all or part of his or her estate and holds a reversionary interest. The lessee is the tenant who receives the leasehold estate. The lessee holds an exclusive right to occupy and use the property on a temporary basis. There are no ownership rights in real property. LEASEHOLD FEATURES (LEASES)

The lessee (tenant) holds the right to exclusive possession. ♦

♦

♦

♦

The lessor (landlord) holds the title or reversion during the lease.

Leasehold is a chattel real estate; an interest in real property but still only a form of personal property.

Tenancy is the estate of a lessee (tenant); the holding of property for another.

TYPES OF LEASEHOLD ESTATES Just as there are several types of freehold (ownership) estates, there are different kinds of leasehold estates. The following types of leasehold estates exist based on the length of their duration. They are an estate for years, an estate from period to period, an estate at will, and an estate at sufferance. ESTATE FOR YEARS (DEFINITE PERIOD) An estate for years is a lease agreement, which is to continue for a definite period fixed in advance. It may be measured in days, weeks, months or years. The maximum term is 99 years. No notice to terminate or vacate is required.



ESTATE FROM PERIOD TO PERIOD (RENEWABLE EACH PERIOD) An estate from period to period is one that continues from period to period (week to week, month to month, year to year) and is renewed automatically for the same time unless the owner or tenant gives the other written notice of an intention to terminate the tenancy. Requires notice to vacate equal to the period of tenancy, but may not go beyond one month’s notice by either lessor or lessee. ESTATE AT WILL (TERMINATE AT WILL) An estate at will is one that confers a right of possession for an indefinite period of time and no express reservation of rent. It is terminable at the will of either party by giving 30 days’ notice. This form of occupancy is rare. ESTATE AT SUFFERANCE (LANDLORD SUFFERS) An estate at sufferance is one in which the lessee (tenant), who rightfully came into possession, retains it after the expiration of his lease without the consent of the lessor (landlord). Requires no notice to vacate. It is the lowest estate in land, for the tenant is subject to eviction proceedings that may begin at any time.

OWNERSHIP OF REAL PROPERTY / TITLE VESTING When a person acquires ownership of real property, he or she must decide how to hold the title. Tenancy is a mode of holding property. Title may be owned separately, or concurrently with someone else, when two or more persons have ownership rights. In California, a licensed real estate agent may not give advice on how to hold title. TITLE (PROOF OF OWNERSHIP) Title is the legal evidence of a person’s right of ownership of property. Transfer of title will be discussed in Chapter 2. VESTING (METHODS OF HOLDING TITLE) Vesting is the method by which one holds title from among many alternatives. It is tenancy. One can vest title either in severalty or concurrent with others.



SEVERALTY (SEPARATE OWNERSHIP) Separate ownership is ownership by only one individual, technically known as ownership in severalty. A person can hold title in severalty under any one of the following titles, depending upon the owner’s legal status: a single man, a single woman, a married man, a married woman, a widower or a widow. A Single Man/Woman A man or woman who is not legally married.

Example: Robert Wilson, a single man. An Unmarried Man/Woman A man or woman who has been married and is legally divorced.

Example: Raymond Evans, an unmarried man. A Married Man/Woman, as His/Her Sole and Separate Property Sometimes a married man or woman wishes to acquire title in his or her name alone. The spouse must consent, by quitclaim deed or otherwise, to the transfer, thereby relinquishing all right, title and interest in the property.

Example: Frances Bryant, a married woman, as her sole and separate property. Property held by corporations is owned in severalty, as if by a single individual. A corporation is a body of persons treated by law as a single “legal person,” having a personality and existence distinct from that of its shareholders. A corporation can go on forever; it does not die.

Example: ABC Inc., a corporation. A Widower/Widow When one’s spouse passes away, one becomes a widower or widow.

Example: Brian Farrell, a widower, as his sole and separate property.



CONCURRENT OWNERSHIP (CO-OWNERSHIP) Concurrent ownership is simultaneous ownership by two or more persons. Their ownership interests are not necessarily equal shares. There are five important types:

Tenancy in common. ♦

♦

♦

♦

♦

♦

♦

♦

♦

♦

♦

Joint tenancy.

Community property.

Community property with right of survivorship.

Tenancy in partnership.

How a person holds title has a significant impact upon his or her income tax and estate

planning. A buyer should consult with a CPA or attorney on how to hold title. The seller or agent should not offer such advice.

TENANCY IN COMMON (EQUAL POSSESSION) Tenancy in common is when two or more persons own undivided interests in a single estate. A tenancy in common is created when no other method of taking title is specified. It has one unity in common: possession. Each owner:

May have unequal shares. If no distribution is specified, tenants in common are presumed to own equal shares.

Has equal right of possession (unity in possession).

May sell, convey, will or mortgage his or her share of the property to someone else. The recipient(s) receive(s) the fractional share of the tenant in common and full right of possession.

Leaves his or her interest to his or her heirs.

Has a separate title to an undivided interest.

Must pay his or her proportionate share of expenses.



Example: Franklin Bailey and Marie Bailey, husband and wife, as tenants in common. Example: Derek Russell, a single man, as to an undivided 2/3 interest and Tina Macy,

a single woman, as to an undivided 1/3 interest, as tenants in common. If owners have disputes and cannot settle them by agreement, a court of law can be used to sell the property. When the courts have the responsibility of selling the property, it is referred to as a partition action. JOINT TENANCY (RIGHT OF SURVIVORSHIP) Joint tenancy is when a single estate is owned by two or more persons with equal and undivided interests in real or personal property. Each owner:

Must be a unity of Time, Title, Interest and Possession (TTIP, four unities). ♦ Time: Takes title at the same time. Title: Each receives title through the same deed.

Interest: Each owns an equal share. Possession: Each has the right to use all of the property.

Carries the right of survivorship [if one tenant dies, surviving tenant(s) acquire the deceased’s interest]. As a consequence, joint tenancy property is not subject to disposition by will.

♦

♦

♦

♦

♦

♦

♦

Surviving joint tenant is not liable to creditors of the deceased on unforeclosed loans.

No probate in the event of death.

Interest cannot be disposed of by will (name an heir to), because the right of survivorship in joint tenants is a paramount interest.

Joint tenant may sell his or her share without the consent of the other owners. This brings the new owner a tenant in common with the other owners who remain as joint tenants.

A corporation cannot hold title in joint tenancy with a natural person because of the corporation’s perpetual existence.

To create joint tenancy, there must be intention by the owners. If it does not state that it is joint tenancy, joint tenancy does not exist.

Example: John Walters and Camille Walters, brother and sister, as joint tenants.



COMMUNITY PROPERTY (HUSBAND AND WIFE) Community property is property acquired during marriage by husband and wife. The Latin terms et us means “and wife,” and et al means “and others.” Community property laws are based on Spanish law (Treaty of Guadalupe Hidalgo of 1848). Since California is a community property state, this means that any property acquired during a marriage is shared equally. This excludes property that is acquired before marriage and during marriage by gift, inheritance, bequest, devise or descent.

Either spouse may buy property without the consent of the other. ♦

♦

♦

♦

♦

♦

♦

♦

♦

Either spouse may sell community personal property for valuable consideration.

If one spouse sells community real property without the other’s consent, the injured spouse has one year to void the sale; it is unenforceable during that year.

Either party may dispose of their half-interest by will. If there is no will, all interest passes to the surviving spouse at death and holds title in severalty.

Property of the community is liable for contracts of either spouse after marriage, including listings.

Community property vesting has equal interest.

The salesperson must make certain that both husband and wife sign all real estate documents.

Property obtained by either the husband or wife before marriage may remain as separate property.

Either spouse may inherit or receive gifts or property, which can remain as separate property.

Example: Christopher Stephens and Valerie Stephens, husband and wife, as community property.



COMMUNITY PROPERTY WITH RIGHT OF SURVIVORSHIP (AFTER 7/01) With the recent enactment of AB 2912, starting July 1, 2001, married couples in California will be able to vest real and personal property in a new form of community property with right of survivorship. This bill provides that the community property of a husband and wife shall pass to the surviving spouse without having to first pass through the administration of the estate. This bill also permits the right of survivorship to be terminated prior to the death of either spouse, the same way a joint tenancy may be severed. TENANCY IN PARTNERSHIP (BY PARTNERS) Tenancy in partnership is the ownership by two or more persons who carry on a business as partnership for a profit.

Each has equal right of possession of property, but only for partnership purposes. ♦

♦

If one partner dies, title vests in the survivor to carry on business and wind up partnership affairs.

When rights to partnership property are assigned, the rights of all partners must be assigned. If a partner dies, that partner’s right to possession of partnership property (the business) goes to the surviving partner(s). The heirs of the deceased partner have no rights to the property, although they are entitled to the deceased’s share of the profits. For tax purposes, all partnership income is distributed to the partners, who report that income individually. An important feature of a partnership is that each partner is liable for all partnership debts. For that reason alone, the decision to form a partnership requires careful consideration. The figures on the following pages illustrate the characteristics for each of the concurrent ownerships.



Vesting Mode Tenancy in

Common Joint

Tenancy Community

Property Community

Property with

Survivorship

Tenancy in Partnership

Parties Any number of persons

(can be husband and

wife)

Any number of persons.

(can be husband and

wife)

Only husband and wife

Only husband and wife

Any number

Time Any time Same time Same time Same time Any time

Title Each co-owner has a

separate legal title to

his or her undivided

interest

Only one title to the

whole property

Only one title in the

community - each interest is separate

Only one title in the

community - each interest is separate

Only one title

Interest/Division Ownership can be

divided into any number of interests,

equal or unequal

Equal, undivided

interest

Equal, undivided

interest

Equal, undivided

interest

Equal, undivided

interest

Possession and Control

Equal right for each owner




Equal right except for personal property

Conveyance Each co-owner’s

share may be conveyed

separately by its owner

Conveyance by one owner without the other breaks

the joint tenancy and

creates tenancy in common

Only if both spouses join

in the conveyance -

separate interest

cannot be conveyed

Only if both spouses join

in the conveyance -

separate interest

cannot be conveyed

Only if all partners join

in the conveyance




Common Joint

Tenancy Community

Property Community

Property with

Survivorship


Deceased’s Shares on

Death

On co-owner’s

death, his or her interest passes by

will or intestacy - no

right of survivorship

On co-owner’s

death, his or her interests

end and cannot be

disposed of by will. Survivor owns the

property by rights of

survivorship. Passes to surviving

joint tenant(s).

On spouse’s death, half

goes to surviving

spouse and half goes by

will to descendant’s devisees or

by success to survivor

On spouse’s death, title passes to surviving spouse -

survivor owns the property by rights of survivorship

Passes to surviving partners - heirs have

right to deceased’s

share of profits

New Owner of Partial Interest

Purchaser becomes a tenant in

common with the other co-

owners

Purchaser becomes a tenant in

common with the other co-

owners

Tenant in common; no community

interest. Purchaser can only acquire whole title of community;

cannot acquire a part

of it.

Tenant in common; no community

interest. Purchaser can only acquire whole title of community;

cannot acquire a part

of it.

Tenancy in common




Common Joint

Tenancy Community

Property Community

Property with

Survivorship


Creditor Sale Co-owner’s interest may be sold on execution

sale to satisfy creditor - creditor

becomes a tenant in common

Co-owner’s interest may be sold on execution

sale to satisfy creditor -

joint tenancy is broken, creditor becomes tenant in common

Entire property

available to satisfy debt - co-owner’s

interest cannot be seized and

sold separately

Entire property

available to satisfy debt - co-owner’s

interest cannot be seized and

sold separately

Entire property

available to satisfy

partnership debt

Figure 1-2 Concurrent Ownership Chart/Title Vesting



CHAPTER TEST 1. Which of the following would be considered real property:

A. kitchen cabinet in a mobile home; B. fruit that has not been picked, but which has been sold under contract; C. stock in a mutual water company; D. minerals, which have been mined.

2. Personal property is easily distinguished from real property by its:

A. lower unit value; B. multiplicity of use; C. mobility; D. greater variety.

3. When two or more parties own property together as tenants in common:

A. each owner’s interest must be equal; B. each owner’s interest may not be transferred by will or intestate distribution; C. the last surviving owner would hold title to the property in severalty; D. each owner’s interest may be conveyed separately.

4. Mr. Taylor, who owned a farm, deeded the property to his sons, “A,” “B” and “C” as

joint tenants. Shortly thereafter, “B” sold his interest to “W.” “A” died and willed his interest to his heir “S.” Ownership of the property would be:

A. “W” and “C” as joint tenants; B. “C” and “W” as tenants in common: “C” holding 2/3 interest, “W” a 1/3 interest; C. undecided until the probate of “A’s” estate is concluded; D. “S,” “W” and “C” as tenants in common, each with 1/3 interest.

5. Another word for personal property is:

A. tenancy; B. freehold; C. chattel; D. fee.



6. When an owner acquires land with riparian rights appurtenant thereto, such rights:

A. give the purchaser ownership of adjacent waters; B. must be expressed in the deed; C. may be determined accurately from an examination of public records; D. are only available to land adjacent to a stream and within the watershed.

7. Which of the following is not real property as between a buyer and seller of land:

A. trade fixtures; B. growing crops; C. detached garage; D. all of the above.

8. The words “time, title, interest and possession” are most closely related to which of the

following concepts:

A. sole ownership; B. dividend interest; C. survivorship; D. prescriptive use.

9. Paul and Angela Shore are selling property to Fred and Felicia Grey. They want to create

a valid estate for the Shores and reserve a life estate for the Greys. Which of the following clauses should be used in the deed:

A. do hereby grant to Paul Shore and Angela Shore a life estate with reversion to

Fred Grey and Felicia Grey upon their deaths; B. Paul Shore and Angela Shore do hereby grant Fred Grey and Felicia Grey a life

estate; C. Paul Shore and Angela Shore a life estate for the life of the grantors; D. do hereby grant to Fred Grey and Felicia Grey for their lives with reservation to

Paul Shore and Angela Shore.

10. Adam gives a life estate to Kay for the life of Watson. Which of the following would best describe the interest now held by Adam:

A. a less-then-freehold estate; B. a reversionary interest; C. an estate in remainder; D. a fee simple estate.


chapter 1 1: real property and ownership

Documents

fee simple defeasible

fee simple absolute

mutual water company

fee simple estate

ownershipvesting mode tenancy

title reverts back

considered personal property

surviving joint tenant