Real Estate Exam

Bundle of Rights

All legal rights that are attached to the ownership of real property.

UPTEE

Use

Possess

Transfer

Encumber

Enjoy

Use

Right to use property, within the law, for any purpose

Possess

The right to live on the property and the right to keep others out

Transfer

The right to sell property, to give it as a gift, or to dispose of it in a way permitted by law

Encumber

The right to borrow money and use property as security for the loan

Enjoy

The right to peace and quiet enjoyment without aggravation by others

Property

Anything that may be owned and gained lawfully (real or personal)

Real Property

Includes the land, anything permanently attached to the land, anything appurtenant to the land, or anything immovable by law

Land

Includes airspace, surface rights, subsurface rights, and water rights

Airspace

Considered real property to a reasonable height - can be sold as real property

Surface Rights

Rights to use the surface of land, including the right to drill or mine

Subsurface Rights

Rights to natural resources (mineral, oil & gas) below the surface

Riparian Riights

Water rights for owners bordering a river or stream

Littoral Rights

Water rights of owners bordering closed bodies of water, generally up to the mean vegetation line

Attacehments

Items permanently attached to the land

* improvements
* fixtures
* growing things

Improvements

Houses, fences, pools - anything resting on land that are permanent and owned as part of the property

Fixtures

Real property that used to be personal property. Determined by:

A - adaptation of item and agreement of parties

I - intent

M - method of attachment

Trade Fixtures

Exception to fixture rules. Items of personal property used to conduct a business. Tenants are responsible for any damage repairs among removing trade fixtures.

Growing Things

* Natural Attachments: growing plants attached by their roots
* Fructus Naturales: naturally occurring plant growth
* Fructus Industriales: annual crops procured by human labor

Estate

Ownership interest or claim a person has in real property

Freehold Estate

Estate of indefinite duration

Estates in Fee

(Fee simple estate) The most complete form of ownership

Life Estate

Estate that is limited in duration of a measuring life. Measuring life is usually the grantee’s life.

Legal Life Estate

Curtesy - husband’s life estate in all, inheritable of deceased wife

Dower - wife’s life estate in all, inheritable of deceased husband

Homestead

A tract of land owned and occupied as the family home

Less-Than-Freehold Estates

(Leasehold Estates)

Tenant’s possessory estate in land (duration known as tenancy)

Estate for Years

Fixed term and definite end date

Periodic Tenancy

Leasehold for an indefinite period - usually month to month

Tenancy at Will

Tenant obtains possession of property with the owner’s permission, but without a rental agreement

Tenancy at Sufferance

Tenant remans in possession after the lease expires

Separate Ownership

Property owned by one person or entity

Co-Owernship

Property owned by two or more persons or entities at the same time

* Tenancy in Common
* Joint Tenancy
* Community Property
* Tenancy by the Entirety

Tenancy in Common

Two or more persons, whose interests are not necessarily equal, with no right of survivorship

Joint Tenancy

When 2+ parties own real property as co-owners with equal interests and the right of survivorship

T - Title (all parties take title on same deed)

T - Time (all parties become tenants at same time)

I - Interest (all parties have equal interest)

P - Possession (all parties have equal right of possession)

Community Property

All property acquired during a marriage with the exception of separate property and property acquired by gift or inheritance

Tenancy by the Entirety

Ownership by husband and wife in which each owns the entire property. In event of death of one, survivor owns property without probate. Both spouses have equal, undivided interest

Acknowledgement

A formal declaration before a notary public officials, by which the person (grantor) who signed (executed) the instrument (deed) that (s)he in fact did execute (sign) the document

Constructive Notice

Given tot the world by recording the document

Actual Notice

Occurs if a person has direct, express information about the ownership interest of a property

Priority

Order in which the deeds and other instruments are recorded

Encumbrance

Non-possessory interest in real property that is held by someone who is not the owner

Money Encumbrances

A lien that creates a legal obligation to pay

* Deeds of Trust and Mortgages
* Mechanics’ Liens
* Tax Liens
* Judgements
* Mortgage Liens

Non-Money Encumbrances

Affects the use of property

* building restrictions
* easements
* zoning requirements
* encroachments

Restriction

Limitation placed on the use of property

* Deed restriction: created in the deed at the time of sale

Easement

The right to enter or use someone’s land for a specified purpose

* non-possessory
* Ingress: right to enter onto a property
* Egress: right to exit from a property

Easement Appurtenant

Creates an ingress & egress; attaches to the land.

* Servient Tenement: whose land is being used
* Dominant Tenement: whose land is receiving the benefit

Easement in Gross

Easement that is not appurtenant to any one parcel (there is only a servient tenement). Usually include public utilities.

Express Grant

Servient tenement grants easement by deed or express agreement

Express Reservation

Seller of a parcel who owns adjoining land reserves an easement over the former property

Necessity

Created when one or more parcels are completely landlocked with no street access

Prescription

Created by continuous, uninterrupted use by a single or multiple parties for the statutory period

Failure of Purpose

An easement may be terminated if purpose for creating the easement no longer exists

Abandonment

Obvious and intentional surrender of the easement

Merger

The same person owns both the dominant and servient tenements

Express Release

Owner of the dominant tenement is the only one who can release an easement. Usually done with a quitclaim deed.

License

Permission to use property for a specific purpose (may be revoked at any time)

Enroachment

Placing a permanent improvement so that it extends over the lot line into adjoining property owned by another

Will

Disposes of property after death

* Witnessed - prepared by an attorney and signed by the maker and two witnesses
* Holographic - written in the maker’s own handwriting, dated, and signed by the maker

Devise

Gift of real property by will

Bequest

Gift of money or personal property by will

Intestate

Dying without a will

Probate

Legal process to prove a will is valid

Succession

Legal transfer of a person’s interest in real and personal property under the laws of descent and distribution

Accession

A process by which there is an addition to property by the efforts of man or natural forces

Adverse Possession

Acquiring title to property by actual occupation that is

* notorious
* hostile
* continuous for statutory period

Deed

Legal instrument used to transfer an interest in real property

* grantor: person conveying the property
* grantee: person receiving the property

Valid Deed

* legally competent grantor
* legal description
* consideration
* words of conveyance
* named grantee
* signed by the grantor, delivered to and accepted by the grantee

Legally Competent

* sane
* 18 yo
* or: married, divorced, member of armed forced, emancipated

Legal Description

* metes and bounds description
* reference to a recorded document
* government survey system (Public Land Survey System)

Habendum Clause

Begins with “to have and to hold” and defines / limits the ownership interest of the grantee

Not Necessary for Valid Deed

* acknowledgment
* recording
* competent grantee
* date
* signature of grantee
* seal or witness

General Warranty Deed

Implied Warranties:


1. Covenant of seizen: grantor is rightful owner with right to convey title
2. Covenant against encumbrances: grantor guarantees that property is free from undisclosed encumbrances
3. Covenant of quiet enjoyment: grantor ensures title can stand up to third party claimants
4. Covenant of further assurance: grantor ensures delivery of any instrument needed to remove clouds on the title
5. Covenant of warranty forerver: guarantees quality of title against any future failure

Special Warranty Deed

Grantor only warrants the title to the property during the time of the grantor’s ownership

* used in foreclosed property sales
* used in estate sales

Bargain and Sale Deed

A deed that doesn’t contain any covenant of warranty, but implies ownership by grantor

Grant Deed

Must have a granting clause as well as two implied warranties


1. Grantor has not already conveyed title
2. Estate is free from encumbrances (other than ones disclosed)

Quitclaim Deed

Grantor only conveys the right, title and interest of the grantor

* no warranties or covenants to grantee
* used to release any interest grantor has
* sometimes called a release deed
* used to clear a cloud on title

Public Grant

transfer of title by the government to a private individual

Foreclosure

Legal process used by lender to seize property of a homeowner for breech of a deed of trust or mortgage

Bankruptcy

Court proceeding to relieve a person’s or company’s financial insolvency

Quiet Title Action

Court proceeding to clear a cloud on the title

Partition Action

Court proceeding to settle a dispute between co-owners about dividing interests in real property

Execution Sale

Forced sale of property under a court order with proceeds used to satisfy a money judgment

Escheat

Legal process in which real and personal property reverts to the state because deceased owner left no will and has no legal heirs.

Eminent Domain

Power of government to take private property for public use after paying just compensation to the owner

Condemnation

Process by which government acquires private property for public use, under its right of eminent domain

Express Contract

Parties declare the terms and put their intentions in words, oral or written

Implied Contract

Agreement is shown by act and conduct rather than words

Unilateral Contract

Contract in which one party promises to perform before the other party is obligated to perform

Executory Contract

Something remains to be performed by one or both parties

Executed Contract

All parties have performed completely

Voidable Contract

Valid and enforceable on its face, but may be rejected by one or more of the parties

Void Contract

No contract at all or has no legal effect

Unenforceable Contract

Valid, but for some reason cannot be proved by one or both parties

Valid Contract

Binding and enforceable with all the basic elements required by law

Contract Basic Elements

* legally competent parties
* mutual consent between parties
* lawful objective
* sufficient consideration
* real estate contract - must be in writing

Parol Evidence Rule

When 2 parties make oral promises to each other, and then write and sign a contract promising something different, the written contract is considered the valid one.

When a contract is intended to be the parties’ complete and final agreement, no further outside promises (oral or written) are allowed

Statute of Frauds

Certain contracts are invalid unless they are in writing and signed by either the parties or their agents.


1. Sales (transfers and conveyances) of real property
2. Any contract that takes more than one year to complete, such as a lease that runs for more than one year

Discharge of Contract

Cancellation or termination of a contract

* full performance
* release by one or all parties
* assignment
* novation
* breach of contract

Mutual Rescission

When all parties agree to cancel agreement