Unit 2 Study Guide: Property Ownership and Interests

Bundle of Legal Rights

The concept of property ownership that includes several distinct rights an owner possesses regarding the property.

Livery of Seisin

An old English term related to the promise of ownership in property.

Disposal Right

The right to determine how to dispose of the property, including selling, gifting, or transferring it.

Enjoyment Right

The right of uninterrupted use of the property without third-party interference.

Exclusion Right

The right to keep others from entering or using the property.

Possession Right

The right to use or occupy the premises.

Control Right

The right to control the use and profits of the property within legal limits.

Appurtenances

Rights or privileges that run with the land and are passed with property ownership unless severed.

Surface Rights

Rights to the surface of the land.

Subsurface Rights

Rights to use the space below the surface of the earth, including the extraction of natural resources.

Air Rights

Rights to use the space above the surface of the earth.

Riparian Rights

Rights related to the use of water when a property borders a waterway.

Littoral Rights

Rights pertaining to navigable waters with a tide.

Severance

The process of changing an item of real estate to personal property by detaching it from the land.

Annexation

The process of changing an item of personal property to real estate by permanently affixing it to the realty.

Fixture

An item that was once personal property but has been converted to real property by being permanently affixed to the realty.

Total Circumstances Test (IRMA)

A legal test used to determine whether an item is a fixture based on Intention, Relationship, Method, and Adaptation.

Fee Simple Absolute

The highest type of interest in real estate recognized by law, with no limitations on ownership.

Fee Simple Defeasible

Ownership that may be lost or defeated by the occurrence of a specified event.

Life Estate Pur Autre Vie

An estate owned for the lifetime of another person, with inheritance rights during that lifetime.

Tenancy in Common

A form of co-ownership where each owner holds an undivided interest in the property.

Joint Tenancy

Ownership of real estate between parties that includes the right of survivorship.

Tenancy by the Entirety

A special form of ownership for married couples with undivided unity of possession.

Condominium Ownership

Ownership of individual units within a property, combined with shared ownership of common areas.

Cooperative Ownership

Ownership where title to the building is held by a corporation, and purchasers are shareholders with proprietary leases.

Trustor

The individual who creates the trust.

Beneficiary

The person or entity that benefits from the trust.

Trustee

The fiduciary who manages the property held in the trust according to the trust agreement.

Living Trust

A trust created during the trustor’s lifetime.

Testamentary Trust

A trust created by the property owner's will.

Land Trust

A trust where real estate is the only asset, often used for secrecy.

Real Estate Investment Trust (REIT)

A type of trust that can own or hold real estate.

General Partnership

All partners participate in the operation and management of the business and share full liability for business losses and obligations.

Limited Partnership

Includes one or more general partners who manage the business and are liable for partnership debts, and limited partners who have limited liability and do not participate in management.

Limited Liability Company (LLC)

Offers the limited liability of a corporation and the tax advantages of a partnership; profits are passed directly to the owners without being subject to corporate tax.

Corporation

A legal entity distinct from its shareholders, offering the benefit of limited liability but subject to double taxation on profits (corporate tax and individual tax on dividends).

S Corporation

A special type of corporation that permits profits and losses to be passed directly to the owners without being subject to corporate tax, similar to a partnership.

Syndicate

A group of people or firms who combine their resources to make and operate a real estate investment.

Joint Venture

A temporary organization