Real Estate Chapter 2

Estates in land

rights to enable the possession of the property

degree, natures, and extent of ones interest in real property

Freehold Estates

ownership estates for an unpredictable duration

Fee Simple Absolute Estate

the highest and most complete form of ownership

• includes all available rights in the Bundle of rights

• this is an inheritable estate

Qualified Fee Estates (Defeasible Fee Estates)

former owners, or heir(s) retains future possessory interests

Determinable Fee Estate (Fee Simple Determinable)

grants the right to use and occupy a property until the occurrence of a designated event

grantor retains possibility of a reverter (IF a designated event occurs, the property can be regained immediately through an “action of forcible entry”)

Fee Simple subject to a condition subsequent

Grants the right to use and occupt a property until the occurrence of a designated event

the original grantor retains the right of reentry (IF a designated event occurs, the property can be regained by filing an action to recover real estate and prove the event occurred to a court law)

Life Estates

rights to use and possess the property during lifetime of a designated person

Conventional (Ordinary) Life Estate 

grants the right to use and occupy a property to a life tenant (the party that owns the life estate) until the death of the life tenant

at the death of the life tenant, the property either reverts back to the original grantor (the reversioner) OR goes to a third party (the remainderman) 

Life estate pur autre vie (for the life of another) 

grants the right to use and occupy a property to a life tenant until the death of someone other than the life tenant (measuring life) 

when the third party dies, the property either: reverts to the reversioner (orignial grantor) OR goes to a remainderman (third party) 

Leasehold Estates

personal property of the lessee (tenant). The lessor (landlord) owns the leased fee ( a fee simple estate minus the rights conveyed in the lease and a reversionary interest)

Estates for years 

Has a fixed term

Does not automatically renew

Does not require a termination notice 

Estate from year to year

Has a fixed term

Automatically renews if not terminated

Requires a termination notice

Estate At Will

Has no fixed term

Lasts until one of the parties provides a termination notice 

Tenancy at sufferance

occurs when tenants retain use and possession of a property beyond their legal tenancy without the landlords consent

The tenant is known as a holdover tenant

Forms of ownership (vesting options)

identify how the ownership of the estate is held

Sole ownership = Tenancy in severalty

title is held by a single individual, if the single holder is married the property is called separate property 

created by a deed or a devise (a gift of real property by will)

conveyed by a deed or devise 

Concurrent Ownership (ownership by two or more people)

there a three forms of concurrent ownership. five conditions known as unities exist within these forms of ownership. The presence or absence of a unity determines which type of concurrent ownership can exist

Unities

Possession: co-owners have the same undivided right to possess the whole property

Interest: co-owners own equal interests

Time: estates were acquired at the same instant of time

Title: estates of co-owners are acquired from same instrument of conveyance

Person: co-owners own as an indivisible legal unit

Tenancy by the entirety 

form of ownership which is reserved for married couples (needs all 5 unities, and is created by a deed or devise) 

Right of survivorship 

right of surviving co-owner to automatically acquire a deceased co-owners interest

Joint Tenants

ownership in which two or more individuals own undivided, equal, interests in the property with the right of survivorship (only needs 4 unities: Possession, Interest, Time, and Title)

Tenancy in common 

ownership in which two or more individuals own undivided interests in the property (can be equal on unequal interests)

requires on unity (Possession)

Created and disposed by a deed, will, or operation of law

Land Trust

a private arrangement via legal contract (trust) which places an individual or company as the owner of a property which they do not have absolute authority that would typically accompany land ownership 

Living Trusts

created during the lifetime of the trustor

Testamentary Trusts

created by will after a trustors death

Condominiums 

Unit owners own:

fee simple title to the airspace within their unites

specified percentage of common elements as tenants in common 

Master Deed (Declaration of Condominium or Declaration Agreement) 

Articles of Incorporation and the Bylaws for a Condominium Association 

Cooperative Ownership

the real estate is owned by a non-profit corporation, which leases units to stockholders via a proprietary lease

stockholders pay a monthly assessment to the corporation os that the corporation can repay debt and pay the expenses of the corporation

Planned Unit Development (PUD)

unit owners own the house, land, and stock in a community association which usually owns and maintains the common elements 

unit owner pays a maintenance fee to the association os that he common elements can be maintained 

form of ownership generally eequires cluster-zoning approval

Timesharing 

Right-to-use (leasehold) - a purchaser pays upfront fee to occupy a unit for one week per year for a specified number of years

Fee Simple (interval ownership) - a purchaser pay upfront fee to co-own a condominium unit, coupled with a right to use the unit for a specified number of weeks each year (usually 50 owners)