Legal Aspects of Real Estate Ch 3-

What is meant by the term “undivided interest”?

An owner's interest in a property in which two or more parties share ownership

For what reasons might the government or a public utility take private property for public use and what is this called?

Some examples would be to widen roadways, easements, or develop a highway. This is called eminent domain.

What is the highest form of ownership interest one can acquire in real estate?

Fee simple freehold estate

What are the two forms of fee simple estate and what do they mean?

The fee simple absolute is a perpetual estate that is not conditioned by stipulated or restricted uses.

The defeasible fee estate is perpetual, provided the usage conforms to stated conditions.

Dower

a wife's life estate interest in the husband's property. When the husband dies, the wife can make a claim to portions of the decedent's property.

Curtesy

the identical right enjoyed by the husband in a deceased wife's property. Property acquired under dower laws is owned by the surviving spouse for the duration of his or her lifetime. 

Elective Share

Elective share is a state-level statute enabling a surviving spouse to make a minimum claim to the deceased spouse's real and personal property in place of the provisions for such property in the decedent's will. 

Homestead

one's principal residence.

What is a life estate?

A freehold estate that is limited in duration to the life of the owner or other named person. Upon the death of the owner or other named individual, the estate passes to the original owner or another named party.

What are the major forms of legal life estate?

Dower and curtesy
Elective share
Homestead

What are leasehold tenants entitled to?

They are entitled to possess and use the leased premises during the lease term in the manner prescribed in the lease.

What are the four types of leasehold estates and which of the four has no definite expiration date?

Estate for Years
Estate from Period-to-Period
Estate at Will 
Estate at Sufferance

Estate at will has no definite expiration date.

Party Wall Easement

A party wall is a common wall shared by two separate structures along a property boundary. Party wall agreements generally provide for severalty ownership of half of the wall by each owner, or at least some fraction of the width of the wall. In addition, the agreement grants a negative easement appurtenant to each owner in the other's wall.

Easement in Gross

a personal right that one party grants to another to use the grantor's real property. The right does not attach to the grantor's estate. It involves only one property, and, consequently, does not benefit any property owned by the easement owner. There are no dominant or servient estates in an easement in gross.

An easement in gross may be personal or commercial.

What is an encumbrance?

An interest in and right to real property that limits the legal owner's freehold interest

What are the primary differences between an easement appurtenant and an easement in gross?

The easement in gross does not attach to the grantor's estate; it involves only one property, and does not benefit any property owned by the easement owner. The easement appurtenant involves more than one property, transfers when any of the affected properties is transferred, and benefits the property owned by the easement owner.

What is an easement by necessity?

An easement appurtenant granted by a court of law to a property owner because of a circumstance of necessity, most commonly the need for access to a property, since property cannot be legally landlocked

How are easements created?

By voluntary action, by necessary or prescriptive operation of law, and by government power of eminent domain

What is a lien?

A creditor's claim against personal or real property as security for a debt of the property owner

What are four legal features of a lien?

• A lien does not convey ownership, with the exception of mortgage liens.

• A lien attaches to the property.

• A property may be subject to multiple liens.

• A lien terminates on payment of the debt and the concurrent recordation of release.

List four types of liens not subject to the homestead exemption.

• Purchase money on the homestead

• Taxes on the homestead

• Debts owed to the federal government

• Encumbrance that existed on the property prior to becoming a homestead

What additional benefits does a California homeowner gain by recording a homestead declaration?

• Protection for voluntary sale of the property

• Rebuttable presumption that the homestead is valid

• A judgment creditor’s lien attaches only to surplus equity

What two factors primarily determine lien priority?

• the lien's categorization as superior or junior

• the date of recordation of the lien

What types of liens are considered superior liens?

• Real estate tax liens

• Special assessment liens

• Federal and state inheritance tax liens

A court-ordered lien against all real or personal property of a parent who defaults on child support is an example of what kind of lien?

Judgment lien

What does a mechanic’s lien do?

It secures the costs of labor, materials, and supplies incurred in the repair or construction of real property improvements so that if a property owner fails to pay for work performed, or materials supplied, a worker or supplier can file a lien to force the sale of the property and collect the debt.

What are the three main forms of ownership

• In severalty – Held by only one owner

• In co-ownership – Held by two or more people

• In trust – Held by a third party for the benefit of someone else
  

What four types of co-ownership does California recognize?

• Tenancy in common

• Joint tenancy

• Community property

• Tenancy in Partnership
  

What does a living trust do?

Allows the trustor, during his or her lifetime, to convey title to a trustee for the benefit of a third party

What are the four unities needed to create a joint tenancy?

• Unity of possession

• Unity of interest

• Unity of time

• Unity of title

What happens to community property upon the death of a spouse?

Half of the deceased's community property passes to the surviving spouse, and the other half passes to the decedent's heirs.

What form of ownership is a condominium?

A condominium is a hybrid form of ownership which combines ownership of a fee simple interest in the airspace within a unit with ownership of an undivided share, as a tenant in common, of the entire property's common elements.

What is the main ownership difference between condominiums and planned unit developments?

Planned unit development owners own the land where their unit is located, not just the airspace around the unit. 

What is timeshare ownership?

1. A fee, or leasehold interest, in a property whose owners or tenants agree to use the property on a periodic, non-overlapping basis.

In a limited partnership, what is the liability difference between a general partner and a limited partner?

Limited partners are liable only to the extent of their investment.
General partners have unlimited liability.

List four key things about corporations. (See page 73 for other correct answers.)

• Corporations can own property in the corporate name.

• Shareholders of a corporation have limited liability and do not participate directly in managing the corporation.

• Shareholders elect directors, who are the ones responsible for setting corporate policy.

• The directors hire corporate officers, who operate the corporation.

What is a limited liability company (LLC)?

A hybrid business entity having characteristics of both a corporation and a partnership.

What is the major benefit of Real Estate Investment Trusts (REITs)?

4. Profits are not taxed.