Accounting Final Exam 4 (All Terms, everything)

Chapters 11, 12, 13, 14, and 15

Real Property: (House)

Land and anything permanently attached to it (like buildings, houses, or trees).

It includes ownership rights over land and buildings.

Personal Property: (Movable)

Moveable items (cars, clothes, furniture).

Means all movable items that are not land or buildings.

Fixtures:

(Once attached permanently → becomes real property)

Is personal property that has been attached to land or a building so permanently that it becomes part of real property.

Ownership usually transfers to the property owner.

Trade Fixture: (Business-use fixture that can be taken back)

Is something a tenant (a business) installs in a rented space for business use, and they are usually allowed to take it with them when they leave.

Key Idea: Even though it’s attached to the building, it still belongs to the tenant (business owner), not the landlord- as long as it can be removed without major damage.

Devise: (Transfer ownership of land by will)

Transfer of real property through a will.

Convey: (grantor transfers legal title to grantee)

To transfer ownership of property to someone else.

Grantor (giver) vs Grantee (gets) (Convey):

Grantor (transfers ownership): is the person making the transfer of title.

Grantee (receives ownership): is the person receiving the transfer of title.

Grantor vs Grantee (Simplified)

Grantor= Gives/transfers property. Seller/Owner giving rights

Grantee= Receives property. Buyer / Receiver.

Legal Title: (Official ownership on paper)

Official, legal ownership recognized by law.

Means ownership granted by the government and respected by a court.

Equitable Title: (Right to benefit from property)

Means you have the right to use and benefit from property, even if you don’t yet legally own it.

👉 You enjoy the property, but your name may not be officially on the legal documents yet.

“You get the benefits, but not full legal ownership yet.”

Right to use/enjoy property even if legal title isn’t fully transferred yet.

Rules against Perpetuities:

👉 Property interests must vest (become certain ownership) within 21 years after the death of a person alive at the time the interest was created.

👉 It prevents property from being controlled for an unlimited time in the future.

State Law:

Is the set of rules made by a state that businesses must follow when operating in that state, especially for taxes, contracts, and regulations.

Bill of Sale: (receipt, evidence of sale)

Written proof of transfer of personal property.

Deed:

Legal document transferring real property.

Title Insurance:

Insurance protecting against defects/problems in property ownership.

Provides insurance that grantor is transferring good title.

Fee Simple Ownership: (land)

You own the property completely and forever. You can live in it, sell it, or pass it on to your heirs.

Full ownership with no limits (most complete ownership).

Life Estate:

Ownership lasts for a person’s lifetime.

You can use and live in the property, but only for your lifetime. When you die, ownership goes to someone else.

A leasehold Estate: (rent an apartment)

Temporary right to use property (like renting).

You don’t own the property- you’re renting it. You have the right to use it for a set time (like an apartment lease).

Absolute Ownership:

Complete control over property (often used for personal property).

You fully own personal items (like a car or furniture) forever, and can do whatever you want with them.

Trust:

Property held by one person (trustee) for benefit of another (beneficiary)

Property is managed by one person (the trustee) for the benefit of another person (the beneficiary). The trustee controls it, but no for their own benefit.

Quitclaim Deed: (no warranties)

Transfer whatever interest the seller has (no guarantees).

Seller warrants nothing besides that they are giving their interest in the property to the buyer.

Warranty Deed: (best for buyer)

Guarantees clear title and no defects.

Makes the promise the seller has good title free from ownership claims by another

Special Warranty Deed: (limited period of time)

Guarantees no defects only during sellers ownership.

Promises against ownership claims only applies to the period during which the seller owned the property.

Easement: (shared driveway)

Right to use someone else’s land.

License: (more limited than easement)

Temporary permission to use land (revocable anytime).

The right to enter the land of another.

Covenant:

Promise about land use (like restrictions).

Promise to do something or not do something with one’s property.

Real Covenant:

Is a rule attached to a piece of land that doesn’t go away when the owner changes.

It’s a rule for the property that every future owner has to follow.

Zoning:

Laws controlling land use (residential, commercial, etc)

Variance:

Permission to break zoning rules

Eminent Domain:

Government taking private property for public use (with compensation).

Process by which the government confiscates land for public purposes.

Tenancy in Common:

(Multiple Owners, Share undivided piece of property).

Shared ownership, unequal shares allowed, no survivorship rights.

Exists when multiple owners own a distinct share of undivided piece of property.

Joint Tenancy with Right of Survivorship: (Multiple owners)

Equal ownership, when one dies, others inherit automatically.

2 or more people own the same property together, equally.

Tenancy by the entirety: (Married couple)

Ownership by married couples with survivorship rights.

This means that a married couple owns a property together, and if one spouse passes away, the other automatically gets full ownership of the property.

Tenancy for Years:

Lease with fixed start and end date.

No notice needs to be given that the tenancy for years will not renew.

Periodic Tenancy: Lease that renews automatically

Tenancy for a fixed period of time such as a week or a month or a year.

Automatically renews until notice is given.

Notice must be given one period in advance.

Landlord:

Cannot interfere with tenant’s right of possession.

Tenant/Landlord Law:

Laws governing rental relationships.

Implied Warranty of Habitability:

Landlord must provide safe, livable housing.

Landlord cannot interfere with tenant’s right of possession.

Must generally give notice before entering rented property.

Tenant Duties:

Pay rent, avoid damage, follow lease terms.

Fair Housing Act:

Prohibits housing discrimination.

Landlord cannot base rental decisions upon characteristics upon mental or physical disability, race, color, sex, national origin, familial status or religion.

Rule of Capture:

First person to take a resource owns it (like oil or wild animals).

Percolating Water: (Underground water)

Water that exists under the land. Often accessed by the use of a well.

Absolute Ownership:

Owner can use all water under their land.

Reasonable use Standard:

Use water reasonably without harming others.

Can only be used to benefit the property where it is located, and the use must be reasonable.

Correlative Water Doctrine: (a specific application of that principle to water)

A version of the correlative rights idea that applies specifically to water resources, especially groundwater.

👉 “Water users over the same source must share it proportionally and reasonably.”

Correlative Rights Doctrine: (a broad principle about fair sharing of shared resources)

Shared water used among landowners.

Each owner of land overlaying percolating water is a joint owner.

A legal rule that says when multiple people share a natural resource, each person has equal rights to use it, but must do so fairly and reasonably without harming others.

👉 “Share the resource fairly.”

Prior Appropriation Rights Doctrine:

First person to use water has priority.

Surface Water:

Water from rain or melting snow.

Water which has no natural stream or way of passage.

Common Enemy Doctrine:

Landowners can get rid of surface water however they want.

Natural Servitude Doctrine:

Lower land must accept natural water flow from higher land.

Stream and Lake Water:

Governed by either reasonable use or prior appropriation depending on location.

Streams have a natural flow and Lakes are a resting body of water.

Mislaid Property:

Property intentionally placed somewhere and forgotten (owner of location holds it).

Lost Property:

Property unintentionally lost (finder can claim).

Abandoned Property:

Owner intentionally gives it up (finder becomes owner).

Found Property:

General term for property someone finds.

Adverse Possession:

Allows a person to gain ownership by adversely possessing the property of another.

Requirements:

Actual entry and exclusive possession

Open and notorious possession

Adverse or hostile possession

Continuous possession

Actual Entry and Exclusive Possession:

Physically using the land alone.

Cannot share possession with true owner.

Open and Notorious Possession:

Obvious to others

Cannot hide possession of land.

Adverse or Hostile Possession:

Without owners permission.

Cannot have consent to use property.

Continuous Possession:

For required legal time period

Cannot be an interruption of possession.

Gifts (3 Requirements):

1) Intent (wanting to give the gift)

2) Delivery (actually giving it)

3) Acceptance (the other person agrees to take it)

Testamentary Gifts:

Gifts given in a will after death

Gift inter vivos:

Gift made during life (permanent)

Gift causa mortis:

Gift made in expectation of death (can be revoked if person survives).

Bailment:

Temporary transfer of possession (not ownership)

Bailor:

Owner who gives property

Bailee:

Person who receives property

Requirements: Need Delivery

Must include delivery of the property

3 Elements (What’s required for a bailment):

1) Intent (agreement to transfer possession temporarily)

2) Possession (giving it to the other person)

3) Physical Control (ability to control the item)

Duty of Care (Bailment):

Bailee must take reasonable care of property

Rights of the Bailee:

Right of Possession:

The bailee has the right to keep the item while the bailment lasts.

This right can be limited by agreement

Right to use the property:

The bailee can use the item, but only in the way that was agreed.

This can be limited by agreement.

Right to compensation:

If there’s an agreement, the bailee can be paid for taking care of the property.

If the bailee is doing it for free, they can still get reimbursed for reasonable costs (like paying for necessary repairs or storage).

Right to a temporary lien:

The bailee can keep the property until they are paid what they are owed.

Right to be warned of defects:

The bailee has the right to be told about any dangers or problems with the item.

Rights of the Bailee (Simplified):

A bailee has the right to:

Hold the item

Use it (as agreed)

Get paid or reimbursed

Keep it until paid (lien)

Be warned if it’s dangerous

Bailee Duties: (person holding the property)

Protect, return, and use properly.

• Take care of it

• Use it properly

• Return it

• Keep it separate

Bailor Duties: (person who owns the property)

Inform of defects, reimburse expenses.

• Give safe item

• Warn of problems

• Pay back expenses

• Cover damages if their item causes harm

Common Carriers:

(Serve everyone, almost always responsible)

These are businesses that transport goods or people for the public and are usually licensed by the government.

👉 Simple: They’re responsible no matter what—unless it’s something truly out of their control.

Private Carriers:

(choose customers, responsible only if careless)

These carriers choose who they want to serve. They are not open to everyone.

👉 Simple: They’re only responsible if they did something wrong.

Contract Carriers:

(serve specific clients, rules based on contract)

These carriers regularly transport goods or people, but only for a specific group of customers under contracts.

👉 Simple: They work for specific customers under contracts.

Innkeeper:

Hotel owner responsible for guests property (with limits)

Federal Trade Commission (FTC):

Protects consumers from unfair, deceptive, or fraudulent business practices in advertising and marketing.

Federal Communications Commission (FCC):

Regulates radio, tv, internet, and phone communications (including ads on these platforms).

US Food and Drug Agency (FDA):

Regulates food, drugs, cosmetics, and ensures labels and safety claims are truthful.

Fraud/Intentional Misrepresentation: (Intent to Deceive)

Lying on purpose to trick someone into a contract.

Negligent Misrepresentation: (Breach)

False statement made carelessly (not checking facts properly).

Caveat Emptor: (Buyer beware)

Buyer is responsible for checking quality before buying.

Puffery: (Is NOT Fraud)

Exaggerated opinions (“best pizza in the world”) that are not legally enforceable.

Deceptive Advertising:

Ads that mislead consumers in a material way.

Unfair Advertising:

Ads that cause harm or are unethical even if not clearly false.

False Advertising:

Straight-up lies in advertising.

Prohibited Advertising:

Advertising that businesses are legally not allowed to use.

Businesses can promote their products, but they cannot lie, trick, or harm people through ads.

👉 Prohibited advertising is any ad that lies, misleads, or harms consumers and is therefore illegal.

Obscene Material/Advertising:

Extremely offensive sexual content with no artistic value.

Indecent Material:

Sexual or offensive content that is less extreme than obscene.

Profane Language:

Strong offensive language (swearing).

Miller Test Elements?

Used to decide if something is obscene:

1. Appeals to sexual interest

2. Offensive by community standards

3. Has no serious value (literary/artistic/scientific)

“As-Is Clauses”:

Buyer accepts product in current condition with no warranties.

Required Disclosures Things to Remember

Law requires sellers to reveal important product information.

Labeling and Packaging:

Require truthful, clear product information.

Fair Packaging and Labeling Act:

Requires labels to show what product is, who made it, and net quantity.

Nutrition Labeling and Education Act:

Requires nutrition facts on most food labels.

Nutrition Content Claims:

Claims like “low fat” or “high fiber” must meet legal standards.