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Exam Prep - Ch 1 & 2
Ch 1 - Real Property Characteristics & Ch 2 Forms of Ownership
| Question | Answer |
|---|---|
| The term appurtenance is often used to describe: | Rights, privileges, or improvements that belong to and pass with the land. |
| Improvements are: | Man’s additions to the land, such as buildings and landscaping. |
| Personal property | A right or interest in something of a temporary or movable nature and includes anything not classed as real property. |
| Personal property | Also called chattel or personalty. |
| Ownership of personal property is transferred by: | A Bill of Sale. When included in real estate sale, an addendum and/or a bill of sale is used. |
| A fixture | An item that was personal property; however, it has been attached or installed in such a way that it has become real property. (For example: a shower head or a ceiling fan). **It can be described as an improvement and is permanent. |
| Annexation | The process of attaching a fixture |
| Accessories | Which may or may not be installed, are also considered part of the real property. (stoves, pool equipment,) Includes such items as stoves, pool equipment, window a/c units, remote control devices, keys and more. |
| Severance | The fixture is uninstalled and once again becomes personal property. |
| Trade Fixtures | Fixtures installed by a tenant in order to carry out a business, and they may be removed from leased property prior to the termination of the lease |
| Emblements | Crops that are cultivated annually (usually by the tenant.) Examples include corn, wheat, and barley (not sugar cane). |
| CHARACTERISTICS OF REAL PROPERTY | 1. Nonhomogeneity - no two pieces are exactly alike. (uniqueness) 2. Immobility - always be there 3. Indestructibility - durability - it will always be there. |
| Land has four economic characteristics: (land is not a liquid asset) | 1. Scarcity - based on geographic considerations. 2. Modification - land use and value are influenced by improvements 3. Fixity - land and buildings are fixed or permanent 4. Situs - location from an economic rather than a geographic standpoint. |
| LEGAL DESCRIPTIONS | A legal description is created and determined by a surveyor. Necessary for a contract to be enforceable, not for a lease. |
| Methods of land description | - Metes and bounds - Lot, block, and subdivision descriptions - The Rectangular Survey System, also known as the Government Survey System |
| Metes and bounds | Use terminal points and angles and always have a point of beginning/ termination point. Uses compass directions, degrees, and minutes. Oldest form of land description. |
| Lot, block, and subdivision descriptions | - Descriptions are derived from a recorded map called a plat. - Most common description used in residential listing agreements |
| The Rectangular Survey System, also known as the Government Survey System | Takes into consideration baselines, and meridians, townships, and sections. One township contains 36 sections. Each section contains 640 acres, which is 1 square mile. Each acre contains 43,560 square feet. |
| Police Power | The power given to a municipality to regulate and control the character and use of property for the health, safety, and general welfare of the public. (ie. Zoning) - For example, R-1 zoning means residential, single-family only. |
| Non-conforming use | A change in zoning which changes permissible use to prohibited. The non-conforming use is automatic as it is considered grandfathered. |
| Variance | If your property violates zoning, you may request a variance (permission/ exception to a zoning ordinance or setback) - A variance goes with the property when the property is sold. |
| Setback | The space between the lot line and the building line. Construction must be “setback” from the lot line. |
| A conditional or special use | Can be granted by a zoning committee or deed restrictions (HOA). - Example, a school within a subdivision |
| Another type of conditional use is a PUD – a planned unit development. | A PUD zone allows for a higher population density with houses clustered together. Developer will provide green space maintained by a nonprofit HOA , residents will pay extra tax for maintenance of green space. |
| A buffer zone | An area of land separating one land use from another, such as residential from commercial (or space between construction and wetlands) |
| Police power | Provides the government with the right to establish building codes and right of the government to take private property for public use through the action of condemnation |
| Eminent Domain | The right of the government to take private property for public use through the action of condemnation - Government must compensate owner. |
| Inverse condemnation. | When an individual forces the government to buy his or her property |
| GOVERNMENTAL RIGHTS IN LAND (PETE) | 1. Police Power - Zoning 2. Eminent Domain - Condemnation 3. Taxation 4. Escheat - intestate owner dies without heirs |
| Taxation | Property taxes are the highest priority lien on real property. Property taxes are ad valorem taxes, or according to value. At foreclosure, property taxes are paid first. |
| Escheat | Property reverts to the state when someone dies, leaving no will and no heirs or kindred. Escheat can also be used if property is abandoned. Abandonment is a legal term – it describes an act of surrendering or forfeiting rights or property |
| CC&R’s and Deed Restrictions | - The most common private controls of land use are deed covenants, conditions, and restrictions. Covenants - if zoning conflicts with deed restriction - whichever is more restrictive prevails. Court injunction is used for enforcement. |
| Encumbrance | A limit on a property or a limit on a property’s owner’s rights that may or may not also be a cloud on the title. - Examples: Reservation Encroachment |
| Reservation | Imposed by the grantor, withholds title to a part of the land described in the deed. (Example: an easement or mineral rights). (Example: an easement or mineral rights). |
| Encroachment | When a structure or improvement overlaps or trespasses onto another’s property, Determination requires a survey. - Determination requires a survey (ie. a fence) |
| Easement | Allows limited use or enjoyment of another’s land (use without possession.) |
| Easements can be created by: | Express (written/verbal) or implied (by actions/evidence), grant, part of a sale Agreement - separate from a sale Reservation - by seller (easement ) Limitation/prescription - constant use without permission (10 years) Necessity - by the court |
| Easements can be terminated by: | merger (acquiring the adjacent property) release – a recorded document used to terminate a right or claim abandonment – an action that terminates rights |
| An easement appurtenant goes to the buyer when the land is sold. (Attached to the land) | Goes to the buyer when the land is sold. The dominant estate benefits from the easement, while the servient estate is encumbered |
| Easement in Gross | Belongs to a person or corporation. An example is a utility easement. |
| License | Permission to do a particular act upon the land or property of another. - example theater ticket or sports event. |
| Adverse Possession (squatter’s rights) | Occurs when property is acquired from the rightful owner through the Statute Of Limitations. _ Occupancy must be hostile, visible or open, actual or notorious, continuous, and distinct for the statutory period. |
| Lis pendens is a recorded notice filed against a specific property, meaning that some form of lawsuit has been filed but not yet resolved in court. | A recorded notice filed against a specific property, meaning that some form of lawsuit has been filed but not yet resolved in court. |
| TYPES OF OWNERSHIP - Chapter 2 | 1. Estate in severalty or tenancy in severalty - (Corporations or Partnerships often hold title this way) 2. Tenancy in common 3. Joint tenancy 4. Tenancy by the entirety 5. Trust |
| Estate in severalty or tenancy in severalty | Ownership by one or sole ownership |
| Tenancy in common - most common, estate of inheritance | Ownership by two or more without rights of survivorship (passing to the other owner(s)) - Right of inheritance - most common |
| Joint tenancy | Ownership by two or more with rights of survivorship (passes to remaining owners) - poor man's will (overrides a will) |
| Four unities required for joint tenancy | Time, title, interest, and possession All owners must acquire their interest at the same time, from the same source, with equal interest and possession. |
| Partition | Procedure to divide the co-tenants’ interests in real property. It can be a court action - involuntary alienation, or by agreement of the parties - voluntary alienation. - ends joint tenancy. |
| Tenancy by the entirety | Specific type of joint tenancy where the co-owners are married to one another: husband/wife, spouse/spouse. - avoids probate. (Not valid in TX) |
| Held in Trust | If a property is held by one party, a trustee, for the benefit of another, then that property is held in trust. |
| Syndicate | When two or more parties join together to create and operate a real estate investment |
| Time Shares (Tenancy in common) | Give an individual part ownership of a property coupled with the right to exclusive use of it for a specified number of days per year, without the responsibility of full ownership |
| Cooperative or “Co-ops” | An investment for residents. - Residents buy shares from the corporation that owns the coop for a “proprietary lease” on their unit. - the shares are personal property |
| Condominiums | Established under laws referred to as horizontal property acts. - each owner has a tenancy in common to the common areas - Property taxes are assessed on each unit separately based on value of the unit plus the share of the common areas. |
| A freehold estate | ownership |
| Bundle of Rights. | 1. the right to sell, will to heirs, encumber or lease (disposition) 2. the right to exclude others (exclusion) 3. the right to use, enjoy, occupy (possession) 4. the right to use uninterrupted by former owners (quiet enjoyment). |
| Fee Simple or Fee Simple Absolute. | Ownership with the greatest bundle of rights - the best type of ownership - The owner has all the available rights to the property and can always pass it to his or her heirs. |
| Fee simple defeasible | Ownership with conditions or terms, which, if violated, could cause the ownership interest to be defeated or terminated |
| Fee simple defeasible can be determinable or condition subsequent. | - determinable, violation of the condition/termination results in reversion to the grantor automatically. - condition subsequent, grantor must take steps to reclaim the property w/in a reasonable period of time if violation occurs |
| Life estate | Ownership for the duration of someone’s life. - Owner is life tenant, but cannot choose who will get property upon their death - The person who gets the property after the life estate is ended is the remainderman. The remainderman gets fee simple |
| Life estate with reversion. | If the life estate is set up so that at the end of the life estate, the property goes back to the original owner - If there is no remainderman, the property escheats to the state. |
| Life estate pur autre vie | If the life estate is based on the life of someone other than the life tenant |
| Leasehold estate | Lease agreements - The lease is personal property, but the right to possession that the lease gives is real property. |
| Types of leasehold estates | 1. An estate for years - specific starting & ending date. 2. A periodic tenancy - ie "month to month" 3. An estate at will or tenancy - can be terminated by either party w/o notice 4. A tenancy at sufferance - tenant refuses to move out. |
| Leasehold Estate - An estate for years | - Specific starting & ending date. - This lease survives death and/or the sale of the property. No notice is required to terminate. |
| Leasehold Estate - A periodic tenancy | - Alease with a fixed period that is automatically renewed unless the tenant or landlord acts to terminate it. - A month-to-month lease is this type. Notice to terminate is usually required, typically 30 days’ notice. |
| An estate at will or tenancy at will | Can be terminated by either party w/o notice |
| Tenancy at sufferance | Tenant refuses to move out. The landlord is not receiving rent. This holdover tenant has no right to be there. If the holdover tenant pays rent and the landlord accepts that rent, a holdover tenancy is created. |
| Types of Leases | - Gross lease - Net lease - Percentage lease - Graduated Lease - Lease with an option to buy - no TREC form - need atty - Lease purchase agreement - no TREC form - need atty - Ground Lease - Oil and Gas Lease |
| Gross Lease | The landlord pays all the expenses of the property. The tenant pays only rent |
| Net Lease | Tenant pays rent plus some of the expenses of the property |
| Percentage Lease | Lease in which all or part of the rent amount is based on the receipts of the tenant’s business (Typical shopping center lease). |
| Graduated Lease | Lease with scheduled rent increases often based on expected business growth |
| Lease with an option to buy | Gives a tenant the right to purchase at a future date. The price is set when the agreement is negotiated. |
| Lease purchase agreement | - An agreement in which part of the rent payment is applicable toward a set purchase price. - Title is transferred from lessor to lessee when the lessor receives the prearranged total price. |
| Ground Lease | The tenant is usually making a long-term commitment, up to 99 years. This lease is more often for industrial or commercial land use. The tenant will build on the leased property. |
| Oil and Gas Lease | This lease gives the tenant the right to extract oil and gas from a specific property. NOTE: In TX - Texas Railroad Commission regulates oil and gas leases, Federal - EPA regulates oil and gas leases |
| Covenant of quiet enjoyment | A landlord is usually prohibited from entering leased property unless there is a need for maintenance, inspections, or emergency response |
| Right of First Refusal | The tenant has the right to match or better any offer before the property is sold to someone else. |
| Subletting | The transfer of some or all of the rights and/or leased space under a lease to another, with liability remaining with the original tenant |
| Assignment | The transfer of all rights and liabilities to a new tenant under an existing lease |
| Forcible entry and detainer or an action of forcible detainer | The legal term for eviction |
| Expiration | When the lease comes to the end of the negotiated term or lease period |
| Termination | When the time period on a lease ends or is cut short |
| Mutual rescission | When a lease is terminated by agreement of the parties. In the eyes of the law there is no default, no breach and no injured party |
| Constructive eviction | Occurs when a landlord is aware of a property condition and allows deterioration to the point that the building is uninhabitable and the tenants are forced to leave. |
| Sale and leaseback | A property owner sells property to an investor or lender and then leases it back |
| A lien | A charge against property as security for a debt - an encumbrance - cloud on title |
| Specific lien | A specific lien attaches to one or more specific or named properties (Example: a mortgage). |
| General lien | A general lien attaches to all the property of the debtor, not exempt from forced sale (Example: a judgment or IRS lien). |
| A voluntary lien | is created by the lienee’s or borrower’s actions, like taking out a mortgage or home improvement loan. |
| An involuntary lien | is created by law and can be statutory or equitable (common law). Examples of statutory liens include federal tax liens, ad valorem (according to value) tax liens, judgment liens, and mechanics and materialmens’ (M&M) liens. |
| An M&M lien (mechanic's lien) | can be placed on a property when materials have been delivered or work has begun |
| Equitable liens | come from common law and include seller (vendor) or buyer (vendee) liens |
| Writ of execution | If a party wins a judgment and is unable to collect, that party can secure a from the courts to enforce payment of the lien. |
| Recorded liens | Are only paid after the property tax lien, which is an automatic unrecorded lien, has been paid. |
| Mineral rights | If the seller owns the mineral rights, they are included in the sale unless the seller reserves them. If there is a question, an atty can determine ownership of mineral rights |
| Riparian rights. | The right to use water from a river or stream that borders your property |
| Littoral rights | The right to use water from a lake or ocean |
| How far does a landowner of non-navigable waterfront property own? | For non-navigable waterfront property, landowners may own to the middle of a body of water |
| How far does a landowner of navigable waterfront property own? | For navigable waterfront property, landowners own to the vegetation line |
| Prior Appropriation | A theory of water law based on the idea that “first in time is first in right (not in TX) |
| Voluntary alienation | Usually involves a written document called a conveyance. - Voluntary alienation occurs when an owner transfers title to another |
| Alienation. | A change of ownership of real property |
| Involuntary alienation | usually happens in court as in foreclosure, bankruptcy, condemnation, escheat, adverse possession, reversion of defeasible fee, partition, or inheritance without a will. |
| REQUIREMENTS OF A VALID DEED | • Grantor and Grantee - must be competent • Consideration • Words of conveyance – The granting clause • Execution - The grantor must sign the deed • Delivery - deed is delivered and accepted. • Legal description of the property |
| Types of deeds include: | • General Warranty Deed - It offers the buyer the best • Special Warranty Deed • Bargain and Sale Deed – a deed with only one covenant. • Quitclaim Deed - a deed that gives NO warranties or guarantees and offers the least protection. |
| General Warranty Deed | It is the most common deed. guarantees and protects against defects. It offers the buyer the best protection. It warrants title to the sovereignty of the soil. |
| Special Warranty Deed | guarantees title only against defects arising under the grantor’s period of ownership. |
| Bargain and Sale Deed | a deed with only one covenant (Trustees, executors, sheriffs, and officers of the court use this.) |
| Quitclaim Deed | deed that gives NO warranties or guarantees and offers the least protection. |
| The covenant of seizin | The grantor claims to be the owner with the right to sell the property. |
| The covenant of quiet enjoyment | The grantor promises the new owner will have uninterrupted use of the property. |
| The covenant of further assurance | The grantor is responsible for any documentation needed to ensure title is transferred to the grantee. |
| The covenant against encumbrances | the grantor promises that all encumbrances have been disclosed. |
| The covenant of warranty forever | The grantor’s promises have no expiration date |
| Dedication | When a developer turns over the streets in a subdivision to the local government. This is accomplished by recording the plat plan. |
| Patent | When the government transfers title to an individual |
| Testate | When one has a valid will |
| Executor | The person named in the will to settle the estate The property is the devise, and the heir is the devisee. |
| Title by Devise | Inheritance by will. The property is the devise, and the heir is the devisee. |
| Intestate | When someone dies without a will. |
| Administrator | The court will appoint an to settle the estate of an intestate person. The heirs will inherit real property according to the Laws of Descent and will have Title by Descent. |
| Probate | The judicial process to prove or confirm a will or to settle the estate of a party who dies intestate |
| Foreclosure (In TX held on first Tuesday of the month) | The legal process instituted by a trustee, lien holder or creditor, after a debtor’s default. - notice of foreclosure by certified mail 21 days before the foreclosure sale - any excess $$ is given to the debtor. on his or her payments. |
| Deed in lieu of foreclosure | An alternative to foreclosure This is sometimes called “friendly foreclosure” or “voluntary deed.” The lender accepts a deed from the borrower. The lender must also accept any junior liens on the property. |
| Redemption sometimes called equitable redemption | At any time up to the moment of the foreclosure, the borrower has the right to step in and pay what is owed and reclaim the property forfeited due to mortgage default. - This is his or her equity of redemption or equitable redemption. |
| Judicial vs non-judicial | With a traditional mortgage, a foreclosure is judicial, but with a Deed of Trust, it is non-judicial due to the power of sale clause. |
| Short Sale | A sale of secured real property that produces less money than is owed the lender – the lender releases its lien so the property can be sold to the new purchaser. Usually requires a BPO (Broker's Price Opinion) |
| Real-estate owned, or REO property | is owned by the lender, usually a bank, government agency, or government loan insurer – after an unsuccessful sale at a foreclosure auction. |
| Constructive Notice | Recording gives constructive notice of ownership. |
| Acknowledgment | Is a declaration to a notary authorized to take oaths that the signature is a free and voluntary act. An acknowledgment verifies the signature. |
| Title | Is both the ownership of something and the legal evidence of that ownership – a deed. |
| Clear or good title | can be transferred to another. |
| Equitable title | An interest created by a legal document, such as that held by a buyer with a signed sales contract who has not yet gone to closing. |
| A title insurance policy | Agrees to compensate or reimburse the insured against losses sustained as result of defects in the title, or attorneys, false claims of ownership, and human error in copying and recording, (will not provide protection for survey or boundary problems) |
| Title insurance premiums | Premiums are paid one time |
| Subrogation clause | This clause allows the title company to assume the rights of a buyer with respect to any claim against a seller if the title company has made payments to that buyer to satisfy that claim. |
| Chain of title | Included in the abstract is a chain of title - a list of all owners from the first until today. A title report or commitment (snapshot of title at the present time) is prepared |
| Abstract of title | A title search is done. This is an examination of public records to compile an abstract of title, which is a complete history of title. |
| Marketable title | Is title that a reasonable buyer would accept as clear. |
| Constructive vs Actual Notice of Title | Buyer may not have direct knowledge of a claim against title except through public records. Actual notice results from direct knowledge of an encumberance. |
| Opinion of title. | A title company attorney views the abstract and renders an opinion of title. |
| “Action to quiet title” or a quiet title suit. | If no one is available to sign a quitclaim, then a court procedure to cure or quiet the cloud can be used. |
| Ch 1 - Real Property | Consists of land, improvements attached to the land, benefits, rights, and ownership interests that go with the land |
| Tests of a fixture include | Method of attachment, adaptation to the property (custom-built as opposed to stock items), and the intention of the parties attaching the fixture |
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deidresj
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