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82 Cards in this Set
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Feudal System |
Landlords provide land to tenants in exchange for loyalty and service |
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Allodial System |
The holding of land in absolute ownership, a legal right or claim of ownership undivided |
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Undivided Interest |
An owners interest in a property in which two or more parties share ownership. |
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Estate |
Right of possession |
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Encumbrance |
Does not have the right to possess |
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Eminent Domain |
Government takes private property for public use |
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Taxation |
Charge on a piece of real estate to raise funds to meet the public needs of a government. |
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Escheat |
When a owner dies and there is no heir to will the property to. |
Revert back |
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Freehold estate |
The owners rights cannot be determined. The rights may last a lifetime, for less that a lifetime, or for generations beyond the owners lifetime. |
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Leasehold estate |
Distinguished by its specific duration, as specified in the lease terms. Rights are temporary |
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Tenancies |
Possession of land or property as a tenant. Both freehold and leasehold estates are referred to as tenancies. |
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Fee Simple |
Highest form of ownership interest one can acquire in real estate. |
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Fee Tenant |
The owner of a fee simple (the highest form of ownership) |
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What are the two forms of Fee Simple? |
Fee Simple Absolute: not conditioned by stipulated or restricted uses. Fee Simple Defeasible: conforms to stated conditions, property must be used for a certain purpose or condition, if the use changes the estate reverts back to the previous grantor. |
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3 types of Fee Simple Defeasible |
Determinable: states usage limitations, if restrictions are violated, estate automatically reverts to grantor or heirs Condition Subsequent: if any condition is breached, the previous owner may repossess the property. Executory Interest: if a specific condition is violated, property goes to a third party. |
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What is meant by the term, “undivided interest”? |
An owner’s interest in a property in which two or more parties share ownership. |
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If a government or a public utility take private property for public use, such as, widening a roadway, easements, or developing a highway, what is this called? |
Eminent Domain |
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What is the highest form of ownership interest one can acquire in real estate? |
Fee Simple freehold estate |
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Life estate |
Estate that is limited to the duration life of the owner. |
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If a government or a public utility take private property for public use, such as, widening a roadway, easements, or developing a highway, what is this called? |
Eminent Domain |
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Life tenant |
Holder of life estate |
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Life Estate/Future Interest Remainder |
Names third party to receive title to the property upon termination of the life estate |
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Life Estate/Future Interest Reversion |
Estate reverts to the original owner, or owner’s heirs |
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What are the two types of life estates? |
Conventional and Legal |
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Conventional Life Estate |
Created by a grant from a property owner to the life tenant, rights pass to a remainder man, or revert to the previous owner. |
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Legal Life Estate |
Created by state law, protecting property rights of surviving family members upon death of husband or wife. Major forms are dower and curtesy, elective share, homestead |
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Legal Life Estate Dower and Curtesy |
Wife’s life estate interest in the husband’s property/husband’s interest in wife’s property. Property is owned by the survivor for the duration of lifetime. |
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Legal Life Estate Elective Share |
Enables the surviving spouse to file for a minimum claim to the deceased spouse’s real or personal property. |
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Legal Life Estate Homestead |
Protect family members against losing their homes to general creditors attempting to collect on debts. |
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Leasehold Estates Estate for years |
Specific, stated duration, per lease |
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Leasehold Estates Estate from Period to Period |
Lease term renews automatically upon acceptance of monthly or periodic rent. |
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Leasehold Estates Estate at will |
Tenancy for indefinite period subject to rent payment, cancelable with notice. |
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Leasehold Estates Estate at Sufferance |
Tenancy against landlord’s will and without an agreement. |
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Encumbrances |
Non-possessory interest limiting the legal owners rights |
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Easements |
Right to use portions of another’s property |
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Easement Appurtenant |
Gives a property owner right of usage to portions of adjoining property owned by another party.
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Attaching to |
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Servient tenement |
Property containing the physical easement itself. |
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Dominant Tenement or Dominant Estate |
The property enjoying the easement useage right |
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Easement by Necessity |
Easement appurtenant granted by a court of law to owner because of necessity. Landlocked property
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Easement in Gross |
A right to use property that does not attach to the real estate. Ex. Utilities and railroads Personal- not revocable or transferable Commercial- granted to businesses, transferable |
Utilities Railroads |
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Easements can be created by... |
Voluntary grant Court decree by necessity or prescription Eminent Domain |
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Easements can be terminated by... |
Release Merger Abandonment Condemnation Change of purpose Destruction Nonvuse |
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Liens |
Claims attaching to real or personal property as security for a debt. |
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A record of lien restricts the owners bundle of rights and reduces the owners __________ in the property to the extent of the lien amount.
Debt Mortgage Equity Easement |
Equity |
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Legal Features of a Lien |
A lien does it convey ownership, with the exemption of a mortgage loan on the property in a title-theory state A lien attaches to the property A property may be subject to multiple liens A lien terminates on payment of the set and recording of the documents |
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Homestead Laws provide that: |
All or portions are exempt from forced sale for the collection of general debts Not exempt-Tax debts, seller financing debt debts for home improvements and mortgage debt The family must occupy the homestead Homestead interest cannot be conveyed by one spouse The exemption and restrictions endure over the life of the head of household and pass on to children of legal age. Homestead interest in a property are extinguished if the property is sold or abandoned In some states the exemption is automatic in others they must file. |
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Liens subject to homestead exemption |
Purchase money Taxes on homestead Mechanic’s liens for work or services completed on the homestead Home Equity Loans Some reverse mortgages Debts owed to the federal government Encumbrances that existed on the property prior to becoming a homestead Divorce claims Child support claims Refinancing a lien Manufactured home refinancing |
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Lien Types |
Voluntary and Involuntary General and Specific Superior and Junior |
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What are the two types of exemptions in the California Homestead Law? |
Automatic Homestead Exemption: to protect equity when a court forced the sale of a house to pay for a judgement. Declared Homestead Exemption: protects a homeowner who voluntarily sell from judgement liens for 6 months. |
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What additional benefits does a California home owner gain by recording a homestead declaration? |
Protection for voluntary sale of the property Rebuttable presumption that the homestead is valid A judgement creditor’s lien attaches only to surplus equity |
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Voluntary Lien |
Property owner created lien to borrow money secured by a mortgage |
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Voluntary Lien |
Property owner created lien to borrow money secured by a mortgage |
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Involuntary Lien |
A legal process placed on the property |
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Statutory Lien |
Statutory law imposes an involuntary lien |
Real estate tax |
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Equitable lien |
Court action poses an involuntary lien |
Security for money |
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Superior lien |
Receive first payment from the proceeds of foreclosure Rank over junior liens Not ranked by recording date Real estate tax, special assessment lien, Federal and State inheritance tax liens, California property tax |
Senior |
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Inferior Lien |
Date of recording determines priority, ranking lien is first to receive proceeds. Include judgement Mechanic lien Tax liens (Federal & State income tax, State tangible tax, State franchise tax) |
Junior |
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The rank ordering of claims established by lien classification and date of recording. |
Lien Priority |
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What two factors determine lien priority? |
The liens categorization as a superior or junior The date of recording |
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What types of liens are considered superior liens? |
Real estate Tax Liens Special Assessment Liens Federal and State inheritance tax Liens |
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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? |
Judgement Lien |
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What does a Mechanic’s Lien do? |
Secures the cost of labor, materials, and supplies incurred in the repair or construction of property improvements so that if a property owner fails to pay for work performed or materials a worker or supplier can file a lien to force the sale of the property and collect the debt. |
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Forms of holding ownership of a freehold estate (3) |
In severalty- one owner In co-ownership- held by two or more In trust- Held by a third party |
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4 types of co-ownership |
Tenancy in common: owners are not married, two or more owners, equal rights, electable ownership shares, no survivorship, no unity of time Joint tenancy- two or more persons own a property as if they are a single person. Equal shares, survivorship, Cannot be divided Community Property Laws- belongs to both spouse equally Tenancy in Partnership- held by business partners, equal rights to all partners |
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Uniform partnership Act |
Another form of ownership held by business partners, tenancy in partnership. |
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Common interest developments |
Developments characterized by the individual ownership of either a housing unit or parcel coupled with the right to use shared common areas and facilities: Examples: Condominiums, Planned unit developments, Cooperatives, Timeshares |
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What are Common Interest Developments in California? |
Condominiums Planned Unit Developments Cooperatives Timeshares |
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Condominium |
Hybrid form of ownership of multi unit residential or commercial properties. It combines a fee simple interest in the airspace and an ownership of undivided share as a tenant in common. |
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Planned unit developments |
Owners own the land where their unit is located, not just the air space around the unit. |
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Planned unit developments |
Owners own the land where their unit is located, not just the air space around the unit. |
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Cooperative or co-op |
The person owns shares in a non-profit corporation or cooperative association, which in turn acquires and owns an apartment building as its principal asset. |
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Timeshare ownership |
A fee or leasehold interest in a property whose owners or tenants agree to use the property on a periodic, non-overlapping basis. |
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Businesses can be organized as: |
Sole proprietorship Partnership Joint Venture Corporation Limited inability company Syndicate |
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Real Estate Investment Trust (REIT) |
A special type of syndicate organized as and unincorporated trust that specifically holds a large portfolio of real estate investments. |
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What does a living trust do? |
Allow the trust or, during his or her lifetime, to convey title to a trustee for the benefit of a third party. |
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What are the four unities needed to create a joint tenancy? |
Unity of possession Unity of interest Unity of time Unity of title |
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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. |
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What form of ownership is a condominium? |
A hybrid form of ownership which combines ownership of a fee simple interest in the airspace within a unit with ownership of a undivided hare, as a tenant in common, of the entire property’s common elements. |
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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 air space around the unit. |
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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. |
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What is a limited liability company (LLC)? |
A hybrid business entity having characteristics of a corporation and a partnership |
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What is a major need it of Real Estate Investment Trusts? (REIT) |
Profits are not taxed |
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