California Legal Aspects Of Real Estate, (Express) Chapter 3, Estates And Ownership

Front 1

Feudal System

Back 1

Landlords provide land to tenants in exchange for loyalty and service

Front 2

Allodial System

Back 2

The holding of land in absolute ownership, a legal right or claim of ownership undivided

Front 3

Undivided Interest

Back 3

An owners interest in a property in which two or more parties share ownership.

Front 4

Estate

Back 4

Right of possession

Front 5

Encumbrance

Back 5

Does not have the right to possess

Front 6

Eminent Domain

Back 6

Government takes private property for public use

Front 7

Taxation

Back 7

Charge on a piece of real estate to raise funds to meet the public needs of a government.

Front 8

Escheat

Back 8

When a owner dies and there is no heir to will the property to.

Hint 8

Revert back

Front 9

Freehold estate

Back 9

The owners rights cannot be determined. The rights may last a lifetime, for less that a lifetime, or for generations beyond the owners lifetime.

Front 10

Leasehold estate

Back 10

Distinguished by its specific duration, as specified in the lease terms. Rights are temporary

Front 11

Tenancies

Back 11

Possession of land or property as a tenant. Both freehold and leasehold estates are referred to as tenancies.

Front 12

Fee Simple

Back 12

Highest form of ownership interest one can acquire in real estate.

Front 13

Fee Tenant

Back 13

The owner of a fee simple (the highest form of ownership)

Front 14

What are the two forms of Fee Simple?

Back 14

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.

Front 15

3 types of Fee Simple Defeasible

Back 15

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.

Front 16

What is meant by the term, “undivided interest”?

Back 16

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

Front 17

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?

Back 17

Eminent Domain

Front 18

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

Back 18

Fee Simple freehold estate

Front 19

Life estate

Back 19

Estate that is limited to the duration life of the owner.

Front 20

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?

Back 20

Eminent Domain

Front 21

Life tenant

Back 21

Holder of life estate

Front 22

Life Estate/Future Interest

Remainder

Back 22

Names third party to receive title to the property upon termination of the life estate

Front 23

Life Estate/Future Interest

Reversion

Back 23

Estate reverts to the original owner, or owner’s heirs

Front 24

What are the two types of life estates?

Back 24

Conventional and Legal

Front 25

Conventional Life Estate

Back 25

Created by a grant from a property owner to the life tenant, rights pass to a remainder man, or revert to the previous owner.

Front 26

Legal Life Estate

Back 26

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

Front 27

Legal Life Estate

Dower and Curtesy

Back 27

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.

Front 28

Legal Life Estate

Elective Share

Back 28

Enables the surviving spouse to file for a minimum claim to the deceased spouse’s real or personal property.

Front 29

Legal Life Estate

Homestead

Back 29

Protect family members against losing their homes to general creditors attempting to collect on debts.

Front 30

Leasehold Estates

Estate for years

Back 30

Specific, stated duration, per lease

Front 31

Leasehold Estates

Estate from Period to Period

Back 31

Lease term renews automatically upon acceptance of monthly or periodic rent.

Front 32

Leasehold Estates

Estate at will

Back 32

Tenancy for indefinite period subject to rent payment, cancelable with notice.

Front 33

Leasehold Estates

Estate at Sufferance

Back 33

Tenancy against landlord’s will and without an agreement.

Front 34

Encumbrances

Back 34

Non-possessory interest limiting the legal owners rights

Front 35

Easements

Back 35

Right to use portions of another’s property

Front 36

Easement Appurtenant

Back 36

Gives a property owner right of usage to portions of adjoining property owned by another party.

Hint 36

Attaching to

Front 37

Servient tenement

Back 37

Property containing the physical easement itself.

Front 38

Dominant Tenement or Dominant Estate

Back 38

The property enjoying the easement useage right

Front 39

Easement by Necessity

Back 39

Easement appurtenant granted by a court of law to owner because of necessity.

Landlocked property

Front 40

Easement in Gross

Back 40

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

Hint 40

Utilities

Railroads

Front 41

Easements can be created by...

Back 41

Voluntary grant

Court decree by necessity or prescription

Eminent Domain

Front 42

Easements can be terminated by...

Back 42

Release

Merger

Abandonment

Condemnation

Change of purpose

Destruction

Nonvuse

Front 43

Liens

Back 43

Claims attaching to real or personal property as security for a debt.

Front 44

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

Back 44

Equity

Front 45

Legal Features of a Lien

Back 45

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

Front 46

Homestead Laws provide that:

Back 46

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.

Front 47

Liens subject to homestead exemption

Back 47

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

Front 48

Lien Types

Back 48

Voluntary and Involuntary

General and Specific

Superior and Junior

Front 49

What are the two types of exemptions in the California Homestead Law?

Back 49

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.

Front 50

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

Back 50

Protection for voluntary sale of the property

Rebuttable presumption that the homestead is valid

A judgement creditor’s lien attaches only to surplus equity

Front 51

Voluntary Lien

Back 51

Property owner created lien to borrow money secured by a mortgage

Front 52

Voluntary Lien

Back 52

Property owner created lien to borrow money secured by a mortgage

Front 53

Involuntary Lien

Back 53

A legal process placed on the property

Front 54

Statutory Lien

Back 54

Statutory law imposes an involuntary lien

Hint 54

Real estate tax

Front 55

Equitable lien

Back 55

Court action poses an involuntary lien

Hint 55

Security for money

Front 56

Superior lien

Back 56

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

Hint 56

Senior

Front 57

Inferior Lien

Back 57

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)

Hint 57

Junior

Front 58

The rank ordering of claims established by lien classification and date of recording.

Back 58

Lien Priority

Front 59

What two factors determine lien priority?

Back 59

The liens categorization as a superior or junior

The date of recording

Front 60

What types of liens are considered superior liens?

Back 60

Real estate Tax Liens

Special Assessment Liens

Federal and State inheritance tax Liens

Front 61

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?

Back 61

Judgement Lien

Front 62

What does a Mechanic’s Lien do?

Back 62

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.

Front 63

Forms of holding ownership of a freehold estate (3)

Back 63

In severalty- one owner

In co-ownership- held by two or more

In trust- Held by a third party

Front 64

4 types of co-ownership

Back 64

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

Front 65

Uniform partnership Act

Back 65

Another form of ownership held by business partners, tenancy in partnership.

Front 66

Common interest developments

Back 66

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

Front 67

What are Common Interest Developments in California?

Back 67

Condominiums

Planned Unit Developments

Cooperatives

Timeshares

Front 68

Condominium

Back 68

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.

Front 69

Planned unit developments

Back 69

Owners own the land where their unit is located, not just the air space around the unit.

Front 70

Planned unit developments

Back 70

Owners own the land where their unit is located, not just the air space around the unit.

Front 71

Cooperative or co-op

Back 71

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.

Front 72

Timeshare ownership

Back 72

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

Front 73

Businesses can be organized as:

Back 73

Sole proprietorship

Partnership

Joint Venture

Corporation

Limited inability company

Syndicate

Front 74

Real Estate Investment Trust (REIT)

Back 74

A special type of syndicate organized as and unincorporated trust that specifically holds a large portfolio of real estate investments.

Front 75

What does a living trust do?

Back 75

Allow the trust or, during his or her lifetime, to convey title to a trustee for the benefit of a third party.

Front 76

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

Back 76

Unity of possession

Unity of interest

Unity of time

Unity of title

Front 77

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

Back 77

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

Front 78

What form of ownership is a condominium?

Back 78

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.

Front 79

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

Back 79

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

Front 80

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

Back 80

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

Front 81

What is a limited liability company (LLC)?

Back 81

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

Front 82

What is a major need it of Real Estate Investment Trusts? (REIT)

Back 82

Profits are not taxed