Real Estate Principles Chapter 2

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Estate

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An estate is an interest, share, right, or equity in real estate that varies from the minimal right of a renter to the maximum right of a full owner

Estate is an ownership interest in the land

There are either 1. freehold or 2. less than freehold, depending on the degree of ownership

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Freehold Estates - real property

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There are two types of freehold estates. One is fee simple estate and the other is life estates

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Estate in fee or estate of inheritance or Fee simple

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The most complete form of ownership and most common. This can also be referred to as fee, fee ownership, or fee simple

This means an owner has transferred all rights of a property to a new owner for an indefinite direction of time.

Remember this is a freehold estate

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Fee simple defeasible estate

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Is a fee state that is subject to particular limitations imposed by the grantor of the estate.

Breaking any condition of the transfer may be grounds for terminating or revoking the property transfer

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Example.

Duke sold his property to Jane with the condition that Jane must never use it for any purpose other than as a private residence. However, after owning the property for several years, Jane decided to start a board and care facility for handicapped adults. The estate may revert to duke because it is a fee simple defeasible estate.

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Life estate

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Life estate is a freehold estate.

A life estate is an ownership interest in real property that only exists for the life of any designated person or persons.

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Estate in reversion

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The party granting a life estate is said to hold an estate in reversion

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Estate in remainder

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If an owner granting a life estate names another person to receive title upon the death of the current life estate holder, that other person claims an estate in the remainder

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Less than freehold estates

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A less than freehold estate is also called a leasehold estate and is considered personal property

Less than freehold estates are personal rights to the use of real property for a period of time

Commonly referred to as the leases or rental agreements

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What are the four types of ownership for personal property or less than freehold estates?

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Estate for years

Estate from period to period

Estate at will

Estate/tenancy at sufferance

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estate for years

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Less than freehold estate

The estate for years is a lease for a fixed period of time, agreed to in advance.

This can be from a few days, even hours, and up to 99 years. No notice for termination is necessary

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Estate from period to period

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And estate from period to period is a renewable agreement to rent or lease a property for a period of time, where the rental or lease amount is fixed in an agreement to sum per week, month, or a year. A notice to terminate must be given usually 30 days.

Less than freehold estate

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Estate at will

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A estate at will is a rental agreement that can be terminated by either party the lessor or leasee at any time, although in California law, there must be at least a 30 day notice to vacate.

There is no true estate at will in California

Less than freehold estate

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Estate at sufferance/ tenancy at sufferance

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These occur when the person renting or leasing a particular property remains after the expiration of the stated term without the landlords consent

Less than freehold estate

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Transfers

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A sale is the most familiar way of transferring property, but it is not the only way. There are seven basic ways to transfer real property.

Deed, will, probate, intestate succession, accession, occupancy, dedication

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Transfer by deed

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Deed is the most common method of acquiring title to a property.

A deed is a written instrument that conveys and evidences title.

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Conveyance

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Convenience is the document used to effect the transfer of title to property from one person to another

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Grantor

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The grantor is the person who grants property or property rights also known as the seller

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Grantee

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Is the person to whom the grant is made also known as the buyer

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Two basic types of deeds?

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Grant deed and quitclaim deed

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Grant deed

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The Grant deed is a document that transfers title with the keyword being Grant.

This is evidence of property ownership

This promises that the owner has not conveyed title to the property to any other person and that the property is free of any encumbrances other than those already disclosed to the grantee

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Implied warranties

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Warranties that are part of the grant deed, these warranties are not written into the deed but they are implied:

-The owner has not convey title to the property to any other person

-The property is free of any encumbrances other than those already disclosed to the grantee

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Quit claim deed

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A quitclaim deed is a deed that conveys all the present right or interest that a person may have in a property, without any warranty, title, or interest.

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Cloud on title

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A cloud on title is a claim, encumbrance, or condition that impairs the title to real property until disproved or eliminated, as, for example, through a quit claim deed or a quiet title legal action.

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Valid deed has these five essential elements...

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1. It must be in writing

2. The parties Grante and grantor, must be properly named and have legal capacity

3. The property must be adequately described

4. There must be a granting clause or action clause

5. It must be signed by the granting party or grantor

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When does a deed take effect?

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The deed does not take effect until it is delivered and accepted

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What are some types of grant or quit claim deed using California?

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Gift deed which is granted as a gift of love and affection. Tax deed which is given if property is sold as payment of past-due property taxes. Administrators deed or executors deed which is given to the purchaser of the deceased persons real property. Sheriffs deed which is granted to the purchaser at a court ordered sale. Trustees deed which is given to the purchaser of property at a trust deed foreclosure sale. Guardians deed used by a guardian to transfer the real property of minors or incompetence. Land patent used by the government to Grant Public land to an individual.

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Three basic methods of delivery are…?

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Manual delivery

delivery through recording

conditional delivery

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Manual delivery

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Manual delivery is a direct transfer of the deed from the grantor to the grantee

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Delivery through recording

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Delivery through recording is the act of putting the title of record in the grantees name at the county recorders office. The grantee must have agreed to the recording

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Conditional delivery

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Conditional delivery requires that a specific event take place before title can be passed, and must be handled by a dis-interested third-party. The deed is been delivered manually.

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(Transfer by will)

Bequeath

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Bequeath is to transfer personal property by will

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(Transfer by will)

Devise

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Devise is to transfer real property by will

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Will

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A will is a document, created by a person, stating how that person's property is to be conveyed or distributed upon his or her death.

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Testate

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Testate means having made and left a valid will.

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Testator or Testatrix

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One who makes a will

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What are the two types of whales?

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Witnessed will and holographic will

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Witnessed will

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Is a typed document usually prepared by an attorney, dated, signed by the property owners, and declared to be a will buy at least two witnesses for a total of three signatures

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Codicil

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A codicil is a change in a will before the makers death

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Revocable living trust

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Is a trust that is effective during the life of the owner, rather than upon his or her death. This can eliminate probate and serve the same function as a will. Property is placed in a trust created for the heirs and may consist of both real and personal property.

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Transfer by probate

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Probate is a superior court procedure to determine a wills validity, any creditors claims, and establish the identity of the beneficiaries.

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Transfer by intestate succession

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If there is no will, the procedure used for transferring the deceased property to his or her heirs is called intestate succession

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Escheat

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escheat is the term used if there is no will and there are no heirs, the property will go to the state of California. There is a five-year period during which airs can make claims to the state for the property.

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Transferred by accession

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Accession occurs when an owner requires title To additional land by natural causes, that is, additions to the property by natural growth.

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Accretion

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The addition to land from natural causes, such as earthquakes, volcanoes, or the action of moving water is known as accretion

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Alluvium

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Deposits of earth made through the natural action of water is called alluvium. Gaining of land.

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Avulsion

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Avulsion is the sudden, violent tearing away of land by, for example, a river

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Encroachment

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Placement of improvement and permanent fixtures on property that do not legally belong to the person who plays them is called encouragement.

Example Fence line on neighbors property. Neighboring land owner has three years from discovery to take action for its removal

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Transfer by occupancy

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Ownership of real property, or the use of real property, can be gained through three types of occupancy

abandonment, adverse possession, prescription (by use).

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Abandonment

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This is with the landlord tenant situation. Abandonment is the relinquishing of a right or interest with the intention of never again reclaiming it

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Adverse possession

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This is related to ownership of the property. Adverse possession is acquiring title to another's property through continuous and notorious occupancy for five years under a claim of title

Certain conditions must be met to obtain a title:

Open and notorious occupancy

Hostile and adverse

Uninterrupted use for five years

Right or color of title

Property taxes

* this only apply to privately owned land. NOT government or public land

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Easement by prescription

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Prescription is an easement, or the right to use another's land, which can be obtained through five years of continuous use.

(The right to use someone's driveway example)

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Transfer by dedication

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Dedication is the gift of land, by its owner, for some public use. This may either be voluntary or mandated by statute (force).

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Title

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Title is the right to ownership of land and the evidence of that ownership.

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Vesting

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Vesting is the placing of a person's name on the deed and the description of the method by which that person will hold title

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What are the six ways of vesting title?

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Severalty

Tenancy in common

Joint tenancy

Tenancy in partnership

Community property several T.

Community property with right to survivorship

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Severalty

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Severalty is the sole and separate ownership of property by one individual or by a corporation

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Corporation

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Corporation is a body of persons treated by law as a single legal person, having a personality in existence distinct from that of the shareholders.

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Tenancy in common

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When two or more people own property together with the right to Will or sell it, however without survivorship rights or community property rights, it is called tenancy in common.

Each owner may sell or transfer his or her interest separately

If one of the owner dies, his or her heirs would inherit the departed interest in the property.

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Unity of possession

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Unity of possession mean each have a right to occupy the property.

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Partition action

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When the courts have the responsibility of physically dividing are selling the property, it is referred to as a partition action.

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Joint tenancy

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Joint tenancy occurs when two or more people have identical interests and the whole property with the same right of possession and the right of survivorship

Joint tenancy can never be willed