1. Copyright © 2004 by Prentice-Hall. All rights reserved. PowerPoint Slides to Accompany BUSINESS LAW E-Commerce and Digital Law International Law and Ethics 5 th Edition by Henry R. Cheeseman Slides developed by Les Wiletzky Wiletzky and Associates, Puyallup, WA Chapter 49 Real Property Chapter 49 Real Property

2. 49 - 2Copyright © 2004 by Prentice-Hall. All rights reserved. Real Property  The land itself as well as buildings, trees, soil, minerals, timber, plants, and other things permanently affixed to the land. Land Land Buildings Buildings Subsurface Rights Subsurface Rights Plant Life and Vegetation Plant Life and Vegetation Fixtures Fixtures

3. 49 - 3Copyright © 2004 by Prentice-Hall. All rights reserved. Estates in Land  Ownership rights in real property.  The bundle of legal rights that the owner has to possess, use, and enjoy the property.  The type of estate that an owner possesses is determined from the deed, will, lease, or other document that transferred the ownership rights to him or her.

4. 49 - 4Copyright © 2004 by Prentice-Hall. All rights reserved. Freehold Estate  An estate where the owner has a present possessory interest in the real property.  Estates in Fee Fee simple absolute Fee simple absolute Fee simple defeasible Fee simple defeasible  Life Estates

5. 49 - 5Copyright © 2004 by Prentice-Hall. All rights reserved. Estates in Fee Fee Simple Absolute  Highest form of owner- ship of real property.  Ownership: Is infinite in duration Is infinite in duration Has no limitation on inheritability Has no limitation on inheritability Does not end upon the occurrence or non- occurrence of an event Does not end upon the occurrence or non- occurrence of an event Fee Simple Absolute  Highest form of owner- ship of real property.  Ownership: Is infinite in duration Is infinite in duration Has no limitation on inheritability Has no limitation on inheritability Does not end upon the occurrence or non- occurrence of an event Does not end upon the occurrence or non- occurrence of an event Fee Simple Defeasible  Grants owner all of the incidents of a fee simple absolute except that it may be taken away if a specified condition occurs or does not occur. Fee Simple Defeasible  Grants owner all of the incidents of a fee simple absolute except that it may be taken away if a specified condition occurs or does not occur.

6. 49 - 6Copyright © 2004 by Prentice-Hall. All rights reserved. Life Estate  Interest in property that lasts for the life of a specified person.  A life estate terminates upon the death of a named person and reverts back to the grantor or his or her estate or other designated person.

7. 49 - 7Copyright © 2004 by Prentice-Hall. All rights reserved. Future Interest  The interest that the grantor retains for him- or herself or a third party.  Reversion – a right of possession that returns to the grantor after the expiration of a limited or contingent estate.  Remainder – a right of possession that goes to a third party upon the expiration of a limited or contingent estate.

8. 49 - 8Copyright © 2004 by Prentice-Hall. All rights reserved. Co-ownership  When two or more persons own a piece of real property.  Also called concurrent ownership.

9. 49 - 9Copyright © 2004 by Prentice-Hall. All rights reserved. Recognized Forms of Co-ownership Joint Tenancy Tenancy in Common Tenancy by the Entirety Community Property Condominium Cooperative

10. 49 - 10Copyright © 2004 by Prentice-Hall. All rights reserved. Summary: Concurrent Ownership (1 of 2) Form of Ownership Right of Survivorship Tenant May Unilaterally Transfer His or Her Interest Joint Tenancy Yes. Deceased tenant’s interest automatically passes to co-tenants. Yes. Tenant may transfer his or her interest without the consent of co- tenants. Transfer severs joint tenancy. Tenancy in Common No. Deceased tenant’s interest passes to his or her estate. Yes. Tenant may transfer his or her interest without the consent of co- tenants. Transfer does not sever tenancy in common.

11. 49 - 11Copyright © 2004 by Prentice-Hall. All rights reserved. Summary: Concurrent Ownership (2 of 2) Form of Ownership Right of Survivorship Tenant May Unilaterally Transfer His or Her Interest Tenancy by the Entirety Yes. Deceased tenant’s interest automatically passes to his or her spouse. No. Neither spouse may transfer his or her interest without the other spouse’s consent. Community Property Yes. When a spouse dies the surviving spouse automatically receives one-half of the community property. The other half passes to the heirs of the deceased spouse as directed by a valid will. No. Neither spouse may transfer his or her interest without the other spouse’s consent.

12. 49 - 12Copyright © 2004 by Prentice-Hall. All rights reserved. Condominium  Common form of ownership in a multiple- dwelling building.  Purchasers of a condominium: Have title to their individual units Have title to their individual units Own the common areas as a tenant in common with the other condominium owners Own the common areas as a tenant in common with the other condominium owners  Owners may sell or mortgage their units without the permission of the other owners.

13. 49 - 13Copyright © 2004 by Prentice-Hall. All rights reserved. Cooperative  Form of co-ownership of a multiple-dwelling building. A corporation owns the building A corporation owns the building The residents own shares in the corporation The residents own shares in the corporation

14. 49 - 14Copyright © 2004 by Prentice-Hall. All rights reserved. Transfer of Ownership of Real Property  Sale of Real Estate The passing of title from a seller to a buyer for a price. The passing of title from a seller to a buyer for a price. Also called a conveyance. Also called a conveyance. Closing – the finalization of a real estate sales transaction that passes title to the property from the seller to the buyer. Closing – the finalization of a real estate sales transaction that passes title to the property from the seller to the buyer.

15. 49 - 15Copyright © 2004 by Prentice-Hall. All rights reserved. Transfer of Ownership of Real Property (continued)  Tax Sale A method of transferring property ownership that involves a lien on property for unpaid property taxes. A method of transferring property ownership that involves a lien on property for unpaid property taxes. If the lien remains unpaid after a certain amount of time, a tax sale is held to satisfy the lien. If the lien remains unpaid after a certain amount of time, a tax sale is held to satisfy the lien.

16. 49 - 16Copyright © 2004 by Prentice-Hall. All rights reserved. Transfer of Ownership of Real Property (continued)  Gift A transfer of property from one person to another without exchange of money. A transfer of property from one person to another without exchange of money.  Will or Inheritance If a person dies with a will, his or her property is distributed to the beneficiaries as designated in the will. If a person dies with a will, his or her property is distributed to the beneficiaries as designated in the will. If a person dies without a will, his or her property is distributed to the heirs as stipulated in the state’s intestate statute. If a person dies without a will, his or her property is distributed to the heirs as stipulated in the state’s intestate statute.

17. 49 - 17Copyright © 2004 by Prentice-Hall. All rights reserved. Transfer of Ownership of Real Property (continued)  Adverse Possession Occurs when a person who wrongfully possesses someone else’s real property obtains title to that property if certain statutory requirements are met. Occurs when a person who wrongfully possesses someone else’s real property obtains title to that property if certain statutory requirements are met. Property owned by federal and state governments are not subject to adverse possession. Property owned by federal and state governments are not subject to adverse possession.

18. 49 - 18Copyright © 2004 by Prentice-Hall. All rights reserved. Deed  A writing that describes a person’s ownership interest in a piece of real property. Warranty Deed Warranty Deed Quitclaim Deed Quitclaim Deed  Grantor – the party who transfers an ownership interest in real property.  Grantee – the party to whom an interest in real property is transferred.

19. 49 - 19Copyright © 2004 by Prentice-Hall. All rights reserved. Recording Statute  A state statute that requires the mortgage or deed of trust to be recorded in the county recorder’s office of the county in which the real property is located.  Quiet title action – a party concerned about ownership rights in a parcel of real property can have a court determine the extent of those rights.

20. 49 - 20Copyright © 2004 by Prentice-Hall. All rights reserved. Marketable Title (Good Title)  Title that is free from any encumbrances or other defects that are not disclosed but would affect the value of the property. Attorney’s Opinion Attorney’s Opinion Torrens System Torrens System Title Insurance Title Insurance

21. 49 - 21Copyright © 2004 by Prentice-Hall. All rights reserved. Nonpossessory Interests Easements Licenses Profits

22. 49 - 22Copyright © 2004 by Prentice-Hall. All rights reserved. Easement  A given or required right to make limited use of someone else’s land without owning or leasing it. Easement Appurtenant – created when the owner of one piece of land is given an easement over an adjacent piece of land. Easement Appurtenant – created when the owner of one piece of land is given an easement over an adjacent piece of land. Easement in Gross – authorizes a person who does not own adjacent land the right to use another’s land. Easement in Gross – authorizes a person who does not own adjacent land the right to use another’s land.

23. 49 - 23Copyright © 2004 by Prentice-Hall. All rights reserved. License  Grants a person the right to enter upon another’s property for a specified and usually short period of time.  A license does not transfer any interest in the property.  A license is a personal privilege that may be revoked by the licensor at any time.

24. 49 - 24Copyright © 2004 by Prentice-Hall. All rights reserved. Profit  Grants a person the right to remove something from another’s real property. e.g., gravel, minerals, grain, or timber e.g., gravel, minerals, grain, or timber Profit Appurtenant – grants the owner of one piece of land the right to go onto another’s adjacent land and remove things from it. Profit Appurtenant – grants the owner of one piece of land the right to go onto another’s adjacent land and remove things from it. Profit in Gross – authorizes someone who does not own adjacent land the right to go onto another’s property and remove things from it. Profit in Gross – authorizes someone who does not own adjacent land the right to go onto another’s property and remove things from it.

25. 49 - 25Copyright © 2004 by Prentice-Hall. All rights reserved. Eminent Domain  The taking of private property by the government for public use. The Due Process Clause of the Constitution requires the government to allow the owner to make a case for keeping the property. The Due Process Clause of the Constitution requires the government to allow the owner to make a case for keeping the property. The Just Compensation Clause of the Constitution mandates that the government must compensate the property owner. The Just Compensation Clause of the Constitution mandates that the government must compensate the property owner.