1. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning Chapter 49 Real Property Twomey Jennings Anderson’s Business Law and the Legal Environment, Comprehensive 20e Anderson’s Business Law and the Legal Environment, Standard 20e Business Law: Principles for Today’s Commercial Environment 2e

2. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 2 Nature of Real Property Real property includes land, buildings and fixtures, and rights in others’ land. Uses of land that do not involve ownership include: –Easements: the right to use a portion of another’s land such as for access to yours. –Profits: the right to take part of the soil or produce of another’s land. –Licenses: privilege to use land for a reason. –Liens: claim on land to secure a debt.

3. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 3 1.Deed 2.Implication 3.Necessity 4.Estoppel 5.Prescription Express grant Express reservation Creation of Easements

4. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 4 BA Easement Easement by Necessity

5. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 5 Fixtures Personal property is attached to or associated with real property in such a way that it becomes real property. Courts look to the method of attachment, to how the property is adapted to the realty, and to the intent of the person originally owning the personal property.

6. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 6 The interest held by a person in real property may be defined in terms of the period of time for which the person will remain the owner. A fee simple estate lasts forever, while a life estate lasts for the life of a person. –These estates are known as freehold estates. Nature and Form of Real Property Ownership

7. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 7 If the interest in the land will vest at a later time, it is called a future interest. If the ownership interest exists for a specified number of days, months, or years, the interest is a leasehold estate. Nature and Form of Real Property Ownership

8. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 8 Liability to Third Persons Under common law, the liability of an occupier of land for injury to third persons on the premises is dependent on the status of the third persons as trespassers, licensees, or invitees. –Attractive Nuisance Doctrine.

9. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 9 Liability to Third Persons Many jurisdictions, however, are ignoring these common law distinctions in favor of an ordinary negligence standard or are giving licensees the same protection as invitees.

10. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 10 Co-Ownership Real property may be the subject of multiple ownership. The forms of multiple ownership are the same as those for personal property. In addition, there are special forms of co- ownership for real property, such as condominiums and cooperatives.

11. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 11 A deed is an instrument by which a grantor transfers an interest in land to a grantee. –It may be a quitclaim deed or a warranty deed. A deed must be signed or sealed by the grantor and delivered to the grantee. Transfer of Real Property by Deed

12. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 12 Deeds Recording the deed is not required to make the deed effective to pass title, but recording provides notice to the public that the grantee is the present owner. Eminent domain and adverse possession may also acquire title to real estate.

13. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 13 transfers whatever interest the grantor may have in the property without specifying that interest transfers a specified interest, and makes certain guarantees sets forth the details of the transaction recites that a named person is making certain conveyance to a named grantee Quitclaim deedWarranty deedCommon law deedStatutory deed Classification of Deeds

14. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 14 Grantor’s Warranties The warranties of the grantor relate to the title transferred by the grantor and to the fitness of the property for use. In the absence of any express warranty in the deed, no warranty of fitness arises under the common law in the sale or the conveyance of real estate. Most states today hold that when a builder or real estate developer sells a new home to a buyer, an implied warranty of habitability arises.

15. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 15 Other Methods of Transfer Eminent Domain. –5 th Amendment allows government to take private property for public use, as long as there is just compensation. Adverse Possession.

16. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 16 Mortgages An agreement that creates an interest in real property as security for an obligation and that ends upon the performance of the obligation is a mortgage. A mortgage must be in writing under the statute of frauds. The mortgage should be recorded to put good-faith purchasers on notice of the mortgage, but even an unrecorded mortgage is valid between the parties.

17. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 17 Rights in Mortgage A purchaser of the mortgaged property does not become liable for the mortgage debt unless the purchaser assumes the mortgage. The mortgagor still remains liable unless the mortgagee agrees to a substitution of parties. If the mortgagor defaults, the mortgagee may enforce the mortgage by foreclosure.