1. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 1 REAL PROPERTY © 2010 Pearson Education, Inc., publishing as Prentice-Hall CHAPTER 48

2. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 2 Real Property Real property is immovable or attached to immovable land or buildings. –Land –Buildings –Subsurface Rights –Plant Life and Vegetation –Fixtures

3. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 3 Land and Buildings Most common form of real property. Landowner usually purchases surface rights. Landowner may use and enjoy the property, subject to applicable government regulation.

4. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 4 Subsurface Rights Mineral rights to the earth located beneath surface. –E.g., rights to gold, oil, natural gas. Often sold separately from surface rights.

5. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 5 Air Rights Owners of real property may sell or lease air space parcels above their land. –E.g., restaurant buying air space to build over highway; developer in city purchasing air rights from nearby properties to obtain variance for taller structure. Valuable in large cities.

6. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 6 Plant Life and Vegetation Includes both natural and cultivated plants. –E.g., trees, crops. Sold with land. Considered real property until harvested.

7. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 7 Fixtures Personal property so closely associated with real property that it cannot be separated without damaging real property. –E.g., kitchen cabinets, carpet, doorknobs. Becomes part of the realty. Included in sale of building unless otherwise agreed.

8. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 8 Estates in Land Ownership rights in real property. Bundle of legal rights that the owner has to possess, use, and enjoy the property. Type of estate is determined from the deed, will, lease, or other document that transferred the ownership rights.

9. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 9 Freehold Estate An estate where the owner has a present possessory interest in the real property. Estates in Fee –Fee simple absolute –Fee simple defeasible Life Estates

10. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 10 Fee Simple Absolute Highest form of ownership of real property. Ownership: –Is infinite in duration. –Has no limitation on inheritability. –Does not end upon the occurrence or nonoccurrence of an event.

11. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 11 Fee Simple Defeasible Qualified fee. 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. –E.g., conveyance of property “as long as the land is used as a church.”

12. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 12 Life Estate Interest in property that lasts for the life of a specified person. –Life of grantee, or –Life of third party (estate pour autre vie). A life estate terminates upon the death of a named person and reverts back to the grantor.

13. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 13 Concurrent Ownership When two or more persons own a piece of real property. Also called co-ownership.

14. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 14 Joint Tenancy Tenancy in Common Tenancy by the Entirety Community Property Condominium Cooperative Forms of Co-ownership

15. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 15 Joint Tenancy Words must clearly show intent to create. –E.g., “Marsha Leest and James Leest, as joint tenants.” Co-owners have right of survivorship. –Deceased partner’s property automatically passes to surviving partner. –Contrary provision in will ineffective. Joint tenant may sell or transfer interest, which terminates joint tenancy.

16. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 16 Tenants in Common Created by express words. –E.g., “Ian Cespedes and Joy Park, as tenants in common.” Interests of deceased partner passes by will, not by survivorship. May encumber, sell, gift, or devise their interest at any time without consent of other owners.

17. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 17 Tenants by the Entirety Co-ownership form that can only be used by married couples. Created by express wording. –E.g., “Harold Jones and Maude Jones, husband and wife, as tenants by the entirety.” Surviving spouse has right of survivorship. Neither spouse may sell, gift, devise, or otherwise transfer property without permission of other spouse.

18. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 18 Community Property Nine states recognize this form of co- ownership. Applies only to married couples Each spouse owns one-half of assets acquired by income during marriage. Property received by gift or inheritance or held before marriage belongs to that partner alone.

19. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 19 Concurrent Ownership Form of Ownership Right of SurvivorshipTenant May Unilaterally Transfer His or Her Interest Joint TenancyYes. 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.

20. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 20 Concurrent Ownership (continued) Form of Ownership Right of SurvivorshipTenant 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, surviving spouse automatically receives one-half of the community property; other half passes to the heirs of the deceased spouse as directed by will. No. Neither spouse may transfer his or her interest without the other spouse’s consent.

21. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 21 Condominium Common form of ownership in a multiple- dwelling building. Purchasers of condominium: –Have title to their individual units. –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.

22. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 22 Cooperative Form of co-ownership of a multiple- dwelling building. –A corporation owns the building. –The residents own shares in the corporation. –Each cooperative owner leases unit in the building from corporation under long-term lease.

23. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 23 Future Interests Reversion – right of possession returns to the grantor after the expiration of a limited or contingent estate. –Arises automatically by law. Remainder – right of possession that goes to a third party upon the expiration of a limited or contingent estate.

24. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 24 Sale of Real Estate Also called a conveyance. The passing of title from a seller to a buyer for a price. Via real estate sales contract. Unless otherwise agreed, fee simple is conveyed. Deed delivered to buyer and price paid to seller at closing.

25. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 25 Deeds Grantor – the party who transfers an ownership interest in real property. Grantee – the party to whom an interest in real property is transferred. Warranty deed – grantor guarantees good title. Quitclaim deed – grantor transfers only such interest as he or she has.

26. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 26 Recording Statutes Mortgage or deed of trust to be recorded in recorder’s office of the county in which the real property is located. –Gives constructive notice of interest in property.

27. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 27 Quiet Title Action Brought by a party concerned about ownership rights in a parcel of real property. To have a court determine the extent of those rights. Public notice of hearing must be given.

28. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 28 Marketable Title Title that is free from any encumbrances or other defects that are not disclosed but would affect the value of the property. Assured by: –Attorney’s opinion, or –Torrens system, or –Title insurance

29. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 29 Tax Sale Method of transferring property ownership that involves a government 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. Most states provide for a period of redemption.

30. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 30 Gift, Will, or Inheritance Gift – gratuitous transfer of property. Will – property distributed to beneficiaries as designated in the will. Inheritance – property distributed to heirs as stipulated in state’s intestate statute.

31. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 31 Adverse Possession Person wrongfully possessing another’s real property obtains title to that property if certain statutory requirements are met. –Statutorily prescribed time period. –Open, visible, and notorious. –Actual and exclusive. –Continuous and peaceful. –Hostile and adverse. Government property not subject to adverse possession.

32. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 32 Nonpossessory Interests Easements Licenses Profits

33. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 33 Easement Right to make limited use of someone else’s land without owning or leasing it. –Easement appurtenant – 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. Granted expressly, implied, or created by prescription.

34. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 34 License Right to enter upon another’s property for a specified and usually short period of time. –E.g., ticket to movie grants holder right to enter the premises.

35. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 35 Profit Right to remove something from another’s real property. –E.g., gravel, minerals, grain, or timber.

36. © 2010 Pearson Education, Inc., publishing as Prentice-Hall 36 Zoning Local ordinances regulating land use, enforced by zoning commissions. Establish use districts (e.g. commercial, residential). Restrict height, size, location of buildings. Establish aesthetic requirements for exteriors. Variances, nonconforming uses may be allowed.