© 2010 pearson education, inc., publishing as prentice-hall 1 real property © 2010 pearson...

© 2010 Pearson Education, Inc., publishing as Prentice-Hall© 2010 Pearson Education, Inc., publishing as Prentice-Hall 1

REAL PROPERTY

© 2010 Pearson Education, Inc., publishing as Prentice-Hall© 2010 Pearson Education, Inc., publishing as Prentice-Hall

CHAPTER 48 CHAPTER 48


Real Property

• Real property is immovable or attached to immovable land or buildings.– Land– Buildings– Subsurface Rights– Plant Life and Vegetation– Fixtures


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.


Subsurface Rights

• Mineral rights to the earth located beneath surface.– E.g., rights to gold, oil, natural gas.

• Often sold separately from surface rights.


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.


Plant Life and Vegetation

• Includes both natural and cultivated plants.– E.g., trees, crops.

• Sold with land.

• Considered real property until harvested.


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.


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.


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


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.


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.”


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.


Concurrent Ownership

• When two or more persons own a piece of real property.

• Also called co-ownership.


Joint TenancyJoint TenancyTenancy in Tenancy in CommonCommon

Tenancy by Tenancy by the Entiretythe Entirety

Community Community PropertyProperty

CondominiumCondominium

CooperativeCooperative

Forms of Co-ownership


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.


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.


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.


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.


Concurrent Ownership

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.


Concurrent Ownership (continued)

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, 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.


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.


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.


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.


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.


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.


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.


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.


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


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.


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.


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.


Nonpossessory Interests

EasementsEasements

LicensesLicenses

ProfitsProfits


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.


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.


Profit

• Right to remove something from another’s real property.– E.g., gravel, minerals, grain, or timber.


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.

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