© 2015 oncourse learning chapter 2 property ownership and interests

© 2015 OnCourse Learning

Chapter 2Property Ownership

and Interests

IN THIS CHAPTER

• The types of ownership of real property.

• Real estate agents must avoid the temptation to give legal advice.

• Real estate licensees must recognize the basic concepts of law.

• Licensees must encourage clients and customers to become properly informed through appropriate legal counsel.

THE CONCEPT OF PROPERTY

• Real estate is the land and all improvements made both on and to the land, whether found in nature or placed there by humans.

• Real property is real estate plus all legal rights, powers, and privileges inherent in ownership of real estate.

Bundle of Rights

• The sticks in the bundle include the major sticks of land, fixtures, and fruits of soil, all of which are tangible (movable).

• The bundle also includes intangible rights such as air rights, water rights, mineral rights, easements, leases, mortgages, licenses, and profits.

• Real property consists of land and everything permanently attached to land, as well as the rights of ownership.– Ownership is transferred by a deed.

• Personal property (personalty or chattel) is everything that is not real property.– Ownership is transferred by a bill of

sale.

• Land is defined as the earth’s surface extending downward to the center of the earth and upward to infinity, including things permanently attached by nature.

Fixtures = Improvements

1. How permanent is the attachment?

2. What was the intent of the person installing the item?

3. If it is removed, can the item be used elsewhere?

Trade Fixtures

• Items of personal property that a business operator installs in a building space (whether owned or rented) are presumed to remain personal property.

An estate in real property is an interest in the property sufficient to give the holder of the estate the right to possession of the property.

Types of Estates

• Freehold estate is ownership for an undetermined length of time.

• Nonfreehold or leasehold estate signifies possession with a determinable end.

Fee Simple Absolute

• Provides the most complete form of ownership and bundle of rights available in real property; also called fee simple.

Life Estates

• A freehold estate that defines itself. • It is ownership, possession, and

control for the life of someone. • Ownership, possession, and control

are contingent upon living. • Therefore, the ownership,

possession, and control are lost at death.

• Under a life estate, heirs of the deceased owner inherit nothing.

Estate Pur Autre Vie

• Based on the lifetime of a person other than the life tenant.

• Provides for inheritance by the life tenant’s heirs only until the death of the person against whose life the estate is measured.

Statutory Dower Rights

• Both dower (recognized in Michigan) and curtesy (not recognized in Michigan) refer to an automatic life estate owned by a surviving spouse in inheritable real property owned by the deceased spouse alone during the marriage.

• If the owner of the land is the husband, the wife has a life estate called dower.

LEASEHOLD ESTATES (NONFREEHOLD ESTATES)

• Estate for Years (Fixed Termination)

• Estate from Year to Year (Periodic Estate)

• Estate at Will• Estate at Sufferance

Ownership of Real Property

• Ownership in Severalty• Concurrent Ownership

– tenancy in common– joint tenancy– tenancy by the entirety– community property

o Right of survivorshipo Right of inheritance

Condominium = Jointly Controlled

• “Horizontal Property Acts” authorize a three-dimensional property description, with a property line above and below the condominium.

• These horizontal property lines create a cube of air space or a volume that is the privately owned condominium.

• Air rights and area below the land surface are owned as tenants in common.

Michigan Condominium ActA prospective purchaser of a new construction condominium must be provided detailed information concerning construction and proposed operating procedures.

1. The recorded master deed with the attached bylaws and subdivision plans

2. A copy of the purchase and escrow agreements

3. The Condominium Buyer’s Handbook

4. A disclosure statement

Other Condo Considerations• Site Condominiums• Cooperatives• Timesharing• Michigan Uniform Securities Act• Syndications

bill of sale bundle of rights chattel community property concurrent condominium convey cooperative co-ownership curtesy declaration deed defeasible dower emblements estate at sufferance estate at will estate for years estate from year to year estate in real property fee simple absolute

CHAPTER TERMINOLOGY REVIEW

fixture freehold estate joint tenancy leasehold estate life estate life tenant master deed Michigan Condo Act Michigan Uniform Securities Act nonfreehold estate ownership pur autre vie remainder

reversion right of first refusal right of inheritance right of survivorship separate property severalty site condominium syndication tenancy in common tenants by the entirety timesharing trade fixtures unities of ownership