Flashcards in Bus. Law: Misc. Bus. Law Deck (39):
When the grantor of a trust dies and s/he has no no named income beneficiaries remain...
the trust immediately terminates and the principal is paid to the remaindermen (the principal beneficiaries).
State law requirements for a will to be considered valid:
A will must be witnessed by two (or three) persons who can verify that the testator signed the will and that the testator had capacity.
exception to state law formality requirements for a will
A will that is entirely in the handwriting of the testator; which must state the testator's intention and be signed.
1. Created in a will.
2. A trust can designate the same persons both trustee and beneficiary as long as not all trustees and beneficiaries are not one in the same.
3. Inability of the trustees to serve does not invalidate the trust.
artificial entity that holds legal title to property for the benefit of beneficiaries.
Real Estate Investment Trust (REIT)
1. An entity that receives special tax considerations by virtue of being required to distribute to its owners (100+) most of its income each year.
2. REITs may be listed on public stock exchanges and its shares traded just as common stock in other companies.
one which prohibits the beneficiary from invading the principal of the trust.
cy pres doctrine
operates to save a trust which has been established for charitable purposes, but might otherwise fail due to the beneficiary no longer being in existence
inter vivos trust
one which comes into existence during the life of its creator
requirements for creating a valid inter vivos trust
3. Trust res (trust property).
4. Separate beneficiaries.
5. AND a lawful purpose.
With respect to accounting for principal, income, and expenses of the trust...
1. Disbursements relating to real estate special assessments are treated as reductions to principal.
2. Roof repair and real estate taxes are treated as reductions to income.
3. Rental receipts are considered trust income.
When a blanket mortgage in favor of A is recorded prior to B's mortgage...
A's mortgage has priority.
assume a loan
Promising to make timely payments on a real estate loan.
When B assumes a loan from A, is A still liable to the loaning bank for the loan balance?
pure race jurisdiction
1. means a state which gives priority to the first to record, regardless whether they were aware of unrecorded claims.
Does recordation ensure that heirs will get a property?
1. An heir's claim to the property does not take priority over an unrecorded mortgage because recordation is only required to protect against bona fide purchasers (or lenders) for value.
2. An heir gives no value, so takes subject to recorded and unrecorded mortgages.
required to protect against bona fide purchasers (or lenders) for value.
buy a building subject to existing mortgage
make no promise to pay the mortgage; smarter move
assume a mortgage/enter a novation
promise to pay mortgage
1. leaves the existing mortgage in place, saving costs of recordation as well as other costs (e.g., survey) incurred in connection with a new mortgage.
2. In a novation, the original borrower is released and a new obligor is substituted.
3. Good move for someone who wants to retain mortgage but be released from liability for payments.
A general warranty deed includes all of the following title warranties:
1. The conveyor of the deed is the true owner.
2. No mineral rights claims against the property.
3. The conveyee will have quiet enjoyment of the property.
Which party wins in a race-notice jurisdiction?
In a race-notice jurisdiction the party who is first to record will prevail against all other claims except those of which he was aware at the time of recording.
1. arises when one passes over the property of another continuously and openly for a period designated by statute - usually 15 years.
2. After continuous use for the statutory period, the adverse user obtains an easement to continue such use and this easement arises without the filing of a deed or of any instrument of record.
Is an easement created when A uses's B's property with permission?
No. No instrument is required in connection with an easement by prescription.
easement by agreement
easement created by a deed
easement by necessity
easement created because it is necessary for A to use B's property
prescriptive easement for descendants
This can only occur if both the parent and the child use B's property adversely.
Can joint tenants convey their share of property to someone else w/out the consent of the other tenants?
Yes. If A, B, and C start as joint tenants, but C conveys the property to D, then A and B own 2/3 as joint tenants, and D owns 1/3 as a tenant in common.
Can tenants by the entirety convey their share of property to someone else w/out the consent of the other tenants?
In a tenants by the entirety situation, are the tenants subject to a judgment against one tenant?
1. If A and B still own the property as tenants in entirety, the judgment has no effect on the title.
2. If, however, A ends up with the property alone, the judgment is effective against A.
Can tenants in common convey their share of property to someone else w/out the consent of the other tenants?
Yes. There are also no survivorship rights, so, when A dies, his share passes to his heirs.
A will is ambulatory in nature. What does this mean?
1. The will has no force or effect until the testator dies.
2. Consequently, the will can be changed at any time as long as the testator retains testamentary capacity.
Is consideration required for a deed of gift?
Who must sign the deed for it to be valid?
Only the grantor has to sign.
Does the deed have to be recorded to be valid?
Can a minor execute a valid deed given a lack of capacity to enter into a contract?
gift causa mortis
1. conditional gift made in contemplation of death.
2. It is automatically revoked if the donor does not die of the impending illness or crisis.
3. Such gifts can only be made when the donor is in a terminal condition.