CH 2 Ownership, Estates, Rights and Interest

Question 1

estate in severalty

Answer 1

tenancy in severalty, or sole ownership.
This can be ownership by one individual or one business entity such as a corporation or a
partnership. Corporations or Partnerships often hold title this way. If only one signature is
required to sell a piece of property, then there is only one owner.

Question 2

tenancy in common

Answer 2

Ownership by two or more without rights of survivorship

Question 3

joint tenancy

Answer 3

Ownership by two or more with rights of survivorship

Question 4

Tenancy by the entirety

Answer 4

is a specific type of joint tenancy where the co-owners are married
to one another: husband/wife, spouse/spouse. One advantage of this type of ownership is
that it avoids probate. (This is also true of joint tenancy.)

Question 5

Time Shares

Answer 5

give an individual part ownership of a property coupled with the right to exclusive use
of it for a specified number of days per year, without the responsibility of full ownership. This can be
called “interval ownership.” It is tenancy in common ownership. This is most often used for resort
or vacation properties.

Question 6

Cooperative or “Co-ops”

Answer 6

are an investment for residents. The land and buildings are owned by a
corporation. Residents must buy shares in the corporation in exchange for a “proprietary lease” on
their unit. The corporation pays for the mortgage, property taxes, and maintenance of the building.
The residents have a personal property interest in their units and the common areas.

Question 7

Condominiums

Answer 7

are established under laws referred to as horizontal property acts. Each unit is a
separate legal ownership, and each owner arranges his or her own financing. Along with unit ownership comes a tenancy in common interest in all the common areas. Property taxes are assessed on
each unit separately and are based on the assessed value of the unit plus the share of the common
areas. It is not necessary for the taxing authority to assess and tax the common areas separately.
Monthly condominium fees are not for taxes. They pay for the maintenance of the complex and the
salary of the manager. Condominium managers work for resident owners, and their main responsibility is to preserve property value

Question 8

freehold estate

Answer 8

is ownership

Question 9

All the legal rights that attach to the ownership of real property

Answer 9

Bundle of

Rights. Disposition, exclusion, possession, quiet enjoyment

Question 10

disposition

Answer 10

the right to sell, will to heirs, encumber or lease

Question 11

exclusion

Answer 11

the right to exclude others

Question 12

possession

Answer 12

the right to use, enjoy, occupy

Question 13

quiet enjoyment

Answer 13

the right to use uninterrupted by former owners

Question 14

Fee simple defeasible

Answer 14

is ownership with conditions or terms, which, if violated, could cause the
ownership interest to be defeated or terminated. When the ownership is defeated, it reverts or goes
back to the original grantor or the grantor’s heirs

Question 15

life estate

Answer 15

is ownership for the duration of someone’s life. The owner is called the life tenant.
The life tenant has all the rights and duties of an owner, except the right to choose who will get the property upon his or her death

Question 16

remainderman

Answer 16

The person who gets the property after the life estate is ended is the

Question 17

a life estate with reversion

Answer 17

If the life estate is set up so that at the end of the life estate, the property goes back to the original
owner

Question 18

life estate

pur autre vie.

Answer 18

If the life estate is based on the life of someone other than the life tenant, this is called a

Question 19

Lease agreements create the leasehold estate

Answer 19

the lease is personal property, but the right to possession that the lease gives is real property. There are four leasehold estates, and each gives possession
without ownership. estate for years, periodic tenancy, estate at will, tenancy at sufferance

Question 20

estate for years

Answer 20

is a lease with a specific starting and ending date. This lease survives
death and/or the sale of the property. No notice is required to terminate.

Question 21

estate at will

Answer 21

or tenancy at will is a lease that can be terminated by either party at will
without notice

Question 22

tenancy at sufferance

Answer 22

occurs when a lease expires, and the tenant refuses to move out

Question 23

periodic tenancy

Answer 23

y is a lease with a fixed period that is automatically renewed unless the
tenant or landlord acts to terminate it. A month-to-month lease is this type. Notice to
terminate is usually required, typically 30 days’ notice

Question 24

Gross Lease

Answer 24

the landlord pays all the expenses of the property. The tenant pays only rent

Question 25

Net Lease

Answer 25

the tenant pays rent plus some of the expenses of the property.

Question 26

Percentage Lease

Answer 26

lease in which all or part of the rent amount is based on the receipts of the tenant’s business (Typical shopping center lease). This lease allows the landlord to participate in the tenant’s success

Question 27

Graduated Lease

Answer 27

– a lease with scheduled rent increases often based on expected business growth

Question 28

Lease with an option to buy

Answer 28

- gives a tenant the right to purchase at a future date. The price is set when the agreement is negotiated. It is advantageous to the tenant-buyer

Question 29

Lease purchase agreement

Answer 29

an agreement in which part of the rent payment is applicable toward a set purchase price. Title is transferred from lessor to lessee when the lessor receives the prearranged total price.

Question 30

Ground Lease

Answer 30

the tenant is usually making a long-term commitment, up to 99 years. This lease is more often for industrial or commercial land use. The tenant will build on the leased property

Question 31

Oil and Gas Lease

Answer 31

this lease gives the tenant the right to extract oil and gas from a specific property. NOTE: On a federal level, for the National portion of the exam, the EPA will be the best answer for any questions regarding what department of the government regulates oil and gas leases.

Question 32

Lien

Answer 32

is a charge against property as security for a debt. The lien is an encumbrance – a limit on your rights. It is also, usually, a cloud on the title. This means title cannot be conveyed or transferred to another until the lien is removed. The legal method of removing an encumbrance is to release it or get a release.

Question 33

Specific lien

Answer 33

A specific lien attaches to one or more specific or named properties (Example: a mortgage)

Question 34

General lien

Answer 34

``` A general lien attaches to all the property of the debtor, not exempt from forced sale (Example: a judgment or IRS lien) ```

Question 35

voluntary lien

Answer 35

is created by the lienee’s or borrower’s actions, like taking out a mortgage or home improvement loan. Filing or recording the mortgage creates a lien. A mortgage is not effective or enforceable until it is recorded. When the mortgage is recorded, if it is the first recorded claim, it will be the first priority lien

Question 36

involuntary lien

Answer 36

is created by law and can be statutory or equitable (common law). (NOTE: Statutory law always takes precedence over common law.) Examples of statutory liens include federal tax liens, ad valorem (according to value) tax liens, judgment liens, and mechanics and materialmens’ (m&m) liens

Question 37

Voluntary alienation

Answer 37

occurs when an owner transfers title to another. Voluntary alienation usually involves a written document called a conveyance. A conveyance is any instrument or document that transfers an interest in real property. Ownership is most often transferred by deed, patent, power of attorney, or will.

Question 38

Involuntary alienation

Answer 38

usually happens in court as in foreclosure, bankruptcy, condemnation, escheat, adverse possession, reversion of defeasible fee, partition, or inheritance without a will

Question 39

Types of deeds include:

Answer 39

General Warranty Deed, Special Warranty Deed, Bargain and Sale Deed, Quitclaim Deed,

Question 40

General Warranty Deed

Answer 40

guarantees and protects against defects. It offers the buyer the best protection. It warrants title to the sovereignty of the soil. It is the most common deed. A buyer who wishes to ensure that the seller is conveying good title should request a General Warranty Deed.

Question 41

Special Warranty Deed

Answer 41

guarantees title only against defects arising under the grantor’s period of ownership. Defects existing before that time are not covered.

Question 42

Bargain and Sale Deed

Answer 42

a deed with only one covenant. (Trustees, executors, sheriffs, and officers of the court use this.) This deed does not provide any warranties about the condition of the title but only promises the grantor has the right to convey the title.

Question 43

Quitclaim Deed

Answer 43

a deed that gives NO warranties or guarantees and offers the least protection. It is used to clear a cloud on the title or to cure a defect in tit

Question 44

The covenant of seizin

Answer 44

the grantor claims to be the owner with the right to sell the property

Question 45

The covenant of quiet enjoyment

Answer 45

the grantor promises the new owner will not be disturbed with claims against the property

Question 46

The covenant of further assurance

Answer 46

the grantor is responsible for any documentation | needed to ensure title is transferred to the grantee

Question 47

The covenant against encumbrances

Answer 47

– the grantor promises that all encumbrances have | been disclosed

Question 48

The covenant of warranty forever

Answer 48

the grantor’s promises have no expiration date.

Question 49

dedication

Answer 49

When a developer turns over | the streets in a subdivision to the local government

Question 50

WILL:

Answer 50

WILL: TESTATE EXECUTOR TITLE BY DEVISE BENEFICIAR

Question 51

NO WILL:

Answer 51

NO WILL: INTESTATE ADMINISTRATOR LAWS OF DESCENT AND DISTRIBUTION TITLE BY DESCENT

Question 52

probate

Answer 52

The judicial process to prove or confirm a will or to settle the estate of a party who dies intestate

Question 53

deed in lieu of foreclosure

Answer 53

is deed in lieu of foreclosure. This is sometimes called “friendly foreclosure” or “voluntary deed.” The lender accepts a deed from the borrower. The lender must also accept any junior liens on the property. This would be the fastest way for the lender to get title to the property

Question 54

Redemption

Answer 54

At any time up to the moment of the foreclosure, the borrower has the right to step in and pay what is owed and reclaim property forfeited due to mortgage default. This is his or her

Question 55

The lender must | send the notice of foreclosure by certified mail __ days before the foreclosure sale

Answer 55

21, There is no requirement that the borrower receive the notice, only that the lender sends it. The notice of foreclosure must be posted at the door of the county courthouse and filed in the County Clerk’s office. With a traditional mortgage (not a Deed of Trust), the foreclosure will be recorded as a lis pendens.

Question 56

Short Sale

Answer 56

A sale of secured real property that produces less money than is owed the lender

Question 57

subrogation clause

Answer 57

This clause allows the title company to assume the rights of a buyer with respect to any claim against a seller if the title company has made payments to that buyer to satisfy that claim. The property owner cannot collect from both the title company and the seller for one problem

Question 58

chain of title

Answer 58

a list of | all owners from the first until today

Question 59

abstract of title

Answer 59

An abstract is a complete history of title