chapter 2

Question 1

What is ownership by one individual or business entity called?

Answer 1

Estate in severalty, tenancy in severalty, or sole ownership

This type of ownership requires only one signature to sell a piece of property.

Question 2

What type of ownership involves two or more parties without rights of survivorship?

Answer 2

Tenancy in common

This is the most common type of joint ownership and allows unequal shares and individual sales without permission.

Question 3

What happens to a share in tenancy in common upon the owner’s death?

Answer 3

It goes to the owner’s heirs at probate

In the absence of instructions, the title company assumes equal shares.

Question 4

What is ownership by two or more parties with rights of survivorship called?

Answer 4

Joint tenancy

This type of ownership allows shares to pass to surviving co-owners immediately upon death.

Question 5

What are the four unities required for joint tenancy?

Answer 5

• Time
• Title
• Interest
• Possession

All owners must acquire their interest at the same time from the same legal document.

Question 6

What is the term for the procedure to divide co-tenants’ interests in real property?

Answer 6

Partition

This can be done through court action or by agreement, and may result in selling the property if it cannot be physically divided.

Question 7

What is tenancy by the entirety?

Answer 7

A specific type of joint tenancy for married couples

This ownership type avoids probate, similar to joint tenancy.

Question 8

What does it mean if property is held in trust?

Answer 8

It is held by one party for the benefit of another

This involves a trustee managing the property for the beneficiary.

Question 9

What do we call a group that joins together to create and operate a real estate investment?

Answer 9

Syndicate

This term refers to a collaborative effort in real estate investment.

Question 10

True or False: Joint tenancy is considered an estate of inheritance.

Answer 10

False

Joint tenancy overrides a will, making it not an estate of inheritance.

Question 11

Fill in the blank: A _______ allows unequal shares and individual sales without permission in joint ownership.

Answer 11

Tenancy in common

This is the most common type of joint ownership.

Question 12

What is a Time Share?

Answer 12

An individual part ownership of a property with the right to exclusive use for a specified number of days per year

Also known as interval ownership and typically used for resort or vacation properties.

Question 13

What type of ownership does a Cooperative (Co-op) represent?

Answer 13

An investment for residents where land and buildings are owned by a corporation

Residents buy shares in the corporation in exchange for a proprietary lease on their unit.

Question 14

What is the main financial responsibility of a corporation in a Co-op?

Answer 14

The corporation pays for the mortgage, property taxes, and maintenance of the building.

Question 15

How is ownership structured in a Condominium?

Answer 15

Each unit is a separate legal ownership with a fee simple, undivided interest in the common areas

Owners arrange their own financing and property taxes are assessed separately.

Question 16

What is the role of a Condominium manager?

Answer 16

To preserve property values and manage the complex on behalf of resident owners.

Question 17

What is an estate in real property?

Answer 17

An interest in real property.

Question 18

What defines a freehold estate?

Answer 18

Ownership.

Question 19

What are the components of the Bundle of Rights?

Answer 19

• The right to sell, will to heirs, encumber or lease (disposition)
• The right to exclude others (exclusion)
• The right to use, enjoy, occupy (possession)
• The right to use uninterrupted by former owners (quiet enjoyment)

Question 20

What is the best type of ownership called?

Answer 20

Fee Simple or Fee Simple Absolute.

Question 21

What does Fee Simple defeasible entail?

Answer 21

Ownership with conditions or terms that could cause the ownership interest to be defeated or terminated.

Question 22

What happens to ownership in Fee Simple defeasible if conditions are violated?

Answer 22

It reverts to the original grantor or the grantor’s heirs.

Question 23

What is the difference between determinable and condition subsequent in Fee Simple defeasible?

Answer 23

Determinable ownership automatically reverts to the grantor upon violation; condition subsequent requires the grantor to take action within a reasonable time.

Question 24

What is a life estate with reversion?

Answer 24

A life estate where, at the end of the life estate, the property goes back to the original owner

The original owner has a reversionary interest in the property.

Question 25

Who is the remainderman in a life estate?

Answer 25

The original owner ## Footnote If there is no remainderman, the property escheats to the state.

Question 26

What is a life estate pur autre vie?

Answer 26

A life estate based on the life of someone other than the life tenant ## Footnote The life upon which this estate is based is called the measuring life.

Question 27

What creates a leasehold estate?

Answer 27

Lease agreements ## Footnote The lease is personal property, but the right to possession that the lease gives is real property.

Question 28

What is an estate for years?

Answer 28

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

Question 29

Define periodic tenancy.

Answer 29

A lease with a fixed period that is automatically renewed unless terminated ## Footnote Notice to terminate is usually required, typically 30 days’ notice.

Question 30

What is an estate at will?

Answer 30

A lease that can be terminated by either party at will without notice ## Footnote Also known as tenancy at will.

Question 31

What occurs in a tenancy at sufferance?

Answer 31

When a lease expires and the tenant refuses to move out ## Footnote The landlord is not receiving rent and the holdover tenant has no right to be there.

Question 32

What is a gross lease?

Answer 32

A lease where the landlord pays all the expenses of the property ## Footnote The tenant pays only rent.

Question 33

Define net lease.

Answer 33

A lease where the tenant pays rent plus some expenses of the property

Question 34

What characterizes a percentage lease?

Answer 34

A lease in which rent is based on the receipts of the tenant’s business ## Footnote This is typical for shopping center leases.

Question 35

What is a graduated lease?

Answer 35

A lease with scheduled rent increases often based on expected business growth

Question 36

What does a lease with an option to buy entail?

Answer 36

Gives a tenant the right to purchase at a future date ## Footnote The price is set when the agreement is negotiated.

Question 37

What is a lease purchase agreement?

Answer 37

An agreement where part of the rent payment goes toward a set purchase price ## Footnote Title transfers when the total price is received by the lessor.

Question 38

What is a ground lease?

Answer 38

A long-term lease, often up to 99 years ## Footnote Typically used for industrial or commercial land use where the tenant builds on the property.

Question 39

What is a life estate?

Answer 39

Ownership for the duration of someone’s life.

Question 40

Who is the owner of a life estate called?

Answer 40

Life tenant.

Question 41

What rights does a life tenant have?

Answer 41

All the rights and duties of an owner, except the right to choose who will get the property upon death.

Question 42

Who receives the property after the life estate ends?

Answer 42

Remainderman.

Question 43

What type of ownership does the remainderman receive?

Answer 43

Fee simple.

Question 44

What is an Oil and Gas Lease?

Answer 44

This lease gives the tenant the right to extract oil and gas from a specific property. ## Footnote In Texas, the Texas Railroad Commission regulates oil and gas leases, while the EPA regulates them on a Federal level.

Question 45

What does the Covenant of Quiet Enjoyment entail?

Answer 45

A landlord is prohibited from entering leased property unless there is a need for maintenance, inspections, or emergency response.

Question 46

What is the Right of First Refusal?

Answer 46

The tenant has the right to match or better any offer before the property is sold to someone else.

Question 47

What is Subletting?

Answer 47

The transfer of some or all of the rights and/or leased space under a lease to another, with liability remaining with the original tenant.

Question 48

What is Assignment in lease terms?

Answer 48

The transfer of all rights and liabilities to a new tenant under an existing lease.

Question 49

What is Forcible Entry and Detainer?

Answer 49

The legal term for eviction, used by a landlord.

Question 50

What does Expiration refer to in lease terms?

Answer 50

When the lease comes to the end of the negotiated term or lease period.

Question 51

What is Termination in the context of a lease?

Answer 51

When the time period on a lease ends or is cut short.

Question 52

What is Mutual Rescission?

Answer 52

When a lease is terminated by agreement of the parties, with no default, no breach, and no injured party.

Question 53

What is Constructive Eviction?

Answer 53

Occurs when a landlord allows property conditions to deteriorate to the point that the building is uninhabitable, forcing tenants to leave.

Question 54

What is Sale and Leaseback?

Answer 54

A property owner sells property to an investor or lender and then leases it back, occupying the property after closing.

Question 55

What is a lien?

Answer 55

A charge against property as security for a debt, functioning as an encumbrance.

Question 56

What are specific and general liens?

Answer 56

Specific liens attach to one or more specific properties (e.g., a mortgage), while general liens attach to all property of the debtor (e.g., a judgment lien).

Question 57

What is a Voluntary Lien?

Answer 57

A lien created by the lienee’s or borrower’s actions, such as taking out a mortgage.

Question 58

What is an Involuntary Lien?

Answer 58

A lien created by law, including statutory and common law liens.

Question 59

What are examples of statutory liens?

Answer 59

* Federal tax liens * Ad valorem tax liens * Judgment liens * Mechanics and materialman’s liens

Question 60

What must occur for a mortgage to be effective or enforceable?

Answer 60

The mortgage must be recorded.

Question 61

What happens when a mortgage is the first recorded claim?

Answer 61

It will be the first priority lien.

Question 62

Fill in the blank: A lien is an encumbrance that limits your _______.

Answer 62

[rights]

Question 63

True or False: Lack of hot water makes a property uninhabitable.

Answer 63

False