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NC Real Estate Exam Prep > Chapter 2 Concepts > Flashcards

Chapter 2 Concepts Flashcards

1
Q

What is the bundle of legal rights?

A

This is a “legal relationship” between the owner and the property.

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2
Q

The rights of ownership or Bundle of Legal Rights include: (DeepC)

A

-right of disposition (to sell, will, transfer, or otherwise dispose of or encumber the property);

-right of enjoyment to use in any legal manner (to uninterrupted use of the property without interference of any third party claiming superior title);

-right of exclusion (to keep others from entering or using the property);

-right of possession (to use or occupy); and

-right of control (of the property and its profits within the framework of the law).

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3
Q

What is an appurtenance?

A

a right or privilege that goes with the ownership of land.

Examples of these rights include subsurface rights (such as mineral rights), air rights, and water rights.

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4
Q

What is improved land vs improved lot?

A

land that has a structure on it, for example a house

certain basic required services necessary to utilize it are available, such as electricity, telephone, street access, or water access.

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5
Q

What are surface rights?

What are subsurface rights?

A

simply the rights to use the surface of the earth

the rights to use the space below ground level and to extract the natural resources lying below the earth’s surface. Such natural resources might include minerals, coal, gas, oil, or water.

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6
Q

What are Riparian rights and what restrictions apply to those rights?

A

are granted to owners of land located along the course of a river or stream provided such use does not harm owners upstream or downstream by interrupting or altering the flow of the water or by contaminating it

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7
Q

With riparian rights, an owner of land that borders a non-navigable waterway owns the land _______ the water to the exact _______ of the waterway

A

Under

Center

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8
Q

littoral rights

A

unrestricted use of navigable waters but own the land adjacent to the water only up to the mean high-water mark. All land below this point is owned by the government.

**(The strip of land between high and low tide lines, called the foreshore, belongs to the state of North Carolina.) This makes a portion of every beach in North Carolina a public beach under the public trust doctrine.

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9
Q

What is a Total Circumstances Test?

A

a legal test applied by the courts to determine whether an item is a fixture (and, therefore, part of the real property) or personal property.

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10
Q

The Four test of the Total Circumstances Test are: (IRMA)

A

Intention - Did the person who installed the item intend it to remain permanently or be removable?

Relationship - Is the person making the attachment an owner or a tenant? It is presumed that an owner intends a permanent attachment (the item becomes a fixture), while a tenant intends a temporary attachment (the item remains personal property).

Method - How permanently was the item attached? Can it be removed without causing damage? To what degree has their been customization of the space around the item?

Adaptation - Has either the item or the property been tailored to facilitate working together? Has it been customized or built in to the property?

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11
Q

Trade fixtures that are not removed at the end of the lease

A

become the real property of the landlord. Acquiring the items in this way is known as accession.

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12
Q

North Carolina Uniform Commercial Code (UCC)

A

if a homeowner purchases an item on credit (a dishwasher, for example) and gives the creditor a security agreement, that item remains personal property and may be removed by the creditor in the event of default. When the item has been paid for in full, it becomes real property.

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13
Q

When is a mobile/manufactured home real property?

A

To convert the home into real property, the moving hitch, wheels, and axles must be removed and the unit must be attached to a permanent foundation on land owned by the owner of the manufactured home. Once the owner files an affidavit confirming the aforementioned actions, the home is considered real property and an improvement to the lot.

***Manufactured housing is not considered real property just because the unit was placed on a residential lot.

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14
Q

What is an estate?

A

the degree, nature, and extent of interest one has in real property.

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15
Q

Estates in land are divided into two major classifications:

A

(1) nonfreehold estates or leasehold estates (those involving tenants’ rights of possession)

(2) freehold estates (those involving rights of ownership)

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16
Q

What are Freehold estates (ownership)? How are they passed?

A

estates of indeterminable length of ownership, such as those existing for a lifetime or forever

Freehold estates are passed from grantor to grantee via the deed when title to real estate is conveyed.

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17
Q

The types of freehold estates that can be transferred include:

A

-fee simple estate (can pass by inheritance),

-defeasible fee estate (can pass by inheritance),

-pur autre vie estate (estate for the life of another) with remainder or reversion (can pass by inheritance), and

-ordinary conventional life estate with remainder or reversion (does not pass by inheritance).

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18
Q

What is a non-freehold estate (lease)?

A

A leasehold estate exists on property in addition to a freehold estate when the property owner has rented the property to a tenant.

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19
Q

The four types of leasehold estates are the:

A

1) estate for years,
2) estate from year to year,
3) estate at will, and
4) estate at sufferance

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20
Q

A fee simple estate is an estate of inheritance and is always legally _________, but it is not always free of __________.

A

transferable

encumbrances

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21
Q

There are two major types of fee simple estates and how do they work?

A

fee simple absolute that basically has no ownership limitation

fee simple defeasible where the ownership can be terminated due to the actions of the current owner

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22
Q

What is Fee simple/Fee Simple Absolute and are there any restrictions?

A

ownership in which there are no limitations (other than governmental restrictions) is a fee simple absolute estate.

Owners of a fee simple estate can do whatever they wish with the property as long as the use does not violate public land use regulations, deed restrictions, or the rights of others.

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23
Q

What is Fee simple defeasible (or qualified fee estate)?

A

A fee simple defeasible (or defeasible fee) estate may be lost (or defeated) on the occurrence or nonoccurrence of a specified event. The new owner must stay qualified to own the estate by obeying deed restrictions imposed on the estate by a previous owner. Whether the restriction prohibits an activity or requires a specified land use will dictate which type of defeasible fee estate has been granted.

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24
Q

A fee simple subject to a condition subsequent estate dictates

A

some action or activity that the new owner must not perform

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25
Q

The former owner of a fee simple subject to a condition subsequent retains a right of re-entry, called

A

a reversionary right so that if the condition is broken, the former owner can retake possession of the property through court proceedings.

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26
Q

A fee simple determinable estate requires

A

that a specified activity or land use continue

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27
Q

In a fee simple determinable The former owners, their heirs, or their successors retain the right of reversion that _____________ reacquires full ownership if the special condition ceases to exist.

A

-automatically

28
Q

Because they will take effect only at some time in the future (if at all), the right of re-entry and the possibility of reversion are called __________ _________.

A

future interests

29
Q

A life estate (or partial estate) is

A

a freehold estate in land that is limited in duration to the life of the new owner or to the life or lives of some other designated person or persons and does not last forever.

30
Q

A conventional life estate is

A

created by grant from the current owner of the fee simple estate.

***The current owner retains a reversionary interest in the property or names a remainderman that will ultimately receive fee simple absolute title

31
Q

A conventional life estate is limited to

A

the lifetime of the new owner of the life estate

32
Q

An ordinary life estate

A

ends with the death of the person to whom it was granted though it is possible to have successive life estates.

33
Q

What is a marital life estate?

A

When someone dies without a will, or dies with a will disinheriting a spouse or leaving him or her very little, North Carolina allows the surviving spouse to choose an “elective share” of the estate instead.

34
Q

There is also an estate known as an estate for the life of another; the legal term being

A

life estate pur autre vie

35
Q

What is a life estate pur autre vie?

A

As with a conventional life estate, the life tenant owns the property. In this estate, it is owned for the lifetime of some named third party, called the measuring life. The measuring life has no present or future ownership in the property and only serves as the yardstick for the term of the life tenant’s ownership. Upon the death of the measuring life, the estate would either revert to the original owner or become the property of the named remainderman. If the life tenant should die before the measuring life, the heirs of the deceased life tenant will inherit the life estate either by will or by descent.

36
Q

A fee simple owner who creates a life estate must consider the future ownership of the property after the termination of the life estate. The future interest may take one of two forms:

A

Remainder Interest and Revisionary interest

37
Q

What is Remainder interest?

A

The grantor names someone other than the grantor to receive title to the property when the life estate terminates. The person(s) named is said to own a remainder interest and is called a remainderman.

38
Q

What is revisionary interest?

A

If the grantor does not name a remainderman, then ownership returns to the grantor when the life estate terminates.

If the grantor is deceased when the life estate terminates, the property goes to the grantor’s heirs or devisees. This interest or estate is called a reversion and is also a future interest.

39
Q

Ownership may be held in 2 different ways, what are they?

A

(1) severalty, which means that title is held by one owner (sometimes referred to as sole ownership)

(2) co-ownership, co-tenancy, or concurrent ownership, where title is held by two or more persons at the same time.

40
Q

When title to one parcel of real estate is vested in two or more persons or entities, those parties are said to be

A

concurrent owners, or co-owners, of the property.

41
Q

An important aspect to concurrent ownership is the unity of possession which means

A

no one owner may possess a portion of the property and not allow access to the other owners.

42
Q

The three forms of concurrent ownership are

A
  1. tenancy in common,
  2. joint tenancy, and
  3. tenancy by the entirety.
43
Q

A parcel of real estate may be owned by two or more people/entities in what is known as a

A

tenancy in common

44
Q

What are the important characteristic of tenancy in common?

A
  1. Is that while co-owners have unity of possession, they may have unequal shares. The deed creating a tenancy in common may or may not state the fractional shares held by each co-owner; if no fractions are stated, the tenants are presumed to hold equal shares.
  2. The second important characteristic of a tenancy in common is that each owner holds an undivided interest in severalty and can sell, convey, mortgage, or transfer that interest through the right of partition.
45
Q

In a tenancy in common, if a co-owner dies, what happens to their interest?

A

On the death of a co-owner, that tenant’s undivided interest passes to the heirs through a probate proceeding.

The interest of a deceased tenant in common does not pass to another co-owner tenant in common unless the surviving co-owner is an heir in the deceased owner’s will or is purchasing the deceased owner’s share

46
Q

With joint tenancy, the ownership shares are usually required to be

A

equal

47
Q

What is the main feature that distinguishes joint tenancy than tenancy in common?

A

The main feature that distinguishes joint tenancy from tenancy in common is the right of survivorship

48
Q

What does the death of one tenant do with survivorship in a joint tenancy?

A

With survivorship, the death of one of the joint tenants does not destroy the ownership unit; it only reduces by one the number of people who hold title to the property.

49
Q

What happens as each successive joint tenant dies in a joint tenancy?

A

As each successive joint tenant dies, the surviving joint tenant(s) will acquire the interest of the deceased joint tenant. The joint tenancy continues until there is only one owner, who then holds title in severalty. The last surviving joint tenant has the same rights to dispose of the property as any sole owner.

50
Q

Tenancy in common type of ownership also requires that the joint tenants have _______ possession, equal interests (shares), and that title be taken at the same time. This means all owners have unity of possession, all ownership shares are equal, title to the property was taken together at the same time, and names of all joint tenants appear on the _______.

A

-equal

-deed

51
Q

What happens if property is owned by three or more joint tenants and one conveys interest to an outside party?

A

the new owner will hold interest as a tenant in common with the remaining joint tenants. The original remaining joint tenants will still hold their undivided interests as joint tenants among themselves

52
Q

Unlike other states, North Carolina _______ favor the right of survivorship for a joint tenancy.

A

does not

53
Q

What is a Tenancy by the entirety?

A

is a special form of tenancy used in many states in which the owners must be spouses. Each spouse has an equal, undivided interest in the property; each, in essence, owns the entire estate.

54
Q

In a tenancy by entirety, what happens in the death of one spouse?

A

On the death of one spouse, full title automatically passes to the surviving spouse through the right of survivorship without a probate hearing. The transfer of the interest of the deceased spouse may be recorded by filing a certificate of death, an affidavit, or a certificate of transfer, as provided by law.

55
Q

The distinguishing characteristics of tenancy by the entirety are the following:

A

A
1. The owners must be spouses when title is received.

  1. The owners have rights of survivorship.
  2. During the owners’ lives, title can be conveyed only by a deed signed by both parties (one party cannot convey a one-half interest).
  3. There is generally no right to partition.
56
Q

In North Carolina, any conveyance to spouses by deed or by will

A

creates a tenancy by the entirety by default unless specifically stated otherwise

57
Q

How can a tenancy by the entirety be terminated?

A

A tenancy by the entirety may be terminated by the death of either spouse, divorce (leaving the parties as tenants in common), or the mutual agreement of both spouses.

58
Q

Condominium laws, often called common interest ownership acts or horizontal property acts, have been enacted in every state, including North Carolina. Under these laws, the occupant/owner of each unit holds a _______________ title to the unit (which is often called title to airspace).

A

fee simple absolute

*Each unit owner also owns a share of the common elements, such as the pool, hallways, and other amenities.

59
Q

Some condominium projects offer a special type of common elements that is reserved for the use of only one or more units to the exclusion of the other units. Assigned storage areas or parking spaces would be examples of

A

limited common elements

60
Q

The North Carolina Condominium Act of 1986 specifies that

A

a condominium is created and established when the developer of the property executes and records a declaration of its creation in the county where the property is located. The declaration must include any covenants, conditions, or restrictions on the use of the property. The developer must file a plat map or plan of the condominium property, buildings, and any other improvements. The developer also must prepare a set of bylaws.

61
Q

Biggest difference between condominium ownership and town house ownership?

A

Town house ownership is similar to condominium ownership with one fundamental difference: the owner of each town house unit also owns the land on which that unit is built.

62
Q

What is a time-share ownership?

A

A time-share ownership is any right to occupy a unit of real property during five or more separated time periods (usually consisting of one or two weeks) over a period of at least five years.

***Time-sharing permits multiple purchasers to buy interests in real estate—usually a unit of a resort hotel, an apartment, or a condominium—with each purchaser having a right to use the facility for a specific time period. For instance, a time-share owner may have the right to use an oceanfront apartment for the first three weeks of June every calendar year.

63
Q

Time-share salespeople must be active

A

real estate brokers operating under a project broker, who are subject to disciplinary action by the North Carolina Real Estate Commission. The Commission can also fine unlicensed time-share developers $500 for each violation of the Act or revoke the project’s registration certificate

64
Q

What is probate?

A

is a legal process that takes place after someone dies and can be quite costly to the heirs. Probate involves proving in court that a deceased person’s will is valid, identifying and inventorying the deceased person’s property, having the property appraised, paying debts and taxes, and distributing the remaining property as the will (or state law, if there’s no will) directs.

65
Q

What is a trust?

A

is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries

NC Real Estate Exam Prep (20 decks)

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