Forms of Ownership

Question 1

Ownership in Severalty

Answer 1

Ownership by a single individual or legal entity (e.g., person, corporation, LLC)

The owner is “severed” from others—has exclusive control over:
- Possession
- Use
- Transfer (sell, lease, will, mortgage, etc.)

Question 2

Co-Ownership

Answer 2

Title to property held by two or more individuals simultaneously

These individuals are called co-owners or concurrent owners

Most states recognize multiple forms of co-ownership (to be covered in following sections)

Question 3

Tenancy in Common

Answer 3

Two or more people own undivided interests in a property. Each owner has unity of possession (right to use the whole property), even with fractional shares

• No right of survivorship
• Shares may be equal or unequal
• Owners can sell, mortgage, or transfer their individual interests without consent of other co-owners
• Default form of ownership when not otherwise specified on a deed

Question 4

Joint Tenancy

Answer 4

Two or more people own property with equal shares and right of survivorship

Upon a co-owner’s death, their interest passes directly to surviving joint tenants—not by will or inheritance

Question 5

Creating Joint Tenancy

Answer 5

TTIP

Possession – Equal rights to possess the whole property

Interest – Equal ownership shares

Time – Interests acquired at the same time

Title – Interests acquired in the same document

MUST BE EXPLICIT

Question 6

Terminating JT

Answer 6

If any unity is broken (e.g., one joint tenant sells their share), the joint tenancy is partially or fully destroyed

New owner becomes a tenant in common

If all joint tenants except one die, the last survivor holds title in severalty

Question 7

Partition

Answer 7

Legal process to dissolve co-ownership when parties cannot agree

Question 8

Partition in Kind

Answer 8

Physical division of property (if feasible)

Question 9

Partition by Sale

Answer 9

Court-ordered sale and division of proceeds when physical division would harm value

Question 10

Tenancy by Entirety

Answer 10

Co-ownership exclusively for married couples. Spouses are treated as one legal entity.

Includes right of survivorship—surviving spouse gets full title automatically

Question 11

TbE Limits

Answer 11

Neither spouse can convey or encumber the property without the other’s consent

Property cannot be partitioned during the marriage (except by divorce, death, or mutual agreement)

Question 12

Community P States

Answer 12

Spouses are equal partners in property acquired during marriage

Question 13

Two Types of P in Community Property

Answer 13

1. Separate Property
   - Owned before marriage
   - Inherited or gifted individually
   - Can be sold or mortgaged by the owning spouse alone
2. Community Property
   - Acquired during marriage
   - Requires both spouses’ signatures to convey or encumber
   - Each spouse owns a 50% interest

Question 14

Trust

Answer 14

legal arrangement in which a property owner (trustor) transfers ownership to a trustee to manage for the benefit of a beneficiary

Question 15

Trustee

Answer 15

holds legal title and owes fiduciary duties to the beneficiary

Question 16

Living Trust

Answer 16

Created during life. Avoids probate. Trustor often serves as trustee and retains control. Property passes directly to beneficiaries upon death.

Question 17

Testamentary Trust

Answer 17

Created in will. Becomes effective upon death of the trustor. Often used for minor children or long-term care

Question 18

Beneficiary

Answer 18

Person who benefits from the trust

Question 19

Land Trust

Answer 19

a trust where real estate is the only asset. The trustor is usually also the beneficiary, retaining control and rights to income and possession

Question 20

Land Trust Features

Answer 20

Beneficial interest is personal property (not real property)

Privacy: Public records do not name the beneficiary

Used for:
- Conservation (farmland, forests, coastal land)
- Assembling parcels discreetly

Beneficial interest can be:
- Assigned without deed formalities
- Pledged as loan security without recorded mortgage

Question 21

Land Trust Duration

Answer 21

Usually set for a fixed term (e.g., 20 years)

Must be renewed, or the trustee may be required to sell the property and return proceeds

Question 22

Types of Partnerships

Answer 22

1. General Partnership
2. Limited Partnership

Question 23

General Partnership

Answer 23

All partners share management and liability

If a partner dies or withdraws, the partnership may dissolve unless otherwise agreed

Question 24

Limited Partnership

Answer 24

One or more general partners manage operations and hold liability

Limited partners contribute capital but have no management role

Limited partners’ liability is limited to their investment

Popular in real estate projects for lower personal risk and pooled capita

Question 25

Uniform Partnership Act

Answer 25

most states allow partnerships to continue after the death or withdrawal of a partner.

Question 26

Corp Ownership

Answer 26

A corporation is a legal entity (“artificial person”) created by state law via a charter Managed by a board of directors, selected by shareholders May own real estate in: - Severalty - Tenancy in common with others Ownership is unaffected by death of officers/shareholders Subject to double taxation unless organized as a special entity

Question 27

LLC Ownership

Answer 27

Combines advantages of both partnerships and corporations: Limited liability for members Pass-through taxation (avoids double taxation) Flexible structure without corporate formalities