II. FORMS OF OWNERSHIP, TRANSFER, AND RECORDING OF TITLE

Question 1

This can be ownership by one individual or one business entity such as a corporation or a
partnership.

Answer 1

Estate in Severalty

Question 2

Ownership by two or more without rights of survivorship is called

Answer 2

Tenancy in Common

This is the most common type of joint ownership. It is an estate of inheritance.

Question 3

Ownership by two or more with rights of survivorship is called:

Answer 3

Joint Tenancy

Upon your death, your share goes to surviving co-owners immediately. This is sometimes called a “poor man’s will” as it eliminates the need for a will. Joint tenancy overrides a will. This is not an estate of inheritance.

Question 4

A specific type of joint tenancy where the co-owners are married to one another: husband/wife, spouse/spouse.

Answer 4

Tenancy by the Entirety

One advantage of this type of ownership is that it avoids probate. (This is also true of joint tenancy.)

Question 5

All the LEGAL rights that attach to the ownership of real property are commonly called:

Answer 5

Bundle of Rights

1. the right to sell, will to heirs, encumber or lease (disposition)
2. the right to exclude others (exclusion)
3. the right to use, enjoy, occupy (possession)
4. the right to use uninterrupted by former owners (quiet enjoyment).

Question 6

Ownership with the greatest bundle of rights - the BEST type of ownership - is called

Answer 6

Fee Simple or Fee Simple Absolute.

The owner has ALL the available rights to the property and can always pass it
to his or her heirs.

Question 7

The ownership with conditions or terms, which, if violated, could cause the ownership interest to be DEFEATED or terminated.

Answer 7

Fee simple defeasible

Fee simple defeasible can be determinable or condition subsequent.

*If it is determinable, violation of the condition or termination of the conditional use results in reversion to the grantor automatically.

*In condition subsequent, the grantor must take steps to reclaim the property within a
reasonable period of time if the condition is violated or the conditional use is terminated.

Question 8

The ownership for the duration of someone’s LIFE.

Answer 8

A Life Estate

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.

The person who gets the property after the life estate is ended is the REMAINDERMAN. The remainderman gets fee simple.

Question 9

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

Answer 9

A life Estate with Reversion

The original owner has a reversionary interest in the property.

The original owner is the remainderman.

Question 10

If the life estate is based on the life of SOMEONE OTHER than the life tenant, this is called

Answer 10

Life Estate pur- autre vie

Question 11

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.

Answer 11

Estate for Years

Question 12

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.

Answer 12

Periodic Tenancy

Question 13

A LEASE that can be TERMINATED by EITHER party at will without notice.

Answer 13

Estate at Will or Tenancy at Will

Question 14

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

The landlord is not receiving rent.

This holdover tenant has no right to be there.

If the holdover tenant pays rent and the landlord accepts that rent, a holdover tenancy is created.

Answer 14

Tenancy at Sufferance

Question 15

A Lease where the LANDLORD pays ALL the expenses of the property.

The tenant pays only rent.

Answer 15

Gross Lease

Question 16

A Lease where the TENANT pays rent PLUS some of the expenses of the property.

Answer 16

Net Lease

Question 17

A Lease in which all or part of the rent amount is based on the receipts of the tenant’s business (Typical shopping center lease).

Answer 17

Percentage Lease

Question 18

A charge against property as security for a debt. It 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.

Answer 18

A lien

Question 19

Liens can be Specific or General.

Answer 19

A Specific Lien attaches to one or more specific or named properties
(Example: a mortgage).

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

RECORDING is required for a judgment to become a lien.

Question 20

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.

Answer 20

A Voluntary Lien

Question 21

Lien 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.

Answer 21

An Involuntary Lien

Question 22

Equitable liens that come from common law and include:

Answer 22

Seller (vendor) or Buyer (vendee) liens.

An example of a vendor’s lien would be seller financing.

A vendee’s lien would be used when a buyer has
paid but not yet received a deed. (i.e., at a foreclosure sale or in contract for deed)

If a party wins a judgment and is unable to collect, that party can secure a writ of execution from
the courts to enforce payment of the lien.

Reminder: At foreclosure, lien priority is determined by the date of recording, with the first recorded
lien having first priority.

Recorded liens are only paid after the property tax lien is paid.

Question 23

Land begins at the center of the earth and extends above the earth. Therefore, we have these types of rights:

Answer 23

Subsurface, Surface, and Air rights.

Mineral rights consist of rights to SUBSURFACE land and profits

Question 24

REQUIREMENTS OF A VALID DEED

Answer 24

Grantor and Grantee - The grantor must be competent.

• Consideration - Legal consideration can be “good” or “valuable. “Love and affection” is an
  example of good consideration. Money is valuable consideration.
• Words of conveyance – The granting clause - a written statement that indicates transfer of
  some interest in real property from one person to another.
• Execution - The grantor must sign the deed.
• Delivery - Title does not pass until the deed is delivered and accepted. Delivery can be into
  escrow. Delivery must be made during the life of the grantor.
• Legal description of the property.

Deeds do not have to be dated, signed by the grantee, or recorded.

Question 25

4 Types of Deeds include:

Answer 25

* General Warranty Deed - 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. * Special Warranty Deed – guarantees title only against defects arising under the grantor’s period of ownership. Defects existing before that time are not covered. * Bargain and Sale Deed – 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. * Quitclaim Deed - 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 title.

Question 26

A CHANGE of ownership of real property is called:

Answer 26

Alienation Voluntary alienation 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. Involuntary alienation usually happens in court as in foreclosure, bankruptcy, condemnation, escheat, adverse possession, reversion of defeasible fee, partition, or inheritance without a will. Involuntary alienation can also occur from natural causes, including accretion and reliction, which result in an increase in property size, and erosion and avulsion, which result in a loss of land.

Question 27

INFO ABOUT RECORDING A TITLE

Answer 27

* Recording is not necessary for a deed to be valid. * Recording gives constructive notice of ownership. This is notice to the world and protects against fraudulent sale. Taking possession of property also gives constructive notice of ownership. * Recording is always done in the county where the property is located. * A document must be acknowledged before it can be recorded. It must also be in English. * An acknowledgment is a declaration to a notary authorized to take oaths that the signature is a free and voluntary act. An acknowledgment verifies the signature.

Question 28

This is an examination of PUBLIC records to compile when a title search is done.

Answer 28

Abstract of Title An abstract is a complete history of title. Included in the abstract is a Chain of Title.

Question 29

Any claim or encumbrance that may superficially INJURE the title to a property or cast doubt on the title’s validity is called a:

Answer 29

“ Cloud on the Title”. Usually, property cannot be conveyed (transferred to another) as long as the cloud exists. A quitclaim deed can sometimes be used to fix the problem.

Question 30

If NO ONE is available to sign a quitclaim, then a court procedure to cure or quiet the cloud can be used. This is called an

Answer 30

“Action to Quiet title” or a Quiet title Suit.

Question 31

INFO ABOUT TITLE INSURANCE

Answer 31

A title insurance policy agrees to compensate or reimburse the insured against any losses sustained as a result of defects in the title, other than those exceptions listed in the policy. Protection is for forged deeds, illegal acts of trustees, guardians, or attorneys, false claims of ownership, and human error in copying and recording. The loss or destruction of records is also covered. A standard title policy will not provide protection for survey or boundary problems.