Module 3 Rights and Interest in Real Estate Flashcards
Identify distinction between freehold and leasehold estates
Freehold
- Full bundle of rights
- No limit to how long it lasts “Indetermined Duration”
- Fee simple
- defeasible
- leased fee interest
- leasehold interest
- Life Estate
Leasehold
- “Defined duration”
- Possessory
- Includes the revision of possessory rights when lease terminate
- Lessor
- Lessee
- Estate at will
- Estate for years
- Estate for period to period
- Estate at sufferance
Types of Leasehold Estates:
Estate at Sufferance
1) Created when tenant lawfully takes possession but stays after lease expires without consent of owner
2) Used to distinguish between (above) and a trespasser who never had permission to enter the land
3) Tenant has no current rights to possess the property, but owner must follow legal procedures for eviction
Types of Leasehold Estates:
Estate at Will
1) Unspecified period of time, similar to a period to period except that it never originated with any specific term
2) Automatic renewal unless notice of termination is given
3) Terminates upon the death of landlord or tenant
Types of Estates
Estate from Period to period
a) Tenancy is for an indefinite period of time with no specific expiration date. Notice must be given to terminate
b) Typically comes about as an extension or holdover from a tenancy for years. Original lease term was likely set as a month to month or some other period of time
c) For this type of extended tenancy, periodic renewal are automatic
Types of Leasehold Estates (tenancies)
Estate for Years
a) Tenancy is for a definite or fixed period of time
b) Lease automatically terminates at expiration
c) Mutual consent required if either party wants to terminate before the end of the term (surrender)
d) Unless prohibited in the lease agreement, an estate for years is assignable by the tenant, tenant can sublease to another
e) Does not terminate upon death of landlord
Characteristics of Freehold Estates
1) Present or future possession
2) Indeterminate Duration
3) Considered to be an ownership positon
* Possession is required to be considered free hold but can be present or future
Types of Freehold Estates : Fee simple
Fee Simple Absolute (Inheritable)
Most complete form of ownership with unlimited duration and subject only to governmental powers
Types of Freehold Estates : Fee simple
Fee Simple Defeasible (Inheritable)
Subject to the occurance of a specific event or non-occurance of a specific event.
Two types
- Qualified by a special limitation
- Subject to a condition subsequent
Types of Freehold Estates : Fee simple
Leased Fee Interest (Inheritable)
An ownership interest held by a landlord with the rights of use and occupancy conveyed by lease to others
The rights of the lesso (leased fee owner) and the lessee are specified by contract terms contained within the lease
Types of Freehold Estates
Life Estate (Non-Inheritable)
- Rights of use, occupancy and control limited to the life time of a designated party: Life Tenant
- Life tenant, one who owns an estate in real property for his or hoer own lifetime, the lifetime of another person or an indefinite period limited by a lifetime
- When life tenant dies estate reverts back to grantor
- Grantor has reversionary interest or future interest
- Life tenant can sell property but when they die property reverts back to grantor
- If grantor is already dead, property goes to a remainder interest designated by grantor called remainderman
Recognize distinctions between liens and other types of encumbrances
- Liens are a monetary claim against property
- Encumbrance affects use or physical condition
“All liens are encumbrances; not all encumbrances are liens”
Distinguish types of non-lien encumbrances
- Easements: Apputenant & Gross
- Encroachments
- Deed Restrictions (CC&R’s)
- Reservations
- Licenses
Easement Appurtenant
This type of easement attaches to the land so that when
the property is sold it is transferred to the new owner. An
easement appurtenant burdens one property while
benefiting another property
Dominant and Servient Estate in an Easement Appurtenant
The property that benefits from the easement is called the
dominant estate, while the property that is burdened by the
presence of the easement is called the servient estate. When
either property sells, the easement passes with the title transfer
because it is permanently attached to the property’s ownership
Easement Appurtenant cont’d
The dominant estate is the “owner” of the easement
The dominant estate is the land parcel to which the easement is attached
It is not attached to the servient estate, but instead burdens the servient estate
Easement in Gross
This easement is personal in nature and does not have a servient or dominant estate, but it does burden the servient estate. Easements in gross are generally retained by a governmental entity at the federal, state or local level.
example, drainage and utility easements
There is no dominant estate
The “owner” of an easement in gross is a person or entity
often a public body or governmental agency.
It is not attached to any land, but burdens the parcels subject to the easement in gross.
Encroachment
Trespassing on the domain of another. Occurs when a portion of an improvement extends beyond the site boundary of it’s owners land.
- Most encroachments are unintentional
- May reduce the value, use or enjoyment of the property that has been intruded upon.
- If left unresolved could mature into an easement by prescription
Deed Restriction
a provison written into a deed that limits the use of land.
usually remain in effect when the title passes to subsequent owners
Types of use (Residential, multi family etc)
Types of construction (brick exterior, wood)
Size of buildings (minimum or maximum)
Prohibited Practices (parking RVs, building fences)
Reservations
encumbrances that are used by the grantor or the government, to set aside certain rights that do not transfer with an ownership change of the property. For example, the government will typically reserve the mineral rights in the original land grant, so that would be a reservation. While title passes to the grantee, some uses or income is reserved for the grantor, like mineral rights, rental income,or easements
Licenses
not encumbrances because they involve a personal agreement that is not attached to the land. However, because they involve property issues, they are sometimes mistaken as an encumbrance
- Revocable oral or written agreement granting privilege to use property
- Not an estate or an interest in land (thus not an encumbrance)
- Not assignable and cant be sold
- A personal agreement usually granted for a specified period of time
Estates in land can be broken down into which two categories? A) Freehold and leasehold B) Fee simple and life C) Riparian and littoral D) Suprasurface and subsurface
A) Freehold and leasehold
Feedback: Correct. See page 33 of your Course Handbook and the online content under the heading of Estates in Land.
Freehold and leasehold are the two legal categories of estates.
What is a tenancy (also known as an estate) in which a lessee remains in possession of the property without the lessor's consent? A) Tenancy for years B) Tenancy from period to period C) Tenancy at sufferance D) Tenancy at will
C) Tenancy at sufferance
Feedback: Correct. See page 38 of your Course Handbook and the online content under the heading of Leasehold Estates. This type of tenancy helps to distinguish a tenant from a trespasser (i.e., someone who never had permission to enter the land).
Which of the following is NOT a characteristic of a freehold estate? A) Ownership B) Defined duration C) Present or future duration D) Indeterminate duration
B) Defined duration
Feedback: Correct. See page 33 of your Course Handbook and the online content under the heading of Estates in Land. A freehold estate has an indeterminate duration.
The remainder interest in a life estate is also known by what term or phrase? A) The grantor B) The life tenant C) The reversionary interest D) The remainderman
D) The remainderman
Feedback: Correct. See page 35 of your Course Handbook and the online content under the heading of Estates in Land. After a life estate ends it goes back to the grantor, or the grantor has passed away, the estate goes to the Remainderman (also known as the remainder interest).
