Unit 4: Forms of Real Estate Ownership

Question 1

Real estate may be held in one of three ways:

Answer 1

1. Ownership in severalty (one owner)
2. Co-ownership (more than one owner)
3. Ownership by a trust (property held for the benefit of another

Question 2

Ownership in severalty occurs when…

Answer 2

property is owned by one individual, corporation, or other entity.

Question 3

The owner in severalty has sole rights to the property and sole discretion to….

Answer 3

sell, lease, leave as a bequest in a will, or otherwise transfer part or all of the ownership rights to another person

Question 4

Co-ownership (or concurrent owners)

Answer 4

when a title to a parcel of real estate is held by two or more individuals

Question 5

Forms of co-ownership

Answer 5

• Tenancy in common (TIC)
• Joint tenancy
• Tenancy by the entirety
• Community property

Question 6

Tenancy in common (TIC)

Answer 6

Each tenant holds an undivided interest in the property.

Question 7

In TIC, co-owners have unity of possession, meaning that each owner is…

Answer 7

entitled to possession and use of the entire property, even though each holds only a fractional ownership interest

Question 8

If no fractions are stated in the deed creating a TIC, the tenants are presumed to hold equal shares

Answer 8

True

Question 9

A share owned by a married couple can be transferred only with the agreement of both parties.

Answer 9

True

Question 10

The TIC has become popular in expensive urban areas because it allows a multi-family dwelling to be sold to multiple owners without the need to convert the entire property to the condominium form of ownership (long and expensive process).

Answer 10

True

Question 11

The downside of co-owner’s TIC interest is that it may not be as easy to _________ as property held in a different form of ownership.

Answer 11

sell

Question 12

Joint Tenancy

Answer 12

property owned by two or more people whether married or unmarried. The distinguising feature is right of surviorship.

Question 13

Right of Survivorship

Answer 13

Upon the death of a joint tenant, the deceased’s interest transfers directly to the surviving joint tenant or tenants.

Question 14

The last survivor takes title in severalty and has all the rights of sole ownership, including the rights to pass the property to any heirs.

Answer 14

True

Question 15

A joint tenancy can be created only by the ____ act of conveying a deed or giving the property by will or living trust

Answer 15

intentional

Question 16

To create a joint tenancy, four elements or unities are needed (PITT)…

Answer 16

• Unity of possession
• Unity of interest
• Unity of time
• Unity of title

Question 17

unity of possession

Answer 17

all joint tenants hold are undivided right to possession

Question 18

Unity of interest

Answer 18

all joint tenants hold an equal ownership interest

Question 19

Unity of time

Answer 19

all joint tenants acquire their interests at the same time

Question 20

Unity of title

Answer 20

all joint tenants acquire their interests by the same document

Question 21

The four requirements or unities are met when the right to posession of a property is acquired by all of the joint owners by means of a single instrument that conveys an equal undivided interest to all of them, stipulating that they are to be joint owners “with the right of surivorship”

Answer 21

True

Question 22

A joint tenancy is destroyed when…

Answer 22

any one of the four unities of joint tenancy is terminated

Question 23

If the joint tenacy has more than two owner to begin with, and one of them conveys that interest, there will still be a joint tenacy but only as to the interests held by the remaining joint tenants; the new owner is a…

Answer 23

tenant in common (TIC)

Question 24

Partition

Answer 24

a legal way to dissolve the relationship between co-owners of real estate when the parties do not voluntarily agree to its termination

Question 25

Tenancy by entirety

Answer 25

special form of co-ownership used in some states that allows a spouse to inherit the other spouse's ownership interest upon death

Question 26

Early common law viewed a married couple as

Answer 26

one legal person (entirety)

Question 27

Community Property Law

Answer 27

any property acquired during marriage is considered to be obtained by mutual efforts

Question 28

Separate property

Answer 28

real or personal property that was owned soley by either spouse before the marriage, acquired by gift or inheritance by one spouse during the marriage, or purchased with separate funds during the marriage

Question 29

Any conveyance or encumbrance of community property requires the signatures of both spouses in ______ property.

Answer 29

Community

Question 30

Trust

Answer 30

a device by which one person transfers ownership of property to someone else to hold or manage for the benefit of a third party

Question 31

Trustor

Answer 31

creates the trust

Question 32

beneficiary

Answer 32

the person who benefits from the trust

Question 33

Trustee

Answer 33

is the party who holds legal title to the property and is entrusted with carrying out the trustor's instructions regarding the purpose of the trust

Question 34

Fiduciary

Answer 34

A person who acts in confidence or trust and has a special legal relationship with the beneficiary

Question 35

Living trust

Answer 35

created by agreement during the property's owner's lifetime

Question 36

Testamentary Trust

Answer 36

established by will after the owner's death

Question 37

Trustors expect that the trustee will complete certain duties indicated such as care and investment of the trust assets to produce an income.

Answer 37

True

Question 38

Living trusts minimize the time and costs of probate

Answer 38

True

Question 39

The trustee is often the trustor

Answer 39

True

Question 40

Upon the death of the trustee, the property passes to the beneficiary or beneficiaries without the need for probate.

Answer 40

True

Question 41

Land trust

Answer 41

Real estate is the only asset and the beneficiary is also the trustor which can help them manage, control, right of posession, right of income or proceeds. Continue on definitie terms, usually 20 years

Question 42

One of the distinguishing charachteristics of a land trust is that the public records usally do not....

Answer 42

name the beneficiary

Question 43

A beneficial interest in property can be transferred by assignment

Answer 43

True

Question 44

The beneficial interest in property can be pledged as security for a loan without having a mortgage recorded

Answer 44

True

Question 45

Ownership by a business organization makes it possible for many people to hold an interest in the same parcel of real estate

Answer 45

True

Question 46

Partnership

Answer 46

an association of two or more people who carry on a business for profit as co-owners

Question 47

General Partnership

Answer 47

all the partners participate in the operation and management of the business and share full liability for business losses and obligations

Question 48

Limited Partnership

Answer 48

Consists of one or more general partners, as well as limited partners

Question 49

Limited partners are not legally permitted to participate, with the result that each can be held liable for business losses only to the amount invested

Answer 49

True

Question 50

Limited partnership allows for investors to organize and invest small amounts of capital to a large real estate project with minimal risk

Answer 50

True

Question 51

Uniform Partnership Act

Answer 51

Provides for the continuation of the existing business even under the circumstances of partners death, withdrawl, or bankruptcy

Question 52

Corporations

Answer 52

a legal entity created under the authority of the laws of the state from which it receives its charter

Question 53

Board of Directors

Answer 53

Manage and operate the corporation and are elected by its shareholders

Question 54

BC the Corporation is a legal entity, it can own real estate in SEVERALTY or as TENANT IN COMMON with other natural/articial persons

Answer 54

True

Question 55

LLC

Answer 55

combines the most attractive features of limited partnerships and corporations. Members enjoy the limited liability of a corp, tax advantages of a partnership-income flows directly to members and is not faced with double taxation

Question 56

Condominiums, cooperatives, and time-share arrangements are three types of property ownership that have arisen in residential, commercial, and industrial markets

Answer 56

True

Question 57

Condominiums

Answer 57

Single units are located in lowrise and highrise complexes, as town houses or stand-alone units

Question 58

____ owners have fee title to interior space of units and share title to common areas

Answer 58

Condominium Ownership

Question 59

Condominiums are transferred by

Answer 59

deed, will, or living trust

Question 60

Cooperative

Answer 60

single units are located in lowrise and highrise complexes

Question 61

Tenants own shares in a corporation, partnership, or trust that holds title to the building. Tenants have proprietary leases and the right to occupy their respective units

Answer 61

Cooperative Ownership

Question 62

Shareholders may sell or transfer shares. Check bylaws.

Answer 62

Cooperative Transfers

Question 63

Time-share

Answer 63

Multiple purchasers buy interests in real estate-usually resort or hotel property. Each purchaser has right to use unit for set time each year or a number of usuage points

Question 64

Fee simple interest. Use agreement is personal property that expires after a specified time period.

Answer 64

Time-Share Ownership

Question 65

Time-share Transfer

Answer 65

An interest in a time-share estate may be conveyed by deed or will by the owner. An interest in time-share use is personal property that may or may not be transferable according to the contract.

Question 66

Horizontal property acts

Answer 66

Also known has Condominium laws, the owner of each unit holds a fee simple title to the unit

Question 67

Common elements

Answer 67

land, coutryard, lobbies, the exterior structure, hallways, elevators, stairways, and the rood, as well as recreational facilities like pools, tennis coutrs, and golf courses

Question 68

Lowrises, town houses that share a wall, and detached structure can all be condominiums

Answer 68

True

Question 69

RIght of first refusal

Answer 69

the owner is required to offer the unit at the same price to the other owners in the condominium or the association before accepting an outside purchase offer.

Question 70

In a ________, a corporation holds title to the land and the building, which the corporation sell shares of stock to prospective tenants

Answer 70

Cooperative

Question 71

In a Cooperative, the purchaser becomes a shareholder in the corporation by virtue of stock ownership and receives a proprietary lease to the apartment for the life of the corporation

Answer 71

True

Question 72

Cooperative tenant-owners do not own real estate instead they own an interest in a corporation that has only one asset: the building

Answer 72

True

Question 73

An important issue in most cooperatives is the

Answer 73

method by which shares in the corporation may be transferred to new owners

Question 74

The burden of any defaulted payment in a cooperative falls on...

Answer 74

the remaining shareholders

Question 75

Approval of prospective tenants by the board of directors in a cooperative will include_________ because the property may be sold by court order in a foreclosure suit.

Answer 75

financial evaluation

Question 76

time-share use is a contract right under which______ owns the real estate

Answer 76

the developer