1. { Chapter 12 Property: Real Property, Leases & Mortgages

2. Real Property  Property that is immovable or attached to immovable land or buildings 1 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

3. Types of Real Property 1. Land and buildings 2. Subsurface rights  Rights to the earth located beneath the surface of the land 3. Plant life and vegetation  Plant life and vegetation growing on the surface of land are considered real property 4. Fixtures  Goods that are affixed to real estate so as to become part thereof 5. Air rights  The owners of land may sell or lease air space parcels above their land 2 Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

4. Estates in Land  Ownership rights in real property; bundle of legal rights that the owner has to possess, use, and enjoy the property  Type of estate: Determined from the deed, will, lease, or other document that transferred the ownership rights 3

5. Freehold Estate  Freehold estate: An estate in which the owner has a present possessory interest in the real property  In short – you own & control all rights completely 4

6. Freehold Estate Types 1. Fee simple absolute: A type of ownership of real property that grants the owner the fullest bundle of legal rights that a person can hold in real property 2. Fee simple defeasible: A type of ownership of real property that grants the owner all the incidents of a fee simple absolute except that it may be taken away if a specified condition occurs or does not occur 5

7. Freehold Estate Types 3. Life estate: An interest in real property for a person’s lifetime; upon that person’s death, the interest is transferred to another party 4. Estate pour autre vie: A life estate that is measured by the life of a third party 6

8. Concurrent Ownership  A situation in which two or more persons own a piece of real property  Also called co-ownership 7

9. Concurrent Ownership Types 1. Joint tenancy: A form of co-ownership that includes the right of survivorship  Right of survivorship: A legal rule that provides upon the death of one joint tenant the deceased person’s interest in the real property automatically passes to the surviving joint tenant or joint tenants 8

10. Concurrent Ownership Types 2. Tenancy in common: A form of co-ownership in which the interest of a surviving tenant in common passes to the deceased tenant’s estate and not to the co-tenants 3. Tenancy by the entirety: A form of co- ownership of real property that can be used only by married couples 9

11. Concurrent Ownership Types 4. Community property: A form of ownership in which each spouse owns an equal one-half share of the income of both spouses and the assets acquired during the marriage 5. Condominium: A common form of ownership in a multiple-dwelling building in which the purchaser has title to the individual unit and owns the common areas as a tenant in common with the other condominium owners 10

12. Concurrent Ownership Types 6. Cooperative: A form of co-ownership of a multiple-dwelling building in which a corporation owns the building and the residents own shares in the corporation 11

13. Future Interests  The interest that a grantor retains for himself or herself or a third party  Reversion: Right of possession returns to the grantor after the expiration of a limited or contingent estate  Remainder: Right of possession that goes to a third party upon the expiration of a limited or contingent estate  Remainder beneficiary 12

14. Transfer of Ownership  Title to real property can be transferred by: 1. Sale (conveyance): The passing of title from a seller to a buyer for a price 2. Deed: An instrument that describes a person’s ownership interest in a piece of real property  Grantor: The party who transfers an ownership interest in real property  Grantee: The party to whom an interest in real property is transferred 13

15. Types of Deeds  General warranty deed:  A deed that protects a grantee of real property from defects in title caused by the grantor and prior owners of the property  Special warranty deed:  A deed that protects a grantee of real property from defects in title caused by the grantor  Quitclaim deed:  A deed in which the grantor of real property transfers whatever interest he has in the property to the grantee 14

16. Recording statutes  A state statute that requires a mortgage or deed of trust to be recorded in the county recorder’s office of the county in which the real property is located 15

17. Quiet Title Action  An action brought by a party, seeking an order of the court declaring who has title to disputed property 16

18. Titles  Marketable title: Title to real property that is free from any encumbrances or other defects that are not disclosed but would affect the value of the property  Attorney’s opinion  Torrens system  Title insurance: A form of insurance obtained from a title insurer who agrees to reimburse the insured for losses caused by undiscovered defects in title 17

19. Adverse Possession  A person who wrongfully possesses someone else’s real property obtains title to that property if certain statutory requirements are met  Certain statutory requirements:  Statutorily prescribed time period  Open, visible, and notorious  Actual and exclusive  Continuous and peaceful  Hostile and adverse 18

20. Nonpossessory Interests  A situation in which a person holds an interest in another person’s property without actually owning any part of the property 19

21. Easements  Easement: A given or required right to make limited use of someone else’s land without owning or leasing it 20

22. Easements 1. Easement appurtenant: Owner of one piece of land is given an easement over an adjacent piece of land 2. Easement in gross: Authorizes a person who does not own adjacent land the right to use another’s land 3. License: A document that grants a person the right to enter upon another’s property for a specified and usually short period of time 4. Profit-à-Prendre: A document that grants a person the right to remove something from another’s real property 21

23. Zoning  Zoning ordinances: Local laws that are adopted by municipalities and local governments to regulate land use within their boundaries  Variance: An exception that permits a type of building or use in an area that would not otherwise be allowed by a zoning ordinance  Nonconforming uses: For real estate and buildings that already exist in a zoned area that are permitted to continue even though they do not fit within a new zoning use established for the area 22