Ch. 5 Forms of Real Estate Ownership Flashcards

Ch. 5 Forms of Real Estate Ownership Flashcards Ownership of Real Estate by a Business OrganizationMakes it possible of many people to hold interest in the same parcel of real estate.How is a joint tenancy created?(4 Elements) By the intentional act of conveying a deed or giving the property by will or living trust.1. Unity of Possession - all joint tenants hold an undivided right of possession2. Unity of Interest - all joint tenants hold an equal ownership interest3. Unity of time - all joint tenants acquire their interest at the same time4. Unity of title - all joint tenants acquire their interests by the same document Right of SurvivorshipUpon the death of a joint tenant, the deceased's interest transfers directly to the surviving joint tenant or tenants.Essentially there is one less owner.Real Estate can be held in 3 different ways: 1. Ownership in severalty (one owner)2. Co-ownership (with more than one owner)3. Ownership by trust (property held for the benefit of another) PartitionA legal way to dissolve the relationship between co-owners of real estate when the parties do not voluntarily agree to its termination. If the court determines that the property cannot be divided physically into separate parcels without destroying its value, the court will order real estate sold.The proceeds will then be divided among the co-owners according to their fractional interests.Limited Liability CompaniesCombination of the attractive feature of limited partnerships and corporations. Enjoy the limited liability offered by a corporate form of ownership and the tax advantages of a partnership - income flows directly to the member of the llc, instead of being subject to double taxation of a corporation.Terminating a Joint TenancyDestroyed when any one of the four unities of joint tenancy is terminated.Joint tenants are fee to convey their individual interest in the jointly held property, but doing so destroys the unities of time and title. New owner cannot be joint tenant, but instead is a tenant in common.CooperationLegal entity-an artificial person-created under the authority of the laws of the state from which it receives its charter.Managed and operated by a board of directors that is selected by the owners-its shareholders.*Because it is a legal entity, it can own real estate in severalty or as a tenant in common with other natural or artificial persons.Continues to own property until formally dissolved.General PartnershipAll the partners participate in the operation and management of the business and share full liability for

business lolls and obligations.

Community PropertyConsists of real and personal property acquired by either spouse during the marriage. Any conveyance or encumbrance of community property requires the signature of both spouses. Spouse can will half of the community property to whomever they desire, but upon the death of one spouse, the surviving spouse automatically owns one-half of the remaining property.*Does not provide the automatic right of survivorship that joint tenancy does.SeveraltyWhen property is owned by one individual, corporation, or other entity. Owner has sole rights to the property and sole discretion to sell, will, lease or otherwise transfer part or all of the ownership rights to another person.Land TrustReal estate is the only asset of a land trust. The beneficiary is also usually the trustor. While the beneficial interest is personal property, the beneficiary retains management and control and has the right of possession as well as the right to any income produced by the property or proceeds from its sale.Usually used for the conservation of farmland, forests, coastal land and scenic views.Joint TenancyProperty owned by two or more people whether married or unmarried.The distinguishing feature of joint tenancy is the right of survivorship.Forms of Co-Ownership (4)1. Tenancy in Common (TIC)2. Joint tenancy3. Tenancy by the entirety4. Community property Tenancy in Common (TIC)Each tenant holds an undivided interest in the property.The co-owners have unity of possession, meaning hat teach owner is entitled to possession and use of the entire property, even though each holds only a fractional ownership interest. Ownership interest divided, not the property.May state fractional interest held by each co-owner. If no fractions stated, presumed to hold equal shares.Because they own separate interests, they can sell, convey, mortgage, or transfer their individual interest in the TIC without consent of the other co-owners. Transferred only with the agreement of both parties when a couple.Tenants by EntiretyA special form of co-ownership used in some states that allows a spouse to inherit the other spouse's ownership interest upon death. Each spouse has an equal, undivided interest in the property. Entirety = refers to the fact that owners are considered one indivisible unit because the early common law viewed a married couple as one legal person). Can convey title only by a deed signed signed by both parties. They do not have ht right to partition or divide the property.

CooperativeCorporation holds title to the land and the building. The corporation then offers shares of stock to prospective tenants. The price for each apartment because the price of the stock. The purchaser becomes shareholder in the corporation by virtue of stock ownership and receives a proprietary lease to the apartment for the life of the corporation.*Do not real estate, instead, own interest in a corporation that has only one asset, the building.Time-SharePermits multiple purchasers to buy relatively small interest in real estate, typically resort properties. Each purchaser receives the right to occupy the facilities for a certain period. Contract right under which the developer owns the real estate. The owner of the time-share has the right to occupy the facilities for a designated period each year, but only for a certain number of years. At end of that time, owner's rights terminate.PartnershipAn association of two or more persons who carry on a business for profit as co-owners.A living trustTrust created by agreement during the property owners lifetime.TrustA device by which on e person transfers ownership of a property to someone else to hold or manage for the benefit of a third party.Testamentary TrustEstablished by will after the owners death.Community Property LawsBased on the idea that the spouses, rather than margin into one entity, are equal partners in the marriage. Any property acquired during a marriage is considered to be obtained by mutual effort. (9 states recognize this) CondominiumThe owner of each unit holds a fee simple title to the unit.The individual unit owner also owns a specified share of the undivided interest in the remainder of the building known as common elements.Separate PropertyReal or personal property that was owned solely by either spouse before that marriage, acquired by gift or inheritance by one spouse during the marriage, or purchased with separate funds during the marriage. Separate property can be mortgaged or conveyed by the owning spouse without the signature of the non owning spouse.Limited PartnershipConsists of one or more general partners, as well as limited partners. The business is run by the general partner(s).The limited partners are not legally permitted to participate with the result that each can only be held liable for business losses only to the amount invested.Common ElementsParts of a property that are necessary or convenient to the existence, maintenance, and safety of a condominium or