Unit 4 - Unit Review Forms of Real Estate Ownership Flashcards

Unit 4 - Unit Review Forms of Real Estate Ownership Flashcards A major advantage of living trusts is that they reduce the time and costs of probate.The answer is true. Living trusts have become a major estate planning tool used to minimize the time and costs of probate.The ownership of an undivided fractional interest in a property is characteristic of a tenancy in common.The answer is true. In a tenancy in common, each tenant holds an undivided fractional interest in the property; the co-owners have unity of possession, meaning that each is entitled to possession of the whole property. It is the ownership interest, not the property, that is divided.The term severalty means that there is only one owner of a property.The answer is true. Ownership in severalty occurs when property is owned by one individual or corporation.A time-share estate includes the right to use the property for a certain specified period of time.The answer is true. Time-share ownership permits multiple purchasers to buy interest in real estate; each purchaser receives the right to use the facilities for a certain period.In a general partnership, the death of one of the partners automatically bankrupts the remaining partners.The answer is false. If a partner in a general partnership dies, withdraws, or goes bankrupt, the traditional common law result would be to dissolve the partnership, which could be reorganized as a partnership of the surviving partners in order to conduct business. Nearly every state has now adopted the Uniform Partnership Act, which provides for the continuation of the existing business even under these circumstances.When two or more individuals decide to buy a property together, it results in The answer is a co-ownership. When two or more people buy property together, it is called co-ownership. A joint venture is a form of partnership in which two or more people carry out a single business project with no intention of establishing an ongoing relationship.An owner can transfer or sell a condominium unit to anyone, unless the condominium association provides for a right of first refusal.The answer is true. Under condominium ownership, each unit becomes a separate parcel of real estate that is owned in fee simple and may be transferred to whomever the owner chooses, unless the condominium association provides for a right of first refusal.When title to a single parcel of real estate is held by two or more individuals, the parties may be called concurrent owners.The answer is true. When title to one parcel of real estate is held by two or more individuals, those parties are called co-owners or concurrent owners.What form of ownership is employed when one person transfers ownership to someone else to hold and manage for a third person?A) Joint ventureB) Joint tenancyC) SeveraltyD) Trust The answer is trust. A trust is a device by which one person transfers ownership of property to someone else to hold or manage for the benefit of a third party. Severalty indicates one owner. Joint tenancy is a form of ownership whereby, as joint owners die, the surviving owners acquire the deceased tenant's interest.

In a tenancy by the entirety, neither spouse can convey a half-interest to a third party, and neither spouse may take court action to partition or divide the property.The answer is true. During their lives, under tenancy by the entirety, the spouses can convey title only by a deed signed by both parties.In a community property state, community property includes all property, both real and personal, acquired by either party prior to or during the marriage.The answer is false. In a community property state, community property includes all property, both real and personal, acquired by either party during the marriage, except by gift or inheritance or with the proceeds of separately owned property.The four unities characteristic of a tenancy in common are possession, interest, title, and time.The answer is false. The four unities characteristic of a joint tenancy are possession, interest, title, and time.Which of these cannot take title as a joint tenant with right of survivorship?The answer is a corporation. Because a corporation continues indefinitely until terminated by legal action, a corporation may never take title as a joint tenant.In a tenancy in common, property is owned by two or more owners with the right of survivorship.The answer is false. In a joint tenancy, property is owned by two or more owners with the right of survivorship.The three basic ways in which a fee simple estate may be held are in severalty, in co-ownership, and in trust.The answer is true. Although the forms of ownership available are controlled by state law, a fee simple estate

may be held in three basic ways: in sole ownership, in

co-ownership with others, and in trust.When a joint tenant conveys interest in the jointly held property to a new owner, the new owner becomes a joint tenant.The answer is false. A joint tenant may freely convey interest in the jointly held property to a new owner; however, doing so will destroy the unities of time and title, and the new owner cannot become a joint tenant.Co-tenants may terminate their co-ownership by asking a court to partition the property.The answer is true. Partition is a legal way to dissolve the relationship when the parties do not voluntarily agree to its termination.When all of the other owners' interests in a joint tenancy have passed to the sole surviving owner, that owner then holds title in entirety.The answer is false. A joint tenancy continues indefinitely, until there is only one remaining owner, who then holds title in severalty.Two people, each of whom has two children, are getting married, and they are buying a house together. They ask the real estate professional for advice about how to take title. What advice should the real estate professional offer?A) Advise they take title as joint tenants to protect each other, so that if one dies, the other gets the houseB) Suggest that they consult an attorneyC) Advise they take title as tenants in common, so that each one-half in interest would go to the appropriate childrenD) Suggest that they consult the real estate professional's employing broker The answer is suggest that they consult an attorney.Because the choice of ownership affects the ability to transfer the real estate, has tax implications, and affects rights to future claims, real estate professionals should tell their clients to discuss the issue with an attorney. Real estate professionals and their brokers are not permitted to give legal advice.A limited liability company (LLC) combines the most attractive features of land trusts and testamentary trusts.The answer is false. An LLC combines the most attractive features of limited partnerships and corporations. The members of an LLC enjoy the limited liability offered by a corporate form of ownership. In addition, the LLC offers the tax advantages of a partnership-income flows directly to the member of the LLC, instead of being subject to the double

taxation of a corporation.Condominium owners hold their own units in fee simple and the common elements under proprietary leases.The answer is false. Condominium owners hold their own units in fee simple and the common elements as tenants in common.

Ownership of a cooperative interest is personal property.The answer is true. When buying into 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.The management and operation of a cooperative are determined by the bylaws of the corporation that owns the property.The answer is true. The bylaws of the corporation that owns the property determine the management and operation of a cooperative.Three siblings bought a farm together. The deed listed all of their names, but failed to designate any form of concurrent ownership. What form of ownership are they presumed to have taken?A) Tenancy in commonB) Joint tenancy with right of survivorshipC) In severaltyD) Tenancy by the entireties The answer is tenancy in common. The siblings are presumed to be tenants in common because the deed did not specify they would take title as joint tenants with right of survivorship. Joint must be specified if that is the desired form of taking title. Severalty ownership cannot be taken by more than one person.The person who creates a trust is called the trustor.The answer is true. A trust is a device by which one person, called the trustor, transfers property to the trustee, who is entrusted to carry out the trustor's instruction regarding the property held in the trust. The party who benefits from the trust is called the beneficiary.