Accounting /Real Estate Notes PSI Exam Prep: Property Ownership Part 4
Real Estate Notes PSI Exam Prep: Property Ownership Part 4
This deck covers key concepts related to property ownership, including different types of estates, co-ownership, and legal descriptions.
The current property owner conveys ownership to a new owner as long as some event does or doesn’t occur. For example, Morris gives a plot of land to a local parks district as long as the district only uses it for youth soccer fields. He gives the possibility of reverter to his son Joe, someone else named by Joe, or Joe’s heirs if the parks district changes the property’s use. If the use changes, the estate automatically ends and the property reverts to whoever holds the possibility of reverter.
a fee simple determinable estate
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Key Terms
Term
Definition
The current property owner conveys ownership to a new owner as long as some event does or doesn’t occur. For example, Morris gives a plot of land to a local parks district as long as the district only uses it for youth soccer fields. He gives the possibility of reverter to his son Joe, someone else named by Joe, or Joe’s heirs if the parks district changes the property’s use. If the use changes, the estate automatically ends and the property reverts to whoever holds the possibility of reverter.
a fee simple determinable estate
The current property owner conveys ownership to a new owner on a specific condition. For example, Trinity conveys her home to her son, Gabriel, on the condition that the property remains residential. If Gabriel converts the property to some other use, the estate doesn’t automatically revert to the original owner; however, Trinity (or her other heirs or successors) has the right to re-acquire full ownership. But she’ll have to go to court to do so.
a fee simple subject to condition subsequent estate
It is an estate in which the holder has a possessory interest in a property but no ownership.
A leasehold estate
It is a lease that ends on a specific date and must be renewed by mutual agreement between the landlord and tenant.
An estate for years
It is a lease that automatically renews at the end of its term (such as a month-to-month lease).
A periodic estate (aka estate from period to period)
It is a lease without an established ending that can be terminated by either party.
An estate at will
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| Term | Definition |
|---|---|
The current property owner conveys ownership to a new owner as long as some event does or doesn’t occur. For example, Morris gives a plot of land to a local parks district as long as the district only uses it for youth soccer fields. He gives the possibility of reverter to his son Joe, someone else named by Joe, or Joe’s heirs if the parks district changes the property’s use. If the use changes, the estate automatically ends and the property reverts to whoever holds the possibility of reverter. | a fee simple determinable estate |
The current property owner conveys ownership to a new owner on a specific condition. For example, Trinity conveys her home to her son, Gabriel, on the condition that the property remains residential. If Gabriel converts the property to some other use, the estate doesn’t automatically revert to the original owner; however, Trinity (or her other heirs or successors) has the right to re-acquire full ownership. But she’ll have to go to court to do so. | a fee simple subject to condition subsequent estate |
It is an estate in which the holder has a possessory interest in a property but no ownership. | A leasehold estate |
It is a lease that ends on a specific date and must be renewed by mutual agreement between the landlord and tenant. | An estate for years |
It is a lease that automatically renews at the end of its term (such as a month-to-month lease). | A periodic estate (aka estate from period to period) |
It is a lease without an established ending that can be terminated by either party. | An estate at will |
It is one in which a tenant (referred to as a holdover tenant) didn’t leave when the lease expired. | An estate at sufferance |
Can ownership in severalty be inherited? | Yes, according to the will and instructions |
It is a form of co-ownership in which each co-owner is entitled to possession of the whole. An owner’s ownership is inheritable and, upon the owner’s death, doesn’t necessarily pass to the other owners. | Tenancy in common |
Is a form of co-ownership in which equal ownership requires unity of time, title, interest, and possession. Includes the right of survivorship, which means that the surviving co-owner(s) will own the property of the person who dies. | Joint tenancy |
Can common tenancy be inherited? | Yes |
Can Joint tenancy be inherited? | No, the interested will go to the survivor members |
Timeshares, condominiums, and cooperatives are primary examples of | common-interest ownership. |
Can timeshares be inherited? | Yes, they can be sold also |
It is a type of freehold estate in which ownership is limited to someone’s lifetime. The future owner is determined based on the life estate’s terms. | A life estate |
It is based on the life of the estate holder/life tenant. For example, Christine gives her son this type of life estate in a property, and the estate lasts until her son’s death. | An ordinary life estate |
Is based on the life of someone other than the holder of the life estate/life tenant. For example, Jarrod grants his ex-wife, Margo, this type of life estate in a house where Jarrod’s mother Rose and Margo, who cares for Rose, both reside. The life estate stipulates that Margo’s interest in the property will cease when Jarrod’s mother dies. | Pur Autre Vie ("for another's life.) |
Any act by the estate holder that significantly reduces the value of the property at the end of the life estate is called | an act of waste |
When a life estate ends, ownership of and interest in the property is determined in one of two ways. | Remainder: Ownership will pass to a remainderman instead of the party who established the life estate.; Reversion: Ownership will revert to the life estate originator (or the originator’s successors and heirs). |
When a life estate ends, the remainderman or reversion holder holds the estate in | fee simple. |
The bundle of rights includes: | Possession: This means that the titleholder may possess (be on) the property.; Control: The owner controls the use of the property.; Exclusion: The owner may decide who may or may not access the property.; Enjoyment: The owner may use the property in any legal matter.; Disposition: The owner has the right to sell or convey the property. |
Property ownership gives the title holder a bundle of rights. What’s significant about the concept of a bundle of rights? | It describes the ability to separate one right from the others while leaving the rest of the bundle intact. |
Your client Frank is interested in selling a 54,450-square-foot lot. A comparable property in the vicinity sold for $3,500 per acre. What would be reasonable list price for Frank’s property? | One acre = 43,560 square feet. Figure his lot acreage first (54,450 ÷ 43,560 = 1.25 acres). Since the two lots are comparable, calculate the price of the comp ($3,500 x 1.25 = $4,375), which is a good list price for Frank’s lot |
In this description, what does “Beginning at the corner of State Route 61 and Hallowell Road” represent? | Bounds are physical features that define the boundaries of the property. Combined with directions and distances (metes), these form the basis of a metes and bounds legal description. |
Without this easement—usually involving access to a road—the owner requiring the right of passage would be landlocked. | This describes an easement by necessity. One way to remember this type of easement is by thinking of the importance of getting access to a road. |
43,560 square feet is | one acre |
A section is | one square mile, or 640 acres. |
A hectare is a | 100-acre measurement. |
What forms the boundaries of a township? | Township lines and range lines |
What is an encumbrance? | A defect on a title that can be monetary or physical |