Agency: Relationship between a buyer or seller of real estate and the licensee who represents that person is an agency relationship
Agent: Individual who is authorized and consents to represents the interests of another person.
Fiduciary duty to the principal. Putting the principal's interests above your own.
Principal is the person on whose behalf the agency acts.
Distinguishing between Client and Customer
Client: Agent owes a fiduciary duty
Customer: Agent owes honesty and fair dealing
Single Agency; Dual Agency and Transaction Brokers
Single agency: Agent represents only one party in any single transaction
Subagency is created when one broker appoints other brokers or salespersons to help perform client-based functions on the principal's behalf.
MLS typically make participating brokers subagents of the seller unless a separate agency agreement has been set up.
Subagent has same obligations to the principal as the original agent
Dual Agency: Agent represents TWO principals in the same transaction
Eg: What does an agent do if a client wants to purchase or lease a property from another client. Agent may assume the role of a transaction broker and facilitate the sale without being an agent for either party
Larger office may assign Designated Agent to each principal to provide client-based services. The broker then functions as transaction broker
Duties of a seller's agent
Promote interests of the client with utmost good faith, loyalty and fidelity
Present all offers to the seller ina timely manner
Disclose all facts about the buyer or tenant
Advise the client to obtain outside expert advise regarding problems or questions which are present but outside the agent's expertise
Account in a timely manner for all money and property received
Protect the client's confidences, unless disclosure is required
Types of disclosures
- Environmental hazards
- Physical condition of property
- Material defects in property
- Material defects in the title to property
- Material limitation on the client's ability to perform under the terms of the contract
Duties of transaction broker
Same as above
Protect confidences of both parties to the transaction
Disclose material adverse facts that they know
Listing Agreements, MLS Systems and Commissions
Listing agreement is contract that creates agency relationship between seller and broker
Exclusive right to sell listing - Broker is paid commission regardless of how the sale is made
Exclusive-Agency listing - Seller works with only one agent but may sell property on his own
Open Listing - Any number of brokers. Only the one bringing a buyer is paid
Net listing - Fixed minimum price. Anything paid above that goes to the broker
MLS: Mechanism by which brokers make their listings available to one another
The amount of and who pays the commission are determined by the listing agreement
Commissions are split between the seller's agent the seller's broker the buyer's agent and buyer's broker. The amount of split is determined by the salesperson's contract with the broker and the MLS agreement.
Wednesday, December 29, 2010
RE: Real Estate Appraisal
Note: Competitive Market Analysis performed by a broker is not the same as an appraisal and does not serve the same purpose
Market Value: Most probable price that a property should bring in an open competitive market in which market participants have typical bargaining power and information
Other types of values for appraisers: Assessed value, Insurable value, rental value
Basic Principles of Value
Anticipation: Value affected by "what will be" in addition to "what is"
Change: Appraisals are only valid at a particular point in time
Substitution: The value of a parcel is affected by the value of the "next best alternative"
Contribution: The value of a part of the real estate depends on the value it adds to the whole
Appraisal Income Approach
Based on the principle that the property's value should be related to the cash flows that the property can generate for an investor
Approach is most useful for income producing properties or those that could be used to produce income
Gross Income Multiplier (GIM)
GIM = Value / Gross Income
Value = Gross Income x GIM
EG: GIM for warehouses in downtown is 8. Subject property is a warehouse withestimated effective gross income of 25k per year. Estimated value of property is
V=25k x 8 = 200k
Gross Rent Multiplier (GRM)
Used with residential properties
Uses monthly gross rents rather than annual gross income
Net Income Capitalization
capitalization rate = net income / value
value = net income / cap rate
EG: Cap rate for properties in an area is 12%. Subject property has expected first-year NOI of 240k Estimated value is V = 240k / 0.12 = 2,000,000
Market Value: Most probable price that a property should bring in an open competitive market in which market participants have typical bargaining power and information
Other types of values for appraisers: Assessed value, Insurable value, rental value
Basic Principles of Value
Anticipation: Value affected by "what will be" in addition to "what is"
Change: Appraisals are only valid at a particular point in time
Substitution: The value of a parcel is affected by the value of the "next best alternative"
Contribution: The value of a part of the real estate depends on the value it adds to the whole
Appraisal Income Approach
Based on the principle that the property's value should be related to the cash flows that the property can generate for an investor
Approach is most useful for income producing properties or those that could be used to produce income
Gross Income Multiplier (GIM)
GIM = Value / Gross Income
Value = Gross Income x GIM
EG: GIM for warehouses in downtown is 8. Subject property is a warehouse withestimated effective gross income of 25k per year. Estimated value of property is
V=25k x 8 = 200k
Gross Rent Multiplier (GRM)
Used with residential properties
Uses monthly gross rents rather than annual gross income
Net Income Capitalization
capitalization rate = net income / value
value = net income / cap rate
EG: Cap rate for properties in an area is 12%. Subject property has expected first-year NOI of 240k Estimated value is V = 240k / 0.12 = 2,000,000
RE: Deeds and Title transfer
Title to real estate means the right to or ownership of real estate.
A person who holds title would if challenged in court be able to recover or retain ownership or possession of a parcel of real estate
Methods of transferring title
Voluntary Alienation
Involuntary Alienation - Escheat; Eminent Domain; Foreclosure; Adverse possession
Devise and descent
Voluntary Alienation and Deeds
Deed is a written instrument by which an owner of real estate intentionally conveys the right, title or interest in a parcel of real estate to someone else.
A GRANTOR is the person who is transferring title to the property to someone else
A GRANTEE is the person receiving title to the property
General warranty deeds: Provide the greatest protection of any deed and the grantor is legally bound by certain covenants or warranties
Covenant of seisin - Possession
Covenant against encumberances - free from liens or other encumberances
Covenant of quiet enjoyment - Title is good against 3rd party claims
Covenant of further assurance - I will provide any documents you need to defend your claim
Covenant of warranty forever - I'll do this forever
The guarantees extend back to the origin of the property. Grantor defends the title against anyone who may previously have had a claim on the property - including himself.
Special warranty deeds - Guarantees that the grantor received title and nothing bad happened during his ownership but makes no promises about what happened before
Bargain and sale deeds - I own it but make no guarantees
Quitclaim deeds - I don't know if I own anything but if I do - you can have it
Quitclaim deeds are frequently used to cure a defect - a cloud on the title
Good Title
Marketable title - sales contracts require the seller to provide the buyer with good and marketable title to the property
Marketable title
- Has no serious defects and does not depend on doubtful questions of law or fact to prove its validity
- Does not expose a purchaser to hazard of litigation
- Can convince a reasonably well-informed and prudent purchaser acting on business principles and with knowledge of the facts and their legal significance that he/she could sell or mortgage the property at a later time
Other types of good title
Insurable title - One that reputable title insurance company would insure
Title of perfect record - No defects of any kind in the public record
Title Searches & Public Records
public recorcds contain information about many of the claims that may exist with respect to a parcel of real estate.
Title searches are regularly done to ensure that each transfer of the property was completed properly and that each past lien has been removed
Title Insurance
Covers against any defects that could be found in the public records, forged documents, incompetent grantors, incorrect marital statements and improperly delivered deeds
Lenders require insurance coverage. The buyer may also obtain coverage of their own
In the event of a claim on the property, the insurance company will typically pay all your legal expenses to defend the title and to get any documents necessary to perfect title.
A person who holds title would if challenged in court be able to recover or retain ownership or possession of a parcel of real estate
Methods of transferring title
Voluntary Alienation
Involuntary Alienation - Escheat; Eminent Domain; Foreclosure; Adverse possession
Devise and descent
Voluntary Alienation and Deeds
Deed is a written instrument by which an owner of real estate intentionally conveys the right, title or interest in a parcel of real estate to someone else.
A GRANTOR is the person who is transferring title to the property to someone else
A GRANTEE is the person receiving title to the property
General warranty deeds: Provide the greatest protection of any deed and the grantor is legally bound by certain covenants or warranties
Covenant of seisin - Possession
Covenant against encumberances - free from liens or other encumberances
Covenant of quiet enjoyment - Title is good against 3rd party claims
Covenant of further assurance - I will provide any documents you need to defend your claim
Covenant of warranty forever - I'll do this forever
The guarantees extend back to the origin of the property. Grantor defends the title against anyone who may previously have had a claim on the property - including himself.
Special warranty deeds - Guarantees that the grantor received title and nothing bad happened during his ownership but makes no promises about what happened before
Bargain and sale deeds - I own it but make no guarantees
Quitclaim deeds - I don't know if I own anything but if I do - you can have it
Quitclaim deeds are frequently used to cure a defect - a cloud on the title
Good Title
Marketable title - sales contracts require the seller to provide the buyer with good and marketable title to the property
Marketable title
- Has no serious defects and does not depend on doubtful questions of law or fact to prove its validity
- Does not expose a purchaser to hazard of litigation
- Can convince a reasonably well-informed and prudent purchaser acting on business principles and with knowledge of the facts and their legal significance that he/she could sell or mortgage the property at a later time
Other types of good title
Insurable title - One that reputable title insurance company would insure
Title of perfect record - No defects of any kind in the public record
Title Searches & Public Records
public recorcds contain information about many of the claims that may exist with respect to a parcel of real estate.
Title searches are regularly done to ensure that each transfer of the property was completed properly and that each past lien has been removed
Title Insurance
Covers against any defects that could be found in the public records, forged documents, incompetent grantors, incorrect marital statements and improperly delivered deeds
Lenders require insurance coverage. The buyer may also obtain coverage of their own
In the event of a claim on the property, the insurance company will typically pay all your legal expenses to defend the title and to get any documents necessary to perfect title.
RE: Private Restrictions on Property
Even someone who holds a fee simple interest in real estate is restricted in what they can do with the property
- Private agreements and claims may restrict how property can be used
- Encumberance is a right or interest by someone other than the property owner that affects the title or use of real estate
- Public regulation and other governmental action may limit an owner's use of the property
LIENS
Lien is a claim or charge against a person's property made to enforce the payment of money
Types of Liens: Mortgage Liens; Tax Liens; Mechanics Liens
If the required bills are not paid, liens can be used to force the sale of the proerty
Often liens simply represent a claim on the proceeds from the sale of the property whenever it occurs
Liens "run with the property" and encumber future owners
EASEMENTS
Easement is the right of one person to use the property of another for a specified purpose and under certain conditions that specify the extent of allowable usage.
Easement in gross - individual interest in the property
Appurtenant easement - associated with another parcel. Runs iwth the land. Meaning if either party to the agreement sell the property - the easement is sold with it.
TERMINANTING EASEMENTS
- Agreement of the parties
- Merger of the properties
- Abandonment of the rights
- Purpose of easement ceases
- Excessive use
Other ways someone may use your property
- Encroachment is unauthorized inversion on intrusion of fixture, building or other improvement over property line
License is revocable permission to temporarily use the property for a specific purpose
Profit a Prendre is a non-possessory interest in real property that permits the holder to remove part of the soil or produce of the land.
Adverse Possession
If an individual takes possession and uses real estate as if it were his own, eventually he may file an action in court to claim title through adverse possession
To do this - the use must be
- Open and notorious (Someone looked or obvious to anyone who looks)
- Continuous and uninterrupted 10-15 years
- Actual and exclusive (not just one of many)
- Hostile and without the owner's consent
- Adverse to the true owner's possession
Restrictive Covenants
Designed to help mitigate spillover effects among properties (positive/negative)
Restrictive covenants set standards for all the parcels within a defined subdivision. They govern the type, height and size of buildings that individual owners can erect, as well as land use, architectural style, construction methods, setbacks and square footage.
Covenants require private actions by other landowners to enforce. If not enforced for a long period of time, the right can be lost.
Property Taxes & Specials
Property Tax Assessment
- Property taxes are levied on the owners of real estate based on the assessed value of the property owned (ad valorem tax)
- Types of taxes - state/city/school district/counties/townships
- Most states exempt certtain real estate from taxation and local jurisdictions often provide tax abatements for certain industries
Property taxes are based on ASSESSED VALUE of the property. Not its true market value.
Assessed value is often fixed fraction of market value
Eg: Residential - 11.5%; Non-Profit - 12%; Commercial - 25%; Vacant Land 12%
Farm land is assessed based on its use value
Levying property taxes
Tax process begins with adoption of a budget. After budget is approved, an appropriation is passed to authorize the expenditure. Tax Levy is formal action taken to impose the tax.
Tax Rate is calculated by dividing the total funds needed by the taxing authority by the total assessed value of taxable properties in the district.
A mill is 1/1000 of a dollar or 0.001
EG: Budget estimates it needs 85,103,450 in property tax revenues.
Estimated assessed value of property in city was 2,673,854,934
Resulting tax rate is 85,103,450/2,673,854,934 = 3.1828%
Resulting mill rate is 0.031828 x 1000 = 31.828 mills
You owned a 125,000 house. Assessed value is 11.5% of actual value = 14,375
Tax bill is
State - Assessed value 14,375 Mill rate 20.000 Taxes Due 287.50
USD Mill rate 36.850 Taxes Due 529.72
City Mill rate 32.142 Taxes Due 462.04
County Mill rate 29.868 Taxes Due 429.35
State Mill rate 1.500 Taxes Due 21.56
Total $1730.17
If you owned a commercial building worth 2.35 million
Assessed value 587,500 Tax bill 70,711.50
Special Assessements
Infrastructure improvements (streets, sewers, sidewalks, etc) in new developments and existing neighborhoods are financed using special assessements
City pays for improvements using general obligation bond
Princial and interest payments on the bond are asessed to the property owner on the tax bill
Pros - property owner gets to borrow at city's financing rate
Cons - City assumes default risk
Urban Planning & Comprehensive General Plan
Urban planning is necessary to ensure that required public services are available for urban growth as it occurs.
Comprehensive Plan is used as a guide when making specific land-use and other urban policy decisions. It presents a vision for what the community will look like in coming decades.
Comprehensive plan should be used to anticipate and prepare for growth and the infrastructure needs that will come with that growth.
Comprehensive Plan projects
- Population & Employment
- Land use requirements
- Housing needs
- Community facilities & utilities
- Transportation needs
ZONING CODES
Zoning ordinances are local laws that divide land in the jurisdiction into zones each with its own restrictions on the type of permitte use and the maximum intensity of that use
- Private agreements and claims may restrict how property can be used
- Encumberance is a right or interest by someone other than the property owner that affects the title or use of real estate
- Public regulation and other governmental action may limit an owner's use of the property
LIENS
Lien is a claim or charge against a person's property made to enforce the payment of money
Types of Liens: Mortgage Liens; Tax Liens; Mechanics Liens
If the required bills are not paid, liens can be used to force the sale of the proerty
Often liens simply represent a claim on the proceeds from the sale of the property whenever it occurs
Liens "run with the property" and encumber future owners
EASEMENTS
Easement is the right of one person to use the property of another for a specified purpose and under certain conditions that specify the extent of allowable usage.
Easement in gross - individual interest in the property
Appurtenant easement - associated with another parcel. Runs iwth the land. Meaning if either party to the agreement sell the property - the easement is sold with it.
TERMINANTING EASEMENTS
- Agreement of the parties
- Merger of the properties
- Abandonment of the rights
- Purpose of easement ceases
- Excessive use
Other ways someone may use your property
- Encroachment is unauthorized inversion on intrusion of fixture, building or other improvement over property line
License is revocable permission to temporarily use the property for a specific purpose
Profit a Prendre is a non-possessory interest in real property that permits the holder to remove part of the soil or produce of the land.
Adverse Possession
If an individual takes possession and uses real estate as if it were his own, eventually he may file an action in court to claim title through adverse possession
To do this - the use must be
- Open and notorious (Someone looked or obvious to anyone who looks)
- Continuous and uninterrupted 10-15 years
- Actual and exclusive (not just one of many)
- Hostile and without the owner's consent
- Adverse to the true owner's possession
Restrictive Covenants
Designed to help mitigate spillover effects among properties (positive/negative)
Restrictive covenants set standards for all the parcels within a defined subdivision. They govern the type, height and size of buildings that individual owners can erect, as well as land use, architectural style, construction methods, setbacks and square footage.
Covenants require private actions by other landowners to enforce. If not enforced for a long period of time, the right can be lost.
Property Taxes & Specials
Property Tax Assessment
- Property taxes are levied on the owners of real estate based on the assessed value of the property owned (ad valorem tax)
- Types of taxes - state/city/school district/counties/townships
- Most states exempt certtain real estate from taxation and local jurisdictions often provide tax abatements for certain industries
Property taxes are based on ASSESSED VALUE of the property. Not its true market value.
Assessed value is often fixed fraction of market value
Eg: Residential - 11.5%; Non-Profit - 12%; Commercial - 25%; Vacant Land 12%
Farm land is assessed based on its use value
Levying property taxes
Tax process begins with adoption of a budget. After budget is approved, an appropriation is passed to authorize the expenditure. Tax Levy is formal action taken to impose the tax.
Tax Rate is calculated by dividing the total funds needed by the taxing authority by the total assessed value of taxable properties in the district.
A mill is 1/1000 of a dollar or 0.001
EG: Budget estimates it needs 85,103,450 in property tax revenues.
Estimated assessed value of property in city was 2,673,854,934
Resulting tax rate is 85,103,450/2,673,854,934 = 3.1828%
Resulting mill rate is 0.031828 x 1000 = 31.828 mills
You owned a 125,000 house. Assessed value is 11.5% of actual value = 14,375
Tax bill is
State - Assessed value 14,375 Mill rate 20.000 Taxes Due 287.50
USD Mill rate 36.850 Taxes Due 529.72
City Mill rate 32.142 Taxes Due 462.04
County Mill rate 29.868 Taxes Due 429.35
State Mill rate 1.500 Taxes Due 21.56
Total $1730.17
If you owned a commercial building worth 2.35 million
Assessed value 587,500 Tax bill 70,711.50
Special Assessements
Infrastructure improvements (streets, sewers, sidewalks, etc) in new developments and existing neighborhoods are financed using special assessements
City pays for improvements using general obligation bond
Princial and interest payments on the bond are asessed to the property owner on the tax bill
Pros - property owner gets to borrow at city's financing rate
Cons - City assumes default risk
Urban Planning & Comprehensive General Plan
Urban planning is necessary to ensure that required public services are available for urban growth as it occurs.
Comprehensive Plan is used as a guide when making specific land-use and other urban policy decisions. It presents a vision for what the community will look like in coming decades.
Comprehensive plan should be used to anticipate and prepare for growth and the infrastructure needs that will come with that growth.
Comprehensive Plan projects
- Population & Employment
- Land use requirements
- Housing needs
- Community facilities & utilities
- Transportation needs
ZONING CODES
Zoning ordinances are local laws that divide land in the jurisdiction into zones each with its own restrictions on the type of permitte use and the maximum intensity of that use
RE: Legal Property Descriptions
A proper description of real estate is essential for legal documents relating to real estate.
A LEGALLY SUFFICIENT description is one that would: Allow a competent surveyor to define the exact boundaries of the property. An address is insufficient.
Three methods are typically used to legally describle real estate
- Metes & Bounds Descriptions
- Rectangular survey system
- Recorded plat system
METES & BOUNDS DESCRIPTION
Property is described by starting at a designated place on the parcel - the Point of Beginning (POB). It proceeds around the property's boundaries following the description given. The description MUST always end at the POB.
METES: Distances used in the description
BOUNDS: Directions of the boundaries that enclose the land
MONUMENTS: Identifying landmarks
RECTANGULAR SURVEY SYSTEM
Created after the revolutionary war. System is based on two sets of intersecting lines
Principal Meridians run North & South
Base Lines run East & West
Each principal meridian is its own base line
- Both principal meridians and base lines are located by reference to degrees of longitude and latitude
- Each area is assigned to a particular meridian and base line.
Township lines are SIX miles apart - running EAST & WEST
- Define strips of land called township tiers
- Township tiers are designated by consecutive numbers north or south of base line
Range Lines are SIX miles apart running NORTH & SOUTH
- Define strips of land called ranges which are designated by consecutive numbers east and west of the principal meridian
Township Squares: Are 36 SQ Mile squares formed by intersections of the township lines and range lines.
Sections - Each township square is divided up into 36 sq mile sections
Subdivision of a section - Each section is divided into halves (320 acres) and quarters (160 acres)
- In turn, each of these parts is further divided into halves and quarters. Each is defined in relation to its position in the section.
1 Section = 1 SQ Mile
1 SQ mile = 640 Acres
43,560 SF = 1 Acre
66'x 660' = 43,560 SQ Ft
One Chain = 66 Feet
One rod = 4 Chains = 264 Feet
One furlong = 660 Feet = 10 Chains
One Acre = 1 Chain x 10 Chains = 66 Feet x 660 Feet = 43,560 SQ Feet
Correction Lines:
The curvature of Earth means that range lines are not strictly parallel. Few townships are exactly six miles square.
To adjust for this, every FIFTH township line (both north and south of the base line) are termed CORRECTION LINES
On each correction line, the range lines are measured to the full distance of six miles apart. Thus the correction lines are exactly 30 miles apart from each other at each point in line.
Similarly every FIFTH range line is a guide meridian. Thus the guide meridians are exactly 30 miles apart from each other.
30 Mile square area bounded by two guide meridians and two correction lines is called a GOVERNMENT CHECK
RECORDED PLAT SYSTEM
Under recorded plat system a subdivision plat is prepared by a licensed surveyor or engineer
The plat divides the land into numbered or lettered lots and blocks.
Other characteristics of the area are outlined in the platting documents - eg streets, easements etc
Legal description then refers to the plat records:
LOT & BLOCK NUMBER
NAME or NUMBER of subdivision plat
Name of county & state
MEASURING ELEVATIONS
Elevations can also be part of legal property descriptions.
DATUM is a point line or surface from which elevations are measured or indicated
A LEGALLY SUFFICIENT description is one that would: Allow a competent surveyor to define the exact boundaries of the property. An address is insufficient.
Three methods are typically used to legally describle real estate
- Metes & Bounds Descriptions
- Rectangular survey system
- Recorded plat system
METES & BOUNDS DESCRIPTION
Property is described by starting at a designated place on the parcel - the Point of Beginning (POB). It proceeds around the property's boundaries following the description given. The description MUST always end at the POB.
METES: Distances used in the description
BOUNDS: Directions of the boundaries that enclose the land
MONUMENTS: Identifying landmarks
RECTANGULAR SURVEY SYSTEM
Created after the revolutionary war. System is based on two sets of intersecting lines
Principal Meridians run North & South
Base Lines run East & West
Each principal meridian is its own base line
- Both principal meridians and base lines are located by reference to degrees of longitude and latitude
- Each area is assigned to a particular meridian and base line.
Township lines are SIX miles apart - running EAST & WEST
- Define strips of land called township tiers
- Township tiers are designated by consecutive numbers north or south of base line
Range Lines are SIX miles apart running NORTH & SOUTH
- Define strips of land called ranges which are designated by consecutive numbers east and west of the principal meridian
Township Squares: Are 36 SQ Mile squares formed by intersections of the township lines and range lines.
Sections - Each township square is divided up into 36 sq mile sections
Subdivision of a section - Each section is divided into halves (320 acres) and quarters (160 acres)
- In turn, each of these parts is further divided into halves and quarters. Each is defined in relation to its position in the section.
1 Section = 1 SQ Mile
1 SQ mile = 640 Acres
43,560 SF = 1 Acre
66'x 660' = 43,560 SQ Ft
One Chain = 66 Feet
One rod = 4 Chains = 264 Feet
One furlong = 660 Feet = 10 Chains
One Acre = 1 Chain x 10 Chains = 66 Feet x 660 Feet = 43,560 SQ Feet
Correction Lines:
The curvature of Earth means that range lines are not strictly parallel. Few townships are exactly six miles square.
To adjust for this, every FIFTH township line (both north and south of the base line) are termed CORRECTION LINES
On each correction line, the range lines are measured to the full distance of six miles apart. Thus the correction lines are exactly 30 miles apart from each other at each point in line.
Similarly every FIFTH range line is a guide meridian. Thus the guide meridians are exactly 30 miles apart from each other.
30 Mile square area bounded by two guide meridians and two correction lines is called a GOVERNMENT CHECK
RECORDED PLAT SYSTEM
Under recorded plat system a subdivision plat is prepared by a licensed surveyor or engineer
The plat divides the land into numbered or lettered lots and blocks.
Other characteristics of the area are outlined in the platting documents - eg streets, easements etc
Legal description then refers to the plat records:
LOT & BLOCK NUMBER
NAME or NUMBER of subdivision plat
Name of county & state
MEASURING ELEVATIONS
Elevations can also be part of legal property descriptions.
DATUM is a point line or surface from which elevations are measured or indicated
RE: Water Rights & Types of ownership
Water Rights
Riparian Rights Doctrine - Used in states EAST of Mississippi where water is plentiful
Riparian Rights - Common-law rights granted to owners of land along the course of river, stream or similar body of water
Equality of rights - Same rights for all riparians
Reasonable use
Ownership extends to the center of the body of the water
Prior Appropriation Doctrine:
Applies in WESTERN states because water is scarce
Under prior appropriation doctrine, the first landowner to use body of water for some beneficial economic purpose has right to use all the water needed
A permit system is typically used to keep track of water rights which can be sold
Littoral Rights - Apply to owners whose land is adjacent to navigable body of water
Ownership of land extends to the high-water mark of lakes and navigable rivers
REAL PROPERTY vs PERSONAL PROPERTY
Real Property: Interests benefits and rights that are included in the ownership of real estate
Personal Property: Legal interests in any item NOT permanently attached to the land
Fixture: Personal property that has become part of the real estate because it is permanently attached to the land or an improvement. Fixtures generally transfer with the real estate unless they are specifically excluded.
Trade Fixture: Article owned by a tenant and attached to rented space or building or used in conducting a business. Trade fixtures must be removed before the last day of the lease and the cost of repairing damage is the responsibility of the tenant.
CONFLICTS OF FIXTURES
When conflicts arise as to whether an item of personal property is a fixture courts apply several tests to determine if an item is a fixture
- Intent of parties
- Test of attachement - was the item permanently attached to the real estate. Can it be removed without damaging the sorrounding property?
- Test of adaptability - Was the item specifically designed/modified to fit the real estate
OWNERSHIP RIGHTS IN REAL ESTATE
Fee Simple Absolute estate - Fee relates to ownership of land; Simple suggests ownership is without restrictions
Fee simple interest provides all of fundamental legal rights associated with the real estate, unabridged and unaltered
- Possess the property
- Use and modify the property
- Exclude others
- Sell or give the property to whomever I want
Qualitified Fee Estates - Owner's rights can be terminated based on the occurence or nonoccurence of some specified event
- Determinable Fee
- Fee on condition subsequent
Each qualitified fee interest has an accompanying future reversion interest that may never be realized
Life Estates
In ordinary life estate, the GRANTEE is called a Life Tenant and enjoys full ownership for the duration of his or her life. The interest terminates upon the grantee's death.
The person who will receive the property upon the death of the grantee is called the REMAINDERMAN and has a REMAINDER interest
If the life estate is based on the lifetime of a person other than the life tenant, it is known as an ESTATE PUR AUTRE VIE "for the life of another"
LEASEHOLD INTEREST
When the lease is created the rights are separated into LEASEHOLD INTEREST ("Less-Than-Freehold") for the tenant or lessee and A leased fee interest with a right of reentry for the lessor or landlord
JOINT OWNERSHIP OF REAL ESTATE
Tenancy in common - Traditional form
- Proportional interests
- Equal rights of use and possession
Joint Tenancy with right of survivorship - When I die, my co-owners receive my interst in the real estate
Unity of time/title/interest/possession
Condominiums and Coops
Condo ownership - Fee simple ownership of units and tenants in common for common grounds.
Cooperatives - Residents purchase shares in a non-profit corporation in proportion to the value of their units
Time Shares - A form of ownership that splits the interst further by time
Riparian Rights Doctrine - Used in states EAST of Mississippi where water is plentiful
Riparian Rights - Common-law rights granted to owners of land along the course of river, stream or similar body of water
Equality of rights - Same rights for all riparians
Reasonable use
Ownership extends to the center of the body of the water
Prior Appropriation Doctrine:
Applies in WESTERN states because water is scarce
Under prior appropriation doctrine, the first landowner to use body of water for some beneficial economic purpose has right to use all the water needed
A permit system is typically used to keep track of water rights which can be sold
Littoral Rights - Apply to owners whose land is adjacent to navigable body of water
Ownership of land extends to the high-water mark of lakes and navigable rivers
REAL PROPERTY vs PERSONAL PROPERTY
Real Property: Interests benefits and rights that are included in the ownership of real estate
Personal Property: Legal interests in any item NOT permanently attached to the land
Fixture: Personal property that has become part of the real estate because it is permanently attached to the land or an improvement. Fixtures generally transfer with the real estate unless they are specifically excluded.
Trade Fixture: Article owned by a tenant and attached to rented space or building or used in conducting a business. Trade fixtures must be removed before the last day of the lease and the cost of repairing damage is the responsibility of the tenant.
CONFLICTS OF FIXTURES
When conflicts arise as to whether an item of personal property is a fixture courts apply several tests to determine if an item is a fixture
- Intent of parties
- Test of attachement - was the item permanently attached to the real estate. Can it be removed without damaging the sorrounding property?
- Test of adaptability - Was the item specifically designed/modified to fit the real estate
OWNERSHIP RIGHTS IN REAL ESTATE
Fee Simple Absolute estate - Fee relates to ownership of land; Simple suggests ownership is without restrictions
Fee simple interest provides all of fundamental legal rights associated with the real estate, unabridged and unaltered
- Possess the property
- Use and modify the property
- Exclude others
- Sell or give the property to whomever I want
Qualitified Fee Estates - Owner's rights can be terminated based on the occurence or nonoccurence of some specified event
- Determinable Fee
- Fee on condition subsequent
Each qualitified fee interest has an accompanying future reversion interest that may never be realized
Life Estates
In ordinary life estate, the GRANTEE is called a Life Tenant and enjoys full ownership for the duration of his or her life. The interest terminates upon the grantee's death.
The person who will receive the property upon the death of the grantee is called the REMAINDERMAN and has a REMAINDER interest
If the life estate is based on the lifetime of a person other than the life tenant, it is known as an ESTATE PUR AUTRE VIE "for the life of another"
LEASEHOLD INTEREST
When the lease is created the rights are separated into LEASEHOLD INTEREST ("Less-Than-Freehold") for the tenant or lessee and A leased fee interest with a right of reentry for the lessor or landlord
JOINT OWNERSHIP OF REAL ESTATE
Tenancy in common - Traditional form
- Proportional interests
- Equal rights of use and possession
Joint Tenancy with right of survivorship - When I die, my co-owners receive my interst in the real estate
Unity of time/title/interest/possession
Condominiums and Coops
Condo ownership - Fee simple ownership of units and tenants in common for common grounds.
Cooperatives - Residents purchase shares in a non-profit corporation in proportion to the value of their units
Time Shares - A form of ownership that splits the interst further by time
Wednesday, December 22, 2010
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