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REAL ESTATE LAW - Definitions

Terms in this set (109)

2 Classification of property:
1 - Real Property, 2 - Personal Property
Real Property
land and those things that are permanently attached to the land, such as homes, office buildings and trees.
Personal Property
sometimes called "chattels" or "goods" - includes living objects, such as animals, and inanimate objects, such as a television.
Tangible Personal Property
Property that has physical substance. Something you can hold taste, see or hear. Includes automobiles, televisions and clothes.
Intangible Personal Property
property that represents a set of rights that have n physical existence but that do represent control or ownership of something of value. E.g. stock certificate.
Fixtures
item of personal property that becomes real property because of its attachment to the land or a building. (e.g. dishwasher, ac unit)
2 Judicial Tests to Determine if it is a Fixture
1. The extent/duration of the fixture's annexation to the real property; and
2. The adaptation of the fixture to the use of the real property.
Airspace
Private airspace is sufficient elevation to permit the construction of the tallest buildings and structures throughout the world.
Mineral Rights
Owner of real property owns all the mineral beneath the surface of the lands
Riparian Rights
rights of the owners of lands adjoining streams, rivers, and lakes relating to the water and its use.
Appropriation - prior appropriation
- found in western states where water is scarce. Developed in the 19th century - predominately with miners, farmers and ranchers. Administrative Agencies established to issue water permits.
Possession
occupation of land evidences by visible acts such as enclosure, cultivation, the construction of improvements, or the occupancy of existing improvements. Possession gives the property owner the right to exclude others from the land.
6 Types of Modern-Day Estates in Real Property
1 -1. Fee Simple or fee simple absolute, 2. Fee Simple Determinable, 3. Fee Simple on Condition Subsequent ,4. Life Estate; 5- Estate for Years; 6 - Estate at Will
Fee Simple or fee simple absolute
estate of real property with infinite duration and no restrictions or use. Owner has unconditional powers over the property and it reverts to the heirs even after the owner's death.
Fee Simple Determinable
Estate of real property with potentional infinite duration. The ownership of a fee simple determinable is subject to a condition, the breach of which can result.
Fee Simple on Condition Subsequent
The ownership of a fee simple on condition subsequent is subject to a condition, the breach of which can result in termination of the estates.
Does not terminate automactically. Terminates at the grantor's power
Life Estate
Estate of real property the duration of which is measured by the life or lives of one or more persons. Life estates are created by deed, will or and express agree. An estate for life may be for either the life of the owner or the life of some other person or people ("measuring life")
Waste
action or nonaction that causes a loss of value to real property. If the life estate owner of the real property does not take care of the real property, the owner will be deemed to commit waste, and the life estate will terminate, even though the measuring life is still alive.
Future Interest
The division of the property into different ownerships. The fee simple determinable, fee simple on condition subsequent, and life estate all have the effect of creating different ownerships in the same property.
Estate for Years
Estate of real property the duration of which is for a definite period. Limited in its duration to a fixed period.
Estate at Will
Estate of real property the duration of which is for an indefinite period. An estate at will can be terminated at the will of the parties. Estate with no fixed term that is created by the express or implied agreements of the parties.
5 Methods of Acquiring Ownership to Real Property
1 - Inheritance, 2 - Devise, 3- Gift, 4 - Contract and Sale, 5 - Adverse Posession
Inheritance
Ability to acquire ownership to real property because of one's kinship to a deceased property who dies intestate. People whom the law designates because of blood or marriage as the owner's heirs.
Devise
- Transfer of real property by means of a last will and testament. Conveyance of real property in a will.
Gift
ownership to real property can be obtained by a gift. With real property execution and delivery is done by a deed to the property. The gift is irrevocable.
Contract and Sale
obtained by buying the property. This is the transaction that involves most real estate paralegals and attorneys.
Adverse Posession
method of acquiring ownership to real property by possession for a statutory time period. Possession of real property is given substantial legal protection. Even in unlawful possession of the real property has the right to exclude anyone else except the true owner.
Deed
Written document that transfers ownership of real property from one person to another.
Tacking
The addition of possession period by different adverse possessors. Permitted if there is some contractual or blood relationship between the 2 adverse possessors.
Color of Title
A form of adverse possession where the original possession of the property by a prescriber is based upon a written instrument such as a deed or court decree. Shown by a written instrument.
Transfer of Ownership/Conveyances
the method of transferring real property during the lifetime of the owners. Accomplished by signing and delivery of a written document, e.g. a deed.
Role of Paralegal in Real Estate of Legal Practice.
• Help prepare real estate documents
• Review sale contracts and life insurance policies
• Examination and Preparation of titles, leases, property descriptions
• Research materials for real property law
Ownership in severalty
property owned by a single owner. A single owner has all the attributes of ownership. The sole right to possess and use property.
4 Types of Concurrent Ownership
1. Joint Tenancy with the right of survivorship, 2. Tenancy in Common , 3. Tenancy by its entirety , 4. Community property
Joint Tenancy with the right of survivorship
ownership of real property by 2 or more persons. Joint tenants with the right of survivorship own equal interest in the real property, and on the death of any owner, the deceased's owner interest will pass to the surviving owner.
Tenancy in Common
Co-Ownership of real property by 2 or more persons. Each owner's interest in the property is capable of Inheritance. May be created by voluntarily grant devise, lease or bequest - or involuntary descent to heirs. Title does not have to arise at the same time or by the same instrument.
Tenancy by its entirety
an estate held by husband and wife as a unit. The husband and wife are treated as a single owner, and neither the husband nor the wife and transfer the property without the other's consent.
Community Property
provides that real property acquired during a marriage is owned equally by the husband and wife.
Legal Description
Description of real property that states the exact size, location and boundaries to help distinguish land from other land or properties.
Survey
- Derived from "French" means "to looks over." Refers to a visual presentation of the physical boundaries of real property
Land Surveyor
prepares and draws up surveys showing the boundaries
Duty of Paralegal
to prepare a written legal description showing the boundaries on the survey
As-built survey
Survey that locates and lists all of the physical improvements in relation to boundaries on the land.
Paralegals - need the following information to prepare a land survey. 7 things
1. State, county, land district and section property is located.
2. Indication of which direction is North on the survey.
3. A point of beginning for the land description
4. Courses and distances for each property line.
5. The name of the surveyor
6. A Scale for distances not shown on the survey
7. A Legend of abbreviations for symbols
Title Insurance
Contract to indemnify the insured against loss caused by defects in real property.
Title Insurance Committment
Commitment by Insurance Company to issue a title insurance policy.
Easement
Right granted to a non-owner of real property to use property for a specific reason, e.g. right for utility company to place activities on Real Property.
Principal Meridians
imaginary north and south lines used in government survey systems. Meridians intersect the base lines from a starting point to measure land under that system.
Base Line
imaginary east-west survey used in the government system to establish township lines.
Township Lines
- Lines in a government rectangular survey system that runs east and west at 6-mile intervals paralegal with base lines and that forms strips of land or tiers called townships
Range Lines
Division of State in a government survey system comprising a 6-mile wide row of townships running north and south.
Call
Course and distance describing a boundary line of land in metes and bounds in a land description.
Chord
straight line from the from the beginning point of an arc to the ending point of an arc.
Distance
- in metes and bounds legal description, is the length of the property boundary line, usually measured in feet a hundredth of foot. 89.16 feet
Township
in a government survey, a square piece of tract land, 6-miles on each side containing 36 Square miles
Section
- Division or parcel of land on a government survey comprising of 1 square mile, 640 acres
Plat
Survey of Real Property that is often recorded
Course
In a metes and bounds legal description, the direction of the property line
Metes and Bounds
Completely describes the boundaries of land.
Contribution
right of a co-owner of real property to receive reimbursement from other co-owners for their share of expenses that are common to the real property
Partition
Method by which co-owner of real property can divide the common property into separate ownerships. Partition may be by voluntary agreement of the co-owners or by court action.
Dower
Widow's interest in real property of her husband that provides a means of support after the husband's death
Curtsey
- Interest in real property of the wife that the law in some states give to the surviving husband at the time of the wife' death
Elective Share
right given to widow in many states to elect, at her husband's death, to receive either dower or some ownership (fee simple) share of her husband's real property.
Agreements in Cotenancy
Real property often is co-owned for investment or commercial purposes. Group owners become co-owners of raw land for speculation of investment - or join for commercial property such as shopping centers.
Checklist for Agreement in Cotenancy
1. The names and addresses of the owners

2. Recitals. A brief history of the relationship of the cotenancy may be stated to explain the agreement.

3. Term of Agreement.

4. Not a partnership. Co-ownership of real property does not in itself make the owners partners. Partners are responsible for each other's activities in connection with the partnerships liabilities and assets. Co-owners are just that and the agreement will state as such.

5. Managing Cotenant. Consent of the other owners has been indirectly given by the appointment of the managing owners.

6. Banking arrangements. who are authorized to sign checks and conduct banking transactions on behalf of the owners.

7. Owners' cash contribution and remedies for failure to make contributions.

8. Allocation of income and profits

9. Sale of the property as a whole - procedure established in the cotenancy agreement for sale of the property.

10. Sale of an owner's undivided interest in the property. To avoid having this happen, they include a procedure to protect against this happening.

11. Remedies for an owner's failure to perform -

12. Partition. Rights of partition are waived to avoid the property being divided and sold.

13. Successors and assigns. All parties, are bound by the agreement even their successors and assigns until termination.

14. Counterparts. If owners live in different parts of the country, the signatures can be executed in separate counterparts.

15. Signature and witnesses. All cotenancy agreement require signatures to be witnessed and notarized. Parties may choose to record the agreement as public record in the county where the property is located.
Role of the Paralegal in Concurrent Ownership
• Paralegals deal with concurrent ownership with the sale, lease or mortgage of real property.
• Draft a deed that creates a form of concurrent ownership in the grantee of the deed
• Research state law to determine if special language is needed to create the form of concurrent ownership desired by the owners
• Reviewing status of title to determine what form of concurrent ownership is held by present owners
• Help prepare deeds, leases, contracts, mortgages and other legal documents
Corporation
a legal entity wherein the owners do not have personal liability for debts or actions of the entity
General Partnership
An association of two or more persons to carry on a business for profit as co-owners.
Limited partnership
- a legal entity made up of two classes of ownerships; general partners and limited partners. The general partners have full liability for the debts and obligations of the limited partnership, and the limited partners have liability limited to the extent of their investment in the partnership.
Limited Liability Company
an entity that offer the tax advantages of a partnership and the limited liability of a corporation.
Mortgage Loan
Loan secured by real property.
Bridge Loan
Short-term loan of 1 to 2 years that provides borrow necessary financing to purchase real property. Usually refinance by a long-term loan.
Conventional Loan
Mortgage Loan in which the risk of repayment rests solely upon the borrower's ability to repay. The value of the security is provided by the mortgage.
Insured or Guaranteed Loan
- mortgage loan in which the repayment is guaranteed to a government agency or private insurance companies.
FHA Insured Loan
Congress designed in 1934. Created under the National Housing Act of 1934 to ensure equality housing for all US citizens. Loans are obtained not from the FHA, but instead from approved lenders who agree to make the loan, subject to a FHA commitment to insure the lenders in case of a default
VA Guaranteed Loans
The Serviceman's Readjustment Act of 1944 authorized the VA to guarantee loans for the purpose of constructing or purchasing homes to veterans
Small Business Association - Guaranteed Loan
US Small Business Administration (SBA) formed to assist small businesses guarantees small business owners the necessary capital to start and continue small businesses.
Savings Bank
aka "Thrift" federally charted institutions that generally invest in long-term home loans. Federal Savings Banks
Commercial Bank
Min source of short-term real estate financing. Make loans for construction or improvements of short-term bridge loans for the acquisition of property.
Life Insurance Companies
invest money in large terms loans used to finance the acquisition or construction of commercial and industrial properties.
Credit Unions
- non-profit financial institutions associated with large corporation or an organization that lends money to its members for long-term and second mortgages
Pension Funds
Funds invested by an employee and employer that is facilitated in retirement plans, which allow withdrawals for the purpose of mortgage loans.
Mortgage Banking Companies
- originate mortgage loans for insurance companies, commercial banks, pension funds, saving banks and other investors throughout the country.
Issuers Mortgage Backed Bonds
- lenders buy pools of residential or commercial mortgages then they package the mortgages as pools into a bond which pays interest and sell the bond in the public securities market.
Secondary Mortgage Market
- Group of investors who purchase mortgage loans from Primary mortgage lenders. Fannie Mae/Freddie Mac.
Conduit Lender
an issue of bonds secured by residential or commercial mortgages. The payments on these loans pay the interest and principal on the bonds
Loan-to-Ratio Value
- Ratio of the amount of a mortgage loan to the value of the secured real property. E.g. loan is $80k, and market value is $100k, loan-to-value ratio is 80%.
Property Management Insurance (PMI)
- insurance issued by a private company that insures a lender against loss it may suffer in the event the debtor defaults on payment of the loan
Subprime Lending
the business practice of making mortgage loans to people who do not have a good credit history or income. Generally, pay higher interest rates.
Predatory Lending Practices
Prey on the Poor. Government agencies are in place to try and regulate subprime lenders.
Primary Market
lenders who make mortgage loans directly to borrowers.
Interest
charge by a lender to a borrower for the use of money.
Primary Mortgage Lender
lender who makes mortgage loans directly to a borrower.
Servicing the Loan
Collection of payment from the borrower of mortgage loans.
Fannie Mae
Federal National Mortgage Association - a quasi-government agency organized for the purpose of investing in FHA and VA loans.
Freddie Mac
- Federal Home Loan Mortgage Corporation, a quasi-public corporation that purchases and invests in mortgages.
Permanent Loan
long term loan that finances the acquisition of real property or refinances a construction loan on improvements.
Construction Loan
mortgage loan made for the purpose of providing money to construct improvements on real property.
Amoritization
reduction of a debt by periodic payments covering interest and party of the principal.
Debt Service
payment of principal and interest on a loan.
Fully Amortized Loan
loan in which the partial payments of principal and accrued interest if paid for the stated period time, will result in the entire loan being paid at maturity
Straight Line Amortized Loan
mortgage loan in which the borrower will pay a different amount for each installment, with each payment consisting of fixed amount credited toward principal and an additional amount for the interest due on the balance of the principal unpaid sine the last payment
Term Loan
loan in which the borrower makes periodic payments of interest, with the principal being paid one installment at the end of the loan terms.
Graduated Payment Mortgage
mortgage loan that permits the borrower to pay l lower monthly payments for the first few y ears and large payments for the remainder of the term.
Balloon Payment
final payment of all unpaid principal and accrued and unpaid interest on the loan, which is greater than the periodic payments on the loan.
Partially Amortized Loan
loan on which the required payment of principal and interest, if paid for the stated period of time, will not pay the loan in full. Final payment will be the balance due on the loan and will be a larger payment than the previous payments.
Negative Amortized Loan
- loan on which the payments are not sufficient to pay the interest costs of the loan. The unpaid interest is added to the principal of the loan, resulting in an increase in the principal amount of the loan during the term of repayment.
Loan-to-Ratio Value
- Ratio of the amount of a mortgage loan to the value of the secured real property. E.g. loan is $80k, and market value is $100k, loan-to-value ratio is 80%.
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