Real Estate Unit 5
Terms in this set (9)
Define "undivided interest" in real estate.
When two or more owners share ownership, the interest of an individual owner is undivided and indivisible in the sense that it pertains to a fractional part of the entire estate, now to a physical portion of the real property.
Discuss how the right of possession determines what kind of estate or interest a party has in real estate.
If the interest-holder enjoys the right of possession, the estate is an estate in land. If the interest-holder does not have the right of possession, the interest is an encumbrance in the case of a private interest-holder, or some form of public interest in the case of non-private (i.e., governmental) interest-holder.
What primarily distinguishes freehold estates from leasehold estates?
Whether an estate in land is a freehold or lease hold estate depends on the length of time the holder may enjoy the right to possess the estate, the relationship of parties owning the estate, and specific interests held in the estate. The duration of the owner's rights in a freehold cannot be determined: they may last for a lifetime, for less than a lifetime, or for generations beyond the owner's lifetime. In a leasehold, they have specific duration, as represented by the lease term.
What is the highest form of ownership interest one can acquire in real estate and why?
Fee simple estate. It includes the complete bundle of rights and the tenancy is unlimited.
What are the essential characteristics of fee simple defeasible estates?
The property must be used for a certain purpose or under certain conditions.
If the use changes or if prohibited conditions are present, the estate reverts to the previous grantor of the estate.
How does a fee simple absolute estate differ from a fee simple defeasible estate?
While defeasible estates restrict the property to a certain purpose or to be used under certain conditions, in an absolute estate, the property is not conditioned by stipulated or restricted uses.
How is a life estate different from a fee simple estate?
A life estate is limited in duration to the life of the owner or other named person. When the life tenant dies, the estate passes to the original owner or another named party, the life tenant does not have the right to pass ownership to his or her heirs.
The fee simple freehold estate is called the highest form of ownership interest, even though a fee simple defeasible carries some restriction on usage. Why are other estates less desirable?
With all other estates in land-- life, leasehold-- the holder of the estate cannot control what happens to the estate in the future. The life estate reverts or is remaindered; the leasehold terminates when the lease expires.
Name the two types of life estates and briefly explain the difference.
Conventional life estate - created by a grant wherein the property owner grants the property to a life tenant
Legal life estate - created by state law wherein the rights of surviving family members are protected when the husband or wife dies.