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MN Course 1 Exam Prep: Property Types, Title, and Environmental Issues

Terms in this set (85)

Manufactured vs. modular home
Manufactured: A home that is built according to HUD construction standards. Updated term for a mobile home or house trailer.

Modular: Units that are constructed in factories off-site according to state building codes. Once assembled on the home site, considered to be real property.
Land
Property that includes the surface of the earth, down to the center of the earth, and upward infinitely into space. It also includes any items permanently attached to the land, such as trees and water.
Real estate
Land, plus all things permanently attached to it, naturally or artificially
Real property
Real estate, plus the interest, benefits and rights included with ownership
Personal property
Anything that's not real property; Also known as chattel
Bundle of rights (5)
The interests, benefits, and rights granted with real property ownership.

1. Possession (right to occupy)

2. Enjoyment (right to possess without interference or harassment)

3. Exclusion (right to refuse other interests)

4. Control (right to determine others' interests)

5. Disposition (right to decide when to transfer ownership)
Fixture vs Trade fixture
Fixture: An item that's permanently attached to real property

Trade fixture: A piece of equipment or other item that is on or attached to the real estate which is used in a trade or business, which may be removed by the business owner as a personal item
Annexation (MARIA acronym)
The conversion of personal property into real property:
Method of annexation (attachment)
Adaptability of item to land's use
Relationship of the parties
Intention in placing item on land
Agreement of the parties

Opposite is severance: Converting real property to personal property by removing it
Characteristics of real property (4 economic, 3 physical)
Economic:
1. Scarcity
2. Improvements
3. Permanence of investment
4. Location or area preference

Physical:
1. Immobility
2. Indestructibility
3. Uniqueness
Littoral vs. Riparian rights
Littoral: Rights of bordering owners to the use of a stationary body of water, such as a lake or sea

Riparian: Rights of bordering owners to the use of a flowing body of water, such as a river or creek
Legal description
A method of identifying a property in written words that allows for an unambiguous interpretation of a property's boundaries and location.
Freehold vs Leasehold estate
Freehold: Ownership is for an indeterminate length of time

Leasehold: Grants possession, but not title, to the owner, and is for a limited period of time
Fee simple vs. Qualified fee
Fee simple: An inheritable estate with absolute ownership

Qualified fee: A fee simple estate that carries a qualification, so that ownership may revert to the grantor if a specified event occurs or a condition is not met. Also called a defeasible fee.
Life estates
Ownership, possession, and control for someone's lifetime. May be created pur autre vie (for another's lifetime). Remainderman holds fee simple estate at end of life estate. If no remainderman is named, property reverts to original owner. A grantor may reserve a life estate for himself when conveying a property.
Types of leasehold estates (3)
Estate for years: Of definite duration, terminates automatically, and is inheritable

Periodic estate: For a specified period of time that automatically renews itself for the same length of time unless one party terminates

Estate at will: Lease duration is unknown at the time it's created, can be terminated by either the lessor or lessee at any time
Tenancy at sufferance
When a tenant continues to occupy a property after lawful authority has expired. Tenant is known as a holdover tenant.
Dower and Curtesy
Dower: Wife's interest in deceased husband's real estate

Curtesy: Husband's interest in deceased wife's real estate
Homestead
An estate which gives the owner special rights in property used as a family home. For instance, an approved assessing unit may opt to have different tax rates for homestead properties than for non-homestead properties.
Community property
The equal ownership of property acquired during a marriage. Nine states recognize community property: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
Forms of ownership (5)
1. Estate in severalty: One person owns a property

2. Tenancy in common: Includes an undivided interest in the property. Owners may sell, convey, mortgage, or transfer their interest without the co-owners' consent.

3. Joint tenancy: Property is owned by a group of two or more persons. One person's death raises the stake the others have in the property. This is called right of survivorship.

4. Tenancy by the entirety: Joint tenancy reserved specifically for married couples

5. Corporate ownership: May be owned as sole proprietor, general partnership, limited partnership, joint venture, etc
Condominium vs. Cooperative
Condominium: The fee simple ownership of a unit in a multi-unit building

Cooperative: A not-for-profit association residential building owned by a corporation and operated for the benefit of the shareholder residents
Timeshare
A condominium-type property that is occupied for short periods by multiple unrelated individuals. These individuals may own real interest in the property or simply the right to use the property for specific times and duration.
Deed restriction
A private control which limits the use or appearance of a given property
Setback
The required distance between the property line and the building line
Easement
Right of use
Types of easements (4)
1. Appurtenant: Involves two landowners—one holds the dominant tenement or estate, the other the servient.

2. In gross: The easement owner doesn't own land adjacent to the property on which the easement applies. This is typically a governmental easement or a public utility easement.

3. By necessity: Created to benefit a landlocked property owner

4. By prescription: Created through prolonged adverse use
Encroachment vs Encumbrance
Encroachment: Illegal intrusion of some structure or object across a boundary line

Encumbrance: Limitation on a title such as a lien or easement
Bylaws
The rules of an association, such as a homeowner's association or cooperative
CC&Rs
Covenants, conditions, and restrictions. The usage limitations imposed on owners/shareholders of a community housing such as a homeowner's association, cooperative, or condo association.
Manufactured vs. modular home
Manufactured: A home that is built according to HUD construction standards. Updated term for a mobile home or house trailer.

Modular: Units that are constructed in factories off-site according to state building codes. Once assembled on the home site, considered to be real property.
Marketable title
A title that is reasonably free and clear of encumbrances so that the average buyer would not hesitate to consummate a sale.
Acknowledgment
A requirement for deed transfer. A public official must acknowledge the grantor's signature.
Recording
Public filing of a document.
Chain of title
A history of conveyances and encumbrances affecting the title from the time the original patent was granted, or as far back as records are available, used to determine how title came to be vested in the current owner.
Abstract of title
A history of the ownership of a parcel of land that lists transfers of title, rights, and liabilities.
Quiet title
A court action to remove a cloud on the title.
Title insurance
A policy that protects the insured against loss or damage due to defects in title.
Cloud on title
This is any claim affecting title to property.
Quitclaim deed
A deed to relinquish any interest in property which the grantor may have, without any warranty of title or interest.
Torrens system
A title search that only goes back to the last title recording, assuming that the previous title search was performed correctly and accurately.
Torrens certificate
Includes the state as guarantor of the title in case of a claim.
Title
Both evidence of property ownership and the ownership itself.
Title commitment
A pledge to provide clear title.
Mortgage registry tax
A tax charged for the transfer of a property when any amount of the purchase price is financed. The tax is only levied against the financed amount.
Conveyance
Legal transfer of real property.
Grantor
The individual who conveys the ownership rights of real property.
Grantee
The one to whom a deed is given.
Legal description
A written description of a parcel of land that locates it precisely and will hold up in court.
Metes and bounds
A method of land description that involves identifying distances and directions and makes use of both the physical boundaries and land measurements.
Plat and block
The most common form of legal description for urban residential property.
Full covenant and warranty deed
Deed that gives most legal promises to buyer.
Quitclaim deed
Deed that transfers only whatever interest the grantor has in the property and does not warrant that the grantor has any interest.
Appurtenance
A right that conveys with the land.
Lien
Right to possess and sell a debtor's property.
Special assessment
A tax or levy customarily imposed against only those specific parcels of real estate that will benefit from a proposed public improvement, such as a street or sewer.
Face-to-face vs. escrow closing
Face-to-face: The parties meet together at a table and sign all closing documents.

Escrow: The parties submit their paperwork to a neutral third party (escrow agent), who processes it. The parties don't meet.
Affidavit of title
A sworn statement assuring that no title defects have occurred since the date of the last title search
Certificate of title
A statement of opinion on the status of a title to real property
RESPA
Real Estate Settlement Procedures Act; Requires written disclosure of estimated settlement costs to the borrower.
TRID
TILA-RESPA Integrated Disclosures; Replaces the HUD-1, Good Faith Estimate, and Truth in Lending disclosures with the Loan Estimate and Closing Disclosure.
Loan Estimate
Disclosure lender gives to borrower within three days of the borrower applying for a loan; discloses loan terms, interest rate, and estimated payment.
Closing Disclosure
A statement of final loan terms and closing costs, provided to the borrower three days prior to closing
Proration
A division of expenses and income between buyer and seller according to who owes what to whom
Accrued vs. prepaid item
Accrued: An expense owed by the seller, but credited to the buyer

Prepaid: Something the seller has paid for, but not yet used
Short sale
When the market value of the property (and the eventual sales price) is less than the amount the borrower owes (plus closing costs)
Foreclosure
The legal taking of a property from the homeowner due to default
Wetlands
Areas of standing water, wet all or most of the year, that support aquatic plants, including bogs, marshes, swamps, and sloughs. Species diversity is very high.
Clean Water Act
Establishes the structure to regulate pollutants such as oil and other hazardous substances discharged into U.S. waters; also establishes quality standards for surface waters
Rivers and Harbors Act
Oldest federal environmental law (1899). Prohibits discharging refuse into, altering the course of, excavating, filling or changing the condition or capacity of any port, harbor, channel without a license or permit, or building any wharf, pier or other structure in any water outside established harbor lines without a permit.
Coastal Zone Management Act
Administered by the National Oceanic and Atmospheric Administration; Designed to "preserve, protect, develop, and where possible, to restore or enhance the resources of the nation's coastal zone"
Floodplain vs Floodway
Floodplain: Low-lying area of ground particularly subject to flooding due to its proximity to a river

Floodway: Where floodwater escapes. Development is prohibited in the floodway.
National Flood Insurance Program (NFIP)
A federal program created to help mitigate future flood losses through the use of building and zoning ordinances and by providing homeowners with access to affordable flood insurance protection
Coastal zone
Runs about six miles inland from Lake Superior
Watershed
Land formations that direct the water "shed" from higher elevations to lakes, streams, and other bodies of water
Shoreland district
Areas within 1,000 feet of a lake's (or any public water basin 25 acres or larger) ordinary high water level (OHWL)
Groundwater
The supply of water that's accessible under the Earth's surface
Water table
The level at which the ground is saturated
Safe Drinking Water Act
A federal law that governs state drinking water regulations
Subsurface Sewage Treatment Systems (SSTS)
Commonly known as septic systems, these are sewage systems that serve individual buildings or homes.
Small Business Liability Relief and Brownfields Revitalization Act
Also known as the Brownfields Law, this act states that the current owners of a property are not liable for cleanup of environmental contaminants on their property if they did not cause or contribute to the contamination
Brownfield
An abandoned commercial or industrial site that is believed to contain toxic waste
Underground storage tank
A tank below ground level that stores liquids, including fuels, industrial products, or waste
Comprehensive Environmental Response Compensation and Liability Act (CERCLA)
A Superfund created in 1980 in response to hazardous waste practices and management of the 1970s
Petroleum Remediation Program (PRP)
Aims to reduce pollution and contamination caused by leaking tanks, and to prevent dangerous conditions from petroleum vapors. Areas where a petroleum leak have occurred are known as petroleum tank release sites.
Environmental impact statement
A report required by the National Environmental Policy Act that specifies the likely environmental impact of a proposed action
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