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Business Law and the Legal Environment for a New Century Alternate Edition

Quote of the Day

“It is a comfortable feeling to know that you stand on your own ground. Land is about the only thing that can’t fly away.” Anthony Trollope, English author

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Business Law and the Legal Environment for a New Century Alternate Edition

Nature of Real Property

 The grantor the grantee is the conveyor of property; is the one receiving it.

 Real property includes: • Land • Buildings • Subsurface Rights • Air Rights • Plant Life • Fixtures --an object considered to be a permanent part of the property.

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Business Law and the Legal Environment for a New Century Alternate Edition

Estates in Real Property

  Rights in real estate usage and ownership vary from unrestricted use and right to sell, to a lesser right of usage, but not the right to transfer it.

The rights that someone can hold are called estates, or interests.

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Business Law and the Legal Environment for a New Century Alternate Edition

Freehold Estates

 The owner of a freehold estate has the present right to possess the property and to use it in any lawful way.

 A fee simple absolute provides the owner with the greatest control.

 A fee simple defeasible may terminate upon the occurrence of some event.

 A life estate is an estate for the life of some named person.

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Business Law and the Legal Environment for a New Century Alternate Edition

Non-Freehold Estates

 Is actually a lease, where the owner permits someone to use and possess the property.

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Business Law and the Legal Environment for a New Century Alternate Edition

Concurrent Estates

 A concurrent estate is when two or more own property at the same time.

• Tenancy in Common – two or more people own the property, each with the right to convey her interests or to pass it down to her heirs.

• A joint tenancy includes the right of survivorship  All co-tenants have an absolute right to partition (division of property).

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Business Law and the Legal Environment for a New Century Alternate Edition

Types of Estates in Marriage

 Tenancy by the Entirety – form of ownership in more than half the states.

• The husband and wife each own the entire property, and they both have a right of survivorship.

 Community Property – form of ownership in nine states.

• Property brought to the marriage or given to one spouse may remain individually owned, called separate property.

• Income or assets earned during the marriage is community property, which must be equally shared.

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Business Law and the Legal Environment for a New Century Alternate Edition

Condominiums and Cooperatives

  In a condominium, the owner of the apartment typically has a fee simple absolute in his particular unit.

In a cooperative, the residents generally do not own their particular unit.

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Business Law and the Legal Environment for a New Century Alternate Edition

Future Interests

 Interests that can be sold now, but do not convey possession; this ability to possess may or may not develop later.

• Reversion – the coveyor of a life estate in property regains possession after the life tenant dies.

• Remainder – a named, third person, gains possession of a property after a life tenant dies.

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Business Law and the Legal Environment for a New Century Alternate Edition

Nonpossessory Interests

 An easement gives one person the right to enter land belonging to another and make a limited use of it, without taking anything away.

• An easement can be created when the landowner expressly grants it, when he implies it (such as in granting permission to access an area accessible only by crossing your land), or by necessity (when there is no other way to reach the property.)

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Business Law and the Legal Environment for a New Century Alternate Edition

Easements, (cont’d)

 Easement by Prescription • An easement by prescription happens when someone makes use of someone else’s property openly, without permission and for the number of years determined by local statute. If the owner does not stop the unauthorized use, the user is granted an easement by prescription.

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Business Law and the Legal Environment for a New Century Alternate Edition

Nonpossessory Interests

(cont'd)  A profit gives one person the right to enter land belonging to another and take something away.

 A license permission to enter upon another’s property.

given the holder temporary  A mortgage is a security interest in real property, given to the institution loaning a buyer the money to buy the real estate.

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Business Law and the Legal Environment for a New Century Alternate Edition

Sale of Real Property

 Seller’s Obligation Concerning Property • Most states now impose an implied warranty of habitability on a builder who sells a new home.

• The seller of a home must disclose facts that a buyer does not know and cannot readily observe, if they materially affect the property’s value.

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Business Law and the Legal Environment for a New Century Alternate Edition

Closing and Deeds

 A general warranty deed normally contains the covenants of: • Seisin –the seller owns the property • Right to Convey – the seller has the right to sell this property • (No) Encumbrances – property is free of easements, profits, mortgages, etc.

• Quiet Enjoyment – no other person can lawfully claim the property • Warranty – seller agrees to defend the grantee if a third party makes a claim

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Business Law and the Legal Environment for a New Century Alternate Edition

Adverse Possession

 To gain ownership of land by adverse possession, the user must prove: • Entry and exclusive possession • Open and notorious possession • A claim adverse to the owner; and • Continuous possession for a statutory period.

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Business Law and the Legal Environment for a New Century Alternate Edition

Land Use Regulation

 Nuisance Law • A nuisance is an unprivileged interference with a the use and enjoyment of property.

 Zoning • State laws that permit local communities to regulate building and land use.

 Eminent Domain • Eminent domain is the power of the government to take private property for public use.

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“Real property is ancient in origin and terminology, but every bit as potent as it was 1,000 years ago.”

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Business Law and the Legal Environment for a New Century Alternate Edition