Nature of Real Property

1. Nature of Real Property • Real property is immovable and includes: • Land. • Buildings. • Airspace. • Plant Life and Vegetation. • Subsurface (mineral) rights. • Fixtures.

2. Fixtures • A fixture is personal property that becomes permanently affixed to real property. • Intent that it become a fixture is necessary. • Intent is determined by: • The fact that the property cannot be removed without causing damage to the realty. • The fact that the property is so adapted to the realty that it has become part of the realty. • In re Sand & Sage Farm & Ranch, Inc. (2001).

3. Fixtures • Trade fixtures: installed for commercial purposes by a tenant. • They remain the property of the tenant and can be removed when tenant leaves, repairing any damage caused by removal.

4. Ownership Interests in Real Property Ownership interests are classified as either Possessory or Non-Possessory: • A Possessory interest such as a fee simple, life or leasehold estate, gives the owner a right to possess the land. • A Nonpossessory interest such as an easement, profit or license, does not give the owner a right to possess the land.

5. Real Property & Environmental LawMULTIPLE-CHOICE QUESTION#10 Financial Advisors, Inc., signs a lease for the first floor of an office building owned by Goodrich Investments, Inc. Unlike a licensee, Financial Advisors • a. has only a temporary right to go upon the property. • b. is entitled to the exclusive use and possession of the property. • c. is not entitled to the exclusive use of the property. • d. must pay for the right to use the property.

6. Real Property & Environmental LawMULTIPLE-CHOICE ANSWER#10 ANSWER: B Lease is a possessory interest.

7. Example Deed Parts of a Deed Parties: “Grantor” and “Grantee” Words of Conveyance: “convey;” “bargain and sell;” give; grant and transfer;” etc. Description of Property: “Blackacre” Habendum: “To have and to hold…” Warranty: General, Special, other? Due Execution: Signed and Acknowledged

8. Ownership in Fee Simple • The Fee Simple (sometimes called fee simple absolute) gives the owner the greatest aggregation of rights, powers and privileges possible under American law and can assigned to heirs. • A “conveyance” (transfer of real estate) “from A to B” creates a fee simple. A is the Grantor and B is the Grantee. • Fee Simple Defeasible: grants conditional ownership to Grantee as long as he complies with condition. “A to B as long as ….”

9. Example Deed 2 “To A, but only for so long as he runs his liquor store on the land, then to B” “To A and his heirs, the surface only of Blackacre” “To A and his heirs, but there is reserved to Grantor ½ of all oil, gas & other minerals on, in, under and that may be produced from Redacre…”

10. Life Estates • Estate that lasts for the life of some specified individual. “A grants Blackacre to B for B’s life” grants B a life estate in Blackacre. • When B dies, Blackacre returns to A or his heirs or assigns, or a third party in the same condition, normal wear and tear excepted. • Grantor A retains a “future interest” in the property. • During B’s life, she can possess, use, and take the fruits of the estate, but not take from the property itself.

11. Non-Possessory Interests • An easementis a right of a person to make limited use of another person's real property without taking anything from the property. • A profitis the right to go onto land in possession of another and take away some part of the land itself or some product of the land. • Property that is benefited by easement/profit carries the the interest with the sale of land.

12. Real Property & Environmental LawMULTIPLE-CHOICE QUESTION#1 Beth owns a corporate office park in Ohio. Her ownership rights include the right to sell or give away the property without restriction, as well as the right to commit waste, if she chooses. Beth’s ownership interest is • a. a fee simple absolute. • b. a leasehold estate. • c. a life estate. • d. the power of eminent domain.

13. Real Property & Environmental LawMULTIPLE-CHOICE ANSWER#1 ANSWER: A Fee simple owner can do anything they want to, subject to laws or ordinances affecting all other property owners. These would limit ability to commit waste, for instance, if dilapidated buildings were regulated.

14. Real Property & Environmental LawMULTIPLE-CHOICE QUESTION#2 With respect to Adam’s land, Bob has an easement, Carol has a profit, and Don has a license. A right to possess the land is owned by • a. Adam, Bob, and Carol only. • b. Adam and Don only. • c. Adam only. • d. Bob, Carol, and Don only.

15. Real Property & Environmental LawMULTIPLE-CHOICE ANSWER#2 ANSWER: C What would answer be if Ed had a lease on Adam’s land?

16. Real Property & Environmental LawMULTIPLE-CHOICE QUESTION#3 Regional Construction Company has a right to drive its trucks across Standard Business Corporation’s property, which is adjacent to Regional’s office. This right is • a. a leasehold estate. • b. a license. • c. an easement. • d. a profit.

17. Real Property & Environmental LawMULTIPLE-CHOICE ANSWER#3 ANSWER: C Roads, pipelines, power lines, utility installations, etc. are normally on easement estates.

18. Real Property & Environmental LawMULTIPLE-CHOICE QUESTION#4 Wood Products Corporation, which owns no land, has a right to cut trees from Natural Resource Company’s land. Wood’s right is • a. a leasehold estate. • b. a license. • c. an easement. • d. a profit.

19. Real Property & Environmental LawMULTIPLE-CHOICE ANSWER#4 ANSWER: D Profit is a right to enter and take something away from land. What about a hunting arrangement?

20. Transfer of Ownership • Ownership in real property can be transferred by: • A written Deed. • A Gift. • A Sale. • An Inheritance. • Adverse Possession. • Eminent Domain.

21. Deeds • A Deed is the instrument setting forth the interests in real property being transferred. • Necessary components of a Deed: • Names of Grantor and Grantee. • Words evidencing intent to convey. • Legally sufficient description of the land. • Grantor’s signature. • Delivery of the Deed.

22. Types of Deeds • Warranty Deed. • Special Warranty Deed. • Quitclaim Deed. • Grant Deed. • Sheriff’s Deed. • Period of redemption.

23. Real Property & Environmental LawMULTIPLE-CHOICE QUESTION#5 Investment Properties Corporation conveys an office building to Jay with a deed that makes the greatest number of warranties and provides the most extensive protection against defects of title. This deed is • a. a grant deed. • b. a quitclaim deed. • c. a special warranty deed. • d. a warranty deed.

24. Real Property & Environmental LawMULTIPLE-CHOICE ANSWER#5 ANSWER: D Deed warrants property to grantee as against all claims, whether arising from things that the grantor did or things that others in the chain of title before him did. …and Grantor does hereby bind itself to warrant and forever defend all and singular the Property unto Grantee against every person whomsoever, lawfully claiming or to claim the same or any part thereof.

25. Real Property & Environmental LawMULTIPLE-CHOICE QUESTION#6 • Opal conveys three acres of wetlands to Pristine Places, Inc., with a deed that warrants only that Opal held good title during her ownership of the property. This deed is • a. a grant deed. • b. a quitclaim deed. • c. a special warranty deed. • d. a warranty deed.

26. Real Property & Environmental LawMULTIPLE-CHOICE ANSWER#6 ANSWER: C The special warranty deed adds a qualifier at the end of the warranty clause to limit the grantor’s liability: and Grantor does hereby bind itself to warrant and forever defend all and singular the Property unto Grantee against every person whomsoever, lawfully claiming or to claim the same or any part thereof, by through or under Grantor but not otherwise.

27. Real Property & Environmental LawMULTIPLE-CHOICE QUESTION#7 Manhattan Developers, Inc., pays Northeast Trust Company to release its claim to a strip of waterfront property. Northeast gives Manhattan a deed that conveys only whatever interest Northeast has in the strip. This deed is • a. a grant deed. • b. a quitclaim deed. • c. a special warranty deed. • d. a warranty deed.

28. Real Property & Environmental LawMULTIPLE-CHOICE ANSWER#7 ANSWER: B Actually not a conveyance of property, but a relase of any claim to property. Effect is to give the grantee whatever interest, if any, that the grantee may have.

29. Recording Statutes • Recording a deed (or any interest in real property) puts the public on notice of the new owner’s interest in the land and prevents the previous owner from fraudulently conveying the same interest to another buyer. • Race statute. • Pure notice statute. • Notice-race statute.

30. Will or Inheritance • Owner of real property dies, his property is transferred by: • Will (testate). • Without Will (intestate). • Title is transferred at the time state law so provides in its testate and intestate laws.

31. Adverse Possession • One person possesses the property of another for a certain statutory period of time, that person automatically acquires title to the land, just as if there had been a conveyance by deed. Must be: • Actual and exclusive. • Open, visible and notorious. • Continuous and peaceable. • Hostile and adverse.

32. Real Property & Environmental LawTRUE/FALSE QUESTION#3 True or False: Adverse possession has the same legal result as a tenancy at sufferance.

33. Real Property & Environmental LawTRUE/FALSE ANSWER#3 ANSWER: F No, it’s much stronger than that! First, what’s a tenant at sufferance? Adverse possession results in what’s called a “limitations” title which can be a fee simple.

34. Real Property & Environmental LawTRUE/FALSE QUESTION#4 Eminent domain refers to the ultimate right of an owner in fee simple absolute to transfer the property by will to whomever he or she wishes.

35. Real Property & Environmental LawTRUE/FALSE ANSWER#4 ANSWER: F Eminent domain is the right of the government to take property for public use

36. Eminent Domain • Rights in property are not absolute. They are constrained by federal and state laws, e.g., nuisance, tax and environmental. • A “Taking” By Eminent Domain: The 5th amendment gives the government the right to “take” private land for public use with just compensation.

37. Real Property & Environmental LawMULTIPLE-CHOICE QUESTION#8 Bay City wants to acquire undeveloped land within the city limits to convert into a public park. Bay City brings a judicial proceeding to obtain title to the land. This is • a. adverse possession. • b. an easement. • c. constructive eviction. • d. the power of eminent domain.

38. Real Property & Environmental LawMULTIPLE-CHOICE ANSWER#8 ANSWER: D Where in the constitution does it say the City can do this?

39. Leasehold Estates • Anyone who rents housing to the public for commercial purposes subjects herself to various state and federal Landlord-Tenant laws. • Owner of the property is the LESSOR and Tenant is LESSEE; the contract is called the LEASE. The property interest is called a leasehold estate.

40. Real Property & Environmental LawTRUE/FALSE QUESTION#7 True or False: Contract doctrines do not apply to landlord-tenant relationships.

41. Real Property & Environmental LawTRUE/FALSE ANSWER#7 ANSWER: F Leases are heavily governed by contracts…

42. Tenancy Interests • Tenancy for Years. • Created by an express contract. • Property is leased for a specified period of time. • Periodic Tenancy. • Does not specify how long lease lasts. • But rent paid at certain intervals. • Tenancy at Will. • For as long as both agree. • Tenancy at Sufferance. • Wrongful possession without the right to possess.

43. Real Property & Environmental LawTRUE/FALSE QUESTION#5 True or False: A periodic tenancy is created by an express contract under which property is leased for a specified period of time.

44. Real Property & Environmental LawTRUE/FALSE ANSWER#5 ANSWER: F No, what’s described here is a tenancy for years (even if it’s only months). You may think of a periodic tenancy as measured by the rent period, in a sense, since you are entitled to one rent period’s notice to leave.

45. Real Property & Environmental LawTRUE/FALSE QUESTION#6 True or False: A tenancy for years is created by a lease that does not specify how long it is to last but does specify that rent is to be paid at certain intervals.

46. Real Property & Environmental LawTRUE/FALSE ANSWER#6 ANSWER: F

47. Landlord-Tenant Relationships • Lease Agreement can be oral or written (oral may not be enforceable). Lease gives Tenant the temporary right to exclusively possess the property. • Sources of Law: • Common Law. • State and Local Statutes, and • The Uniform Residential Landlord and Tenant Act (URLTA) which has been adopted by 1/4 of the states.

48. Lease Agreement • Form of the Lease: • Must express intent to establish the lease. • Provide for transfer of possession to the Tenant. • Provide for the Landlord’s “reversionary” interest. • Describe the property. • Indicate length of the term, amount of rent, when and where rent paid. • Illegality. • Osborn v. Kellogg (1996).

49. Real Property & Environmental LawMULTIPLE-CHOICE QUESTION#9 Dora leases a house from Evan for a two-year term. To ensure the validity of their lease, it should include • a. a description of the premises. • b. a due date for the payment of the property taxes. • c. a requirement that Dora perform structural repairs to the house. • d. a requirement that Evan carry liability insurance.

50. Real Property & Environmental LawMULTIPLE-CHOICE ANSWER#9 ANSWER: A Read the question – only A is necessary to the validity of the lease; the other things are all very good ideas and examples of the many things that need to be addressed in a lease.