Chapter 2
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Ownership of Real Estate. Ownership in Severalty. Concurrent Ownership ... All documents relating to real estate must be in writing (statute of frauds) ...

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Chapter 2
Chapter 2.

Real Estate = Land + Fixtures

Real Property = Ownership rights to R/E

Personal Property = all other ownership rights

Estate = an interest in real estate

Kinds of Estates:

  • Freehold: Indefinite duration, at least a life time.

  • Estates of Inheritance

    • Fee Simple: Highest form of ownership

    • Defeasible Fees: Estate will terminate on the occurrence of a certain condition.

      • Example: A conveys property to X church so long as it is used as a church.

    • Estate for the life of another. Example: to X so long as my daughter lives.

  • Estates Not of Inheritance (Life Estates)

    • Conventional Life Estate

      • Reversion to the grantor’s heirs on the death of the life tenant.

      • Remainder (Remainderman) – the person(s) who gets the estate on death of the life tenant.

  • Marital Life Estates: husband and wife often have an interest (1/3 life estate in NC) in any property owned by the other. It is often necessary to when a married grantor conveys property owned in severalty to have the spouse sign the deed, so that the spouse waives any claim to a marital life estate.

  • Nonfreehold (leasehold) Estates

    • Estate for years

    • Periodic tenancy

  • Ownership of Real Estate

    • Ownership in Severalty

    • Concurrent Ownership

      • Tenancy in Common – no right of survivorship

      • Joint Tenancy – right of survivorship

      • Tenancy in the Entirety – joint tenancy for husband and wife. Divorce terminates tenancy in the entirety and creates tenancy in common.

    • Hybrid Forms of Ownership

      • Condominium – tenancy in common for the common areas.

  • Ownership by a business organization

    • Corporation

    • Partnership

    • Limited Partnership (or syndicate)

    • REIT

  • Assurance of Title common ownership of common areas.: Deed, Will, or Lease are evidence of title (an interest or estate). All documents relating to real estate must be in writing (statute of frauds).

    How is title transferred?

    • By Descent (Intestate Succession)

    • By Will

    • By Deed (voluntary Alienation)

    • Involuntary Alienation - Examples: Adverse Possession, Lien Foreclosure, Escheat, Eminent Domain (condemnation)

    Essential Elements in a Deed common ownership of common areas.

    • In writing

    • Grantor must have legal capacity

    • Grantor/Grantee identified

    • Property Description must be adequate

      • Metes (distances) & Bounds (directions)

      • Reference to Plat or Map

      • Government Survey System (not in NC)

      • Informal Reference – must be unambiguous.

    • Operative words of conveyance

    • Grantor must sign common ownership of common areas.

    • Deed must be delivered

    • Deed must be sealed (in NC)

      Kinds of Deeds

    • General Warranty Deed: covenants of 1) seisin, 2) right to convey, 3) against encumbrances, & 4) warranty and quite enjoyment (grantor agrees to defend the title of the grantee).

    What is an Encumbrance in Real Estate? common ownership of common areas.

    • Leins

    • Restrictive Covenants

    • Pending Litigation (Les Pendens)

    • Easements

    • Zoning Laws (local police power)

      Other Kinds of Deeds

    • Special Warranty Deed

    • Quitclaim Deed

    Methods of Title Assurance common ownership of common areas.

    • Title Examination (by an attorney)

      • Abstract of Title

      • Opinion of Title

    • Title Insurance (Chicago Title Ins. Co.)

    • Title Recordation: NC is a racehorse state.

      • Revenue stamps ($1 per $500 of value)

      • Title must be acknowledged before a notary

      • Recorded at the Registrar of Deeds Office

    Mortgages: A debt (note) secured by R/E common ownership of common areas.

    • Title Theory States – Deed of Trust (NC)

    • Lien Theory States – Mortgage

      Important Elements of a Mortgage

    • Escrow

    • Acceleration Clause

    • Prepayment Penalty

    • Due-on-sale clause (non-assumable)

    • Recording a Mortgage

    Mortgage Default and Foreclosure common ownership of common areas.

    • Alternatives to Foreclosure: workouts and restructuring

    • Foreclosure

      • Judicial Foreclosure (Lien Theory States)

      • Non-Judicial Foreclosure (Title Theory States)

      • Equity of Redemption: 10-day upset bid period.

      • Deficiency Judgement

    • Deed in Lieu of Foreclosure (friendly forclosure)

    • Tax Sale: parallels the foreclosure procedure.

    Real estate math
    Real Estate Math common ownership of common areas.

    Calculating Brokerage Commission:

    $ Commission = Commission Rate * Price

    Calculating Net Price to Seller:

    Net Price = Sales Price (1 – c)

    where: c = commission rate

    Calculating Area: common ownership of common areas.

    Area of a rectangle = length * width

    Area of a triangle = ½ * base * height

    Volume of a Cube = length * width * heigth

    Units of Measure:

    1 mile = 5,280 feet

    1 acre = 43,560 sq. feet

    Sample problems
    Sample Problems common ownership of common areas.

    • Calculate the agents commission when the sales price is $250,000 and the rate is 6%.

    • Calculate the Sales Price if the seller wants $150,000 net after commission and the rate is 6%.

    • Calculate the number of acres in a tract of land that is 1,000 feet deep and 250 feet wide.

    • Calculate the square yards of carpet needed for a room measuring 12 by 18 feet.

    • Calculate the number of cubic yards of cement needed for a driveway that is 100 feet long, 10 feet wide, and 6 inches deep.

    • Calculate the price per square foot of a 20.5 acre tract that sold for $325,000.