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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.
slide2
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.
slide3
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
slide4
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.
slide5
Townhouse: townhouse owner gets deed to a tract of land & common ownership of common areas.
    • Time share Ownership: NC gives purchaser 5 days to cancel purchase.
    • PUD (Planned Unit Development)
  • Ownership by a business organization
    • Corporation
    • Partnership
    • Limited Partnership (or syndicate)
    • REIT
slide6
Assurance of Title: 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)
slide7
Essential Elements in a Deed
  • 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
slide8
Grantor must sign
  • 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).
slide9
What is an Encumbrance in Real Estate?
  • Leins
  • Restrictive Covenants
  • Pending Litigation (Les Pendens)
  • Easements
  • Zoning Laws (local police power)

Other Kinds of Deeds

  • Special Warranty Deed
  • Quitclaim Deed
slide10
Methods of Title Assurance
  • 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
slide11
Mortgages: A debt (note) secured by R/E
  • 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
slide12
Mortgage Default and Foreclosure
  • 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

Calculating Brokerage Commission:

$ Commission = Commission Rate * Price

Calculating Net Price to Seller:

Net Price = Sales Price (1 – c)

where: c = commission rate

slide14
Calculating Area:

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
  • 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.