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Nature of Real Property

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

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Nature of Real Property

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

    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). 2

    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. 3

    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. 4

    5. Real Property & Environmental Law MULTIPLE-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 Law MULTIPLE-CHOICE ANSWER #10 ANSWER: B PAGE: 743 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 7

    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 ….” 8

    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 ˝ of all oil, gas & other minerals on, in, under and that may be produced from Redacre…” 9

    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. 10

    11. Non-Possessory Interests An easement is a right of a person to make limited use of another person's real property without taking anything from the property. A profit is 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. 11

    12. Real Property & Environmental Law MULTIPLE-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 Law MULTIPLE-CHOICE ANSWER #1 ANSWER: A PAGE: 734 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 Law MULTIPLE-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 Law MULTIPLE-CHOICE ANSWER #2 ANSWER: C PAGE: 734 Nasty question, I agree: What would answer be if Ed had a lease on Adam’s land?

    16. Real Property & Environmental Law MULTIPLE-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 Law MULTIPLE-CHOICE ANSWER #3 ANSWER: C PAGE: 734 Roads, pipelines, power lines, utility installations, etc. are normally on easement estates.

    18. Real Property & Environmental Law MULTIPLE-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 Law MULTIPLE-CHOICE ANSWER #4 ANSWER: D PAGE: 734 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. 20

    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. 21

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

    23. Real Property & Environmental Law MULTIPLE-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 Law MULTIPLE-CHOICE ANSWER #5 ANSWER: D PAGE: 735 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 Law MULTIPLE-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 Law MULTIPLE-CHOICE ANSWER #6 ANSWER: C PAGE: 737 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 Law MULTIPLE-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 Law MULTIPLE-CHOICE ANSWER #7 ANSWER: B PAGE: 738 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. 29

    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. 30

    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. 31

    32. Real Property & Environmental Law TRUE/FALSE QUESTION #3 Adverse possession has the same legal result as a tenancy at sufferance.

    33. Real Property & Environmental Law TRUE/FALSE ANSWER #3 ANSWER: F PAGE: 738 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 Law TRUE/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 Law TRUE/FALSE ANSWER #4 ANSWER: F PAGE: 739 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. 36

    37. Real Property & Environmental Law MULTIPLE-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 Law MULTIPLE-CHOICE ANSWER #8 ANSWER: D PAGE: 739 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. 39

    40. Real Property & Environmental Law TRUE/FALSE QUESTION #7 Contract doctrines do not apply to landlord-tenant relationships.

    41. Real Property & Environmental Law TRUE/FALSE ANSWER #7 ANSWER: F PAGE: 741 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. 42

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

    44. Real Property & Environmental Law TRUE/FALSE ANSWER #5 ANSWER: F PAGE: 740 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 Law TRUE/FALSE QUESTION #6 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 Law TRUE/FALSE ANSWER #6 ANSWER: F PAGE: 740 Didn’t we just talk about this?

    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. 47

    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). 48

    49. Real Property & Environmental Law MULTIPLE-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 Law MULTIPLE-CHOICE ANSWER #9 ANSWER: A PAGE: 741 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.

    51. Rights and Duties Trend in the law is to curtail, by contract and real estate law, the immense freedom that Landlords had in the past. Possession. Using the Premises. Maintaining the Premises. Rent. 51

    52. Rights and Duties Landlord has a duty to deliver actual physical possession under URLTA or legal right to possession (“American” rule). Tenant’s right to exclusive possession is only subject to Landlord’s limited right to come unto the property. Tenant has a “covenant of quiet enjoyment” by which Landlord promises Tenant’s peace and enjoyment of the property. 52

    53. Real Property & Environmental Law TRUE/FALSE QUESTION #8 Under the covenant of quiet enjoyment, a landlord promises that a tenant will not be disturbed in the use of the premises.

    54. Real Property & Environmental Law TRUE/FALSE ANSWER #8 ANSWER: T PAGE: 743 How might a landlord breach this covenant?

    55. Rights and Duties Eviction occurs when Landlord: Deprives Tenant of possession of the leased property; or Interferes with this use or enjoyment of the property to the extent that Tenant cannot use or enjoy. Constructive eviction occurs when Landlord: Breaches lease or covenant or quiet enjoyment; and Makes it impossible for the Tenant to use and enjoy the property. 55

    56. Rights and Duties Residential property -- Landlord must furnish premises in habitable condition. Landlord is responsible for maintaining common areas such as stairs, parking lots, elevators and swimming pools. Commercial property -- may still require Tenant to maintain depending on the lease. 56

    57. Rights and Duties Implied Warranty of Habitability applies to major (substantial) defects if Landlord knew or should have known about & he had a reasonable time to repair. To determine breach, Courts consider: Whether Tenant caused damage. How long defect existed and age of building. Defects impact on Tenant’s safety and health. Whether defect contravenes relevant statutes. 57

    58. Rent Rent is Tenant’s payment to the Landlord for the Tenant’s occupancy or use of the Landlord’s real property. Payment based on agreement, custom, state statute, waiver. Security Deposits. A deposit by Tenant which Landlord may retain for non-payment of rent or damage to premises. URLTA has specific provisions as to when it may be kept and when it must be returned. 58

    59. Tenant’s Remedies If Landlord breaches the warranty of habitability, depending on state law, Tenant may: Withhold rent -- put in escrow. Repair and Deduct -- notify, repair, and deduct repair from rent. Cancel the Lease -- must be constructive eviction or breach of habitability. Sue for Damages -- difference between what paid for and what received. 59

    60. Real Property & Environmental Law TRUE/FALSE QUESTION #9 When a landlord sells leased premises to a third party, any existing leases terminate automatically.

    61. Real Property & Environmental Law TRUE/FALSE ANSWER #9 ANSWER: F PAGE: 744 Leases usually* are encumbrances that remain in place when property is sold. It is said that the property is sold “subject to” the lease. The buyer simply becomes the landlord. *Depends on the contract, however!

    62. Transferring Rights to Leased Property Transferring Landlord's Interest. Landlord may sell any and all of his rights in the real property. New owner buys “subject to the lease,” if lease is recorded. Transferring Tenant’s Interest. Landlord’s consent may or may not be required by statute or the lease itself. 62

    63. Transferring Rights Transferring the Tenant’s Interest (cont’d) Assignments: Tenant transfers his entire interest in the lease to a third person. Original Tenant is not released from liability under the lease. Subleases: Tenant transfers all or part of his interest in the lease for a shorter period of time than the lease. Original Tenant is not relieved of liability under the lease. 63

    64. Real Property & Environmental Law MULTIPLE-CHOICE QUESTION #11 Allen owns a duplex that he leases to Brad and Cora. Allen may sell a. the duplex at any time. b. the duplex, but only after the lease term expires and Brad and Cora have moved out. c. the duplex, but only with Brad and Cora’s permission. d. the lease, but not the duplex.

    65. Real Property & Environmental Law MULTIPLE-CHOICE ANSWER #11 ANSWER: A PAGE: 744 He can sell the duplex “subject to” the lease. What rights do Brad and Cora have to dispose of the leasehold interests that they have?

    66. Real Property & Environmental Law MULTIPLE-CHOICE QUESTION #12 Bill leases an apartment from Cathy. Two months later, Bill moves out, and arranges with Dian to move in and pay the rent to Cathy for the rest of the term. This is a. an assignment. b. an easement. c. an eviction. d. a sublease.

    67. Real Property & Environmental Law MULTIPLE-CHOICE ANSWER #12 ANSWER: A PAGE: 745 How is a sublease different than this?

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