Rei 4413 1st Edition Exam # 2 Study GuideTypes of Ownership- Two preliminary questions must be resolved before the real estate transaction commences:Are limitations attached to the existing ownership of the land?What type of estate should be bought or sold?• Estates in Land• Estate: A large, grand residential property is typically referred to as an estate.• However, the word estate is a word of many meanings:• Freehold Estate: An indefinite estate for life or in fee.• Nonfreehold or Leasehold Estates: An ownership interest in land generally of a fixedor determinable duration.• Freehold Estate• Fee Simple Absolute: An estate limited absolutely to its owners and their heirs that assigns forever without limitation or condition.• Fee Simple Defeasible: A fee estate that may end upon the happening of a specified event.• Fee Simple Determinable: A type of defeasible fee that ends automatically when land is used in a manner forbidden in the grant of ownership.• Possibility of Reverter: Future interest associated with the fee simple determinable estate wherein the interest may return to the grantor when there is a breach of a condition to which it was granted.• Fee Simple Subject to an Executory Limitation or Interest: A type of defeasible fee that ends automatically when land is used in a manner forbidden in the grant of ownership, but vests in someone other than the grantor.• Executory Interest: A future interest associated with the fee simple subject to an executory condition wherein the interest may return to a party other than the grantor when there is a breach of a condition to which it was granted.• Fee Simple Subject to a Condition Subsequent: A type of defeasible fee that entitlesthe grantor to end the interest by exercising the right of entry after the grantee breaches a condition under which it was granted.These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.• Right of Entry: A future interest associated with the fee simple subject to a condition subsequent in which the grantor may elect to end the interest after the grantee breaches a condition under which it was granted.• Restraint on Alienation: A provision in an instrument of conveyance that prohibits the grantee from transferring the property that is the subject of the restraint.• Fee Tail: An estate in fee that descends to the grantee’s direct lineal heirs and through themto the direct lineal heirs of the next generation.• Conventional Life Estates:• Life Estate: An estate in which duration is measured by the life of a person.• Reversion: A future interest left in the grantor after the grantor conveys an estate smaller than her own. “It arises merely as a matter of simple subtraction.”• Remainder: A future interest created in favor of a party other than the grantor that generally follows a life estate; can be vested or contingent.• Vested Remainder: A future interest in which the remainderman has an absolute right to a possessory interest at the end of a prior interest.• Contingent Remainder: A future interest that depends on the occurrence of an uncertain event.• Remainderman: The holder of a remainder interest.• Resolving Disputes Between Life Tenants and Future Estate Holders:• Taxes and Interest: The well-established rule states life tenant must pay all annual taxes and interest on debts on the land to the extent that the tenant has received profits, rents, or income from the property.• Insurance: Neither the life tenant nor the future interest owner, such as the remainderman or the owner of the reversion, has a duty to insure; if either does insure, the distribution of the proceeds will depends on the facts of each case.• Repairs: What is a life tenant’s duty to keep property in repair? Depends on whether the repairs are ordinary or extraordinary….•Life tenant who receives income, rents, or profits from the real estate has a duty to make ordinary repairs (painting, replacing windows). •Life tenant will not be responsible if the repairs are extraordinary (replacement of furnace).•Life tenant may voluntarily go beyond making ordinary repairs and make improvements on the property.• Tenant’s Use of Property: A life tenant may act as the fee simple owner would if shewere on the land; but she is limited in her ability to diminish the market value of the remainder or reversion.•Right of Estovers: A life tenant is generally entitled to cut timber as needed for repair of structures and fences or for fuel. •Waste: A destructive use of real property by one in rightful possession. In general, a life tenant is not allowed to commit waste. • Estate Planning: The creation of a life estate as an estate planning device often creates unforeseen complications – who pays insurance, mortgage, and tax payments?• Trusts and Estate Planning: • Trusts can help avoid pitfalls of estate planning.•Trust: An arrangement in which one party, the trustee, holds and manages property for the benefit of another, the beneficiary.• Concurrent Ownership• Concurrent Estate: Ownership or possession of property by two or more people at the same time.• Concurrent Forms of Ownership• Joint Tenancy: Ownership of real or personal property by two or more people in which each owns an undivided interest in the whole and each has the right of survivorship.• Four Unities: The four characteristics of an interest held in joint tenancy:•1. Unity of Time: The requirement that the interests of joint tenants must vest at the same time.•2. Unity of Title: The requirement that joint tenants must acquire their interests in the same conveyance. •3. Unity of Interest: The requirement that joint owners must have equal interests in the land.•4. Unity of Possession: The requirement that joint tenants must have equal, undivided interests in the possession of the land.• Terminating a Joint Tenancy: A joint tenancy is terminated whenever one of the four unities is destroyed, such as when there has been a voluntary or involuntary conveyance of the owner’s interest in the property.•Severance: A joint tenant’s transfer of her interest that terminates the joint tenancy and converts it into a tenancy in common.• Presumption Against Joint Tenancy: Courts attempt to find severance whenever possible because of judicial bias