Exam 4 Review Corporations Chapters 34 37 Property Chapters 48 50 Securities Chapter 44 1 Kinds of property Tangible and Intangible Tangible Physical objects Intangible Does not exist in physical form Rights represented from a stock certificate a promissory note and a deed Real and Personal Real Also called realty land and all interests in it Personal Also called chattel every other thing or interest identified as property The only exception is certain physical objects that are personal property but that may because of their attachment to land or their use in connection with land become a form of real property called fixtures The transfer of title to real property typically is a formal affair Personal Property By Sale Consideration is price By Gift One person to another without consideration o Must be delivered donor must have intent and donee 2 Transferring Title of Property By Will or Descent Someone acquires property after must accept someone dies By Accession owner of something owns and increase to the property whether natural or human made owner of a cow also owns the calf that the cow gives birth to By Confusion If identical things are mixed together a bunch of grain from 2 farmers each farmer is only entitled to his share of what he had mixed in if it was mixed intentionally and unauthorized the wrongdoer will bear the loss if any By Possession Someone taking property that has been abandoned or lost 3 Freehold estate vs Non freehold estate Both considered possessory interests in property Freehold Estate A right of ownership of real property for an indefinite time or for the life of a person Non Freehold Estate Leasehold Estates Estates that exist for a predetermined time like renting an apartment 4 Joint Tenancy Most significant feature is right of survivorship Upon the death of a joint tenant title to the entire property passes by operation of law to the survivor or survivors 5 Tenancy by Entirety Created only by a conveyance to a husband and wife It is distinguished from joint tenancy by the inability of either spouse to convey separately his or her interest during life and thus destroy the right of survivorship 6 Non Possessory Interests Easement Limited right to use the land of another in a manner specified by the acts of the parties or by operation of law and possessing all the attributes of an estate in the land itself 7 Contract of Sale General contract law governs the sale of real property Formation Because oral agreement for the sale of an interest in land is not enforceable under the statue of frauds the buyer and seller must reduce the agreement to writing and have it signed by the other party to be able to enforce the agreement against the party Simplest agreement contains names and addresses description of property closing date type of deed to be given price and payment 8 Who needs to sign a deed to make it valid Grantor a seal and an acknowledgment before a notary public or other official authorized to attest to the authenticity of the documents 9 Adverse possession Title to land transferred involuntarily without deed or other formality Happens when a person who openly and continuously occupies the land of another for a statutorily prescribed time typically five to twenty years will gain title to the land 10 Last sentence of 5th amendment of U S Constitution Private property will not be taken for public use without just compensation 11 Restrictive Covenants Owners of real property imposing private restrictions negative covenants on the use of land Homeowners association telling you what you can do 12 Corporation De Jure vs De Facto vs Estoppel De Jure Cannot be challenged by anyone De Facto Corporation is formed can only be challenged by the state Estoppel Does not create a corporation 13 Ultra Vires Because a corporation has authority to act only within its powers any action or contract that is not within the scope and type of acts which the corporation is legally empowered to perform is ultra vires 14 Debt securities vs equity securities Debt Securities Also called bonds generally involve the corporation s promise to repay the principal amount of a loan at a stated time and to pay interest usually at a fixed rate while the debt is outstanding Equity Securities A source of capital creating an ownership interest in a corporate enterprise they do not in any way vest their owner with title to any of the corporation s property They do give their owner the right to participate in control the right to participate in the earnings of the corporation and the right to participate in the residual assets of the corporation upon dissolution 15 Who declares dividends The Board of Directors 16 Who s in charge of managing of corporation Shareholders they elect Board of Directors who are delegated the power to manage the business of the corporation the B o D delegate power to officers who hold their offices at the will of the board and who in turn hire and fire all necessary operating personnel and run the day to day affairs of the corporation 17 Preemptive Right The privilege of a stockholder to maintain a proportionate share of ownership by purchasing a proportionate share of any new stock issues 18 What are Fundamental Changes and who needs to approve them Amendments to the articles of incorporation a sale or lease of all or substantially all of the corporate assets not in the regular course of business most mergers consolidations compulsory share exchanges and dissolution The Shareholders must approve these changes 19 Security Stocks bonds notes convertible debentures warrants or other documents that represent a share in a company or a debt owed by a company 20 1933 Act vs 1934 Act 1933 Focuses on the issuance of securities 1934 Focuses on the trading in issued securities these secondary transactions greatly exceed in number and dollar value the original offerings by issuers 21 What securities are exempt from registration Short term commercial paper securities issued or guaranteed by domestic governmental organizations such as municipal bonds securities of domestic banks and savings and loan associations securities of not for profit organizations certain securities issued by federally regulated common carriers and insurance policies and annuity contracts issued by State regulated insurance companies 22 Rule 10b 5 Antifraud provision part of 1934 applies to any purchase or sale of any security makes it unlawful for any person to do any of the following when using the