Chapter 2 - Principles of California Real Estate Lesson 2:...

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1 Lesson 2: Estates in Land and Methods of Holding Title Principles of California Real Estate Introduction » This lesson will discuss: types of estates in land ways of holding title to property Estates in Land Interests in real property » Interest : An interest in real property is a right to the property or a claim against it. » Interests may be: possessory (also called estates ) nonpossessory
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2 Categories of Estates » Two basic categories: freehold estate (includes title) leasehold estate (no title) » Both a freehold and a leasehold estate may exist in the same property; the relationship between the two estates is known as privity. » Two kinds of freehold estates: fee simple estate life estate Freehold Estates » Fee simple : the most common type of estate the highest and most complete form of land ownership can potentially last forever A fee simple estate is perpetual, transferable, and inheritable. Freehold Estates Fee simple estates
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3 » Two types of fee simple estates: absolute defeasible (qualified) Fee Simple Estates Fee Simple Estates Fee simple absolute » Fee simple absolute: Title owner not subject to any special limitations or conditions. » Fee simple absolute is the default estate, unless it is clear the grantor intended otherwise. Fee Simple Estates Fee simple defeasible » Fee simple defeasible : Fee title with a condition or qualification attached Interest will end if a specified act or event occurs
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4 Freehold Estates Life estates » Life estate : limited in time lasts only as long as a specified person is alive James donated his farm to the Children’s Aid Society, but retained a life estate in the farm. James has exclusive possession and use of the farm until he dies, and then the farm will belong to the Children’s Aid Society. While James is alive, he is the life tenant . Life Estates Example Life Estates Duration » Measuring life : The life on which a life estate depends. (Need not be the life tenant) In the example, James’s life is the measuring life for his life estate. The life estate will end when James dies.
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5 Life Estates Future interests » Future interest : The ownership interest that will begin when the life estate ends. » When a life estate is created, a future interest in the property is created at the same time. Life Estates Future interests » Two types of future interests: estate in reversion estate in remainder Margarita grants a life estate to John, and stipulates that the property will come back to her (or to her heirs) at the end of the measuring life. Margarita and her heirs have an estate in reversion. They are called reversioners . Future Interests Estate in reversion
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6 On the other hand, if Margarita stipulates that the property will go to Sam (not back to her or her heirs) when John dies, then Sam has an estate in remainder. Sam would be called a remainderman. Future Interests
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This note was uploaded on 01/26/2012 for the course FIN 365 taught by Professor Staff during the Spring '11 term at S.F. State.

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Chapter 2 - Principles of California Real Estate Lesson 2:...

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