Principles and Practice Module 3 PowerPoint
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This document provides an overview of real estate law concepts covered in Chapter 5 of a real estate principles and practices course. It defines key terms and discusses the differences between real and personal property. It also covers various possessory interests in real estate like estates and leaseholds. Nonpossessory interests like easements and liens are explained. The document concludes with a quiz testing understanding of the concepts.
Principles and Practice Module 3 PowerPoint
- 1. Real Estate Principles & Practices Module 3 March 2015
- 2. Chapter 5 Overview of Real Estate Law March 2015
- 3. Key Terms • Appurtenance • Easement • Encumbrance • Fixture • Freehold Estate • Leasehold Estate • License • Lien • Lis Pendens • Possessory Interest • Restrictive Covenant • Trade Fixture March 2015
- 4. Real vs. Personal Property • Real Property: Land and everything intended to remain with it • Personal Property: Any property that is moveable and not intended to remain with the land March 2015
- 5. Real Property Rights • Real property rights are defined in terms of a bundle of rights conferred by ownership: – Right of use – Right of enjoyment – Right of disposal • Trespassing, encroachment, and nuisances may interfere with a property owner’s bundle of rights March 2015
- 6. Attachments • Generally considered real property • Natural attachments – Plants growing on the land (naturally occurring or planted). Considered real property while growing and personal property when removed (e.g., crops) • Man-made attachments are called fixtures: – Items of personal property that may or may not be attached to real property but are closely associated with it in such a way that they are, and are intended to, become part of the real property March 2015
- 7. Attachments: Intention and Purpose • The most important considerations are the: – Intention of the annexer (person who owned the item as personal property and brought it onto the real property) – Purpose of the annexation • Manner of annexation (actual or constructive) • Relation of the parties • Written agreement • Trade fixtures March 2015
- 8. Appurtenances • Rights that go along with real property: – Air rights – Water rights (riparian littoral, appropriative) – Mineral rights – Support rights (lateral, subjacent) – Accession (by annexation or forces of nature) March 2015
- 9. Possessory Interests: Estates • An estate is a possessory interest, which entitles the holder to possession of the property, either now (present interest) or in the future (future interest) March 2015
- 10. Fee Simple Estates • Fee Simple Absolute – The fullest freehold estate interest that can exist in real property – If A owns land in feel simple absolute and deeds it “to B” without any limiting language, B will then own the land in fee simple absolute March 2015
- 11. Fee Simple Estates • Fee Simple Defeasible: Any type of real property ownership that may be defeated or undone if certain events occur or certain conditions are not met – Fee simple determinable: Terminated automatically if certain conditions occur – Fee simple conditional: May be terminated by the owner if conditions stated in the deed are not met (cont.) March 2015
- 12. Life Estates • A freehold estate that lasts only as long as a specified person lives – If A owns property in fee simple, she could deed it “to B for life.” B would have the right to occupy and use the property for the rest of his life. But when B died, the life estate would terminate • Created to simplify division of property in a will and to keep property from being probated after death March 2015
- 13. Dower • A special real property interest that the law provides as a statutory life estate to a spouse when a married person owns real property in Ohio and attempts to sell or otherwise transfer an interest in that real property – Inchoate (contingent or incomplete) dower rights – Choate (active or complete) dower rights March 2015
- 14. Leasehold Estates • An interest that gives the holder a temporary right to possession of the estate, without title • Also called a less-than-freehold estate • Three main types: – Estate for years – Periodic tenancy – Tenancy at will March 2015
- 15. Tenancy at Sufferance • Used to describe possession of property by a holdover tenant – Someone who came into possession of property under a valid lease, but stays on after the lease expires, without the landlord’s permission March 2015
- 16. Eviction • Dispossessing or expelling someone from real property • Legal eviction process: – Notice to vacate – Forcible entry and detainer action – Writ of execution March 2015
- 17. Nonpossessory Interests: Encumbrances • Two types discussed in this chapter: – Easements – Liens March 2015
- 18. Easements • A right to use another person’s real property for a particular purpose – Appurtenant easement: Burdens one piece of land for the benefit of another piece of land – Easement in gross: Benefits a person only and not the land March 2015
- 19. Creation of Easements • Easement by express reservation • Easement by express grant • Easement by implication • Easement by necessity • Easement by prescription March 2015
- 20. Termination of Easements • Release • Merger • Abandonment • Prescription • Destruction • Failure of purpose March 2015
- 21. Liens (Financial Encumbrances) • A nonpossessory (financial) interest in property – Voluntary liens (mortgages) – Involuntary liens—general or specific (vendor’s liens, mechanic’s liens, tax liens, special assessments, judgment liens, attachment liens March 2015
- 22. Lien Priority • General rule: – Liens are given priority according to the order in which they attached to the property – Exception—A property tax lien is superior to all other liens on the property. March 2015
- 23. Adverse Possession • Acquiring title to someone else’s real property by possession of it. • In Ohio, possession and use of property can mature into title of the claimant’s possession is: – Open and notorious – Hostile and adverse – Exclusive – Continuous for more than 21 years March 2015
- 24. Land Use Restrictions • Public – Zoning ordinances, building codes, subdivision regulations, environmental laws • Private – Conditions, covenants March 2015
- 25. Zoning Ordinances • Exceptions: – Nonconforming uses – Variances – Conditional Uses March 2015
- 26. Conditions and Covenants • Conditions: Provisions on a deed (or other document) that make the parties’ rights and obligations depend on the occurrence (or non-occurrence) of a particular event • Covenants: Promises or guarantees, either express or implied, in a deed or other document. March 2015
- 27. Chapter 5 Quiz 1.) Which rights are NOT transferred with real property? a. disposal rights b. easements c. encroachments d. support rights March 2015
- 28. Chapter 5 Quiz 2.) Chris owns land next to a lake and near a mountain and needs to quickly come up with some money for a stock investment. Which would NOT be an appropriate option for Chris? a. sell air rights b. sell appropriative rights c. sell an easement d. sell mineral rights March 2015
- 29. Chapter 5 Quiz 3.) A buyer and seller cannot agree on whether a particular item should be included in the sale of the house. What consideration will the court weigh most heavily? a. how complete the house will look without the item b. the intention of the annexer and the purpose of the annexation c. the opinion of the real estate agent d. that, after closing, the annexer said she always intended to remove the item. March 2015
- 30. Chapter 5 Quiz 4.) Which is NOT considered a fixture to real property? a. built-in washer that is at the repair shop on the day of closing b. curio cabinet in the living room that the buyer thought looked perfect with the room décor c. keys to the house d. white picket fence around the house March 2015
- 31. Chapter 5 Quiz 5.) A candy maker has a five-year lease and installs a marble counter to roll candy on. When the lease is up, the candy maker may a. not remove the counter because he did not ask the owner if he could install it. b. not remove the counter because it is a fixture. c. not remove the counter because of a verbal agreement. d. remove the counter because it is a trade fixture. March 2015
- 32. Chapter 5 Quiz 6.) Which does not describe a real property interest for a limited period of time? a. defeasible fee estate b. leasehold estate c. life estate d. life estate pur autre vie March 2015
- 33. Chapter 5 Quiz 7.) A fee simple absolute estate is NOT a. conditional. b. inheritable. c. perpetual. d. transferable. March 2015
- 34. Chapter 5 Quiz 8.) Which is NOT a valid time period for an estate for years? a. two weeks b. two months c. two years d. until all inventory is sold March 2015
- 35. Chapter 5 Quiz 9.) Which is NOT an encumbrance on real property? a. appurtenant easement b. judgment lien c. personal license d. restrictive covenant March 2015
- 36. Chapter 5 Quiz 10.) In deciding who will be paid from a foreclosure sale, which is first in lien priority? a. first lien recorded b. mechanic who filed a mechanic’s lien c. mortgagee or original lender d. state’s lien for real property taxes March 2015
- 37. Chapter 5 Quiz 11.) JJ gets a personal easement in gross to hunt on CC's land. Later, CC changes her mind. How can CC terminate the easement? a. buy JJ’s property b. post a “No Trespassing” sign on her property c. prove in court that there is no remaining wildlife to hunt on her land d. record a release from JJ that he will not hunt on her land anymore March 2015
- 38. Chapter 5 Quiz 12.) Jerry operates a farm in a suburb of Urbana, Ohio. Later, the city expands and Jerry's farm is now in the middle of an R-1 residential zoned neighborhood. Jerry a. can continue to operate the farm as a nonconforming use. b. can keep his house, but he needs to tear down his silos and barn within the next five years. c. cannot consider subdividing his farm because of the zoning change. d. must sell his farm and move. March 2015
- 39. Chapter 5 Quiz 13.) Pat is buying a house from Terry, subject to an existing mortgage. What will happen if Pat cannot make the payments? a. The lender will sue Pat to try and collect the debt because buying the house subject to the existing mortgage was the same as an assumption. b. Pat will lose the equity in the home, but will not be liable to repay any other money for the debt. c. Pat will lose the house and have to pay the entire debt. d. Since Pat bought the house subject to the existing mortgage, the old mortgage is of no concern and Pat can continue to live there. March 2015
- 40. Chapter 5 Quiz 14.) Which is NOT a possessory interest in real estate? a. fee simple absolute b. fee simple defeasible c. fee simple indeterminable d. life estate March 2015
- 41. Chapter 6 Brokers, Salespeople, and the Agency Relationship March 2015
- 42. The Broker-Salesperson Relationship • An agent is a licensed salesperson who represents another in a real estate transaction or a person authorized to represent the principal in dealings with third parties • A salesperson is an agent of his broker • The broker-salesperson relationship is also an agency relationship March 2015
- 43. Creating an Agency Relationship • An agent’s authority always comes from the principal • Depending on the scope of authority, an agent may be classified as: – Universal – General – Special March 2015
- 44. Authority • Actual authority (listing agreement) • Express authority • Implied authority March 2015
- 45. Real Estate Agency Relationships • Principal/client • Customer • Subagent • Buyer broker • Salespeople are subagents of the broker’s client • It is illegal for a salesperson to represent a client directly, without a broker March 2015
- 46. Ohio’s Agency Law • Ohio Agency Law no longer presumes that brokers represent sellers • Pro for buyers because they now have an advocate • Pro for sellers and listing agents because they don’t need to worry about liability for representations made by the buyer’s agent/broker because that person is no longer their subagent March 2015
- 47. Agency Relationships • Under Ohio’s Agency Law, there are four types of agency relationships that may be entered into: – Agency relationship between a licensee and a seller – Agency relationship between a licensee and a buyer – Dual agency relationship between a licensee and both seller and buyer – In-company or “split” agency relationship between two licensees in the same brokerage March 2015
- 48. Agency Relationships • The four types of agency relationships, in different combinations, offer brokers five models of business under which a brokerage may operate: – Brokerage practicing split agency and dual agency – Brokerage practicing dual agency for all in-house transactions – Brokerage practicing exclusive buyer agency only – Brokerage practicing exclusive seller agency only – Brokerage practicing split agency but no dual agency (cont.) March 2015
- 49. Agency Relationships • Management-level licensees – A licensee who is employed by or affiliated with a real estate broker and who has supervisory responsibility over other licensees employed by or affiliated with that real estate broker • Split Agency – When two salesperson-level licensees in the same brokerage represent two different parties in the same transaction, with only their broker considered a dual agent (cont.) March 2015
- 50. End Module 3 March 2015