Unit 5: Forms of Real Estate Ownership Test

Severalty

- Person inherits property and owns it solely

- Title held by one individual or corporation

- Man singularly holds title to his own property

- Large corporation holds title to land on which its headquarters is built

Co-ownership
- Spouses jointly hold title for property
- Title held by two or more individuals

- Brother and sister each hold title for vacation property

Public entities generally own real property in trust. (False)

The forms of real estate ownership are controlled on a national level to promote uniformity throughout the country. (False)

Unity of interest - All joint tenants hold equal ownership interests
Unity of possession - All joint tenants hold an undivided right to possession
Unity of time - All joint tenants acquire their interests at the same time
Unity of title - All joint tenants acquire their interests by the same document

In tenancy in common, each tenant holds a divided fractional interest in the property. (False)

A joint tenancy can be created by conveying a deed or giving the property by will or living trust. (True)




Limited liability company

- Combines the most attractive features of limited partnerships and corporations.

General Partnership
- Dissolved and must be reorganized if one owner dies.
- Mr. A and Mr. B are partners in an business. Mr. A dies. Mr. B must therefore dissolve and reorganized the partnership.

Corporation
- Ms. M and Ms. N are owners of a business. The title is never affected if Ms. M or Ms. N dies.

Limited Partnership

- The death of an owner may not affect title if provided in the agreement.

- The partnership agreement may provide for the continuation of the organization after the death or withdrawal of one of the partners.

The death of a shareholder in a corporation results in the dissolution of the corporation. (False)
A general partnership is dissolved and must be reorganized if one partner dies, withdraws, or goes bankrupt. (True)

The individual unit owners of a condominium own the common elements as tenants in common. (True)

Condominium laws are often called vertical property acts. (False)

Q : A corporation is a legal entity, recognized as an artificial person. Property owned solely by the corporation is owned in

A : severalty.

(Explanation : The answer is severalty. The term person does not always refer to a natural individual—a human; the law regards a corporation as an artificial person. Because this is so, a corporation can own real estate in severalty (alone).)

Q : A person lives in an apartment building. The land and structures are owned by a corporation, with one mortgage loan securing the entire property. Like the other residents, this person owns stock in the corporation and has a lease to the apartment. This type of ownership is called

A : cooperative

(Explanation : The answer is cooperative. In a cooperative, a corporation holds title to the property and offers stock shares to the residents, who then receive a proprietary lease to the apartment.)

Q : A person who owns one unit in a multiunit structure together with a specified undivided interest in the common elements owns a

A : condominium.

(Explanation : The answer is condominium. A person who holds a fee simple title to a unit and a specified share of the undivided interest in the common elements owns a condominium.)

Q : A legal arrangement under which the title to real property is held to protect the interests of a beneficiary is a

A : trust.

(Explanation : The answer is trust. Trusts protect beneficiaries. Partnerships can protect limited partners; corporations can protect stockholder-owners.)

Q : A man owns one of 20 units in fee simple, along with a 5% ownership share in the parking facilities, recreation center, and grounds. What kind of property does he own?

A : Condominium

(Explanation : The answer is condominium. When a person owns part of a development in fee and a percentage of the rest in common with the other unit owners, this is condominium ownership.)

Q : A parcel of property was purchased by two friends. The deed they received from the seller at closing transferred the property without further explanation. The two friends took title as which of the following?

A : Tenants in common

(Explanation : The answer is tenants in common. When joint tenancy is not clearly prescribed by the deed, grantees take title as tenants in common—to avoid accidental joint tenancy. Unmarried persons are unable to hold community property or be tenants by the entirety because both are reserved for married couples.)

Q : A neutral individual holds title for the benefit of another when property is held in

A : trust.

(Explanation : The answer is trust. Property held by a neutral individual for the benefit of another is being held in trust.

Q : A trust is a device by which one person transfers ownership of property to someone else to hold or manage for

A : The benefit of a third party.

(Explanation : The answer is the benefit of a third party. A trust is a device by which one person transfers ownership of property to someone else to hold or manage for the benefit of a third party.)

Q : A trust is a legal arrangement in which property is held for the benefit of a third party by a(n)

A : trustee.

(Explanation : The answer is trustee. The trustor creates trust that is held for the benefit of the beneficiary who will ultimately benefit from the trust. A third party, the trustee, holds legal title to the property and is entrusted with carrying out the trustor's instructions.)

Q : According to some states, any real property that either spouse owns at the time of marriage remains separate property. Further, any real property acquired by either spouse during the marriage (except by gift or inheritance of with the proceeds of separate property) belongs to both of them equally. What is this form of ownership called?

A : Community property

(Explanation : The answer is community property. This arrangement falls under community property law, which is found—with some variations in details—in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington.)

Q : An owner purchased an interest in a house in Beachfront. The owner is entitled to the right of possession only between July 10 and August 4 of each year. Which of the following is MOST likely the type of ownership that has been purchased?

A : Time-share

(Explanation : The answer is time-share. When a person holds an interest in property for a stated time each year, that person is sharing the property according to a time plan. It is a time-share.)

Q : All of the following can be classified as real property EXCEPT

A : cooperative unit ownership.

(Explanation : The answer is cooperative unit ownership. Because it involves receiving shares of stock and a leasehold—both of which are considered by common law to be personal property—cooperative ownership is personal, not real, property.)

Q : One of the distinguishing characteristics of a land trust is that

A : public records usually do not name the beneficiary.

(Explanation : The answer is public records usually do not name the beneficiary. One of the distinguishing characteristics of a land trust is that the public records usually do not name the beneficiary.)

Q : Ownership in severalty is property owned by

A : one individual or corporation.

(Explanation : The answer is one individual or corporation. Ownership in severalty is property owned by one individual or corporation.)

Q : The real property interest that takes the form of personal property is the

A : cooperative unit ownership.

(Explanation : The answer is cooperative unit ownership. Because it involves receiving shares of stock and a leasehold—both of which are considered by common law to be personal property—cooperative ownership is personal, not real, property.)

Q : The forms of property ownership are controlled by the

A : state

(Explanation : The answer is state. The forms of property ownership are controlled by the state.)

Q : The four unities of possession, interest, time, and title are associated with which of the following?

A : Joint tenancy

(Explanation : The answer is joint tenancy. A joint tenancy can only be created by an intentional act and requires the four unities—PITT—to be present.)

Q : Three people are joint tenants with rights of survivorship in a tract of land. One owner conveys his interest to a friend. Which statement is TRUE?

A : The other two owners remain joint tenants.

(Explanation : The answer is the other two owners remain joint tenants. When one of three joint tenants sells to a new person, the other two remain joint tenants with respect to each other. The new person is a tenant in common and is not owner in severalty of the entire property because severalty is sole ownership.)

Q : Three women were concurrent owners of a parcel of real estate. When one of the women died, her interest, according to her will, became part of the estate. The deceased was a

A : tenant in common.

(Explanation : The answer is tenant in common. If the deceased had been a joint tenant, the property would not have passed to an heir as prescribed in her will because joint tenancy supersedes a will. She also was not a tenant by the entirety, a category reserved for husbands and wives. Nor was she an owner in severalty because that requires property to be held by only one person.)

Q : Title to a property is held by two or more individuals; this property is held in

A : co-ownership.
(Explanation : The answer is co-ownership. When title to a property is held by two or more individuals, the property is being held in co-ownership.)

Q : Real estate can be owned under a variety of trusts, including living or testamentary trusts, land trusts, and by investors in

A : a real estate investment trust (REIT).

(Explanation : The answer is a real estate investment trust (REIT). Real estate can be owned under a variety of trusts, including living or testamentary trusts, land trusts, and by investors in a real estate investment trust (REIT).)

Q : Real properties owned by public entities, such as cities, counties, states, and public agencies are generally owned in

A : severalty.

(Explanation : The answer is severalty. Real properties owned by public entities, such as cities, counties, states, and public agencies are generally owned in severalty.)



Q : Which of the following is MOST likely evidence of ownership in a cooperative?

A : Shareholder's stock

(Explanation : The answer is shareholder's stock. The documents that show ownership in a cooperative are shares of stock in the cooperative corporation and a proprietary lease.)

Q : Which of the following refers to ownership by one person?

A : Severalty

(Explanation : The answer is severalty. Severalty ownership is ownership by one person severed—cut off—from all others.)

Q : Which statement applies to both joint tenancy and tenancy by the entirety?

A : The last survivor becomes a severalty owner.

(Explanation : The answer is the last survivor becomes a severalty owner. Tenancy by the entirety is a type of joint tenancy recognized by some states that is reserved for married couples. In both, there is a right of survivorship. The last survivor becomes sole (severalty) owner.)