© 2009 by south-western, cengage learning samirlander chapter 8

© 2009 by South-Western, Cengage Learning

SAMSAMIRLANDERIRLANDER

Chapter 8Chapter 8

Florida Real Estate:Florida Real Estate: Principles, Practices and Principles, Practices and

License LawLicense Law

Chapter 8Chapter 8

Property OwnershipProperty Ownership

© 2009 by South-Western, Cengage Learning

© 2009 by South-Western, Cengage Learning

Key TermsKey Terms

Bundle of rights

Chattel

Common property

Concurrent ownership

Cond-op

Condominium

Cooperative

Declaration of condominium

Elective share

Estate at will

Estate for years

Estate in severalty

Estate in land

Exempt property

Fee

Fee simple absolute

Fee simple defeasible

© 2009 by South-Western, Cengage Learning

Key TermsKey Terms

Fee simple estate

Fixtures

Freehold estate

Holdover tenant

Homestead

Joint tenancy

Land

Leased property

Leasehold

Leasehold estates

Life estate pur autre vie

Life estates

Monthly maintenance

Owners association

Partition

Personal property

Personalty

Property

© 2009 by South-Western, Cengage Learning

Key TermsKey Terms

Proprietary lease

Real estate

Real property

Remainderman

Reversionary interest

Right of survivorship

Separate property

Statutory life estates

Tenancy at sufferance

Tenancy at will

Tenancy by the entirety

Tenants in common

Time-shares

© 2009 by South-Western, Cengage Learning

Property OwnershipProperty Ownership

Feudal system: land ownership vested only with the Crown

Leased property: Leased property: possessory right of the property

© 2009 by South-Western, Cengage Learning

Property OwnershipProperty Ownership

Estates were reversionary and defeasible

Land owned by the Crown

Individuals possessed rights only for their lifetime

Estates were not inheritable

© 2009 by South-Western, Cengage Learning

Property OwnershipProperty Ownership

Allodial system

Land vests with individual owners

Inheritable estate

© 2009 by South-Western, Cengage Learning

Real Property CompositionReal Property Composition

© 2009 by South-Western, Cengage Learning

Real Property CompositionReal Property Composition

© 2009 by South-Western, Cengage Learning

Real Property CompositionReal Property Composition

© 2009 by South-Western, Cengage Learning

Real Property CompositionReal Property Composition

© 2009 by South-Western, Cengage Learning

Real Property CompositionReal Property Composition

© 2009 by South-Western, Cengage Learning

Real Property CompositionReal Property Composition

© 2009 by South-Western, Cengage Learning

Real Property CompositionReal Property Composition

© 2009 by South-Western, Cengage Learning

Real Property CompositionReal Property Composition

© 2009 by South-Western, Cengage Learning

Real Property CompositionReal Property Composition

Littoral rights: land adjoins a stationary body of water

Riparian rights: land adjoins flowing bodies of water

© 2009 by South-Western, Cengage Learning

Real Property CompositionReal Property Composition

Flowing water: owner has right to limited nonexclusive use

Property boundaries/riparian rights:Navigable: high water mark

Not navigable: middle of watercourse

© 2009 by South-Western, Cengage Learning

Real Property CompositionReal Property Composition

© 2009 by South-Western, Cengage Learning

Real Property CompositionReal Property Composition

© 2009 by South-Western, Cengage Learning

Real Property CompositionReal Property Composition

© 2009 by South-Western, Cengage Learning

Real Property CompositionReal Property Composition

Oil

Gas

Mineral rights

Extend to center of earth’s core

© 2009 by South-Western, Cengage Learning

Real Property CompositionReal Property Composition

Total legal bulk of Total legal bulk of improvement made to improvement made to landland

© 2009 by South-Western, Cengage Learning

FixturesFixtures

Become real property by utility and permanence

Review items to remain with the seller

© 2009 by South-Western, Cengage Learning

FixturesFixtures

© 2009 by South-Western, Cengage Learning

FixturesFixtures

© 2009 by South-Western, Cengage Learning

FixturesFixtures

Method of attachmentWill removal result in damage?

AdaptabilityPermanently attached?

Intent of the partiesAgreement in advance

© 2009 by South-Western, Cengage Learning

FixturesFixtures

Installed and used in conduct of business

Personal propertyRemoved prior to expiration of lease

Property returned to original condition

© 2009 by South-Western, Cengage Learning

FixturesFixtures

Property is soldFixtures remain

Personal property does not remain

Taxes AssessedFixtures contribute to value = higher taxes

© 2009 by South-Western, Cengage Learning

FixturesFixtures

Property is appraisedFixtures add value

Personal property does not add value

Insurance on real propertyFixtures are covered

Personal property covered separately

© 2009 by South-Western, Cengage Learning

Types of EstatesTypes of Estates

Freehold estates

Nonfreehold estates

Less than freehold

© 2009 by South-Western, Cengage Learning

Types of EstatesTypes of Estates

Interest in land held for an indefinite time

Lifetime or longer

Right of:Ownership

Possession

© 2009 by South-Western, Cengage Learning

Types of EstatesTypes of Estates

Freely hold property

Types of freehold estatesFee simple

Fee simple absolute

Fee simple defensible

Life estates

© 2009 by South-Western, Cengage Learning

Types of EstatesTypes of Estates

Fee: ownership and all rights in land

LeaseholdLimited duration ownershipRight of possession in the improvement

© 2009 by South-Western, Cengage Learning

Types of EstatesTypes of Estates

Characteristics: Held for lifetime or longer

Inheritable

Fee Simple AbsoluteFee Simple AbsoluteMost common and desirable

© 2009 by South-Western, Cengage Learning

Types of EstatesTypes of Estates

Fee Simple AbsoluteFee Simple AbsoluteCharacteristics:

Least restrictive

Limited only by government rights

Nondefeasible

© 2009 by South-Western, Cengage Learning

Types of EstatesTypes of Estates

Fee Simple DefeasibleFee Simple DefeasibleConditions

If conditions are violated:Rights of ownership can be defeated

“but if”

© 2009 by South-Western, Cengage Learning

Types of EstatesTypes of Estates

CharacteristicsHeld for a lifetime

Not inheritable

Exception: life estate : life estate pur autre viepur autre vie

Lifetime of 3rd party

Reversionary

© 2009 by South-Western, Cengage Learning

Types of EstatesTypes of Estates

3 types of voluntary life estates

Life estate in remainder

RemaindermanRemainderman

© 2009 by South-Western, Cengage Learning

Types of EstatesTypes of Estates

Life estate in reversion

© 2009 by South-Western, Cengage Learning

Types of EstatesTypes of Estates

Life estate by reversion

© 2009 by South-Western, Cengage Learning

Types of EstatesTypes of Estates

Dower: wife’s right to husbands property upon death

Curtsey: husband’s right to wife’s property upon death

Homestead protection: life estate to surviving spouse

© 2009 by South-Western, Cengage Learning

Types of EstatesTypes of Estates

Freehold: ownership

Nonfreehold: leasedLeasehold estatesLeasehold estates

Tenant: Lessee

Landlord: Lessor

© 2009 by South-Western, Cengage Learning

Types of EstatesTypes of Estates

Rights of the parties

Tenant may occupy with a valid lease

Abides by terms

Pays rent

Is not in default

© 2009 by South-Western, Cengage Learning

Types of EstatesTypes of Estates

Rights of the parties

Landlord may not occupy

Landlord has a reversionary estatereversionary estate

Reclaims property upon termination of the lease

© 2009 by South-Western, Cengage Learning

Types of EstatesTypes of Estates

Estate for yearsEstate for yearsStarting and ending date

Estate at willEstate at will

Tenancy at willTenancy at will

No specified term

3 Categories3 Categories

© 2009 by South-Western, Cengage Learning

Types of EstatesTypes of Estates

Estate at SufferanceEstate at Sufferance

Tenancy at SufferanceTenancy at Sufferance

Tenant remains in possession beyond legal term without consent

Holdover tenantHoldover tenant

3 Categories3 Categories

© 2009 by South-Western, Cengage Learning

Types of EstateTypes of Estate

Estates

Freehold Estates Less- than Freehold Estates

Estates in fee Life Estates

Fee simpleabsolute

Estates in:RemainderReversion

Reservation

Fee simplequalified

Estates for yearsEstate from period to period

Estate at willEstate at sufferance

© 2009 by South-Western, Cengage Learning

Types of EstatesTypes of Estates

© 2009 by South-Western, Cengage Learning

Forms of OwnershipForms of Ownership

Estate in severalty: Estate in severalty: one person

Severalty: severed

© 2009 by South-Western, Cengage Learning

Forms of OwnershipForms of Ownership

Four TypesJoint tenancy

Tenancy in common

Tenancy by the

entirety

Community property

© 2009 by South-Western, Cengage Learning

Forms of OwnershipForms of Ownership

Right of survivorship

Not willable / inheritable

Four unitiesTime

Interest

Title

Possession

© 2009 by South-Western, Cengage Learning

Forms of OwnershipForms of Ownership

ossessionossession

nterestnterest

imeime

itleitle

urvivorshipurvivorship

PP

II

TT

TT

SS

© 2009 by South-Western, Cengage Learning

Forms of OwnershipForms of Ownership

May sell without consent of other joint tenants

New owner becomes a tenant in common

Corporations have perpetual life

May not own as joint tenants

© 2009 by South-Western, Cengage Learning

Forms of OwnershipForms of Ownership

Unity of possession

Separate title

May sell without consent of others

No right of survivorshipInheritable

© 2009 by South-Western, Cengage Learning

Forms of OwnershipForms of Ownership

© 2009 by South-Western, Cengage Learning

Forms of OwnershipForms of Ownership

Reserved for husband and wife

Four unities:Possession

Interest

Title

Time

5th Unity - marriage

© 2009 by South-Western, Cengage Learning

Forms of OwnershipForms of Ownership

Right of survivorship

Neither spouse may encumber or sell without consent of other

Terminated by:Joint action

Divorce

Death of either spouse

© 2009 by South-Western, Cengage Learning

Forms of OwnershipForms of Ownership

Equal interest in property acquired during marriage

Not community property:Acquired before marriage

After marriage through :

Gift

Will

Florida is not community property state

© 2009 by South-Western, Cengage Learning

Forms of OwnershipForms of Ownership

Partition: Partition: dividing of common interests into separate interests

Two methodsPartition in kind

Partition in law

Two ways:Voluntary agreement

Court

© 2009 by South-Western, Cengage Learning

Forms of OwnershipForms of Ownership

Special interests in Florida

Elective share

Exempt properties

Homestead

© 2009 by South-Western, Cengage Learning

Forms of OwnershipForms of Ownership

Elective ShareElective ShareSurviving spouse entitled to a share of deceased estate

Share is 30% in Florida

© 2009 by South-Western, Cengage Learning

Forms of OwnershipForms of Ownership

Exempt PropertyExempt PropertyUpon death, surviving spouse is automatically entitled to personal property

Property up to $10,000 plus automobiles

© 2009 by South-Western, Cengage Learning

Forms of OwnershipForms of Ownership

HomesteadHomesteadMust reside in home

Legal title as of Jan 1

File for exemption

© 2009 by South-Western, Cengage Learning

Forms of OwnershipForms of Ownership

HomesteadHomesteadRelief from debt except those from:

Property taxes

Special assessments

Mortgages

Vendor liens

Construction liens

© 2009 by South-Western, Cengage Learning

Forms of OwnershipForms of Ownership

Homestead ExemptionHomestead ExemptionAnnual property tax exemption

Credit against tax bill

Maximum amount: $25,000

© 2009 by South-Western, Cengage Learning

Forms of OwnershipForms of Ownership

Homestead ExemptionHomestead ExemptionExample:

$100,000 Assessed Value

- 25,000 Homestead Exemption$75,000 Value subject to tax

© 2009 by South-Western, Cengage Learning

Community OwnershipCommunity Ownership

Four Types

Condominiums

Cooperative

Planned-unit development

Resort time-sharing

© 2009 by South-Western, Cengage Learning

Community OwnershipCommunity Ownership

“city within a city”

Self-government

Assessments of common area maintenance

Provision for services

© 2009 by South-Western, Cengage Learning

Community OwnershipCommunity Ownership

Fee simple title to an individual unit

Separate propertySeparate property

Undivided interest in remaining elements

Common area

© 2009 by South-Western, Cengage Learning

Community OwnershipCommunity Ownership

Common PropertyCommon PropertyLand

Interior and exterior walls

Other improvements

Hallways and stairs

Recreation areas and landscaping

Parking lots

© 2009 by South-Western, Cengage Learning

Community OwnershipCommunity Ownership

Created by:

New construction

Conversion

© 2009 by South-Western, Cengage Learning

Community OwnershipCommunity Ownership

Types of condo properties:High-rise buildings

Garden apartments

Townhomes

Warehouses

Office building

Detached single family homes

© 2009 by South-Western, Cengage Learning

Community OwnershipCommunity Ownership

Enabling legislation:Horizontal Property Act

Strata Title Act

Condominium Act

Provides for horizontal subdivision of air space

Florida Condominium ActChapter 718

© 2009 by South-Western, Cengage Learning

Community OwnershipCommunity Ownership

Master deedOwnership to individual units transferred by deed

Ownership rights:Sell

Sublease

Gift

Will

© 2009 by South-Western, Cengage Learning

Community OwnershipCommunity Ownership

Owners associationOwners associationControl, regulate and maintain common areas

Fees or carrying chargesCommon area maintenance

Insurance

Management / legal fees

Common area property tax

Reserves

© 2009 by South-Western, Cengage Learning

Community OwnershipCommunity Ownership

Separate property tax bill

FinancingNo joint liability

MaintenanceCommon areas: Owners association

Individual units: Individual owners

© 2009 by South-Western, Cengage Learning

Community OwnershipCommunity Ownership

Florida Condominium Act

Declaration of condominiumDeclaration of condominium

Bylaws

Plat map

Conveyance document

© 2009 by South-Western, Cengage Learning

Community OwnershipCommunity Ownership

Disclosures

Right to rescind:New – 15 days

Resale – 3 daysRefund of deposit

© 2009 by South-Western, Cengage Learning

Community OwnershipCommunity Ownership

Title to land, building, and improvements held by not-for-profit corporation

Purchase shares of stock

Proprietary lease: Proprietary lease: occupancy agreement

Monthly maintenanceMonthly maintenance

© 2009 by South-Western, Cengage Learning

Community OwnershipCommunity Ownership

Corporation pays:Mortgage

Property tax

Repairs / maintenance

Management expenses

© 2009 by South-Western, Cengage Learning

Community OwnershipCommunity Ownership

Allocation of sharesSquare footage of unit

Location

Exposure

Floor height

View and outdoor spaceBalcony

Terrace

© 2009 by South-Western, Cengage Learning

Community OwnershipCommunity Ownership

Board may:Screen shareholders

Reject any sale

Grant permission to transfer shares

Approve or deny subleasing

Charge flip tax

© 2009 by South-Western, Cengage Learning

Community OwnershipCommunity Ownership

Cooperative Act disclosures:Legal description

Common area description

Title held

Liens

Easements

Lawsuits

Judgments

Manager

Date completed

Operating statements / budgets

Sale / resale procedures

© 2009 by South-Western, Cengage Learning

Community OwnershipCommunity Ownership

80/20 RuleCollection of rents:

Retail space

Garage rents

Cellular antennae

Satellite dish

Vending machines

Other

© 2009 by South-Western, Cengage Learning

Community OwnershipCommunity Ownership

Condo-opCondo ownership in land

Owners association

Developer ownership in land for commercial space

Retail space

Garage

© 2009 by South-Western, Cengage Learning

Community OwnershipCommunity Ownership

Cooperative setup / Condominium bylaws

Sale / leasing flexibility

Maintenance tax benefits

Per share deduction of mortgage interest

Tax benefit creates marketing tool

80/20 eliminated

© 2009 by South-Western, Cengage Learning

Community OwnershipCommunity Ownership

Individually owned homes and ownership of common areas

Association owns common areas

Unit owners own share of association

© 2009 by South-Western, Cengage Learning

Community OwnershipCommunity Ownership

Created by local zoning lawsSmaller lots increase density

Developer creates common areas

Single family detached dwellings

Attached townhomes

© 2009 by South-Western, Cengage Learning

Community OwnershipCommunity Ownership

Time shares Time shares Resort property

Unit ownership for a specified period

Organized 3 waysRight-to-use

Interval ownership

Club plan

© 2009 by South-Western, Cengage Learning

Community OwnershipCommunity Ownership

Florida Time-Share ActSales associates must be licensed

10 day right to rescind

Timeshare registered with SEC are exempt