Chapter 3: Interests and Estates

Front

An interest in real estate is best defined as ownership of one or more of the bundle of rights to real property.

Back

one or more of the bundle of rights to real property

Answer explanation

Pg. 29

An interest in real estate is ownership of any combination of the bundle of rights to real property including the rights to:

- possess

-use

-transfer

-encumber

-exclude

Front

Encumbrances and police power are examples of

Back

interests that do not include possession

Answer explanation

Pg. 30

Private interest holder does not have right to possess, the interest is an encumbrance (government entity)

Police Power - right of the local government to zone.

Front

What distinguishes a freehold estate from a leasehold estate?

Back

A leasehold endures only for a specific period of time.

Answer explanation

Pg. 31

Freehold estate - the duration of owners rights can not be determined, rights may endure for a lifetime

Leasehold estate- is distinguished by specific duration, as represented by the lease term.

Front

The highest form of ownership interest one can acquire in real estate is

Back

absolute fee simple estate

Answer explanation

Pg. 32

Fee simple is the highest form of ownership interest.

Fee simple absolute - perpetual estate that is not conditioned by stipulated or restricted uses and can be freely passed on heirs.

Front

The distinguishing feature of a defeasible fee simple estate is that

Back

the estate may revert to a grantor or heirs if the prescribed use changes.

Answer explanation

pg. 33

The defeasible fee estate is perpetual, provide the usage conforms to stated condition:

- property must be used for certain purposes under certain conditions

-if the use changes or if prohibited conditions are present the estate reverts back to the grantor of the estate

Front

Upon the death of an owner, a life estate passes to

Back

the original owner or other named person

Answer explanation

pg. 33

A life estate is a freehold estate that is limited to the duration to the life of the owner. Upon death of the owner, the estate passes to the original owner or another named party.

Front

How is a conventional life estate created?

Back

A fee simple owner grants the life estate to a life tenant.

Answer explanation

Pg. 34

A conventional life estate is created by grant from a fee simple property owner to the grantee, the life tenant.

Front

What establishes a pur autre vie life estate from an ordinary life estate?

Back

The pur autre vie estate endures only for the lifetime of a person other than the grantee.

Answer explanation

Pg. 35

A pur autre vie life estate endures over the lifetime of a third person, after which the property passes from the tenant holder to the original grantor or their party.

Front

Which of the following life estates is created by someone other than the owner? Conventional life estate, Ordinary life estate, Legal life estate, Community property life estate

Back

Legal life estate

Answer explanation

Pg. 35

A legal life estate is created by state law as opposed to being created by a property owner.

The focus of a legal life estate is defining and protecting the property rights of surviving family members upon the death of husband or wife.

Front

Which of the following is true of a homestead? A homestead interest cannot be conveyed by one spouse, A homestead interest cannot be passed to the children of the head of house, A homestead interest is a form of conventional life estate, A homestead is a primary or secondary residence occupied by a family

Back

A homestead interest cannot be conveyed by one spouse

Answer explanation

Pg. 35

Homestead laws protect family members against losing their homes to general creditors attempting to collect debts.

Laws provide

-all or portions of ones homestead is exempt from sale

-tax, debts, seller financing debts, improvements, mortgage debt are not exempt

- the family must occupy the homestead

-the homestead interest can not be conveyed by one spouse

-homestead exemptions and restrictions endure over the life of the head of household and pass to children

-homestead interests are extinguished if the property is sold or abandoned

-some states exemption is automatic, must file for exemption