CHAPTER 41 REAL PROPERTY AND JOINT OWNERSHIP DAVIDSON, KNOWLES & FORSYTHE Business Law: Cases and Principles in the Legal Environment (8 th Ed.)

CHAPTER 41CHAPTER 41REAL PROPERTY AND REAL PROPERTY AND

JOINT OWNERSHIPJOINT OWNERSHIP

CHAPTER 41CHAPTER 41REAL PROPERTY AND REAL PROPERTY AND

JOINT OWNERSHIPJOINT OWNERSHIP

DAVIDSON, KNOWLES & FORSYTHE DAVIDSON, KNOWLES & FORSYTHE Business Law: Cases and Principles Business Law: Cases and Principles

in the Legal Environmentin the Legal Environment (8 (8thth Ed.) Ed.)

2© 2004 West Legal Studies in Business© 2004 West Legal Studies in BusinessA Division of Thomson LearningA Division of Thomson Learning

BUSINESS LAW: BUSINESS LAW: Cases & PrinciplesCases & PrinciplesDavidson Davidson • Knowles • Forsythe 8• Knowles • Forsythe 8 thth Ed. Ed.

PROPERTY RIGHTSPROPERTY RIGHTSPROPERTY RIGHTSPROPERTY RIGHTS

Two distinctly different meanings for Two distinctly different meanings for property:property:– An object subject to ownership, a valuable An object subject to ownership, a valuable

asset.asset.– A group of rights and interests protected by A group of rights and interests protected by

law.law.



PROPERTY RIGHTSPROPERTY RIGHTS

Rights associated with owning property:Rights associated with owning property:– To use property personally.To use property personally.– Give someone else the use of it.Give someone else the use of it.– Rent it to someone else.Rent it to someone else.– Use property to secure loan.Use property to secure loan.



PROPERTY RIGHTSPROPERTY RIGHTSPROPERTY RIGHTSPROPERTY RIGHTS

Rights associated with owning property:Rights associated with owning property:– Right of support from adjoining lands.Right of support from adjoining lands.– Right to use adjacent body of water.Right to use adjacent body of water.– Limited rights to airspace.Limited rights to airspace.– Right to grow things.Right to grow things.– Right to things attached to the land.Right to things attached to the land.



REAL PROPERTY DEFINEDREAL PROPERTY DEFINEDREAL PROPERTY DEFINEDREAL PROPERTY DEFINED

Definition of Real Property:Definition of Real Property:– Land and things permanently attached to land, Land and things permanently attached to land,

like buildings and roadways.like buildings and roadways.Definition of a Fixture:Definition of a Fixture:

– Property at one time was movable and Property at one time was movable and independent of real estate but became attached independent of real estate but became attached to it.to it.

– Examples are: water heaters, built-in ovens, Examples are: water heaters, built-in ovens, installed dishwashers.installed dishwashers.



REAL PROPERTY DEFINEDREAL PROPERTY DEFINEDREAL PROPERTY DEFINEDREAL PROPERTY DEFINEDThe Nature of Plants:The Nature of Plants:

– Generally considered as real property.Generally considered as real property.– UCC classifies plants based on who will remove UCC classifies plants based on who will remove

them: them: Seller removes plants: personal property.Seller removes plants: personal property. Buyer removes plants: real property.Buyer removes plants: real property.

State Governance.State Governance.– Property laws vary from state to state.Property laws vary from state to state.– Laws of the state where property located govern Laws of the state where property located govern

land.land.



REAL PROPERTY DEFINEDREAL PROPERTY DEFINEDREAL PROPERTY DEFINEDREAL PROPERTY DEFINED

Federal Regulation:Federal Regulation:– Title III of the Americans with Disabilities Act, Title III of the Americans with Disabilities Act,

regulates property open to the public to regulates property open to the public to accommodate those with a disability.accommodate those with a disability.

– Violators subject to damages and civil Violators subject to damages and civil penalties.penalties.



ACQUISITION OF REAL ACQUISITION OF REAL PROPERTYPROPERTY


Original Occupancy:Original Occupancy:– Private ownership of land previously owned by the Private ownership of land previously owned by the

government.government.– May be accomplished by outright grants or homestead May be accomplished by outright grants or homestead

entry laws.entry laws.

Voluntary Transfer by the Owner:Voluntary Transfer by the Owner:– Transfer accomplished by written deed.Transfer accomplished by written deed.– Deed is evidence used for real estate and indicates who Deed is evidence used for real estate and indicates who

owns the land.owns the land.– Written document required by Statutes of Fraud.Written document required by Statutes of Fraud.



Voluntary Transfer by the Owner.Voluntary Transfer by the Owner.– Warranty deed: contains implied covenants to Warranty deed: contains implied covenants to

effect that a good and marketable title is being effect that a good and marketable title is being conveyed.conveyed.

– Grant deed: includes covenant that grantor has Grant deed: includes covenant that grantor has not conveyed property interest to anyone else not conveyed property interest to anyone else and all the encumbrances are listed on the deed.and all the encumbrances are listed on the deed.

– Quitclaim deed: grantor makes no promises Quitclaim deed: grantor makes no promises about property interest.about property interest.





Delivery of the Deed: Grantor delivers deed Delivery of the Deed: Grantor delivers deed to grantee to complete transfer or uses a to grantee to complete transfer or uses a third person to deliver.third person to deliver.

Recording of the Deed: Accomplished by Recording of the Deed: Accomplished by filing the deed with the proper authority.filing the deed with the proper authority.– Not a legal prerequisite to transfer, but Not a legal prerequisite to transfer, but

establishes grantee’s interest in the property.establishes grantee’s interest in the property.





Transfer by Will or Intestate Succession.Transfer by Will or Intestate Succession.– Person arranges to transfer real property by Person arranges to transfer real property by

provisions in a valid will.provisions in a valid will.– If person doesn’t have valid will pass by If person doesn’t have valid will pass by

intestate succession statute of state where intestate succession statute of state where property is located.property is located.

– Intestate statute determines who inherits Intestate statute determines who inherits property if valid will does not exist.property if valid will does not exist.





PROTECTION OF REAL PROTECTION OF REAL PROPERTYPROPERTY


Real property subject to loss: Real property subject to loss: – By operation of law.By operation of law.– Due to actions of government.Due to actions of government.– Due to actions of another person.Due to actions of another person.– Or by act of nature.Or by act of nature.

Such losses are generally involuntary on Such losses are generally involuntary on part of the owner.part of the owner.





Involuntary Transfers by Operation of Involuntary Transfers by Operation of Law.Law.– Lender may foreclose if a person is in default Lender may foreclose if a person is in default

on a mortgage.on a mortgage.– Property may be attached to satisfy a legal Property may be attached to satisfy a legal

judgment.judgment.– Failure to pay for labor or materials will create Failure to pay for labor or materials will create

a mechanic’s liens.a mechanic’s liens.





Involuntary Transfers by Government Involuntary Transfers by Government Action.Action.– Government has right to take private land for Government has right to take private land for

public use. public use. – This right is called eminent domain. This right is called eminent domain. – Government must have legitimate use and must Government must have legitimate use and must

pay owner a reasonable amount of money.pay owner a reasonable amount of money.– Government may enact zoning and planning Government may enact zoning and planning

laws that restrict how the property may be used.laws that restrict how the property may be used.





Private Restrictions on Land Use:Private Restrictions on Land Use:– Restrictive covenants may limit how land can Restrictive covenants may limit how land can

be used.be used.– These are private agreements between These are private agreements between

landowners on the use of the property.landowners on the use of the property.




Adverse Possession:Adverse Possession:– Occurs when someone tries to take title and Occurs when someone tries to take title and

possession of real estate from the owner.possession of real estate from the owner.– If possession is of an adverse nature and If possession is of an adverse nature and

continues for sufficient length of time, adverse continues for sufficient length of time, adverse possessor may take ownership from true owner.possessor may take ownership from true owner.




Adverse Possession.Adverse Possession.– For possession to be adverse, it must be actual, For possession to be adverse, it must be actual,

open, and notorious. open, and notorious. Actual: adverse possessor is actually on land and is Actual: adverse possessor is actually on land and is

using real estate in a reasonable manner.using real estate in a reasonable manner. Open: must be obvious that adverse possessor is on Open: must be obvious that adverse possessor is on

the property.the property. Notorious: must be adverse or hostile to the true Notorious: must be adverse or hostile to the true

owner.owner.

– Required holding period varies from state to Required holding period varies from state to state and is specified by state statute.state and is specified by state statute.




Easements: Person entitled to use the land Easements: Person entitled to use the land of another in a particular manner.of another in a particular manner.– Not a right to own, but the right to use property Not a right to own, but the right to use property

in a particular manner.in a particular manner.Easements created by:Easements created by:

– Express.Express.– Prescription.Prescription.– Contract.Contract.– Necessity.Necessity.– Implication.Implication.



RENTAL OF REAL PROPERTYRENTAL OF REAL PROPERTYRENTAL OF REAL PROPERTYRENTAL OF REAL PROPERTY

Types of Tenancies:Types of Tenancies:– Owner of real property may allow others to use Owner of real property may allow others to use

their property.their property.– Exchanging temporary possession of property Exchanging temporary possession of property

for money or other consideration is a rental for money or other consideration is a rental agreement.agreement.

– Tenancies are governed by the rules of both Tenancies are governed by the rules of both contract law and real estate law.contract law and real estate law.



RENTAL OF REAL PROPERTYRENTAL OF REAL PROPERTYRENTAL OF REAL PROPERTYRENTAL OF REAL PROPERTY Types of Tenancies:Types of Tenancies:

– Tenancy for a fixed term: automatically expires after a Tenancy for a fixed term: automatically expires after a set period of time.set period of time.

– Periodic tenancy: starts at specific time and continues Periodic tenancy: starts at specific time and continues for successive periods until expired.for successive periods until expired.

– Tenancy at will: terminated by landlord or tenant at Tenancy at will: terminated by landlord or tenant at will.will.

– Tenancy at sufferance: tenant entered into possession Tenancy at sufferance: tenant entered into possession properly and with landlord’s permission but wrongfully properly and with landlord’s permission but wrongfully remains on the property.remains on the property.




Rights and Duties of Tenants:Rights and Duties of Tenants:– Tenants rents the right to exclusive possession Tenants rents the right to exclusive possession

and control of premises.and control of premises.– Landlord not entitled to enter the premises.Landlord not entitled to enter the premises.– Tenant is allowed to remove trade fixtures, but Tenant is allowed to remove trade fixtures, but

if removal causes damages, tenant must repair.if removal causes damages, tenant must repair.– Tenants do not have an obligation to make Tenants do not have an obligation to make

major improvements.major improvements.



RENTAL OF REAL PROPERTYRENTAL OF REAL PROPERTY Rights and Duties of Tenants:Rights and Duties of Tenants:

– Warranty of Habitability: landlord impliedly promises Warranty of Habitability: landlord impliedly promises that premises will be fit for living.that premises will be fit for living.

– Constructive Eviction: owner does not protect interest of Constructive Eviction: owner does not protect interest of tenant and allows material interference with tenant’s tenant and allows material interference with tenant’s enjoyment of premises. enjoyment of premises.

– Assignments and Subleases: allowed unless prohibited Assignments and Subleases: allowed unless prohibited by lease. Transfer of the tenant’s entire interest in the by lease. Transfer of the tenant’s entire interest in the lease (assignment); tenant transfers only part of interest lease (assignment); tenant transfers only part of interest and retains the balance (sublease).and retains the balance (sublease).




Rights and Duties of Landlords:Rights and Duties of Landlords:– Have right to retake possession of property at Have right to retake possession of property at

the end of the lease.the end of the lease.– Rent: compensation landlord receives in Rent: compensation landlord receives in

exchange for granting tenant the right to use the exchange for granting tenant the right to use the property.property.

– Damages by the Tenant: landlord has right to Damages by the Tenant: landlord has right to reimbursement from tenant for any damages reimbursement from tenant for any damages caused by the tenant.caused by the tenant.



RENTAL OF REAL PROPERTYRENTAL OF REAL PROPERTY Rights and Duties of Landlords:Rights and Duties of Landlords:

– Security Deposits: money to be used after tenant has Security Deposits: money to be used after tenant has vacated the premises to repair any damage vacated the premises to repair any damage negligently/intentionally caused by tenant.negligently/intentionally caused by tenant.

– Duty to Protect a Tenant and His or Her Guests: Duty to Protect a Tenant and His or Her Guests: landlord does not warrant premises are safe but does landlord does not warrant premises are safe but does have duty to warn tenant of latent defects.have duty to warn tenant of latent defects.

– Rights After Abandonment by a Tenant: tenant Rights After Abandonment by a Tenant: tenant wrongfully abandons premises during the term of the wrongfully abandons premises during the term of the lease, landlord has several options.lease, landlord has several options.



LEGISLATIVE TRENDSLEGISLATIVE TRENDSLEGISLATIVE TRENDSLEGISLATIVE TRENDS Discrimination in housing prohibited by federal Discrimination in housing prohibited by federal

statutes.statutes. Amendment increased the amount of protection by Amendment increased the amount of protection by

providing methods for enforcement:providing methods for enforcement:– HUD can initiate lawsuit in federal court or before HUD can initiate lawsuit in federal court or before

administrative law judge, if all parties agree. administrative law judge, if all parties agree. – Person subjected to discrimination can file suit in state Person subjected to discrimination can file suit in state

or federal court.or federal court.– U.S. attorney general can file suit if pattern or practice U.S. attorney general can file suit if pattern or practice

of discrimination exist.of discrimination exist.



LEGISLATIVE TRENDSLEGISLATIVE TRENDSTo recover retaliatory eviction tenant must To recover retaliatory eviction tenant must

prove:prove:– Complaint was bona fide, reasonable, and Complaint was bona fide, reasonable, and

serious.serious.– Did not create the problem.Did not create the problem.– Complaint was filed before the landlord began Complaint was filed before the landlord began

eviction proceedings.eviction proceedings.– Primary reason landlord began eviction Primary reason landlord began eviction

proceedings was to retaliate against the tenant for proceedings was to retaliate against the tenant for filing complaint.filing complaint.



JOINT OWNERSHIP OF JOINT OWNERSHIP OF PROPERTYPROPERTY


Exist when two or more people have Exist when two or more people have concurrent title to property.concurrent title to property.

Five forms of joint ownership recognized in Five forms of joint ownership recognized in property law.property law.

Each of co-owners have undivided right to Each of co-owners have undivided right to use the whole property.use the whole property.

Most forms of co-ownership created Most forms of co-ownership created voluntarily or by someone else.voluntarily or by someone else.




Primary remedies to resolve a dispute are:Primary remedies to resolve a dispute are:– To sell property and divide the proceeds.To sell property and divide the proceeds.– To divide the property equitably and give each tenant a To divide the property equitably and give each tenant a

separate parcel.separate parcel.

Tenancy in Common:Tenancy in Common:– Exists when two or more people have an undivided right Exists when two or more people have an undivided right

to use the whole property.to use the whole property.– Tenant may sell, assign, give, and in a valid will, pass Tenant may sell, assign, give, and in a valid will, pass

his/her interest.his/her interest.– No valid will, then interest passes to heirs.No valid will, then interest passes to heirs.





Joint Tenancy with Rights of Survivorship:Joint Tenancy with Rights of Survivorship:– Each tenant has an equal interest in the Each tenant has an equal interest in the

property.property.– Interest passes to other tenants upon death of a Interest passes to other tenants upon death of a

tenant. tenant. – Will has no effect on this type of tenancy.Will has no effect on this type of tenancy.





Tenancy by the Entireties:Tenancy by the Entireties:– Tenants must be husband and wife, who share Tenants must be husband and wife, who share

the property.the property.– Each tenant is a joint owner in the whole Each tenant is a joint owner in the whole

property.property.– One spouse dies, the survivor receives the One spouse dies, the survivor receives the

property.property.




Community Property:Community Property:– Each spouse owns one-half of property Each spouse owns one-half of property

accumulated during marriage.accumulated during marriage.– Separate property includes:Separate property includes:

Property acquired before marriageProperty acquired before marriage Inherited, received by gift, or by intestate succession Inherited, received by gift, or by intestate succession Purchased with separate fundsPurchased with separate funds





Distinguishing Among the Forms of Joint Distinguishing Among the Forms of Joint Ownership:Ownership:– If tenants are married, most states presume If tenants are married, most states presume

community property or entireties property.community property or entireties property.– If state recognized neither form, it will presume If state recognized neither form, it will presume

a joint tenancy with the right of survivorship.a joint tenancy with the right of survivorship.– If tenants are not married, most states presume If tenants are not married, most states presume

a tenancy in common.a tenancy in common.




Transfer on Death Ownership:Transfer on Death Ownership:– Transfer on death or pay on death ownership Transfer on death or pay on death ownership

should be distinguished from forms of joint should be distinguished from forms of joint ownership.ownership.

– Recipient does not have an interest in the asset Recipient does not have an interest in the asset during the owner’s life.during the owner’s life.

– Recipient entitled to the assets at the owner’s Recipient entitled to the assets at the owner’s death.death.

CHAPTER 41 REAL PROPERTY AND JOINT OWNERSHIP DAVIDSON, KNOWLES & FORSYTHE Business Law: Cases and Principles in the Legal Environment (8 th Ed.)

Documents

owning property

property rights rights

property laws

personal property

definition of real property

knowles forsythe business

west legal studies

limited rights