Module 3: Legal Issues

Transcription

1 Module 3: Legal Issues Glossary Abstract of Title: An abstract is a summary of all actions relating to the history of a property. Liens, zoning changes, judgments, and recorded easements are some of the items that would be included in the abstract. It is prepared by an abstractor, or title examiner, who works at the county clerk s office, as part of the title examination process. Accession: Accession refers to the acquisition of new land or real property by natural or by artificial means. If a tenant were to leave trade fixtures on the premises after the termination of a lease, the landlord would acquire ownership of those fixtures by accession. Land may build up along bodies of water, and the owner of the adjacent land would acquire title to the new land by accession. Accretion: The buildup of land along bodies of water is called accretion. Acknowledgment: An acknowledgement is an individual s formal declaration in a legal document such as a deed that he is acting voluntarily. This declaration is made by signing a document in the presence of a notary public or other duly authorized public officer. An acknowledgment serves as public proof that signatories are who they say they are and that they have acted voluntarily. Act of Waste: Act of waste describes the damage, abuse, or destruction of property, causing it to lose value, especially by one who holds less than a fee simple interest, such as the holder of a life estate or a tenant. Adverse Possession: Title may rarely be transferred by adverse possession when one person develops legitimate ownership interests in another person s property through an openly hostile and continuous (10 years in New York) occupation of the land without the owner s permission. Air Rights: These rights refer to the use of the airspace above a property, which may be sold or leased independently of the tract itself. Alluvion/Alluvium: The actual mud and sand worn away by erosion and deposited by accretion is called alluvion or alluvium. 1 Module 3: Legal Issues NY Real Estate Salesperson

2 Alteration: The change in the value of land resulting from its development, modification, or the erection of buildings and other improvements, is called alteration. Appurtenance: An appurtenance is any right, benefit, or improvement that becomes part of the real property. Appurtenances are said to run with the land as they transfer along with the property. Assessments: An assessment is a tax or other charge levied on a property owner. Taxing authorities assess taxes. Condominium boards, for example, may assess their members for repairs or improvements. Avulsion: The sudden loss of land, such as by landslide or earthquake, is called avulsion. Bargain and Sale Deed with Covenant: This commonly-used type of deed adds only one covenant. Grantors declare that they have an actual interest in the real property, and the single covenant states that the grantor did nothing to encumber the property during the period of the grantor s ownership. The grantor makes no other warranty about the title prior to the time the grantor gained ownership. Bargain and Sale Deed without Covenant: A bargain and sale deed offers no warranty against defects in title or any associated encumbrances. Grantors declare that they have an actual interest in the real property, and the bargain and sale deed conveys all of a grantor s interest to a grantee. Beneficiary: This is the person who holds equitable ownership of the trust assets; the individual who receives the income from property held in trust or, eventually, the property itself (see Trust). Bundle of Rights: The bundle of rights refers to the principle that ownership of real property encompasses many rights, normally including the right to control the use of the property, the right to exclude others from the property, the right to possess the property, the right to dispose of the property, and the right to enjoy the property. Chain of Title: As part of the abstract, the abstractor will also prepare a chain of title, which is a listing of all previous grantors and grantees. Chattel: Personal property, chattel, and personalty are frequently used synonymously. Technically, chattel refers only to the actual objects themselves and not to the rights associated with ownership. Closing Statement: A closing statement is a document presenting a full accounting of all the funds associated with a real estate closing. It is essentially a snapshot showing the receipt and disbursement 2 Module 3: Legal Issues NY Real Estate Salesperson

3 of all funds as of the day of closing. The final result indicates how much the buyer must bring in cash or certified funds, as well as how much the seller will receive. Consideration: Consideration is a promise by the grantor and grantee to exchange something of value to demonstrate that both parties agree to the terms of the contract or deed. Consideration may be money, a specific item, or the performance of services that both parties determine to be of value. Consideration distinguishes a contractual agreement from a gift. Constructive Notice: The legal presumption that everyone has knowledge of a fact when the fact is a matter of public record is known as constructive notice. In real estate, constructive notice is accomplished by recording relevant documents with the office of the county recorder in which the property is located. Conveyance: The grantor s interest in property that is being transferred by a deed or will is known as the conveyance. The granting clause in a deed, also called words of conveyance, is a specific part of a deed that states the grantor s wish to convey his current interest in a specific, identified property to the grantee. Credits: A credit on a closing statement is a positive balance or a positive amount. Credits reflect expenses that have been paid by a particular individual or expenses that are owed to that individual. Curtesy/Dower: Historically used to protect the rights of a surviving spouse, dower is a wife s automatic interest in her deceased husband s property. Conversely, curtesy is a husband s automatic interest in his deceased wife s property. Dower and curtesy are no longer recognized by New York law. Debits: A debit is a negative balance or a negative amount. On closing statements, debits reflect charges made to the parties involved in the transaction. Dedication/Dedication by Deed: Dedication is the voluntary gift of one s land to the public. Some dedications are philanthropic in that conveyance to the government is for the good of the public. Other dedications often result from the development of a subdivision when the developers dedicate land for schools, parks, utilities, and streets. Deed: A deed is the written instrument used to legally transfer title from one person to another by voluntary conveyance. Delivery and Acceptance: Title actually passes from the grantor to the grantee when the deed is delivered to, or accepted by, the grantee. Acceptance means that the grantee receives the deed and 3 Module 3: Legal Issues NY Real Estate Salesperson

4 agrees to be bound by the terms of the agreement. Acceptance generally must be in writing; but, it also may be inferred from certain acts of the grantee, such as taking possession of the property, recording the deed, or paying the sale price. These alternative forms of acceptance eliminate the need for the grantee to sign the deed. Description (Legal Description): A legal description is defined as a method of describing the precise location of real estate in a manner that would be acceptable by a court of law. It is necessary to include the legal description of the property in a deed in order to distinguish it from all other properties. The exact boundaries of a property can be described by a metes and bounds survey, by use of the rectangular survey system, by referencing recorded plats with the lot and block system, or sometimes by referencing pre-existing documents. Dominant Tenement/Servient Tenement: With most easements, there must be two adjacent tracts of land owned by different parties. The tract that benefits from the easement is said to be the dominant tenement. The tract over which the easement runs is said to be the servient tenement. In other words, the land whose owner has the right to cross over another s land is the dominant tenement. The tract that is crossed over is the servient tenement. (See Easement Appurtenant) Durability: Durability refers to the permanence of land. While its economic value and surface appearance may change, land is considered to be indestructible. This durability also makes transference of land to others, such as heirs, possible. Easement Appurtenant: An appurtenance is any right, benefit, or improvement that becomes part of the real property. To create an easement appurtenant (or appurtenant easement) there must be two adjacent tracts of land owned by different parties. Once established, easements run with the land, meaning that if the dominant tenement is sold, the easement is included in the sale and will be so forever. If created in a deed, the term easement by grant is sometimes used. New York utilizes a special Grant of Easement document when an easement appurtenant is being created between two landowners. Easement by Condemnation: If the government needed to create an easement for the benefit of the public, the government could obtain the easement through condemnation proceedings. Unlike the government s power of eminent domain, the creation of an easement by condemnation does not allow the government ownership of the land, only the use of the land. The government would be required to pay the affected property owner a fair market value price for the use of the easement. Easement by Grant: An easement expressly created by deed or other formal document. (See Easement Appurtenant) 4 Module 3: Legal Issues NY Real Estate Salesperson

5 Easement by Implication: An easement by implication may be created when an owner of a property sells only the rear portion of the property to a third party. The seller and the purchaser did not discuss an easement for access to the newly separated property; however, since there is no other way to get to the property, it is understood, or implied, that the seller and the purchaser intend for there to be an easement over the original owner s remaining property. Easement by Necessity: Property owners have an expectation that they will be able to access their property. If someone purchases property that is landlocked and the seller refuses to grant an easement, court action may be necessary. If certain conditions are met, the court will probably grant an easement, which is known as an easement by necessity. The key points are that the easement is necessary to avoid landlocked property and that court action may be required. Easement by Prescription: If a third party uses the property of another as if he has been granted an easement and every right to use it, the third party may be able to claim the permanent right to the easement after a designated (or prescriptive) period of time. The prescriptive period in New York is 10 years. Easement for Light and Air: An easement for light and air may be obtained from an adjoining land owner to protect against the obstruction of light and air that would result if a building or other structure were constructed on the grantor's property. An easement for light and air would normally run with the land and be enforceable against new owners who wish to interfere with the view or ventilation of the property holding the easement. Easements for light and air cannot be created by implication. They must be express agreements. Easement in Gross: An easement in gross is the permanent right to use someone else s land. Many easements in gross are used as rights-of-way by utility companies or railroads. An easement in gross consists of only one property and is said to be an individual interest with no dominant tenement. Easement: Easements refer to a right to use the land of another for a particular purpose. An easement is an incorporeal right in land in that it conveys only the right to use and does not convey ownership or possession. Emblements: Annual growing crops, or emblements, which must be replanted each year, are considered personal property, even prior to harvesting. 5 Module 3: Legal Issues NY Real Estate Salesperson

6 Encroachment: Encroachments occur when some part of a fence, building, driveway, etc., extends illegally onto an adjoining property. The owner of the affected property may be able to legally force the encroaching property owner to pay damages or to remove the encroachment. Encumbrance: An encumbrance is any claim, charge, lien, or liability attached to and binding upon real property that may have an effect on the title and thereby lessen the value of the property. It is some right or privilege held in the property by someone who is not the owner of the property. Encumbrances could be a recordable document, such as a lien, or something physical, such as an easement or an encroachment. Escheat: The term is used to describe the transfer of the title of a decedent s property to the government when the person died intestate and with no heirs. Estate at Sufferance: An estate at sufferance (tenancy at sufferance) is created when a tenant illegally maintains possession of the property without the consent of the landlord. Estate at Will: An estate at will is a more informal type of lease agreement in that it has no specific ending date, and, therefore, no exact period of tenancy. It will continue so long as the landlord allows the tenant to remain. The termination of an estate at will is often tied to the occurrence of some future event. Estate for Years: An estate for years refers to a leasehold estate for any specific period of time. The term need not be for exactly a year; therefore, the word years is somewhat of a misnomer. An estate for years does not automatically renew. Estate from Period to Period: A periodic estate (also known as a periodic tenancy ) is created by a lease agreement that defines the estate as automatically renewing for consecutive periods of time. The most familiar type of periodic estate is created with month-to-month leases. Estate: Estate refers to the degree, nature, extent, and quantity of interest one has in real property. For someone to have an estate in real property, he must also have some way to possess the property. Executor s Deed: This type of deed is used by an executor, the individual named in the will of a deceased person, to administer the terms of the will. The executor s deed is used to convey the title of the deceased person's real property to a purchaser, heir, or devisee. An executor s deed is very similar to a bargain and sale deed with covenant. 6 Module 3: Legal Issues NY Real Estate Salesperson

7 Fee Simple Estate: An estate in fee simple (Fee, Fee Absolute) is the highest and most complete form of land ownership recognized by law. Fee simple means that ownership will not end at the death of the owner; it will be passed on to the heirs. Owners of fee simple estates may use, sell, devise, give away, or otherwise dispose of real property in any way they wish, within the limits of the law. Fixity: The investment permanence of land, known as fixity, refers to the idea that the cost of improving land may take many years to recoup. (See also Illiquidity) Fixture: A fixture refers to an item that was once personal property that has now been firmly attached to the land in such a way that it becomes part of the real estate. Freehold Estate: This term refers to actual ownership of property and the exclusive right to enjoy the possession and use of the property for an indefinite period. Full Covenant and Warranty Deed: Also known as a general warranty deed, this deed provides the grantee the maximum protection possible in that the grantor warrants the title to be clear of defects, and further agrees to assume all liabilities regarding any future claims on the title. General Lien: General liens affect all of the property, both real and personal, owned by the debtor. These liens include many kinds of taxes, such as delinquent state or federal income taxes. General liens also result from decedent s debts, judgments as the result of court action, estate taxes, and corporate franchise taxes. Grantee: The grantee is the individual who accepts the title from the grantor. Without a named, legally valid grantee, a deed cannot convey title. Grantor: The grantor is the individual who voluntarily conveys title to another person. In order to be party to the conveyance of title by deed, the grantor must be legally competent to enter into a contract. Habendum Clause: The habendum clause in a deed describes the extent of the ownership interest that is being conveyed. If anything less than a fee simple estate is being transferred, such as a qualified fee or fee on condition, those limitations or conditions would be stated in the habendum clause. Homestead Laws: Laws which provide a surviving spouse with shelter, protection from the forced sale of the primary home, and exemptions from property taxes, are known as homestead laws or homestead exemptions. Many states have homestead laws; however, New York does not. 7 Module 3: Legal Issues NY Real Estate Salesperson

8 Illiquidity: Liquidity refers to how easily a product or commodity may be bought and sold, with minimal loss of value. Real estate is considered to demonstrate illiquidity as it usually cannot be sold or converted to a cash equivalent quickly, as investments in the stock market can be, for example. Immobility: The characteristic of land relating to the fact that land is considered to be immovable. A parcel of land cannot be moved to another location. Involuntary Alienation: Involuntary alienation occurs when property is conveyed against the owner s wishes, usually by operation of law. Examples of involuntary alienation include foreclosure, eminent domain, and adverse possession. Involuntary Lien: Involuntary liens encumber property against the owner s wishes. Examples of involuntary liens include those placed for unpaid property taxes, judgments, or special assessments. Joint Tenancy: Co-ownership with the right of survivorship is called joint tenancy. If a joint tenant dies, the surviving joint tenants acquire the deceased co-owner s interest in the property, without regard to wills or laws of descent and distribution. Joint Venture: A joint venture is an entity formed between two or more parties to undertake an economic activity. The parties agree to create a new entity by both contributing to the joint venture, and then sharing the expenses, control, and revenues. A joint venture may be for one specific project only, or it may be on a continuing basis. Land Patent: A land patent is title to a tract of land, granted by a federal or state government to an individual or a private company. In the original 13 colonies, the proprietor, or representative of the government would grant land patents. In the United States, all land can be traced back to land originally claimed by France, Spain, the United Kingdom, Mexico, Russia, or Native Americans. In British colonial America, the King of England made large grants of territory to individuals and companies. In turn, royal colonial governors later made smaller grants of land based on actual surveys of the land. In New York, chains of title frequently date back to a grant from the King of England or to grants from Dutch noblemen. Land patents are no longer used. Land: Land is defined the surface of the earth, extending downwards to the center, and upwards to infinity, and includes all things placed there by nature. Leasehold Estate: Leasehold estates refer to lease or rental interests in property. Leasehold interests are rightfully considered to be estates because the tenants have the legal right to possess the property, 8 Module 3: Legal Issues NY Real Estate Salesperson

9 the key distinction regarding estates. Lessees (tenants) have permission to possess, use, and occupy real property owned by the lessor (landlord) for a specified period of time, in accordance with the terms of the lease agreement. License: A license is a personal, revocable privilege to enter the land of another for a specific purpose. A license does not convey possession or the right to occupy the property. A license differs from an easement in that it can be terminated at any time by the licensor. Lien: A lien is a claim placed against a property in order to secure the payment of a debt; therefore, liens are encumbrances that concern monetary claims. Life Estate: A life estate is a freehold estate in which the interest in the property is held until the death of the owner or some other person specified by the grantor of the estate. Unlike other freehold estates, life estates cannot be inherited by the heirs of the grantee. Transfer of property ownership following the end of a life estate occurs according to the provisions stipulated by the grantor. Lis Pendens: Lis pendens, Latin for "litigation pending," refers to any pending lawsuit or to a specific situation when public notice of a lawsuit has been recorded. This notice protects a pending claim on the property. Littoral Rights: Littoral rights refer to rights concerning properties abutting oceans, seas, and lakes, rather than rivers and streams (riparian rights). Littoral rights are usually concerned with the use and enjoyment of the shore. Ownership generally extends to the mean high water mark. Lot and Block: The lot and block system of legal description, also known as lot, block, and subdivision or recorded plat methods, is commonly used when tracts of land are divided into individual parcels, or lots, for sale or development. The recorded plat of a subdivision becomes a legal description of the property. Individual parcels may now be legally described by stating their lot and block numbers in reference to the applicable recorded plat. Marketable Title: A marketable title is one that is considered to be free from defects and encumbrances, thereby permitting an owner to sell or transfer a property freely, and it is generally understood to be a title that prospective buyers can or should accept without objection. When accepting a marketable title, a buyer can usually feel secure in the purchase because a marketable title is one that the buyer will most likely not have to defend against other claimants. 9 Module 3: Legal Issues NY Real Estate Salesperson

10 Mechanics Lien: Anyone who supplies materials or labor to a job site and is not compensated may file a mechanics lien, which is a claim against the real estate for materials supplied and work performed. Mechanics liens are a crucial means for individuals to ensure payment for the work they perform. Metes and Bounds: Metes and bounds is a legal method for describing land that gives the exact dimensions and location of a parcel in reference to a man-made, or possibly naturally-fixed, monument. The surveyor then records the parcel's distance and direction from the monument by measuring the perimeter of the lot in feet, usually to 10ths or 100ths of a foot. He indicates direction in degrees, minutes, and seconds. Mortgage: A mortgage is the transfer of an interest in property to a lender as security for a debt. When the terms of the mortgage have been satisfied, the mortgage ends. If the borrower does not repay the debt as promised, the lender may foreclose. Opinion of Title: A legal document prepared by an attorney, who generally works for a title company, after an examination of the instruments (deeds, liens, etc.) in the chain of title. In the document, the attorney expresses his opinion regarding whether or not a particular parcel of real property has good and marketable title. This is not a guarantee of title. Partition (Partition Suit): A partition suit is a court action to dissolve a joint tenancy when the parties do not voluntarily agree to its termination. If the parties cannot agree on how to divide the property, the court may force the sale of the property and order the distribution of the proceeds to the joint tenants. Partnership: A partnership is created when two or more parties agree to combine their property and talents to create a for-profit business. Partnerships are often favored over corporations for tax reasons, as the partnership does not have to pay taxes on profits before they are distributed. Partners, however, usually have greater personal liability than they would as shareholders of a corporation. Party Wall: When referring to easements, a party wall is described as a common wall between two buildings, constructed directly on the property line. The law states that each owner owns her half of the party wall and has an easement right in the other half of the party wall. The party wall cannot be modified or demolished without consent of both owners. Each owner is responsible for the maintenance of her half of the wall. Personal Property: Personal property (personalty, chattels) is all property that does not fit the definition of real property. Personal property is generally moveable and transfers with a bill of sale rather than a deed. 10 Module 3: Legal Issues NY Real Estate Salesperson

11 Possessory/Non-Possessory Interests: Possessory interests refer to the rights to control a property and to exclude others from the property. Tenants are normally said to have possessory interests, in that they have possession without ownership. Non-possessory interests, such as easements and licenses, do not allow possession or the right to occupy a property; but, only the right to use. Prorations: Closing statement expenses that are handled directly between the buyer and the seller are called adjustments or prorations. Expenses, and sometimes income, are allocated proportionately between the buyer and the seller based on when the charges or expenses are due and paid. Public Grant: A public grant occurs when land is passed from the government to private parties. One example of public grants would be the sale of closed military bases to developers. (See Land Patent) Qualified Fee (Defeasible Fee): An estate that is transferred by the grantor with a less-than-absolute interest due to specific conditions or contingencies, with which the grantee must comply, contained in the deed. These types of estates may start out as strong as fee simple estates; however, the occurrence or non-occurrence of certain events may cause the new owner to lose the property. Qualified Fee Determinable: A qualified fee determinable estate is a type of freehold estate that has a specific limitation regarding the use of the property. If the new owner (grantee) fails to comply with the terms of the limitation, the former owner (grantor) has the right to recover ownership of the property. Qualified Fee on Condition: An estate in qualified fee on condition (also known as subject to a condition subsequent) is one in which the former owner in fee simple (the grantor) has specified that the new owner (the grantee), as well any heirs or assigns, cannot violate a stipulated condition. If the condition is violated, the former owner retains the right of re-entry, a legal mechanism through which the current estate ends and the former owner can recover fee simple ownership. Quitclaim Deed: A quitclaim deed releases a grantor s interest, if any, in a subject property to a grantee. The grantor does not state in the deed that he has any title or interest to the property, and it effectively conveys, or quits, whatever interest he may have. A quitclaim deed carries no warranties whatsoever. Real Estate (Realty): The term real estate encompasses everything in the definition of land, while also adding man-made permanent buildings and structures (known as improvements) to the definition. Real estate, also known as realty, is basically the land and everything permanently attached to it either by nature or by man. (See Land, Real Property) 11 Module 3: Legal Issues NY Real Estate Salesperson

12 Real Estate Settlement Procedures Act (RESPA): RESPA is a federal law affecting many real estate closings. RESPA is a consumer protection statute that aims to help educate consumers about closing and settlement services. RESPA applies to most residential purchases secured by federally-related mortgages. Among its many stipulations, RESPA requires full disclosure of estimated and actual closing costs and the use of the HUD-1 closing statement form. RESPA also prohibits kickbacks or referrals paid by lenders. Real Property: While real estate refers to the land and the improvements, real property refers to both the real estate and the set of rights associated with ownership of real estate. (See Land, Real Estate) Reconciliation: The debits and credits of the buyer and seller are balanced out, or reconciled, as the final step on a closing statement. The result of the reconciliation will indicate the amount of additional funds that are due from the buyer and how much the seller will receive. Referees Deed: In New York, a referee is a court-appointed officer who conducts tax and foreclosure sales. The referee will prepare a referee s deed to the highest bidder. It is essentially a bargain and sale deed without covenant as it makes no warranties regarding the title. Reference to a Plat: In real estate development, legally describing individual lots by their location on a previously recorded survey, or plat, of an entire development or subdivision, is known as referencing a plat. Remainder Interests/Remainderman: A property owner can specify a son, daughter, or other person to be the recipient of the property at the end of the owner s life. The owner then has a life estate, and the designated third party, the remainderman, has a remainder interest, which is a future interest in the property during the term of the life estate. Reversionary Interest: The grantor of a qualified fee or life estate may stipulate that upon the death of the owner of the life estate, or upon the failing to meet the provisions of the qualified fee estate, the property will revert to the grantor or his heirs. During the period of the estate, the grantor would retain a reversionary interest because the property may, at some time, revert to the grantor. Right of Survivorship: Right of survivorship is a key characteristic of joint tenancy. If one joint tenant were to die, the decedent s share of the property would automatically pass to the remaining joint tenants, regardless of a will. 12 Module 3: Legal Issues NY Real Estate Salesperson

13 Right-of-Way: A right-of-way is a strip of land that is granted via an easement for transportation purposes, such as for a rail line or highway or to permit the laying of communication cables, natural gas pipelines, power transmission lines, etc. (See Easement in Gross) Riparian Rights: Riparian rights refer to rights of owners whose property is adjacent to bodies of water that flow such as rivers and streams. Riparian rights include such things as the right to access for swimming, boating, and fishing; the right to construct piers and docks; and the right to use the water for domestic purposes. Scarcity: Economic scarcity is created solely by demand for land in particular areas, which leads to a shortage. As with all commodities, land is most valuable when it is in short supply and in high demand, and some land is more desirable than other land. Severalty: Property that is owned by one individual or one legal entity is referred to as being owned in severalty. At first glance, it may appear that the term means several individuals own the property. The key is that ownership is severed from all others. Situs: In law, the situs of property is where the property is treated as being located for legal purposes. Every property is unique as no two properties may occupy the exact same space. Special Purpose Real Estate: The intended activity of a special purpose property dictates its design. Some of the most common examples of special purpose properties are hospitals, nursing homes, hotels, restaurants, theaters, clubs, schools, and places of worship. Specific Lien: Specific liens are claims against particular parcels of real estate, and they do not affect any other property, either real or personal, owned by the debtor. Specific liens would include those filed for unpaid real estate property tax, defaults on mortgages, special assessments levied by a local government or a homeowner s association, and mechanics liens. Subordination Agreement: A subordination agreement between lien holders would change the priority of liens, with the senior lien holder agreeing to take a lower, or subordinate, position to a junior lien holder. Subsurface Rights: Subsurface rights relate to everything beneath the surface of a property. The importance of this right lies largely in the fact that ownership may be secured for the mineral deposits located beneath the surface. 13 Module 3: Legal Issues NY Real Estate Salesperson

14 Surface Rights: Surface rights are rights and interests with respect to the surface of the earth, including natural elements and the things built on or attached to the surface. Survey: Surveys may consist of charts, documents, maps, and plats that are used to document precisely the boundaries of land ownership. Surveys are normally an integral part of the legal description of property. Syndicate: Syndicate is a general term for two or more individuals or companies that unite for business purposes and pool their resources. Tax Lien: Unpaid ad valorem tax liabilities and special assessments levied by counties and municipalities become specific liens on a property. Unlike state and federal tax liens that are general liens, ad valorem tax liens are specific liens. Tenancy by the Entirety: New York recognizes tenancy by the entirety," in which both husband and wife own an equal, undivided interest in any property acquired after the marriage began. Tenancy by the entirety is a special type of joint tenancy reserved only for a husband and wife. There is a right of survivorship, which is common to all joint tenancies; however, there is no right to partition. Tenancy in Common: Tenancy in common describes co-ownership of property with the right of inheritance. If one owner dies, distribution of his interest in a co-owned property is done according to his will or by the laws of descent and distribution if there is no will. This right of inheritance is a key distinction between tenancy-in-common and joint tenancy. Title Closing: Title closing is sometimes referred to as simply closing, settlement, or close of escrow. The closing finalizes the transaction between the buyer and seller. At the closing, all of the stipulations and requirements of the sales contract are completed. The seller normally transfers a good and marketable title and possession of the property to the purchaser in exchange for an agreed upon sum, which is often a combination of loan proceeds and cash from the purchaser. The seller normally satisfies any existing liens or other encumbrances, and any additional amounts due from or to the buyer or seller are collected and disbursed. Title Insurance: Title insurance protects against problems with the tile. It usually covers defects that may not be discovered through an examination of the public record. For example, an abstractor or attorney would probably have no way to determine if the grantor s signature on a past deed was forged, or if a previous grantor was incompetent. 14 Module 3: Legal Issues NY Real Estate Salesperson

15 Title Search: A title search, or title exam, consists of an examination of the information contained in the public records to determine the state or condition of the title. Deeds and other documents are reviewed to be sure that title passed properly to each prior owner, and if any liens were filed, they are reviewed to determine if they were paid in full. The buyer will want to receive the best title possible, one free of defects and as safe as possible from future challenges. Title: Title is the right to ownership of land, or evidence of ownership of real property. When referring to real property, title is not a document, but rather is the rights to ownership. These rights are transferred by deeds. Trade Fixture: Objects affixed to the leased property that are owned by and are necessary for a tenant s trade or business are called trade fixtures, and they are not subject to the same rules of transfer that other fixtures are. Trade fixtures are considered to be personal property, and they remain the tenant's property when the lease ends. Trust: A trust is an arrangement whereby property (including real, tangible, and intangible) is managed by one person, persons, or organizations for the benefit of another. A trust is created by a trustor (also known as a settlor or a grantor) who entrusts property to a trustee. Trustees hold legal title to the trust property, but they are obliged to hold the property for the benefit of one or more individuals or organizations known as beneficiaries. Trustees owe fiduciary duties to the beneficiaries, who are the "beneficial" owners of the trust. Undivided Interest (Unity of Possession): The common element of co-ownership is that the co-owners have an undivided interest in the property. Ownership interests may be divided in various ways, but there is no actual physical division of the property. Co-owners own the property together, and they cannot say that one co-owner owns one part of the property and another co-owner owns another part. Each owner has the right to the use and possession of the entire property. (See Tenancy-in-Common, Joint Tenancy) Uniqueness: Because land occupies a specific site that no other piece of land may also occupy, it exhibits the physical characteristic of being unique unto itself, and it is not interchangeable any exact substitute. Unities of Possession, Interest, Time, and Title: For a joint tenancy to be established, each co-owner must hold an undivided interest (Unity of Possession); each co-owner must hold an equal ownership share (Unity of Interest); and the co-owners must have acquired their ownership interests at precisely the 15 Module 3: Legal Issues NY Real Estate Salesperson

16 same time and on the same document (Unities of Time and Title). A joint tenancy must have all four unities. Voluntary Alienation: Voluntary alienation occurs when the property owner intends to transfer property, usually by sale, gift, or dedication. Transfer of property by will after the death of the owner is also considered voluntary alienation. Involuntary alienation occurs when the property is conveyed against the owner s wishes, usually by an operation of law. Examples of involuntary alienation include foreclosure, eminent domain, and adverse possession. Voluntary Lien: When owners purposely take actions that result in liens being placed on their properties, the liens are categorized as voluntary liens. That is, the owners choose to initiate liens that would not otherwise exist. A mortgage pledging the property as security for a loan is a common type of voluntary lien. Water Rights: When a property borders a body of water or a river, the right to use and enjoy the water is usually included in the bundle of rights. There are two types of rights associated properties bordering water. Riparian rights refer to rights along flowing water and littoral rights refer to properties that border large lakes and oceans. 16 Module 3: Legal Issues NY Real Estate Salesperson