Monday, June 29, 2009

Real Estate Notes 1

Water Rights
Appropriation of water rights is determined either through the doctrine of prior appropriation or through the doctrine of riparian and littoral rights. While riparian rights pertain to moving bodies of water, littoral rights pertain to nonmoving bodies of water (i.e. lakes or oceans). Littoral rights allow an abutting landowner the freedom to use and enjoy the water bordering their land but disallows any measures to channel the water away from the land.

The allocation of water rights is determined by the doctrine of prior appropriation.
All terms relate to water rights, with "riparian" -- the right to use water adjacent to one's property -- being the most common in sections of the U.S. where water is abundant. However, in states where water is more scarce, a form of "prior appropriation" applies. Also known as "first in time is first in right," it grants water rights to divert a specific amount of water from a specific source to irrigate a specific piece of property. Those rights are then assigned a priority based on when the right was first used or applied for. In periods of peak demand, they give those whose claim is the oldest the right to get their water first.

Joint Tenancy
Joint Tenancy can not be created by an Operation of Law.
Joint Tenancy requires possession, time, interest, and title.

License
Granting the use of property for a defined period for a specific purpose is almost always a form of licensing. Easements grant only access, not ownership, use or occupancy rights. Further, that access is generally for the benefit of the property owner, such as maintaining utilities or sidewalks.

Appurtenant Easements
Appurtenant easements afford the most protection since they are generally a permanent feature of the property. Thus, in the case of sale, the lake access passes to any new owners. By contrast, an "easement in gross" is between two individuals, which would severely limit the attractiveness and value of the property if the original owner wished to sell.

Land is indestructible, Immovable, and Unique.

Trade Fixtures are items on the premises that are installed by the tenant and are related to the tenant's business.

Real Estate Tax Liens
Real Estate Tax liens do not need to be recorded. The requirement for individuals to record liens is due in part to the necessity of correctly identifying the complainant. For example, not just "ABC Contracting," but the specific ABC Contracting that performed the work and is owed the money. Because they bear the authority of government and are easily identified, liens by taxing authorities do not need to be recorded because they do not need to be identified.

Statutory Liens
Mechanic's liens are statutory liens. A "statutory lien" is one that arises out of specific law (otherwise known as statutes). By contrast, an "equitable lien" has its roots in common law or custom. A "voluntary lien" is one entered with the property owner's knowledge and consent, such as a mortgage. A "general lien" grants a creditor the right to file a claim against all of a debtor's assets, not just a particular property.

Covenant Seisin specifies that the grantor is the owner and has the right to convey the title.

General Warranty Deeds
General Warranty Deed proves a marketable title. A general warranty deed stipulates that the ownership being conveyed is free of any hidden liens, encumbrances or other claims. Further, it states that if some unknown encumbrance should arise in the future, the person conveying the deed will make appropriate compensation. (This guarantee, however, is no substitute for title insurance.) The purpose of a deed is to transfer property rights.

Quiet Title suit would be used to clear a defect from the title records.
Partition suit is used to force a division of property without all the owners’ consents

Subrogation when a claim is settled by a title insurance company, the company acquires all rights and claims of the insured against any other person who is responsible for the loss.
For example, let's say John buys a property and the seller provides a general warranty deed stipulating clear title. However, that turns out not to be the case and a third party provides a valid claim to a share of the property. Since John took out title insurance, the title insurance company negotiates and pays a settlement with the claimant on John's behalf. John's right to sue the seller then transfers to the title insurance company, which will take action to recover the amount they paid on John's behalf.

Civil Rights Act of 1866 prohibits discrimination in housing based on Race.

Federal Fair Housing Act
Prima facie (at first view) case against a broker for discrimination be established after a complaint has been received because the broker has failed to display a HUD Equal Opportunity poster.
The handicapped access provisions for the 1988 Fair Housing Act require the ground floor to be handicapped accessible. Buildings constructed before the 1991 standards went into effect, only need the first floor to be modified.
Exemptions: The private club is exempt because its preferential treatment is based on its membership; the home owner is exempt, so long as he is selling his home without a broker; the warehouse is exempt because it's not a housing unit.
If a person owns and lives in a unit, he or she is entitled to practice a certain measure of discrimination. The view is that a person's dwelling (which includes units such as duplexes and triplexes) enjoys a degree of "sanctity" and the person may choose whom he or she brings into their "home."

Agency
Exclusive - Appoints an agent to sell property, but owner retains the right to sell the property himself.
Exclusive Right to Sell - Appoints an agent to produce a ready, willing, and able buyer and will owe the agent a full commission if the owner sells the property herself.

Redlining is the illegal process of a banker refusing to approve loans for a neighborhood based on the racial composition of the area.

Steering is the illegal practice of directing minorities to areas populated by the same race or religion.

Equitable title means that the prospective buyer has obtained the right to acquire ownership of a property currently owned and occupied by another.

Statute of Frauds requires real estate contracts and leases greater than 1 year to be in writing to be enforceable.

Assign a contract for the sale of real estate means to transfer one's rights under the contract.

A homeowner may rescind a loan within 3 days.
Under an installment land contract a seller retains legal title.

Depreciation
Depreciation provides a deduction from a property's income based on estimates of how the property will decrease in value over time. Depreciation only applies to property improvements since land does not wear out and cannot diminish in value. Residential properties are depreciated on a straight-line basis over 27 1/2 years.

Defeasance Clause ensures that if a borrower repays the entire debt on time they will receive the title to the property. A defeasance clause literally states that when the mortgage is paid in full as per the specified terms, then any rights of the lender to the property have been defeated and no longer exist. On the other hand, failure to execute the debt per terms of the agreement removes the borrower's right to defeat the clause and allows the property to revert to the lender.

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