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Midterm

REM 300 Midterm: Real Estate Midterm.docx


Department
Real Estate Management
Course Code
REM 300
Professor
Cynthia Holmes
Study Guide
Midterm

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Real Estate Midterm
What is Real Estate?
- Property consisting of land or building
- Industry, investment/asset, input to production, legal term describing ownership rights, field of study,
place to live, place to work
Chapter 1: Evolution of Ownership
History of Land Ownership
- Land ownership emerged in England in the Middle Ages
- Tenants on Crown land gradually obtained rights through the courts and legal system
- “Estates” evolved to be a bundle of rights that is associated with land ownership
- The most complete bundle of rights is called a “fee simple estate”.
Fee Simple Estate
- A typical Canadian property owner has a fee simple estate.
- The bundle of rights includes
Can use of the property
Can sell or lease or give away
Decides who inherits the property
- Also called freehold ownership
- The government does impose some restrictions
- The bundle of rights is transferred through a legal document called a deed
- Another term for “bundle of rights” is “title”
Leasehold estate – Renting
- If a fee simple estate holder wants to lease their property, then they create a leasehold estate using a
legal document called a lease.
- The tenant gets the right to use the rented property for a limited time frame in exchange for rent
payment
- Many laws govern the relationship between landlord and tenant
Life Estate
- A bundle of property rights that includes use and possession, but not disposal
- Terminates when the holder dies - the holder of a life estate cannot designate who inherits the land and
cannot sell it
- When the holder dies, the fee simple estate passes to the beneficiary designated by the previous fee
simple interest holder
All-time life estate winner
- Jeanne Calment, at age 90, sold her apartment under a life estate system
- The new owner would get possession of the apartment only when Jeanne died, and would pay a
monthly fee to Jeanne
- Jeanne was the lived until age 122
- The new buyer was 47 when he purchased the apartment and died at the age of 77, never getting
possession of the apartment and paying her many times the original value
Co-ownership
- Real estate is often owned by a group of people who all hold the same bundle of rights at the same
time.
- The interests cannot be physically separated.
- There is a variety of forms of co-ownership (also called concurrent ownership). Two most important
are:
Joint tenancy
Tenancy in common

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Forms of Direct Co-ownership
- Tenancy in common:
Standard form except in special cases and in marriage
Fee simple estate with multiple owners
Your heir inherits your share
- Joint tenancy
The co-owner gets your share when you die, not your heirs
Only created under very specific conditions – same legal document giving title, same time,
same rights of possession, same share of the interest (50-50 if two owners, etc.)
Matrimonial Home
- Set of laws associated with the family residence owned by a married couple
- Rules about settlements in the event that one spouse dies or in the case of divorce
- If a spouse dies, the share goes to the other spouse immediately and is not disposed of as part of the
will
- Gives rights to a spouse in divorce even if the house is listed in the other spouse’s name
Condominiums
- Individual ownership (in fee simple estate) of some particular physical space PLUS tenancy in common
co-ownership of the remainder of the property (including hallways, lobby, land, etc.)
- A condo board is elected by the owners, sets and collects condo fees, makes decisions about the
common areas
Sample condo fees
- Unit was for sale for $349,000
- 1 bedroom plus den, parking spot, locker, near Rogers Centre
- Mortgage payment (with a decent downpayment) is about $1,800 per month
- Condo fees are $515 per month
Other forms of co-ownership
- Co-operative
- Partnerships
Limited partnerships
Limited vs. general partner
Real vs. Personal Property
- Real property: Rights in land and its permanent structures, plus whatever grows upon or is affixed
- Limits are
Surface of the earth and improvements
Riparian rights are for owners of land bordering a shore
Air, up to reserved air space or tallest structure
Beneath the earth: Minerals, oil and gas, water
- Personal property: All other property
Personal and household goods
Intellectual property
Personal property is movable
Built on Air Rights
- MetLife building built on platforms above the railway tracks near Grand Central Station in NYC
Fixtures
- Fixture: Real property that formerly was personal property
- Rules for determining when something becomes a fixture:

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Manner of attachment
Character of the article and manner of adaptation: custom screens or storm windows, custom
designed furniture
- Intention of the parties
Easements
- Right of use a (dominant) parcel of land “enjoys” over an adjacent (servient) parcel
- Called affirmative if there is “intrusion” over the servient parcel, negative otherwise.
- Examples of affirmative easements are driveway or access right-of-way, sewer line and drainage
- Examples of negative easements are light and air easement and scenic easement
- Runs with the land: Rights and obligations are inseparable from the parcels involved
Adverse possession (How to steal real estate)
- Take possession of the property without the consent of the owner and act like you’re the owner (also
known as squatting)
- Ignore all claims by the owner
- Possess the land openly, exclusively and continuously for ten years (in Ontario)
Expropriation
- The government can take private property for public use but must pay fair compensation to the owner
- For example, a city may expropriate property to build schools or roads
- Vera Coking, an elderly widow, owned a single family house next to Trump Plaza in Atlantic City. Trump
tried to buy it from her to make a limo parking area, but she refused to sell. Trump convinced the city to
expropriate her property, but Mrs. Coking took them to court. How do you think the court ruled?
Restrictive Covenants
- Covenants that impose restrictions on land use; created when land is transferred to a new owner
- Examples:
No freestanding structures
No chain-link fences
No external antenna, satellite dish or clothesline
Required use of professional lawn service
No flags or lawn ornaments or pink paint or willow trees
- Is either created in a deed that conveys ownership from one owner to another or through a list of
restrictions recorded on an entire subdivision at a time
Question 1
Paul owns his house in fee simple. His will leaves the house to Sheryl, his wife, for the duration of her life.
Upon her death, Paul specifies that the house should go to their son James. Sheryl lives in the house for a
year, and then gives the house to her daughter Karla. Six months later, Sheryl dies. James and Karla are
battling over the ownership. (a) What type of interest does Sheryl hold on the house? (b) What type of interest
does Karla have? (c) What will the judge rule in the case of James vs. Karla, and why?
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