Duplessis.SG.Chapter 19.doc

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Department
Management and Organizational Studies
Course
Management and Organizational Studies 2275A/B
Professor
Henry Meredith
Semester
Winter

Description
PAR5:PROPERTY C HAPTER 19 R EAL P ROPERTY Objectives After studying this chapter, you should have an understanding of: • the nature and ownership of real property • the various ways to acquire and transfer ownership • how a mortgage works • the rights and duties of landlords and tenants Learning Outcomes • Understand the rights and restrictions attached to ownership of property (pages 471 and 474) • Understand the difference between tenancy in common and joint tenancy and when each method of co-ownership is preferable (page 472) • Understand how ownership of interests in land are documented and recorded in the provinces (page 474 - 476) • Recognize what should be investigated before purchasing land (page 476 - 484) • Recognize the rights of the mortgage holder (page 484 - 488) • Understand the landlord-tenant relationship (page 488 - 490) • Understand the rights and obligations of the landlord and tenant in a commercial lease (page 491 - 493) • Understand an owner’s options for disposition of owned land (page 493 – 494) Chapter Summary Real property is permanent and immovable, and the total quantity is fixed. The focus of the law is on the land itself rather than the building or fixtures attached to it. Ownership is called the fee simple and includes everything on, above, and below the land, subject to a wide variety of limits on use. The owner of land can transfer and divide ownership in a number of ways. Registration of any interest in land is required to preserve priority over other claimants. There are two systems of registration in Canada – registry and land titles – although most provinces are moving toward an electronic land titles system. The most common ways to acquire ownership are to purchase the fee simple through a real estate transaction or to become a tenant through a leaIn buying land, there is considerable risk involved, which can be managed through investigation of all aspects of land. A mortgage is security for a loan that emphasizes the preservation of the value of the property. A mortgage gives the lender the right to sell the land or have it sold if the loan is not repaid. The landlord transfers to the tenant the right of exclusive possession Copyright © 2011 by Nelson Education Ltd. PART5:PROPERTY of the land for the term of the lease. In return, the landlord is entitled to rent and has the right to regain possession at the end of the lease or earlier if the tenant defaults. The lease will end when a specified term expires or when one party gives the required notice to the other. The holder of the fee simple can dispose of her interest as she chooses: lease the land temporarily; sell it, or give it away while she is alive or in her will upon death. Study Outline Use this outline to prepare a complete set of notes for this chapter. Ownership Interests in Land – page 471 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Interests in land__________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Division of ownership__________________________________________________ _______________________________________________________________________ Division of ownership in time____________________________________________ _______________________________________________________________________ Limits on Ownership – page 472 _______________________________________________________________________ _______________________________________________________________________ Restrictions on land use___________________________________________________ _______________________________________________________________________ Contractual limits________________________________________________________ _______________________________________________________________________ Registration of Ownership – page 474 _______________________________________________________________________ _______________________________________________________________________ Provincial systems of registration____________________________________________ _______________________________________________________________________ _______________________________________________________________________ Searching tile____________________________________________________________ Copyright © 2011 by Nelson Education Ltd. CHAPTE19:REAL PROPERTY _______________________________________________________________________ Chain of title_____________________________________________________________ Clear title_______________________________________________________________ Electronic registration__________________________________________________ _______________________________________________________________________ Sequence of registration____________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Electronic registration__________________________________________________ Acquisition of Ownership – page 476 _______________________________________________________________________ _______________________________________________________________________ The purchasing transaction_________________________________________________ _______________________________________________________________________ Participants in the transaction_______________________________________________ _______________________________________________________________________ Disclosure by seller to buyer________________________________________________ _______________________________________________________________________ Stages in the transaction____________________________________________________ Agreement of purchase and sale__________________________________________ _______________________________________________________________________ The investigation______________________________________________________ _______________________________________________________________________ Title to the property_______________________________________________________ _______________________________________________________________________ Legal claims against the seller_______________________________________________ _______________________________________________________________________ Verification of boundaries__________________________________________________ _______________________________________________________________________ Physical examination______________________________________________________ _______________________________________________________________________ Environmental audit_______________________________________________________ _______________________________________________________________________ Taxes__________________________________________________________________ _______________________________________________________________________ Local Bylaws____________________________________________________________ The closing___________________________________________________________ 46 PART5PROPERTY Incomplete transactions____________________________________________________ _______________________________________________________________________ The Real Estate Mortgage – page 484 _______________________________________________________________________ _______________________________________________________________________ How a mortgage works____________________________________________________ _______________________________________________________________________ Terms of the mortgage_____________________________________________________ _______________________________________________________________________ Life of a mortgage________________________________________________________ _______________________________________________________________________ Mortgagee’s remedies__________________________________________________ The Real Estate Lease – page 488 _______________________________________________________________________ _______________________________________________________________________ The landlord-tenant relationship_____________________________________________ _______________________________________________________________________ Terms of the lease________________________________________________________ _______________________________________________________________________ Rights and obligations_____________________________________________________ _______________________________________________________________________ Assignment and subletting_______________________________________________ Termination of the lease____________________________________________________ _______________________________________________________________________ Disposition of Property – page 493 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Risk Management – page 494 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ SELF-ASSESSMENT Key Terms Briefly define each term in the space provided. Copyright © 2011 by Nelson Education Ltd. CHAPTER 19: REAL PROPERTY 48 PART5:PROPERTY Real property – page 471 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Fixtures – page 471 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Fee simple – page 472 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Tenancy in common – page 472 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Joint tenancy – page 472 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Easement – page 473 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Restrictive covenant – page 473 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Registry system – page 474 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Paralegal – page 474 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Land titles system – page 475 _______________________________________________________________________ _______________________________________________________________________ Title search – page 481 Copyright © 2011 by Nelson Education Ltd. CHAPTE19:REAL PROPERTY _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Closing – page 482 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Mortgage – page 484 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Equity of redemption – page 485 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Mortgagor – page 485 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Mortgagee – page 485 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Foreclosure – page 488 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Deficiency – page 488 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Tenant – page 488 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 50 PAR5:PROPERTY Landlord – page 488 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Lease – page 489 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Exclusive possession – page 489 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Distress – page 491 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Periodic tenancy – page 493 _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Matching Match the correct letter of the most appropriate term in the space provided before each sentence. Please note that you will use only 10 of the terms so you must choose the best term available to match with its description. A Agreement of purchase and sale N Landlord B Closing O Lease C Deed P Mortgage D Deficiency Q Mortgagee E Distress R Mortgagor F Easement S Periodic tenancy G Equity of redemption T Real property H Exclusive possession U Registry system I Fee simple V Restrictive covenant J Fixtures W Specific performance K Foreclosure X Tenancy in common L Joint tenancy Y Tenant M Land titles system Z Title search 1. ____ Anything permanently attached to land, such as buildings and anything attached to the land by nails. Copyright © 2011 by Nelson Education Ltd. CHAPTE19:REAL PROPERTY 2. ____ Co-ownership with the right of survivorship. 3. ____ The right to use another’s land for a particular purpose, such as to take a short cut. 4. ____ A restriction in a deed on the use of land, such as a restriction on the minimum size house in a subdivision. 5. ____ The highest level ownership of land. 6. ____ The system of land registration whereby the administrators guarantee the title of land. 7. ____ The right to have legal ownership of mortgaged land restored upon repayment of the debt. 8. ____ The lender’s right to terminate the borrower’s interest in the property by taking possession of the land. 9. ____ The right of a commercial landlord to seize the tenant’s property for nonpayment of rent. 10. ____ A lease that is automatically renewed unless one party gives proper notice to terminate. Questions Write a short, point-form answer for each question in the space provided. To assist you in understanding the chapter, it is recommended that you also use additional paper to write a full and complete essay answer for each question. 1. Where does land derive its value from? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 2. What source of law largely governs real property? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 3. Distinguish between tenancy in common and joint tenancy. _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 52 PART5:PROPERTY _______________________________________________________________________ 4. Outline some of the numerous restrictions on land imposed by statute law and common law. _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 5. What is the risk created for landowners from the varying restrictions on ownership that exist? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 6. What is the key difference between the registry system and land titles system? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 7. What is the basic premise in terms of risk assumption in land purchases? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 8. What is title insurance? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 9. From a legal perspective, what is so important about the agreement of purchase and sale? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Copyright © 2011 by Nelson Education Ltd. CHAPTE19:REAL PROPERTY 10. From a legal perspective, what is so important about the agreement of purchase and sale? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 11. What basic terms are generally included in an agreement of purchase and sale of land? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 12. What issues should the buyer investigate during the search period under an agreement of purchase and sale of land? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 13. Can someone refuse to complete a real estate transaction for a reason that is outside the agreement of purchase and sale? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ 14. Discuss the two aspects to a mortgage transaction. _______________________________________________________________________ _______________________________________________________________________ ________________________________________________________________
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