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Property midterm (Chapter 14- Residential and Leases (Common lease…

- - - - when the tenancy is for a fixed period of time
      - neither party has to give notice to the other of the lease's expiration
      - writing only for over a year tenancy
    - - creation by expressed or implied agreement
      - tenancy for a fixed period that automatically continues for succeeding periods until either party gives notice of termination
      - ends by notice from one party to the other, given at least as far ahead as the length of the period.
    - - tenancy of no fixed duration; lasts as long as the landlord and tenant agree
      - ends as soon as one party terminates the tenancy
    - - tenant wrongfully stays in possession after the termination of a tenancy
      - terminated when the landlord evicts the tenant leaves, or a new lease is executed
  - - - Location of the property
      - rental rate charged for similar properties in the area
      - vacancy rates in teh area
      - proposed use of the premises
      - length of the lease term
      - rent control ordinance limitations
    - - Gross Lease
        
        the tenant pays a fixed monthly amount
        
        no operating expenses are paid by tenant
        
        modified gross lease
        
        where landlord, also requires tenant to pay a proportional share of other property costs
      - Percentage Lease
        
        tenant pays a fixed + a percentage of revenue.
      - Triple net lease
        
        tenant pays landlord a fixed amount + operating expenses
    - - price regulation imposed upon landlords
  - - - Exclusive possession
        
        has possession until term of lease expires or tenant defaults in obligations under lease
      - Limited right to entry
        
        reasonable notice of intent to and landlord agree for purpose of making repairs; notice waived in cases of emergency.
      - implied covenant of quiet enjoyment
        
        tenant will not be evicted or disturbed in his/her possession by the landlord or anyone acting with landlords consent.
      - duty to maintain the leased premises
        
        landlord must keep premises repair.
      - implied warranty of habitability
        
        must be safe and suitable for basic human habituation. bare living requirements must be met.
        
        remedies; reduce rent-repair-withold rent-terminate the lease.
    - - duty to pay rent
      - lawful purposes
      - not to commit waste
      - duty not to disturb other tenants
  - - - the actual space or property to be occupied by the tenant.
      - exclusive use of the premises and a right to use the common areas.
    - - a lease provides possession
    - - the landlord has the right to collect even if the amount of rent is not stated in the lease. if not clearly stated, due does not arise until the last day of the rental period.
    - - common area maintenance- paying a share of the common area
    - - provide for which the tenant intends to use the property.
    - - landlords often require tenants to make an advance payment to cover certain expenses.
      - security deposit- an advance payment used to protect the landlord from damage the tenant causes to the property or to compensate the landlord for lost rent if the tenant vacates before the term of the lease of fails to pay the amount owed under the lease.
      - can pay first and last month of rent
    - - may require that a third party guarantee the tenant's performance of the lease
    - - tenant has no general duty to correct defective conditions on the premises. On termination of the tenancy, the tenant must return the property to the landlord in the same condition it was in when the lease began, except for wear and tear.
    - - this allows the landlord to secure appropriate insurance, review the qualification of the contractor.
  - - - reasonable modifications necessary to afford services
      - remove barriers
      - new construction and improvements
  - - - transfers all of the tenant's unexpired lease to a third party, need written consent from landlord.
      - assignee gets same rights and duties as assignor
      - the landlord can release the assignor from liability and accept the assignee as having sole liability under the lease (novation).
      - Assignor remains liable to landlord in case of default
    - - tenant transfers only a portion of their leashold estate
      - unless otherwise states, sublease is free without notice
      - subtenant becomes a tenant to the original lessee; the rights and duties are governed by the agreement between tenant and subtenant
- - - - security interest=insurable interest
      - insurable interest must exist at the time of the loss to recover
    - - named insured- policy owner
      - additional insured
        
        party unrelated to the named insured who receives the benefits of the insurance policy without having to pay premiums
        
        insurer owes the additional insured the same duties it owes to the named insured
    - - broker-agent of insured; can obtain insurance from a number of different insurance companies; fiduciary duty to insured
  - - - application
      - effective date; when coverage begins;insurer has no liability until policy is issued; binder can be insured to protect the in between
      - contract- covered losses
    - - insurer is free to exclude coverage as long as exclusion is plainly stated- common exclusions- earth movement, deterioration, latent defects, pollution, war and terror
    - - basic- the lowest amount your insured; nothing unless it is explicitly expressed
      - broad- same as basic including glass breakage, falling object, water damage
      - special- covers everything except what is excluded
      - homeowners do not cover you for earthquake
  - - - protects real and personal;no coverage for personal
    - - comprehensive insurance policy (does not include earthquake; protects only insured's personal activities
    - - policy only if the other other insurance policy limits have been exhausted
      - covers in excess of basic
    - - protects loss or damage to a building while it is under construction
  - - - required to replace the damaged property with comparable
    - - standard method= replacement-depreciation
    - - pays agreed precentage
    - - insurer pays full replacement regardless of policy limit
  - - - notify the insurer after within the time period stated in policy
      - cooperate with insurer
      - mitigate by taking steps to avoid incurring expenses
    - - act in good faith and fair dealing
      - duty to indemnify and defend- the insurer has a defend insured by paying costs to defend and pay covered claims up to the limits
      - duty to settle claims
- - - - Co-ownership of real property in which parties may hold equal or unequal shares in the land and have separate but undivided interests in the entire property
      - creation of interest
        
        default manner of holding title if the intention of the parties is not clear as to what type is presumed
        
        can be acquired inter vivos
      - conveyance of interest
        
        when the intention is not clear, the default form of holding title where the intention of the parties is unclear
        
        owners interest may be sold to creditors
      - possession
        
        equal possession, just not equal shares
    - - co-ownership in which two or more persons own equal shares of property, with the right of survivorship between the joint tenants
      - right to survivorship- upon the death of one JT, the SJT automatically receive equal shares from the deceased joint tenant
      - creation
        
        time- must be acquired at the same time
        
        title- the joint tenants must acquire title by the same deed or will
        
        interest- all joint tenants must have an equal interest in the property. Each tenant must have the same share of the undivided whole
        
        possession- must have equal right to possess the entire property
      - conveyance
        
        upon death- the other tenant gets it
        
        if all dies at the same time, treat as TIC
        
        Creditor- if attached before joint tenant dies, owner's interest may be severed to satisfy the creditor.
        
        CHECK THE CHAPTER REVIEW
    - - A form of JT limited to married couples
      - creation- 4 unities + marriage
      - conveyance
        
        spouses cant dispose of property by will
        
        divorce terminates TE and creates TIC
      - creditors of one tenant may not attach the property because it would adversely affect the interest of the other, nondebtor
    - - absent an agreement to the contrary, assets and liabilities acquired during marriage by the labor of either spouse are presumed to be community property.
      - separate property
        
        property acquired before marriage
        
        gifts and inheritances
        
        property acquired after permanent separation
        
        spouses opt out of community property rights
        
        income generated by separate property
      - conveyance of interest
        
        upon the death of one of the spouses, the surviving spouse retains his or her one-half interest in the community assets.
        
        creditors can attach community property assets to both spouses
  - - - carrying costs-each tenant must pay a proportionate share of mortgage costs and taxes based on the interest held in the property
      - necessary repairs
        
        the co tenant can seek a contribution from the other co-tenants
    - - made at the discretion of the improving co--tenant
    - - resulting in separate owners of adjoining parcels of land
      - required when- tenant has dispossessed the other co-tenants
      - when impossible to partition- sell land
    - - each co-tenant is entitled to equal possession.
    - - non-possessing co-tenants cannot collect rent from possessing
    - - any rents or other income collected by a co-tenant from a third party must be shared with the other co-tenants.
    - - a co-tenant not possession the property is not entitled to collect rent from the co-tenant in possession of the property.
    - - a co-tenant must pay a proportionate part of the net sums received from the operation of mineral interests
  - - - no consideration required
      - must be in writing, signed by both parties
      - cannot limit or waive child support
      - may not promote divorce
      - must be signed voluntarily
      - cannot be unconscionable when made
        
        full, fair, and reasonably disclosed
    - - each party's salary and wages can remain that party's separate property
      - the agreement can govern the disposition of property on separation.
      - can deal with any other matter including their personal rights.
- - - - In writing
        
        if a state permits the use of oral, only personal
        
        the types of doc can be informal, but must have the intention on
        
        must be dated
        
        holographic will
        
        must be in testator's handwriting
        
        signed by testator
        
        no witnesses needed
      - capacity
      - testator's signature
        
        must be able to sign, if unable, the testator may direct another person to execute the will in his or her presence
        
        notary public- a commissioned representative of a state who is charged with verifying the identity of the signor of documents
        
        acknowledged- a will is this when the testator and witnesses confirm the authenticity of their signatures before a notary public
      - witnesses
    - - when two or three more testators execute the same instrument as their will
    - - reciprocal wills, occur when two or more testators execute separate wills and make reciprocal gifts
    - - revision to a will that can modify, amend, or revoke a prior will
      - must be executed in the same way as the original
      - must specifically reference what is being amended, if not, then must be read alongside the will
    - - codicil
      - physically destroy
      - operation of law: like divorce
  - - - property transferred under operation of law
      - community property- surviving spouse is entitled to his one half share
    - - lineal descendants
      - parents of the decedent
      - decedent's brothers and sisters
      - paternal and maternal grandparents
      - if not, escheats
    - - the issue steps into the shoes of their preceseased ancestor in equal portion
    - - living lineal descendants share equally the property of the estate, regardless of the degree of their relationship to the testator.
    - - nonmartial children- ilegitimate child is eligible to take from the mother's estate and the biological fathers estate
      - adopted children can accept intestate
      - posthumous child, usually treated as heir and entitled to inherit
      - simultaneous deaths- unknown who dies first and thus intestate does not apply
  - - - if intestate, he is an administrator
      - if testate, he is an executor
    - - if decedent is testate, the will can only dispose of property owned by the decedent at ToD
      - property is appraised and decedent's debts are paid
      - Representative collects all of the decedent's assets
  - - - inter vivos- during a trustor's life
      - testamentary trust- takes effect after death
      - revocable trust- can be revoked at any timee by the trustor prior to the trustor's death
      - irrevocable trusts- cannot be changed or revoked during the trustor's life
- - - - Adverse to that of the landowner
        
        adverse of claim- measured by what a third party would think about the possession.
        
        boundary line disputes- the user believes the property belonged to him or her rather than to the neighbor
        
        any permission prevents adverse possession
      - actual possession
        
        color of title- a defective legal instrument, holder believes is effective to transfer title but cannot operate as a legal conveyance of title
        
        includes the lack of a sig on a deed, the land's procurement through a faulty foreclosure sale procedure
      - exclusive possession
        
        cannot share with the legal titleholder of the property or with the general public
        
        cannot attain if the adverse possessor allowed other individuals to reside in different rooms on the property
      - open, visible, and notorious
        
        an observant should or would know of the possessor's possession.
        
        the use may not be carried on in secret or concealed from observation.
      - Continuous for the statutory period
        
        the possession must not be interrupted by either physical ouster or court ordered eviction
        
        tacking- giving the years you've acquired from someone else
    - - file a lawsuit against the adverse possessor for trespass or a quiet title action
      - or permit access
  - - - condemnation- legal proceeding by which the government exercises its eminent domain powers.
    - - Is there a taking of private property
        
        landowner is deprived of any use of the property
        
        there is a permanent physical invasion on the property
        
        OR a regulatory taking occurs that denies the landowner all economic uses of the property
        
        regulatory taking- government regulation that deprives the owner of all econmically beneficial use of the property
      - is the taking for a public use or public purpose
        
        public use- any conceivable benefit to the public welfare can be deemed a public use; broadly defined; related to a conceivable public purpose.
      - has just compensation been paid to the private property owner
        
        payment of a property's fair market value at the time of the taking
  - - - donor's intention to make a gift
        
        the actions or intentions of the donor must be clear, unmistaken, and unequivocal
      - delivery of the gift to the donee
        
        until delivery occurs, the promise to make a gift can be revoked.
        
        constructive delivery- a method that can be used in making gifts where the donor makes a symbolic delivery of the property to the donee
      - acceptance of the gift by the donee
    - - the donor intended to make a gift effective at death
      - the donor made the gift in anticipation of an impending death from an illness, disease, or peril.
      - delivery of the gift occurred
      - setting aside gifts must reflect free will
- - - - tax deduction
        
        mortgage interest deduction
        
        loan amortization schedule- process of paying regular installments of a debt over a period of time
        
        home equity interest- debt secured by a mortgage on the residence for which the loan proceeds were used for the purposes other than acquiring the property
        
        a person can deduct the interest of 100,000 (cant be purchase of first or second home)
        
        deduction for points- a percentage of a loan given to the lender as additional consideration for making the loan (one point = one %)
      - Using a residence for business purposes- when portions of the estate are used to operate a business
        
        as the principal place of business for the taxpayers trade or business
        
        as a place where the taxpayer met or dealth with patients, clients, or customers in the normal course of the taxpayers business
        
        if the taxpayer uses a separate structure free standing to the home in connection with trade or business.
    - - definitions
        
        basis- the cost of buying or building the home
        
        gain- the amount of money realized from the sale of he property in excess
        
        the amount realized from the sale of the property below the property's basis
        
        depreciation- the decrease in the value of assets (not for residential properties)
        
        selling expenses- everything needed to make the deal
      - the amount of income tax owed from the realized gain is taxed at a capital gains tax rate
    - - tax from sale can be deferred if followed correctly
      - IRC 1031
        
        gains on commercial real property can be deferred
        
        requires an owner to deduct part of the building cost and the value of improvements
        
        a deferral of the recognition of gain or loss when property held for business or commercial purposes is exchanged for like kind property
        
        the basis of the original property carries over to the replacement proeprty
    - - government owner property
      - tax exempt organizations
      - homeowner's deduction
    - - decreased real property taxes and placed substantial limimtations on the ability to increase real property taxes at the state and local levels
      - Requires two-thirds in both houses for future increases in any state tax rate, including income tax
      - property taxes are limited to 1% of the real property's assessed value; increased max of 2% annually unless sold
      - reassessment is not needed for a lot of transfers of title
  - - - tax deductions- a reduction to taxable income
      - tax credits- lower the amount of taxes to be paid, dollar for dollar
      - difference- the deduction comes before the tax rate, while the tax credit comes after the tax rate
    - - may only deduct a total of $1 million from home mortgages from one person- house, condo, etc
      - even if the taxpayer has three mortgages totaling $1 million, only two residences will qualify
      - a person can continue to use the $1 million of tax deductible interest in perpetuity. If the taxpayer refinances or purchases, the taxpayer may continue to use the $1 million mortgage interest deduction
      - business and investment properties have tax deductible with no limitation.
    - - residential properties= (selling price of property - selling expenses) - (Basis in property + Improvements) = realized gain (loss)
      - commercial property= (selling price of property - selling expenses) - (basis in property - depreciation + improvements)= realized gain (loss)
    - - principal residence exemption- may qualify to exclude part of the gain on the sale of a home if they owned and used the home as a principal residences for two out of the previous five years prior to its sale.
      - does not have to be continuous occupancy
    - - the property involved must be a like-kind exchange; liberally interpreted- both the property exchanged and the property received be business, trade, or investment property
      - a qualified intermediary must be used- entity that accepts the funds, prepares and escrow, and handles legal contracts
      - the exchange must occur within the appropriate time- 45 days from title transfer to identify the replacement. must close on the replacement in 180 days from the time title is transferred.