Modern Real Estate Practice in Pennsylvania 12 th

Modern Real Estate Practice in Pennsylvania 12 th Edition Chapter 5: Interests in Real Estate

5 Interests in Real Estate • Learning objectives – Identify limitations on ownership rights imposed by government action and form of conveyance – Describe various estates in land, the rights, and limitations they convey – Explain concepts related to encumbrances and water rights – Distinguish between the various types of government powers, and how they are exercised – Define key terms © 2012 Kaplan, Inc. 2

5 Interests in Real Estate • Governmental powers (PETE) – Police power – Eminent domain – Taxation – Escheat © 2012 Kaplan, Inc. 3

5 Interests in Real Estate • Freehold estates – Fee – Life simple absolute simple defeasible simple determinable estate • Pur autre vie • Remainder and reversion – Legal life estate • Dower and curtesy • Homestead © 2012 Kaplan, Inc. 4

5 Interests in Real Estate Freehold Estates Fee Simple Estate Fee Simple Absolute Life Estate Fee Simple Defeasible Special Limitation with Possibility of Reverter © 2012 Kaplan, Inc. Condition Subsequent with Right of Re-Entry Conventional Life Estate Ordinary with Remainder or Reversion Pur Autre Vie with Remainder or Reversion Legal Life Estate Dower Homestead Curtesy 5

5 Interests in Real Estate • Police power – Enabling Acts: Power to establish legislation to preserve order • Protect public health and safety • Promote general welfare – Exercised by states, municipalities, and counties © 2012 Kaplan, Inc. 6

5 Interests in Real Estate • Police power – Restrictions cover • • Environmental protection laws Zoning and building ordinances Use regulations Occupancy Size Location Construction restrictions Rental regulations © 2012 Kaplan, Inc. 7

5 Interests in Real Estate • Eminent domain: the right to acquire privately owned real estate for public use • Condemnation: the process • Courts used to settle disputes © 2012 Kaplan, Inc. 8

5 Interests in Real Estate • Kelo v. New London – Private property taken for a redevelopment plan anchored by private business • Many states (PA included) redefined what a taking can be © 2012 Kaplan, Inc. 9

5 Interests in Real Estate • Other governmental powers – Taxation Charge on real estate to raise funds to meet the public needs of the government – Escheat State law provides for ownership of real estate to escheat (revert) to the state when an owner dies leaving no will and no heirs can be located © 2012 Kaplan, Inc. 10

5 Interests in Real Estate • Estates in land – Defines degree, quantity, nature, and extent of owner’s interest – Measured by duration • Freehold estates (forever) – Real estate – Real property • Leasehold estates (defined length of time) – Contract – Personal property © 2012 Kaplan, Inc. 11

Freehold Estates • Indeterminable length • Fee simple estate – Fee simple absolute – Indefeasible • Defeasible fee – – • Conditional fee Determinable fee Life estate – Conventional life estate – Legal life estate Leasehold Estates • Do not involve ownership • Fixed period of time • Types: – Estate for years – Estate from period to period – Estate at will – Estate at sufferance • Involve a contract © 2012 Kaplan, Inc. 12

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5 Interests in Real Estate • Fee simple estate – Highest interest in real estate recognized by law • Fee absolute = All rights to property • Fee simple determinable= Special limitation • Fee simple subject to a condition subsequent (owner must go through court) © 2012 Kaplan, Inc. 14

5 Interests in Real Estate • Life estates – Freehold estate – Limited to life of specific person (can be estate holder or another) – Entire bundle of rights EXCEPT • cannot pass ownership to heirs and • ends with death of owner of estate © 2012 Kaplan, Inc. 15

5 Interests in Real Estate • Conventional life estate – Intentional act of grantor (owner) – Transferred during life or as part of will – Conveyed to life tenant – Ends on death of person against whose life estate is measured – May be sold, leased, mortgaged, or given away. . . – Cannot waste or harm the estate • Pur autre vie—tied to the life of a third party © 2012 Kaplan, Inc. 16

5 Interests in Real Estate © 2012 Kaplan, Inc. 17

5 Interests in Real Estate • Future rights – Remainder – Reversion © 2012 Kaplan, Inc. 18

5 Interests in Real Estate • Legal life • Statutory life estate – Created for surviving spouse – Spouse entitled to 33 percent of estate (by will or statute) © 2012 Kaplan, Inc. 19

5 Interests in Real Estate • Spousal signatures – PA abolished dower and curtesy – PA does not require a non-owning spouse to sign real estate documents – May be required by lender or title company © 2012 Kaplan, Inc. 20

5 Interests in Real Estate • Encumbrances: claim, charge, or liability – Attaches to real estate – Binding on real estate – Affects title © 2012 Kaplan, Inc. 21

5 Interests in Real Estate • Liens – Financial charge against property – Provides security for debt or obligation of owner • Lienholder (creditor) has the right to have the debt paid out of the debtor’s property • Debt can be paid from the proceeds of a court-ordered sale © 2012 Kaplan, Inc. 22

5 Interests in Real Estate • Deed restrictions – Private agreements that affect use of land • • Binding on subsequent owners Run with the land Limit use Enforced by private court action • Covenants, conditions, and restrictions (CC&Rs) – Filed in the public record with the original subdivision plan © 2012 Kaplan, Inc. 23

5 Interests in Real Estate • Easement: the right to use the land of another for a particular purpose – Appurtenant easement — annexed to the ownership of one parcel and allows this owner the use of a neighbor’s land – Easement in gross — an individual interest in or limited right to use the land of another © 2012 Kaplan, Inc. 24

5 Interests in Real Estate Commonly created by written agreement • Express grant from the owner of the property over which the easement will run • Deed of conveyance by the grantor – Reserving an easement over the sold land – Granting new owner easement over grantor’s remaining land • Long-time usage: – Easement by prescription – Necessity (follows) – Implication—actions imply intent to create easement © 2012 Kaplan, Inc. 25

Servient Tenement © 2012 Kaplan, Inc. 26

Dominant Tenement © 2012 Kaplan, Inc. 27

5 Interests in Real Estate • Easement by necessity – Created by a court order • Not for convenience: must grant a landlocked parcel access to ingress and egress • Tricky situation: appurtenant easement with a common grantor (owner subdivides and creates an easement for access) © 2012 Kaplan, Inc. 28

5 Interests in Real Estate • Easement by prescription – Claimant uses land for certain time frames – In Pennsylvania: 21 years – Continuous, exclusive – Without owner’s permission – Cannot be acquired on public land – Tacking permitted © 2012 Kaplan, Inc. 29

5 Interests in Real Estate • Party wall: building wall that straddles the boundary lines between two properties – Each property owner owns half of the wall, each owner has an easement right in the other half of the wall for building support – Each pay half of the expenses to maintain the wall – Can have a party driveway © 2012 Kaplan, Inc. 30

5 Interests in Real Estate • Terminating an easement – Purpose no longer exists – Termination by merger – By release or abandonment – By nonuse of a prescriptive easement – By destruction (knock down a party wall) – By lawsuit: action to quiet title Actions may require legal steps © 2012 Kaplan, Inc. 31

5 Interests in Real Estate • Licenses – Privilege to enter the land of another for a specific purpose – Not a permanent right — may be withdrawn • Examples: – Park in driveway – Erect a billboard – Have a garden • May be oral, should be written © 2012 Kaplan, Inc. 32

5 Interests in Real Estate • Encroachment: unauthorized intrusion of an improvement or other real property onto another’s property – Extending from one property across the property line onto another parcel or beyond legal building lines – Can be discovered by spot survey – May lead to easement by prescription © 2012 Kaplan, Inc. 33

5 Interests in Real Estate • Water rights – Waterfront property has value • State laws govern the use of water • Riparian or littoral © 2012 Kaplan, Inc. 34

5 Interests in Real Estate • Riparian – Land bordered or traversed by river, stream, or waterway – Cannot interrupt or contaminate flow • Non-navigable water split in middle © 2012 Kaplan, Inc. 35

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5 Interests in Real Estate • Water rights • Littoral – Land bordering oceans, seas, or large lakes – Land bordering tidal areas L---O----L Large Oceans Lakes © 2012 Kaplan, Inc. 37

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5 Interests in Real Estate • Avulsion: sudden change in a stream’s course • Accretion: an increase in land • Alluvium: gradual depositing of solid material by a body of water • Erosion: loss of property by the wearing away of water • Relection: creation of dry land by gradual withdrawal of water © 2012 Kaplan, Inc. 39

5 Interests in Real Estate • Doctrine of prior appropriation – Used in states where water is scarce – Right to use water, except for limited domestic use, is controlled by the state – Landowners must demonstrate they will use water in a beneficial way © 2012 Kaplan, Inc. 40