Washington Real Estate Fundamentals Chapter Two Questions and Answers

Washington Real Estate Fundamentals Chapter Two Questions and Answers Estate interests in real property that include possession Two categories of estates 1. Freehold estates 2. Leasehold (less-than-freehold) estates Freehold Estate Interest in real property that has indeterinable (not fixedd or certain) duration Leasehold Estate Interest in real property that has limited duration of time. The holder of the lease is referred to as tennant. Tenantn has possession of the property but not the title. Fee Simple Estate The greatest interest that one can have in real property. An estate that is unqualified, of indefinite duration, freely transferable and inheritable. Defeasible Fee Owner holds the same interest as the owner as the owner of a fee simple estate but interest is subject to termination Fee Simple Determinable A fee simple estate qualified by a special limitation. Language used to describe limitation includes the words so long as, while, or during. A Fee Simple Subject to a Condition Subsequent doesn't end automatically when the condition is breached, instead the grantor must take some action Life Estate A freehold estate in land that is limited in duration to the life of the owner or to the life or lives of some other designated person or persons. Estate In Reversion A life estate whereby the property reverts back to the grantor when the grantee (life tenant) dies Estate In Remainder Grantor gives a life estate to a grantee. Upon the death of the grantee the property goes to a third party. Leasehold Estate less-than-freehold estate. The holder is referred to as tenant. The tenant does not own the property, but rather has ta right to exclusive possession of the property for a specified period Estate For Years An interest for a certain, exact period of time in property leased for a specified consideration. Periodic Estate Non-ownership Estate; Has a defined start date, but no defined end date (typically has an automatic renewal clause) Tenancy At Sufferance Lowest type of estate. Technically not an estate. A tenant who came into possession of the property lawfully, under a valid lease, holds over after the lease has expired. Concurrent Ownership Two or more persons own a piece of real property Under Washington law, three forms of concurrent ownership are recognized: 1. Tenancy in Common 2. Joint Tenancy 3. Community Property Tenancy In Common Co-ownership of property in which each party owns an undivided interest that passes to his or her heirs at death. Termination of Tenancy In Common A legal action that divides the interest in the property and deseparate parcels. AKA Partiotion Suit Joint Tenancy The joint ownership of property by two or more co-owners in which each co-owner owns an undivided portion of the property. On the death of one of the joint tenants, his or her interest automatically passes to the surviving joint tenants. Advantage of joint tenancy: Avoiding the delay and cost of probate proceedings Disadvantage of joint tenancy: Gives up the right to dispose of owner interest in the property by will. Community Property property acquired during marriage and owned equally by both spouses limited partnership A partnership with one or more general partners and one or more limited partners. Limited Liability Companies combines the most favorable attributes of both partnerships and corporations Members (like shareholders) are not personally liable for LLC obligations. LLC's are taxed like a partnership. To form an LLC - Articles of Organization must be filed with the Secretary of State Joint Ventures when two or more companies join forces - sharing resources, risks, and profits, but not actually merging companies - to pursue specific opportunities Trust One or more trustess manage property for the benefit of one or more beneficiaries. Real Estate Investment Trust (REIT) Finance large real estate projects Cooperative Ownership of the property is vested in a single entity - usually a corporation. Residents own shares in the corporation rather than owning the property themselves.