Real Estate (PA): Chapter 7- Forms of Real Estate Ownership (12th edition) Practice Exam Examples Questions With Correct Detailed Answers.

Co-ownership - correct answer When title to one parcel of real estate is held by two or more individuals; concurrent owners Tenancy in common - correct answer When each tenant holds an undivided fractional interest in the property. The co-owners have a unity of possession. It is ownership interest, not the property that is divided. Unity of possession - correct answer Meaning that they are entitled to possession of the whole property. When two or more people acquire titles to a parcel of real estate and the deed does not indicate the form of tenancy... - correct answer the new owners are usually determined to have acquired title as tenants in common. Joint Tenancy - correct answer The Right of Survivorship. Upon the death of a joint tenant, the deceased's interest transfers directly to the surviving joint tenant or tenants. Severalty - correct answer Where title is held by an individual or corporation. The last survivor of a Joint Tenancy takes title in severalty. Then has right to pass property to any heirs. To create a Joint Tenancy you need 4 unities (PITT) - correct answer Unity of possession- undivided right to possession Unity of Interest- hold equal ownership interests Unity of Time-acquire their interest at the same time Unity of Title- acquire their interest by the same document Joint Tenancies are terminated when - correct answer A joint tenancy is destroyed when any one of the four unities of joint tenancy is terminated. Termination of C0-ownership by PARTITION SUIT or Partition - correct answer A legal way to dissolve the relationship when the parties do not voluntarily agree to its termination. If court can't physically divide parcel without destroying its value, the court will order the real estate sold. Tenancy by the Entirety (a form of Joint Tenancy) - correct answer a special form of co-ownership that allows the husband or wife to inherit the other spouse's ownership interest upon death. Recognized in PA and automatically created. Entirety - correct answer refers to the fact that the owners are considered one indivisible unit- married couple is one legal person. Termination of a Tenancy of Entirety in PA (JDAD) - correct answer Judgement sale Death Agreement Divorce Community Property Rights - correct answer Pennsylvania is not a Community Property State; a "marital property" state and utilizes an "equitable distribution" procedure for dividing marital property. Separate Property - correct answer Real or personal property that was owned solely by either spouse before the marriage, by gift or inheritance during the marriage as well as any property purchased with separate funds after the marriage. Community Property - correct answer consists of real and personal property acquired by either spouse during the marriage. Any conveyance or encumbrance of community property requires the signatures of both spouses. Community property does not provide an automatic right of survivorship as joint tenancy does. Trust - correct answer When one person transfers ownership of property to someone else to hold or mange for the benefit of a third person. Trustor - correct answer the person who creates the trust Beneficiary - correct answer the person who benefits from the trust Trustee - correct answer the party who holds legal title to the property and is entrusted with carrying out the trustor's instructions regarding the purpose of the trust. Fiduciary - correct answer The trustee is a fiduciary; one who acts in confidence or trust and has a special legal relationship with the beneficiary. The trustee's power and authority are limited by the terms of the trust agreement, will, or deed in trust. Trust Companies - correct answer corporations set up for real estate to be held in trust. Living Trust - correct answer Estate planning tool used to minimize the time and costs of probate. Property owner transfers ownership of real and personal property to a trustee (Husband & Wife can be trustees of their own property). Upon the death of the surviving trustee, the estate is distributed to the beneficiary(ies). Testamentary Trust - correct answer A trust established by will after his or her death Land Trust - correct answer Real Estate is the only asset. Title of property is conveyed to a trustee, and the beneficial interest belongs to the beneficiary (usually the trustor). Public records do not usually name the beneficiary. May be used for secrecy when assembling separate parcels. Partnership - correct answer an association of two or more people who carry on a business for a profit as co-owners. General Partnership - correct answer All partners participate to some extent in the operation and management of the business and share full personal liability for business losses and obligations. Limited Partnership - correct answer Consists of one or more general partners and limited partners. Limited partners are not legally permitted to participate in the business, and each can be held liable for business losses only to the amount invested. Uniform Partnership Act - correct answer a partnership is recognized as a legal entity and can hold title in the partnership's name. Uniform Limited Partnership Act - correct answer a limited partnership is recognized as a legal entity that can hold title to property in the limited partnership's name. Corporations - correct answer a legal entity- an artificial person- created under the laws of the state from which it receives its charter. Managed by Board of Directors. Can own real estate in severalty or as a tenancy in common. Double taxation is a problem (Profits & Dividends for shareholders) S Corporation - correct answer composed of 100 or fewer shareholders; avoids double taxation (Only shareholders are taxed once) LLC - Limited Liability Companies - correct answer a relatively recent form of business organization; combines the most attractive features of limited partnerships and corporations. Condominium Ownership - correct answer Horizontal Property Acts; The owner of each unit holds a fee simple title to the unit. Tenancy in common Common Elements - correct answer individual unit owners also own a specified share of the undivided interest in the remainder of the building and land. (Lobby, hallways, elevators, rec facilities) Pennsylvania Uniform Condominium Act - correct answer a condominium is created and established when the owner of an existing building or the developer of unimproved property executes and record a Declaration of Condominium. Declaration of Condominium - correct answer *a legal description of the condo units and common elements *Condo bylaws *a survey of the property *architects drawings & surveyors legal descriptions of each unit *restrictive covenants controlling the rights of ownership Right of first refusal - correct answer A condo unit can usually be sold or transferred to whomever the owner chooses, unless the condo association provides for a right of first refusal; of unit at same price to other owners in condo or association before accepting outside purchase offer. HOA - correct answer Homeowners association; may manage property on own or hire property manager; governed by board of directors Condo Conversions - correct answer existing tenants are informed, given ample opportunity to purchase unit or continue as tenant for a period of time PA Condo sales - new or conversion - correct answer 15 days before a sales contract is signed purchasers must be given a public offering statement. If not provided statement purchaser may cancel within 15 days after receiving material. May recover 5% of unit's sale or max $2000. Condo conversion - correct answer Must be given a 2 year warranty in structural defects in unit and common areas. Resale Certificate - correct answer Must give Condo Declaration, bylaws and rules and regulations of the association. Must give to buyer before closing. IF given after closing, buyer can void the agreement within five days after receiving the info. Cooperative Ownership - correct answer a corporation holds title to the land and the building. Corporation then offers shares of stock to prospective tenants. Purchasers become a shareholder and receives a proprietary lease. Do not own real estate they own internet in the corporation. Must sell the stock back to the corporation at the original purchase price. Corporation realizes any profits when the shares are resold. Any liens on unit falls on remaining shareholders. ADVANTAGES: IRS treats as a fee simple, freedom of maintenance, acceptable collateral for financing, control over the property. Time - Share Ownership - correct answer permits multiple purchasers to buy interest in real estate; time-shares are most common with resort property ownership. Fee Simple interest if time-share