8/18/2019 f 13550000220134001 Pp t 01

http://slidepdf.com/reader/full/f-13550000220134001-pp-t-01 1/14

1-1Copyright ©2008 by The McGraw-Hill Companies, Inc. ll!ights !eser"e#

Chapter 01:Real Estate Investment: BasicLegal Concepts

McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. ll rights reser!e".

8/18/2019 f 13550000220134001 Pp t 01

http://slidepdf.com/reader/full/f-13550000220134001-pp-t-01 2/14

1-2

Property Rights and EstatesProperty Rights and Estates

Real property vs. personal propertyEstates

Based on Rights: Possession vs. !ot in Possession Based on Possession and "se: #reehold vs.

Leasehold

Possessory estates #reehold

#ee $imple EstatesLi%e Estates

8/18/2019 f 13550000220134001 Pp t 01

http://slidepdf.com/reader/full/f-13550000220134001-pp-t-01 3/14

1-&

EstatesEstates

!onpossessory Estates: #'t're Estates Reversion

Remainder Leasehold Estates

Estate %or (ears

Estate %rom (ear to (ear

8/18/2019 f 13550000220134001 Pp t 01

http://slidepdf.com/reader/full/f-13550000220134001-pp-t-01 4/14

1-)

*dditional Interests *dditional Interests

*n interest is a right or claim on real property+ itsreven'es+ or prod'ction. * common e,ample o% an interest is hen an o ner

o% real estate pledges or enc'm ers his property as acondition %or o taining a mortgage. /he lender is saidto have a sec'red interest.

*n easement is a nonpossessory interest in

land. /he right is %or the 'se o% the land %or aspecial p'rpose. E,amples incl'de rights o% ay %or road access and

'tility lines.

8/18/2019 f 13550000220134001 Pp t 01

http://slidepdf.com/reader/full/f-13550000220134001-pp-t-01 5/14

1-

/itle *ss'rance/itle *ss'rance

/itle *ss'rance/he eaning o% /itle * stract /erm 'antity o% Rights Conveyed * stract o% /itle

/itle Chain

8/18/2019 f 13550000220134001 Pp t 01

http://slidepdf.com/reader/full/f-13550000220134001-pp-t-01 6/14

1-3

/itle *ss'rance/itle *ss'rance

4eeds 5rantor 6 5rantee

5eneral 7arranty 4eedCovenant that the grantor has good titleCovenant that the grantor has the right to conveythe propertyCovenant to compensate the grantee %or loss o%property or eviction as a res'lt o% a s'perior claim!o enc'm rances on title e,cept those noted

8/18/2019 f 13550000220134001 Pp t 01

http://slidepdf.com/reader/full/f-13550000220134001-pp-t-01 7/141-8

/itle *ss'rance/itle *ss'rance

4eeds $pecial 7arranty 4eed

Limits the covenants to the o nership d'ration o%the c'rrent grantor.!o g'arantees on the o nership o% prior grantors.

Bargain and $ale 4eedConveys property itho't seller arranties$ometimes called an 9as-is deed

8/18/2019 f 13550000220134001 Pp t 01

http://slidepdf.com/reader/full/f-13550000220134001-pp-t-01 8/141-;

/itle *ss'rance/itle *ss'rance

4eeds $heri%%<s 4eed-/r'stee 4eed

Bargain and sale deed received y a 'yer %rom a%oreclos're or other %orced sale y sheri%% or tr'stee!o arranties are added

'itclaim 4eed!o Covenants/he least protection to the grantee5rantor conveys hatever right 9may e,ist

8/18/2019 f 13550000220134001 Pp t 01

http://slidepdf.com/reader/full/f-13550000220134001-pp-t-01 9/141-=

/itle *ss'rance/itle *ss'rance

* stract 6 >pinion /itle search

$t'dy o% relevant records La yer<s opinion on title

Is it good and mar?eta le@ *re there any clo'ds on title@Is there a rea? in the chain o% title@

8/18/2019 f 13550000220134001 Pp t 01

http://slidepdf.com/reader/full/f-13550000220134001-pp-t-01 10/141-10

/itle Ins'rance/itle Ins'rance7hy /itle Ins'rance and not * stract and >pinion@1. 4e%inite contract lia ility to the premi'm payer 2. Reserves s'%%icient to meet ins'red losses&. $'pervision y an agency o% the state

). Protection to the policyholder against %inancial losseca'se o% any ?ind o% title de%ect+ disclosed or

hidden7hile an a stract and opinion method may still e

'sed eca'se o% cost considerations+ in generaltitle ins'rance is 'sed. *s a general r'le+ lendersill reA'ire that a 'yer 'se title ins'rance.

8/18/2019 f 13550000220134001 Pp t 01

http://slidepdf.com/reader/full/f-13550000220134001-pp-t-01 11/141-11

/itle *ss'rance/itle *ss'rance

/itle Ins'rance >ne time premi'm

"nseen a ards in the P' lic RecordRis? is spread among many property o ners

> ners< PolicyIns'res the interest o% a ne o ner

Lender<s PolicyIns'res the interest o% the lender

8/18/2019 f 13550000220134001 Pp t 01

http://slidepdf.com/reader/full/f-13550000220134001-pp-t-01 12/141-12

Recording *ctsRecording *cts

Recording protects the interest o% theo ner

Constr'ctive !otice * person is deemed to have hateverin%ormation is in the p' lic record

echanics Liens ay e recorded 9a%ter the %act $eller<s a%%idavit Lien aiver

8/18/2019 f 13550000220134001 Pp t 01

http://slidepdf.com/reader/full/f-13550000220134001-pp-t-01 13/141-1&

Limitations on Property RightsLimitations on Property Rights

5overnment Restrictions Police Po er

Doning+ 'ilding codes+ etc. Eminent 4omain

Eminent domain is relatively e,pansive dependingon the state+ government has relatively road

po ers on hat property they may ta?epossession o% thro'gh eminent domain and %or

hat p'rpose.

8/18/2019 f 13550000220134001 Pp t 01

http://slidepdf.com/reader/full/f-13550000220134001-pp-t-01 14/141-1)

Limitations on Property RightsLimitations on Property Rights

Private Restrictions 4eed restrictions

$' division restrictions