(Put Practices – purch & sale beginning)
Determining the Form of Title
Tenancy In Severalty or Separate Property - This form of ownership only has one owner. Since there is only one
owner, the 4 Unities are not applicable. One person enjoys all rights of the property.
(1)
Single Owner - The single owner could have purchased the property prior
to getting married. This would remain separate property after the marriage.
Even in a community property State such as California, property acquired
prior to marriage is retained as separate property. Even after marriage, if a
person acquired ownership through an inheritance or gift from an
individual it is considered separate property; only one owner.
(2)
Commingling - If an owner of separate property commingled property
with joint property during the marriage, the courts could rule the separate
property as community property in a divorce.
Example: If a spouse paid the property tax on her separate property with
a joint checking account, the courts might rule the separate property as
community property.
(3)
Tenancy In Severalty - Upon the death of a single owner under Tenancy in
Severalty, the property would pass to the individual heirs, charity, trust,
etc. that the owner specifies in his/her will.
(On the next page put slides Practices – Purch – Sale – Page 001 & 001A)
1
ii.
Tenancy by Entirety and Community Property - This form of tenancy deals
with ownership of property by married couples. The use of either has to do with
their residency in a given State. States establish ownership by one or the other
form; never both within the same State. Most States utilize the English system of
government and laws. They do not utilize municipalities. They do not have
community property laws. The eight (8) western States utilize the Spanish form of
government and laws. They have municipalities and community property laws.
(1)
Tenancy By The Entirety - Under this old English form of common law, all
property acquired by a husband and wife have a survivorship arrangement.
The 4 Unities are present. Each owns 50% of the property. Each has equal
possession. They must have acquired the property at the same time and
both their names must be on the title. When the first spouse dies, the
surviving spouse obtains the deceased spouse’s interest; the surviving
spouse gets the entire estate.
(2)
Community Property - In a community property State, all property
acquired by a couple is considered community property UNLESS the
property was acquired by a separate effort. If a spouse utilizes assets that
are separate property to acquire new property, the new property will not be
community property. At death, this separate property can be passed on to
individuals, charities, trusts, etc. other than the spouse. If the property is
acquired by a joint effort, the property is always community property.
When a spouse dies, he or she can pass on their interest to a person of
their choosing. The surviving spouse does not necessarily gain the
deceased spouse’s share. The deceased spouse has to will their share of
ownership to the other spouse.
(On the next page put slides Practices – Purch – Sale – Page 002 & 002A)
2
iii.
Co-Tenancy or Concurrent Tenancy - This form of tenancy/ownership is for
those who are joint owners , but are NOT married. Example: Two brothers
inherit a cabin from their mother upon her death. Joint ownership can be set up
on a survivorship arrangement (survivor gets it all) OR it can be titled as an
inheritable tenancy (deceased owners passing their interest to heirs).
(1)
Joint Tenancy - This form of tenancy/ownership among non-married
individuals is exactly the same as Tenancy by the Entirety for married
couples. Each owner enjoys the 4 Unities and the surviving owner ends up
with the entire estate. Each owner must acquire the property at the same
TIME, must all be listed on the TITLE, must have equal INTEREST, and
equal POSSESSION of the property. An owner CANNOT pass on their
interest to a person of their choosing. The surviving owner(s) will obtain
their interest at death; a survivorship designation.
(2)
Tenancy In Common - This is the only form of multiple ownership that
does not require the 4 Unities. Owners under Tenancy in Common can
have UNEQUAL interest/ownership. One owner could own 10% and the
other own 90% of the property. They do not have to acquire ownership at
the same time or all be listed on one recorded document. One owner may
have acquired their ownership by inheritance from their uncle. The other
owner may have purchased from the uncle 5 years prior. The only Unity
that is required is EQUAL Possession. Each owner can utilize the property
equally as far as use and possession.
(On the next page put slides Practices – Purch – Sale – Page 003 & 003A)
3
iv.
Tenancy/Ownership by a Trust or Corporation - Trusts and Corporations can
only own property by Tenancy in Severalty as a single owner or as Tenants in
Common with other owners. Obviously a trust or corporation cannot get married
and so they cannot own property under Tenancy by Entirety. A trust or
corporation does not die and so neither can hold property in Joint Tenancy which
has a survivorship clause.
(On the next page put slides Practices – Purch – Sale – Page 004 & 004A)
4
(1)
Commingling - If an owner of separate property commingled property
with joint property during the marriage, the courts could rule the separate
property as community property in a divorce. Example: If a spouse paid
the property tax on her separate property with a joint checking account,
the courts might rule the separate property as community property.
(2)
Tenancy In Severalty - Upon the death of a single owner under Tenancy In
Severalty, the property would pass to the individual heir, charity, trust, etc.
that the owner specifies in his/her will.
(On the next page put slides Practices – Purch – Sale – Page 005 & 005A)
5
Forms of Earnest Money
Buyer's Consideration - The buyer’s consideration to seller under contract requirements.
E/M Deposit - Check - The attached earnest money deposit is an up-front payment that shows a
commitment by the buyer to the seller.
Additional E/M - Any additional earnest money due if offer accepted. Usually the buyer will make an
immediate deposit and then specify additional Earnest Money deposits to be made in the immediate future.
Example: G writes a check out for $4,000 with the offer (E/M deposit). She also specifies that if the offer
is accepted, she will deposit an additional $26,000 within 30 days. This scenario is fairly common.
(On the next page put slides Practices – Purch – Sale – Page 006 & 006A)
6
Other Forms of Earnest Money
Promissory Note - Payable at closing.
Title to Other Property - The buyer could offer title to his/her real property as a show of
earnest money.
Cash Saving Account - An assignment of available cash upon acceptance,
Super Bowl Tickets - A person in Seattle placed his Super Bowl tickets into escrow to entice the
seller to action.
The purpose of the buyer’s earnest money to show the seller that he/she is serious and is willing to place
the specified item into escrow.
(On the next page put slides Practices – Purch – Sale – Page 007 Only)
7
Different Purchase and Sale Agreements
There are several different residential purchase and sale agreements. The different forms specify the
type of real property being purchased and sold.
1. Residential Purchase and Sale Agreement
2. Condominium Purchase and Sale Agreement
3. Vacant Land Purchase and Sale Agreement
4. Manufactured Home Purchase and Sale Agreement
5. New Construction Purchase and Sale Agreement
(On the next page put slides Practices – Purch – Sale – Page 008 & 008A)
8
Pre-qualified Buyers
In the past, a number of our licensees have required tentative buyers to obtain a pre-qualified loan before
seriously making offers on property (they do not do that, now). This, however, is a suggestion that can
move things along with a purchase and sale agreement with possible sellers.
Maximum Price - This pre-qualified status will show the maximum that a buyer/ purchaser can
pay for a home. This can save you a lot of wasted time if the buyer cannot qualify for a loan.
Software Budgeting
Some agents sit down with buyers and show them what amount they can comfortably afford to spend on
a house. There are budgeting software programs available that take in information and work out a
budget for individuals. You can utilize this software to calculate the amount that a buyer can afford.
(On the next page put slides Practices – Purch – Sale – Page 009 & 009A)
(On the next page put an ending slide)
9