Tues. 8/30/2011
Real Property  Estates
The rule against perpetuities – any vested interest in land must vest within 21
years of a life in being.
Owner gives to “A” for life  A’s kids who reach 21. Exemption of 9 months for
pregnancy Who reach 35.
The fertile octagenary rule.
In Texas – mortgager is a lien holder not owner name on title is owner
Free hold estate – common law
Fee simple
1. own entire property (Surface & Mineral Rights)
2. Unconditional power to dispose of property
3. Title can descend to heirs
In texas-5.001 – all conveyances are assumed fee simple
2nd Day
2001/09/01
08:00
Thursday
4 - Freehold Estates
A freehold estate is one where the duration of ownership is indeterminate, which could
be for a lifetime of an individual or an unlimited duration. In most cases, for instance, the
real estate that you buy is a freehold estate.
1)
Regular Life Estate
Life Estate ends by death, transfer or joint transfer to 3rd party.
Owner - > holds “Remainder” when property is conveyed to someone “A” “for life”.
Remainder returns to owner upon “A”’s death, transfer
Life Tenant Duties: Can’t waste resources.
2)
Pur Autre Vie estate (for the life of another)
Life estate is measured by life of another.
3)
Conditional Life Estate
A)
Fee on Conditional (Also called Fee Simple Determinable)
Original owner receives possibility of “Reverter” rather than a “Remainder” as in a
Regular Estate.
Don’t meet the condition then Instanti (Latin) Instantly reverts upon failing condition.
B)
Fee on Condition Subsequent (Also called Fee Simple Condition)
Original owner receives right of “Entry” rather than a “Reverter” as in a Fee on
Conditional. Retain the right to pursue reacquiring property by suit.
Prior to 1983 disputes between Surface & Mineral rights owners on use or abuse were
judged by complex tests.
Post 1983 due “Moser”, the following rights stay by default with the surface owner.
Building Stone
Lime Stone
Caliche
Surface Shale
Water
Sand
Gravel
Near Surface Cola (Lignite)
Iron ore
Mineral Rights are Dominant.
Resources in the ground are real property, once the resource is extracted or
recovered (Possessed) the resource become personal property.
Tues. 9/6
No Class
Thurs. 9/8
Statutory estates
1. homestead
2. Community Property: - Gives each spouse 1/2 interest in marital property.
3. Water Rights
4. Cemetery Lots
Dower: - Gives Wife rights in Husband’s real property – (Not In TX)
Curtesy: - Gives Husband rights in Wife’s real property – (Not In TX)
Homestead: - Where you live.
How to create – Live There!
Strong homestead laws, help keep families together, reduces burdens on society
18 – homestead rights can’t be waved, written into constitution.
Belong only to people & not corporations
3 original ways to loose Homestead status from Debt:
1. non-payment for mortgage
2. non-payment for property taxes
3. non-payment of home improvements (Lien)
Article 16 S 50
3 New ways to loose Homestead status from Debt
4. Home equity loan – (must go to Court)
5. Reversed mortgage
6. Home owners association – (Don’t pay dues)
Bankruptcy - homestead exempt Max. Size of protected
Urban 10 acres
Single Person/rural 100 acres
Head of Household (Multiple)/rural 200 acres
Urban = (Test) (If fail then = Rural)
1. Within border limits of municipality or extra territorial jurisdictions of
municipality. &
2. Served by police protection, paid or volunteer fire department.
& 3 of the 5 following:
3. Electricity, natural gas, sewer, storm sewer, water
Attach debt to homestead (Lien) for after sale.
Sell homestead asset - Proceeds are exempt for 180 days to acquire new
homestead. Any excess cash asset after acquiring new homestead would be
attachable after 180 days.
3 ways - terminate homestead
1. debt
2. alienate homestead = For sale (Sale of homestead)
3. abandonment of homestead
3 original ways to loose Homestead status from Debt
1. non-payment for mortgage
2. non-payment for taxes
3. non-payment of home improvements
Article 16 S 50
3 New ways to loose Homestead status from Debt
4. Home equity loan – (must go to Court)
5. Reversed mortgage
6. Home owners association – (Don’t pay dues)
Certain Personal Property protected: - (42.002)
(food?), tools, farm equip., 2 firearms, home furnishings, jewelry up to 25% of
estate value. 1 vehicle for every licensed driver.
Community property
Once married, assets which come into marriage are assets of marriage
Exceptions:
1. prior property
2. gifts & devise (inheritance)
3. personal injury law suit (except lost wages)
4. military pensions (If married less than 10 years)
Tues. 9/13 Real property
Common law marriage (In Texas – informal marriage)
1. cohabitation (No specific min time limit)
2. Must have an agreement to be married
3. Hold yourself out as Husband & Wife (refer to other as spouse including
slang references).
2.401 family code - Person has up to 2-years after relationship end to make a
claim for your % of interest in community property
Water rights
State of TX owns water, individuals can collect rain water
Cemetery lots
Perpetual care trust to get around the rule of perpetuities
Water Rights Code 11.021
TX Water Code: All water belongs to state.
Water conservation districts monitor usage. If water allotment is not used water right
allocation is reduced by the difference for the amount that is not used.
Water conservation districts differ by city, county, state.
Ponds and Lakes wholly contained on your property remain personal property.
Cemetery Lots
1. Lease Lots - Never able to buy
2. Set up as perpetual care Trust and is property of cemetery. Cemetery is an actual
trustee gets around law of perpetuities.
Surveyors decide the legal description of size of property.
Point of beginning can be defined by anything except natural structures: rocks, trees,
rivers, etc.
(DIAGRAMS)
Thur. 9/15 MISSED NOTES
How property is owned affects liability, control, and taxes.
Types of Ownership
1. Ownership in severalty – owned by 1 person, pays taxes at regular rate, maximum
liability for civil risk and has maximum control.
2. Tenants in Common – can be 2 or more persons, have undivided interests and can
be passed to trustee, has equal liability in ration to users. Does not have complete
control. Taxes are in joint ratio to users. If conflict arises one party can buy the
other out or divide the property. If ownership in TX is 2 or more it is presumed a
tenants in common relationship.
3. Joint Tenants – No part is inheritable. TX has attempted to abolish. Has to be a
written document that specifically defines ownership as Joint Tenants. If
foreclosed it becomes a tenants in common. Has same tax liability as tenants in
common.
Partnership – 2 or more people who run a business for profit, if not a written as
agreement controlled by statute.
Rights in partnership property
Interest in business
Right to participate or manage partnership
Interest is inheritable as community property
Duties: Fiduciary is obligation to make decisions in favor and can each convey property
away. Pay taxes at highest rate. Has limited control.
Joint venture – acts just like partnership but serves 1 purpose or objective with the same
rules as partnership.
Limited Partnership – Must have 1 general partnership and can have unlimited partners.
Each limited partner only liable to deposit and:
Must file certificate with state
Has no right to participate in business functions same tax rate as others
If LP (general partner) does participate then relationship becomes partnership, usually
will share a % of profits by partnership agreement.
Corporation – shareholders elect board of directors, who hire officers who actually run
the company
Initiated by filing Articles of Incorporation
Shareholders have no control over business operations, depending on laws may not have
immediate control over board of directors functions (2/3 vote, etc.).
Corporation = 1 person
Me  Law Firm Inc.
Cannot successfully sue and recover damages from individual person so long as funds are
kept separate than the corporate entity umbrella protects the Individual. If funds received
for business functions are deposited into personal accounts then liability is created and
corporation are nullified.
Tues. 9/20 Arrived late 08:30
At 08:30 his lecture ended with Corporations
&
Trusts begin
Trusts – 3 types
Alive, intervivos, or testomentry – last will and testament origin(Trustor/Settler)
1. Beneficiary can sue trustee for inappropriate acts or mishandled profits
2. Creditors can seek profits paid to beneficiaries
3. Trust must have specific instruction to prevent trustee from risky Financial
moves.
4. Never take trust from attorney
Land trust – promoter collects money from investors to buy land, proceeds pay investors
as beneficiaries.
1. Some Courts Rule as partnerships so owners/investors are liable, not really a trust
because it does not provide liability protection.
2. More favorable for tax
REIT Real Estate Investment Trust
1. Allows smaller investors to invest in large property investments
2. investor is only liable for amounts invested
3. Governed by TX business commerce code, IRS, SEC.
Tues. 9/20 Arrived late 08:30
At 08:30 his lecture ended with Corporations
&
Trusts begin
1. testamentary trust (created from will) or inter vivos Trust (Alive – Living
will)
2. land trust
3. real estate investment trust (REIT)
IREIT – Internet REIT
testamentary or will/ inter vivos
9/22 Thur. Real Property
Fixtures and easements
Easement: - Rights that 3rd parties have in someone else’s property for their own
benefit.
Fixtures: - are personal property that become real property
Criteria or litmus test for fixtures (Requires only 1):
1. annexation (how attached to property)
2. adaption (adapted for use on property)
3. intention (by party agreement)
4. material injury caused by removal
Easement: – Rights to use or access to a piece/portion of someone else’s
property for their benefit.
1. Appurtenant – (runs with property or attached to Deed)
2. in gross (utilities or easements in plot plan)
Appurtenant::
(8 total) 4 written document & 4 oral(not verbal) actually just non-written
1.
2.
3.
4.
express grant – written deed
express reservation – incorporated within deed of sale
reference to a Platt (Like in gross)
reference to a statute (beach access)
9/27 Tues.
begin (4) oral (not verbal) actually just non-written
1. Easement by implication (ask court to act inequity)
-use of easement was obvious + apparent at time of separation
- use was reasonably continuous
- reasonably necessary for fair and enjoyable use of property
- both properties were previously owned by one person
2. easement by prescription
- adverse
- open
- notorious
- hostile
3.
-
Easement by estoppel
prove communication of promise to A by B
A believed promise
A relied on promise to their legal detriment
4.
-
Easement by necessity
unity of ownership prior to separation
easement is a necessity
necessity existed at time property was severed or separated
How easement ENDS
1. by release (Agreement by owner of easement)
2. by merger (Unity of ownership)
3. by failure of purpose (File Affidavit “Failure of Purpose”)
4. by abandonment
9/29 Real estate - Test after deeds 10/11
Mobile and manufactured homes are personal property unless and until:
1. You file application “Statement of ownership and Location” and elect Real
Property provision with “TX dept of housing and community affairs”
manufactured homes division
2. Then take it to County Clerk office for filing.
Voluntary and involuntary (Beyond your control) conveyances
Voluntary conveyance
Deed – easement, mineral rights, ownership warranties, duties, restrictions, life
estates, etc…
Deeds in TX by Default Is fee simple, Must use specific language in deed no be
other than Fee Simple.
5.021 property code
5.022 look at form deed for assignments
Statute – 3 requirements of deeds
1. in writing
2. subscribe to (signed by grantor)
3. delivered (grantor took action to release deed doc.)
(case law) (common law) court additional requirements
4. words to show intent to transfer (give, gift, grant)
5. identify grantor(s) and grantee(s)
6. sufficient legal description
County clerk requirements (to record @ clerk office)
7. addresses for both parties
8. acknowledged (notarized)
TB+C Statutes of frauds
Texas Business Commerce
1. any transfer of interest in real estate
2. any lease more than a year
Voluntary Conveyances (Deeds & Wills)
1. General warranty – (Strongest) deed with words or terms grant or convey
2. Special warranty deed
3. Quitclaim deed –(Weakest)
4. WILL
General warranty – (Strongest) deed with words or terms grant or convey
1. not transferred to any other parties
2. free from any encumbrance (lien, taxes, assessments)
Special warranty deed
1. transfer of my title with no warranty beyond myself (my Ownership)
Quitclaim deed –(Weakest)
Grantor renounces interest in property to grantee with no warranties / guaranties
Quitclaim deeds are used to clear title issues.
Last voluntary transfer = will
No lawyer required
Holographic will - hand written
Voluntary conveyance
10/4 Tuesday – TEST Review
Free hold –
Rule against perpetuities
Explain and def.
The rule against perpetuities – any vested interest in land must vest within 21
years of a life in being.
Fee simple – in TX all transfers are assumed or default to fee simple
Eo instanti – in
Possibility of reverter when condition is not adhered to it instantly reverts to
original owner (however, could still require court action)
3 types of life estates
Regular.
Pur Autre Vie estate (French) for the life of another
Conditional Life Estate
A)
Fee on Conditional (Also called Fee Simple Determinable)
Original owner receives possibility of “Reverter” rather than a “Remainder” as in a
Regular Estate.
Don’t meet the condition then Instanti (Latin) Instantly reverts upon failing condition.
B)
Fee on Condition Subsequent (Also called Fee Simple Condition)
Original owner receives right of “Entry” rather than a “Reverter” as in a Fee on
Conditional. Retain the right to pursue reacquiring property by suit.
Mineral rights is dominant
Become personal prop. After removal
Statutory estates
1. homestead
2. Community Property: - Gives each spouse 1/2 interest in marital property.
3. Water Rights
4. Cemetery Lots
Homestead how created(live there),
ended 3 ways - terminate homestead
1. debt
2. alienate homestead = For sale (Sale of homestead)
3. abandonment of homestead
Lost
3 original ways to loose Homestead status from Debt
1. non-payment for mortgage
2. non-payment for taxes
3. non-payment of home improvements
Article 16 S 50
3 New ways to loose Homestead status from Debt
1. Home equity loan – (must go to Court)
2. Reversed mortgage
3. Home owners association – (Don’t pay dues)
you cannot wave Homestead rights.
Proceeds from sell, are they exempt from creditor and for how long
Attach debt to homestead (Lien) for after sale.
Sell homestead asset - Proceeds are exempt for 180 days to acquire new
homestead. Any excess cash asset after acquiring new homestead would be
attachable after 180 days.
Know – test for urban and rural area
Bankruptcy - homestead exempt Max. Size of protected
Urban 10 acres
Single Person/rural 100 acres
Head of Household (Multiple)/rural 200 acres
Urban = (Test) (If fail then = Rural)
3. Within border limits of municipality or extra territorial jurisdictions of
municipality. &
4. Served by police protection, paid or volunteer fire department.
& 3 of the 5 following:
Electricity, natural gas, sewer, storm sewer, water
Water rights –who owns
State of TX unless lake or pond and it is completely contained within your
property.
TX title theory or a lien theory state – property
Name on Title owns Land, Mortgagor holds Lein.
How does cemetery lot get around rule against perpetuity
- Cemetery Leases Lots to client & Sets up as perpetual care Trust.
Property belongs to cemetery. Cemetery is an actual trustee and gets
around law of perpetuities by setting up perpetual care Trust
Property descriptions written by surveyors
Platt/sub-division
Metes and bounds – Description cannot use natural landmarks.
4 sides > N 10 degrees, E direction first
P.O.B. point of begin
Hold property
Difference: ownership in severalty, tenants in common, joint tenants
Types of Ownership
1. Ownership in severalty – owned by 1 person, pays taxes at regular rate, maximum
liability for civil risk and has maximum control.
2. Tenants in Common – can be 2 or more persons, have undivided interests and can
be passed to trustee, has equal liability in ration to users. Does not have complete
control. Taxes are in joint ratio to users. If conflict arises one party can buy the
other out or divide the property. If ownership in TX is 2 or more it is presumed a
tenants in common relationship.
3. Joint Tenants – No part is inheritable. TX has attempted to abolish. Has to be a
written document that specifically defines ownership as Joint Tenants. If
foreclosed it becomes a tenants in common. Has same tax liability as tenants in
common.
Limited partnership - how do you loose protected status
In LP, If general partner does participate then relationship becomes partnership
General partnership
Consequence if you don’t
Corp- who runs it “Officers run it, they are hired by the Board of Directors
Trust – testamentary (dead)
Inter vivos (live)
Community property and exception and can rules be changed (yes through
prenup).
Once married, assets which come into marriage are assets of marriage
Exceptions:
1. prior property
2. gifts & devise (inheritance)
3. personal injury law suit (except lost wages)
4. military pensions (If married less than 10 years)
Test for common law marriage
1. cohabitation (No specific min time limit)
2. Must have an agreement to be married
3. Hold yourself out as Husband & Wife (refer to other as spouse including
slang references).
Fixtures / easements
Mobile home – personal property
How can it become real property
How do easements end
Voluntary conveyance
Deeds, elements, statute 3, case law 3
Quitclaim general, specialty deeds, statutes of frauds, record
Texas Business Commerce
3. any transfer of interest in real estate
4. any lease more than a year
Wills – witness (written), holographic (hand written)