Chapter 2
Property Ownership
and Interests
© 2015 OnCourse Learning
IN THIS CHAPTER
• The types of ownership of real property.
• Real estate agents must avoid the
temptation to give legal advice.
• Real estate licensees must recognize the
basic concepts of law.
• Licensees must encourage clients and
customers to become properly informed
through appropriate legal counsel.
THE CONCEPT OF PROPERTY
• Real estate is the land and all
improvements made both on and to the
land, whether found in nature or placed
there by humans.
• Real property is real estate plus all legal
rights, powers, and privileges inherent in
ownership of real estate.
Bundle of Rights
• The sticks in the bundle include the
major sticks of land, fixtures, and fruits
of soil, all of which are tangible
(movable).
• The bundle also includes intangible
rights such as air rights, water rights,
mineral rights, easements, leases,
mortgages, licenses, and profits.
• Real property consists of land and
everything permanently attached to
land, as well as the rights of ownership.
– Ownership is transferred by a deed.
• Personal property (personalty or
chattel) is everything that is not real
property.
– Ownership is transferred by a bill of sale.
• Land is defined as the earth’s surface
extending downward to the center of the
earth and upward to infinity, including
things permanently attached by nature.
Fixtures = Improvements
1. How permanent is the attachment?
2. What was the intent of the person
installing the item?
3. If it is removed, can the item be used
elsewhere?
Trade Fixtures
• Items of personal property that a
business operator installs in a building
space (whether owned or rented) are
presumed to remain personal property.
An estate in real property is an
interest in the property sufficient to
give the holder of the estate the
right to possession of the property.
Types of Estates
• Freehold estate is ownership for an
undetermined length of time.
• Nonfreehold or leasehold estate
signifies possession with a determinable
end.
Fee Simple Absolute
• Provides the most complete form of
ownership and bundle of rights
available in real property; also called
fee simple.
Life Estates
• A freehold estate that defines itself.
• It is ownership, possession, and control
for the life of someone.
• Ownership, possession, and control are
contingent upon living.
• Therefore, the ownership, possession,
and control are lost at death.
• Under a life estate, heirs of the
deceased owner inherit nothing.
Estate Pur Autre Vie
• Based on the lifetime of a person
other than the life tenant.
• Provides for inheritance by the life
tenant’s heirs only until the death of
the person against whose life the
estate is measured.
Statutory Dower Rights
• Both dower (recognized in Michigan)
and curtesy (not recognized in Michigan)
refer to an automatic life estate owned
by a surviving spouse in inheritable real
property owned by the deceased spouse
alone during the marriage.
• If the owner of the land is the husband,
the wife has a life estate called dower.
LEASEHOLD ESTATES
(NONFREEHOLD ESTATES)
• Estate for Years (Fixed Termination)
• Estate from Year to Year (Periodic
Estate)
• Estate at Will
• Estate at Sufferance
Ownership of Real Property
• Ownership in Severalty
• Concurrent Ownership
– tenancy in common
– joint tenancy
– tenancy by the entirety
– community property
o Right of survivorship
o Right of inheritance
Condominium = Jointly Controlled
• “Horizontal Property Acts” authorize a
three-dimensional property description,
with a property line above and below the
condominium.
• These horizontal property lines create a
cube of air space or a volume that is the
privately owned condominium.
• Air rights and area below the land surface
are owned as tenants in common.
Michigan Condominium Act
A prospective purchaser of a new construction condominium must be provided detailed
information concerning construction and proposed operating procedures.
1. The recorded master deed with the
attached bylaws and subdivision
plans
2. A copy of the purchase and escrow
agreements
3. The Condominium Buyer’s Handbook
4. A disclosure statement
Other Condo Considerations
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Site Condominiums
Cooperatives
Timesharing
Michigan Uniform Securities Act
Syndications
CHAPTER TERMINOLOGY REVIEW
bill of sale
fixture
bundle of rights
freehold estate
chattel
joint tenancy
community property
leasehold estate
concurrent
life estate
condominium
life tenant
convey
master deed
cooperative
Michigan Condo Act
co-ownership
Michigan Uniform
curtesy
Securities Act
declaration
nonfreehold estate
deed
ownership
defeasible
pur autre vie
dower
remainder
emblements
estate at sufferance
estate at will
estate for years
estate from year to year
estate in real property
fee simple absolute
reversion
right of first refusal
right of inheritance
right of survivorship
separate property
severalty
site condominium
syndication
tenancy in common
tenants by the entirety
timesharing
trade fixtures
unities of ownership