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Real Estate Law
Some of the most common legal problems most people face concern buying, selling, and leasing property. Real estate is by far the principal source of wealth for the average working American. To protect citizens our government has enacted myriad laws and regulations applying to the many variations of issues in ownership and transfer of real estate property.
One of the most fundamental and basic questions about real estate and real estate ownership is simply what is real estate? What is the definition? What kinds of ownership of real estate are there?
Well, it isn’t simple by a long shot.
Ownership of bare land seems like a simple proposition but that parcel of land might be severely limited in its potential by many factors:
- How has the government determined the land can be used (zoning).
- Who owns the mineral rights?
- What rights do you have in the water flowing over the land (riparian rights)?
- Who has the right to use your land to reach another parcel (real estate easements)?
- Can you drill a well, build a fence, remove trees, plant crops, raise cattle, build a house; the list goes on.
Not researching such questions when acquiring ownership or other rights in a parcel of land can lead to serious legal problems.
Ownership of a building whether a house or barn or office building has its own problems and dangers.
- Is the structure sound and safe for your use?
- Has it been built according to local building regulations?
- Is the title for ownership clear of any legal problems from former owners?
- Are there any pending regulations that may be enacted in the near future that will obstruct your free use of the property?
Often the value of commercial property largely lies in the content of the structures such as manufacturing machinery, furniture, and stored inventory. It’s necessary to determine what part of those contents are part of the real estate. The factors that determine that are not always intuitive.
How much of the value is due to its potential use?
Might functional or economic obsolescence reduce its value in the near future?
Are there changes in the neighborhood such as changing zoning or other factors that will render a commercial property worthless in a few years?
Foreclosure and Distressed Property
Residential, Single Family Homes, Condominiums, Apartments
When ownership of real estate is potentially compromised by holders of liens the legal complexity can become excruciatingly complex. The very laws that are designed to protect borrowers and lenders can require extensive judicial oversight to unravel in case of foreclosure. This can be made even more frustrating with the inclusion of factors like the circumstances of the owner who may be in a category that has legally enhanced rights due to veteran status or due to membership in another government-protected group.
A short sale is the sale of a real estate property in which the net proceeds from the sale of the property will be short of the loans secured by the property. If all lien holders agree to accept less than the amount actually owed, a sale of the property can be completed.
Types of Ownership of Real Estate
Choosing the most advantageous form of ownership can have huge consequences at retirement time or in the event of the death of a spouse or partner. As family conditions change, often ownership of a residence or an income property needs to be reviewed by your attorney. The tax consequences alone can be devastating.
One of the most common forms of ownership that many married couples or partners use is Joint Tenancy.
Joint Tenancy creates equal, undivided ownership. There are several requirements to qualify for this type of ownership, and while the right of survivorship is automatic in the event of one partner’s death, there can be variations from state to state.
Tenancy in Severalty is by one person or corporation.
Tenancy in Common is not necessarily with equal shares to each owner, and the interest of each partner is conveyed to their own heirs in the event of their death.
Tenancy by the Entirety is only available to married couples. Both parties must agree to any sale and in the event one spouse dies his/her interest reverts to the other spouse.
Leased Real Estate
While not usually thought of as ownership, a written lease creates a special type of ownership in a property. The lease will convey a bundle of rights for a specific period of time.
The lessor remains the nominal owner of the property but has relinquished certain rights of use. Depending on the written agreement the lessee’s rights can be sold or sub-leased.
When entering into such an agreement legal advice is a basic precaution any lessee or lessor should seek.
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