Real Estate National — Property Ownership, Contracts, and Title Transfer

JOINT TENANCY: Co-ownership where owners hold equal, undivided interests WITH the RIGHT OF SURVIVORSHIP — when one owner dies, their interest passes automatically to the surviving joint tenant(s), bypassing probate. THE FOUR UNITIES required (PITT): Possession (equal right to possess the whole); Interest (equal ownership shares); Time (acquired at the same time); Title (same deed/instrument); CONTRAST — TENANCY IN COMMON: Owners can have unequal shares, acquired at different times, with NO right of survivorship (a deceased owner's share passes to their heirs/estate); SEVERALTY: Ownership by one person alone; TENANCY BY THE ENTIRETY: A form for married couples in some states (survivorship plus additional protections); the right of survivorship is the defining feature of joint tenancy and a heavily tested concept on the national real estate exam.

ESSENTIAL ELEMENTS OF A VALID CONTRACT: (1) OFFER AND ACCEPTANCE (mutual assent / 'meeting of the minds'); (2) CONSIDERATION (something of value exchanged); (3) LEGAL CAPACITY (parties must be of legal age and sound mind); (4) LEGAL PURPOSE (the contract's objective must be lawful); (5) For real estate — IN WRITING (the Statute of Frauds requires contracts for the sale of real estate, and leases over one year, to be in writing to be enforceable); STATUTE OF FRAUDS: A law requiring certain contracts (including real estate transfers) to be written and signed; CONTRACT VALIDITY TERMS: Valid (legally binding and enforceable); Void (no legal effect, e.g., illegal purpose); Voidable (one party can cancel, e.g., signed by a minor or under duress); Unenforceable (valid but cannot be enforced in court, e.g., a verbal real estate sale agreement); these contract fundamentals are core national exam content.

EASEMENT: A non-possessory right to USE another person's land for a specific purpose without owning it. TYPES: EASEMENT APPURTENANT: Benefits an adjacent parcel (the 'dominant estate') and burdens another ('servient estate') — runs with the land (transfers with ownership); e.g., a driveway crossing a neighbor's land to reach yours; EASEMENT IN GROSS: Benefits a person or entity, not a parcel — e.g., utility company easements for power lines; EASEMENT BY NECESSITY: Created when a parcel would otherwise be landlocked; EASEMENT BY PRESCRIPTION: Acquired through long-term, open, continuous use without permission (like adverse possession but for use rights); CREATION/TERMINATION: Created by grant, reservation, necessity, prescription; terminated by release, merger, abandonment; ENCUMBRANCE: An easement is an encumbrance on the servient property (affects its use/value); easements are a key property rights concept tested on the national exam — the distinction between appurtenant (runs with land) and in gross (personal/entity) is especially important.

DEED TYPES AND PROTECTION LEVELS: GENERAL WARRANTY DEED (most protection): The grantor warrants the title against ALL defects, including those that arose before the grantor owned the property; includes full covenants (seisin, against encumbrances, quiet enjoyment, further assurance, warranty forever); the grantor will defend against all claims; SPECIAL (LIMITED) WARRANTY DEED: Warrants only against defects that arose DURING the grantor's ownership — not before; QUITCLAIM DEED (least protection): Transfers whatever interest the grantor has (if any) with NO warranties — used to clear clouds on title, between family, or in divorce; if the grantor has no interest, the grantee gets nothing; BARGAIN AND SALE DEED: Implies the grantor holds title but offers limited or no warranties (varies); FOR BUYERS: The general warranty deed provides the greatest protection and is preferred in most arms-length sales; the level of warranty (general > special > bargain and sale > quitclaim) is a core national exam topic.

LIQUIDATED DAMAGES: An amount agreed upon IN ADVANCE in the contract as the compensation a party will receive if the other party breaches/defaults — avoiding the need to prove actual damages later. IN REAL ESTATE: Commonly, if the BUYER defaults (backs out without a valid contingency), the SELLER may keep the EARNEST MONEY DEPOSIT as liquidated damages; the contract specifies this remedy; PURPOSE: Provides certainty and avoids litigation over actual damages; the amount must be a reasonable estimate of potential damages (not a penalty — courts may not enforce amounts that are punitive rather than compensatory); EARNEST MONEY: The deposit the buyer puts down to show good faith; if the buyer defaults, it may be forfeited as liquidated damages; if the buyer cancels under a valid contingency (financing, inspection, appraisal), they typically get it back; OTHER REMEDIES for breach: specific performance (court orders completion of the sale), actual damages, rescission; liquidated damages is a key contract remedy concept on the national exam — a pre-agreed sum (often earnest money) that compensates without proving actual loss.

CONTINGENCY: A CONDITION written into a purchase contract that must be satisfied (or waived) for the contract to proceed to closing. If a contingency is not met, the protected party (usually the buyer) can cancel the contract — typically recovering their earnest money. COMMON CONTINGENCIES: FINANCING (loan approval contingency — buyer must obtain a mortgage); INSPECTION (buyer can have the property inspected and cancel/negotiate based on findings); APPRAISAL (property must appraise at or above the purchase price for the loan); SALE OF BUYER'S CURRENT HOME (buyer must sell their existing home first); TITLE (clear, marketable title); PURPOSE: Contingencies protect the buyer from being bound to purchase if key conditions aren't met; DEADLINES: Each contingency has a deadline; failing to act/remove by the deadline may waive it; REMOVAL/WAIVER: When satisfied or waived, the contingency is removed and the contract proceeds; a contract with fewer contingencies is more attractive to sellers (more certain) but riskier for buyers; contingencies are fundamental contract knowledge on the national exam — conditions protecting parties, with earnest money typically returned if a valid contingency fails.

REAL vs PERSONAL PROPERTY: REAL PROPERTY (realty): Land and everything PERMANENTLY ATTACHED to it — the land itself, buildings, fixtures, and the bundle of legal rights; transferred by deed; PERSONAL PROPERTY (chattel/personalty): MOVABLE items NOT permanently attached — furniture, vehicles, appliances (unless built in); transferred by bill of sale; FIXTURE: Personal property that has become PERMANENTLY ATTACHED to real property, thereby becoming part of the real property (e.g., a built-in dishwasher, a ceiling fan, attached shelving); TESTS FOR FIXTURE STATUS (MARIA / IRMA): Method of attachment; Adaptability to the property; Relationship of the parties; Intention of the party who attached it; Agreement between the parties; EMBLEMENTS: Annual crops grown by a tenant are personal property; TRADE FIXTURES: Items a commercial tenant attaches for business — remain the tenant's personal property and can be removed; DISPUTES: Whether an item (e.g., a chandelier, window treatments) conveys with the sale or not — the contract should specify; the real vs personal property distinction, and especially the fixture analysis, is core national exam content.

TITLE INSURANCE: Protects the insured against financial loss from DEFECTS in the title that EXISTED BEFORE the policy was issued (covers past events, unlike hazard insurance which covers future events). COVERED DEFECTS: Undiscovered liens; forgery in the chain of title; errors or omissions in public records; competing ownership claims/undisclosed heirs; encroachments; recording errors; fraud; TWO TYPES: OWNER'S POLICY (protects the buyer/owner up to the purchase price); LENDER'S (mortgagee) POLICY (protects the lender up to the loan amount — usually required by the lender); ONE-TIME PREMIUM: Paid once at closing (not ongoing like other insurance); TITLE SEARCH: Before issuing, the title company searches public records to find defects; the policy insures against undiscovered ones; MARKETABLE TITLE: Title free of serious defects that a reasonable buyer would accept; CHAIN OF TITLE: The history of ownership; CLOUD ON TITLE: A claim or defect affecting title; title insurance protects against pre-existing title defects and is standard in real estate transactions — important national exam knowledge distinguishing it from property/hazard insurance (which covers future physical damage).