Real Property Ownerships Possessory Interests Lecture 4

INTEREST - Refers to a right or set of rights in real property

ESTATE - Possessory Interest - a real property interest that includes the right of possession
(Freeholds & Leases)

NONPOSSESSORY INTERESTS:
- Easements
- Restrictive covenants
- Liens

The Domesday (Doomsday) Book is a great land survey finished in 1086. Commissioned by
William the Conqueror to assess the extent of the land and other resources owned in
England at the time.

It provides extensive records of landowners, the amount of land they owned, their tenants,
how many people occupied the land, the amounts of woodland, meadow, livestock, fish and
game, along with tools, ploughs and other resources, any buildings present, etc.

Purpose of the survey – provide an ongoing written record of the value of the land and its
assets
- before the Norman Conquest,
- after it, and
- at the time of Domesday (Doomsday).

Like any good King, William wants to know the value of what he has conquered so he can
TAX IT!

Someone who holds TITLE to real property has OWNERSHIP of the BUNDLE OF RIGHTS
comprising that property

Fee Title
FEE SIMPLE ABSOLUTE TITLE
a/k/a FEE SIMPLE TITLE
a/k/a FEE TITLE

Outright ownership of the entire bundle of rights

= Maximum or Best title you can hold

LIFE ESTATE: - Gives “HOLDER” of the life estate the ability to use and enjoy the property for
his/her life. When that person dies, the property goes to the holder(s) of the REMAINDER
INTEREST.

Life Estate can be created by the owner of the property or in some cases it is imposed by
law
Example – Creating a Life Estate by a Deed
John is getting ready to go into a retirement home. He has no children and wants his farm to
stay in the family, so John signs a Warranty Deed that conveys the farm to his sister Mary,
for her life, and then upon Mary’s death the farm will be divided among those of Mary’s
children who are then living.

John dies – very sad.

He has no children and wants his farm to stay in the family, so before he died John executed
a Last Will and Testament that bequeaths his farm to his sister Mary for her life and then
upon Mary’s death the farm will be divided among those of Mary’s children who are then
living.

Example – Life Estate (sort of) –Texas Constitution- Art 16 - Sec 52

On the death of the husband or wife, or both, the homestead shall descend and vest in like
manner as other real property of the deceased, and shall be governed by the same laws of
descent and distribution, but it shall not be partitioned among the heirs of the deceased
during the lifetime of the surviving husband or wife, or so long as the survivor may elect to
use or occupy the same as a homestead, or so long as the guardian of the minor children of
the deceased may be permitted, under the order of the proper court having the jurisdiction,
to use and occupy the same.

Leasehold Estates - A leasehold estate is an ownership of a temporary right to hold land or

property in which a lessee or a tenant holds rights of real property by some form of title
from a lessor or landlord. Although a tenant does hold rights to real property, a leasehold
estate is typically considered personal property.

Different Types of Leasehold Estates

TENANCY FOR YEARS - A lease of property for definite period of time – one day to decades
If the term of the lease is for one year or more – the lease must be in writing

STATUTE OF FRAUDS- [Statutes] adopted by all states requiring that all deeds, long term
leases and mortgages must be in writing to be enforceable. Derives from the original
(English) Statute of Frauds in 1677.

Periodic Tenancy - Often called a “month to month” tenancy

- No definite length of time
- Often by oral agreement
- State laws provide the parties must give notice if they want to terminate (in Texas it
is one rental period)

Ground Lease - a lease – but different

- Includes not just the inside space, but the underlying land as well
- Usually for a long term (50 years, 75 years, 99 years)
- Often the landlord leases the ground to the tenant, and the tenant is then
responsible for constructing and maintaining the improvements – just like if the
tenant owned the dirt outright
Condominiums
Condominium Projects provide for an alternative form of property ownership and
conveyance
Condominium owner owns fee title to its CONDOMINIUM UNIT

Also owns an undivided percentage ownership interest (an undivided interest) in the
COMMON ELEMENTS of the condominium project

Problem #1
How can you create separate real property interests with horizontal boundaries?
In other words – how can you stack ownership units on top of other units

Solution – create a condominium project (e.g. The Spring Condos)

Problem #2A
How can you subdivide a property (cut it into smaller pieces) without going through the
governmental subdivision/platting process (kind of an Austin thing – but also applicable in
other jurisdictions) (e.g. Site Unit Condo, North Shoal, Creek Site)
Problem #2B
Is there an alternative way of creating a “master planned” or “controlled” community or
project – to have disparate ownership of elements of a project to operates as a single whole

Solution – create a condominium project a/k/a a condominium regime

A condominium project is created pursuant to STATE LAW. Each state has specific laws that
cover requirements for the creation, operation, and dissolution of condominium projects.

For example - Florida Statutes:

Title XL – Real and Personal Property
Chapter 718 – Condominiums

Uniform Law Commission- Uniform Condominium Act

Example of a “model” statute
“The Uniform Condominium Act (UCA) contains comprehensive provisions for the creation,
management, and termination of condominium associations, including point-of-sale
consumer protection.”

Texas has adopted a version of the Uniform Condominium Act with a number of
modifications as the Texas Uniform Condominium Act. Located in Chapter 82 of the Texas
Property Code

Creation of a Condo Project

A Condominium Project (sometimes referred to as a Condominium Regime) is created by
preparing and filing a CONDOMINIUM DECLARATION in the official public records of the
County where the project is located. This is prepared in accordance with the applicable state
statute

Within a condominium there can be many different types of units; Residential, Office, Retail,
Hotel. (Austin Convention Centre Hilton)
GENERAL COMMON ELEMENTS – for use by everyone
- Elevator lobby
- Hallways
- Parking garage

LIMITED COMMON ELEMENTS – for use by a limited number of owners/residents

- Balconies
- Storage units

A condo project must have an OWNER’S ASSOCIATION that:

- Collects dues
- Maintains common elements
- Procures property and casualty insurance and liability insurance for the project
- Pays taxes on the common areas
- Enforces the provisions of the condo declaration

Housing Cooperatives
When you buy into a Co-Op, you become a shareholder in the corporation that owns the
real property and improvements (the co-op building). As a shareholder, you are entitled to
exclusive use of a designated housing unit in the property. An ownership interest in a co-op
is NOT considered real property.

Extremely popular in NYC and other large metropolitan areas.

While a condo owner can freely sell his or her condominium to anyone, the common-
ownership element of a co-op means its bylaws usually require potential shareholders to be
approved by the coop’s board of directors.

Real Property Ownerships Possessory Interests Lecture 5

Nonpossessory Interests in Real Property

A nonpossessory interest in land is the right of one person to use, or to restrict the use of,
land that belongs to another person. In other words, the holder of a nonpossessory interest
in land does not have an ownership interest in the land.

Rather, the nonpossessory interest can give the holder the right to use the land for a specific
purpose or it can give the holder the right to limit or prevent the use of the land in some
manner or for some purpose.

Easement- the right to use another party’s land for a specific and limited purpose. Known as
a “nonpossessory right” because you do not have a right of possession, but rather a right to
use the property for the easement purpose
Easement are Create by Contracts
An easement is a nonpossessory interest in real property created pursuant to a contractual
agreement between the party that grants the easement (the Grantor) and the party that
benefits from the easement (the Holder or the Beneficiary).
Since an easement is created by a contract, everything depends upon how the Easement
Agreement is written. The terms and conditions of that contractual arrangement are
determined by the written easement agreement.

Easement Appurtenant
“Appurtenance” – something that goes with something else

An Easement Appurtenant gives a property owner (the dominant estate) the right to use all
or part of an adjoining property (the servient estate) for a specified purpose or purposes

ACCESS EASEMENT across the Miller

property to provide the Morris
property with access to and from FM
619

The Morris property benefits from the

easement – it is called the
DOMINANT ESTATE

The Miller Property is burdened by

the easement – it is called the
SERVIENT ESTATE

Ingress & Egress Easement - rights for entry and exit to personal property (e.g. Easement
for a pipeline, power line, or fiber optic cable)

The benefit of (ability to use) an easement in gross is transferable separately from any land
title or ownership, since it’s not tied to any dominant estate

Different Types of Easements

Driveway/access/ = ingress – egress
Utility easements, such as:
 Sewer
 Water
 Drainage
  Electrical

Air Rights
Ariel Easement – Hunter College Skybridge – Manhattan

Avigation Easement – Air rights around airports – Lakeway Airpark

Inundation Easement – ability to flood a property – LCRA Lake Travis

Easements generally “run with the land” . The rights and obligations created by the
easement agreement are inseparable from the property or properties involved, i.e., the
servient estate, and if applicable, the dominant estate.

In other words, absent a provision which calls for termination of the easement, the
easement will continue to exist until the owners of the respective properties agree
otherwise or the beneficiary of the easement abandons the easement

However, you can have temporary easements (e.g. a temporary construction easement to
install a pipeline)

License - Temporary, revocable right to use property, Personal to the licensee, does not run
with the land. (e.g. event tickets)

Example - Snow cone stand in shopping center parking lot in Oklahoma City
 Temporary or seasonal use of property
 Lease not really appropriate, so I wrote a License Agreement

Encumbrances - any limitation upon an owner’s use and enjoyment of its property

Type of Encumbrance Restrictive Covenants

- Covenants, Conditions, and Restrictions
- Deed Restrictions
- CCR’s
Written document that voluntarily places – restrictions on the use of property
- Residential restrictions (Senna Hills)
- Commercial restrictions (HEB – no grocery, pharmacy or gas)

Lien - Interest in property that serves as security for an obligation to pay money

Specific Liens- Arise from ownership and use of a specific piece of real property. These can
be voluntary or involuntary.
- Mortgage or Deed of Trust
- Mechanics’ lien
- Property tax lien

General Liens- Arise from events unrelated to the property in question

Judgment Lien - to secure payment of a court awarded judgment for monetary damages
Federal tax liens - the government's legal claim against your property when you neglect or
fail to pay a tax debt.