1) Life Estate-
Definition: A property that can be owned and occupied by a specific person until the end of their life.
Example: A property formerly owned by Harry and his wife was donated to the City of San Marcos. Harry’s wife had the right to possess and occupy the property. Harry died in 1978, but his wife died in 1985. The property was donated in 1985.
a) Property formally owned- Harry and his wife formally owned the property.
b) A person has right to possess and occupy during lifetime- Harry’s wife had the right to possess and occupy until her death in 1985.
c) Property changed ownership at end of lifetime- The property was donated to the City of San Marcos when Harry’s wife died.
2) Estate in remainder-
Definition: The estate that exists after the life estate has ended because of a death.
Example: Morty’s father owns and occupies a home under a life estate contract. Morty’s father writes in his will that Morty will inherit the property when he dies.
a) Someone has a life estate- Morty’s father owns a house with a life estate.
b) Someone will get the property when the life estate expires- Morty will inherit the property when his father dies.
c) A person doesn’t have rights now, but will when the life estate ends- Morty will take possession of the home after his father dies, not before.
Definition: Another word for a landlord, also known as the person who rents a property to a tenant.
Example: Tom bought one property for investment purposes. Tom rents his home to Amanda for $1500/month for one year.
a) A homeowner- Tom buys the property
b) Homeowner has rights to the property- Tom sets a price of $1500/month to rent to Amanda because he has a reversionary interest in the property.
c) A tenant- Amanda leases the property from Tom.
4) Tenancy at Will-
Definition: A tenant is given the right to live in a property by the owner for an unspecified amount of time without a rental agreement.
Example: Sam allows Bob to live in his investment home. Bob agrees to renovate the house and in return stay for free in Sam’s home.
a) No rental agreement- Bob and Sam do not discuss an amount of rent to be paid each month.
b) Tenant has the right to live in a property- Bob is allowed to occupy the property with Sam’s permission.
c) Unspecified time- Bob is allowed to live in the property for as long as it takes to renovate the house, which could be any amount of time.
5) Tenancy at Sufferance-
Definition: A tenant is not wanted on an owner’s property, but the tenant stays anyways causing the owner to conduct an eviction.
Example: Sue rents a property to Bill for $1400 a month. Bill stops paying his rent after the third month in the house. Sue tells Bill to leave her property, but Bill stays in the home. Sue calls the Sheriffs department to issue an eviction notice.
a) A tenant is not wanted- Sue asks Bill to leave the property
b) A tenant stays against an owner’s will- Bill stays in the property after Sue asks him to leave.
c) Eviction Notice- Sue issues an eviction notice to remove Bill from her property for not paying the rent.
6) Easement by Prescription-
Definition: When a person uses someone else’s land for a long period of time without the permission of the owner of that land.
Example: Henry purchased a 5-acre lot next to another person with a 5-acre lot. The neighbor to Henry’s lot cuts across Henry’s lot everyday on his way home from work because it is faster than using the road.
a) A person uses someone else’s property- Henry’s neighbor drives on Henry’s lot to get home.
b) Long period of time- Henry’s neighbor cuts across Henry’s lot everyday to get home after work.
c) Uses without permission- Henry’s neighbor did not ask Henry if he could drive on his property, he just drives on it without permission.
Definition: Allows for a person to enter someone else’s land for a specific purpose, but does not give that person an interest in the property.
Example: Tod has the right to go onto Jim’s driveway to get to his own house. Tod drives on Jim’s property every day, but he does not own this property.
a) The right to enter a property- Tod can drive on Jim’s driveway
b) The right to use for a specific purpose- Tod can use Jim’s driveways to get to his own house.
c) No interest held by 2nd party- Tod does not have the right to sell the driveway leads up to his property because it belongs to Jim.
Definition: A financial interest in a property that is used when a debt is owed. If this debt is not paid off the person with the financial interest has the right to foreclose on the property.
Example: Mary bought a home for $400,000 and a GMC car for $40,000. She only has enough money to pay the mortgage one month, and does not have enough money to pay her car payment. GMC puts a financial encumbrance on her house until she pays the money for her car payment. If she does not pay her car payment within 60 days GMC will foreclose her property.
a) Financial interest- GMC is owed money for Mary’s car.
b) Debt is owed- Mary did not pay her car payment and owes GMC money.
c) Foreclosure- GMC has the right to foreclose on her home if she does not pay the money owed for her car payment.
Definition: The process for which the value of a property is found to determine the amount of taxes to be paid on it.
Example: Polly puts a bid on a bank owned home. The bank sends out an appraiser to determine the value of the home to see how much her taxes will be each month. The appraiser determines the house is worth $165,000 and she will have to pay $100 a month in property taxes.
a) Property is appraised- The bank sends out someone to inspect the property.
b) The price is determined- The appraiser determines the house is worth $165,000.
c) Property taxes are determined based on the price- The appraiser determines the house is worth $165,000 and she will have the pay $100/month in taxes.
9) Base Value-
Definition: The amount for the starting point of the assessment of a property.
Example: Ronny purchases a property in 1978 for $100,000. He decides to sell his home is 1990 and wants to know how much taxes he will have to pay to sell it. Ronny has not made any improvements and has owned the property for 12 years. The assessment determines his house is worth $150,000 and he will have to pay $15,000 in taxes.
a) Last purchase price of the property- Ronny purchased his house is 1978 for $100,000.
b) No improvements were made and same owner means no more than 2% increase per year- The value of his home was determined to be $150,000 based on his original purchase price and that he didn’t do any upgrades.
c) Final price used for tax purposes- Ronny’s house is worth $150,000 and he will have to pay $15,000 in taxes.
Definition: The amount of time a lessee can rent a property for.
Example: Bobby signs a contract with Ted to rent a townhouse for 2 years at $1300 a month. At the end of 2 years Ted must either leave the property or sign a new contract with Bobby.
a) Agreement between owner and lessee- Ted agrees to rend Bobby’s townhouse.
b) An amount of time- Ted agrees to rent Bobby’s townhouse for 2 years.
c) Termination of tenancy at end of specific amount of time- Ted must either leave or sign a new contract with Bobby after 2 years.