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Introduction to Real
Estate Finance and
1 Investments
©2008 The McGraw-Hill Companies,
McGraw-Hill/Irwin
All Rights Reserved
 Rights
• Realty vs. Personalty
• Statute of Frauds
• Property Rights
 Possess, Use, Enjoy, Dispose
• Holder of an interest in property right

Copyright ©2008 by The McGraw-Hill Companies, Inc. All Rights Reserved 1-2
 Estates
• Possessory estates
 Freehold
• Fee Simple Estates
• Qualified Estates
• Life Estates
 NonFreehold: Leasehold Estates
• Estate for Years
• Estate from Year to Year

Copyright ©2008 by The McGraw-Hill Companies, Inc. All Rights Reserved 1-3
 Estates
• Nonpossessory Estates: Future Estates
 Reversion
• The right retained by a grantor or grantors heirs
 Remainder
• Contingent
 Example: Must graduate from college
• Vested
 No contingency attached

Copyright ©2008 by The McGraw-Hill Companies, Inc. All Rights Reserved 1-4
 Additional Interests
• Easements: Right of Use
 Easement in Gross
• Example: Utility company easement
• Servient estate only
 Appurtenant Easement
• Dominant and servient estates
• Encumbrance

Copyright ©2008 by The McGraw-Hill Companies, Inc. All Rights Reserved 1-5
 Title Assurance
• A Good & Marketable Title
• What is title?
 Abstract Term
 Quantity of Rights Conveyed
 Abstract of Title
 Title Chain

Copyright ©2008 by The McGraw-Hill Companies, Inc. All Rights Reserved 1-6
 Title Assurance

• Deeds
 Grantor & Grantee
 General Warranty Deed
• Covenants: Seisin, Quiet Enjoyment, Against
Encumbrances, Further Assurance, Warranty
Forever
• Strongest deed for a grantee to receive
• No encumbrances on title except those noted

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 Title Assurance

• Deeds
 Special Warranty Deed
• Limits the covenants to the ownership duration of
the current grantor.
• No guarantees on the ownership of prior grantors.
 Quit Claim Deed
• No Covenants
• The least protection to the grantee
• Grantor conveys whatever right “may exist”

Copyright ©2008 by The McGraw-Hill Companies, Inc. All Rights Reserved 1-8
 Title Assurance

• Abstract & Opinion

 Title Search
• Grantor-Grantee Index
• Mortgagor-Mortgagee Index
 Lawyer’s Opinion on Title
• Is it good and marketable?
• Are there any title clouds?
• Is there a break in the title chain?

Copyright ©2008 by The McGraw-Hill Companies, Inc. All Rights Reserved 1-9
 Title Assurance

• Title Insurance
 One time premium
 Unseen Hazards in the Public Record
• Risk is spread among many property owners
 Owners’ Policy
• Insures the interest of a new owner
 Lender’s Policy
• Insures the interest of the lender

Copyright ©2008 by The McGraw-Hill Companies, Inc. All Rights Reserved 1-10
 Recording Acts
• Recording protects the interest of the
owner
• Constructive Notice
 A person has whatever information is in the
public record
• Mechanics Liens
 Relation Back Doctrine
 Affidavit of Title

Copyright ©2008 by The McGraw-Hill Companies, Inc. All Rights Reserved 1-11
 Limitations on Property Rights
• Government (Public) Restrictions
 Police Power
• Zoning: land use restriction
• Building Codes
 Eminent Domain
• Private Restrictions
 Deed Restrictions: Qualified Fees
 Subdivision Restrictions

Copyright ©2008 by The McGraw-Hill Companies, Inc. All Rights Reserved 1-12