Monday, March 16, 2009

Land Ownership Basics Explained

Property law in law school is not one of the most popular subjects, although it is mandatory in most schools. As a result of land existing far before humans, or the creation of law, the rules for land ownership are a mismatch of old and current influence. Regardless of the history, there are a few elements that are easy to explain, that will give you a solid foundation on understanding land ownership. This applies to the entire Common Law area.

The concept of land ownership is based on Title. Title is the description of someones rights over a piece of land. Someones rights over a piece of land can vary immensely. It is a sliding scale from no rights to absolute control. The type of control is called an interest. If you are in control now, you have a present interest. If you are going to be in control in the future you have a future interest. Here are some examples of a present interest:

  • Most people have no rights to enter Area 51. They are trespassers with no title.
  • When you enter Tim Hortons or Starbucks as a customer you are a business guest. Your title is a License (permission) to use the property as a customer. That License can be revoked at any time. You can get kicked out for any reason.
  • If you are at a Hotel, your title is the right to stay and live in the room for the contracted period, in private. This is quiet possession.
  • If you rent from a home owner, you have the right to live in the house/apt for the lease period in private. This is also quiet possession.
  • You have a shared driver with your neighbour. The land is technically theirs but you have a certain title to use the land for that purpose. (easement)
  • If you own a home outright you live in your title is absolute.
Here are some examples of a future interest.
  • If you rent out your home, you have a future interest to live in it, when the lease expires. That is future possessory interest. You have the right to posses it in the future. You can sell that interest by re-leasing, or re-renting the property out.
  • Your parents have transferred their house into a life estate, and you get the house on their death. That means your parents have a present possessory interest in the house until their death, and you have a future possessory interest after their death.
Here are some items that complicate title, which are called encumbrances. These issues can seriously complicate a sale.
  • If you owe someone/business money, they may go to court and ask for a lien to be placed on your house title. That basically says to anyone, "If you buy this piece of property, I need to be paid off before you get clean title"
  • If you owe Tax, either property or income, that may be put on as a lien/encumbrance.
  • If you have a mortgage or have used the house as collateral for a loan, that is an encumbrance
  • If you owe child support that will cause title problems
  • If the house is co-owned, and one of the owners wont co-operate in a sale, that can complicate things.
  • If you have rented or leased the land, that is a right that gets passed on with the sale (unless your lease states otherwise)
So you can have a present or a future right to the land. As mentioned that is the interest. While you have a current right to own the land, you may not have a right to be on it. That is the possessory part. Your landlord although she owns the land, is not allowed to enter it while you are living their. Your landlord has a non-possessory interest in the land.

If you have a 10 year business lease, and the building is sold, the new buyers buy it SUBJECT to (which means they must honour) the 10 year lease.

The various types of title are looked at when doing a title search prior to a sale. Your Lawyer/Title Insurance Company will go to the land registry in your area (or recorder of deeds in your county), and look up the piece of land (Roll Number), and check to see if there is anything on file, like the items listed above, that will complicate a sale.

Changing the ownership or interest in the land is called a conveyance. Any time there is a conveyance or a lien or something put on the land, it is recorded in the county, or land registry office. This is a central location for people to be able to know who owns land, and under what circumstances.

That explains the basic concepts of land ownership. In the next article we will look at the sale of land, deed types, and disclosure.

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Copyright © 2009 Peter MacSweeney.
All rights reserved. Reproduction in whole or in part without the express written consent of the author is forbidden. Contact the author through the comment form for all inquiries, including media.

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