Real Estate General Matters
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The Gilroy Law Firm is a nationally recognized and pre-eminent real estate law firm. We tenaciously study real estate law – from the State and Federal Constitutions to the local Ordinances. We are advocates of property rights and assure our Clients, with well-researched Opinion Letters, of their property rights and legal positions so that they can either avoid or succeed in litigation and, most importantly, take charge of their matters and resolve any disputes or questions in their matters.
The Gilroy Law Firm has represented parties on all sides of real estate and property rights issues. As discussed in the Eminent Domain Section of this website, Tracy Gilroy, President of the Firm, began her career as in-house counsel to a State Highway Department.
Gilroy has spent 36 years as a Trial and Appellate Lawyer advocating property rights either for or against government’s rights. Gilroy’s inside knowledge of a state’s aggressive infrastructure building is appreciated by our Property Owner Clients as well as the Municipalities who may want a “property-owner friendly” lawyer to help the city avoid or succeed in litigation.
Gilroy has represented Developers and has been a General Contractor in her own development projects. In the development process, Gilroy has represented Individuals wanting to assert rights against Developers. Gilroy’s real estate experiences, from representing all sides of a transaction, helps Gilroy advise Clients from all perspectives and avoid or succeed in litigation.
Homeowner Associations have been routine clients of The Firm for either establishment or a revising of governing documents and procedures that allow for a smoother operation.
Neighbors have gathered at the Firm to determine property rights and for the Firm to provide Road Maintenance Agreements and resolve other title issues.
Individuals have sought property rights in boundary line disputes and quiet title actions.
And, of course, all types of properties (residential, commercial, agricultural and industrial) have been subjects of our purchase and sales efforts. (See Real Estate Sales & Purchases).
Real estate law is vast and addressed in the Federal and State Constitutions, Federal Public Laws, United States Codes, State Statutes, Local Ordinances, specific laws dealing with title, water, air, environmental laws and taxes; land use and zoning laws, contract law, property common law, law of agency and licensing (if dealing with a broker/agent). In the near future, we hope to have lots of our research library accessible to our Clients for their review and analysis.
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As a service today, we have compiled some Real Estate 101 Questions & Answers as well as a brief introduction to the listed specialized areas of Real Estate Law in which The Gilroy Law Firm practices.
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This term is used to describe both land and physical human-made improvements to the land.
The term “land”, commonly understood, to mean the surface of the earth also includes to the earth’s center and, therefore, water and mineral rights. It also includes air and space above the land and the trees and water on the land.
Caveat: Statutes, common law and title laws in each state may alter whether “land” includes these “subsurface” and “airspace” rights.
This term is broad and includes both land and real estate. That means that it includes interests and rights and obligations that are automatically included in the ownership of land and real estate. This term is, in everyday life, synonymous with real estate. Traditionally, it encompasses the reference of “a bundle of sticks,” which is how property used to transfer hands back in the days of old. Today, each stick is a right of ownership. Here are the ownership rights of real property owners:
The Right of Possession
The Right to Control the Property within the Law
The Right to Enjoy the Property within the Law
The Right to Exclude others from entering or using the Property
The Right to Dispose of the Property (sell, bequeath, transfer, gift or encumber)
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To have title to property means that one has ownership in the property. To have a deed to property means that the ownership is evidenced in a document, commonly called a deed. With that said, attorneys and non-attorneys alike use these two terms synonymously. As “title to a car” is a document, “title to property” is also a document, i.e. a deed.
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When purchasing real estate, a title report should be run by professionals to ensure what deeds and other rights and obligations encumber the property. From the “title report”, a title insurance company will agree to provide the owner-to-be with title insurance, which ensures that the title company’s title report is accurate. This insurance is a one-time purchase for owners and is well-worth the cost, as it guarantees representation by counsel if any legal title issues arises and is covered by the purchased insurance.
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The law of contracts is vast and truly should not be simplified except to say that there are basic requirements to make a contract enforceable. Of course, it is highly recommended that any legal transaction be reviewed by a lawyer. Here are the basic requirements for an enforceable real estate contract:
Offer and Acceptance with “Meeting of the Minds” on the Terms;
Voluntary Agreement;
Made by Legally Competent Parties;
Supported with Legal Consideration (something of legal value, i.e. a quid pro quo); and
For a Legal Act.
1st Note: Real Estate Contracts should be in writing to avoid the Statute of Frauds issues.
2nd Note: These basic requirements make a contract enforceable; these are not Terms of Contract, which are party specific agreements and should be devised by legal counsel to fit the situation and goals of the parties.
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Ownership takes several forms; the drafting of Deeds should involve services from a Real Estate Lawyer.
Here are the types of ownership found in drafted deeds:
Individual Ownership – One Individual or One Entity – This ownership is also known as “Ownership in Severalty,” which is an old term that was derived from the individual owner being “severed” or “cut off” from other owners so that he/she/it could own the property alone.
Co-ownership – There are lots of ways for more than one person/entity to own real estate. Whenever there is more than one owner, except in Tenants by the Entirety (married couples in non-community property states), it is best to have an exit strategy with a Buy/Sell Agreement.
Interestingly, the co-ownership makes the most difference when one of the owners dies or wants to transfer its interest in the real estate. But ownership also plays a part in liability issues and in allocating expenses of the property.
So, here are the basic ways of owning real estate:
Tenancy in Common: Each “tenant” (meaning owner, here) holds an undivided fractional interest in the real estate. That means that each has “unity of possession”; so they can each possess the whole property. But, upon transfer or sale, then the percentage interest in the whole applies. If the deed states the percentage of interest, that percentage applies upon transfer; otherwise, it is assumed that all tenants in common share equal proportions on the transfer.
CAVEAT: Each tenant can sell their individual interest without the consent of the other tenants. The Gilroy Law Firm recommends a Buy-Sell Agreement whenever more than one person/entity owns property.
Joint Tenancy: Joint tenancy is not implied. It must be emphatically stated in the deed of ownership. To create a joint tenancy, “tenants (meaning owner, here) must have the following:
Unity of Possession
Unity of Interest, i.e. shares in the property
Unity of Time, i.e. all “tenants” acquiring title at the same time
Unity of Title, i.e. all “tenants” acquiring title with the same deed.
CAVEAT: Joint Tenancy usually means that joint tenants have the right of survivorship. In other words, when one joint tenant dies, the others obtain the deceased’s interest. However, many states require the deed to also emphatically state “with rights of survivorship.”
Ownership by Married Couples:
Tenancy by the Entirety: This is a special form of joint tenancy between a husband and wife in some states. “Survivorship” is automatic, and neither husband nor wife can transfer the property without the other’s approval. Some states have this type of ownership rather than having community property ownership.
Community Property Ownership: In some states, like Washington, husbands and wives, who own property as joint tenants, do not necessarily have the rights of survivorship. As joint tenants, a husband and wife are allowed the benefit (and burdens) of community property law.
This area of the law is more intense than addressed in this “ownership” definition; but, suffice to say that, under community property laws, a husband and wife are equal: signatures of both are needed to transfer the title to the property. (That is the same as “tenants by the entirety.”)
But, in death, each community property owning spouse is allowed to transfer (bequeath) their separate ½ to someone other than their spouse. If such a transfer does not happen, then the surviving spouse will automatically inherit the deceased’s portion of the community property under the community property law of the state.
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Terminating co-ownership is best done with a Buy/Sell Agreement, which should be drafted and executed before the co-ownership is created. Assuming no buy-sell agreement was executed, parties are left to negotiate for an exit.
If negotiations fail, a “Suit of Partition” is the answer, if other dispute resolution techniques do not succeed. (See Alternative Dispute Resolution).
Partition is a legal way to dissolve the ownership. The Court will first look to the goals of the parties and attempt a physical subdivision of the property, if desired, and if physically possible and economically feasible. If not, the Court will likely order the property sold and the net proceeds of the sale to be divided among the co-owner pursuant to their fractional interests
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This term means “runs with the land,“ which is another old term that just “sticks” with real estate. In other words, if real property enjoys an appurtenance, that means it has a benefit which “comes along” with it. It is a right or privilege associated with the property, but not necessarily visible upon it. Nonetheless, the right and privilege is transferred when the real property is transferred – automatically, unless excluded.
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Personal Property is a term, synonymous with “personalty”, that refers to property that does not fit within the definition of real property. It is usually a moveable item such as vehicles, furniture, art, jewelry, moveable sheds etc. These days almost anything can be moved, so “intentions” to attach or fix the items to the real estate usually makes the distinction of whether the item is personalty or an attachment to real estate or deemed real estate no matter what. When buying or selling real estate, especially that with attachments or “trade fixtures”, one should be careful to specify what items are attachments and which items are moveable or being purchased under a Bill of Sale versus a Real Estate Contract.
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OTHER SPECIFIC AREAS OF LAW PRACTICED BY THE GILROY LAW FIRM
Private ownership of land requires compliance with governmental regulations reasonably promulgated with the goal of orderly and planned growth. Reasonable regulations are permitted, usually, under the states’ “police power,” which is an inherent power of the state, delegated to municipalities, to protect the health, safety and welfare of the citizens. However, those inherent powers can go overboard, be abused and result in a regulatory taking of a person’s real property.
In Land Use Planning, local governments enact “Comprehensive Plans” to guide future changes to the landscape; these plans are supposed to be long term and visionary. These Plans are not the regulations themselves. These Comprehensive Plans include, at least the following:
Land Use plans and goals;
Housing needs and goals:
Transportation needs and goals
Public Infrastructure needs and goals
Land Use Law deals with the regulations, based on the Comprehensive Plan. These regulations restrict owners’ usage of their property and are commonly referred to as Zoning Laws or Ordinances.
The development issues that Zoning Laws affect, most often, are:
Permitted Uses and Conditional Uses of Land and Rezoning Efforts
Non-conforming Uses and Variances
Lot Sizes
Building Size and Height
Setbacks from Streets and Neighbors
Appearances of Lot and Structures
Density of Development
Utility installations
Protection of Natural Resources
The Gilroy Law Firm has studied Land Use Laws for decades. That expertise transfers into the Firm’s practice in Washington Counties and benefits our Clients with a wealth of national research in our libraries. We have focused efforts, mostly in Missouri, on rezoning efforts, obtaining variances, negotiating with City Planners, and the continual struggle between zoning laws and personal rights of ownership and the constitutional right to life, liberty and property ownership with due process of law.
In Washington, Tracy Gilroy serves on the Island County Planning Commission as a volunteer in order to serve the community and get up to speed on the laws of Washington Counties. In Island County, Gilroy has been keenly aware to safeguard the County and its constituents against “regulatory takings.” These takings are similar to eminent domain matters, but a bit more discreet. Some zoning regulations have the potential for regulatory takings. So careful review and honest, open negotiations with Washington Counties will usually serve to resolve any Zoning Law disputes.
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Being your own general contractor may save you money or it could cost a lot in time, expense and lost benefits from expertise. One thing is certain: the job is stressful, and experience helps alleviate the stress. Dealing with contractors, inspectors and suppliers in contract negotiations as well as quality of work and disbursement issues takes knowledge of the industry and negotiation skills. The Gilroy Law Firm has been surrounded by and learned from development and contractors for four decades. Gilroy continually hones negotiation skills since 1984.
Development is the most litigious area of the law and, with a proper foundation in the law, owners and developers can avoid litigation in the process. Real estate involves legal transactions at every turn. It is best to have preventative legal review. No two developments are alike, so it is always best practice to go through legal review no matter what number development it may be.
The Gilroy Law Firm, usually for a Flat Retainer Fee, will provide the following services:
Contracts for Purchase (Draft and Review)
Contracts for Development (Draft and Review)
Project Management Tasks to Supervise and Review:
Project Feasibility Studies and Development Goals
Pre-Construction Stage and Design Issues
Site Evaluation and Environmental Coordination
Design Management & Coordination
Construction Bidding
Development Plans
Construction
Contract Negotiations and Change Orders
Construction Monitoring Issues
Disbursements of Payments and other Administration Issues
Move In/Close Out Issues
Improvement Coordination & Management
Warranty Administration
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Property Management involves leasing, marketing and overall maintenance of real estate owned by investors, usually. This service is governed by Contract and Real Estate law. The Gilroy Law Firm does not engage in the actual Property Management of other’s properties; however, it has served its Clients for decades in their battle with and against Property Management Companies.
The “best practice” is to retain The Gilroy Law Firm to negotiate the Property Management Contract before signing it. Then, when inundated with reports and bills, it is best to schedule a Working Meeting to review, at least on an Annual Basis. It will save headaches and avoid litigation in the long run.
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Options are Contracts for the potential purchase of real estate. These types of agreements, along with 1st Right of Refusal agreements, are often misunderstood. If you want to potentially purchase a property, it is best to contract for both agreements.
Leases are method to obtain possession and, therefore, a very important interest in real estate. Either deemed a month-to-month tenant, a term tenant or a holdover tenant, the tenant’s “ownership” interest in the property is called a “leasehold interest.” Leasehold interests are to be respected regardless of how created. And, yet, eviction laws exist to remove tenants who do not, in turn, respect the rights of the titled owners.
The Gilroy Law Firm prefers to no longer engage in landlord-tenant disputes, but we have a wide network of lawyers we work with and advises for our clients seeking those services. More importantly, though, The Firm advises Owners and Tenants on Lease Terms before signing so that misunderstandings are avoided and, if necessary, litigation is a success.
Lease Agreements should at least have the following terms, in addition to the basic requirements for a valid lease:
Term of Tenancy
Payment of Rent – Amount and Method
Late Charges and Breaches on Failure to Pay
Security Deposit & Condition of Premises
Emergency Entry and Inspection
Extended Absence
Repairs, Alterations and Damages
Utilities
Parking
Pets and Other Occupants per Subleasing
Quiet Enjoyment of Others
Hold Harmless Clauses
Applicable Law & Compliance
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The Gilroy Law Firm has assisted Clients engage in private financing by drafting Promissory Notes and Deeds of Trust for recordation. Securing loans with property protects the lender, of course, and therefore is always recommended for every loan.
Borrowers have also requested legal services to review Commercial Financing documentation. These documents are complex and, usually, borrowers just sign without reading page 1. This is a dangerous practice that is, of course, not recommended. Negotiating for the best loans and collection procedures can and does happen. And, if nothing else, document review allows the borrower the knowledge of how the system of financing works and reveals its risks.
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Tracy Gilroy has been performing title reviews in real estate transactions since 1984. It is intriguing work that takes concentration and a vast knowledge of real estate law and title ownership. Public records of ownership are accessible to all for review, but having the expertise to understand the gaps and coverages in a title report is essential. A real estate lawyer or, more often, a title company typically performs the title search of property to be purchased or transferred in order to ensure that good title will be conveyed. Once the title report is received, a real estate lawyer’s review is best to ensure good title is conveyed and the title insurance offered is best coverage available for the price.
Recording of deeds (or easements or other encumbrances) is a specific act that must be followed to ensure that a document is truly “of record.” Formatting the document properly for recordation is also required.
Once recorded, the document may rise to the level of the “chain of title”, which reflects the record of the property’s ownership. An unbroken chain of title can be traced back to the very first “owner” of record. The chain will not include liens or encumbrances not specifically related to the ownership.
If a gap or a “cloud” in the chain of title exists, the law allows for the gap to be closed or the cloud to be lifted via a “Quiet Title Action.” The Gilroy Law Firm has filed many actions that served to quiet title for property owners.
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Ownership Deeds are discussed in the questions above. Here, we will also discuss easements.
An easement is a special interest in real estate. It is generally known as an encumbrance (claim or liability) that attaches to real estate, but only allows for “possession” by the easement holder for the specific reason or purpose of the easement.
An “appurtenant” easement is one that is attached to the ownership of one parcel for the benefit of another parcel. The parcel over which the easement “runs” is known as the “servient” estate as it is subject to the easement. The parcel that enjoys the easement running over another parcel is the “dominant estate” as it is permitted to enforce the easement upon the servient estate.
Easements are created in many ways:
By Written Agreement
Easement by Prescription (similar to Adverse Possession)
Easement by Necessity (usually an ingress/egress need, i.e. access)
Easements are terminated, not usually automatically, but with legal effort. Here are some ways that easements can be terminated:
An Easement by Necessity can terminate if the Need Terminated
When the ownership of the dominant or servient estate merge
By Release of Easement to the Servient Estate
By Abandonment of the Easement – Intentions Matter here.
By Non-Use of a Prescriptive Easement
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When Property Owners share an Access Easement to their properties, it is best to have a Road Maintenance Agreement of record. These types of agreements outline the parties’ rights and obligations.
The Gilroy Law Firm has reviewed 100s of Road Maintenance Agreements for Clients and have drafted our fair share over 36 years.
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Articles of Interest
More information coming soon!