Unit 8
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Common Elements
The parts of a condominium project owned jointly by all unit owners, including hallways, elevators, roofs, grounds, and recreational facilities.
In a Chicago high-rise condominium, the lobby, pool, fitness center, and rooftop deck are common elements maintained by the homeowners association.
Condominium
A form of ownership in which the owner holds fee simple title to an individual unit plus an undivided interest in the common elements of the project. Governed by declaration and bylaws.
A buyer purchases a condo unit on the 12th floor and automatically becomes a member of the condominium association with rights to use the common elements.
Cooperative
A form of ownership in which a corporation holds title to the entire property and shareholders receive proprietary leases for individual units. Shareholders own stock in the corporation, not the real estate directly.
In a cooperative building, residents buy shares of stock in the co-op corporation and receive a proprietary lease for their specific apartment.
Co-Ownership
Ownership of real property by two or more persons or entities at the same time. Includes tenancy in common, joint tenancy, tenancy by the entirety, and other forms.
A married couple purchases a home together, creating co-ownership with rights of survivorship under Illinois law.
Corporation
A legal entity created under state law that can own real estate in severalty. Provides limited liability to shareholders. Must act through authorized officers or agents.
A real estate investment corporation purchases an office building. The corporation holds title in severalty, and shareholders have limited liability.
General Partnership
A business entity in which two or more persons agree to carry on a business for profit. All partners have unlimited personal liability and can bind the partnership.
Two friends form a general partnership to flip houses. Both partners are personally liable for partnership debts and can sign contracts for the business.
Joint Tenancy
A form of co-ownership with the right of survivorship. Requires four unities (time, title, interest, possession). When one joint tenant dies, their interest automatically passes to the surviving joint tenants.
Two siblings inherit a lake house as joint tenants with right of survivorship. When one dies, the other automatically becomes sole owner.
Joint Venture
A temporary partnership formed for a specific business purpose or project, such as developing a single real estate project. Ends when the project is completed.
A developer and an investor form a joint venture to build a shopping center. The venture dissolves after the center is completed and sold.
Limited Liability Company (LLC)
A hybrid business entity that provides limited liability protection like a corporation while allowing pass-through taxation like a partnership. Popular for holding real estate.
Investors form an LLC to purchase and manage rental properties. The LLC shields members from personal liability for property-related lawsuits.
Limited Partnership
A partnership with at least one general partner who has unlimited liability and one or more limited partners whose liability is limited to their investment. Limited partners cannot participate in management.
A real estate syndicator forms a limited partnership to raise money for an apartment complex. Limited partners receive tax benefits but have no say in daily operations.
Marital Property
Property acquired during marriage that is subject to division upon divorce. Illinois is an equitable distribution state, not community property.
A home purchased during marriage with marital funds is marital property and subject to equitable division in a divorce proceeding.
Partition
A legal action to divide co-owned property among the owners or to force its sale and division of proceeds. Available when co-owners cannot agree on use or sale.
Two siblings who inherited a house cannot agree on whether to sell it. One files a partition action asking the court to order the sale and split the proceeds.
Partnership
A business relationship in which two or more persons agree to share profits and losses from a business. Can be general or limited. Real estate can be held in partnership name.
Three investors form a partnership to buy and manage commercial rental properties. Profits and losses flow through to the individual partners' tax returns.
Proprietary Lease
A lease given by a cooperative corporation to a shareholder that grants the right to occupy a specific unit. The lease is tied to ownership of shares in the cooperative.
When someone buys shares in a cooperative, they receive a proprietary lease that gives them the exclusive right to live in a particular apartment.
Right of Survivorship
The automatic transfer of a deceased co-owner's interest to the surviving co-owners. A key feature of joint tenancy and tenancy by the entirety.
Because the couple owned their home in joint tenancy with right of survivorship, when the husband dies, the wife automatically becomes sole owner without probate.
Severalty
Ownership of real property by a single individual or entity. The owner has sole and exclusive rights to the property.
An investor purchases a rental house in her own name, holding it in severalty with no co-owners.
Syndicate
A group of investors who pool money to purchase and manage real estate. Can be organized as a partnership, corporation, or LLC.
A real estate syndicate raises $5 million from 50 investors to purchase a large apartment complex.
Tenancy by the Entirety
A form of co-ownership available only to married couples in Illinois. Includes right of survivorship and protects the property from individual creditors of one spouse.
A married couple buys a home titled as tenants by the entirety. Creditors of only one spouse cannot force the sale of the home to satisfy a judgment.
Tenancy in Common
The most common form of co-ownership. Each owner holds an undivided interest and can sell, mortgage, or will their share independently. No right of survivorship.
Three friends buy an investment property as tenants in common with 40%, 35%, and 25% interests. Each can sell their share without the others' consent.
Town House
A style of attached housing where owners hold fee simple title to their unit and the land beneath it, plus membership in a homeowners association that maintains common areas.
A buyer purchases a townhouse. They own the unit and the small yard in fee simple, while the HOA maintains the roof, exterior, and shared amenities.
Trust
A legal arrangement in which a trustee holds legal title to property for the benefit of beneficiaries. Can be used for estate planning, asset protection, or real estate investment.
Parents place their vacation home in a revocable living trust to avoid probate and provide for their children upon their death.