Property Ownership: A Crucial Property Law to Know Before Executing Development Projects
Are you looking to bring your Truoba 1800 sq. ft. house plans dream into reality?
Great. However, note that the first and most important law that is strongly advisable to know before executing your specially selected design concerns land ownership.
To be eligible to develop real estate, you need proof of ownership. Usually, proof of ownership is presented in the form of a title deed – a legal document indicating you own all the legal rights and obligations to a specific piece of land or a Declaration of Trust – a certificate showing you own a particular property partially.
There are two primary forms of ownership, beneficial ownership, and legal ownership, which we will discuss in this article.
Let’s get started
The Beneficial Ownership
This is a form of ownership where you do not own the property wholly. In other words, you own partial rights (beneficial rights) to that particular land. The land belongs to someone else, but you are economically entitled to benefiting from it – the owner is regarded to have a beneficial interest in that particular property. In that case, you can have a share of rental income or sale income when the legal owner sells the concerned property.
Beneficial ownership occurs due to the declaration of trust. Declaration of trust refers to a legal agreement to co-own or have partial ownership of a property; usually, represented as a legal document (certificate) signed by all co-owners.
- Describes the property,
- Highlights all trustees subjected to the property,
- Specifies the power granted to each trustee,
- Contains trustee details like taxpayer’s identification, and
- Clause of agreement, specifying the form of trust granted – revocable or irrevocable trusts.
There are two primary forms of beneficial ownership in the real estate field: revocable and irrevocable privilege, depending on the trust granted to a property’s co-owners.
- Revocable Ownership – is where the rights or trust granted can be terminated or supposed to end after a specified period.
- Irrevocable Ownership – refers to permanent co-ownership. The possession can only end after a legal agreement to end the joint ownership or sell the property is reached.
Beneficial ownership is complicated and can impact development significantly.
The Legal Ownership
Legal ownership of a property indicates that the said owner possesses the title to a particular piece of land. That is, you own the bundle of legal rights of a property.
The bundle of legal rights of a property refers to a collection of legal privileges owned and enjoyed by the real estate owners. These rights include;
- The Right of Possession – the titleholder is entitled to that property and is liable for all obligations regarding it.
- The Right of Control – the titleholder is allowed to develop the property in any legal way. However, other rules and regulations govern how you use a particular piece of land.
- The Right of Exclusion – the right allows the owner to limit what and who enters the property. However, other rules such as a legal search warrant can override this right.
- Right of Benefit – the right authorizes the owner to use the property in any legally profitable way that can benefit him.
- The Right of Disposition – the titleholder can transfer ownership to anyone eligible to hold property in the concerned state. Refer to your state’s property law for insight about owning a property in that country.
Although the legal property titleholder possesses the listed rights and is protected by law, other legal aspects such as floating lien can legally override the rights. Failure to comply with local authorities and law requirements regarding properties can also lead to the loss of named privileges. Additionally, the government’s property appraisal can lead to a transfer of the bundle of rights of a property to a government agency.
An eligible person can obtain legal ownership of a property through four ways;
- Outright Purchase – it is the most common way. The bundle of legal rights of a property is transferred to someone after paying the agreed amount.
- Inheritance – this is a form of acquisition where a person automatically obtains the property ownership title after the actual titleholder’s demise. Note that inheritance laws differ in various states.
- Prescription Acquisition – also known as Adverse Possession – Refers to obtaining the ownership title through a legal principle that allows someone to claim ownership after residing in someone’s property for a specified period. Acquiring possession through prescription acquisition is often described as gaining the squatter’s rights.
- Default of Floating Lien – often described as the crystallization of floating lien – here, the ownership title is transferred to the lender when a debtor fails to repay the amount credited.
While there are other ways legal ownership is transferable such as gifting and confusion, the mentioned are most common. Variant scopes of property ownership law govern specific modes of property title acquisition.
The form of ownership you have dictates the extent to which you can develop a property. Therefore, if you are looking to execute a specially chosen design, whether a Truoba 1800 sq. ft. house plan or small house plan or a unique residential house plan, ensure to know the form of ownership you obligate to and how it influences your development project. You may also seek both forms of ownership to leap the best from your project. Read more news and stories from therightnewsnetwork.com.