Real Estate Terminology
Complex terms made simple

Types of Ownership

Types of Contract
small_logo.jpg (832 bytes) Sole Ownership

Title of the property is held by one person or known as sole ownership.

Sole ownership is available to single and married persons. The major advantage of sole ownership for an individual is flexibility. As a sole owner you can make all the decisions regarding a property without having to get the decisions regarding a property without having to get the agreement of co-owners.

The entitled ownership can decide what property or properties to buy, when to buy, and how much to offer. You can decide to pay cash, or seek loan by using the entitled property as collateral. Once bought, the property is "by law" full control by the property owner. But freedom and responsibility go together. For example, if you purchase a rental property, you must determine the prevailing rents, find tenants, prepare contracts, collect the rent, and keep the property in repair; or hire and pay someone else to manage the property. Normally some real estate agents provide such services at a nominal fee.

 
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Concurrent Ownership

Tenants in common

    Concurrent ownership means two or more persons held the ownership of a single property.

    When two or more persons wish to share the ownership of a single property, they may do so as tenants in common. As tenants in common, each own an undivided interest in the whole property. This means each owner has a right to possession of the entire property. None can exclude the others nor claim any specific portion of the property for himself or herself. None of the persons can sell his or her portion of property without the approval of the rest of the ownership.

No Right of Survivorship:

    If a co-owner dies, his interest passes to his heirs or devisees, his interest will not pass to the rest of the tenants. Unless the remaining co-owners are named in the deceased’s last will and testament to do so. When a creditor has a claim on a co-owner’s interest and forces its sale to satisfy the debt, the new buyer becomes a tenant in common with the remaining co-owners.

Co-owner responsibility:

Any revenue and cost generated from that tenancy in common property are shared among the tenant in common.

 

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Joint Tenancy
No right of survivorship, when one of the owner dies his or her shares goes to the rest of surviving tenant.

 

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Tenancy by Entirely
This is a form of joint tenancy for married persons. The basis for this is that a husband and wife are an indivisible legal unit. The surviving spouse becomes the sole ownership of the property if his or her half decreases.

 

small_logo.jpg (832 bytes) Partnership

A partnership exists when two or more persons, as partners, unite their property, labour, and skill as a business to share the profits and losses created by it. Two or more partners representing the whole group of partners on contract and sign legal documents.

 

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Divorce
In the event of divorce, the parting spouses become tenants in common. If the ex-spouses do not wish to continue co-ownership, either he/she can sell his or her individual interest. If a buyer may not be found for a partial interest nor an amicable agreement reached for selling the interests of both simultaneously, either may seek a court action to partition the property. In some cases the court may award the property to the parting spouses if there are unreasonable doubt of the divorce.

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small_logo.jpg (832 bytes) Types of Contract

  1. Example Contract

  2. Exclusive Right to sell listing

  3. Exclusive Agency Listing

  4. Open Listing

  5. Net Listing

 

small_logo.jpg (832 bytes) Exclusive Right to Sell

Example of Contract:

LISTING CONTRACT

Property Description :

  A single-family house at 5 Jalan Hijau

  Taman Biru, 50400 Petaling Jaya

Selangor, Malaysia.

Price : RM 100,000

Terms : Cash

In consideration of the services of ABC REALTY SDN BHD (herein called the "Broker"), to be rendered to Mr. Austin Power and Dr. Evil (herein called the "Owner"), and the promise of said Broker to make responsible efforts to obtain a purchaser, therefore, the Owner hereby grants to be the Broker for the period of time from noon on 18 August 1999 to noon on 18 October 1999 (herein called the "listing period"). The exclusive and irrevocable right to advertise and find a purchaser for the at the price and terms shown

Or for such sum and terms or exchange as the owner later agrees to accept.

The Owner hereby agrees to pay broker a cash fee of 2% of the selling price or exchange price.

  1. in case of any sale or exchange of the above property within the listing period either by the Broker, the Owner, or any other person, or

  2. upon the Broker finding a purchaser who is ready, willing, and able to complete the purchase as purposed by the owner, or

  3. in the event of a sale or exchange within the 30 days of the expiration of the listing period to any party shown the above property during the listing period by the Broker or his representative and where the name was disclosed to the Owner.

The Owner agrees to give the Broker access to the building on the property for the purpose of showing them at reasonable hours, and allows the Broker to post a "For Sale" sign on the premises.

The Owner agrees to allow the Broker to place this listing information in any multiple listing organization of which he is a member and to engage the cooperation of other brokers as subagents to bring about a sale.

The Owner agrees to refer to the Broker all inquiries regarding this property during the listing period.

Accepted by:

ABC REALTY SDN BHD

By: Mr. Tan Ah Kow                  Owner : Mr. Austin Power

Agent Number : E1234               Owner : Dr. Evil

Date : 18 August 1999

 

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small_logo.jpg (832 bytes) Exclusive Right To Sell Listing
Exclusive Right to sell or exclusive authorization right to sell listing, its distinguishing characteristic is that no matter who sells the property during the listing period, the listing broker is entitled to a commission.

 

small_logo.jpg (832 bytes) Exclusive Agency Listing
The exclusive agency listing is same as the exclusive right to sell listing, except the owner of the property may sell the property himself during the listing period and not owe a commission to the broker. However the broker is the only broker who can act as an agent during the listing period.
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Open Listing

Open listing carry no exclusive rights. An owner can give an open listing to any number of brokers at the same time, and the owner can still find a buyer and avoid a commission. Owner is at a disadvantage because there is little incentive for broker to expend time and money showing the property. This reluctance to develop a sale effort usually means the few, if any offers will be received and the result may be no sale or sale below market price.

small_logo.jpg (832 bytes) Net Listing
Net Listing means an owner states the price he wants for his property and then agrees to pay the broker anything above the selling price as the commission. E.g. Owner states RM 100,000, Broker/Agent sold that property at RM 110,000. The Broker gets RM 10,000.

 

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