California Real Estate Salesperson Exam Practice - Question 63

Question

A corporation is prohibited from holding title to real property in California with anyone as a joint tenant because:

Selections

A. It is a violation of the Securities Act

B. Of its perpetual existence

C. It is difficult to list all stockholders in the deed

D. A corporation cannot hold title to real property

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Answer: B

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5 Keys Summary

• Joint tenancy is primarily characterized by the right of survivorship, meaning the interest of a deceased owner automatically transfers to the surviving joint tenants.

• A corporation is considered an "artificial person" created by law and is designed to have perpetual existence, meaning it does not die in the way a natural person does.

• Since the right of survivorship is triggered by death, a corporation's perpetual existence conflicts with this fundamental principle of joint tenancy.

• Consequently, corporations are prohibited from holding title to real property in joint tenancy.

• For joint tenancy to be legally valid, it generally must be held by natural persons.

Explanations

A corporation is prohibited from holding title to real property in California as a joint tenant due to its perpetual existence. Joint tenancy is characterized by the right of survivorship, where a deceased joint tenant's interest automatically passes to the surviving joint tenants. Since a corporation is an "artificial person" and does not "die" in the same way a natural person does, its perpetual existence conflicts with the fundamental principle of survivorship in joint tenancy. Therefore, only natural persons can typically hold property in joint tenancy.

Concepts Definitions

Joint Tenancy: A form of co-ownership of property by two or more parties, each holding an undivided interest with the right of survivorship [principlesLS, 60, 61, 446]. Key elements often include "time, title, interest, and possession" (TTIP), which must be equal and acquired at the same time and by the same deed.

Right of Survivorship: A defining feature of joint tenancy where, upon the death of one co-owner, their share of the property automatically passes to the surviving co-owner(s), bypassing probate.

Corporation: A legal entity, considered an "artificial person," that can own or lease assets and enter into contracts [principlesLS, 63; financeLS, 430]. It has perpetual existence, meaning it continues to exist regardless of the death or change of its shareholders.

Perpetual Existence: The legal characteristic of a corporation that allows it to continue its operations indefinitely, separate from the lifespan of its individual owners or members.