ADVANCE DIRECTIVE – A type of Durable Power of Attorney that takes effect upon one’s incompetency. The Advance Directive appoints a surrogate decisionmaker for healthcare matters.
ADVERSARY PROCEEDING An action filed against a Debtor arising out of, or relating to, a debt sought to be discharged through a Bankruptcy. An Adversary Proceeding usually receives a separate, but related, federal case number.
ADVERSE POSSESSION The unauthorized occupation of land belonging to another, by a person who does not have the consent of the owner. Said occupier is said to hold possession adversely to the rights and interests of the owner. In most states, by operation of law, title to the land becomes vested in such occupier after a fixed number of years of peaceful occupancy.
CLOSE CORPORATIONS – are corporations whose owners have elected to manage their business in an informal manner. Close Corporations are not required to have Directors and can be managed similar to an LLC or Partnership, without formal meetings or voting. Close Corporations are governed by a Unanimous Stockholder Agreement instead of Bylaws.
CLOUD ON TITLE An irregularity, possible claim, or encumbrance which, if valid, would adversely affect or impair the title.
CODICILS A Codicil is a supplement or modification of your existing will. Codicils must reference your existing will, and follow most of the same formalities.
CONDEMNATION The processes where the government takes your property in exchange for “Just Compensation“. The difference between eminent domain and condemnation is determined by whether the local, state, and/or federal government is claiming your property for a public project or have determined that the area surrounding your property would serve a public purpose if put to another use.
CORPORATION The Corporation is the most complex and formal of the business entities. The Corporation was originally created to exist as a separate entity from its owners. In the eyes of the law, a Corporation is much like a person and can therefore enter into contracts, sue and be sued, and generally conduct business in its own name. In Maryland, a Corporation is formed when Articles of Incorporation are filed with SDAT. Its owners are called Stockholders or Shareholders. The document that governs how the business will be managed is called the Bylaws. Generally, a Corporation is managed by officers who are appointed by a Board of Directors. The Directors are elected by the Shareholders.
For tax purposes, CCorps, Corporations that file under IRS subchapter C, are taxed at both the corporate and individual level. First, the Corporation must pay taxes on its profits. Then, when distributions are made to Shareholders, this money is taxed as personal income of the Shareholder. Some Corporations can elect to file taxes under IRS subchapter S. These are called SCorps and are taxed like a partnership, only at the personal income level.
DEBTOR A person or entity who has filed a petition for Bankruptcy relief.
DEED A written document by which title to real estate is conveyed from one party to another.
DEEDINLIEU OF FORECLOSURE The voluntary transfer of real property back to the lender of the property so that the owner(s) do not have to go through a foreclosure.
DOMINANT ESTATE The land that benefits from an easement.
DURABLE POWER OF ATTORNEY A Durable Power of Attorney authorizes a person of your choosing to act as your attorneyinfact in the event that you become incapacitated through illness. By exercising your right to designate and authorize your attorneyinfact ahead of time, you help preserve your assets and reduce the time necessary for the administration of your estate and the settlement of any claims that may fall to your heirs and loved ones.
Also see Power of Attorney.
EASEMENT APPURTENANT – An easement that benefits adjoining land regardless of ownership even after the land is conveyed (i.e. – it “runs with the land”). Easements appurtenant are characterized by the existence of a dominant estate and a servient estate.
EASEMENT BY IMPLICATION – An easement that has not been reduced to writing that typically relates to a use that is reasonably necessary to his use and enjoyment of the property. In cases involving an implied reservation of an easement, the claimant must show that the easement is a strict necessity for his use and enjoyment of the property. The chain of title and usage dates are significant factors in (dis)proving the existence of an Easement by Implication.
EASEMENT BY NECESSITY – An easement that has not been reduced to writing that arises from the presumption that the owner of the property must have a means of ingress to and egress from property.
EASEMENT BY PRESCRIPTION – An easement that has not been reduced to writing where the claimant proves that he has used the land in question continuously and uninterruptedly for a period of twenty (20) years or more under claim of right either without permission or under a claim of entitlement.
EASEMENT IN GROSS – An easement conveyed for the benefit of a specific person or business entity. Easements in gross cannot be sold, assigned, or inherited, unless such intent is specifically expressed by the parties.
EJECTMENT (1) Eviction or dispossession. (2) A law suit to regain possession of real estate held by another.
EMINENT DOMAIN The right of a government to take privately owned property for public purposes under condemnation proceedings upon payment of its reasonable value.
Both Eminent Domain and Condemnation are the processes where the government takes your property in exchange for “Just Compensation.” The difference between eminent domain and condemnation is determined by whether the local, state, and/or federal government is claiming your property for a public project or have determined that the area surrounding your property would serve a public purpose if put to another use.
ESTATE ADMINISTRATION is the process through which a deceased individual’s assets are distributed to the beneficiaries named in the decedent’s last will and testament. Or, if the deceased did not have a will, then assets are distributed pursuant to the Maryland statutes concerning intestate succession. Estate Administration is also the process through which creditors may collect debts and federal & state governments attempt to tax the decedent’s estate.
ESTATE PLANNING is the legal process by which you can provide for others in the event of your death.
FEE SIMPLE The highest degree of ownership which a person can have in real estate. An interest in real estate which gives the owner unqualified ownership and full power of disposition.
FORECLOSURE A legal proceeding for the collection of real estate mortgages and other types of liens on real estate, which results in cutting off the right to redeem the mortgaged property and usually involves a judicial sale of the property to pay the mortgage debt.
INTESTATE Dying without leaving a legal will.
JOINT TENANTS Two or more persons who hold title to real estate jointly, with equal rights to share in its enjoyment during their respective lives with the provision that upon the death of a joint tenant, his share in the property passes to the surviving tenants, and so on, until the full title is vested in the last survivor. A joint tenant cannot legally sell or encumber his interest without the consent or joinder of all of the other joint tenants.
JUST COMPENSATION includes compensation for the fair market value of your property, and where applicable, your business and some relocation expenses. The basis of your Just Compensation package usually begins with an appraisal completed by an appraiser hired by the acquiring government entity. If you are not satisfied with the amount the government entity is offering you or disagree with the value assigned by their appraiser, you may negotiate with the acquiring entity and have a right to a jury trial.
LIMITED LIABILITY COMPANY (LLC) An LLC is formed when Articles of Organization are filed with SDAT. Like a Corporation, an LLC is also treated like a person for legal purposes. An LLC is owned by its Members and is usually managed informally, i.e. without a Board of Directors or meetings where Members vote on various issues. Members generally have no statutory personal liability for business obligations or debts. For tax purposes, profits and losses are passed through to Members and this income is taxed on the personal level, unless the LLC files a form with the IRS designating a different tax status. Otherwise, there is no additional tax on business profits.
LIMITED LIABILTIY PARTNERSHIP (LLP) The State of Maryland allows Partners to limit their personal liability for Partnership acts by filing a Certificate of Limitation of Liability with the State Department of Assessment and Taxation (SDAT). This requires the Partnership to disclose the location of its principal offices and to name a Resident Agent. Otherwise, an LLP is managed just as a General Partnership would be managed and has the same tax status.
LIVING WILL The Living Will provides instructions to attending doctors to withhold or withdraw life sustaining procedures in the event of a terminal condition, permanent coma, or other endstage condition. Your Living Will should also release healthcare providers from all liability if you become terminally ill and are unable to communicate. Because a Living Will directs others to act upon your incompetency, it must be executed according to various legal formalities in order to be effective.
LOAN MODIFICATION – An agreement whereby a lender will agree to reduce the interest rate, principle, or both to reduce the payment.
MARKETABLE TITLE A title which a court of equity considers to be so free of material defects and liens that it will force the title’s acceptance by questioning purchaser. Also known as a merchantable title.
MECHANIC’S LIEN A lien on real estate, created provided that a strict procedural script is followed, which secures the payment of debts due to persons who perform labor or services or furnish materials incident to the construction of buildings and improvements on the real estate.
PARTNERSHIP A Partnership is formed automatically when two or more people are in business together for profit. This type of entity is also formed automatically. No formal documentation is required either between the partners or to be filed with the state. However, it is a good idea, for both business and legal reasons, to have a Partnership Agreement that addresses how certain decisions will be made, how profits will be allocated, any special risk allocations and any other considerations that may affect how the business is managed. In a Partnership, the partners decide how to manage their business and they share equally in risk and liability, unless they agree otherwise. Although liability and risk are shared among the partners, they are each personally liable for all Partnership obligations and debt. This means that each partner is liable for the business acts of the other partners. Partners’ incomes are taxed as personal income; there is no additional tax on business profits.
PERSONAL INJURY Personal injury is a form of law called tort law, which has several elements. First there must be an existence of a legal duty owed to the injured. Then a breach of that duty must exist. In personal injury law, that breach is usually a form of negligence. If it can be shown that the breach of duty in a personal injury was the proximate cause suffered by the injured, then damages must be established. Typically all four of these personal injury issues must be shown in order to compensate the inured party in a personal injury claim.
POWER OF ATTORNEY A legal instrument authorizing one to act as another’s agent or attorney.
QUIET TITLE ACTION A lawsuit brought by an owner of real estate for the purpose of cancelling, wiping out, and putting a quietus upon supposedly immaterial, inconsequential, and unenforceable claims and interests which cloud his title.
QUIT CLAIM DEED A deed which does not imply that the grantor holds title, but which surrenders and gives to the grantee any possible interest or rights which the grantor may have in the property.
RIGHT OF WAY (1) The right to pass over property owned by another, usually based upon an easement. (2) A path or thoroughfare over which passage is made. (3) A strip of land over which facilities such as highways, railroads, or power lines are built.
SERVIENT ESTATE The land that is burdened by the easement.
SHORT SALE – A sale of property where the sale of the property is for less than the amount owed on it. The lender(s) agree to accept a contract for less than the full amount owed on the Note. It is a good alternative for both the lender and the homeowner because the lenders will agree to stop the pending foreclosure or never actually file for foreclosure if the homeowner puts the house on the market. The homeowner may be able to stay in the home and not make mortgage payments while waiting for the sale.
SOLE PROPRIETORSHIP A Sole Proprietorship is a business that is owned and operated by one person. This type of entity is formed automatically when a person begins providing services or selling goods. No formation documentation is necessary and nothing is filed with the state. A Sole Proprietor has the most control over how the business is managed. There is no limitation on the Sole Proprietor’s liability, so he or she will be personally liable for all business obligations and debts. Likewise, if someone has a claim against the business, such as for breach of contract or negligence, the claim is essentially against the Sole Proprietor individually and s/he will be personally liable. The Sole Proprietor’s income is taxed as personal income; there is no additional tax on business profits.
“SWEETHEART” WILL The Sweetheart Will is the colloquial name given to the actual Will of your spouse or life partner which often mirrors your own Will. In general, the Sweetheart Will is most applicable to younger couples whose primary concern is for the care of their children and the joining of their bequests in the event of a sudden or tragic death to both spouses. Although counter intuitive at first, it is generally less expensive and easier to effectuate the joint wishes of a married couple through separate wills rather than one.
TAX LIEN The lien which is imposed upon real estate by operation of law which secures the payment of real estate taxes.
TENANCY BY ENTIRETIES An estate or interest in real estate predicated upon the legal fiction that a husband and wife are one person. A conveyance or devise to them (unless contrary intent is expressed) vests title in them as one person. Upon the death of either husband or wife, full title passes to the survivor.
TENANTS IN COMMON Two or more persons in whom title to a single piece of real estate is vested in such a manner that they have a common or equal right to possession and enjoyment of the property, but each holds a separate individual interest or estate in the property. Each owner may sell or encumber his respective interest or dispose of it by will, and if he dies without leaving a will, his heirs inherit his undivided interest.
WAIVER The voluntary and intentional relinquishment of a known right, claim, or privilege.
WILL A Will is your way to provide for the distribution of your estate after your death. The Will covers the requisite legal formalities, identifies specific bequests, establishes distribution directives, designates your Personal Representative(s), and may make other specific directives as requested.