Business Organizations and Agency Law Legal Issues - Essay Example

Order 120635 Business Organizations and Agency Law Legal Issues (Real E Introduction: Real E is the legal term for immovable property which includes landed property with anything that is permanently fixed to the land like buildings, towers etc. Real Estate is also used synonymously used with real property and also sometimes known as realty. But from the technical point of view, many like to differentiate real estate, implying to the land and fixtures, from real property, pointing to the ownership rights over real estate. Gradually with the growth of ownership of private property, real estate has come to be acknowledged as an important sphere of business. The various types of real estate business comprises of (i) Appraisal which includes professional valuation services (ii) Brokerages covers assisting buyers and sellers in transactions (iii) Development comprising of improving land for use by way of addition or replacing buildings (iv) Property management which is managing a property on behalf of its owners (v) Real Estate Marketing that covers the sales aspect of the property business and finally (vi) Relocation services encompassing repositioning people or businesses to a different country. Within each field, an organization might focus on a specific type of real estate like residential, commercial, or industrial property. Apart from that, nearly every construction business essentially bears an association with real estate. (Real Estate: Wikipedia) The Applications of Real Estate Agency law in the business environment: Of late several economists have overlooked the fact that absence of effective real estate laws can impede investment in a lot of development nations. In almost every society, cutting across economic conditions, a considerable proportion of the net wealth is held in the form of land and buildings. In the most developed economies, the primary source of capital used by individuals and small companies to buy and make improvements in land and buildings is through mortgages in which the real property forms the collateral. The banks are ready to extend such loans at convenient rates in major part, since in case the borrower fails in making payment, the lender can make a foreclose which implies that, it can file a case, to take possession and sell it to obtain money. (Legal Encyclopedia: Real Estate) The fundamental concept forming the basis for real property laws are uniform across the US. Nevertheless, a lot of differences in the application of these concepts among the states as also among the counties and cities within the states are found. Freehold Estate constitutes the first category of ownership under the Real Estate Agency law. The idea of estates in the American laws emerged from the feudal system in England. Estates in land are interests that are currently or might become possessory and which are measured by time frame. Possessory estates confer the holder the right to immediate possession. Realty estates are further classified as freehold and non-freehold. While freehold estates go on for an indefinite period or until the happening of certain event, non-freehold estates terminate on a specific date. (Overview of Real Property Law in the United States) The largest estate that is allowed under the provisions of law is the fee simple absolute in which the holder of this estate possesses complete possessory privileges at present and in the future for an indefinite period. No restrictions on its inheritability are present, it cannot be divested and it will not terminate on the occurrence of any event. But, the holder of the estate can sell it or any portion of it during the period of his lifespan and make a will prior to his death for disposal of the property. The other possessory estates are Fee Simple Determinable that suggests a fee simple however restricts the use of the land. Life Estate that is an estate whose period is calculated by the life or lives of one or more human being, and terminates at the death of a person. Fee Tail, that is an estate which can continue in a long-term manner, however can merely be transferred to lineal descendants will terminate if and when the first fee tail tenant possesses no lineal descendants to succeed him or her in possession. (Overview of Real Property Law in the United States) The most usual type of ownership, at the period while a homeowner buys a home, is the fee simple absolute. Concurrent Estates: An estate in land wherein two or more parties possess a contemporaneous interest within the same realty is a concurrent estate. Under this there are three types and these are (i) Tenancy in Common (ii) Joint Tenancy and (iii) Tenancy by the Entirety. (i) Tenancy in Common: In the case of Tenancy in common, every tenant possess an undivided interest in the whole property. Every tenant reserves the right to possession of the entire property. However, no right to survivorship exists. Every tenant possesses a separate proportionate interest in the property that is alienable through inter vivos or testamentary transfer and passes through succession. A belief exists that a conveyance to two persons or more than that is a tenancy in common. (ii) Joint Tenancy: Under this type of tenancy every tenant possess an ownership of an undivided share of the estate. And under this there is right of survivorship. Therefore, consequent on the demise of one of the joint tenant, the survivor holds the undivided right of the complete estate that is not subject to the rights and privileges of the deceased co-tenant. (iii) Tenancy by the Entirety: Tenancy by the Entirety is a marital estate that can exclusively be made between a husband and wife. It is identical to the joint tenancy sans that the right of survivorship cannot be destroyed, as separation by one tenant is impossible. For Tenancy by Entirety, a continuing marriage is essential. In a lot of states there is a supposition that a tenancy by the entirety is made in any conveyance to a husband and wife. About half of the states, nevertheless have nullified this category of tenancy. In New York, the tenancy by the entirety is present as to realty but not personalty. Leaseholds: As regards leaseholds, it is an estate in land. It is non-freehold estate having the potential of a definitively ascertainable time frame of possession. The tenant possesses an interest in the premises which is currently possessory and the landlord has a future interest. The major types of tenancies are (i) Periodic tenancy (ii) Tenancy at Will (iii) Tenancy for years (iv) Holdover Tenant (v) Statute of frauds. (Overview of Real Property Law in the United States) Differentiate among the various types of business entities: The selling or buying a house property constitutes an intricate process and the real estate agent assists in accomplishing this job. These agents are equipped with more proficiency, experience and knowledge in the sphere and they help in directing their clients. The Real Estate agencies look forward to know the needs of the customers and assist them in turning the long-term objective of procuring a house into a reality. The real estate agent pockets a part of the amount, which the buyers pay for buying the house as their fees. Real estate agents may also assist in the selling process too. They release ads in the local magazines and attempt to get a good response. They also help out the sellers in fixing up a price for their property. These agents also do the required documentation, which is an absolute must for such real estate transactions. Finally the real estate agents receive a commission in the final stage of the transaction. Some of the work done by the real estate agents are (i) They assist in finding out the wants, needs and choices of the buyers (ii) They determine the selling price of the property (iii) It is important that they must be familiar with the normal layout of the house and its distinctive features (iv) They must access the insurance requirements of the prospective buyers (v) A productive endeavor by the real estate agents has been that they have started using the Internet as a medium for hawking for their business. (Real Estate Agent-Real Estate Company-Real Estate Agency) Real Estate Company: The principal aim of a real estate company is to check prices and extend proper service. It is a fact that real estate organizations have a lot of work with papers. To be properly structured and to enhance their efficiency, they also depend on appropriate software. Real Estate Agency: It is crucial that Real Estate Agencies keep in mind the needs of the clients for taking the responsibility of any transaction. (i) The aim and purposes of the buyers. (ii) The eventual goals in home ownership (iii) the difficulties experienced by the buyers in appreciating that objective. The real estate agencies look forward to motivate and build confidence among the public and discharge their responsibilities in a new, efficient and responsive way. The people managing the real estate agencies provide helpful information to the buyers as regards the purchase of the right property, the offer and the negotiations. It is essential in case of the buyer to get in writing from the real estate agent that is agent has come to represent the buyer. In case a buyer is unable to get a document in writing from a real estate agent, he might find out that the agent is representing the seller. The agents those who are loyal to the seller might disclose the crucial details of both the buyer and sellers. (Real Estate Agent-Real Estate Company-Real Estate Agency) Sales Agency: It is stated that all agents implicated in the real estate transactions represent the sellers. In case an agent possesses a list of properties in his custody, it can be said that he is represents the seller. Buyer Agency: Agencies are present who devote time exclusively for the cause of buyers. Designated Agency: Certain real estate agencies also give on offer a dual estate agency in which one agent of the company represent the buyer and the another agent of the company represent the seller. This type of dual agency is known as Designated Agency. This category of dual agency permits each agency to represent his party. (Real Estate Agent-Real Estate Company-Real Estate Agency) Impact of e-business on the global legal environment with regard to the various types of business entities: The real estate market is also gearing up to reap the benefits of e-business. According to the e-commerce overview, Statistics Canada that comprises of firms working for the renting and leasing, managing real estate on behalf of others, acting as intermediaries in the sale or giving rent of real estate and appraising real estate. Real estate developers, lessons of non-residential buildings and taken in as a subset. Developer data cannot be segregated because of the small sample size. Some of the real estate companies are taking the help of the Internet to provide clients with market information. The increased cost and the uniqueness of the products and the service type of the transactions need personal contact to secure trust. It is a fact that using the Internet as procurement or selling tool needs a website. Researches show that about 27% of the real estate companies utilize the Internet to reach new customers whereas just 12% consider better coordination with suppliers is an advantage. 18% and 13% of the companies consider lower costs and time to market are its main advantages. (E-Commerce Overview Series: Real Estate Development) The personal type of the business is considered to be a possible cause that can be attributed for the marginal declines in perceived applications and advantages of the Internet. However, e-commerce activities intended for real estate development are not planned the role of the agencies, but to improve their level of service. It is said that the genuine winners in the online real estate space will be the traditional real estate agencies who are able to find a solution to use the Internet to power their offline business. Establishing contact with the customers, and accessing the supplier's databases over the Internet might facilitate the real estate industry to present increased latest information to the clients more rapidly. Developers are not in need of this level of access, as their business needs personal contact. Procuring services needs more personal contact compared to the products, as also property transaction function. (E-Commerce Overview Series: Real Estate Development) Substantial experimentation in the real estate e-business is and has been undertaken. Several of the property management companies log service calls, carry out tenant satisfaction surveys and look out for building services in the online space. Developers are buying goods offline also in the absence of obvious cost savings. Among the real estate firms, a array of personalized services are bought through personal contacts whereas majority of the web tools focus on the procurement of commodities. On the downside there are a number of obstacles impeding the penetration of e-commerce within the real estate industry and the developer sub-sector. The value of confidence and reliability within the search and transaction process assumes a leading obstacle. Besides the high value of real estate products and the service characteristics of the industry also render the personal relationships important. Apart from that, some firms view propriety information as a method to gain competitive edge. However smaller firms see the cost and threat of failure connected with e-business experimenting not necessary by the limited perceived cost savings, even in the less personal, goods purchasing function. In the coming years, web based real estate markets and financial sourcing information instruments will come to be increasingly widely used for transiting market information and documents. Apart from that, prospective tenants might post their requirement of space on a website that is accessible to the real estate providers. E-Commerce initiatives have been developed by the companies outside the conventional real estate development industry, but with substantial real estate holdings. Bank of America, IBM and Prudential Insurance that in a combined manner hold close to $ 3 billion in real estate transactions annually, announced that they have taken ownership stakes in netStruxr, which is a Webbased portal aimed at matching corporate real estate buyers, owners and service providers. (E-Commerce Overview Series: Real Estate Development) It is crucial that businesses must deal with the legal issues on the Internet by espousing three basic concepts of secure, defend, and transform. 'Secure' and 'defend' are contradictory terms which are for valid reasons. An achieving e-business enterprise should build itself into a fortress that is secured and defended by counsel from several types of competitive attack. However, on the top of all, it must have metamorphosed itself to reap benefits of the e-business revolution maybe through the application of legal systems and processes to secure that advantage. Advice and counsel has an important part to contribute in this process also. Secure comprises the first constituent of the legal approach. In order to secure its business, an organization should be able to identify assets that are critical and protect it through preventative action. This aspect is important to avoid the depletion of endeavor and loss of momentum that happens at the time when a business is compelled to take legal action in order to defend those assets. (Secure, Defend & Transform-the complete E-Business Legal Strategy) Some of the important assets that can be compromised in an e-business are the business identity, covered in its trademark, logos and domain name, which is the most important one. Protection of these assets must be done through a process of legal registration in commercially important jurisdiction, to guarantee the highest level of protection. Various legal inputs to secure business are not just regarding ensuring regarding the ownership or control over the information assets. It has also a responsibility in attaining maximum stages of conformity with the various national laws as they are spread across the world, with the objective of safeguarding the business from liability from the customers as well as the regulators since the beginning. As regards defend which is the traditional legal function, which happens when the damage is done, at the time when the problems are genuine and while the legal tangles are certain. Hence it has been observed that a strategic 'secure' stage implemented from the very initiation, lowers the chances that the second 'defend stage will be required. (Secure, Defend & Transform-the complete E-Business Legal Strategy) The reliability of the institutional settings particularly the "rule of law," is crucial for the development of e-business. It is important that businesses and consumes are confident that a company will provide satisfactory performance, in the absence of which there is a legal resource. Whereas physical infrastructure is the most crucial for accounting for the variation in Internet use, the Oxley and Yeung support that e-commerce operations depends mainly on the rule of law, and secondly on the availability of methods of payment like credit cards. In nations which have a strict rule of law, customs, personal relationships come to be more important and customers sometimes refrain from dealing with the unknown strangers over the Internet. (Feasibility of Global e-Business Projects) Conclusion: Immovable property is termed as real estate or realty and the various category of real estate business are Appraisal, Brokerages, Development, Property management, Real Estate marketing & Relocation services. Presence of effective real estate laws is essential for the development of the nation. In US the bases of real property laws are not uniform across the entire US. The various types of ownership under the Real Estate Agency Law are freehold estate, Concurrent Estates- under which comes tenancy in common, joint tenancy, tenancy by the entirety. Besides there are leaseholds under which the various types of tenancies are tenancy at will, tenancy for years, holdover tenant, and statue of frauds. Real estate agents work for their clients in return for a fee and they also assist in the selling process. In case of a real estate company their responsibility remains checking prices and delivers proper service. With the onset of the Internet, many real estate companies have made their product offering through Internet to take advantages of e-business. Businesses carrying out through the Internet must secure and defend it. REFERENCES "E-Commerce Overview Series: Real Estate Development". (November 2003) Retrieved from http://strategis.ic.gc.ca/epic/internet/indsib-fsib.nsf/en/ou00019e.html Accessed 14 April, 2006 "Legal Encyclopedia: Real Estate". Retrieved from http://www.answers.com/topic/real-estate Accessed 14 April, 2006 "Overview of Real Property Law in the United States". Retrieved from http://www.intcounselor.com/real-property.html Accessed 14 April, 2006 Raven Peter. "Feasibility of Global e-Business Projects" Retrieved from http://www.seattleu.edu/asbe/igbi/publications/Global_EBusiness.pdf Accessed 14 April, 2006 "Real Estate Agent-Real Estate Company-Real Estate Agency". Retrieved from http://www.clearleadinc.com/site/real-estate-agent.html Accessed 14 April, 2006 "Real Estate". Wikipedia. Retrieved from http://en.wikipedia.org/wiki/Real_estate Accessed 14 April, 2006 "Secure, Defend & Transform-the complete E-Business Legal Strategy" Retrieved from http://www.pwcglobal.com/lu/eng/ins-sol/publ/pwc_legal.pdf Accessed 14 April, 2006 Read More