60-Hour Washington Real Estate Fundamentals Flashcards
What is the last clause of The 5th Amendment?
It is the “takings clause”, that states the specific limits though which the government may legally use the power of eminent domain.
They could only seize property for public use, within the due process of law and the payment of just compensation to the current owners.
Flood Zone A
They have a 1% chance of flooding and are located in a “special flood hazard area”.
Flood Zone B
They have a moderate .2% chance of flooding.
Flood Zone C
Generally, refers to properties that are outside a defined flood hazard zone.
The Transfer of Ownership
Transferring ownership from one party to another is known as “conveyance.” There are a variety of deed types, each with a specific purpose, so the correct deed must be used if the title is to be transferred correctly.
The Recording of the Deed
The recording of a deed is extremely important, and it must be done if the document is to become public record and protect the owner’s interests. Mortgages, deeds, and other relevant documents are recorded in a land registry office or county recorder, depending on how the state has set up the recording processes. States also decide which documents become public records.
The Foreclosure Process
The foreclosure process is the legal process a lender uses in case of breach of contract on a mortgage. That process varies state by state; for example, in some states it involves the courts, but in others, it does not. As a real estate licensee, you should familiarize
yourself with the local process.
Condemnation
The act of taking private property for public use by a political subdivision upon payment to owner of just compensation.
Escheat
The reverting of property to the State when heirs capable of inheriting are lacking.
Eminent Domain
The right of the government to acquire property for necessary public or
quasi-public use by condition; the owner must be fairly compensated.
Police Power
The right of the State to enact laws and enforce them for the order, safety, health, morals and general welfare of the public.
Tax
Enforced charge extracted of personal, corporations and organizations by the
government to be used to support government services and programs.
P.E.T.E.
Governmental Powers:
Police Powers
Eminent Domain
Taxation
Escheat
Zoning Laws
Laws that separate or divide areas of land into different districts depending on their use. Zoning laws generally apply to large areas of land, rather than just individual pieces of real estate.
City Planning Laws
Closely related to zoning laws, and include laws about the electrical, sewer and other facilities that a municipality’s residents use.
Building Codes & Health Standards
Building codes are different for residential real estate and for commercial or industrial properties; and depend to a certain extent on the intended use for the property. Building codes and health standards include everything from how wide doorways and stairwells must be, to the materials
and methods used in construction. Things like plumbing codes, electrical standards, occupancy rules, parking and traffic impact, and even swimming pool regulations all fall under building codes.
Who checks on building codes and health standards?
the city or municipality inspectors
Rent Controls
Rent controls are designed to protect the public by putting an upper limit on the amount landlords can charge tenants to lease space. Rent controls either provide a ceiling, a maximum amount that can be charged in rent, or by providing controls around how much a landlord can increase rents.
In regard to Eminent Domain, what does just compensation mean?
The requirement that the government taking the property must pay just compensation is intended to make sure the property owner is in the same position financially after his or her property is taken through eminent domain.
Who can and can’t tax real property?
The U.S. federal government cannot tax real property (the Constitution prohibits this.) However,
state and local governments do have the authority to levy property taxes on property owners.
What can property owners do if they think their property taxes are too high and what can the outcomes be?
They can appeal to the taxing authority and get their properties re-assessed? This may lower or raise their tax burden.
What happens if someone doesn’t pay their property taxes?
The taxing authority can place a lien against the property. This means that
when the property is ultimately sold, the taxing authority will be paid the amount of taxes due
before the property owner receives the sales proceeds.
Can a taxing authority force the sale of property if property taxes aren’t paid, or the delinquencies have met a certain threshold?
Yes
True or False?
Most mortgage lenders consider a failure to pay property taxes as the equivalent of defaulting
on the mortgage loan.
True
This is serious as it can trigger foreclosure actions.
What has a higher authority over a property, mortgage liens or property tax liens?
Property tax liens
When can a homeowner get a property tax refund?
A homeowner may be eligible for a property tax refund if their income was below a specific level and if their property taxes increased by more than a certain percentage over the previous year. If property tax refunds are available in their state, homeowners may need to file a separate property tax return in addition to filing income tax returns.
Freehold Estate
The right to own land, or an interest derived from land, with no fixed time period.
What are the three types of Free-Hold estate?
- Fee Simple Absolute ownership
- Fee Simple Determinable/Defeasible
- Life Estate
Fee Simple Estate
- form of freehold estate that represents the greatest interest that someone could have in real property
- the unqualified right to possess, control and enjoy their property sell, transfer, mortgage, encumber or bequeath the property to others after their death.
- Rights are perpetual
Three Prongs to Fee Simple Absolute Estate:
-Alienable
-Divisible
-Descendible
Fee Simple Determinable Estate
An estate that will end automatically when the stated event or condition occurs. The interest will revert to the grantor or the heirs of the grantor.
ownership with conditions
- i.e. must be used for agriculture or educational purposes
life estate
another form of Freehold Estate, allows individual to retain interest in property until his or her death, with the permission of the grantor. has the right to remain on the property until death but must maintain it.
Leasehold Interest
the lease of a property for a defined period time without an expressed ownership of the land
What are the types of Leasehold interest?
- Tenancy for Years
- Periodic Tenancy
- Tenancy at Will
- Tenancy at Sufferance
Life Tenant
The owner of a life estate.
Remainder
An estate which takes effect after the termination of the prior estate, such as
a life estate. A future possessory interest in real estate.
Remainderman
A person who inherits or is entitled to inherit property upon the
termination of the estate of the former owner
What are the Principles of Value
-Highest and Best Use
-Principle of Anticipation
-Principle of Change
-Principle of Conformity
-Principle of Contribution
-Principle of Progression
-Principle of Substitution
Highest and Best Use
An appraisal phrase meaning that use which at the time of an appraisal is most likely to produce the greatest net return to the land and/or buildings over a given period of time; that use which will produce the greatest amount of profit. This is the starting point for an appraisal.
Principle of Anticipation
Affirms that value is created by anticipated benefits to be derived in the future.
Principle of Change
Holds that it is the future, not the past, which is of prime importance in estimating value. Change is largely the result of cause and effect.
Principle of Conformity
Holds that the maximum of value is realized when a reasonable degree of homogeneity of improvements is present. Use conformity is desirable, creating and maintaining higher values.
Principle of Contribution
A component part of a property is valued in proportion to its contribution to the value of the whole. Holds that maximum values are achieved when the improvements on a site produce the highest (net) return, commensurate with
Principle of Progression
The worth of a lesser valued residence tends to be enhanced by association with higher valued residences in the same area.
Principle of Substitution
Affirms that the maximum value of a property tends to be set by the cost of acquiring an equally desirable and valuable substitute property, assuming no costly delay is encountered in making the substitution.
General Steps of the Appraisals
- gather information from public records and will also make a physical inspection of the property.
- look at local records for property tax
- Methods or approaches
- Comparison method; for single family homes; appraiser looks at recent sale prices of comparable houses or “comps” in the neighborhood
- Income Capitalization; for rentals or investment properties; divide the new operating income, which is the rental income, by the capitalization rate, which is the rate of return on the property should be expected to generate
- Cost approach; for no comps; how much it costs to build it, minus the depreciation
Steps to Sales Comparison Appraisal Method
- Property identification
- Compare the properties
- The Final Valuation
What is TILA?
The Truth in Lending Act, also known as Reg Z. It was enacted in 1968 to protect consumers so that they will know the true cost of borrowing.
What are the 3 main TILA requirements?
- the disclosure requirements
- the three-day right to rescission
- the advertising guidelines
