All Flashcards
Kansas Real Estate Commission (KREC)
KREC is a governmental body that oversees real estate in Kansas.
1. Determines how licenses are earned and maintained
2. Protects the public
3. Enforces regulations
There are five commissioners, each appointed by the Governor, who vote on issues. There are also employed staff people who work at KREC, but none of them can vote.
Kansas Association of REALTORS® (KAR)
KAR is a professional trade association that licensees may choose to join.
a professional trade association that provides services for real estate brokers and salespeople
Real Estate
land and anything artificial attached to it. (a house is bound to land through foundation)
Brokerage (verb)
process of bringing parties together.
real estate brokerage (the noun)
a real estate company.
supervising broker
oversees the entire operation at the main office and compensates everyone in the office.
branch broker
has a business relationship with the supervising broker at the main office, but is responsible for the operation of the branch office.
Associate Broker
someone who has a broker’s license, but is associated with (supervised by) a supervising broker.
Salesperson
Generates business and then provides services on behalf of the broker.
Staff
Some are licensed while others are not. Unlicensed staff can perform administrative tasks.
MLS Multiple listing service
a computer based system that allows brokers to share information about their listings (the properties they are marketing for sellers) and it allows brokers to more efficiently find properties for buyers.
Rebates
where an unlicensed person receives money in some form for real estate activity Example, a seller is promised money after closing for listing with the licensee. - illegal in kansas
Referral fees
where a licensee recommends another licensee (such as when clients are moving to another city) - legal in kansas
BRRETA
Brokerage Relationships in Real Estate Transactions Act
Transaction Broker
If a buyer or seller wants a licensee to provide only information. DOES NOT REPRESENT THE BUYER OR SELLER.
BRRETA brochure
Brokerage Relationships brochure) is a menu of services with explanations that help consumers determine which service is best for them. The brochure must be given to the consumer at the first practical opportunity.
Dual Agency
If a licensee were to represent both the buyer and the seller in the same transaction - illegal in KS
Client
A buyer or seller who signs a written agency agreement of any kind with you becomes your client(also known as a principal).
customer
A buyer or seller who has not signed a written agency agreement with you
Designated Agency
creates a “one to one” relationship between the licensee and the client
agency
signing the agreement ON BEHALF OF THE ENTIRE BROKERAGE, creating a legal relationship between the buyer and everyone in the brokerage
trust account
bank account in which a supervising broker or branch broker holds other people’s money. No more than $100.00 of the broker’s money can be in the account
Commingling
when more than $100 of the broker’s money is in a trust account
Ministerial acts’
acts that a licensee may perform for a person that are informative in nature and do not rise to the level of active representation on behalf of a person.
When can a transaction broker disclose confidential information
In commercial real estate (and any residential real estate involving more than four units). unless prohibited from doing so by the buyer and/or seller
How much can KREC fine a Licensee?
$1,000.00 per violation. If the violation is considered “aggravated,” the fine can be up to $5,000.00. Aggravated means it was extreme or intentional.
CON NOT LEVY CRIMINAL FINES - ONLY CIVIL
A willful violation of either the license law or BRRETA is a misdemeanor. A court of law may impose what penalties
1st Violation: Up to 12 months in jail and/or fines from $100 to $1000.
2nd Violation: Up to 12 months in jail and/or fines from $1000 to $10,000.
Will KREC deny a license if someone has a felony conviction
Not necessarily - depends on how recent and the nature
Indestructibility
The land itself cannot be completely destroyed or worn out
Nonhomogeneity
Each parcel of real estate is unique. Even side-by-side properties that look like duplicates are technically not, because of their unique locations
Scarcity
There is a fixed supply of land. This affects the price.
Modification
Intentional changes to a parcel of land can either increase or decrease its value. The actual changes, such as landscaping, are called improvements, regardless of their impact (favorable or unfavorable).
Permanence of Investment
Also called fixity. Anything which is “fixed” stays put.
Area Preference
The site (the actual location and surroundings) of real estate matters to buyers. The technical term is situs.
Allodial System
Property ownership as it is today in the U.S., with all the rights of ownership
Common Law
law that resulted from many years of court decisions, as opposed to statutes which are written laws enacted by legislative bodies
Possession
occupy the property
Enjoyment
possess the property without interference, such as someone else claiming that they own it, or perhaps someone doing something to excessively taint the owner’s experience on the property.
Disposition
dispose of the property (sell or give it to someone).
Control
use the property (legally) as desired.
Exclusion
keep others from using the property.
Land
Ownership extends down to the center of the earth and upward to infinity. It includes all natural things permanently attached. Naturally growing plants and minerals are part of the land. In addition to surface rights, the owner has subsurface rights, and air rights.
subsurface rights
a landowner could sell his or her land but retain the mineral rights.
Real property
real estate plus the bundle of rights
Personal Property
any property that is not real property.
severance
Real property becoming personal property
attachment
Personal property becoming real property
emblements
Cultivated annual crops are considered personal property, and are called emblements, or fruits of industry.
Fixture
an object that was once personal property, but now is attached. Therefore, it’s now real property. Kitchen cabinets and bath tubs are examples of fixtures.
Trade fixture
a fixture used for a business. It is attached by the tenant, remains the personal property of the tenant, and can be removed by the tenant when leaving the space being leased, but the tenant is responsible for any damages caused from the removal. Shelves, signs and counters
Four Tests to determine if something will be considered real or personal property
Agreement of the Parties
Intention of the Parties
Method of Attachment
Adaptation of the Item
Police Powers
local and state governments have the power to pass legislation to protect public health and safety. Think of the side of a police vehicle. It says: “To protect and serve.”
Zoning Ordinances
regulate and control the use of land
Zoning Classifications
specifically determine the purpose(s) for which land can be used (R- Residential, C - Commercial, I - Industrial or A – Agricultural)
Enabling legislation
passed by the state grants local government zoning powers
Planned Unit Development (PUD)
This is a new, preplanned area of a city.
buffer zone
Instead of having two different zones, such as residential and commercial, right next to each other, parks and playgrounds often serve as buffer zones.
Nonconforming Use
(also known as grandfathered use) – If zoning rules change, a nonconforming use may be allowed if the property’s current use existed before the zoning rules changed.
Downzoning
reducing density in an area.
Spot Zoning
a specific property is rezoned to permit a use that’s different from the other properties in that zone.
variance
an exception
conditional-use permit
Property owners who are given permission to do something that is not consistent with the zoning code are granted a special-use permit
Building Codes
Using its police powers, the government protects the public by setting standards regarding fire safety, carpentry, electrical work, plumbing, etc.
Building Permit
granted for new construction only if the proposed building complies with zoning laws and building codes.
Subdivider
buys undeveloped land and divides into smaller lots for sale
plat
map that shows the boundaries of the lots.
subdivision plan
shows all physical details of the subdivision, including easements for water, utilities, and sewers
Clustering
putting housing units on smaller lots to create more open space in the area, perhaps for recreation.
Developer
Improves the land, constructs buildings on the lots, and sells them.
Land Sale Regulation
The buyer (having received the property report and signed the contract) has a 7-day cooling off period to revoke the contract.
Taxation
A charge on real estate to meet the financial needs of government.
Eminent Domain
The power of government to seize private land for a public good, without the owner’s consent
condemnation
The government takes title to the property
Inverse Condemnation
the process by which property owners can force government (through a legal process) to buy their property because a government project has caused significant loss of value
Escheat
If someone dies without a will, and there are no heirs found (through a required search) the property would revert to the county or state
Asbestos
banned in 1978. it had been used as insulation, as covering for ducts and pipes, and as material in flooring, roofing, etc. It crumbles easily into dangerous, inhalable particles.
Lead
used in paint until 1978. It can also be found in pipes, solder, and other products. Exposure can cause damage to the brain, kidneys, and the nervous system.
Radon
colorless, odorless, tasteless gas produced by the decay of radioactive substances. Home inspections should include a radon test for the benefit of the buyer.
Brownfields Legislation
old industrial sites that may contain toxic wastes. Legislation gave states financing to clean them up and it protects developers from liability for toxic waste that existed before they purchased the property.
encumbrance
an agreement or circumstance that places a restriction on how a property can be used
easement
makes something easier or better for someone
positive easement
allows you to cross your neighbor’s property, for example, if it’s the only way you can get to the main road
negative easement
prevents a property owner from building an excessively high building that blocks your view of a lake or valley
appurtenant easement
an easement that remains with the property even after it is sold to another party
easement in gross
does not remain in effect when property is sold, it is simply an agreement where a land owner grants permission to someone to enter his or her property, to fish in a farm pond, for example.
Dominant Tenement
benefits from the easement
Servient Tenement
it serves the need of the Dominant to access the public road.
Easement by Necessity
an easement allowing someone to do something necessary.
Personal Easement in Gross
AKA Easement in Gross
personal easement (typically between friends). No dominant party. Ends when either party dies or when one sells the property.
License
only temporary permission (ex: farmer lets someone use land to hunt for the day) terminates at the agreed time of expiration
Commercial Easement in Gross
most common type of easement in gross. It is given to railroads, utility companies, etc., to maintain tracks, pipelines, and power lines to provide utilities and services. The commercial easement allows them to enter private property to install or repair items, or to do tasks as needed.
Easement by Prescription
f Sam has a driveway at the edge of his property that extends on to Mary’s property, and Sam has used the driveway for a certain period of time (5 years or more in most states), this may result in a permanent easement right by prescription
encroachment
somebody crossed over a line they weren’t supposed to cross
Deed Restrictions
a condition or limitation placed on a property by the owner of the property when it’s transferred to another party
lien
a lender’s claim against a collateral asset. his means that the home can be legally sold (by the lender) if the borrower fails to repay the loan.
lienor
lender (holder of the lein)
Lienee
The borrower
Specific lien
a claim against specific property (Either real or personal)
general lien
a claim against all of a person’s real and personal property.
voluntary lien
When you sign mortgage documents to buy a home, you are knowingly and voluntarily (with your consent) creating a lien on the property
involuntary lien
local government has the power to place a tax lien on your home if you fail to pay the real estate taxes
statutory liens
created by law
equitable liens
created by a court
Ad Valorem
(assessed value) real estate tax raises money for the operation of government agencies
How to compute ad valorem tax rate
Market value of the property X Assessment rate = Assessed Value X Equilizer (if necessary) = Equalized assessed value X Tax rate = Tax bill
mills
1/10 of 1 cent or .0001
Equalizer
a factor (such as 0.8, 1.2, etc.) that is multiplied by the assessed value to raise or lower a community’s overall assessed value (when necessary) so it is in line with the entire state, making community to community comparisons fair, and making statewide taxes fair.
Tax Sale
occurs when taxes on property have not been paid for a period of time specified by law.
Equitable Redemption
Pay what is owed (taxes, penalties, court costs) before the tax sale.
Statutory Redemption
Pay what is owed (taxes, penalties, court costs) after the tax sale
Special Assessments
a tax for improvements made in a specific area or neighborhood, such as a sidewalk.
Mortgage Lien
When a buyer signs a mortgage document, this creates a lien against the property
Mechanic’s Lien
The mechanic can file for a mechanic’s lien if they are not paid for work done or materials supplied. This lien is specific and involuntary. It is specific to the real estate and involuntary, because the property owner didn’t agree to the lien. The mechanic’s right to file this lien is provided by government
Lis Pendens
a notice in the public records that would inform you if there were a pending lawsuit involving a property
Metes and Bounds Description
Metes means distance. Bounds means direction. This is the oldest system of property description. Using objects (monuments) to reference
Point of Beginning (POB)
where the property officially begins
boundary lines
The perimeter of the property referenced in relation to monuments
legal description
an official property description suitable for a real estate sales contract
Principal Meridians
The bold north/south lines
Baselines
dotted lines running east and west
Size of Township
6 miles X 6 miles (36 square miles)
Rectangular Survey System
creates a massive grid or checkerboard that is referenced.
How many sections in a Township
36 sections (1 sq mile each)
Size of a section in rectangular system
640 acres
Correction Lines
systematic adjustments at certain intervals to compensate for the curvature of the earth. Every fourth township line is a correction line (every 24 miles)
Guide Meridian
every fourth range line (running north and south)
systematic adjustments at certain intervals to compensate for the curvature of the earth. (every 24 miles)
fractional sections
Sections that are oversized or undersized
government lot
An area of land that is less than a full quarter section (not owned by the government)
Plat of Survey Method (or Lot-Block-Tract Method)
used in conjunction with a metes and bounds or rectangular survey description. It clearly and simply numbers lots in a city or town on a plat map.
Datum
An official point (level surface) from which elevations are measured. Every large city has one.
Benchmark
Bronze markers placed throughout the U.S. indicating elevation
Mile
5,280 feet or 320 rods
Acre
43,560 square feet or 160 square rods
Rod
16 ½ feet or 5 ½ yards
Chain
66 feet or 4 rods
Estate
The type and degree of interest (ownership) in real estate.
leasehold estates
To legally hold something is to have rights to it. If you live in an apartment, you have the right to live there for the duration of the lease. Therefore, you have a leasehold estate. Your hold (your right to occupy the apartment) is limited by the lease
freehold estates
type of real estate ownership lasts for an unknown period of time. The property is freefrom hold by anyone other than the owner. There may be a mortgage on the property, but it is still classified as a freehold estate.
fee simple absolute
complete ownership, and it is the highest form of ownership recognized by law - is inheritable
Fee Simple Defeasible Estate
also called qualified fee. The word defeasible means that the estate (ownership) is subject to a condition
reversion
directly reversing what you did originally. If you granted property to the city with a condition regarding its use, but the city did not meet that condition, the property would naturally revert (return) to you or your heirs.
remainder
a third party that would have a remainder interest in the property in a reversion situation
two different types of conditions within the concept of fee simple defeasible estates are
Condition Subsequent and Condition Precedent
Condition Subsequent
also called fee simple conditional. We never have, so you never will. A church grants land to the city with the condition that no gambling will be allowed on it. We never have gambled on that land, so you never will.
Condition Precedent
This is also called fee simple determinable. We always have, so you always will. A landowner grants property to an environmental group with the condition that an existing bird sanctuary be maintained and operated on the property. The precedent (maintaining a bird sanctuary) must be met.
Life Estates
a freehold estate based on someone’s life. Remember, a freehold estate lasts for an unknown period of time.
conventional life estate
created voluntarily by a grantor (the property owner).
ordinary life estate
Barbara gives a life estate to Danielle so she can live in a home that Barbara owns for the rest of her (Danielle’s) life, Danielle cannot pass her life estate on to an heir, because it ends immediately upon her death.
pur autre vie life estate
an allowance of someone to live in someone’s home for the remainder of the homeowner’s life. “for the life of another”. the life tenant’s heirs may inherit the life estate (unlike an ordinary life estate). Of course, the heir’s life estate will end upon the death of the person with the measuring life.
a life tenant cannot
commit waste (Neglect the property)
a life tenant can
lease the property to someone (but only for the duration of the life estate) *They have true ownership interest for the duration of the life estate
Legal Life Estates
statutory life estates.created automatically by law, not by someone’s choice. Their purpose was primarily to keep people from becoming homeless due to the loss of a spouse or due to legal action taken against them as a result of certain kinds of debts.
Curtesy
This is a legal life estate for the husband in his deceased wife’s property.
Dower
This is a legal life estate for the wife in her deceased husband’s property.
Homestead
This is a life estate that protects a family from certain (but not all) debts, allowing them to continue to live in the home.
Riparian Rights
pertain to land bordering on streams or rivers. Generally, if the water is non-navigable (meaning you couldn’t use a boat on it), the owner’s property actually extends to the center of the water. If it is navigable (you could sail a boat on it) the government owns it. In this case the owner’s property would extend out to the high water mark at the water’s edge.
Littoral Rights
refer to property ownership rights along the ocean or a lake. Also in this case, the owner’s property would extend out to the high water mark at the water’s edge.
Prior Appropriation
protect people’s rights related to the use of water.
Accretion
the process of gradual addition of land
Alluvion
the actual new deposits of land (perhaps due to the flow of a river)
Erosion
the gradual loss of land
Avulsion
the sudden removal of land
Reliction
the gradual subsiding of water, leaving additional land.
leasehold estate
created by a lease agreement. It is of limited duration and includes fewer rights than does a freehold estate
lessor
The owner of the property
lessee
the person who receives the lease. “ee” at the end of a word indicates that the person is the recipient of something.
Estate for Years
an estate for a stated period. The lessee must vacate the premises at the end of the lease.
Periodic Estate
If a tenant rents an apartment on a month-to-month basis, but the tenant and the landlord don’t specify a number of months, this is called a periodic or period to period estate. Either party can end the estate by giving notice.
Periodic Estate
If a tenant rents an apartment on a month-to-month basis, but the tenant and the landlord don’t specify a number of months, this is called a periodic or period to period estate. Either party can end the estate by giving notice.
Tenancy at Will
could be called “tenancy at who knows?” If you tell someone they can rent a bedroom with attached bathroom in your house until your mother-in-law moves in at some unknown point in the future, this is called tenancy at will. Reasonable notice would be required.
Tenancy (Estate) at Sufferance
Also called holdover tenancy. The tenant wrongfully remains on the premises after their right to possess (occupy) it has ended.
Gross Lease
the common residential lease. The tenant pays a set amount. The landlord pays the building’s operating expenses.
Net Lease
common for commercial or residential properties. The tenant pays a set amount plus some or all of the building expenses. If you ever hear of a double net lease (net-net) or a triple net lease (net-net-net), what does that mean? The more “nets,” the more expenses paid by the tenant.
Percentage Lease
the monthly rent will be a percentage of the gross income the tenant generates
Variable Lease
allows for future changes in the amount of rent related to a business
graduated lease
the lease agreement might state the monthly rent for the first year, and then indicate increasing, predetermined amounts for the second and third year.
index lease
doesn’t state a specific amount of increase because the increase will be based on a common index, such as the consumer price index.
Ground Lease
A company could lease undeveloped land and then build and operate their corporate headquarters on that ground. The tenant would be responsible for all building expenses, so this would be a type of net lease. The land and the improvements are turned over to the property owner after the expiration of the lease agreement.
Oil and Gas Lease
land owner usually receives a one-time lease payment to allow drilling. The land owner (landlord) receives a royalty for gas or oil found. If none is found, a flat rent is charged.
Lease-Purchase
leasing for a period of time with the intent to purchase at a later date.
Sale-Leaseback
ABC Company sells their building to an investor. The investor then leases the building to ABC. With this sale-and-leaseback arrangement, the investor has a stable tenant and a good return on investment. ABC company (the lessee) has freed up capital.
lease option
a renewal option. The lessee may renew the lease if notice is given before a specified date
lease with option to buy
allows the tenant to purchase the property during a specified period. The tenant is usually given credit toward the purchase for part of the rent paid.
Uniform Residential Landlord and Tenant Act
established the Landlord’s right of reentry to the premises and the Landlord’s obligation to perform maintenance. This Act also protected tenants from retaliation for complaints, from contract clauses where the tenants waive their rights, and from exculpatory clauses in contracts – clauses allowing the landlord to escape all liability.
Ownership in Severalty
sole ownership
Joint Tenancy
Ownership by two or more people with Right of Survivorship. This means that when one co-owner dies, that co-owner’s share goes to the surviving co-owner(s). If a co-owner has a will that is in conflict with the right of survivorship, the right of survivorship will prevail.
Unities for Joint Tenancy
conditions that must exist for joint tenancy (TTIP)
Unity of Time
Unity of Title
Unity of Interest
Unity of Possession
If a tenant dies in joint tenancy
their ownership interest is equally divided among the surviving joint tenants.
Selling Joint Tenancy
A joint tenant can’t will their ownership interest to someone, but they CAN sell their ownership interest. would be a tenant in common (defined below) with all the rights enjoyed by tenants in common. Lauren would not receive any additional ownership interest upon the death of a joint tenant.
Tenants in Common
*Undivided interest ina property
*Can sell or mortgage their interest in the property without consent of the other owners
*CAN will their ownership interest
Right to Partition
tenants in Common and Joint Tenants have the right to legally force the end of the tenancy. The assets would then be distributed to the tenants.
Tenancy by the Entirety
This is a form of joint tenancy that exists only between husband and wife. In addition to the unities of time, title, interest, and possession, there is a unity of person, meaning that the husband and wife are considered one person.
Community Property
property acquired during the marriage. Each spouse owns half. However, property owned separately before the marriage remains separate. Also, property acquired through separate funds, even during the marriage, remains separate.
General Partnership
he partners have a right to manage the partnership, but they have unlimited liability for debts
Limited Partnerships
at least one general partner and one or more limited partners. Limited partners don’t run the business, and are liable only to the extent of their investments.
corporation
an artificial person created by a charter. It will live forever unless dissolved. It is run by a board of directors. Shareholders invest in the corporation. Their liability is limited by the amount of their investment. The corporation can hold title to real estate, just like a person. The corporation pays income taxes because it’s a person. Next, dividends are paid to shareholders who also must pay income taxes on their dividends. It’s double taxation.
S Corporation
Combines the features of a general corporation and a partnership. Stockholders enjoy limited liability and they avoid double taxation
Syndication
Two or more people who operate a real estate investment. This is usually a limited partnership. The syndicator is the general managing partner and investors are limited partners.
Joint Venture
This is usually created for a single project. This can take any ownership form.
trustor
transfers property into the trust.
trustee
manages the trust and holds legal title to the assets in the trust.
beneficiary
benefits from the trust
Living Trust
created by the property owner during his/her life. Upon the property owner’s death, the property automatically goes to the beneficiary, avoiding the cost and delay of probate.
Testamentary Trust
“last will and testament.” This type of trust is set up after the property owner’s death in accordance with his/her will.
Land Trusts
hold only real property
Real Estate Investment Trust (REIT)
A type of business organization for small investors who pool their money and participate in large real estate projects. The investors hold certificates that are like shares of stock.
Cooperatives
The tenants form a nonprofit corporation that purchases the building. The corporation holds title to the real estate. The tenants own shares of stock, giving them a long-term lease to occupy a unit - called a proprietary lease. Owners are limited in what they can do to renovate their units. Owners must offer their shares to the corporation before selling them to someone else (the corporation retains the right of first refusal).
Condominiums
All occupants in the multi-unit building own separate property (their unit) as tenants in common
Time-Sharing
Individuals own or lease a specified time interval in a property, usually a week. This is common with resort properties. There are two formats
Time-share estate – a fee simple interest in the unit is purchased for the same period each year in perpetuity.
Time-share use – contracted right to use property for the same period each year for a certain number of years.
alienation
the act of transferring title from one owner to another
4 ways of voluntary ownership
Sale, Will, Gift, Dedication
Probate
When a person dies with a will, the process of determining the validity of the will, paying the deceased person’s debts and distributing his or her assets is called probate.
Testator
A man making a will
Testatrix
woman making a will
Devisee
person receiving real estate in a will
Transfer by Accession
refers to additions to land through human or natural causes
Adverse Possession
means a person can obtain title to a parcel of real estate without the seller’s consent if certain conditions are met.
Transfer Tax
a tax imposed by the government on property when the title transfers from one owner to another.
deed
a written document that transfers ownership interests in real estate from the existing owner (the “grantor”) to another person (the “grantee”)
General Warranty Deed
provides the greatest protection to the person who is receiving title to the real estate (also called the “grantee”) because it includes specific covenants (promises) that protect the grantee (the buyer).
Quitclaim Deed
has the least protection. This means the grantor doesn’t provide any guarantees to the grantee. Quitclaim deeds are used to fix a minor cloud on a title.
Grant Deed
does not provide the grantee with any protection against encumbrances that were incurred by previous owners.
Special Purpose Deed
used in special circumstances, such as when a person dies without a will, or when property is sold to a person at a tax auction.
Consideration
another word for anything of value. This could be money or anything else of value that is mutually agreed upon by the grantor and grantee.
Granting Clause
wording in the deed that states that it is the grantor’s intent to transfer the title to the property to the grantee.
Legal Description
More complex than just a street address, legal descriptions define the exact location and boundaries of the property.
Appurtenances
define the rights and privileges associated with the land.
Acknowledgement
where a notary public verifies the grantor’s signature is genuine, and that the signing of the document is voluntary.
Delivery and Acceptance
the point in time when the property actually changes hands from the grantor to the grantee.
Recording
Each deed becomes a public document when it is recorded on public property roles. This protects the deed against future interests of other people.
Habendum Clause
defines or limits the extent of ownership being granted to the grantee. Typical habendum clauses begin with the words, “to have and to hold.”
Covenant of Seisen
means the grantor has the power and authority to convey the title.
Covenant Against Encumbrances
means the grantor promises the new owner there are no encumbrances (like easements, taxes, etc.) other than those stated in the deed.
Covenant of Quiet Enjoyment
means the grantor promises no one can legally interfere with the new owner’s property.
Covenant of Further Assurance
the grantor promises to correct any defects in the title.
Covenant of Warranty Forever
means the grantor will pay any expenses to defend the title if it’s challenged by someone who claims to have a better title, or to compensate the grantee if the title fails.
constructive notice
When the title is recorded in public documents
Title Search
a close examination of all public records to determine the title history of the real estate
Marketable Title
one that’s free of major defects that would deter a buyer from purchasing the real estate from the owner
Cloud on Title
if there are documents or other information that calls into question any previous title
Quiet Title Lawsuit
This is a lawsuit meant to clear any cloud on a title.
Color of Title
Any title that on its surface appears to be good but is not is said to have the “color of title.”
Abstract of Title
a brief history of documents affecting the title
Certificate of Title
a document prepared by a title examiner, title company or attorney who has carefully reviewed all public records that pertain to that individual property. Then, the examiner prepares an opinion as to the status of the title that lists all liens and other encumbrances.
Title Insurance
an insurance policy that protects the buyer in case some defect in the title is found at some future point. It is considered evidence of title.
Mortgagee’s/Lender’s Policy
protects only the lender ‘s interest (mortgagee) against their potential loss.
Owner’s Policy
protects the buyer for as long as the buyer owns the property. The fee for the policy is paid only once (at closing).
Leasehold Policy
protects renters who have a valid lease.
Deed
the title to the property that shows the seller and the new owner. It is considered evidence of a marketable title.
RESPA
Real Estate Settlement Procedures Act
covers all real state closings of one- to four-unit residential properties, including condominiums and cooperatives that include federally related first mortgages.
when does the lender give the closing disclosure to the buyer
at least three BUSINESS days before closing
Proration
financial calculation of what is fair according to what is actually used.
Prepaid Expenses
expenses that have been paid before the date of closing. The seller should be credited (reimbursed) and the buyer debited (required to pay). Annual HOA dues are one example.
Accrued Expenses
those that have been accumulated by the seller (but have not been paid) and will be paid by the buyer.
actual-number-of-days-in-the-period method
calculates the proration using the actual number of days in the proration period.
statutory month method
assumes that every month has 30 days. This method also can use a statutory year, which assumes there are 360 days in the year
Statutory-month-variation method
A monthly charge is calculated like the statutory month method but uses the actual number of days in the month of closing to find the daily charge.
Principal
the person seeking to buy, sell, exchange or rent real estate. AKA Client
Fiduciary Relationship
one in which the agent must exercise great care when representing the client. This means all aspects of the agency relationship must remain confidential, and the agent must not do anything to place the client at a legal or negotiating disadvantage in the real estate transaction.
Universal Agent
This type of agent represents the principal in all matters that can legally be delegated to others.
General Agent
represents the principal in a particular business or related range of activities.
Special Agent
an agent that represents a principal in a specific transaction or task. This is usually for a limited period of time.
Designated Agent
an agent appointed by the broker to act as an agent for a principal in a real estate transaction.
Capacity of the Parties
means the principal can empower the agent to do only what the principal is empowered to do. For example, the principal has the legal capacity to buy, sell, exchange or rent real estate, but turns over these responsibilities to the agent.
Legal Purpose
the purpose of the agency must be legal.
Expressed Agency
created in writing when the principal appoints the agent to represent him or her in a real estate transaction.
Implied Agency
can be created by the actions or conduct of the parties rather than by a written agreement.
Agency by Necessity
created in an emergency situation, and it may be unnecessary to get the consent of the principal to create such agency
Performance
when the agency’s purpose has been completed and the relationship is no longer needed
Discharge by the Principal
This occurs when the principal fires the agent. However, the broker may be able to sue for breach of contract and attempt to recover damages, meaning money.
Resignation
when the agent resigns from the agency relationship at any time. The agent, however, may be liable for breach of contract and any resulting damages.
Abandonment
Inactivity on the part of the agent for an unreasonable period of time suggests the agent has abandoned the relationship, thus causing the agency to be terminated.
Puffing
making statement of opinion and exaggerating the benefits of a property.
Errors and Omissions Insurance
comparable to malpractice insurance in the medical profession. It protects the broker against financial loss due to liability for errors, mistakes and certain types of negligence.
Stigmatized Property
Any property that has a bad or questionable reputation
As-Is Sales
the seller will not fix any defects in the property. Nonetheless, the seller must disclose those defects, known and hidden, in the property.
Megan’s Law
a system of notifying citizens of convicted sex offenders who live in their midst called Megan’s Law. An agent must always provide property buyers with information about how to access these databases.
Price-Fixing
If two or more real estate brokers to collude to set a “standard” commission, this is called price-fixing. That’s illegal.
Market Allocation
where brokers in a market divide up the market among themselves and agree not to assist buyers or sellers in the parts of the market allocated to the other brokers. Illegal
Boycotting
where two or more brokers conspire against another broker to reduce competition by not showing that broker’s listings or doing anything else to cooperate with that broker’s clients.
Tie-In Agreements
an agreement to perform one service or product only if the client purchases another product or service.
Express Contract
Contracts where the parties show their intentions by words, either written or oral.
Implied Contract
Contracts where the parties show their intentions by their acts or conduct
Executed Contract
one that has been completed. At closing, a real estate contract is considered executed.
Void Contract
A contract is considered void if it does not contain all the contract elements.
Bilateral Contract
A contract where both parties promise to do something. The seller promises to sell his or her home to the buyer. In return, the buyer promises to pay the seller for the house.
Unenforceable Contract
a contract that appears to be valid but is not legally enforceable by either party in a court of law.
Option to Purchase
a separate contract between two parties giving one party the right to do something within a specific period of time. Usually, the buyer gives the seller money and in return gets the right during a fixed period of time to buy the seller’s property at a specific price.
Earnest Money
an amount of money the buyer puts down as a deposit to show the seller his or her intent to buy the property is earnest.may be anything of value agreed upon by the buyer and seller.
Consideration
Usually, this is money, but consideration can be anything of value such as personal property or personal services. Legal consideration is literally anything the buyer and seller mutually consider valuable. A contract that does not state the consideration to be paid is voidable.
Mortgage Contingency
This means the sale of the property is conditioned upon the buyer obtaining a mortgage on the property.
Property Sale Contingency
his makes the purchase of the seller’s home conditional upon the buyer being able to sell their property.
Inspection Contingency
makes sale of the property conditioned upon the property inspection report. This allows the buyer to set conditions based on the property’s habitability and freedom from major defects.
Mirror Image Offer
An offer for the full purchase price of a parcel of real estate that meets all the seller’s terms in the listing agreement is called a mirror image contract.
Contracts Under Duress
Duress is the use of force or the threat of force to obtain an agreement. This means the consenting party must not be coerced into the contract. Contracts made under duress are voidable at the option of the consenting party.
Specific Performance
a legal term that that means the defaulting party is ordered by a court to go through with the terms of the contract.
Open Listing
the seller signs listing agreements with multiple brokers who all simultaneously market the property. Only the broker who brings the buyer to the table is owed a commission. Usually, if the seller finds the buyer without the help of any of the listing brokers, none of the brokers is owed a commission.
Exclusive Agency Agreement
he seller employs only one broker to sell her home. If the owner of the home sells the property, the broker is not entitled to a commission
Exclusive Right-to-Sell Listing
the seller signs a listing agreement with only one broker. If the seller or another broker brings the buyer to the table, the listing broker is still owed a commission. This is the most common type of listing agreement.
Broker Protection Clause
means if the listing agreement of a broker who lists a parcel of real estate expires, the broker is still due a commission if the house is sold to anyone who was introduced to the property during the period of the listing agreement.q
Net Listing
a seller is guaranteed a specific amount of money for his or her property and the sales commission is not based on the sales price. Instead, the commission is any amount that is above the sale price that the seller agrees to in advance - illegal
Exclusive Buyer Agency Agreement
The broker may earn a commission from the buyer even if the buyer finds/purchases a home without the assistance of the broker.
Exclusive Agency Buyer Agreement
the broker is the exclusive agent for the buyer but will not be entitled to a commission if the buyer finds a property without the broker’s assistance
Civil Rights Act of 1866
prohibits any discrimination based on race only in any real estate transaction
Fair Housing Act of 1968
prohibit discrimination based on color, race, national origin, religion, sex, mental or physical disabilities and familial status (meaning families with children younger than 18).
