All Flashcards
Riparian
Borders moving water
Define a fixture (4 criteria)
1) method of attachment
2) adaptation
3) agreement
4) relationship of parties
Littoral
Boarding non moving water
Prior appropriation
First to divert has superior rights to all
Heterogeneous
Every piece is unique
Can’t be moved
Always local commodity
Physical indestructibility
Land can’t be destroyed not insurable or depreciated
Uniqueness
Legal basis for specific performance
Scarcity
Economic land characteristic land is limited
Situs
Economic land characteristic for area preference “location, location”
Improvements
Economic land characteristic
Investment performance
Sewage, drainage, electric making land more valuable over time
Metes and bounds
Starts with POB marked with permanent artificial monuments. Metes are measurement (inches, feet,acres etc.)
Bounds artificial monuments, compass angle, irregular shaped lots
Government survey
Large scale tracks, west, geodetic, rectangular system
Principal meridians north to south
Base lines east to west
T4s, r3e
Los pendens
Action pending against a property
Property tax lien
Specific, superior
easement appurtenant
Enjoyed by the owner of real estate
Easement in gross
Attached to a certain person, not sold with the land
Dominant estate
Right to use land of another “benefits” from easement
Serving estate
Land subject to use
Express reservation
Created by a landowner selling his property but retaining an easement
Freehold
Exclusive rig to procession and use of land for an indefinite period
Fee estate
Type of freehold estate
Highest and most unrestricted ownership in land exits it’s indefinitely
Life estate
Conveyed for duration of life
Has all 6 bundles of legal rights
Only for duration of life estate
Life tenant
Holder of life estate
Pur auntre vie
For another’s life; a persons interest in a life estate last for the duration of another’s life instead of their own
Non freehold estate
Leasehold conveys right to procession only for a specific period of time
Sole ownership
Estate in severalty, passes to heirs
Joint tenancy
Method of ownership where title is held by multiple persons as if each was a single person. Identical rights in the property. Automatically passes to other tenant. Right of survivorship.
Joint tenancy 4 elements “unities”
Title - gain from same instrument, same deed..same will
Time - all tenants named at the same time.
Interest- all one one single interest in land equally same shares for same duration
Possession- undivided possession of whole property equal use
Tenancy in common
Most common type
Equal or uneven shares
No right of survivorship each can pass to heirs
Can transfer interest at will
Estate for years
Leasehold estate definite beginning and ending date; no notice required
Estate from year to year
Periodic automatic from one period to the next requires proper notice from either side to terminate
Estate at will
In lawful possession without a definite time specified when he will vacate
Condominiums
Holds title to individual units; full bundle of rights, common areas are tenants in common, taxed separately
Cooperatives
Receives stock in corporation
Proprietary lease
La
taxes and liens are against entire property
Timeshares
Fee simple title as tenants in common.
Alienation
Any transfer of real property voluntary or involuntary
Marketable title
Aka merchantable title or perfect title that is reasonable free from defects
Equitable title
Right to receive legal title after completing specified performance like paying off a mortgage.
Abstract
A condensed history of a title
Certificate of title
A title examiners final opinion based on the title search. Marketable or free from defects
Subrogation clause
If an owner makes a claim in a title it grants the insurer the same rights and remedies that the owner has
Warrant deed
Offers greatest possible protection to the grantee and is the most common type.
Seisin
Assurance made by grantor of a deed that they own what they say and can convey it.
Quiet enjoyment (in titles)
Promise arising for a grantor that the grantee will enjoy quiet enjoyment without disturbance of hostile claimants. Doesn’t promise title is perfect like seizin but says will be defended
Furtherer assurances
Aspect of warrant deed that the grantor will do any further acts that might be required to ensure perfect title.
Special warrant deed
Conveys real property but grantor only warrants title against defects arising while he owned. I.e. Executor, trustee, guardian
Bargain and sale deed
Contains no promises by the grantor about the status of title to be conveyed.
Quitclaim deed
Grantor makes no promises about the status of title and passes it as-is used to clear clouds on title
Premises clause
Granting clause names parties to the transaction, the extend of ownership, the consideration, and legally describes the property.
Habendum clause
Follows the premises clause. Indicates type of estate.
Testimonium clause
Conclusion of deed “in witness whereof the parties to these present have hereunto set their hands and seal”
Recording
A deed is valid even if not recorded however offer little protection from claims against the property. Creates a public record to verify if marketable.
RESPA
Real estate settlement procedures act. Enforced by consumer financial protection bureau that regulates closing procedures. Informed of settlement costs
RESPA exemptions
Business purpose loans, loans involving 25 acres or more, temporary financing, loans for vacant land, loan conversions, secondary market transfers, financed by seller, assumption of existing loan, or more than 4 units.
Good faith estimate
Estimate of settlement charges. Must receive within three days of application
Transfer taxes
Generally paid by the seller, grantor, lessor, and are due when deed is recorded. Based in sales price of the property
Federal tax deductions
Homeowners may deduct mortgage interest payments, real estate taxes, and some closing cost (points) from federal income tax.
Condemnation
A law suit initiated by the government against a landowner who fails to consent to the government taking property through eminent domain.
Inverse condemnation
Situation where govt regulation is so pervasive that it eliminates any economically viable use of ones property
Escheat
Govt power that causes unclaimed property to transfer to the state…person dies intestate or without a will
Dedication
The voluntary transfer of privately owned property to a governing body for public purposes.
Public grant
Voluntary transfer of land from government to private owner.
Takings clause
Constitutional limitation on government powers that prevents from taking property with out fair compensation or for non public purpose.
Zoning
Valid exercise of police powers. Defines permissible land uses
Variance
Relief for case specific hardships due to zoning. May be permitted if homeowner can show undue hardship and can show it won’t greatly alter the character of the locality.
Conditional use/special use permits
Authorizes a particular use that benefits the community rather than an individual ie hospital to be built in residential area.
Spot zoning
Zoning for small area differs significantly from surrounding zoning. Usually used in areas to accommodate a non conforming use. Rarely survives a legal challenge
Bulk zoning
Used to control building density rather than land use
CERCLA
Imposes mitigation abatement and cleanup for an owners property. Even if they weren’t responsible ?
Zoning vs. covenants
In the event of conflict zoning laws need to be followed over covenants. Arises when a deed restriction is less restrictive than a zoning law.
Equal credit opportunities act
When reviewing a renters credit history. The ECOA prevents discrimination based on race, color, religion, national origin, sex, marital status, age, or dependance on public assistance.
Gross lease
Fixed lease or flat lease pays rent at a fixed rate. Lessor pays taxes, insurance, and all other expenses such as maintenance and repair.
Net lease
Lessee pays base rate ( a fixed amt) and also pays pro-ratated share of expenses associated with the building. Usually based on the square footage. Base rent plus prorate is referred to as the effective rent.
Percentage lease
Fixed amt of rent plus a percent of business income that exceeds an agreed upon amt.
Gradual lease
Lessee pays predetermined rental increases at specific times
Federal interstate land sales full disclosure act
Enacted in 1968 land developers must register subdivisions of 100 or more non exempt lots with HUD and provide each purchaser with a property report
Property report (under Fed interstate land sales full disclosure act)
Given prior to purchaser agreement signed
Distance to nearby communities over paved or unpaved roads
Existence of mortgages or liens on property
Loc. of recreation, available sewer service, type of title,
Buyer has two years to cancel contract and get money back
Federal interstate land disclosure act…cooling off
7 days following the date of the contract being signed to cancel for any reason by notice to seller and get money back
Taxable income
Gross income minus allowable expanses and deductions
Potential gross income
The maximum potential rental income a rental property could produce if all units were occupied, also known as projected gross income and scheduled gross income.
Effective gross income
Effective gross income is the actual rental income received after deducting any rental losses and vacancies
Net operating income
Net operating income (NOI) is the actual gross income derived by subtracting all other operating expenses from effective gross income.
Economic life
The estimated time period during which an improvement yields a return over and above that which is attributed to the land. Used by appraisers and investors for tax depreciation purposes.
Investment permanence (fixity)
Concept that describes the permanence of an investment in infrastructure improvements..produces stable and long term returns. Offers greater options for future development than a specific improvement like residential home
Valid contract elements
Offer, acceptance, consideration, and lack of defenses that would otherwise cancel a contract or prevent it from being formed. Meeting of the minds between two parties, lack of capacity.
Creates Void contract
Legally insane, no meeting of the minds, fraud in factum (intentional deceit, that tricks into a document other than what was intended) buyer tricked so no meeting of minds, illegal, duress,
Voidable contract
Limited capacity, non legal insanity, minors (must reject within a reasonable time of becoming an adult), intoxication ( must act promptly), fraud in the inducement (seller misrepresents material information intentional deceit), mistake (mutual, unintentional, material mistake).
Unilateral
Single party promises to perform under specific conditions. No ,eating of the minds….$50 reward for return of my dog
Bilateral
Both parties make promises to perform
CCR’s
Covenants, conditions, and restrictions.
Novation
Parties agree to substitute one agreement in part or in full for another agreement. New party is Liable to perform relieving the original party.
Statute of frauds
Requires certain contracts to be written to be enforceable. Sale of land, transfer for more than a year, leases longer than a year
Monetary damages
Remedy for breach of contract that is limited to the amount the parties agreed to (liquidated damages)
“Benefit of the bargain” damages
The difference between the fair market value and the contract price (seller) or diff between the contract price and FMV (buyer)
Liquidated damages
Damages specifically agreed to. Exclusive damages available to the non-breaching party. USUALLY earnest money
Specific performance
Court ordered contract remedy that enforces the breech jog party to perform as promised in a contract. Because real estate is unique…not available for other contracts.
Assignment
A new party agrees to receive the rights and responsibilities that the original party promised, without relieving the original petty of liability. The old contract remains in tact and a new party is added
Open listing
Between a seller and any number of buyers, only pays broker who sells or can sell themselves. Unilateral (obligates only broker to act) executory( will not arise until buyer is found) and indefinite expiration date.
Exclusive agency
Seller agrees to pay broker if he sells AND if any other broker does. But not if owner sells himself. Must be written, bilateral, and have definite expiration.
Exclusive right to sell
Greatest benefit to the broker, paid no matter who sells property, must be written, bilateral, executory, for personal service, and must have definite expiration date
Terminating listing agreements
Full performance, abandonment by the broker; breach, lapse of time; mutual agreement, revocation, death, insanity, or bankruptcy, change of ownership of property or destruction of property.
Open buyer agreement
Counterpart to an open listing, compensates who first brings a property to a buyer
Exclusive buyer agency agreement
Pays agent only if agent finds a property, not if they find on their own or with anorexic broker, counterpart to exclusive agency
Exclusive agency buyer agency agreement
Compensates broker is property similar to one described on contract is found no matter who finds it.
Termination of buyer-broker agreements
Full performance, abandonment by the broker, breach, lapse of time, mutual agreement, death, insanity, or bankruptcy, revocation
Equitable title
Limited ownership interest that conveys the right to receive legal title upon full performance, buyer receives once both parties sign purchase agreement or sales contract
Option contract
A buyer (or lessee) contracts with a seller for the exclusive privilege (but not obligation) of accepting an offer at a specified price for a specified period of time Unilateral
Option contract elements
Must have 3 essential contract elements (Offer/acceptance
Consideration and lack of defenses) along with a specified price, the date the option will expire, and a description of the property.
Rescission
Terminate a contract by mutual agreement and without breach returns parties to their original positions
Independent contractor
Hired to perform a specific task, who uses independent discretion and judgement to select a method of completion.
Single agency
Agency representation where broker represents only one party in the transaction. That party is the client and the other party is the customer.
Dual agency
Same agent represents multiple parties with competing interests in the same transaction. Escrow agents are example.
Must be written and signed by all parties before any confidential information is exchanged.
Designated agency
Single broker represents both buyer and seller but appoints two different salespeople to handle the transaction.
Universal agent
Authorized to perform a variety of tasks, much broader grant than special or general agency. An unlimited power of attorney is an example. Have authority to legally obligate clients.
Fiduciary
Person holding a position of trust and confidence by the virtue of their representation of another. Fair and honest treatment, disclose material adverse facts, performance of ministerial acts.
Obedience to client
Loyalty, disclosure, confidentiality, accounting, reasonable care and due diligence.
Express agreement
Agency agreement where parties clearly state such an intent orally or in writing.
Implied agreement
Agency agreement created by actions or statements of the parties. If they act as though an agency relationship exists it does.
Trust accounts
Escrow accounts laws require brokers to maintain in order to deposit and hold monies if third parties.
Fair housing laws
Administered by HUD; enforced by HUD and dept of justice. Includes dwellings for sale or lease. All buildings, structures, vacant land, not including commercial property.
Civil rights act of 1866
Federal law and constitutional amendment that prevents any discrimination based on race. Enforced by federal court.
Federal fair housing act of 1968
Race, color, religion, sex, or national origin.
Fair housing amendment act of 1988
Increased penalties for violators and to include handicapped and for familial status.
Fair housing exemption
Never race
Private individual owner exemptions of fair housing
Exempt if
1) they don’t own more than three single-family houses at any one time
2) don’t sell more than one sfh in any two year period
3) do not employ a real estate agent
4) do not use discriminatory advertising
5) owner occupants ie rent rooms exempt from non racial aspects if less than 4 units.
Elderly housing
All residents (excluding employees) over 62 Or at least one person in household be 55 years old or older and 80% of all units are so occupied... They are exempt from familial status protection.
Federal fair housing enforcement
File a complaint with HUD within one year of the alleged act or two years in federal court. Right to hearing by administrative law judge who can award actual damages.
Fair housing penalties
Up to 16k for first time violations, 65k for third time violations within 7 years. Pattern on discrimination…civil penalties up to 55k to 110k
Primary mortgage market
Direct lenders aka prime lenders or originators who make loans directly to borrowers. Most sell the loan to other investors, by selling their loans they liquidate their investment and receive additional funds to make more loans
Secondary mortgage market
Network of institutions that purchase and sell existing mortgages.
Usury
Act of charging interest rate in excess of what the law permits, state usury laws establish a max interest rate lenders may charge.
Reduction certificate
Doc aka estoppel certificate that certifies the status of a loan as of a certain date. Usually provided when a loan is being assumed
Hypothecation
Lending arrangement where buyer retains right to possess while it serves as security for loan.
Graduated payment mortgage
Fixed rate loan where payments are initially negatively amortized (causing low initial payments) and then amortized causing increasing payments for the life of the loan.
Interest only mortgage
Aka straight mortgage or term loan where buyer pays only interest during the life of the loan followed by the entire balance. Achieve low monthly payments in the begining.
Blanket mortgage
Borrower pledges more than one parcel of real estate, normally contain a partial release clause allowing parcels to be released as the debt is paid down.
Package loan
Pledges personal property as well as real property as collateral.
Conventional loans
Originated by primary market lenders without government insurance. Represents a greater risk to lenders than govt backed loans. Down payment PMI
FHA
Govt backed loan backed by government insurance. Provides mortgage insurance on loans made by the FHA approved lenders. Insures but does not originate
VA loan
Govt backed loan that is guaranteed.
Established in 1944
Guarantees loans made by approved lenders; they can lend but typically don’t.
Little or no down payment
And no PMI
Regulated closing costs
Funding fee charged at closing; 2.15 first time and
Are assumable and prepaid without penalty
Commercial banks
Banks which make loans primarily to assist commerce especially in the areas of business loans, home improvement loans, and short term construction ( demand deposits (checking accounts) are primary source of funds). Need to be
More liquid than s&l
Savings and loans S&L
Deal mainly in conventional loans and govt backed loans but primarily conventional loans. They also buy and sell mortgages on the secondary market.
Mortgage bankers
Primary lender that borrow from commercial sources. Close loans in their own name, assume risks, and may service loans even after sold. They do not take deposits.
Mortgage broker
Merely an intermediary who arranges and closes loans in the name of the lender. Doesn’t loan funds themselves. They arrange loans and then charge the borrower a fee.
Secondary mortgage market
Purchase and sell existing mortgages
FNMA
Fannie Mae doesn’t loan money directly. Generates funds by buying and selling existing FHA and VA loans and conventional mortgages.
GNMA
Ginnie Mae operates federal subsidy housing loan programs. Works with Fannie Mae to provide special assistance programs for low yield, high risk loans. Helps to stabilize national realestate markets. Don’t buy or sell loans
FHLMC
Freddie Mac
Borrows money from pension and trust funds to purchase mortgages and pool them together. Doesn’t guarantee payment of Freddie Mac mortgages. Purchases conventional and govt backed mortgages.
FHA advantages
Lower down ala 3.5 % down
Must purchase FHA mortgage insurance. And pay it up front on each payment.
No income requirement but steady for two years
Debt to income 31% for housing costs and 43% for housing expenses less than conventional.
Credit score more forgiving
Sets max loan amts
Defines allowable closing costs
Inactive statue
Person who is not under the supervision of a principal or supervising broker. Can’t engage in acts requiring a license.
Must apply for active status within 3 years or re-qualify
Education must be within 2 years
Regulant
One who is regulated by the board
Brokerage agreement
Written agreement establishing the brokerage relationship between client and a licensee which states if they will represent as an agent or independent contractor.
Brokerage relationship
The contractual relationship between a client and a licensee
Client
The person who has entered into a brokerage relationship with a licensee
Sole proprietor (non broker owned)
Brokerage firm which requires a firm license but must be owned by an unlicensed individual under specific circumstances.
Sole proprietor (principal broker owned)
Brokerage firm which does not require a firm license as long as the individual broker/owner is licensed.
The VREB consists of:
Consists of 9 members
7 licensed brokers or salespersons with five consecutive years of experience and 2 citizens with a 4 year term
Chairmen elected from membership.
vRAB authority
Regulates real estate licenses
May enforce va fair housing laws involving licensees and their employees.
May promulgate real estate forms; but can’t standardize agreements ( such as sales contracts)
License exemptions
Sell own property
Act under power of attorney
Follow a court order
Auction property when not held over 48 hrs
Firm license qualifications
All firms except those owned by a single broker and a single location must be separately licensed and must be registered to do business in Virginia
Business entity salesperson license
Licensed salespersons and associate brokers may apply for a separate “business entity” sales person license. Permits work under a broker as a business entity and to benefit from the accompanying limitations on personal liability.
Non residents license by reciprocity
Applying for a va license must file an irrevocable consent to suits and services.
Waive national portion of exam and pre exam class
Salesperson experience is 12 to 36 months or 36 to 48 broker experience.
Must take va portion
Concurrent brokers license
Seeking to be active in multiple firms (only brokers can) broker pays fee, submit application, and provide written verification that they notified the principal broker of each firm.
Branch offices
Must be licensed and supervised by a broker even If owned by a single licensed broker. Branch licenses must be kept at the licensed branch.
Reporting change in status
Active vs inactive must be reported within 10 days
Termination
Broker must return license to the board by certified mail within 10 days
Voluntary inactivation
The licensee must notify the board within 10 days.
Change in personal information
30 days address, name
Change in firm info
Firm or branch address or ownership principal broker has 30 days
Termination of principal broker
Firm must return within 3 days
Reinstatement
Expired licenses may reinstate for up to one year following expiration (within 30 days by paying renewal fee; 31 days to 1 year by paying extra reinstatement fee. Salesperson 100 Sales person business entity 135 Broker 120 Concurrent broker 120 Firm 245 Branch office 135
Lapse
Licenses not timely reinstated (over 1year from expiration) must reapply for initial license.
Post licensure education (salesperson)
30 hrs of PLE within 1year of initial certification. When renewing for the first time active Nd inactive must complete
Continuing education
16 hrs every renewal period (2years). Sales persons 16, brokers 24 only active sales people and brokers are required…not inactive
Operating a firm
Each branch licensed and a single location must be designated as the “main” location
Keep list of assigned licenses
Exercise reasonable supervision
Must have 1 principal broker
Principal broker duties
Ensure compliance Receive board communications Keep records all financial records for 3 years from the date of closing or ratification. Supervise advertising Manage escrow accounts
Supervising brokers
Broker assigned to supervise associate brokers and salespersons at each branch
Long distance supervision over 50 miles must make quarterly certifications to the board that they complied with rules of supervision
Associate brokers
Any other licensee in a firm that holds a brokers license that is not the principal or supervising broker.
Brokerage disclosure
Can be verbal at first but in writing at the earliest practical time but no later than the time when specific real estate assistance is first provided.
Must be conspicuous, printed in bold, all capitals, underlined, and within a separate box.
Kept for 3 years
Notification of dual agency
Written consent after giving written disclosure
Not in compliance if not signed by client
Given in purchase agreement, lease, or any other doc related to a transaction.
Can be given with other disclosures
Conversion
Appropriation (stealing) of escrow money or property
Reporting escrow violations
Within 3 days of forming a reasonable belief that any violation occurred
Board inquiries
Respond within 21 days (questions or record requests other)
10 days for financial records any book, document, or record concerning any real estate transaction
Reporting convictions
With in 30 days of plea or conviction
Internet advertising
Include firm name and address and state of the firm
Individual adds must also include the licensee’s name
Online must include date of last update
Internet disclosures
Web pages must display disclosures or a link to them
Email, newsgroups, bulletin boards..disclosures must app rear at the beginning or end of a message or posting
Instant messages…disclosure unnecessary only if provided elsewhere (email, letter) before providing or offering regulated services
Chat…may appear on web page containing the chat sessions (must be visible)
Voice over net (VON) must be spoken before providing or offering regulated services
Banner advertisements…disclosures must be in the advertisement itself, or be accessible via a link
Disciplinary procedures
Complaints- written complaint by any person or by its own discretion
Investigation-notifies licensee and principal broker. A committee investigates. Either dismisses or prosecutes
Prosecution- agree or dispute allegations through an informal trial may impose fines up to $2500 per violation and suspend/ revoke license…must prosecute within one year of discovery, but not over 5 years of violation
Appeal- can be appealed to va court of appeals and higher
Appeal
Transaction recovery fund
$20 fee
Below 400k board may assess all licensees up to a additional $20 over 2 years (45 days to respond)
2nd notice sent 30 more days to pay..then automatic suspension until received
TRF payments
Obtain judgement from va court, fail to receive full compensation, exhaust all other attempts to receive full compensation, timely within 6 months of final judgment) file a claim with an affidavit describing actions and steps taken
TRF damage limits
Actual damage only
Single transaction to a single aggravated party in a single transaction is $20k. Maximum TRF payment to multiple aggrieved parties in a single transaction $50k
Maximum to multiple parties is 100k
Can suspend payments for up to 1 year if they think more are coming
