CA REAL ESTATE EXAM FLASHCARDS
When you're on the go or just need a quick vocab refresh while studying for the CA Real Estate Exam, these cards come in handy!
Reed vs. King
Pertains to death on a property. If a death occurred within 3 years, you must disclose the death & manner of death. The exception to this rule would be if the death occurred due to HIV or AIDS.
Jones vs. Mayer
Civil Rights Act of 1968. Prohibits racial discrimination in every private property transaction whether selling or leasing.
Easton vs. Strassburger
Pertains to disclosures. Every agent must conduct a reasonable competent, diligent, visual inspection of ACCESSIBLE areas for 1-4 unit single family homes. Seller must also disclose to 3rd parties. Does NOT replace any other inspection.
Transfer Disclosure Statement (TDS)
The form used to disclose.
Real Property
Land; Fixtures (attachments); Appurtenant (“runs with the land”); Immovable by law.
Chattel Real
…is PERSONAL property. Ex: Leasehold; Security Interest (mortgage or trust deed)
Mineral Rights
Refers to the right to remove substances from the land. Usually from beneath the surface.
Deed
Transfers the title to REAL ESTATE.
Bill of Sale
Transfers title to PERSONAL property.
M.A.R.I.A.
Method of attachment; Adaptability; Relationship of the parties; Intent of the parties; Agreement of the parties. Tests used by courts in determining whether or not something is a fixture. TIME & COST ARE NOT CONSIDERED in making this determination.
Interpleader
A legal action filed by ESCROW when parties disagree on whether something is a fixture.
Freehold Estates
Highest form of lad ownership and of indefinite duration
Holder
Owner of a LIFE ESTATE, as long as she is alive. A Holder CAN SELL or LEASE a life estate. Holder CANNOT WILL/DEVISE or COMMIT WASTE (fail to pay property tax; fail to maintain) with a life estate.
Creator
When a Holder/Owner of a LIFE ESTATE dies it reverts back to the Creator of the life estate.
Fee Simple Absolute
Highest & most complete form of land ownership.
Fee Simple Defeasible
Real Property subject to the power of termination.
Defeasible Estates
Subject to a condition. If condition is breached, there will be a forfeiture of the land or loss of title.
Life Estate
A freehold estate with limited duration based upon somebody’s life.
Estate in Reversion
Process by which the Holder in a LIFE ESTATE has died and the estate is going back to the Creator.
Encumbrances
Anything that would be a burden on the title. Two types: Money (liens); Non-money (easements).
Lien Priority
The earlier the lien is recorded, the more senior the lien is in priority.
Mechanics Lien
Liens against REAL property. Used to help secure payment for anybody providing: labor; services; materials or equipment. Effective when the WORK STARTED.
Liens
Money encumbrances that make property security for the payment of a debt or discharge of an obligation. Ex: Mechanics lien; Property tax lien; Mortgage
General Lien
A lien that affects both REAL and PERSONAL property. Ex: IRS; Judgements & attachments (seizes assets).
Voluntary Lien
A lien accepted freely. Ex: Mortgage.
Involuntary Lien
A lien that happens by operation of law. Ex: Property tax lien; Mechanics lien; IRS
Easement
The right to use the land of another for a particular purpose.
Dominant Tenement
Benefits from the easement.
Servient Tenement
Burdened by the easement.
Easement in Gross
Utility companies access property using this type of easement.
Prescriptive Easement
A HOSTILE easement.
N.A.C.H.O.
An easement will become a legal right is 5 things take place: Notorious; Adverse; Continuous for 5 years; Hostile; Open (not done in secret)
Title Vesting
Method or mode of holding title.
Prescriptive Easement (Termination)
Termination of a PRESCRIPTIVE easement can be done by either: Merger; Agreement (dominant signs a QUITCLAIM deed); Destruction; Non-Use for 5 years; Adverse Possession (going after property itself)
Ownership in Severalty
Ownership by one person or sole proprietorship.
Concurrent Ownership
Ownership by more than one person.
Joint Tenancy
Concurrent Ownership that includes 4 uniting factors: TIME (everyone has to sign at the same time); TITLE (everyone’s name is on the document); INTEREST (everyone gets equal share); POSSESSION (everyone gets use of the the entire structure). Property CANNOT be willed/devised due to RIGHT OF SURVIVORSHIP.
Tenancy in Common
Concurrent Ownership united by 1 factor: POSSESSION (everyone gets use of the entire structure). This type of vesting allows property to will/devised due to NO Right of Survivorship.
Community Property
Holdover from Spain. Property that is acquired during marriage.
Right of Survivorship
When one vested party in JOINT TENANCY dies, the other vested party(ies) gain the property interest of the party that died. Allows property to escape probate.
Separate Property
Property acquired prior to marriage either including by gift, will or inheritance. Also includes proceeds or income from separate property.
Metes & Bounds
Land description. METES refers to distance. BOUNDS refer to natural & artificial markers. Used in extremely RURAL areas where NO tract map has been recorded.
Topography
“Lay of the land”
Principal Baselines
There are 3 baselines. They run EAST & WEST.
Principal Meridian Lines
There are 3 meridian lines. They run NORTH & SOUTH. Starting points are: HUMBOLT; MT. DIABLO; SAN BERNARDINO.
Sections in a Township
There are 36 sections; 36 square miles; 6 miles square.
Lot & Block
The way we uniquely describe property that includes the Assessor’s Parcel Number (APN).
Appropriation
Right of the government to collect water & distribute to all non-owners of the water.
Eminent Domain
Power of the government to take private property for some PUBLIC USE paying Fair Market Value & just compensation.
Condemnation
Process of government converting private property into a public use (typically by way of Eminent Domain).
Inverse Condemnation
Homeowner forces the government to purchase their property because of something the government has done causing the homeowner to no longer enjoy their home.
Zoning
A PUBLIC control. A comprehensive legal tool in executing the GENERAL PLAN.
Variance
If a homeowner is placed at a disadvantage, she may file a variance.
Conditional-Use Permit
Allows or permits a non-conforming use such as a church in a residential zone to exist.
Grandfather Clause
A provision in a zoning ordinance that allows an existing use to continue, although non-conforming.
CC&R’s
Covenants, Conditions & Restrictions. A PRIVATE control. Found or referenced in the DEED. Created by the developer. Are APPURTENANT to the land.
Radon Gas
An environmental hazard proven to be colorless and odorless.
Mass Spectrometer
Used to measure levels of radon gas.
Police Power
Power of government to enact laws to promote Public Health, Public Safety & General Public Welfare. Ex: Zoning; a Real Estate License.
Alquist-Priolo
Cover earthquakes. Seller must disclose. Applies to ALL counties in CA.
Accretion
Accumulation of new soil on the property due to the action of water.
Alluvium Soil
The new soil created by accretion.
Accession
The increase in land ownership due to accretion.
Avulsion
The violent tearing away of land by the action of water.
Reliction
Water may permanently recede uncovering new land that was once under water.
Riparian Rights
If property borders any type of water course such as a river or stream, property owner has the right to REASONABLE use.
Littoral Rights
Right to reasonable use of lake or ocean that borders property.
Potable Water
Water fit for consumption. A Potability Test is used to test water for consumability.
Agent
Represents a PRINCIPAL in business dealings with 3rd parties. Principal an employer to the agent.
Power of Attorney
Document that allows an agent to act on behalf of a principal. Also known as Attorney-in-fact. Do not need a Real Estate license to sell principal’s property with Power of Attorney in place. However, CANNOT deed or sell property to HIM/HERSELF.
Estoppel
Stops one from later denying facts which that person once acknowledged were true & others accepted on good faith.
Ratification
Principal agrees or ratifies conduct of an agent that was not previously authorized.
Special Agent
When an agent is hired to a specific task.
Dual Agency
Represents both principals. Must be disclosed.
Fiduciary Duty
Highest, good faith and loyalty is owed to the PRINCIPAL; Honesty, fairness and disclosure (not loyalty) is owed to 3rd parties.
Appraisal
Opinion or estimate of value. Valid for 1 day.
Certified General
Highest license one can get as an appraiser. Can appraise any amount for both commercial and residential.
Narrative Report
Most detailed appraisal report. Also known as a self-contained report.
Short Report
Used by lenders. Also called a summary report.
Cap Rate
Net Operating Income divided by the List Price = the CAP RATE. The higher the risk, the higher the cap rate.
Value
Net Operation Income divided by the Cap Rate = the VALUE.
Letter Report
Used when the client ifs familiar with the property. Also known as a Restricted Use Report.
Sales Comparison Approach
Also known as Market Data Approach. Based on principle of Substitution. Works well with: Residential; Raw Land; Manufactured Homes; some Commercial.
Cost Approach
Replace or Reproduce. This approach is used when there are no comparables and the property produces no income. Ex: New construction; unique buildings; Public buildings; Special purpose.
Income Approach
Works well with large apartment complexes; retail; offices
Replacement Cost
Building a building of the same utility.
Reproduction Cost
Building an exact replica.
Principle of Substitution
Value that tends to be decided by the cost of acquiring an equally desirable property.
Principle of Conrtibution
A property improvement may or may not increase the property’s overall value market value, regardless of the cost of the improvement.
Progression
The value of a building is enhanced if buildings around it have a higher value.
Regression
A building’s value declines if the buildings around it have a lower value.
Elements of Value
There are 4 elements that need to be present before a product has market value; Demand. Utility. Scarcity. Transfer (the ability to). (D.U.S.T.)
Depreciation
A loss in value. There are 3 forms of depreciation; Functional, Economic, Physical.
Functional Obsolescence
Inside the property line. Usually curable.
Economic Obsolescence
External/outside of property. Incurable.
Physical Obsolescence
Property damage, destruction. Wear and tear.
Gross Rent Multiplier
It is a multiple of the rent as it relates to risk. Formula: Property value / Income.
Non-Institutional Lenders
Mortgage Companies/Mortgage Bankers; Private Individuals; Mortgage Brokers
Warehousing
Bundling up of loans. Mortgage companies will warehouse their loans and sell on the 2nd Market.
Promissory Note
A.k.a. loan documents. The PROMISE to pay and the evidence of the DEBT. A negotiable instrument.
