CA Real Estate Qs Flashcards
What is the purpose of a deed?
A deed is a legal document that transfers ownership of real property from one party to another.
What is a lien?
A lien is a legal right or interest that a lender has in the debtor’s property, granted until the debt obligation is satisfied.
What is an encumbrance?
An encumbrance is any claim, lien, charge, or liability attached to and binding on real property that may affect the property owner’s rights.
What does “fee simple” mean in real estate?
Fee simple refers to the most complete form of property ownership, which is not limited in duration and includes all rights to the property.
What is an easement?
An easement is a legal right to use another person’s land for a specific purpose.
What is the difference between a general lien and a specific lien?
A general lien affects all of a debtor’s property, while a specific lien applies only to a particular piece of property.
What is a mortgage?
A mortgage is a loan secured by real estate in which the borrower pledges the property as collateral.
What does “amortization” refer to in a mortgage?
Amortization refers to the process of paying off a loan through regular payments of principal and interest over a set period.
What is title insurance?
Title insurance protects against loss or damage caused by defects in the title to a property.
What is a real estate appraisal?
An appraisal is an assessment of the value of a property conducted by a licensed appraiser.
What is the role of a real estate broker?
A real estate broker represents buyers or sellers in real estate transactions and is typically licensed to handle complex transactions and manage agents.
What is a lease?
A lease is a contract that allows a tenant to use and occupy a property for a specified period in exchange for rent.
What is an easement appurtenant?
An easement appurtenant benefits a specific piece of land (dominant estate) and runs with the land, meaning it remains with the property when sold.
What is an easement in gross?
An easement in gross benefits a person or entity rather than a piece of land and does not transfer with the property.
What is a variance in zoning?
A variance is an authorized deviation from zoning laws or regulations to allow a property owner to use their land in a way not normally permitted.
What is a deed of trust?
A deed of trust is a document that secures a loan by transferring the legal title of the property to a trustee, who holds it as collateral for the loan.
What does “encroachment” mean?
Encroachment refers to the intrusion of a structure or improvement onto another person’s property.
What is the definition of “market value”?
Market value is the estimated amount for which a property should sell on the open market, based on comparable sales and other factors.
What is the purpose of a property disclosure?
A property disclosure is a statement provided by the seller that reveals known issues or defects with the property.
What is the difference between a fixed-rate mortgage and an adjustable-rate mortgage?
A fixed-rate mortgage has a constant interest rate throughout the life of the loan, while an adjustable-rate mortgage has an interest rate that can change periodically based on market conditions.
What is a quitclaim deed?
A quitclaim deed transfers any interest the grantor may have in the property without making any guarantees about the title.
What is a warranty deed?
A warranty deed provides a guarantee of clear title and protection against future claims to the property.
What is a tax lien?
A tax lien is a claim placed on a property by a government for unpaid taxes, which must be paid before the property can be sold or refinanced.
What is the role of an escrow account?
An escrow account holds funds or documents by a neutral third party until specific conditions of a transaction are met, such as completing a real estate sale.
What is a “right of first refusal”?
A right of first refusal gives an individual or entity the opportunity to purchase or lease a property before the owner accepts another offer.
What is a community property?
Community property is property acquired during marriage that is jointly owned by both spouses and is divided equally upon divorce or death.
What is a tenancy in common?
Tenancy in common is a form of co-ownership where each owner has an undivided interest in the property, which can be inherited by heirs.
What is joint tenancy?
Joint tenancy is a form of co-ownership where each owner has an equal share and the right of survivorship, meaning the surviving owner(s) inherit the deceased owner’s share.
What is a deed restriction?
A deed restriction is a provision in a property deed that limits the way the property can be used or developed.
What is a “subdivision” in real estate?
A subdivision is the process of dividing a larger parcel of land into smaller lots for development or sale.
What is an “assessed value”?
The assessed value is the value of a property as determined by the local tax assessor for the purpose of calculating property taxes.
What is a “homestead exemption”?
A homestead exemption is a legal provision that provides tax relief to homeowners by exempting a portion of the home’s value from property taxes.
What is a “gross lease”?
A gross lease is a lease agreement where the landlord covers all property expenses, including taxes, insurance, and maintenance.
What is a “net lease”?
A net lease is a lease agreement where the tenant pays not only rent but also property taxes, insurance, and maintenance costs.
What is a “triple net lease”?
A triple net lease is a lease where the tenant pays for property taxes, insurance, and maintenance in addition to the base rent.
What is a “master lease”?
A master lease is a lease agreement where the tenant rents the entire property and has the right to sublease or lease out portions of the property to others.
What is an “exclusive right to sell” listing?
An exclusive right to sell listing is an agreement where the real estate agent is entitled to a commission if the property sells, regardless of who finds the buyer.
What is an “open listing”?
An open listing is an agreement where the property owner can work with multiple agents and only pays a commission to the agent who finds a buyer.
What is a “security deposit”?
A security deposit is an amount of money paid by a tenant to a landlord as a guarantee against damage or unpaid rent.
What is a “sublease”?
A sublease is a lease arrangement where the original tenant leases the property to another tenant while retaining some rights and obligations under the original lease.
What is a “right of survivorship”?
The right of survivorship means that upon the death of one co-owner, their interest in the property automatically passes to the surviving co-owners.
What is a “contract for deed”?
A contract for deed is a type of seller financing where the buyer makes payments directly to the seller until the purchase price is paid in full, at which point the title is transferred.
What is “earnest money”?
Earnest money is a deposit made by a buyer to demonstrate their commitment to purchasing the property.
What is a “purchase agreement”?
A purchase agreement is a legally binding contract between a buyer and seller outlining the terms and conditions of the sale of a property.
What is “depreciation”?
Depreciation is the reduction in value of a property over time due to wear and tear, which can be deducted as an expense for tax purposes.
What is “capital improvements”?
Capital improvements are major renovations or upgrades made to a property that increase its value or extend its useful life.
What is “gross rent multiplier”?
The gross rent multiplier is a metric used to evaluate rental properties, calculated by dividing the property’s purchase price by its gross rental income.
What is “net operating income”?
Net operating income is the total income generated from a property minus operating expenses, excluding financing costs and taxes.
What are “operating expenses”?
Operating expenses are costs associated with running and maintaining a property, including utilities, maintenance, and property management fees.
What is a “subdivision survey”?
A subdivision survey is a type of survey that includes a topographic survey of a parcel of land which will be divided into smaller tracts, lots, or estate divisions.
What is the primary purpose of the California Department of Real Estate (DRE)?
The primary purpose of the California Department of Real Estate (DRE) is to protect consumers by regulating the real estate industry through licensing, education, and enforcement of laws and regulations.
What is a “lien” in real estate?
A lien is a legal claim or right against a property, typically used as security for the repayment of a debt. If the debt is not repaid, the lienholder may have the right to sell the property to recover the owed amount.
What is “tenancy in common”?
Tenancy in common is a form of co-ownership where each owner holds an undivided interest in the property. Owners may have unequal shares, and there is no right of survivorship, meaning the share of a deceased owner passes to their heirs or beneficiaries.
What is a “dual agency” in real estate transactions?
A dual agency occurs when a real estate agent or brokerage represents both the buyer and the seller in the same transaction. This is legal in California if both parties are fully informed and consent to the arrangement.
What is the difference between “real property” and “personal property”?
Real property refers to land and anything attached to it, such as buildings or trees, while personal property consists of movable items like furniture, cars, or electronics. Real property is immovable, whereas personal property is not.
What is “eminent domain”?
Eminent domain is the government’s power to take private property for public use, provided the property owner is given just compensation. This is often used for projects such as highways, parks, or other public infrastructure.
What does the term “cloud on title” mean?
A cloud on title refers to any claim, lien, or encumbrance that affects the ownership or transferability of the property. A cloud on title must be resolved before a property can be sold with clear title.
What is the “Statute of Frauds” in real estate?
The Statute of Frauds is a legal doctrine that requires certain types of contracts, including real estate contracts, to be in writing to be enforceable. This includes contracts for the sale or lease of property for more than one year.
What is “equitable title”?
Equitable title refers to the interest held by a buyer under a real estate sales contract who has not yet received legal title to the property. The buyer has the right to obtain full ownership once the terms of the contract are fulfilled.
What is the “right of survivorship” in real estate?
The right of survivorship is a feature of joint tenancy, where upon the death of one co-owner, the deceased’s interest in the property automatically passes to the surviving co-owner(s), bypassing the probate process.
What is a “quitclaim deed”?
A quitclaim deed is a type of deed that transfers any ownership interest the grantor has in a property without providing any warranties or guarantees about the title’s validity. It is often used in transfers between family members or to clear up title issues.
What is a “grant deed”?
A grant deed is a legal document used to transfer ownership of real property from one person to another. The grantor guarantees that the property has not been sold to someone else and that the property is free from undisclosed encumbrances.
What is “escrow” in a real estate transaction?
Escrow is a neutral third-party process used to hold funds, documents, and instructions between the buyer and seller during a real estate transaction until all conditions are met, ensuring the safe transfer of property and money.
What is a “restrictive covenant”?
A restrictive covenant is a legal obligation imposed on a property owner through a deed or contract, restricting the use or development of the property. Common examples include limitations on building height or property use.
What is the difference between a “promissory note” and a “mortgage”?
A promissory note is a written promise to repay a loan, while a mortgage is the security instrument that gives the lender the right to foreclose on the property if the borrower defaults on the loan.
What does “constructive notice” mean in real estate?
Constructive notice refers to the legal presumption that a person has knowledge of a fact because it is recorded in the public record, such as a deed or lien, even if they do not have actual knowledge of it.
What is a “balloon payment”?
A balloon payment is a large, lump-sum payment due at the end of a loan term. It is often seen in loans that require smaller, periodic payments with a large final payment to satisfy the remaining balance.
What is the “bundle of rights” in real estate?
The bundle of rights refers to the various legal rights associated with property ownership, including the right to possess, use, transfer, exclude others from, and encumber the property.
What is “adverse possession”?
Adverse possession is a legal doctrine that allows a person to claim ownership of land under certain conditions, such as continuous, open, and hostile possession of the property for a statutory period, typically five years in California.
What is a “deed of trust”?
A deed of trust is a type of security instrument in which the borrower transfers legal title to a trustee to hold as security for the loan. If the borrower defaults, the trustee may foreclose on the property.
What is the difference between “market value” and “market price”?
Market value is the estimated amount a property would sell for under normal conditions, while market price is the actual price at which a property is sold, which may differ from its market value.
What is “zoning”?
Zoning refers to government-imposed regulations that control how land in specific areas can be used, such as for residential, commercial, industrial, or agricultural purposes.
What is the “Doctrine of Prior Appropriation”?
The Doctrine of Prior Appropriation is a water rights doctrine stating that water rights are granted to the first user to take water from a source for beneficial use. This doctrine is common in states with limited water resources, like California.
What is “tenancy by the entirety”?
Tenancy by the entirety is a form of co-ownership available only to married couples, where both spouses hold an equal, undivided interest in the property with the right of survivorship. It is not recognized in California, which uses community property law.
What is a “plat map”?
A plat map is a detailed survey map that shows the divisions of land into lots, streets, and public areas. It is used to create a subdivision and is filed with the county to become part of the public record.
What is the “Equal Credit Opportunity Act” (ECOA)?
The Equal Credit Opportunity Act (ECOA) is a federal law that prohibits lenders from discriminating against credit applicants based on race, color, religion, national origin, sex, marital status, age, or because they receive public assistance.
What is the “Fair Housing Act”?
The Fair Housing Act is a federal law that prohibits discrimination in housing-related transactions based on race, color, religion, sex, disability, familial status, or national origin.
What is a “variance” in zoning?
A variance is an exception granted by a local zoning authority that allows property owners to use their land in a way that deviates from current zoning regulations, typically due to unique circumstances or hardships.
What is “steering” in real estate?
Steering is the illegal practice of guiding prospective homebuyers or renters to or away from certain neighborhoods based on race, ethnicity, or other protected characteristics, in violation of the Fair Housing Act.
What is “blockbusting” in real estate?
Blockbusting is the illegal practice of inducing property owners to sell their homes at a loss by suggesting that people of a particular race, religion, or ethnicity are moving into the neighborhood, causing property values to drop.
What is “joint tenancy”?
Joint tenancy is a form of property co-ownership where two or more people hold equal shares and have the right of survivorship. Upon the death of one owner, their share automatically passes to the surviving co-owners.
What is a “life estate”?
A life estate is a form of property ownership where the individual, called the life tenant, has the right to use and benefit from the property for the duration of their life. After their death, the property passes to a remainderman or reverts to the grantor.
What does “title insurance” cover?
Title insurance protects the property buyer and lender from losses due to defects in the title, such as liens, encumbrances, or claims of ownership that were undiscovered at the time of sale.
What is “functional obsolescence”?
Functional obsolescence refers to a reduction in a property’s value due to outdated design or features that are no longer useful or desirable, such as a house with only one bathroom in a neighborhood where multiple bathrooms are standard.
What is “economic obsolescence”?
Economic obsolescence is the loss of property value due to external factors, such as changes in the surrounding area, economic downturns, or new zoning regulations, that the property owner cannot control.
What is a “short sale” in real estate?
A short sale occurs when a property is sold for less than the outstanding balance on the mortgage, with the lender agreeing to accept less than what is owed. It typically happens when the homeowner is unable to continue making mortgage payments.
What is “real estate depreciation”?
Real estate depreciation is the decrease in the value of a property over time due to wear and tear, age, or obsolescence. It is also used as a tax deduction for investment properties.
What is “capitalization rate”?
The capitalization rate (cap rate) is the rate of return on a real estate investment property based on the income the property is expected to generate. It is calculated by dividing the property’s net operating income by its current market value.
What is a “reverse mortgage”?
A reverse mortgage allows homeowners aged 62 or older to convert part of the equity in their home into cash without having to sell the home. The loan is repaid when the borrower dies, sells the home, or no longer lives in the home.
What is “private mortgage insurance” (PMI)?
Private mortgage insurance (PMI) is insurance that lenders require borrowers to purchase if they are making a down payment of less than 20% of the property’s purchase price. It protects the lender in case of borrower default.
What is the purpose of a “home inspection”?
A home inspection is conducted to evaluate the condition of a property, including its structural integrity, systems, and appliances. The inspection helps buyers identify any potential problems or repairs needed before finalizing a purchase.
What is “dual agency disclosure”?
Dual agency disclosure is the legal requirement that a real estate agent inform both the buyer and seller when they are representing both parties in a transaction. Both parties must consent to the arrangement.
What is a “net listing”?
A net listing is a type of listing agreement where the seller sets a minimum acceptable price, and the broker receives any amount above that price as their commission. This type of listing is illegal in many states due to potential conflicts of interest.
What is “leasehold estate”?
A leasehold estate is a tenant’s right to occupy and use a property for a specific period as defined in a lease agreement. The tenant does not own the property but has the right to use it under the terms of the lease.
What is the “Truth in Lending Act” (TILA)?
The Truth in Lending Act (TILA) is a federal law designed to protect consumers in credit transactions by requiring clear disclosure of key loan terms and costs, including the annual percentage rate (APR) and total finance charges.
What is the “Real Estate Settlement Procedures Act” (RESPA)?
RESPA is a federal law that requires lenders to disclose certain information about the real estate settlement process, including the estimated costs of closing, and prohibits kickbacks and unearned fees in real estate transactions.
