Chapter 1 - Basic Real Estate Concepts Flashcards
Appurtenance
Runs with the Land
Bill of Sale
How title is conveyed for personal property (Chattel)
Chattel
Personal Property
Deed
How title or ownership is transferred for real property
Hereditaments
Anything capable of being inherited. Includes everything that defines Land, and everything in the term tenements that is capable of being inherited.
Highest and Best Use
The highest possible ‘present value’ of land resulting from the intelligent use of capital, labor, and other resources to improve the land and it’s productivity.
Immobility
A physical characteristic of land, it cannot be relocated. The primary distinguishing feature between land and personal property. Reason why real estate market is a local market.
Indestructibility
A physical characteristic of land. It is a pemement commodity and cannot be destroyed. It can be altered.
Land Use Controls
Public (city planning and zoning, state and regional planning, building codes, suitability for occupancy requirements and environmental control laws.
Private (Protective or restrictive covenants, restrictions in deeds)
Land
Three components:
- Surface
- Subsurface
- Air space
Nonhomogeneity
Uniqueness (No two parcels are identical)
Specific Performance
Arises from nonhomogeneity, if a seller contracts to sell real property, they cannot offer money as a substitute for this duty to sell.
Personal Property (Chattel)
Anything that is not Real Property
Real Estate
The combination of land, improvements and right and privileges, ownership conveyed by deed.
Scarcity
An economic characteristic of land. Availability, fixed supply base, no additional supply being created.
Situs
Location, Location, Location
Tenements
Ownership interest in anything immobile and considered part of real property. “Structures attached to the land”
Physical Characteristics of Real Estate
Immobility
Indestructibility
Nonhomogenity
Economic Characteristics of Real Estate
Scarcity
Permanence of investment
Situs (location, socio-economic)
Real Estate Investment Objectives
Make a profit using the following three things:
- appreciation
- positive cash flow
- tax advantages
Realtor
Registered trademark of the National Association of Realtors. a Licensee who is also a member fo the national, state and local associations.
Code of Ethics
NAR created this is 1913 before there was licensing law. Parallels exist between the two.
Brokerage
Bringing together buyers and sellers/landlords and tenants for the temporary or permanent transfer of an interest in real property
Free Market
Governed by the law of supply and demand.
Supply and demand
Supply is the amount of something available for purchase, demand is the amount of something people are willing to purchase.
Special Characteristics of the Real Estate Marker
Must be local because of physical characteristics of
- immobility
- nonhomogeneity
Real Estate Cycle
Absorption of Excess Supply Low Vacancies Increased rent & Prices Acceleration of New Construction Oversupply High vacancies Declining Prices, Rent and Construction.
Broker
North Carolina is an All Broker state:
- Provision Broker (passed exam)
- Broker (requires 90 hours post-licensing)
- Broker in charge (2 years full time Broker experience)
Ad Valorem
Real Property Taxes “According to Value”
Machinery Act
in North Carolina, the assessed value of the property must be set at 100% of the market value. Reappraisal to happen every 8 years (octennial), horizontal adjustment can happen every 4 years.
Horizontal Adjustment
Reappraisal that can happen between octennial assessment every 4 years.
North Carolina Tax Rate
Per $100 of assessed value. (Move the decimal 2 spots to the left)
Mill Rate or Mileage
Tax rate based on 1/10th of $0.01. (Move the decimal 3 spots to the left)
Appraisal
Process of determining market value
Assessment
Determination of taxable value. (Machinery Act = reappraised every 8 years or horizontal adjustment every 4)
Timetable for Listing and Tax Collection
January 1 - Tax lien attaches to property
January 31 - taxable property listed
July 1 - annual tax rate set
September 1 - tax bill due and payable
January 5th (following year) - last day to pay w/o penalties
Property Tax Lien
Ad valorem. Lien takes first priority, exception to the pure race system, collector has already won the race to the courthouse/tax lien doesn’t need to be recorded.
Special Assessment Liens
Tax levied against properties for County, City or Town special projects such as street paving, sidewalks or sewer etc. “Front Foot” is the way to determine how much tax is to be paid, how many feet that border the improvement
