Chapter 1 - Real Property Flashcards
Air Rights
The rights in real property to the reasonable use of the air space above the surface of the land.
Bundle of Rights
All of the legal rights incident to ownership of property including rights of use (control & exclusion), possession, enjoyment, encumbering (having a lien placed against the property for payment of debt), and disposition. (residential real estate owners typically get the whole bundle of rights, but this may not be true for commercial real estate)
Land
The materials of the earth, whatever may be the ingredients of which it is composed, whether soil, rock, or other substance, and includes free or unoccupied space for an indefinite distance upwards as well as downwards.
Mineral Rights
A landowner’s right to receive a portion of the profits of any minerals that are extracted from the land
Real Estate
Land + anything permanently attached to the land (i.e. man-made improvements such as a separate garage, barn, out-house, smoke house, fence, etc.)
Real Property
Land + anything permanently attached to the land + appurtenances + bundle of rights
Fixture
Appurtenances attached to the land or improvements, which usually cannot be removed without significant damage and agreement as they become real property, i.e., plumbing fixtures, cabinets, cable wiring, etc.
MARIA - Method of attachment, adaptability, relationship of the parties, intent of the seller, agreement
Chattel
Movable/immovable personal property, such as a mobile home, trailer, or wagon (home sale must specify whether or not items like this are included or excluded)
Surface Rights
Rights to the surface, exterior or upper boundary of a parcel of land, including access to water and other substances
Sub-surface rights
Rights to the area below the earth’s surface, such as oil and mineral rights
Emblements
crops and other annual plantings considered to be personal property of the cultivator
Personal Property
Any property which is not considered real property, also called movable property or chattel
Trade Fixture
articles of personal property annexed by a business tenant to real property which are necessary to the carrying on of a trade and are removable by the tenant (i.e., barber chair, mirrors, stylist work stations, etc.)
Mobile Home
structure transportable in one or more sections, designed and equipped to contain not more than 2 dwelling units to be used with or without a foundation system.
Modular
system for construction of dwellings and other improvements to real property through the on-site assembly of component parts (modules) that have been mass produced away from the building site.
Manufactured Home
residential structure with or without permanent foundation that was built off-site and complies with HUD standards.
When is a mobile or manufactured home classified as an improvement (must meet all 3 criteria)?
- Home must be connected to utilities
- Must sit on foundation (i.e., be off its wheels and on support)
- Placed on land owned by the person who also owns the home
* **Taxed as real estate
When is a mobile or manufactured home classified as personal property (if any of the 3 situations are true)?
- Home is on land owned by someone other than the homeowner
- Home must not be connected to utilities
- Home must not sit on foundation
Condominium
an estate in real property wherein there is an undivided interest in common in a portion of real property coupled with a separate interest in space called a unit, the boundaries of which are described on a recorded final map, or condo plan
Cooperative
an apartment building, owned by a corporation and in which tenancy in an apartment unit is obtained by the purchase of shares of stock of the corporation and where the owner of such shares is entitled to occupy a specific apartment in the building.
Time-Share
a form of subdivision of real property into rights to the recurrent, exclusive use or occupancy of a lot, parcel, unit, or segment of real property, on an annual or some other periodic basis, for a specified period of time.
When supply goes down, demand goes ____, and price goes ____
When supply goes down, demand goes up, and price goes up
When supply goes up, demand goes ____, and price goes ____
When supply goes up, demand goes down, and price goes down
Planned Unit Development (PUD)
mixed-use/multi-use building, i.e., grocery store in the bottom floor of an apartment building
One Story Home
ranch style–does not typically include a staircase (one level)
One-and-a-half story Home
Similar to a 2-story home, but distinguishing factors are that the roofline has dormers/gable ends with windows embedded. The half-story is typically a loft area between the first floor ceiling and the roof
Split-level Home
staggered layer home–when entering, you will often be standing at the base of 2 staircases, 1 that goes up to a living space and 1 that goes down to a basement area.
Foundation
The part of the structure, typically below grade, upon which all other construction is built–forms a structure’s base, holding up the house acting as a barrier against moisture, as an insulator, and it helps repel insect infestations.
Footing
Concrete set in the soil (foundation bed) that support the foundation of the house. Essential for weight distribution
Slab-on-Grade Construction
A structure which does not include a basement. The first floor is made up of a concrete slab, which lays on the ground and supported by foundation walls.
Foundation Wall
form a base that generally creates a basement, resting on the footings and commonly made from poured concrete.
Pier
Large columns with pier caps that the building rests on–used to elevate a home above floodplains to reduce flood and severe weather damage to the structure
Platform Balloon framing system
uses an abundance of lightweight lumber over 2 stories
Platform Framing
most popular system because it often uses less timber and reduces labor costs. Independent walls are typically layered floor by floor.
Post & Beam Framing
Uses heavy timbers to bear the roof and floor loads. The timbers are often thicker and longer than those used in platform and balloon framing. Both employ long-standing joinery methods and minimizes the use of nails.
Headers
Local horizontal structural elements used in wood framing to span doors and windows.
Studs
Vertical framing members found in wall construction. Typically placed 12”, 16” or 24” on center
Beam
A horizontal structural member that supports a floor. Beams are typically wood, cold formed metal framing or steel
Sill Plate
The bottom member of wood frame stud wall
Joist
Horizontal timbers, beams or bars supporting a floor.
Girder
A primary horizontal structural element. Typically a deep beam in which smaller joists or beams frame into.
Bridging
technique used to keep floor joists in static position–in many cases, they are small wooden boars that crisscross between floor joists to keep the joists from shifting.
Subfloor
layer of material attached directly to the floor joists–plywood or particleboard is usually used
Top Plate
runs horizontally across the top of the studs to hold them in place
Sole plate
lumber that the studs rest on
Soffit
The underside of a roof overhang
Eave
The section of the roof that overhangs the walls of a house
Flashing
Sheet metal used at wall and roof junctions and around chimneys to prevent water entry
Pitch
Also known as the slope. Typically used in describing the slope of a roof, driveway, sidewalk, etc.
Rafter
The structural member or beam that supports the roof. It spans from the exterior wall to the ridge board of the peak of the roof
Gable Roof
2 sloping sides that meet at a peak called a ridge (when a child draws a house, it’s usually a house with a gable)
Hip Roof
typically slopes in all 4 directions
Shed Roof
Slopes in only 1 direction
Flat Roof
not always entirely flat, instead it has a 10 degree slope also called the pitch
Mansard
type of hip roof, the difference is that each slope is broken in 2 to maximize living space
Gambrel
type of gabled roof with the slope interrupted partway
Ridge Board
inserted at peak of a sloped roof to connect the rafters, they are considered non-structural elements because gravity does the work
Sheathing
Panels that cover the exterior wall. Typically made of plywood or exterior grade gypsum board.
Sliding Window
built on a track that allows homeowners to slide windows up and down or horizontally
Swinging Window
AKA casement window–you swing the sash open with a cranking mechanism
Fixed Window
Cannot open or close a fixed window–(1) Fixed picture windows usually don’t have glazing bars to detract from the view, (2) Fixed bay windows have sashes that protrude on each side of the window, & (3) Fixed bow window is a curved window
Mullion
part of the window construction that holds the window panes in place
Muntin
decorative slat that divides panes of glass on a window
Straight-Line Depreciation
A method of depreciation under which improvements are depreciated at a constant rate throughout the estimated useful life of the improvement.
Tax Depreciation
identifies the amount of decrease in the value of a property over its useful life. A homeowner can write-off the depreciation of their property as an expense on their taxes
What is the useful life for residential properties according to the IRS for tax purposes?
27.5 years
What is the useful life for commercial properties according to the IRS for tax purposes?
39 years
Property Insurance
provides protection against most risks to property, such as fire, theft, and some weather damage. Floor and water damage are typically not covered and must be added on.
Cash Flow
amount of money left in investor’s pocket each month after all expenses.
Leverage
borrowed capital (i.e., from investors) or debt (i.e., mortgage) to increase potential for returns
Capital Gain
At resale of a capital item, the amount by which the net sale proceeds exceed the adjusted cost basis (book value). Used for income tax computations. Gains are called short or long based upon the length of the holding period after acquisition. Usually taxed at lower rates than ordinary income.
Cost Basis
amount property is worth for tax purposes (i.e., purchase price + fees (i.e., settlement fees & insurance))
