Chapter 13 - Taking Title to Real Property and Close of Escrow Flashcards
Common closing costs include:
loan origination fee discount points appraisal fee credit report cost tax service fee private mortgage insurance (PMI) mortgage insurance premium (MIP) Veterans Administration Funding Fee County Transfer Tax City Transfer Tax Recording Fees Home Warranty Policy Commissions Tax and Insurance Impounds Wire Transfer fee Notary Fee Prepaid interest Other fees including: drawing fee prepayment penalty beneficiary demand fee deed of reconveyance/ reconveyance deed prorated rents homeowner's transfer fee flood certification fee roof certification fee wire fee / courier fee/ federal express fee
Knowing all the closing costs before they are incurred will reduce mistakes made by the agent and eliminate surprises for buyers.
Closing costs
Costs incurred by the buyer and seller in the escrow closing process.
Usually grouped into RECURRING and NON-RECURRING closing costs
Recurring - occurs more than once (property taxes, homeowners insurance)
Non-recurring - occur only once (escrow and title insurance fees)
Loan Origination Fee
Fee lenders charge a borrower to originate a loan.
VA Funding Fee
Fee charged by the Dept of Veteran Affairs (VA) to guarantee a VA loan.
County Transfer Tax
$0.55 per $500 tax charged by county tax assessor to transfer real property in the county.
Charged on new money in the transaction, not loan assumptions.
Prorated Rents
Seller already collected rents for the month.
Close of escrow is in the middle of the month, part of the rents must be paid to the buyer.
Flood Certification
Identifies whether a property is in a flood zone.
Severalty
A person owns a parcel of real property as sole ownership
Tenancy in Common / Tenants in Common (TIC)
Concurrent ownership by two or more persons, each with an undivided interest – but not necessarily equal – and without right of survivorship.
TIC occurs when 2 or more people own a property together and can will each of their portions to their own heirs. They both have possession of the property, own unequal shares with the right possession, and can will their ownership portion to their heirs (no right of survivorship)
Joint Tenancy
Form of concurrent ownerships in which two or more people own a parcel of real property with the unities of time, title, interest, and possession.
Also has a right of survivorship.
What is Tenancy in Partnership and what are the 3 types?
When Two or more people own a parcel of real property as a partnership.
General partnership - partnership that exposes the partners to unlimited liability including other assets besides the partnership property.
Limited partnership - minimizes an investors liability exposure because the investor can only lose what was invested into the property.
Syndicate venture / syndication - may have 2 entities: a general partner and limited partners. When real estate investors come together to buy a parcel of real property
A “Blind pool” syndicate venture is a syndication in which the property investors have no property information and have given the general partner money to find and acquire an appropriate property.
Stock Cooperative
A corporation that owns an entire property.
Each shareholder owns a portion of shares in the corporation and has the right to occupy a specific unit.
Limited Liability Company (LLC)
Shields personal assets from property liability and has a flexible management structure and tax reporting.
Corporation
Separate legal entity that is used as a vehicle to hold real property.
Methods of Acquiring and Transferring Title to Real Property in CA
Transfer - deeds (most common way)
Will - written instrument used to dispose of real and personal property after a person’s death
Succession - when a person dies without a will but has heirs, the law provides for disposition of the person’s property to their heirs
Accession - annexation , accretion
Occupancy - adverse possession , government patent
Joint Venture
Two or more people enter into a real estate venture for one specific property.
Grantor vs Grantee
Grantor - Person who is conveying real property to another person (grantee)
Grantee - Person who is receiving real property from the grantor
Delivery
Grant deeds (& quitclaim deeds) require delivery of the document from the grantor (seller) to the grantee (buyer).
Recordation presumes delivery.
Grant Deed
Convey a parcel of real property and contain 2 implied warranties:
- The grantor has not conveyed the property to someone else (fraud) prior to signing the grant deed
- There are no undisclosed encumbrances on the property.
All types of grant deeds (including trustee’s deed, sheriff’s deed, patent deed, etc) must require:
- Grant deed must be in writing
- Must identify the grantor and grantee
- Must have a granting clause (“I deed.”, “I grant.”, “I convey.” etc.)
- Must adequately describe the property and be singed by the grantor
- Must be delivered by the grantor to the grantee. Although not required, a grant deed is usually recorded in the county where the property is located and presumes delivery.
Lot, Blocks, and Tracts Land Description Method
Utilizes recorded subdivision maps to describe real property.
The Subdivision Map Act requires the mapping of all new subdivisions, so each parcel in the subdivision is delineated and identified.
Lot, Blocks, and Tracts Land Description Method
Utilizes recorded subdivision maps to describe real property.
The Subdivision Map Act requires the mapping of all new subdivisions, so each parcel in the subdivision is delineated and identified.
Government Survey Land Description Method
Used for large parcels of rural acreage
1 Acre equals
43,560 square feet
Commercial Acre
An acre of land less than the amount of land dedicated for public improvements.
Example - sidewalks, alleys, etc
Metes and Bounds
Utilizes measurements of distances (metes) and boundaries (bounds) from a predetermined point, usually a monument.
Quitclaim Deed
Document used to remove a person from the title to real property.
Inter-Spousal Deed
A deed between a husband and wife or two spouse.
What is a will and what are the 2 types of wills?
A written instrument used to dispose of real and personal property after a person’s death.
2 Types–
Holographic - handwritten, dated and signed by the testator’s own handwriting and is not witnessed
Witnessed - usually has 2 witnesses who subscribe their names as witnesses to the will.
Probate
Process of administering a deceased person’s will or estate.
Interstate Succession
When a person dies without a will (however they do have heirs), the law provides for disposition of the person’s property.
3 Types-
Separate property - divided equally between surviving spouse and children
Community property - 1/2 of the property belongs to the surviving spouse, other half is subject to disposition by the decendent’s will. There is no right to survivorship. If there is no will, the decedent’s half of the community property remaining after payment of the debts goes to the surviving spouse.
Escheat - When a person dies without a will and without heirs, the property will escheat to the State of CA.
Accession
The extensionof an owner’s title to real property through either anneatin (man-made) or accretion (naturally occuring).
Avulsion
Rapid tearing away of the land by a stream.
Alluvium
Land that accumulates due to the splash-up action of water.
Adverse Possession
“OUCH” + Taxes = Adverse Possession
A person can acquire land by use that is:
Open and notorious to the owner's intent Uninterrupted (continuous) use of a period of 5 years or more Claim - a claim of right Hostile to owner's title & intent \+ Taxes - pays property taxes
Government Patent
A transfer of ownership from the government to a member of the general public.
Conveys real property from the state or federal government to an individual.
