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Real Estate Broker > Chapter 5: General Business Law > Flashcards

Chapter 5: General Business Law Flashcards

0
Q

The Uniform Commercial Code (UCC)

A

A state statute enacted by the State of New York and, in basically the same form, by most other states, to simplify, clarify, and modernize the laws governing commercial transactions.

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1
Q

Case Law

A

Interpretation by the court regarding laws.

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2
Q

Negotiable Instrument

A

An unconditional promise or order to pay a fixed amount with or without interest. It must satisfy the requirements of negotiability defined in UCC Article 3. These are a substitute for money.

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3
Q

Draft

A

A three-party negotiable instrument. The person who signs this and is identified as the one ordering payment is known as the drawer. The person ordered in this to make payment is known as the drawee. The drawee pays a third party- the payee, instead of the drawer.

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4
Q

Check

A

This is a type of draft (also three-party) and is the most familiar negotiable instrument. The drawer is the signer of the check, the drawee is the financial institution and the payee is the individual or entity to whom it is made out.

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5
Q

Promissory Note

A

Expresses a promise to pay. The individual who makes the promise to pay is known as the maker or borrower. The person or entity to whom the promise is made is known as the payee or the lender. This is a two-party negotiable instrument.

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6
Q

Certificate of Deposit (CD)

A

Another type of note containing an acknowledgement by a bank that a sum of money has been received. The bank promises to repay the money together with interest at an agreed-upon rate when this matures. This is a two-party negotiable instrument.

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7
Q

Requirements for Negotiability Regarding a Draft, Note or Check

A

It must be in writing
It must be signed
It must contain a promise or order to pay
It must be unconditional, if it is conditional is is not a negotiable instrument.
It must state a specific or fixed sum of money
It must be payable on demand or at a definite time.

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8
Q

Endorsement

A

A signature by other than a maker, drawee or an acceptor this is place on an instrument to negotiate (or transfer) it to another person.

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9
Q

Blank Endorsement

A

When the signature of a check appears alone.

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10
Q

Special Endorsement

A

The instrument names an individual to whom the instrument is to be paid.

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11
Q

Holder

A

A person who is in possession of an instrument that is drawn, issued or endorsed to him.

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12
Q

Holder in Due Course (HDC)

A

A holder who takes a negotiable instrument for value, in good faith, and without notice that it is defective or overdue. To qualify for this, the transferee must meet UCC requirements as follows:

  • Taken for “value.” The holder must give something of value for the instrument to qualify.
  • Taken in “good faith.”
  • Without notice of defect.
  • Without any apparent evidence of forgery, alterations or irregularity.
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13
Q

Assignment

A

When a nonnegotiable contract is transferred. This is the transfer of rights under a contract.

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14
Q

Business Organizations

A

Can be structured including sole proprietorships, partnerships, corporations, limited liability companies, limited liability partnerships and joint ventures. Business organizations can receive, hold and convey title to real property in the same ways as individuals.

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15
Q

Sole Proprietorship

A

This form of business organization is owned by one individual and uses a name other than the owner’s personal name.

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16
Q

Partnership

A

A form of business organization that is owned by two or more parties and created by contract between the partners.

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17
Q

General Partnership

A

The partners are personally liable for partnership debts exceeding partnership assets. Partners are jointly (together) and severally (separately) liable for these debts.

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18
Q

Limited Partnership

A

Consists of one or more general partners who are jointly and severally liable and one or more silent, or limited, partners who contribute money or other assets of value to the extent of their ownership interest. Limited partners are not liable.

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19
Q

Corporation

A

A taxable legal entity recognized by the law with tax rates separate from individual income taxes.

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20
Q

Profit Making Organizations

A

Created to do business and distribute profits to shareholders in the form of dividends.

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21
Q

Nonprofit Organizations

A

Includes diverse organizations such as charities and colleges.

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22
Q

C Corporations

A

Corporations that are not subchapter S. Must pay corporate income tax and the shareholders are also taxed on their dividends that are profits. A double tax is paid.

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23
Q

S Corporations

A

A type of corporation that is permitted to function as a corporation but taxed as a partnership. It does not pay corporate income tax. The corporation franchise tax is 6.85 percent for income of $290k or less and 7.5 percent for over $390,000

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24
Q

LLC (Limited Liability Company)

A

May be formed by one or more persons. Owners (members) are not personally liable for the obligations of this, but is taxed as a partnership. This form of business combines the most favorable attributes of both partnerships.

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25
Q

LLP (Limited Liability Partnership)

A

Typically formed by professionals such as attorneys and accountants, does not have to have a general partner. All partners are not liable for the obligations of the partnership and may participate in management. This is taxed as a partnership.

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26
Q

Joint Venture

A

An organization formed by two or more parties for the purpose of investing in real estate or any other type of investment.

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27
Q

Security

A

Purchase of this earns the investor the right to participate in the profits of a company. These profits are realized through dividends paid to the investor and also by the sale of this after they have appreciated in value. The most common type of this is stocks and bonds.

28
Q

Real Estate Investment Trusts (REITs)

A

Created in 1967, the beneficiaries of the trust were not taxed doubly on trust income. The trust can earn income from real estate investments without paying trust income tax.

29
Q

Civil Court

A

Decides civil matters involving amounts of up to $25,000 including small claims and housing.

30
Q

Substantive Law

A

A body of law which addresses every day behavior.

31
Q

Procedural Law

A

Addresses the rules as to how a lawsuit proceeds through the court system and also deal with the functions of administrative agencies.

32
Q

Statutory Laws

A

Include all laws that are created by acts of the legislature in contract to constitutional law or laws generated by court decisions (case law). Criminal and contract law included many of these laws.

33
Q

Agency Law

A

Embodies the laws pertaining to the relationship between parties to an agreement where one party in the agency relationship (agent) may act on behalf of another (principal) and bind the principal by words and actions.

34
Q

Real Property Law

A

Deals with the acquisition, transfer and possession of an interest in real estate and the rights attached to it.

35
Q

Administrative Law

A

Addresses administrative directives in the form of rules regulations and orders to carry out regulatory powers. Federal, state, and local government agencies rely on these.

36
Q

Commercial Law

A

Embodies statutes that are applicable to the rights and relations of persons engaged in commerce or trade carried on for profit. An example is UCC (Uniform Commercial Code).

37
Q

Constitutional Law

A

Covers the role of the Supreme Court and its authority as it relates to the president, congress and the states.

38
Q

Contract Law

A

Addresses the promises made by different parties to one another. It defines the elements of contract validity and then examines remedies should there be a breach of contract. Real estate agents are prohibited from drawing contracts and may only use prescribed forms.

39
Q

Corporation Law

A

Includes federal and state statutes and regulations that govern the formation and operation of corporations. These laws include the Internal Revenue Code and the New York General Business Law.

40
Q

Trusts and Wills

A

Address the succession to the ownership of an estate by inheritance or any act of law. A trustee is one who holds title for the benefit of another called a beneficiary.

41
Q

Civil Law

A

Relates to the public. It addresses the private rights of citizens to sue and seek remedies through the courts for a wrongful action against them. Ex: If an individual sues another for breach of contract.

42
Q

Criminal Law

A

Declares what conduct is criminal and prescribes the punishment to be imposed for such conduct. The purpose is to create sanctions as as to prevent harm to the public.

43
Q

Personal Property Law

A

Also known as chattel or personalty, is anything that is the subject of ownership other than real property. Tangible items of this is known as goods.

44
Q

Partnership Law

A

Addresses the form of business organization composed of two or more individuals.

45
Q

Torts

A

Deals with civil lawsuits; namely wrongful acts that are committed either intentionally or unintentionally. Intentional acts are known as intentional (this). Ex: Car accidents are a type of negligence known as unintentional (this). Assault and battery are known as intentional (this) that are also crimes.

46
Q

Due Process of Law

A

This is inherent in the rights that are part of the American system of justice. It lies at the foundation of the legal system. This mandates that anyone involved in a legal matter is entitled to have a legal proceeding according to the established rules and regulations. It implies the right of the person affected to be present in any court proceeding affecting his life, liberty or property and to have the opportunity to defend himself.

47
Q

Civil Procedure

A

Defines the exact steps that must be followed in the development of a lawsuit.

48
Q

Litigation

A

Another name for a lawsuit. It may involve a contest in court for the purpose of enforcing a law or seeking a legal remedy.

49
Q

Mediation

A

Involves the use of a neutral third party to discuss and attempt to resolve a dispute. This person makes suggestions to both sides and role is of persuasion.

50
Q

Arbitration

A

A form of resolving a dispute between two or more opposing parties by a neutral third party. The neutral third party makes an award after hearing both sides. Non-binding (this) means that the (this) decision is a recommendation and need not be complied with.

51
Q

Domestic Relations Law

A

The statute that governs how martial property is divided should a couple divorce in New York. In community property states, all property acquired during the marriage is divided equally should there be a divorce. New York is not a community property state, so property is not necessarily divided evenly.

52
Q

Marital Property

A

Property acquired during the marriage and is distributed equitably taking into account numerous factors including the number of years married, contributions of each of the partners, possible future circumstances, and projected tax consequences.

53
Q

Chapter 7

A

Liquidation Bankruptcy - The debtor’s nonexempt property is sold for cash. The cash is distributed pro rate to the creditors, and any unpaid debts are discharged.

54
Q

Trustee

A

Often lawyers or accountants who become the legal representative of the bankrupt debtor’s estate. (This) must be appointed in a Chapter 7 filing.

55
Q

Automatic Stay

A

The filing of a voluntary or involuntary bankruptcy petition suspends certain actions of creditors against the debtor or the debtor’s property.

56
Q

Discharged

A

Debts that are wiped out through the bankruptcy and are therefore no longer a debt of the bankrupt individual or entity.

57
Q

Chapter 11

A

Reorganization Bankruptcy provides a method for reorganizing the debtor’s financial affairs under the supervision of the bankruptcy court.

58
Q

Chapter 13

A

Consumer debt adjustment is a rehabilitation form of bankruptcy for individuals. Permits the courts to supervise the debtor’s plans for the payments of unpaid debts by installments.

59
Q

Gift Tax

A

If a person receives money or property from another. Exemptions include the annual exclusion of $12,000, tuition or medical expenses for another, gifts to a spouse, gifts to a political organization, gifts to a charity.

60
Q

Estate Tax

A

Money and property owned upon death. Tax exemptions were $1 million in 2011.

61
Q

Statute of Limitations

A

Imposes time limits within which litigation may be commenced. The time limit is 6 years.

62
Q

Doctrine of Laches

A

Can bar an action even though the specified period has not yet run out if there has been any of the following:

  • Unreasonable delay
  • Changes of position
  • Prejudice
63
Q

Statute of Frauds

A

The contracts involving the creation of an interest in real property or the conveyance of an interest in real property must be written to the enforceable. This requires that real estate contracts be written and contain all of the essential elements for a valid contract. Oral testimony is not sufficient.

64
Q

Mechanic’s Lien

A

A specific lien filed by a person who provides labor to a property.

65
Q

Materialmen’s Lien

A

A specific lien filed by a supplier of products required in the construction or improvement of a building.

66
Q

Lis Pendens

A

Pending litigation.

67
Q

Notice of Pendency

A

A legal notice that a lawsuit has been filed concerning title to specific property. Filed in the office of the county clerk.

Real Estate Broker (22 decks)

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