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Real Estate Exam Summary > Chapter 9a > Flashcards

Chapter 9a Flashcards

1
Q

What does Caveat Emptor means?

A

Let the buyer be aware

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2
Q

What does Actual Notice means?

A

Actual notice is seeing with your own eyes and accepting (or rejecting) what can be seen. This usually shows up when a buyer does not like a cracked driveway or a broken window.

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3
Q

What is Constructive Notice?

A

is public record, such as the abstract of title, any judgments against the property, any liens against the property etc. The title company abstractors usually find these deficiencies and report them to the buyer.

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4
Q

What does a notice Lis Pendens means?

A

It means means “pending litigation.” This tells the buyer and the world that there is a law suit going on with the property and for the buyer to beware. When a deed is recorded it is considered constructive notice.

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5
Q

Who can provide an opinion of title?

A

An attorney can provide an opinion of title stating that the title meets all ownership needs and has no questions in its history. No Sales Associate or Broker may give an opinion of Title – this would be considered as “unauthorized practice of law”.

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6
Q

What is an abstractor?

A

An abstractor is a title searcher hired to produce a chain of title

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7
Q

What two items can quiet a title?

A

Color of Title

a break in the Chain of Title

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8
Q

What does a color of title mean?

A

This means there is a claim against the title- such as Adverse Possession. This must be cleared by the courts before the property can be transferred.

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9
Q

What does a break in the Chain of Title?

A

It means there is an unexplained gap, or break in the ownership of the property. Most of the time, it is a name change on the part of a married woman but whatever the change, it must be corrected by a Suit to Quiet the Title before the property can be transferred.

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10
Q

What is a deed?

A

It is the document (instrument) which transfers ownership from the grantor to the grantee.

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11
Q

What are the basic type of deeds?

A 
The Basic Types of deeds are
General Warranty Deed 
Special Warranty Deed 
Bargain and Sale Deed 
Quit Claim Deed
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12
Q

How many parts is a deed written?

A

The names of the three parts are Premises, Habendum and Testimonium.

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13
Q

What is the deed part named premises?

A

Name of the grantor (correct legal name),
Name of the grantee (correct legal name),
Accurate legal description of the property (legal description on record).

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14
Q

What is the deed part name habendum?

A

Recitation of consideration “ for one dollar and other valuable consideration”,
Granting Clause - words of conveyance- these are the promises of the seller.
Habendum Clause - defines ownership taken by the grantee. The clause which clarifies the purpose of the deed with the phrase “to have and to hold”.
Designations of any limitations of ownership,
Exceptions and Reservations - references to any restrictions and covenants, etc., of a subdivision.

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15
Q

What deed part is the testimonium?

A

Signed wishes of the grantor (Acknowledgement) - where the grantor transfers the property of his own free will.
In Florida, signatures of two witnesses
Delivery by the grantor and acceptance by the grantee.

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16
Q

What are the requirements of a deed?

A
  1. Grantor must have a sound mind and of legal age
  2. There must be consideration
  3. Deed must have proper words of conveyance
  4. There must be a legal description so the surveyor knows what to look for
  5. Seller or grantor must acknowledge or sign the deed
  6. There must be two witnesses to the signing of the lease
  7. Delivery and acceptance of the lease must take place
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17
Q

What is menace?

A

Threat of bodily harm

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18
Q

What is duress?

A

Actual harm

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19
Q

What is undue influence?

A

A nephew encouraging a transaction that is clearly to his benefit leveraging the love of a family member

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20
Q

What are the type of Deeds?

A

General Warranty Deed is the highest and best deed.

Special Warranty Deed This type of deed is usually used by large corporations in business real estate or banks that have foreclosed on a property.

A Bargain and Sale Deed the grantor has ownership of the property - and that’s all. This type of deed is given for properties which have been auctioned.Trustees, fiduciaries and officers of the court often use this deed.

A Quit Claim Deed: says that the grantor “quits” or releases any interest that he may have had in the property, if he had an interest.

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21
Q

What does private home ownership subject by government interference?

A

Police Power
Eminent Domain
Taxation
Escheat

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22
Q

What is known as Police Power?

A

It is the right of the local, state and federal government to make laws for the good of all.

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23
Q

What is taxation?

A

is the right the government has to collect funds to pay for public services.

24
Q

What is known as special assessment taxes?

A

used for a “one-time” fee for something that affects one piece of property at a time. For example, if new curbs and gutters are installed by the city in front of a home, the owner will be assessed a special assessment tax to pay for these improvements

25
Q

What is known as ad valorem?

A

These taxes actual mean “value added tax” but these are always real estate taxes, based on actual value of the home, assessed value of the home, and the year’s tax rate per hundred dollars of assessed value.

26
Q

What is an encumbrance?

A

is anything that burdens or limits the title of a property.

27
Q

What are examples of encumbrances?

A

The following are examples of encumbrances:Deed Restrictions, Easements, Leases, Liens, Encroachments and Licenses

28
Q

Most of deed restrictions are

A

restrictive covenants

29
Q

What are the types of restrictions?

A

Limiting restrictions: State things you can never do (No fences, no dog runs etc.)

Affirmative restrictions: State things you must abide by. (Set back requirements, minimum square footage, front of house must be brick etc.

30
Q

Who can enforce restrictions?

A

Court of law

31
Q

Who can bring an action asking for enforcement?

A

Anyone who is under the same restrictions who feels there has been a violation.

32
Q

An easement can be created by

A 
Implication
Reservation
Necessity
Condemnation
Express Agreement
33
Q

An easement is an encumbrance but

A

an encumbrance is not always an easement

34
Q

What are the types of easements?

A
  1. Appurtenant - easements for adjacent properties and they run with the land and can’t be sold separately.
  2. In gross - are not tied to any land, but are in instead owned by a company or by a person
  3. Easement by necessity - created by a court of law
  4. Easement by prescription - easement by adverse possession
35
Q

What are the two parties of an appurtenant easement?

A

Dominant - the property benefiting from the easement

Servient - the property burdened by the easement

36
Q

What are the requirements to create prescriptive easements?

A
  1. Possession -an individual must be in possession of the property for the prescribed time period required by the state where the property is located.
  2. Open - the individual must make “open use” that is, everyone must be able to see what the person is doing. (No underground tunnels etc.)
  3. Actual: similar to actual notice, the person must be in possession of the property for the prescribed time for everyone to see.
  4. Continuous: for the statutory time period.
  5. Hostile: in violation of the owner’s legal description by using the owner’s property and claiming as one’s own.
37
Q

What can easements be terminated by?

A

The purpose of the easement no longer exists. (a new road is built, etc.)

The holder of the easement abandons it for the statutory time period.

A merger of the properties occurs so an easement is not needed.

Destruction of the property or the easement (such as being at the bottom of a new dam filled with water.)

The owner of the easement issues a Quit Claim deed back to the property owner that granted the easement.

Excessive use occurs as determined by the courts.

38
Q

What is a lease?

A

a possessory, non-freehold, interest in land, created without ownership.

39
Q

Who are the parties of a lease?

A

A lease is a contract between the lessor and the lessee, subject to the Florida Tenant and Landlord Act,

40
Q

What is an assignment?

A

means either the lessor or lessee may have the right to transfer the interest each has to another, should they chose to do so.

41
Q

What happens to the assignee when an assignment takes place?

A

The third party (the assignee) takes the place of the first person in all parts and conditions of the contract and is required to perform accordingly

42
Q

What is a sublease?

A

is created when the lessee grants a portion of time or a portion of space to another

43
Q

What are the types of commercial leases?

A
  1. A gross lease - requires a tenant to pay only rent, usually on a square foot basis while the landlord pays all of the other expenses like taxes, insurance etc.
  2. Net lease - requires the tenant to pay rent plus a portion or all of other expenses such as taxes and insurance
  3. A percentage lease - requires the tenant to pay rent based on a percentage of his gross profits and is usually used in start-up business
  4. A ground lease - gives the tenant the right to build or use the land for a specific time period, up to 99 years
  5. An index lease - goes up or down based on a specific index.
  6. A graduated lease - has gradual rent increases built in
44
Q

What is a lien?

A

is a debt or charge against the property. It is an interest against the property

45
Q

What are the types of lien?

A

Voluntary and Involuntary

  1. A Voluntary lien is one that the owner was willing to place on the property

A Mechanic’s Lien-Chapter 713 F.S., is a *Statutory Lien that governs construction liens, more commonly referred to as mechanic’s liens.

A Statutory lien is based on state, local and federal written laws and is a lien that cannot be automatically discharged through bankruptcy

46
Q

What are involuntary liens?

A

An Involuntary lien is one that was placed on the property without the owner’s consent or willingness. All liens except a mortgage lien are involuntary - such as special assessment liens, mechanic’s liens etc.

47
Q

Other involuntary liens includes:

A

General Liens - are a result of losing a judgment case. A general lien is against all the assets of the person who lost the law suit and affects all real and personal property (car, boat, house, or business).

An Equitable lien - is always either a judgment lien or a mortgage lien and is based on a doctrine of fairness and a written contract.

An Income Tax lien - is a general lien because income tax is initially based on a person. If that person does not pay his taxes, the IRS sues to get a judgment; then the court awards a judgment against all the assets of the individual including his property.

Specific Liens - are liens applied to a specific piece of property and affect only that piece of property (an example of a specific lien is a property tax lien on 123 Mulberry Lane).

48
Q

Who gets paid when a lien is paid?

A
  1. Cost of the sale (paid to the county for advertising, legal fees etc.)
  2. Property taxes (These do not have to be recorded.)

2a) Ad Valorem Taxes
2b) Special Assessment Taxes

  1. First mortgage or Deed of Trust
  2. All other mortgages and other types of liens recorded with priority established by date of recording including mechanic and materialman’s liens.
49
Q

What happens if there is no enough money to pay all the liens?

A

If there is not enough money for all the liens to be paid, the court may issue a deficiency judgment against the borrower. The total assets of the borrower are then available for collection by the debt holder. Everything is available to the debt holder including cars, boats, campers, airplanes etc.

50
Q

What is a subordination agreement?

A

is a legal document used to make the claim of one party junior to (or inferior to) a claim in favor of another. It is generally used to allow first lien status to a lienholder who would otherwise be secondary to another party, with the approval of the party that would otherwise have first lien

51
Q

What is an encroachment?

A

is a physical thing which is an unauthorized intrusion of the owner’s legal title. For example, the tree hangs over into the owner’s space, as defined by his legal description of the property.

52
Q

What are examples of encroachments?

A

A fence placed on the wrong place on a property line

Tree limbs hanging over a property line

A roof of a garage over the neighbor’s lot line

A concrete driveway placed on or over the neighbor’s lot line.

53
Q

How are encroachments discovered?

A 
By physical inspection (actual notice)
A survey (constructive notice)
54
Q

Why are encroachments important?

A

The encroachment can lead to a color or cloud on the title and a possible adverse possession suit if it is left for the statutory time period

55
Q

What is a license?

A

is permission to use the property of another for a specific purpose.

It is not assignable.

The person who gave the license has the right to revoke it at any time.

Death of the parties terminates the license.

Real Estate Exam Summary (23 decks)

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