Chapters 1-5

Question 1

Real Estate Broker

Answer 1

A person or an organization acting as the agent for others in negotiating the purchase and sale of real property for a fee.

Question 2

Real Estate Salesperson

Answer 2

An individual who is licensed to negotiate and arrange real estate sales; works for a real estate broker

Question 3

Appraisers

Answer 3

One qualified by education, training and experience who is hired to estimate the value of real and personal property based on experience judgement, fact, and use of formal appraisal processes

Question 4

Property Managers

Answer 4

a person who manages properties for an owner as the owner’s agent

Question 5

Home inspectors

Answer 5

a qualified professional trained and experienced in evaluating buildings and their components

Question 6

Mortgage Brokers

Answer 6

a broker who arranges a loan between a lender and a borrower for a fee

Question 7

Architects

Answer 7

a licensed professional who designs buildings with construction documents and specifications

Question 8

General contractors

Answer 8

contractor whose principle business is in connection with any structure being build, requiring in its construction the use of at least two unrelated building trades of crafts

Question 9

Real estate cycle

Answer 9

Recovery - Expansion - Hyper Supply - Recession

Question 10

Recovery

Answer 10

when there is low demand, which is indicated by declining vacancies in properties, and no new construction is happening. Demand is balanced with supply

Question 11

Expansion

Answer 11

activity resumes. Vacancies are still down, implying a market for property, new construction is going on to meet anticipated need.

Question 12

Hyper Supply

Answer 12

New construction but vacancies are increasing, indicating there might be an oversupply developing

Question 13

Recession

Answer 13

supply has reaches\d point where it tips the seesaw, with an excess of units available, more than demand requires. Results in increase inventory.

Question 14

brokerage engagements

Answer 14

each brokerage agreement has to include the terms of the agreement and an expiration date. When the engagement is entered into, the licensee is obligated to provide original copies of the agreement to all parties involved.

Question 15

Management agreements

Answer 15

involve licensees with property management relationships with their clients. Any written property management agreement must identify the property being managed and list the terms and conditions of the manager’s responsibilities.

Question 16

Appreciation

Answer 16

Monetary gain resulting from the increase in the market value of an investment, excluding additions of capital. For example, a house which is sold five years after it was purchased for 50% more than the purchase price.

Question 17

Capital Gains

Answer 17

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.

Question 18

Straight Line Depreciation

Answer 18

A method of depreciation under which improvements are depreciated at a constant rate throughout the estimated useful life of the improvement.

Question 19

Tax-Deferred Exchange

Answer 19

The trade or exchange of one real property for another without the need to pay income taxes on the gain at the time of trade.

Question 20

Property Insurance

Answer 20

Provides protection against most risks to property, such as fire, theft and some weather damage.

Question 21

Land

Answer 21

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. Land just means raw land. Does not include man-mad structures on the surface or below.

Question 22

Real estate

Answer 22

Land plus anything permanently attached to land. House, building, fence, or anything else a person permanently installs on their land – fixtures or appurtenances. Mobile home, trailer, or wagon not included in real estate ownership. Owners of mobile homes rent the land where it rests.

Question 23

Real Property

Answer 23

Land, things affixed to land, appurtenances, plus the bundle of rights. Rights depend on prior owner and what was conveyed to current owner. Bundle of rights.

Question 24

Personal Property

Answer 24

everything that is not property – moveable property or chattel.

Question 25

Fixtures

Answer 25

Appurtenances attached to the land or improvements, which usually cannot be removed without agreement as they become real property; Examples – plumbing fixtures, store fixtures built into the property, wiring, sometimes appliances, wells underground storage tanks, sewer systems, and mines.

Question 26

Method of Attachment

Answer 26

if an item is attached using bolts, screws, nails, glue, cement, or another permanent method, it if considered a fixture, therfore real property

Question 27

Adaptability

Answer 27

items that were custom built to fit in a particular room will most likely be a fixture

Question 28

Relationship of Parties

Answer 28

if the parties went to court to determine if an item is a fixture, the courts typically favor the buyer over the seller, and tenant over the landlord

Question 29

Intentions of parties

Answer 29

what was the intention of the seller when they installed the item? if the seller installed an item with the intention of making it permanent, its considered a fixture

Question 30

Agreement between parties

Answer 30

most purchase contracts will expressly define which items are included in the sale. Fixtures that will be personal property should be state in writing

Question 31

Air rights

Answer 31

The rights in real property to the reasonable use of the air space above the surface of the land.

Question 32

Bundle of Rights

Answer 32

all legal rights associated with the ownership of property. Include right to use, possession, encumbering, and dispositions

Question 33

Right of Possession

Answer 33

Owner exclusively owns the property
Owner can opt to share their right of possession to the property with another person or other legal entity

Question 34

Right to Dispose

Answer 34

owner has the right to sell or transfer all or part of the property

Question 35

Right to use

Answer 35

owner can use the property in any legal manner

Question 36

right to encumber

Answer 36

owner may place a lien on the property, meaning owner can take out a mortgage on the property

Question 37

right of quiet enjoyment

Answer 37

owner can possess and use the property in peace, without outside disturbances

Question 38

Mineral Rights

Answer 38

A landowner’s right to receive a portion of the profits of any minerals that are extracted from the land

Question 39

Chattel

Answer 39

Goods or every species of property movable or immovable which are not real property. Personal property.

Question 40

Emblements

Answer 40

The crops and other annual plantings considered to be personal property of the cultivator.

Question 41

Personal Property

Answer 41

Any property which is not real property.

Question 42

Trade Fixture

Answer 42

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. Examples: Display counters, computers, sale racks, registers. Often have liens on them.