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Colorado Real Estate Exam > CO Real Estate - Law and Practice (Unit 1-11) > Flashcards

CO Real Estate - Law and Practice (Unit 1-11) Flashcards

1
Q

Six categories of real property

A

Residential
Commercial
Mixed use
Industrial
Agricultural
Special Purpose

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2
Q

When supply increases and demand goes down, prices…

A

Go down

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3
Q

When demand increases and supply decreases, prices…

A

Go up

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4
Q

Two characteristics that govern the way the market reacts to pressures of supply and demand

A

Uniqueness
Immobility

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5
Q

Factors affecting real estate supply are:

A
  1. labor force, construction and material costs
  2. government controls and financial policies
  3. local government factors
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6
Q

Factors affecting real estate demand are:

A
  1. Population
  2. Demographics
  3. Employment and wage levels
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7
Q

Advantages of real estate as an investment

A

Rate of return

Control

Appreciation

Equity Build up

Leverage

Tax Benefits

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8
Q

Disadvantages of real estate as an investment

A

Liquidity

Active Management

Risk

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9
Q

What can the use of property exchanges do for an investor?

A

Avoid taxation

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10
Q

Three physical characteristics of land

A

Immobility

Indestructibility

Uniqueness

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11
Q

What is the bundle of legal rights?

A
  1. right of possession
  2. right to control property lawfully
  3. right of enjoyment
  4. right of exclusion
  5. right of disposition
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12
Q

A right or privilege associated with the property, although not physically part of it

A

Appurtenance (parking spaces, water rights, easements)

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13
Q

Difference between riparian and littoral rights

A

Riparian: Common law rights granted to owners of land along the course of a flowing body of water (unrestricted right to use the water) and own the land under the water

Littoral: Owners whose land borders a commercially navigable body of water, do not own the actual land under water

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14
Q

Process of increasing land resulting from deposit of soil by water’s action

A

Accretion

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15
Q

Gradual wearing away of land by natural forces

A

Erosion

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16
Q

Sudden removal of land due to an act of nature

A

Avulsion

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17
Q

Under this doctrine, right to use the water, with exception of limited domestic use, is controlled by the state rather than land owner adjacent to water

A

Prior Appropriation

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18
Q

Four economic characteristics of real estate

A

Scarcity
Improvements
Permanence of Investment
Area preference or situs (location)

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19
Q

Items of personal property

A

Chattels

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20
Q

Annually cultivated crops such as fruit, veggies and grain

A

Emblements

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21
Q

An item of real property can become personal property through the process of

A

Severance

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22
Q

The process of changing personal property into real property

A

annexation

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23
Q

Personal property that has been so attached to land that by law it becomes part of the real property

A

Fixture

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24
Q

Legal tests of a fixture

A

Method of annexation

Adaptability of the item for land’s ordinary use

Relationship of the parties

Intention of the person in placing the item on the land

Agreement of the parties

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25
Q

A piece of personal property owned by the tenant, attached to a rented space for business purposes

A

Trade Fixture

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26
Q

Landlord’s can acquire trade fixtures through the process of

A

Accession

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27
Q

Type of estate ownership interest that continues for an indefinite period

A

Freehold Estate

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28
Q

What defines the degree, quantity, nature and extent of an owner’s interest in real property?

A

An estate in land

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29
Q

What is the highest interest in real estate recognized by the law?

A

A fee simple, or fee simple absolute estate

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30
Q

Type of qualified fee estate that is subject to the occurrence or nonoccurrence of some specified event

A

Fee simple defeasible estate

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31
Q

A type of fee simple defeasible estate that may be inherited and uses language like “so long as, or while, or during”

A

A fee simple determinable estate

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32
Q

A type of fee simple estate given on condition of ownership

A

A fee simple subject to a condition subsequent

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33
Q

A freehold estate limited to the duration of either the life of the holder or the life of some other designated party

A

A life estate

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34
Q

Definition of pur autre vie

A

a life estate based on the lifetime of a person other than the life tenant, provides for inheritance of the property right by the life tenant’s heirs but that right only exists until the death of the identified persons

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35
Q

Remainder vs Reversionary Interest

A

Both considered future interests

Remainder: the creator of the life estate names a remainderman as the person to whom the property will pass when the life estate ends

Reversionary: Creator of life estate chooses not to name a remainderman, in which case ownership returns to the original owner upon the end of the life estate

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36
Q

Types of legal life estates

A

Dower

Curtsey

Homestead

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37
Q

A legal life estate in real estate occupied as the family home

A

HOmestead, protects home from most creditors during the occupant’s lifetime

NOT protected from debt secured by the property itself or from real estate taxes

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38
Q

A type of interest in real estate that does not rise to the level of ownership or possession, but gives a degree of use

A

Encumbrance

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39
Q

The right to use land of another for a particular purpose

A

Easement

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40
Q

For an easement appurtenant to exist…

A

Two parcels must be owned by different owners. Parcel that benefits is the dominant tenement, the parcel providing is the servient tenement.

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41
Q

Individual or company interest in or right to use someone else’s land

A

Easement in Gross

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42
Q

How can you create an easement?

A

Easement by Necessity (right of ingress and egress)

Easement by Prescription (based on if you’ve already been using it for a period of time)

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43
Q

An easement terminates in any of the following situations

A

When need no longer exists

When owner of either tenement becomes sole owner

By release of right of easement to the owner of the servient tenement

By abandonment of easement

By the nonuse of a prescriptive easement

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44
Q

A personal privilege to enter the land of another for a specific purpose

A

License

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45
Q

When a building, fence, driveway illegally extends beyond boundaries of land it creates an

A

Encroachment

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46
Q

What are the four main governmental powers

A

Police Power

Eminent Domain

Taxation

Escheat

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47
Q

The power to enact legislation to preserve order, protect the public health and safety, and promote general welfare of its citizens is known as

A

Police Power

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48
Q

The right of the government to acquire privately owned real estate for public use is known as

A

Eminent domain

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49
Q

Action brought by property owner seeking compensation for land adjacent to land used for public purpose when the property’s use and value have been diminished

A

Inverse condemnation

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50
Q

The process by which the state may acquire privately owned real or personal property when an owner dies and leaves no heirs or will

A

Escheat

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51
Q

Four types of co-ownership

A

Tenancy in common

Joint tenancy

Tenancy in entirety

Community Property

52
Q

When a parcel of land is owned by 2 or more people with an undivided interest and unity of possession

A

Tenancy in common

53
Q

Distinguishing feature of joint tenancy is…

A

right of survivorship

If a joint tenant dies, the deceased’s interest transfers directly to the surviving joint tenants with no legal action required

54
Q

The four unities necessary to establish a joint tenancy (PITT)

A

Possession - all joint tenants hold an undivided right to possession

Interest - all joint tenants hold an equal ownership interest

Time - all joint tenants acquire their interest at the same time

Title - all joint tenants acquire their interest on the same document

55
Q

The legal way to dissolve the relationship between co-owners of real estate when the parties do not voluntarily agree to its termination

A

Partition

56
Q

When type of tenancy allows a spouse to inherit the other spouse’s ownership interest upon death?

A

Tenancy by the entirety

57
Q

A trust that is created by an agreement during a property owner’s lifetime

A

A living trust

58
Q

A trust that is established by will after owner’s death is a

A

Testamentary trust

59
Q

The three basic methods of describing real estate (legal descriptions)

A

Metes and Bounds - relies on property’s physical features to determine the boundaries and measurements of a parcel

Rectangular Survey - (gov) standardized description of land based on two sets of intersecting lines (principal meridians and base lines

Lot and Block method - uses plat maps and includes lot and block number, name or number of subdivision plat and name of county and state

60
Q

How many square miles are in a township? (sections)

A

36

61
Q

A point, line or surface from which elevations are measured or indicated

A

A datum

62
Q

Legal term for transfer of title during property owner’s lifetime

A

Voluntary Alienation

63
Q

A clause that begins with the words “to have and to hold” used in deeds when its necessary to define or explain the ownership to be enjoyed by the grantee

A

Habendum Clause

64
Q

A formal declaration under oath that the person who signs a written document does so voluntarily and that signature is genuine, made before a notary

A

Acknowledgment

65
Q

When does title officially pass from grantor to grantee?

A

When deed is delivered and accepted

66
Q

Type of deed that provides the greatest protection to the buyer because the grantor is legally bound by certain convenants

A

General warranty deed

67
Q

The basic warranties covered by a general warranty deed

A

Covenant of seisin - right to convey title

Covenant against encumbrances - property is free from liens or encumbrances, unless stated

Covenant of further assurance - promise to obtain and deliver any instrument needed to make title good

Covenant of quiet enjoyment - grantee’s title will be good against any third party who might be a court action against

Covenant of warrant forever - grantor promises to compensate grantee for loss sustained if the title fails at any time in the future

68
Q

Type of deed that limits the grantor’s defense of the title transferred by warranting

  1. that the grantor received title
  2. that the property was not encumbered during the time the grantor held title unless stated
A

Special Warranty Deed

69
Q

Type of deed that contains no express warranties against encumbrances but it does IMPLY that the grantor holds title and possession of property (grants and releases) (grants, bargains and sells)

A

Bargain and Sale Deed

70
Q

Type of deed that provides the least protection of any deed and carries no warranties or covenants (remises, releases and quitclaims)

A

Quitclaim Deed, frequently used to cure a title defect (cloud on a title)

71
Q

Type of deed by which a trustor conveys real estate to a trustee

A

Deed of trust

72
Q

Type of deed used by a trustee to return title to the trustor

A

Reconveyance Deed

73
Q

Type of deed used when trustee conveys title to anyone but the trustor

A

Trustee’s deed

74
Q

Title to property may be transferred without the owner’s consent through process called

A

Involuntary alienation

75
Q

Four types of involuntary alienation

A

Escheat (when someone dies intestate, no will)

Condemnation by state’s power of eminent domain

Foreclosure

Adverse Possession

76
Q

Required characteristics of an adverse possession (ONCHA)

A

Open

Notorious

Continuous

Hostile

Adverse

77
Q

When title passes by will or descent, estate must go through this type of judicial process, during which the successor will be recognized

A

Probate

78
Q

What state must probate procedures take place?

A

In the county in which the decedent last resided

If they owned real estate in another county, probate will take place in that county as well

79
Q

the legal presumption that information has been obtained by an individual through due diligence

A

Constructive Notice

80
Q

Information of an interest in property is available but also someone is actually aware of it is called

A

Actual Notice

81
Q

The order in which documents or liens are recorded is called

A

Priority

82
Q

The record of a property’s ownership

A

Chain of title

83
Q

Court action used to establish ownership when it cannot be traced through an unbroken chain of title

A

Action to Quiet Title

84
Q

An examination of public records to determine whether any defect exists in chain of title

A

Title Search

85
Q

Summary report of what the title search found in the public records

A

Abstract of title - all recorded liens and encumbrances are included

86
Q

Is a certificate of title a guarantee of ownership?

A

No

87
Q

A contract under which the policyholder is protected from losses arising from defects in the title

A

Title Insurance

88
Q

When a title company makes a payment to settle a claim covered by a policy, that company acquired the right to any remedy or damages available to the insured..called the right of

A

subrogation

89
Q

Type of covered that covers: defects found in public records, forged documents, incompetent grantors, incorrect marital settlements, improperly delivered deeds

A

Standard Coverage

90
Q

Type of coverage that covers property inspection, including unrecorded rights of persons in possession, examination of survey, and unrecorded liens not known by policy holder

A

Extended Coverage

91
Q

What is not covered by either standard nor extended coverage?

A

Defects and liens listed in the policy

Defects known to buyer

Changes in land use brought about by zoning ordinances

92
Q

A legal registration system used to verify ownership of real estate

A

Torrens System

93
Q

The following three requirements must be met for a sales associate to be a nonemployee

A
  1. sales associate must have a current real estate license
  2. sales associate must have a written contract with a broker that specifies that the sales associate will not be treated as an employee
  3. substantial portion of the sales associates income as a real estate professional must be based on sales production (commission)
94
Q

Four anti trust laws

A

Price fixing - competitors agree to set prices or other terms and conditions for products or services rather than letting competition in the open market establish those prices

Group boycott - 2 or more business conspire against another business or agree to withhold their patronage to reduce competition

allocation of customers/markets

tie-in agreements - agreements to sell one product only if the buyer purchases another

95
Q

Two federal acts governing electronic contracting

A
  1. Uniform electronic transactions act
  2. Electronic signatures in Global and National Commerce act
96
Q

Rules established by tradition and court decisions

A

Common Law

97
Q

Laws enacted by the legislature

A

Statutory Law

98
Q

Rules and regulations created by a real estate commissions and departments

A

Administrative Law

99
Q

Agency relationship created by an oral or written agreement between parties

A

Express agency

100
Q

Agency relationship resulting from the parties’ behavior is creating an

A

implied agency

101
Q

The six common law fiduciary responsibilities of an agent COLD-AC

A

Care

Obedience

Loyalty

Disclosure

Accounting

Confidientialtiy

102
Q

Agent who is a person empowered to do anything the principal could do personally

A

Universal Agent

103
Q

Agent who may represent the principal in a broad range of matters

A

General agent

104
Q

Agent who is authorized to represent principal is one specific act

A

Special Agent

105
Q

When an agent represents only one party in a transaction

A

Single Agency

106
Q

When an agent represents two principals in the same transaction

A

Dual agency

107
Q

When two sales associates from the same broker are involved in a transaction but represent different principals

A

Designated Agency

108
Q

Exaggeration of a property’s benefits is called

A

Puffing

109
Q

The intentional misrepresentation of a material fact in such a way as to harm or take advantage of another person

A

Fraud

110
Q

This occurs when an agent should have known that a statement about a material fact was false

A

Negligent Misrepresentation

111
Q

Type of listing agreement where listing broker is paid regardless of who sells the property

A

Exclusive right to sell

112
Q

Type of listing where broker is only paid if they are procuring cause of sale, but only one broker

A

Exclusive agency

113
Q

Type of listing where seller employs multiple brokers and only pays one if they are the procuring cause

A

Open listing

114
Q

Type of listing where broker is entitled to any amount exceeding the seller’s stated net proceeds

A

Net Listing

115
Q

What can cancel a listing or buyer rep agreement?

A
  1. Closing of transaction
  2. Term expires
  3. property is destroyed
  4. title is transferred by operation of law
  5. mutual agreement to cancel
  6. either party breaches
  7. either party dies or becomes incapacitated
116
Q

What must a contract be in order to be legitimate?

A
  1. voluntary
  2. agreement or promise
  3. legally competent parties
  4. legal act
  5. lawful consideration
117
Q

Parties state terms of a contract orally or in writing creating an

A

express contract

118
Q

Agreement of parties is demonstrated by their acts and conducts creates an

A

implied contract

119
Q

If both parties promise to do something in a contract, this is

A

a bilateral contract

120
Q

What kind of a contract is a one-sided agreement?

A

A unilateral contract

121
Q

Executed vs Executory

A

Executed - fulfilled contract

Executory - when one or both parties still has an act to perform in order to fulfill

122
Q

Essential elements of a contract (5)

A

Offer & acceptance

Consideration

Legal Purpose

Consent

Legal Capacity

123
Q

Three methods of discharging a contract

A
  1. performance
  2. breach
  3. remedies (damages specific performance or rescission)
124
Q

Validity of a contract - a contract may be

A
  1. valid
  2. void (lacks one or more elements)
  3. voidable (appears to have all elements but my be rescinded or disaffirmed)
  4. unenforceable (appears to have all elements but cannot be enforced in court)
125
Q

Assignment vs Novation of contracts

A

Assignment = substitution of parties

novation = substitution of a new contract

126
Q

A change or modification to an existing contract is considered an

A

Amendment

127
Q

A provision added to an existing contract that may change or be an addition to the content of the original contract is an

A

Addendum

Colorado Real Estate Exam (9 decks)

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