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Real Estate Exam > Definitions > Flashcards

Definitions Flashcards

1
Q

21E Certificate

A

property free from contamination

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2
Q

203(b)

A

FHA financing

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3
Q

1031 exchange

A

way to defer capital gains tax by re-investing within 6 months

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4
Q

1099-s

A

report real estate sales to IRS

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5
Q

accretion

A

increase in property due to wind/water

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6
Q

accretion line

A

edge of water (high tide)

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7
Q

adverse possession

A

squatters rights

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8
Q

aeolian soil

A

deposited by wind (dunes)

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9
Q

air rights

A

80-500 ft above real estate

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10
Q

alienation clause

A

due on sale clause for lender

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11
Q

alluvion

A

increase land on shoreline by deposits or recession of water

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12
Q

alluvium

A

clay, silt, sand deposited by running water

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13
Q

annexation

A

when property that was personal becomes real property

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14
Q

appurtenance

A

a right belonging to and passing along with the property (like right of way)

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15
Q

assemblage

A

combining two or more lots

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16
Q

avulsion

A

sudden separtion of land from one lot and attachment to another by flood/river change

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17
Q

bargain and sale deed

A

certificate of sale; no warranties; ususally foreclosure

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18
Q

binder

A

deposit or earnest money

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19
Q

blockbusting

A

inducing panic to leave neighborhood

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20
Q

boot

A

unreplaced property value or reduced mortgage debt

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21
Q

bundle of rights

A

all of rights that come with home ownership: possession, exclusion, control, disposition, enjoyment

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22
Q

calling the note

A

first step of foreclosure

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23
Q

cash flow

A

profit leftover after debt service and capital expenses paid from NOI

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24
Q

cash on cash return

A

% of total investment received as cash flow

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25
Q

CERCLA

A

Comprehensive Environmental Response, compensation, liability act 1980 (superfund act)

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26
Q

estoppel certificate

A

(also called certificate of no defense) confirms if there is debt or lease when property sold

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27
Q

chapter 21E

A

(MA) superfund; creates office of brownfield revitalization

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28
Q

chapter 40A

A

(MA) creates zoning laws/master plan for towns

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29
Q

chattel

A

personal property

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30
Q

CFCs

A

non-toxic chemical (refrigeration)

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31
Q

chlordane

A

from pest treatments; must be disclosed

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32
Q

common area load

A

(commercial prop) % of rentable sq footage over usable sq footage (common areas)

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33
Q

comparative-unit method

A

price per sq foot for new construction

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34
Q

Comprehensive Loss Underwriting Exchange (CLUE)

A

records past consumer claims / homeowner’s insurance

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35
Q

condemnation

A

taking property by means of eminent domain

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36
Q

conditional sales contract

A

(usually land) buyer has equitable title until all conditions made/money paid

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37
Q

conditional use permit

A

like a variance but limited/special use

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38
Q

constructive eviction

A

when tenant leaves property bc landlord hasn’t fulfilled contract duties

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39
Q

constructive notice

A

public notice of something

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40
Q

cost approach

A

uses construction coasts to assess value of unusual property (church) where comps aren’t possible

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41
Q

covenant

A

promise, guarantee or limitation in deed

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42
Q

curtesy/dower rights

A

husband/wife can have property upon spouse’s death for thir lifetime

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43
Q

datum

A

point used to measure elevation in metes and bounds survey method

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44
Q

debt service

A

mortgage payments

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45
Q

dedication

A

giving land for public use

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46
Q

defeasance clause

A

clause on mortgage that releases it when last payment made

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47
Q

depreciation recapture tax

A

25% tax for any depreciation value made back at sale

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48
Q

devise

A

transfer real property through will

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49
Q

discount rate

A

rate the Fed lends at for banks

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50
Q

doctrine of capture

A

owner of land has rights to capture any liquid minerals under their land

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51
Q

doctrine of estoppel

A

once you cause someone to act in a certain way based on info given, you can’t go back on your word.

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52
Q

doctrine of laches

A

(time limit) you lose your rights if you do not assert them in reasonable time

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53
Q

doctrine of prior appropriation

A

(not colonies) rights to a river based on whoever uses the water first

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54
Q

Dodd Frank Act

A

changed RESPA requirements and processes for more transparency in lending

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55
Q

dominant tenement

A

property owner with right to easement appurtenant

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56
Q

Dower’s rights

A

(not in MA) surviving spouse granted life estate for property not willed to them and up to 1/3 interest in place of whatever was left in will

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57
Q

DTI

A

debt to income ratio

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58
Q

assumption clause

A

due on sale clause

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59
Q

easement appurtenant

A

involving two adjoining lots; gives one owner right of way access over other’s lot

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60
Q

easement in gross

A

a personal right to use another’s land

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61
Q

Elements of value

A

DUST: demand, utility, supply, transferability

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62
Q

emblements

A

crops that require annual or semi-annual harvesting considered personal property

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63
Q

entry-only listing

A

flat-fee listing – only enters on MLS

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64
Q

ECOA

A

Equal Credit Opportunity Act

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65
Q

Equity Right of Redemption

A

(MA) under Statutory Right of Redemption property owner has 6 months from date of tax foreclosure to regain ownership of property

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66
Q

equitable title

A

future right to obtain legal title

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67
Q

Escheat

A

power of government to take property left without will/heirs

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68
Q

Escrow account

A

Also known as trust acct

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69
Q

Exclusive agency

A

must be in writing with exp date. Seller can find own buyer

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70
Q

Exclusive right to sell

A

must be in writing with exp date. Seller must pay commission

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71
Q

Federal Funds Rate

A

rate for interbank lending

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72
Q

Freddie Mac/Fannie Mae

A

buys loans form lenders for them to be able to offer more mortgages

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73
Q

FHA

A

insures mortgage loans. as low as 3.5%

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74
Q

Federal Open Market Committee

A

buy/sell US debt to/from member banks

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75
Q

Federal Reserve Board (The Fed)

A

establishes/regulates monetary policy

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76
Q

Fee simple absolute

A

fee/feesimple/fee simple indefeasible – ownership without restrictions

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77
Q

fee simple defeasible

A

ownership dependent on specific condition in deed

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78
Q

Fee simple determinable

A

fee simple defeasible estate where limitation is violated and title automatically lost

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79
Q

fee simple subject to condition subsequent

A

fee simple defeasible estate where limitation is violated and grantor can request forfeiture of title via court action

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80
Q

fee simple subject to an executory limitation

A

fee simple defeasible estate where limitation is violated and property transfers to third party named by grantor

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81
Q

Title XI

A

Appraisers must have valid appraisal license

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82
Q

Foreign Investment in Real Property Tax Act

A

10% of sale price withheld and sent to IRS

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83
Q

Four stages of life cycle

A

growth, stability, decline, revitalization

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84
Q

Freehold

A

Ownership interest in realty

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85
Q

Fully amortized loans

A

also known as direct reduction loans – completely paid off with last payment

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86
Q

Garn St. Germain Act

A

Due on sale clause cannot be triggered in event of death, divorce, marriage, leasing, devising on property or transfer into family trust

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87
Q

General Warranty Deed

A

grantor accepts liability for past, present and future claims. Includes covenant of warranty forever.

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88
Q

Government rectangular survey

A

public land survey system – not in original 13 states – uses meridians and base lines

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89
Q

graduated lease

A

rent increases on an agreed upon schedule. Escalator clause increases or decreases rent

90
Q

graduated loan

A

lower payments early on in loan cause nagative amortization

91
Q

graduated payment mortgage (GPM)

A

payments on loan gradually increase with pred. of rising income (doctors)

92
Q

Ground lease

A

tenant rents land, builds improvements, at end of lease, improvements belong to landlord. up to 99 years. Common for fast food chains

93
Q

Growing equity mortgage (GEM)

A

extra payments to loan go to principal in order to pay off faster

94
Q

Habendum Clause

A

seen in life estate deeds – defines or limits estate being granted

95
Q

holographic

A

handwritten wills

96
Q

homestead laws

A

protect homeowners from forced sale of house due to unsecured debts

97
Q

Homeowners Protection Act of 1998

A

When hoeowner’s LTV dips below 78%, PMI will automatically discharge

98
Q

Holdover tenant

A

squatter

99
Q

hypothecate

A

pledge something as a secuirty for debt without giving up possession (mortgage)

100
Q

implied easement

A

implied through sale but not legally created/documented

101
Q

implied warranty of habitability

A

(MA) automatic warranty on new construction – 3 yrs

102
Q

impounds

A

reserves held in escrow by lender (property taxes)

103
Q

inactive licensees

A

may make referrals, but still need cont ed and member fees

104
Q

installment sales contract

A

basically a rent to own – also called contract for deed , land contract, conditional sales contract

105
Q

intestate

A

no will or defective will left by deceased

106
Q

inverse condemnation

A

if government takes land and causes depreciation for leighbors, they can claim compensation

107
Q

joint tenancy

A

has right of survivorship

108
Q

Land and surface rights

A

extends usually 30’ below surface

109
Q

leaseback

A

frees capital and creates tax relief

110
Q

LEED certification

A

green building rating system

111
Q

legatee

A

heirs to PERSONAL property

112
Q

license

A

personal, revocable permission to enter property (sporting event)

113
Q

Lien theory state

A

borrower holds legal title to property that is financed

114
Q

life estate

A

ownership held for life; non-inheritable

115
Q

littoral

A

shoreline of large body of water

116
Q

lot and block survey method

A

uses metes and bounds (monuments/benchmarks)

117
Q

ltv

A

loan to value ratio

118
Q

93A

A

(MA) consumer protection act. 30-day demand letter.

119
Q

metes

A

distances

120
Q

MI

A

mortgage insurance for FHA loans

121
Q

modified gross lease

A

tenant pays fixed amount in first year (base year) and then more based on owner’s operating expenses

122
Q

mortgage interest deduction

A

can deduct interest up to 750,000 debt

123
Q

municipal lien certificate

A

required at closing to prove status of payment of property taxes, water, etc

124
Q

Net operating income (NOI)

A

effective gross income minus operating expenses

125
Q

net lease

A

tenant pays building expenses in addition to rent. Debt service not part of operating expenses.

126
Q

net listing

A

illegal commision arrangement with unspecified comission over certain sale amount

127
Q

non-designated agency

A

common/default rep. Client represented by all agents at brokerage.

128
Q

non-freehold

A

all uses of property but ownership (rent)

129
Q

non-recourse loan

A

borrower not personally liable in event of foreclosure

130
Q

novation

A

cancellation of contract and replaced with new one

131
Q

noncupative will

A

verbal. not enforceable in most states

132
Q

ONCHA

A

(squatter) 20+ years, claim easement by prescription or claim ownership of land

133
Q

open mortgage

A

mortgage matured or overdue and subject to foreclosure

134
Q

open end mortgage

A

HELOC

135
Q

package mortgage

A

covers real and personal property

136
Q

parol

A

oral/verbal

137
Q

partial release clause

A

used with blanket mortgages

138
Q

participation mortgage

A

lender participates as an investor in development

139
Q

PCBs

A

200 chemical compunds not found in nature

140
Q

percentage lease

A

lease amount based on percentage of gross sales (department store)

141
Q

PITI payment

A

principle, interest, prop tax, insurance

142
Q

pledged account mortgage

A

borrower pay to subsidize interest rate on loan to have lower payments during times of high interest rates.

143
Q

plottage value

A

increased value from assemblage (bundling plots)

144
Q

points

A

origination fee charged by lenders at closing. 1%=point

145
Q

power of sale clause

A

Allows lender to sell property if owner defaults on terms

146
Q

letter of comitment

A

pre-approval letter from mortgage co; non-binding

147
Q

prescription

A

method of obtaining an easement by adverse use of someone’s property

148
Q

principal

A

the client or person paying you

149
Q

private restriction

A

like a covenant runs with the land

150
Q

privity of contract

A

right to sue under a contract

151
Q

privity of estate

A

legal relationship between two entities with common interest in same property

152
Q

procuring cause

A

the effort of a broker to produce a ready, willing and able buyer

153
Q

professional liability insurance

A

errors & omissions ins

154
Q

proprietary lease

A

what cooperation gives unit owners (coop)

155
Q

puffing

A

exaggeration made by salesperson; can be cause for 93a claim

156
Q

pur autre vie

A

life estate not based on grantee’s life, but a third-party life.

157
Q

purchase money mortgage (PMM)

A

seller financing

158
Q

quantity survey method

A

determines cost of rebuilding property exactly as is using local construction costs

159
Q

quieting title

A

land court action to determine owner of property

160
Q

quitclaim deed

A

also known as non-warranty deed; often used for fixing mistakes on deed or in foreclosure

161
Q

Reverse annuity mortgage (RAM)

A

bank makes payments to borrower against equity; 62+

162
Q

reappraisal lease

A

an appraiser opines on rent value rather than landlord/tenant

163
Q

Recording/conveyance stamps

A

(MA) 2.28/500 or 3.24/500 Barnstable

164
Q

redlining

A

credit discrimination

165
Q

reliction

A

increase of land due to withdrawal of water

166
Q

rentable sq footage

A

includes common area

167
Q

REO

A

real estate owned = bank owned foreclosure property

168
Q

RESPA

A

real estate settlement procedures act; full disclosure of closing costs

169
Q

reversionary interest

A

when a grantor or landlord have right to regain possession of property in the future

170
Q

right of first refusal

A

first dibs; right to match other offers

171
Q

riparian

A

rights to or along a running body of water

172
Q

riparianism

A

(MA) used for rivers; prop bordering navigable waterways have rights up to accretion line and properties on non-nav waterways have rights to mid-point of waterway.

173
Q

riverfront area

A

land between mid-point high mark and 200 ft out (or 25 ft if densely populated)

174
Q

SARA – superfund amendments and reathorization act

A

provides for innocent landowner status

175
Q

satisfaction piece

A

mortgage discharge (recorded evidence of payment of debt)

176
Q

Seisin/seizin

A

possession of real property with freehold claim

177
Q

separate property state

A

(MA) married persons may own property separately and in their own name

178
Q

servient tenement

A

the property owner encumbered by the right of an easement appurtenant

179
Q

severability clause

A

allows for cancellation of part of clause without cancelling whole contract

180
Q

severalty

A

ownership by one person (cooperative)

181
Q

severance

A

property that was real becomes personal

182
Q

severance damage

A

property owner may receive if government only takes part of land in eminent domain

183
Q

shared appreciation mortgage (SAM)

A

a loan where an investor makes the down payment for property in exchange for share in equity of property

184
Q

shared equity loan

A

lender provides financing and pays portion of down payment

185
Q

sheriff’s deed

A

deed used to convey title to property sold to satisfy court judgment

186
Q

simple interest mortgage

A

non-compounding mortgage; interest calculated daily

187
Q

special warranty deed

A

also known as limited warranty deed; grantor guarantees they did not cause any issues with title

188
Q

stachybotrys

A

black mold; must be disclosed

189
Q

statute of frauds

A

only written RE contracts are enforceable

190
Q

straight line depreciation

A

method of calculating depreciation which calculates annual loss based on IRS economic life years: 27.5 residential / 39 commercial

191
Q

straight mortgage

A

interest only mortgages; principle paid on last payment

192
Q

strict foreclosure

A

foreclosure auction not required bc lender can sue borrower for amount owed in court; if borrower doesn’t pay, lender automatically receives title.

193
Q

subject to

A

a method for taking over a mortgage, but seller is still liable.

194
Q

surety

A

someone who guarantees and becomes legally responsible for another

195
Q

swing loan

A

type of bridge loan for people purchasing new home before selling old one

196
Q

take over mortgage

A

when a buyer takes over the debt of seller at sale

197
Q

taxpayer relief act

A

shelter from capital gains 250k single, 500k married

198
Q

tax sale

A

sale of property at public auction to satisfy deliquent taxes

199
Q

tax title

A

ownership acquired at tax sale

200
Q

tenancy at sufferance

A

squatter

201
Q

tenancy by the entirety

A

co-ownership for married couples only

202
Q

tenancy in common

A

co-owners may have equal or unequal interests. INHERITABLE

203
Q

testator

A

person leaving will

204
Q

title theory state

A

a state where bank holds title on property with mortgage; borrower holds equitable title

205
Q

Title V

A

pass inspection within 2 years of sale (3 if pumped yearly) or 6 mo after sale.

206
Q

torrens system

A

US system of land registration

207
Q

TRID forms

A

TILA-RESPA disclosure forms

208
Q

trustee’s deeds

A

deeds executed by trustee to convey real estate to anyone besides trustor

209
Q

UCC – uniform commercial code

A

regulates business and financial transactions

210
Q

UFFI

A

banned in 1979

211
Q

USTs – underground storage tanks

A

buried underground by 10% or more; banned in MA under 21 E

212
Q

Uniform settlement statement

A

used to be HUD-1; lists all cost of RE transaction

213
Q

unimproved property

A

raw land

214
Q

unit in place method

A

calculates systems in property for reproduction or replacment

215
Q

URAR

A

uniform residential appraisal report; required by Fannie and Freddie

216
Q

usable sq footage

A

does not include common area

217
Q

Utilization pooling

A

property owner does not have right to capture all liquid minerals under their land, but is entitled to a fraction of them

218
Q

value in use

A

the value to a particular user (farmer vs. homeowner)

219
Q

adjustable rate mortgage (ARM)

A

variable interest rate

220
Q

wetland protection act (DEP)

A

buffer zone of 100ft from wetland; 50 ft for minor changes

221
Q

wraparound mortgage

A

seller financing that wraps around seller’s existing mortgage

Real Estate Exam (4 decks)

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