Definitions and Things To Know

Question 1

Physical Obsolescence

Answer 1

Physical obsolescence refers to a reduction in a property’s value due to its physical deterioration, aging, or outdated features. This can include wear and tear, lack of maintenance, or the presence of outdated systems or materials. For example, a property with an old and inefficient heating system or outdated appliances may experience physical obsolescence.

Question 2

Functional Obsolescence

Answer 2

Functional obsolescence occurs when a property’s design or features become less desirable or functional compared to current market preferences or standards. This type of obsolescence is not necessarily related to the property’s physical condition but rather to its design or layout. For instance, a house with an outdated floor plan, insufficient storage space, or an awkward layout may suffer from functional obsolescence.

Question 3

External (Economic) Obsolescence

Answer 3

External obsolescence is influenced by factors external to the property itself, such as changes in the surrounding neighborhood or broader economic conditions. These factors can negatively impact a property’s value. Examples include changes in zoning regulations, the construction of nearby undesirable developments, or economic downturns affecting the local economy. External obsolescence is often beyond the control of the property owner.

Question 4

Foreclosure

Answer 4

Notice of Default, Notice of Intent to Accelerate, Notice of Foreclosure Sale, Under Texas law, a lender must provide a written notice to the homeowner at least 20 days before the foreclosure sale. This notice includes information about available foreclosure prevention options, such as loan modification or refinancing.

Question 5

Statute of Frauds

Answer 5

Any contract for the sale of real property or an interest in real property must be in writing to be enforceable.

Leases with a term of more than one year must be in writing.

Question 6

Universal Agency

Answer 6

In a universal agency, the agent has the authority to act on behalf of the principal in all matters, similar to granting broad and extensive powers. This type of agency is rare and typically involves a high level of trust between the principal and agent.

Question 7

General Agency

Answer 7

A general agency relationship grants the agent authority to handle a broad range of transactions or activities on behalf of the principal. However, the authority is not as extensive as in a universal agency. Real estate brokers often have a general agency relationship with their clients.

Question 8

Special Agency (Limited Agency)

Answer 8

In a special agency, the agent is authorized to perform specific tasks or transactions on behalf of the principal. The authority is limited to a particular purpose or a specific time frame. For example, a real estate agent may have a special agency relationship to sell a specific property.

Question 9

Express Agency

Answer 9

An express agency is created when the parties explicitly state the terms and scope of the agency relationship, either in writing or verbally. The terms of the agency are explicitly communicated and agreed upon.

Question 10

Implied Agency

Answer 10

Implied agency arises when the parties’ conduct suggests that an agency relationship exists, even if it’s not explicitly stated. The actions and behaviors of the parties imply an agreement to act on behalf of the principal.

Question 11

Apparent Agency (Agency by Estoppel)

Answer 11

Apparent agency occurs when a third party reasonably believes that an agency relationship exists based on the actions, statements, or appearances of the principal and agent. Even if there is no actual agency agreement, the principal may be bound by the agent’s actions if the third party reasonably relied on the appearance of agency.

Question 12

Condemnation

Answer 12

government entity exercises its power of eminent domain to take private property for public use. This typically involves compensating the property owner at fair market value. Eminent domain is the authority of the government to take private property for public use, but the Fifth Amendment to the U.S. Constitution requires that just compensation be paid to the property owner.

Question 13

Escheat

Answer 13

Escheat is a legal process where ownership of property reverts to the state when an individual dies without a will (intestate) and without any heirs or when the property is abandoned. The idea behind escheat is to ensure that property does not remain in a state of legal limbo and instead returns to the public domain or the ownership of the state.

Question 14

Subrogation

Answer 14

Subrogation is a legal principle that allows one party (such as an insurance company) to step into the shoes of another party and assume their legal rights and remedies. It often arises in situations where a third party is responsible for causing harm or loss to the insured party. After compensating the insured, the insurance company may pursue subrogation to recover the amount it paid from the responsible third party.

Question 15

Fair Credit Reporting Act (FCRA)

Answer 15

The FCRA is a federal law designed to regulate the collection, dissemination, and use of consumer credit information. It aims to ensure accuracy, fairness, and privacy in the reporting and use of credit information by consumer reporting agencies (credit bureaus).

Consumers have the right to access their credit reports and dispute inaccuracies.
Consumer reporting agencies must follow reasonable procedures to ensure the accuracy of the information they collect and maintain.

Individuals must be notified when adverse actions are taken based on information in their credit reports (e.g., denial of credit or employment).

Consumers have the right to opt-out of receiving pre-approved credit offers.

Question 16

Sherman Antitrust Act

Answer 16

The Sherman Antitrust Act is a landmark federal law that addresses anticompetitive practices and promotes fair competition in the marketplace. It was enacted to prevent and prohibit antitrust violations, including monopolies and restraints of trade.

Section 1 prohibits contracts, combinations, and conspiracies that unreasonably restrain trade or commerce.
Section 2 addresses monopolies and attempts to monopolize, making them illegal.

Question 17

Equal Credit Opportunity Act (ECOA)

Answer 17

The ECOA is a federal law that prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age, or because the applicant receives income from a public assistance program.

Question 18

Novation

Answer 18

Novation is a legal concept that involves the substitution of one of the parties to a contract with the consent of all parties involved. In a novation, the original contract remains intact, but one of the original parties is replaced by a new party, who assumes the rights and obligations of the departing party.

Wholesaling

Question 19

The Uniform Electronic Transactions Act (UETA)

Answer 19

model law that provides a legal framework for the use of electronic signatures and records in commercial transactions. The UETA was developed to facilitate and promote the use of electronic commerce by establishing uniform rules that govern the validity and enforceability of electronic signatures and records.

Question 20

RESPA

Answer 20

Real Estate Settlement Procedures Act. It is a federal law in the United States that was enacted to protect consumers involved in residential real estate transactions, particularly those related to the financing and closing of real estate transactions. RESPA is designed to ensure that consumers receive accurate and transparent information about the costs of real estate transactions and to prevent certain abusive practices in the mortgage lending and settlement process.