Exam Flashcards
Broker & Managing Broker CE Requirements
Broker: 12 hours every two years
Managing Broker: 24 hours, 12 of which must be broker management
Are cultivated crops fixtures or personal property?
Personal Property
Bundle of Rights
DEEP C
Disposition
Exclusion
Enjoyment
Possession
Control
Fee Simple Determinable
Inheritable freehold estate - title remains with new owner as long as the conditions of ownership are met. Returned automatically.
Fee on Condition
Similar to Fee Simple Determinable and is recognizable when the words “but if” appear in the deed.
Estate continues unless a specific event occurs. Returned through a court order.
Use Variance Definition
Allows owner to use the land for a purpose that would otherwise be prohibited by the zoning in place.
Four Criteria to get a Use Variance
- The property’s economic benefit is eliminated due to current zoning. Provide financial evidence.
- Hardship must be unique to this property and not endemic to the neighborhood
- Requested variance can’t alter the essential character of the neighborhood.
- The hardship can’t be self-inflicted.
Area Variance Definition
Allows the owner to use the land in a way that’s not normally allowed by the physical or dimensional requirements of current zoning.
Fiduciary Duties
OLD CAR
Obedience
Loyalty
Disclosure
Confidentiality
Accounting
Reasonable Skill and Care
FHA 203(k) Rehabilitation Loan (aka Renovation Loan)
Allows the buyer to finance both the purchase of the property and the renovation in a single loan
How long are escrow records held in the office?
Two years
How long must all real estate records be held?
Five years
3 Types of Depreciation
- Physical depreciation
- Functional obsolescence - loss in value caused by defects in design (poor floor plan, inconvenient room sizes, level without a bathroom)
- External depreciation (aka economic obsolescence) - loss of value caused by undesirable or hazardous influence offsite (traffic, odors, airport)
GRM Formula
GRM = price / monthly gross rent
Chicago Transfer Tax
$3.75 per $500
Chicago Transit Authority (CTA) imposes additional $1.50 per $500
Truth in Lending Act (TILA)
Purpose is to better educate the public about the costs of credit and financing through disclosures that are requirement of lenders and credit providers
Illinois State of Limitation
Personal Injuries - 2 years
Property Damage - 7 years
Contract Breach (verbal) - 5 years
Contract Breach (writing) - 10 years
Constructive Notice
Existing Knowledge
CAN-SPAM Act
Requires commercial emails to follow rules that limit junk emails
Actual Notice
Being directly informed of something or having witnessed something
Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) Title XI
real estate appraisals must be:
-in writing
-in accordance with uniform standards
-by individuals whose competency has been demonstrated
Housing and Economic Recovery Act & Dodd-Frank Wall Street Reform & Consumer Protection Act
Changed the way mortgage loans are handled, including increasing requirements for qualifying property. Included appraisal clauses
Federally Related Transaction
Any transaction of real property which a federal financial agency is involved. DOES NOT INCLUDE FHA OR VA LOANS.
Rules:
1. Require a state-license or appraiser
2. Properties valued at $400k or less are exempt
Cap Rate Formula
Rate = NOI / Value
Cap Rate Risk Levels
High Cap Rate
Risk = High
Value = Low
Low Cap Rate
Risk=Low
Value = High
Regulation Z
Contains the laws and statutes for implementing Truth in Lending Act (TILA)
Requires lenders to disclose:
-APR
-Loan Terms
-Total borrower costs
Real Estate Settlement Procedures Act (RESPA)
Requires lenders to provide various loan disclosures to borrowers.
Requires lender to disclose:
-The loan type
-All loan fees
-Projected payment table
-Estimated closing costs
TILA - RESPA Integrated Disclosures (TRID)
Requires lenders to use the TRID disclosure forms:
-Loan Estimate
-Closing Disclosure
Home Mortgage Disclosure Act (HMDA) of 1975
Purpose is to provide public and elected officials with info on whether financial institutions are fulfilling their obligations to serve the housing needs or their communities.
Land Contract aka Contract for Deed
Seller retains title. Contract has to be paid in full before deed if turned over to buyer.
Purchase Money Mortgage
Buyer retains title but places security interest in the property on seller’s behalf.
Interest rate is high to compensate seller for not receiving full payment up front.
Who is exempt from transfer taxes?
Properties conveyed by or from any government body.
After switching brokerages, how long do you have to notify the Division of Real Estate?
15 Days
Homestead Exemption for One Person
$15,000
How quickly must escrow checks be deposited?
1 business day
Guaranteed Sales Plan
Licensee either sells the property in listing term or has to buy it
Illinois Transfer Rate Tax
$0.50 for each $500 of the transfer price
Broker CE Requirements
12 Hours
Security deposits must be returned in
45 days
Illinois License Renewal Periods
Brokers: April 30th on even-numbered years
Residential Leasing Agents: July 31st on even-numbered
years
Firm: October 31st on even-numbered years
Managing Brokers: April 30th on odd-numbered years
Timeshare Lien and Security Interest Act
Allows timeshare managers to assess liens against timeshare ownership interests when there are unpaid fees, etc.
Boundaries of Townships
Township lines and range lines
Sub-Agency
a licensee from one firm who brings an unrepresented buyer for a property listed by another firm
Are commercial loans covered in RESPA?
No
Escalator Offer
A clause that buyer will beat out all competing offers up to a certain amount
Bulk Zoning
limits on building heights and lot widths
Sales Approach Order
- Financing terms and cash equivalency
- Conditions of sale, market conditions at the time of contract and closing
- Location
- Physical characteristics
Loft Lease
Large open space with few amenities
Gross Lease
Tenant pays a fixed rent and landlord pays all operating expenses
Net Lease
Tenant pays on top of the rent one or more of the following expenses:
-property taxes
-property insurance premiums
-maintenance costs
Percentage Lease
tenant pays a base rent + an additional charge based on a percentage of tenant’s gross sales or income
Triple Net Lease
tenant pays rent plus taxes, insurance, and maintenance costs
