Exam Prep

Question 1

Abstract of title

Answer 1

The History of title or chain of title. a summary of all recorded instruments which affect a piece of real estate arranged in order in which they were recorded.

Question 2

Acceleration clause

Answer 2

A clause in a contract by which the time for payment of a debt is advanced, usually making the obligation immediately due and payable because of the breach of some condition. Ex. Failure to pay an installment when due.

Question 3

Acknowledgement

Answer 3

A declaration made by a person to a notary public or other public official authorized to take acknowledgements, that the instrument was executed by the person and that it is a free and voluntary act. “notary”

Question 4

Acre foot

Answer 4

A term used in measuring the volume of water, equal to the quantity of water required to cover one acre on foot deep.
The amount of water it takes to fill 1 acre with a foot of water or the amount of water it takes to sustain a family of four for 1 year.

Question 5

Administrator

Answer 5

A person appointed by the court to administer the estate of a deceased person who died intestate.

Question 6

Intestate

Answer 6

When a person who died leaves without a will.

Question 7

Ad valorem

Answer 7

Latin word meaning “according to value” used to describe a tax based on the assessed value of real property.

Question 8

Adverse possession

Answer 8

The right of an occupant of land to acquire a superior title to the real estate against the recorded owner, where such possession has been actual, notorious, hostile, visible, and continuous for the required statutory period.

Question 9

Agency

Answer 9

A legal relationship resulting from an agreement or contract, either expressed or implied, written or oral, whereby one person, the agent, is employed by another, called the principal, to do certain acts in dealing with a third party.

Question 10

Alienation

Answer 10

Transfer of real property by one person to another. Also known as ‘due on sale’, ‘transfer clause’, or a ‘conventional loan’.

Question 11

Amortization

Answer 11

Liquidation or gradual retirement of a financial obligation by periodic installments. Ex.Adjustable rate mortgage.

Question 12

Appropriation

Answer 12

Acts involved in taking and reducing to personal possession of water occurring in a stream or other body of water and applying such water to beneficial use.
Doctrine of prior appropriation used in water rights.

Question 13

Attachment

Answer 13

A type of encumbrance, permitted only under special circumstances, which is placed against the real estate of a defendant in a pending law suit for money damages. ex. a lien.

Question 14

Attorney’s opinion

Answer 14

Written opinion of an attorney-at-law regarding the marketability of title to real property based upon an examination of the abstract of title or the records in the county clerk and recorder’s office. ex. Abstract of title.

Question 15

Animal Unit

Answer 15

grazing capacity of land to properly sustain one animal and any offspring for one year.

Question 16

Balance Sheet

Answer 16

A statement showing a company’s financial position at the end of an accounting period by listing assets, liabilities, and owner’s equity. Written in a P&L statement.

Question 17

Balloon payment

Answer 17

is a “call payment”

Question 18

Bargain and Sale Deed

Answer 18

Any deed that recites consideration and purports to convey the real estate. A bargain and sale deed with a covenant against the grantor’s acts warrants only that he or she has done nothing to harm or cloud the title.

Question 19

Beneficiary

Answer 19

Person who benefits from certain acts. Ex. a will, one receiving benefits, profits or advantages, one for whose benefit a trust is created.

Question 20

Blanket Mortgage

Answer 20

A mortgage that covers more than one piece of property. Mostly used by developers.

Question 21

Broker

Answer 21

Duly licensed person, firm, partnership, LLC, association, or corporation who, in consideration of compensation or with the intent of receiving such compensation, facilitates a real property transaction for another party.

Question 22

Building Code

Answer 22

local government regulations specifying structural requirements of buildings.

Question 23

Buyers Agent

Answer 23

A broker engaged by and representing the buyer in a real estate transaction.
No matter who sells the property, the buyers agent gets paid, because they are the exclusive buyers agent.

Question 24

Capitalization rate

Answer 24

A percentage rate of change applied in the income approach to value. ROI, Net operating income.

Gross income+ ancillary income- vacancy rate and collection costs= effective gross income. Effective gross income-expenses=NOI.

Question 25

Cash basis accounting

Answer 25

Recognizing revenue and expense when cash is received or disbursed rather than when earned or incurred.

ex. A service business not dealing in inventory has the option using the cash or accrual basis of accounting. Individual taxpayers must use the accrual basis.

Question 26

Cash flow

Answer 26

Cash receipts minus cash disbursements from an operation or asset. An annual cash flow statement shows total return after taxes.
Ex. You can have negative or positive cash flow on a building.

Question 27

Caveat Emptor

Answer 27

Latin phrase meaning “let the buyer beware”, formerly imposing a duty on the buyer to examine the products or property accepting them ‘as is’.

Question 28

Certificate of reasonable value

Answer 28

Veterans administrations certified appraisal of value of real property. Ex. VA loan, VA appraiser.

Question 29

Certificate of taxes

Answer 29

Shows the condition of the taxes. It is a written guaranty of the condition of the taxes on a certain property made y the county treasurer wherein the property is located. Any loss resulting from an error in a tax certificate shall be paid by the county that such treasurer represents.

Question 30

Chattel

Answer 30

Property other than real estate. Ex. personal property-or an item that is movable property.

Question 31

Cloud on a title

Answer 31

An outstanding claim or encumbrance that affects or impairs title to the property. It effects marketability.

Question 32

Collateral security

Answer 32

Some security additional to the personal obligation of the borrower, as a chattel mortgage or trust deed. Something that gives its loan its value.

Question 33

Colorado Coordinate System

Answer 33

A method of land description based on measurements from the intersection of statutorily defined north-south and east-west axes; applied only in Delta and Ute counties. aka- the way we measure property is with X Y coordinates

Question 34

Commingling

Answer 34

Mixing money belonging to others with personal or business funds.
Illegal commingling is using the money of one beneficiary for the benefit of another or failing to maintain money in identified escrow accounts.

Question 35

Common interest community

Answer 35

Real estate described in a declaration which obligates an individual unit owner to pay property tax, insurance premiums, maintenance, or improvement on some declared real property owned in common.
Ownership does not include a leasehold interest of less than forty years, measured from the date the initial term commences, including renewal options. ex. condominiums, you own the air lot but not the walls or the land. so you get a proprietary lease.

Question 36

Common Law

Answer 36

Law evolving from usage, custom and judicial interpretation rather than legislated by statute. Ex. Colorado is a common law state where laws are made in court.

Question 37

Community Property

Answer 37

Property acquired by a husband and wife, or either, during marriage, by their industry and not by gift, belonging equally to husband and wife. The law only exists in 9 states.

Question 38

Condemnation

Answer 38

Real property law, the process by which property of a private owner is taken for public use, with compensation to the owner, under the governmental right of eminent domain.

Question 39

Construction mortgage

Answer 39

A short term loan used to finance the building of a structure. Commonly used by developers.

Question 40

Constructive notice

Answer 40

The conclusive presumption that all persons have knowledge of the contents of a recorded instrument. Ex. record a deed, take possession.

Question 41

Contract

Answer 41

An agreement, enforceable at law, between two or more competent persons, having legal purpose, wherein the parties agree to act in a certain manner. It’s an irrevocable agreement to do or not do something.

Question 42

Conventional mortgage

Answer 42

A mortgage securing a load made by private investors without government participation. It is not FHA insured or VA guaranteed.

Question 43

Conversion

Answer 43

Unauthorized appropriation of ownership rights over goods or property belonging to another; also altering one form of property to another such as changing a leasehold apartment building to freehold condominium ownership. aka. Altering a property from one form to another.

Question 44

Conveyance

Answer 44

An instrument in writing by which a person transfer some estate, interest, or title in real estate to another , such as a deed or lease. Written transfer of some estate.

Question 45

Covenant

Answer 45

A promise or agreement, usually in writing, to do or not do certain acts; also stipulations in real estate conveyance document governing use of the property.
Ex. A guarantee warranty, two deeds supply a covenant, a general warranty deed and special warranty deed.

Question 46

Cubage

Answer 46

The product of multiplying width x height x depth (or length) of an object. L x W x H

Question 47

Cul-de-sac

Answer 47

A street which dead-ends in a semi-circle.

Question 48

Curtsey

Answer 48

Common-law life-estate where all of wife’s real property given to the husband upon her death. When the husband survives.
Not active in Colorado.

Question 49

Customer

Answer 49

A party to a real estate transaction with whom the broker has no brokerage relationship because such party has not engaged or employed a broker. Ex. someone you are showing properties too and don’t have a contract with.

Question 50

Dedication

Answer 50

Transfer of land from private to public use, as streets in a platted subdivision. Ex. A builder dedicates the street

Question 51

Bundle of rights

Answer 51

1. Possession 2. Use or control for any legal purpose 3. Quiet enjoyment 4. Exclusion 5. Disposition

Question 52

General Warranty Deed

Answer 52

1. Covenant of seisin (possession) 2. Covenant against encumbrances, except those mentioned in the deed or title policy 3. Quiet enjoyment, which is protection from third party 4. Further assurance 5. Warranty forever