Final Exam Flashcards
Explain the basic procedure at closing, including what documents are brought.
The closing is the point at which the parties to a real estate transaction come together, sign the appropriate paperwork and disburse the funds. Prior to the closing information must be gathered concerning loan payoff amounts, new loans obtained, title search, legal description of the property, tax information and inspection reports such as termite, lead paint, etc. An appraisal will also have been obtained prior to the closing. Several days prior to the closing, the attorney will receive the loan packet which will outline the procedure. The closing the most common participants are usually the buyer, the seller, an attorney, a notary, and the closing professional. Optional participants can be a paralegal, the real estate and even a representative from the loan company. At the closing many documents are passed between the parties, verified, signed and an accounting of all funds take place. Documents include: General warranty deed, mortgage, IRS funds, lien waiver affidavits, HUD 1 settlement form, bill of sale for personal property, compliance agreement, credit insurance documents, loan application, Patriot Act requirements, PMI disclosures, truth in lending forms, trust disbursement records, inspection letters and a plat of survey. When all forms are verified and signed, all moneys have changed hands appropriately and the closing is complete, the general warranty deed and the mortgage will be filed.
Explain the basic steps in a title examination and list and describe common problems that occur.
To begin a title search the examiner must know the street address, parcel number tax number or some other identifier to identify the specific property. To be as accurate as possibly in the examination of records, the title examiner must also have the names of the current owners and the time period for which the examination will be carried out. The title examiner will then start a chain of title, which is a complete listing of all owners of the property. Once all past ownership is established, any adverse conveyance will be determined. Examples of this would be the establishment of an easement, or a failure to pay taxes. Records will be searched including birth records, death records, marriage records, probate records, and judgments. After all the research has been completed, the information is compiled into a final report. Some common problems that occur in a title examination can be gaps in a chain of title, names changes due to marriage, and properties that have been subdivided at some point in the past.
List and explain the various exceptions to zoning classifications.
- Non conforming use: A structure that violates the zoning classification, but predated the enactment of the zoning rule. It is “grandfathered” in.
- Conditional use permit: An exception to a zoning classification granted by a zoning board usually to benefit area residents.
- Variance: An exception to a zoning classification granted by a zoning board. An example would be a business run out of a home.
How does agency law apply to the relationship between the real estate broker and the client (seller).
The real estate agent, as named, is an agent. In a typical real estate transaction, the seller becomes the principal. As such the real estate agent has the duty to the seller to obey their wishes, take care, be loyal and be accountable. The seller, as the principal, has duties to the agent to compensate the agent, cooperate with the agent, and not to unfairly injure the agent’s reputation.
List and explain the four landlord/tenant relationships.
- Tenancy for Years: These are created by the terms of the lease. The lease arrangement will begin and end on a specific date.
- Tenancy from Year to Year: A lease arrangement that runs for a series of intervals, such as a month to month basis. Automatically renews at the end of the period unless the parties agree to terminate.
- Tenancy at Will: An informal agreement with no set terms. The tenant stays for “as long the tenant desires.”
- Tenancy at Sufferance: Tenant is on the premises without permission.
List and discuss the four types of deeds
- General Warranty Deed: Conveys fee simple absolute rights to the grantee. Warrants the covenants of seizing, quiet enjoyment, against encumbrances, further assurance, and warranty forever.
- Special Warranty Deed: Resemble a general warranty deed, but instead of making several promises, a special warranty deed only makes a single warranty.
- Deeds of Trust/Mortgages: Specifies the lender’s right to the property in the event that the buyer defaults on her mortgage. Sets out the rights of the lender, creates a promissory note between the buyer and the lender, and gives lender right to foreclose in the event of default.
- Quitclaim Deed: Surrenders any rights that the grantor may have in the property, but does not make any representation about the nature or quality of the rights that the grantor has.
What are the basic elements of a mortgage?
- Must be in writing
- Must identify all the parties property by name
- Contains specific clauses, such as promissory note, granting clause, description of the debt and a power of sale provision
What are capital gains taxes?
Capital gains taxes are taxes that a seller pays on the profit of the sale of his property.
What is an appraisal and why do we have it done?
An appraisal is an independent evaluation of the value of the real estate. Some lenders will not lend money until it has been established that the property is worth the amount being requested by the borrower.
What are the advantages and disadvantages of real estate as an investment?
Advantages: generally appreciates in value, improves a homeowner’s credit rating, provides a ready source of funds for home equity loans, offers tax write offs.
Disadvantages: poor liquidity, property taxes, maintenance costs, financing and down payment costs
What information can be found in tax records?
Tax records list the current owner’s names/addresses, the assessed value of the property, the sales history of the property, the current tax rate of the property, fair market value of the propert and oftentimes a survey of the property.
Explain the role of technology in modern real estate legal practices?
- online loan application
- online real estate searches
- loan processing software
- closing software
- electronic records of deeds
- email, etc.
How are restrictive covenants enforced?
Restrictive covenants are enforced through the filing of a civil suit by an adjoining land owner who must also be bound by the same restrictive covenant.
Explain the impact that zoning rules and regulations can have on properties.
Zoning rules and regulations can impact what types of buildings can be built, where they can be built. They are designed to promote health and morals, reduce traffic congestion, emphasize safety, and provide adequate heat, light and airflow for residents.
Explain foreclosure – what is it.
Foreclosure is the right of the lender to initiate an action to auction off property for outstanding indebtedness in a mortgage or a deed of trust.
