Legal Descriptions Flashcards
(342 cards)
1
Q
Define Survey
A
A legally valid drawing of the dimensions of a piece of real estate, including its boundaries and the location of improvements
2
Q
Metes and Bounds
A
legal land description method identifying a piece of real estate’s exact dimensions and location in reference to a fixed and permanent monument
3
Q
Define Point of Beginning
A
The definite starting point for a metes and bounds description
4
Q
Define Monument
A
An object used to mark the boundaries of a piece of real estate
5
Q
Define Rectangular Survey System
A
method to describe land by using principal meridians and base lines; also known as the government survey system
6
Q
Define Lot and Block
A
A way to describe a piece of land by referring to the lot and block numbers in a subdivision that were assigned by the developer
7
Q
Street numbers and place names are
A
Informal references
8
Q
A street address is not
A
an adequate legal description.
9
Q
In order for a document to be recorded for a real estate transaction, it has to contain a specific legal description, called a
A
valid legal description.
10
Q
methods of surveying:
A
Metes and bounds
Rectangular survey system
Recorded plats (lot and block)
11
Q
Metes and bounds are also considered the most accurate method of identifying a piece of land, which is probably why they’re the
A
most common method used for land description in Texas today.
12
Q
Metes and bounds are a written legal land description identifying
A
a piece of real estate’s exact dimensions and location in reference to a fixed and permanent monument.
13
Q
Metes refers to
A
the distance measurements used in the description.
14
Q
Bounds are the descriptions
A
of the boundaries that enclose a parcel of real estate.
15
Q
monuments were used as
A
corner markers for metes and bounds.
16
Q
Monuments are typically a
A
metal pin or piece of rebar driven into the ground at each point of the description.
17
Q
When a system of metes and bounds is used, the description of the property is made up of several
A
points described in relation to each other.
18
Q
After point of beginning, the next point is described as
A
“X (number) of feet from the point of beginning.”
19
Q
(Meters and bounds) This path of points usually moves in a
A
clockwise direction from the monument around a parcel of land, describing size/distance in feet and direction in degrees, minutes, and seconds.
20
Q
rectangular survey system uses a more refined version of
A
longitude and latitude system of mapping with a surveyed grid of meridians, baselines, townships, and ranges to describe a piece of land.
21
Q
lot and block system, also known as
A
recorded plats.
22
Q
Lot and block uses metes and bounds to first
A
locate the borders of each parcel, or a sectioned off portion of real estate.
23
Q
The Lot and Block (Recorded Plat) System has a handful of terms that could get confusing. Here’s a quick definition of each:
A
Plat - A drawing of a development used in the lot and block method
Parcel - Individual lots combined to make a block
Lot - Individual parcel of land measured and defined by the metes and bounds system
Block - A collection of lots (parcels)
Tract - The totality of the property represented on a plat
24
Q
Define Plat
A
A drawing of a development used in the lot and block method
25
Define parcel
Individual lots combined to make a block
26
Define lot
Individual parcel of land measured and defined by the metes and bounds system
27
Define block
A collection of lots (parcels)
28
Define tract
The totality of the property represented on a plat
29
1 township =
36 sections
30
1 section =
640 acres (a square mile)
31
1 acre =
43,560 square feet
32
1 mile =
5,280 linear feet
33
A benchmark is a
permanent marker of known location and elevation(as established by a government survey team. Elevation is determined in relation to sea level.)
34
Longitude Lines/Meridians:
Units of measurement that run north to south to Earth’s poles
35
Latitude Lines/Parallels:
Units of measurements that run east to west, parallel to the equator
36
Range:
A column created by drawing a parallel line every six miles east and west of a principal meridian
37
Township Lines:
Lines that intersect with range lines to create 36-square-mile parcels (6 x 6 square miles) called townships
38
Acre:
A measure of the surface of land (43,560 square feet)
39
Section:
A square made up of mile-long boundaries (1 square mile) that equates to 640 acres
40
Here are the three main ways we describe real estate:
Metes and bounds
Rectangular survey system
Lot and block (recorded plat)
41
Meridians:
A true meridian running through an initial point, which, together with the baseline, forms the highest level framework for all rectangular surveys in a given area.
42
Baselines:
A parallel of latitude, referenced to and established from a designated initial point, upon which all rectangular surveys in a defined area are based.
43
Ranges:
A measure of the distance east or west from a referenced principal meridian, in units of six miles.
44
Tiers:
A measure of the distance north and south from a referenced principal baseline, in units of six miles.
45
Sections:
An approximately one-square-mile block of land (640 acres). There are 36 sections in a survey township.
46
Townships:
Also known as a survey township. A square parcel of land of 36 square miles, or a measure of the distance north or south from a referenced baseline, in units of six miles.
47
There are also longitude lines that serve as principal meridians, and latitude lines that serve as
Baseline
48
a section can then be divided into
halves (320 acres) and quarters (160 acres). Those halves and quarters can then be halved and quartered again.
49
Every 24 miles north and south of a baseline, we name a
correction line, or standard parallel.
50
And every 24-by-24 mile area created by a guide meridian and a standard parallel is known as a
Check
51
Datum:
base point from which measurement is taken by moving upward or downward, marking standard heights or depths
52
Air Lot:
Airspace above a parcel of land
53
Contour Map:
map where curved lines (contour lines) connect contiguous points of equal elevation to define the contours of the land, also called a topographic map
54
All of the real estate description methods we’ve previously discussed are
surface identification methods.
55
Legal descriptions
are ways of describing exact boundaries of a piece of land to accurately understand what a person owns or has possession of
56
A datum is a base point from which
Elevation is measured
57
A datum is established by the
Mean sea level
58
And just in case you’re doing business in New York City, datum is measured there by
water level.
59
An air lot is
the space above a particular parcel.
60
You’ll need two key pieces of information to locate an air lot:
The location of the parcel of land where the air lot is believed to be
The elevation (from the point of the datum) of where the air lot is thought to extend
61
A contour map, also called a
Topographic map
62
A contour map shows hills.... and
valleys, plateaus, and other patterns that may affect water drainage, runoff, or other development issues.
63
A developer uses a contour map to determine the need for
leveling, grading, and engineering any potential problem.
64
vertical land description is most commonly used when
air rights and subsurface rights need specific explication. (This is also the method for expressing condominium ownership boundaries.)
65
Vertical land descriptions can help when determining
air rights, water rights, and subsurface rights.
66
a parcel of land does NOT need a new description every time it changes hands. Previously recorded descriptions can be referenced for the new conveyance for up to
Seven years
67
After seven years, a new survey is needed by
lenders and title companies.
68
Land Surveying:
The science of determining points and the distances and angles between them, often for the purpose of establishing land maps and boundaries for ownership transfers of real estate
69
A survey ultimately certifies the
legal description of the land being sold.
70
Surveys show the size and dimensions of the tract of land, as well as the
location and shape of the property.
71
An improvement survey is a type of survey that looks specifically at
current or future improvements on the land to make sure they’re within the property boundaries.
72
With an improvement survey, the drawing shows where the ...
building, fences, and other human-made objects are located.
73
plat is a legal form of property description only if the developer
records it in the public record.
74
Contract:
A legally binding and enforceable agreement to do or not to do a specific thing
75
Performance Agreement:
a contract that requires the contracting parties either to perform certain actions or to uphold certain contractual promises
76
Forbearance Agreement:
Part of a contract that requires one or more of the contracting parties to refrain from actions they are otherwise legally entitled to perform
77
Because contracts create obligations that can be legally enforced, it is extremely important both parties
understand and accept all of the stipulations in any contractual agreement.
78
In Texas, all real estate contracts
must be in writing and signed by the party to be charged if they are to be enforceable in favor of a license holder.
79
a client or customer may be able to enforce an
oral contract against you.
80
Bilateral Contract:
An agreement in which both parties give consideration and promise to perform the actions specified in a contract
81
Unilateral Contract:
An agreement in which one party promises to perform and the other party accepts this promise, requiring only one party to act
82
Executed Contract:
contract in which all terms have been fulfilled by all parties
83
Executory Contract:
contract that is not completely executed or performed
84
Addenda
Documents containing additional terms, information, or obligations that are attached to a contract
85
Four Corners Doctrine:
legal concept stating that the court can only consider information that appears within the four corners of the documents
86
Amendment:
Changes or makes modifications to an already agreed upon contract
87
These skills ensure real estate professionals provide their clients with awesome service by helping them understand what contracts actually mean (without ....
giving legal advice, of course).
88
the 13-member Broker-Lawyer Committee, which is a part of the Texas Real Estate Commission,
drafts and edits the contract forms.
89
If the broker receives a deposit or earnest money, the broker must deposit the money by the
close of business on the second working day after the execution of the contract.
90
If the broker finds the deposit or earnest money check has been dishonored by the bank, the broker shall immediately
notify both parties.
91
lease with option to buy is a
contract in which the buyer can lease a property for a period of time (usually a year) and then have an option to buy the property at the end of the lease period.
92
When a dispute goes to court, the court is bound by the four corners doctrine. This is a legal concept that states that the court can
ONLY consider what appears within the four corners of the documents. Nothing outside of what appears in the contract will be considered.
93
License holders must make certain any verbal agreements between the parties are also in the contract. These are conveyed through
Addenda
94
The big thing to remember is that an amendment is not the same as an
Addendum
Side note: An amendment is created and agreed to by the parties after the contract has been finalized.
95
The buyer asks for an extension of the closing date to properly get the financing in place. The seller agrees to the extension with the use of the TREC form
Amendment to Contract.
96
Here's the list of all the addenda TREC promulgates for use by license holders:
Addendum for Sale of Other Property by the Buyer
Addendum for Back-Up Contract
Addendum for Release of Liability on Assumed
Loan and/or Restoration of Seller’s VA Entitlement
Seller Financing Addendum
Environmental Assessment, Threatened or Endangered Species, and Wetlands Addendum
Addendum for Coastal Area Property
Addendum for Property Located Seaward of the Gulf Intracoastal Waterway
Addendum for Property Subject to Mandatory Membership in a Home Owner’s Association
Third Party Financing Addendum
Loan Assumption Addendum
Addendum for Reservation of Oil, Gas and Other Minerals
Short Sale Addendum
Addendum for Property in a Propane Gas System Service Area
Promulgated Temporary Leases:
Seller’s Temporary Residential Lease
Buyer’s Temporary Residential Lease
97
TREC promulgates six contract forms:
One to Four Family Residential Contract (Resale) — standard form for sale of residential properties
Unimproved Property Contract — land without improvements
New Home Contract (Incomplete Construction) — builder selling residential property where construction is incomplete
New Home Contract (Completed Construction) — builder selling residential property where construction is complete
Farm and Ranch Contract — acreage properties that typically have both farm and ranch improvements as well as residential improvements
Residential Condominium Contract (Resale) — properties that include ownership of one unit in a multiple-unit structure plus ownership in an undivided interest in the land and any other common elements
98
In a bilateral contract, it
obligates both parties to fulfill certain terms.
99
Agents who have property listings on the MLS should make sure the listing reflects what stage the
contract is in.
100
When there is an executory contract for the sale, the property will be called
pending rather than for sale.
101
Once the contract is executed, the property's listing status in the MLS will need to be changed from pending to
Sold
102
Statute of Frauds:
A law which requires certain types of contracts to be in writing and signed by all parties who are bound by the contract
103
Parol Evidence Rule:
A legal term that states that if the important details of an agreement were discussed but fail to make it into the written contract, the written and signed contract is given authority over any word of mouth
104
Valid contracts are legal agreements meeting...
all the essential, basic requirements of the law.
105
The five components of a valid contract are:
Mutual assent
Legally competent parties
Consideration
Lawful objective
Adherence to the Statute of Frauds
106
mutual assent requires all the contracting parties to...
agree to all of the contract’s provisions and conditions
107
Mutual assent requires:
An offer and acceptance
A counteroffer to the original offer can exist
Acceptance of the original offer is not required
The absence of fraud, misrepresentation, or duress
The absence of mistakes
108
the offeror is the person extending the contract and the offeree is
the person accepting the contract.
109
An offer remains open until it is:
Accepted
Rejected
Retracted prior to acceptance (For example: The offeror can revoke the offer at any time if they have not heard from the offeree, whether the offeree has technically accepted the offer or not.)
Countered
Expired
110
Express acceptance:
A candid and unqualified outward manifestation of an agreement, such as: “Yes, I agree to your offer.” In real estate, since the contract must be in writing, the acceptance would be expressed.
111
Implied acceptance:
When the parties bound by the contract act in a manner implying acceptance of the offer
When all parties involved act out the contract’s obligations instead of openly stating an agreement or acceptance
112
Conditional acceptance:
Requires a specific condition to be satisfied or an event to take place before acceptance of the contract
Can be viewed as a counteroffer
Example: “I will buy this shirt if you give me a 20% discount.”
113
There are three types of (offer) acceptance:
Express acceptance
Implied acceptance
Conditional acceptance
114
exchange of consideration means...
that no one may obtain anything of value without providing some form of compensation (in a contract, you cannot get something for nothing).
115
Lawful Objective
means that a contract cannot explicitly or implicitly call for any illegal activities.
116
Lawful objective in a contract includes:
Considering all relevant laws and statutes
Confirming there are no illegal action(s) being required of any parties involved
Becoming void if it implicitly or explicitly requires illegal conduct
Being held accountable for attempting to fulfill a contract devoid of lawful objective
117
A valid contract must adhere to the statute of frauds, a law which requires
certain types of contracts to be in writing and to be signed by all parties who are bound by the contract.
118
The statute of frauds requires contracts to be in writing if the situation falls under at least one of these categories:
It involves the sale or transfer of real estate.
It concerns debts or specific duties.
The terms extend for a period of more than one year.
The terms extend beyond the lifetime of the promisor.
It involves the sale of goods valued at $500 or more under the Uniform Commercial Code.
119
History: The term “statute of frauds,” is derived from
“An Act for Prevention of Frauds and Perjuries.”
120
The statute of frauds applies to most real estate contracts including, but not limited to:
Sales Contracts
Listing Agreements
Buyer Representation Agreements
Property Management Agreements
Trust Deeds
Mortgages
Leases for periods of longer than one year (less than one year does not require this)
121
Parol literally means “word of mouth.” So, the parol evidence, then, are the terms and conditions the parties
discussed before the final contract was written.
122
the parol evidence rule holds that when important details of an agreement discussed between two or more parties fail to make it into the written contract, the written, signed contract is
given authority over any parol evidence.
123
Partial Performance:
This occurs when one or more of the contracting parties perform only a portion of the agreed-upon contractual duties
124
Substantial Performance:
Occurs when a party performs the majority of the contract’s requirements but does not perform according to the contract’s stipulations
125
Contingencies:
Stipulations or conditions that must be satisfied before the contract can be performed
126
Assignment:
The transference of obligations in a contract from one party to another
127
Novation:
The act of replacing an existing contract with a new, modified one
128
If one or more of the contracting parties either partially or completely fails to fulfill the contractual obligations, this is referred to as a
Breach of contract
129
When a contract is discharged, the terms and conditions of the contract are either
cancelled or satisfied.
130
The five common reasons for discharging a contract are:
```
Partial performance
Substantial performance
Non-performance due to legal issues
Mutual agreement
Operation of law
```
131
In the case of a breach, the party who has honored their contractual obligations has the right to seek
compensation for any damages suffered as a result of the other party’s breach.
132
When there is a breach of contract, the non-breaching party or the party who fulfills (or wants to fulfill) their part of the contract has four options:
1) forfeit
2) rescind
3) Sue for specific performance
4) Sue for compensatory damages
133
Forfeit:
no longer any contractual relationship.
This means the seller is entitled to keep the earnest money and all other payments collected from the prospective buyer.
134
Rescind:
means the non-breaching party can cancel the contract entirely.
It also means the seller must return all payments received from the buyer.
135
Sue for specific performance:
legal remedy results in a court order requiring all parties to carry out the promises stipulated in a contract.
136
Sue for compensatory damages:
does not force the parties to abide by the original contract,
but it DOES require the party who breached the contract to compensate the party who did not.
137
Financing contingency:
Makes the purchase contract conditional upon the buyer’s ability to obtain financing
138
Inspection contingency:
Makes the purchase contract conditional upon the outcome of the home inspection report or appraisal report
139
the contracting parties may have the option of transferring their rights and duties to a third party. This transfer is known as
Assignment
140
Assignment is also very common in commercial real estate. Often the person or entity that puts the property under contract is not the same one that will close. The contract could be assigned to a new buyer with a fee paid to the original buyer. This is known as
wholesaling
141
Novation
the act of replacing an existing contract with a new, modified one with different obligations.
Legally, it is understood to be the exchange of one contract for another.
142
Recording:
The placing of documents about the claims and ownership of real estate in the county clerk’s office at the courthouse
143
Abstract of Title:
condensed history of title to a tract of land that summarizes the transfers of ownership and encumbrances
144
Attorney’s Opinion of Title:
document written by a lawyer that identifies any defects in an abstract of title that may or may not state that the seller has marketable title to the property bill of sale; a document written to pass ownership of personal property to someone else
145
Title Insurance:
Insurance to protect the owner of a property if any other person proves ownership; covers the insured person's investment into the property but does not guarantee continued ownership
146
actual notice is:
An action by taking possession of the property
| A way of showing ownership
147
constructive notice of ownership is:
recording the deed
which is part of the normal process in real estate closings. Usually, the title company sends the deed to the County Clerk’s Office for recording and the recording company sends the recorded deed to the purchaser.
148
chain of title
the complete history of the title, including all transfers from the original owner up until the present owner
149
Real estate license holders are required to tell every buyer they should obtain an abstract of title and
have it examined by an attorney or receive a policy of title insurance.
150
early real estate “sales agents” were not acting in an
agent capacity.
151
Estate:
The degree, quantity, nature, and extent of one's interest in property
152
Statutory Estate:
An estate that is created as a matter of state law
153
Freehold Estate:
An estate in land in which ownership will last for an indeterminate duration
154
Leasehold Estate:
A type of property interest allowing tenants to occupy and use a property they do not own; contains a reversionary righ
155
Fee Simple Estate:
Fee Simple Estate:
156
Defeasible Fee Estate:
Also known as fee simple defeasible or qualified fee, is a type of freehold estate in which the person who has possession of the property is only able to hold the property until an event takes place or does not occur; two common defeasible fee estates are fee simple determinable and fee simple subject to condition subsequent
157
Fee Simple Subject to Condition Subsequent:
A defeasible fee estate in which a grantor conveys a parcel of real estate subject to a condition of ownership; the grantor must go to court to assert their right to retake ownership (right of re-entry)
158
Fee Simple Determinable Estate:
A defeasible fee estate that will come to an end automatically and immediately upon the occurrence of a designated event, the time of which is uncertain
159
Life Estate:
An interest in real estate that will end upon the death of the life tenant or the pur autre vie life
160
Conventional Life Estate:
type of freehold life estate created by a deed or will that lasts for the duration of the tenant's life
161
Legal life estate:
type of freehold life estate created by an act of law; a Texas homestead would be one example
162
Pur Autre Vie:
type of freehold life estate that grants someone ownership of a property for the duration of another person's life
163
Remainder:
Refers to the estate that will pass to another party at the death of the person upon whom the life estate is based
164
Reversion:
The portion of an estate that will return to the original grantor when a life estate has ended
165
Reversionary Interest:
Refers to an estate wherein, upon the death of the life estate owner, full ownership reverts to the original fee simple owner; also known as a revisionary right
166
Remainderman:
Refers to recipient of the remainder — either the grantor who set up the life estate or a designated third party
167
Estate for Years:
A leased possession of property for a certain, specific period of time; also known as a tenancy for years
168
The interest one holds in real estate can be limited by the rights or interest of others. These limiting interests of others can take the form of:
Statutory, as in tax liens, or
| Encumbrances, such as the rights of others to use specific rights of way on a parcel of land, liens, etc.
169
The four main types of estates in land are:
Freehold Estates
Leasehold Estates
Equitable Estates
Concurrent Estates
170
The individual, depending on the type of freehold estate, may also have a right of
Disposition or right to convey the interest they own.
171
freehold estate is. Let's break it down further into three categories:
Fee simple absolute estate
Defeasible fee estate (also called "qualified fee")
Life Estate
172
Two common forms of defeasible fee estates are:
Fee Simple Determinable
Fee Simple Subject to Condition Subsequent
173
with the fee simple subject to condition subsequent estate, the previous owner would have to go to
court to prove that they should be the proud owner again.
174
Fee simple determinable language relieves the grantor of the need to pursue court approval whereas the wording used for fee simple subject to condition subsequent
Does not
175
The life estate documents identify the party to whom the estate will pass at the time of the death of the individual upon whom the life estate is based. Sometimes it passes to a
new owner and sometimes it reverts back to the original owner.
176
There are certain terms that apply to a life estate that you'll want to learn. They are:
Remainder refers to the estate that will pass to another party at the death of the person upon whom the life estate is based.
Reversion is the concept that that the property will revert back to the person who granted the life estate in the first place.
Remainderman refers to recipient of the remainder — either the grantor who set up the life estate or a designated third party.
177
Life estates may be created by
agreement of the parties or by operation of the law (state statute).
178
Upon the death of the life tenant, the holder of either the
reversionary or remainder interest will own a fee simple absolute estate.
179
There are two different types of life estates:
Conventional life estate
Legal life estate
180
categories and subcategories of freehold estates:
Fee simple absolute estate
Defeasible fee estate (also called "qualified fee")
Fee Simple Determinable
Fee Simple Subject to Condition Subsequent
Life estate
Conventional (including pur autre vie)
Legal
181
In a leasehold estate, one party owns the property, but
someone else lives there
182
whereas a freehold estate may be evidenced by a deed, a leasehold estate may be evidenced by
A lease
183
Keep in mind that the most important aspect of the leasehold estate is that
the tenant’s right of possession continues until the lease has expired
184
Leasehold estates are established when a tenant has
possession of a property and has the legal right to use the property, but they do not have actual ownership interest (i.e., they do not hold legal title and cannot legally sell the property).
185
Tenant has “right of possession” aka..
Possessory Estate
186
reversionary right
means possession of the property reverts back to the landlord after the lease term has expired.
187
The landlord’s interest in the property is specifically known as a
leased fee estate plus reversionary right
188
There are four types of leasehold estates:
Estate for Years
Periodic Estate
Estate at Will
Tenancy at Sufferance
189
An estate for years has a definite ending period, there is no automatic renewal, AND
no notice is required.
190
A periodic estate (also known as a periodic tenancy)
has a fixed lease period wherein the lease is automatically renewed at the end of each lease period until the landlord or tenant act to terminate it.
191
Although, like an estate for years, a periodic estate lasts for a pre-determined length of time, the periodic estate does not have to
have an ending date. It goes for as long as both the landlord and the tenant want it to last.
Notice is required.
192
estate at will (also known as tenancy at will)
tenant is occupying a property with the landlord's knowledge and consent, but without a formal lease agreement
193
Under an estate at will, the landlord and tenant have all of the typical
rights and obligations under any other type of leasehold estate, except that the tenant or landlord both have the right to terminate the lease agreement at any time.
194
tenancy at sufferance, Also known as an estate at sufferance
tenancy at sufferance occurs when a tenant remains in possession of the property beyond their lease term, without the consent of the landlord.
195
When a tenancy at sufferance occurs, the tenant is referred to as the
holdover tenant, because they no longer have a standard tenant-landlord relationship.
196
The word “sufferance” in tenancy at sufferance means
to passively allow or tolerate something.
197
Equitable estate
occurs when a freehold estate owner has ownership interest on the property, but another party has interest in the property that is less than the interest afforded by ownership.
198
Liens and easements are considered types of
Encumbrances (any claim or right against a property held by another that is not the fee title owner.)
199
concurrent estate, which is an estate that is
owned by two or more individuals (i.e. co-ownership).
200
Joint Tenancy:
Property that is owned by two or more persons at the same time who all have an equal, undivided interest in the property
201
Tenants in Common: (in concurrent Estate)
When two or more parties own a property as a tenancy in common, each owner has a partial ownership interest and partial rights in a property
202
Community Property:( type of concurrent Estate)
Recognized in Texas (and 8 other states), as the type of joint tenancy that exists between married couples
203
The type of estate that is created by community property is also referred to as a
statutory estate since it’s an estate that was established by law in the legal union of marriage.
204
Easement:
A right to use or cross someone else's land for a specific purpose
205
Restriction:
An outline of what someone may not do on their own personal piece of property
206
License:(in reference to encumbrance)
The permission to use someone else’s property for a temporary period of time
207
Conveyance:
A transfer of ownership of a piece of real estate from one person to another
208
Probate:
The legal process in which a court decides who will inherit property
209
Encroachment:
When an owner’s property (such as a fence, tree, driveway) crosses the property boundaries of another landowner.
210
What is considered a nonpossessory interest in someone else's land?
Encumbrance
211
Encumbrances are attached to the title, not the
Owner of the property
212
An easement appurtenant exists
when two tracts of adjacent land are owned by two different people. Because property cannot be landlocked in Texas, one of the owners has the easement, or right to cross the other’s land. If they didn't have this right, they would never be able to leave their land.
213
When an easement appurtenant exists, there is one parcel of land which benefits at the (relative) expense of another. These are known as
the dominant tenement and servient tenement respectively.
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easement in gross
an individual or company is allowed to be on the owner's property for specific purposes.
Example: An electric company would have the right to be on someone’s land to clear limbs from power lines thanks to an easement in gross.
215
It is also possible for someone to obtain an easement by prescription after:
using a portion of someone’s property for some time without the owner’s permission.
216
Here in Texas, to establish an easement by prescription, the area in question would have to have been used by the non-owner of the property for at least
Ten years
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easement by prescription
Person would have to use the easement continuously, exclusively, and without the owner’s permission.
218
easement by necessity
owner cuts up a larger piece of property into two or more pieces to sell them off, it is possible that the owners of the properties in the back will not have a road or way to get in or out of the property unless they drive across someone else’s land. Since there is NO OTHERS CHOICES but to use someone else’s land, the people who need a way in and out will be granted an easement by necessity.
219
restrictions (often called restrictive covenants)
outline what someone may not do on their own personal piece of property.
Common in subdivisions
220
The type of encumbrances known as restrictive covenants (sometimes called deed restrictions) are added by
previous owners or added to deeds by the developers for specific subdivisions.
221
An encroachment uncontested over 10 years could result in
legal right to use the land of that adjacent property owner by creating a prescribed easement.
222
The most common type of encroachment is a
fence that was not placed on the property line.
223
(Encumbrance to Title) Although the attorneys handling the divorce should
transfer the ownership to the proper person, it does not always happen that way.
224
quitclaim deed is a document
the ex would have to sign to clear up the title, which "quits" or terminates their rights or claim to the property.
225
cloud on the title
By "cloud," we mean dispute
Another problem with the title may be created if there was a death and the property was inherited.
226
Statutory Lien:
A lien brought by a government entity such as a tax lien
227
General Lien:
A lien in which the real estate AND personal property may be sold to satisfy the debt
228
Specific Lien:
A lien that is against only the real estate
229
Priority of Liens:
The order in which debts or taxes levied by the government will be paid off through a court sale
230
Governments typically levy two types of taxes on real estate:
```
Special assessments (also called improvement taxes)
Ad valorem taxes (based on the assessed value of the property)
```
231
Special assessments are also called ...
improvement taxes
232
Ad valorem taxes
based on the assessed value of the property
233
```
Special assessments (also called improvement taxes)
Ad valorem taxes (based on the assessed value of the property)
Both types of taxes are
```
specific, involuntary, statutory liens on a taxpayer’s real estate.
234
A tax lien is a kind of
statutory lien that is imposed against real property if the property owner becomes delinquent in the payment of taxes.
235
Liens are claims that a
lender, tax office, or a repair person has against a property.
236
The lien could be against the real estate only, but it could also include
the personal property.
237
Texas has a statutory redemption period for property tax liens. If a person loses their property for nonpayment of their property taxes, they could potentially
get their property back as many as two years afterwards if the property was their homestead. For all other properties, the time frame is six months.
238
A property could have a special assessment put on it if the local government did anything in the way of
improving the area through fixes like the installation of curbs, sidewalks, or even paving the street.
239
The term ad valorem is Latin for
according to value
240
Many governmental bodies have the authority to levy and use ad valorem taxes, including the following:
```
Counties
Cities
Towns
Districts containing parks or preserved forests
Hospital districts
Water districts
School districts
```
241
Ad valorem taxes are specific,
involuntary, statutory (created by law) liens.
242
If a property owner wants to protest the appraised value, they would take their opinion and objections (and any evidence of why the number is wrong) to the
appraisal district office for the county.
243
The actual method by which a district imposes a tax is called
Appropriation
244
When the district officially imposes the tax, the action is called a
Tax levy
245
When talking about taxes, local due dates are also called
penalty dates
246
A knowledge of local due dates, also called penalty dates, is especially important for the
proration of taxes when a property is sold.
247
In Texas, ad valorem tax bills are usually received in the month of
October, each year
248
Real estate taxes are paid in arrears. This means they’re paid
after the time period for which the owner is being taxed.
249
Make sure that you, as an agent, prepare everything for the closing at the very beginning of the listing.
Here are some of the ways you can do this:
Obtaining a copy of an existing survey is a good start with the seller
Getting the buyer pre-approved for a loan
Call, prod, and move forward everyone that is involved in the transaction
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(Investment in tax liens)
| The buyer receives a tax lien certificate, which entitles them to one of the following:
A yield from the lien that must be paid by the defaulting taxpayer upon redemption (which we'll go over in more detail later)
Title to the property after a specified period of time
251
If the former homeowner is behind on taxes and can come up with the funds during the first year, they will have to pay the tax bill plus
25%
252
If the former homeowner is behind on taxes and can come up with the funds during the second year, the interest jumps to
50%
253
Special assessments are levied for common improvements, such as:
```
Gutters
Street lights
Curb improvements
Street paving
Sidewalks
```
254
Special assessments may be imposed by implementing the following general procedure:
1) A local government body submits a proposal for an improvement, or affected property owners petition the city for an improvement. Both submissions must indicate the need for or desirability of the improvement.
2) The proper authority holds hearings on the improvement after the affected property owners have been notified of the proposal or petition.
3) An ordinance is passed that describes the improvement, the cost of the project, and the area affected.
4) The amount to be assessed is calculated against all assessable properties in an assessment roll. The assessment roll indicates how the cost will be divided, usually according to front footage or estimated individual benefit.
5) Public hearings are held to confirm the assessment roll. Community members can raise objections at this time; the proposal is then decided by a local court.
6) The special assessment becomes a lien on the affected owners’ properties.
7) Local authorities issue a warrant after the improvement is completed that allows a local collector to issue bills to begin collecting the special assessment.
255
Special assessments become liens on affected homeowners’ properties after
the warrant and bills are issued.
256
Real estate transfer taxes are usually paid by
purchasing tax stamps,
...which are affixed to a deed at the time of recording at the county clerk’s office.
257
Some property transfers are exempt from transfer taxes. Common examples include:
Transfers between governmental bodies
Transfers by educational or religious institutions
Transfers of real estate as security for a loan
Real estate gifts
258
In 2015, with the full backing of TAR, the state legislature passed legislation that said there would never be a
transfer tax on real estate.
| This legislation later became a part of Texas' state constitution.
259
federal tax lien is a general...
involuntary, statutory lien that is held against all of the defaulting taxpayer’s property.
260
When a person does not pay Internal Revenue Service (IRS) taxes, such as the federal income tax, the IRS may obtain a
Federal tax lien
261
The IRS will first assess the taxpayer’s liability, then send a
Notice and Demand for Payment to the taxpayer.
262
If the taxpayer does not respond within ten days after receiving the Notice and Demand for Payment,
the IRS may then create a lien for the amount of the debt.
263
federal tax lien creates a claim on the taxpayer’s
real and personal property, including any property purchased after the lien is filed.
264
Homeowners and investors must pay federal income tax on profit made from the sale or use of real estate. However, both homeowners and investors can reduce these taxes through the use of
Tax shelters
265
The priority of mechanic’s liens is established not by the date of filing, but by the date
the work began or materials were delivered to that specific property.
266
tax liens take priority over
non-tax liens
267
Subordination agreements are
written compromises between lien holders to change the priority of their liens.
Ex: When buyers obtain a mortgage loan to purchase a property, lenders often require a highest-priority lien. (Highest priority liens are said to be "in first position.")
The bank will almost always want to be in the first position.
268
Voluntary Lien:
A lien that is created on purpose and with the agreement of the owner of the property in question, such as a mortgage
269
Involuntary Lien:
A lien that is created without the property owner taking any action to initiate it
270
Statutory Lien:
Lien established by local, state, or federal law for a specific set of circumstances
271
Equitable Lien:
A right that exists only in equity, with one party charging their property as security for a debt or loan
272
Mechanic’s Lien:
A lien created when a worker has not been paid for work done on a property
273
Execution Lien:
Lien created by a writ of execution issued by a court to force payment of monies owed from a judgment when a debtor does not pay
274
Federal Judgment Lien:
Lien filed by the government for failure to pay certain debts
275
Lis Pendens:
A document recording at the courthouse giving notice that a lawsuit is pending on a particular piece of property
276
Vendor’s Lien:
A lien the seller has against a buyer as a security for the unpaid balance of the purchase price
277
Vendee’s Lien:
A document declaring a claim from a buyer that the seller has not transferred title to the buyer according to the agreement
278
General liens affect
any property an individual or institution owns, including both real and personal property. This includes many kinds of taxes, such as IRS and inheritance taxes.
279
Specific liens are claims against
particular parcels of real estate and they do not affect any other property.
Examples of specific liens are vendor’s liens, execution liens, vendee’s liens, surety bail bond liens, mechanic’s liens, mortgages, special assessments, property taxes, and attachments.
280
Liens are
legal claims or rights to a debtor’s property that serve as a security interest for obligations or debt.
281
Lenders may also require a preferred lien, which means
that no other liens can take priority.
282
Mortgage liens can also be deed of
trust liens.
Under a deed of trust (or trust deed), title is held by a trustee as security for a debt until it is paid.
283
Mortgage liens are
specific, voluntary liens.
Buyers choose to have lien and only in RE.
284
Judgments are decrees given
By courts
285
When judgments specify the amount of money owed, they are called
money judgments.
286
Judgment liens are general, and
involuntary liens, so they apply to both real and personal property.
287
The written court decree is called an
Abstract of judgement
288
A writ of execution can be issued by
a court to force payment of monies owed from a judgment when a debtor does not pay.
It gives court officers the right to confiscate and sell the debtor’s property to satisfy the debt.
289
The government can file a federal judgment lien for
failure to pay certain debts, such as student loans. These liens are filed in the county where real property is held.
290
A judgment lien is a
general, involuntary lien. It may attach to all of the owner’s property except their homestead property.
291
A notice called a lis pendens is used to inform
the public when a lawsuit is filed that affects a specific piece of real estate.
292
A lis pendens notice is often useful because a
considerable time period may elapse between the time a lawsuit is filed and the time a judgment is rendered.
293
A writ of attachment is also called an
attachment lien.
Plaintiffs in a lawsuit may seek a writ of attachment, in which the court seizes property until it reaches a judgment. This protects creditors from a conveyance of title before a judgment is rendered.
294
An attachment lien is a
general, involuntary lien and may attach to all of the owner’s property except their homestead property.
295
Certain kinds of property are exempt from attachments and executions. Exemptions are often limited to a certain value. They vary from state to state, but might include items such as:
```
Tools used for a trade or business 🔨
Social Security 🔒
Basic household appliances and furniture 🚽
School books 📚
Money owed to debtors for child support or injury 💰
Prescription health supports 💊
Basic wages 💵
Cemetery lots 🕯
```
296
A vendor’s lien is a
specific, involuntary lien on a property as security for the purchase price that arises when a seller has not yet received full payment for the property.
297
80-10-10 loans
This name meant that the buyer would make a 10% down payment, borrow 80% of the sales price from a mortgage company, and then finance the last 10% with the seller.
298
Leveraging an asset means
using borrowed money to help purchase it.
299
vendee's lien
is a specific, involuntary lien that protects buyers.
300
bail bond lien:
Bail bonds can be put up in the form of real estate in lieu of cash when a property owner is accused of a crime.
specific, statutory, involuntary lien enforceable by a court officer or the sheriff if the accused property owner does not appear in court.
301
Bundle of Legal Rights:
Ownership of land with all of the legal rights of possession, control, enjoyment, exclusion, and disposition
302
Groundwater Rights:
Property owners' right to use water under the surface through the rule of capture
303
Accretion:
The process that results in the gradual increase in land area through deposits of soil by action of water
304
Avulsion:
The sudden loss of land by flood or when a stream or river changes course
305
In accordance with riparian rights, a property owner does NOT own the water, but they may use
the water and share those same rights and uses with other property owners whose land also interacts with the water.
306
Littoral use prohibits the property owner from artificially
changing the water’s location.
307
Groundwater in Texas follows the rule of capture, meaning
the landowner does not actually own the water under the property, but they have have the right to drill for the water and use it.
308
soil that gets deposited is also referred to as
alluvion
309
Texans should be aware that there is an Open Beach Law. This gives the public the right to
Use the beaches
310
In Texas, the agency responsible for governing water rights is the Texas Commission on Environmental Quality (TCEQ). They are also responsible for
applying federal and state laws under the Texas Water Code.
311
Texas Commission on Environmental Quality (TCEQ) is made up of
3 members who are appointed by the governor and confirmed by the state senate. They function to hold hearings to authorize permits involving water.
312
All western states, including Texas, have enacted laws that require water users to obtain a permit from the state. In general, those laws provide the highest priority to the earliest water users. This is known as the
Doctrine of Prior Appropriation and is sometimes called “first in time, first in right.”
313
Homestead:
A property that a person or family owns and occupies as their primary residence
314
Separate Property:
Property owned by either spouse prior to the marriage or by gift or inheritance during the marriage
315
state constitutional homestead rights are
Automatic and protects homeowners from claims by creditors being made against their homes, preventing any eviction by these creditors.
316
When a married couple occupies a separate property (owned by just one of them), the non-owner acquires
homestead rights.
317
Municipal Utility District (MUD):
Rural districts of Texas with lower tax rates that exist to provide developers a way to finance or be reimbursed for utility improvements they make
318
Public Improvement District (PID):
A district where property owners can decide on government financed and approved improvement projects for which they will be taxed
319
Disclosures required by Texas law:
Every potential buyer, seller, or agent is entitled to be told immediately if the broker is representing anyone on the property they are inquiring about.
Every unrepresented buyer or seller must be given the Information About Brokerage Services form at the first substantive discussion about specific real property.
Every buyer must be advised, in writing, that they should get an abstract of title examined by an attorney of their choice or obtain a policy of title insurance.
320
All buyers must be advised that the property they are interested in may have lead paint if it was built prior to
Jan 1, 1978 through the Addendum for Seller's Disclosure of Information on Lead-Based Paint and Lead-Based Paint Hazards as Required by Federal Law.
321
A material fact in a real estate transaction is
any fact that is significant or essential to the transaction – that is, any piece of information that could reasonably be expected to influence a prudent individual’s decisions regarding the transaction.
322
Members of the Texas Association of REALTORS® have a
Legal Hotline they can call for advice on disclosure issues.
323
In 1991, the Padgett family entered into a real estate contract from the Stone Point development for
$207,500.
324
additional tax liability. If the license holders involved in the transaction do not disclose tax liability, then the title company will
likely do so at the closing. This extra tax liability happens most commonly in the sale of ranches.
325
another disclosure that has to be made is about the conditions under
the surface of the property. This will usually take place when selling a piece of property that is unimproved.
326
there may be a natural gas line that runs under the property that the buyer would need to be informed of. The buyer might want to build an improvement on the land in the future, and building it over the pipeline could result in
its damage.
| Needs to be disclosed
327
So how do you know if a property comes with mandatory membership in an HOA? You could look up previous sales in the neighborhood in the MLS in an effort to find out that information, but that would not be the best route. Why?
Well, if the previous agent made a mistake filling out the MLS sheet, then you might duplicate the same misrepresentation.
328
When obtaining HOA info for buyers, Since the HOA representative on the phone may not give the best answer and you don't want any extra liability, it would be better if the inquiry took place over email. This way, you'd have
Written record
329
What do members get in exchange for paying their association dues?
Sometimes it's access to recreation areas, which are maintained using the proceeds from the fees.
330
Smaller towns that surround cities across Texas are areas known as
Extra Territorial Jurisdictions (ETJ)
331
The distance limit for what counts as an ETJ is dependent on the
population of the town or city.
332
The other reason why a buyer needs to be informed about an ETJ is because
they might be planning on building on the land someday.
333
Some buyers who purchase small acreage in rural areas have no idea what they are getting themselves into. For example, they will need water in order to live on their property. There are two basic possibilities for accessing water:
Drill a well
Have a local utility service company provide the water
They could have the water trucked in to the property. 🚚
334
Is buying is considering drilling for a well for water in rural property, agent should advise buyers to
consult with a local well driller. There are fluctuations in how deep the ground water is in various areas, so making rough estimates that might inform the buyer's decision to purchase is not a good idea.
335
Because of the potential distance between the service provider and the buyer's land, there could be a long time period before the buyer would be able to get utility service. This needs to be
disclosed by the seller to the buyer.
336
If you live outside of a city area in Texas, your property is most likely covered by
a taxing entity called the Municipal Utility District (MUD).
337
The reason MUDs exist is to protect against pollution of water and to look after septic issues. If a property is being purchased in a MUD, there will be a special
addendum attached to the contract.
338
disclosure concerns properties along the coast. This disclosure is made through the use of the Addendum
for Coastal Area Property.
This addendum notifies the buyer that if their property has a common boundary with lands that are submerged at certain tides, then there will be restrictions on how the property may be used and developed.
339
Maybe the county paved a road that was previously dirt. The homeowners in the area would be taxed for the footage that they own along the road. If that tax is in place at contract time
let the buyer know or the buyer can terminate the contract.
340
If a home has had mold in the past, but the mold has been removed, the owner will receive a
Mold Remediation Certificate from the company who worked on the home.
That certificate is good for five years.
341
State law says the seller is supposed to tell the buyer about
liens on the property.
342
Some builders have been known to charge a private
transfer fee to buyers when they purchased one of their homes.
The fee was set up in such a way that every time the home sold, the fee would be paid to the builder.
