Lesson 3: Laws and Regulations

Question 1

What is the “Fair Housing Act”?

Answer 1

The Fair Housing Act prohibits discrimination in the sale, rental, and financing of dwellings based on race, color, religion, sex, disability, familial status, or national origin. It aims to ensure equal housing opportunities for all.

Question 2

Define “Real Estate Settlement Procedures Act (RESPA)”.

Answer 2

RESPA ensures that consumers are provided with greater and more timely information on the nature and costs of the settlement process and are protected from unnecessarily high settlement charges caused by certain abusive practices.

Question 3

What does the “Truth in Lending Act” (TILA) require?

Answer 3

TILA requires lenders to disclose credit terms and costs to consumers, including the annual percentage rate (APR), term of the loan, and total costs to the borrower. This facilitates comparison shopping among consumers.

Question 4

Explain the “Americans with Disabilities Act” in the context of real estate.

Answer 4

This act requires public buildings and facilities to be accessible to individuals with disabilities, influencing real estate by requiring compliant modifications to existing properties and new constructions.

Question 5

What is “eminent domain”?

Answer 5

Eminent domain is the right of a government or its agent to expropriate private property for public use, with payment of compensation. This power is often utilized for infrastructure projects like highways and public utilities.

Question 6

Define “redlining”.

Answer 6

Redlining is the discriminatory practice of fencing off areas where banks avoid investments based on community demographics. It is illegal under the Fair Housing Act.

Question 7

What is the purpose of “zoning laws”?

Answer 7

Zoning laws are local regulations defining how property in specific geographic zones can be used. They regulate building size, placement, type of structures, and uses of buildings, ensuring orderly development.

Question 8

Explain “environmental impact assessments” in real estate.

Answer 8

These assessments evaluate the effects proposed projects have on the environment, helping to protect natural resources and ensure that development activities are sustainable.

Question 9

What is the “General Data Protection Regulation” (GDPR) and its relevance to real estate?

Answer 9

Although primarily European, GDPR affects real estate companies dealing with EU residents by requiring stringent data protection and privacy, influencing how client data is collected and handled globally.

Question 10

Define “constructive eviction”.

Answer 10

Constructive eviction occurs when a landlord’s actions or a property’s condition make the premises uninhabitable, effectively forcing the tenant to leave and terminate the lease without penalty.

Question 11

What is a “1031 exchange” in real estate law?

Answer 11

A 1031 exchange allows an investor to defer paying capital gains taxes on an investment property when it is sold, as long as another similar property is purchased with the profit gained by the sale.

Question 12

Define “homestead exemption”.

Answer 12

A homestead exemption protects the value of a home from property taxes, creditors, and circumstances arising from the death of the homeowner spouse.

Question 13

What does “adverse possession” mean?

Answer 13

Adverse possession is a legal doctrine that allows a person to claim a property right in land owned by another. Continuous and open use of the property must be demonstrated for a specific period, as defined by state law.

Question 14

Explain “lien priority”.

Answer 14

Lien priority determines the order in which creditors are paid following a foreclosure or sale of secured assets. Generally, the first to record the lien holds the primary position.

Question 15

What is “title insurance”?

Answer 15

Title insurance protects real estate owners and lenders against any property loss or damage they might experience because of liens, encumbrances, or defects in the title to the property.

Question 16

Define “escrow agent”.

Answer 16

An escrow agent is a neutral third party who conducts the closing of a real estate transaction, ensuring that all conditions are met before property and money change hands.

Question 17

What are “covenants, conditions, and restrictions” (CC&Rs)?

Answer 17

CC&Rs are the rules and limitations that govern the use of property within a homeowner association or a condominium development. They can dictate how a property looks, what it can be used for, and more.

Question 18

Explain “transfer of development rights” (TDR).

Answer 18

TDR is a zoning technique that allows landowners to transfer the allowable building density from their property to another location, preserving land without development while compensating the landowner.

Question 19

Define “leasehold estate”.

Answer 19

A leasehold estate grants the holder the right to use and occupy rental property during the term of the lease, but does not provide ownership title to the property.

Question 20

What does “dual agency” refer to in real estate transactions?

Answer 20

Dual agency refers to a situation where a real estate agent represents both the buyer and the seller in the same transaction, which can create conflicts of interest.

Question 21

Define “brokerage”.

Answer 21

Brokerage in real estate refers to the process or business of acting as a broker, that is, one who arranges or negotiates a transaction between a buyer and a seller for a commission when the deal is executed.

Question 22

What is a “fiduciary duty” in real estate?

Answer 22

A fiduciary duty is a legal or ethical relationship of trust between two or more parties. In real estate, agents have a fidarious duty to act in the best interests of their clients.

Question 23

Explain “commercial property insurance”.

Answer 23

Commercial property insurance provides coverage for buildings and personal property owned by a business, protecting against perils such as fire, theft, and natural disasters.

Question 24

What is “capital gains tax” in real estate?

Answer 24

Capital gains tax is a tax on the profit made from the sale of property or an investment. In real estate, it applies to the difference between the purchase price and the selling price of a property, minus allowable expenses.

Question 25

Define “non-conforming use” in zoning.

Answer 25

Non-conforming use occurs when a property’s use does not comply with current zoning regulations but is allowed because the property was being used in that way before the new zoning law was enacted.

Question 26

What does “power of attorney” mean in real estate transactions?

Answer 26

Power of attorney in real estate transactions refers to a legal document that grants one person the authority to act on behalf of another person in legal or financial matters pertaining to real estate.

Question 27

Explain “real estate syndication”.

Answer 27

Real estate syndication is a method of raising capital through a pool of investors to purchase and manage a property when the cost is too prohibitive for an individual or small group to finance independently.

Question 28

Define “master-planned community”.

Answer 28

A master-planned community is a large-scale residential plan that includes various amenities such as schools, shops, and recreational facilities. It’s designed and built with a specific lifestyle experience in mind.

Question 29

What is “rent control”?

Answer 29

Rent control is a government policy or law that limits the amount landlords can charge for renting out a home, apartment, or other forms of real estate. It is intended to protect tenants from drastic rent increases.

Question 30

Define “real estate developer”.

Answer 30

A real estate developer is a person or company that buys land, finances real estate deals, builds or has builders build projects, and orchestrates the process of development from the beginning to end.

Question 31

What is a “market analysis” in real estate?

Answer 31

A market analysis is a quantitative and qualitative assessment of a market. In real estate, it looks at the dynamics of the area including supply and demand, property values, and demographic changes.

Question 32

Explain “real property tax”.

Answer 32

Real property tax is a tax assessed on real estate by a local government. The tax is based on the property’s assessed value, including both the land and the buildings on it.

Question 33

What is “property management”?

Answer 33

Property management involves the administration of residential, commercial, or industrial real estate, including managing property owned by another party or entity to ensure the property is in acceptable condition for use.

Question 34

Define “exclusive right to sell”.

Answer 34

Exclusive right to sell is a contractual agreement whereby one real estate agent is given the right to be the only agent to sell a particular property, earning a commission regardless of how the property is sold.

Question 35

What is an “offer to purchase” in real estate?

Answer 35

An offer to purchase is a legal document that states a potential buyer’s price and terms for buying a property. If accepted by the seller, it can form the basis of a binding contract.

Question 36

Explain “easement” in property law.

Answer 36

An easement is a legal right to use another’s land for a specific limited purpose. For example, to cross property to access a public road.

Question 37

Define “condominium”.

Answer 37

A condominium is a building or complex of buildings containing a number of individually owned apartments or houses. Each owner has title to the individual unit, plus shared ownership of the common areas.

Question 38

What does “exclusive agency listing” refer to in real estate?

Answer 38

Exclusive agency listing is a contract under which the owner appoints a real estate agent as the exclusive agent for the sale of the owner’s property. However, the owner retains the right to sell the property themselves without paying a commission.

Question 39

Define “property rights”.

Answer 39

Property rights are the legal rights to use, control, and dispose of property. In a broader sense, they include the rights to use, lease, mortgage, sell, and pass the property to heirs.

Question 40

What is “title search”?

Answer 40

A title search is an examination of public records to determine and confirm a property’s legal ownership, and find out what claims or liens are on the property that could affect the purchase.