License Flashcards
When a broker earns a commission but seller refuses to pay what can broker do?
Let the transaction close then sue.
What is blind ad?
Ad that does not list brokerage.
When seller who has listed property declares Chapter 13 what happens to listing?
Listing must be ratified by bankruptcy court.
Sold as is means ______
Seller will not make any necessary repairs.
Is trustee appointed for someone who files Ch 7 bankruptcy?
Yes
When can licensee place a sign on property?
Written permission from owner.
How long must rejected offers be kept?
One year from the day the offer was rejected.
Does the commissioner’s rules dictate specific lettering size?
No.
What happens to listing during Ch 7 bankruptcy?
Must be court ratified.
During chapter 7 bankruptcy what is salesperson commission considered?
Unsecured creditor claim.
Can a real estate broker/salesperson do an appraisal?
No.
When can you contact a For Sale by Owner?
When you have a buyer.
adjusted basis
adjusted purchase price
Formula adjusted basis
Basis + Acquisition Costs + Capital Improvements - depreciation = Adjusted basis
Adjusted Sales Price
Sales price - Cost of sale (commissions and closing costs)= adjusted sales price
Basis
Purchase Price
Blue Sky
protects public from being sold illegal partnership
boot
cash or personal property person puts in to equal out exchange of property
C Corp
double taxation, artificial person, veil of protection
Limited partnership
general members + other members, limited say, joint and several liability, pass through taxes (k-1)
S-Corp
1 or more stockholders, 100 max and American citizens, veil of protection, pass through tax (k-1)
LLC
managing members and members, veil of protection, pass through taxes,
REIT
100 stockholder minimum, nor corp tax, capital gains tax as long as they distribute 95% of their profits
Securities
pool of money to invest, need securities license
Capital Gains
taxable profits realized from selling capital assets
short term capital gain
held for 12 months or less and taxed as ordinary income
long term gain
15%, over 400K income 20%
capital loss
can take up to $3000 a year off taxes, excess moves forward to next year
installment sale
seller must carry some or all of the financing
tax deferred exchange
trade properties and defer taxes
mortgage relief
mortgage boot during tax deferred exchange
starker exchange
exchange 1 property for multiple properties over time, once relinquish property 45 days to identify new properties, 180 (including the first 45) to COE
Capital gains formula
Adjusted sales price - adjusted basis = capital gains
Depreciation formula
purchase price(basis)- land =building value + acquisition costs=depreciation value / economic life = annual depreciation * number of years held = depreciation
Rate of return
investor’s percentage yield based on property income production.
cap rate
NOI - cap value = cap rate
cash on cash return
cash flow / $ invested = cash on cash return
equity build up
reduce principal and grow equity
diversification
having several different types of investments
inflation hedge
investment that keeps pace with inflation
liquid asset
can turn into cash quickly
frozen asset
cannot be converted into cash easily
Depreciation formula
Purchase price (basis)- land = building value + acquisition costs= depreciation value / economic life = annual depreciation * number of years held= depreciation
NOI formula
Potential Gross income- vacancies, bad debt, credit losses= effective gross income - operating expenses = NOI
Cash flow formula
NOI - debt service= cash flow
What is Title I for FHA for?
home improvement loan
What is Title II for FHA loan for?
purchase, construction, or refinance
What is Title III for FHA?
created Fannie Mae to purchase Title I and II loans
What is UFMIP
Upfront mortgage insurance premium for FHA loan
(currently) 1.75%
When is annual premium due for FHA?
monthly
encumbrance
anything that effects or limits the fee simple title to the property. a right or interest in a property held by one who is not the legal owner.
easements
right of someone who doesn’t own property but can use it.
deed restriction
private controls put on by owners of property passed on with sale of property
attachment
seizing property until judgment decided
beneficiary
lender in deed of trust
collateral
security, property
construction loan
interim, bridge, gap, swing
deed of reconveyance
satisfaction for deed of trust
draws
blanket loan taken out in pieces
encroachment
physical trespass
estoppel certicate
borrower gets when verifying balance owed on house
inchoate
mechanic lien; lien in place for job not completed yet
laches
past the statute of limitations
legal title
trustee
lien specific
lien on specific property
general lien
lien on everything you own
lis pendens
pending lawsuit
lot releases
blanket mortgage, release lots
mechanic lien
20 day advanced notice, 120 days to file from date of completion, 180 days from filed suit
acceleration
mortgage is due in full ( ex after miss a payment)
alienation clause
due on sale
defeasance
paid of loan
OR more
principal only payment
novation
substituting borrower
obligatory advance
draws done by date
priority
who recorded first
reduction certificate
lender certifies balance on mortgage
package loan
real estate and personal
trustor
borrower
Who must pay for a termite inspection of a home purchased with a VA loan?
The seller
what is renewal for statute of limitations?
90 days before 5 years runs out
what is the legal rate of lien?
legal rate 1% over prime rate at time of judgment or 10%, whichever is lower.
writ of attachment
document whereby court takes custody of property til settlement of case.
what is difference between residential lien and commercial lien?
Residential must be in writing.
amortized loan
extinguishing the loan with level payments
installment loan
pay based on outstanding balance
interest only loan
pay on interest only, ballon payment at end
budget loan
PITI loan (principal, interest, taxes, insurance)
graduated loan
negative amortization loan
variable interest and ARM loan
rate is tied to index, payments change as rates change.
equity participation loan,
give a low rate, if sell for profit split with lender
reverse mortgage
must be over 62 and live in home
take out loan
loan in place to cover home after certificate occupancy issued.
open end loan
loan balance can change, open equity loan
chattel loan
personal propery - like in restaurant the stove
purchase money loan
seller carrybacks only
junior (subordinate)
allows another lender to have a higher interest in property
title theory
when the lender holds legal title to mortgage property
lien theory
when the borrower has legal title to mortgage and lend is merely holder of lien
hypothecate
leveraging property as collateral but using and keeping property
promissory note
IOU $
evidence of loan
obligation of loan
borrower liability of loan
what is explained in note, amount interest %, etc.
negotiable document in promissory note
can buy/sell
why must promissory note be notarized?
proves you signed it of your own free will in front of witness.
Assignment of Rents clause
allows the lender to collect rents after forclosure
non disturbance clause
allows tenant to stay and pay rent for continuation of lease and lender to collect rents
quiet enjoyment clause
benefits tenant and allows to stay and pay rent after forclosure
What are the damages due the borrower if lender does no issue release of lien once paid off?
Within 30 days from last payment lender must release of pay $1000 plus damages.
statute of limitations
legal period during which you may bring a lawsuit (5 years)
writ of execution
enforce judgment instead of just having on record; sheriff sells your property, personal first then real estate
