National Exam Flashcards
What is the law of agency?
The law of agency is a legal doctrine dealing with contractual or quasi-contractual rights or obligations of a person (the agent) acting on behalf of another person (the principal).
Define ‘Tenancy in Common’.
‘Tenancy in Common’ refers to a type of concurrent estate in which each owner, referred to as a tenant in common, is regarded by the law as owning separate and distinct shares of the same property.
What is a deed?
A deed is a legal document that conveys an interest in real property. The three most common types of deeds, in order of decreasing legal protection, are: Warranty Deed, Special Warranty Deed, and Quitclaim Deed.
Define ‘Fair Housing Act’.
The Fair Housing Act is a federal law that prohibits discrimination in housing based on race, color, religion, sex, familial status, national origin, and disability.
What is a ‘lien’?
A lien is a legal claim or a “hold” on some type of property, whether personal or real property, making it collateral against monies or services owed to another person or entity.
Define ‘Easement’.
An easement is a nonpossessory right to use and/or enter onto the real property of another without possessing it.
What is a ‘Listing Agreement’?
A Listing Agreement is a contract between a real estate broker and an owner of real property granting the broker the authority to act as the owner’s agent in the sale of the property.
What is the ‘Truth in Lending Act’ (TILA)?
TILA is a federal law designed to promote the informed use of consumer credit by requiring disclosures about its terms and cost. It standardizes the manner in which costs associated with borrowing are calculated and disclosed.
What are the four essential elements of a valid contract?
The four elements are competent parties, mutual agreement (offer and acceptance), consideration (something of value), and legal purpose.
What is the difference between a ‘Mortgage’ and a ‘Deed of Trust’?
A mortgage involves two parties (borrower and lender). A deed of trust involves three parties (borrower, lender, and trustee). The trustee holds the property in trust as security for the loan.
What is a ‘Net Listing’?
In a net listing, the seller sets a minimum net amount they are willing to accept for the property. If the agent sells the property for more than the minimum, they keep the excess as their commission.
Define ‘Encumbrance’.
An encumbrance is a claim, lien, charge, or liability attached to and binding real property. It may affect the title, value, or use of the property.
What is ‘Redlining’?
Redlining is an unethical and illegal practice where lenders refuse to make loans or impose more onerous terms in certain areas of a community, often racially determined.
What is the ‘Community Reinvestment Act’ (CRA)?
The CRA is a federal law designed to encourage commercial banks and savings associations to help meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods.
Define ‘Appraisal’.
Appraisal is the process of developing an opinion of value for real property. It involves market, cost, and income data analysis.
What is the ‘RESPA’ (Real Estate Settlement Procedures Act)?
RESPA is a federal law that gives consumers the right to review information about loan settlement costs after they apply for a loan and again at loan settlement. It was designed to help consumers become better shoppers for settlement services.
What is a ‘Balloon Payment’?
A balloon payment is a large, lump-sum payment scheduled at the end of a series of considerably smaller periodic payments.
What does ‘PMI’ stand for and when is it used?
PMI stands for Private Mortgage Insurance. It’s used when a homebuyer makes a down payment of less than 20% of the home’s purchase price.
What are ‘Restrictive Covenants’?
Restrictive covenants are limitations to the use of property imposed by past or present owners and recorded in the deed. They can bind future owners and often affect the transferability of the deed.
Define ‘Joint Tenancy’.
a form of property ownership where two or more individuals, often referred to as joint tenants, hold equal and undivided interests in a property.
What is the ‘Equal Credit Opportunity Act’ (ECOA)?
The ECOA is a federal law that prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or because someone receives public assistance.
Define ‘Capital Gains’.
Capital gains refer to profits from the sale of an investment or real estate, which are calculated by subtracting the purchase value from the sale value.
What is a ‘Breach of Contract’?
A breach of contract refers to the violation of any terms or conditions in a contract without a legal excuse.
What is ‘Escrow’?
Escrow refers to the use of a third party during a transaction to ensure that the buyer and seller fulfill their obligations before the transaction is finalized.
What is ‘Title Insurance’?
Title insurance is a type of insurance that protects the holder from financial loss due to defects in the title to a property.
Define ‘Comparative Market Analysis’ (CMA).
A CMA is an estimate of a home’s value based on similar properties in the immediate area that have recently sold, are currently on the market, or were listed but did not sell.
What is a ‘Real Estate Investment Trust’ (REIT)?
A REIT is a company that owns, operates, or finances income-producing real estate. They provide a way for individual investors to earn dividends from real estate investments without having to buy, manage, or finance properties themselves.
What is ‘Landlord-Tenant Law’?
Landlord-tenant law is a part of the common law that details the rights and duties of landlords and tenants. It includes elements of both real property law and contract law.
Define ‘Property Management’.
Property management involves overseeing and handling the daily operations of real estate properties. This could be residential, commercial, or industrial real estate.
What is ‘Zoning’?
Zoning refers to municipal or local laws or regulations that dictate how real property can and cannot be used in certain geographic areas.
What is ‘Sweat Equity’?
Sweat Equity is the non-monetary investment that homeowners or investors put into a property, such as do-it-yourself home improvements.
Define ‘Metes and Bounds’.
Metes and Bounds is a system of land description whereby all boundary lines are set forth by use of terminal points and angles – metes (measures) including distances and angles, bounds (boundaries) using physical features of the land.
What is a ‘1031 Exchange’?
A 1031 exchange, also known as a like-kind exchange, is a transaction that allows for the disposal of a property and the acquisition of another property without generating a tax liability from the sale of the first property.
What is the role of a ‘Real Estate Appraiser’?
A real estate appraiser is a licensed or certified professional who evaluates a property to establish its market value. They use detailed information about the property and data on comparable properties to arrive at an estimate.
What is ‘Dual Agency’?
Dual agency occurs when a real estate agent is representing both the buyer and the seller in the same transaction. Some states permit this practice with disclosure, while others do not.
What is a ‘Contingency’ in a real estate contract?
A contingency in a real estate contract is a condition or action that must be met for the contract to become binding.
