Need To Learn Topics Flashcards
1
Q
Real Estate commissioner
A
The license law (BPC 10051) says the governor appoints the Commissioner. There is no Real Estate Commission, per se. The Commissioner employs deputies, clerks, and others as needed to carry out the duties of the office. The legislature and licensees have no role in choosing the Commissioner.
2
Q
How long will the comissioner extend a licence is they extend it?
A
90 days
3
Q
Who have to have a real estate licence for someone to practice real estate in a general partnership
A
Anyone in th egerneal partnership that wants to practice needs a licence
4
Q
What is the experience requirement for a broker’s license applicant?
A
Two years as a sales person in the last 5 years
5
Q
What do you need if you want ot parctice in another state
A
You need to meet all requirements of that state
6
Q
What is required of all renewal applicants after the first renewal
A
8- hour survey
7
Q
How many hours must a broker complete of approved instruction in the four years prior to renewal?
A
45 hours
8
Q
All applicants for renewal must take how many hours of education on consumer protection?
A
18
9
Q
Once a licensee has their license revoked, how long do they have ot wait ot petition to get it reinstated?
A
1 year
10
Q
Can a restricted license be renewd?
A
restricted licenses cannot be renewed Licenses may be issued with restrictions in term, responsible broker, and certain conditions to be met; the holder of such a license has no right to renew it. If the holder meets some condition of the restriction, the restriction may be lifted and an unrestricted license issued, or, if not, the restricted license may be suspended, but it cannot be “extended indefinitely” or renewed.
11
Q
What is a “fixture?”
A
An item of perosnal property that has been converted into real property by affixing it to real property
12
Q
What determined if an item is real property or personal property?
A
One’s original intention can override the test of movability in determining whether an item is a fixture or not. If someone attached an item to real property, yet intended to remove it after a period of time, the article may be deemed personal property. If a person intended an article to be a fixture, even though the item is easily removable, the article may be deemed a fixture. For example, an apartment renter installs an alarm system, fully intending to remove the system upon lease expiration. Here, the alarm system would be considered personal property.
13
Q
Two people own a house, each having an undivided equal interest. Which of the following best describes what each party owns?
A
Fifty percent of the estate consisting of the indivisible whole of the real property. An undivided interest is an owner’s fractional interest in an entire (undivided) estate, but not in a physical portion of the real property itself. An owner who has an undivided equal interest with another cannot exercise exclusive rights over a portion of the real estate, which is an indivisible whole.
14
Q
A real property interest that includes the right to possess is considered
A
an estate in land. Interests are principally distinguished by whether they include possession. If the interest-holder enjoys the right of possession, the party is considered to have an estate in land, or, familiarly an estate. Freehold and leasehold estates in land are further distinguished by whether the duration of the owner’s rights can be determined.
15
Q
The right to control land usage by zoning and eminent domain is an example of
A
a public interest.
16
Q
Ned grants his sister Alice an estate for as long as she lives. Her descendants, however, cannot inherit the estate. What kind of estate is it?
A
An ordinary life estate. A life estate is limited in duration to the life of the owner or other named person. Upon the death of the owner (ordinary life estate) or other named individual (pur autre vie life estate), the estate passes to the original owner (a reversionary interest) or another named party (a remainder interest). Thus with the life estate, the owner enjoys full ownership rights during the estate period, and holders of the future interest own either a reversionary or a remainder interest.
17
Q
Homestead estates
A
Homestead protection laws protect homeowners and other small property owners from being left homeless during times of economic strife. Specifically, homestead laws allow individuals to declare a portion of their property as “homestead” and therefore mostly off-limits to creditors
homestead interest cannot be conveyed by one spouse.
18
Q
Legal Life estates
A
a legal life estate. Homestead, dower, and curtesy are legal life estates. A legal life estate is created by state law as opposed to being created by a property owner’s agreement. The focus of a legal life estate is defining and protecting the property rights of surviving family members upon the death of the husband or wife.
19
Q
Seperate property
A
Separate property consists of: property owned by either spouse at the time of the marriage; property acquired by either spouse through inheritance or gift during the marriage; property acquired with separate- property funds; and income from separate property.
A spouse owns separate property free and clear of claims by the other spouse. He or she can transfer it without the other spouse’s signature.
Upon the death of the separate property owner, the property passes to heirs by will or laws of descent.
20
Q
Community property
A
Community property consists of all other property earned or acquired by either party during the marriage.
Community property cannot be transferred or encumbered without the signatures of both spouses. Upon the death of either spouse, half of the deceased’s community property passes to the surviving spouse, and the other half passes to the decedent’s heirs.
21
Q
Joint Tenancy
A
The four unities:
To create a joint tenancy, all owners must acquire the property at the same time, use the same deed, acquire equal interests, and share in equal rights of possession. These are referred to as the four unities.
Comes with the right of survivorship. When one person dies, their interest transfer equally to the other owners. Only natural people can own
Can only be owned by real persons
Joint tenants own equal shares in the property and received their interest at the same time, with the same deed.
If an owner sells/transfers their interest in the Joint tenancy, it can only be owned as a tenant in common because they did not acquire it at the same time.
There is no probate when a person dies bc it automatically transfers to the other person
Ownership of the undivided whole
there is a single title to the property.
22
Q
Tenants in common
A
The tenancy in common, also known as the estate in common, is the most common form of co-ownership when the owners are not married (though tenants in common can be married). The defining characteristics are: two or more owners; identical rights; interests individually owned; electable ownership shares; no survivorship; and no unity of time. With “identical rights”, co-tenants share an indivisible interest in the estate, i.e., all have equal rights to possess and use the property subject to the rights of the other co-tenants.
Tenants in common do not necessarily own equal shares of the property and may have come to own their shares at different times.
If a person dies, their ownership can pass on to their heirs through probate
Can be owned by real people or a corporation.
One unity, equal right of possession
You can decide what shares of the property each person gets
It will protect your interest in the property and the amount you invested
Co-tenants may sell, encumber, or transfer their interests without obstruction or consent from the other owners. A co- tenant may not, however, encumber the entire property.
there are as many titles to the property as there are co-owners.
23
Q
An estate at will
A
The estate at will, also called a tenancy at will, has no definite expiration date and hence no “renewal” cycle. The landlord and tenant agree that the tenancy will have no specified termination date, provided rent is paid on time and other lease conditions are met. For example, a son leases a house to his father and mother “forever,” or until they want to move. The estate at will is terminated by proper notice, or by the death of either party.
24
Q
Estate from period to period
A
In an estate from period-to-period, also called a periodic tenancy, the tenancy period automatically renews for an indefinite period of time, subject to timely payment of rent. At the end of a tenancy period, if the landlord accepts another regular payment of rent, the leasehold is considered to be renewed for another period.
25
fTenant by Entireties
Tenancy by the entireties is a form of ownership reserved exclusively for husband and wife. It features survivorship, equal interests, and limited exposure to foreclosure. In some states it now applies to same-sex couples.
26
By contrast to a condominium, the owner of a cooperative owns
In a cooperative, or co-op, one owns shares in a non-profit corporation or cooperative association, which in turn acquires and owns an apartment building as its principal asset. Along with this stock, the shareholder acquires a proprietary lease to occupy one of the apartment units.
27
Time Share Freehold
In a freehold time-share, or interval ownership estate, tenants in common own undivided interests in the property. Expense prorations and rules governing interval usage are established by separate agreement when the estate is acquired.
28
Tax Lien Priority
The category of superior, or senior, liens ranks above the category of inferior, or junior, liens, meaning that superior liens receive first payment from the proceeds of a foreclosure. The superior category includes liens for real estate tax, special assessments, and inheritance tax. Other liens, including income tax liens, mortgage liens and judgment liens, are inferior.
29
How can a lienholder change lien priority?
A lienor can change the priority of a junior lien by voluntarily agreeing to subordinate, or lower, the lien's position in the hierarchy. This change is often necessary when working with a mortgage lender who will not originate a mortgage loan unless it is senior to all other junior liens on the property. The lender may require the borrower to obtain agreements from other lien holders to subordinate their liens to the new mortgage.
30
Foreclosure
A proceeding to enforce a lien by forcing the sale or transfer of a secured property. All liens can be enforced by the sale or other transfer of title of the secured property, whether by court action, operation of law, or through powers granted in the original loan agreement. The enforcement proceedings are referred to as foreclosure. Note that lienors already possess equitable title, so they do not need to undertake a legal proceeding to establish this.
31
Strict Foreclosure
Strict foreclosure is a court proceeding that gives the lender title directly, by court order, instead of giving cash proceeds from a public sale. On default, the lender gives the borrower official notice. After a prescribed period, the lender files suit in court, whereupon the court establishes a period within which the defaulting party must repay the amounts owed. If the defaulter does not repay the funds, the court orders transfer of full, legal title to the lender.
32
License to use
A license is a personal right that a property owner grants to another to use the property for a specific purpose (to reach the kindergarten school bus). Unlike a personal easement in gross, which terminates only on the death of the grantee (Betty Luanne, in this instance), a license is revocable at any moment, is not transferable and does not attach to the land. It ceases on the death of either party, or on the sale of the property.
33
Actual Notice
The term "notice" is synonymous with "knowledge." A person who has received actual notice has actual knowledge of something. Receiving actual notice means learning of something through direct experience or communication. Thus, a document in itself cannot be actual notice. It is the seeing of the document that makes it actual notice.
34
Constructive Notice
It is knowledge one could have or should have obtained (I,e info at the recorders office)
35
Genereal warranty deed
A general warranty deed offers the most protection for the grantee because it ensures that they have a clear right to the property. With this type of deed, the grantor ensures that there are no liens or easements against the property and that if there are, the grantee will be compensated accordingly
36
Lawsuit to "Quite Title"
Where there is a possibility that prior errors in deeds or other recorded documents might cloud (encumber) the title, the relevant parties execute a quitclaim deed to convey "any and all" interest to the grantee. If a party responsible for encumbering title refuses to quitclaim the interest, the owner may file a quiet title suit. This requires the lienor to prove the validity of an interest. If the defendant is unable to do so, the court removes the cloud by decree.
37
Documentary stamp tax
A transfer tax based on the price of the property being conveyed.
38
WEasement by necessity
An easement by necessity is an easement appurtenant granted by a court of law to a property owner because of a circumstance of necessity, most commonly the need for access to a property. Since property cannot be legally landlocked, or without legal access to a public thoroughfare, a court will grant an owner of a landlocked property an easement by necessity over an adjoining property that has access to a thoroughfare.
39
Quitclaim Deed
A quitclaim deed transfers real and potential interests in a property, whether an interest is known to exist or not. The grantor makes no claim to any interest in the property being conveyed and offers no warrants to protect the grantee. Where there is a possibility that prior errors in deeds or other recorded documents might cloud (encumber) the title, the relevant parties execute a quitclaim deed to convey "any and all" interest to the grantee.
40
A valid lease
A valid lease creates obligations that survive the death of the landlord or tenant, with certain exceptions. A tenant's estate remains liable for payment of rent if the tenant dies; the landlord's estate remains bound to provide occupancy despite the landlord's death.
41
Easement by perssceription
If someone uses another's property as an easement without permission for a statutory period of time and under certain conditions, a court order may give the user the easement right by prescription, regardless of the owner's desires. For a prescriptive easement order to be granted, the following circumstances must be true: the use has been occurring without permission or license; the owner knows or is presumed to have known of the use; and the use has been generally uninterrupted over the statutory prescriptive period.
42
Tenancy from period to period
URLTA sets standards for improving oral, vague, or unbalanced lease agreements. In the case of an unclear lease expiration date, the lease is generally deemed to be a periodic tenancy.
43
Leased fee estate
The ownership interest that the landlord or lessor maintains in a property under a lease with the rights of use and occupancy being conveyed or granted to a tenant or lessee. The ownership interest in a leased property.
44
Deficiency judgement
Whenever there are insufficient funds to retire a defaulted and foreclosed mortgage loan, a deficiency judgment may be ordered – if allowed by law – to make up the difference. To comply with the judgment, the borrower must raise additional funds from other sources to make up the difference between the outstanding loan balance and the proceeds from the foreclosure sale.
45
Lien-theory state
A lienor generally has an equitable interest in the property, but not legal ownership.
46
Title theory state
The exception is a mortgage lien on a property in a title-theory state. In these states, the mortgage transaction conveys legal title to the lender, who holds it until the mortgage obligations are satisfied. During the mortgage loan period, the borrower has equitable title to the property.
47
Superfund Act (CERCLA)
parties responsible for improper disposal of hazardous waste could be charged for the cleanup costs. Under CERCLA and the Superfund Amendment of 1986, current landowners as well as previous owners of a property may be held liable for environmental violations, even if "innocent" of a violation. Sellers often carry the greatest exposure, and real estate licensees may be held liable for improper disclosure.
48
Police Power
At the local level, county and city governments control land use through the authority known as police power. The most common expressions of police power are county and municipal zoning.
49
Residential zoning
Residential zoning regulates density, by limiting the number and size of dwelling units and lots in an area.
50
Plat of subdivision
Part of The approval process for development of multiple properties in an area includes submission
51
Metes and bounds
A metes and bounds description identifies the boundaries of a parcel of real estate using reference points, distances, and angles. The description always identifies an enclosed area by starting at an origination point, called point of beginning, or POB, and returning to the POB at the end of the description.
Describes using Nothwesterly along Erie road to the POB (point of beginning)
52
Township
A township is the area enclosed by the intersection of two consecutive meridians and two consecutive parallels. Since the parallels and meridians are six miles apart, a township is a square with six miles on each side. Its area is therefore 36 square miles. Remember to differentiate square miles from miles square: 4 square miles is a measure of area (2 miles x 2 miles); 4 miles square is a representation of the sides of a square (4 miles by 4 miles).
There are 36 sections in a township
53
How big is a section
640 acreas
54
How many SF is an acre?
43,560 SF
55
When is a lot and block system used
Subdivisions
56
In a Rectangular Survey system, how many acres are in a section?
640 Acres
57
Actions that can terminate an offer (ARRLCD)
Any of the following actions or circumstances can terminate an offer: acceptance; rejection; revocation; lapse of time; counteroffer; or death or insanity of either party.
58
Intensity
Commercial zoning regulates intensity of usage by limiting the area of store or office per site area. Intensity regulation is further achieved by minimum parking requirements, setbacks, and building height restrictions.
59
Rescission
Parties to a contract may rescind a contract by mutual consent, or a damaged party may rescind the contract unilaterally. This act of rescission cancels the contract and returns the parties to their pre-contract condition, including the refunding of any monies already transferred.
60
valid contract can…
A valid contract that is in writing is enforceable within a statutory time period. A valid contract that is made orally is also generally enforceable within a statutory period, with the exception that some contracts are enforceable only if they are in writing. These laws apply in particular to the transfer of interests in real estate. A void or voidable contract was not a truly valid contract.
61
Counter offer
By changing any of the terms of an offer, the offeree creates a counteroffer, and the original offer is void. At this point, the offeree becomes the offeror, and the new offeree gains the right of acceptance. If accepted, the counteroffer becomes a valid contract provided all other requirements are met.
62
Valuable consideration
Valuable consideration can be something of tangible value, such as money, or something a party promises to do or not do. For example, a home builder may promise to build a house for a party as consideration for receiving money from the home buyer.
63
Planned Unit Development
Planned unit development zoning restricts use to development of whole tracts that are designed to use space efficiently and maximize open space. A PUD zone may be for residential, commercial, or industrial uses, or combinations thereof.
64
Variance vs non-conforming use
A variance is granted by the zoning board if the owner has a justifiable reason. A nonconforming use is one that clearly differs from current zoning and is subject to change upon conveyance. A zoning variance allows a use that differs from the applicable ordinance for a variety of justifiable reasons.
65
What is the connection between compensation and and agency relationship
It is important to understand that the agency relationship does not require compensation or any form of consideration. Nor does compensation define an agency relationship: a party other than the principal may compensate the agent.
66
Disclosure of the Agency relationship : listing agent and a customer
Agency disclosure must occur upon "substantive contact" between the listing agent and a customer. Examples of substantive contact include: showing the prospect a property; eliciting confidential information from a prospect regarding needs, motivation, or financial qualification; and executing a contractual offer to sell or lease.
67
Disclosure of agency relationship : listing agent to prospective buyers
Whenever substantive communication is made beyond casual conversation. A listing agent must disclose in writing to a buyer or tenant that the agent represents the owner in the transaction. This disclosure must occur before or at the first "substantive contact" with the customer prospect. In some states, buyer representatives must disclose the agency relationship to sellers or their agents upon initial contact.
68
Buyer / tenent agent agency disclosure to sellers agent
Initial contact
69
Implied Agency
Clients and agents may also create an implied agency listing based on substantive actions rather than on an express agreement. For example, if a seller allows a broker to undertake certain activities toward effecting a transaction without a specific authorization, but with full knowledge and consent, an implied agency may have been created.
70
Can you assign a Listing agreement?
No. A losting agreement is no assignable bc of stuff
71
Temination of a listing agreement
A listing may terminate on grounds of: performance; infeasibility; mutual agreement; revocation; abandonment; breach; lapse of time; invalidity of the contract; incapacitation of either party; destruction of the property; or, in this case; involuntary title transfer.
72
Standard of practice
The agent is hired to do a job, and is therefore expected to do it with diligence and reasonable competence. Competence is generally defined as a "standard of practice" equal to the level of real estate marketing skills and knowledge of other practitioners in the area.
73
Agent duty of disclosure
An agent has the duty to inform the client of all material facts, reports, and rumors that might affect the client's interests in the property transaction. This includes: the agent's opinion of the property's condition; information about the buyer's motivations and financial qualifications; discussions between agent and buyer regarding the possibility of the agent's representing the buyer in another transaction.
74
Co Brokerage
Most listing agreements provide for brokerage cooperation in the multiple listing clause. A transaction involving a cooperating subagent is called co-brokerage. In a co-brokered transaction, the listing broker splits the commission with the "co-broker," typically on a 50-50 basis.
75
Executory Contract
An executory contract is one for which the signatories have yet to perform their respective obligations and promises. Upon closing, the sale contract is fully performed and no longer exists as a binding agreement.
76
What kind of interest does the buyer acquire once a real estate sale contract is signed by the principal parties?
Equitable title. A sale contract gives the buyer an interest in the property that is called equitable title, or ownership in equity. If the seller defaults and the buyer can show good faith performance, the buyer can sue for specific performance, that is, to compel the seller to transfer legal title upon payment of the contract price.
77
Up until when can an offeror revoke an offer?
An offeror may revoke an offer for any reason prior to communication of acceptance by the offeree.
78
ASSIGNABILITY OF AN OPTION
It is always assignable unless the contract prohibits assignment A real estate contract that is not a personal service contract can be assigned to another party unless the terms of the agreement specifically prohibit assignment. An option-to-buy is therefore assignable in the absence of such a prohibiting clause.
79
Verbal executory Contract
Once an offer is accepted
80
Assignability on a sale transaction
Either party to a sale transaction can assign the sale contract to another party, subject to the provisions and conditions contained in the agreement.
81
Due on Sale clause
The mortgage agreement may or may not state that the seller's loan will be accelerated by the lender and called due on sale. The due-on-sale clause in the sale contract merely stipulates that the buyer and seller recognize the possibility that loans that survive the closing may be called due.
82
Telephone Consumer Protection Act (TCPA)
The TCPA was enacted to rein in invasive telemarketing practices by requiring certain identification procedures, compliance with do-not-call requests, and a Do-Not-Call list registry.
83
Vacancy
The total existing space of a certain type that is unoccupied at a given time Vacancy is the amount of total real estate inventory of a certain type that is unoccupied at a given time. It is often stated as a percentage of total inventory, the vacancy rate for that property type.
84
Market Value vs Market Price
Market value is an estimate; market price is the price at which a property sold.
85
First step in the appraisal process
define the appraisal problem and the purpose of the appraisal. The first step in the process is to define the appraisal problem and the purpose of the appraisal. This involves identifying the subject property by legal description; specifying the interest to be appraised; specifying the purpose of the appraisal; specifying the date for which the appraisal is valid; and identifying the type of value to be estimated.
86
Sales comparison approach
Make dollar adjustments to the sale prices of comparable properties to account for competitive differences with the subject. The sales comparison approach consists of comparing sale prices of recently sold properties that are comparable with the subject, and making dollar adjustments to the price of each comparable to account for competitive differences with the subject. After identifying the adjusted value of each comparable, the appraiser weights the reliability of each comparable and the factors underlying how the adjustments were made. The weighting yields a final value range based on the most reliable factors in the analysis.
If the comparable is inferior to the subject in some characteristic, an amount is added to the price of the comparable. If the comparable is better than the subject in some characteristic, an amount is deducted from the sale price of the comparable. This neutralizes the comparable's competitive advantage or disadvantage in an adjustment category. For example, a comparable has a swimming pool and the subject does not. To equalize the difference, the appraiser deducts an amount, say $6,000, from the sale price of the comparable.
87
Cost Approach
is very accurate for a property with new improvements that represent the highest and best use. The strengths of the cost approach are that it: provides an upper limit for the subject's value based on the undepreciated cost of reproducing the improvements. It is also very accurate for valuing a property with new improvements which are the highest and best use of the property.
88
Income Approach
uses a method that is also used by investors to determine how much they should pay for an investment property. The strength of the income approach is that it is used by investors themselves to determine how much they should pay for a property. Thus, in the right circumstances, it provides a good basis for estimating market value. The approach, however, does not project what an income property's future income will be. Moreover, it is not an applicable method for estimating value if the subject is a non-income producing property.
89
The Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).
Title XI of FIRREA requires that competent individuals whose professional conduct is properly supervised perform all appraisals used in federally-related transactions. As of January 1, 1993, such federally-related appraisals must be performed only by state-certified appraisers.
90
Market Data Approach / Sales Comparison Approach
selects comparable properties, adjusts the comparables, and estimates the value. The steps are to first identify comparable sales; then compare comparables to the subject and make adjustments to comparables; then, finally, weigh values indicated by adjusted comparables for the final value estimate of the subject.
he principal factors for comparison and adjustment are time of sale, location, physical characteristics, and transaction characteristics. An adjustment may be made for such differences as mortgage loan terms, mortgage assumability, and owner financing.
The last step in the approach is to perform a weighted analysis of the indicated values of each comparable. The appraiser, in other words, must identify which comparable values are more indicative of the subject and which are less indicative. However, all comparables are taken into account, not simply the nearest comparable.
91
Economic Obsolescence
Economic (or external) obsolescence is the loss of value due to adverse changes in the surroundings of the subject property that make the subject less desirable. Since such changes are usually beyond the control of the property owner, economic obsolescence is considered an incurable value loss.
92
Promissory Note
It is evidence of the borrower's debt to the lender. A valid mortgage or trust deed financing arrangement requires a note as evidence of the debt.
A promissory note is a negotiable instrument, which means the payee may assign it to a third party. The assignee would then have the right to receive the borrower's periodic payments
93
Regulation Z + truth in lending
Regulation Z applies to all loans secured by a residence. It does not apply to commercial loans or to agricultural loans over $25,000. Its provisions cover the disclosure of costs, the right to rescind the credit transaction, advertising credit offers, and penalties for non-compliance with the act.
94
Trust deed or mortgage
The mortgage or trust deed is evidence of the collateral pledge of the purchased property as security for the loan.
95
VA Certificate of elgibility
A document that tell a veteean how much the VA woll guarantee on a loan .
96
Purchase Money mortgage financing arrangement
The buyer gives the seller a mortgage and note as part of the purchase price of the property. With a purchase money mortgage, the borrower gives a mortgage and note to the seller to finance some or all of the purchase price of the property. The seller in this case is said to "take back" a note, or to "carry paper," on the property
97
Flow of money and documents in a mortgage loan transaction
The borrower gives the lender a note and a mortgage in exchange for loan funds. When a borrower gives a note promising to repay the borrowed money and executes a mortgage on the real estate for which the money is being borrowed as security, the financing method is called mortgage financing.
98
Mortgage underwriting : the three majoe components
Mortgage underwriting includes: evaluating the borrower's ability to repay the loan; appraising the value of the property offered as security; and determining the terms of the loan.
99
Equal opportunity Credit Act (ECOA)
The Equal Credit Opportunity Act (ECOA) requires a lender to evaluate a loan applicant on the basis of that applicant's own income and credit rating, unless the applicant requests the inclusion of another's income and credit rating in the application. In such a case, a lender may not discount or disregard income from part-time work, a spouse, child support, alimony, or separate maintenance.
100
Real Estate settlement and procedures Act (RESPA
RESPA is a federal law which aims to standardize settlement practices and ensure that buyers understand settlement costs. RESPA applies to purchases of residential real estate (one- to four-family homes) to be financed by "federally related" first mortgage loans. In addition to imposing settlement procedures, RESPA provisions prohibit lenders from paying kickbacks and unearned fees to parties who may have helped the lender obtain the borrower's business.
101
Role of VA in mortgage lending
The Veterans Administration (VA) offers loan guarantees to qualified veterans. The VA partially guarantees permanent long-term loans originated by VA-approved lenders on properties that meet VA standards. The VA's guarantee enables lenders to issue loans with higher loan-to-value ratios than would otherwise be possible.
102
Buydown
A buydown loan entails a prepayment of interest on a loan. The prepayment effectively lowers the interest rate and the periodic payments for the borrower. Buydowns typically occur in a circumstance where a builder wants to market a new development to a buyer who cannot quite qualify for the necessary loan at market rates.
103
Amortizing loan
Part of each periodic payment is applied to repayment of the loan balance in advance and part is applied to payment of interest in arrears.
104
Real estatre compared to stock porfolio
a more management-intensive investment. Real estate tends to require a high degree of investor involvement in management of the investment. Even raw land requires some degree of maintenance to preserve its value. Improved properties often require extensive management, including repairs, maintenance, onsite leasing, tenant relations, security, and fiscal management.
105
PRINCIPAL Redidence w/o home office tax treatment
The owner may be able to avoid capital gain tax when the property is sold. Provided the owner meets certain ownership and use tests, there is no capital gain tax on sale of the property unless the gain exceeds $250,000 for a single taxpayer or $500,000 for married taxpayers who file jointly. Since the property is not used for business, deductions for expenses against income are not allowed.
106
Deducations
Selling costs include such expenses as brokerage commissions, relevant advertising, legal fees, seller-paid points and other closing costs. These costs are deducted from the selling price to get the amount realized, which is reduced by the adjusted basis to calculate gain on sale for gains tax purposes.
107
Who can levy real property taxes?
A tax district. Real estate property taxes are imposed by "taxing entities" or "taxing districts" at county and local levels of government. States may legally levy taxes on real property, but most delegate this power to counties, cities, townships and local taxing districts. The federal government does, however, tax income derived from real property and gains realized on the sale of real property.
108
Ad valoren taxation
An ad valorem tax is a tax based on the assessed value of an item, such as real estate or personal property. The most common ad valorem taxes are property taxes levied on real estate. However, ad valorem taxes may also extend to a number of tax applications, such as import duty taxes on goods from abroad.
109
Statutory right of redemtion
If the taxpayer can redeem the property after the tax sale, this right is known as a statutory right of redemption. In this case, the taxpayer must pay the amount paid by the winning bidder at the tax sale, plus any charges, additional taxes, or interest that may have accumulated.
110
Ad valorem tax base
the total of all assessed values of properties minus exemptions. The tax base of an area is the total of the appraised or assessed values of all real property within the area's boundaries, excluding partially or totally exempt properties such as those owned by the government or non- profit organizations.
111
Primary tax benefit for residence
Deducting mortgage interest is a significant tax advantage of owning one's residence. Depreciation and cost-deductions do not apply to a non-income producing residence. Appreciation is a benefit, but not a tax benefit.
112
the home mortgage disclosure act
The Home Mortgage Disclosure Act requires lenders involved with federally guaranteed or insured loans to exercise impartiality and non-discrimination in the geographical distribution of their loan portfolio. In other words, the act is designed to prohibit redlining, the practice of restricting loans by geographical are(a)
113
Title VII of Civil Right Act of 1968
Among the circumstances where the Fair Housing Act might allow for an exemption is: a privately owned single-family home where no broker is used, with certain additional conditions. In other words, as soon as a broker is used in the sale, the law applies.
114
Fair HOusing Act
The Fair Housing Act prohibition against discriminatory misrepresentation states that an agent may not conceal available properties, represent that they are not for sale or rent, or change the sale terms for the purpose of discriminating.
115
Fair housing Laws
Fair housing laws prohibit discriminatory advertising, discrimination on the basis of national origin, discrimination based on age in dwellings of more than four units, and discrimination against families with children. The fact that the owner is requiring the same deposit from tenants with and without children does not discriminate against families with children but actually favors them.
Federal fair housing laws do not prohibit age and family status discrimination in residential dwellings of four units or less and in single family houses if sold or rented by owners who have no more than three houses.
116
Fair Housing Amendments of 1988
The Fair Housing Amendments Act of 1988 prohibited discrimination based on sex and discrimination against handicapped persons and families with children. Executive Order 11063 concerned racial discrimination in housing where federal funding was involved; the Civil Rights Act of 1968 concerned discrimination based on race, color, religion, and national origin; Jones v Mayer concerned racial discrimination.
117
Property Condition Disclosure form
Whether the seller lists or sells by-owner, he or she must still fulfill the obligation to complete the Property Condition form in a timely fashion. Similarly, the licensee is required to disclose all known material facts regardless of the seller’s disclosures.
118
Antitrust Laws - Sherman anti trust act
Antitrust laws forbid brokers to band together to set a price on their services in listing and selling property. Even being overheard discussing commission rates or being present at such a conversation can lead to charges of price fixing.
119
Arrears
Items paid in arrears are paid after the expense has been incurred.
120
Property Manager relationship w/ property owner
The management agreement creates an agency relationship between the manager and the principal. This is a fiduciary relationship and, in general, the agent is charged with producing the greatest possible net return on the owner's investment while safeguarding the value of the investment for the owner/investor.
121
Effective gross income
revenue from all sources minus losses from uncollected rents, vacancies, and evictions. The total of scheduled rents plus revenues from such sources as vending services, storage charges, late fees, utilities, and contracts is the potential gross income. Subtracting losses caused by uncollected rents, vacancies and evictions gives effective gross income.
122
ADA
Employers with at least fifteen employees must follow nondiscriminatory employment and hiring practices and make reasonable accommodations to enable disabled employees to perform essential functions of their jobs. Modifications to the physical components of the building may be necessary to provide the required access to tenants and their customers. Existing barriers must be removed when the removal is "readily achievable," that is, when cost is not prohibitive.
123
Management Plan
In preparing a management plan, a manager must consider the owner's objectives, including financial goals; the competitive market for the property, both local and regional, depending on the property type; and the features of the particular property. The plan will also include a budget and indications of what the manager intends to do with the property to meet the owner's objectives.
124
Insurance policy (75%) Co-insurance4 (80%) Calculate recovery amount
Percent of insurable property value carried / 80% replacement cost) x claim = recovery
Thus, (75% / 80% x $150,000) = $140,625. However, the face value of the policy is the maximum they can receive, which is $140,000
125
Valid real property sales contracts
To be valid, any contract must be made between legally capable parties. Generally everyone is fully capable of contracting, except persons who are subject to certain limitations [unemancipated minors, persons of unsound mind, aliens, and persons deprived of civil rights (e.g., convicts)] (Ref 88) Though there is a standard form approved by DRE, it is not required. Any form prepared by an attorney may be used, but not one prepared by a licensed broker who is not also an attorney. Since sellers and buyers are not required to have agents, the signatures of agents cannot be a required element.
126
Residential security deposits
They must be held by the landlord for the depositors’ benefit. The landlord holds the security for the tenant who is party to the lease or agreement (CC 1950.5 (d)). No lease or rental agreement may contain any provision characterizing any security as “nonrefundable” (CC 1950.5(m)). A landlord may withhold portions of the security deposit to compensate for repairs, cleaning, and default (CC 1950.5 (b)). A landlord may demand an amount up to two months' rent, in the case of unfurnished residential property, and an amount equal to three months' rent, in the case of furnished residential property, in addition to any rent for the first month paid on or before initial occupancy.
127
Local builing codes in CA...
have been replaced by codes in the State Housing Law. The law (HSC 17922(a)) replaces local codes with the Uniform Housing Code, Uniform Building Code, Uniform Plumbing Code, Uniform Mechanical Code, and National Electric Code. Municipalities retain the power to create local use zone requirements, local fire zones, building setback, side and rear yard requirements, and property line requirements.
128
Subdivision Map Act
The Subdivision Map Act (GC 66424) defines a subdivision as any portion of improved or unimproved land that is shown as contiguous on the county assessment roll. Parcels may be considered contiguous even if separated by roads, streets, utility easement or railroad rights-of-way. The law covers parcels larger than 160 acres, but they can be smaller. The five-or-more-unit criterion belongs to the Subdivision Lands Law. There is no required 1⁄2 mile separation.
129
California Housing Finance Agency (CalHFA)
offers low-cost loan products to home buyers through private lenders. CalHFA is not a direct lender, but works through private lenders. Its mission is helping first-time homebuyers, not enforcing credit laws. As for funding, it is self-sufficient. CalVet is the agency that offers financing for veterans. (Ref 370)
130
Broker is exempt from esrow licensing when...
the broker is working as an agent of a principal to the transaction. The exemption conditions prescribed by the Financial Code FC 17006(a)(4)) are: 1) performing acts as part of a transaction in which 2) the broker is an agent to a transaction party or is a transaction party, and 3) the acts being performed require a real estate license. The other conditions mentioned concerning unavailability of a licensed escrow agent, authorization by the principals, and limited size of funds are irrelevant to the exemption.
