NJ Real Estate Flashcards
Licensees are required to provide their customer with a document called the Consumer Information Statement on NJ RE relationships except in this situation:
Non-residential sale and lease transactions
How many days does an attorney have to review signed contracts after it is delivered to both parties? (Attorney review clause)
3 business days
NJ Law against discrimination applies to which specific group?
Private club renting only to its members
A licensee must deliver a duplicate original of a signed contract to all parties within how many days?
Immediately
How long does a broker have to maintain a record of his client submitting an offer that was NOT accepted and a listing contract that expired without a sale?
6 months from offer or from expiration of listing
Is a Judgement a special or general lien?
General
Which type of deed would not normally be used to transfer title?
Quitclaim deed
Title is transferred at the time of?
Settlement (closing)
When a deed or other document is recorded, what kind of notice is given?
Constructive notice
Granting Clause
Component of a deed where the grantor expresses a desire to transfer interest in the property to the grantee
Legal process know as Attachment is:
When the court decides to take custody of the property so that the defendant (owner) cannot dispose of the property before the court case is decided
Do trade fixtures have to remain if they are attached to the space?
No, if it’s business related it can be removed
Cost Appraisal/Summation approach
Determines the cost (or replacement cost) of constructing a building using up to date materials and techniques
Market data approach/Sales Comparisons approach
Finding value by comparing a property to others in the area that are similar in size and condition
The Cost Approach to value a building is helping when:
Very few buildings nearby are similar (church etc.)
Cap Rate (%) Formula
NOI/Asset Value
The Quantity Survey Method
When an appraiser analyzes data on labor costs, material costs, and amount of materials needed to determine the structure’s replacement cost
If a buyer gives a salesman a cash deposit, can he deposit it with or without the owners consent?
Without for a CASH deposit as earnest money
Novation
Substitution of a new obligation between the same parties with the consent of both parties. Original contract is discharged, also happens when a member of a contract is replaced
Transaction broker owes fiduciary duty to who?
Nobody. They work with a buyer and seller without repping anyone
Conversion Funding
When a Salesperson uses a clients funds for his own use
Private Well Testing Act
Buyer and seller must certify in writing that they have received and reviewed water test results at closing (only applicable where water sources are drinkable)
Bridge Mortgage/Loan
Short term financing where money is lent during the gap between two closings (buying house and then other house sells so you don’t need the loan anymore)
Chattel Mortgage
Using personal property as security
Closed Mortgage
Locked in and cannot be paid off before maturity
Shared Appreciation Mortgage
The lender gets some or all payment in the form of a share of the increased value or appreciation of the property
Equitable Right of Redemption
Ability for the mortgagor in default to pay back his loan and redeem the property before it is auctioned away at a foreclosure sale
Ginnie Mae purchases loans on which market?
Secondary Mortgage Market
Alienation Clause, aka due on sale clause
Requires mortgagor to pay off loan all at once if there is a sale or transfer of title
Habendum Clause
Deed or lease that details the interests and rights to be enjoyed by grantee or lessee
Demise
The transfer in estate by way of lease
Estate at Will
Tenant occupies space without a definite time period or regular payment of rent
Estate for Years
Leasehold for a specific amount of time (years or just months)
Periodic Tenancy
A periodic tenancy is a tenancy that continues for successive periods until the tenant gives the landlord notification that he wants to end the tenancy.
Purpose of Real Estate Settlement Procedure Act (RESPA)
To Eliminate kickbacks and referral fees from settlement service providers and to help consumers become better shoppers and more informed (1974)
Reappraisal Lease
A lease in which the rent is adjusted based on an independent appraisal of the value of the property; frequently seen with long-term ground leases.
Township measurement
A township measures 6 x 6 miles (36 X 36 miles)
Capitalization (Cap) Rate Formula
Net Operating Income/Property Asset Value
Tenancy from Period to Period
tenancy from period to period is a type of lease that specifies a definite initial time but that is automatically renewable unless terminated by either the landlord or tenant.
Tenancy in common
Each co-tenant in a tenancy in common has an interest in the property and is free to transfer this interest during life or through a will (no right to survivorship)
Joint tenants
must have equal ownership interests in the property. So, three owners would each have a one-third interest in the property. If one of the joint tenants dies, his or her interest immediately ceases to exist and the remaining joint tenants own the entire property (right to survivorship)
Tenancy by entirety
For married couples, protects the family and automatically passes to spouse upon death
Liquidated Damages
Liquidated damages (also referred to as liquidated and ascertained damages) are damages whose amount the parties designate during the formation of a contract for the injured party to collect as compensation upon a specific breach (e.g., late performance).
Contract for Deed
A bond for deed (or land contract) is a contract to sell real property in which the purchase price is to be paid by the buyer to the seller in installments and in which the seller, after payment of a stipulated sum, agrees to deliver title to the buyer. It may also be called a “contract for deed”.
Reverse Annuity Mortgage
type of mortgage in which a homeowner can borrow money against the value of his or her home, receiving funds in the form of a fixed monthly payment or a line of credit. No repayment of the mortgage (principal or interest), is required until the borrower dies, moves away permanently or sells the home
Loan to Value Ratioo
Loan Amount/Property Value
Blanket Mortgage
A blanket mortgage is a loan that covers more than one piece of property. It sometimes is used to finance a subdivision development. Say, for example, that a builder buys six lots on which he plans to build houses and sell them
Home Equity Loan
A home equity loan seeks to use the equity that a mortgagor has built up in a property either for improving the property or some other use
Open Mortgage
An open mortgage is a mortgage loan that can be paid back at any time without a prepayment penalty
Package Mortgage
A package mortgage is a loan that covers real estate and personal property being sold with the real estate. The buyer of a house in which furniture is being included in the sale may want to apply for a package loan. For example, this loan can be used to purchase a furnished vacation home
Wraparound Mortgage
A wraparound mortgage is a new mortgage that literally wraps around an old mortgage. A seller sells a property to a buyer, but the seller doesn’t pay off an existing mortgage. The buyer gives a new, larger mortgage to the seller
Net Listing
Imagine a situation where a real estate broker said “your home is worth $300,000. But instead of taking a commission on that $300,000 value, my fee will be limited to everything above that figure.”
Sounds pretty good – unless the home is worth substantially more than $300,000 (Illegal in NJ)
New Jersey MLS
Multiple Listing Service
A Variance
a request to deviate from current zoning requirements. If granted, it permits the owner to use his land in a way that is ordinarily not permitted by the zoning ordinance. It is not a change in the zoning law, but a waiver from the requirements of the zoning ordinance
Easement by necessity
Allows an owner of a landlocked parcel to cross over another’s land to access a public road. Easements by necessity are known as appurtenant. This means that they benefit a particular piece of land, rather than an individual person
Appurtenance
A legal term denoting the attachment of a right or property to a more worthy principal. Appurtenance occurs when the attachment becomes part of the property such as a furnace or air conditioning unit.
Void Contract vs. Voidable
void contract is not a contract and has no effect in a court of law and cannot be enforced in a court of law. Most commonly, a void contract will be missing one or all of the essential elements needed for a valid contract. Neither party needs to take action to terminate it, since it was never a contract to begin with
a voidable contract is a contract which may appear to be valid and has all of the necessary elements to be enforceable, but has some type of flaw which could cause one or both of the parties to void the contract. The contract is legally binding, but could become void. If there is an injured party involved, the injured party or the defrauded must take action, otherwise the contract is considered valid (ex. A contract entered into with a minor could be voidable)
Unenforceable Contract
an unenforceable contract is a contract which cannot be enforced in a court of law. This could happen because the terms of the contract are ambiguous, if one party has a voidable contract or if the Statute of Limitations has expired
The Statute of Limitations
requires that lawsuits be filed within a certain period of time following a breach
Doctrine of Laches
This principal states that a court has determined a contract is unenforceable due to needless delay or neglect in filing a claim even though the statute of limitations may not have expired
Subagency vs. dual agency
Subagency refers to a specific client representation relationship between a property listing broker or real estate agent and another real estate broker or agent who brings the buyer to purchase the property.
In subagency, the agent bringing the buyer is actually working for the seller as a subagent of the listing broker. This is important, as the agent working with the buyer actually owes fiduciary duties to the seller, not the buyer
…Dual Agent owes fiduciary duty to both
Prior Appropriation
water rights with a legal doctrine that the first person to take a quantity of water from a water source for “beneficial use”—agricultural, industrial or household —has the right to continue to use that quantity of water for that purpose
Real Property vs. Personal Property
Real property is immovable while personal property is anything that can be moved
Principle of Progression and Regression
A real estate valuation theory which states that a property of lesser value is enhanced through proximity with higher value properties and vice versa
Escheat
The reversion of property to the state (usually when owners have no heirs)
Prescriptive Easements
Think of prescriptive easements as the acquisition of an easement by adverse possession or squatters rights (Homeowners who walk across a vacant commercial lot to access retail stores or mass transit )
When a municipal tax lien is sold to a private investor, what period of time does a property owner have to redeem the property before the lien holder can start foreclosure?
2 Years
Does the owner of an office in a Condo building have responsibility for common areas?
Yes
If a married couple asks salesperson how they should take ownership of the estate, should salesperson tell them tenancy by entirety?
No, he should tell them to consult with their attorney
An attachment is a
Lien
Does Planned Unit Development provide for a degree of open space in a new residential development?
Yes
In a transfer of title, is the signature of the grantee required?
No
What time of lease is a CoOp granted through?
Proprietary lease
Title to personal property would be transferred with a?
Bill of Sale
Which appraisal method is least effective when valuing a vacant lot?
Cost Method
Characteristics of value
Utility, Scarcity, Transferability (not cost)
Reproduction Cost
The Cost to replace and existing structure using the exact same materials, construction methods, and design as the original
Which is more important for a sellers agent to reveal to the buyer (and necessary), patent or latent defects?
Latent defects
A remedy in court compelling the defendant to carry out the terms of an agreement is known as
Specific Performance
Is a broker of record who also functions as the office manager required to file monthly sales figures with the New Jersey RE Commission?
No
Graduated Payment Mortgage
A graduated payment mortgage loan, often referred to as GPM, is a mortgage with low initial monthly payments which gradually increase over a specified time frame
Open-End Mortgage
An open-end mortgage is a type of mortgage that allows the borrower to increase the amount of the mortgage at a later time. Open-end mortgages permit the borrower to go back to the lender and borrow more money if certain conditions have been met. There is usually a set dollar limit on the additional amount that can be borrowed
Can a buyer source his mortgage with the Federal National Mortgage Association (Fannie Mae)?
No, Fannie Mae it purchases mortgages from lending institutions to make lending activity more affordable
Does an applicant for a VA loan for a two-family dwelling need to occupy the space?
No, he can give it to another VA I think…
According to the Truth in Lending Law, what items need to be included for a “true or effective” annual interest rate?
Application fees, Discount points, and finance charges
- Not Recording Feeds
Big Difference between VA and FHA
VA Guarantees loans while FHA insures loans
Primary purpose of the HUD Uniform Settlement Statement
Outlines Closing Costs
Sheriff’s Sales
A term used to refer to distressed public property auctions. Sheriff’s sales is generally the last step in the foreclosure process after the homeowner has exhausted all his/her options to avoid defaulting on a mortgage. Once the borrower has defaulted, the lender will file suit in court to recover its loan loss, and if the court awards a judgement, the property will be scheduled to be sold at a public auction
Are the property taxes paid off after all other liens are satisfied in a Sheriff’s sale?
No, they’re paid off before
Subordination Clause
Clause that allows tenant to be evicted before lease expires if the building is sold to a new owner who wants to expel tenant
The Truth in Lending Act only applies to properties with how many units?
At least 3
Where does the NJ RE Commission get the money to fund the Guaranty Fund?
New licensees are assessed a fee at the time of licensing and may be assessed further fees as deemed necessary down the road
How do you have to renew your license before requiring further education?
2 years
You have 1 year to apply for issuance of salesperson license after?
You complete your 75 hour course
Who is responsible for enforcing the NJ Timeshare Act
NJ RE Commission
How long does a broker have to deposit a buyers money in the BROKER’S TRUST ACCOUNT?
within 5 days of receipt (he must deposit it)
