PRACTICE OF REAL ESTATE Flashcards
Exchanging like-kind property for like-kind property, resulting in a deferral of capital gains tax; also called a tax-free exchange
1031 EXCHANGE
A federal law passed adding two new protected classes; Handicap and Familial Status
1988 AMENDMENTS TO THE FAIR HOUSING ACT
A client level duty relating to account of earnest money, actions, etc.
ACCOUNTING
A customer level duty relating to disclosure of all material defects (including latent or hidden defects) to any customer; e.g., leaky roofs, leaky basements, etc.
ACCURATE
An addition made to an original contract; e.g., adding the requirement that a roof be repaired. Also, sometimes referred to as an amendment
ADDENDUM
One who is hired to represent another
AGENT
A change made to an original contract; e.g., extending closing date on contract; also referred to as an addendu
AMENDMENT
A transfer of rights in contract to another party
ASSIGNMENT
A total transfer of rights in a lease where the original tenant and new tenant are both liable to the landlord for the lease payments
ASSIGNMENT OF LEASE
The title given to someone who has the power of attorney; can sign on others behalf
ATTORNEY-IN-FACT
A contract containing a promise for a promise; e.g., buyer and seller in selling and buying a house
BI-LATERAL
The illegal act of making a profit by inducing owners to sell by telling them that persons of a protected class are moving into their neighborhood
BLOCKBUSTING
Markers in a Metes and Bounds description; e.g., stake, well, etc.
BOUNDS
Where a party to a contract does not perform according to the terms of the agreement
BREACH
Profit made on an investment item, such as real estate
CAPITAL GAIN
A client level duty exercising knowledge and skill
CARE
Banned all racial discrimination
CIVIL RIGHTS ACT OF 1866
Banned discrimination in residential real estate on the basis of race, color, religion, national origin, sex, handicap, or familial status
CIVIL RIGHTS ACT OF 1968
Mixing escrow money with personal or business funds; illegal
COMMINGLING
An essential element of a contract; one must be of legal age and of sound mind
COMPETENT PARTIES
A client level duty relating to maintaining confidential information of the client
CONFIDENTIALITY
In leasing, a situation where the landlord constructively evicts the tenant by not maintaining the premises; e.g., no heat in the wintertime; lessee or tenant must actually leave the premises and is released from lease obligations
CONSTRUCTIVE EVICTION
A type of syndication where owners can limit their liability; a corporation who purchases real estate takes title in severalty
CORPORATION
A rejected offer and a new offer made back to the other party
COUNTER-OFFER
Buyer backs out of a contract, is release from the contract but the seller keeps the earnest money is liquidated or pre-arranged damages
DECLARE CONTRACT FORFEITED
An essential element of a contract; must have an adequate description of the real estate; generally a legal description
DESCRIPTION
A client level duty relating to disclosing to a client all materials facts regarding the transaction
DISCLOSURE
A situation where a broker represents both buyer and seller at the same time; must have written prior permission from both parties and informed consent
DUAL AGENCY
Good faith money
EARNEST MONEY
Liability insurance for real estate agents that protects against claims of failure to perform duties or mistakes being made
ERRORS AND OMISSIONS INSURANCE
A lease clause allowing a landlord to pass increased costs along to tenant; i.e., can raise rent to tenant if landlord`s costs go up
ESCALATION CLAUSE
Only for owner-occupied properties; a person can write off up to $250,000 of capital gains if single, $500,000 if married; must have been your personal residence for 2 of the past 5 years; can use exclusion repeatedly, not just once in a lifetime
EXCLUSION ON HOMES
A type of listing where the owner and one broker are authorized to sell and receive a commission
EXCLUSIVE AGENCY LISTING
A type of listing where only one broker is authorized to sell and receive a commission
EXCLUSIVE RIGHT TO SELL LISTING
The phase in a contract where the promises have been completed; e.g. contract closing
EXECUTED
The phase in a contract where the promises have been made but not completed; e.g. contract pending
EXECUTORY
Refers to a contractual obligation where all parties have clearly stated their intentions
EXPRESSED
A customer level duty relating to treating all customers fairly
FAIR
A person with a child under 18; a protected class under the 1988 Amendments to the Fair Housing Act
FAMILIAL STATUS
Loyalty and trust; what an agent owes to a principal (client)
FIDUCIARY
Linear (straight) feet along the street line; in essence, the width of your property along the street
FRONT FOOTAGE
A person who represents someone else in several areas on an ongoing basis; e.g., property manager to owner; also salesperson to broker
GENERAL AGENT
Insurance a real estate brokerage can obtain to protect against someone being harmed or injured on the brokerage premises
GENERAL LIABILITY INSURANCE
A form of legal description that uses benchmarks to identify land
GEODETIC SURVEY SYSTEM
A form of legal description that describes land in America using meridians (north and south) and base (east and west) lines; every six miles range and tier lines are drawn to form townships; also referred to as the rectangular survey system
GOVERNMENT SURVEY SYSTEM
A lease where the payments can go up or down, but are pre-determined
GRADUATED LEASE
A lease where the landlord pays taxes, assessments, insurance, etc.
GROSS LEASE
A lease for ground; usually long-term; e.g., farmers, gas stations, etc.
GROUND LEASE
A physical or mental impairment; a protected class under the 1988 Amendments to the Fair Housing Act
HANDICAP
Insurance a real estate brokerage can obtain on business property to protect against vandalism
HAZARD INSURANCE
A customer level duty relating to being honest with customers
HONEST
Refers to a contractual obligation that is created by one`s actions
IMPLIED
A lease where the payments can go up or down but are based on some type of index, such as the consumer price index
INDEX LEASE
In 1968, the United States Supreme Court rules that one cannot discriminate racially under any circumstances
JONES VS MAYER
An essential element of a contract; must be for a lawful purpose
LEGAL OBJECT
A way to structure a business that combines the benefits of a partnership with pass through profits and losses to owners along with the limited liability protection of a corporation
LIMITED LIABILITY COMPANY (LLC)
An arrangement where one can invest money with a general partnership; the limited partner is normally only liable for their investment; basically a financial backer; not involved in day to day running of business
LIMITED PARTNERSHIP
A clause in a contract allowing for the earnest money to be forfeited to the seller if a buyer backs out of a contract; also called pre-arranged damages
LIQUIDATED DAMAGES
A form of legal description which lists a lot #, block#, subdivision, county and state; recorded on a plat map; used primarily for new subdivisions
LOT AND BLOCK SYSTEM
(Fiduciary) A client level duty relating to doing what is in your client`s best interest
LOYALTY
Length measurements in a Metes and Bounds description; e.g., feet and inches
METES
A form of legal description that gives a physical description of the property
METES AND BOUNDS
False statement of a material fact
MISREPRESENTATION
A clause in a contract where the buyer is obligated to buy only if loan approval is obtained; usually buyer gets earnest money back if mortgage is denied
MORTGAGE CONTINGENCY CLAUSE
A lease where the tenant pays all or part of taxes, assessments, insurance, etc. Taxes paid by tenant would be tax deductible for the tenant.
NET LEASE
Normally illegal; this is where the real estate commission is the sale price less the seller`s required proceeds
NET LISTING
A clause in a lease and lending document allowing for continuation of a lease even if the property is foreclosed on
NON-DISTURBANCE CLAUSE
(Performance) A client level duty following instructions of a client
OBEDIENCE
In a real estate transaction, the buyer makes the first offer
OFFER
An essential element of a contract; the parties must agree on the exact same terms
OFFER AND ACCEPTANCE
A type of listing where everyone is authorized to sell and receive commission, including the owner; the only one who gets paid is the one who is the procuring cause (found the buyer)
OPEN LISTING
Costs incurred in a property management situation, such as utilities and repairs; does not include vacancies
OPERATING COSTS
A possibility contract where one party is bound to perform but the other party is not
OPTION
Receiver of option (possible buyer)
OPTIONEE
Giver of option (seller)
OPTIONOR
Refers to a contractual obligation that is created by what appears to be; similar to implied
OSTENSIBLE
A type of syndication where the partners have unlimited liability and generally share in profits, losses, taxes, etc.
PARTNERSHIP
A lease where the rent is based on a percentage of sales; normally used in retail leases
PERCENTAGE LEASE
A non-assignable contract; e.g., listing contract
PERSONAL SERVICES CONTRACT
Used with the Lot and Block System, this map is a diagram of a subdivision
PLAT MAP
A written document authorizing one to sign legal documents on behalf of another
POWER OF ATTORNEY
A clause in a contract allowing for the earnest money to be forfeited to the seller if a buyer backs out of a contract; also called liquidated damages
PRE-ARRANGED DAMAGES
One who hires an agent for representation
PRINCIPAL / CLIENT
An agreement between an owner and property manager that shows basic duties of the property manager; generally this agreement does not contain a vacancy rate
PROPERTY MANAGEMENT AGREEMENT
Protects broker in case negotiations extend past the expiration date of listing; this clause is normally standard in an agency agreement
PROTECTIVE PERIOD CLAUSE
Subjective opinion; e.g., this home has a beautiful view; not a law violation
PUFFING
(REIT) A type of syndication that is basically a giant mutual fund for real estate investments
REAL ESTATE INVESTMENT TRUST
A form of legal description that describes land in America using meridians (north and south) and base (east and west) lines; every six miles range and tier lines are drawn to form townships; also referred to as the government survey system
RECTANGULAR SURVEY SYSTEM
Lenders refusing to loan in certain areas based upon protected classes
REDLINING
In a contract, this returns the parties to status quo; way they were before contract signed
RESCIND
A contract where one is given the first opportunity to buy if a property is put up for sale
RIGHT OF FIRST REFUSAL
A portion of ground measuring one mile square; also one square mile; contains 640 acres; every acre contains 43,560 square feet
SECTION
Required if one sells investments to the general public, such as REIT`s (Real Estate Investment Trust)
SECURITIES LICENSE
Amount of space between lot line and building line
SETBACK LINES
A federal law that prohibits groups of brokers setting a fixed price for services
SHERMAN ANTI-TRUST LAWS
An essential element of a contract; must have signatures of all parties to contract
SIGNED
A simple business form under which a person can operate a business; it has no separate legal existence from the owner. Also, profits and losses flow through to the owner.
SOLE PROPRIETORSHIP
A person who represents someone else one time in one area; e.g., broker to seller
SPECIAL AGENT
Court action to force completion of a contract
SPECIFIC PERFORMANCE SUIT
Length times width
SQUARE FOOTAGE
A law that requires certain documents to be in writing to be enforceable; e.g., real estate sales contracts, deeds, leases over 1 year
STATUTE OF FRAUDS
Directing people toward areas based upon their protected class
STEERING
An agency situation where one agent is authorized to use another agent to represent the client; historically, this is where two brokers, the listing and selling broker, both represent the seller; buyer is a customer and is unrepresented
SUB-AGENCY
A partial transfer of rights in a lease where just the original tenant remains liable for the lease payments; the new tenant is a lessee of the original tenant
SUBLEASING
Two or more people investing together
SYNDICATION
Exchanging like-kind property for like-kind property, resulting in a deferral of capital gains tax; also called a 1031 exchange
TAX-FREE EXCHANGE
States that all terms of the contract must be completed in a timely manner
TIME IS OF THE ESSENCE CLAUSE
A portion of ground measuring 6miles square; also 36 square miles
TOWNSHIP
Separate account for holding other people`s money; usually held by broker; also referred to as escrow account
TRUST ACCOUNT
A contract that may not be enforceable in court; e.g., an oral contract
UNENFORCEABLE
A contract containing a promise for an action; e.g., a lease with an option to buy
UNI-LATERAL
A contract containing all the essential elements, including being in writing
VALID AND ENFORCEABLE
A contract with no legal effect; e.g., one of the parties not of sound mind
VOID
A contract that can be voided by one of the parties; e.g., contract signed by a minor, under duress, or due to misrepresentation
VOIDABLE
An essential element of a contract; contract doesn`t have to be in writing, but generally does to be enforceable (an oral contract generally cannot be enforced in court)
WRITING
