Practice Quiz Flashcards
- What are the unities of joint tenancies?
There are four unities “PITT”
1 - Unity of time - acquire at same time
2 - Unity of title - all joints tenants must acquire their interests by the same deed
3 - Unity of interest - tenants hold equal ownership interests
4 - Unity of possession - all joint tenants hold undivided possession of the property
- How does joint tenancy work when a will is involved?
The main feature of a joint tenancy is that it carries the right of survivorship automatically. Cannot be willed. The remaining tenants receive the share owned by the deceased tenant.
- How can joint tenancy become tenancy in severalty?
If one or more of the joint tenants dies and only one remains the remaining joint tenant would hold the title in severalty.
- What is the priority of liens?
The priority of a lien determines the order in which debts will be paid off. Real estate taxes and special assessments take priority over all other liens. All other liens are paid in order of priority normally determined by the the date of recording in public records of the county where the property is located.
- What is the process if a person dies Testate?
A person who dies Testate has prepared a will indicating the way to dispose of his or her property after death. Legally when a person dies, title to his or her real estate immediately passes either to their heirs by decent or to the persons named in the will. However the will must be probated and all claims against the estate must be satisfied.
- What are the freehold estates?
Fee simple - highest form of interest entitled to all rights in property. No time limit runs forever and upon death estate passes to heirs.
Fee determinable (conditional, or defeasible) - terminates upon occurrence of or nonoccurence of a specified event, future interest is called a possibility of a reverter.
Life estate - limited to the life of a specific person. Does not have right to pass along to heirs. Ends with death. Reversionary interest goes back to owner or grantor. Remainderman - goes to someone else. Pur autre vie- on the life of another. Has true ownership
- Which leasehold estate is not a legal object.
Tenancy in sufferance.
- What encumbrance is a product of a court decree?
Judgements. a judgement becomes a general involuntary lien on real property owned by a debtor when it is docketed with the county clerk.
- What are examples of involuntary alienation?
Involuntary alienation includes: Intestate( escheat), land needed for public use ( Eminent domain through condemnation suit), Non-payment of debt (Foreclosure), Open,notorious, continuous, hostile and adverse use ( adverse possession).
- Without owners consent. Transfers carried out by operation of law ranging from condemnation of land for public use to sale of property to satisfy tax lien or mortgage lien.
- Person dies intestate. Taken over by escheat.
- Power of eminent domain - when private property is taken - owner is given an opportunity to challenge money offered.
- Transferred to satisfy owners’ debts - debts that can be foreclosed are mortgage loans, real estate taxes, construction liens and general judgements against the property owner.
- Partition proceed - one co-owner seeks to force another to divide property
- What ways bridge the gap in the chain of title?
A quitclaim deed is commonly used to bridge the gap in the chain of title.
- Define devise
Devise is the gift of real property by will. the act of leaving real property by will.
- What is a rem proceeding?
If the municipalty forecloses on a tax sale certificate, it is through judicial foreclosure before a court known as a rem proceeding.
- Define a special assessment.
a tax or levy customarily imposed against only those specific parcels of real estate that benefit from public improvements like a street or a sewer.
- Know the difference between a usage encumbrance and a lien.
Liens are financial claims against the property. Physical or usage encumbrances, which include restrictions, easements,licenses and encroachments.
- Define lien?
A lien is a financial claim against property that provides security for a debt or obligation of the property to the owner. If the obligation is not repaid,the lien holder, or creditor, has the right to have it paid out of the property usually from the proceeds of a court sale.
- What are the characteristics of a limited partnership?
Limited partnerships include a general partner and limited partners. Run by general partner or partners.The limited partners are only have liability up to their initial investment.
- What types of buildings would use the cost approach?
The types of buildings would be special purpose buildings like schools,churches and public buildings.
- What is the principle of a cap rate?
It assumes the value of the property is based on its net income. It takes the capitalization rates of similar properties to the relationship of net income. IRV formula includes Net income/capitalization rate equals value.
- What are the three approaches to value and their alternate names?
- Sales comparison approach (Market data approach)
Gross rent multiplier if rented (GRM) Sales price/rental income. - Cost approach uses reproduction cost, replacement cost and deductions. Physical - normal wear and tear or. Functional obsolescence and external obsolescence.
- Income approach
- What is the principle of the math formula IRV
Income/rate = value
- What are the steps to the cost approach
- Estimate the value of the land as if it were vacant
- Estimate the current cost of constructing the building and improvements.
- Estimate the amount of the accrued depreciation resulting from physical deterioration, functional obsolescence and or external obsolescence.
- Deduct accrued depreciation from the estimated construction costs of new buildings and site improvements.
- Add estimated land value to the depreciated cost of the buildings and site improvements to arrive at the total value of the property.
- What is the definition of consideration?
That received by the grantor in exchange for the deed. Something of value that induces a person to enter into a contract. Consideration may be valuable (e.g. money), or good (love and affection).
- What type of agent is found in a standard real estate transaction?
Special agent.
- What is the process for present or transmitting offers?
All written offers must be forwarded to sellers within 24 hours.
- What is the commission rules for exclusive agency and exclusive right to sell.
Exclusive agency - only one broker specified to act as exclusive agent. If any broker brings abuyer the listing broker is still due a commssion, which he or she splits with the selling broker. If the seller finds a buyer with no help from any broker, seller retains the right to sell property without obligation to the broker.
Exclusive right to sell listing - one broker is appointed as sole agent of the seller and is given exclusive right to represent the property. Seller must pay broker regardless of who sells if sold while listing is in effect. If seller gives the broker an exclusive right to sell listing but finds a buyer without broker assistance the seller must still pay the broker a commission.
- Define executed and executory.
Executed - a contract which all parties have fulfilled their promises and thus performed the contract or can mean a signed contract.
Executory - a contract under which something remains to be done by one or more of the parties.
Four stages:
- Meeting of the minds - executed
- attorney review - unenforceable
- After attorney review - executory
- Closing - executed
- Define assignment and novation.
An assignment - is the transfer of rights and or duties under a contract. Unless contract specifically forbids it rights may be assigned to a third party.Most contracts contain a clause that permits or forbids. Assignor maintains secondary liability if assignee breaches.
A Novation - is a substitution of a new contract for an existing agreement.May be between the same parties or a new party substituted (novation of the parties). Old contract is no longer in force.
- What is commission based on an open listing?
Seller agrees to pay broker commission only if a buyer for the property is produced by them. Can enter into as many number of brokers all acting as agents. If seller sells property without the aid of a broler, there is no obligation to pay commission. Does not need a termination date. a subsequent exclusive listing with another broker would automatically terminate an open listing.
- In an assignment, what is important about liability?
Assignor maintains secondary liability if the the assignee breaches contract.
- Define specific performance and liquidated damages.
Liquidated damages represents money agreed to in advance by buyer and seller that serves as compensation if one party does not live up to the contract.
If seller defaults buyer has three alternatives:
- The buyer may rescind or cancel and recover earnest money
- The buyer may sue for specific performance to force seller to perform or convey the property
- The buyer may sue seller for compensatory damages.
If the buyer defaults:
- The seller may declare the contract forfeited and retain the earnest money as liquidated damages.
- The seller may rescind the contract cancel, terminate. This requires seller to return all payments.
- The seller may sue for specific performance. This may require the seller to offer, or tender a valid deed to the buyer to show compliance with the contract terms or
- The seller may sue for compensatory damages.
New Jersey allows a specific time limit of six years under the statute of limitations.
Seller is entitled to keep the deposit if buyer refuses to perform for no good reason. Seller who does not live up
- Be able to recognize business relationships in situations.
General agent - represents principal in broad range of matters within scope of authority. E.g. property manager is responsible for running a large building and hires maintenance personnel.
Special agent - authorized to represent principal in one specific capacity. Typically a real estate broker.
Client - person employed by the broker in an agency relationship. Seller is the the client, buyer is the customer.
Power of attorney - authorized to legally bind attorney in fact.
Salesperson acts as agent of the broker and as a subagent of the principal. Unless specifically retained, it is inaccurate for a salesperson to refer to the buyer as a client.
- Define a net listing?
Based on the amount of money the seller will receive if property sold. Broker free to offer at any price. if the property is sold, the broker pays the seller only the net amount previously agreed on and keeps the rest. This tupe of listing is illegal in New Jersey.
- Know examples of a voidable contract.
Seems valid on the surface to be valid, but may be rescinded, or disaffirmed by one of the parties (e.g. a contract with a minor). Contracts signed by a person under duress (force) or undue influence (being taken advantage of) are voidable (may be canceled0 buy such person or by a court. Extreme care should be taken when one or more parties to a contract is elderly, sick, in great distress, or under the influence of drugs or alcohol. to be valid, every contract must be signed as the free and voluntary act of each party.
- Know real estate examples of a unilateral contract.
One-sided.One party makes promise to induce a second party to do something the second party is not legally obligated to act. An offer of an award is an example.
- What is the MLS?
An organization in which brokers share listings with each other.
- Who must act under a unilateral contract?
A unilateral contract whereby one party makes a promise to induce the second party, only the first party is required to act. The offerer of an award must act if the offerer performs.
- What are the essential elements of a real estate contract?
- Competent parties (18+)
- Offer and acceptance
- Consideration
- Legality of object
- What are essential to be included in a real estate contract?
- Contract in writing
- Competent parties
- Agreement to buy and sell
- Adequate description of the property
- Consideration (price and terms of payment)
- Grantors agreement to convey (type of deed)
- Place and time of closing
- Signatures of the parties
- Define 4 business relationships
- Seller’s agent or subagent - works only for the seller
- As buyer’s agent - works only for the buyer
- As a disclosed dual agent - works for both the buyer and seller. To work as a dual agent, a firm must first obtain informed written consent
- As a transaction broker - a transaction broker works with a buyer or seller or both in the sales transaction without representing anyone and does not promote the interests of one party over another and are not required to keep confidential any information.
- What are the essential elements of a real estate contract?
- Competent parties (18+)
- Offer and acceptance
- Consideration
- Legality of object
- What makes up meeting of the minds.
Taken place when the parties agree on:
- Price
- Down payment and.
- Financing method.