Principals

Question 1

Lot and Block

Answer 1

• A System for the legal description of land that refers to parcels’ lot and block numbers, which appear on-recorded maps and plats of subdivided land; may also be used for assessment maps.
• Most recent system of legal descriptions

Question 2

Metes and Bounds

Answer 2

• A system for the legal description of land that refers to the parcel’s boundaries, which are formed by the point of beginning (POB) and all intermediate points (bounds) and the courses or angular direction of each point (metes).
• Earliest system of legal description utilized in US. Today used primarily in 13 original colonies.
• A Surveyor provides a legal description.

Question 3

Metes

Answer 3

Refers to the bearing or direction relative to North or South.
1 full circle = 360⁰
1⁰ = 60 (60 “Minutes”)
1’ = 60” (60 “Seconds”)
1⁰ = 3,600” (60 seconds per Minute x 60 Minutes per Degree)

Example: A property boundary is North 33⁰ 10’12” East. This would be read as “North 33 Degrees, 10 Minutes, 12 Seconds East”

Question 4

Bounds

Answer 4

• The distances that a boundary runs at that prescribed angle. Distances are usually indicated in feet (using decimals instead of inches).
• Other earlier methods of measurements used = Rods and chains

1 Mile = 8 Furlongs
1 Furlong = 660 Feet, or 10 Chains
1 Chain = 66 Feet, or 4 Rods
1 Rod = 16.5 Feet, or 25 Links
1 Link = 7.92 Inches

Question 5

Which system of legal descriptions came into common usage in the 1950s with the development of large subdivisions?

Answer 5

Lot and Block

Question 6

Bearing, Distance

Answer 6

“Metes” refers to ______ and “bounds” refers to _____?

Question 7

Metes and Bounds

Answer 7

Which system of legal description is the earliest system used in the US?

Question 8

Gunter’s Chain

Answer 8

+ Many modern units of measurement are based on Gunter’s Chain
+ Edmund Gunter born in Wales in 1851, educated as a priest at Oxford, loved math
+ In 1607 he designed a chain”4 perches in length, divided into 100 links”. It was flexible, could be carried over shoulders and didn’t stretch or shrink
+ Easy to halve and quarter or double and redouble
In Gunter’s combination system an acre was 10 square chains

Question 9

Rectangular Survey System

Answer 9

A land survey system used in Florida, Alabama, Mississippi and all states north of the Ohio River or west of the Mississippi River except Texas; divides land into townships and ranges approximately six miles square, each normally containing 36 one-square-mile sections of 640 acres, except when adjusted for the curvature of the earth.
+ Sometimes called Government Survey system, came along later and is the basis of descriptions in most states after the 13 colonies in the NE and Middle Atlantic states. Based on standardized measurements and consistent squares, as opposed to the irregular shapes commonly found in metes and bounds descriptions.+

Question 10

Rectangular Survey System II

Answer 10

Early Congress decided that the remaining territories west and south of Ohio would be surveyed and divided up into townships
Thomas Hutchins was appointed Geographer to US by George Washington. On 9/30/1785 he started from a point on the west back of the Ohio river, in East Liverpool, OH.
In 1786 the party was strengthened by the addition of more surveyors and a military guard. Every six miles a new survey party started running a line due south
Over the next 30 years, or so, more than three quarters of the US was plotted out in these survey descriptions that still exist today. Accomplished by men on foot and horseback with a compass in hand and Gunther’s chain over their shoulders

Question 11

Basic Measurement System

Answer 11

1 Township = 36 Square Miles (6 x 6 miles)

1 Section = 1 Square Mile (5,280 x 5,280 feet)

1 Square Mile = 640 Acres

¼ Section = 160 Acres

Quarter-Quarter Section = 40 Acres

Question 12

Which system is found primarily in the Northeast?

Answer 12

Metes and Bounds

Question 13

Estate

Answer 13

A right or interest in property. Defines an owner’s degree, quantity, nature, and extent of interest in real property. There are many different types of estates, including freehold (fee simple, determinable fee, and life estate) and leasehold. To be an estate in land, an interest must allow possession (either now or in the future) and be differentiated primarily by its duration.

Question 14

Fee Simple Estate

Answer 14

Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the government powers of taxation, eminent domain, police power and escheat.

Absolute ownership subject only to limitations imposed by the State; also called freehold.

Question 15

Fee Simple II

Answer 15

The fullest and most complete type of estate

Still subject to common public limitations

Consists of the full bundle of rights

None have been exercised or given away
Inheritable
Transferable
Perpetual

If I die my heirs will inherit; while alive I may sell or transfer; I don’t have to do anything to continue ownership.

Question 16

Fee Simple III

Answer 16

Most common form of ownership in residential real estate appraisals

If have mortgage (a lien against the property) owner does not have true fee simple title.

In the majority of appraisal assignments, the fee simple is what we are valuing; we do not take the existing mortgage into consideration when valuing the property

Not valuing owners equity position == appraisal job is to find market value of the fee simple estate.

Question 17

Partial Interest

Answer 17

Divided or undivided rights in real estate that represent less than the whole (a fractional interest)

If one or more of the bundle of rights is missing, it results in a partial interest or partial estate
Life estates
Leased fee estates
Leasehold estates

Question 18

Life Estate

Answer 18

Rights of use, occupancy and control, limited to the lifetime of a designated party, sometimes referred to as the life tenant
Example – Elderly person transfers ownership to another party, but retains right to live in property for the rest of their live. Upon death rights transfer to named person (called Remainderman)
An adjustment to the value of a life estate property would involve some sort of discounting of value based upon mortality tables and the expected remaining life of the person holding the life estate.

Question 19

Leased Fee Interest

Answer 19

A freehold (ownership interest) where the possessory interest has been granted to another party by creation of a contractual landlord-tenant relationship (i.e., a lease)

Question 20

Leasehold Interest

Answer 20

The tenant’s possessory interest created by a lease

When a property is leased, it creates two separate estates or interest. One belongs to the property owner and the other belongs to the tenant

If the house or land is leased at the time of sale, the value of the leasehold may be calculated separately from the leased fee ownership of the property itself. The appraiser would account for the terms and also factor in the length of time remaining on the lease.

Even though the owner of a leasehold interest has no real interest, a leasehold interest may have value if the contract rent stipulated in a lease is less than the property’s market rent. A leasehold estate is considered a non-freehold estate.

Question 21

Easement

Answer 21

The right to use another’s land for a stated purpose.
Or
Non-possessory (incorporeal) interest in landed property conveying use, but not ownership, of a portion of that property.

Some else is allowed to enter a property and therefore the owner has relinquished the exclusive right to occupy and use the property. This creates a partial interest or diminished estate.

The effect of an easement can vary from negligible to substantial. A simple right of way across the edge of a property may have little or no impact. But a right-of-way or power line easement through the center of a property may have substantial impact on usability and value.

Question 22

Easement in Gross

Answer 22

An easement that benefits a legal person or entity (individual, corporation, partnership, LLC, government entity, etc.) and not a particular tract of land; an easement having a servient estate but no dominant estate.

 Examples – railroads, pipelines and utility companies
 Benefits one property but does not benefit another parcel of land Common in an area and affect a number of different properties.  
 -Example – Everyone in a neighborhood may have a utility easement along the front of their property for local water and sewer lines.      

Therefore, there may be no need to adjust for this factor, because the subject and all the properties that are used as comparables sales are affected by similar easements.

Question 23

Easement Appurtenant

Answer 23

Easements can work for the benefit or the detriment of one party over another
If I own a property in the rear of yours and access it through an access right-of-way over your property, I gain a benefit and your property is encumbered
I have the dominant tenement and you would have the servient tenement
An easement having both dominant and servient estates. The easement interest passes with title to the dominant estate and continues to burden the servient estate.
An easement appurtenant contrasts with an easement in gross, which has a servient estate but no dominant estate.
My property in the rear is worth more because of the right-of-way access than if it had no access at all. A positive adjustment would be needed when comparing my property to one with no recorded access.
The property in the front, over which my right-of-way passes, may be worth less than another property that is not encumbered by aright-of-way. In that case an adjustment would have to be made when comparing that property to one that does not have a right-of-way over it.

Question 24

Affirmative Easement

Answer 24

The right to perform a specific act on a property owned by another.
Also called dominant estate
Good kind of easement – works in your favor

Question 25

Negative Easement

Answer 25

An easement preventing a property owner from certain, otherwise permitted, use of their land, (e.g., agreeing not to do something such as building a wall or fence blocking an adjoining property’s view. ``` Can be punitive in nature and create losses in value. Examples: Conservation easements Drainage easements Historic preservation easements Subsurface rights Air Rights Takes away basic rights ```

Question 26

Conservation Easements

Answer 26

An interest in real property restricting future land use to preservation, conservation, wildlife habitat, or some combination of those uses. A conservation easement may permit farming, timber harvesting, or other uses of a rural nature to continue, subject to the easement. In some locations a conservation easement may be referred to as a conservation restriction.

Question 27

Drainage Easements

Answer 27

The right to drain surface water fromone owner’s land over the land of one or more adjacent owners. Can have significant impact on value

Question 28

Historic Preservation Easement

Answer 28

Generally includes various kinds of controls Imposed by municipalities Usually are composed of small districts Restrictions vary considerably can include such items as controls for exterior details such as doors, windows, and roof lines. May dictate choices of materials and paint colors.

Question 29

Façade Easement

Answer 29

Traditionally considered a type of preservation easement that protected only the façade of a building, not the entire structure. More Precisely, a façade easement is an interest in real property that has the effect of prohibiting alteration of the exterior of an existing improvement; generally imposed on historically significant structures to ensure their preservation. To qualify for tax benefits associated with the donation of a façade easement, the structure must be a “certified historic structure” as defined in IRS Section 170(h)(4)(C) or be located in a registered historic district and be certified by the Secretary of the Interior as being of historic significance to the district. The Pension Protection Act of1996 added requirements to charitable contributions of façade easements, most significantly requiring that the entire exterior of the building not just the front façade be preserved. Very desirable Hard to sell

Question 30

License

Answer 30

For real property a personal, assignable and typically revocable privilege or permit to perform some activity on the land of another without obtaining an interest in the property. Can be terminated at any time and is considered to be personal property, rather than real property. Example: The purchase of hunting or fishing rights on private property

Question 31

Encroachment

Answer 31

Trespassing on the domain of another Is physical in nature Occurs when someone builds something over the property line of another Typically unintentional…happens when property lines are unclear When discovered, warrants some sort of action FHA will insure a loan on a property that is subject to an encroachment if a perpetual encroachment easement is filed. This agreement recognizes the problem and absolves the mortgagee of any liability. The parties agree to just leave it alone.

Question 32

Mary Jones

Answer 32

Mary Jones has a property with no road frontage. She has an access right of way across the property of her neighbor Bob Smith for ingress, egress and regress. Who has the dominant tenement in this situation?

Question 33

Estate in Remainder

Answer 33

Bob grants a life estate in his property to his mother, Mary. As long as Mary is alive, Bob’s estate in the property is referred to as an _____.

Question 34

True or False? Fee simple estate is not limited by the governmental powers of taxation, eminent domain, police power and escheat.

Answer 34

False

Question 35

True or False? When a property is leased, two separate estates are created.

Answer 35

True

Question 36

Individual Ownership

Answer 36

An estate in real estate held by one owner Is called Tenancy in Severalty Tenancy – The holding of property by any form of title Individuals may own property in differing legal forms.

Question 37

Concurrent Ownership

Answer 37

``` Property may also be concurrently owned by more than one individual. Concurrent ownership includes: Tenancy in common Joint tenancy Tenancy by the entirety ```

Question 38

Tenancy in Common

Answer 38

An estate held by two or more persons, each of whom has an undivided interest Most basic example of concurrent ownership No limit to the number of tenants Ownership does not have to be equal shares Each tenant may sell off their interest without approval or knowledge of others No right of survivorship

Question 39

Joint Tenancy

Answer 39

Joint ownership by two or more persons with the right of survivorship Right of survivorship If one joint tenants dies, that person’s interest automatically passes to the other joint tenants Equal ownership interest To create all owners must go on title at the same time (unity of time). In some states, it is common for husbands and wives to take property as joint tenants.

Question 40

Tenancy by the entirety

Answer 40

An estate held by a husband and wife in which neither has a disposable interest in the property during the lifetime of the other, except through joint action. Tenancy by the entirety has the same right of survivorship provisions as joint tenancy, but the survivor must be a spouse.

Question 41

Land Trusts

Answer 41

A legal vehicle for partial ownership interests in real property in which independently owned properties are conveyed to a trustee; may be used to effect a profitable assemblage or in some cases to facilitate the assigning of property as collateral for a loan. A trustee agreement is established to define the duties of the trustee, who is typically an independent department of a banking institution A trustee has limited duties and responsibilities

Question 42

Partnership

Answer 42

An association of two or more persons who carry on as co-owners of a business for profit. Opportunity to pool funds Multiply buying power Share risk

Question 43

General Partnership

Answer 43

An ownership arrangement in which all partners share in investment gains and losses and each has personal and unlimited responsibility for all liabilities Ownership interest is defined (10%, 20%.....)

Question 44

Limited Partnership

Answer 44

An ownership arrangement consisting of general and limited partners. General partners manage the business and assume full liability for partnership debt, while limited partners are passive and liable only to the extent of their own capital contributions. Offer opportunities for investment without the hassle of day to day operations

Question 45

Corporation

Answer 45

In law, an organization that acts as a single legal entity in performing certain activities, usually business for profit; also includes charitable, educational and religious organizations. A stock corp is a legal entity that can be used by investors to pool their resources and purchase real estate. A corp may be utilized to purchase a single property or a portfolio of multiple properties Ownership is divided into partial interests by selling shares of stock Corp owns the real estate Shareholders owns the stock

Question 46

Syndications

Answer 46

A private or public partnership that pools funds for the acquisition and development of real estate projects or other business ventures. Used to purchase, develop, manage and dispose of real estate Created when someone purchases real property with the intent to transfer the rights to a limited partnership which will then sell interests to investors.

Question 47

Real Estate Investment Trust (REIT)

Answer 47

A corporation or trust that combines the capital of many investors to acquire or provide financing for all forms of real estate. A REIT services much like a mutual fund for real estate. Its shares are freely traded, often on a major stock exchange. To qualify, for the favorable tax treatment currently accorded such trusts, 90% of the taxable income of a REIT must be distributed among it shareholders, who must number at least 100 investors; no fewer than five investors can own more than 50% of the value of the REIT during the last half of each taxable year. The Federal Securities and Exchange Commission stipulates that REITs with over 300 investors have to make their financial statements public. Popularity waxes and wanes during economic cycles and with the changing tax laws

Question 48

Condominium

Answer 48

A form of ownership in which each owner possesses the exclusive right to use and occupy an allotted unit plus an undivided interest in common areas. Condos product 2 elements A fee simple owner + an undivided interest in certain specified common area which may include amenities such as swimming pools and clubhouses or may be undeveloped land.

Question 49

Cooperative

Answer 49

A form of ownership in which each owner of stock in a cooperative apartment building or housing corporation receives a proprietary lease on a specific apartment and is obligated to pay a monthly maintenance charge that represents the proportionate share of operating expenses and debt service on the underlying mortgage, which is paid by the corporation. This proportionate share is based on the proportion of the total stock owned. (forms 2090 & 2095)

Question 50

Planned Unit Development (PUD)

Answer 50

A type of residential, commercial and/or industrial development in which buildings are clustered or set on lots that are smaller than usual and large, open, park-like areas are included within the development. HOA that hold title to the common area Mandatory membership of all unit owners The right of unit owners to vote in the operation of the association Lien supported assessment of the members

Question 51

Joint Tenancy

Answer 51

Has the right of survivorship, when a joint tenant dies, their shares go to the surviving tenants

Question 52

Timesharing

Answer 52

Limited ownership interest in, or the rights of use and occupancy of, residential apartments or hotel rooms. There are two forms of timesharing: (1) fee timeshares – may be based on timeshare ownership or interval ownership and (2) Non-fee timeshares – there are three types, a prepaid lease agreement, a vacation license and a club membership. Fee timesharing the purchaser receives a deed that conveys title to a unit for a specific part of a year.

Question 53

Non-fee Timesharing

Answer 53

A limited interest in real property in which the purchaser receives only those rights specifically granted by the developer, usually the right to use a timeshare unit and the related premises; does not impart legal title to the property.

Question 54

Deed

Answer 54

A written, legal instrument that conveys an estate or interest in real property when it is executed and delivered. Grantor => the seller of a property Grantee => the buyer of a property Title officially passes from one party to another when a deed is delivered by the grantor and accepted by the grantee.

Question 55

To Be Legally Valid

Answer 55

The deed must be in writing There must be a description of the parties The grantor must be legally capable (not a minor) The property must be adequately described There must be a legally acceptable grantee clause There must be a consideration (amount) The deed must be signed by the grantor The deed must be delivered to the grantee

Question 56

Grant Deed

Answer 56

A deed in which the grantor warrants that they have not previously conveyed or encumbered the property; does not ensure that the grantor is the owner of the property or that the property is unencumbered; convey any after-acquired title of the grantor, unless a different intent is expressed The grantor does not expressly warrant the title as being free and clear of all encumbrances and does not even warrant that they are the owner of the property.

Question 57

Quitclaim Deed

Answer 57

A form of conveyance in which any interest the grantor possesses in the property described in the deed is conveyed to the grantee without warranty of title The weakest form of deed Makes no claims or warrant to the quality of the title. Used in tax sales A property is claimed by a county or town for non-payment of taxes It is strictly caveat emptor (Latin for “buyer beware”)

Question 58

Bargain and Sale Deed

Answer 58

A deed that conveys real property from a seller to a buyer but does not guarantee clear title; used by court officials and fiduciaries to convey property they hold by force of law, but to which they do not hold title Next step up from quitclaim deed Does not guarantee clear title, but seller (grantor) implies they do hold title Do not have covenants or warranties; is some states a seller is allowed to add covenants

Question 59

Tax Deed

Answer 59

A deed that conveys title to a property purchased at a tax sale; may or may not convey absolute title; free of all prior claims and liens, depending on state law. This is essentially a bargain and sale deed, but is used specifically for tax sales where properties have been taken over for non-payment of real estate taxes.

Question 60

Warranty Deed

Answer 60

A deed that conveys to the grantee title to the property free and clear of all encumbrances, except those specifically set forth in the document. This is the best and most powerful type of deed. The grantor warrants or guarantees that the title being conveyed is free and clear of all encumbrances. If at a later date a cloud on the title appears or someone else make a claim against the title, the grantor must make it right

Question 61

Deed of Trust / Trust Deed

Answer 61

A legal instrument similar to a mortgage document, except that three parties are involved in securing the debt: the borrower, a lender, and a trustee who holds property title when the deed of trust is executed and delivered. The trustee transfers title to the lender if the borrower defaults and to the borrower if the note is repaid This is similar to a mortgage and is the method used in some states. Title is vested in a third party, the trustee, until the lien is satisfied. It is an alternative document that is a security instrument for a lender. In some states, lenders prefer because in the event of default the trustee can sell the property without going through the lengthy and expensive foreclosure process.

Question 62

Reconveyance

Answer 62

Passing of title to real property back to the original owner; e.g., in a deed of trust arrangement, upon liquidation of the debt the property is reconveyed from a third-party trustee tothe trustor (borrow). -If a deed of trust is recorded andthen the loan is paid off, the reconveyence document passes title back to the owner.

Question 63

Recordation

Answer 63

Deeds do not have to be recorded to be valid. However, it is in the best interests of the parties to record the deed in the public records. This puts the world on notice that the property has transfered ownership. - To be recorded in the public records, such as the office of a county clerk, recorder of deeds, or prothonotary, most states require an acknowledgement that the grantor's signature on the deed is valid. This is usually accomplished by the signature and seal of a notary public or other designated official.

Question 64

Contract

Answer 64

A legally binding afreement between two or more parties represents their promise to do or not to do a particular thing. In many jurisdictions statutes of frauds, or their equivalent, may render a real property contract voidable if it does not consist of a signed, written agreement. - An agreement between persons which obliges each party to do or not to do a certain thing. - An agreement with specific terms between two or more persons or entities in which there is a promise to do something. - A firm agreement to perform an act, refrain from acting or make a payment or delivery.

Question 65

Oral vs- Written Contracts

Answer 65

Most contracts that can be completed within one year can be written or oral. The major exceptions are contracts involving the ownership of real estate and commercial contracts for goods worth in excess of $500 - they need to be in writing to be enforceable.

Question 66

Uniform Code

Answer 66

Adopted in every state except LA. Covers the sale of any "goods" valued over $500. Goods mean all things which are movable at the time of identification....investments securities (Article 8) and things in action. "Goods" also includes the unborn young of animals and growning crops and other identified things attached to realty as described in the section on goods to be severed from realty. Does NOT cover much in the way of real estate activity.

Question 67

Statute of Frauds

Answer 67

Every state has a statue of frauds that requires certain documents to be in writing.

Question 68

Mutual Assent

Answer 68

A contract is an agreement, or Mutual Assent to the same terms Mutual assent is established by the process of offer and acceptance

Question 69

Restatement Second Of the Law of Contracts

Answer 69

Detail the main principles of the common law of contracts

Question 70

Offer

Answer 70

A manifestation of willingness to enter into a bargin, which creates in the offeree the power of acceptance A specific proposal to enter into an agreement with another Offers remain open until they are.... - -- Accepted - -- Rejected - -- Retracted prior to acceptance - -- Countered - -- Expirered by their own terms

Question 71

Revoked

Answer 71

An offer may be revoked at any time prior to the communication of acceptance of the offer. -An offer may be revoked by the maker of the offer, by giving notice of revocation to the person to whom the offer was made Can be revoked by the lapse of time set forth in the offer. In the event no specific time is set, an offer may be revoked bu the laspe of a reasonable time with communication of the acceptance. In extreme cases the offer could be revoked by the death or insanity of the offeror. Many time an offer is rejected but a counter-offeris made...this creates a new offer

Question 72

Acceptance

Answer 72

A manifestation of willingness to be bound by the terms of an offer made in a manner invited or required by the offer. All of the terms of the other must be accepted without change or condition. Acceptance may occur as an express act oran implied act

Question 73

Express Contract

Answer 73

The existence of the contract and its terms are stated in words or the writings of the parties. May be oral or written I.e., listing agreements, purchase offers, mortgages, leases and installment contracts Perferable to have in writing

Question 74

Implied Contract

Answer 74

The existence of a contract and its terms are inferred or impled from the conduct of the parties. The contract is created by the actions ofthe parties who perform the terms.

Question 75

Bilateral Contract

Answer 75

Both parties have made promises to each other. One promise is in exchange for another. A real estate contract is a bilateral agreement. "A" agrees to sell and "B" agrees to buy - under certain specified terms.

Question 76

Unilateral Contract

Answer 76

One in which one party makes a promise in order to induce another party to do something. The second party is not legally compelled to comply. However, if the second party accepts and performs, then the first party must keep the promise. A real estate option is an example of an unilateral agreement. "A" agrees to sell his property to "B" for $200,000 anytime within the next six months. "B" is under no obligation to perform, but if they exercise the option, then "A" must sell.

Question 77

Quitclaim Deed

Answer 77

From the buyer's standpoint, which is the weakest type of deed?

Question 78

Trustee

Answer 78

In a trust deed state, title to a property is vested in the ______ until the mortgage lien is satisfied.

Question 79

Shorter than

Answer 79

The statute of limitation for suing for breach of an oral contract is _____ for written contracts.

Question 80

Trust Deed

Answer 80

Which type of deed is similar to a mortgage document?