Principles Flashcards
What is an appraiser
Someone who determines a value of property
Opinion of value that is unbiased
Can value intangible, personal property, & real property
Perform assignment ethically & competently
Six Assignment Elements
- Client and other intended users
- Intended Use
- Purpose (type and definition)
- Effective Date of Opinion and Conclusion
- Subject of Assignment and relevant characteristics
- Assignment conditions
Scope of Work
The type of data and the extend of research & analysis
Competency
- Property type & the interest to be appraised
- The Market and market participation
- Geographic location
- Intended Use
- Laws, regulation, and client requirement to be applied
- Analytic methods and procedures
Competent appraisal practice
Working in an unfamiliar location must acquire an understanding of the market and property type to ensure credible assignment results
Valuation Process
Systematic procedure that an appraiser employs to answers the client’s question about the value of real property
Sufficient Diligence
- Be aware of & understand methods & techniques
- Not commit substantial error of omissions
- No make a series of errors
Suprasurface Rights
Air rights
Land
The solid surface of the earth, as distinguished from water
Appurtenance
Riparian and Littoral Rights (attached) to the land cand cannot be retained by the seller after property is sold
Littoral Rights (Water Rights)
Rights pertaining to properties abutting an ocean, lake, or pond (non-flowing water) with use of shoreline
Real Property
All rights, interest, and benefits relating to the ownership
Appurtenance
Something added or appended to a property that then becomes inherent to the property
Riparian and Littoral Rights
Subsurface Rights
Rights to use and profit of underground portion of property Rights to Extract Rights to Construct Mineral Rights Oil & Gas Rights
Land Rights
Government and Legal
Economic
Social
Environmental and Geographical
Bundle of Rights
Total range of ownership interests in real property
- Possession
- Transfer
- Lease
- Mortgage
- Improve
Partial Interests
Divided or undivided rights in real estate that represent less than whole
Real Estate
Land and anything permanently attached to
Four forces of market
Government and Legal
Economic
Social - i.e. environmental preservation, historic
preservation, private vs public development
Environmental and Geographical
Trade Fixtures
Articles placed in or attached to rented buildings by a tenant to help carry out the trade or business of the tenant
Estate
Rights or interest in property
Estate
Rights or interest in property.
Two categories - Freehold or Leasehold
Fixtures
Article once personal property that becomes affixed in such a manner as to become real estate
Freehold estate
Fee simple estate or Life Estate
Life Estate
Rights of use, occupancy, and control limited to lifetime of a designated party
Life Tenant
Person who owns an estate in real property for their lifetime, lifetime of another, or an indefinite period limited by lifetime
Lease
Lessor - The landlord
Lessee - The tenant
Does not terminate upon death of lessor
Estate Tenancy
Definite or fixed period of time regardless of death of lessor. Early termination must be agreed upon by both parties. Lessee can sublet
Estate Tenancy for years
Definite or fixed period of time regardless of death of lessor. Early termination must be agreed upon by both parties. Lessee can sublet
Encumbrance
Claim or liability that affects or limits title to property
Two types 1. Liens (Monetary)
2. Encumbrances (Use or Physical condition)
Easement by prescription
Rights to use another’s land, which is established by exercising this right openly, hostilely, and continuously over a period of time
Adverse possesion
Involuntary transfer of property without owners consentt.
Adverse possesion
Involuntary transfer of property without owners consent.
Condemnation
Land taken for public use
Four Types of Deeds
General Warranty - Binds grantor and heirs to defend
title conveyed to the grantee against claim
Special Warranty - Grantor provides two covenants
(1) Grantor received title to property (2) Grantor and
heirs will defend errors and omission
Bargain & Sale - Conveys but does not guarantee clear
title, typically in foreclosure and tax sales
Quitclaim - Grantor conveys interest held in property
to grantee w/o warranty of title. Least protective
Elements of a deed
- Identifies parties
- Legally competent
- Conveyance
- Legal Description
- Consideration (typically $)
- Executed by written document
- Acceptance by grantor and grantee
Reservation
Clause found in a legal instrument and conveyance that creates a new right of interest on behalf of grantor ( i.e. maintain oil rights)
Reservation
Clause found in a legal instrument and conveyance that creates a new right of interest on behalf of grantor ( i.e. maintain oil rights)
1 acre equals
43,560
Sole Ownership
Ownership in severalty (separate or set apart)
Owns the property separate from anyone else
REIT
Real Estate Investment Trust - Trust the combines capital from many investors.( like a mutual fund)
90% of taxable income distributed to shareholders with at least 100 investors and no few than 5 investors can won more than 50% of the value during last half of tax year
Syndication
Private or public partnership that pools funds for the acquisition & development of RE projects
4 Types of Ownership
- Tenancy in common - Two or more people with an undivided fractional interest. Each owner can buy, sell, mortgage or transfer there % w/o consent of others. Upon death shares pass to heirs ( or designee in will)
- Joint Tenancy - Two or more owners with rights of survivorship. Upon death shares pass to other owners w/o passing to heirs. Must have language in agreement to assume transfer of ownership outside of owners
- Tenancy in the Entirety - Married couples. Upon death passes to surviving spouse. Avoids probate
- Community Property - Each spouse has 1/2 undivided and can be passed based on will
Separate Property
Can be passed by spouse w/o consent of other
Community Property
Must have consent of both spoused
Types of Ownership
Ownership in severalty
Co-Ownership (4 Types)
Trust
Trust
R/E can be transferred to another person ( called Fiduciary)
Types of Trust
- Living Trust - While property owner is alive
- Testamentary Trust - Established by will after death
- Land Trust - Property conveyed to trustee
Four forces of value
Demand
Utility
Desire
Transferability
