Principles and Practices Flashcards
____________ _________ are real estate installment agreements for which the buyer (vendee) makes payments to the seller (vendor) in exchange for the right to occupy and use the property but no deed or title is transferred until all, or a specified portion of payments have been made.
Land Contracts
this is a contract that gives the lender certain stated rights when there is a transfer of ownership in property(e.g. declare the entire loan balance immediately due and payable.)
Alienation clause or due-on-sale clause or acceleration clause
_______________ of a loan means that one party agrees to take over payments of another party’s debt , with the terms of the not remaining the same
Assumption
within how many days must a land contract be recorderd?
Within 20 days of execution
This is a federal law dealing with real estate closings that provides specific procedures and guidlines for the disclosure of settlement costs
Real Estate Settlement Procedures Act (RESPA)
What 3 disclosures must borrowers applying for a mortgage loan receive at the time of the application or within 3 days of the lender receiving their loan application?
HUD Special Information Booklet
Mortgage Service Disclosure Sttment
Good Faith Estimate (GEF) of settlement costs
What are the 7 main rules of RESPA?
- Prohibits kickbacks and fees for services not performed during the lcosing
- Limits the amount of escrow money reserve lenders may require for taxes or insurance
- Requires a HUD Special information booklet explaining RESPA be given to buyers
- Requires a Good Faith Estimate (GFE) of settlement cost be given to the buyer
- Requires use f tehHUD-1 Settlement Statement
- Gives buyer the right to inspect the HUD-1 Settlement Statement one day prior to closing
- Requires brokers and lender to disclose multiple relationships without obligation parties to sue suggested referrals.
The _____ ______________ _______________ shows the actual settlement cost of the loan transaction.
HUD-1 Settlement Statement
Are the escrow deposits that lenders require a buyer to pay in order to cover future property taxes or homeowners insurance required to appear on the HUD-1 Settlement Statement?
yes
Lenders offering residential financing, including ARMs must comply with federal guidlines under __________ ____
Regulation Z of the Truth and Lending Act
What does CHARM stand for?
Consumer Handbook on Adjustable Rate Mortgages
What 3 things does Reg Z require?
- A general brochure be given to borrowers
- Certain specific disclosures be made if relevant to the specific ARM program
- The annual percentage rate (APR) be disclosed.
What does ARM and APR stand for?
Adjustable Rate Mortgage
Annual Percentage Rate
What is the formula to calculate adjustable interest rate the borrower pays on a loan?
Index + Margin
A _________ is one percentage of the loan amount
point
These are paid to the lender to make up the difference between the current market interest rate and the rate given to a borrower on a note.
discount point (points are short for percentage points)
These 2 acts require institutional lenders to make disclosure to borrowers at the time of loan application and prior to the close of escrow.
Regulation Z of the Truth in Lending Act
Real Estate Settlement procedures act (RESPA)
This act requires lender to disclose consumer credit cost in order to promote informed use of consumer credit.
Truth in Lending Act (TILA)
While ______________ ___ does not set limits on interest rates or other finance charges imposed by lendres, it does regulate the disclosure of these items in written disclosures concerning all finance charges and related aspects of credit transaction
regulation z
disclosures in lending are required during which two general areas?
- When lenders offer credit but before the transaction is consummated
- When credit terms are advertised to potential cusomers.
RESPA laws apply to what kind of properties?
one to four unit residential properties (including condos, co-ops and mobile homes)
The ideal balance that should be maintained in the Recovery Fund is?
$500,000 to $2 million
Is Split agent a policy or a relationship?
policy
On a business card a brokers name must appear how?
greater or of equal prominence
Is a legal description required to be present in a listing agreement?
no
Is puffing legal? is inducment legal?
Yes/no
Is my license held at the broker’s main office or the branch office?
main
What is the formula to figure out a selling price?
Mortgage +closing costs / commission = needed selling price*
*If commission is 7% plug in .93 into formula.
what taxes are associated with a lease?
Real estate taxes
Why are taxes termed Ad Valorem?
because based on assessed value of the property
Which 3 classes are protected under FHA (Family Housing Act)?
Age, Martial Status, and receipt of public assistance
Is a buyers mortgage loan considered a credit or debit on a closing statment?
credit to the buyer
According to RESPA how long does a lender have to produce a GFE?
Within 72 hours of the loan application
The pledging of something without giving it up is called?
hypothecate
What characteristics describe value?
DUST: Demand, utitliy, scarsity, and transferability
___________ ________ are both a lien and an encumbrance
Property Tax
How much is the fine for failure to present the lead pamphlet to a client?
$11,000
Tenant of Entireties is only available to who?
Married couples
Which type of tenancy always come with the right of survivorship?
Joint Tenancy
Ohio is a __________ __ __________ state.
tenants in common
An owner should expect a fee simple absolute when they get what kind of deed?
general warranty deed
Race, color and ancestry are covered by which act?
The civil rights act of 1866*
- does not cover religion
Licensing law says you have how many days to report about any convictions you have on your record?
15 days
Bringing an action for specific performance can only be brought on by who?
seller/buyer
Can a sales person sue the seller?
No, only a broker can sue the seller
When is an ancillary trust approved ?
only when the broker dies
Is it ok to tell buyers of multiple buyers?
Never! Unless the seller says to do so.
What happens to a listing agreement if the seller or salesperson dies?
gets terminated
If a third party is maintaining your website and info becomes out of date, how long do you have to get it up to date?
2 weeks
How much money per day can The Commission fine a licensee for ignoring a cease and desist order?
$1000/ day
What must be contained in the HUD Fair Housing poster?
the address of the Ohio Division of Real Estate
The fair housing poster must be hung up in proximity to what?
the broker’s license
Who provides the Equal Opportunity Info Bulletin? The Division or the Commission?
The Commission
A seller’s agent must provide the seller with the __________ _____ __ ______ _______________ prior to marketing or showing the property.
The Consumer Guide to Agency Relationships
What is the fee for renewing a salesperson’s license per year?
$45
The Ohio Real Estate Commission consists of how many members? Who are they appointed by and who provides consent to these appointments?
5
The governor
The Ohio Senate
Four of the five members of the Real Estate Commissions have to be real estate brokers. How long do have been practicing to be appointed?
At least 10 years
The Commission may levy fines up to ___________ per license law viloaton, with no limit.
$2500
Who is the Ohio Division of Real Estate run by? Who appoints that person?
Superintendent
Director of Commerce
Which duty is something both the Commission and Division can do?
Place a broker’s license on deposit
The Superintendent may also issue citations up to _______ for violating advertising law, certain agency requirements and fair housing language law.
$200 with a max of $2500
Who administers the Recovery fund?
The Division
Who can subpoena witnesses for investigation?
The Division
Who can suspend and revoke a licensee’s license?
The Commission
Who issues real estate licesnes?
The Division
Who sets the criteria for continuation in business?
The Commission
Who reviews all educational requirements for brokers and salesperson and updates cont. edu requirments?
The Commission
Who audits broker’s records and trust accounts?
The Division
Who investigates complaints agains licensees?
The Division
How much can a person get loaned up to from the Education and Research Fund?
$800
No more than ____ hours of post-licensing edu can be taken in one day.
8
Until what age must a licensee completer CE every 3 years?
70
Licensee may take more than 30 hours of CE, but only up to ____ hours can count towards future three-year period.
10
After the mandatory 3 hours on recent legislation, 3 hours on civil rights, and 3 hours on cannon’s of ethics the remaining 21 hours must be approved by?
The Division
Licensees who are 70 or older must only complete ___ hours of required CE classes every 3 years. The ____ hours must consist of Core Law, Fair Housing and Cannon of Ethics
9; 9
If a broker wishes to not retain a saleperson’s license the broker should do what two things?
Return the license to the division for inactivation and send to salesperson via certified mail a notice of inactivation within 3 days of submitting to the Division
Complaints that involve alleged violations of license laws should be file with who?
The Ohio Division of Real Estate
What is the payment ceiling from the Real Estate Recovery Fund? Are funds allocated per licensee involved or per violation?
$40,000
Per licensee
What happens to a licensee’s license if the RE Recovery Fund has to cover payment of a complaint?
License is suspended till money is paid back plus interest.
How many of the 21 CE credits needed beyond the 9 designated to core law, civil rights and cannons of ethics can be computer-reltated? How many on basic computer topics?
15; 6
A licensee is notified by ___________ mail if a complaint is filed and by ____________ mail if a formal hearing is requirered.
regular; certified
Who investigates a complaint and who determines the punishment?
The Division; The Commission
What is the single most important factor in determining supply in the real estate market?
The economic base of an area
What is the single most important factor in determining demand in the real estate market?
The interest rates (cost of money)
What is the doctrine called that allows a tenant farmer to re-enter the land to harvest crops that were planted by the tenant farmer even after the land has been sold to a new owner?
Doctrine of emblements
___________________ annexation is when personal property is associated with real property in such a way that the law treats it as a fixture, even though it is not physically attached to the real property.
Constructive
Ie. key to the house of garage door opener
Between a buyer and a seller and the rules of determining real property the law is usually in favor of the ___________. Between a tenant and a landlord the law is usually in favor of the ____________.
Buyer; Tenant
What are rights that go along with real property called?
Appurtenances
What are two types of water rights?
Riparian rights
Appropriative rights
Riparian rights are?
water rights obtained through land ownership
The rule of ___________ says that whoever drills a well on his land owns all the oil or gas the well produces, even though it may have migrated from under a neighbor’s land.
capture
What are the two types of support rights for land?
Lateral support
Subjacent support
What are the four forces of nature which can affect or move shape of the land and can sometimes result in a transfer of title?
erosion: a wearing away
accretion: deposits of silt
avulsion: a violent stripping away of land by water
reliction: water recedes
What are the two types of freehold estates?
Fee Simple estates
Life estates
What is the fullest freehold estate interest that can exist in real property?
fee simple absolute
A _____ __________ ______________ is a type of real property ownership that may be defeated or undone if certain events occur or certain conditions are not met.
Fee simple defeasible.
There are two types of fee simple defeasible. Fee simple determinable and fee simple conditional. What is the difference between the two?
Determinable is a type of defeasible estate which is terminated automatically if certain conditions occur.
Conditional is a type of defeasible estate which may be terminated by the owner if conditions stated in the deed are not met
A _______ ___________ is a freehold estate that lasts only as long as a specified person lives
life estate
The holder of a life estate is called a ?
life tenant
A life estate may also be based on another person’s life which is called what?
life estate pur autre vie
If the grantor deeds the property to B for life title reverts to the grantor or the grantor’s heir (if the grantor has already died) upon the death of the life tenant this interest is called?
A reversionary interest
If the grantor deeds the property “to B for the life, then to C,” C has what type of interest? What is C considered to be?
Remainder interest; remainderman
In dower rights what does inchoate vs choate mean?
Inchoate: means contingent or incomplete
choate: means active or complete
A ______________ estate is an interest that gives the holder a temporary right to possession of the estate, without title.
leasehold estate
What are the 3 types of leasehold estates?
- Estate for years
- periodic tenancy
- tenancy at will
This type of leasehold estate is a leasehold estate for any fixed time period?
estate for years
What is the difference between a estate for years and a periodic tenancy?
A estate for years is a leasehold estate that is for a fixed time period (ie ten days, ten months, etc) . A periodic estate is a leasehold estate for a duration of time (ie month to month) NOT a specific date.
What is a leasehold estate called which has no specific termination date or specified period of time?
Tenancy at Will
Which leasehold estate is terminated upon the death of the landlord or the tenant?
tenancy at will
Which leasehold estate renews automatically, unless one of the parties terminates?
Periodic tenancy
A tenant who came into possession of property under a valid lease, but stays on after the lease expires, without the landlord’s permission is called?
holdover tenant
Tenancy at _____________ is the term used to describe possession of property by a holdover tenant.
Sufferance
What are the three steps to evict a tenant?
- Notice to vacate
- Forcible entry and detainer action
- Writ of execution
How many days before a landlord files a law suit must a landlord provide a tenant with Notice to Vacate in the eviction process?
3
For a residential eviction based on breach of an obligation affecting health and safety the landlord’s first step is to send a notice stating the tenancy will terminate on a particular date unless the tenant takes care of the issue. How many days is the resident given?
30
A landlord may begin legal proceedings to evict the tenant when a tenant dos not move out within how many days?
3 (or other time frame specified in the notice). This process is called Forcible entry and detainer action.
A _______ ___ ______________ is a court order directing a public officer (sherriff) to seize and/or sell property to regain possession for the owner and/or satisfy a debt.
writ of execution
When a writ of execution is filed and the tenant does not move out within ____ days, the sheriff can forcibly remove the tenant and his belongings from the property.
10
What are the two types of easements? What is an easement?
Appurtenant easement and easement in gross
An easement is a right to use another person’s real property for a particular purpose.
This type of easement burdens one piece of land for the benefit of another piece of land.
appurtenant easement
This type of easement benefits a person only and the land
Easement in gross
What type of easement is created by open and notorious and hostile and adverse use of another person’ land for 21 years?
Easement by prescription
____________ allows two or more users in succession to add together their periods of use to equal the required 21 years.
Tacking
Know the differences between Easement vs License
Licenses are temporary; easement for an indefinite period of time
Licenses can be contracts made orally; easement must be in writing
Licenses can be revoked; easements can not
An ______________ is a physical object intruding onto a neighbor’s property.
encroachment
An easement is not a physical object it’s a _________.
right
An encroachment is NOT an encumbrance because?
It is not a right or interest held by the encroacher
A ________ is a nonpossessory (financial) interest in property
lien
A ______________ _________ is a written, legally binding promise to repay a debt.
promissory note
What is the judgment called if a debtor goes into default and after selling the property at a sheriff’s sale the property does not yield enough to pay the debt so the courts will allow the creditor to go after other property owned by the debtor
deficiency
What are the three requirements for a valid mortgage?
- meeting of the minds
- legal capacity
- legally sufficient consideration
A _________ lien is an involluntary, specific lien that secures payment of the balance of the purchase price of real estate if a real estate buyer dos not pay the seller in full at closing.
vendor’s
A _____________ lien is an involuntary specific lien claimed by someone who performed work on real property—-construction, remodelrng, repairs or demolition and has not been paid.
mechanics
_______ liens are liens on real property to secure the payment of real estate taxes.
Tax
____________ ______________ are taxes used to pay for public improvements (eg paving roeads, installing sewer line) in a particular neighborhood. These create an involuntary, specific lien against the owners’ properties.
Special assessments
Unpaid federal income taxes are voluntary or involuntary liens? Specific or general?
involuntary
general
__________ liens are involuntary general liens that attach to aperosn’ property as a result of court action.
Judgment
_____________ liens are liens intended to prevent transfer of property pending thee outcome of litigation.
Attachment
For real property the order of attachment simply creates an involuntary lien, called a ___ ___________, which is a recorded notice stating there is a lawsuit pending that may affect title to the defendant’s property.
lis pendens
When it come to the priority of liens needing to be paid, which lien is superior to all other liens on a property regardless of what order it came in?
Property tax
__________ _____________ is acquiring title to someone else’s property by possession of it. The main purpose of this is to encourage productive use of land with the rational that it is better to give tittle to someone who actively uses the land than to someone who ignores it.
Adverse possession
