Principles of Real Estate 1 Flashcards
statutory law
the body of laws an regulations enacted by federal and state legislative bodies
common law
the body of law based on custom, usage and court decisions
Brokerage
the aspect of the real estate business that pertains to overseeing the needs of the parties and completing a transaction
for a commission or fee, bringing together parties interested buying, selling, exchanging or leasing real property
appraisal
• Providing a professional opinion of the value of real property
mortgage lending
• Providing money to individuals or corporations for the conditional transfer or pledge of real estate as security for the payment of a debt
RMLOs
Residential Mortgage Loan Originators
• Licensed in Texas through the Texas Department of Savings and Mortgage Lending
property management
- The management of residential and commercial properties on behalf of the investor – owner of the property.
- Generally responsible for the day-to-day operations of the property, maintenance, and tenant relations.
apartment locators
- Work for firms that specialize in locating units for tenants in multi-family complexes.
- Locator should have knowledge of amenities of all complexes in the market area.
- Locators in Texas must have a Texas Real Estate License
home inspectors
• Licensed in Texas by the Texas Real Estate Commission (TREC)
real estate development
• Involves the acquisition of land for development into residential subdivisions, retail centers and other commercial uses.
oil and gas
• Companies employ a large number of individuals with a real estate background.
Education Standards Advisory Committee
12 members
• 7 of 12 members must be brokers who have been active in real estate for no less than 5 years
• 4 must be education-related members who have been instrumental in the instruction of real estate core curriculum or continuing education
• 1 public member
National Association of Realtors (NAR)
The largest professional organization for real estate professionals, both commercial and residential.
Institute of Real Estate Management (IREM)
- An international community of real estate managers
- Dedicated to
- ethical business practices
- maximizing the value of investment real estate
- promoting superior management through education and information sharing
CCIM Institute
- Established to give commercial real estate practitioners an opportunity to further their business practices though education and networking opportunities.
- The institute administers the Certified Commercial Investment Member (CCIM) designation
Society of Industrial and Office Realtors (SIOR)
- A professional affiliate of the National Association of Realtors
- Designees can hold the following specialty designations
- Industrial
- Office
- Sales manager
- Executive Manager
- Advisory Service
International Council of Shopping Centers
• The purpose is to advance the shopping center industry and to promote its role in the commercial distribution of consumer goods and services.
Building Owners and Managers Association (BOMA) International
- Members are
- Building owners
- Managers
- Developers
- Leasing professionals
- Corporate facility managers
- Asset managers
- The providers of the products and services needed to operate commercial properties.
benefits of home ownership
occupancy tax benefits pride of ownership security investment
occupancy
-The owner occupies the residence
tax benefits
mortgage interest and property taxes may be tax deductible
pride of ownership
many home owners see the home as a sign of accomplishment
security
home ownership protects the individual or family from future increases in rental rates
investment
properties are purchased and held in anticipation of income, appreciation or both
-money directed toward the purchase, improvement, and development of an asset in expectation of income or profits
physical characteristics of land
indestructibility or durability
immobility
nonhomogeneity
indestructibility or durability
• Refers to the fact that land cannot be destroyed.
immobility
• Refers to the fact that land cannot be moved
nonhomogeneity
• Refers to the fact that no two parcels of land are the same.
economic characteristics of land
scarcity
modification
fixity
situs
scarcity
- Comes from the theory of supply and demand
* When there is a shortage of something that individuals want, the price goes up.
modification
• Value is affected by man-made changes to the land. The changes can be to the land itself or off-site.
fixity
-performance; in real estate, the fact that land is permanent, and cannot be moved
situs
• Refers to the location of the property or land from an economic, not geographic, viewpoint. • Both natural and man-made factors will have an impact on preferences Climate Views Access to natural recreation Schools Job opportunities Transportation
value
A fair return or equivalent in goods, services, or money for something exchanged
The monetary worth of something
supply affected by
- land costs
- construction costs
- taxation
- economics
- local government building codes and zoning ordinances
demand affected by
- growth in employment
- transportation system
- personal preference
- availability of credit
- federal government policy
real estate licensees must have a good understanding of various aspects of law
- agency law
- contract law
- real estate licensing laws and rules
- finance regulations
- advertising
- consumer protection law
Texas Real Estate License Act (TRELA)
the purpose is to protect the public against unscrupulous brokers and salespersons
-the statute that controls the licensing of persons permitted to practice real estate brokerage in texas
Texas Real Estate Commission (TREC)
- Primary purpose is to carry out the provisions of the license act
- 9 members
- Members are appointed by the governor and approved by the senate
- Serve for a 6 year term
- 6 are broker members that have been brokers for at least 5 years
- 3 are public members
powers of the TREC
- Issue salesperson and broker licenses
- Enact rules and regulations that have the full force and effect of the law and advise with reference to these rules and laws
- Suspend or revoke licenses of those who violate the license act
- Place a licensee on probation
- Require additional education
- Subpoena books, records and witnesses, and if a licensee fails to respond to the subpoena, file suit with the Attorney General to enforce it
- File an action against a licensee on its own motion
- Assess administrative penalties up to $5,000 per day against offending licensed and unlicensed individuals
- Promulgate forms which are mandatory for licensees
land
• Defined as the surface of the earth extending downward to the center of the earth and upward above the surface to infinity
real estate
- All that is encompassed in land
* With the addition of all things permanently attached, whether by nature or by a person, any and every interest in land
real property
• All that is encompassed in land
• With the addition of all things permanently attached, whether by nature or by a person, any and every interest in land
as well as the interest, benefits and rights inherent in real estate ownership
“bundle of rights”
rights are severable
bundle of legal rights
the concept of land ownership that means ownership of all legal rights to the land rather than ownership of the land itself
surface rights
ownership rights in a parcel of real estate that are limited to the surface of the property, and do not include the air above it or minerals below the surface
subsurface rights
ownership rights in a parcel of real estate to the minerals, gas, oil and so forth that lie beneath the surface of the property
air rights
the right to use the open space above a property, generally allowing the surface to be used for another purpose
improvement
- an improvement on land is any structure, usually privately owned, erected on a site to enhance the value of the property
- an improvement to land is usually a publicly owned structure
personal property
Things of temporary or movable nature
personalty
items of personal property
chattel
personal property
bill of sale
a written instrument given to pass title to personal property
fixture
an item of personal property that has been converted to real property by being permanently installed or attached to the real property
annexation
• The process of attaching personal property so that it becomes real property
severance
changing an item of real estate to personal property by detaching it from the land
tests to determine if fixture or personal property
- intention of parties
- method of attachment
- adaptation to the property
intention of partie
was the item intended to be permanent
method of attachment
How an item was attached to the property
adaptation to the property
How the item fits the property
trade fixtures
article installed by a tenant under the terms of a lease and removable by the tenant before the lease expires
-remain personal property and are not true fixtures
emblements
growing crops that are produced annually through labor and industry
-deemed to be personal property
accession
acquiring title to additions or improvements to real property as a result of the annexation of fixtures or the accretion of alluvial deposits along the banks of streams
manufactured home
A home that is built in a factory according to a federal building code administered by HUD
- Built on a frame that includes axles and towing components
• Home is towed to the site in one or more units
-not a mobile home
HUD
US Department of Housing and Urban Development
modular homes
Primarily built off site in a factory
Single-family home
Not attached to another dwelling
Most often situated in the subdivision of homes of similar price and styling
Covenants conditions and restrictions (CCRs)
Deed restrictions
Imposed by the developer of the subdivision
Establish standard for home size, style, type of construction, location on a lot, type of landscaping installed
Condominiums
Multifamily complexes individually owned units
Three interests
-fee simple ownership of the unit
-fee simple ownership in an undivided interest in the common area
-an easement to the airspace occupied by the unit
Interest are not several must be conveyed at the same time
Cooperatives
Similar to condo
Units owned by a corporation
When somebody purchases the cooperative they buy stock and receive proprietary lease on the unit
townhomes
Sold as a distinct living unit on an individual lot
The units share a common wall (party wall)
retro- commissioned or converted structures
Include the conversion of existing buildings into residential units
mixed-use developments
Building types or combinations of buildings that allow for a “mix” of uses
timeshare
Gives the owner the right to occupy a property for a certain time interval
The purchaser receives the right to a specific time period annually, and the time allotted may change from year to year depending on the agreement.
capital gain
income earned from the sale of an asset
Homeowners insurance
A contract between the insurance company and the policyholder
Homeowners need insurance coverage to protect them from losses related to the structure, personal possessions and liability
aka hazard insurance
HO-A Policies
- Provide limited, actual cash- value coverage of a home and its contents.
- Only the types of damage specifically listed in the policy are covered
Renters insurance
- A landlord’s insurance does not cover a renter’s personal property
- Renters insurance covers belongings, provides liability protection, and pays additional living expenses if a fire or other event stated in the policy forces the policyholder to move temporarily
condominium insurance
- Condominium insurance covers belongings, provides liability protection, and pays additional living expenses
- It also covers damage to improvements, additions, and alterations to the condo
townhouse insurance
- Townhouses may be insures by either an individual homeowners policy or an association master policy
- If a townhouse is owner-occupied and the townhouse association does not have a master policy on the building, a homeowners policy can be purchased on the individual unit
- If the association has a master policy, a TX tenant homeowners policy can insure the personal property
mobilowners insurance
- Mobile homes without wheels and resting one blocks or a permanent foundation may qualify for a homeowners policy
- However, most mobile homes are insured by a mobilowners policy is an auto policy that covers mobile homes used as residences
farm and ranch insurance
• Farm and ranch owners policies insure homes outside of city limits on land used for farming and raising livestock
coinsurance clause
a provision in insurance policies covering real property that required the policyholder to maintain fire insurance coverage generally equal to at least 80% of the property’s actual replacement cost
factors that affect insurance premiums
- Age and condition
- The home’s replacement cost
- Construction materials used in the home
- Location
- Availability of local fire protection
- The policyholder’s claims history
- The policyholder’s credit score
comprehensive loss underwriting exchange (CLUE)
a claims history database that enables insurance companies to access consumer claims information when they are underwriting or rating an insurance policy
