Pt2 Flashcards
How much is 1 Sq mile
640 acres
Comparative market analysis
Study home sales and listings in neighborhood to establish list price/offer range
Net operating income
used on income property it is the income minus te operating expenses (utilities, taxes, insurance, legal and maintenance) NOT debt service (mortgage/interest) or depreciation
Capitalization rate
expected return in percent which is used to divide into NOI
ex: NOI (net income) of $50000 and cap rate of 10% is 500000/.10
Equity
the value minus your debt
(increases as debt is paid off)
loan to value
refers to what percentage of the property value is borrowed
*75% LTV means 75% of the propery value is borrowed
*Property worth $150000 times 75% is $112500 loan
How much is one point
1%
Amortization
Process of paying a loan back over some number of years (amort = to kill off… “to kill of loan”)
PITI
Principal (amount to loan)
Interest
Taxes
Insurance
Down Payment
Amount of equity required by a lender
Net to seller
sales price minus costs to seller of selling (commission title insurance, taxes, etc.)
Prepaids
2 month insurance and taxes
cash flow
depreciation, interest NOT included.
loan payments, maintenance/repairs, real estate taxes ARE included
Personal to Real Property
Attachement
Real Property to Personal
Severance
Economic Characteristics of Real Property
Scarcity
Situs
Fixit
Modification
Scarcity
Limited Supply in Area
Situs
Location, Location, Location
Fixity
Long term investment (immobile and indestructible)
Modification
improvements change value (good or bad)
Immobility
Land surface and improvements attached
Indestructibility
land can not be destroyed, investment is stable and long term
Metes and bounds
distance and direction **has a point of beginning
Government Rectangular survey
Made up of
principal meridians
base lines
range lines
Township lines
**Makes survey system
Range lines
6 miles apart parallel to principal meridians
Township Lines
6 miles apart parallel to base lines
size of township
6 square miles, 36 miles
section
36 in a township, 1 mile by 1 mile
640 acres
**Numbering starts on NE
Length of a mile
5280 ft
5280 ft
one mile
Fractional sections and government lots
along rivers EX: corner of KS
Plats
legal description in urban areas
Escheat
the right of a government to take ownership of estate assets or unclaimed property in the event there are no heirs or beneficiaries.
Encumbrance
a claim against an asset by an entity that is not the owner. Common types of encumbrances against real property include liens, easements, leases, mortgages, or restrictive covenants. Encumbrances impact the transferability and/or use of subjected properties.
lis pendens
“litigation pending”
encumbrance created by law
notice in public records of a pending lawsuit involving title to or possession of the real estate
Judgement Lien
a court ruling that gives a creditor the right to take possession of a debtor’s property if the debtor fails to fulfill their contractual obligations
General and involuntary
Tax lien
failure to pay taxes
Mechanic Lien
Failure to pay carpenter or someone who did work
specific and involuntary
**Covers cost of materials and services provided
legal claim against a home or other property to guarantee payment
How to calculate the amount of real estate taxes on a property
multiply the assessed value by the tax rate
Freehold estate
a type of real property ownership that has no fixed duration of the leasehold.
Leasehold estate
right to live somewhere the duration of the lease
Deed Vs Title
Deed is the paper
Title is the right
Types of deeds
General Warranty - Greatest protection
Special Warranty - limited warranty
Quitclaim - no warranty
Highest form of ownership
Fee simple absolute
Recording of deed
must have public record of deed
zoning ordinances
regulate and control the use of land
PUD
planned unit development
nonconforming use
“granfathered in” if a property was there before the zoning ordinances were in place
amendement
zoning law can be changed
variance
a zoning exception
Government Powers
PETE
Police powers
Eminent Domain
Taxes
Escheat
Appurtenant easements
transfer with the title - belong to the land. “run with the land”.
*must be ADJACENT to each other
Negative easements
prevent an owner from using the property in some manner
Positive easements
allow a person to use another’s property for some stated purpose
privilege to use the lad of another for a specific purpose
license
deed restrictions
conditions or limitations placed in a deed by the owner when the property is transferred from one to another
easement in gross
Given to a person to enter someone’s land for a specific purpose. Expires at the death of easement owner. Has a servient but no dominant tenement
easement by prescription
acquired when a claimant uses another’s land for a period of time
*uninterrupted use of property for specific time (5-10 years)
*Continuous use of property
*must be adverse use, without the owner’s consent
*must be visible, open and notorious use, so that owner can easily learn of it
lien
a claim or charge against property to enforce payment of money
lienor
party holding the lien
lienee
party who has property encumbered by the lien
general lien
claim against ALL of the person’s property. real AND personal
*inheritance tax, IRS liens, judgments
specific lien
claim against specific property
*such as mortgage, mechanic’s lien, real estate taxes
Voluntary lients
Made with owner’s consent
*mortgage
Involuntary liens
Created by law and do not require the onwer’s consent
(can be statutory or equitable)
Statutory liens
involuntary, created by state laws
Equitable liens
Created by the court
*ensure fairness and justice
Equitable right of redemption
allows the owner to redeem property before the tax sale
statutory right of redemption
may be exercised after the tax sale
special assessment
tax on specific parcels of real estate to pay for local improvements
**Like sidewalk, repaving streets, etc
correction line
every 4th township
Gide meridian
every 4th range line
Range
east and west of Principal meridian
Princiapl meridian
north and south
base lines
east and west
which section is set aside for school purposes
section 16
township lines
run parallel to base lines
spot survery
when a survey shows the location and size of buildings on a property
datum
level surface from which elevations are measured
benchmarks
bronze markers paced through US as reference points of elevation above sea level
ordinary life estate
based on the life of the owner.
If A gives B an ordinary life estate. B is the “owner” continues until B passes
Pur autre vie
life of another. If A gives B a life estate, it ends when A passes
what can an ordinary life Tennant not do
commit waste - damage, deteriorate, abandon property
remainder interest
when an estate passes to a third party named in the deed.
Reversion
If no remainder, the estate reverts (reverses) back to original owner. If owner has died, goes to heirs.
Curtesy
a legal life estate - husband’s life estate of his deceased wife’s property
Dower
a legal life estate - wife’s life estate of her deceased husband’s property
Conventional life estate
can be either ordinary or pur autre vie
*Created by the actions of a grantor
Legal life estates
created by law
Riparian rights
extent of ownership depend if water is navigable.
If no, extends to center of the water
If yes, Extends to high-water mark at water’s edge
Littoral rights
rights of an owner of property along a large body of water that is not flowing - such as an ocean or lake. usually extends to high-water mark
Prior appropriation
apply in states where water is scare - ownership and use are controlled by state, not owner next to water.
Accretion
gradual addition of land by nature
Alluvion
New deposits of land as a result of accretion
*Land owner is entitled to all additions
Erosion
gradual loss of land through the natural forces of nature
Avulson
Sudden removal of land by forces of nature
Reliction
Gradual subsiding of water, leaving additional land.
Estate for years
Definite period of time. There is an end to the lease
Periodic Estates
From period to period. no expiration date. Goes for an indefinite period
Tenancy at will
indefinite period, can be terminated b either party. “can live here until mother moves in”
Tenancy at sufferance
Tenant wrongfully remains in possession of property after right to stay has expired
Variable lease
allows for future changes in the amount of rent
*can be graduated or index
Graduated lease
allows for rent changes at predetermined future dates
Index lease
rent change is based ona common index
Ground lease
long-term lease (generally 50+ years) Net lease. tenant pays the building operating expenses
Lease purchase
tenant leases property for a period of time with the intention of purchasing the property at a later date
Sale- leaseback
oner sells property where the business is located to an investora nd then leases the property back. The seller benefits because it frees up capital – the rent can be deducted as a business expense. The buyer benefits because it has a stable tenant and a favorable return on investment (walgreens)
Assignment
all remaining terms of he lease are transferred
Ownership of severalty
sole ownership
Joint tenancy
ownership by 2 or more people with right of survivorship. When one co-owner dies, share goes to surviving co-owner
Tenancy by entirety
Between husband and wife “one person”. Terminated by the death of either spouse, divorce or mutual agreement
Community Property
Property bought together, is shared equally. anything before stays separate
Limited liability company
LLC. Owners have limited liability, avoid double taxation , no restrictions who can be in then. Good for small businesses
Joint Venture
created for single project for a limited time or when project is finished. It is then dissolved
Living trust
Created during the trustor’s lifetime
*avoids probate after death
Land trust
real estate
Testamentary trust
created by will after the property owner’s death
Intestate
Person dies without a will
descent
the state determines the disposition of the property after one dies without a will
Involuntary alienation
Adverse Possession
someone uses property for period of time earns rights
Provisions: use, hostile, open (well known to others - could be easily acknowledged)
Accession
additions to the land through natural or human causes
Seisin
gives assurance that the grantor has the power and authority to convey title and has the type of ownership interest that is being conveyed by the deed
Constructive notice
legal notice, information that has been made public
Actual notice
direct knowledge of information a person has actually gained by reading, seeing or hearing
Inquiry notice
notice that could be presumed by law when a situation exists that indicates a reasonable person would make further inquiries
Perfecting title
clearing any clouds on title
Quiet title lawsuit
can be initiated to remove clouds on the title
Owners policy
*insures the amount paid for the property
*may include exceptions for claims that could be determined from physical inspection of the property
*Not assignable
Lenders policy
*insures for the loan amount and decreases as the loan is repaid
*Has no exceptions for claims that could be determined from physical inspection of the property
*Assignable
Standard policy coverage
protects against defects found in public records
Extended Coverage
Insures against standard risks plus defects found only by inspection of the property or by survey, unrecorded liens and easements, mining claims, water rights and rights of parties in possession of the property
Escrow closing
Escrow agent is appointed to handle all the closing actives without the parties present
Escrow agent
neutral third party who coordinates the closing activities
Percolation tests
if property is not connected to public sewer system, test determines the rate of effluent absorption by the soil from septic system
RESPA
Real Estate Settlements Procedures Act
*prohibits kickbacks and referral fees. provides consumers with info about the costs associated with their real estate transaction
*1-4 unit residential property - condo/cooperatives
Fraud
The intentional misstatement of a fact
Misrepresentation
The unintentional misstatement of facts
Seller disclosure agreement
A listing by the seller of any property defects
Antitrust laws
laws designed to protect free competition
Caveat emptor
the concept that buyers make purchases at their own risk
Latent defects
hidden defects in the property
Procuring cause
something done by the broker that resulted in completion of the sales transacion
