Real Estate Flashcards
1
Q
TREC
A
(enforcer of the law) includes 9 appointed people. Their purpose is to oversee the licensing, education requirements, and ethical standards. Is a government agency created by the Texas Legislature to enforce TRELA.
2
Q
TRELA
A
(it’s the law) and is a smaller part of the Texas Occupations Code created by the Texas Legislature to govern Texas real estate 1101
3
Q
ROI
A
return on investment
4
Q
Article 11
A
states that a REALTOR® may provide a service they are not specialized in only after fully disclosing their lack of experience, or if the REALTOR® obtains assistance from someone competent in the field, in which case, the client must be informed.
5
Q
Education Standards Advisory Committee (ESAC)
A
the function is to review and revise curriculum standards, course content, and instructor certification requirements for both Qualifying and Continuing Education courses (CE). This committee incudes 12 members: including license holders, education members, and a public representative.
6
Q
SAE
A
Sales Agent Apprentice Education is an educational requirement that must be completed in the first two years of being licensed as a real estate agent. Each newly-licensed person must take three 30-hour courses before renewing their license at the end of the first two years of being a license holder.
7
Q
CMA
A
comparative market analysis- compares the prices of similar properties
8
Q
BPO
A
Brokers Price opinion is the process used by a hired sales agent to determine the potential selling price or estimated value of a real estate property. A lender asks for a BPO if the owners are wanting to refinance or if they are about to foreclose.
9
Q
NOI
A
net operating income
10
Q
The capitalization rate
A
or cap rate is a rough estimating of what the property will return over time
11
Q
GPR
A
gross potential rate tells you the max amount of money you are bringing in if all of your spaces were rented out based on market value
12
Q
sellers market
A
is a market condition in which the number of properties for sale does not meet the demand (number of people looking to buy). The pricing and negotiations of a transaction are often in favor of the seller in this type of market (hence the name), but this is not the case in 100% of situations.
13
Q
buyer’s market
A
is the condition of having fewer buyers than the supply of homes for sale in the area.
14
Q
Months of inventory to type of market
A
0-4 Sellers Market
4-6 Neutral Market
6 Buyers Market
15
Q
misrepresentation
A
a false statement, either spoken or written, that is made unintentionally
16
Q
IABS Notice
A
Information About Brokerage Services
17
Q
Negligence
A
is carelessness in the work that needs to be accomplished.
18
Q
Incompetence
A
usually occurs when a license holder attempts to facilitate a type of transaction that they have never attempted.
19
Q
earnest money
A
a deposit that is submitted along with a contract to demonstrate seriousness about the offer
20
Q
commingling
A
the illegal act of a license holder mixing their own money with a client’s or customer’s money.
21
Q
conversion
A
he act of a broker or sales agent using a client’s or customer’s money for their own use
22
Q
puffing
A
is an exaggeration to accomplish a goal, such as a sale.
23
Q
AMC
A
Appraisal Management Companies is an entity authorized to provide appraisal management services by TALCB.
24
Q
TALCB
A
Texas Appraiser Licensing and Certification Board is a subdivision of TREC
25
Sitis
desirability of a location-is an economic preference for a particular location and not a geographic one
26
fixity
permanence of land
27
comparative market analysis
used to establish market price
28
Sunset Act
is a common state law, which, in Texas, requires the Sunset Commission to evaluate all state agencies every 12 years with respect to their efficiency and the need for their services (essentially, to see if they are still needed).
29
land
natural resources seen on surface and the minerals below the surface and the air above the surface
30
real estate
land and human made improvements
31
real property
includes land, improvements and the set of rights associated with real estate ownership
32
bundle of rights
legal rights for real properties. includes the right of exclusion, the right of possession, the right of disposition, the right of quiet enjoyment
33
ownership rights
surface rights, subsurface rights, air rights and water rights
34
Riparian rights
govern the use of flowing water, such as a stream or river, that pass through or border a property. can use but don't own.
35
Littoral Rights
govern lakefront or seafront property and usually allow the property owner to use the water bordering their property. can't artificially change the water's location
36
Another word for personal property
chattel
37
synonym for personal property
personalty
38
deed
ownership to a parcel of real estate is transferred by this recordable document
39
bill of sale
ownership to personal property transfers by this
40
affixing
common way to turn personal property into real property
41
trade fixture
is personal property that is owned by and needed for a tenant’s business.
42
accession
trade fixtures left behind after least ends become property of landlord
43
AAI
annexation, adaptation and intention
44
annexed
attached to land
45
adaptation
the use and modification of a particular item for a specific use in a property
46
intention
inferred from the nature of the item and blends annexation and adaptation
47
fructus naturales
trees, bushes, and grasses that do not require annual cultivation are real estate
48
fructus industriales
also known as emblements- cultivated annual crops that are personal property
49
2 ways to find out who owns property's mineral rights
landman or oil and gas attorney
50
landman
search for property owners that have possession of their mineral rights in an attempt to obtain a lease on those rights for oil companies
51
mobile home built after 1976
manufactured home
52
modular homes
similar to manufactured homes. partially built in a factory and then the parts are trucked to the site. considered real property
53
condominium
ownership of the unit itself and joint ownership of the land and shared space.
54
cooperatives
or co-ops. a type of ownership where the title belongs to a legally created entity, the cooperative
55
assessments
are regular fees used to pay for things like the upkeep of common community areas, road repairs, and structural maintenance. also called HOA dues, maintenance fees etc.
56
PUD
planned unit development- is a subdivision or development that includes single-family dwellings along with some common elements such as parks, pools, community recreational centers, and/or golf courses. Operated by a homeowners association, or HOA.
57
multifamily homes
duplex, triplex and fourplex residences
58
economy of scale
reduced cost of maintaining one location that serves more than one family
59
timeshares
is one residence that has multiple owners who take turns using the property.
60
IRA Withdrawals
first time homeowners could potentially withdraw up to $10000 from their retirement account IRA to go towards their down payment
61
Capital gains
refers to the profit received from selling a capital asset.
62
capital loss
refers to the loss incurred from selling a capital asset
63
capital gain equation
Sales price - (Purchase price + Cost of improvements) + Total depreciation – Expenses = Gain
64
holding period
the amount of time between the day a property is bought and the day it is sold
65
short-term capital gain
holding period is less than one year
66
long-term capital gain
holding period is greater than or equal to one year
67
The Taxpayer Relief Act of 1997
created certain exclusions from capital gains taxes for homeowners- used every 2 years
68
rollover transactions
transfers of funds to investments of the same type, used to defer the payment of taxes
69
1031 Exchange
lets an investor sell a property, reinvest the proceeds in a brand new property, and defer all capital gain taxes.
70
PMI
prime mortgage insurance
71
homestead rights
This right is automatic and protects homeowners from claims by creditors being made against their homes, preventing any eviction by these creditors
72
homestead limits
10 acres for urban. It can be multiple lots but must be contiguous or adjoining.
200 acres for rural family and 100 acres for rural single person
73
Ad valorem taxes
are calculated according to the assessed value of real estate.
74
Assessed value
is the value placed on a property by a governmental unit for use in levying annual real estate taxes.
75
homestead tax exemption
will reduce the amount of ad valorem taxes paid on the homestead.
76
PITI
principal interest taxes and insurance
77
amortization
is the process of paying off a debt or mortgage in regular installments based on a fixed payment schedule.
78
PMI
private mortgage insurance for conventional loans. borrowers who put down less than 20%
79
MIP
mortgage insurance premium for FHA loans is paid through the duration of the loan
80
arrears
interest paid after it's received/issued. ex. the feb 1 mortgage payment pays interest for the month of Jan
81
MUD
municipal utility district
82
National Flood iNsurance Act of 1968
subsidized flood insurance and requires land management and flood control programs
83
CLUE reports
Comprehensive Loss underwriting exchange- provides dates of claims, insurance company or companies involved, the type of policy, whether the loss was related to a named catastrophe (hurricane, etc.), location of the loss (on or off the property), the amount paid, and the cause of the loss.
84
Residential Condominium Contract
provides for a way for the prospective buyer to ask for the documents and is provided by TREC
85
single family home
Standalone house where the owner owns the house and land
86
townhouse
Owners own the dwelling AND the land it sits on, but might also share common elements like condominium owners do. The major difference between a condominium and a townhouse is the conveyance of the land with the residence by the deed.
87
agency relationship
is created when an individual authorizes another party to represent them and act in their best interest.
88
agent
the person who does the representing
89
client
the person who is being represented
90
principal
2 meanings. a major party who is a part of a real estate transaction. an individual who authorizes an agent to represent their interests as a client in a real estate transaction.
91
customer
are the people on the other side of the transaction. They're the people who have signed an agency agreement with the other license holder.
92
Third party
is ANY person involved in a real estate transaction with you who is not your client.
93
listing agent
an agent representing a seller
94
buyer's agent
an agent representing a buyer
95
special agency
the client grants their agent the authority to act on their behalf for specific actions.
96
commission
The commission rate is negotiated between the principal and the broker.
97
listings
If a sales agent switches brokerages, their clients remain with their previously sponsoring broker as their agency relationships were with that sponsoring broker.
98
general agency
Gives agents more power AND Holds the principal responsible for actions performed by their agent
99
universal agency
is the broadest classification of agency. It gives agents the power to act on behalf of their principal and make decisions on behalf of the principal.
100
Describe agency
in manner, authority and liability, and the form that it takes
101
Creating an agency
orally, in writing, by implication or action
102
express agency
is created by a written or oral agreement between the principal and the agent. All details are clear and definite.
103
implied agency
means there is nothing in writing. The agency relationship is recognized (or implied) because of the actions, conduct, and words of either or both parties.
104
agency by ratification
This occurs when a broker or sales agent has done something on behalf of, but without prior authorization of, a principal.
105
gratuitous agency
An agent can, of course, agree to work for no compensation. The agent is still held to all the duties of an agency relationship.
106
non-agency
the broker or the sales agent would have a contract with someone (either a seller, buyer, tenant, or landlord) and would only give services that do not require fiduciary duties.
107
The Sherman Antitrust Act
is a law that was passed in 1890 that prohibits trusts, contracts, combinations, or conspiracies “in the restraint of trade or commerce.” made monopolies a no no
108
Texas Fair Enterprise & Antitrust Act of 1983
a law that investigates and prosecutes things like price-fixing, bid-rigging, monopolies, cartels, group boycotts, and anti-competitive mergers and acquisitions.
109
fiduciary
meaning they have a legal and ethical responsibility to act in their client's best interest
110
OLD CAR
obedience, loyalty, disclosure, confidentiality, accounting, reasonable care
111
IABS
is an agency disclosure notice (mandated by TRELA) that explains how agency is performed in real estate.
112
subagent
means a license holder who:
(A) represents a principal through cooperation with and the consent of a broker representing the principal and
(B) is not sponsored or associated with the principal's broker.
113
SC:0
subagent commission- indicates that the brokerage is indicating that they will not share a commission with a subagent
114
BC:#
buyer representative commission- indicates percentage of the sales price that the buyer's broker will receive
115
intermediary relationships
occur when the same real estate office is representing both the seller and the buyer as clients in the same transaction. The broker appoints associated license holders to work with both parties.
116
intermediary with appointments
frees up the two appointed agents to give a full degree of representation to both clients.
117
intermediary without appointments
the broker participates in an intermediary environment by being the single, neutral license holder working with both clients and overseeing the transaction
118
floor duty
or opportunity time is time where you can be the first to answer phone calls in the office to pick up potential clients
119
material fact
is any fact that is significant or essential to the transaction – that is, any piece of information that could reasonably be expected to influence a prudent individual’s decisions regarding the transaction.
120
substantive communication
is communication that involves a substantive discussion relating to specific real property.
121
obedience
only required if legal
122
reasonable care
assumes agent expertise will be used in handling clients concerns-standard is based on what most agents would do
123
disclosure
if it will help the client, the agent should share it- including sharing of material facts about a property
124
obedience
the principal is the ultimate decision maker-is only required if legal
125
loyalty
the principals best interests come before the agents interests-the buyers agent should get the lowest price possible, even if it means less commission
126
TDPTA
was enacted in 1973. The purpose of the act is to protect consumers against false, misleading, and deceptive business practices, unconscionable actions, and breaches of warranty.
127
misrepresentation
which is the unintentional spread of false information
128
fraud
generally includes both affirmative misrepresentations and affirmative concealment, and the person making the misrepresentation is aware of the true facts.
129
economic damages
compensatory damages for pecuniary loss, including costs of repair and replacement
130
non economic damages
exemplary damages or damages for physical pain and mental anguish, loss of consortium, disfigurement, physical impairment, or loss of companionship and society-includes exemplary/punitive damages
131
treble damages
which is just a fancy legal-speak way of saying "three times as much
132
errors and omissions insurance
covers the entire office to avoid lawsuits whenever possible
133
warranty of authority
This is a kind of guarantee that an agent gives (explicitly or implicitly) to a third party that establishes that the agent has the authority to bind a principal – i.e., that the agent has the authority to make contracts, agreements, and enter into similar arrangements on the principal’s behalf.
134
FSBO
for sale by owner
135
Paragraph F7
one to four residential contract- stating that repairs should be performed by qualified and licensed workers
136
puffing
is describing a property in a flattering or favorable way.
137
equal opportunity in housing
is the concept that everyone will have equal access to housing with no discriminatory actions taking place.
138
Civil Rights Act of 1866
a set of basic rights regardless of their race, color, or previous condition of servitude.- to prevent housing discrimination- make and enforce contracts, to sue, be parties, and give evidence, to inherit, purchase, lease, sell, hold, and convey real and personal property.
139
Civil Rights act of 1964
included a prohibition against discrimination on the basis of race, color, sex and national origin in any program or service funded by the federal government such as schools, employment, public spaces
140
Executive Order 11063
1962-prohibited discrimination in the selling or leasing of property owned or funded by the federal government, including those properties relying upon Veterans Administration (VA) and Federal Housing Administration (FHA) loans.
141
Civil Rights Act of 1968
Title VIII of this act, also known as the Fair Housing Act, prohibits discrimination in real estate practices.
142
Fair Housing Act
says that it is unlawful to refuse to sell, rent to, or negotiate with any person because of that person's inclusion in a protected class.
143
HUD
Department of Housing and Urban Development, commonly referred to as HUD, enforces the Fair Housing Act.
144
Protected classes
families crave resorts not small damp rooms: familial status, color, religion, national origin, sex, disability, race
145
ADA
Americans with Disabilities Act prohibits discrimination against people with disabilities in employment, transportation, public accommodation, communications, and governmental activities.
146
steering
s the illegal act of channeling buyers or tenants to certain areas based on demographics.
147
disparate impact
an action taken by a license holder could be adversely affecting a protected class.
148
Fair Housing Exemptions
housing for older persons, dwellings for religious organizations or private clubs, rental rooms in owner occupied property, single family residences sold by owner, housing for older persons, drug use record exemption
149
Texas Property Code
which includes an overview of people's basic rights as tenants in a rental property, and the Texas Fair Housing Act.
150
TDHCA
Texas Department of Housing and Community Affairs helps protect and expand affordable housing
151
UPCS
uniform physical condition standards
152
LURA
land use restriction agreement
153
HTC
housing tax credit
154
HOPA
Housing for Older Persons Act
155
reasonable accomodation
is a change in rules, policies, or practices that may be necessary to afford a person with a disability an equal opportunity to use or enjoy a dwelling, such as assistance in filling out a rental application or allowing a unit transfer.
156
Housing and community Development act
1988- amendment to the Fair Housing Act that added familial status and disability to the list of protected classes.
157
Quality Housing and Work Responsibility Act of 1998
This act required HUD to set reasonable limitations on the number of occupants allowed in a dwelling. HUD concluded that a “two occupants per bedroom” rule — taking other factors into consideration — constitutes a good basic model.
158
Fair Housting Act Exemptions
religious organizations, private clubs, housing for older persons, drug use record, owner transactions
159
1997 Omnibus Appropriations Act
a privilege for lender-initiated self-tests of residential real estate related to lending transactions” as part of their efforts to ensure fair lending practices.
160
blockbusting
refers to the practice of encouraging the panic selling of homes below market value, generally by raising fears that an influx of individuals belonging to a particular minority group will decrease property values in a neighborhood and affect the area negatively.
161
conciliation
is an attempt to resolve the issues raised by a complaint or an investigation through informal negotiations between the aggrieved person, the respondent, and the HUD Secretary.
162
ECOA
Equal Credit Opportunity Act makes it illegal for a lender to discriminate against borrowers based on their membership in a protected class.
163
Community Reinvestment Ac
CRA- passed in 1977, the Act requires lenders to assist their local communities by participating in community development projects. The Act also says that lenders need to submit an annual statement including public comments about their attempts to help low-income communities.
164
redlining
areas where lenders would actually draw a line around a certain area on a map and refuse to lend to people in that area at all
165
Home Mortgage Disclosure Act
1975- This act requires lenders to disclose specific lending information, which HUD then uses to map lending patterns.
166
Code of Ethics categories
Duties to clients and customers; duties to the public; duties to realtors
167
preamble
The introduction to the National Association of REALTORS® Code of Ethics is called the:
168
standard of practice
an example of how a particular Article has been applied
169
NAR Code of Ethics
adopted in 1913
170
Golden Rule
in NAR code of ethics and basically states treat others the way you want to be treated.
171
3 qualities of REALTOR
competency, fairness, high integrity
172
farming
sending out “seeds” in hopes of receiving a “harvest” of listings.
173
TREC's Canons of Professional Ethics and Conduct
are the ethical and professional standard for the real estate industry in Texas.
174
6 Canons of Professional Ethics
Fidelity
Integrity
Competency
Consumer Information
Discriminatory Practices
Information About Brokerage Services
175
fidelity
The real estate agent must place no personal interest above that of their clients.
The real estate agent must protect and promote the interests of their clients.
The real estate agent must be faithful and observant to trust placed in the agent.
176
competency
stay informed on market conditions affecting the real estate business
exercise judgment and skill in the performance of the work
complete the continuing education
limit your activities to only the services that you're fully qualified to provide
177
IABS
The font size of the link should be 10-point if spelling out "Texas Real Estate Commission" and 12-point if using "TREC".
A link to a completed IABS Notice in a readily noticeable place on the homepage of each business website should be provided.
178
consumer information
let consumers know that TREC regulates brokers and agents
There are options for anyone who wants to check the license status of a real estate professional or file a complaint.
The homepage of the business website must have a link to the Notice in at least 10-point font.
display of Consumer Protection Notice TREC No. CN 1-2
179
broker
is a person or business entity who is licensed to represent one of the parties in a real estate transaction in exchange for a commission or other valuable consideration.
180
sales agent
a person who is associated with (sponsored by) a licensed broker for the purpose of performing any of the practices of real estate as described above and by TRELA.
181
TREC Members
9 (All appointed by the governor and confirmed by at least 2/3 of the Texas Senate.)
182
TREC membership term length
6 years
183
Chapter 572
the law (chapter) imposes a code of ethics and standard of conduct on members of the Commission
184
Promulgated Contracts
are contracts prepared and authorized by the Texas Real Estate Commission that must be used by real estate license holders.
185
TRELA was passed in
1939
186
TREC was created in
1949
187
Texas Real Estate Broker-Lawyer Committee
is a committee that creates and corrects contract forms to be used by Texas real estate license holders. consists of 13 members- 6 appointed by commission- 6 from state bar of texas appointed by the president of the state bar- 1 public member appointed by governor
188
broker license requirements
4 years of active experience as a license holder in texas, 900 classroom hours
189
Renewal of license happens every
2 years
190
Amount you pay if license is expired less than 90 days
1 1/2 the amount of renewal
191
Amount you pay if license is expired between 90 days and 6 months
2x the amount of renewal
192
easement
is a right owned by one party to use the land of another.
193
right of way
is a type of easement used for passing through another's land.
194
abstract of title
is an abbreviated history of a property, including info on any transfers, grants, wills, conveyances, liens, and encumbrances.
195
exclusive single agency
when the broker has decided that they will represent either the seller or the buyer, but they will not represent both of them in a transaction
196
Real Estate Recovery Trust Account
it is a fund managed by the Texas Real Estate Commission to provide payment to a party who has been damaged through the violation of The Real Estate License Act by a license holder.
197
actual damages
also known as compensatory damages. These are based on the proven facts: the harm, loss, or injury suffered.
198
punitive damages
compensation placed on mental distress or hardship
199
nolo contendere
a person was accused of something and was a defendant in a trial, but will accept the decision of the court without pleading guilty to the charge.
200
After receiving a notice of violation, how many days does a license holder have to request a hearing?
20 days
201
How do you pay a penalty while still ensuring that your payment does not go through until the appeal is over?
give a supersedeas bond
202
injunction
is an order that prevents a person from starting or continuing a specific action.
203
number of members of Broker-Lawyer Committee
13 (6 brokers appointed by TREC, 6 lawyers appointed by the president of the Texas Bar, 1 public member appointed by the governor.) Term length is 6 years
204
purpose of Broker-Lawyer Committee
Draft and revise contract forms for the approval and adoption by TREC.
205
title insurance policy
sales agent must tell the buyer to get one for the property prior to close
206
informal reference of property descriptions
street address
207
legal property description
is a description that makes it clear to all parties exactly what property is being bought or sold.
208
survey
is a legally valid drawing of the dimensions of a piece of real estate, including its boundaries and the location of improvements. (Improvements are permanent, human-made additions to the property.)
209
metes and bounds
are a written legal land description identifying a piece of real estate’s exact dimensions and location in reference to a fixed and permanent monument.
210
monuments
are objects used to mark the boundaries of a piece of real estate, are typically a metal pin or piece of rebar driven into the ground at each point of the description.
211
metes
refers to the distance measurements used in the description.
212
bounds
are the descriptions of the boundaries that enclose a parcel of real estate.
213
point of beginning
definite starting point for a metes and bounds description
214
rectangular survey system
also known as government survey system- uses a more refined version of the longitude and latitude system of mapping with a surveyed grid of meridians, baselines, townships, and ranges to describe a piece of land.
215
plat
a drawing of a development used in the lot and block method
216
parcel
individual lots combined to make a block
217
lot
individual parcel of land measured and defined by the metes and bounds system
218
block
a collection of lots (parcels)
219
tract
the totality of the property represented on a plat
220
lot and block system
also known as recorded plats
221
1 township =
36 sections
222
1 section =
640 acres (a square mile)
223
1 acre =
43,560 square feet
224
1 mile =
5,280 linear feet
225
benchmark
s a permanent marker of known location and elevation, as established by a government survey team
226
meridians
A true meridian running through an initial point, which with the baseline, forms the highest level framework for all rectangular surveys in a given area (longitude lines)
227
baselines
A parallel of latitude, referenced to and established from a designated initial point, upon which all rectangular surveys in a defined area are based
228
range
A column created by drawing a parallel line every six miles east and west of a principal meridian
229
tiers
A measure of the distance north and south from a referenced principal baseline, in units of six miles
230
section
A square made up of mile-long boundaries (1 square mile) that equates to 640 acres
231
townships lines
Lines that intersect with range lines to create 36-square-mile parcels (6 x 6 square miles) called townships
232
correction line
a line Every 24 miles north and south of a baseline
233
guide meridian
every 24 miles east and west of a principal meridian
234
check
every 24-by-24 mile area created by a guide meridian and a standard parallel is known as a
235
datum
is a base point from which elevation is measured.
236
contracts contain 1 of 2 types of agreements
performance agreement or forbearance agreement
237
performance agreement
requires the contracting parties either to perform certain actions or to uphold certain contractual promises.
238
forbearance agreement
requires one or more of the contracting parties to refrain from actions they are otherwise legally entitled to perform.
239
addenda
are documents containing additional terms, information, or obligations that are attached to a contract.
240
four corners doctrine
. This is a legal concept that states that the court can only consider what appears within the four corners of the documents.
241
amendment
changes or makes modifications to an already agreed upon contract. All parties must sign amendments.
242
bilateral contract
is an agreement in which both parties give consideration and promise to perform the actions specified in a contract.
243
unilateral contract
is a contract in which only one of the two parties is bound to perform.
244
executed contract
is a contract in which all promises and terms have been fulfilled by all parties.
245
executory contract
is a contract that is not completely executed or performed.
246
5 components of a valid contract
Mutual assent
Legally competent parties
Consideration
Lawful objective
Adherence to the Statute of Frauds
247
3 types of acceptance
express acceptance, implied acceptance and conditional acceptance
248
lawful objective
means that a contract cannot explicitly or implicitly call for any illegal activities.
249
parol evidence rule
are the terms and conditions the parties discussed before the final contract was written
250
assignment
Allows an individual to transfer their rights and obligations to a third party, who then takes on the role originally played by the person who made the transfer.
251
novation
Allows an individual to create a new contract and replace the existing contract with the new, modified one.
252
2 ways to notify world of ownership of property
actual notice (taking possession of property for others to observe directly) and recording the deed or constructive notice
253
abstract of title
is a condensed history of title to a tract of land that summarizes the transfers of ownership and encumbrances.
254
title insurance
is a policy that protects homeowners (and likewise, lenders) from certain financial losses due to title issues, such as defects, encumbrances, and liens.
255
chain of title
(the complete history of the title, including all transfers from the original owner up until the present owner
256
4 main types of estates
leasehold, equitable, freehold and concurrent estates
257
assignment
rights are transferred
258
wholesaling
The contract could be assigned to a new buyer with a fee paid to the original buyer. - form of assignment common in commercial real estate
259
novation
it is understood to be the exchange of one contract for another.
260
Statutory Estates
are created as a matter of state law, so they can vary from state to state.
261
4 main types of estates
Freehold Estates
Leasehold Estates
Equitable Estates
Concurrent Estates
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freehold estate
it means that the individual with interest has some degree of ownership for an undetermined or unspecified and unlimited period of time.
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fee simple estate
It is of indefinite duration, freely transferable, and freely inheritable.
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Defeasible Fee Estates
is a property interest characterized by perpetual ownership on the condition that the property is used for a certain purpose or under specific conditions. (also called qualified fee)
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two common forms of defeasible fee estates
fee simple determinable and fee simple subect to condition subsequent
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fee simple determinable estate
This particular defeasible estate will come to an end automatically and immediately upon the occurrence of a designated event, the time of such occurrence is uncertain.
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fee simple subject to condition subsequent
These estates have specific requirements on them that, if they are not met, could cause the property to revert back to the original owner.
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life estates
is yet another type of freehold estate and is so named because it is owned for the duration of an individual's life.
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remainder
refers to the estate that will pass to another party at the death of the person upon whom the life estate is based.
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reversion
is the concept that the property will revert back to the person who granted the life estate in the first place.
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remainderman
refers to the recipient of the remainder — either the grantor who set up the life estate or a designated third party.
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estate
he degree, quantity, and extent of interest one owns in property is referred to as
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statutory estates
re those that are created as a matter of state law, so they can vary from state to state.
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remainderman
recipient of the remainder, with a remainder interest (designated third party)
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reversion
Set themselves up for repossession of the property via -also known as reversionary interest
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If no third party is named as remainderman, when a life estate owner dies, the property reverts to the grantor.
grantor
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2 types of life estate
conventional life estate and legal life estate
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pur autre vie
When a conventional life estate is based on the life of someone other than the life tenant, it is referred to as
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conventional life estate
It is an estate created by the grantor that is based on the life of the life tenant OR the life of another.
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homestead
is a residence that is occupied by the individual or family who owns it.
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3 types of Freehold estates
fee simple absolute estate, defeasible fee estate, life estate
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leasehold estate
one party owns the property, but someone else lives there.
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reversionary right
possession of the property reverts back to the landlord after the lease term has expired.
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types of leasehold estates
estate for years, periodic estate, estate at will and tenancy at sufferance
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estate for years
leased possession of property for a certain, specific period of time stipulates a specific starting and ending time. notice is not required.
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periodic estate
has a fixed lease period wherein the lease is automatically renewed at the end of each lease period until the landlord or tenant act to terminate it. ex month to month lease. notice is required
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estate at will
When a tenant is occupying a property with the landlord's knowledge and consent, but without a formal lease agreement
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tenancy at sufferance
occurs when a tenant remains in possession of the property beyond their lease term, without the consent of the landlord.
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holdover tenant
the tenant in a tenancy at sufferance
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equitable estate
This occurs when a freehold estate owner has ownership interest on the property, but another party has an interest in the property that is less than the interest afforded by ownership.
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encumbrance
ex. liens and easements- refers to any claim or right against a property held by another that is not the fee title owner.
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Equitable estates are commonly created by
encumbrances
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concurrent estates
an estate that is owned by two or more individuals (i.e., co-ownership).
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3 subcategories of concurrent estate
joint tenancy, tenants in common, community property
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joint tenancy
Property that is owned by two or more persons at the same time who all have an equal, undivided interest in the property
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tenants in common
When two or more parties own a property as a tenancy in common, each owner has a partial ownership interest and partial rights in a property
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community property
Recognized in Texas (and eight other states) as the type of joint tenancy that exists between married couples. The type of estate that is created by community property is also referred to as a statutory estate since it’s an estate that was established by law in the legal union of marriage.
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equitable estate
if another party has an easement on your property
| commonly created by encumbrances
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freehold estates
defeasible fee estate
| life estate
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leasehold estates
estate for years
| periodic estate
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encumbrances
refers to any claim or right against a property held by another who is not the fee title owner.
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types of encumbrances
monetary (mortgage) or physical (easement)
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easement
is an interest in, or a right to use, another individual’s land or property, generally for a specific, limited purpose.
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easement appurtenant
exists when two tracts of adjacent land are owned by two different people.
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easement in gross
an individual or company is allowed to be on the owner's property for specific purposes.
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encroachment
is an illegal use of another land owner’s property. It occurs when one owner’s property (such as a fence, tree, driveway) crosses the property boundaries of an adjacent property.
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quitclaim deed
"quits" or terminates their rights or claim to the property.
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cloud on the title
dispute on an otherwise clear title. ex. if there is a death and the property was inherited
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probate
is the legal process in which a court decides who will inherit property.
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special assessments
also known as improvement taxes
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ad valorem taxes
are general property taxes calculated according to the assessed value of real estate. (support state and local agencies)
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appropriation
The actual method by which a district imposes a tax. A district passes a law or ordinance that states the details of the proposed tax, and the district obtains the authority to collect needed funds for the proposed expenditures.
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tax levy
the action of the district officially imposing the tax
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equalization factor
used to multiply with the assessed value of a property to help equalize tax assessments throughout the state
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statutory lien
is a lien brought by a government entity
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tax lien
is a kind of statutory lien that is imposed against real property if the property owner becomes delinquent in the payment of taxes.
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general lien
A lien that includes the real estate and the personal property
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specific lien
. A lien that is against only the real estate
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voluntary liens
When a person takes some action that places a lien on their own property
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involuntary liens
when a property owner does not take any action to initiate the lien.
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statutory liens
Statutory liens are local, state, or federal law established liens for a specific set of circumstances. ex. federal tax liens, mechanical liens, ad valorem liens and judgment liens
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equitable liens
is a right that exists only in equity, with one party charging their property as security for a debt or loan. ex. vendors lien or if a buyer does not pay for a property in full
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mechanic's lien
is created when a worker has not been paid for work done on a property.
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attachment lien
the court seizes property until it reaches a judgment- general and involuntary lien and may attach to all of the owner’s property except their homestead property.
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vendor lien
is a specific, involuntary lien on a property as security for the purchase price that arises when a seller has not yet received full payment for the property.
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80-10-10 loans
the buyer would make a 10% down payment, borrow 80% of the sales price from a mortgage company, and then finance the last 10% with the seller.
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vendee's lien
is a document declaring a claim from a buyer that the seller has not transferred title to the buyer according to the agreement.
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Judgment Liens
When judgments specify the amount of money owed. These are general, involuntary liens and apply to both real and personal property
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Lis Pendens Notice
is used to inform the public when a lawsuit is filed that affects a specific piece of real estate.
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execution liens
can be issued by a court to force payment of monies owed from a judgment when a debtor does not pay. It gives court officers the right to confiscate and sell the debtor’s property to satisfy the debt. This is also known as a writ of execution.
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federal judgment lien
the government files this for failure to pay certain debts, such as student loans. These liens are filed in the county where the real property is held.
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bail bond liens
Bail bonds can be put up in the form of real estate in lieu of cash when a property owner is accused of a crime. this is a specific, statutory and involuntary lien.
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municipal utility liens
If a property owner refuses to pay bills for municipal utilities, the municipality can obtain this on the property. It's specific and involuntary.
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mortgage
voluntary, specific lien
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mechanic's lien
involuntary, specific
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federal judgment lien
involuntary, general
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judgement liens
takes effect only after it has been recorded in the county clerk’s office when decrees given by courts specify the amount of money owed
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execution liens
can be issued by a court to force payment of monies owed from a judgment when a debtor does not pay
gives court officers the right to confiscate and sell the debtor’s property to satisfy the debt
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municipal utility liens
when a property owner refuses to pay bills for municipal utilities
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protects professionals whose labor or materials has improved the value of real property
created when a worker has not been paid for work done on a property
mechanic's liens
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bundle of rights
the ownership of land with all of the legal rights of possession, control, enjoyment, exclusion, and disposition
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riparian rights
govern the use of flowing water, such as rivers and streams that pass through or border a property. rivers and streams
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littoral rights
govern lakefront or oceanfront property and usually allow the property owner to use the water bordering their property. lakes and oceans
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accretion
is the process that results in the gradual increase in land area through deposits of soil by action of water.
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avulsion
is the sudden loss of land by flood or when a stream or river changes course. Because it's a sudden change, no title is lost.
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alluvion
The soil itself that gets deposited is referred to as
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open beach law
This gives the public the right to use the beaches. This basically states that even though someone may own a lot, no building may be built in an area that is an easement for the public.
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doctrine of prior appropriation
"first in time, first in right". laws that require water users to obtain a permit from the state. In general, those laws provide the highest priority to the earliest water users.
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TCEQ
Texas Commission on Environmental Quality is the agency responsible for governing water rights in Texas. They apply federal and state laws under the Texas Water Code.
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TCEQ commission
made up of 3 members appointed by governor and confirmed by state senate
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separate property
owned by just one of them, acquired before the marriage or by gift or inheritance
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4 types of encumbrances
lien, easement, deed restriction, encroachment
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3 forms of ownership
individually owned, co-owned, or held in trust
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individual ownership
occurs when one person is the owner of a property.
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severalty
property that is owned by a single individual is also sometimes referred to as being held in
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3 types of co-ownership
Tenancy in common,
Joint tenancy,
Community property, property held in partnership
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tenancy in common
each owner has a partial ownership interest and partial rights in a property
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who would hold the ownership of a co-owner who passes away?
the deceased's named descendants
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joint tenancy
co-ownership in which the parties have an equal and undivided interest in the property.. This also has a right of survivorship.
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4 unities of joint tenancy
unity of interest, unity of time, unity of title, unity of possession
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community property
is property owned by a married couple, in which each spouse has ½ ownership of any property obtained during the marriage, plus a right of survivorship ownership after the death of either spouse.
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held in trust
an individual transfers ownership of that property to another individual, who in turn manages that property for a third party.
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trustor
The transferor or creator of the trust is called
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beneficiary
The individual who receives the trust is called
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trustee
The manager of the trust, a.k.a. the third party, is called
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3 types of trusts
living trust, testamentary trust, land trust
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living trust
created during someone’s life to manage their assets in life and in death.
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testamentary trust
is created through the use of a will when someone dies.
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land trust
land is purchased to be held for a long period of time for the benefit of certain people that are named when the trust document is created.
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revocable living trust
may be changed by the beneficiaries at any time.
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REITs
real estate investment trusts- made up of multiple investors investing in property
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general partnerships
in which the partners will be liable for all of the losses of the company. all partners can be held legally responsible for the other partners’ actions and commitments.
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limited partnerships
in which the partners have their personal assets protected and will only lose to the level of their investment.made up of both limited and general partners. The general partners do the work of managing and overseeing the business, and they usually accept unlimited personal liability.
Limited partners function more like investors, supplying capital (money) but playing no role in the day-to-day operation and management of the business.
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ingress
the right to enter property
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egress
the right to exit property
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partnership
is created when two or more parties agree to combine their property and talents to create a for-profit business.
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LLP
limited liability partnership- the general partners who see to the management and daily operations of the business assume full liability, while the limited partners (who function primarily as investors and are not involved in the day-to-day operations of the business) assume only limited liability for the amount they have invested.
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Uniform Partnership Act (UPA)
outlines the basic requirements of a partnership agreement, apart from any specific details that might be written into a particular partnership contract.
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Uniform Limited Partnership Act (ULPA)
written agreement - later amended to become RULPA revised uniform limited partnership act
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held in trust
involves a trustor, beneficiary, and trustee
| created through the use of a will when someone dies
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partnership
creates financial and legal responsibilities for general partners
Limited partners’ liability is generally limited to the amount of their investments in a business.
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corporation
s a business entity that is considered to be an artificial person
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s corporation
Passes gains or losses to shareholders. there are no double taxes on this compared to another corporation. there can be no more than 100 shareholders.
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limited liability company
profits and losses pass through to partners. LLC is a hybrid of a limited partnership and an S corporation. none of the members (owners) of the company can be held personally liable for debt. The members have no interest or claim to the property that the company owns, plus the interest that the member has is considered to be personal property. multiple partners that actively participate but can't be held liable for each others actions
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syndicates
is two or more people or companies that join together to create and run a real estate investment.
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LLP
limited liability partnership-multiple partners that actively participate but can't be held liable for each others actions- profits and losses pass through to partners
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REIT
a trust that owns investment properties, investors buy shares
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listing agreement and buyer's representation agreements
are basically service contracts made between a buyer or seller and a broker
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agency relationship
authorizing a license holder to represent the principal (the seller) and the principal’s property to third parties (buyers or tenants).
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the parties to the listing agreement
seller and broker
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cooperating broker
is the other broker or sales agent who shows the listed property to a buyer who subsequently purchases the property.
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MLS
multiple listings service-- the service that exposes a property to a larger audience of buyers and also offers advantages to sellers, brokers, and buyers
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Owners of properties built before what year should be concerned about the possibility of lead paint contamination?
1978
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material fact
in a real estate transaction is any fact that is significant or essential to the transaction – that is, any piece of information that could reasonably be expected to influence a prudent individual’s decisions regarding the transaction
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Padgett v. Pharett (Cal. 1997)
material information wasn't disclosed to the padgetts and they won the negligence law suet.
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seller's disclosure notice
disclosure of the current piece of property that is filled out by sellers
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additional tax liability
must be disclosed to buyer. most common with ranches.
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Extra Territorial Jurisdictions (ETJ)
These are areas just a few miles outside the city limits that the city may decide to annex someday as part of their tax base. The distance limit for what counts as an ETJ is dependent on the population of the town or city.
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MUD
Municipal Utility District-taxing entity -Taxes are levied to support the building of infrastructure for basic utilities.
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Public Improvement District (PID).
If a county or city has made some type of improvement that benefits property owners in the area, there will be an additional tax that the owners will have to pay.
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Mold remediation certificate
If a home has had mold in the past, but the mold has been removed, the owner will receive this certificate from the company who worked on the home. It's good for 5 years.
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Residential Real Estate Listing Agreement Exclusive Right to Sell
from TAR-The listing agreement outlines the relationship between the involved parties, what's expected of them, and how the broker will be paid.
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open listing
multiple real estate brokers (and the owners themselves) have the right to sell the property. A commission will be paid to whichever agent is the procuring cause of the sale.
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pocket listings
listings that do not appear on the MLS or the time between when it is secured by the sellers' agent and when it shows up on the MLS. can also happen when an owner wants to privately sell their home.
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exclusive right to sell listing
which is a listing contract in which the broker has the exclusive right to sell the property and the owner has agreed to pay them a commission
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exclusive agency addendum to listing
an addendum to the exclusive right to sell listing agreement that would turn the document into an exclusive agency listing and allow for this. In it, the sellers will name who they have in mind to sell the property to, or they will just reserve the right to sell it themselves.
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net listing
the seller names an amount they want the property to sell for, and the broker tries to sell it for more than that set price. the broker's commission is the difference between the set listing price and the actual sales price.
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2 actions must take place before a license holder takes a net listing
the agent must give the seller an opinion of value for the property. the seller must insist that they want to sell using a net listing.
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Addendum for Property Subject to Mandatory Membership in a Property Owners Association.
disclosure of HOA fees and expections
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4 types of listings
net listing, exclusive agency, exclusive right to sell and open listing
