Real Estate Flashcards
Bundle of Rights
Right & interest of having title such as possession, control, exclusion, sell, and of enjoyment
Real Property
- goes with the property
- Generally immovable
Personal Property
- goes with the person
- Generally movable
Chattel Real
cows moove - personal property
Fixture
was personal and is now real
MARIA Method, Adaptability, Relationship, Intention, Agreement
Trade Fixture
personal because it goes with a business
Riparian Rights
river - moving body of water
Littoral Rights Lake
body of water standing still
Accretion
additional of land
Avulsion
tearing away of land
Reliction
gradual recession of water leaving land permanently uncovered.
Appurtenances
Runs with the land
Freehold Estate
no fixed duration of ownership
Fee Simple Estate
highest possible ownership..
- also know as fee simple absolute
Fee Simple Defeasible
Possesses the property as a fee simple subject to a condition
Life Estate
ownership of land for the duration of a person’s life
Less than Freehold Estate
limited period of time
Estate for Years
defined period of time
Periodic Tenancy
period to period such as month to month
Estate at Will
end at any time
Estate at Sufferance
landlord is suffering as tenant is in possession passed agreed upon time.
Lease
possession but not ownership from lessor to lessee - considered personal property
Percentage Lease
based on a percentage of gross receipts
Net Lease
tenant pays taxes, insurance and maintenance
Gross Lease
tenant pays fixed amount
Sandwich Lease
primary party is lessee and a lessor
Tenant Improvement Allowance
allowance to customize generally for business purpose
Subleases
Grants possession but not responsibility
Assignment
Grants possession and responsibility
Surrender
agreement to return the property to the owner (landlord) before the lease ends
Eviction
landlord fails to do something that he/she has a legal duty to provide.
Deeds
evidence of transfer
A Grant Deed
transfer of real property from one person or entity to another person or entity. Each party transferring an interest in the property, or “grantor”, is required to sign it.
A Quitclaim Deed
Deed releasing a person’s interest with no warranties. Typically in non-sale situations
Warranty deed
deed that guarantees a clear title to the buyer of real property
Special Warranty Deed
Seller only warrants or guarantees the title against defects that may have arisen during the period of ownership of the property.
General Warranty Deed
Seller warrants or guarantees the title against defects that may have arisen during the entire life of the property.
Chain of Title
history of ownership which shows conveyances and encumbrances.
Title
Ownership
Abstract of Title
Summary
Cloud on Title
Defect in title ie.. single women married
A Quiet Title
Action lawsuit in order to establish a party’s title
Alienation of Title
capacity of property or a property right to be sold or transferred
Title Insurance
Ensure clear and marketable title
Standard Policy of Title Insurance
Standard coverage includes:
- Defects that are found in public records
- Forged documents
- Incompetent grantors
- Incorrect marital statements
- Improper delivery of deeds
ALTA Policy of Title Insurance
Protects real property owners and mortgage lenders against losses from defects in titles.
Extended Policy of Title Insurance
Includes everything in a standard policy plus defects found in a property inspection. Which would include unrecorded rights of parties in possession, examination of sur vey. unrecorded liens, not known by a policy holder
Severalty
sole ownership
Concurrent Estate
ownership with others
Joint Tenancy
TTIP right of survivorship
Tenancy in Common
unity of possession
Encumbrances
Limitation
Easement
Right to cross
dominant tenement
Gaining the benefit of the easement
servient tenement
Suffers the burden of an easement
Easement by Prescription
granted after used the property in a hostile, continuous and open manner for a statutorily prescribed number of years
Appurtenant Easement
right to use adjoining property that transfers with the land
Easement in Gross
no dominent tenament
Government Powers
PETE - Police Power, Escheat, Taxation, Eminent Domain
Police Power
States ability to regulate for the betterment of the health, safety, morals, and general welfare of community.
Zoning
Police power that divides and into areas for designated uses Variance Exception to the roll
Down Zoning
Commercial to residential
Grandfather Clause
exempt from new rule,
Nonconforming Use
A type of zoning variance where a parcel of land may be given an exception from current zoning ordinances due to improvements made by a prior owner or before the
current zoning ordinances made the desired use non-conforming under local law.
Building Codes
protect public health, safety and general welfare
Escheat Reversion
of property to the state when the owner dies without heirs.
Intestate
no will
Testate
has a will
Probate
executor for the estate of a deceased person sells property in order to divide the property among the beneficiaries.
Holographic Will
written by hand
Taxation
financial charge by a state to fund various public expenditures
Marginal
tax rate percentage taken from your next dollar of taxable income
1031 Tax Deferred Exchange
- Defer taxes
- identify 45 days, acquire within180 days of closing previous property.
Boot
Fair market value of other Property received in an exchange
Ad Valorem
Latin for according to value
Eminent Domain
Government ability to take private property for public use
Condemnation
Process of compensating a person when property is taken by eminent domain.
Inverse Condemnation
Sueing the government for just compensation when property is taken
Encroachment
When a structure is built in part on a neighbor’s property.
Liens
money owned
General Liens
lien against all personal property
Specific Liens
lien that is on a single property
Voluntary Lien
lien that exists because of an action taken by a debtor
Involuntary Lien
Liens that were imposed on a individual. i.e. .. taxes and judgment liens
Mechanics Lien
Lien on behalf of those who have supplied labor or materials that improve the property.
Judgement Lien
Lien placed by the court
Lis Pendis
lawsuit pending involving either the title to the property or a claimed ownership interest in it.
Injunctions
Court order that compels a party to do or refrain from specific acts.
Constructive Notice
Signifies that a person should have known as a reasonable person would have
Actual Notice
Personally given to somebody
Escrow
neutral third party
Debit
money owed
Credit
money received
Short Rate
A higher periodic rate for a shorter term than what was originally contracted
Impounds
Money set aside by a lender to pay for reoccurring costs that take priority over the loan such as taxes and insurance.
RESPA
Eliminating kickbacks and referral fees which add unnecessary costs to settlement services.
TILA
- Inform use of consumer credit
- Require disclosures about its terms and cost to standardize the manner in which
costs associated with borrowing are calculated and disclosed.
Fair Housing Act 1968
act banning refusal to sell or rent a dwelling to any person because of race, color, religion, sex, or national origin.
Jones vs. Mayer
1968 court case that bared all racial discrimination, private as well as public, in the sale or rental of property based on the thirteenth amendment.
Sherman Anti-Trust Act
bans anti competitive behavior such as price fixing
Americans with Disabilities Act
1990 act prohibiting discrimination against people with disabilities in employment, transportation, public accommodation, communications, and governmental activities.
Material Fact
a fact that, if known, might have caused a buyer or seller of real estate to make a different decision
Steering buyers
You should live by “those” people
Blockbusting
sellers - You better sell because you do not want to live by “those” people
Panic Selling
sellers - You better sell because you do not want to live by “those” people
Panic Peddling
sellers - You better sell because you do not want to live by “those” people
Redlining
denying services such as a loan, either directly or through selectively raising prices, to residents of certain areas based on race or ethnicity.
Misrepresentation
the action or offense of giving a false or misleading account of the nature of some thing
Actual Fraud
fraud committed with the actual intent to deceive and thereby injure another
Constructive Fraud
person gained an unfair advantage over another by unfair methods.
Intent
does not need to be shown
Commingling
mixing of funds
Puffing
gross exaggeration of facts
Caveat Emptor
latin for buyer beware
Void Contract
Lacks one of the 4 essential elements
Voidable Contract
Option to rescind
Bilateral Contract
promise for a promise example would be a exclusive listing
Unilateral Contract
promise for a act example would be a open listing or a option contract
Executed Contract
a contract that has been fully performed
Executory Contract
a contract that has not yet been fully performed
The Statute of Frauds
states what contracts must be in writing
Statute of Limitations
States time frames for certain contracts
Novation
latin for new as it relates to contracts
Codicil
amendment
Agency
ACOLD Accountability Care Obedience Loyalty Disclosure Fiduciary A position of trust, good faith and honesty
Actual Authority
Expressly conferred by a principal to an agent to act on the principal’s behalf.
Ostensible Authority
Authority granted by acceptance of action on the principles behalf.
Dual Agent
buyer & seller have the same BROKER
General Agent
- authorized to perform any and all acts associated with the job. - A real estate licensee acting in the capacity of a property manager.
Special Agent
- Limited authority granted to him or her through a principal. - Relationship with the principal is not expected to be continuous.
- Listing contract creates a special agency.
Estoppel
prevents asserting something contrary to what is implied by a previous action or statement.
Listing
bilateral employment contract
Exclusive Listing
- one broker can be paid
- no need to show procuring cause in order to be compensated.
Exclusive Agency Listing
- Owner sells agent gets nothing
- You need to show your are the procuring cause in order to be compensated
Exclusive Authorization and Right to Sell Listing
Broker gets paid if property sold regardless of procurance cause
Open listing
- Seller can hire multiple brokers
- Broker that proves procuring cause would be compensated
Net Listing
Money received above and beyond a designated amount
Protection Period Clause (Safety Clause)
Compensated after listing expires if you can prove your are the procuring cause
Contingency Clause
defines a condition or action that must be met in order for a real estate contract to become binding
Hold Harmless Clause
- also known as a liability waiver
- agreement whereby parties agree not to hold the other party responsible for any
loss, damage, or legal liability that may arise under the agreement.
Interim Occupancy Agreement
Staying after sale
Deposit
Placing something of value to show that you are serious about your offer.
Value
What a willing buyer will pay on the open market
Essential Elements of Value STUD
- Scarcity Transferability, Utility, Demand
Principle of Substitution
no prudent person would pay very a property when another one readily available that has the same use, design and income for less.
Principle of Contribution
How much does an item contribute to the net income of a property?
Principle of Regression
The value of a more expensive home placed in a neighborhood of less expensive homes will drop in value.
Principle of Progression
Progression states that the value of less expensive properties will increase when placed in the area of more expensive properties.
Principle of Highest and Best
- How much of a net return you can get by building on the property?
- If the use is temporary, it would then be considered the Interim use
Plottage
1+1 =3 adding two or more sites to create a big site worth more
Appraisal
Estimate of value
Narrative Appraisal
A comprehensive appraisal report is a “complete” appraisal.
Market Data (Comparison) Approach
- Examination and comparison of actual sales of comparable properties.
- Best used to find values of houses and vacant lots.
Cost (Replacement) Approach
- Finding out how much would it cost to replace the building brand new
- Better for new buildings not old.
Capitalization (Income) Approach
Converts Income into value.
A property that can prove to bring in more income will increase the value.
- Most appropriate for a shopping center.
Gross Multipliers
price divided by rent
Cap rate
Higher Cap rate represents higher risk
Acre
43,560
Depreciation
loss in value to any cause
Physical Deterioration
wear and tear
Functional Obsolescence
poor planning
Economic Obsolescence
outside causes
mortgage
a voluntary, specific lien
Mortgage brokers
Intermediary between consumers and lenders.
- Mortgage broker originates loans while the mortgage lender funds loans.
mortgage banker
A direct mortgage lender
Interest
rent on money
Leverage
borrowed capital to increase the potential return of an investment
Amortization
the paying off of debt
Negative Amortization
interest paid but debt increases
Balloon Loan
loan that does not fully amortize over its term
Appreciation
increase in value over time
Construction Loan
short-term loan used to finance the building of a property.
Obligatory Advances
Money given during a construction loan at agreed upon stage
participation loan
A loan that requires interest plus a portion of the profits as payment.
Interim Loan
short term financing
Take-Out Loan
- Long-term loans replace interim financing, such as a short-term construction loan.
- Usually mortgages with fixed payments that are amortizing.
Subject To
seller liable, buyer not liable
Assume
relieves seller, buyer is liable
Hypothecate Pledging
an asset as collateral for a loan while retaining ownership
Subordination Clause
Current debts will take priority over debts made in the future.
Prepayment Clause
provision that permits a borrower to satisfy a debt before it is due date.
Prepayment Penalty
regulates what the borrower is allowed to pay off and when.
Due-on-sale clause
Balance of the loan may be called to repay in full upon sale
Primary Mortgage Market
Where Lenders make mortgage loans directly to borrowers
Secondary Mortgage Market
resale marketplace
Insurance companies (as a lender)
- Prefer income producing properties and long term large industrial projects.
- Frequently demand to be able to do a participation loan
savings and loan association
A state or federally-chartered financial intermediary that accepts deposits from the public and invests those funds primarily in residential mortgage loans
FHA
- Small downpayment required
- insures the lender, does not make loans.
- unconventional loan because they are backed by the government.
- no pre-payment penalty
- Single family homes, one to four units owner occupied
VA Loan
- Does not require a down payment, however the lender can require one.
- owner occupied house, condominium, or townhouse
GNMA
A governmental part of the secondary market that deals primarily in recycling VA and FHA mortgages.
FNMA
federally sponsored private corporation which provides a secondary market for housing mortgages.
