Real Estate Pre-Licensing Course [National Study] Flashcards
Why do we have real estate licenses?
to protect consumers
to protect the public or for the public good
What does police power mean?
the right of the government to enact laws to protect the public
Who needs a real estate license?
anyone who does any of the following for a fee or with expectation of a fee:
- advertise
- business of selling
- renting
- leasing
- negotiating
- exchanging
- purchasing
- dealing in real estate
- options for real estate
Who governs real estate licensure?
State legislature
- state or local real estate board or commission oversees the laws and enforces them in most states.
In addition to state laws, your real estate activities will also be subject to ?
Federal law (laws of the United States)
* state law builds on federal law
is more specific
* federal law wins in any conflict
What are the two types of real estate license in most states?
a. Salesperson License
b. Broker License
T or F: Realtors and NAR is a state licensing?
F:
- Realtors and the NAR is a membership in a trade association
- est. 1908 (National Association of Realtors)
- largest trade association
- one of the most powerful lobbying groups in US.
Salesperson License
- Must affiliate w/ a broker to practice real estate
- May not accept direct client payment
Broker’s License
- Can do everything that a real estate salesperson can do
- may operate independently
- accept client payment
- can handle escrow funds (client deposit)
Can associate brokers or broker associates handle escrow accounts?
No; they have a brokers license but work under another broker, so they can not handle escrow accounts.
Who can handle escrow accounts?
- Employing Brokers
- Broker of records
If the office is associated with a local REALTOR associations, what must all agents associated with that office must be?
REALTORS
How long does the usual process for a real estate
1-12+ months (and about 2-4 months on avg.)
What are you hired to do as a listing agent by a seller to sell their property?
working in their best interest to get the property sold for the most money in the shortest timeframe.
What is the first step when you are hired as a listing agent by a seller to sell their property?
preparing the property for sale
What is one of the most important aspects of a listing agent’s job?
Advertising the property
MLS
Multiple Listing Services
When can brokers and agents pay or split commissions with their unlicensed assistants?
Never allowed to split or pay commissions with their unlicensed assistants
What are the two (2) forms of hiring at a brokerage?
- 1099 independent contractor
- W2 employee
What is considered a 1099 independent contractor?
- paid by the job or commission
- sets their own schedule
- can turn down work
- use their own methods
What are most residential real estate agents?
1099 contractors
note: do not have taxes withheld from their pay
Typically in commercial real estate or hire administrators or assistants, paid hourly, on a salary, employer controls what and how work is down is considered?
W2 Employee
What is drafted after a buyer has viewed the property and submit and offer to the seller if they accept it?
Purchase and Sale Contract (P&S)
How many days typically before the Purchase and Sales Contract is signed?
7-14 days
Once the offer is accepted, depending on negotiations, the buyer will have between a few days and two (2) weeks to do what?
Due Diligence in examining the property w/ a professional
* depends on what time frame was negotiated
After the due diligence is complete, what will be drafted?
Purchase and Sales Contract by attorneys with 7 to 14 days after offer is accepted
What parties will attend the closing table once the terms and conditions of the P&S are met?
Seller
Buyer
Attorneys
closing attorney if different
title company representative
possibly the lender
When are brokerages and their agents paid?
after closing, the transfer of ownership happens
Client is?
the person who hires an agent in a real estate transaction
aka PRINCIPAL
Principal is?
person who hires an regent in a real estate transaction
a Special Agent is?
Broker; hired to perform a specific task on behalf of the client
- can be hired and paid directly by the client
- also primary agent
What is a subagent?
someone authorized to assist the primary agent
How does a broker pay their agent?
as a Subagent
What is an agent with a brokers license who choose to work under another broker?
associate-broker = are generally subagent
broker-associate
What is vicarious liability?
When someone is responsible for the actions of another when the party is acting on their behalf (i.e. Broker and the agents working on the behalf of the broker).
* if agent violates the law, it is as if the broker had done it himself
What is a “team”?
a group of real estate agents who all work for the same broker and decide to work together
note: a team can not advertise separately
What should the broker of record do if a group of agents forms a team in an office?
make sure that they are treated as independent contractors of the broker, and not as agents of the team or W2 employees
Are brokers and agents allowed to pay or split commissions with their unlicensed assistants?
Never allowed; unlicensed assistants are very limited in what they can legally do in real estate transactions.
What should brokers be aware of in a real estate transaction and establishing policies for their agents?
when a license is required about the use of unlicensed assistants
what is written that will govern how much commission payments will be, when an agent is entitled to pay, how pay works, who owns the agent’s listings, and how the relationship will be terminated if an agent is hired as a 1099 independent contractor?
independent contractor agreement
What is real property?
Land and anything attached to it
- various rights associated w/ ownership of the land
- also know as (realty, real estate or immovable property)
What is personal property?
What is the difference between real property and real estate, realty and immovable property and why they are not interchangeable?
real estate, realty and immovable property refer just to the land and what is attached to it
real property refers to both the land and rights associated with it
How is ownership of real property transferred or conveyed?
using a deed
What is a deed similar to ?
A receipt for real estate
What is transferring ownership (legal title) to real estate known as?
granting title
what is a grouping of property rights that can be separately transferred?
Bundle of rights (possession, exclusion, control, disposition, enjoyment)
- right to possess
- right to control
- right to exclude
- right to enjoy
- right to transfer or dispose
(PEE-CD or DEEP-C)
Rights to the land’s surface are known as?
Surface rights
- can extend to approximately 30 ft below the land’s surface.
What is considered improvements?
anything that is attached permanently (direct or indirect to the land)
(ex. house is an improvement)
What are rights to the space above and below the land?
air & mineral rights
- as well as oil and precious metals
- vertical interest than can be sold separately from the surface rights
What is real property?
the land and anything attached to it, and all the rights associated with it
What is personal property?
Anything not attached to the land
Means ownership made up of fee simple (also known as fee simple absolute) fee simple determinable, life estate?
Freehold Estate
What does freehold estate mean?
full ownership of their house or land until they decide to sell or do something with it.
What is non-freehold estate?
non ownership but someone has legal interest in the property
- ex. lease or rent
What is ownership by own person (or just one owner)?
Severalty
Ownership of real property is transferred or conveyed using?
a deed
the act of transferring legal ownership of a property from a seller to buyer through a legal document?
Granting title
- through grant deed
What test can you do to see if a property is a fixture?
M - Method
A - Adaptability
R - Relationship
I - Intention
A - Agreement
What is personal property that is now real property because it is now permanently attached to the land?
fixture
Give or grant
Confer
What are three (3) forms of defeasible interest?
- Fee Simple Determinable
- Fee simple subject to a condition
subsequent - Fee simple subject to an executory
limitation
What are the two (2) major categories in Interest in real estate?
Freehold Interest = Ownership
Non-freehold interest = less than freehold
( not ownership but interest and rights to the property, ie rent)
Where is Habendum Clause seen?
life estate deeds
What is known as to have and to hold?
Habendum Clause
This explains the rights that the new owner has with the property?
Habendum Clause
For anothers life is also know as ?
Pur Autrie Vie
This type of life estate is based on a third party not on the grantee’s life?
Pur Autrie Vie
Which type of lien is place on real estate to get payment for work that fixed the real estate and is involuntary?
Mechanics Lien
What is ownership that is for the term of someones life?
Life Estate
What are the different types of freehold interests?
Fee Simple Absolute
Fee Simple Defeasible
Life Estate
Default type of ownership, is inheritable and is not limited in any way?
Fee Simple Absolute
- Fee
- Fee Simple
- Fee Simple indefeasible
What is fee simple defeasible also known as?
Qualified Fee
What are the three forms of defeasible interests?
- Fee simple determinable
- Fee simple subject to a condition subsequent
- Fee simple subject to an executory limitation
