Real Estate terms Flashcards
Escheat
Escheat refers to the right of a government to take ownership of estate assets or unclaimed property. It most commonly occurs when an individual dies with no will and no heirs. Escheat rights can also be granted when assets are unclaimed for a prolonged period of time.
Usury
Usury is the act of lending money at an interest rate that is considered unreasonably high or that is higher than the rate permitted by law.
MOG rights
Mineral Oil & Gas rights
Elements of a valid contract
- Capable parties
- Lawful object
- Consideration
- Offer and acceptance
When is a contract void?
To say that a contract is void means that it does not fulfill the requirements of a valid contract, it is not legally binding or enforceable. A contract that is void in one that is missing any one of the essential elements that make a contract binding:
- Capable parties
- Lawful object
- Consideration
- Offer and acceptance
What is a voidable contract?
A voidable contract is a formal agreement between two parties that may be rendered unenforceable for a number of legal reasons. Reasons that can make a contract voidable include:
Failure by one or both parties to disclose a material fact
A mistake, misrepresentation or fraud
Undue influence or duress
One party’s legal incapacity to enter a contract
One or more terms that are unconscionable
A breach of contract
Voidable vs. Void Contracts
A voidable contract occurs when one of the involved parties would not have agreed to the contract originally if they had known the true nature of all of the elements of the contract prior to original acceptance. With the presentation of new knowledge, the aforementioned party has the opportunity to reject the contract after the fact.
What is an unenforceable contract?
An unenforceable contract or transaction is one that is valid but one the court will not enforce. Unenforceable is usually used in contradiction to void (or void ab initio) and voidable. If the parties perform the agreement, it will be valid, but the court will not compel them if they do not.
Might include oral contracts.
Appurtenant easement
An appurtenant easement is a type of easement that still applies to a property even if the owners change. It is sometimes referred to as “running with the land”.
Easement vs. encumbrance
An easement is a type of encumbrance.
An encumbrance is a claim against a property by a party that is not the owner.
Easement is a real estate concept that defines a scenario in which one party uses the property of another party, where a fee is paid to the owner of the property in return for the right of easement.
Prescriptive easement
A prescriptive easement is the right to use the land of another, not an ownership interest in the land of another. In order to acquire a prescriptive easement over another’s property, the following elements must be met: (1) actual use of the property; (2) open and notorious use of the property; (3) use that is hostile and adverse to the original owner; (4) continuous and uninterrupted use of the property; (5) use of the property under a claim of right to the property; and (6) use for the statutory period of five years.
Package mortgage
A mortgage in which the loan is used to buy a house as well as all furniture and other property in the house.
Blanket mortgage
A blanket mortgage is a single mortgage that covers two or more pieces of real estate. The real estate is held together as collateral, but the individual properties may be sold without retiring the entire mortgage. Blanket mortgages are commonly used by developers, real estate investors, and flippers.
Open mortgage
An open mortgage is one that can be fully paid off, refinanced or re-negotiated at any time without penalties. … Open mortgages tend to have higher interest rates compared to closed mortgages due to the prepayment flexibility. As a result, open mortgages are not as popular as closed mortgages.
Open-end mortgage
An open-end mortgage is a type of mortgage that allows the borrower to increase the amount of the mortgage principal outstanding at a later time. Open-end mortgages permit the borrower to go back to the lender and borrow more money. There is usually a set dollar limit on the additional amount that can be borrowed.
Lease assignment
When a tenant decides to assign a lease, he is essentially giving up all his rights and responsibilities to the rental agreement and the unit to a third-party assignee. As a result, the original tenant (the “assignor”) will have to vacate the unit and allow the new tenant to take over all of the leased premises.
However, please note that under the terms of most lease agreements, the original tenant will remain responsible for the terms of the lease. This is important if the new tenant defaults on the lease agreement or causes damage to the property. (Do keep in mind that, sometimes, a landlord may in fact release the original tenant from liability under an assignment of lease). If you’re considering a lease assigment, it can be a smart idea to pursue permanent assignment so you won’t be on the hook for expenses or damages.
Specific performance
Specific performance is a remedy in contract law that is most often applied in real estate litigation and disputes where a court issues an order requiring a party to perform a specific act, and to specifically perform according to the terms of a contract. … This is called specific performance.
Cap rate
The capitalization rate (also known as cap rate) is used in the world of commercial real estate to indicate the rate of return that is expected to be generated on a real estate investment property. … It is used to estimate the investor’s potential return on their investment in the real estate market.
Calculation:
net operating income / current market value = cap rate (percentage)
Severalty
Ownership in severalty means one person owns the property. Think of the word “severed,” separated from, rather than the word “several,”
Tenancy in common vs joint tenancy
Basically, joint tenancy pertains to homeownership in which each party is on the home title and has an equal interest in the property. An example of a joint tenancy is the ownership over a house by a married couple. In this situation, each of the spouses has an equal share and interest over the house. In the case of divorce, each spouse may sell his or her share in the property. Once there is a sale, the joint tenancy becomes tenancy in common.
Tenancy in common, on the other hand, refers to ownership over a certain property by two individuals without any right of survivorship. They are co-owners of the property and their shares and interest over said property are equal. However, there are also situations in tenancy in common when the parties do not have equal shares. The sharing scheme shall depend entirely on the stipulation of the parties.
Joint tenancy and tenancy in common have different rules concerning the death of one of the tenants. This is the main difference between these two kinds of tenancy. In tenancy in common, the death of one of the parties shall have the effect of transferring the rights of the decedent tenant in favor of his heirs. In joint tenancy, the parties enjoy the right of survivorship. This means that when one of the co-owners dies, the survivor co-owner shall get the decedent’s share over the property. In joint tenancy, each co-owner’s possession, interest, time, and, title of the property is vital. In order for the transfer of rights to accrue, there must be a will of a deed executed in favor of the survivor.
Fee simple
a permanent and absolute tenure in land with freedom to dispose of it at will, especially (in full fee simple absolute in possession ) a freehold tenure, which is the main type of land ownership.
Fee simple defeasible
Fee simple defeasible is a legal term and type of property ownership, where the ownership is dependent on specific conditions. If the conditions of ownership are violated, the property may be returned to the grantor or to a specified third party.
Fee simple absolute
The best form of property ownership is fee simple absolute, sometimes called a freehold, which means that the owner or owners can do whatever they like with the property, subject only to encumbrances like liens, or local guidelines, such as zoning, taxation, or criminal laws.
Fee simple determinable
a determinable fee simple estate is one that automatically terminates upon the occurrence of a specified event or the cessation of use for a specified purpose and will revert to the grantor without any entry or other act
Discount points
Mortgage points, also known as discount points, are fees paid directly to the lender at closing in exchange for a reduced interest rate. This is also called “buying down the rate,” which can lower your monthly mortgage payments. One point costs 1 percent of your mortgage amount (or $1,000 for every $100,000).
Regulation B
Regulation B is intended to prevent applicants from being discriminated against in any aspect of a credit transaction. Reg B outlines the rules that lenders must adhere to when obtaining and processing credit information.
Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) is a federal law that regulates the collection of consumers’ credit information and access to their credit reports. It was passed in 1970 to address the fairness, accuracy, and privacy of the personal information contained in the files of the credit reporting agencies.
Truth in Lending Act
The Truth in Lending Act (TILA) protects you against inaccurate and unfair credit billing and credit card practices. It requires lenders to provide you with loan cost information so that you can comparison shop for certain types of loans.
(includes 3 day good faith estimate requirement)
Also known as Regulation Z.
Equal Credit Opportunity Act
The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the Equal Credit Opportunity Act (ECOA), which prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or because you get public assistance.
