Terms/Words to know Flashcards
Dower
a wife’s life estate interest in her husband’s property
Curtesy
a husband’s life estate interest in his wife’s property
Real estate can be defined as
land and everything permanently attached to it
The distinguishing feature of a defeasible fee simple estate is that…
it may revert to a grantor if the prescribed use changes
a distinct feature of a joint tenancy is that joint tenants
cannot will their interest to a party outside the tenancy
There are two adjoining properties. An easement allows property A to use the access road that belongs to property B. In this situation, property B is said to be which of the following in relation to property A?
Servient estate
In a case of foreclosure, which lien will always be paid first?
Tax liens
What does the “chain of title” to a property mean?
A chronology of successive owners of record
list of people who owned the home in the past
The Uniform Residential Landlord and Tenant Act fundamentally attempts to…
encourage fairness and simplicity in lease forms and provisions
Syndicate
Group of investors who combine funds to buy, develop, and/or operate a property. They keep investing in more properties if successful
Joint Venture
Group of investors who combine funds, similar to Syndicate, but only for 1 Project. They do not keep working together on additional projects.
Opportunity Cost
The return that an investor could earn on capital invested with minimal risk
General partnership
A syndicate in which all members participate equally in managing the investment and in the profits or losses it generates
Limited partnership
Invest $ in the property but do not participate in operating the property. Only responsible for their original investment… if there’s a loss on the property – the general partners are responsible for any debt exceeding your initial investment
How do you calculate Taxable Income?
Net Amount - Interest & Depreciation
Are there pre-payment penalties in New Jersey?
NO
Deductions - you can deduct your T.I.P.P. - what does the T.I.P.P. stand for?
- Taxes
- Interest on mortgages
- Prepayment penalties (none in NJ)
- Points
What are Capital Improvements
Ex: putting on an addition, paving a driveway, replacing a roof, adding central air conditioning, and rewiring the home
What is CASH FLOW
The amount of money you have left after every expense (including your mortgage payment) is paid
The Four principal types of Investment are
Money, Equity, Debt, Real Estate
TAXATION: the “Adjusted Basis” is
The cost of the investment plus capital improvements, less depreciation
Can principal payments on your Mortgage be deducted from taxes?
NO, only your Interest payments may be deducted for tax purposes
How much is the Capital Gains tax exclusion?
Up to $250,000 for a single seller and $500,000 for a married couple can be excluded from gains tax every Two Years
Pre-Tax Cash Flow =
= (NOI - Debt Service)
- NOI: net operating income
- Debt Service: periodic principal and interest payments
Are “Real estate, Real Property, and Realty’ all the same?
YES
Real Estate Taxation: You have to adhere to “PETE”:
- Police Power (zoning, health dept)
- Eminent Domain (the right for them to take away your property for gov’t use
- Taxation (gov’t has right to tax you)
- Escheat (if you pass away with no heirs, gov’t sells your house and takes your money
“Equalization” is used to…
minimize discrepancies
How long does it take for you to go into Tax Foreclosure when you don’t pay your taxes…?
6 months. Taxes are always the #1 Lien on the property, placed every year on January 1.
Dual Agency
- 2 Agents from one SAME broker represent the buyer/seller (ex: 2 agents from Weichert)
** It’s not dual agency if there’s 1 agent from 1 broker and 1 agent from another brokerage, even though they’re under the same franchise name **
What is ad valorem taxation
Property tax, based on assessed value.
o Ad valorem tax is levied annually on the taxable value of a property in order to help fund government and public services
What is ‘Tax Base’?
The total of all assessed values in a jurisdiction excluding exemptions
Tax Rate - What is the Millage Rate?
Take the millage rate and multiply by .001 (two decimals to the left)
** Think of “MiLLage” with 2 L’s, so you move the decimal 2 spots to the ‘L’eft
How do you calculate the Tax Rate Derivation?
Divide tax requirement by the tax base
** Think of “Derivation” as “Divide” so you have to divide the tax requirement by tax base (tax “base”, “base” on the bottom of the division)
How is the individual tax bill assessed?
Individual Tax Bill = RATE x Taxable Value
Taxable value: (assessed value minus exemptions and adjustments)
ETHICS: Fair Housing Act: “Racist Realtors Can Never Have Financial Success” (What does R.R.C.N.H.F.S stand for in regards to discrimination)
Race Religion Color National Origin Handicapped 1988 Familial Status 1988 Sex (as a gender) 1974
RESPA =
Real Estate Settlement Procedures Act
Reg Z ->
- APR - Lender has to disclose this
- Interest Rates - no triggering
- Right of rescission - 3 days to cancel
“TRID” ->
Truth in lending
Respa
ID - Integrated Disclosure
^ “TRID”
Condominium is
an ownership of a unit of airspace plus undivided interest in common elements
A Co-Op is
an ownership of a share in a corporation, plus proprietary lease in unit
** Owners potentially liable for expenses of entire co-op. Creditors may foreclose on entire property**
What is a lien?
A financial burden on the property
What is an Encumbrance?
aka “mortgage” … a “cling” on the property that lowers the value of a property
Seller’s Property Condition Disclosure (SPCD) Form contains what?
it contains the seller’s attest of the property’s condition at the time of contracting for sale.
- must be transmitted to buyer by a state-stipulated deadline*
- Required to be completed with Sale of contract*
- If seller answers ‘no representation’ - seller cannot be held liable as no position was taken.*
- Buyer must acknowledge receipt when given the completed form*
What kind of interest does the buyer own after a real estate sale contract is signed by the principal parties?
a) Legal Title
b) Lienholder interest
c) Remainder interest
d) Equitable title
d) Equitable title
What parties must be identified in a sale contract?
a) Only a seller
b) Seller and buyer
c) Seller, buyer, and agent(s)
d) Seller, buyer, and title company
b) Seller and buyer
To create an enforceable option-to-buy contract, there must be an exchange of:
a) a promise to sell and a promise to buy
b) valuable consideration and a right to buy
c) valuable consideration and a promise to buy
d) a down payment and a post-dated contract for sale
b) valuable consideration and a right to buy
An option-to-buy is:
a) not assignable unless the contracts specifically allows assignment
b) never assignable
c) assignable, with seller permission
d) assignable unless the contract prohibits assignment
d) assignable unless the contract prohibits assignments
Foreclosures: Judicial Foreclosure: What is a deficiency judgment?
judgment by court on borrower to forfeit other property to pay off any shortfalls from foreclosure
Foreclosures: Strict Foreclosure
court orders legal transfer of title directly to lender without public sale
Foreclosures: Deed in lieu of foreclosure
‘power of sale’ granted to lender; no suit; no deficiency judgement; NO REDEMPTION PERIOD AFTER SALE
Foreclosures: Non-judicial foreclosure
‘power of sale’ granted to lender; no suit; no deficiency
Land Use: What is a master plan
A land use plan for a municipality, county, or region which incorporates community opinion, the results of intensive research, and the various land use guidelines and regulations of the state. Acts as a blueprint for subsequent zoning ordinances and rulings
Know that its for a municipality/county/region, not the for the State*
What is a quitclaim deed used for?
QuitClaim Deed: Commonly used to transfer property to another person, as a gift. (Usually done in Marriages, or between Family Members)
Since this is considered a “gift” they don’t pay taxes for transferring the property
What is the Metes and Bounds method?
describes perimeter by landmarks, monuments, distances, angles
Usable within the rectangular survey system
Starting at Point of Beginning (POB), follow perimeter, return to POB
What is the Lot and Block System? (Recorded Plat Method)
used to describe properties in residential, commercial, industrial SUBDIVISIONS
Tracks of land divided into LOTS, then grouped into BLOCKS
What are the dimensions of a township?
6 miles by 6 miles
How many sections are in a township?
36 sections per township. 1 section = 640 Acres
What is a contract?
An agreement between two or more parties who have a “MEETING OF THE MINDS”, and have pledged to perform (or refrain from performing) some act
- a valid contract is legally enforceable by meeting certain requirements of contact law
The key things a Contract needs to be Valid:
- competent parties
- voluntary act of good faith
- mutual consent
- valuable consideration
- legal purpose
Conveyance Contract Requirements:
- must be in writing
- must contain legal description
- must be signed by one or more parties
- exception: per Statute of Frauds, leases for one year or less may be verbal and still be enforceable
Are contracts assignable?
They are assignable UNLESS expressly prohibited… or if the contract is a personal service contract (Listings not assignable)
Bilateral vs Unilateral contract
Bilateral: both parties promise to perform
Unilateral: one party performs only if other party performs
Express vs Implied Contract
Express: all terms expressly agreed to
Implied: unintentional agreement deemed to exist due to terms implied by actions
Executed vs Executory Contract
Executed: fully performed
Executory: performance yet to be completed
Misrepresentation and Fraud: What is “puffing”?
The licensee boasting about property’s benefits
they are “puffing” the property’s benefits
What is a subagency?
- outside brokers and agents who help the listing agent
- listing broker’s own agents
- (disallowed in some states)
What can the buyer do if a seller defaults in a sale contract?
The buyer can cancel, or sue for damages or specific performance (ex: buyer’s deposit)
