TN Real Estate 60 Hr course Flashcards
Erica presented an offer to her seller client, and after a bit of negotiating with the buyer and buyer’s broker, the offer was accepted. Which one of these activities will Erica be taking care of at this point in the sales process?
Verify progression of the loan through the buyer’s broker.
In the real estate business, which professional’s primary role is to provide brokerage services to their clients and to supervise licensees who work for them?
Real estate broker
Licensee Bonita has just submitted an MLS listing with photos for her client. Which of the following steps will she need to complete next?
Expose the property to prospective buyers using a tailored marketing plan.
In Tennessee, the primary role of the ______ is to provide brokerage services to clients while under a broker’s supervision.
Affiliate broker
In the real estate business, whose primary role is to estimate property value based on established valuation guidelines?
Real estate appraiser
Which of these choices represents a specialization for which a real estate licensee may pursue an NAR designation?
Green buildings
Ethical or not ethical:
A licensee is the listing agent on his parent’s property, but keeps this fact confidential from prospective buyers.
Not Ethical
What two things did George do wrong?
Meet George. George is an affiliate broker in Tennessee. He’s fairly new to the real estate industry. In an attempt to build his book of business, he drove through neighborhoods, looking for homes for sale. After identifying a few, doing some research, and preparing CMAs, he contacted several sellers. He told the sellers that he appraised their property at a higher value than their current listing agent. He offered the sellers a discount on the commission if they terminated their listing with their current agent and signed a contract with him.
Contacted sellers for the purpose of asking them to break their contracts with their agents
Told sellers he had appraised their property
Carol has been licensed for a few short months and has closed three residential transactions. Her uncle calls and informs her that he’d like to engage her as a buyer’s agent. He’s interested in purchasing some commercial investment property. Which part of the Code of Ethics prohibits Carol from helping her uncle unless she receives some assistance from someone experienced in commercial investment property?
Article 11, Standard of Practice 11-2
Licensee Renaldo is working with a client who’s selling a home that’s been on the market for some time. Eventually the seller agrees to take an offer lower than the listing price. But just a week later, another offer is made, this time at the price the seller had originally wanted. The seller asks Renaldo, “Where do I stand legally if I break the purchase agreement with the first buyer and accept this new offer?” Does the NAR Code of Ethics or TREC allow Renaldo to offer an opinion on the seller’s question?
Both TREC and the NAR Code of Ethics prohibit Renaldo from the unauthorized practice of law, which he would be doing if he offered an opinion on the result of breaking a contract.
A Tennessee licensee discloses to a potential buyer that she’s the owner of the property that she has listed. She makes this disclosure of personal interest because ______.
It’s required by the TREC rules of conduct.
Myron, Sheila, and Stephen grew up together, went to the same college, shared the same apartment for years, and even got their first jobs at the same company. But now as they start their own families, they find that their needs are changing, and it’s time to go their separate ways. Myron and Kim, childhood sweethearts who recently married, are expecting their first child. Kim has two kids from a previous marriage, so they are looking for a community that has everything their growing family needs in a relatively small area, such as neighborhoods, schools, and shopping. They hope to live in a (1).
Sheila and her partner, Reese, recently purchased a condo situated above a trendy little restaurant. The entire neighborhood is a mix of homes and shops. Sheila and Reese live in a (2).
Stephen, who’s decided to pursue his dream to become a dancer, needs to be able to head into the city for auditions, so he’s elected to move into a community near train and rail stations, but still offers convenient shopping and recreational opportunities. Stephen lives in a (3)
- planned unit development
- mixed use property
- transit-oriented development
Supply impact or Demand impact
Carmen owns a construction company that until recently was doing a booming business. His company has definitely been impacted by the closing of several military bases in the area.
Demand impact
Supply impact or Demand impact
The Federal Reserve Board has taken steps that reduce the amount of money available for mortgage loans.
Demand impact
Supply impact or Demand impact
Adelaide, a broker in a mid-sized town, is thrilled that the mayor’s incentives to bring new business into the area have finally paid off. A new high-tech company from the West Coast has decided to move its manufacturing to the area, bringing new jobs that are paying higher salaries. The company is also relocating many mid-level managers to the area to oversee operations.
Demand Impact
Supply impact or Demand impact
Tom and his wife, Karen, have been watching interest rates for months, hoping that rates will drop so that they can qualify for a mortgage loan and move into the house of their dreams.
Demand Impact
Supply impact or Demand impact
Carmen, the construction company owner, can’t catch a break. A new company is moving into town, bringing with it new jobs, better salaries, and people relocating to the area, but Carmen can’t take advantage of the situation because the forests in the area have been overcut and there’s a lack of wood for building materials.
supply impact
Supply impact or Demand impact
Sydney is a land developer with big plans for a beautiful new subdivision. He even has several investors lined up who are willing to fund the project. The only problem is land—there isn’t any.
supply impact
What can you expect to see during a downcycle?
No one is buying, and no one is selling.
when does the real estate downcycle usually occur?
From mid-November through the end of December
What is your farm area?
A targeted area or market demographic in which you plan to cultivate your business
The two best places for licensees to spend their marketing dollars are in their sphere of influence and in ______.
Their farm area
To begin your real estate career, you must affiliate with a broker. For how many years must you work under the license of a sponsoring broker, who will supervise, train, and be responsible for you before you can apply to be a broker and go independent or start your own firm?
two
Mallory had a falling out with her broker, Sam. She’s decided to work for another broker in town. Sam is being petty and won’t sign her release. What’s Mallory’s next step?
Submit a release affidavit with the commission.
Legal or Illegal
Edwin, a licensed Tennessee broker, asked one of his unlicensed administrative staff, Susie, to hold two open houses for him while he was on vacation. Edwin compensated Susie for her time.
Illegal
Legal or Illegal
Amy, a licensed Tennessee broker, paid a commission to Darin, a licensed broker in Florida, who assisted one of her affiliate brokers in selling a home in Tennessee. Darin helped the buyer client negotiate the counter-counter-offer when the seller came back with a counter offer on the original purchase offer.
Illegal
Which of these statements is true about your listing agreements, buyer representation agreements, offers to purchase, counter offers, contract amendments and addenda, disclosure statements, and settlement statements?
A. These documents aren’t part of the rule to maintain records for three years.
B. All copies of these documents must be destroyed within 24 hours after the transaction closes.
C. Your principal broker is responsible for reviewing these documents for accuracy and must do so in a timely manner.
D. These documents must be preserved as long as the brokerage remains in business.
C
Farrah is a Tennessee affiliate broker. She has a system for keeping copies of all her client correspondence, including emails, faxes, and phone logs. Which aspect of a normal professional routine is Farrah demonstrating?
Because Tennessee law requires her to maintain these records for three years.
A principal broker in Tennessee is required to ______ for all transactions in which affiliated licensees participate.
Review and approve transactional documents and agreements
How long must licensees retain real estate transaction records?
Three years
TREC Power Or Not a TREC Power:
Issue, revoke, or suspend a real estate license
TREC Power
TREC Power Or Not a TREC Power:
Prohibit licensees from serving more than three clients at a time
Not a TREC Power
TREC Power Or Not a TREC Power:
Establish the rules of conduct and ethics for all license holders
TREC Power
TREC Power Or Not a TREC Power:
Impose fees to cover the costs of administering the law
TREC Power
How many members make up the commission?
9
True or False:
TREC members are elected by the public.
False
True or False:
TREC members serve five-year terms.
true
True or False:
There must be at least one member of the commission who is 60 years or older.
true
True or False:
At least one member of the commission must be a member of a racial minority.
True
How many commission members are required to be present at a meeting in order for the meeting to be valid?
5
The Real Estate Education and Recovery Fund exists for one main purpose. What is that purpose?
To compensate victims who have been awarded a judgment against a licensee who has violated license law.
True or false:
Fees paid by new licensees fund the account; however, if the balance of the account dips below a specified minimum, all licensees may be assessed additional fees.
True
True or False:
A balance of at least $500,000 is needed for the recovery fund account.
True
True or False:
Payments from the account are limited to $50,000 for a single transaction.
False
True or False:
The Real Estate Education and Recovery Fund is funded through taxation.
False
What’s the maximum amount that can be disbursed from the Real Estate Education and Recovery Account in a single transaction?
The maximum amount that can be disbursed from the account against any one licensee, in a single transaction, is $15,000.
TREC must operate in accordance with what act?
The Uniform Administrative Procedures Act
TREC has the authority to?
TREC has the authority to adopt rules to charge and collect fees. These fees cover the cost of administering Tennessee license law, and expenses related to the commission’s daily operations.
Say if a TREC fee would apply or not to the following situations.
- Applying for a real estate license
- Applying for a brokerage license
- A license applicant taking pre-licensing courses
- License renewal
- Transferring to another firm
- Taking continuing education courses
- fee
- fee
- no fee
- fee
- fee
- no fee
TREC Complaint process in order.
- A complaint against a licensee, instructor, or an applicant is filed with the commission.
- The commission determines whether the complaint has merit.
- TREC sends a copy of the complaint to the respondent.
- TREC conducts an investigation and may request additional evidence, if needed.
- TREC will hold a formal hearing and determine discipline, if warranted.
How long must a person on parole or probation wait before taking the licensing exam?
two years
What are the steps followed in a hearing with the commission?
- The time and location of the hearing is established and the respondent is notified by mail or personal delivery.
- The respondent stands before the commission as required by the hearing notice.
- The commission members determine the course of action or discipline.
- The respondent complies with the course of action or discipline.
TREC : How many commission members agree to a decision of license suspension or revocation?
The majority of commission members.
When must licensees turn over trust monies?
Trust monies must be turned over to over to the principal broker immediately upon receipt.
The commission has the authority to assess a penalty for each day a violation occurs. Because the violation occurred for the two weeks Brendan was away from the office and on vacation, TREC could consider each of the 14 days as a separate violation.
What is the range of the civil penalty that TREC can assess according to its rule on civil penalties? This rule can be found on pages 10‒12 in your Official Rules of the Tennessee Real Estate Commission resource.
$700 to 14,000
What is the range of the civil penalty that TREC can assess for a single violation, according to its rule on civil penalties?
$50 - $1,000
True or False:
The commission has 10 members.
False there are nine.
True or False:
The governor appoints commission members.
True
True or False:
Members serve for four years.
False, they serve 5 years and must serve until a successor is appointed
True or False:
One member must be at least 60 years of age.
True
True or False:
Seven members represent the public at large and two members are licensed real estate brokers or affiliate brokers.
False, seven members must have served as a licensed broker or affiliate broker for at least five years before their appointment. Two members must be members of the public who aren’t real estate professionals.
wo members of the Tennessee Real Estate Commission, Barb and Jeff, represent the public at large. Besides not being real estate licensees, what else do we know about Barb and Jeff?
They don’t live in the same part of the state.
True or False:
Applicants who have been convicted or sanctioned within the past 15 years must submit a form detailing the criminal record.
False, The form must be submitted if the applicant was convicted or sanctioned within the last 10 years.
True or False: with prior convictions / disciplinary action
Applicants must submit three character references.
True
True or False: with prior convictions / disciplinary action
The applicant and the applicant’s principal broker must attend a hearing before the commission.
False, The applicant and the applicant’s principal broker must attend a hearing before the commission.
True or False: with prior convictions / disciplinary action
Applicants may not take the licensing exam until three years have passed since their probation/parole/conviction expiration or they were released from prison.
False. Only two years have to pass before the applicant is eligible for the exam (assuming the commission grants permission at the hearing).
Sheila, a licensee from another state, has asked to meet with you. She’s in town for a few days and is interested in finding out what she would need to do to obtain an affiliate broker license in Tennessee.
You begin by telling her that the nonresident candidate must be regularly engaged in the real estate business and maintain a place of business in their state. You know from what Sheila’s told you that she already meets these requirements. Next, you tell her about the firm affiliation requirements. What do you say?
The candidate must be affiliated with a nonresident firm and principal broker that hold an active TN real estate license.
Nonresident applicants are required to sign an irrevocable consent form called the Tennessee Nonresident Applicant Consent to Suits. What’s the purpose of this form?
To allow legal action to be taken against a nonresident licensee who has violated a regulation while practicing real estate in Tennessee
True or False:
Each firm must have a real estate firm license and a licensed principal broker.
True
True or False:
Branch offices aren’t required to have their own real estate firm license.
False.
Each branch office must have its own real estate firm license.
True or False:
Both firms and branch offices must have a physical location and a facility that can adequately accommodate affiliated licensees.
True
True or False:
If two firms are located at the same address, one principal broker can act as a principal broker for both firms.
True
True or False:
Firm licenses must be renewed every year.
False.
Firm license renewal is every two years, just like other real estate licenses.
Select the status in which your first Tennessee real estate license will be issued.
Active
True or False:
To place a license in temporary retirement, the licensee holder or firm must submit a written request to the real estate commission, along with the license, the change-of-status fee, and current mailing address.
True
True or False:
License holders don’t have to have their education requirements completed before placing their license into temporary retirement status.
False.
All education requirements must be completed prior to submitting the written request to the real estate commission.
True or False:
During the temporary retirement period, the retiree isn’t required to pay the license renewal fee prior to the license expiration date.
False.
the retiree must pay the license renewal fee prior to the license expiration date.
True or False:
During the temporary retirement period, the retiree may not engage in any license-related real estate activity.
True
With the exception of a broker’s original license, how long are real estate licenses valid in Tennessee once they’ve been issued?
two years
You need to complete a total of ____ hours of continuing education prior to renewing your license.
16
You need to send $____ with your renewal application.
$75
How many days prior to the license expiration date are licensees required to deliver their renewal paperwork and fees to the real estate commission?
60 days
True or False:
Tennessee requires that all real estate licensees, without exception, carry errors and omissions insurance as part of the granting and renewing of licenses.
False
Acquisition agents are exempt, but all other licensees should have a policy that can be obtained either independently (as long as it meets or exceeds minimum requirements) or through a program the real estate commission administers.
True or False:
Licensees have 30 days to provide proof of insurance after suspension without paying a fine.
Ture
True or False:
If a broker has committed a violation of the real estate act, the commission has the authority to downgrade a broker to affiliate broker status.
True
True or False:
Brokers can have their license suspended or revoked because of any unlawful act or violation committed by one of their affiliate brokers.
False.
Although brokers are responsible for their licensees, unless they were aware of the violation, or demonstrated a failure to supervise, they can’t have their own licenses suspended or revoked as a result of someone else’s illegal actions.
True or False:
Licensees who have been convicted of a violation will have their license revoked.
Ture
The commission automatically revokes the licensee’s license 60 days after the conviction unless the licensee requests, in writing, that a hearing be held during that 60-day period. If a hearing is held, the commission determines what sanctions to impose.
True or False:
Licensees who plead guilty or are convicted of an offense must notify the commission within 60 days of the conviction.
True
Suppose you’re the sponsoring broker for Barbara, a licensed affiliate broker. Barbara has an unlicensed assistant named Delores. Barbara has a lot on her plate and has been heavily leveraging Delores, including giving her tasks that Barbara would normally perform, such as showing properties, explaining listings, and negotiating counter-offers. We know it’s illegal for Delores to perform these activities. Who’s legally responsible for her actions? Select all that apply.
- Sponsoring broker
- Affiliate broker
- Unlicensed Assistant
The sponsoring broker takes ultimate responsibility for the actions of affiliated licensees and their unlicensed assistants. The affiliated licensee and the assistant are also responsible. TREC can issue civil fines against an unlicensed person who performs activities for which a license is required.
What is required to get your license reinstated if lapsed due to health reasons,
- Provide a doctor’s note to the commission.
- Pay necessary renewal fees.
- Provide a personal statement to the commission.
What are the requirements to renew your license if it is expired fewer than 60 days?
- Provide proof of compliance with prerequisites or licensure conditions.
- Pay a renewal fee.
What are the requirements to renew if your license is expired more than 120 days, but for less than one year.
- Proof of compliance with any prerequisites or licensure conditions.
- Pay a $50 penalty per each 30-day expiration period.
- Pay an additional penalty of $100 per each 30-day expiration period, starting on the 121st day.
what are the requirements to renew if your license is expired for more than a year.
- Requalify for licensure by completing necessary pre-licensing courses
- Pass the state license exam.
- Pay new license fee.
What’s the maximum amount a consumer can recover from the Real Estate Education and Recovery Account?
$15,000
The maximum the Real Estate Education and Recovery Account will pay out on behalf of any one licensee is ______, regardless of judgment amount.
$30,000
Carson has a $45,000 judgment against his former agent, Nina, who was a Tennessee affiliate broker until she lost her license. What’s the maximum he can obtain from the Real Estate Education and Recovery Account?
$15,000
What’s the maximum amount that can be awarded from the Real Estate Education and Recovery Account for all judgments against a single licensee?
30,000
D: Customer
Someone who’s working with a real estate licensee, but who isn’t represented by him.
D: Principal
Someone who’s a party to a transaction OR the person for whom the agent acts.
D: Client
Someone who has agency representation with the real estate licensee.
D: Consumer
Someone who uses or purchases a product or service
D: Agent
Someone who acts on behalf of someone else
D:Fiduciary
Someone who’s in a position of trust and loyalty
We’d like to introduce Alison, a real estate licensee. Alison just received a call from the Masons. They’re interested in putting their house on the market and would like to talk more with Alison about this process. Alison meets with the Masons the next day and is excited about this new prospect. She leaves them with her business card and a promise to call back in two months when they say they’ll be ready to act. In return, Alison leaves with an unsigned agency agreement and contact information for their son, Brent, who’s ready to buy his first home.
Are the Masons Alison’s clients?
No
Give 3 examples of what a general agent can do.
- Handles all dealings for a specific piece of client property
- Conducts duties of property managers
- Enters into contracts on the client’s behalf
Give 3 examples of what a special agent can do.
- Acts as an intermediary, but doesn’t make decisions or enter into contracts on the client’s behalf
- Acts with limited authority on a client’s behalf
- Covers most real estate transactions involving a buyer and seller
Give 3 examples of what a universal agent can do.
- Empowered to do anything the principal could do personally
- Holds the most authority of any agent
- Considered an uncommon role for a real estate agent
Give 3 examples of what a designated agent can do.
- Appointed by the brokerage’s broker to represent one party in an in-house transaction
- Designated to perform fiduciary duties to a client
- Known also as an appointed agent or assigned agent
True or False:
Edwin collects rents, evicts tenants, and enters into leases on behalf of his boss, the property owner. Edwin is a designated agent.
False.
Edwin is a property manager who has been given authority through the property management agreement to act on the property owner’s behalf. This level of authority makes Edwin a general agent, not a designated agent.
True or False:
Harriet has just been appointed guardian of her 12-year-old niece, Annabel, whose parents were tragically killed in an automobile accident. Harriet is a universal agent.
True
True or False:
Ingo and Amy both work at the same firm and are involved in the same transaction, in which Amy represents the seller and Ingo represents the buyer. Ingo owes fiduciary duties to the buyer, and Amy to the seller. Ingo and Amy are designated agents.
True
True or False:
Jamie acts as an intermediary, liaison, and negotiator for her client, but she’s not authorized to make decisions on her client’s behalf. Jamie’s primary role is to help her client find and buy a house. Jamie is a general agent.
False.
Jamie is acting in the role of a special or limited agent, which means she has limited authority to act on her client’s behalf.`
True or False:
A universal agent is a facilitator.
False.
A universal agent has broad authority.
True or False:
A transactional broker is a limited agent to the seller.
False.
A transactional broker isn’t an agent to any party.
True or False:
An escrow officer is a limited agent.
True
True or False:
A non-agent is a facilitator.
True
D: Facilitator
Broker who is working with all parties as customers
D: Affiliate Broker
Someone working under a broker to perform real estate activities
D: Limited Agency
Agency relationships are limited to actions the client specifically instructs or initiates
D: Designated agent
Licensee serving as a client’s agent to the exclusion of other licensees affiliated with a broker
Alexander, a licensee at Elite Realty, met with Leo to discuss the possibility of listing Leo’s home and to review agency options. “I’d love for you to represent me,” Leo said. “We need to get my sister, who is co-owner, to sign the listing agreement this weekend.” They made plans to meet at the house on Saturday.
On Friday, Alexander received a call from Mary, an affiliate broker at the competing Bigtown Realty. “I have some clients who know Leo, and he told them you were his listing agent. Can we see the house tonight?”
Is Alexander Leo’s agent?
No, because implied agency doesn’t create agency in Tennessee.
Property managers most often serve as which type of agents?
General
Property managers often serve as general agents because they are given the authority to act on the property owner’s behalf, and are responsible for handling all details regarding the owner’s property.
Rhonda is an unrepresented buyer who’s purchasing Tony’s townhome. Gary represents Tony in the sale of his property. What’s Rhonda’s relationship to Gary?
A customer
What type of real estate agency relationship usually exists when a licensee has the broad responsibility of handling all of the details of a specific property?
General
A general agent has the responsibility of handling all details of a specific property. Property managers often serve as general agents.
Justin is representing the seller in a transaction. Which of the following tasks is he permitted to perform for the unrepresented buyer as a non-agent?
Explain to a buyer the purpose of the seller’s property disclosure.
Simon is a buyer represented by Peter. Peter shows Simon several homes currently on the market. What is Peter’s relationship to the sellers, if he doesn’t represent them?
The sellers are Peter’s customers.
The sellers are Peter’s customers; he doesn’t owe fiduciary duties to them, but he is required to treat them with fairness and honesty.
Phil is a property manager, which means he serves as a ______ agent to his landlord/client.
General
Property managers are general agents, who, through the property management agreement, are given the authority to act on behalf of the property owner and are responsible for all of the dealings on a specific piece of property.
You have a listing agreement with Sam. Because of this, what’s Sam’s relationship to you?
Client
Jerry is holding an open house for a property he has listed. He speaks to several visitors, but none of them discuss making an offer. What are these visitors called?
Customers
Terry represents seller Farrah, and Michael represents Troy, the buyer. Who is (or are) the principal(s) in this transaction?
Farrah and Troy
Which type of agent is an escrow officer?
Limited agent
What’s the name for someone providing general assistance to a buyer and/or seller, but not serving as a legal representative?
Facilitator
Jenna signs a designated agency agreement with Tom so that he can represent her in her condo search. Javier, another licensee in Tom’s office, has a client selling a condo that sounds perfect for Jenna. Who’s the dual agent in this situation?
No one, since Tom is a designated agent
This isn’t a dual agency situation because designated agency creates a relationship between the licensee and client only.
Lisa is holding an open house for her client, Tim. Several couples stop by. Aarthi and Ram don’t interact with Lisa at all. Gina and Reggie talk with Lisa about the property; they’re not working with another licensee. Marcus and Marvin stop by and talk with Lisa about the property; they’re already working with another licensee. Which parties are considered consumers at this point?
Aarthi and Ram
Tim is Lisa’s client; Gina and Reggie and Marcus and Marvin both talk with Lisa about the property, so could be considered customers. Aarthi and Ram made no contact with Lisa, so are most likely to be termed consumers at this point.
True or False:
Signing the agency disclosure creates an agency relationship.
False.
An agency disclosure is important, but it’s just informational. A signed, bilateral agency representation agreement is necessary to create an agency relationship.
True or False:
The two types of agency available in Tennessee are designated agency and exclusive agency.
False
True or False:
Agency disclosure defines and explains the differences in the legal duties to clients compared to legal duties to all parties.
True
True or False:
A facilitator can’t provide advice to customers.
False.
Facilitators can’t imply that they represent customers, but they can offer some professional guidance.
True or False:
Licensees may serve as facilitators to both parties in a transaction, as long as they assist them equally.
True
Agent or Not Agent:
Amelia is selling her home, and her broker friend, Martin, thinks he has a buyer for her. Amelia purchases a lockbox and tells Martin the code so he can show the house to potential buyers.
Not Agent
Agent or Not Agent:
Everett is relocating to a new state. He doesn’t know the area or anything about nearby brokerages. He sets up a meeting with James, and tells him he’d like to hire him to search for agreeable properties. He tells James that he plans to hire someone from the brokerage across town as well. James has an agreement to cover just that situation.
Not Agent
Agent or Not Agent:
Brandon is the executor of his father’s estate and wants to sell the house. He signs an exclusive agreement with Jill to let her market the property for three months.
Agent
Agent or Not Agent:
Tilda’s brother, Jeff, was recently licensed as an affiliate broker. She’s ready to sell her home and step up to a larger one, so she calls him and says, “I want you to find me a new house and then I want you to sell my old one. You’re the only one I trust to bring people through.” The next day, Tilda emails Jeff a list of the houses she wants to look at and asks if he can meet her at the first one.
Not Agent
How soon must the Tennessee Real Estate Commission be notified after a broker becomes incapacitated for any reason?
10 days
After the commission is notified of broker incapacitation, what must the brokerage do?
Submit a contingency business plan to the commission
A client terminates a listing agreement before its expiration date. What happens now?
The client may owe a commission anyway.
What agency agreement creates a relationship between a buyer or seller and all affiliates in a brokerage firm?
Traditional agency agreement
Jeremy’s seller clients have completed closing and moved out of their house, and are just waiting for Jeremy to send them a copy of the final transaction documents. Which fiduciary duties does Jeremy still owe them?
Only confidentiality and accounting
What’s required to create agency in Tennessee?
Bilateral, written agreement between parties
What’s true about a licensee’s seat on the local park commission’s board of trustees?
The seat must be disclosed if the organization buys or sells property through the licensee’s brokerage.
What does OLD CAR stand for?
Obedience
Loyalty
Disclosure
Confidentiality
Accounting
Reasonable Care
Hannah is working with a buyer client on an offer for a property that’s just right for the buyer.
By the time Hannah receives the check for the earnest money, it’s after 5 p.m. on a Friday, the bank has closed, and the seller is out of town for the weekend.
Hannah puts the check in her briefcase for safekeeping.
On Saturday morning, Hannah takes the check to her bank and deposits the earnest money into her personal account.
Expecting a commission check to clear, Hannah writes a check from her personal account to make her car payment, just in time.
On Monday, she’ll write another check from her personal bank account to the seller to deliver her client’s earnest money.
Has Hannah done her duty of accounting to the client?
No, because Hannah deposited the money into her personal bank account instead of an escrow account for the brokerage.
No, because Hannah essentially used her client’s funds to pay her car payment.
Brian is an affiliate broker and a member of the local men’s fraternal organization, Brothers United.
Brothers United wants to purchase some land for recreational purposes, and the board president signs an agency agreement with Brian so he can represent the organization in its property search.
Brian identifies three land tracts and sets up appointments to tour them, but he doesn’t disclose to the sellers’ agents or the sellers that he’s a member of the organization.
Which agency duty did he violate?
Prohibition against undisclosed representation when there’s personal interest
Tennessee law stipulates that most agency relationships are limited. What are these limits?
Limits on licensee powers and duties
Dual Agency or Not
You represent the buyer, and an agent from a different firm represents the seller in the same transaction.
Not Dual Agency
Dual Agency or Not
You represent the buyer in a transaction in a traditional buyer agency relationship, and another agent from your firm represents the seller with a traditional seller agency agreement.
Dual Agency
Dual Agency or Not
You represent the buyer in a designated agency relationship, and another agent from your firm represents the seller with a designated agency relationship.
Not Dual Agency
Confidential or Not Confidential
The property is listed for $265,000, but the seller is willing to go as low as $250,000.
Confidential
Confidential or Not Confidential
The seller wants to move because of an ongoing dispute with the neighbor.
Confidential
Confidential or Not Confidential
The buyer is going to offer $245,000, but is willing to go as high as $250,000.
Confiential
Confidential or Not Confidential
The seller originally paid $235,000 for the property.
Not Confidential
Confidential or Not Confidential
The buyer wants to buy the home so he can rent it to his sister.
Confidential
Confidential or Not Confidential
The seller recently replaced the roof due to hail damage.
Not Confidential
What kind of Agency?
Two licensees in the same brokerage represent a buyer and a seller.
Dual-license dual agency
What kind of Agency?
Broker appoints one licensee to represent the buyer and another to represent the seller.
Designated agency
What kind of Agency?
One licensee represents both a buyer and a seller.
Single-license dual agency
What kind of Agency?
Broker can be a dual agent in this type of agency.
Traditional agency
TN Designated Agency or Typical
Eileen’s client, Nathan, is selling a home. Jacob from the same agency represents a buyer for whom Nathan’s home might be perfect. Eileen and Jacob represent the clients’ interests while their broker, Tandy, is a dual agent.
Typical
TN Designated Agency or Typical
Roberta and Erin work for the same firm. They each have buyer clients who have made offers on the same property. There is no conflict of interest because the buyer relationships are only with Roberta and Erin, not with the firm.
TN Designated Agency
TN Designated Agency or Typical
Phillip is the listing agent for Doug’s hobby farm. Doug received an offer with some strange contingencies, and Phillip needs to discuss this with his broker, Karen. He needs to be careful due to possible dual agency conflict of interest since the buyer is also represented by another agent in Karen’s brokerage.
Typical
TN Designated Agency or Typical
Both the buyer and seller of 123 Elm Street are represented under designated agency agreements with two affiliate brokers at Heritage Real Estate. Their broker isn’t considered a dual agent.
TN Designated Agency
Who’s the Dual Agent?
You’re the listing agent for Martin, who’s been trying to sell his property for almost a year. Your brokerage firm has a new affiliate, Lauren, and she has a buyer who can’t wait to see Martin’s property. If this transaction progresses, who will the dual agent be?
No One
Facilitator Or Agent?
Your cousin wants to buy a house offered For Sale By Owner. At her request, you explain the right format for an offer and the names of some real estate attorneys who could review paperwork and handle the closing.
Facilitator
Facilitator Or Agent?
Eddie is a buyer who met with you once to get some MLS listings, but he didn’t want you to represent him. After falling in love with an open house, Eddie calls to say he wants to sign a representation agreement now so you can help him negotiate.
Agent
Facilitator Or Agent?
You’re the listing agent for your friend Carolyn’s house. Potential buyer Sherie calls you and asks you to show her the house. At the showing, you provide all necessary agency disclosures and explain that you represent the seller. Sherie doesn’t have representation.
Agent
Facilitator Or Agent?
Your brokerage has a policy whereby you default to facilitator status if an unrepresented buyer wants to purchase one of your listings. You disclosed this to your seller and he consented when he filled out the agency agreement. An unrepresented buyer at an open house you’re hosting wants to make an offer on the property.
Facilitator
Which type of Agent or Type of Facilitator?
Provides a brochure on curb appeal, offers a list of staging companies, and describes available marketing avenues
Facilitator assisting seller
Which type of Agent or Type of Facilitator?
Diligently searches for a property and serves as an advocate for a client’s needs
Buyer’s agent
Which type of Agent or Type of Facilitator?
Markets the property through the MLS, social media, and print ads, and helps prepare counter-offers
Seller’s agent
Which type of Agent or Type of Facilitator?
Signs the buyers up for a service that will email listings that meet their criteria
Facilitator assisting buyer
Ned represents Sofia in the sale of her townhome. Luciana represents Sofia’s buyer, Arturo. What is Luciana’s responsibility to Sophia?
Disclosure that the buyer will not have the funds for the down payment unless they sell their current home.
Madeline works for a single-agency firm. If she wants to represent both the buyer and seller in a transaction, what must she do?
She can’t do this at her firm.
What should brokers do if affiliates mistakenly share confidential information with other licensees?
Follow the firm’s process for such events.`
You’re attending an open house with your buyer client, Stacey Magnuson. At the open house, you’re introduced to the following cast of characters:
Juan Hernandez: The seller
Tammy: The listing agent
Alison: Stacey’s sister
Chad: Stacey’s lender
Pete: Another potential buyer attending the open house
Identify whether each person is a third party or not a third party to you as the buyer’s agent.
Tammy: 3rd party
Juan: 3rd Party
Stacey: Not A 3rd party
Alison: Not a 3rd party
Pete: Not a 3rd Party
Chad: 3rd Party
What duties are owed to customers?
- Disclosure of Material facts
- Reasonable care and skill in the performance
- Honesty and fair dealing
- Prompt presentation of all written offers and counter-offers
To Share or Not to Share
You’re holding an open house. The salesperson for the house is your buddy, Larry Lister. Larry told you this was a great property that was “move-in ready!” You arrive about a half hour before the open house and take a stroll around and through the house. You notice the shingles on the roof have uneven spacing, which is a sign the roof could be nearing the end of its life.
You don’t notice any water damage. You call Larry to see if he can give you more details about the roof, but he isn’t available. Bill and Betty Buyer arrive and tour the house. What should you do?
Share your concerns about the roof if buyers show interest in the property.
What is in a purchase agreement?
*Address and sometimes a legal description of the property
*Sale price
*Terms (such as all cash or subject to your client obtaining a mortgage for a given amount)
*Seller’s promise to provide clear title (ownership)
*Target date for closing (the actual sale)
*Amount of earnest money deposit accompanying the offer; whether it’s a check, cash, or promissory note; and how it’s to be returned if the offer is rejected—or kept as damages if your client later backs out for no good reason
*Method by which real estate taxes, rents, fuel, water bills, and utilities are to be adjusted (prorated) between buyer and seller
*Provisions about who will pay for title insurance, survey, termite inspections, and so on
*Type of deed to be given
*Other state-specific requirements
*A provision that the buyer may make a final walk-through inspection of the property just before the closing
*A time limit (preferably short) after which the offer will expire
*Contingencies
What kind of Offer
The housing market in Reggie’s area is hot right now, and he’s already lost out on two properties. He decides to bid on two properties at once. This is an example of ______.
Simultaneous offers
D: Back Up Offer
An offer is considered a back-up offer when the seller already has accepted another offer.
A back-up offer acknowledges that there is an existing offer and essentially says that if the first buyer cancels, then the new buyer is automatically in contract with the seller.
Just as with a standard offer, all parties to the contract must sign a back-up offer for it to be effective. Note, too, that sellers can sign more than one back-up offer, as long as the seller makes the position of each party known.
What are the different ways of terminating an offer, and define each one?
- Withdrawal: Either side may withdraw an offer at any time prior to its ratification.
- Rejection: The party to whom the offer was made (seller) may reject it at any time prior to acceptance (unless the offer expires after a specified period of time).
- Counter-Offer: By making a counter-offer, the initial offer is terminated and replaced by a new offer. In this case, the roles are reversed. The buyer now becomes the person accepting or rejecting the offer.
- Lapse of time: Typically offers are automatically terminated if they are not accepted by a deadline, as established by the parties.
- Death or insanity: The death or insanity of either party prior to acceptance will terminate an offer.
Samantha Seller signed a Seller Representative Agreement with Larry Lister. Meanwhile, Betty Buyer has Brooke show her three homes. Who’s owed the duty of disclosing adverse material facts, Samantha or Betty?
Both
Your client, Allie, makes an offer on the home of her dreams in Canton. Six hours later, her husband comes home from work and announces that he was just laid off. What can Allie do?
She can withdraw the offer before the seller accepts it.
Your client, Jimmy, is a man who likes to take risks: he eats expired lunch meat and thinks extreme sports are for toddlers. It’s no wonder that he’s the type of buyer who puts bids on several different properties at once, getting himself into a(n) ______ situation.
Simultaneous offer
Customers, lenders, and appraisers are all ______.
Third parties
When you’re involved in a transaction, lenders, appraisers, and other service providers are all ______.
Third parties
You’re a buyer’s agent, meeting with the buyer and the buyer’s lender, Chuck, who is a ______ the transaction.
Third party to
Bill and Betty Buyer, who are moving into the area, contact Larry Lister because Bill’s job requires him to move. Larry knows the neighborhood that the Buyers are moving into and is aware that one of the major factories will be closing in two years. What should Larry do?
Larry should tell the Buyers about the imminent factory closing and let them know it may affect the value of their property within a few years.
What are the different types of listing agreements in TN?
- Exclusive agency
- Exclusive right-to-sell
- Open (aka non-exclusive)
D: Exclusive Agency
An agreement that allows sellers to work with an agent while still trying to locate the buyer themselves.
If the sellers find the buyer, the sellers don’t owe a commission to the agent.
D: Exclusive Right-To-Sell
Allows the listing agent to list the property and receive a commission no matter who brings the buyer to the table.
D: Open Listing
An agreement that allows sellers to contract with multiple agents but only pay a commission to the agent who locates a buyer.
Ture or False:
All agreements require a date, beyond which the agreement is invalid.
Ture
Ture or False:
All agreements include a carry-over clause, outlining the period after termination during which the broker will still be paid.
Ture
Ture or False:
All agreements outline the parties’ responsibilities to each other.
False
The Agreement to Show Property form doesn’t create agency, and therefore doesn’t call out specific duties.
Ture or False:
All agreements point out the seller’s responsibility to complete property condition disclosure forms.
False
The Agreement to Show Property form doesn’t state the seller’s responsibility to disclose property condition.
Ture or False:
All agreements allow broker compensation of either a percentage of sales price, or a flat amount.
False
Only Exclusive Right to Sell, Designated agency (RF101) and Exclusive Right to Sell, Seller’s Agency (RF102) provide the option for either flat fee or percentage compensation.
What is form RF102
Exclusive right to sell Sellers Agenct
What is form RF101
Exclusive Right to sell : Designated agency
What 9 elements need to be in a listing agreement?
- Parties to the agreement
- Definite expiration date
- Property description
- Listing price
- Any terms the seller required
- Clear statement explaining what entitles a broker to commission and how it will be calculated
- Duties of the parties
- Information on a carry-over clause, if applicable
- Note about actions beyond the licensee’s scope
Which section of the listing agreement authorizes the broker to market on the MLS and the Internet, and to place a lockbox on the property?
Responsibilities and Rights of the Parties
Seller Duty or Not Seller Duty: on a RF101 Exclusive Right to sell agreement designated agency.
The seller will complete a property condition disclosure form.
Seller duty
Seller Duty or Not Seller Duty: on a RF101 Exclusive Right to sell agreement designated agency.
The seller will vacate the property during open houses and showings
Not a seller duty
Seller Duty or Not Seller Duty: on a RF101 Exclusive Right to sell agreement designated agency.
The seller will allow the property to be shown at reasonable hours.
seller duty
Seller Duty or Not Seller Duty: on a RF101 Exclusive Right to sell agreement designated agency.
The seller will pay for all property repairs requested by the buyer after an accepted offer.
Not a seller duty
Seller Duty or Not Seller Duty: on a RF101 Exclusive Right to sell agreement designated agency.
The seller will refer all property inquiries to the broker.
seller duty
Seller Duty or Not Seller Duty: on a RF101 Exclusive Right to sell agreement designated agency.
The seller will compensate the broker on the day of closing.
seller duty
on a RF101 Exclusive Right to sell agreement designated agency.
In which section of the listing contract does the seller indicate whether the agent can hold public open houses?
hold harmless
When can a listing be terminated?
- When the property sells and closes
- When the stated listing term ends, even if the property has not sold
- By mutual agreement
- By abandonment by the listing agent
- At the seller’s request
Without the broker’s permission, a seller terminated a listing agreement before the date stated in the contract. What two things might the seller owe?
- Marketing and advertising expenses to date
- Full commission if a ready, willing, and able buyer were found
Patsy’s home had been on the market for five weeks, and two brokers had buyers who were ready to make offers.
If Patsy accepted one of those offers, the corresponding broker would be the only one to earn a commission.
What type of listing does this describe?
Open listing
What are the Listing Agent’s Negotiation Duties?
- Meet with the buyer’s agent to receive the offer, or receive the offer by fax, email, etc.
- Review the offer with your seller and explain any special requests or requirements.
- Prepare a seller’s net sheet based on the current offer.
- Assist the seller with a response, including a counter-offer, if appropriate.
- Present any acceptance or counter-offer to the prospective buyer’s representative.
- Repeat this process until all parties reach an agreement.
- Manage the process throughout.
Hot or Cold or Somewhere In Between?
Let’s take a look at a few approaches Alison took with various clients.
Alison priced Jenna’s property just below market rate. Jenna wasn’t initially sure about this approach, but Alison explained that she believed others were pricing homes above market rate. At a more-than-fair price, Alison believed a bidding war would ensue and garner a better price than pricing at market value.
She was right! Within a week on the market, multiple offers came flooding in. Alison and Jenna then asked all of the buyers to present their highest and best offer.
From those, Jenna accepted the best offer and secured another offer as a back-up.
This approach worked for Alison, partly because of market conditions.
Which type of market was Alison likely working in?
Hot
Hot or Cold or Somewhere In Between? Reprise
Here’s another.
This was a tough market for Alison to predict. After talking with Brody, her seller, and evaluating market conditions, they thought it best to price his property below market value to generate interest and hopefully garner multiple offers.
After a few weeks on the market, an offer came in that was $20,000 below list price. Hoping to do a little better, Brody countered at just below list price, and the buyer accepted.
Thinking about the reason for pricing below market value and the subsequent response, which type of market was Alison likely working in?
Neutral
Hot or Cold or Somewhere In Between?
After meeting with her sellers, the Kowalskis and evaluating the market, Alison has come up with a strategy, and she doesn’t think the Kowalskis will be thrilled to hear it.
She thinks the best way to generate interest, given the number of similar properties on the market, is to price just below market value, and even then, not to expect a bidding war or multiple offers.
In fact, the Kowalskis may need to be prepared for an offer that’s even lower than the recommended list price.
There’s nothing wrong with the property; it’s just the nature of this market. Which type of market is this?
Cold
True or False:
When showing properties to a buyer customer, you only show properties for which the listing firm will pay your commission.
True
True or False:
You should discuss financing options with buyer customers and provide a list of qualified lenders or mortgage brokers upon request.
False
This is a duty owed to a buyer client, but not a buyer customer.
True or False:
You should ensure that a pre-qualification letter accompanies an offer, regardless of whether you have a buyer client or buyer customer.
True
You want to ensure that a pre-qualification letter accompanies the offer to provide proof to the seller of buyer qualification.
Conducting an effective buyer presentation helps to establish a good foundation with a prospective buyer client. When preparing for a buyer presentation, what main purpose should you keep in mind?
Build trust
What’s the purpose of sharing the history of buyer agency with the buyer?
Show how agency has evolved to benefit buyers.
As soon as potential buyers contact Amelia, she sets them up to receive weekly emails with listings that fit what they’re looking for. The thing is, they hardly ever get in touch with her after that. What’s the best thing Amelia could do to improve her likelihood of sealing the deal?
Have an in-person buyer presentation meeting.
By inviting potential clients into the office, Amelia would build a rapport with the buyers, showing them how serious she is about helping them find a home, and make sure they’re serious, too.
Mark is trying to set up a face-to-face meeting with potential buyers the Tomlins, but the Tomlins have refused. What should Mark do next?
Politely insist on a meeting.
If a buyer refuses a face-to-face meeting, you shouldn’t take no for an answer. Tactfully insist on a meeting. If they still refuse, they probably aren’t worth your time.
What’s an advantage an in-person meeting has over another way of communicating with a potential buyer client?
Since they’ve had face time with the licensee, buyers are more likely to stay with that broker.
What are the 4 type of Buyer Representation Types in TN?
- Exclusive designated
- Non-exclusive buyer
- Exclusive buyer
- Non-exclusive designated
In which section of the exclusive buyer designated agency agreement does the buyer agree to a facilitator-managed transaction rather than accept a dual agency situation?
Buyer’s Authorization
True Or False:
By signing the buyer broker agreement, your buyers can be assured that you’ll devote priority time to helping them find a home in the shortest possible time.
True
True Or False: buyer designated agency agreement
The agreement includes compensation to be paid to you.
True
True Or False: buyer designated agency agreement
The agreement locks buyers into the relationship for an indefinite period of time.
False
True Or False: buyer designated agency agreement
With a buyer agency representation agreement, buyers could find themselves in dual agency situations if sellers are represented by affiliates from the same brokerage.
True
True Or False:
If the buyers have signed an exclusive designated agency agreement, they could find themselves in dual agency situations if sellers are represented by affiliates from the same brokerage.
False
True Or False:
The non-exclusive designated agency agreement allows a buyer to work with several licensees from the same brokerage.
True
True Or False:
Non-exclusive buyer agency allows the buyer to work with other brokerages.
True
Beth has decided to buy a home in her new city. She makes an appointment to meet with Sandra, an affiliate broker in a nearby real estate office. Beth tells Sandra that she doesn’t have the time or the patience to work with multiple agents, and that she would be happiest if she only had one person searching for and showing her properties. After Sandra explains the representation choices, Beth decides that she likes the idea of an agency relationship where she’s exclusively represented by Sandra. Which type of agreement should Beth sign?
Exclusive buyer, designated agency
The fact that Beth only wants to work with one person means that she’s looking for exclusive representation, and her interest in having the agency relationship confined to Sandra means that designated agency is the appropriate choice.
D: Exclusive Buyer Designated Agency
The buyer creates a relationship solely with the real estate licensee, who signs the agreement (broker or affiliate broker).
This doesn’t create a relationship between the buyer and all affiliates in the brokerage. The buyer won’t seek representation from any other broker or affiliate.
TAR Form RF141
D: Exclusive Buyer Buyer Agency
The buyer is represented by just one broker, and the relationship includes all affiliates in the brokerage.
This means that the buyer could be in a dual agency situation if an affiliate in the same office represents the seller in the same transaction.
TAR Form RF142
D: Non-Exclusive Buyer Designated Agency
Like Exclusive Designated Agency representation, this relationship is between a buyer and a single broker or affiliate broker, rather than with all affiliates working under the broker.
However, the buyer retains the right to sign a non-exclusive representation agreement with other licensees from this or other brokerages.
TAR Form RF143
D: Non-Exclusive Buyer Buyer Agency
The buyer has a relationship with the brokerage as a whole, but it isn’t exclusive.
The buyer may agree to be represented by brokers and associate brokers from other firms.
TAR Form RF144
All Tennessee buyer representation agreements must be in writing, and should contain what?
- Have a definite termination date.
- Clearly state compensation details, including any retainer fee and commission information.
- State the services the licensee is going to provide to the client.
- State the limits to the licensee’s authority.
- Include any other terms of the buyer representation relationship that the client and licensee have agreed upon.
True Or False: buyer designated agency agreement
The contract explicitly states that the licensee’s area of expertise doesn’t extend to legal or tax advice.
True
True Or False: buyer designated agency agreement
The buyer has no way of specifying the nature of the property that would best meet his or her needs.
False
What are the sections on the buyer designated agency agreement?
- Parties and the term
- Type of Property
- Client Duties
- Carry-Over Clause
- Agency / Agent Responsibilities
- Agent Disclosure
- Buyer’s Authorizations / Designated Agent
- Confidential Information Disclosure
- Limitations and Expert Assistance
- Exhibits and special Stipulations
- Signatures
Ture Or False: Listing/Agency Mutual Release Agreement
The release agreement is between the client and an individual licensee.
False
Ture Or False: Listing/Agency Mutual Release Agreement
If the client is a seller, the agreement includes a cancellation fee and/or compensation if an eventual purchaser was identified while the seller was a client.
True
Ture Or False: Listing/Agency Mutual Release Agreement
The agreement doesn’t have a place to indicate whether the client is a buyer or seller.
False
Ture Or False: Listing/Agency Mutual Release Agreement
The managing broker must sign the agreement for it to be valid.
True
D: Land
As the earth’s surface extending downward to the center of the earth and upward to infinity, including permanently attached natural objects.
D: Real Estate
Includes everything in the definition of land plus all things permanently attached to it naturally or artificially.
Artificial attachments are called improvements and include things such as fencing, buildings, walkways.
D: Real Property
Real Property is sometimes legally referred to as “Land, tenements, and hereditaments.”
Includes Real Estate plus the interests, benefits, and rights automatically included with real estate ownership.
What are the interests, benefits, and rights of real property? And D:
- Possession: The right to occupy the property.
- Enjoyment: The right to use the property in any legal way the owner desires.
- Exclusion: The right to refuse others entry to, or use of, the property.
- Control: The tight to determine how the property will be used by the owner, or by others.
- Disposition: The right to dispose of by sale, lien, easement, lease, any interest in the property.
Real Property or Personal Property
Above Ground Pool
Personal Property
The Millers loved their new gas grill, but didn’t like the look of the propane tank. They preferred the look of the outdoor living spaces they saw in all the home magazines. Mr. Miller built a custom countertop around the grill, and even incorporated an electric griddle and built-in sink. With all this, they were really cooking!
What test best fits the argument that the grill is a fixture?
Adaptation to the land’s use
Luke loved his outdoor fireplace, a focal point of the courtyard in the back of his home. The fact that he and his son had assembled it together—Luke, Jr. had said it reminded him of building with Legos—made it all the more special. Even though it weighed more than 1,000 pounds, he built it with portability in mind. After all, it wasn’t affixed to the concrete patio.
On what grounds can Luke claim the fireplace is personal property? Select all that apply.
Intentions of the annexing party
What does the acronym MARIA means?
- Method of annexation
- Adaptability of item to land’s use.
- Relationship of the parties
- Intention in placing item on land
- Agreement of the parties
D: Method of annexation
(also known as attachment) refers to whether the item is attached to the property and how permanent the attachment is.
You have to ask yourself whether the item can be removed without causing damage to the property to which it’s attached. If it can’t, it’s considered real property.
Explain Method of annexation
Let’s say, for instance, you purchase an outdoor fireplace kit that involves stacking interlocking blocks together on a level surface on your outdoor patio. Later, when you decide to sell your house, you can take this fireplace with you, even if it weighs several hundred pounds, because it’s not attached to the property itself.
If, however, to make the fireplace more secure, you decide to cement it to your patio. This would be a form of permanent attachment that now makes the fireplace part of the real property. Mrs. Goldman’s antique light fixtures were attached with wiring and screws to the walls and ceiling of the house, so they were real property. Her rosebushes were planted in the ground, so they were also real property.
D: Adaptability of Item to Land’s Use
is related to how the item is situated or adapted to the real property.
Explain Adaptability of Item to Land’s Use
Even if your stand-alone fireplace were not cemented in, if it were part of an outdoor entertainment area and fit into it in such a way that other fixed items would have to be dismantled to remove the fireplace, it could be argued that the item had been adapted to the environment and must not be removed. Other items that fall under this category are garage door openers or the remote controls of other built-in features that are permanently attached to the property.
D: Relationship of the Parties
if there’s a dispute between the person who added the item and the person who removed it—is another element used to determine whether an item is real or personal property. In general, the courts tend to favor a tenant’s take on an item over the landlord’s, and a buyer over a seller.
D: Trade Fixtures
A trade fixture is removable personal property that a tenant attaches to leased commercial premises in order to conduct business.
According to the law, commercial tenants may remove their trade fixtures when their lease ends and they move out. But three conditions apply,
- Essential for the tenant’s business operations
- Detachable without damaging the property (or repairable)
- Moved out within a certain period of time
Explain Intention in placing item on land
Often, the intention of the party who installed the item is regarded as the most important consideration in determining whether the item should stay or go.
However, a person’s original intentions may change over time, or an item that was intended to be temporary may end up physically attached to the property, which can change the item from temporary to permanent.
Explain Agreement of the Parties
Agreement is the simplest and first test: If the parties have agreed that an item will stay or go, then that agreement meets the legal test. To be safe, the agreement should be in writing.
A bill of sale or agreement in the purchase contract meets these requirements. Buyers sometimes believe that items such as refrigerators, washers, dryers, and other appliances are fixtures when they’re actually sellers’ personal property. When these items are staying with the house, they should not only be listed in the sale contract but may need to be conveyed via a bill of sale. This eliminates any confusion between the parties.
Sven installed an electronic moving rack at the Rent-a-Tux shop he ran for 18 years. He’s had enough of dealing with the ungrateful landlord, so he’s moving to the suburbs to open another store, Rent-a-Better-Tux. Affixed or not, he plans to take his tux conveyor with him. Which one of the tests supports his argument?
Relationship of the parties
Jan’s husband, Neil, is a design engineer. So when she complained about the unsightly pass-through shelves in the living room, he installed sliding fabric panels on one side, and bolted a custom-made oversize bulletin board on the other. Unsightly bookshelves? Out of sight! Now that they’re selling, Jan couldn’t wait to take her bulletin board with her. She never intended to leave it, after all.
What reason or reasons might a buyer have to argue that the bulletin board should stay right where it is? Which of the five tests apply?
- Method of attachment
- Adaptation to the land’s use
What are the five tests to determine Property type?
- Method of annexation
- Adaptability of item to land’s use.
- Relationship of the parties
- Intention in placing item on land
- Agreement of the parties
Philomena loved her grandmother’s antique chandelier, which hung gracefully in the formal dining room. It was a conversation starter for all her elegant dinner parties.
Even though it was affixed, she made certain that, when it was time to sell, she excluded the chandelier from the sale by putting written notice in the listing disclosures.
What is Philomena hoping to ensure?
Agreement of the parties
D: Emblements
Cultivated crops are called emblements and are considered personal property, even though they’re part of the soil.
D: Severance
Occurs when an item that was real property becomes personal property by detaching it (severing it) from the land.
D: annexation
This occurs when personal property is attached to real property, which makes it a fixture.
D: Mobile Home
Don’t use this term unless you’re talking about a home built before 1976. (Honest, it’s a legal thing.) That was the year that HUD began using federal construction standards for this type of home, as enacted by Congress in the Mobile Home Construction and Safety Standards Act. Mobile homes are those constructed without any regulation, before 1976. Manufactured homes are built according to HUD construction and safety standards. Otherwise, they share the common elements of a home that can be transported due to its attached chassis, tongue, axles, and wheels.
D: Manufactured Home
This is a home that’s constructed with a permanent chassis and wheels because it’s made to be transported. After it’s constructed in a factory, it’s towed to its destination and anchored to the ground. In theory, it can be removed and towed to a different site because the chassis, tongue, axles, and wheels are still attached.
D: Modular Home
A modular home is not actually in the same class as a manufactured home, but we’ll define it here because it’s easy to confuse the terms. A modular home is built in pieces off-site, then those pieces are transported to the spot where it will spend the rest of its days, and the build is completed there. A modular home isn’t built with transportation in mind, and it therefore doesn’t include a chassis or wheels.
When is a manufactured home real property?
- When the the parts that make it transportable (the tongue, the axles, and the wheels) must be removed,
- When it has been permanently affixed to the land.
- The owner must then take any state-specific steps that are required to officially change the home’s classification with the appropriate authorities.
How has TN made it easy to tell if a manufactured home real property?
They do this by requiring that a manufactured home have either an Affidavit of Affixation or a certificate of title.
Explain TN’s Affidavit of Affixation
When the real estate and the manufactured home are owned by the same owners, and the manufactured home is affixed to the real estate, the owners may record an Affidavit of Affixation.
This certifies that the manufactured home is, in fact, real property. One caveat: if the land is owned by someone other than the owner of the manufactured home, the owner must use a certificate of title, even if the home is affixed to the land.
Explain TN’s Certificate of Title
A manufactured home not affixed to the land or owned by someone different than the landowner will have a certificate of title. In this case, the manufactured home is considered to be personal property and not real estate.
D: Economic Characteristics of Real Estate
- Scarcity: It’s true what they say—you can’t make more land. In addition, not all land is suitable or available for building. If land is scarce, its value will likely be greater than if it is plentiful.
- Improvements: Usually, the term “improvement” refers to making something better. In the real estate world, improvements are structures, such as buildings, sheds, barns, fences, roadways, etc., that are placed on land. The condition and types of improvements on a property can impact value either positively or negatively. Improvements can also positively or negatively impact the value of surrounding properties or an entire community. For example, something as simple as a rundown house in a neighborhood can have an adverse impact on the value of neighboring properties. Proximity to commercial or industrial properties can adversely impact the value of entire neighborhoods or communities.
- Permanence of investment: The cost and nature of infrastructure improvements (roads, underground water, wastewater, natural gas, or electric installations) are sizeable and can’t be easily reversed, and these infrastructure investments have relatively stable returns over time. Thus, these types of improvements represent “permanence.”
- Location or area preference: A property’s value is in large part dependent on its situs (location). For example, land on one side of a river may be perceived to be more valuable than land directly across the same river.
D: Physical Characteristics of Real Estate
- Immobility: The geographic location of land is fixed; it can never be changed.
- Indestructibility: While improvements may deteriorate over time, the land itself cannot be destroyed.
- Uniqueness: One parcel (a piece of land) will not be exactly like another. This is the concept of non-homogeneity.
What are the bundle of Rights? And D:
- disposition : which gives the owner the right to sell or convey the property
- exclusion : which provides the owners with the right to decide who may or may not access the property (owners can exclude others from their property)
- enjoyment : which gives the owner the ability to use the property in any legal manner
- possession : which simply means that the property is owned by the title holder
- control : which allows the owner to control the use of the property, including how others may use the property
D: Surface rights
include both land and water rights. This can be particularly important for land in a part of the world where water is scarce, as well as in situations where water is necessary for agriculture and farming.
D: Subsurface
AKA: Mineral Rights
rights pertain to the right to use underground resources such as natural gas and minerals.
D: Air rights
involve the right to use the open space above buildings up to an elevation established by law. Think about a piece of property with a stunning view of a mountain or lake. Now imagine a huge skyscraper is built right in front of that property’s view. If the property owner doesn’t have air rights to the area around his property, that skyscraper could really affect the property owner’s enjoyment!
D: Percolating
water rights include the right to draw water from underground resources (such as wells) for the landowner’s use.
D: Riparian Rights
rights are common law rights granted to landowners whose land abuts a natural flowing body of water, such as a river or stream.
To remember this, keep in mind that riparian and river both start with R.
Each state has laws governing riparian rights, but in the absence of other laws, landowners own the land to the exact center of a non-navigable waterway and to the edge of a navigable waterway.
A navigable waterway is defined as one that’s large enough to support commercial boat traffic.
Landowners may use the water but may not divert it to deprive those downstream of its use, or contaminate it in any way.
D: Littoral Rights
rights are the rights of landowners whose lands border commercially navigable closed bodies of water, such as lakes and oceans.
To remember this, recall that both littoral and lake begin with L.
State laws govern littoral rights.
Absent other laws, owners with littoral rights have unrestricted use of the water and own the land up to the average high-water mark.
Landowners may use the water but may not divert it to deprive others of its use or contaminate it in any way.
D: Accretion
The process by which water carries rock, sand, and soil and causes land build-up
D: Alluvion
New deposits of land that are the result of accretion (common at the mouth of large rivers)
D: Avulsion
Loss of land by sudden large-scale changes in water flow
D: Erosion
Gradual loss of land due to a natural force
D: Reliction
Gradual receding of water, which uncovers new land
What are the Areas of Law Relating to Real Estate Practice?
- Law of Contracts
- General property law
- Law of agency
- State-specific license laws
- Landlord-tenant laws
- Consumer protection laws
D: The Law of Contracts
The law of contracts governs the use of contracts, and the required elements to make a contract valid. It also covers what happens in the case of a breach of contract, and how contracts may be terminated.
You’ll often see court cases cited in a discussion of contract law because the courts are used to determine contract validity, legality and enforceability.
An important point to remember about contracts: You are not an attorney and may not legally draft a contract.
Your role as a licensee is limited to the use of legally approved forms and standard clauses.
D: General Property Law
General property law covers the forms of ownership and tenancy in real property, and its distinction from personal property within the common law legal system.
It also covers the rights of ownership and tenancy and the government’s rights and authority under eminent domain and various police powers.
D: Law of Agency
The law of agency is all about your role relating to your clients.
Agency law covers how an agency relationship is created, and the duties of an agent to the principal.
D: State-Specific License Laws
State-specific license laws relate to the requirements of a licensee when performing real estate activities within the state.
License law, continuing education requirements, supervisory requirements, and prohibited conduct are all covered by license law.
D: Landlord-Tenant Laws
Landlord-tenant laws are those that—not surprisingly—address the landlord-tenant relationship.
They establish everything from the duties and responsibilities of each party to the state laws for handling lease agreements to fair housing considerations for tenants and other tenants’ rights issues.
D: Consumer Protection Laws
Consumer protection laws are those established to ensure that the licensed professionals in a state treat consumers (including their customers and clients) with fairness.
These laws (and their associated rules) are designed to protect consumers from unfair or unethical business practices, fraud, misrepresentation, and more.
In real estate, the state real estate commission or department is often charged with one primary duty: ensuring that the professionals it licenses have the appropriate degree of professionalism, education, and training, as well as strong moral character and a history free of crimes involving moral turpitude and/or felony convictions before those professionals are granted their real estate licenses.
D: The Sherman Act (1890)
Prohibits monopolies and collusive actions that result in unreasonable restraint of trade, such as price fixing.
D: The Clayton Act (1914)
Supports the Sherman Act by prohibiting mergers or acquisitions that would unreasonably reduce competition or create monopolies.
D: The Federal Trade Commission Act (1914)
Created the Federal Trade Commission (FTC), an agency with the purpose of preventing unfair methods of competition in commerce.
D: Per Se
Per se means that guilt is established on the face of the circumstances; no need to prove the entities involved profited from the act, or that there was an intent to act illegally.
Enforcement of antitrust law occurs at various levels. What three of these parties are involved in the enforcement of antitrust law?
- Federal Trade Commission
- Department of Justice
- State Attorney General
What are the possible penalties that may be imposed on antitrust law violators?
- Prison time
- Restitution to the victims
- Fines
- Monetary damages
Explain the Anti-trust Penalties
Penalties for violating antitrust laws are very severe. According to the Federal Trade Commission, fines can be as high as $100 million for a corporation or $1 million for an individual and may include prison terms of up to 10 years.
The Sherman Act permits (in certain cases) the maximum fine to be increased to twice the gain or loss involved. In addition, collusion among competitors may constitute violations of the mail or wire fraud statute, the false statements statute, or other federal felony statutes, all of which the Antitrust Division prosecutes.
In addition to receiving a criminal sentence, a corporation or individual convicted of a Sherman Act violation may be ordered to make restitution to the victims for all overcharges. Victims of price-fixing conspiracies may also be awarded up to three times the amount of damages suffered in a civil suit.
And how’s this for punishment? If your brokerage is found guilty of violating antitrust laws, it may be subject to court-ordered supervision for up to 10 years.
D: Freehold Estates
The interest in a freehold estate can be passed down to heirs. which is called a fee simple estate, or it can be for the lifetime of the individual, which is called a life estate. Let’s take a look at the differences between fee simple and life estate.
D: Fee Simple Estates
A type of Freehold Estate.
The interest in a freehold estate can be passed down to heirs, which is called a fee simple estate, or it can be for the lifetime of the individual, which is called a life estate. Let’s take a look at the differences between fee simple and life estate.
A fee simple estate conveys the most rights possible—the whole bundle of rights. Fee simple conveys all the rights of ownership including use, disposition, and inheritability.
D: Life Estate
A type of Freehold Estate.
But it doesn’t convey the entire bundle of rights. Owners hold the estate for only their lifetime, or sometimes for another named individual’s lifetime.
D: Leasehold Estates
A tenant’s right to occupy a property is known as a leasehold estate.
Leasehold estates are created by a contract between the owner of the real estate (known as the lessor) and a tenant (known as the lessee).
The terms of the contract transfer the right to possession and use of the owner’s property to the tenant, usually for a specified period of time.
The period of time the lease covers, the amount the tenant will pay for the right to use the property, and the rights and obligations of both parties are also established in the lease contract.
What are different types of Leasehold Estates?
- Estate for years
- Estate at will
- Estate at Sufferance
- Periodic Estate
D: Estate for Years
This is a leasehold of definite duration that terminates automatically and is inheritable, meaning that if either party to the lease (usually the owner or the tenant) dies, the lease is not automatically terminated. “Estate for years” is a bit of a misnomer—it simply means definite duration, with a specific start and stop date, and can be for any length of time, even days or weeks.
D: Estate at Will
This leasehold estate (aka “tenancy at will”) is either an oral agreement or one that has no specific ending date. It may be terminated at will by either party, and it’s not inheritable. At the death of either party to the lease, the leasehold automatically terminates.
D: Estate at sufferance
This type of estate (aka “tenancy at sufferance”) is one in which a tenant continues to occupy property after lawful authority has expired.
The tenant is known as a holdover tenant.
If a tenant under a lease stays beyond the lease’s terms, and the landlord continues to accept rent from that tenant, that tenant becomes a month-to-month tenant.
Alternatively, the landlord may remove the tenant by initiating a holdover proceeding, which is used to evict a tenant on any grounds other than the non-payment of rent, such as staying beyond the term of the lease or violating terms of a lease or rent laws.
D: Periodic estate
This leasehold estate (aka “periodic tenancy”) is periodic (e.g., six months) and automatically renews itself for successive tenancy unless one party terminates.
This is also an inheritable leasehold estate. The period involved may be any negotiated period of time.
What are the two types of fee simple estates?
- Fee Simple Absolute
- Fee Simple Defeasible
D: Fee Simple Absolute
absolute (most commonly used in Tennessee, it means ownership without any conditions or limitations)
D: Fee Simple Defasible
Contains a condition of ownership; if that condition is violated or not met, the ownership will revert to the original owner, or to a named third party.
What are the two types of life estates?
- Conventional Life Estate
- Legal Life Estate
D: Conventional life estate
most common form of life state in Tennessee, created by the property owner who grants the property to an individual for a lifetime.
D: Legal life estate
A legal life estate is an involuntary life estate created automatically by law when certain events occur.
Although other forms of legal life estate exist, in Tennessee, a legal life estate is always a homestead.
This means a life estate in the property as long as it is held by the family.
Tennessee’s homestead exemption act allows state residents who meet the minimum residency requirements to remain and keep their property during tough economic hardships.
As long as the home is occupied by the owner’s immediate family, creditors can’t seize the home for nonpayment of debts.
True or False:
Both fee simple absolute and fee simple defeasible estates provide complete ownership, with all the sticks in the bundle of rights.
True
What are the two primary categories of fee simple defeasible estates?
- Special limitation with possible reverter
- Condition subsequent with right of re-entry
D: Special limitation with possible reverter
With this fee simple defeasible estate, once the trigger occurs, the property automatically reverts to the original owner.
D: Condition subsequent with right of re-entry
This type of fee simple defeasible estate is one in which the estate doesn’t end automatically if the stated event or condition occurs, but the grantor can reclaim ownership by taking action.
What are the two types of Conventional Life Estates?
- Ordinary with remainder or reversion
- Pur autre vie with remainder or reversion
D: Ordinary with remainder or reversion
With an ordinary life estate, after the life estate holder dies, the property reverts to the original owner (reversion), or ownership rights are transferred to another person that the original owner has named (remainderman). At the end of a life estate, the reversionary owner or remainderman hold a fee simple estate.
D: Pur autre vie with remainder or reversion
Pur autre vie is a legal term for a different type of life estate. Pur autre vie means “for another’s life.” The holder of this life estate remains in possession with all the rights of a life estate until the death of another person who was named when the life estate was established.
D: Dower and Curtesy
A different form of life estate, not practiced in Tennessee is dower or curtesy, sometimes called marital life estates.
Dower gives the widow life estate rights on the death of her husband, and curtesy gives the widower life estate rights on the death of his wife. These life estates were abolished by Tennessee code 31-2-102 in 2010.
D: Pur Autre Vie
This is a legal term, which means “for another’s life.”
The holder of the estate remains in possession with all the rights of a life estate until the death of the person named when the life estate was established.
D: Remainderman
At the end of a life estate, this is the person who will then hold a fee simple estate.
D: Reversion
When another person isn’t named as a remainderman in a life estate, the estate reverts to the original owner at the end of the life estate.
D: Reservation
An owner reserves a life estate for themselves when conveying a property.
D: Prohibition of Waste
Because a life estate is essentially “borrowing” someone else’s prop- erty for the duration of a lifetime, the life tenant is required to maintain the property, pay property taxes, etc.
With this type of estate, ownership of the property doesn’t automatically revert to the previous owner when a condition is breached unless the owner takes legal action.
Condition subsequent with right of re-entry
This type of leasehold involves a possessory interest that’s automatically renewed at the end of each period specified in the lease.
Periodic estate
Life estates can be divided into which two subcategories?
Conventional and legal life estates
To what type of estate does pur autre vie apply?
Life estate
Jarod bought a home in which he has all the rights of ownership, including the right to sell and to convey the property to heirs at his death. What type of fee simple estate is this?
Fee simple absolute
Which type of fee simple estate provides ownership without any conditions or limitations?
Fee simple absolute
Selma and Richard have the temporary right to live at 123 Elm Street. They can come and go and use the property as they see fit, but they can’t do so indefinitely. They must vacate the property at the end of next year. What sort of interest do they have in 123 Elm Street?
Leasehold estate
The Robinsons gave their daughter, Alyssa, the family property, provided she doesn’t marry her boyfriend, because they don’t like him. If she marries him, the property automatically reverts to them. What type of fee simple estate is this?
Special limitation with possible reverter
What type of leasehold is characterized only by possession of a property, such as a situation in which a tenant continues to occupy an apartment after the lease has terminated?
Estate at sufferance
Angelo’s aging mother needs a place to live out her remaining years. Angelo conveys a home to her, but only for her lifetime. This is an example of what type of life estate?
Ordinary
D: Estate in Severalty
One person owns the property, and all other interests are severed.
D: Co-Ownership
Property with ownership by more than one person, also called concurrent ownership.
D: tenancy in common
A form of ownership that includes an undivided interest in the property; owners may sell, convey, mortgage or transfer their interest without the consent of co-owners
Property with ownership by more than one person, also called concurrent ownership.
What are the different types of Co-Ownership?
- Tenancy in common
- Joint tenancy
- Tenancy by the entirety
D: Tenancy In Common
Each person is entitled to possession of the whole. If one dies, that person’s ownership is inheritable and doesn’t necessarily pass to the other owner(s).
No right of survivorship; when a co-owner dies, interest can pass according to decedent’s will; beneficiary then becomes a tenant in common.
Deed (owners may each have their own) may contain the words “tenants in common;” if no specific wording is included, almost all states assume tenants in common is the co-ownership type; interest assumed to be equal between co-owners unless stated otherwise, but equal interest isn’t required.
Co-owners can request court-ordered partitioning of property to terminate tenancy in common.
Undivided (each co-owner has the right to possess the entire property, but can’t claim or exclude others from a specific portion of the property); each owner can sell, trade, gift, etc., own interest without other owners’ consent.
D: Joint Tenancy
This is defined as equal ownership with undivided rights of possession and requires unity of four separate conditions:
All owners must have the same type of interest in the property, all must receive their title at the same time from the same source, all must have the same percentage of ownership, and all must have the right to undivided possession in the property.
Joint tenancy includes the right of survivorship, meaning when one joint tenant dies, that person’s share automatically goes to the other surviving joint tenant(s).
When there are only two joint tenants left, the death of one of the owners terminates the joint tenancy, and the survivor takes title in severalty (sole ownership).
Joint tenancy includes right of survivorship; when a joint tenant dies, interest passes to other joint tenants.
When there are only two joint tenants left, the death of one of the owners terminates the joint tenancy and the survivor takes title in severalty (sole ownership).
May be created by a will; otherwise deed must identify each owner as a joint tenant
Partition suit may jeopardize joint tenancy.
Undivided (each co-owner has the right to possess the entire property, but can’t claim or exclude others from a specific portion of the property); owners can’t sell, trade, gift, etc., interest without other owners’ consent.
D: Tenancy by the entirety
This type of tenancy also has the right of survivorship.
Only available to married couples, this form of ownership also includes unity of time, title, interest, possession, and marriage.
Key to this form of ownership is that creditors of one spouse can’t attach liens to or sell the interest of the debtor spouse.
Only creditors with claims against the couple may attach and sell the interest of the property owned in this manner.
Also, one spouse can’t transfer interest in the property without the consent of the other spouse.
Tenancy by the entirety can’t be reduced to tenancy in common or joint tenancy.
Such a change of ownership would require divorce, an annulment, or for the couple to amend the title.
Assumed in some states when a married couple purchases real estate; recommended wording: “husband and wife as tenants by the entirety with the right of survivorship”
Divorce or annulment terminates tenancy by the entirety; co-owners become tenants in common.
Undivided; neither spouse can will, sell, trade, gift, etc.
Explain Termination of joint tenancies
Joint tenants may sell their personal share of ownership; however, the buyer of that share does not become a joint tenant, because the required four unities do not exist.
The new buyer didn’t receive a title at the same time as the other tenants, so the unity of time is destroyed.
Therefore, the new owner is a tenant in common. The remaining tenants continue as joint tenants, with the right of survivorship shared between them.
The new buyer, as a tenant in common, has an inheritable share.
Explain Termination of co-ownership by partition
Remember that in a tenancy in common, each person is entitled to possession of the whole.
But what if you hate your co-tenant(s), or simply hate co-tenancy?
Each tenant has the right to sell his own share, but the resulting tenancy will still be a tenancy in common situation.
In order to terminate a tenancy in common entirely, you may need to bring legal action to have the property partitioned, which would allow each tenant to have a specific, divided portion (partition) of the property exclusively.
In the case of an equitably divided piece of land, each tenant would receive title to a separate tract according to that person’s share of interest. In cases where it’s impossible to do an equitable split, a court may order the sale of the property and determine the appropriate share of proceeds to be distributed to the tenants in common.
What are the unities of Tenants in common
- Possession only
What are the unities of Joint tenancy
- Time
- title
- Interest
- Possession
What are the unities of Tenancy by the entirety
- Time
- title
- Interest
- Possession
- Person
True or False:
If the spouses divorce, the tenancy by the entirety automatically ends and the former spouses become tenants in common.
True
What states have community property rights?
- Arizona
- California
- Idaho
- Louisiana
- Nevada
- New Mexico
- Texas
- Washington
- Wisconsin
Explain Community Property Rights?
Contrary to common belief, community property doesn’t have to be titled in both spouses’ names.
In states that have community property rights, all property acquired by either spouse during their marriage (with the exceptions of property that was gifted, inherited, and in some cases the result of personal injury recovery, which are all considered “separate property”) is considered community property regardless of which spouse’s name is on the title.
Both partners may also have other properties purchased before the marriage that they own individually (in severalty), but any property purchased during the marriage is owned equally, regardless of whether one or both spouses are on the title.
Siblings Julia and Gene are co-owners of a small retail building in which a tanning salon is currently operating. Gene really wants to leave his ownership interest to his son when he dies, but the way in which they own the property doesn’t allow him to do so. What type of ownership do they have?
Joint tenancy
Joint tenancy does not include the right of inheritance; ownership interest passes to the remaining tenants once a tenant dies.
Ken, Barbie, and Skipper owned a property as a joint tenancy. When Skipper moved out of state, she sold her interest to Midge. Two years later, Ken died. How is the interest in the property divided?
Barbie and Midge each own 50%.
Joint tenancy includes the right of survivorship, so Ken’s interest will pass to the other tenants. But because Midge bought in later than the others, she isn’t considered a joint tenant. Ken’s share will therefore pass entirely to Barbie.
What is the accurate description of the parcel of land shown in this image?
NW ¼ SE ¼ NE ¼ Section 1, Kennedy Township
Right! Those legal descriptions read from right to left, so things get more specific as as you go!
To receive intestate shares, children must be considered legal offspring according to Tennessee law. Legal includes what?
- Biological children born of the marriage
- Adopted children
- Posthumous children – children conceived but not born before the deceased’s death, and those born within 10 months of that death who survived at least 120 hours after birth
- Children born outside of marriage – if there was a marriage ceremony that later turned out to be void, or paternity was determined before or after the deceased’s death in accordance with procedures that Tennessee law recognizes
- Grandchildren – provided their parent (the deceased’s child) is dead
Explain the diffrent types of vlaues.
- Assessed value: Stakeholers Tax Assessment office. The price placed on a home by a municipality to calculate property taxes.
- Depreciated value: Stakeholders IRS. Calculated for income tax purposes to determine basis for taxable amount. Accelerated depreciated programs have been used by the federal government to stimulate the economy.
- Investment Value: Stakeholders Investor. One way to determine investment value is to calculate the return on investment (ROI). The higher the ROI, the better the investment. Another way to determine investment value is to apply a capitalization rate to the net operating income. Again, the higher the better.
- List Price: Stakeholder Owner. his is the amount for which an owner has offered to sell a property. This is what is found in an MLS listing.
- Market Value: Stakeholder Buyer and Seller. The purchase price agreed to by the buyer and seller sets the market value. Also referred to as the “meeting of minds.”
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