Transfer Flashcards
Boot
What is given (cash/property, etc) to make up the difference in the value of properties in a tax-free exchange
Income tax deductions for personal residence
Interest, Taxes, and some Uninsured Casualty Losses. If the owner of a condominium pays interest on a mortgage for his share of common areas, he can deduct that interest on his income tax return
Who is responsible for reporting a real estate transaction to the IRS?
Escrow Agent
Impound Account
account maintained by the mortgage company to collect insurance/tax payments. they are “recurring” costs (yearly insurance/tax bill divided to monthly cost added alongside monthly mortgage bill).
Deed of reconveyance
Restore title from lender to borrow when loan is paid off. Shows evidence of pay off.
CLTA
ALTA
California Land Title Association
American Land Title Association
What does a standard title insurance cover?
Problems found after closing that are matters of record (forgery and fraud, improper delivery, lack of capacity of grantor).
Does not cover stated exceptions.
CLTA
What does an extended title insurance cover?
same types of things as standard, but more (unrecorded taxes, easement, encroachments, adverse possession, liens). Is usually required by lenders
Owner’s Policy vs Mortgagee’s Policy
Title insurance policy types. Owner wants to own property without clouds, lender wants title without clouds so they can foreclose if necessary.
Quitclaim Deed
Transfers interests WITHOUT covenants or warranties. “What I’ve got, you’ve got”. Best for grantor. Clears titles (problem solver). Grantor wants no future claims or liability.
Escrow
Escrow involves the deposit of funds and/or instruments by buyer and/or seller with a neutral third party who has agreed to execute the provisions of an agreement or contract
What code are the rules for escrow found in?
Financial code
Who can execute escrow instructions?
buyers, sellers, and third parties
Marginal tax rate
tax rate applied to the NEXT dollar earned
Cost basis single family residence includes/not includes
Cost basis of new property in exchange?
absent any boot given or received, cost basis of new property will be same as old property
If you feel like a tax assessment is over-assessed, go to the _____________
Assessment appeals board
The purpose of the “sale to the state” by a tax collector is to _____________
Start the clock on the redemption period for payback of unpaid taxes- last for 5 years, during which time owner can stay in home- starts on June 30th
Suit to Quiet Title
Court hearing to recognize valid claims and “quiet” invalid claims against property. Used to clear titles.
Writ of Attachment
Issued by a court to law enforcement to “attach” or seize an asset in order to satisfy a judgement.
Chain of title
history of successive ownership documents linked together (examiner seeks unbroken chain)
If there are errors or missing documents found in a title search, the title is ________- this is called a broken ________.
clouded
broken chain
Abstract of title
historical summary of all recorded documents affecting title
What does title report show?
current condition of title and a commitment to insure (including exceptions- what it won’t insure)
Standard vs special exceptions (title insurance)
standard= items not covered and buyer responsible for checking
special- clouds specific to the property found by examiner
Name the 3 parties in a trust deed
Trustor: borrower
Trustee: 3rd part
Beneficiary: lender
Restrictive Covenants
- found in a _________
- what is their purpose?
- where do you typically find them?
- deed or lease
- restrict behavior
- subdivision & community management associations
eg- condo must be painted white, no RVs in driveway, must have brick siding
they are NOT voidable by successive owners
Condemnation
process of eminent domain
How do you determine the commission on the sale of dead person’s home?
Court order through probate sale
Grantor
person conveying (grants) interest in real property to another person
A valid deed must contain:
- writing
- parties described
- competent parties
- described property
- granting clause “i heareby grant”
- signed
- delivered and accepted
note: does NOT need to be acknowledged, does NOT need to be dated
Constructive notice
notice imputed by law- recording of instruments creates constructive notice
Actual notice
Actual knowledge of a fact, as opposed to constructive notice (legal recording of fact)
Emancipated Minor
Under 18, but:
- got emancipated by court
- married
- active US forces
If not emancipated, contracts from people under 18 are void.
Warranty Deed
a deed that guarantees a clear title to the buyer of real property (grantor “warrants” that title is free an clear by agreeing to defend 3rd party claims on title in future)
Special Warranty Deed
only guarantees the title against defects that arise during the grantor’s ownership, not prior to the grantor’s ownership.
Sheriff Deed
Deed issued to purchaser of forclosed property
What kind of escrow instructions are typically used in SoCal? NoCal?
Bilateral
Unilateral
What kind of loans does RESPA cover?
1-4 family residential
Trust Deed (Deed of Trust)
Trustor (borrower)
Trustee (third party)
Beneficiary (lender)
Trustee holds title and conveys title trustor or beneficiary until loan is either paid off or defaulted.
habendum clause
“to have and to hold” - not required for effective deed
Private vs public grant:
dedication
private: individual -> individual
public: government -> individual
dedication: individual to government
How many people need to witness a witnessed will?
2
During probate, how long do creditors have to file a claim?
4 months
Do grantors and grantees need to be competent to have a valid deed?
The grantor (seller) does, but the grantee (borrow) does NOT!
Unilateral Escrow Instructions
both buyer and seller prepare their own escrow instructions
Transfer tax (rate)
55c per $500
What is a certificate signed by the borrower, stating that the mortgage amount is correct?
Estoppel
Broker may not retain funds for payment of promissory note for more than ____ days
25
Tax Deed
deed for property publicly sold due to non payment of property taxes
If an individual leaves his personal property at a furnished apartment house, how long does the individual have to take civil actions to recover his personal property?
90 days
The city transfer tax rate is what % of the county rate?
half
If a title to real property is in an individual’s name, what needs to happen before the title can be transferred?
.
The instrument of transfer needs to be signed by the individual and his/her spouse
When land is registered in California, the new owner receives which of the following instead of a deed?
Certificate of Title
What are unilateral escrow instructions?
Buyer and seller both prepare their own escrow instructions
Acknowledgement of a deed may be made by:
may not be made by:
court clerk, public notary, military official
cannot: broker
Purely ficticous name
Feigned Name
Seal of public notary must contain:
Security Instrument
document that describes the rights and duties of the lender and the borrower
Title to real estate passes when a deed is _________
delivered and accepted
Lis Pendes
pending lawsuit
Lis pendens is a legal document giving notice that an action or proceeding is pending in the courts which affects the title to the designated property.
Where would you make a title search?
County Recorders
Federal Land
County Clerks
When escrow holds desposit money because of a dispute between buyer and seller, the money can be realesed by:
- court order
- written request by both paries
How long is someone’s right of redemption for unpaid property taxes?
When does this start?
5 years
Starts when property sold to state for unpaid property taxes
What proposition limits property taxes in California?
Prop 13
What are property tax rates?
1% of assessed value plus any local voter-approved assessments
What is the maximum property tax assessment increase each year? (assumming no reassessment)
2%
Property tax reassessment occurs if:
- ownership changes
- property improvements > 50% of old assessment (if not, added to assessment)
Special Property Tax Exemptions:
- homeowners __________
- veterans _____________
- senior citizens _________
- $7k
- $4k
- postpone until sale
Property taxes are based on fiscal year, which run from:
July 1 through June 30
Acronym for property tax payment dates
No Darn Fooling Around
Property Tax Due Dates
No: November 1 (1st installment)
Darn: December 10 (deliquient)
Fooling: February 1 (2nd installment)
Around: April 10 (deliquent)
(fiscal year July 1 to June 30th)
Another phrase for “power of attorney”
attorney in fact
Escheat
property reverts to state if owner died intestate and no potential heirs make claim on property for 5 years
“et ux”
and wife
Subordination Clause
clause that states current claims on debt take priority on future claims on debt
Who signs a reconveyance deed?
The trustee
If there is no specified date of closing escrow, escrow should close:
in a reasnoable amount of time
Assessment Role
Record of taxable persons and property in taxing jurisdiction- prepared by assessor. Shows the assessed value of everything for property tax purposes
Escrow prorates are based on _____ day year, and _____ day month
365
30
Pest control reports are kept with
Structural pest control board
If a person buys property in a California land project and then changes his mind, he can obtain a refund of his money without a specific reason within how long
5 days
Legatee
reciever of legacy (will personal property)- similair to devisee, but for personal property
for income tax purposes, the most complete calculation of adjusted cost basis is:
aquisition cost + capital improvements - depreciation
Capital gains exclusion for primary residence
single= $250k
married= $500k
must own and occupy for 2 of last 5 years. there is no limit for number of times this exclusion can be used in lifetime
Accroding to RESPA, when does the lender need to provide the Uniform Settlement Statement (HUD-1) to the borrower?
at or before closing
If a change of ownership is not recorded, how many days after the change does an owner have to inform the county tax assessor about a change of ownership?
45 days
Compentency of grantor and grantee in deed transfer?
Granot must be comptenet- grantee does not.
Transfer tax on loan assumptions?
no
eg- Purchase price 50k, assumed loan 30k, transfer tax (55c per $500) paid on 20k
Capital gains Calculation
adjusted sell price (-) adjusted cost basis
adjusted sell price= sell price (-) closing costs
adjusted cost basis= original purchase price (+) capital improvements (-) depreciation
A buyer of a business opportunity would obtain a Certificate of Clearance from the:
State board of equalization. The Board will issue the Certificate of Clearance if the seller of a business has paid his sales tax in full.
Realized gain is:
total gain (recognizable AND defered gain)
In the absence of a special agreement to the contrary, a trust deed normally having highest priority is one that was
recorded first.
Generally, recording establishes the priority of a trust deed. “First to record is first in right.” An exception would result from the existence of a subordination clause. Other exceptions may exist in relation to mechanics’ liens and judgment liens.
Escrow can be terminated by:
mutual consent of both parties
An escrow may not be terminated unilaterally by incapacity or death of either party, an attorney-in-fact acting for one of the parties, or revocation by the broker.
The main advantage of an installment sale is to __________
prorate the gain over the term of the installment contract
In the absence of court approval, a minor or incompetent can
A) encumber real property through a power of attorney.
B) do all of these.
C) receive a deed to a property through gift or inheritance.
D) convey property through a guardian.
A minor can receive property through gift or inheritance, but because a minor is incapable of appointing an agent, such delegation of authority as appointing a power of attorney is void. Negotiating in real property with or for a minor is permitted through a court-appointed guardian (parents if living). Each transaction requires court approval.
Seizure of property for payment of money before judgment is known as a(n)
A) writ of execution.
B) lis pendens.
C) condemnation.
D) attachment.
An attachment is a legal seizure prior to a court action. The instrument employed is a writ of attachment. A lis pendens effectively puts a “hold” on property, but it is not a seizure.
In determining whether to insure title, the title company would rely most on documents found in the
A) chain of title.
B) title guarantee.
C title report.
D title search.
A title search is an examination of matters disclosed by the public records, including the county recorder’s office and such other sources as the county clerk, various tax agencies, federal court clerk, and the Secretary of State. The standard policy of title insurance, in addition to protecting against risks of record, protects against off-record hazards such as forgery, lack of capacity, nondelivery of a deed or federal estate taxes, et cetera.
“short rated”
earned premium for policy cancelled before expiration of insurance policy
Buyer and seller sign escrow instructions that the broker takes to the escrow agent. The escrow agent discovered discrepancies between the escrow instructions and purchase contract. Which statement is TRUE?
A) The purchase contract would prevail because it is the original document.
B) The purchase contract must be redrafted to agree with the escrow instructions.
C) The escrow agent and the broker must resolve the conflict.
D) The escrow instructions generally prevail because it is the most recent document.
A subsequent document (such as escrow instructions) will prevail over an earlier document (the deposit receipt).
Another term for alienation clause is _________
Due on Sale
