Unit 1 Chapter 8

Question 1

P.E.T.E.

Answer 1

Even under the allodial system of government, private home ownership is subject to government interference
called P.E.T.E., which stands for:

• Police Power- the right of the local, state, and federal government to make laws for the good of all.
• Eminent Domain- allows the government to purchase property from a private owner for the public good
even when the owner is unwilling to sell.
• Taxation- the right the government has to collect funds to pay for public services.
• Escheat- the right of the government to claim ownership of property for which there is no legal owner.

Question 2

Government entities

Answer 2

entities regulate the following aspects of real property interests: bundle of rights, legal descriptions,
financing, insurance, inheritance, and taxation.

Question 3

Federal regulation

Answer 3

In regulating real property rights, the federal government is primarily concerned with broad standards of real
property usage, natural disaster, land description, and discrimination. The following fall under Federal-level power
and influence:
• Ownership system
• Monetary policies and fiscal policies
• Labor, consumer protection, and environmental laws
• Loan assistance, HUD programs, fair housing, and civil rights legislation
• Flood insurance
• Income and capital gains taxation
• Reporting and disclosure requirements
• Government-related agencies
• Services (transportation and infrastructure)
• Educational assistance

Question 4

State regulation

Answer 4

State governments are the primary regulatory entities of the real estate business. State governments establish
real estate license laws and qualifications. In addition, state governments have established real estate
commissions to administer license laws and oversee activities of licensees. The following fall under state-level
influence:
• State income taxation
• Development incentives
• Services (transportation infrastructure)
• Eminent domain and escheat
• Licensing
• Statutory redemption
• Condominium and timeshare regulation

Question 5

Local regulation

Answer 5

County and local government regulation focuses on land use control, control of improvements, and
taxation. Land use regulations and ordinances control how all property within the jurisdiction may be developed,
improved, demolished, and managed. Influences at the local levels of government are similar in kind to those at
the higher levels, but this is where they are most acutely felt. They include:
• Eminent domain, police power, and taxation
• Zoning, building, and health codes
• Occupancy rules
• Planning, schools, and services
• Tax incentives
• Annexation policies
• Rent control

Question 6

Judicial regulation

Answer 6

The judicial system exerts an influence on real estate ownership and use through decisions based on case law
and common law, as distinguished from statutory law. Case law consists of decisions based on judicial
precedent. Common law is the collective body of law deriving from custom and generally accepted practice in
society.