VA Real Estate Flashcards
Comingling, conversion
Depositing client fund in broker’s own account is comingling. Using the funds for personal use is conversion.
Remainder and Reversionary interest
Remainder passes ownership to a third person, reversionary reverts ownership to the grantor of the deed granting ownership of the life estate.
Trade Fixtures
Installed by tenant for doing business. Remain property of tenant, but must be removed before lease expiration and repair damages to property caused by fixture.
Fixed rate lease
Property manager can’t raise rent as market dictates
co-op apartment
Is personal property, not real estate and no deed involved. Owners are shareholders in overall organization and have a proprietary lease to their apartments
CERCLA
Comprehensive Environmental Response, Compensation, and Liability Act (Superfund) to clean up uncontrolled releases of specified hazardous substances. Was amended by congress and president in 1986 to peg liability only to polluters and landlords who failed to take steps to prevent it
Blockbusting
“panic peddling” or “panic selling” when someone seeks to get listings by predicting negative results as minorities buy homes and move into a neighborhood
Contract for deed
property purchased on the installment plan with the seller holding title for at least one year after the date of sale
eminent domain
delegated police power that is exercised via a suit for condemnation (due process; a public forum no t usually tried in courts) for the public good, and that requires market value compensation for the owner of rights in real property
Civil Rights Act of 1866
Fair Housing 1968
Civil Rights 1866: law that followed Civil War extending equal rights in real property to members of all races.
Fair Housing of 1968: Race, creed, or national origin; Gender (1974); Disabilities and families w/childern (1988)
familial status
people with children
easement
right to use land of another for a specific purpose (right of way)
airspace
three dimensional and is measured by lengthxwidthxheight-= cubic feet. Divide by 27 for cubic yards
life estate
the holder’s interest ends at the death of the person (typically the holder) against whose life the estate is measured
what must a real estate contract be to be enforceable (according to statute of frauds)?
in writing
appraisal consideration for investment property for gross income
income from all accounts is considered, but settlements of sale of land are not figured into the calculation
fair housing not applicable when?
single-family homes not covered if owned by private individual who owns 3 or fewer such houses, a broker isn’t used and there was no discriminatory advertising, and the owner sells no more than one house he didn’t live in during the past year check this..
Property development limitations (which apply?)
the most restrictive
executory
contract not yet completely performed. When all terms and cond are met, it is “executed”
restaurant that exists in a building now zoned for office development
restaurant remains as a nonconforming use, but cannot expand
broker, salesperson relationship to seller
broker is single agent of seller, and salesperson is subagent of the seller
appraisal
an estimate or opinion of value on a certain date based on verifiable data obtained within a certain period of time
When can broker functioning as intermediary appoint one licensee to communicate with seller and another to communicate with buyer?
broker who wishes to make appointments must obtain WRITTEN permission from the parties to do so and must give them written notice of who is being appointed to the seller and to the buyer.
irs form 8300
must be filed on all cash payments above $10,000
vendor/vendee
best describes parties to a purchase and sales contract
What kind of contract conveys the covenant of quiet enjoyment and right to use property but does not convey ownership?
lease
Net lease, gross lease
Net lease: Tenant pays property expenses. Gross lease: tenant pays rent and landlord pays property expenses
Discussion of fees between competitors
could be seen as an attempt to conspire to set the coset of real estate brockerage services–violate antitrust law.
Who disburses commissions?
All commission fees must be paid to the primary broker, who then disburses commissions/fees to agents
buyer broker agreement
contract wherein the broker represents a buyer or tenant.
Who can sue the principal
only the broker
real property/personal property
surface land, subsurface and airspace above and all natural vegetation. When trees are cut, minerals are extracted or other crops harvested, they are severed from the real property and become personal property
Principle of conformity
To retain value, property should be located in an area with similar properties
net lease
includes rent plus operating expenses within the rental price
Blanket loan
covers several parcels of real estate and provides for the release of the mortgage lien on each parcel when it is sold and an agreed-upon amount of the original loan is paid. (normally used to finance developments, in that it has a partial release clause
partial release clause
allows the take out of individual properties as they are sold off (as in a blanket loan that affects many parcels in one development
lis pedens
legal notice that a legal suit has been filed or is being filed that could affect the property, but the case hasn’t yet been heard, therefore effect on property can’t be determined
condo vs coop
condo is fee simple just like a house. coop owner owns shares in a corporation that owns the whole building and pays property taxes on it.
Mills
each 1/10 of a cent–used to express the tax rate per dollar of assessed value
Equal Credit Opportunity Act
Borrower is entitled to a copy of the appraisal if the buyer paid for it. In michgan, the buyer must get lender’s permission to get a copy of the appraisal
Property or neighborhood’s life cycle
growth, equilibrium, decline (GED old!)
sales comparison approach, cost approach, income approach
SC: estimates value based on most recent sales of comps. CA: est value of land by sales comparison approach and the actual cost to replace or reproduce improvements. IA: estimates value based on net operating income in relation to comparable capitalization rates of comparable recently sold properties.
square feet in an acre, acre in square mile
43,560, 640
first violation of fair housing law
HUD’s penalty is 10K, while Justice department may fine for a pattern of repeat violations up to 100,000
Find taxable capital gain from sale of principal residence
subtract adjusted cost basis from net proceeds
After paying for an option to purchase, who may renegotiate the terms
both may renegotiate terms of the transaction
what law protects handicapped
fair housing law.
determine net operating income
estimate potential gross income, then deduct estimated vacancy and collection losses to derive effective gross income. THen subtract yearly operating expense from effective gross income.
Zoning regulations establish
permitted land use and also can include building height, setbacks and density. Careful zoning will increase property appreciation.
What does RESPA cover
federally related loans , which include loans made through Federal Housing Admin (FHA) or VA, loans intended to be sold to Fannie or Freddie or any other type of loan regulated by fed govt.
lead paint last used
1977
spot survey
discloses any improvements on a property as well as any encroachments or easements
Earnest money must be held where?
Escrow account–not in a deal file, or company operating account
License requirement for home office
None required, but any licenses accociated with that office must be available for customers and clients to view
How soon after successful completion of the licensing exam must an applicant apply for license
52 weeks, otherwise the course will have to be retaken
Consent order issued by REB and signed by a licensee represents …
admission of guilt for which REB may asses $2500 fine per violation of license law or REB regulations
Licensee convicted of fraud will likely…
have license suspended or revoved by the REB and assessed a fine by REB
What must a licensee have to apply for a broker license
Must be actively engaged, maintaining 40 hrs of work experience per week in 36 of last 48 months, must also pass four broker courses.
What must nonresident salespeople from states with reciprocity do
May meet either active practice requirement or must meet educational requirement of their state, provided courses are equivalent to VA, do not have to be active in their state
Sales person continuing education requirements
every two years–three hours of ethics, two of fiar housing, one of legal updates, one of agency and one of contracts.
escrow account
money of others, rent fees, so on
When can escrowed money be distributed
broker determines that seller breached and buyer should receive refund; seller and buyer give broker a written disbursement agreement; settlement on property
how long should broker keep copies of disclosure docs
three years minimum
exclusive right to sell agreements
- must be written and have termination date
- entitle a commission to the agent if property is sold by owner during term.
- state that sellers must enter into a sales contract if the broker brings a buyer who offers the price and terms in the listing agreement. (VA allows seller to not sell but instead pay the commission.)
material fact
A fact that a client or customer would reasonably require in order to make a decision to contract.
Inactive or experied licensses
must be returned to the REB
A nonlicensed teneant of an apartment bulding knowingly solicited and accepted payment from MT realty, a licensed property manager for referring prospective tentants. Which is true?
Both Tim and MT Realty acted within the law
Seller owes what to broker
an accurate disclosure statement or disclaimer statement to be provided to the buyer. Seller clients also owe their agents an accurate disclosure of whether they are contracted with another agent.
Virginia Real Estate Board stated purpose
protect the public from any dishonesty and incompetence by real estate licensees
Buyer client owes what to broker
accurate discolsure of whether the client is contracted with anotehr agent, items covered under the agreement, eneral location of the property desired and type of transaction sought (rental, purchase, etc.) plus the commission when triggered.
real estaet brokerage or leasing business that is a sole proprietorship or artificial person must have
- One principal or corporate offiicer as a principal broker with active license.
- A firm license from REB.
- a supervising broker to supervise each associate broker in each of its branch offices.
REB VA Transaction Recovery Fund assessment…
$20 at initial licensing. if fund goes below 400k, board can assess all licensees up to $20 every 2 yr renewal. Inactivation is automatic following a month after a second notice of amounts due, which is sent 45 days after the initial assessment. Licenses who remain inactive for nonpayment for an additional 30 days have their licenses terminated.
Size of the VA Transaction Recovery Fund
Fund must have minimum 400,000 or maximum $2 million.
Law that states any parent or guardian accompanied by a minor under 18 is a family, which is a protected class and further defines a pregnant woman as constituting a parent with a minor.
familial status
All resale purchasers of time-share interests in VA must be given
a certificate of resale anytime prior to contracting, and the resale buyer has five days from the making of that contract to cancel it. The cancellation right may NOT be waived.
Time share developers in VA are required to
- post with the REB a surety bond for the greater of 25,000 or total deposits
- maintain controld of an responsibility for the project until 90% of units have been sold and the common facilities have been completed, whichever occurs later (up to 10 years)
Condominium owners association in VA
Regulated by the VA Condominnium Act, which would subject a condominium oners’ association to the requirement and pentalty up to 500 if the association failed to provide a complete certificate within 14 days of the sellers or the seller’s agent’s request
Legal docs …. Agent should …
agent should never interpret
nonresident owners of rental real estate must
have an agent, whether a licensee or otherwise, for at least the purpose of service of process. Otherwise the Secretary of the Commonwealth will act as agent by default.
Equal credit opportunity Act appraisal reg?
provides that borrower is entitle to a copy of the appraisal if the buyer paid for it.
Rental property sold mid lease
new owner must stick to lease terms unless the lease was period-to-period with automatic renewal when rent is tendered
- blanket mortgage
- buydown mortgage
- graduated payment
- growing equity
- package
- participation
- reverse
- shared equity
- More than 1 parcel of real estate is pledged as collateral. Typically has partial release clause allowing borrower to sell parcels and keep mortgage on remaining ones.
- paying lender upfront points on the loan, interest temporarily reduced
- payment in first 1-3 years is paid at reduced rate, and may result in negative amortization, unpaid int put back on principal.
- borrower agrees to increase principal payment a certain percentage each year–faster equity.
- includes personal property such as furnishings and appliances–common in condos
- more than 1 lnder funds the loan an d each holds EQUAL lien position.
- for srs over 62, homeowner receives payments drawn from home equity and repayment is due when senior no longer lives in home.
- lender may offer favorable interest rate in return for equity interest in property.
truth in lending act (implemented by Fed Res board Regulation z
Requires that borrowers be shown how much they are paying for credit in both dollar terms and percentage terms at annual rate(APR) before committing to the loan. Borrower has right to rescind certain transactions. Lender must notify borrrower if using prin. dwelling for loan security. borrow may rescind in writing until midnight of the 3rd business day after settlement
Equal Credit Opportunity Act
1974, first protected against sex and marital status. IN 1976, feds added color, race, religion, national origin, age and those who receive pub assistance were added. (Regulation B)
Home Mortgage Disclosure Act
1975, Reg C, ensure banks provide regular reports to Fed govt that they are serving housing needs or communities.
Bullshit paperwork for banks to report data on home purchases.
Community reinvestment act
designed to combat redlining. Forces loans to low-income communities.
Forced to give loans to peps with bad credit who has no biz buying houses!
fair credit reporting act
1970, if person denied credit because of bad report, lender must reveal to the buyer the identity of the credit agency reporting information. Most are to be dropped after 7 years from report
gramm-leach-bliley act GBLA
Requires copanies to give consumers privacy notices explaining the company’s privacy policies–applies to banks and lending institutions
Hint: Gramm is a private man
Performance and Forbearance are …
Things that make contracts legally enforceable: parties must do something (performance) or to refrain from certain acts (forbearance)
Seven things that make contract valid and legally enforceable.
- legally competent parties
2 in writing (statute of frauds) - signed by parties to agreement
- have a lawful objective
- include consideration–doesn’t need to be $
- mention of offer and acceptance
- contain legal description of the property.
express contract
parties declare intentions verbally or in writing
implied contract
created by actions of parties–like sitting down at a restaurant. You expect to be served food
bilateral contract
promise is exchanged for a promise. “I will do this, you will do that”
Each must act
unilateral contract
promise is exchanged for performance–I will do this IF you do that.
One acts only if first fulfilled his promised action.
valid contract
meets all requirements of law
void contract
no legal effect, and is not a contract at all
voidABLE contract
binds one party but not the other. 17 year old who’s selling a property is voidable by the minor
unenforceable contract
may have once been valid, but its enforcement is barred by statute of limitations or law change
offer includes what? 4 things
- ID of parties
- legal description of real estate and personal property included
- sales price
- financing contingency
other contingencies, list of inspections, discoseure
In case of breach or default, what can innocent party do
- accept partial performance (acreage is smaller than described).
- unilaterally rescind
- sue for specific performance–contract must do exactly what it says.
- sue for money damages
- accept liquidated money damages –applies only to seller, means retaining earnest money
- Mutually rescind the contract–sometimes best for both to just walk away
Agency relationship created when?
When one person agrees to act on behalf of another.
Residential Property Disclosure Law provisions related to stigmatized property.
Clarifies that there is no legal requirement to disclose stigmatizing events that had no physical effect on property–murder, rape, suicide-or adverse conditions outside the four corners of the property.
Post licensure education
in the first two-year renewal period, each must complete 30 hours of post-licensure education. three hours of each: afroe agency law fair housing real estate law offer to purchase ethics and standards (15 hours of mandatory topics) also, 15 hours of elective topics in either commercial or residential track. Electives must be a minimum of 1 hr in duration to a max of 4 hours)
closing
process of transfer of title and settlement of accounts.
deed restrictions
private and non-governmental, set by previous owners of the property and are enforced through neighbors’ lawsuits, not by local building authorities
right to exclude
one of the rights contained int he bundle of legal rights of ownership
oral lease length …and it creates what
is enforceable if less than a year and creates tenancy at will
acceleration clause
clause in note, mortgage or deed of trust that permits lender to declare entire amount of principal and accrued interest due and payable immediately in event of default
acceptance
indication by a party receiving an offer that they agree to terms. most states, must be in writing when real property involved
accretion
increase or addition of land from natural deposit of sand or soil by stream, lake or river
accrued depreciation
amt of depreciation, or loss in alue that has accumulated since initial construction. difference between current appraised value and cost to replace building new
accrued items in mort. Escrow
list of expenses incurred but not yet paid, such as mort. interests
acknowledgement
formal declaration before pubic official, usually notary, by person who has signed a deed, contract or other doc.
acre sq feet?
Sq Yards?
43,560 sq feet or 4,840 sq. yards
actual notice
actual knowledge a person has of particular fact
adjacent property is …
near but not necessarily in contact with
adjoining property is…
contiguous or attached
adjusted basis
original cost of a property, plus acquisition costs, plus the value of added improvements to the property
adjustment date in a mortgage …
date interest rate changes on arm
ad valorem tax
tax in proportion to value of property
adverse possession
method of acquiring title to another person’s property through court action after taking actual open hostile and continuous possession for a statutory period of time. May require payment of prop taxes
agency what is it?
Names of parties?
legal relationship between principal (client) and agent that arises out of a contract wherein an agent is employed to do certain tasks
agent what is it?
someone granted authority to act on behalf of another
allodial system is …
in the US, system of land ownership in which land is held free and clear of any rent or services due to the govt. commonly contrasted with feudal system
apportionments
adustment of income, expenses or carrying charges related to real estate.
approbation
right of govt to set aside land for public use
Communist crap
appurtenance
something that transfers with the title to land even if not an actual part of the property, such as an easement
ARELLO
association of Real Estate LIcense Law Officials
assignment
transfer of rights from one to another; assignable loans, assignable real estate purchase contract, for example.
attachment
process where court takes custody of a debtor’s property until debt is satisfied
avulsion
removal of land when strem or other body of water changes its channel
bare title
naked title, lacks any ownership interests.
Bear naked … Without the honey lien
bargain and sale deed
conveys title but does not necessarily carry warranties against liens or encumbrances
base line use in establish property lines
imaginary east-west line used as a reference point when describing property with the rectangular or govt survey method
basis
cost of purchase plus capital improvements minus depreciation.
bench mark related property boundaries…
permanently marked point with a known elevation
bequest related to will…what does it give?
personal property given by provision of a will
bilateral contract
each party agrees to perform an act in exchange for anotehr promising to perform an act
bill of sale transfers what kind of property?
written instrument that transfers ownership of personal property
blanket mortgage
more than one parcel of real estate is pledged to cover a single debt
blockbusting
illegal practice of inducing homeowners to sell by suggesting protected class will be entering the neighborhood
oral agreement between lessor and lessee
Valid?
Creates what kind of tenancy?
valid tenancy at will
purchase money mortgage
loan taken back as part of the sales price by the seller
Seller financing
leashold
right to occupy a property without interference for a specified period.
economic characteristics of land
scarcity, location, and durability.
Legal descriptions using the government survey system are NOT generally used in
the original 13 states.
An escheat occurs when
a property owner dies without heirs or a valid will.
Three identical homes in a neighborhood were listed at the same time in a market where demand was constant. According to the law of supply and demand, which would have sold for the lowest price?
The first sold.
An appraiser MUST be licensed or certified to handle Federally related work on residential property valued at more than
$250,000.
A couple owns an older home in a neighborhood that is becoming a commercial area. Because of the change in the use of the land, the couple can expect the value of their parcel to increase at some future time. This is an example of the principle of
anticipation.
When the sellers are lending part of the purchase price, they may secure the debt either with a deed of trust or a mortgage. For the seller, one benefit of the deed of trust is that
foreclosure is usually simpler and faster.
A broker has brought a ready, willing, and able buyer to a seller. In MOST listing contracts, the broker has earned his commission when
the seller accepts the offer.
A broker supplies the financing for a project to build condominiums with the stipulation that he has the exclusive right to sell the completed condos. Which of the following BEST describes this relationship?
Agency coupled with an interest.
State laws differ on whether a buyer is entitled to know about
a suicide that occurred in the house last year.
The Department of Housing and Urban Development estimates that most private homes built before 1978 contain potentially dangerous levels of lead. Because of this, some Federal agencies, such as FHA
require the buyer to acknowledge disclosure of the presence of any known lead paint.
The document used in a real estate sale that establishes the legal rights of the buyer and seller is the
purchase contract.
The real estate contract for a specific property for use as an unlicensed whiskey sales operation was forced to terminate. The termination was the result of
impossibility of performance.
A judgment has been properly recorded. Any subsequent purchasers, whether they have actually examined the record or not, have been given
constructive notice.
or Federal income tax purposes, which of the following are costs of homeownership that may be deducted from gross income?
Mortgage loan interest, local property taxes, mortgage loan origination fees.
When someone has living heirs but dies without leaving a will, the estate is distributed according to the
statute of descent.
According to the Truth-in-Lending Act, if any “trigger terms” are used in an ad, all of the following disclosures MUST appear in the ad EXCEPT the
prepayment penalties and rebates.
An equal housing opportunity notice MUST be
displayed in the brokerage office.
A managing broker can be held responsible for
all real estate activities of salespersons.
downzoning
Look up
who funds a primary loan?
mortgage banker
Banks
And more … All Direct lenders.
To qualify for innocent landowner status, enviro inspection should occur when?
prior to taking title
market data approach does not include what?
cost of structure replacement
Regulation B
Equal Credit Opportunity Act
a property managment agreement creates what type of agency
general agency
Entity that loses ownership through a deed of trust mortgage foreclosure is the
mortgagor
Maximum amt of time given to licensees to respond to VREB demands for ducuments pertaining to a transaction for which the licensee was required to keep records
10 days
