vocab

Question 1

Principle of progression

Answer 1

A valuation principle that says having nicer, more expensive homes nearby can increase the values of a property

Question 2

Federal National Mortgage Association (FNMA)

Answer 2

“Fannie Mae” is the popular name for this federally chartered corporation, which creates a secondary market for existing mortgages, FNMA does not loan money directly, but rather buys DVA, FHA, and conventional loans.

Question 3

Functional obsolescence

Answer 3

Loss in value from functional problems caused by age or poor design

Question 4

Dual agent

Answer 4

When a real estate licensee works with both the buyer and the seller.

Question 5

Subject to

Answer 5

Situation in which a buyer takes title to property but the existing loan stays in the name of the seller, so the seller is primarily liable for the loan

Question 6

Material fact

Answer 6

fact that a reasonable person would think was relevant to decision being made

Question 7

Special warranty deed

Answer 7

A deed in which the grantor warrants only against defect that occurred during their ownership ( the grantor of a special warranty deed does not provide a warranty or guarantee against any defects in clear title that existed before their ownership

Question 8

Bundle of rights

Answer 8

legal rights of the real estate title holder. includes the right of possession, the right of control, the right of exclusion, the right of enjoyment and the right of disposition.

Question 9

Lawful object

Answer 9

A contract must be legal. If a contract has an illegal purpose, it is void

Question 10

Contract for deed

Answer 10

A contract for the sale of real estate under which the sale price is paid in periodic installments by the purchaser, who is in possession and holds equitable title, although actual title is retained by the seller until final payment.

Question 11

CC&Rs

Answer 11

Covenants, conditions, and restrictions. Condominium documents that serve as the operational procedures describing the rights and prohibitions of the co-owners in a condominium association

Question 12

Implied contract

Answer 12

An agreement created by actions of the parties involved, but there is no written record nor any actual verbal agreement. An implied contract is a legal substitute for a contract that is assumed to have been drawn.

Question 13

Unenforceable Contract

Answer 13

Contract which cannot be enforced in a court of law-

Question 14

Impounds

Answer 14

Account maintained by the mortgage company to collect recurring costs such as insurance and tax payments that are necessary for you to keep your home, but are not technically part of the mortgage

Question 15

Leasehold estate

Answer 15

A tenants right to occupy real estate during term of a lease, generally considered to be a personal property interest

Question 16

Capitalization rate

Answer 16

The rate of return a property will produce on the owner’s investment

Question 17

Township

Answer 17

The principal unit of the rectangular survey system. A township is a square with six-mile sides and an area of 36 square miles

Question 18

Enforceable contract

Answer 18

An Agreement that can be implemented in court

Question 19

FHA

Answer 19

The Federal Housing Administration was created by the National Housing Act of 1934 with the intention of regulating the rate of interest and the terms of mortgages that it insured in order to make home ownership more accessible

Question 20

Taxation

Answer 20

Financial charge (or some other type of levy imposed) upon a taxpayer by a governmental organization

Question 21

Mortgagor

Answer 21

Entity giving the promissory note that serves as evidence of the debt. The borrower is known as the mortgagor

Question 22

Fee Apraisor

Answer 22

Self-employed appraiser who charges a fee for each appraisal he does

Question 23

Earnest Money Deposit

Answer 23

Deposit made to a seller representing a buyer’s intention to purchase a home in “good faith”

Question 24

General Agent

Answer 24

Agent who has the authority to perform any and all acts required for a job or business

Question 25

Special Assessment

Answer 25

A tax or levy customarily imposed against only those specific parcels of real estate that will benefit from a proposed public improvement, such as a street or sewer

Question 26

Trust deed

Answer 26

Three-party system of securing a promissory note with a trustor, trustee and Beneficiary

Question 27

Open Listing

Answer 27

Unilateral contract in which multiple agents can be employed to find a buyer. If the owner finds a buyer, no commission is paid

Question 28

Redlining

Answer 28

Discriminatory practice of mortgage lenders in which they draw “red line” around portions of a map to indicate or neighborhoods where they don’t want to make loans

Question 29

Equitable title

Answer 29

The beneficial interest of a person whom equity regards as the real owner but the legal right vests with another.

Question 30

Cost (Replacement) Approach

Answer 30

Method of estimating the value of property by adding the appraiser’s estimate of the replacement cost of the building to estimated land value and subtracting depreciation. It is most commonly used to appraise special purpose properties. It sets the upper limits of value and is most appropriate for the appraisal of new property.

Question 31

Laches

Answer 31

An equitable doctrine used by the courts to bar a legal claim or prevent the assertion of a right because of undue delay, negligence, or failure to assert the claim or right

Question 32

Encroachment

Answer 32

When a neighbor is using land which they not own

Question 33

Competent or capable Parties

Answer 33

All parties entering into a contract must be “legally fit” (having the necessary age, ability and authority to accomplish any given acts or duties) for the contract to be valid.

Question 34

Unilateral Contract

Answer 34

An agreement in which person makes a promise - for example, an open listing

Question 35

listing

Answer 35

Employment contract between principal and broker where the broker is paid by the principal to find a buyer.

Question 36

Prepayment Clause

Answer 36

Allows a penalty to be enforced if a mortgage is paid off early

Question 37

Servient Tenement

Answer 37

The land burdened by the easement

Question 38

Marginal Tax Rate

Answer 38

Percentage of tax applied to your income for each tax bracket in which you qualify. In essence, the percentage taken from your next dollar of taxable income above a predefined income threshold. It is applied to the nearest dollar of taxable earned income.

Question 39

Value

Answer 39

The current worth of owning a particular property, or what someone would pay for it in a fair transaction. Its original cost has no relevance to its value

Question 40

Exclusive Agency Listing

Answer 40

Employment contract where the seller agrees to pay a broker commission if any agent/broker finds a buyer. But if the owner sells it themselves, the broker gets no commission

Question 41

Sherman Anti-trust Act

Answer 41

Federal Law that promotes free market competition by prohibiting any contract, trust, or conspiracy in restraint of interstate or foreign trade

Question 42

Joint Tenancy

Answer 42

Concurrent ownership with unities of Time, Title, Interest and Possession (TTIP). Has right of survivorship, meaning if one joint tenant dies, the surviving joint tenants take the remaining interest.

Question 43

Grant Deed

Answer 43

A deed that included two implied warranties: 1. The grantor has not already given the title to another person; and 2- The estate has no undisclosed encumbrances. It is not necessary to record the deed. Grant deeds are considered officially executed when signed by the grantor.

Question 44

Subordination Clause

Answer 44

A clause in an agreement which states that another agreement will take priority over it. Allows a mortgage to be added at a later date which will take priority over an existing mortgage, such as when an owner re-finances a piece of property that already has a second mortgage, and the re-financing lender requires the second mortgage provider to ass a subordination cause which gives the re-financing loan priority over the second mortgage. Subordination is the act of yielding priority

Question 45

Multi-Family Residential Use

Answer 45

An R-3 zone is for Multi-family Residential use

Question 46

Protection Period Clause (Safety Clause)

Answer 46

Clause which protects the listing broker’s commission if the owner sells to a buyer procured by the broker, even after the listing agreement has ended. The name of the potential buyer(s) should be documented in writing at the end of the listing period. This is not a time to find a new buyer.

Question 47

Interest

Answer 47

Amount charged to a borrower for the privilege of using the lender’s money. It is effectively rent on money.

Question 48

Usury

Answer 48

The practice of charging more than the rate of interest allowed by law.

Question 49

Contingencies

Answer 49

A provision or condition in the purchase of real estate requiring a certain act to be done or an event to happen before the contract becomes binding

Question 50

Reconveyance deed

Answer 50

A deed which indicates that the borrower is released from a mortgage debt and transfers the property title from the lender (or beneficiary) to the borrower. Most commonly issued when a mortgage has been paid in full.

Question 51

Exclusive Listing

Answer 51

Employment agreement in which a specified agent earns a commission if a property is sold within a specified time frame. The specified agent will generally earn a commission, even if another licensee finds a buyer. If two exclusive listings are signed, the seller may have to pay two commissions.

Question 52

Easement in Gross

Answer 52

Easement which attaches to an individual (person or entity). There is no dominant tenement- for example, the power company’s right to access utility lines.

Question 53

Graduated payment Adjustable Mortgage (GPAM)

Answer 53

Allows for the deferment of certain principal payments. Typically, this means that payments on a loan start a lower monthly payment and increase over a specified time frame

Question 54

Earnest Money Deposit

Answer 54

Deposit made to a seller representing a buyer’s intention to purchase a home in “good faith”. An earnest money deposit says to the seller: “Yes, I am serious about buying your house and I’m willing to put my money where my mouth is.” It can be cash, a promissory note, checks, a postdated check, or any items of value.

Question 55

Net listing

Answer 55

Employment contract in which seller pays the listing broker all purchase price proceeds over and above a minimum figure required by the seller

Question 56

Life estate Pur Autrie Vie

Answer 56

An interest in real property that lasts the length of someone’s life (who is not the life tenant). It is a type of freehold estate because it is indefinite in duration. When the “measuring life” ends, title reverts to the original owner (reversion) or a remainderman.

Question 57

Police Power

Answer 57

The government’s right to regulate conduct or property to protect the health, safety, welfare, and morals of the community. Includes regulations like zoning laws

Question 58

Statute of Frauds