Vocab Flashcards
Hypothecation
To pledge property as security for an obligation or loan without giving up possession of it
Rescission
Returns parties to their original position; return any money exchanged. *Applies to provisions of TILA regarding “consumer credit” transactions
Novation
Substituting a new obligation for an old one or substituting new parties to an obligation
Net Lease
A lease that requires a tenant pay not only rent but also any costs incurred in maintaining the property, including taxes, insurance, utilities, and repairs
Equal Credit Opportunity Act (ECOA)
The federal law that prohibits discrimination in the extension of credit because of race, color, religion, national origin, sex, age or marital status
CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act)
A federal law administered by the EPA that establishes a process for identifying parties responsible for creating hazardous waste sites, forcing liable parties to clean up toxic sites, bringing legal action against responsible parties, and funding the abatement of toxic sites. *See superfund
Truth in Lending Act (TILA)
Federal legislation that allows the government to regulate the lending practices of mortgage lenders. Often called “Regulation Z”
TILA-RESPA Integrated Disclosure Rule (TRID)
Rule that implements provisions of the Dodd-Frank Act intended to combine and clarify disclosures to consumers
Closing Disclosure (CD)
A lender’s disclosure required by TRID, which shows all the costs of closing, in addition to, the costs of the loan, and a comparison from the Loan Estimate with actual costs. The CD must be issued 3 business days before consummation of the loan
Consumer
A person or entity seeking or receiving licensed activities
Client
A person who is being represented by a licensee; the principal
Customer
A consumer who is not being represented by the licensee, but for whom the licensee is performing ministerial acts
Ministerial Acts
In Illinois, acts that a licensee may perform for a consumer that are informative and do not constitute active representation
Pur Autre Vie
“For the life of another” A life estate pur autre vie is a life estate that is measured by the life of a person other than the grantee
Subrogation
The substitution of one creditor for another, with the substituted person succeeding to the legal rights and claims of the original claimant. Subrogation is used by title insurers to acquire from the injured party rights to sue to recover any claims the insurers have paid
Exclusive Buyer Agency Agreement
Exclusive right to represent. The broker is entitled to commission whether or not they locate the property the buyer ultimately chooses
Exclusive-Agency Buyer Agency Agreement
Exclusive contract between buyer and broker. Brokers are entitled to payment if they locate the property the buyer ultimately chooses. *The risk is educating the buyer.
Open Buyer Agency Agreement
Nonexclusive buyer agency agreement. Buyer is permitted to enter into similar agreements with an unlimited number of brokers. The buyer is obligated to compensate only the broker who locates the property the buyer ultimately purchases
Consummation
The point at which something is complete and/or finalized
Appurtenance
A right, privilege, or improvement belonging to and passing with the land
Appurtenant Easement
An easement that is annexed to the ownership of one parcel and allows the owner the use of the neighbor’s land
Easement in Gross
An individual or company interest in or right to use someone else’s land. I.e. a railroad’s right-of-way is an easement, or a utility company’s easement
Easement by Necessity
An easement that is created when an owner sells a parcel of land that has no access to a street or public way except over the seller’s remaining land. Created by a court order based on the principle that owners must have the right to enter and exit their land
Easement by Prescription
If the claimant has made use of another’s land for a certain period of time. *10-21 years
Easement by Condemnation
Acquired for a public purpose, through eminent domain. The owner of the servient tenement must be compensated for any loss in property value
License
A personal privilege (not a right) to enter the land of another for a specific purpose. Differs from an easement because a license can be canceled by the licensor at any time
Bargain and Sale Deed
A deed that carries with it no warranties against liens or other encumbrances but does imply that the grantor has the right to convey title. The grantor may add warranties to the deed at his discretion
General Warranty Deed
A deed in which the grantor fully warrants good clear title to the premises. Used in most real estate deed transfers, a general warranty deed offers the greatest protection of any deed
Quitclaim Deed
Provides the grantee with the least protection of any deed. It carries no covenants or warranties. Used primarily to convey less than fee simple or to cure a title defect
Deed in Trust
Trustor conveys real estate to a trustee for the benefit of the trustee
Trustee’s Deed
Conveyance from trustee to third party
Ownership in Severalty
Occurs when property is owned by one individual or corporation
Co-ownership
Illinois recognizes co-ownership i.e. joint tenancy and tenants in common but does not recognize community property because Illinois is a Marital Property state
Tenancy in Common
Each tenant holds an undivided fractional interest in the property i.e. one-half or one-third. The co-owners have “unity of possession” meaning they are entitled to possession of the whole property.
Joint Tenancy
Owned by two or more people. The feature that distinguishes Joint Tenancy from Tenancy in Common is “unity of interest.” Title is held as though all the owners, collectively, constitute one unit. Joint Tenancy includes “right of survivorship”: upon the death of a joint tenant, the deceased’s interest transfers directly to the surviving joint tenant(s).
Creating Joint Tenancies
- Unity of Possession
- Unity of Interest
- Unity of Time
- Unity of Title
Terminating Joint Tenancies
A joint tenancy is terminated when any of the four unities is terminated. The new owner cannot become a joint tenant in the original joint tenancy and will hold interest as a tenant in common. Rights of other joint tenants, however, are unaffected.
Three Categories of Appraisers:
- Associate Real Estate Trainee Appraiser
- Certified Residential Real Estate Appraiser
- Certified General Real Estate Appraiser
- Entry level appraiser; all reports must be cosigned by a state-certified residential real estate appraiser or state-certified general real estate appraiser
- Qualified to appraise residential property of one to four units without regard to transaction value or complexity, but with restrictions in accordance with Title XI, USPAP, and criteria established by the AQB
- Qualified to appraise all types of real property without restrictions as to the scope of practice subject to USPAP requirements
Calculating RE Taxes p. 176
(Assessed Value x Equalization Factor) - (Exemptions x Tax Rate) = Annual Tax
Homestead
A legal life estate in real estate occupied as the family home. The home is protected from unsecured creditors during the occupant’s lifetime. Every homeowner in Illinois is entitled to $15K per head of household, $30K for two heads of household (max amount)
Estates in Land:
- Freehold estates
- Leasehold estates
- Fee Simple Absolute
- Fee Simple Defeasible p.120
- Fee Simple Determinable
- Last for an indeterminate length of time
- Last for a fixed period of time i.e. for years & period to period
- Highest interest recognized by law. Absolute ownership; entitled to all rights to the property
- (Defeasible fee) A qualified estate, that is, it is subject to the occurrence or nonoccurrence of some specified event i.e. condition subsequent or fee simple determinable
- A Fee Simple Defeasible estate that may be inherited
Economic Characteristics of Real Estate
- Scarcity
- Improvements
- Permanence of Investment
- Location
Physical Characteristics of Real Estate
- Immobility
- Indestructibility
- Uniqueness
Bundle of Legal Rights
- Right of Possession
- Right to Control the property
- Right of Enjoyment
- Right of Exclusion
- Right of Disposition
Illinois License Renewal
- Leasing Agents license expires on July 31st of each even-numbered year
- Brokers license expires on April 30th of each even-numbered year
- Managing Broker license expires April 30th of each odd-numbered year
Conditional-use Permit i.e. Special-use Permit
Awarded to current owner; is usually granted to a property owner to allow a special use of property, defined as an allowable conditional use within that zone, such as a day care center in a residential district
Variance (Run with the land)
Provides relief if zoning regulations deprive an owner of the reasonable use of the property. To qualify for a variance, the owner must demonstrate the unique circumstances that make the variance necessary. In addition, the owner must prove that she is harmed and burdened by the regulations. Example: If an owner’s lot is level next to a road but slopes steeply 30 feet away from the road, the zoning board may allow a variance so the owner can build closer to the road than setback requirements generally allow.
Comparative Market Analysis
Based on:
- Recently closed (sold) properties
- Properties currently on the market
- Properties that did not sell
Market Value
Most probable price a property would bring in the open market
Government Check
Irregular area created by corrections; 24 miles apart
Must Know Measurements (Legal Descriptions of Land)
- Sections are smaller than townships
- Township = 36 sections
- Section = 1 square mile or 640 acres
- 43,560 square feet per mile
- 5,280 feet per mile
Government Lots
Areas smaller than full-quarter sections
Annual Tax Calculation
(Assessed Value x Equalization Rate) - (Exemptions x Tax Rate)
Tax Deed
Tax deed must be recorded within one year after the expiration of the redemption period, or else it is absolutely void with no right or reimbursement
CAN-SPAM Act of 2003
Establishes requirements for commercial email, spells out penalties for email senders and gives consumers the right to have emailers stop sending emails to them
Accretion
To increase or addition of land by the deposit of sand or soil washed up naturally from a river, lake or sea
Accession
Acquiring title to additions or improvements to real property as a result of the annexation of fixtures.
Special Warranty Deed
- Warranty that the grantor received title
- Warranty that the property was not encumbered during the time the grantor held title, except as otherwise noted in the deed
Title Theory State
Some states interpret a mortgage to mean that the lender is the owner of mortgaged land. On full payment of the mortgaged debt, the borrower becomes the landowner.
28/36 Ratio
*Also known as 28/43
- The 28 means “total monthly housing payment (PITI, as well as mandatory assessments and PMI) cannot exceed 28% of gross monthly income
- The 36 means “recurring long-term debts and housing payment combined may not exceed 36% of gross monthly income.”
Police Power
4 Government Powers: PETE
The government’s right to impose laws, statutes and ordinances, including zoning ordinances and building codes, to protect the public health, safety and welfare
PETE: Police Power Eminent Domain Taxation Escheatment
Assignment
A transfer of rights or duties under a contract. i.e. “the substitution of parties”
Liquidated Damages
An amount predetermined by the parties to a contract as the total compensation to an injured party should the other party breach the contract
Fair Housing Act
The federal law that prohibits discrimination in housing, based on race, color, religion, sex, handicap, familial status, and national origin
General Lien
The right of a creditor to have all of a debtor’s property (both real and personal) sold to satisfy a debt
Specific Lien
A lien affecting or attaching only to a certain, specific parcel of land or piece of property
Real Property
The interests, benefits, and rights inherent in real estate ownership
Personal Property
Items, called chattels, that do not fit into the definition of real property; movable objects. Also called personalty.
Leasing Real Estate in Illinois
The statute of frauds in Illinois requires that lease agreements be in writing to be enforceable if they are for more than one year
Judgement
The formal decision of a court on the respective rights and claims of the parties to an action or suit. After a judgement has been entered and recorded with the county recorder, it usually becomes a general lien on the property of the defendant.
Actual Eviction
The legal process that results in the tenants being physically removed from the leased premises
Constructive Eviction
Actions of a landlord that so materially disturb or impair a tenant’s enjoyment of the leased premises that the tenant is effectively forced to move out and terminate the lease without liability for any further rent
Constructive Notice
Notice given to the world by recorded documents. All people are charged with knowledge of such documents and their contents, whether or not they have actually examined them. Possession of property is also considered constructive notice that the person in possession has an interest in the property
Actual Notice
Express information or fact; that which is known; direct knowledge
Quick-take
A summary proceeding permitted by Illinois law in which a plaintiff/condemnor may obtain immediate fee simple title to real property, including the right of possession and use
Tenancy by the Entirety
The spousal joint ownership of the principal residence acquired during marriage. Upon death of one spouse, the survivor becomes the owner of the property
Inverse Condemnation
An action brought by a property owner seeking just compensation for land taken for public use when the taker of the property does not intend to bring eminent domain proceedings. Property is condemned because its use and value has been diminished due to an adjacent property’s public use.
Intermediate Mortgage Theory State
Theory based on the principles of title theory states but still requiring the mortgagee to foreclose to obtain legal title
Bilateral Contract
A contract by which all parties to the instrument are legally bound to act as prescribed
Option Listing
Listing with a provision that gives the listing sponsoring broker the right to purchase the listed property
Unilateral Contract i.e. Option contract
A one-sided contract wherein one party makes a promise so as to induce a second party to do something. The second party is not legally bound to perform; however, if the second party does comply, the first party is obligated to keep the promise
Per IL, Article 15 Statute of Limitations actions being brought against licensees must be taken…
Within 5 years after the facts become known
In IL, Escrow Records must be maintained for at least…
5 years
Subagent
One who is employed by someone already acting as an agent. I.e. Serhant’s team working with him on a listing
Cost Approach
The process of estimating the value of a property by adding to the estimated land value the appraiser’s estimate of the reproduction or replacement cost of the building, less depreciation
Gross Lease
A lease of property according to which a landlord pays all property charges regularly incurred through ownership, such as repairs, taxes, insurance, and operating expenses. Most residential leases are gross leases.
In Illinois, if a landlord wants to terminate a year-to-year tenancy, how much notice must the tenant receive?
60 days
What is the relationship between the Illinois Agency Statutes and the Common Law of Agency?
Illinois Agency Statutes supersede the common law of agency in Illinois
Description of the review process for a final administrative decision of IFDPR?
The accused may petition the circuit court of the county in which the accused resides. The circuit court’s decision may be appealed directly to the Illinois Supreme Court.
Every Illinois Broker who applies for renewal of a license must successfully complete how many hours of continuing education courses in each two-year license renewal period?
12 hours
A person who successfully completed her Illinois real estate education requirement on November 1, 2014, may take the state license exam no later than
October 31, 2018 I.e. 4 years to take the exam
Tenancy at will
Gives the tenant the right to possess property with the landlord’s consent for an unspecified or uncertain term
Tenancy at sufferance
Arises when a tenant who lawfully possessed real property continues in possession of the premises without the landlord’s consent after the rights expire. I.e. a holdover tenancy
Curtesy
The identical interest that a husband has in the real estate of his deceased wife. NOT IN ILLINOIS - WE HAVE HOMESTEAD
Dower
The life estate a wife has in the real estate of her deceased husband. NOT IN ILLINOIS - WE HAVE HOMESTEAD
Deed Restrictions
Private agreements that affect land use
Easement
The right to use the land of another for a particular purpose
Land in the Northwest corner of Illinois is in reference to which principle meridian?
The 4th Principle Meridian - Goes down to Beardstown
*The 3rd P.M. goes from Rockford to Centralia - Centralia is the baseline
The 2nd P.M. is in Indiana
Section 16 is set aside for…
School purposes
The General Datum plane referred to by surveyors throughout Illinois is the…
North American Vertical Datum
In Illinois, legal descriptions of land are usually based on the…
Rectangular Survey System
You may terminate the loan’s escrow account when the remaining balance is equal to or less than…
65%
A non-possessory interest in real property is also called an…
Encumbrance
Encumbrance
Anything (for example, a mortgage, tax, or judgement lien; an easement; a restriction on the use of the land) that may diminish the value or use and enjoyment of a property
