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Real Estate Salesperson License Exam > Vocabulary Worksheet > Flashcards

Vocabulary Worksheet Flashcards

1
Q

Bundle of Rights

A

Set of legal rights that come with property ownership and they include:
(1) right of possession = titleholder is legal owner of property.
(2) right of control = can use property in any way that is legal.
(3) right of enjoyment = can partake in any activities that are enjoyable but also lawful.
(4) right of exclusion = can limit who may enter the property, but may have some exceptions like permitting access to utility lines or a search warrant.
(5) right of disposition = right to transfer ownership permanently or temporarily to another when property is owned not mortgaged.

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2
Q

Real Property

A

All things attached to the land and all rights inherent with that land. Things that are immovable.
Ex: natural formations like a hill or pond, artificial additions like a driveway, rights of ownership.

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3
Q

Personal Property

A

Things that are generally movable. May hear personal property referred to as “chattels” or “personality.”
Tip: think of the word “cattle” to associate with “chattels” –> cows “moo” so chattels are “moo-vable” property.

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4
Q

Fixture

A

Personal property that becomes real property.

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5
Q

Mnemonic MARIA

A

Used as factors in determining whether something is a fixture or not:
M = Method of attachment.
A = Adaptability; if item becomes an integral part of the home, it cannot be removed.
R = Relationship of the parties.
I = Intention of party when the item was attached; whether it was intended to be a permanent attachment.
A = Agreement btwn parties; as indicated in purchase contract, whether a clause clearly defines and agrees on items included in the sale.

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6
Q

Severance

A

Changing an item from real property to personal property by detaching it from the land.

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7
Q

Annexation

A

Adding to property by attaching an item to the property (so personal property to real property), creating a fixture.
Can be used to refer to a smaller piece of land attaching to a larger one, or a smaller document being annexed to a larger one (like a codicil to a will).

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8
Q

Trade fixture

A

Piece of equipment on or attached to the real estate which is used in a trade or business. At the end of a business tenancy, these fixtures may be removed from the real estate, so it’s technically a tenant’s personal property even if attached. But if tenant leaves the trade fixture even after moving out, then it becomes the landlord’s real property.

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9
Q

Appurtenance

A

Something that belongs to something else, attached or not. It is part of the property and passes with it upon sale or other transfer (“run with the land”). Require no separate conveyance.
Ex: barn to a house, easement to land, stock in mutual water company, covenants, and mineral rights. These are all real property.

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10
Q

Encroachment

A

Structure or improvement on one person’s land that physically intrudes on the land of another person. Can be found by survey and is a form of trespass.

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11
Q

Emblements

A

Annual crops which have been legally cultivated and belong to the tenant; tenants have implied right to the harvest, so emblements are treated as the tenant’s property.
Considered personal property. Tenant farmer has right to crops even after lease ends until the end of the growing season.

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12
Q

Riparian Rights

A

An owner’s rights to use water from moving water, like a river, stream, or creek.
Usu has to do with water that is moving in one direction.

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13
Q

Littoral Rights

A

An owner’s rights to use water from an ocean, sea, or lake that is situated next to or near the property.
Usu has to do with water that does not have a direction; by the shore.

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14
Q

Accretion

A

When soil is deposited by the water and increases the size of the property.

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15
Q

Reliction

A

When land is exposed due to a natural process that results in the withdrawal of water, such as when a river channel dries up.

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16
Q

Erosion

A

When land or soil is worn away by wind, water, currents, or ice.

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17
Q

Avulsion

A

When natural causes tear away land in a violent way. Ex: dam breaking or an earthquake.

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18
Q

Freehold Estate

A

An estate where you have exclusive right to enjoy the possession of a property indefinitely.
3 types of freehold estates:
(1) Fee simple absolute
(2) Fee simple defeasible
(3) Life estate

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19
Q

Fee Simple Absolute

A

Type of freehold estate that is absolute ownership of real property; greatest interest in parcel of land that you can own. Has indefinite duration.
It’s only limited by the 4 basic gov powers (taxation, eminent domain, police power, escheat), some encumbrances, or a condition in the deed.
This type of ownership cannot be claimed by previous owner or their heirs.

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20
Q

Fee Simple Defeasible

A

Type of freehold estate created when a grantor puts a condition on a fee simple estate. If that particular event happens, then the estate could be lost.
2 types of defeasible estates:
(1) Fee simple determinable = grantor states a specific duration, and if no longer the case, reverts back to grantor.
(2) Fee simple subject to a condition subsequent = grantor states a specific condition, and if not followed, grantee can lose title.

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21
Q

Life Estate

A

Type of freehold estate in which interest in real property lasts the duration of one person’s lifetime (ma be that of the person holding estate or another person).
Life tenant receives property and is responsible for maintenance and paying taxes. They cannot leave the property to someone in their will. May sell, mortgage, or lease it for duration of estate.

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22
Q

Take-Out Loan

A

A long-term loan to replace a construction loan. A permanent mortgage loan which a lender agrees to make to a borrower upon completion of improvements on the borrower’s land. Proceeds of the loan are used principally to pay off the construction loan.

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23
Q

Warehousing

A

When a lender collects loans and puts them out as a package for sale. Process by which a mortgage banker or mortgage broker assembles mortgages that he or she has made and prepares the mortgages to be sold in the secondary mortgage market.

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24
Q

Certificate of Reasonable Value (CRV)

A

The maximum amt that a bank will loan for a property; the appraisal commitment of the Veterans’ Administration used to fix the value of the property being proposed for purchase by a veteran under the GI Bill of Rights.

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25
Q

Usury

A

Charging an interest rate higher than the legal limit.

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26
Q

Writ of execution

A

A court order granted to put in force a judgement of possession obtained by a plaintiff from a court. When issuing a writ of execution, a court typically will order a sheriff or other similar official to take possession of property owned by a judgement debtor.

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27
Q

Cost approach

A

A real estate valuation/appraisal method that estimates that the price a buyer should pay for a piece of property is equal the cost to build an equivalent building.
Calculated as land value plus current replacement cost of a structure minus the accrued depreciation.
Mostly applied for special properties (church or school), new construction, or unique homes with few comparables.

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28
Q

Less Than Freehold Estate

A

An estate that has a fixed, defined period.
4 types of less than freehold estates: estate for years, periodic tenancy, estate at sufferance, estate at will.

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29
Q

Estate for Years

A

Aka tenancy for years.
A less-than-freehold, leasehold interest in land for a fixed period of time, so there is no need to give notice at the end of the rental.

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30
Q

Periodic Tenancy

A

Aka estate from years to years.
A less-than-freehold tenancy that is not bound to a lease with a fixed period (may be week-to-week, month-to-month, year-to-year). Proper notice must be given to end lease.

31
Q

Estate at Sufferance

A

Aka tenancy at sufferance.
A less-than-freehold tenancy where the tenancy wrongfully holds on to a property after the lease has ended. Landlord usu has to legally evict the tenant.

32
Q

Estate at Will

A

A less-than-freehold estate that can be ended at any time (indefinite term), based on the will of both parties.
Gives the lessee the right to possession until the estate is terminated by either party.

33
Q

Lease

A

A written bilateral contract that gives exclusive possession of a property to the lessee with a reversionary right to the lessor.
A valid lease must contain mutual agreement (or offer and acceptance), lawful object, consideration, and capable parties.
Leases are personal property, so they do not run with the land.
Note: lessor is landlord, and lessee is tenant.

34
Q

Percentage Lease

A

Rental agreement that is based on a % of the monthly or annual gross sales made on the premises. Common with large retail stores.

35
Q

Net Lease

A

Rental agreement where the lessee has the responsibility to pay taxes, insurance, and maintenance, as well as monthly lease payment.
Aka triple net lease.

36
Q

Gross Lease (Aka fixed, flat, or straight lease)

A

Rental agreement where the tenant pays a fixed amt which never changes as a results of changes in the various expenses of the property. Landlord pays for these expenses, including repairs, taxes, and operating expenses. Opposite of net lease, where these costs are covered by the lessee.

37
Q

Sandwich Lease

A

Lease agreement in which a party leases a property from an agent who is, in turn, leasing the property from the owner.
Any party in a lease who maintains a dual position of landlord and tenant.

38
Q

Sale Lease Back

A

Agreement in which the property is sold but leased back to the seller simultaneously. thus, the seller becomes the tenant of the new owner. Advantage for the seller is that the money gained from the sale and all future rents paid are 100% deductible.

39
Q

Tenant Improvement Allowance

A

A fund the landlord provides to pay for improvements to the leased space. These allowances often pay for costs incurred when a tenant moves to the new property.

40
Q

Abandonment

A

Deliberate giving up on one’s rights to property due to falling behind on taxes or absence. Can also refer to giving up a property due to dereliction.

41
Q

Subleases

A

An additional lease in which the tenant leases the property to another person while still maintaining responsibility for the property to the landlord.

42
Q

Assignment

A

A transfer of contract rights, which includes everything including ownership.
Note: differs from sublease, which transfers possession but not ownership.

43
Q

Surrender

A

Situation in which the landlord/lessor and tenant/lessee mutually agree to release each other from their lease obligations, thus terminating the lease before initially expected termination.

44
Q

Constructive Eviction

A

Situation in which a landlord either does something or fails to do something that he has a legal duty to do, usu causing the tenant to complain and/or vacate the premise.
Ex: landlord refusing to provide heat or water to an apt.

45
Q

Estoppel Statement

A

A legal theory under which a person is barred from asserting or denying a fact because of the person’s previous acts or words.
The actions must not be contrary to what they had promised originally.

46
Q

Deed

A

An instrument used to evidence transfer of title of real property from grantor (owner/seller) to grantee (buyer).
Title cannot be conveyed by assignment of previous deed.
Requires grantors to be legally competent, must be delivered and accepted, and contain a granting or action clause. Does NOT need to be acknowledged to be valid.

47
Q

Grant deed

A

Deed that conveys any title acquired after the grantor has conveyed the title to the real property (“after acquired title”). Shows that you have clear title to sell and no knowledge of anything that might impact the title.
Doesn’t include a warranty that you’ll defend the title against anyone else who may pop up and stake a claim to the property after the sale takes place.

Most commonly used deed in CA to convey title.
Contains 2 implied warranties:
1) Title was not previously conveyed to another, and
2) There are no encumbrances other than those known and revealed.

48
Q

Quitclaim deed

A

Deed that conveys only the interest held by the grantor at the time of conveyance.
Contains no explicit or implied warranties that grantor owns the property or any interest in it.
Does not convey “after acquired title.”
Generally used to clear some “cloud on the title” or when an owner gives a house to someone they have a strong relationship with (e.g., father to son).
Offers the least amt of protection for a buyer of your home. Transfers rights and ownership to the buyer, but does not guarantee that the seller has the right to do so.

49
Q

Warranty deed

A

Deed that contains written warranties or express covenants of title.
It is legal but seldom used in CA due to the use of title insurance, which can evidence marketable title.
It conveys “after acquired title.”

50
Q

Special warranty deed

A

A deed to real estate where the seller (grantor) warrants only against anything that occurred during their physical ownership.
Grantor doesn’t guarantee against any defects in clear title that existed before they took possession of the property.
More limited/less comprehensive than the more common general warranty deed.
Used more or commercial real estate transactions, and aka as covenant deed or limited warranty deed.

51
Q

General warranty deed

A

A deed that covers the property’s entire history and guarantees that the property is free and clear from defects or encumbrances, whether they happened or under whose ownership.
Assures the buyer they are obtaining full ownership w/o valid potential legal issues w/ the title.
Most commonly used in traditional home sales and provides the most protections for people buying your home.

52
Q

Bargain and sale deed

A

A deed “conveying real property without covenants” and “for which the grantor implies to have or have had an interest in the property but offers no warranties of title to the grantee.”
May mean that the new owner does not have good title, but it gives the grantor/owner limited liability. Risky for a grantee/buyer.
Used when limited or not warranties can be provided, but title can be proved.
This type of deed is especially used by local gov, fiduciaries, and in foreclosure sales by sheriffs.

Ex: if home is sold in a tax sale or foreclosure, may use bargain and sale deed, meaning the seller doesn’t need to clear the title and there are no protections for the buyer. Any liens for that property will run with the property and the buyer becomes responsible for them.

53
Q

Reconveyance deed

A

Evidence that the loan has been successfully paid off so no remaining balance is owed. Used with a trust deed to clear the title of any liens related to the note and trust deed.
Conveys title to property from a trustee back to the trustor on termination of the trust (usu due to promissory note being paid in full).

54
Q

Trust deed

A

3-party security instrument conveying title to land as security for the performance of an obligation. The 3 parties are a borrower (trustor), lender (beneficiary), and a 3rd party (trustee), to whom legal title to the real property is conveyed.
Trustee holds legal title for the beneficiary and has power to sell the property if the trustor does not fulfill obligations as recited in the trust deed. Trustee also has power to reconvey legal title to the trustor if the beneficiary requests reconveyance of that title (when loan is paid in full).

55
Q

Gift deed

A

Used when grant makes a gift of property to the grantee. May use grant deed form or quitclaim deed form for the purpose. If intended to defraud creditors, transfer may be set aside within one year.

56
Q

Tax deed

A

Deed given to highest bidder after property tax sale.

57
Q

Sheriff’s deed

A

Issued to the successful bidder after a judicial foreclosure sale after the statutory redemption period has passed.
Title conveyed carries no warranties or representations whatsoever.

58
Q

Equitable title

A

Right of possession and right to do as one pleases with the property as long as the interest of the lender (beneficiary) is not jeopardized. A trustor gains equitable title when they sign the trust deed.

59
Q

Title

A

Indicates “fee” position of lawful ownership and right to property.
“Bundle of rights” possessed by an owner.
Combination of all elements constituting a proof of ownership.

60
Q

Chain of Title

A

A history of conveyances and encumbrances affecting the title from the time the original patent was granted, or as far back as records are available, used to determine how title came to be vested in current owner.

61
Q

Abstract of Title

A

A record of the history of title to real property. Abstract companies collect docs and records relating to specific properties then sell them to interested parties.
No guarantee is made as to the condition of title.

62
Q

Cloud on Title

A

A claim, encumbrance, or condition which impairs the title to real property until disproved or eliminated via quitclaim deed or a quiet title action.

63
Q

A Quiet Title Action

A

Lawsuit brought in a court having jurisdiction over land disputes, in order to establish a party’s title to real property against anyone and everyone, and thus “quiet” any challenges or claims to the title.

64
Q

Alienation of Title

A

Process of a property owner voluntarily giving or selling the title of their property to another party.

65
Q

Title Insurance

A

Insurance to protect a real property owner or lender up to a specified amt against certain types of loss or damage occurring from liens, encumbrances, or defects in a property’s title or actual ownership.
Ex: defective or unmarketable title.

66
Q

Standard Policy of Title Insurance

A

Insures primarily against defects in title which are discoverable through an examination of the public record.
Provides the following coverage (expressly excludes all other coverage):
Matters of public record, forgery in the chain of title, lack of capacity of anyone in chain of title, and defense costs (attorney/court).

67
Q

ALTA Policy of Title Insurance

A

Stands for American Land Title Association (ALTA).
Type of title insurance policy issued by title insurance companies which expands the risks normally insured against under the standard type policy to include: unrecorded mechanic’s liens, unrecorded physical easements, facts a physical survey would show, water and mineral rights, and rights of parties in possession (like tenants and buyers under unrecorded instruments).
Basically provides a more complete coverage for lenders.

68
Q

Extended Policy of Title Insurance

A

Policy that eliminates exclusions from standard policy of title insurance. Covers matters not of public record, water rights, rights of parties in possession, and physical aspects.

69
Q

Severalty

A

Owned by natural or legal person only (can be a corporation); sole ownership.

70
Q

Concurrent Estate

A

Property that more than one individual owns at a time.
3 types: tenancy in common, joint tenancy, and community property.

71
Q

Joint Tenancy

A

Undivided ownership of a property interest by 2 or more persons each of whom has a right to an equal share in the interest and a right of survivorship.
Valid joint tenancy requires 4 unities: Possession, Interest, Title, and Time.
1) Interests must be equal.
2) Interests are undivided (no spec divided portion of property is owned).
3) Possession rights are equal and undivided.
4) Part or all of interest owned may be sold.
5) Interest cannot be passed by will (rights of survivorship). Upon death of joint tenant, their interest would best in the surviving joint tenant(s).

72
Q

Tenancy in Common

A

Co-ownership of property by 2 or more persons who each hold an undivided interest, w/o right of survivorship.
Only one unity required: equal rights of POSSESSION.
1) Interests may be equal or unequal.
2) Interests held are undivided (no spec divided portion of the property is owned).
3) Possession rights are equal no matter what % of interest owned.
4) Part or all of interest owned may be sold.
5) May be passed by used of a will.

73
Q

Community Property

A

Property acquired by husband and/or wife during a marriage when not acquired as the separate property of either spouse. Each spouse has equal rights of management, alienation, and testamentary disposition of community property.
1) Interests must be equal.
2) Interests are undivided.
3) Possession rights are equal.
4) May sell part or all of their interest.
5) Either may leave their interest by will, if not, then by the process of intestate succession, it would pass to the surviving spouse.

Real Estate Salesperson License Exam (5 decks)

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