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Real Estate Exam > Definitions > Flashcards

Definitions Flashcards

1
Q

LAND CONTRACT (aka contract for deed or installment contract)

A

Seller holds onto deed until buyer completely pays off the house

Owner financing where the seller keeps the warranty deed for the entire duration of the contract for deed; thus the seller retains legal title. The buyer gets possession and receives an equitable title upon the signing of the contract for deed, allowing for the buyer to obtain the deed after the entire contract is paid off. Also referred to as a contract for deed or installment contract.

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2
Q

Usury Laws

A

Sets the maximum interest that a lender can charge

protects the borrower

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3
Q

REGULATION Z (aka truth in lending laws)

A

Federal law pertaining to lenders having to disclose all loan costs to borrowers

Doesn’t apply to commercial loans

Also referred to as Truth-In-Lending Laws

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4
Q

REAL ESTATE SETTLEMENT PROCEDURES ACT

(RESPA

A

Federal law whose purpose is to inform borrowers ahead of time total closing costs so borrowers can shop around to get the best deal

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5
Q

FULLY AMORTIZED NOTE

A

Loan where the payments apply to principal and interest; the entire principal loan balance is totally paid off over the term

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6
Q

Blanket Mortgage

A

Covers more than 1 property

A blanket mortgage is a single mortgage that covers two or more pieces of real estate. The real estate is held together as collateral, but the individual properties may be sold without retiring the entire mortgage. Blanket mortgages are commonly used by developers, real estate investors, and flippers

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7
Q

Package Mortgage

A

Uses both real and personal property as security

A package mortgage uses real and personal property as security

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8
Q

Tenancy at Sufferance

A

A lease where the tenant stays over without permission; landlord suffers

A tenancy at sufferance is when the tenant stays over without permission and the landlord has to evict.

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9
Q

Right of Redemption

A

Right of the owner to buy back his house after foreclosure

Redemption is an owner’s right to buy a property back after foreclosure

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10
Q

Net Lease

A

Tenant pays expenses such as taxes and insurance.

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11
Q

Gross Lease

A

Landlord pays expenses such as taxes and insurance.

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12
Q

Blockbusting

A

trying to scare owners to sell by telling them that persons of a protected class are moving into the area

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13
Q

Reversion

A

Right of an owner to get a property back when someone else`s rights expire.

A landlord getting his property back after tenants lease expires

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14
Q

Assumable Mortgage

A

An outstanding mortgage and its terms are transferred from the current owner to a buyer

By assuming the previous owner’s remaining debt, the buyer can avoid obtaining their own mortgage.

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15
Q

Encumbrance

A

A claim against a property by a party that is not the owner

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16
Q

Appurtenance

A

It “runs with the land”

A right privilege or improvement that passes with the land

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17
Q

Real property

A

Real estate and the bundle of rights associated with owning the real estate.

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18
Q

Personal property

A

Ownership of anything that is not real estate, and the rights associated with owning the personal property item. Items of personal property are also called chattels or personalty.

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19
Q

Tangible property

A

Physical, visible, and material. Real estate, by its physical nature, is tangible property. Personal property may be tangible or intangible. Boats, jewelry, coins, appliances, computers, and art work are examples of tangible personal property.

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20
Q

Emblements

A

Plants and crops requiring human intervention and labor are called emblements.

Despite their attachment to land, are considered personal property

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21
Q

Tie-in arrangement

A

Violates anti-trust

Says “u have to buy this stuff too if u want to purchase that”

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22
Q

Price Fixing

A

Collusion between or among members of a particular trade to maintain prices at a set level.

Violates anti-trust

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23
Q

Group Boycotts

A

Agreements between or among members of a particular trade that would prevent other members from fair participation in the trade’s activities.

Violates anti-trust

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24
Q

Market Allocation

A

Agreements between or among members of a trade to avoid doing business in specific market areas.

Violates anti-trust

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25
Q

Tie-in Arrangements

A

Arrangements that requires a buyer to purchase additional or unrelated products or services when making a product purchase.

Violates anti-trust

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26
Q

Acceleration Clause

A

If a borrower defaults on the loan, the lender can call the entire balance due and payable immediately.

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27
Q

Alienation Clause (due on sale)

A

Prevents sale of the property without lender’s approval.

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28
Q

Prepayment Clause

A

Allows the lender to charge extra interest if the loan is paid off before the normal completion date.

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29
Q

Adjustable rate mortgage (ARM)

A

Allows the lender to change the interest rate at specified intervals and by a specified amount.

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30
Q

Loan Type: Firm commitment

A

A straightforward offer to make a specific loan at a specific interest rate for a specific term.

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31
Q

Loan Type: Lock-in commitment

A

An offer to lend a specific amount for a specific term at a specific interest rate.

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32
Q

Loan Type: Conditional commitment

A

Offers to make a loan if certain provisions are met.

33
Q

Loan Type: Take-out commitment

A

Offers to make a loan that will “take out” another lender’s loan.

34
Q

Deed of trust

A

A deed of trust is an agreement between a home buyer and a lender at the closing of a property.

It states that the home buyer will repay the loan and that the mortgage lender will hold the legal title to the property until the loan is fully paid.

35
Q

Lis Pendens

A

A written notice that a lawsuit has been filed concerning real estate, involving either the title to the property or a claimed ownership interest in it.

36
Q

Net listing

A

Owner sets a minimum amount that he wants to receive from the sale of the property and lets the brokerage firm have as commission any amount above the set minimum.

Net listings are not illegal in Illinois, but they are discouraged.

37
Q

Void contract

A

An agreement that does not meet the tests for validity, and therefore is no contract at all. If a contract is void, neither party can enforce it.

38
Q

Reproduction value

A

The value based on the cost of constructing a precise duplicate of the subject property’s improvements, assuming current construction costs.

39
Q

Exchange value

A

The value that results from comparing the property to other similar properties on the open market.

40
Q

Rental value

A

An estimate of the rental rate a property can command for a specific period of time.

41
Q

Depreciated value

A

A value established by subtracting accumulated depreciation from the purchase price of a property.

42
Q

Condemned value

A

The value set by a county or municipal authority for a property which may be taken by eminent domain.

43
Q

Salvage value

A

The nominal value of a property that has reached the end of its economic life.

44
Q

Assessed value

A

The value of a property as estimated by a taxing authority as the basis for ad valorem taxation.

45
Q

Replacement value

A

The value based on the cost of constructing a functional equivalent of the subject property’s improvements, assuming current construction costs.

46
Q

Assemblage

A

Combining properties to create a value greater than the sum of the parts.

47
Q

Subdivision

A

Dividing a property to create a value greater than that of the single property.

48
Q

Straight term loan

A

Loan in which only interest is paid during the term of the loan, with the entire principal amount due with the final interest payment.

49
Q

Ministerial Acts.

A

These are acts that done for a customer that do not require any advice or use of
judgment and therefore do not rise to client level services

50
Q

EXCLUSIVE AGENCY LISTING

A

A type of listing where the owner and one broker are authorized to sell and receive a commission

51
Q

Graduated Lease

A

Lease payments can go up or down. But this is predetermined

Unlike an index lease, which also goes up or down

52
Q

Ground Lease

A

Simply means leasing ground

53
Q

Mortgage/financing contingency clause

A

Says buyer can back out if he doesn’t get financing

54
Q

MORTGAGOR

A

The giver of a mortgage (borrower)

55
Q

Plottage (or assemblage)

A

Plottage or assemblage is where combining properties together results in more value for all the properties than if being left separated.

56
Q

Lis pendens

A

In United States law, a lis pendens is a written notice that a lawsuit has been filed concerning real estate, involving either the title to the property or a claimed ownership interest in

57
Q

Encumbrance

A

An encumbrance is a claim made against a property by someone other than the current titleholder.

Some common claims are leases, liens, easements, and mortgages.

58
Q

RIGHT OF SURVIVORSHIP

A

Found in joint tenancy, when one owner dies, the ownership interest passes to the surviving owners

59
Q

Servitude

A

Right to use the land of another (such as an easement or license).

60
Q

Accretion

A

build up of soil

he increase of the actual land on a stream, lake or sea by the action of water which deposits soil upon the shoreline. Accretion is Mother Nature’s little gift to a landowner.

61
Q

“Voluntary alienation”

A

a normal transfer of real estate

62
Q

Wraparound mortgage

A

seller sells the property keeping the existing mortgage in place and loans extra money to the buyer.

63
Q

Equitable redemption

A

Borrower`s right to stop the foreclosure process by paying off the loan BEFORE the sale

64
Q

Attorney in fact

A

Person w/ power of attorney

65
Q

Protective period clause

A

If find buyer during listing but same buyer purchase after listing expires, brokerages still gets commission

66
Q

Alienation clause

A

Loan isn’t assumable, loan balance due on sale of property

67
Q

Fully amortized loan

A

Payments towards principal and interest, at end of term entire loan is paid off already

68
Q

Partially amortized loan

A

Payment goes to principal and interest

ballon payment at end to pay off what wasn’t paid already

69
Q

Chattel mortgage

A

Personal property secures loan

Under a typical chattel mortgage, the purchaser borrows funds for the purchase of movable personal property from the lender

70
Q

Encroachment

A

Improvement or appurtenance that extends across the property line; e.g., fences, tree limbs, etc.

71
Q

defeasance clause

A

Whatever secures the loan is void once loan is paid off. Borrower “defeats” lender

72
Q

Avulsion

A

avulsion refers to a sudden loss of land, which results from the action of water. It differs from accretion, which describes a gradual addition to land resulting from the action of water.

73
Q

Subrogation

A

Signing over rights to an insurance company upon being paid for a claim.

Insurance company goes after whoever the other pary at fault is

  • Subrogation is a term describing a legal right held by most insurance carriers to legally pursue a third party that caused an insurance loss to the insured.
  • Generally, in most subrogation cases, an individual’s insurance company pays its client’s claim for losses directly, then seeks reimbursement from the other party’s insurance company.
  • Subrogation is most common in an auto insurance policy but also occurs in property/casualty and healthcare policy claims.
74
Q

Proprietary lease

A

Lease in cooperative

Also referred to as an occupancy agreement, gives a shareholder in a housing cooperative the right to occupy a particular dwelling unit. Homebuyers who join a co-op are purchasing shares in a corporation rather than acquiring real estate.

75
Q

Statutory redemption

A

Borrower redeems AFTER foreclosure sale

The process, known as “statutory redemption,” allows mortgagors (homeowners) a limited amount of time, often one year, to reclaim (or redeem) the property if they are able to pay what the property sold for at the foreclosure sale.

(Equitable redemption - redeems property before foreclosure sale)

76
Q

Equitable redemption

A

Borrower redeems property BEFORE foreclosure sale

Equitable redemption is the right of a defaulting mortgagor to reclaim property by paying all past due mortgage payments anytime PRIOR to foreclosure.

77
Q

Open End Mortgage

A

Permits the borrower to go back to the lender and borrow more money.

There is usually a set dollar limit on the additional amount that can be borrowed

  • An open-end mortgage is a type of mortgage that allows the borrower to increase the amount of the mortgage principal outstanding at a later time.
  • An open-end mortgage allows a borrower to take a portion of the loan value for which they have been approved to cover the costs of their home; by taking only a portion, the borrower can pay a lower interest rate since they are only obligated to make interest payments on the outstanding balance.
  • An open-end mortgage is advantageous for a borrower who qualifies for a higher loan principal amount than may be needed to buy the home.
78
Q

Bargain and sale deed

A

Implies the grantor owns the property and has right to convey it. But no warranties go with it

Bargain and sale deeds are typically used when transferring property in foreclosure or tax sales, because the seller is likely to have little knowledge of the history and status of the property,

“indicates that only the seller of a property holds the title and has the right to transfer ownership. This type of deed offers no guarantees for the buyer against liens or other claims to the property, so the buyer could be responsible for these issues if they turn up.”

79
Q

Special Warranty Deed

A

grantor only warrants against defects arising during the time he owned the property

not against defects arising before he owned property

Real Estate Exam (26 decks)

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