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Real Estate Test > All > Flashcards

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1
Q

Kansas Real Estate Commission (KREC)

A

KREC is a governmental body that oversees real estate in Kansas.
1. Determines how licenses are earned and maintained
2. Protects the public
3. Enforces regulations
There are five commissioners, each appointed by the Governor, who vote on issues. There are also employed staff people who work at KREC, but none of them can vote.

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2
Q

Kansas Association of REALTORS® (KAR)

A

KAR is a professional trade association that licensees may choose to join.
a professional trade association that provides services for real estate brokers and salespeople

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3
Q

Real Estate

A

land and anything artificial attached to it. (a house is bound to land through foundation)

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4
Q

Brokerage (verb)

A

process of bringing parties together.

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5
Q

real estate brokerage (the noun)

A

a real estate company.

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6
Q

supervising broker

A

oversees the entire operation at the main office and compensates everyone in the office.

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7
Q

branch broker

A

has a business relationship with the supervising broker at the main office, but is responsible for the operation of the branch office.

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8
Q

Associate Broker

A

someone who has a broker’s license, but is associated with (supervised by) a supervising broker.

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9
Q

Salesperson

A

Generates business and then provides services on behalf of the broker.

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10
Q

Staff

A

Some are licensed while others are not. Unlicensed staff can perform administrative tasks.

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11
Q

MLS Multiple listing service

A

a computer based system that allows brokers to share information about their listings (the properties they are marketing for sellers) and it allows brokers to more efficiently find properties for buyers.

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12
Q

Rebates

A

where an unlicensed person receives money in some form for real estate activity Example, a seller is promised money after closing for listing with the licensee. - illegal in kansas

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13
Q

Referral fees

A

where a licensee recommends another licensee (such as when clients are moving to another city) - legal in kansas

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14
Q

BRRETA

A

Brokerage Relationships in Real Estate Transactions Act

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15
Q

Transaction Broker

A

If a buyer or seller wants a licensee to provide only information. DOES NOT REPRESENT THE BUYER OR SELLER.

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16
Q

BRRETA brochure

A

Brokerage Relationships brochure) is a menu of services with explanations that help consumers determine which service is best for them. The brochure must be given to the consumer at the first practical opportunity.

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17
Q

Dual Agency

A

If a licensee were to represent both the buyer and the seller in the same transaction - illegal in KS

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18
Q

Client

A

A buyer or seller who signs a written agency agreement of any kind with you becomes your client(also known as a principal).

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19
Q

customer

A

A buyer or seller who has not signed a written agency agreement with you

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20
Q

Designated Agency

A

creates a “one to one” relationship between the licensee and the client

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21
Q

agency

A

signing the agreement ON BEHALF OF THE ENTIRE BROKERAGE, creating a legal relationship between the buyer and everyone in the brokerage

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22
Q

trust account

A

bank account in which a supervising broker or branch broker holds other people’s money. No more than $100.00 of the broker’s money can be in the account

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23
Q

Commingling

A

when more than $100 of the broker’s money is in a trust account

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24
Q

Ministerial acts’

A

acts that a licensee may perform for a person that are informative in nature and do not rise to the level of active representation on behalf of a person.

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25
Q

When can a transaction broker disclose confidential information

A

In commercial real estate (and any residential real estate involving more than four units). unless prohibited from doing so by the buyer and/or seller

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26
Q

How much can KREC fine a Licensee?

A

$1,000.00 per violation. If the violation is considered “aggravated,” the fine can be up to $5,000.00. Aggravated means it was extreme or intentional.
CON NOT LEVY CRIMINAL FINES - ONLY CIVIL

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27
Q

A willful violation of either the license law or BRRETA is a misdemeanor. A court of law may impose what penalties

A

1st Violation: Up to 12 months in jail and/or fines from $100 to $1000.

2nd Violation: Up to 12 months in jail and/or fines from $1000 to $10,000.

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28
Q

Will KREC deny a license if someone has a felony conviction

A

Not necessarily - depends on how recent and the nature

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29
Q

Indestructibility

A

The land itself cannot be completely destroyed or worn out

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30
Q

Nonhomogeneity

A

Each parcel of real estate is unique. Even side-by-side properties that look like duplicates are technically not, because of their unique locations

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31
Q

Scarcity

A

There is a fixed supply of land. This affects the price.

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32
Q

Modification

A

Intentional changes to a parcel of land can either increase or decrease its value. The actual changes, such as landscaping, are called improvements, regardless of their impact (favorable or unfavorable).

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33
Q

Permanence of Investment

A

Also called fixity. Anything which is “fixed” stays put.

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34
Q

Area Preference

A

The site (the actual location and surroundings) of real estate matters to buyers. The technical term is situs.

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35
Q

Allodial System

A

Property ownership as it is today in the U.S., with all the rights of ownership

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36
Q

Common Law

A

law that resulted from many years of court decisions, as opposed to statutes which are written laws enacted by legislative bodies

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37
Q

Possession

A

occupy the property

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38
Q

Enjoyment

A

possess the property without interference, such as someone else claiming that they own it, or perhaps someone doing something to excessively taint the owner’s experience on the property.

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39
Q

Disposition

A

dispose of the property (sell or give it to someone).

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40
Q

Control

A

use the property (legally) as desired.

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41
Q

Exclusion

A

keep others from using the property.

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42
Q

Land

A

Ownership extends down to the center of the earth and upward to infinity. It includes all natural things permanently attached. Naturally growing plants and minerals are part of the land. In addition to surface rights, the owner has subsurface rights, and air rights.

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43
Q

subsurface rights

A

a landowner could sell his or her land but retain the mineral rights.

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44
Q

Real property

A

real estate plus the bundle of rights

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45
Q

Personal Property

A

any property that is not real property.

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46
Q

severance

A

Real property becoming personal property

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47
Q

attachment

A

Personal property becoming real property

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48
Q

emblements

A

Cultivated annual crops are considered personal property, and are called emblements, or fruits of industry.

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49
Q

Fixture

A

an object that was once personal property, but now is attached. Therefore, it’s now real property. Kitchen cabinets and bath tubs are examples of fixtures.

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50
Q

Trade fixture

A

a fixture used for a business. It is attached by the tenant, remains the personal property of the tenant, and can be removed by the tenant when leaving the space being leased, but the tenant is responsible for any damages caused from the removal. Shelves, signs and counters

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51
Q

Four Tests to determine if something will be considered real or personal property

A

Agreement of the Parties
Intention of the Parties
Method of Attachment
Adaptation of the Item

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52
Q

Police Powers

A

local and state governments have the power to pass legislation to protect public health and safety. Think of the side of a police vehicle. It says: “To protect and serve.”

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53
Q

Zoning Ordinances

A

regulate and control the use of land

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54
Q

Zoning Classifications

A

specifically determine the purpose(s) for which land can be used (R- Residential, C - Commercial, I - Industrial or A – Agricultural)

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55
Q

Enabling legislation

A

passed by the state grants local government zoning powers

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56
Q

Planned Unit Development (PUD)

A

This is a new, preplanned area of a city.

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57
Q

buffer zone

A

Instead of having two different zones, such as residential and commercial, right next to each other, parks and playgrounds often serve as buffer zones.

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58
Q

Nonconforming Use

A

(also known as grandfathered use) – If zoning rules change, a nonconforming use may be allowed if the property’s current use existed before the zoning rules changed.

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59
Q

Downzoning

A

reducing density in an area.

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60
Q

Spot Zoning

A

a specific property is rezoned to permit a use that’s different from the other properties in that zone.

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61
Q

variance

A

an exception

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62
Q

conditional-use permit

A

Property owners who are given permission to do something that is not consistent with the zoning code are granted a special-use permit

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63
Q

Building Codes

A

Using its police powers, the government protects the public by setting standards regarding fire safety, carpentry, electrical work, plumbing, etc.

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64
Q

Building Permit

A

granted for new construction only if the proposed building complies with zoning laws and building codes.

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65
Q

Subdivider

A

buys undeveloped land and divides into smaller lots for sale

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66
Q

plat

A

map that shows the boundaries of the lots.

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67
Q

subdivision plan

A

shows all physical details of the subdivision, including easements for water, utilities, and sewers

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68
Q

Clustering

A

putting housing units on smaller lots to create more open space in the area, perhaps for recreation.

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69
Q

Developer

A

Improves the land, constructs buildings on the lots, and sells them.

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70
Q

Land Sale Regulation

A

The buyer (having received the property report and signed the contract) has a 7-day cooling off period to revoke the contract.

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71
Q

Taxation

A

A charge on real estate to meet the financial needs of government.

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72
Q

Eminent Domain

A

The power of government to seize private land for a public good, without the owner’s consent

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73
Q

condemnation

A

The government takes title to the property

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74
Q

Inverse Condemnation

A

the process by which property owners can force government (through a legal process) to buy their property because a government project has caused significant loss of value

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75
Q

Escheat

A

If someone dies without a will, and there are no heirs found (through a required search) the property would revert to the county or state

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76
Q

Asbestos

A

banned in 1978. it had been used as insulation, as covering for ducts and pipes, and as material in flooring, roofing, etc. It crumbles easily into dangerous, inhalable particles.

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77
Q

Lead

A

used in paint until 1978. It can also be found in pipes, solder, and other products. Exposure can cause damage to the brain, kidneys, and the nervous system.

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78
Q

Radon

A

colorless, odorless, tasteless gas produced by the decay of radioactive substances. Home inspections should include a radon test for the benefit of the buyer.

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79
Q

Brownfields Legislation

A

old industrial sites that may contain toxic wastes. Legislation gave states financing to clean them up and it protects developers from liability for toxic waste that existed before they purchased the property.

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80
Q

encumbrance

A

an agreement or circumstance that places a restriction on how a property can be used

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81
Q

easement

A

makes something easier or better for someone

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82
Q

positive easement

A

allows you to cross your neighbor’s property, for example, if it’s the only way you can get to the main road

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83
Q

negative easement

A

prevents a property owner from building an excessively high building that blocks your view of a lake or valley

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84
Q

appurtenant easement

A

an easement that remains with the property even after it is sold to another party

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85
Q

easement in gross

A

does not remain in effect when property is sold, it is simply an agreement where a land owner grants permission to someone to enter his or her property, to fish in a farm pond, for example.

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86
Q

Dominant Tenement

A

benefits from the easement

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87
Q

Servient Tenement

A

it serves the need of the Dominant to access the public road.

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88
Q

Easement by Necessity

A

an easement allowing someone to do something necessary.

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89
Q

Personal Easement in Gross

A

AKA Easement in Gross
personal easement (typically between friends). No dominant party. Ends when either party dies or when one sells the property.

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90
Q

License

A

only temporary permission (ex: farmer lets someone use land to hunt for the day) terminates at the agreed time of expiration

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91
Q

Commercial Easement in Gross

A

most common type of easement in gross. It is given to railroads, utility companies, etc., to maintain tracks, pipelines, and power lines to provide utilities and services. The commercial easement allows them to enter private property to install or repair items, or to do tasks as needed.

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92
Q

Easement by Prescription

A

f Sam has a driveway at the edge of his property that extends on to Mary’s property, and Sam has used the driveway for a certain period of time (5 years or more in most states), this may result in a permanent easement right by prescription

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93
Q

encroachment

A

somebody crossed over a line they weren’t supposed to cross

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94
Q

Deed Restrictions

A

a condition or limitation placed on a property by the owner of the property when it’s transferred to another party

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95
Q

lien

A

a lender’s claim against a collateral asset. his means that the home can be legally sold (by the lender) if the borrower fails to repay the loan.

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96
Q

lienor

A

lender (holder of the lein)

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97
Q

Lienee

A

The borrower

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98
Q

Specific lien

A

a claim against specific property (Either real or personal)

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99
Q

general lien

A

a claim against all of a person’s real and personal property.

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100
Q

voluntary lien

A

When you sign mortgage documents to buy a home, you are knowingly and voluntarily (with your consent) creating a lien on the property

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101
Q

involuntary lien

A

local government has the power to place a tax lien on your home if you fail to pay the real estate taxes

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102
Q

statutory liens

A

created by law

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103
Q

equitable liens

A

created by a court

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104
Q

Ad Valorem

A

(assessed value) real estate tax raises money for the operation of government agencies

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105
Q

How to compute ad valorem tax rate

A

Market value of the property X Assessment rate = Assessed Value X Equilizer (if necessary) = Equalized assessed value X Tax rate = Tax bill

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106
Q

mills

A

1/10 of 1 cent or .0001

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107
Q

Equalizer

A

a factor (such as 0.8, 1.2, etc.) that is multiplied by the assessed value to raise or lower a community’s overall assessed value (when necessary) so it is in line with the entire state, making community to community comparisons fair, and making statewide taxes fair.

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108
Q

Tax Sale

A

occurs when taxes on property have not been paid for a period of time specified by law.

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109
Q

Equitable Redemption

A

Pay what is owed (taxes, penalties, court costs) before the tax sale.

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110
Q

Statutory Redemption

A

Pay what is owed (taxes, penalties, court costs) after the tax sale

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111
Q

Special Assessments

A

a tax for improvements made in a specific area or neighborhood, such as a sidewalk.

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112
Q

Mortgage Lien

A

When a buyer signs a mortgage document, this creates a lien against the property

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113
Q

Mechanic’s Lien

A

The mechanic can file for a mechanic’s lien if they are not paid for work done or materials supplied. This lien is specific and involuntary. It is specific to the real estate and involuntary, because the property owner didn’t agree to the lien. The mechanic’s right to file this lien is provided by government

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114
Q

Lis Pendens

A

a notice in the public records that would inform you if there were a pending lawsuit involving a property

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115
Q

Metes and Bounds Description

A

Metes means distance. Bounds means direction. This is the oldest system of property description. Using objects (monuments) to reference

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116
Q

Point of Beginning (POB)

A

where the property officially begins

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117
Q

boundary lines

A

The perimeter of the property referenced in relation to monuments

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118
Q

legal description

A

an official property description suitable for a real estate sales contract

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119
Q

Principal Meridians

A

The bold north/south lines

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120
Q

Baselines

A

dotted lines running east and west

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121
Q

Size of Township

A

6 miles X 6 miles (36 square miles)

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122
Q

Rectangular Survey System

A

creates a massive grid or checkerboard that is referenced.

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123
Q

How many sections in a Township

A

36 sections (1 sq mile each)

124
Q

Size of a section in rectangular system

A

640 acres

125
Q

Correction Lines

A

systematic adjustments at certain intervals to compensate for the curvature of the earth. Every fourth township line is a correction line (every 24 miles)

126
Q

Guide Meridian

A

every fourth range line (running north and south)
systematic adjustments at certain intervals to compensate for the curvature of the earth. (every 24 miles)

127
Q

fractional sections

A

Sections that are oversized or undersized

128
Q

government lot

A

An area of land that is less than a full quarter section (not owned by the government)

129
Q

Plat of Survey Method (or Lot-Block-Tract Method)

A

used in conjunction with a metes and bounds or rectangular survey description. It clearly and simply numbers lots in a city or town on a plat map.

130
Q

Datum

A

An official point (level surface) from which elevations are measured. Every large city has one.

131
Q

Benchmark

A

Bronze markers placed throughout the U.S. indicating elevation

132
Q

Mile

A

5,280 feet or 320 rods

133
Q

Acre

A

43,560 square feet or 160 square rods

134
Q

Rod

A

16 ½ feet or 5 ½ yards

135
Q

Chain

A

66 feet or 4 rods

136
Q

Estate

A

The type and degree of interest (ownership) in real estate.

137
Q

leasehold estates

A

To legally hold something is to have rights to it. If you live in an apartment, you have the right to live there for the duration of the lease. Therefore, you have a leasehold estate. Your hold (your right to occupy the apartment) is limited by the lease

138
Q

freehold estates

A

type of real estate ownership lasts for an unknown period of time. The property is freefrom hold by anyone other than the owner. There may be a mortgage on the property, but it is still classified as a freehold estate.

139
Q

fee simple absolute

A

complete ownership, and it is the highest form of ownership recognized by law - is inheritable

140
Q

Fee Simple Defeasible Estate

A

also called qualified fee. The word defeasible means that the estate (ownership) is subject to a condition

141
Q

reversion

A

directly reversing what you did originally. If you granted property to the city with a condition regarding its use, but the city did not meet that condition, the property would naturally revert (return) to you or your heirs.

142
Q

remainder

A

a third party that would have a remainder interest in the property in a reversion situation

143
Q

two different types of conditions within the concept of fee simple defeasible estates are

A

Condition Subsequent and Condition Precedent

144
Q

Condition Subsequent

A

also called fee simple conditional. We never have, so you never will. A church grants land to the city with the condition that no gambling will be allowed on it. We never have gambled on that land, so you never will.

145
Q

Condition Precedent

A

This is also called fee simple determinable. We always have, so you always will. A landowner grants property to an environmental group with the condition that an existing bird sanctuary be maintained and operated on the property. The precedent (maintaining a bird sanctuary) must be met.

146
Q

Life Estates

A

a freehold estate based on someone’s life. Remember, a freehold estate lasts for an unknown period of time.

147
Q

conventional life estate

A

created voluntarily by a grantor (the property owner).

148
Q

ordinary life estate

A

Barbara gives a life estate to Danielle so she can live in a home that Barbara owns for the rest of her (Danielle’s) life, Danielle cannot pass her life estate on to an heir, because it ends immediately upon her death.

149
Q

pur autre vie life estate

A

an allowance of someone to live in someone’s home for the remainder of the homeowner’s life. “for the life of another”. the life tenant’s heirs may inherit the life estate (unlike an ordinary life estate). Of course, the heir’s life estate will end upon the death of the person with the measuring life.

150
Q

a life tenant cannot

A

commit waste (Neglect the property)

151
Q

a life tenant can

A

lease the property to someone (but only for the duration of the life estate) *They have true ownership interest for the duration of the life estate

152
Q

Legal Life Estates

A

statutory life estates.created automatically by law, not by someone’s choice. Their purpose was primarily to keep people from becoming homeless due to the loss of a spouse or due to legal action taken against them as a result of certain kinds of debts.

153
Q

Curtesy

A

This is a legal life estate for the husband in his deceased wife’s property.

154
Q

Dower

A

This is a legal life estate for the wife in her deceased husband’s property.

155
Q

Homestead

A

This is a life estate that protects a family from certain (but not all) debts, allowing them to continue to live in the home.

156
Q

Riparian Rights

A

pertain to land bordering on streams or rivers. Generally, if the water is non-navigable (meaning you couldn’t use a boat on it), the owner’s property actually extends to the center of the water. If it is navigable (you could sail a boat on it) the government owns it. In this case the owner’s property would extend out to the high water mark at the water’s edge.

157
Q

Littoral Rights

A

refer to property ownership rights along the ocean or a lake. Also in this case, the owner’s property would extend out to the high water mark at the water’s edge.

158
Q

Prior Appropriation

A

protect people’s rights related to the use of water.

159
Q

Accretion

A

the process of gradual addition of land

160
Q

Alluvion

A

the actual new deposits of land (perhaps due to the flow of a river)

161
Q

Erosion

A

the gradual loss of land

162
Q

Avulsion

A

the sudden removal of land

163
Q

Reliction

A

the gradual subsiding of water, leaving additional land.

164
Q

leasehold estate

A

created by a lease agreement. It is of limited duration and includes fewer rights than does a freehold estate

165
Q

lessor

A

The owner of the property

166
Q

lessee

A

the person who receives the lease. “ee” at the end of a word indicates that the person is the recipient of something.

167
Q

Estate for Years

A

an estate for a stated period. The lessee must vacate the premises at the end of the lease.

168
Q

Periodic Estate

A

If a tenant rents an apartment on a month-to-month basis, but the tenant and the landlord don’t specify a number of months, this is called a periodic or period to period estate. Either party can end the estate by giving notice.

169
Q

Periodic Estate

A

If a tenant rents an apartment on a month-to-month basis, but the tenant and the landlord don’t specify a number of months, this is called a periodic or period to period estate. Either party can end the estate by giving notice.

170
Q

Tenancy at Will

A

could be called “tenancy at who knows?” If you tell someone they can rent a bedroom with attached bathroom in your house until your mother-in-law moves in at some unknown point in the future, this is called tenancy at will. Reasonable notice would be required.

171
Q

Tenancy (Estate) at Sufferance

A

Also called holdover tenancy. The tenant wrongfully remains on the premises after their right to possess (occupy) it has ended.

172
Q

Gross Lease

A

the common residential lease. The tenant pays a set amount. The landlord pays the building’s operating expenses.

173
Q

Net Lease

A

common for commercial or residential properties. The tenant pays a set amount plus some or all of the building expenses. If you ever hear of a double net lease (net-net) or a triple net lease (net-net-net), what does that mean? The more “nets,” the more expenses paid by the tenant.

174
Q

Percentage Lease

A

the monthly rent will be a percentage of the gross income the tenant generates

175
Q

Variable Lease

A

allows for future changes in the amount of rent related to a business

176
Q

graduated lease

A

the lease agreement might state the monthly rent for the first year, and then indicate increasing, predetermined amounts for the second and third year.

177
Q

index lease

A

doesn’t state a specific amount of increase because the increase will be based on a common index, such as the consumer price index.

178
Q

Ground Lease

A

A company could lease undeveloped land and then build and operate their corporate headquarters on that ground. The tenant would be responsible for all building expenses, so this would be a type of net lease. The land and the improvements are turned over to the property owner after the expiration of the lease agreement.

179
Q

Oil and Gas Lease

A

land owner usually receives a one-time lease payment to allow drilling. The land owner (landlord) receives a royalty for gas or oil found. If none is found, a flat rent is charged.

180
Q

Lease-Purchase

A

leasing for a period of time with the intent to purchase at a later date.

181
Q

Sale-Leaseback

A

ABC Company sells their building to an investor. The investor then leases the building to ABC. With this sale-and-leaseback arrangement, the investor has a stable tenant and a good return on investment. ABC company (the lessee) has freed up capital.

182
Q

lease option

A

a renewal option. The lessee may renew the lease if notice is given before a specified date

183
Q

lease with option to buy

A

allows the tenant to purchase the property during a specified period. The tenant is usually given credit toward the purchase for part of the rent paid.

184
Q

Uniform Residential Landlord and Tenant Act

A

established the Landlord’s right of reentry to the premises and the Landlord’s obligation to perform maintenance. This Act also protected tenants from retaliation for complaints, from contract clauses where the tenants waive their rights, and from exculpatory clauses in contracts – clauses allowing the landlord to escape all liability.

185
Q

Ownership in Severalty

A

sole ownership

186
Q

Joint Tenancy

A

Ownership by two or more people with Right of Survivorship. This means that when one co-owner dies, that co-owner’s share goes to the surviving co-owner(s). If a co-owner has a will that is in conflict with the right of survivorship, the right of survivorship will prevail.

187
Q

Unities for Joint Tenancy

A

conditions that must exist for joint tenancy (TTIP)
Unity of Time
Unity of Title
Unity of Interest
Unity of Possession

188
Q

If a tenant dies in joint tenancy

A

their ownership interest is equally divided among the surviving joint tenants.

189
Q

Selling Joint Tenancy

A

A joint tenant can’t will their ownership interest to someone, but they CAN sell their ownership interest. would be a tenant in common (defined below) with all the rights enjoyed by tenants in common. Lauren would not receive any additional ownership interest upon the death of a joint tenant.

190
Q

Tenants in Common

A

*Undivided interest ina property
*Can sell or mortgage their interest in the property without consent of the other owners
*CAN will their ownership interest

191
Q

Right to Partition

A

tenants in Common and Joint Tenants have the right to legally force the end of the tenancy. The assets would then be distributed to the tenants.

192
Q

Tenancy by the Entirety

A

This is a form of joint tenancy that exists only between husband and wife. In addition to the unities of time, title, interest, and possession, there is a unity of person, meaning that the husband and wife are considered one person.

193
Q

Community Property

A

property acquired during the marriage. Each spouse owns half. However, property owned separately before the marriage remains separate. Also, property acquired through separate funds, even during the marriage, remains separate.

194
Q

General Partnership

A

he partners have a right to manage the partnership, but they have unlimited liability for debts

195
Q

Limited Partnerships

A

at least one general partner and one or more limited partners. Limited partners don’t run the business, and are liable only to the extent of their investments.

196
Q

corporation

A

an artificial person created by a charter. It will live forever unless dissolved. It is run by a board of directors. Shareholders invest in the corporation. Their liability is limited by the amount of their investment. The corporation can hold title to real estate, just like a person. The corporation pays income taxes because it’s a person. Next, dividends are paid to shareholders who also must pay income taxes on their dividends. It’s double taxation.

197
Q

S Corporation

A

Combines the features of a general corporation and a partnership. Stockholders enjoy limited liability and they avoid double taxation

198
Q

Syndication

A

Two or more people who operate a real estate investment. This is usually a limited partnership. The syndicator is the general managing partner and investors are limited partners.

199
Q

Joint Venture

A

This is usually created for a single project. This can take any ownership form.

200
Q

trustor

A

transfers property into the trust.

201
Q

trustee

A

manages the trust and holds legal title to the assets in the trust.

202
Q

beneficiary

A

benefits from the trust

203
Q

Living Trust

A

created by the property owner during his/her life. Upon the property owner’s death, the property automatically goes to the beneficiary, avoiding the cost and delay of probate.

204
Q

Testamentary Trust

A

“last will and testament.” This type of trust is set up after the property owner’s death in accordance with his/her will.

205
Q

Land Trusts

A

hold only real property

206
Q

Real Estate Investment Trust (REIT)

A

A type of business organization for small investors who pool their money and participate in large real estate projects. The investors hold certificates that are like shares of stock.

207
Q

Cooperatives

A

The tenants form a nonprofit corporation that purchases the building. The corporation holds title to the real estate. The tenants own shares of stock, giving them a long-term lease to occupy a unit - called a proprietary lease. Owners are limited in what they can do to renovate their units. Owners must offer their shares to the corporation before selling them to someone else (the corporation retains the right of first refusal).

208
Q

Condominiums

A

All occupants in the multi-unit building own separate property (their unit) as tenants in common

209
Q

Time-Sharing

A

Individuals own or lease a specified time interval in a property, usually a week. This is common with resort properties. There are two formats
Time-share estate – a fee simple interest in the unit is purchased for the same period each year in perpetuity.
Time-share use – contracted right to use property for the same period each year for a certain number of years.

210
Q

alienation

A

the act of transferring title from one owner to another

211
Q

4 ways of voluntary ownership

A

Sale, Will, Gift, Dedication

212
Q

Probate

A

When a person dies with a will, the process of determining the validity of the will, paying the deceased person’s debts and distributing his or her assets is called probate.

213
Q

Testator

A

A man making a will

214
Q

Testatrix

A

woman making a will

215
Q

Devisee

A

person receiving real estate in a will

216
Q

Transfer by Accession

A

refers to additions to land through human or natural causes

217
Q

Adverse Possession

A

means a person can obtain title to a parcel of real estate without the seller’s consent if certain conditions are met.

218
Q

Transfer Tax

A

a tax imposed by the government on property when the title transfers from one owner to another.

219
Q

deed

A

a written document that transfers ownership interests in real estate from the existing owner (the “grantor”) to another person (the “grantee”)

220
Q

General Warranty Deed

A

provides the greatest protection to the person who is receiving title to the real estate (also called the “grantee”) because it includes specific covenants (promises) that protect the grantee (the buyer).

221
Q

Quitclaim Deed

A

has the least protection. This means the grantor doesn’t provide any guarantees to the grantee. Quitclaim deeds are used to fix a minor cloud on a title.

222
Q

Grant Deed

A

does not provide the grantee with any protection against encumbrances that were incurred by previous owners.

223
Q

Special Purpose Deed

A

used in special circumstances, such as when a person dies without a will, or when property is sold to a person at a tax auction.

224
Q

Consideration

A

another word for anything of value. This could be money or anything else of value that is mutually agreed upon by the grantor and grantee.

225
Q

Granting Clause

A

wording in the deed that states that it is the grantor’s intent to transfer the title to the property to the grantee.

226
Q

Legal Description

A

More complex than just a street address, legal descriptions define the exact location and boundaries of the property.

227
Q

Appurtenances

A

define the rights and privileges associated with the land.

228
Q

Acknowledgement

A

where a notary public verifies the grantor’s signature is genuine, and that the signing of the document is voluntary.

229
Q

Delivery and Acceptance

A

the point in time when the property actually changes hands from the grantor to the grantee.

230
Q

Recording

A

Each deed becomes a public document when it is recorded on public property roles. This protects the deed against future interests of other people.

231
Q

Habendum Clause

A

defines or limits the extent of ownership being granted to the grantee. Typical habendum clauses begin with the words, “to have and to hold.”

232
Q

Covenant of Seisen

A

means the grantor has the power and authority to convey the title.

233
Q

Covenant Against Encumbrances

A

means the grantor promises the new owner there are no encumbrances (like easements, taxes, etc.) other than those stated in the deed.

234
Q

Covenant of Quiet Enjoyment

A

means the grantor promises no one can legally interfere with the new owner’s property.

235
Q

Covenant of Further Assurance

A

the grantor promises to correct any defects in the title.

236
Q

Covenant of Warranty Forever

A

means the grantor will pay any expenses to defend the title if it’s challenged by someone who claims to have a better title, or to compensate the grantee if the title fails.

237
Q

constructive notice

A

When the title is recorded in public documents

238
Q

Title Search

A

a close examination of all public records to determine the title history of the real estate

239
Q

Marketable Title

A

one that’s free of major defects that would deter a buyer from purchasing the real estate from the owner

240
Q

Cloud on Title

A

if there are documents or other information that calls into question any previous title

241
Q

Quiet Title Lawsuit

A

This is a lawsuit meant to clear any cloud on a title.

242
Q

Color of Title

A

Any title that on its surface appears to be good but is not is said to have the “color of title.”

243
Q

Abstract of Title

A

a brief history of documents affecting the title

244
Q

Certificate of Title

A

a document prepared by a title examiner, title company or attorney who has carefully reviewed all public records that pertain to that individual property. Then, the examiner prepares an opinion as to the status of the title that lists all liens and other encumbrances.

245
Q

Title Insurance

A

an insurance policy that protects the buyer in case some defect in the title is found at some future point. It is considered evidence of title.

246
Q

Mortgagee’s/Lender’s Policy

A

protects only the lender ‘s interest (mortgagee) against their potential loss.

247
Q

Owner’s Policy

A

protects the buyer for as long as the buyer owns the property. The fee for the policy is paid only once (at closing).

248
Q

Leasehold Policy

A

protects renters who have a valid lease.

249
Q

Deed

A

the title to the property that shows the seller and the new owner. It is considered evidence of a marketable title.

250
Q

RESPA

A

Real Estate Settlement Procedures Act
covers all real state closings of one- to four-unit residential properties, including condominiums and cooperatives that include federally related first mortgages.

251
Q

when does the lender give the closing disclosure to the buyer

A

at least three BUSINESS days before closing

252
Q

Proration

A

financial calculation of what is fair according to what is actually used.

253
Q

Prepaid Expenses

A

expenses that have been paid before the date of closing. The seller should be credited (reimbursed) and the buyer debited (required to pay). Annual HOA dues are one example.

254
Q

Accrued Expenses

A

those that have been accumulated by the seller (but have not been paid) and will be paid by the buyer.

255
Q

actual-number-of-days-in-the-period method

A

calculates the proration using the actual number of days in the proration period.

256
Q

statutory month method

A

assumes that every month has 30 days. This method also can use a statutory year, which assumes there are 360 days in the year

257
Q

Statutory-month-variation method

A

A monthly charge is calculated like the statutory month method but uses the actual number of days in the month of closing to find the daily charge.

258
Q

Principal

A

the person seeking to buy, sell, exchange or rent real estate. AKA Client

259
Q

Fiduciary Relationship

A

one in which the agent must exercise great care when representing the client. This means all aspects of the agency relationship must remain confidential, and the agent must not do anything to place the client at a legal or negotiating disadvantage in the real estate transaction.

260
Q

Universal Agent

A

This type of agent represents the principal in all matters that can legally be delegated to others.

261
Q

General Agent

A

represents the principal in a particular business or related range of activities.

262
Q

Special Agent

A

an agent that represents a principal in a specific transaction or task. This is usually for a limited period of time.

263
Q

Designated Agent

A

an agent appointed by the broker to act as an agent for a principal in a real estate transaction.

264
Q

Capacity of the Parties

A

means the principal can empower the agent to do only what the principal is empowered to do. For example, the principal has the legal capacity to buy, sell, exchange or rent real estate, but turns over these responsibilities to the agent.

265
Q

Legal Purpose

A

the purpose of the agency must be legal.

266
Q

Expressed Agency

A

created in writing when the principal appoints the agent to represent him or her in a real estate transaction.

267
Q

Implied Agency

A

can be created by the actions or conduct of the parties rather than by a written agreement.

268
Q

Agency by Necessity

A

created in an emergency situation, and it may be unnecessary to get the consent of the principal to create such agency

269
Q

Performance

A

when the agency’s purpose has been completed and the relationship is no longer needed

270
Q

Discharge by the Principal

A

This occurs when the principal fires the agent. However, the broker may be able to sue for breach of contract and attempt to recover damages, meaning money.

271
Q

Resignation

A

when the agent resigns from the agency relationship at any time. The agent, however, may be liable for breach of contract and any resulting damages.

272
Q

Abandonment

A

Inactivity on the part of the agent for an unreasonable period of time suggests the agent has abandoned the relationship, thus causing the agency to be terminated.

273
Q

Puffing

A

making statement of opinion and exaggerating the benefits of a property.

274
Q

Errors and Omissions Insurance

A

comparable to malpractice insurance in the medical profession. It protects the broker against financial loss due to liability for errors, mistakes and certain types of negligence.

275
Q

Stigmatized Property

A

Any property that has a bad or questionable reputation

276
Q

As-Is Sales

A

the seller will not fix any defects in the property. Nonetheless, the seller must disclose those defects, known and hidden, in the property.

277
Q

Megan’s Law

A

a system of notifying citizens of convicted sex offenders who live in their midst called Megan’s Law. An agent must always provide property buyers with information about how to access these databases.

278
Q

Price-Fixing

A

If two or more real estate brokers to collude to set a “standard” commission, this is called price-fixing. That’s illegal.

279
Q

Market Allocation

A

where brokers in a market divide up the market among themselves and agree not to assist buyers or sellers in the parts of the market allocated to the other brokers. Illegal

280
Q

Boycotting

A

where two or more brokers conspire against another broker to reduce competition by not showing that broker’s listings or doing anything else to cooperate with that broker’s clients.

281
Q

Tie-In Agreements

A

an agreement to perform one service or product only if the client purchases another product or service.

282
Q

Express Contract

A

Contracts where the parties show their intentions by words, either written or oral.

283
Q

Implied Contract

A

Contracts where the parties show their intentions by their acts or conduct

284
Q

Executed Contract

A

one that has been completed. At closing, a real estate contract is considered executed.

285
Q

Void Contract

A

A contract is considered void if it does not contain all the contract elements.

286
Q

Bilateral Contract

A

A contract where both parties promise to do something. The seller promises to sell his or her home to the buyer. In return, the buyer promises to pay the seller for the house.

287
Q

Unenforceable Contract

A

a contract that appears to be valid but is not legally enforceable by either party in a court of law.

288
Q

Option to Purchase

A

a separate contract between two parties giving one party the right to do something within a specific period of time. Usually, the buyer gives the seller money and in return gets the right during a fixed period of time to buy the seller’s property at a specific price.

289
Q

Earnest Money

A

an amount of money the buyer puts down as a deposit to show the seller his or her intent to buy the property is earnest.may be anything of value agreed upon by the buyer and seller.

290
Q

Consideration

A

Usually, this is money, but consideration can be anything of value such as personal property or personal services. Legal consideration is literally anything the buyer and seller mutually consider valuable. A contract that does not state the consideration to be paid is voidable.

291
Q

Mortgage Contingency

A

This means the sale of the property is conditioned upon the buyer obtaining a mortgage on the property.

292
Q

Property Sale Contingency

A

his makes the purchase of the seller’s home conditional upon the buyer being able to sell their property.

293
Q

Inspection Contingency

A

makes sale of the property conditioned upon the property inspection report. This allows the buyer to set conditions based on the property’s habitability and freedom from major defects.

294
Q

Mirror Image Offer

A

An offer for the full purchase price of a parcel of real estate that meets all the seller’s terms in the listing agreement is called a mirror image contract.

295
Q

Contracts Under Duress

A

Duress is the use of force or the threat of force to obtain an agreement. This means the consenting party must not be coerced into the contract. Contracts made under duress are voidable at the option of the consenting party.

296
Q

Specific Performance

A

a legal term that that means the defaulting party is ordered by a court to go through with the terms of the contract.

297
Q

Open Listing

A

the seller signs listing agreements with multiple brokers who all simultaneously market the property. Only the broker who brings the buyer to the table is owed a commission. Usually, if the seller finds the buyer without the help of any of the listing brokers, none of the brokers is owed a commission.

298
Q

Exclusive Agency Agreement

A

he seller employs only one broker to sell her home. If the owner of the home sells the property, the broker is not entitled to a commission

299
Q

Exclusive Right-to-Sell Listing

A

the seller signs a listing agreement with only one broker. If the seller or another broker brings the buyer to the table, the listing broker is still owed a commission. This is the most common type of listing agreement.

300
Q

Broker Protection Clause

A

means if the listing agreement of a broker who lists a parcel of real estate expires, the broker is still due a commission if the house is sold to anyone who was introduced to the property during the period of the listing agreement.q

301
Q

Net Listing

A

a seller is guaranteed a specific amount of money for his or her property and the sales commission is not based on the sales price. Instead, the commission is any amount that is above the sale price that the seller agrees to in advance - illegal

302
Q

Exclusive Buyer Agency Agreement

A

The broker may earn a commission from the buyer even if the buyer finds/purchases a home without the assistance of the broker.

303
Q

Exclusive Agency Buyer Agreement

A

the broker is the exclusive agent for the buyer but will not be entitled to a commission if the buyer finds a property without the broker’s assistance

304
Q

Civil Rights Act of 1866

A

prohibits any discrimination based on race only in any real estate transaction

305
Q

Fair Housing Act of 1968

A

prohibit discrimination based on color, race, national origin, religion, sex, mental or physical disabilities and familial status (meaning families with children younger than 18).

Real Estate Test (2 decks)

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