Chapter 1: Real Estate Math Flashcards
(943 cards)
1
Q
Criteria for Adjustments
A
Appraisers usually compare 3-6 homes but usually only include 3 on the report.
2
Q
Extraction
A
Land value is estimated by deducting the depreciated cost of improvements in a property from the total sales price of the property
3
Q
Zoning variance
A
Allowing a property use that differs from the applicable ordinance for a variety of justifiable reasons
4
Q
Zoning variance
A
Allowing a property use that differs from the applicable ordinance for a variety of justifiable reasons
5
Q
Zoning variance
A
Allowing a property use that differs from the applicable ordinance for a variety of justifiable reasons
7
Q
Topography
A
Physical features and contours of land
8
Q
PITI
A
An acronym for principal, interest, taxes & insurance
9
Q
Topography
A
Physical features and contours of land
10
Q
Testate
A
property owner dies with valid will in place
11
Q
Topography
A
Physical features and contours of land
12
Q
Income Approach
A
Assumes property is purchased based on anticipation of income.
Assumes an investor will not pay more for a similar property with a similar income.
13
Q
Restrictive covenants
A
limitations placed on use of land by developer of residential subdivision
14
Q
Testate
A
property owner dies with valid will in place
15
Q
Interest
A
Buyers perspective - amount paid in return for the use of money
Lenders perspective - money earned from a loan investment
16
Q
Real estate auction types
A
Absolute - Sold to highest bidder regardless of price
Minimum Bid - The auctioneer will accept bids at or above a published minimum price
Reserve - High bid is reduced to an offer, not sale. A minimum bid isn’t published, seller reserves right to accept or reject the highest bid within a specified time period - anywhere from immediately following the auction up to 72 hours after it concludes
17
Q
Testate
A
property owner dies with valid will in place
18
Q
Restrictive covenants
A
limitations placed on use of land by developer of residential subdivision
19
Q
Real estate actions
A
Absolute
Minimum
Reserve
20
Q
Restrictive covenants
A
limitations placed on use of land by developer of residential subdivision
21
Q
Data Collection - Specific Data
A
Information and details about the subject property, as well as data about comparable properties costs, income and expenses, sales, and other relevant information.
22
Q
Real estate auction types
A
Absolute - Sold to highest bidder regardless of price
Minimum Bid - The auctioneer will accept bids at or above a published minimum price
Reserve - High bid is reduced to an offer, not sale. A minimum bid isn’t published, seller reserves right to accept or reject the highest bid within a specified time period - anywhere from immediately following the auction up to 72 hours after it concludes
23
Q
Valuation
A
Investment value - ROI
Insured value - Face amount a casualty or hazard insurance policy will pay if deemed unusable
Mortgage value - The value the lender places on a property as collateral for the loan. Especially in case of a foreclosure - to recover the debt.
Use Value - Income, appreciation, specific use (residential, agricultural, commercial, or recreational)
Tax benefits - Capital gains, tax losses, tax deferrals and depreciation for an owner
Exchange value - What realtors are concerned about, found from comparing similar properties
24
Q
Real estate auction types
A
Absolute - Sold to highest bidder regardless of price
Minimum Bid - The auctioneer will accept bids at or above a published minimum price
Reserve - High bid is reduced to an offer, not sale. A minimum bid isn’t published, seller reserves right to accept or reject the highest bid within a specified time period - anywhere from immediately following the auction up to 72 hours after it concludes
25
Q
Real estate actions
A
Absolute
Minimum
Reserve
26
Real estate actions
Absolute
Minimum
Reserve
27
Capitalization rate
Rate of return
28
Ground rent capitalization
Ground rent of the subject is capitalized at market rates
29
Farmer Mac
Est 1988 to ensure liquidity and a secondary market for ag. real estate & rural housing
30
CO
cert of occupancy received once inspected and cleared for occupation and use
31
Sunshine law
Law that mandates that meetings of governmental agencies and departments bs open to the public.
32
URAR
Uniform Residential Appraisal Reports
33
Sales Comparison Approach
Examine price or price per unit area of similar properties recently sold or currently being sold in the marketplace to come up with comparable value assessments.
Most reliable if comparable sales exist. If no comparable sales have been made, this cannot be used.
34
Special use permit
Authorization for a use that is not consistent with the zoning ordinance in a literal sense but is beneficial or essential to the public welfare and does not materially impair other uses in the zone
35
Compound Amount
Initial deposit (1 + Interest rate) to the nth degree which is the number of periods
37
Comps in the same neighborhood
Can have significantly different value due to location
38
Comps in the same neighborhood
Can have significantly different value due to location
39
Farmer Mac
Est 1988 to ensure liquidity and a secondary market for ag. real estate & rural housing
40
CO
cert of occupancy received once inspected and cleared for occupation and use
41
Sunshine law
Law that mandates that meetings of governmental agencies and departments bs open to the public.
42
Loan flipping
Getting a buyer to pay a higher interest rate, charging new fees & points
43
Principles of Value
Anticipation, assemblage, change,conformity, competition contribution
44
Predatory Lender
Preys on individuals that call into the B, C or D credit category.
Those who don’t speak good english, poorly educated and elderly.
45
Physical Deterioration
Decay or disintegration, cracks, settling, structure defects, termite damage.
46
Special use permit
Authorization for a use that is not consistent with the zoning ordinance in a literal sense but is beneficial or essential to the public welfare and does not materially impair other uses in the zone
47
Use Variance
Gives permission to use land for purpose not allowed by current zoning because, owner is deprived of all economic use or benefit, hardship is unique & not universal, will not change character of area, not self created hardship
48
Adjustment Period
Time when interest rate changes, every one; three, or 5 years
49
Illegal Nonconforming Use
When a property use conflicts with ordinances that were in place before the use commenced
50
Adjusting Comps
Collect and analyze information
Choose comps in the area
Compare sellers property and do some adjusting to the value of the comps
51
non-conforming use
differs from current zoning
52
Farmer Mac
Est 1988 to ensure liquidity and a secondary market for ag. real estate & rural housing
52
CO
cert of occupancy received once inspected and cleared for occupation and use
53
TDR
Transfer of development rights
54
Partnership VS Corporation
Partnerships do not pay income taxes.
Individual partners pay taxes.
A corporation on the other hand has double taxation.
The corporation pays tax on its corporate profit and then the stockholders pay taxes on their dividends.
55
Sunshine law
Law that mandates that meetings of governmental agencies and departments bs open to the public.
56
OTS
Savings Institutions are chartered, regulated, examined & supervised by this.
Office of Thrift Supervision
57
Special use permit
Authorization for a use that is not consistent with the zoning ordinance in a literal sense but is beneficial or essential to the public welfare and does not materially impair other uses in the zone
59
Covenant
A guarantee included in a deed to benefit a property that’s sold or to benefit a property that’s kept when an adjoining property is sold
61
Reit - Equity Trusts
Gives small investors opportunity to pool money to participate as owners of larger and more efficient and profitable investments. Usually broken down by specialization.
Usually earns income from rent.
62
Loan flipping
Getting a buyer to pay a higher interest rate, charging new fees & points
64
Predatory Lender
Preys on individuals that call into the B, C or D credit category.
Those who don’t speak good english, poorly educated and elderly.
65
Assessed value
Ad valorem - based on value
Estimated by a taxing authority, IRS, local school or fire district
66
Loan flipping
Getting a buyer to pay a higher interest rate, charging new fees & points
67
Interstate Land Sales Full Disclosure Act
Authorizing a nationwide program of registration of subdivisions marketed in interstate commerce intended to protect consumers by making relevant information available to them when they are considering purchasing land
68
Mortgage Fees
Origination - typically 1% of loan amount. This fee is negotiable.
Points = prepaid interest, 1/8 for each discount points
69
Injunction
A court action which prevents the owner from using a property in a way that’s contrary to the recorded restrictions
70
Use Variance
Gives permission to use land for purpose not allowed by current zoning because, owner is deprived of all economic use or benefit, hardship is unique & not universal, will not change character of area, not self created hardship
71
Adjustment Period
Time when interest rate changes, every one; three, or 5 years
72
Illegal Nonconforming Use
When a property use conflicts with ordinances that were in place before the use commenced
73
Discount Points
These charges are designed to offset any losses the lender might suffer when selling the loan to a secondary mortgage market.
Discount points raise the effective interest rate of the loan.
Yield is increased by 1/8 percent for each discount point.
4 points x 1/8 percent = 4/8 = .50 %
73
Predatory Lender
Preys on individuals that call into the B, C or D credit category.
Those who don’t speak good english, poorly educated and elderly.
74
non-conforming use
differs from current zoning
75
Condemned value
The value set by a county or municipal authority for a property which may be taken by eminent domain
76
Freddie Mac
Assembles loans into a pool of mortgages and issued a security backed by the mortgage
77
TDR
Transfer of development rights
78
Partnership VS Corporation
Partnerships do not pay income taxes.
Individual partners pay taxes.
A corporation on the other hand has double taxation.
The corporation pays tax on its corporate profit and then the stockholders pay taxes on their dividends.
79
Adjustment Period
Time when interest rate changes, every one; three, or 5 years
79
Use Variance
Gives permission to use land for purpose not allowed by current zoning because, owner is deprived of all economic use or benefit, hardship is unique & not universal, will not change character of area, not self created hardship
80
non-arms-length
relative to relative, under market price.
Unreliable as indicators.
81
Negative Amortization Cap
Limits the amount of unpaid interest that the lender can add to the principal balance.
Usually a negative amortization cap limits the total amount the borrower can owe to 125% of the original loan
82
Illegal Nonconforming Use
When a property use conflicts with ordinances that were in place before the use commenced
83
Commercial Bank Loan Types
Construction : last from 3 - 12 months
Home improvement - up to 5 years
Manufactured housing loans - 10 years or sometimes longer
84
Covenant
A guarantee included in a deed to benefit a property that’s sold or to benefit a property that’s kept when an adjoining property is sold
85
Survey
Official document giving the dimensions and showing the property boundaries
86
Loan to Value
Ratio between borrowed funds and market value of property being financed
86
non-conforming use
differs from current zoning
87
Reit - Equity Trusts
Gives small investors opportunity to pool money to participate as owners of larger and more efficient and profitable investments. Usually broken down by specialization.
Usually earns income from rent.
88
Mortgage fraud
A crime in which the intent is to materially misrepresent or omit information on a mortgage loan application to obtain a loan or obtain a larger loan than would have been obtained had the lender known the truth.
89
Short sale
```
Agent selection
Declaration and proof of hardship
Property valuation
Short sale application
Short sale agreement
Finding a buyer
Negotiation
Closing
```
90
Taking
Taking clause of the 5th amendment, private property cannot be taken for public use without just compensation
91
Loan-To-Value Ratio
Loan amount/Value
92
TDR
Transfer of development rights
92
Partnership VS Corporation
Partnerships do not pay income taxes.
Individual partners pay taxes.
A corporation on the other hand has double taxation.
The corporation pays tax on its corporate profit and then the stockholders pay taxes on their dividends.
93
ARM
Adjustable-rate mortgage - Interest rates can change & either go up or down during the time of the loan
94
DIF
Depositor insurance fund. Insured the deposits and protects the depositors of insured banks and to resolve failed banks
96
Reit - Mortgage Trust
REMT’s
Real estate mortgage trusts
Reits and REMTs usually are owned by a parent company or commercial bank
REMTs receive income mainly from mortgage interest, loan origination fees, profits earned from buying and selling mortgages.
These trusts participate in long term permanent financing but are more apt to invest in short term or senior and junior loans with potential for higher profits.
97
Building codes
Establishing the standards for virtually every aspect of a construction project which allows the county and municipalities to protect the public against the hazards of unregulated construction
98
Points
Pre-paid interest and paid at closing and usually 1% of the loan amount.
Items usually included in the cost of obtaining a new real estate loan.
One-time service charge to the borrower for making the loan.
99
Interstate Land Sales Full Disclosure Act
Authorizing a nationwide program of registration of subdivisions marketed in interstate commerce intended to protect consumers by making relevant information available to them when they are considering purchasing land
100
Mortgage Fees
Origination - typically 1% of loan amount. This fee is negotiable.
Points = prepaid interest, 1/8 for each discount points
101
Deed restrictions
A clause in a deed that places limits on how the property may be used
102
Injunction
A court action which prevents the owner from using a property in a way that’s contrary to the recorded restrictions
103
Conventional Loan
Cash equivalent sale
104
Covenant
A guarantee included in a deed to benefit a property that’s sold or to benefit a property that’s kept when an adjoining property is sold
105
Small income, PUD, co-ops, condos, & commercial reports
Freddie Mac & Fannie Mae use other forms
106
Reit - Equity Trusts
Gives small investors opportunity to pool money to participate as owners of larger and more efficient and profitable investments. Usually broken down by specialization.
Usually earns income from rent.
107
Demand Accounts
Personal business/checking accounts that can be withdrawn at any time by the depositor
Rarely used for mortgage lending
108
RHS
Rural Housing Service created in 1994 to meet housing and community development needs of rural America.
109
Reit Trusts
Equity
Mortgage
Hybrid
110
Neighborhood
```
Ownership makeup(rental, owner occupied)
Vacancy
Consistent
Current land use
Land contour
streets
utilities
irritants
community status
access
schools
public service
government issues
```
111
Freddie Mac
Assembles loans into a pool of mortgages and issued a security backed by the mortgage
112
Interest Rate Caps
To protect borrowers from unlimited increases.
The first cap (periodic cap) sets the amount of increase or decrease allowed in each adjustment period.
The second cap (overall or aggregate cap) sets a maximum interest-rate increase over the life of the loan. A 2% increase in interest rate results in approximately a 15% increase in monthly payment.
Ceiling or lifetime caps
114
Farms for sakes
Independently owned and large scale production or corporate
115
Interstate Land Sales Full Disclosure Act
Authorizing a nationwide program of registration of subdivisions marketed in interstate commerce intended to protect consumers by making relevant information available to them when they are considering purchasing land
116
Mortgage Fees
Origination - typically 1% of loan amount. This fee is negotiable.
Points = prepaid interest, 1/8 for each discount points
116
Injunction
A court action which prevents the owner from using a property in a way that’s contrary to the recorded restrictions
117
Limited Liability Companies
Give limited liability protection of corporations without the regulations associated with corporations.
LLC’s have operating agreements that are similar to corporation bylaws, but unlike corporations, they do not have permanent existence
118
Reit - Hybrid Trust
Ability to invest in real estate and finance
120
Negative Amortization Cap
Limits the amount of unpaid interest that the lender can add to the principal balance.
Usually a negative amortization cap limits the total amount the borrower can owe to 125% of the original loan
121
Condemnation Suit
Needed to initiate squiring of property by eminent domain
123
Loan Types
Conventional & Gov Backed
124
Adjusting Comps
Collect and analyze information
Choose comps in the area
Compare sellers property and do some adjusting to the value of the comps
125
Add-On Interest
Add-on rate determines interest by calculating it as a percentage of the original loan (principal) rather than on the balance due before each payment.
Typically used for home improvement loans and many private mortgage companies use it for junior liens.
Resulting in more interest and higher payments and can almost double the simple interest rate.
126
Survey
Official document giving the dimensions and showing the property boundaries
127
Pending Sales
Homes whose offers have been accepted by the sellers, the sales haven’t closed. Sales usually remain pending for 30-60 days.
Pending sakes are less reliable than a sold home.
Anything can happen to overturn the sale.
If a pending comparable is a very close match to the home you are trying to list you can contact the listing agent and see if the pending sale is close to the asking price.
The agent cannot give out the actual final price.***Violation of the agents fiduciary duty to the seller.
128
Cost Approach
Special-use properties such as public or governmental structures, county courthouses, marinas, and unique properties
Newer structures that haven’t suffered any significant depreciation
Not good for older structures.
129
Mortgage fraud
A crime in which the intent is to materially misrepresent or omit information on a mortgage loan application to obtain a loan or obtain a larger loan than would have been obtained had the lender known the truth.
130
Predatory Lender
Prays on customers who may fall into sub prime lending categories, particularly those who do not speak good english, poorly educated & elderly
131
Short sale
```
Agent selection
Declaration and proof of hardship
Property valuation
Short sale application
Short sale agreement
Finding a buyer
Negotiation
Closing
```
132
Ginnie Mae
Owned within HUD, est. 1968 to promote home ownership
133
Taking
Taking clause of the 5th amendment, private property cannot be taken for public use without just compensation
134
Freddie Mac
Assembles loans into a pool of mortgages and issued a security backed by the mortgage
136
Negative Amortization Cap
Limits the amount of unpaid interest that the lender can add to the principal balance.
Usually a negative amortization cap limits the total amount the borrower can owe to 125% of the original loan
137
DIF
Depositor insurance fund. Insured the deposits and protects the depositors of insured banks and to resolve failed banks
138
Gross Rent or Gross Income Multipliers
GRM & GIM
Gross Rent or Income Multipliers
Used for single family homes & duplexes
139
Reit - Mortgage Trust
REMT’s
Real estate mortgage trusts
Reits and REMTs usually are owned by a parent company or commercial bank
REMTs receive income mainly from mortgage interest, loan origination fees, profits earned from buying and selling mortgages.
These trusts participate in long term permanent financing but are more apt to invest in short term or senior and junior loans with potential for higher profits.
140
To specialize in land brokerage
farms, ranch, recreation, timberland, and other specialty properties
Undeveloped tracts of land
transitional & developmental land
Subdivision and lot wholesaling
site selection, assemblage, appraisal, auction, farm & land management, market analysis, land planning & zoning environmental issues, water rights, government regulations, land title defects, vacant land contracts & financing
141
Loan Types
Federal Housing Administration (FHA)
Department of Veterans Affairs (DVA or VA)
Rural Housing Service (RHS)
Texas Department of Housing & Community Affairs (TDHCA)
142
Incentive Zoning
Allows developers to provide specific amenities and benefits in exchanges for zoning incentives.
143
Building codes
Establishing the standards for virtually every aspect of a construction project which allows the county and municipalities to protect the public against the hazards of unregulated construction
145
Survey
Official document giving the dimensions and showing the property boundaries
146
Credit
An amount that is paid to a party at closing for items paid prior to closing.
147
Transfer of development rights (TDR)
A method for protecting land by transferring the right to develop from one area and giving it to another.
148
Taking
Taking clause of 5th amendment which says, in part, the private property cannot be taken for public use without just compensation
149
Deed restrictions
A clause in a deed that places limits on how the property may be used
150
Mortgage fraud
A crime in which the intent is to materially misrepresent or omit information on a mortgage loan application to obtain a loan or obtain a larger loan than would have been obtained had the lender known the truth.
150
Taking
Taking clause of the 5th amendment, private property cannot be taken for public use without just compensation
150
Short sale
```
Agent selection
Declaration and proof of hardship
Property valuation
Short sale application
Short sale agreement
Finding a buyer
Negotiation
Closing
```
151
Per Diem
Daily rate
Can be calculated by 365-day year or 360-day year (where every month is considered to have 30 days)
152
Secondary mortgage market
market for banks to repackage & sell mortgages as securities to institutional investors.
153
Conventional Loan Limits
65% for land acquisition
75% for land development
80% for multi-family & commercial
85% for one to four family residences
154
Sunshine law
open meeting law
155
police power
power of state to regulate in order to promote public health, safety, morality & welfare
156
DIF
Depositor insurance fund. Insured the deposits and protects the depositors of insured banks and to resolve failed banks
157
Comps in the same neighborhood
Can have significantly different value due to location
158
Syndicates
Corporate is a separate legal entity established by the filing of articles of incorporation with the Secretary of State. Corporations can own property in corporate name.
159
Residential Appraisals
Single family appraisals are usually conducted on The Uniform Residential Appraisal Report.
URAR.
160
Highest & Best Use
Legally permissible
Physically possible
Financially feasible
Maximally productive
161
RHS
Rural Housing Service created in 1994 to meet housing and community development needs of rural America.
162
Reit Trusts
Equity
Mortgage
Hybrid
163
Data Collection - General Data
This is information about the property’s location - country, region, city and neighborhood.
The neighborhood helps the appraiser determine those social, economic, physical, and political influences that directly impact the property’s value and potential.
163
Building codes
Establishing the standards for virtually every aspect of a construction project which allows the county and municipalities to protect the public against the hazards of unregulated construction
163
Reit - Mortgage Trust
REMT’s
Real estate mortgage trusts
Reits and REMTs usually are owned by a parent company or commercial bank
REMTs receive income mainly from mortgage interest, loan origination fees, profits earned from buying and selling mortgages.
These trusts participate in long term permanent financing but are more apt to invest in short term or senior and junior loans with potential for higher profits.
164
Classes of Depreciation
Physical Deterioration
Functional Obsolescence
External Obsolescence
165
Interest Rate Caps
To protect borrowers from unlimited increases.
The first cap (periodic cap) sets the amount of increase or decrease allowed in each adjustment period.
The second cap (overall or aggregate cap) sets a maximum interest-rate increase over the life of the loan. A 2% increase in interest rate results in approximately a 15% increase in monthly payment.
Ceiling or lifetime caps
166
Home Value
Is based on ....
location
property condition
financing trends
improvements
supply & demand
167
Farms for sakes
Independently owned and large scale production or corporate
168
Deed restrictions
A clause in a deed that places limits on how the property may be used
170
PUD
produces high density of residential housing units, a max use of open spaces and greater development flexibility, resulting in lower priced homes and minimum maintenance cost
Higher density than allowed in current zoning
171
Limited Liability Companies
Give limited liability protection of corporations without the regulations associated with corporations.
LLC’s have operating agreements that are similar to corporation bylaws, but unlike corporations, they do not have permanent existence
172
Reit - Hybrid Trust
Ability to invest in real estate and finance
173
Income Ratio
Establishes the borrowers capacity to pay the loan by limiting the percentage of gross income they may spend on housing costs.
173
Land Value Estimate
- Direct sales comparison
- Extraction
- Allocation
- Subdivision development analysis
- Land résiduel
- Ground rent capitalization
174
Mortgage
Needs a note to be legally valid
175
Judicial foreclosure
Allows the sale of mortgaged property under the supervision of the court. Proceeds go to satisfy the mortgage, other lien holders and finally the borrower.
A public sale is advertised for the first Tuesday of the next month. It is sold to the highest bidder.
Texas Supreme Court has publicized rules of civil procedure for judicial foreclosures.
177
Zoning ordinance
enacted by local government to specify land usage for every parcel within jurisdiction
178
Condemnation Suit
Needed to initiate squiring of property by eminent domain
179
RHS
Rural Housing Service created in 1994 to meet housing and community development needs of rural America.
180
Loan Types
Conventional & Gov Backed
181
Determining parcel size
26,136 / 43,560 = .60 or 60 percent of an acre
181
Reit Trusts
Equity
Mortgage
Hybrid
182
Procuring Cause
The actions taken by a broker which results in the owner being able to make a sale.
183
intestate
property owner dies with no will in place
184
Principal of Substitution
A buyer won’t pay more for a property than they would pay for a property that is similar in characteristic and amenities
185
Recently sold properties
Since it’s closed, it’s safe to assume that the selling price was arrived at mutually by a willing seller & buyer
186
Legal non confirming use
When an existing property use conflicts with ordinances that were in place before the use commenced
187
Arms-length Transaction
Both parties are dealing from equally bargaining positions.
Reflects a property that has been exposed on the open market for a reasonable period of time.
188
Reproduction Value
Cost to construct a precise duplicate
189
Predatory Lender
Prays on customers who may fall into sub prime lending categories, particularly those who do not speak good english, poorly educated & elderly
190
Estimate effective gross income
Vacancy losses & credit losses
191
Ginnie Mae
Owned within HUD, est. 1968 to promote home ownership
192
Interest Rate Caps
To protect borrowers from unlimited increases.
The first cap (periodic cap) sets the amount of increase or decrease allowed in each adjustment period.
The second cap (overall or aggregate cap) sets a maximum interest-rate increase over the life of the loan. A 2% increase in interest rate results in approximately a 15% increase in monthly payment.
Ceiling or lifetime caps
193
Writing Conventional Loans
Standards that are provided by Freddie Mac & Fannie Mae so that the loan can be sold in a secondary mortgage market
194
5 Types of Residential Specialty
```
FSbO
First time buyer
Vacation properties
Working with investors
Working as a buyers agent
```
Commercial real estate - complex, multifaceted & business only
Malls, office parks, restaurants, gas stations, convenience stores and office buildings
195
Feed in Lieu of Foreclosure
A defaulting borrower who faces foreclosure may avoid court actions and costs by voluntarily feeding the property to the mortgagee.
This transfers legal title to the lender.
The transfer, however, does not terminate any existing liens on the property
196
Compound interest
Interest which is computed on the principal amount plus accrued interest.
Interest may be compounded daily, monthly, semiannually or annually.
196
Approaches to Value
Cost, Income, and Sales Comparison
197
Texas Veterans Home Improvement Program
Introduced to provide below market interest rate loans to qualified Texas Vets for home repairs & improvements to existing homes.
198
REITS
Reits must follow certain tax and dividend guidelines otherwise the company is forced to suspend.
Reits are chartered in the state in which they are headquartered and are subject to the regulations and statutes of that state.
199
As-of-right zoning
uses automatically allowed in the zoning code
200
Mortgage Brokers
Facilitate the loan and receive a fee.
Texas Secure and Fair Enforcement for Mortgage Licensing Act of 2009 (Texas SAFE Act)
mortgage loan originators must have a valid license
201
Farms for sakes
Independently owned and large scale production or corporate
202
Subprime Borrowers
Anyone below A paper credit
203
Securities and Exchange Commission
Syndicated intending to make profit for many people from the efforts of a few, must comply with the rules and regulations of whom
204
Limited Liability Companies
Give limited liability protection of corporations without the regulations associated with corporations.
LLC’s have operating agreements that are similar to corporation bylaws, but unlike corporations, they do not have permanent existence
205
Reproduction Cost
Require duplicating the design, materials, and craftsmanship of the original improvement as closely as possible.
205
Reit - Hybrid Trust
Ability to invest in real estate and finance
206
Eminent domain
The right of government to acquire property, for public purpose, after paying just compensation
208
Fair Credit Reporting Act
| or Consumer Credit Protection Act of 1970
Keeps credit info confidential
Obtains authorization before getting info
Reveals source of credit info to consumer
209
Pre-approval
the formal process that only a lender can do.
Issue max loan amount and issue pre-approval letter
Pre-approval letters typically last 3 or 4 months
210
Substitution
When a buyer will not pay more for a home than what the buyer would pay for another home that is equally attractive & available
210
Condemnation Suit
Needed to initiate squiring of property by eminent domain
211
Balloon Loan
Partially amortized with a large payment due at the end.
Sometimes extensions are allotted on the payment, but usually not.
212
To specialize in land brokerage
farms, ranch, recreation, timberland, and other specialty properties
Undeveloped tracts of land
transitional & developmental land
Subdivision and lot wholesaling
site selection, assemblage, appraisal, auction, farm & land management, market analysis, land planning & zoning environmental issues, water rights, government regulations, land title defects, vacant land contracts & financing
213
Loan Types
Federal Housing Administration (FHA)
Department of Veterans Affairs (DVA or VA)
Rural Housing Service (RHS)
Texas Department of Housing & Community Affairs (TDHCA)
214
Incentive Zoning
Allows developers to provide specific amenities and benefits in exchanges for zoning incentives.
215
Texas Department of Housing and Community affairs (TDHCA)
Department which offers mortgage loan funds & down payment assistance to eligible first home buyers of all professions
216
Escheat
The right of government to ownership of property, which is left by a deceased property owner who leaves no will and died without descendants
217
Adjustable Rate Loans
Became popular in the 1980’s when interest rates were at an all time high
- index
- margin
- adjustment period
- interest rate caps
- calculated rate
- initial rate
- mortgage payment adjustment period
- payment cap
- negative amortization cap
218
My first Texas Home
A taxable mortgage program offering mortgage loans and more competitive, fixed, low interest APR w. down payment and closing assistance of 5% of the mortgage loan for first time homebuyers.
219
Loan Types
Conventional & Gov Backed
221
non-arms-length
relative to relative, under market price.
Unreliable as indicators.
222
Texas Veterans Land Board’s VLB
Created in 1983 to assist Texas veterans in purchasing a home with low-interest rate loan with little or no money down.
223
Acre
43,560 square feet
Acre of land has a road frontage width of 120 feet.
43,560 / 120 = 363
224
Transfer of development rights (TDR)
A method for protecting land by transferring the right to develop from one area and giving it to another.
225
Terminating Partnerships
Agreement
Bankruptcy of a partner or partnership
Court order that results when a partner petitions the court for a dissolution of the partnership
Death of a general partner
226
Taking
Taking clause of 5th amendment which says, in part, the private property cannot be taken for public use without just compensation
228
Judicial Foreclosure
In the event of defaulting by the purchaser, the lender has legal right to satisfy the debt through a judicial foreclosure. Proceeds from the sale are used to repay the remaining debt on the mortgage loan.
229
Doctrine of laches
Stated that if a property owner is lax in protecting their rights they might lose them
230
FHFA
conservator of Fannie Mae & Freddie Mac. Ensures both are running properly as a reliable source of funding for finance & community investment
231
What should you do to convert fractions to decimals?
To convert fractions to decimals, divide the numerator by the denominator.
232
Depreciation value
A value established by subtracting accumulated depreciation from the purchase price.
Depreciation value = Purchase price of a property - Accumulated depreciation
Rental value - An estimate of the rental rate a property can command for a specific period of time.
232
Predatory Lender
Prays on customers who may fall into sub prime lending categories, particularly those who do not speak good english, poorly educated & elderly
233
Spot Zoning
Singling out a small area of land of section in an existing neighborhood and placing in a different zone from that of neighboring property
234
Secondary mortgage market
market for banks to repackage & sell mortgages as securities to institutional investors.
235
Area variance
Permission to vary one or more of the dimensional or physical requirements of the applicable g law, code, or ordinance in connection with some proposed construction
236
Conventional Loan Limits
65% for land acquisition
75% for land development
80% for multi-family & commercial
85% for one to four family residences
237
Sunshine law
open meeting law
238
What business forms can syndications take
Limited Partnership
General Partnership
Corporation
Real Estate Investment Trust
239
police power
power of state to regulate in order to promote public health, safety, morality & welfare
240
Ginnie Mae
Owned within HUD, est. 1968 to promote home ownership
242
Syndicates
Corporate is a separate legal entity established by the filing of articles of incorporation with the Secretary of State. Corporations can own property in corporate name.
244
Nonconforming use
Use of property that clearly differs from current zoning
245
Small income properties, PUD, co-ops, condominiums, and commercial reports.
Freddie Mac and Fannie Mae use other reports
246
Use variance
Permission to use the land for a purpose not allowed by the current zoning
247
Partially Amortized Loan
Balloon Loan
248
Regression
Value of a more expensive property goes down when surrounded by less expensive.
249
Preparing for a CMA
Collect & analyze info
choose comps
compare with comps
estimate price
250
Reits & Tax Exemption
Shares must be owned by at least 100 investors
5 Persons or fewer cannot hold more than 50% of shares during the last half of the tax year
At least 75% of trust assets must be made up of cash, real estate, mortgage notes, or government securities
Income from sticks and bonds purchased with the proceeds of new capital may qualify as part of the 75% - but only during the first year after raising funds
No more than 30% of gross annual income can come from gains from sale of securities held for less than a year or real estate held for less than 4 years
At least 90 % of income must be distributed to shareholders within one year after the end of each fiscal year and the trust will not pay income taxes at the corporate level
251
To specialize in land brokerage
farms, ranch, recreation, timberland, and other specialty properties
Undeveloped tracts of land
transitional & developmental land
Subdivision and lot wholesaling
site selection, assemblage, appraisal, auction, farm & land management, market analysis, land planning & zoning environmental issues, water rights, government regulations, land title defects, vacant land contracts & financing
252
Anticipation
The benefits a buyer expects to receive over the period of time he or she has the property
252
Market Price
An amount a purchase agrees to pay and a seller accepts.
253
Potential gross income
Rent scheduled to be collected plus additional sources of income
254
Loan Types
Federal Housing Administration (FHA)
Department of Veterans Affairs (DVA or VA)
Rural Housing Service (RHS)
Texas Department of Housing & Community Affairs (TDHCA)
254
Incentive Zoning
Allows developers to provide specific amenities and benefits in exchanges for zoning incentives.
255
Area of Triangle
1/2 base x height
256
Reit Rules Cont
Reit shareholders have the same rights as stockholders in any corporation
257
Sales Comparison Approach
Making adjustments by adding or deducting value.
Comparable vs Subject ...comparable is being compared to the subject
258
Building permits
Documentation from a government agency giving permission to begin the construction or renovation of a building or improvement.
259
FIRREA
Financial Institutions Reform, Recovery and Enforcement Act
This was in response to the savings & loan crisis.
Includes provisions to regulate appraisal.
260
PUD
produces high density of residential housing units, a max use of open spaces and greater development flexibility, resulting in lower priced homes and minimum maintenance cost
Higher density than allowed in current zoning
261
REO
Real estate owned, generally a great deal, esp for first-time home buyers and investors
262
SML
Department of savings and mortgage lending
263
Taking
Taking clause of 5th amendment which says, in part, the private property cannot be taken for public use without just compensation
263
Transfer of development rights (TDR)
A method for protecting land by transferring the right to develop from one area and giving it to another.
264
Secondary mortgage market
market for banks to repackage & sell mortgages as securities to institutional investors.
265
Mortgage
Needs a note to be legally valid
266
Judicial foreclosure
Allows the sale of mortgaged property under the supervision of the court. Proceeds go to satisfy the mortgage, other lien holders and finally the borrower.
A public sale is advertised for the first Tuesday of the next month. It is sold to the highest bidder.
Texas Supreme Court has publicized rules of civil procedure for judicial foreclosures.
267
Mortgage Payment Adjustment Period
When the lender will change the amount of monthly payment to reflect change in interest rate
268
CCR
Deed restrictions
| Covenants, conditions and restrictions
269
Conventional Loan Limits
65% for land acquisition
75% for land development
80% for multi-family & commercial
85% for one to four family residences
269
Sunshine law
open meeting law
270
Zoning ordinance
enacted by local government to specify land usage for every parcel within jurisdiction
271
Debit
Taken from that party
271
police power
power of state to regulate in order to promote public health, safety, morality & welfare
272
REMIC
Real Estate Mortgage Investment Conduit
273
Real Estate Mortgage Investment Conduit
Hold commercial & residential mortgage pools into different maturity and risk classes.
Corporation, trust, association or partnership
274
SEQ, Plain Vanilla, Clean Pay or Current Pay
Most basic REMIC structure
Principal on these classes is retired sequentially.
Only one class begins to receive principal payments from underlying securities after the principal on any previous class has been paid off.
275
TAC - Targeted Amortization Classes
Pay a targeted principal payment schedule at a single, constant prepayment speed. TAC’s may provide protection against increasing prepayments and early retirement of the investment
276
Support or Companion Classes
Support or companion classes have the most volatile cash flow behavior. Prepayment variability from the underlying mortgage related collateral cannot be eliminated; it can only be redistributed. PACs, TACS & other support classes rely on companion classes to absorb this variable
277
Accrual Classes
Investors in an accrual class receive no cash flow from the securities until certain other classes are paid off
278
IO/PO
Interest Only & Principal Only
Complex securities that are extremely sensitive to interest rate changes because prevailing rates affect prepayments
279
Leverage
Is the use of borrowed funds to increase potential return of an investment. The higher the ratio of borrowed funds to equity - the greater degree of leverage.
280
Investment Benefits
Positive cash flow, tax benefits, appreciation
Investors can lose money via - negative cash flow and loss realized at the time of the sell
281
Various Real Estate Syndications
General partnership
Limited partnership
Corporation
Reits
282
General Partnership
An active partner in the partnership with unlimited personal liability for the debts of partnership
283
Limited partnership
Partnerships in which the partners have limited personal liability as opposed to the unlimited liability of a general partnership
284
Corporations
A legal entity established by the filing of articles of incorporation with the Secretary of State. Shareholders of a corporation have limited liability and do not participate directly in managing the corporation.
285
LLC
Corporate structures that give limited liability protection of corporations without the regulations associated with corporations.
286
Statute of Frauds
A lease for a period exceeding one year must be in writing and signed by both parties in order to be enforceable because of the Statute of Frauds
287
Agency Disclosure
Tenants entering a lease agreement for more than one year and are contemplating option to buy - an information about brokerage services form must be given at the first substantial dialogue
288
Sex Offender Laws
I do not need to disclose sex offenders. Send them the public sex offender registry so I don’t end up in court.
289
Lead - Based Paint
Properties build before 1978
Sellers & landlords must give buyers and renters the pamphlet, developed by EPA, HUD & consumer product safety commission (CSPC) titled “protect your family from lead in your home”
Must be in sales contracts & lease agreements
Sellers, lessors and real estate agents share responsibility for ensuring compliance
290
American with Disabilities Act & Fair Housing Amendments Act
Enacted January 1, 2009
ADA
Outlined design and construction requirements for covered multi-family dwellings for first occupancy after March 13, 1991
Applied to
Multifamily with an elevator and four or more dwelling units
Ground-floor dwelling units in a building that has 4 or more
Public use area
Common use area
Individual apartments at a housing facility
291
Leasehold Estates
Estate for years
Estate from period to period
Estate at will
Estate at sufferance
292
Estate for Years
Continues for a definite fixed period of time.
Any specific length of time measured in days, weeks, or months.
Definite beginning and ending date.
Not necessary to give notice to landlord fir termination
No automatically renewal
Common in commercial and apartment leases
293
Estate from Period to Period
Periodic tenancy - week, year or month.
M2M is most common.
Requires notice to terminate - 30, 60 or whatever is agreed to in the lease.
No definite ending date, renews itself.
Most apartment leases.
294
Estate at Will
Usually occurs when there is no lease or where the tenancy is not a consideration. Given with permission and no agreement about rent. This estate can be terminated by either party at either time with proper notice
295
Estate at Sufferance
A tenant that stays on property after a lease ends without consent.
This is called a hold over tenant. If owner allows M2M tenancy is created.
296
Landlords Rights & Obligations
Receive rent
Re-possess the property following the lease term
Monitor the tenants obligations to maintain the premises
Provide the necessary building support and services
Maintain condition of property
297
Landlords Rights & Rules
When giving an application to a renter, the landlord must give printed notice of his selection criteria. It must include why an applicant can be denied. Criteria such as criminal history, previous rental history, current income, credit history or failure to provide accurate or complete information on the application form are some of the reasons.
298
Conveyance of Leased Property
Landlord may sell, assign, or mortgage the leased fee interest. However, transferring and encumbering the leased property does not extinguish the obligations and covenants of a lease. Buyers & creditors must take their interest subject to terms of the lease, lease is transferred with property
299
Contract Requirements & Conditions
Parties - must be legally capable to enter agreement, certain age, sanity etc.
Property description - identify the property by legal description or other locally accepted reference.
Exclusive possession - Must provide irrevocable right to exclusive possession during the lease term, provided the tenant meets all obligations
Legal & permitted use - Intent that is legal but not permitted might cause default
Consideration - The lease contract must be accompanied by consideration to landlords rights conveyed.
Offer & Acceptance - Party must accept lease and communicate acceptance
Signatures - Landlord must sign lease, tenant doesn’t need to but should to enforce terms.
Oral vs Written -Any term longer than one year must be in writing because of the statute of frauds
300
Key components to a Lease
```
Capacity to contract
Demising clause
Description of the premises
Clear statement of term
Specification of rent and how it is to be paid
In writing
Signatures
Delivery
```
301
Security Deposit
Much be returned after 30 days of vacating premise for residential and 60 days for a commercial lease.
A landlord that refuses to return a security deposit can be liable for 3 times the deposit plus $100 and any applicable attorney fees.
Can be refundable or non-refundable.
302
Section 92.052
Devines the landlord’s obligation for repair of a property
Conditions to maintain -
Materially affects the health or safety of an ordinary tenant
Arises from the landlords failure to provide and maintain in good operating condition a device to supply hot water of a minimum temp of 120 fahrenheit
303
Tenant repairs
Under certain conditions a tenant may make trésors and deduct from rent.
When it involves a overflow, raw sewage, or flooding from broken pipe
When involving a breach of agreement, when water service stops
If it involves heating or cooling
When receiving written notification of breach of health or safety
304
Repair & Deduct Section 92.0561
Deduction for repairs for any month must not exceed one months rent or $500, whichever is greater
If rent is subsidized, deduction may apply to fair market rent
305
Subleasing
No one can sublease a property without the landlords consent.
306
Default
Landlord or tenant who violated any of the terms and covenants of the lease has breached contract and is in default
307
Texas Property Code Section 24
Process for a suit for possession is in the Texas Property Code, Section 24
308
Tenant Default allowed by State
If military is called to active duty
I’m some cases of family violence. Delinquent rent is still due & landlord must give written notice or else tenant is relieved of delinquent rent too.
309
Constructive Eviction
Nullifying the tenants lease obligations if landlord fails to provide services and maintain property condition.
In order for this to work, tenant must also vacate premises.
310
Lease Termination
Term Expiration
Notice
Voluntary Agreement
Property destruction
Condemnation - Taking by eminent domain
Foreclosure PTFA - protecting tenants at foreclosure act, required to give tenant 90 days notice, tenant has 90 days to get it together
Breach of Contract - Although contract was breached the landlord may not physically remove a tenant from the unit, permanently lock out a tenant, turn off utilities or remove a door without court order
Landlord default - tenant must move out for validity
Abandonment - If a tenant abandons leased property & demonstrates no intention to fulfill the lease, the landlord may take possession and pursue legal recourse.
311
Death or Sale
Nothing changes in lease agreement.
BUT any tenant that is 62 or older can terminate a lease if they have been accepted into an adult care facility, residential health care facility, or a housing unit that receives subsidies for housing for senior citizens. They can cancel a lease if moving due to a relatives home for health care reasons
312
Gross Lease
Full service lease. Requires landlord to pay the property’s operating expenses, including utilities, repairs & maintenance while tenant only pays rent.
Office & industrial properties.
Residential are usually gross leases with the exception that tenants will pay utilities.
313
Residential Leases
May be net or gross.
314
Commercial Lease
long term - up to 25 years
negotiable due to financial magnitude
have serious financial consequences; must express all points of agreement & be very precise
315
The Uniform Residential Landlord and Tenant Act (URLTA)
It’s important because it prompted legislation at the state level that empowered the courts to nullify residential leases that violated URLTA guidelines, important where a lease gave unfair advantages to the landlord
316
Covenant
A promise in a written contract or a deed of real property
317
Conveyance
The act of transferring an ownership interest in a property from one party to another
318
Leasehold estate
An ownership of a temporary right to hold land or property in which a lesser or a tenant holds rights of real property by some form of title from a lessor or landlord. ( Less-than-freehold estate)
319
Free holds
Any estate free from hold of any entity besides the owner
320
Option to renew
A lease provision that gives the tenant the right to extend the lease for an additional period of time and sets forth the terms for the new renewed lease.
321
Security Deposit
Money that a tenant deposited with the owner of the property to pay for damages beyond normal wear and tear.
322
Subletting
Transfer by a tenant, the sublessor, of a portion of the leasehold interest to another party, the subleases, through the execution of a sublease. Also called subleasing.
323
Assignment
Transfer of entire leasehold interest by a tenant, the assignor, to a 3rd party the assignee
324
Suit for possession
Legal suit filed by a landlord if tenant is in default
325
Gross lease or full service
Requires the landlord to pay the property’s operating expenses, including utilities, repairs, & maintenance
Tenant only pays rent
326
Net lease
tenant is required to pay rent in addition to some or all maintenance and operating expenses, tax, insurance & utilities repairs
327
Graduated lease
Lease where rent payments start at a fixed amount & increase and the lease term matured
328
Land lease
Lease where the landowner grants the tenant a leasehold interest in the land only in exchange for rent
329
Percentage lease
A lease whose rental is based on a percentage of the monthly or annual gross sales made on the site
330
Proprietary lease
Lease which conveys a leasehold interest to an owner of cooperative. It died not stipulate rent, as the rent is equal to the owners share of periodic expenses.
331
Index lease
Lease which provided for the adjustment of rent according to changes in price index
332
Property Managers
```
Apartments
Shopping Centers
Condos
Duplexes
Industrial Complexes
Office Complexes
```
333
Individual property managers
Real estate broker who manages properties for one or more owners. Such a manager may be part of a small property management firm.
334
Individual Building Manager
Usually manages a single large property. Working directly for an owner requires no license.
335
Resident Manager
Lives on property and may be employed by a broker.
336
Real estate asset manager
Acts as the property owners agent and adviser for the property. These managers plan and direct purchase, development & disposition of real estate on behalf of business investors.
Focusing on long term strategy rather than day to day.
337
Property management proposal
Description of property, including land and all improvements
List of required maintenance
Info on how maintenance records will be kept
Info on account procedures
Schedule of property inspection d
Proposed budgets - operating, capital, stabilized
Info on proposed management fee
338
Management Fee
A negotiated item. Often a base fee and or percentage of the collected rents. The manager may also receive additional compensation for leases that are renewed and for the supervision of repair projects undertaken
339
Agreement Termination
Section outlined what circumstances the agreement will be cancelled or renewed & notice required.
340
Property Manager Skills
Supervision
Accounting - Understand generally accepted accounting principals (GAAP) & be able to prepare and interpret monthly and yearly reports
Building system knowledge - Understand how various building systems work
341
Bargain and sale covenant
I own but won’t defend
342
Types of deeds
full covenant and warranty deed, special warranty deeds, bargain and sale deed with covenants, bargain and sale without covenants, quitclaim deed, executors deed, referee’s deed
343
Alienation
Transfer of title to real estate
344
Conveyance
When the transfer uses a written document.
A living owner makes a private grant by means of conveyance or deed.
A private grant that occurs when the owner dies is a transfer by will.
345
Voluntary Alienation
Unforced transfer of title by sale or gift from an owner to another party.
346
Public Grant
Unforced transfer of title by sale or gift from government entity to private party.
347
Private Grant
Transfer of title by sale or gift from one private party to another.
348
Deed
Elements -
```
Grantor
Grantee
Act of conveyance
Consideration
Legal description
Habendum clause
Designation of limitations
Exemptions and reservations affecting the title
Signature of the grantor
Delivery and acceptance of the deed
Acknowledgement
Recording
```
349
Grantor
Transfers title to real property.
Must be competent. Someone who is mentally handicapped cannot convey title to real estate.
Must be 18 + and alive at time of transfer
350
Quitclaim Deed
Only conveys what present interest a person may have without representations or warranties of title.
351
Warranty Deed
Usually required by buyers, title insurance companies, and lenders on real estate transactions.
This guarantees absolute ownership interests.
352
Special Warranty Deed
The seller guarantees that they have not personally done anything to adversely impact the title being conveyed to the buyer
353
General Warranty Deed
The seller covenants with the buyer that the seller has done nothing to impact title and nor has anyone else within “chain of title”
Best title for a buyer to receive.
354
Grantee
receives property from grantor, must be living on time of delivery or it is void
355
Act of Conveyance - Granting Clause
Expresses grantor’s present desire and intention to transfer legal title to the grantee.
Words are contained in the granting clause.
“I hereby grant John Doe all of (legal description of property) together with all the appurtenances and rights to said premises”
356
Consideration
The deed must be accompanied by valuable (monetary) or good (love and affection) consideration, but the amount not need to reflect the actual price in most cases.
357
legal description criteria
provides sufficient data for surveyor to locate parcel
identifies the property as unique and distinct from all other properties
provides accuracy and consistency over time
358
Habendum Clause (to have and to hold)
describes the type of estate being conveyed, it usually follows the granting clause and reaffirms the extend of ownership being transferred
359
Designation of Limitations
Dictate how a property may be used. Restrictions spelled out in the deed.
360
Subject to clause
subject to easement on the property
361
Signature of the Grantor
Deed must be signed by grantor but not grantee.
362
PMI
Private Mortgage Insurance Program
364
defeasance clause
a provision indicating the borrower will receive title once all payments are met
365
Savings accounts
Give bank long term funds it needs for investment ventures including real estate loans
366
Syndicates
Corporate is a separate legal entity established by the filing of articles of incorporation with the Secretary of State. Corporations can own property in corporate name.
367
TXDOB
Texas Department of Banking
368
intestate
property owner dies with no will in place
369
Supply & Demand
How many properties are available in the area, property prices, number of prospective buyers, and price buyers are willing to pay
369
Income Approach Steps
```
Estimate potential gross income
Estimate effective gross income
Estimate Net operating income
Select capitalization rate
Apply rate
```
370
Allocation
A typical ratio of land value to total value is derived from comparable properties and applied to the subject
371
Legal non confirming use
When an existing property use conflicts with ordinances that were in place before the use commenced
372
Cluster zoning
Zoning in which density is determined for an entire area, rather than a lot by lot basis
373
Deficiency Judgment
If the sale does not yield sufficient funds to cover amounts owed the mortgagee may ask the court for this.
374
Straight line method
Estimate accrued depreciation because it’s easier than breakdown but less precise.
375
Debt Ratio
Calculated based on all monthly payments the borrower has, including those items or payments the borrowers must make for other debts. Debts include car payments and revolving charge accounts.
375
Diminishing return
Result of continuing to add improvements to a property that will not increase the value
377
My Choice Texas Home
A taxable mortgage program offering mortgage loans at 30 year fixed interest rates with down payment and closing cost assistance without a first-time homebuyer requirement.
379
Ranch
area of landscape, including various structures, for practice of raising grazing livestock such as cattle’s or sheep for meat or wool
380
Active listings
Give an indication of how each of the homes currently on the market stacks up against others
381
Debt Ratio
Conventional loan - typically required to be under 36%
FHA guidelines - require debt to be no more than 43%
381
PUD
produces high density of residential housing units, a max use of open spaces and greater development flexibility, resulting in lower priced homes and minimum maintenance cost
Higher density than allowed in current zoning
382
HMDA
Home Mortgage Disclosure Act of 1975 requires that lenders report statistical information each year to ensure that lenders are not restricting loans to certain individuals or neighborhoods to exclude them from obtaining a mortgage. “Redlining”
383
Writing Conventional Loans
Standards that are provided by Freddie Mac & Fannie Mae so that the loan can be sold in a secondary mortgage market
384
5 Types of Residential Specialty
```
FSbO
First time buyer
Vacation properties
Working with investors
Working as a buyers agent
```
Commercial real estate - complex, multifaceted & business only
Malls, office parks, restaurants, gas stations, convenience stores and office buildings
385
Conditions
Deed restrictions that provide for a reversion of the title is violated
386
Payment Cap
Ensures the same monthly payment although the interest rate fluctuates
Problematic if payment isn’t covering interest through higher interest rates resulting in a negative amortization
387
Feed in Lieu of Foreclosure
A defaulting borrower who faces foreclosure may avoid court actions and costs by voluntarily feeding the property to the mortgagee.
This transfers legal title to the lender.
The transfer, however, does not terminate any existing liens on the property
388
Mortgage
Needs a note to be legally valid
389
Right of Redemption
The right to reclaim a property by paying off amounts owed to creditors including interest and costs.
Usual redemption period is 2 years. Applied to homestead properties and land designated for agricultural use when suit was filed.
Other propertied - 180 days.
390
Texas Veterans Home Improvement Program
Introduced to provide below market interest rate loans to qualified Texas Vets for home repairs & improvements to existing homes.
391
REITS
Reits must follow certain tax and dividend guidelines otherwise the company is forced to suspend.
Reits are chartered in the state in which they are headquartered and are subject to the regulations and statutes of that state.
392
Zoning ordinance
A regulation enacted by the local government to specify land usage for every parcel within jurisdiction
393
As-of-right zoning
uses automatically allowed in the zoning code
394
Mortgage Brokers
Facilitate the loan and receive a fee.
Texas Secure and Fair Enforcement for Mortgage Licensing Act of 2009 (Texas SAFE Act)
mortgage loan originators must have a valid license
395
Texas Appraiser Licensing and Cert Board (TALCB)
1. Appraiser Trainee
2. Licensed Residential Appraiser
3. Certified Residential Appraiser
4. Certified General Appraiser
396
Subprime Borrowers
Anyone below A paper credit
397
Mortgage Clauses
```
Identify parties
Legal description of property
Attachment of note
Property Taxes
Insurance
Preservation & Maintenance
```
398
Securities and Exchange Commission
Syndicated intending to make profit for many people from the efforts of a few, must comply with the rules and regulations of whom
399
Judicial foreclosure
Allows the sale of mortgaged property under the supervision of the court. Proceeds go to satisfy the mortgage, other lien holders and finally the borrower.
A public sale is advertised for the first Tuesday of the next month. It is sold to the highest bidder.
Texas Supreme Court has publicized rules of civil procedure for judicial foreclosures.
400
Fannie Mae
Shareholder owned, ensures mortgage money is available for people across the country. FHA insured.
401
Zoning ordinance
enacted by local government to specify land usage for every parcel within jurisdiction
402
Eminent domain
The right of government to acquire property, for public purpose, after paying just compensation
403
Capitalization Rate
Income / Value = Cap Rate
404
Fair Credit Reporting Act
| or Consumer Credit Protection Act of 1970
Keeps credit info confidential
Obtains authorization before getting info
Reveals source of credit info to consumer
405
Pre-approval
the formal process that only a lender can do.
Issue max loan amount and issue pre-approval letter
Pre-approval letters typically last 3 or 4 months
407
Balloon Loan
Partially amortized with a large payment due at the end.
Sometimes extensions are allotted on the payment, but usually not.
408
Landlords base rents on what criteria?
Landlords decide what their rents will be, based on the rental market, type of property and the geographic location.
408
intestate
property owner dies with no will in place
409
Real Estate Investment Trusts (REIT) *******
Looking investments using the trust form of ownership. REIT is the avoidance of corporate tax.
The goal of the law was to influence small investors to combine their resources with others to raise venture capital for real estate transactions.
REITS enjoy special income tax benefits similar to those granted to mutual funds. They are exempt from corporate tax if they invest at least 75% of their assets in real estate and distribute 90% or more of their annual real estate income to investors.
410
Market value
most probable price
411
Texas Department of Housing and Community affairs (TDHCA)
Department which offers mortgage loan funds & down payment assistance to eligible first home buyers of all professions
412
Escheat
The right of government to ownership of property, which is left by a deceased property owner who leaves no will and died without descendants
413
Adjustable Rate Loans
Became popular in the 1980’s when interest rates were at an all time high
- index
- margin
- adjustment period
- interest rate caps
- calculated rate
- initial rate
- mortgage payment adjustment period
- payment cap
- negative amortization cap
414
My first Texas Home
A taxable mortgage program offering mortgage loans and more competitive, fixed, low interest APR w. down payment and closing assistance of 5% of the mortgage loan for first time homebuyers.
415
Legal non confirming use
When an existing property use conflicts with ordinances that were in place before the use commenced
416
CRA
Est to prevent redlining and encourage banks and thrifts to help meet credit needs of all segments of their communities
417
Cost Approach
The appraiser estimates a property’s value by adding the land value to the depreciated value of any improvements to the property.
418
Where can most analysis info for a CMA be found ?
MLS
Multiple listing Service
419
Texas Veterans Land Board’s VLB
Created in 1983 to assist Texas veterans in purchasing a home with low-interest rate loan with little or no money down.
420
Land residual
Net operating income attributable to the land is capitalized at market rates to obtain land value
420
Market Value
Based on analyzing data
421
Mortgage lien
Is released when the debt is paid in full
422
Piti
Principal
Interest
Taxes
Insurance
423
Subdivision development analysis
Costs and profit are deducted from estimated gross sales prices of subdivided and finished lots, and net sales proceeds are discounted to present value
423
Indirect Cost
```
Administration
Appraisal
Architectural & Engineering
Attorney
Filing
Financing
Interest
Leasing
Recording Fees
Surveyor Fees
Taxes during construction
```
424
Terminating Partnerships
Agreement
Bankruptcy of a partner or partnership
Court order that results when a partner petitions the court for a dissolution of the partnership
Death of a general partner
426
Reconciliation
The step of the appraisal process in which the appraiser looks at all 3 options to determine the most effective.
426
Value Vs Price or Cost
Value vs Price
Market value vs What someone will pay
426
Writing Conventional Loans
Standards that are provided by Freddie Mac & Fannie Mae so that the loan can be sold in a secondary mortgage market
426
5 Types of Residential Specialty
```
FSbO
First time buyer
Vacation properties
Working with investors
Working as a buyers agent
```
Commercial real estate - complex, multifaceted & business only
Malls, office parks, restaurants, gas stations, convenience stores and office buildings
427
Judicial Foreclosure
In the event of defaulting by the purchaser, the lender has legal right to satisfy the debt through a judicial foreclosure. Proceeds from the sale are used to repay the remaining debt on the mortgage loan.
428
Doctrine of laches
Stated that if a property owner is lax in protecting their rights they might lose them
429
FHFA
conservator of Fannie Mae & Freddie Mac. Ensures both are running properly as a reliable source of funding for finance & community investment
430
Income Approach
Used to value commercial & investment properties.
Obtain income and expense data, comparable and competitive properties in the market.
Use market data to determine capitalization and discount rates for analysis.
430
Conventional Loan
Cash equivalent sale
430
Feed in Lieu of Foreclosure
A defaulting borrower who faces foreclosure may avoid court actions and costs by voluntarily feeding the property to the mortgagee.
This transfers legal title to the lender.
The transfer, however, does not terminate any existing liens on the property
431
Duties of a mortgagor
Keep property in good repair, pay all property taxes, protect from loss due to fire or other disasters. Most lenders require that the property be insured for at least 80% of its value or up to 100%
432
Obtaining CMA info
listing service, other brokers, local board of Realtors, county records, appraisers, title companies, individual experience
433
Spot Zoning
Singling out a small area of land of section in an existing neighborhood and placing in a different zone from that of neighboring property
434
Texas Veterans Home Improvement Program
Introduced to provide below market interest rate loans to qualified Texas Vets for home repairs & improvements to existing homes.
435
Area variance
Permission to vary one or more of the dimensional or physical requirements of the applicable g law, code, or ordinance in connection with some proposed construction
436
As-of-right zoning
uses automatically allowed in the zoning code
436
REITS
Reits must follow certain tax and dividend guidelines otherwise the company is forced to suspend.
Reits are chartered in the state in which they are headquartered and are subject to the regulations and statutes of that state.
437
Mortgage Brokers
Facilitate the loan and receive a fee.
Texas Secure and Fair Enforcement for Mortgage Licensing Act of 2009 (Texas SAFE Act)
mortgage loan originators must have a valid license
438
What business forms can syndications take
Limited Partnership
General Partnership
Corporation
Real Estate Investment Trust
439
Adjusting Comps
Collect and analyze information
Choose comps in the area
Compare sellers property and do some adjusting to the value of the comps
439
Subprime Borrowers
Anyone below A paper credit
439
Securities and Exchange Commission
Syndicated intending to make profit for many people from the efforts of a few, must comply with the rules and regulations of whom
440
Collecting Home Site Data
Property width and shape, irregular shapes are less valuable
Frontage, esp to a desired feature
Depth, sometimes a deeper lot is more valuable
Area, assemblage and plottage
440
Eminent domain
The right of government to acquire property, for public purpose, after paying just compensation
441
Percentage of Profit
Profit/Original Cost
441
Replacement Cost
Include all the costs of building a house or other real estate improvement from the ground up and having the same utility as the one being valued, but with a modern design, new materials, and current standard workmanship.
441
Reconciliation Steps
Applicability to the property type and appraisal problem.
Reliability of the data and data source.
Accuracy of calculations and logic used in deriving value conclusions.
The quantity of relevant evidence provided by each approach to value and by the highest and best use estimate.
The consistency of evidence provided by each approach to value and by highest and best use estimate.
The consistency of evidence produced by the approaches to value.
441
Criteria for adjustments
```
Date of sale
location
physical characteristics
transaction characteristics
sale conditions (foreclosure or between family members)
```
441
Fair Credit Reporting Act
| or Consumer Credit Protection Act of 1970
Keeps credit info confidential
Obtains authorization before getting info
Reveals source of credit info to consumer
442
Hectare
Metric measurement = 10,000 square meters or approximately 2.47 acres.
Convert acres in hectares by dividing by 2.47
442
Neighborhood
Ownership makeup - Owner occupied or if it’s mainly rentals (owner occupied are in better shape)
Vacancies - if there are several, people may not be interested in the area
Consistency - determine style, age, size & quality. Zoning codes and restrictions when enforced have a considerable effect on protecting the value of the property
Current land use - Depending if it’s residential to primary use, values of existing property can be on the upswing or downswing.
Land contour - Variations in topography are more appealing than totally flat or steep & hilly
Street size, utilities available (electric, gas, water, sewers, telephone, cable & internet)
Irritants - check for odors, industrial noise, pollution, smog, fog, or frequent & excessive wind.
Community status - is it prominent or prestigious?
Access - to highways, malls, employment, and other important places
Schools - number 1 priority for a lot of buyers
Public service - transportation, police and fire houses
Government issues - Identify whether the current zoning codes to protect the property from the influx of non-residential use. Collect property tax information and determine how it compares with neighboring communities.
443
Pre-approval
the formal process that only a lender can do.
Issue max loan amount and issue pre-approval letter
Pre-approval letters typically last 3 or 4 months
444
Nonconforming use
Use of property that clearly differs from current zoning
445
Balloon Loan
Partially amortized with a large payment due at the end.
Sometimes extensions are allotted on the payment, but usually not.
446
Use variance
Permission to use the land for a purpose not allowed by the current zoning
447
Partially Amortized Loan
Balloon Loan
448
Expired Listings
Homes comparable to the seller’s home that ultimately did not sell.
449
Highest and Best Use
Determined by market forces
- legally permissible
- physically possible
- financially feasible
- maximally productive
450
Reits & Tax Exemption
Shares must be owned by at least 100 investors
5 Persons or fewer cannot hold more than 50% of shares during the last half of the tax year
At least 75% of trust assets must be made up of cash, real estate, mortgage notes, or government securities
Income from sticks and bonds purchased with the proceeds of new capital may qualify as part of the 75% - but only during the first year after raising funds
No more than 30% of gross annual income can come from gains from sale of securities held for less than a year or real estate held for less than 4 years
At least 90 % of income must be distributed to shareholders within one year after the end of each fiscal year and the trust will not pay income taxes at the corporate level
451
Non-judicial foreclosure
The process whereby the lender gives the borrower a notice of default (NOD) and the intent to sell the property in a form prescribed by that states statute. Sometimes referred to as “power of sale” foreclosure.
Much quicker than with court action.
If buyer fails to cure default with use of filing bankruptcy or temporary stay on foreclosure, the lender may conduct a public auction
453
Evaluation
A study of the nature, quality, or utility of certain property interests in which a value estimate is not necessarily required.
Does not result in an estimate of value.
Looks at a number of economic principles that influence the value.
454
Primary mortgage market lenders
Originate loans and are made up of
Savings & Loan Associations
Commercial Banks
Credit Unions
Life Insurance Companies
455
Income Approach
Based on substitution and anticipation
456
Texas Department of Housing and Community affairs (TDHCA)
Department which offers mortgage loan funds & down payment assistance to eligible first home buyers of all professions
457
Reit Rules Cont
Reit shareholders have the same rights as stockholders in any corporation
458
Escheat
The right of government to ownership of property, which is left by a deceased property owner who leaves no will and died without descendants
459
Building permits
Documentation from a government agency giving permission to begin the construction or renovation of a building or improvement.
460
Adjustable Rate Loans
Became popular in the 1980’s when interest rates were at an all time high
- index
- margin
- adjustment period
- interest rate caps
- calculated rate
- initial rate
- mortgage payment adjustment period
- payment cap
- negative amortization cap
461
My first Texas Home
A taxable mortgage program offering mortgage loans and more competitive, fixed, low interest APR w. down payment and closing assistance of 5% of the mortgage loan for first time homebuyers.
462
REO
Real estate owned, generally a great deal, esp for first-time home buyers and investors
466
Comparable Factors
Location & Physical Characteristics
467
Texas Veterans Land Board’s VLB
Created in 1983 to assist Texas veterans in purchasing a home with low-interest rate loan with little or no money down.
468
Mortgage Payment Adjustment Period
When the lender will change the amount of monthly payment to reflect change in interest rate
469
CCR
Deed restrictions
| Covenants, conditions and restrictions
471
Income Ratio
Conventional loans - typically required to be under 28%
FHA - Require thé income ratio to be no more than 31%
472
Arms-length Transaction
Both parties are dealing from equally bargaining positions.
Reflects a property that has been exposed on the open market for a reasonable period of time.
473
REMIC
Real Estate Mortgage Investment Conduit
474
Real Estate Mortgage Investment Conduit
Hold commercial & residential mortgage pools into different maturity and risk classes.
Corporation, trust, association or partnership
475
SEQ, Plain Vanilla, Clean Pay or Current Pay
Most basic REMIC structure
Principal on these classes is retired sequentially.
Only one class begins to receive principal payments from underlying securities after the principal on any previous class has been paid off.
476
TAC - Targeted Amortization Classes
Pay a targeted principal payment schedule at a single, constant prepayment speed. TAC’s may provide protection against increasing prepayments and early retirement of the investment
477
Support or Companion Classes
Support or companion classes have the most volatile cash flow behavior. Prepayment variability from the underlying mortgage related collateral cannot be eliminated; it can only be redistributed. PACs, TACS & other support classes rely on companion classes to absorb this variable
478
Accrual Classes
Investors in an accrual class receive no cash flow from the securities until certain other classes are paid off
479
IO/PO
Interest Only & Principal Only
Complex securities that are extremely sensitive to interest rate changes because prevailing rates affect prepayments
480
Leverage
Is the use of borrowed funds to increase potential return of an investment. The higher the ratio of borrowed funds to equity - the greater degree of leverage.
481
Investment Benefits
Positive cash flow, tax benefits, appreciation
Investors can lose money via - negative cash flow and loss realized at the time of the sell
482
Various Real Estate Syndications
General partnership
Limited partnership
Corporation
Reits
483
General Partnership
An active partner in the partnership with unlimited personal liability for the debts of partnership
484
Limited partnership
Partnerships in which the partners have limited personal liability as opposed to the unlimited liability of a general partnership
485
Corporations
A legal entity established by the filing of articles of incorporation with the Secretary of State. Shareholders of a corporation have limited liability and do not participate directly in managing the corporation.
486
LLC
Corporate structures that give limited liability protection of corporations without the regulations associated with corporations.
487
Statute of Frauds
A lease for a period exceeding one year must be in writing and signed by both parties in order to be enforceable because of the Statute of Frauds
488
Agency Disclosure
Tenants entering a lease agreement for more than one year and are contemplating option to buy - an information about brokerage services form must be given at the first substantial dialogue
489
Sex Offender Laws
I do not need to disclose sex offenders. Send them the public sex offender registry so I don’t end up in court.
490
Lead - Based Paint
Properties build before 1978
Sellers & landlords must give buyers and renters the pamphlet, developed by EPA, HUD & consumer product safety commission (CSPC) titled “protect your family from lead in your home”
Must be in sales contracts & lease agreements
Sellers, lessors and real estate agents share responsibility for ensuring compliance
491
American with Disabilities Act & Fair Housing Amendments Act
Enacted January 1, 2009
ADA
Outlined design and construction requirements for covered multi-family dwellings for first occupancy after March 13, 1991
Applied to
Multifamily with an elevator and four or more dwelling units
Ground-floor dwelling units in a building that has 4 or more
Public use area
Common use area
Individual apartments at a housing facility
492
Leasehold Estates
Estate for years
Estate from period to period
Estate at will
Estate at sufferance
493
Estate for Years
Continues for a definite fixed period of time.
Any specific length of time measured in days, weeks, or months.
Definite beginning and ending date.
Not necessary to give notice to landlord fir termination
No automatically renewal
Common in commercial and apartment leases
494
Estate from Period to Period
Periodic tenancy - week, year or month.
M2M is most common.
Requires notice to terminate - 30, 60 or whatever is agreed to in the lease.
No definite ending date, renews itself.
Most apartment leases.
495
Estate at Will
Usually occurs when there is no lease or where the tenancy is not a consideration. Given with permission and no agreement about rent. This estate can be terminated by either party at either time with proper notice
496
Estate at Sufferance
A tenant that stays on property after a lease ends without consent.
This is called a hold over tenant. If owner allows M2M tenancy is created.
497
Landlords Rights & Obligations
Receive rent
Re-possess the property following the lease term
Monitor the tenants obligations to maintain the premises
Provide the necessary building support and services
Maintain condition of property
498
Landlords Rights & Rules
When giving an application to a renter, the landlord must give printed notice of his selection criteria. It must include why an applicant can be denied. Criteria such as criminal history, previous rental history, current income, credit history or failure to provide accurate or complete information on the application form are some of the reasons.
499
Conveyance of Leased Property
Landlord may sell, assign, or mortgage the leased fee interest. However, transferring and encumbering the leased property does not extinguish the obligations and covenants of a lease. Buyers & creditors must take their interest subject to terms of the lease, lease is transferred with property
500
Contract Requirements & Conditions
Parties - must be legally capable to enter agreement, certain age, sanity etc.
Property description - identify the property by legal description or other locally accepted reference.
Exclusive possession - Must provide irrevocable right to exclusive possession during the lease term, provided the tenant meets all obligations
Legal & permitted use - Intent that is legal but not permitted might cause default
Consideration - The lease contract must be accompanied by consideration to landlords rights conveyed.
Offer & Acceptance - Party must accept lease and communicate acceptance
Signatures - Landlord must sign lease, tenant doesn’t need to but should to enforce terms.
Oral vs Written -Any term longer than one year must be in writing because of the statute of frauds
501
Key components to a Lease
```
Capacity to contract
Demising clause
Description of the premises
Clear statement of term
Specification of rent and how it is to be paid
In writing
Signatures
Delivery
```
502
Security Deposit
Much be returned after 30 days of vacating premise for residential and 60 days for a commercial lease.
A landlord that refuses to return a security deposit can be liable for 3 times the deposit plus $100 and any applicable attorney fees.
Can be refundable or non-refundable.
503
Section 92.052
Devines the landlord’s obligation for repair of a property
Conditions to maintain -
Materially affects the health or safety of an ordinary tenant
Arises from the landlords failure to provide and maintain in good operating condition a device to supply hot water of a minimum temp of 120 fahrenheit
504
Tenant repairs
Under certain conditions a tenant may make trésors and deduct from rent.
When it involves a overflow, raw sewage, or flooding from broken pipe
When involving a breach of agreement, when water service stops
If it involves heating or cooling
When receiving written notification of breach of health or safety
505
Repair & Deduct Section 92.0561
Deduction for repairs for any month must not exceed one months rent or $500, whichever is greater
If rent is subsidized, deduction may apply to fair market rent
506
Subleasing
No one can sublease a property without the landlords consent.
507
Default
Landlord or tenant who violated any of the terms and covenants of the lease has breached contract and is in default
508
Texas Property Code Section 24
Process for a suit for possession is in the Texas Property Code, Section 24
509
Tenant Default allowed by State
If military is called to active duty
I’m some cases of family violence. Delinquent rent is still due & landlord must give written notice or else tenant is relieved of delinquent rent too.
510
Constructive Eviction
Nullifying the tenants lease obligations if landlord fails to provide services and maintain property condition.
In order for this to work, tenant must also vacate premises.
511
Lease Termination
Term Expiration
Notice
Voluntary Agreement
Property destruction
Condemnation - Taking by eminent domain
Foreclosure PTFA - protecting tenants at foreclosure act, required to give tenant 90 days notice, tenant has 90 days to get it together
Breach of Contract - Although contract was breached the landlord may not physically remove a tenant from the unit, permanently lock out a tenant, turn off utilities or remove a door without court order
Landlord default - tenant must move out for validity
Abandonment - If a tenant abandons leased property & demonstrates no intention to fulfill the lease, the landlord may take possession and pursue legal recourse.
512
Death or Sale
Nothing changes in lease agreement.
BUT any tenant that is 62 or older can terminate a lease if they have been accepted into an adult care facility, residential health care facility, or a housing unit that receives subsidies for housing for senior citizens. They can cancel a lease if moving due to a relatives home for health care reasons
513
Gross Lease
Full service lease. Requires landlord to pay the property’s operating expenses, including utilities, repairs & maintenance while tenant only pays rent.
Office & industrial properties.
Residential are usually gross leases with the exception that tenants will pay utilities.
514
Residential Leases
May be net or gross.
515
Commercial Lease
long term - up to 25 years
negotiable due to financial magnitude
have serious financial consequences; must express all points of agreement & be very precise
516
The Uniform Residential Landlord and Tenant Act (URLTA)
It’s important because it prompted legislation at the state level that empowered the courts to nullify residential leases that violated URLTA guidelines, important where a lease gave unfair advantages to the landlord
517
Covenant
A promise in a written contract or a deed of real property
518
Conveyance
The act of transferring an ownership interest in a property from one party to another
519
Leasehold estate
An ownership of a temporary right to hold land or property in which a lesser or a tenant holds rights of real property by some form of title from a lessor or landlord. ( Less-than-freehold estate)
520
Free holds
Any estate free from hold of any entity besides the owner
521
Option to renew
A lease provision that gives the tenant the right to extend the lease for an additional period of time and sets forth the terms for the new renewed lease.
522
Security Deposit
Money that a tenant deposited with the owner of the property to pay for damages beyond normal wear and tear.
523
Subletting
Transfer by a tenant, the sublessor, of a portion of the leasehold interest to another party, the subleases, through the execution of a sublease. Also called subleasing.
524
Assignment
Transfer of entire leasehold interest by a tenant, the assignor, to a 3rd party the assignee
525
Suit for possession
Legal suit filed by a landlord if tenant is in default
526
Gross lease or full service
Requires the landlord to pay the property’s operating expenses, including utilities, repairs, & maintenance
Tenant only pays rent
527
Net lease
tenant is required to pay rent in addition to some or all maintenance and operating expenses, tax, insurance & utilities repairs
528
Graduated lease
Lease where rent payments start at a fixed amount & increase and the lease term matured
529
Land lease
Lease where the landowner grants the tenant a leasehold interest in the land only in exchange for rent
530
Percentage lease
A lease whose rental is based on a percentage of the monthly or annual gross sales made on the site
531
Proprietary lease
Lease which conveys a leasehold interest to an owner of cooperative. It died not stipulate rent, as the rent is equal to the owners share of periodic expenses.
532
Index lease
Lease which provided for the adjustment of rent according to changes in price index
533
Property Managers
```
Apartments
Shopping Centers
Condos
Duplexes
Industrial Complexes
Office Complexes
```
534
Individual property managers
Real estate broker who manages properties for one or more owners. Such a manager may be part of a small property management firm.
535
Individual Building Manager
Usually manages a single large property. Working directly for an owner requires no license.
536
Resident Manager
Lives on property and may be employed by a broker.
537
Real estate asset manager
Acts as the property owners agent and adviser for the property. These managers plan and direct purchase, development & disposition of real estate on behalf of business investors.
Focusing on long term strategy rather than day to day.
538
Property management proposal
Description of property, including land and all improvements
List of required maintenance
Info on how maintenance records will be kept
Info on account procedures
Schedule of property inspection d
Proposed budgets - operating, capital, stabilized
Info on proposed management fee
539
Management Fee
A negotiated item. Often a base fee and or percentage of the collected rents. The manager may also receive additional compensation for leases that are renewed and for the supervision of repair projects undertaken
540
Agreement Termination
Section outlined what circumstances the agreement will be cancelled or renewed & notice required.
541
Property Manager Skills
Supervision
Accounting - Understand generally accepted accounting principals (GAAP) & be able to prepare and interpret monthly and yearly reports
Building system knowledge - Understand how various building systems work
542
Bargain and sale covenant
I own but won’t defend
543
Types of deeds
full covenant and warranty deed, special warranty deeds, bargain and sale deed with covenants, bargain and sale without covenants, quitclaim deed, executors deed, referee’s deed
544
Alienation
Transfer of title to real estate
545
Conveyance
When the transfer uses a written document.
A living owner makes a private grant by means of conveyance or deed.
A private grant that occurs when the owner dies is a transfer by will.
546
Voluntary Alienation
Unforced transfer of title by sale or gift from an owner to another party.
547
Public Grant
Unforced transfer of title by sale or gift from government entity to private party.
548
Private Grant
Transfer of title by sale or gift from one private party to another.
549
Deed
Elements -
```
Grantor
Grantee
Act of conveyance
Consideration
Legal description
Habendum clause
Designation of limitations
Exemptions and reservations affecting the title
Signature of the grantor
Delivery and acceptance of the deed
Acknowledgement
Recording
```
550
Grantor
Transfers title to real property.
Must be competent. Someone who is mentally handicapped cannot convey title to real estate.
Must be 18 + and alive at time of transfer
551
Quitclaim Deed
Only conveys what present interest a person may have without representations or warranties of title.
552
Warranty Deed
Usually required by buyers, title insurance companies, and lenders on real estate transactions.
This guarantees absolute ownership interests.
553
Special Warranty Deed
The seller guarantees that they have not personally done anything to adversely impact the title being conveyed to the buyer
554
General Warranty Deed
The seller covenants with the buyer that the seller has done nothing to impact title and nor has anyone else within “chain of title”
Best title for a buyer to receive.
555
Grantee
receives property from grantor, must be living on time of delivery or it is void
556
Act of Conveyance - Granting Clause
Expresses grantor’s present desire and intention to transfer legal title to the grantee.
Words are contained in the granting clause.
“I hereby grant John Doe all of (legal description of property) together with all the appurtenances and rights to said premises”
557
Consideration
The deed must be accompanied by valuable (monetary) or good (love and affection) consideration, but the amount not need to reflect the actual price in most cases.
558
legal description criteria
provides sufficient data for surveyor to locate parcel
identifies the property as unique and distinct from all other properties
provides accuracy and consistency over time
559
Habendum Clause (to have and to hold)
describes the type of estate being conveyed, it usually follows the granting clause and reaffirms the extend of ownership being transferred
560
PMI
Private Mortgage Insurance Program
561
Arrears
Monies paid in advance, taxes, mortgage interest utility payments for things that predate the closing date.
562
defeasance clause
a provision indicating the borrower will receive title once all payments are met
563
Where can most analysis info for a CMA be found ?
MLS
Multiple listing Service
564
Appraisal Report
State purpose and intended use.
Identify property.
State valued estimate.
Explain data collected, confirmed & reported
Specify report date and effective date
Include signed Cert. required by USPAP
State limiting conditions and all assumptions that impact the analysis, opinion and conclusion value
565
Types of Cost
Direct & Indirect
567
Direct sales comparison
Sales of comparable vacant parcels are analyzed and adjusted to indicate a value for the subject land.
Usually the most reliable method for estimating land value when comparable sales are available.
568
Terminating Partnerships
Agreement
Bankruptcy of a partner or partnership
Court order that results when a partner petitions the court for a dissolution of the partnership
Death of a general partner
569
State Certified Appraisers
Passed necessary examination established by FIRREA and USPAP
570
Cluster zoning
Zoning in which density is determined for an entire area, rather than a lot by lot basis
571
Deficiency Judgment
If the sale does not yield sufficient funds to cover amounts owed the mortgagee may ask the court for this.
574
Straight line method
Economic age-life method
575
My Choice Texas Home
A taxable mortgage program offering mortgage loans at 30 year fixed interest rates with down payment and closing cost assistance without a first-time homebuyer requirement.
576
Judicial Foreclosure
In the event of defaulting by the purchaser, the lender has legal right to satisfy the debt through a judicial foreclosure. Proceeds from the sale are used to repay the remaining debt on the mortgage loan.
577
Ranch
area of landscape, including various structures, for practice of raising grazing livestock such as cattle’s or sheep for meat or wool
578
Credit Unions
Don’t pay income tax
***Pay higher interest rates than other savings institutions
Make mostly short term loans
Second Mortgage
or
Home improvement
579
Doctrine of laches
Stated that if a property owner is lax in protecting their rights they might lose them
580
HMDA
Home Mortgage Disclosure Act of 1975 requires that lenders report statistical information each year to ensure that lenders are not restricting loans to certain individuals or neighborhoods to exclude them from obtaining a mortgage. “Redlining”
581
Loan Amount
LTV ratio (percentage) x Property Value
582
FHFA
conservator of Fannie Mae & Freddie Mac. Ensures both are running properly as a reliable source of funding for finance & community investment
583
Conditions
Deed restrictions that provide for a reversion of the title is violated
584
Payment Cap
Ensures the same monthly payment although the interest rate fluctuates
Problematic if payment isn’t covering interest through higher interest rates resulting in a negative amortization
585
Debit
An amount that one party must pay at closing for items paid prior to closing by another party.
586
Simple Interest
Most real estate loans use simple interest. Simple interest is money that is paid only for the amount of principal the borrower still owes.
Interest = principal x rate x time
587
Right of Redemption
The right to reclaim a property by paying off amounts owed to creditors including interest and costs.
Usual redemption period is 2 years. Applied to homestead properties and land designated for agricultural use when suit was filed.
Other propertied - 180 days.
588
Where can most analysis info for a CMA be found ?
MLS
Multiple listing Service
590
Zoning ordinance
A regulation enacted by the local government to specify land usage for every parcel within jurisdiction
592
Conventional Loan
Cash equivalent sale
593
Spot Zoning
Singling out a small area of land of section in an existing neighborhood and placing in a different zone from that of neighboring property
595
Mortgage Clauses
```
Identify parties
Legal description of property
Attachment of note
Property Taxes
Insurance
Preservation & Maintenance
```
596
Area variance
Permission to vary one or more of the dimensional or physical requirements of the applicable g law, code, or ordinance in connection with some proposed construction
598
Fannie Mae
Shareholder owned, ensures mortgage money is available for people across the country. FHA insured.
600
Credit
Given to that party
601
Cost Approach - Unit Comparison
Computed by cost per unit and number of units.
Unit of measurement is usually in square feet but in some cases cubic feet. (height, width, and length)
602
What business forms can syndications take
Limited Partnership
General Partnership
Corporation
Real Estate Investment Trust
606
Insurance Companies*********
Invest roughly 1/3 of assets into real estate
Texas has one of the largest dollar volumes of insurance company real estate loans of any state in the US second to CA, no other states come closer
607
Per Front Foot
Measuring a property based in its front footage
609
Nonconforming use
Use of property that clearly differs from current zoning
611
Property Value
Loan Amount/LTV Ratio
612
CMA Data
property dimensions, frontage, landscape and title considerations
factor in
```
quality
home size
basement condition
bed/bath #
A/C
Energy Efficiency
Parking
Interior Design
```
613
Investment Groups
With such favorable tax breaks, REITS draw thousands of investors. REITS concentrate on income producing properties & generally diversify their holdings both with regard to property type and geographical location.
Target = Land Development Projects
```
condominiums
high rises
warehouses
office complexes
single-family subdivisions
other major projects
```
614
CRA
Est to prevent redlining and encourage banks and thrifts to help meet credit needs of all segments of their communities
615
Use variance
Permission to use the land for a purpose not allowed by the current zoning
616
Reconciliation
The step of the appraisal process in which the appraiser looks at all 3 options to determine the most effective.
617
Cost Approach - Index Method
Appraiser applies a percentage increase factor to the original cost of construction to account for the cost over time.
618
Partially Amortized Loan
Balloon Loan
619
Mortgage lien
Is released when the debt is paid in full
620
Piti
Principal
Interest
Taxes
Insurance
621
Mortgage Brokers
Facilitate the loan and receive a fee.
Texas Secure and Fair Enforcement for Mortgage Licensing Act of 2009 (Texas SAFE Act)
mortgage loan originators must have a valid license
622
Profit Margin
Profit/Selling Price
623
Cost Approach - Quantity Survey Method
Detailed estimate of all material, labor, supplies, overhead & profit.
Usually used by contractors and experienced estimators due to its detail.
624
Value
```
Location
Property Condition
Improvements
Supply & Demand
Finance Terms
```
625
Mortgage
Needs a note to be legally valid
626
Reits & Tax Exemption
Shares must be owned by at least 100 investors
5 Persons or fewer cannot hold more than 50% of shares during the last half of the tax year
At least 75% of trust assets must be made up of cash, real estate, mortgage notes, or government securities
Income from sticks and bonds purchased with the proceeds of new capital may qualify as part of the 75% - but only during the first year after raising funds
No more than 30% of gross annual income can come from gains from sale of securities held for less than a year or real estate held for less than 4 years
At least 90 % of income must be distributed to shareholders within one year after the end of each fiscal year and the trust will not pay income taxes at the corporate level
627
Pitfall or Overpricing
A home failing to sell and becoming an expired listing.
628
Salvage value
End of economic life, price of selling if dismantled or moved
629
Duties of a mortgagor
Keep property in good repair, pay all property taxes, protect from loss due to fire or other disasters. Most lenders require that the property be insured for at least 80% of its value or up to 100%
630
Judicial Foreclosure
In the event of defaulting by the purchaser, the lender has legal right to satisfy the debt through a judicial foreclosure. Proceeds from the sale are used to repay the remaining debt on the mortgage loan.
631
Mortgage Clauses
```
Identify parties
Legal description of property
Attachment of note
Property Taxes
Insurance
Preservation & Maintenance
```
632
defeasance clause
a provision indicating the borrower will receive title once all payments are met
633
Comparable Factors
Location & Physical Characteristics
634
Piti
Principal
Interest
Taxes
Insurance
635
Judicial foreclosure
Allows the sale of mortgaged property under the supervision of the court. Proceeds go to satisfy the mortgage, other lien holders and finally the borrower.
A public sale is advertised for the first Tuesday of the next month. It is sold to the highest bidder.
Texas Supreme Court has publicized rules of civil procedure for judicial foreclosures.
636
Commercial Banks
Financial institution designed to act as a depository for funds and as a lender for commercial activities - usually short-term loans
637
Reit Rules Cont
Reit shareholders have the same rights as stockholders in any corporation
638
Assemblage
When two adjacent pieces of property are joined together, the value of the one larger parcel may be greater than two separate.
639
Non-judicial foreclosure
The process whereby the lender gives the borrower a notice of default (NOD) and the intent to sell the property in a form prescribed by that states statute. Sometimes referred to as “power of sale” foreclosure.
Much quicker than with court action.
If buyer fails to cure default with use of filing bankruptcy or temporary stay on foreclosure, the lender may conduct a public auction
640
Building permits
Documentation from a government agency giving permission to begin the construction or renovation of a building or improvement.
641
First step in appraisal process
Define the problem and scope of work
642
Feed in Lieu of Foreclosure
A defaulting borrower who faces foreclosure may avoid court actions and costs by voluntarily feeding the property to the mortgagee.
This transfers legal title to the lender.
The transfer, however, does not terminate any existing liens on the property
643
Residential Appraisals
Single family appraisals are usually conducted on The Uniform Residential Appraisal Report.
644
Denominator
Shows how many total parts there are.
645
Right of Redemption
The right to reclaim a property by paying off amounts owed to creditors including interest and costs.
Usual redemption period is 2 years. Applied to homestead properties and land designated for agricultural use when suit was filed.
Other propertied - 180 days.
646
AMC
Appraisal Management Company
647
REO
Real estate owned, generally a great deal, esp for first-time home buyers and investors
648
Choosing comps
# Choose
Recently sold (you should have at least 3, the more recent, the more reliable)
Pending sales
Active listings
Expired listings
649
Non-judicial foreclosure
The process whereby the lender gives the borrower a notice of default (NOD) and the intent to sell the property in a form prescribed by that states statute. Sometimes referred to as “power of sale” foreclosure.
Much quicker than with court action.
If buyer fails to cure default with use of filing bankruptcy or temporary stay on foreclosure, the lender may conduct a public auction
650
Deficiency Judgment
If the sale does not yield sufficient funds to cover amounts owed the mortgagee may ask the court for this.
651
Breakdown method
Break deprecation down to 3 classes & estimate based on curable & incurable factors.
652
Origination Points
Lenders charge origination points to recover some costs of the loan origination process. Depending on the lending institution, the origination points may be negotiable. Origination points do not change the effective rate of interest.
653
Mortgage Fees
Origination - typically 1% of loan amount. This fee is negotiable.
Points = prepaid interest, 1/8 for each discount points
654
Duties of a mortgagor
Keep property in good repair, pay all property taxes, protect from loss due to fire or other disasters. Most lenders require that the property be insured for at least 80% of its value or up to 100%
655
Comparable Factors
Location & Physical Characteristics
656
Mortgage lien
Is released when the debt is paid in full
657
Pre-approval
the formal process that only a lender can do.
Issue max loan amount and issue pre-approval letter
Pre-approval letters typically last 3 or 4 months
658
Cost Approach - Estimate Depreciation
Refers to loss in value of any structure.
Curable or incurable.
Divided into three classes -
Physical deterioration
Functional obsolescence
External Obsolescence
659
Information for the CMA
Collect and analyze info about the sellers property
Choose comps in the area
Compare the sellers property to the comparables and adjust the value
Estimate a reasonable and realistic selling price for the sellers property
660
Mortgage Payment Adjustment Period
When the lender will change the amount of monthly payment to reflect change in interest rate
661
Add-On Interest
AOI = LA x IR x N
AOI = Loan amount x Interest rate x number of payments
662
Arms-length Transaction
Both parties are dealing from equally bargaining positions.
Reflects a property that has been exposed on the open market for a reasonable period of time.
663
CCR
Deed restrictions
| Covenants, conditions and restrictions
664
non-arms-length
relative to relative, under market price.
Unreliable as indicators.
665
Balloon Loan
Partially amortized with a large payment due at the end.
Sometimes extensions are allotted on the payment, but usually not.
666
Replacement value
Cost to construct a functional equivalent
667
Reconciliation Steps
Applicability to the property type and appraisal problem.
Reliability of the data and data source.
Accuracy of calculations and logic used in deriving value conclusions.
The quantity of relevant evidence provided by each approach to value and by the highest and best use estimate.
The consistency of evidence produced by the approaches to value.
668
Adjustable Rate Loans
Became popular in the 1980’s when interest rates were at an all time high
- index
- margin
- adjustment period
- interest rate caps
- calculated rate
- initial rate
- mortgage payment adjustment period
- payment cap
- negative amortization cap
669
Direct cost
or hard cost, cost of labor and material
670
Mortgage Payment Adjustment Period
When the lender will change the amount of monthly payment to reflect change in interest rate
671
REMIC
Real Estate Mortgage Investment Conduit
672
Real Estate Mortgage Investment Conduit
Hold commercial & residential mortgage pools into different maturity and risk classes.
Corporation, trust, association or partnership
673
SEQ, Plain Vanilla, Clean Pay or Current Pay
Most basic REMIC structure
Principal on these classes is retired sequentially.
Only one class begins to receive principal payments from underlying securities after the principal on any previous class has been paid off.
674
TAC - Targeted Amortization Classes
Pay a targeted principal payment schedule at a single, constant prepayment speed. TAC’s may provide protection against increasing prepayments and early retirement of the investment
675
Support or Companion Classes
Support or companion classes have the most volatile cash flow behavior. Prepayment variability from the underlying mortgage related collateral cannot be eliminated; it can only be redistributed. PACs, TACS & other support classes rely on companion classes to absorb this variable
676
Accrual Classes
Investors in an accrual class receive no cash flow from the securities until certain other classes are paid off
677
IO/PO
Interest Only & Principal Only
Complex securities that are extremely sensitive to interest rate changes because prevailing rates affect prepayments
678
Leverage
Is the use of borrowed funds to increase potential return of an investment. The higher the ratio of borrowed funds to equity - the greater degree of leverage.
679
Investment Benefits
Positive cash flow, tax benefits, appreciation
Investors can lose money via - negative cash flow and loss realized at the time of the sell
680
Various Real Estate Syndications
General partnership
Limited partnership
Corporation
Reits
681
General Partnership
An active partner in the partnership with unlimited personal liability for the debts of partnership
682
Limited partnership
Partnerships in which the partners have limited personal liability as opposed to the unlimited liability of a general partnership
683
Corporations
A legal entity established by the filing of articles of incorporation with the Secretary of State. Shareholders of a corporation have limited liability and do not participate directly in managing the corporation.
684
LLC
Corporate structures that give limited liability protection of corporations without the regulations associated with corporations.
685
Statute of Frauds
A lease for a period exceeding one year must be in writing and signed by both parties in order to be enforceable because of the Statute of Frauds
686
Agency Disclosure
Tenants entering a lease agreement for more than one year and are contemplating option to buy - an information about brokerage services form must be given at the first substantial dialogue
687
Sex Offender Laws
I do not need to disclose sex offenders. Send them the public sex offender registry so I don’t end up in court.
688
Lead - Based Paint
Properties build before 1978
Sellers & landlords must give buyers and renters the pamphlet, developed by EPA, HUD & consumer product safety commission (CSPC) titled “protect your family from lead in your home”
Must be in sales contracts & lease agreements
Sellers, lessors and real estate agents share responsibility for ensuring compliance
689
American with Disabilities Act & Fair Housing Amendments Act
Enacted January 1, 2009
ADA
Outlined design and construction requirements for covered multi-family dwellings for first occupancy after March 13, 1991
Applied to
Multifamily with an elevator and four or more dwelling units
Ground-floor dwelling units in a building that has 4 or more
Public use area
Common use area
Individual apartments at a housing facility
690
Leasehold Estates
Estate for years
Estate from period to period
Estate at will
Estate at sufferance
691
Estate for Years
Continues for a definite fixed period of time.
Any specific length of time measured in days, weeks, or months.
Definite beginning and ending date.
Not necessary to give notice to landlord fir termination
No automatically renewal
Common in commercial and apartment leases
692
Estate from Period to Period
Periodic tenancy - week, year or month.
M2M is most common.
Requires notice to terminate - 30, 60 or whatever is agreed to in the lease.
No definite ending date, renews itself.
Most apartment leases.
693
Estate at Will
Usually occurs when there is no lease or where the tenancy is not a consideration. Given with permission and no agreement about rent. This estate can be terminated by either party at either time with proper notice
694
Estate at Sufferance
A tenant that stays on property after a lease ends without consent.
This is called a hold over tenant. If owner allows M2M tenancy is created.
695
Landlords Rights & Obligations
Receive rent
Re-possess the property following the lease term
Monitor the tenants obligations to maintain the premises
Provide the necessary building support and services
Maintain condition of property
696
Landlords Rights & Rules
When giving an application to a renter, the landlord must give printed notice of his selection criteria. It must include why an applicant can be denied. Criteria such as criminal history, previous rental history, current income, credit history or failure to provide accurate or complete information on the application form are some of the reasons.
697
Conveyance of Leased Property
Landlord may sell, assign, or mortgage the leased fee interest. However, transferring and encumbering the leased property does not extinguish the obligations and covenants of a lease. Buyers & creditors must take their interest subject to terms of the lease, lease is transferred with property
698
Contract Requirements & Conditions
Parties - must be legally capable to enter agreement, certain age, sanity etc.
Property description - identify the property by legal description or other locally accepted reference.
Exclusive possession - Must provide irrevocable right to exclusive possession during the lease term, provided the tenant meets all obligations
Legal & permitted use - Intent that is legal but not permitted might cause default
Consideration - The lease contract must be accompanied by consideration to landlords rights conveyed.
Offer & Acceptance - Party must accept lease and communicate acceptance
Signatures - Landlord must sign lease, tenant doesn’t need to but should to enforce terms.
Oral vs Written -Any term longer than one year must be in writing because of the statute of frauds
699
Key components to a Lease
```
Capacity to contract
Demising clause
Description of the premises
Clear statement of term
Specification of rent and how it is to be paid
In writing
Signatures
Delivery
```
700
Security Deposit
Much be returned after 30 days of vacating premise for residential and 60 days for a commercial lease.
A landlord that refuses to return a security deposit can be liable for 3 times the deposit plus $100 and any applicable attorney fees.
Can be refundable or non-refundable
701
Section 92.052
Devines the landlord’s obligation for repair of a property
Conditions to maintain -
Materially affects the health or safety of an ordinary tenant
Arises from the landlords failure to provide and maintain in good operating condition a device to supply hot water of a minimum temp of 120 fahrenheit
702
Tenant repairs
Under certain conditions a tenant may make trésors and deduct from rent.
When it involves a overflow, raw sewage, or flooding from broken pipe
When involving a breach of agreement, when water service stops
If it involves heating or cooling
When receiving written notification of breach of health or safety
703
Repair & Deduct Section 92.0561
Deduction for repairs for any month must not exceed one months rent or $500, whichever is greater
If rent is subsidized, deduction may apply to fair market rent
704
Subleasing
No one can sublease a property without the landlords consent.
705
Default
Landlord or tenant who violated any of the terms and covenants of the lease has breached contract and is in default
706
Texas Property Code Section 24
Process for a suit for possession is in the Texas Property Code, Section 24
707
Tenant Default allowed by State
If military is called to active duty
I’m some cases of family violence. Delinquent rent is still due & landlord must give written notice or else tenant is relieved of delinquent rent too.
708
Constructive Eviction
Nullifying the tenants lease obligations if landlord fails to provide services and maintain property condition.
In order for this to work, tenant must also vacate premises.
709
Lease Termination
Term Expiration
Notice
Voluntary Agreement
Property destruction
Condemnation - Taking by eminent domain
Foreclosure PTFA - protecting tenants at foreclosure act, required to give tenant 90 days notice, tenant has 90 days to get it together
Breach of Contract - Although contract was breached the landlord may not physically remove a tenant from the unit, permanently lock out a tenant, turn off utilities or remove a door without court order
Landlord default - tenant must move out for validity
Abandonment - If a tenant abandons leased property & demonstrates no intention to fulfill the lease, the landlord may take possession and pursue legal recourse.
710
Death or Sale
Nothing changes in lease agreement.
BUT any tenant that is 62 or older can terminate a lease if they have been accepted into an adult care facility, residential health care facility, or a housing unit that receives subsidies for housing for senior citizens. They can cancel a lease if moving due to a relatives home for health care reasons
711
Gross Lease
Full service lease. Requires landlord to pay the property’s operating expenses, including utilities, repairs & maintenance while tenant only pays rent.
Office & industrial properties.
Residential are usually gross leases with the exception that tenants will pay utilities.
712
Residential Leases
May be net or gross.
713
Commercial Lease
long term - up to 25 years
negotiable due to financial magnitude
have serious financial consequences; must express all points of agreement & be very precise
714
The Uniform Residential Landlord and Tenant Act (URLTA)
It’s important because it prompted legislation at the state level that empowered the courts to nullify residential leases that violated URLTA guidelines, important where a lease gave unfair advantages to the landlord
715
Covenant
A promise in a written contract or a deed of real property
716
Conveyance
The act of transferring an ownership interest in a property from one party to another
717
Leasehold estate
An ownership of a temporary right to hold land or property in which a lesser or a tenant holds rights of real property by some form of title from a lessor or landlord. ( Less-than-freehold estate)
718
Free holds
Any estate free from hold of any entity besides the owner
719
Option to renew
A lease provision that gives the tenant the right to extend the lease for an additional period of time and sets forth the terms for the new renewed lease.
720
Security Deposit
Money that a tenant deposited with the owner of the property to pay for damages beyond normal wear and tear.
721
Subletting
Transfer by a tenant, the sublessor, of a portion of the leasehold interest to another party, the subleases, through the execution of a sublease. Also called subleasing.
722
Assignment
Transfer of entire leasehold interest by a tenant, the assignor, to a 3rd party the assignee
723
Suit for possession
Legal suit filed by a landlord if tenant is in default
724
Gross lease or full service
Requires the landlord to pay the property’s operating expenses, including utilities, repairs, & maintenance
Tenant only pays rent
725
Net lease
tenant is required to pay rent in addition to some or all maintenance and operating expenses, tax, insurance & utilities repairs
726
Graduated lease
Lease where rent payments start at a fixed amount & increase and the lease term matured
727
Land lease
Lease where the landowner grants the tenant a leasehold interest in the land only in exchange for rent
728
Percentage lease
A lease whose rental is based on a percentage of the monthly or annual gross sales made on the site
729
Proprietary lease
Lease which conveys a leasehold interest to an owner of cooperative. It died not stipulate rent, as the rent is equal to the owners share of periodic expenses.
730
Index lease
Lease which provided for the adjustment of rent according to changes in price index
731
Property Managers
```
Apartments
Shopping Centers
Condos
Duplexes
Industrial Complexes
Office Complexes
```
732
Individual property managers
Real estate broker who manages properties for one or more owners. Such a manager may be part of a small property management firm.
733
Individual Building Manager
Usually manages a single large property. Working directly for an owner requires no license.
734
Resident Manager
Lives on property and may be employed by a broker.
735
Real estate asset manager
Acts as the property owners agent and adviser for the property. These managers plan and direct purchase, development & disposition of real estate on behalf of business investors.
Focusing on long term strategy rather than day to day.
736
Property management proposal
Description of property, including land and all improvements
List of required maintenance
Info on how maintenance records will be kept
Info on account procedures
Schedule of property inspection d
Proposed budgets - operating, capital, stabilized
Info on proposed management fee
737
Management Fee
A negotiated item. Often a base fee and or percentage of the collected rents. The manager may also receive additional compensation for leases that are renewed and for the supervision of repair projects undertaken
738
Agreement Termination
Section outlined what circumstances the agreement will be cancelled or renewed & notice required.
739
Property Manager Skills
Supervision
Accounting - Understand generally accepted accounting principals (GAAP) & be able to prepare and interpret monthly and yearly reports
Building system knowledge - Understand how various building systems work
740
PMI
Private Mortgage Insurance Program
741
Adjustment Period
Time when interest rate changes, every one; three, or 5 years
742
defeasance clause
a provision indicating the borrower will receive title once all payments are met
743
Interest Rate Caps
To protect borrowers from unlimited increases.
The first cap (periodic cap) sets the amount of increase or decrease allowed in each adjustment period.
The second cap (overall or aggregate cap) sets a maximum interest-rate increase over the life of the loan. A 2% increase in interest rate results in approximately a 15% increase in monthly payment.
Ceiling or lifetime caps
744
Payment Cap
Ensures the same monthly payment although the interest rate fluctuates
Problematic if payment isn’t covering interest through higher interest rates resulting in a negative amortization
745
Negative Amortization Cap
Limits the amount of unpaid interest that the lender can add to the principal balance.
Usually a negative amortization cap limits the total amount the borrower can owe to 125% of the original loan
746
Partially Amortized Loan
Balloon Loan
747
Loan Types
Conventional & Gov Backed
748
Loan Types
Federal Housing Administration (FHA)
Department of Veterans Affairs (DVA or VA)
Rural Housing Service (RHS)
Texas Department of Housing & Community Affairs (TDHCA)
749
Conventional Loan Limits
65% for land acquisition
75% for land development
80% for multi-family & commercial
85% for one to four family residences
750
Cluster zoning
Zoning in which density is determined for an entire area, rather than a lot by lot basis
751
Deficiency Judgment
If the sale does not yield sufficient funds to cover amounts owed the mortgagee may ask the court for this.
752
Writing Conventional Loans
Standards that are provided by Freddie Mac & Fannie Mae so that the loan can be sold in a secondary mortgage market
753
PMI
Private Mortgage Insurance Program
754
HMDA
Home Mortgage Disclosure Act of 1975 requires that lenders report statistical information each year to ensure that lenders are not restricting loans to certain individuals or neighborhoods to exclude them from obtaining a mortgage. “Redlining”
755
My Choice Texas Home
A taxable mortgage program offering mortgage loans at 30 year fixed interest rates with down payment and closing cost assistance without a first-time homebuyer requirement.
756
Fair Credit Reporting Act
| or Consumer Credit Protection Act of 1970
Keeps credit info confidential
Obtains authorization before getting info
Reveals source of credit info to consumer
757
Ranch
area of landscape, including various structures, for practice of raising grazing livestock such as cattle’s or sheep for meat or wool
758
Subprime Borrowers
Anyone below A paper credit
759
Predatory Lender
Preys on individuals that call into the B, C or D credit category.
Those who don’t speak good english, poorly educated and elderly.
760
HMDA
Home Mortgage Disclosure Act of 1975 requires that lenders report statistical information each year to ensure that lenders are not restricting loans to certain individuals or neighborhoods to exclude them from obtaining a mortgage. “Redlining”
761
Loan flipping
Getting a buyer to pay a higher interest rate, charging new fees & points
762
RHS
Rural Housing Service created in 1994 to meet housing and community development needs of rural America.
763
Conditions
Deed restrictions that provide for a reversion of the title is violated
764
Payment Cap
Ensures the same monthly payment although the interest rate fluctuates
Problematic if payment isn’t covering interest through higher interest rates resulting in a negative amortization
765
Texas Veterans Land Board’s VLB
Created in 1983 to assist Texas veterans in purchasing a home with low-interest rate loan with little or no money down.
766
Texas Veterans Home Improvement Program
Introduced to provide below market interest rate loans to qualified Texas Vets for home repairs & improvements to existing homes.
767
Right of Redemption
The right to reclaim a property by paying off amounts owed to creditors including interest and costs.
Usual redemption period is 2 years. Applied to homestead properties and land designated for agricultural use when suit was filed.
Other propertied - 180 days.
768
Texas Department of Housing and Community affairs (TDHCA)
Department which offers mortgage loan funds & down payment assistance to eligible first home buyers of all professions
769
My first Texas Home
A taxable mortgage program offering mortgage loans and more competitive, fixed, low interest APR w. down payment and closing assistance of 5% of the mortgage loan for first time homebuyers.
770
Zoning ordinance
A regulation enacted by the local government to specify land usage for every parcel within jurisdiction
771
My Choice Texas Home
A taxable mortgage program offering mortgage loans at 30 year fixed interest rates with down payment and closing cost assistance without a first-time homebuyer requirement.
772
Secondary mortgage market
market for banks to repackage & sell mortgages as securities to institutional investors.
773
Ginnie Mae
Owned within HUD, est. 1968 to promote home ownership
774
Fannie Mae
Shareholder owned, ensures mortgage money is available for people across the country. FHA insured.
775
Mortgage Clauses
```
Identify parties
Legal description of property
Attachment of note
Property Taxes
Insurance
Preservation & Maintenance
```
776
Freddie Mac
Assembles loans into a pool of mortgages and issued a security backed by the mortgage
777
Farmer Mac
Est 1988 to ensure liquidity and a secondary market for ag. real estate & rural housing
778
Fannie Mae
Shareholder owned, ensures mortgage money is available for people across the country. FHA insured.
779
CRA
Est to prevent redlining and encourage banks and thrifts to help meet credit needs of all segments of their communities
780
FHFA
conservator of Fannie Mae & Freddie Mac. Ensures both are running properly as a reliable source of funding for finance & community investment
781
DIF
Depositor insurance fund. Insured the deposits and protects the depositors of insured banks and to resolve failed banks
782
Predatory Lender
Prays on customers who may fall into sub prime lending categories, particularly those who do not speak good english, poorly educated & elderly
783
Mortgage fraud
A crime in which the intent is to materially misrepresent or omit information on a mortgage loan application to obtain a loan or obtain a larger loan than would have been obtained had the lender known the truth.
784
As-of-right zoning
uses automatically allowed in the zoning code
785
CCR
Deed restrictions
| Covenants, conditions and restrictions
786
Taking
Taking clause of the 5th amendment, private property cannot be taken for public use without just compensation
787
CO
cert of occupancy received once inspected and cleared for occupation and use
788
Zoning ordinance
enacted by local government to specify land usage for every parcel within jurisdiction
789
Sunshine law
open meeting law
790
TDR
Transfer of development rights
791
PUD
produces high density of residential housing units, a max use of open spaces and greater development flexibility, resulting in lower priced homes and minimum maintenance cost
Higher density than allowed in current zoning
792
non-conforming use
differs from current zoning
793
Use Variance
Gives permission to use land for purpose not allowed by current zoning because, owner is deprived of all economic use or benefit, hardship is unique & not universal, will not change character of area, not self created hardship
794
CRA
Est to prevent redlining and encourage banks and thrifts to help meet credit needs of all segments of their communities
795
Deed restrictions
A clause in a deed that places limits on how the property may be used
796
Covenant
A guarantee included in a deed to benefit a property that’s sold or to benefit a property that’s kept when an adjoining property is sold
797
Conditions
Deed restrictions that provide for a reversion of the title is violated
798
Restrictive covenants
limitations placed on use of land by developer of residential subdivision
799
Mortgage lien
Is released when the debt is paid in full
800
Piti
Principal
Interest
Taxes
Insurance
801
Injunction
A court action which prevents the owner from using a property in a way that’s contrary to the recorded restrictions
802
Doctrine of laches
Stated that if a property owner is lax in protecting their rights they might lose them
803
police power
power of state to regulate in order to promote public health, safety, morality & welfare
804
Testate
property owner dies with valid will in place
805
intestate
property owner dies with no will in place
806
Escheat
The right of government to ownership of property, which is left by a deceased property owner who leaves no will and died without descendants
807
Eminent domain
The right of government to acquire property, for public purpose, after paying just compensation
808
Condemnation Suit
Needed to initiate squiring of property by eminent domain
809
Duties of a mortgagor
Keep property in good repair, pay all property taxes, protect from loss due to fire or other disasters. Most lenders require that the property be insured for at least 80% of its value or up to 100%
810
Taking
Taking clause of 5th amendment which says, in part, the private property cannot be taken for public use without just compensation
811
Building codes
Establishing the standards for virtually every aspect of a construction project which allows the county and municipalities to protect the public against the hazards of unregulated construction
812
Building permits
Documentation from a government agency giving permission to begin the construction or renovation of a building or improvement.
813
Zoning ordinance
A regulation enacted by the local government to specify land usage for every parcel within jurisdiction
814
Incentive Zoning
Allows developers to provide specific amenities and benefits in exchanges for zoning incentives.
815
Cluster zoning
Zoning in which density is determined for an entire area, rather than a lot by lot basis
816
Sunshine law
Law that mandates that meetings of governmental agencies and departments bs open to the public.
817
Transfer of development rights (TDR)
A method for protecting land by transferring the right to develop from one area and giving it to another.
818
Spot Zoning
Singling out a small area of land of section in an existing neighborhood and placing in a different zone from that of neighboring property
819
Survey
Official document giving the dimensions and showing the property boundaries
820
Topography
Physical features and contours of land
821
Nonconforming use
Use of property that clearly differs from current zoning
822
Legal non confirming use
When an existing property use conflicts with ordinances that were in place before the use commenced
823
Illegal Nonconforming Use
When a property use conflicts with ordinances that were in place before the use commenced
824
Special use permit
Authorization for a use that is not consistent with the zoning ordinance in a literal sense but is beneficial or essential to the public welfare and does not materially impair other uses in the zone
825
Zoning variance
Allowing a property use that differs from the applicable ordinance for a variety of justifiable reasons
826
Use variance
Permission to use the land for a purpose not allowed by the current zoning
827
Area variance
Permission to vary one or more of the dimensional or physical requirements of the applicable g law, code, or ordinance in connection with some proposed construction
828
Interstate Land Sales Full Disclosure Act
Authorizing a nationwide program of registration of subdivisions marketed in interstate commerce intended to protect consumers by making relevant information available to them when they are considering purchasing land
829
Non-judicial foreclosure
The process whereby the lender gives the borrower a notice of default (NOD) and the intent to sell the property in a form prescribed by that states statute. Sometimes referred to as “power of sale” foreclosure.
Much quicker than with court action.
If buyer fails to cure default with use of filing bankruptcy or temporary stay on foreclosure, the lender may conduct a public auction
830
Real estate actions
Absolute
Minimum
Reserve
831
Farms for sakes
Independently owned and large scale production or corporate
832
Ranch
area of landscape, including various structures, for practice of raising grazing livestock such as cattle’s or sheep for meat or wool
833
REO
Real estate owned, generally a great deal, esp for first-time home buyers and investors
834
Short sale
```
Agent selection
Declaration and proof of hardship
Property valuation
Short sale application
Short sale agreement
Finding a buyer
Negotiation
Closing
```
835
Real estate auction types
Absolute - Sold to highest bidder regardless of price
Minimum Bid - The auctioneer will accept bids at or above a published minimum price
Reserve - High bid is reduced to an offer, not sale. A minimum bid isn’t published, seller reserves right to accept or reject the highest bid within a specified time period - anywhere from immediately following the auction up to 72 hours after it concludes
836
5 Types of Residential Specialty
```
FSbO
First time buyer
Vacation properties
Working with investors
Working as a buyers agent
```
Commercial real estate - complex, multifaceted & business only
Malls, office parks, restaurants, gas stations, convenience stores and office buildings
837
To specialize in land brokerage
farms, ranch, recreation, timberland, and other specialty properties
Undeveloped tracts of land
transitional & developmental land
Subdivision and lot wholesaling
site selection, assemblage, appraisal, auction, farm & land management, market analysis, land planning & zoning environmental issues, water rights, government regulations, land title defects, vacant land contracts & financing
838
Partnership VS Corporation
Partnerships do not pay income taxes.
Individual partners pay taxes.
A corporation on the other hand has double taxation.
The corporation pays tax on its corporate profit and then the stockholders pay taxes on their dividends.
839
Terminating Partnerships
Agreement
Bankruptcy of a partner or partnership
Court order that results when a partner petitions the court for a dissolution of the partnership
Death of a general partner
840
Syndicates
Corporate is a separate legal entity established by the filing of articles of incorporation with the Secretary of State. Corporations can own property in corporate name.
841
Limited Liability Companies
Give limited liability protection of corporations without the regulations associated with corporations.
LLC’s have operating agreements that are similar to corporation bylaws, but unlike corporations, they do not have permanent existence
842
Securities and Exchange Commission
Syndicated intending to make profit for many people from the efforts of a few, must comply with the rules and regulations of whom
843
What business forms can syndications take
Limited Partnership
General Partnership
Corporation
Real Estate Investment Trust
844
REITS
Reits must follow certain tax and dividend guidelines otherwise the company is forced to suspend.
Reits are chartered in the state in which they are headquartered and are subject to the regulations and statutes of that state.
845
Mortgage Brokers
Facilitate the loan and receive a fee.
Texas Secure and Fair Enforcement for Mortgage Licensing Act of 2009 (Texas SAFE Act)
mortgage loan originators must have a valid license
846
Mortgage
Needs a note to be legally valid
847
Judicial Foreclosure
In the event of defaulting by the purchaser, the lender has legal right to satisfy the debt through a judicial foreclosure. Proceeds from the sale are used to repay the remaining debt on the mortgage loan.
848
Mortgage Clauses
```
Identify parties
Legal description of property
Attachment of note
Property Taxes
Insurance
Preservation & Maintenance
```
849
defeasance clause
a provision indicating the borrower will receive title once all payments are met
850
Piti
Principal
Interest
Taxes
Insurance
851
Judicial foreclosure
Allows the sale of mortgaged property under the supervision of the court. Proceeds go to satisfy the mortgage, other lien holders and finally the borrower.
A public sale is advertised for the first Tuesday of the next month. It is sold to the highest bidder.
Texas Supreme Court has publicized rules of civil procedure for judicial foreclosures.
852
Non-judicial foreclosure
The process whereby the lender gives the borrower a notice of default (NOD) and the intent to sell the property in a form prescribed by that states statute. Sometimes referred to as “power of sale” foreclosure.
Much quicker than with court action.
If buyer fails to cure default with use of filing bankruptcy or temporary stay on foreclosure, the lender may conduct a public auction
853
Feed in Lieu of Foreclosure
A defaulting borrower who faces foreclosure may avoid court actions and costs by voluntarily feeding the property to the mortgagee.
This transfers legal title to the lender.
The transfer, however, does not terminate any existing liens on the property
854
Right of Redemption
The right to reclaim a property by paying off amounts owed to creditors including interest and costs.
Usual redemption period is 2 years. Applied to homestead properties and land designated for agricultural use when suit was filed.
Other propertied - 180 days.
855
Deficiency Judgment
If the sale does not yield sufficient funds to cover amounts owed the mortgagee may ask the court for this.
856
Mortgage Fees
Origination - typically 1% of loan amount. This fee is negotiable.
Points = prepaid interest, 1/8 for each discount points
857
Duties of a mortgagor
Keep property in good repair, pay all property taxes, protect from loss due to fire or other disasters. Most lenders require that the property be insured for at least 80% of its value or up to 100%
858
Mortgage lien
Is released when the debt is paid in full
859
Pre-approval
the formal process that only a lender can do.
Issue max loan amount and issue pre-approval letter
Pre-approval letters typically last 3 or 4 months
860
Balloon Loan
Partially amortized with a large payment due at the end.
Sometimes extensions are allotted on the payment, but usually not.
861
Adjustable Rate Loans
Became popular in the 1980’s when interest rates were at an all time high
- index
- margin
- adjustment period
- interest rate caps
- calculated rate
- initial rate
- mortgage payment adjustment period
- payment cap
- negative amortization cap
862
Mortgage Payment Adjustment Period
When the lender will change the amount of monthly payment to reflect change in interest rate
863
Adjustment Period
Time when interest rate changes, every one; three, or 5 years
864
Interest Rate Caps
To protect borrowers from unlimited increases.
The first cap (periodic cap) sets the amount of increase or decrease allowed in each adjustment period.
The second cap (overall or aggregate cap) sets a maximum interest-rate increase over the life of the loan. A 2% increase in interest rate results in approximately a 15% increase in monthly payment.
Ceiling or lifetime caps
865
Payment Cap
Ensures the same monthly payment although the interest rate fluctuates
Problematic if payment isn’t covering interest through higher interest rates resulting in a negative amortization
866
Negative Amortization Cap
Limits the amount of unpaid interest that the lender can add to the principal balance.
Usually a negative amortization cap limits the total amount the borrower can owe to 125% of the original loan
867
Partially Amortized Loan
Balloon Loan
868
Loan Types
Conventional & Gov Backed
869
Loan Types
Federal Housing Administration (FHA)
Department of Veterans Affairs (DVA or VA)
Rural Housing Service (RHS)
Texas Department of Housing & Community Affairs (TDHCA)
870
Conventional Loan Limits
65% for land acquisition
75% for land development
80% for multi-family & commercial
85% for one to four family residences
871
Writing Conventional Loans
Standards that are provided by Freddie Mac & Fannie Mae so that the loan can be sold in a secondary mortgage market
872
PMI
Private Mortgage Insurance Program
873
HMDA
Home Mortgage Disclosure Act of 1975 requires that lenders report statistical information each year to ensure that lenders are not restricting loans to certain individuals or neighborhoods to exclude them from obtaining a mortgage. “Redlining”
874
Fair Credit Reporting Act
| or Consumer Credit Protection Act of 1970
Keeps credit info confidential
Obtains authorization before getting info
Reveals source of credit info to consumer
875
Subprime Borrowers
Anyone below A paper credit
876
Predatory Lender
Preys on individuals that call into the B, C or D credit category.
Those who don’t speak good english, poorly educated and elderly.
877
Loan flipping
Getting a buyer to pay a higher interest rate, charging new fees & points
878
RHS
Rural Housing Service created in 1994 to meet housing and community development needs of rural America.
879
Texas Veterans Land Board’s VLB
Created in 1983 to assist Texas veterans in purchasing a home with low-interest rate loan with little or no money down.
880
Texas Veterans Home Improvement Program
Introduced to provide below market interest rate loans to qualified Texas Vets for home repairs & improvements to existing homes.
881
Texas Department of Housing and Community affairs (TDHCA)
Department which offers mortgage loan funds & down payment assistance to eligible first home buyers of all professions
882
My first Texas Home
A taxable mortgage program offering mortgage loans and more competitive, fixed, low interest APR w. down payment and closing assistance of 5% of the mortgage loan for first time homebuyers.
883
My Choice Texas Home
A taxable mortgage program offering mortgage loans at 30 year fixed interest rates with down payment and closing cost assistance without a first-time homebuyer requirement.
884
Secondary mortgage market
market for banks to repackage & sell mortgages as securities to institutional investors.
885
Ginnie Mae
Owned within HUD, est. 1968 to promote home ownership
886
Fannie Mae
Shareholder owned, ensures mortgage money is available for people across the country. FHA insured.
887
Freddie Mac
Assembles loans into a pool of mortgages and issued a security backed by the mortgage
888
Farmer Mac
Est 1988 to ensure liquidity and a secondary market for ag. real estate & rural housing
889
CRA
Est to prevent redlining and encourage banks and thrifts to help meet credit needs of all segments of their communities
890
FHFA
conservator of Fannie Mae & Freddie Mac. Ensures both are running properly as a reliable source of funding for finance & community investment
891
DIF
Depositor insurance fund. Insured the deposits and protects the depositors of insured banks and to resolve failed banks
892
Predatory Lender
Prays on customers who may fall into sub prime lending categories, particularly those who do not speak good english, poorly educated & elderly
893
Mortgage fraud
A crime in which the intent is to materially misrepresent or omit information on a mortgage loan application to obtain a loan or obtain a larger loan than would have been obtained had the lender known the truth.
894
As-of-right zoning
uses automatically allowed in the zoning code
895
CCR
Deed restrictions
| Covenants, conditions and restrictions
896
Taking
Taking clause of the 5th amendment, private property cannot be taken for public use without just compensation
897
CO
cert of occupancy received once inspected and cleared for occupation and use
898
Zoning ordinance
enacted by local government to specify land usage for every parcel within jurisdiction
899
Sunshine law
open meeting law
900
TDR
Transfer of development rights
901
PUD
produces high density of residential housing units, a max use of open spaces and greater development flexibility, resulting in lower priced homes and minimum maintenance cost
Higher density than allowed in current zoning
902
non-conforming use
differs from current zoning
903
Use Variance
Gives permission to use land for purpose not allowed by current zoning because, owner is deprived of all economic use or benefit, hardship is unique & not universal, will not change character of area, not self created hardship
904
Deed restrictions
A clause in a deed that places limits on how the property may be used
905
Covenant
A guarantee included in a deed to benefit a property that’s sold or to benefit a property that’s kept when an adjoining property is sold
906
Conditions
Deed restrictions that provide for a reversion of the title is violated
907
Restrictive covenants
limitations placed on use of land by developer of residential subdivision
908
Injunction
A court action which prevents the owner from using a property in a way that’s contrary to the recorded restrictions
909
Doctrine of laches
Stated that if a property owner is lax in protecting their rights they might lose them
910
police power
power of state to regulate in order to promote public health, safety, morality & welfare
911
Testate
property owner dies with valid will in place
912
intestate
property owner dies with no will in place
913
Escheat
The right of government to ownership of property, which is left by a deceased property owner who leaves no will and died without descendants
914
Eminent domain
The right of government to acquire property, for public purpose, after paying just compensation
915
Condemnation Suit
Needed to initiate squiring of property by eminent domain
916
Taking
Taking clause of 5th amendment which says, in part, the private property cannot be taken for public use without just compensation
917
Building codes
Establishing the standards for virtually every aspect of a construction project which allows the county and municipalities to protect the public against the hazards of unregulated construction
918
Building permits
Documentation from a government agency giving permission to begin the construction or renovation of a building or improvement.
919
Zoning ordinance
A regulation enacted by the local government to specify land usage for every parcel within jurisdiction
920
Incentive Zoning
Allows developers to provide specific amenities and benefits in exchanges for zoning incentives.
921
Cluster zoning
Zoning in which density is determined for an entire area, rather than a lot by lot basis
922
Sunshine law
Law that mandates that meetings of governmental agencies and departments bs open to the public.
923
Transfer of development rights (TDR)
A method for protecting land by transferring the right to develop from one area and giving it to another.
924
Spot Zoning
Singling out a small area of land of section in an existing neighborhood and placing in a different zone from that of neighboring property
925
Survey
Official document giving the dimensions and showing the property boundaries
926
Topography
Physical features and contours of land
927
Nonconforming use
Use of property that clearly differs from current zoning
928
Legal non confirming use
When an existing property use conflicts with ordinances that were in place before the use commenced
929
Illegal Nonconforming Use
When a property use conflicts with ordinances that were in place before the use commenced
930
Special use permit
Authorization for a use that is not consistent with the zoning ordinance in a literal sense but is beneficial or essential to the public welfare and does not materially impair other uses in the zone
931
Zoning variance
Allowing a property use that differs from the applicable ordinance for a variety of justifiable reasons
932
Use variance
Permission to use the land for a purpose not allowed by the current zoning
933
Area variance
Permission to vary one or more of the dimensional or physical requirements of the applicable g law, code, or ordinance in connection with some proposed construction
934
Interstate Land Sales Full Disclosure Act
Authorizing a nationwide program of registration of subdivisions marketed in interstate commerce intended to protect consumers by making relevant information available to them when they are considering purchasing land
935
Real estate actions
Absolute
Minimum
Reserve
936
Farms for sakes
Independently owned and large scale production or corporate
937
Ranch
area of landscape, including various structures, for practice of raising grazing livestock such as cattle’s or sheep for meat or wool
938
REO
Real estate owned, generally a great deal, esp for first-time home buyers and investors
939
Short sale
```
Agent selection
Declaration and proof of hardship
Property valuation
Short sale application
Short sale agreement
Finding a buyer
Negotiation
Closing
```
940
Real estate auction types
Absolute - Sold to highest bidder regardless of price
Minimum Bid - The auctioneer will accept bids at or above a published minimum price
Reserve - High bid is reduced to an offer, not sale. A minimum bid isn’t published, seller reserves right to accept or reject the highest bid within a specified time period - anywhere from immediately following the auction up to 72 hours after it concludes
941
5 Types of Residential Specialty
```
FSbO
First time buyer
Vacation properties
Working with investors
Working as a buyers agent
```
Commercial real estate - complex, multifaceted & business only
Malls, office parks, restaurants, gas stations, convenience stores and office buildings
942
To specialize in land brokerage
farms, ranch, recreation, timberland, and other specialty properties
Undeveloped tracts of land
transitional & developmental land
Subdivision and lot wholesaling
site selection, assemblage, appraisal, auction, farm & land management, market analysis, land planning & zoning environmental issues, water rights, government regulations, land title defects, vacant land contracts & financing
943
Mortgage Brokers
Facilitate the loan and receive a fee.
Texas Secure and Fair Enforcement for Mortgage Licensing Act of 2009 (Texas SAFE Act)
mortgage loan originators must have a valid license
