real estate (national) Flashcards
(196 cards)
1
Q
what legal document supports the conveyance of real estate?
A
deed
2
Q
what supports the conveyance of personal property?
A
receipt or bill of sale
3
Q
what is used as the legal description of land
A
metes and bounds
4
Q
metes and bounds uses…
A
- a point of beginning
- compass directions
5
Q
lot and block uses…
A
recorded plats/plat maps
6
Q
government survey uses..
A
legal description for land
-1 section = 1 sq mi (640 acres)
- 36 sq mi in a township
7
Q
what are the 3 methods of land descriptions
A
- metes and bounds
- government survey
- lot and block
8
Q
how many square ft are in 1 acre?
A
1 acre =43560 sq ft
9
Q
what is a lien
A
a legal claim/interest against a property to protect lender from loss
10
Q
types of liens (2)
A
- voluntary
- involuntary
11
Q
example of a voluntary lien
A
mortgage
12
Q
example of involuntary lien
A
tax lien, mechanics lien, etc
13
Q
how does a voluntary lien affect property value or title?
A
it doesn’t
14
Q
how does an involuntary lien affect property value and title?
A
- decreases market value
- clouds title (meaning it creates an impediment to selling/refinancing)
15
Q
easement
A
the right to use another persons property for a specific use
16
Q
types of easements (2)
A
- appurtenant easement
- easement in gross
17
Q
appurtenant easement
A
burdens one piece of land for the benefit of another (ex. driving over neighbors land to reach yours as it’s the only way)
18
Q
easement in gross
A
benefits and person only and not the land (ex. utility companies right to private access in order to complete their job)
19
Q
encroachment
A
when one property owner extends a structure of their property onto their neighbors without permission
20
Q
what is probate
A
transfer of the property owned by a deceased person without a will
21
Q
adverse possession
A
possession of a property without the owners permission. once it reaches a certain amount of time, the person trespassing can claim the property
22
Q
littoral rights
A
rights of landowners to access a body of water that is still, such as a lake
23
Q
riparian rights
A
a landowner whose property borders a river has a right to use water from that river on his land
24
Q
basic types of ownership (2)
A
- ownership in severalty
- co ownership/concurrent
- common interest
25
ownership in severalty
1 owner
26
co ownership/concurrent
more than 1 owner
27
tenancy in common: type of ownership, how many people have ownership of the property, survivorship?
- most common type of co ownership
- 2 or more people have an undivided interest in the entire property
- no survivorship
28
joint tenancy: type of ownership, ownership implications, survivorship?
- co ownership
- each owner has undivided interest
- right of survivorship ( if one owner dies the others get some of their share)
29
common interest ownership: definition and example
where owners share an interest in common areas
ex. condominiums, retirement communities, timeshares
30
timeshare
a vacation property multiple people own (basically a vacation condo)
31
condominiums
type of ownership where a building is divided into multiple units. can be owned separately or in common
32
co-op/cooperative
buildings owned by corporations.
- residents are shareholders, each paying a proprietary lease
- if one shareholder fails to pay the lease, the whole cooperative may face foreclosure
33
trust deed
instruments held by a third party as security for the payment of a note
34
what are the 3 party devices of a trust deed?
1. borrower= trustor
2. lender= beneficiary
3. independent 3rd party= trustee
35
what is an estate?
a possessory interest which entitles the holder to the possession of the property, either now (present interest) or in the future (future interest)
36
life estate
a freehold estate that lasts only as long as a specified person lives
37
condemnation
when the government orders a property to be vacated and stay vacant
38
escheat
transfer property to the government if the owner dies and has no heirs
39
police power
authority of the government to enact regulations that protect the public’s safety
40
governments have controls on land use through…(2)
1. zoning laws
2. building code
41
appraisal
an opinion on value of property
42
what is survivorship
the inheritance of interest other owners receive when one of the owners die
43
building codes
regulations set by the government to control the design, construction, and modification of buildings
44
covenants and example
specific rule on a property through the deed
ex. deed includes the requirement of the property to be kept a religious property, be kept a certain color, etc.
45
types of land controls/restrictions (2)
| what type of people establish them?
1. public (government)
2. private
46
subdivision CCR’s (covenants, conditions, and restrictions)
set of rules/promises made by the developer governing the use of a property
47
bylaw
rules created by company to control the actions of its members
48
what type of condominium controls are in place? (2)
-bylaws
-owner’s association regulations
49
situations that require an appraisal (4)
1. loans
2. taxes
3. insurance
4. refinance
50
effective date
the date you are valuing (appraising) the property
51
steps to an appraisal (8)
1. define the problem
2. determine scope of work
3. collect relevant data
4. determine properties highest and best use
5. determine land value (without the property value)
6. apply 3 approaches to value
7. reconcile
8. report
52
scope of work
an appraisal outline identifying the work needed to complete the appraisal
53
General appraisal data (PEGS)
- physical factors
- economical factors
- governmental factors
- social factors
54
highest and best use
most profitable use
55
3 approaches to value
1. sales comparison approach’s
2. cost approach
3. income approach
56
sale comparison approach
uses recent sales data from similar properties to determine a property’s market value
- most useful/accurate
57
cost approach
considers the cost to construct a property similar to the one being appraised
- best for unique properties/ones not sold enough to have enough sales comparison data
58
income approach
estimates value by how much income the property generates
- best for commercial/investment properties
59
reconciliation
process of weighing each approach to value in order to reach a final value conclusion
60
market value
expected price
61
market price
actual price
62
loan value
amount lender is willing to loan for property
63
insurance value
amt of money the property can be insured for
64
assessed value
estimate of a properties value, which is used to calculate property taxes
65
property characteristics that affect value (3)
1. immobility
2. indestructibility
3. uniqueness
66
economic principles that affect property value (4)
- highest and best use
- supply and demand
- conformity
- scarcity
67
comparative/competitive market analysis (cma)
method of determining recommended listing price by comparing the subject property to other properties that have sold, are presently for sale, or did not sell in a given area
68
broker price opinion (BPO)
estimate of a properties value typically performed by a broker or an agent
69
automated valuation method (AVM )
Computer program that uses algorithms and property data to estimate a properties market value
70
discount points
- One point is 1% of the loan amount
- add to lenders yield
71
lenders yield
used to determine the risk of a real estate investment
net operating income (NOI)/loan amount
72
loan to value ratios (LTV)
amount of money borrowed/price of property
73
private mortgage insurance (PMI)
offered by private companies to protect a lender against default
74
what are the 4 components of a monthly mortgage payment?
PITI
-Principal
-Interest
-Taxes
-Insurance
75
Conventional loan
long term, fully amortized, fixed rate real estate loan
76
debt service ratio & formula
the ability to generate enough cash to cover debt payments
Net Operating Income/Annual debt service
77
credit scoring
determining credit worthiness
78
promissory note
a promise to pay an amount of money in a specific timeframe to a person
79
amortized loan
loan payed back in monthly payments with interest
80
partially amortized/balloon loans
loans payed back in monthly payments plus interest with one big payment at the end
81
interest only loan
borrower pays only the interest for a certain amount of time before paying the principle balance
82
adjustable rate mortgage (ARM)
loan with variable interest rates
83
3 types of government loans
1. fha insured loan
2. va guaranteed loans
3. usda/rural development loan programs
84
federal housing administration (fha)
gov agency under HUD that actually insures the loans
85
va guaranteed loans
a portion of a loan the va pays for
86
in order to attain a va loan, you need... (2)
1. Certificate of eligibility (COE)
2. Discharge Papers
87
USDA rural development loan programs
provides low interest no down payment loans to help eligible families living in rural communities
88
land contract
| right to occupy property by...
Installment agreement where the buyer makes payments to the seller in exchange for the right to occupy and use the property.
- no deed/title is transferred until all or a specific portion of the payment has been made
89
underwriter
the individual that evaluates a loan application to determine its risk level for a lender or investor
- usually the final decision maker
90
home equity loan
usually a one time loan that lets you use your home equity as collateral
## Footnote
home equity: owners interest in a property determined by how much they paid off (the more they pay off the more their home equity is)
91
home equity line of credit (HELOC) loan
money available to the homeowner to be borrowed as expenses arise
92
bridge mortgage loan
mortgage that occurs between the termination of one mortgage and the beginning of the next
93
reverse mortgage loan
a senior (age 62+) mortgages their house and in return receives a lump sum of cash, sets up an equity line, or receives a monthly check from the lender
94
construction loan
Temporary loan used to finance the construction of improvements and buildings on land
95
rehab loans
a loan that provides enough funds to buy a property and renovate it
- property must be at least a year old
96
real estate settlement procedures act (RESPA)
fed law dealing with closings that lays out the specific procedures and guidelines for disclosure of settlement costs
-prohibits kickbacks
97
kickback
when a real estate agent acting as a fiduciary receives gifts from a third party for referring clients to them
-this is ILLEGAL
98
truth in lending (regulation z)
discloses the true costs of obtaining credit/lending
99
to follow truth in lending/regulation z for advertisements, trigger phrases must be...
fully disclosed
ex. amount of down payment (20%, 10%, etc)
100
RESPA disclosures include.. (3)
1. HUD booklet
2. mortgage servicing disclosure statement
3. Good faith estimate (GFE) of settlement cost
101
equal credit opportunity act (ECOA)
fed law that prohibits discrimination in granting credit to people based on
-sex
-age
-marital status
-color
-religion
-national origin
-receipt of public assistance
-exercised rights under the the consumer protection act
102
lending process (5)
1. consult with lender
2. complete loan application
3. process loan application
4. analyze the borrower and the subject property
5. closing the loan
103
prepayment clause/penalty
gives lenders right to charge the borrower a penalty for early payment of loan
104
balloon payments
large lump sum payment at the end of a loan term
105
progression
worst home in best area
106
regression
best home in worst area
107
conformity
particular home achieves its max value when surrounded by homes that are similar
108
5 elements for valid contract
1. Contractual capacity
2. offer
3. acceptance
4. consideration
5. lawful and possible objective
109
statute of frauds
law requiring certain types of contracts to be written and signed in order to be enforceable
110
offer
legal document listing the terms and conditions th buyer requires to buy the property
111
what events can terminate an offer? (4)
1. lapse of time
2. death/incapacity of party
3. revocation
4. rejection
112
void contract
contract that was void from the beginning and cannot be made valid
113
voidable contract
initially valid but can be eventually annulled by one of the parties
114
unenforceable contract
contract that cannot be be enforceable by the court of law
115
unilateral contract
1 party makes a promise to the other party
116
bilateral
both parties make promises to each other
117
option
contracts that give 1 person the right to do something without obligating them to do it
118
is an option a bilateral or unilateral contract
Unilateral
119
option requirements (2)
- be in writing
- be very specific
120
right of preemption
right to have the first chance to buy/lease the property if the owner decides to sell it
121
acceptance of a contract only may....(4)
-be made by the offeree
- be communicated to the offeror
- be made in the manner specified
- not vary the terms of the offer
122
possible remedies for breach (4)
1. compensatory breach
2. liquidated damages
3. specific performance
4. rescission
123
rescission of contract
allows a party to cancel a contract in the case of duress, misrepresentation
-nullified as if it never happened
124
cancellation of contract
describes the end of a contract, requires legal justification
125
termination of contract
ending a contractual relationship due to breach of a contract
126
addenda/um to contracts
separate document if attached to original contract that modifies or add its terms
127
amendments to contracts
a change to an existing contracts all parties agree on
128
purchase agreement
legally binding contract between a buyer and seller that outlines the terms and conditions for the sale of good/services
129
contract contingency
a condition that must be met for a contract to be valid/a transaction to proceed
130
lease purchase agreement
contract that allows a tenant to rent a property with the option to buy at the end of the lease
131
types of leases (4)
1. gross lease
2. net lease
3. percentage lease
4. land/ground lease
132
gross lease
tenant pays fixed amt for rent, landlord pays other expenses (taxes, insurance, utilities, etc)
133
net lease
tenant pays property expenses in addition to rent
134
percentage lease
tenant pays rent + percentage of sales made (used for commercial buildings)
135
land/ground lease
a person rents land from a landowner, not the property
136
agency relationships (4)
- licensee and a seller
- licensee and a buyer
- dual agency btw licensee and buyer and seller
- split agency btw 2 licensees in the same brokerage
137
dual agency
agent represents both buyer and seller
138
split agency
two agents from same broker represent buyer and seller
139
types of listing contracts (4)
1. exclusive right to sell
2. exclusive agency agreement
3. open listing
4. net listing
140
escrow
a deed, bond, money, or something of value held in trust by a 3rd party to be given to the grantee upon fulfillment of a condition
141
exclusive right to sell
a seller agrees to work with one agent to market and sell their property
142
exclusive agency agreement
seller gives the agent the right to market and sell a property only if the agent brings the buyer
143
open listing
allows property owner to work with multiple agents to sell their property
144
net listing
seller tells agent the lowest amount they want the property to sell for, if the agent finds a buyer who pays a higher price, the excess is paid to the agent
145
power of attorney
allows someone to act on the behalf of someone else in a real estate transaction
146
agency relationships are created by...
the agents being provided authority by the principle
147
based on the level of authority, agents can be classified as...(3)
- universal
- general
- special
148
universal agent
agent with the ability to act on behalf of the client in any legal/financial matter that can be delegated
-this authority is ongoing
149
general agent
agent with the ability to act on the behalf of a client within a specific area
-this authority can be ongoing
150
special agent
agent with the ability to act on the behalf of a client for a special task
- this authority is not ongoing
151
types of authority (3)
-actual
-express
-implied
152
actual authority
power of an agent to act on the behalf on a principle, which can be given expressly or impliedly
153
express authority
the principal explicitly give authority to the agent
154
implied authority
the principle implies the agent has authority to act, not expressly given
155
reasons for agency termination (6)
1. accomplishment of task
2. expiration
3. operation of law
4. mutual agreement
5. renunciation
6. revocation
156
fiduciary responsibilities (6)
ACCOLD
-Accountability
-Confidentiality
-Care
-Obedience
-Loyalty
-Disclosure
157
T or F: the agent is a fiduciary to a third party
False
158
agency disclosure
lets buyer and seller know who is working for whom in the transaction
159
seller and sellers agent must tell the buyer about _____ defects and are not required to disclose _____ defects
latent, patent
160
latent defects
hidden defect
161
patent defects
obvious defects
162
residential property disclosure form
includes detailed description of property condition, including checks for mold, smoke damage, flood damage, etc.
- delivered to buyer before offer to purchase
163
federal fair housing act
prohibits discriminating based on sex, race, religion, race, national origin, etc in the sale or lease of property
164
Americans with disabilities act (ADA) requires compliance in... (5)
1. employment
2. public services
3. public accommodations
4. private entities
5. telecommunications
165
t or f: the comparative market analysis is not the equivalent of an appraisal
true; its performed by a real estate agent, and therefore cannot be an actual appraisal
166
t or f: an appraisal is not required to refinance a home
false; it is required
167
title insurance policy
a contract that protects the owner of a property from losses that may occur if the title has defects
168
title
the actual lawful ownership of a property
169
possible title problems
- unpaid taxes
- liens, such as mortgage or mechanics
- fraudulent documents
- more
170
resolutions to title problems (3)
- title searches
- negotiate with lien holders
- legal action to clear title
171
title search
review of public record to find the lawful owner of a property
172
cloud in the title
an defect that makes the ownership of the property unclear
173
marketable title
owner with an unbroken chain of recorded titles going back 40 years
174
insurable title
a title that an insurance company is willing to insure, even if it has defects
175
transfer of title becomes effective when...
the grantor (seller) gives executed and signed the deed to the buyer (grantee)
176
the deed is required to be ____ after it is delivered
recorded with the county
177
who pays for the day of closing?
seller
178
steps to closing (6)
1. offer acceptance & deposit of earnest money
2. home inspection & appraisal
3. getting financing
4. title search & insurance
5. closing costs & preparations
6. closing/roundtable meeting
179
home warranty
covers the cost of replacing home appliances and home systems
180
builders/new construction warranty
agreement between a home builder and a homeowner that covers the quality of the construction
181
redlining
refusal to give loans for discriminatory reasons
182
federal fair housing act exemptions
- single family home sold/rented by individual owner
- rental of a room/unit in a dwelling with no more than 4 units
183
blockbusting
panic selling
- predicting the entry of minorities into a neighborhood, so you tell current residents to leave
184
steering
steering certain buyers into certain neighborhoods based on their race, religion, national origin, etc
185
disparate treatment
outright discrimination
186
antitrust laws
encourages competition and prevents monopolies
187
economic/external obsolescence
factors unrelated to the property negatively affects its value
188
functional obsolescence
factors related to the property that negatively affect its value
189
constructive notice
assumes everyone has received notice of a legal action, which happens when a property is recorded
190
actual notice
Individual has first hand notice of something
191
estate for years
any estate for a definite amount of time (ex. a lease)
192
testate
having left a will
193
intestate
having not left a will
194
3 types of concurrent/co ownership
1. tenancy in common
2. joint tenancy
3. tenancy by the entirety
195
tenancy by the entirety
each owner has the equal amount of interest in the property (1 person has 100% interest and the other person also has 100% interest)
- for married couples
196
4 conditions needed to be met in order for joint tenancy
PITT
- Possession
- Interest
- Time
- Title
