Real Estate Principles Flashcards
(200 cards)
1
Q
California Law determines that all property is?
A
Real Property or Personal Property
2
Q
The term Real Estate refers to?
A
An estate or interest in Real Property or land. Real Estate and Real Property are synonymous.
3
Q
Real Estate is considered anything that is?
A
immoveable or that which “runs with the land” or is Appurtenant to the land.
4
Q
California Civil Code defines Real Property to include the following elements:
A
•Land•Airspace•Improvements •Appurtenance or Incidental to the land•Anything Immovable by law
5
Q
Bundle of Rights are?
A
•Possession•Quiet Enjoyment•Control•Exclusion•Disposal
6
Q
Mineral Rights are:
A
OilGasGoldCoalIronGemstones (turquoise and tourmaline)
7
Q
Water Rights are?
A
Part of Real Property and are classified as either Riparian or Littoral
8
Q
Riparian Rights
A
Belong to owners of property bordering flowing water such as rivers and streams. State owns property beneath waterway.
9
Q
Littoral Rights
A
Owners rights of property bordering a standing, or still, body of water (lakes,oceans, or bays).
10
Q
Percolating water
A
Underground water not classified as a stream. “Perc test” is required to verify that water is consumable and in sufficient supply.
11
Q
Mutual Water Company
A
When a development is built that will be using a common spice of water. Individual property owners each own an equal share of stock.
12
Q
Fixtures
A
Items that were personal property before being permanently attached to Real Property.
13
Q
Contracts
A
must be in writing with the exception of a lease for twelve months or less. The sale of personal property for any amount of $500 or more, or any amount for the sale of a motor vehicle.
14
Q
Uniform Commercial Code
A
bulk sale of goods, securities, and formation of security agreements. contract maybe required.
15
Q
Deed
A
the transfer of ownership of Real Estate. Recorded with the County Recorders office.
16
Q
Bill of Sale
A
the transfer of Personal Property. Not recorded.
17
Q
Emblements
A
Cultivated Crops, part of the land until harvested. Once removed from ground they become personal property.
18
Q
Land Description
A
-Legal description-APN/Assessors Parcel Number (County Tax Assessor)-Street Address when available
19
Q
Lot and Block Method
A
subdivision map giving both a lot and block legal description and street address.
20
Q
Metes and Bounds
A
Metes; distances measured in inches feet yards or rods. Bounds; natural or artificial boundaries.
21
Q
Township and Range Survey System
A
Baselines- Run east-west from a specified reference pointMeridians- Run north-south
22
Q
Townships
A
numbered and measured in each direction from point of intersection of the baseline and the meridian. Has 36 sections with each section being one square mile
23
Q
Ranges
A
Townships run east and west
24
Q
Tiers
A
Townships run north and south.
25
Treaty of Guadalupe Hidalgo in 1848
Existing rights of Mexican citizens living in California were honored by the government of the U.S. and government of the California Territory
26
Community Property
property acquired by either spouse during marriage, as well as property owned separately; obtained prior to or during marriage.
27
Estates in Property
Either Freehold or Less-than-Freehold
28
Freehold Estate/ Fee Simple Absolute
most complete form of ownership that one can have in property. undetermined amount of time.
29
Fee Simple Defeasible
conditions or limitations attached to the ownership that could defeat a party's claim to property. A limitation to the Deed or ownership rights.
30
Life Estate
interest in property for the duration of the life of a designated person or persons
31
Remainderman
The person designated to receive the property
32
Reversionary Holder
is the original owner and the Grantor of the Life Estate
33
Less-than-Freehold Estates
the rights to the use of Real Property for a period of time. Commonly referred to as Leases or Rental Agreements
34
Chattel Real
used in reference to a less-than-freehold estate or lease. A personal interest in real property.
35
Leases
CA requires Leases to be in writing if they are for a term of more than one year. Only Landlord/Lessor required to sign showing agreement of terms.
36
Estate for Years
a lease for a fixed specified period of time.
37
Estate from Period-to-Period
is a renewable agreement to rent or lease property for a specified period of time such as month to month to year to year.
38
Estate-At-Will
can be terminated by either party at any time.
39
Estate-at-Sufference
occurs when the tenant remains after the agreed upon term either without paying rent or against the landlords wishes.
40
OR suffix
is the party giving or the GivOR
41
EE suffix
the party rEcEiving
42
Title
used synonymously with ownership. If you own the property it is said that your name is on the Title. Can be held by individual, multiple parties, trust or corporations.
43
Ownership in Severalty
a person owns property solely or there is no one else on Title. Individual, Corporation or Trust.
44
Concurrent Ownership
shared ownership; owned by more than one person concurrently or at the same time. Individuals, Trusts, and Corporations.
45
Unity of Time
Each owner takes Title at the same time.
46
Unity of Title
Each owner receives Title with the same Deed.
47
Unity of Interest
Each owner has an equal share or interest.
48
Unity of Possession
Each owner has the right to use the entire property.
49
Tenants in Common
allows for any number of owners. Each owner can have an equal or unequal share of the property as determined by property owners. They have Unity Possession. individuals share in the property passes to their heirs not other co-owners upon death.
50
Joint Tenancy
a form of concurrent ownership allowing co-ownership giving equal share or ownership.
51
Right of Survivorship
a distinguishing trait of Joint Tenancy. If the co-owner dies, the surviving co-owners inherits the property.
52
Quit Claim Deed
for married couples; relinquishing the right of the non-owning spouse and claim to the property.
53
Warranty Deed
warrants or guarantees that the grantor has good title. Title flaws or errors is the responsibility of the seller or grantor of the property whether knowing or not they knew of any problems.
54
Reconveyance Deed
when a trust deed or loan against the property is paid in full.
55
PUD- Planned Interest Development
share elements of Common Interest Ownership and similar to condos. Difference being individual unit owner own the land beneath their own unit.
56
Co-op (Co-Operative)
Co-op individual unit owner owns stock in the corporation and proprietary lease.
57
Deed Restrictions/Zoning Regulations
Encumbrances that may be considered a benefit to property owners
58
Liens
legal form of recording a notice that the property is security for payment of a debt.
59
Attachments
lien or a legal hold against a party title to property for potential future judgment. This seizure of property is done by filing a lien.
60
Easements
used to give one person the right to use the property of another for a specified purpose.
61
Encroachment
advancing beyond the designated or legal limits. Based on property of one party infringing/ extending extending onto land of another party/neighbor
62
Homestead
form of encumbrance, protection from creditors provided for by state law. Some or all equity in owner-occupied property may be protected from creditors of an unsecured debt.
63
Priority of Claims
Proceeds of a forced sale will be paid in following order:Tax Liens, Holders of any other Lien or Encumbrance, Homeowner in the amount of the Homestead, Levying Officer, Judgment Creditors, Any other claims against the property, Homeowner for any remaining proceeds from the sale.
64
R1
residential property to accommodate on family, Single Family Residence or SFR acronym may also be used.
65
R2
designates residential property that has 2 residences on one property or is on structure with 2 separate dwelling accommodations is called a Duplex.
66
R3
residential property with 3 residences and is also referred to as a trip-plex
67
R4
is usually referring to residential property with 4 units is a Four-Plex. Commonly used to designate any 1-to-4 unit residential dwelling. Used because the BRE licensing is concerned with 1-to-4 unit residential properties.
68
R-Multi
complexes of five or more residential units are generally considered Multi Family. May be zoned Commercial with a designation such as RC and usually handled as a commercial transaction by the Real Estate Licensee
69
C1
often used for smaller business such as small individual stores frequently in older "downtown" areas.
70
C2
designate a commercial property such as a small strip center.
71
C3
designate a larger shopping center.
72
Manufacturing and Industrial
M1/I1
used for small industrial areas.
73
M2/I2
used for large industrial areas.
74
Agricultural Property
A1
may include small agricultural purpose properties.
75
AG
includes most agricultural purpose properties.
76
Property Tax Events
cause change in the amount of taxes owed; are improvements to the property that required building permits or a drastic change in property values in the area. Applies to both increase and decrease.
77
Proposition 13
amended the california constitution to limit the states ability to increase property tax assessments above 1975 base values.
78
Base Value
for property tax purposes is the cash value established by the purchase price or any subsequent tax event that has occurred since February 28, 1978.
79
Benefit assessment
term more often used for smaller areas or neighborhoods that will benefit directly from the assessment.
80
Supplemental Taxes
Based on a voter approved improvement which has nothing to do with the sale of the property of the purchase price.
81
Mello-Roos
supplemental tax that was created originally in San Francisco as a way to increase funds for schools. Has evolved to be used for any needs that the local government may have. It does not have to benefit the immediate area.
82
Mello-Roos District
commonly attached to or created in new developments. Often times the developer will use it as a negotiating point to accommodate the needed facilities to be provided by the county or city where the property is being developed.
83
County Tax Collectors
elected officials that are responsible for collecting property taxes. If not paid for five years, the county tax collector will be responsible for initiating Foreclosure proceedings to include the Foreclosure sale..
84
Tax Deed
when a tax foreclosure has concluded the County Tax Collectors office will provide the purchaser with it...if property is sold through a Tax Foreclosure in the State of California, the Tax Deed will be free and clear of any additional liens against the property.
85
Certificate of Redemption
will be provided to the property owner once all delinquent taxes are paid.
86
Tax Fee
will be charged by most mortgage lenders to the Borrower at Close of Escrow. Fee pays for a service provided to lenders that notifies lenders when a property they have financed is tax default.
87
Property Tax Year
from July 1 to June 30 based on the fiscal Calendar. Annual Property Taxes are paid in two installments.
- 1st installment due Nov. 1/ Delinquent if not paid by 5pm on Dec. 10 of same year.
- 2nd installment is due Feb. 1/ Delinquent if not paid by 5pm April 10 of the same year.
- Tax Lien takes effect January 1 of the calendar year
88
Property Tax Postponement Law
Property owners that are age 62 or older, disabled, or blind can request in writing that their property taxes and interest be deferred, government allows senior citizens to set aside their tax payments until they vacate the property either by death or when they no longer occupy the property as their primary residence.
89
Escheat
the governments reversionary right in privately owned Real Property. When a property owner dies with no known heirs and with no will, which is also known as "Intestate". If no heirs have been located at the end of the five year period, the state will take Title to the Property through the process.
90
Governing Board of CRA
composed of City Council members, Redevelopment proposals must conform to the General Plan, but do not need to conform to local zoning ordinances. The CRA can use the power of Eminent Domain to acquire property for the purpose of redevelopment. Funds can be borrowed from any source available to finance the purchase and construction required for redevelopment. CRA can act as a developer.
91
Acquisition
means to acquire or to obtain. Reference to the acquisition of Real Property, it can be accomplished in a number of ways that are currently accepted practice and within the guidelines of the laws.
92
Alienation
the act of removing oneself from the ownership or rights to a piece of Real Property.
93
Title
term that is commonly used synonymously with ownership. It is said in Real Estate industry, that one Holds Title to property, meaning that they own it or that their name is on the Title of Deed to the Property.
94
Grant
term that means to give as with a Grant Deed. Grant Deed is a written document that must contain the name of the Grantor and the Grantee.
95
Private Grant
used to describe the transfer of property from one individual, or person, to another individual with the use of a Grant Deed.
96
Public Grant
Transfers Real Property from the government to an individual.
97
Dedication
transfers Real Estate from an individual to the government.
98
Public Dedication
the transfer of Real Property from the property owner or individual to the government for public use for a variety of reasons, which is commonly used for the creation of a roadway.
99
Alienation by Operation of the Law or Court Action
way of clearing Title, establishing Title or transferring Title to Real Property to another person. Transfer of ownership under this method may be an involuntary transaction on the part of the owner of the property.
100
Quiet Title Action
court action that is brought to force those persons who have claim to a property to prove their claims, or to have the courts rule the claims invalid. This clears any invalid claims against a property thus the terms Clear Title or Clear Clouds on Title
101
Partition Action
court action brought by a co-owner of a property that wishes to divide or end the co-ownership of the property that is owned by more than one person.
102
Power of Sale
clause in the Note that accompanies a Trust Deed which allows the Trustee to sell the property to pay the balance of the debt if the property owner defaults on loan agreement or failed to make payments as agreed.
103
Judicial Foreclosure Action
requested by the Trustee of the Trust Deed to request a court-supervised sale of the property to collect the debt that is owed under a default action.
104
Action for Declaratory Relief
brought by co-owners or those with rights in Real Property to request a clarification of their rights and obligations concerning a property.
105
Execution Sale
court action that allows a party that has won a lawsuit and received judgment against a person who owns Real Property to require that sale of the property to pay the debt. Party holding judgment can request court-supervised sale of any of the persons within the state. Purpose of the sale is for the creditor or Judgment Lien Holder to collect the money that is owed to them.
106
Writ of Execution
awarded to a judgment Lien Holder to allow and instruct the officials to perform the sale through public auction and use the proceeds to pay the Judgment Lien Holder the amount owed plus expenses and court costs. The Purchaser of property sold through an Execution Sale will receive a Sheriffs Deed.
107
Forfeiture
may be involuntary which occurs when a condition of a Deed is breached. Can happen with a Fee Simple Defeasible ownership and a condition of the Deed has been defeated or broken, or with a Trust Deed and the Conditions have been violated as with payment default. The Grantor of the deed has the right to reclaim the property. May also be on voluntary basis when property owner knows they are unable to meet the conditions of a Deed and Forfeits ownership.
108
Marriage
provides for Community Property of all property acquired during marriage unless specifically designated otherwise.
109
Bankruptcy
under the auspices of the Federal Bankruptcy Court. The Bankruptcy Court has the authority to sell a creditors property to pay debts.
110
Escheat
process that takes place when a person dies Intestate (without a Will) and with no apparent Heirs.
111
Eminent Domain
governments right to acquire property as needed for public use such as to build a roadway or expand a freeway. The Real Property in question will be condemned for its present use.
112
Equitable Estoppel
transfer referred to as After Acquired Title. This type of transaction occurs when a conveys interest in Real Property prior to acquiring those rights. If a party misrepresents themselves and their interest which in turn causes the tranfer of Real Property, the injured party has a claim of right. Occasionally used as a means to commit fraud by unsavory people.
113
Succession
often occurs when the property is owned jointly with the exception of Tenants in Common ownership, which does not have the Right of Survivorship unless specified in the Deed.
114
Intestate
property owners who have died without a Will that would have stated who the property was to go.
115
Community Property with surviving spouse
1/2 is owned by each spouse. The decease spouse's 1/2 is divided after the decedents liabilities are paid:
- 1/3 to spouse and 2/3 to children if more the one child
- 1/2 to spouse and 1/2 to children if only one child
- 100% to spouse if no children
- 100% to spouse if Title was taken as "Community Property with the Right of Survivorship"
- Community Property with Right of Survivorship: Surviving Spouse receives 100% ownership of the property.
116
Conveyance of Property after Death: Joint Tenancy
same as with Community Property with the Right of Survivorship. The Property ownership passes 100% to the surviving spouse.
117
Separate Property
property owned Sole and Separate or with no Co-Owner
•Surviving Spouse with no children:
-Spouse 1/2, Surviving Parent, brother/sister, or child of deceased sibling other 1/2. If none, spouse gets other 1/2
•Spouse with one child:
-Spouse 1/2, Child 1/2
•Spouse with more than one child:
-Spouse 1/3, Children divide 2/3 equally
•No surviving spouse of child:
-Property is distributed to next-of-kin in order according to California law beginning with parent, brother,sister, or child of deceased sibling.
•No heirs exist, property will go to the State through Escheat.
118
Testate
With a Will provides for the succession of an owner's property passing to the persons chosen by the deceased. A Will is a document or Devise that is prepared by a Testator, who is legally competent person, to pass Title to another after their demise.
119
Devise
term given to the document or instrument that transfers Real Property or the name given to a Will that transfers Real Property.
120
Devisor
the decease person giving the property through a Will or Devise.
121
Devisee
party receiving the property through the Will or Devise.
122
Bequest of a Legacy
is the term used to describe the transfer of personal property of Chattel through the use of the Will. A Legacy may include items such as money, jewelry, or furniture.
123
Legator
the person giving the Bequest or Legacy through the Will.
124
Legatee
is the recipient of the Bequest or Legacy through the Will.
125
Witnessed Wills
formal, written documents that have been signed in front of witnesses. An attorney prepares the Will by listing the Testator's property both Real and personal along with the choices of Heirs or Devises and Legatees.
126
Statutory Wills
prepared forms that are completed by the Testator by filling in the blanks and adding any amendments necessary. Statutory Wills may also be completely type written by the Testator or any other party chosen as long as it meets the requirement established by law which make it "statutory".
127
Holographic Wills
completely handwritten by the Testator and cannot be typewritten. The Holographic Will must be signed and dated by the Testator, but doesn't need witnessed. If the Will has typed sections included or is not all in the Devisor's handwriting, it is no longer a Holographic Will and will be considered a Witnessed Will and require witnesses.
128
Probate
court process to distribute the property, both Real and personal, of a person who is deceased. Probate court works with the person designated by the Decedent to oversee their property. This person is known as the Executor. If the decedent has not named Executor, the probate Court can name an Administrator.
129
Accession
the increase of property owned by either man-made or natural causes. These additions add property to owners Title by improvements, accretion, or reliction. Does not include property gained through fraud, misrepresentation, or even misinformation filed with the county records.
130
Improvements
are any structures or fixtures that are added to the Real Property. A fixture is referring to an item that is personal property until it becomes permanently attached such as an air conditioning system.
131
Accretion
is the increase of land area through the forces of nature. Accretion occur when a property is adjacent to or bordering a flowing waterway.
132
Alluvium or Alluvion
build-up of soil or land gradually or occurring over a long period of time. This process may be so gradual that is not noticeable.
133
Erosion
the gradual removal of land and can be caused by something as simple as rainfall or the Constant flow of water.
134
Avulsion
the sudden removal of land, as by earthquake, flood, volcanic action or the sudden change in the course of a stream.
135
Reliction
occurs when waters permanently recede from a property leaving newly exposed land, which now becomes part of the existing property increasing the land mass or the size of the owners property.
136
Occupancy or Possession
of a property may establish ownership and be acquired in one of the following three ways.
137
Adverse Possession
used to acquire Title of property when the Adverse Possessor is acting under the belief that they actually have the right of ownership. More than one person believes they own a piece of Real Property, but only one occupies the property. The person occupying is known as Adverse Possessor.
138
Claim of Title or Right, Color of Title
the right of ownership based on belief of that ownership. May be due to the possession of document that declares Adverse Possessor is the owner whether valid or not. More than one document may exist declaring ownership to more than one party creating a Cloud on Title or Color of Title.
139
Clear Title
must be obtained by Adverse Possessor must be obtained through the courts. Need to file lawsuit that requirements met and request the Cloud on Title is removed and a Clear Title provided.
140
Prescriptive Easement
court ordered Easement allowing the right to use or to travel across the property that belongs to another person. Conditions must be met:
- Open and notorious use
- Continuous use for a maximum of five years
- Hostile to owners interest
- Claim of right
141
Abandonment
when a party vacates a property or forfeits their rights to property, such as a tenant or Lessee, reverts right of possession back to Landlord or Lessor. Other situations:
- Adverse Possessor vacates in less than 5 yrs.
- Easement is not used for more then 5 yrs.
- Life Tenant abandons rights to the stated property.
142
Deeds
documents used to transfer ownership from one entity to another and verify granting or giving of the Real Property.
143
Bill of Sale
document similar to a Deed; used to transfer ownership of Chattel or personal property such as a car.
144
Valid Deeds
-Written: Real estate Deeds and contracts must be in writing. Verbal contracts are not legal for Real Estate transactions in California
145
Granting Clause
"I hereby grant" must be in document making clear statement that Grantor fully intends to give or Grant the Deed in question.
146
Designated Grantee
person receiving the Deed must be named in document. Deed can never be left blank concerning the recipient. Blank Deed similar to Bearer Bond meaning that whoever held the document in their possession owned it.
147
Competent Grantor
person giving or granting property must be legally competent. Competent Grantor must be:
- Sane: person who is not sane would either have been declared incompetent in a court of law or committed to a hospital for mental care.
- 18 yrs or older unless; married, military, emancipated by court of law, free of certain Felony convictions
148
Adequate description of property
legal description not necessary as long as description is sufficiently adequate that it will not be confused with any other property. Complete address usually suffice. Fully Executed Document is signed by all involved persons.
149
Effective Deeds
must be delivered by Grantor to Grantee to transfer Title. If Grantor does not deliver Deed to Grantee, not effective and Title or ownership will not transfer. If Grantee does not physically accept Deed, transfer is incomplete and may be completed at later date when Deed is accepted. If Grantee refuses the Deed, Title does not transfer.
150
Items NOT essential for Deed to be Valid or Effective
- Consideration: money or something of value including love and affection. Consideration essential for contract to be valid, but not for Deed.
- Signature of Grantee: acceptance by Grantee provides constructive notice of the transfer of the Deed but not necessary as taking possession of property or Deed verifies transfer. Only Grantor must sign.
- Date: Not necessary, but advisable in case of any discrepancies in the future as to the rightful ownership.
- Legal Description: An adequate description that adequately describes the property such as a full address is all that is required.
- Recording: Recording a Deed with County Recorder's Office in the county where property is always advisable, but not necessary.
151
Grants Deed
documents used to transfer/grant/give ownership of Real Estate to another. Refers to document granting or giving the ownership of Real Property.
152
Implied Warranties
part of Grant Deed means that it warranties or guarantees the Grantor has not previously conveyed Title to another.
153
Quitclaim Deed
that quits any claim to the property that Grantor may have. Grantor of Quitclaim Deed is giving constructive notice Grantee no longer has any claim on a piece of property.
154
Community Property State
means that property gained in marriage is the possession of both husband and wife. It is always required that a spouse not on title must sign a Quit Claim Deed any time the owning spouse purchases, sells, or finances property that is held as "Sole and Separate."
155
Trust Deeds
primary form of Real Estate financing in California. Given from the Truster/ Borrower/ Property Owner, to the Beneficiary who is the Lender, as a means of placing their Real Property as security for a loan. Beneficiary hands Trust Deed to a Trustee who is a third party hired to maintain a Trust that has been established.
156
Reconveyance Deed
used by Lender to Recover interest or give back the interest held by Lender to the property owner when the loan secured with a Trust Deed has been paid in full.
157
Trustee's Deed
used to transfer ownership to successful bidder at Foreclosure Sale/Bankruptcy Sale when Trust Deed was used as a security instrument for a loan against Real Property. The Trustee of the property, or the party acting on behalf of the lender, is the Grantor of a Trustee's Deed.
158
Sheriff's Deed
provided to the successful bidder of a property that has been sold though an Execution Sale to satisfy a Judgment. A Sheriff's Deed similar to a Trustee's Deed except is used when Financing Instrument was a mortgage instead of a Trust Deed.
159
Tax Deed
used to transfer ownership to the successful bidder of a Tax Sale. If property owner does not pay property taxes to County Tax Collector as required, the property can be sold through a Foreclosure Sale much like the Foreclosure Sale by a Lender.
160
Warranty Deed
a way of giving a guarantee that the Grantor/ Seller of the property owns a Clear Title and has the right to sell it to the Grantee/Buyer. Gives several traditional forms of covenants regarding the property, which fall under the two categories of Present Covenants and Future Covenants which give the Sellers promise:
161
Present Covenants
Right of Ownership-has Title and Possession
Right to Convey-Can validly grant or convey
Against Encumbrances-There are no encumbrances other than those disclosed.
162
Future Covenants
Quiet Enjoyment-Proecr Buyer from others.
Warranty-No other can legally claim the Title.
Further Assurances- If anything is omitted that may cause Title be invalid, the Seller promises to do whatever necessary to correct the problem.
163
Title Companies
hired to perform complete search of Title and history of the Title. Title Insurance Companies provide insurance to protect both the Buyer and the Seller from any errors or defects in the Title that may result in lack of validity and ownership of the property in question.
164
Recording
way of providing constructive notice or announcing to public the transaction has taken place. Recording a Deed is not legally required, it helps ensure that the ownership of property will not be questioned.
165
Public Recording Systems
to advantage of both Buyers and Sellers of Real Property. Makes statement and clarifies ownership.
166
Chain of Title
statement made by Title Company in Preliminary Title Report that declares any and all transfers or changes in ownership that have occurred on the subject property during past 12 or 24 month period as requested
167
Deeds to be Recorded
must have name of property owner and address of Grantee so the Tax Bill can be sent to correct property owner.
168
Acknowledgement
used as a way to verify authenticity of documents
169
Notary
require the persons signing a document have at least one form of photo identification with them at the time of signing.
- Drivers License
- Passport
- Employee ID from Job
170
Agency
legal concept refers to the relationship between the parties to a transaction. Concept of an Agency establishes that once Agent/Broker enters into a contract with a party, they are obligated to that party or they owe that party fiduciary obligations whether or not money has changed hands.
171
Fiduciary Relationship or Obligation
one of trust and loyalty to the party that has hired another to perform a service. All parties to Real Estate transactions have certain obligations to all other parties of the transaction. Obligation to use due diligence is duty of the Agents to a Real Estate transaction and in all that they do in relation to completion of the transaction. Agent must do everything that they can and do it to best of their ability to see that client has received best services Agent can provide.
172
Fiduciary Relationship Owes
- Honesty and Good Faith or Fair Dealing
- Obedience
- Loyalty
- Confidentiality
- Full Disclosure of Material Facts: Transfer Disclosure Statement (TDS) required by law to notify buyer of these material facts.
173
Creation of Agency
when client or Principal enters in a contract agreement or verbal agreement with an Agent or Fiduciary to provide a service on Principals behalf. When Seller signs a Listing Agreement with Agent, Agency is created.
174
Client or Principal
person or party that hires another to act on their behalf.
175
Agent or Fiduciary
Party hired to perform a service for a fee
176
Third Party
One with whom the Agent conducts business on behalf of the principal usually referring to potential Buyers.
177
Sub-Agent
Usually considered to be the Buyers Agent.
178
Special Agent
one who is hired to perform one particular service and when that job is completed, Agency ends.
179
Special Agency
would also end or cancel if a Contract such as a listing agreement expired without finding a Buyer. If the Seller signed a new Listing Agreement, a new Agency would be created.
180
General Agent
created when Broker is hired to perform ongoing jobs and duties. Property Manager is an example of General Agent.
- Show Rentals units to potential tenants
- Prepare Leases
- Collect rents
- Maintain Property
- Manage or oversee maintenance work
181
Dual Agency
representing both Buyer and Seller or both sides to a Real Estate transaction. Must be clearly disclosed to all parties to the transaction. Also when Buyers Agent and Sellers Agent both work for same Brokerage whether in the same office or in separate branch offices under the same Broker. Price, terms, and motivation must never be disclosed to the other party without written permission from the party concerned.
182
Single Agency
when the parties to a Real Estate Transaction are represented by different Agents that work under separate Brokers.
183
Principal
- Seller
- Buyer
- Landlord
- Borrower
184
Agency Disclosure Statement/ Disclosure Regarding Real Estate Agency Agreement
form that is required by BRE, can be obtained through California Association of Realtors (CAR) to be completed and given to all parties to a Real Estate Transaction involving One-to-Four unit residential dwellings by the Agents. To disclose the facts about the Agency and declare the type of Agency in the current transaction.
- Disclose: nature of an Agency
- Elect: party or parties they are representing
- Confirm: their involvement to the Clients
185
Employment Relationship or Agency
- Express Agreement
- Ratification
- Estoppel/ Ostensible
186
Express Agent
When parties involved acknowledge that an agreement has been reached. According to the Equal Dignities Rule the agreement does not need to be in writing unless it is required as follows: and transactions in California Real Estate Law are required as follows:
- Employment Agreements: between Broker and Associate Licensee must be in writing.
- Contracts for the Sale of Real Property: authorizes Agent to find a Purchaser for Real Property must be in writing.
- Lease of Real Property: for term of longer than one year must be in writing. Longer than one year means 12 months and one day or longer, however, is common practice to have any leases of 12 months also in writing.
187
Ratification (Authorization) or Subsequent Ratification
creates an agreement through a contract subsequent to an action or the contract is written after the action.
188
Estoppel Agreement/ Implied Agency/ Ostensible Agency
created when person declares that a particular Agent is representing them in the performance of a job or duty. Once an individual states the Agent is representing them, they are committed to that Agent and may owe a commission if resultant transaction closes.
189
Valid Real Estate Contracts
- Consent
- Legal Purpose
- Consideration
190
Actual Authority
of Agent is specified in Agency Disclosure with specifics for the particular job in the Real Estate contract such as the Listing Agreement of the Purchase Offer. Duties include authority that is spelled out.
191
Inherent Authority
additional duties that the Agent needs to perform even though they are not specified in the Employment Contract. Such duties are referred to as due diligence or the work of the Agent to perform the duties required by the contract based on laws and customs.
192
Handling Deposits
By Agent/Broker is one of the most crucial duties of the Agent/Broker. When Buyer makes offer to purchase, consideration is required for contract to be Valid. Means that Buyer must provide a Deposit.
193
Deposit Money
any form must be deposited within three business days of the Offer being accepted into their Escrow Company's Trust Account or Brokers Trust Account. Deposit Funds may never be deposited into Brokers Personal Account or an account privately held by the Associate Licensee who wrote Purchase Offer.
194
Trust Fund Accounts
neutral checking accounts that are reserved for clients funds only. Broker/ Escrow Company can not have any of their own funds in the Trust with exception of $200, to prevent any of clients money from being charged bank fees and guarantee always sufficient funds to cover checks on behalf of client. Account must be balanced monthly. Individual Accounting for each client must be maintained separately using columnar account methods. Signer for account must always be available for immediate demand from the client for funds. Signer can be Broker of Record, licensee in Brokers employ, non-licensed employee that is bonded, or another Broker with written authorization to sign for the Broker of Record.
195
Co-Mingling
act of placing funds that belong to a client into a personal account or using the Trust Account for personal use. Other words is act of mixing personal funds with clients funds. Illegal and not only against BRE Rules & Regulations, but also felony under the Federal law Real Estate Settlement and Procedures Act (RESPA)
196
Conversion
act of converting clients funds into personal funds. Felony
197
Broker Agent Agreements
first Contracts Agents need to work with. One must have a Real Estate Brokers License to own a Real Estate Business: Real Estate Sales, Mortgage Brokerage, or Property Management.
198
Broker Agent Employment Contract
include form and term of payment. Typical form is commission, the Principal pays is first divided between the Agents' offices in Purchase Transaction and directly to Agent/Broker in other Real Estate transaction such as Mortgage Brokering.
199
Listing Agreement
between Seller/Principal and Broker. Associate Licensee cannot be direct representative of client. Broker Agent Contract defines terms of agreement between Agent and Broker.
200
items points of particular concern when working with Real Estate contracts
Adequate Description- of the property concerned
Terms-must be clear and concise
Identification of the Parties-to the transaction must be as clear as possible
Time-allowed for the performance of the contingencies and conditions of the contract must be included
