TN Real Estate 60 Hr course Flashcards

Question

Legal or Illegal Edwin, a licensed Tennessee broker, asked one of his unlicensed administrative staff, Susie, to hold two open houses for him while he was on vacation. Edwin compensated Susie for her time.

Answer 1

Because Tennessee law requires her to maintain these records for three years.

Answer 2

Review and approve transactional documents and agreements

Answer 3

Three years

Answer 4

TREC Power

Answer 5

Not a TREC Power

Answer 6

TREC Power

Answer 7

TREC Power

Answer 8

To compensate victims who have been awarded a judgment against a licensee who has violated license law.

Answer 9

The maximum amount that can be disbursed from the account against any one licensee, in a single transaction, is $15,000.

Answer 10

The Uniform Administrative Procedures Act

Answer 11

TREC has the authority to adopt rules to charge and collect fees. These fees cover the cost of administering Tennessee license law, and expenses related to the commission’s daily operations.

Answer 12

1. fee 2. fee 3. no fee 4. fee 5. fee 6. no fee

Answer 13

1. A complaint against a licensee, instructor, or an applicant is filed with the commission. 2. The commission determines whether the complaint has merit. 3. TREC sends a copy of the complaint to the respondent. 4. TREC conducts an investigation and may request additional evidence, if needed. 5. TREC will hold a formal hearing and determine discipline, if warranted.

Answer 14

1. The time and location of the hearing is established and the respondent is notified by mail or personal delivery. 2. The respondent stands before the commission as required by the hearing notice. 3. The commission members determine the course of action or discipline. 4. The respondent complies with the course of action or discipline.

Answer 15

The majority of commission members.

Answer 16

Trust monies must be turned over to over to the principal broker immediately upon receipt.

Answer 17

$700 to 14,000

Answer 18

$50 - $1,000

Answer 19

False there are nine.

Answer 20

False, they serve 5 years and must serve until a successor is appointed

Answer 21

False, seven members must have served as a licensed broker or affiliate broker for at least five years before their appointment. Two members must be members of the public who aren't real estate professionals.

Answer 22

They don't live in the same part of the state.

Answer 23

False, The form must be submitted if the applicant was convicted or sanctioned within the last 10 years.

Answer 24

False, The applicant and the applicant's principal broker must attend a hearing before the commission.

Answer 25

False. Only two years have to pass before the applicant is eligible for the exam (assuming the commission grants permission at the hearing).

Answer 26

The candidate must be affiliated with a nonresident firm and principal broker that hold an active TN real estate license.

Answer 27

To allow legal action to be taken against a nonresident licensee who has violated a regulation while practicing real estate in Tennessee

Answer 28

False. Each branch office must have its own real estate firm license.

Answer 29

False. Firm license renewal is every two years, just like other real estate licenses.

Answer 30

False. All education requirements must be completed prior to submitting the written request to the real estate commission.

Answer 31

False. the retiree must pay the license renewal fee prior to the license expiration date.

Answer 32

False Acquisition agents are exempt, but all other licensees should have a policy that can be obtained either independently (as long as it meets or exceeds minimum requirements) or through a program the real estate commission administers.

Answer 33

False. Although brokers are responsible for their licensees, unless they were aware of the violation, or demonstrated a failure to supervise, they can’t have their own licenses suspended or revoked as a result of someone else’s illegal actions.

Answer 34

Ture The commission automatically revokes the licensee’s license 60 days after the conviction unless the licensee requests, in writing, that a hearing be held during that 60-day period. If a hearing is held, the commission determines what sanctions to impose.

Answer 35

1. Sponsoring broker 2. Affiliate broker 3. Unlicensed Assistant The sponsoring broker takes ultimate responsibility for the actions of affiliated licensees and their unlicensed assistants. The affiliated licensee and the assistant are also responsible. TREC can issue civil fines against an unlicensed person who performs activities for which a license is required.

Answer 36

1. Provide a doctor's note to the commission. 2. Pay necessary renewal fees. 3. Provide a personal statement to the commission.

Answer 37

1. Provide proof of compliance with prerequisites or licensure conditions. 2. Pay a renewal fee.

Answer 38

1. Proof of compliance with any prerequisites or licensure conditions. 2. Pay a $50 penalty per each 30-day expiration period. 3. Pay an additional penalty of $100 per each 30-day expiration period, starting on the 121st day.

Answer 39

1. Requalify for licensure by completing necessary pre-licensing courses 2. Pass the state license exam. 3. Pay new license fee.

Answer 40

Someone who's working with a real estate licensee, but who isn't represented by him.

Answer 41

Someone who's a party to a transaction OR the person for whom the agent acts.

Answer 42

Someone who has agency representation with the real estate licensee.

Answer 43

Someone who uses or purchases a product or service

Answer 44

Someone who acts on behalf of someone else

Answer 45

Someone who's in a position of trust and loyalty

Answer 46

1. Handles all dealings for a specific piece of client property 2. Conducts duties of property managers 3. Enters into contracts on the client's behalf

Answer 47

1. Acts as an intermediary, but doesn’t make decisions or enter into contracts on the client’s behalf 2. Acts with limited authority on a client’s behalf 3. Covers most real estate transactions involving a buyer and seller

Answer 48

1. Empowered to do anything the principal could do personally 2. Holds the most authority of any agent 3. Considered an uncommon role for a real estate agent

Answer 49

1. Appointed by the brokerage's broker to represent one party in an in-house transaction 2. Designated to perform fiduciary duties to a client 3. Known also as an appointed agent or assigned agent

Answer 50

False. Edwin is a property manager who has been given authority through the property management agreement to act on the property owner’s behalf. This level of authority makes Edwin a general agent, not a designated agent.

Answer 51

False. Jamie is acting in the role of a special or limited agent, which means she has limited authority to act on her client's behalf.`

Answer 52

False. A universal agent has broad authority.

Answer 53

False. A transactional broker isn't an agent to any party.

Answer 54

Broker who is working with all parties as customers

Answer 55

Someone working under a broker to perform real estate activities

Answer 56

Agency relationships are limited to actions the client specifically instructs or initiates

Answer 57

Licensee serving as a client’s agent to the exclusion of other licensees affiliated with a broker

Answer 58

No, because implied agency doesn’t create agency in Tennessee.

Answer 59

General Property managers often serve as general agents because they are given the authority to act on the property owner’s behalf, and are responsible for handling all details regarding the owner’s property.

Answer 60

A customer

Answer 61

General A general agent has the responsibility of handling all details of a specific property. Property managers often serve as general agents.

Answer 62

Explain to a buyer the purpose of the seller's property disclosure.

Answer 63

The sellers are Peter's customers. The sellers are Peter’s customers; he doesn’t owe fiduciary duties to them, but he is required to treat them with fairness and honesty.

Answer 64

General Property managers are general agents, who, through the property management agreement, are given the authority to act on behalf of the property owner and are responsible for all of the dealings on a specific piece of property.

Answer 65

Farrah and Troy

Answer 66

Limited agent

Answer 67

Facilitator

Answer 68

No one, since Tom is a designated agent This isn’t a dual agency situation because designated agency creates a relationship between the licensee and client only.

Answer 69

Aarthi and Ram Tim is Lisa’s client; Gina and Reggie and Marcus and Marvin both talk with Lisa about the property, so could be considered customers. Aarthi and Ram made no contact with Lisa, so are most likely to be termed consumers at this point.

Answer 70

False. An agency disclosure is important, but it’s just informational. A signed, bilateral agency representation agreement is necessary to create an agency relationship.

Answer 71

False. Facilitators can’t imply that they represent customers, but they can offer some professional guidance.

Answer 72

Submit a contingency business plan to the commission

Answer 73

The client may owe a commission anyway.

Answer 74

Traditional agency agreement

Answer 75

Only confidentiality and accounting

Answer 76

Bilateral, written agreement between parties

Answer 77

The seat must be disclosed if the organization buys or sells property through the licensee’s brokerage.

Answer 78

Obedience Loyalty Disclosure Confidentiality Accounting Reasonable Care

Answer 79

No, because Hannah deposited the money into her personal bank account instead of an escrow account for the brokerage. No, because Hannah essentially used her client's funds to pay her car payment.

Answer 80

Prohibition against undisclosed representation when there’s personal interest

Answer 81

Limits on licensee powers and duties

Answer 82

Not Dual Agency

Answer 83

Dual Agency

Answer 84

Not Dual Agency

Answer 85

Confidential

Answer 86

Confidential

Answer 87

Confiential

Answer 88

Not Confidential

Answer 89

Confidential

Answer 90

Not Confidential

Answer 91

Dual-license dual agency

Answer 92

Designated agency

Answer 93

Single-license dual agency

Answer 94

Traditional agency

Answer 95

TN Designated Agency

Answer 96

TN Designated Agency

Answer 97

Facilitator

Answer 98

Facilitator

Answer 99

Facilitator assisting seller

Answer 100

Buyer’s agent

Answer 101

Seller’s agent

Answer 102

Facilitator assisting buyer

Answer 103

Disclosure that the buyer will not have the funds for the down payment unless they sell their current home.

Answer 104

She can't do this at her firm.

Answer 105

Follow the firm’s process for such events.`

Answer 106

Tammy: 3rd party Juan: 3rd Party Stacey: Not A 3rd party Alison: Not a 3rd party Pete: Not a 3rd Party Chad: 3rd Party

Answer 107

1. Disclosure of Material facts 2. Reasonable care and skill in the performance 3. Honesty and fair dealing 4. Prompt presentation of all written offers and counter-offers

Answer 108

Share your concerns about the roof if buyers show interest in the property.

Answer 109

\*Address and sometimes a legal description of the property \*Sale price \*Terms (such as all cash or subject to your client obtaining a mortgage for a given amount) \*Seller’s promise to provide clear title (ownership) \*Target date for closing (the actual sale) \*Amount of earnest money deposit accompanying the offer; whether it’s a check, cash, or promissory note; and how it’s to be returned if the offer is rejected—or kept as damages if your client later backs out for no good reason \*Method by which real estate taxes, rents, fuel, water bills, and utilities are to be adjusted (prorated) between buyer and seller \*Provisions about who will pay for title insurance, survey, termite inspections, and so on \*Type of deed to be given \*Other state-specific requirements \*A provision that the buyer may make a final walk-through inspection of the property just before the closing \*A time limit (preferably short) after which the offer will expire \*Contingencies

Answer 110

Simultaneous offers

Answer 111

An offer is considered a back-up offer when the seller already has accepted another offer. A back-up offer acknowledges that there is an existing offer and essentially says that if the first buyer cancels, then the new buyer is automatically in contract with the seller. Just as with a standard offer, all parties to the contract must sign a back-up offer for it to be effective. Note, too, that sellers can sign more than one back-up offer, as long as the seller makes the position of each party known.

Answer 112

1. Withdrawal: Either side may withdraw an offer at any time prior to its ratification. 2. Rejection: The party to whom the offer was made (seller) may reject it at any time prior to acceptance (unless the offer expires after a specified period of time). 3. Counter-Offer: By making a counter-offer, the initial offer is terminated and replaced by a new offer. In this case, the roles are reversed. The buyer now becomes the person accepting or rejecting the offer. 4. Lapse of time: Typically offers are automatically terminated if they are not accepted by a deadline, as established by the parties. 5. Death or insanity: The death or insanity of either party prior to acceptance will terminate an offer.

Answer 113

She can withdraw the offer before the seller accepts it.

Answer 114

Simultaneous offer

Answer 115

Third parties

Answer 116

Third parties

Answer 117

Third party to

Answer 118

Larry should tell the Buyers about the imminent factory closing and let them know it may affect the value of their property within a few years.

Answer 119

1. Exclusive agency 2. Exclusive right-to-sell 3. Open (aka non-exclusive)

Answer 120

An agreement that allows sellers to work with an agent while still trying to locate the buyer themselves. If the sellers find the buyer, the sellers don't owe a commission to the agent.

Answer 121

Allows the listing agent to list the property and receive a commission no matter who brings the buyer to the table.

Answer 122

An agreement that allows sellers to contract with multiple agents but only pay a commission to the agent who locates a buyer.

Answer 123

False The Agreement to Show Property form doesn’t create agency, and therefore doesn’t call out specific duties.

Answer 124

False The Agreement to Show Property form doesn’t state the seller’s responsibility to disclose property condition.

Answer 125

False Only Exclusive Right to Sell, Designated agency (RF101) and Exclusive Right to Sell, Seller’s Agency (RF102) provide the option for either flat fee or percentage compensation.

Answer 126

Exclusive right to sell Sellers Agenct

Answer 127

Exclusive Right to sell : Designated agency

Answer 128

1. Parties to the agreement 2. Definite expiration date 3. Property description 4. Listing price 5. Any terms the seller required 6. Clear statement explaining what entitles a broker to commission and how it will be calculated 7. Duties of the parties 8. Information on a carry-over clause, if applicable 9. Note about actions beyond the licensee’s scope

Answer 129

Responsibilities and Rights of the Parties

Answer 130

Seller duty

Answer 131

Not a seller duty

Answer 132

seller duty

Answer 133

Not a seller duty

Answer 134

seller duty

Answer 135

seller duty

Answer 136

hold harmless

Answer 137

1. When the property sells and closes 2. When the stated listing term ends, even if the property has not sold 3. By mutual agreement 4. By abandonment by the listing agent 5. At the seller’s request

Answer 138

1. Marketing and advertising expenses to date 2. Full commission if a ready, willing, and able buyer were found

Answer 139

Open listing

Answer 140

1. Meet with the buyer’s agent to receive the offer, or receive the offer by fax, email, etc. 2. Review the offer with your seller and explain any special requests or requirements. 3. Prepare a seller’s net sheet based on the current offer. 4. Assist the seller with a response, including a counter-offer, if appropriate. 5. Present any acceptance or counter-offer to the prospective buyer’s representative. 6. Repeat this process until all parties reach an agreement. 7. Manage the process throughout.

Answer 141

False This is a duty owed to a buyer client, but not a buyer customer.

Answer 142

True You want to ensure that a pre-qualification letter accompanies the offer to provide proof to the seller of buyer qualification.

Answer 143

Build trust

Answer 144

Show how agency has evolved to benefit buyers.

Answer 145

Have an in-person buyer presentation meeting. By inviting potential clients into the office, Amelia would build a rapport with the buyers, showing them how serious she is about helping them find a home, and make sure they’re serious, too.

Answer 146

Politely insist on a meeting. If a buyer refuses a face-to-face meeting, you shouldn’t take no for an answer. Tactfully insist on a meeting. If they still refuse, they probably aren’t worth your time.

Answer 147

Since they’ve had face time with the licensee, buyers are more likely to stay with that broker.

Answer 148

1. Exclusive designated 2. Non-exclusive buyer 3. Exclusive buyer 4. Non-exclusive designated

Answer 149

Buyer's Authorization

Answer 150

Exclusive buyer, designated agency The fact that Beth only wants to work with one person means that she’s looking for exclusive representation, and her interest in having the agency relationship confined to Sandra means that designated agency is the appropriate choice.

Answer 151

The buyer creates a relationship solely with the real estate licensee, who signs the agreement (broker or affiliate broker). This doesn’t create a relationship between the buyer and all affiliates in the brokerage. The buyer won’t seek representation from any other broker or affiliate. TAR Form RF141

Answer 152

The buyer is represented by just one broker, and the relationship includes all affiliates in the brokerage. This means that the buyer could be in a dual agency situation if an affiliate in the same office represents the seller in the same transaction. TAR Form RF142

Answer 153

Like Exclusive Designated Agency representation, this relationship is between a buyer and a single broker or affiliate broker, rather than with all affiliates working under the broker. However, the buyer retains the right to sign a non-exclusive representation agreement with other licensees from this or other brokerages. TAR Form RF143

Answer 154

The buyer has a relationship with the brokerage as a whole, but it isn’t exclusive. The buyer may agree to be represented by brokers and associate brokers from other firms. TAR Form RF144

Answer 155

1. Have a definite termination date. 2. Clearly state compensation details, including any retainer fee and commission information. 3. State the services the licensee is going to provide to the client. 4. State the limits to the licensee’s authority. 5. Include any other terms of the buyer representation relationship that the client and licensee have agreed upon.

Answer 156

1. Parties and the term 2. Type of Property 3. Client Duties 4. Carry-Over Clause 5. Agency / Agent Responsibilities 6. Agent Disclosure 7. Buyer's Authorizations / Designated Agent 8. Confidential Information Disclosure 9. Limitations and Expert Assistance 10. Exhibits and special Stipulations 11. Signatures

Answer 157

As the earth's surface extending downward to the center of the earth and upward to infinity, including permanently attached natural objects.

Answer 158

Includes everything in the definition of land plus all things permanently attached to it naturally or artificially. Artificial attachments are called improvements and include things such as fencing, buildings, walkways.

Answer 159

Real Property is sometimes legally referred to as "Land, tenements, and hereditaments." Includes Real Estate plus the interests, benefits, and rights automatically included with real estate ownership.

Answer 160

1. Possession: The right to occupy the property. 2. Enjoyment: The right to use the property in any legal way the owner desires. 3. Exclusion: The right to refuse others entry to, or use of, the property. 4. Control: The tight to determine how the property will be used by the owner, or by others. 5. Disposition: The right to dispose of by sale, lien, easement, lease, any interest in the property.

Answer 161

Personal Property

Answer 162

Adaptation to the land’s use

Answer 163

Intentions of the annexing party

Answer 164

1. Method of annexation 2. Adaptability of item to land's use. 3. Relationship of the parties 4. Intention in placing item on land 5. Agreement of the parties

Answer 165

(also known as attachment) refers to whether the item is attached to the property and how permanent the attachment is. You have to ask yourself whether the item can be removed without causing damage to the property to which it’s attached. If it can’t, it's considered real property.

Answer 166

Let’s say, for instance, you purchase an outdoor fireplace kit that involves stacking interlocking blocks together on a level surface on your outdoor patio. Later, when you decide to sell your house, you can take this fireplace with you, even if it weighs several hundred pounds, because it’s not attached to the property itself. If, however, to make the fireplace more secure, you decide to cement it to your patio. This would be a form of permanent attachment that now makes the fireplace part of the real property. Mrs. Goldman’s antique light fixtures were attached with wiring and screws to the walls and ceiling of the house, so they were real property. Her rosebushes were planted in the ground, so they were also real property.

Answer 167

is related to how the item is situated or adapted to the real property.

Answer 168

Even if your stand-alone fireplace were not cemented in, if it were part of an outdoor entertainment area and fit into it in such a way that other fixed items would have to be dismantled to remove the fireplace, it could be argued that the item had been adapted to the environment and must not be removed. Other items that fall under this category are garage door openers or the remote controls of other built-in features that are permanently attached to the property.

Answer 169

if there’s a dispute between the person who added the item and the person who removed it—is another element used to determine whether an item is real or personal property. In general, the courts tend to favor a tenant's take on an item over the landlord's, and a buyer over a seller.

Answer 170

A trade fixture is removable personal property that a tenant attaches to leased commercial premises in order to conduct business.

Answer 171

1. Essential for the tenant’s business operations 2. Detachable without damaging the property (or repairable) 3. Moved out within a certain period of time

Answer 172

Often, the intention of the party who installed the item is regarded as the most important consideration in determining whether the item should stay or go. However, a person's original intentions may change over time, or an item that was intended to be temporary may end up physically attached to the property, which can change the item from temporary to permanent.

Answer 173

Agreement is the simplest and first test: If the parties have agreed that an item will stay or go, then that agreement meets the legal test. To be safe, the agreement should be in writing. A bill of sale or agreement in the purchase contract meets these requirements. Buyers sometimes believe that items such as refrigerators, washers, dryers, and other appliances are fixtures when they’re actually sellers’ personal property. When these items are staying with the house, they should not only be listed in the sale contract but may need to be conveyed via a bill of sale. This eliminates any confusion between the parties.

Answer 174

Relationship of the parties

Answer 175

1. Method of attachment 2. Adaptation to the land's use

Answer 176

1. Method of annexation 2. Adaptability of item to land's use. 3. Relationship of the parties 4. Intention in placing item on land 5. Agreement of the parties

Answer 177

Agreement of the parties

Answer 178

Cultivated crops are called emblements and are considered personal property, even though they’re part of the soil.

Answer 179

Occurs when an item that was real property becomes personal property by detaching it (severing it) from the land.

Answer 180

This occurs when personal property is attached to real property, which makes it a fixture.

Answer 181

Don’t use this term unless you’re talking about a home built before 1976. (Honest, it’s a legal thing.) That was the year that HUD began using federal construction standards for this type of home, as enacted by Congress in the Mobile Home Construction and Safety Standards Act. Mobile homes are those constructed without any regulation, before 1976. Manufactured homes are built according to HUD construction and safety standards. Otherwise, they share the common elements of a home that can be transported due to its attached chassis, tongue, axles, and wheels.

Answer 182

This is a home that’s constructed with a permanent chassis and wheels because it’s made to be transported. After it’s constructed in a factory, it’s towed to its destination and anchored to the ground. In theory, it can be removed and towed to a different site because the chassis, tongue, axles, and wheels are still attached.

Answer 183

A modular home is not actually in the same class as a manufactured home, but we’ll define it here because it’s easy to confuse the terms. A modular home is built in pieces off-site, then those pieces are transported to the spot where it will spend the rest of its days, and the build is completed there. A modular home isn’t built with transportation in mind, and it therefore doesn’t include a chassis or wheels.

Answer 184

1. When the the parts that make it transportable (the tongue, the axles, and the wheels) must be removed, 2. When it has been permanently affixed to the land. 3. The owner must then take any state-specific steps that are required to officially change the home’s classification with the appropriate authorities.

Answer 185

They do this by requiring that a manufactured home have either an Affidavit of Affixation or a certificate of title.

Answer 186

When the real estate and the manufactured home are owned by the same owners, and the manufactured home is affixed to the real estate, the owners may record an Affidavit of Affixation. This certifies that the manufactured home is, in fact, real property. One caveat: if the land is owned by someone other than the owner of the manufactured home, the owner must use a certificate of title, even if the home is affixed to the land.

Answer 187

A manufactured home not affixed to the land or owned by someone different than the landowner will have a certificate of title. In this case, the manufactured home is considered to be personal property and not real estate.

Answer 188

1. Scarcity: It’s true what they say—you can’t make more land. In addition, not all land is suitable or available for building. If land is scarce, its value will likely be greater than if it is plentiful. 2. Improvements: Usually, the term "improvement" refers to making something better. In the real estate world, improvements are structures, such as buildings, sheds, barns, fences, roadways, etc., that are placed on land. The condition and types of improvements on a property can impact value either positively or negatively. Improvements can also positively or negatively impact the value of surrounding properties or an entire community. For example, something as simple as a rundown house in a neighborhood can have an adverse impact on the value of neighboring properties. Proximity to commercial or industrial properties can adversely impact the value of entire neighborhoods or communities. 3. Permanence of investment: The cost and nature of infrastructure improvements (roads, underground water, wastewater, natural gas, or electric installations) are sizeable and can't be easily reversed, and these infrastructure investments have relatively stable returns over time. Thus, these types of improvements represent "permanence." 4. Location or area preference: A property's value is in large part dependent on its situs (location). For example, land on one side of a river may be perceived to be more valuable than land directly across the same river.

Answer 189

1. Immobility: The geographic location of land is fixed; it can never be changed. 2. Indestructibility: While improvements may deteriorate over time, the land itself cannot be destroyed. 3. Uniqueness: One parcel (a piece of land) will not be exactly like another. This is the concept of non-homogeneity.

Answer 190

1. disposition : which gives the owner the right to sell or convey the property 2. exclusion : which provides the owners with the right to decide who may or may not access the property (owners can exclude others from their property) 3. enjoyment : which gives the owner the ability to use the property in any legal manner 4. possession : which simply means that the property is owned by the title holder 5. control : which allows the owner to control the use of the property, including how others may use the property

Answer 191

include both land and water rights. This can be particularly important for land in a part of the world where water is scarce, as well as in situations where water is necessary for agriculture and farming.

Answer 192

AKA: Mineral Rights rights pertain to the right to use underground resources such as natural gas and minerals.

Answer 193

involve the right to use the open space above buildings up to an elevation established by law. Think about a piece of property with a stunning view of a mountain or lake. Now imagine a huge skyscraper is built right in front of that property’s view. If the property owner doesn’t have air rights to the area around his property, that skyscraper could really affect the property owner’s enjoyment!

Answer 194

water rights include the right to draw water from underground resources (such as wells) for the landowner's use.

Answer 195

rights are common law rights granted to landowners whose land abuts a natural flowing body of water, such as a river or stream. To remember this, keep in mind that riparian and river both start with R. Each state has laws governing riparian rights, but in the absence of other laws, landowners own the land to the exact center of a non-navigable waterway and to the edge of a navigable waterway. A navigable waterway is defined as one that’s large enough to support commercial boat traffic. Landowners may use the water but may not divert it to deprive those downstream of its use, or contaminate it in any way.

Answer 196

rights are the rights of landowners whose lands border commercially navigable closed bodies of water, such as lakes and oceans. To remember this, recall that both littoral and lake begin with L. State laws govern littoral rights. Absent other laws, owners with littoral rights have unrestricted use of the water and own the land up to the average high-water mark. Landowners may use the water but may not divert it to deprive others of its use or contaminate it in any way.

Answer 197

The process by which water carries rock, sand, and soil and causes land build-up

Answer 198

New deposits of land that are the result of accretion (common at the mouth of large rivers)

Answer 199

Loss of land by sudden large-scale changes in water flow

Answer 200

Gradual loss of land due to a natural force

Answer 201

Gradual receding of water, which uncovers new land

Answer 202

1. Law of Contracts 2. General property law 3. Law of agency 4. State-specific license laws 5. Landlord-tenant laws 6. Consumer protection laws

Answer 203

The law of contracts governs the use of contracts, and the required elements to make a contract valid. It also covers what happens in the case of a breach of contract, and how contracts may be terminated. You’ll often see court cases cited in a discussion of contract law because the courts are used to determine contract validity, legality and enforceability. An important point to remember about contracts: You are not an attorney and may not legally draft a contract. Your role as a licensee is limited to the use of legally approved forms and standard clauses.

Answer 204

General property law covers the forms of ownership and tenancy in real property, and its distinction from personal property within the common law legal system. It also covers the rights of ownership and tenancy and the government’s rights and authority under eminent domain and various police powers.

Answer 205

The law of agency is all about your role relating to your clients. Agency law covers how an agency relationship is created, and the duties of an agent to the principal.

Answer 206

State-specific license laws relate to the requirements of a licensee when performing real estate activities within the state. License law, continuing education requirements, supervisory requirements, and prohibited conduct are all covered by license law.

Answer 207

Landlord-tenant laws are those that—not surprisingly—address the landlord-tenant relationship. They establish everything from the duties and responsibilities of each party to the state laws for handling lease agreements to fair housing considerations for tenants and other tenants’ rights issues.

Answer 208

Consumer protection laws are those established to ensure that the licensed professionals in a state treat consumers (including their customers and clients) with fairness. These laws (and their associated rules) are designed to protect consumers from unfair or unethical business practices, fraud, misrepresentation, and more. In real estate, the state real estate commission or department is often charged with one primary duty: ensuring that the professionals it licenses have the appropriate degree of professionalism, education, and training, as well as strong moral character and a history free of crimes involving moral turpitude and/or felony convictions before those professionals are granted their real estate licenses.

Answer 209

Prohibits monopolies and collusive actions that result in unreasonable restraint of trade, such as price fixing.

Answer 210

Supports the Sherman Act by prohibiting mergers or acquisitions that would unreasonably reduce competition or create monopolies.

Answer 211

Created the Federal Trade Commission (FTC), an agency with the purpose of preventing unfair methods of competition in commerce.

Answer 212

Per se means that guilt is established on the face of the circumstances; no need to prove the entities involved profited from the act, or that there was an intent to act illegally.

Answer 213

1. Federal Trade Commission 2. Department of Justice 3. State Attorney General

Answer 214

1. Prison time 2. Restitution to the victims 3. Fines 4. Monetary damages

Answer 215

Penalties for violating antitrust laws are very severe. According to the Federal Trade Commission, fines can be as high as $100 million for a corporation or $1 million for an individual and may include prison terms of up to 10 years. The Sherman Act permits (in certain cases) the maximum fine to be increased to twice the gain or loss involved. In addition, collusion among competitors may constitute violations of the mail or wire fraud statute, the false statements statute, or other federal felony statutes, all of which the Antitrust Division prosecutes. In addition to receiving a criminal sentence, a corporation or individual convicted of a Sherman Act violation may be ordered to make restitution to the victims for all overcharges. Victims of price-fixing conspiracies may also be awarded up to three times the amount of damages suffered in a civil suit. And how’s this for punishment? If your brokerage is found guilty of violating antitrust laws, it may be subject to court-ordered supervision for up to 10 years.

Answer 216

The interest in a freehold estate can be passed down to heirs. which is called a fee simple estate, or it can be for the lifetime of the individual, which is called a life estate. Let’s take a look at the differences between fee simple and life estate.

Answer 217

A type of Freehold Estate. The interest in a freehold estate can be passed down to heirs, which is called a fee simple estate, or it can be for the lifetime of the individual, which is called a life estate. Let’s take a look at the differences between fee simple and life estate. A fee simple estate conveys the most rights possible—the whole bundle of rights. Fee simple conveys all the rights of ownership including use, disposition, and inheritability.

Answer 218

A type of Freehold Estate. But it doesn’t convey the entire bundle of rights. Owners hold the estate for only their lifetime, or sometimes for another named individual’s lifetime.

Answer 219

A tenant’s right to occupy a property is known as a leasehold estate. Leasehold estates are created by a contract between the owner of the real estate (known as the lessor) and a tenant (known as the lessee). The terms of the contract transfer the right to possession and use of the owner’s property to the tenant, usually for a specified period of time. The period of time the lease covers, the amount the tenant will pay for the right to use the property, and the rights and obligations of both parties are also established in the lease contract.

Answer 220

1. Estate for years 2. Estate at will 3. Estate at Sufferance 4. Periodic Estate

Answer 221

This is a leasehold of definite duration that terminates automatically and is inheritable, meaning that if either party to the lease (usually the owner or the tenant) dies, the lease is not automatically terminated. “Estate for years” is a bit of a misnomer—it simply means definite duration, with a specific start and stop date, and can be for any length of time, even days or weeks.

Answer 222

This leasehold estate (aka “tenancy at will”) is either an oral agreement or one that has no specific ending date. It may be terminated at will by either party, and it’s not inheritable. At the death of either party to the lease, the leasehold automatically terminates.

Answer 223

This type of estate (aka “tenancy at sufferance”) is one in which a tenant continues to occupy property after lawful authority has expired. The tenant is known as a holdover tenant. If a tenant under a lease stays beyond the lease’s terms, and the landlord continues to accept rent from that tenant, that tenant becomes a month-to-month tenant. Alternatively, the landlord may remove the tenant by initiating a holdover proceeding, which is used to evict a tenant on any grounds other than the non-payment of rent, such as staying beyond the term of the lease or violating terms of a lease or rent laws.

Answer 224

This leasehold estate (aka “periodic tenancy”) is periodic (e.g., six months) and automatically renews itself for successive tenancy unless one party terminates. This is also an inheritable leasehold estate. The period involved may be any negotiated period of time.

Answer 225

1. Fee Simple Absolute 2. Fee Simple Defeasible

Answer 226

absolute (most commonly used in Tennessee, it means ownership without any conditions or limitations)

Answer 227

Contains a condition of ownership; if that condition is violated or not met, the ownership will revert to the original owner, or to a named third party.

Answer 228

1. Conventional Life Estate 2. Legal Life Estate

Answer 229

most common form of life state in Tennessee, created by the property owner who grants the property to an individual for a lifetime.

Answer 230

A legal life estate is an involuntary life estate created automatically by law when certain events occur. Although other forms of legal life estate exist, in Tennessee, a legal life estate is always a homestead. This means a life estate in the property as long as it is held by the family. Tennessee’s homestead exemption act allows state residents who meet the minimum residency requirements to remain and keep their property during tough economic hardships. As long as the home is occupied by the owner's immediate family, creditors can’t seize the home for nonpayment of debts.

Answer 231

1. Special limitation with possible reverter 2. Condition subsequent with right of re-entry

Answer 232

With this fee simple defeasible estate, once the trigger occurs, the property automatically reverts to the original owner.

Answer 233

This type of fee simple defeasible estate is one in which the estate doesn’t end automatically if the stated event or condition occurs, but the grantor can reclaim ownership by taking action.

Answer 234

1. Ordinary with remainder or reversion 2. Pur autre vie with remainder or reversion

Answer 235

With an ordinary life estate, after the life estate holder dies, the property reverts to the original owner (reversion), or ownership rights are transferred to another person that the original owner has named (remainderman). At the end of a life estate, the reversionary owner or remainderman hold a fee simple estate.

Answer 236

Pur autre vie is a legal term for a different type of life estate. Pur autre vie means “for another’s life.” The holder of this life estate remains in possession with all the rights of a life estate until the death of another person who was named when the life estate was established.

Answer 237

A different form of life estate, not practiced in Tennessee is dower or curtesy, sometimes called marital life estates. Dower gives the widow life estate rights on the death of her husband, and curtesy gives the widower life estate rights on the death of his wife. These life estates were abolished by Tennessee code 31-2-102 in 2010.

Answer 238

This is a legal term, which means “for another’s life.” The holder of the estate remains in possession with all the rights of a life estate until the death of the person named when the life estate was established.

Answer 239

At the end of a life estate, this is the person who will then hold a fee simple estate.

Answer 240

When another person isn’t named as a remainderman in a life estate, the estate reverts to the original owner at the end of the life estate.

Answer 241

An owner reserves a life estate for themselves when conveying a property.

Answer 242

Because a life estate is essentially “borrowing” someone else’s prop- erty for the duration of a lifetime, the life tenant is required to maintain the property, pay property taxes, etc.

Answer 243

Condition subsequent with right of re-entry

Answer 244

Periodic estate

Answer 245

Conventional and legal life estates

Answer 246

Life estate

Answer 247

Fee simple absolute

Answer 248

Fee simple absolute

Answer 249

Leasehold estate

Answer 250

Special limitation with possible reverter

Answer 251

Estate at sufferance

Answer 252

One person owns the property, and all other interests are severed.

Answer 253

Property with ownership by more than one person, also called concurrent ownership.

Answer 254

A form of ownership that includes an undivided interest in the property; owners may sell, convey, mortgage or transfer their interest without the consent of co-owners Property with ownership by more than one person, also called concurrent ownership.

Answer 255

1. Tenancy in common 2. Joint tenancy 3. Tenancy by the entirety

Answer 256

Each person is entitled to possession of the whole. If one dies, that person’s ownership is inheritable and doesn’t necessarily pass to the other owner(s). No right of survivorship; when a co-owner dies, interest can pass according to decedent’s will; beneficiary then becomes a tenant in common. Deed (owners may each have their own) may contain the words “tenants in common;” if no specific wording is included, almost all states assume tenants in common is the co-ownership type; interest assumed to be equal between co-owners unless stated otherwise, but equal interest isn’t required. Co-owners can request court-ordered partitioning of property to terminate tenancy in common. Undivided (each co-owner has the right to possess the entire property, but can’t claim or exclude others from a specific portion of the property); each owner can sell, trade, gift, etc., own interest without other owners’ consent.

Answer 257

This is defined as equal ownership with undivided rights of possession and requires unity of four separate conditions: All owners must have the same type of interest in the property, all must receive their title at the same time from the same source, all must have the same percentage of ownership, and all must have the right to undivided possession in the property. Joint tenancy includes the right of survivorship, meaning when one joint tenant dies, that person’s share automatically goes to the other surviving joint tenant(s). When there are only two joint tenants left, the death of one of the owners terminates the joint tenancy, and the survivor takes title in severalty (sole ownership). Joint tenancy includes right of survivorship; when a joint tenant dies, interest passes to other joint tenants. When there are only two joint tenants left, the death of one of the owners terminates the joint tenancy and the survivor takes title in severalty (sole ownership). May be created by a will; otherwise deed must identify each owner as a joint tenant Partition suit may jeopardize joint tenancy. Undivided (each co-owner has the right to possess the entire property, but can’t claim or exclude others from a specific portion of the property); owners can’t sell, trade, gift, etc., interest without other owners’ consent.

Answer 258

This type of tenancy also has the right of survivorship. Only available to married couples, this form of ownership also includes unity of time, title, interest, possession, and marriage. Key to this form of ownership is that creditors of one spouse can’t attach liens to or sell the interest of the debtor spouse. Only creditors with claims against the couple may attach and sell the interest of the property owned in this manner. Also, one spouse can’t transfer interest in the property without the consent of the other spouse. Tenancy by the entirety can’t be reduced to tenancy in common or joint tenancy. Such a change of ownership would require divorce, an annulment, or for the couple to amend the title. Assumed in some states when a married couple purchases real estate; recommended wording: "husband and wife as tenants by the entirety with the right of survivorship” Divorce or annulment terminates tenancy by the entirety; co-owners become tenants in common. Undivided; neither spouse can will, sell, trade, gift, etc.

Answer 259

Joint tenants may sell their personal share of ownership; however, the buyer of that share does not become a joint tenant, because the required four unities do not exist. The new buyer didn’t receive a title at the same time as the other tenants, so the unity of time is destroyed. Therefore, the new owner is a tenant in common. The remaining tenants continue as joint tenants, with the right of survivorship shared between them. The new buyer, as a tenant in common, has an inheritable share.

Answer 260

Remember that in a tenancy in common, each person is entitled to possession of the whole. But what if you hate your co-tenant(s), or simply hate co-tenancy? Each tenant has the right to sell his own share, but the resulting tenancy will still be a tenancy in common situation. In order to terminate a tenancy in common entirely, you may need to bring legal action to have the property partitioned, which would allow each tenant to have a specific, divided portion (partition) of the property exclusively. In the case of an equitably divided piece of land, each tenant would receive title to a separate tract according to that person’s share of interest. In cases where it’s impossible to do an equitable split, a court may order the sale of the property and determine the appropriate share of proceeds to be distributed to the tenants in common.

Answer 261

1. Possession only

Answer 262

1. Time 2. title 3. Interest 4. Possession

Answer 263

1. Time 2. title 3. Interest 4. Possession 5. Person

Answer 264

1. Arizona 2. California 3. Idaho 4. Louisiana 5. Nevada 6. New Mexico 7. Texas 8. Washington 9. Wisconsin

Answer 265

Contrary to common belief, community property doesn’t have to be titled in both spouses’ names. In states that have community property rights, all property acquired by either spouse during their marriage (with the exceptions of property that was gifted, inherited, and in some cases the result of personal injury recovery, which are all considered “separate property”) is considered community property regardless of which spouse’s name is on the title. Both partners may also have other properties purchased before the marriage that they own individually (in severalty), but any property purchased during the marriage is owned equally, regardless of whether one or both spouses are on the title.

Answer 266

Joint tenancy Joint tenancy does not include the right of inheritance; ownership interest passes to the remaining tenants once a tenant dies.

Answer 267

Barbie and Midge each own 50%. Joint tenancy includes the right of survivorship, so Ken’s interest will pass to the other tenants. But because Midge bought in later than the others, she isn’t considered a joint tenant. Ken’s share will therefore pass entirely to Barbie.

Answer 268

Joint tenancy This is joint tenancy. Tenancy by the entirety requires a fifth unity (person). If one joint tenant dies, that tenant's interests go to the remaining joint tenants. If only one tenant is left, that tenant owns the property in severalty.

Answer 269

Tenancy in common With tenancy in common, if one owner dies, that person’s ownership is inheritable. It doesn't automatically pass to the other owners as it would with joint tenancy.

Answer 270

Joint tenancy Joint tenancy provides equal ownership shares with undivided possession rights and requires four ownership unities: time, title, interest, and possession. Joint tenancy includes the right of survivorship.

Answer 271

Lucas and Tom Joint tenants are allowed to sell their interests, so Tom became a property owner when Ivan sold his interest. However, joint tenancy is not inheritable but instead includes the right of survivorship. Trace's and Chad's interests passed to Lucas and Tom.

Answer 272

A trust is a special relationship called a fiduciary relationship that is created between the trustee and the trustor. The trustor is the person who creates the trust. The trustee is the person who carries out the trustor’s wishes. Trusts are very common and very accommodating. Any assets may be held in a trust, and anyone may set up a trust naming anyone, including the person who sets up the trust, as beneficiary, trustee or both. A trustor, grantor, or settlor conveys title to a trustee.

Answer 273

Is the person who carries out the trustor's wishes.

Answer 274

Living trust is created during a person’s lifetime and is often used when minor children are involved. The property may be placed within the trust for their use in their lifetime or when they reach the age determined by the person who creates the trust. In the meantime, the trustee will manage it for them according to the terms of the trust. A living trust differs from a living will in that a living trust is established to convey property, whereas a living will is created to dictate terms of care in the event the trust maker becomes incapacitated.

Answer 275

1. Trustor 2. Trustee 3. Beneficiary

Answer 276

To create a trust, the trustor usually will convey property to the trustee with instructions for how the trustee is to hold and manage it on behalf of the beneficiary (it's also possible to deed the property directly to the trust). These instructions are called the trust agreement. Often the trustor and trustee will be the same person until the trustor dies, in which case the new trustee is named within the trust. In the case of a married couple, the spouses may transfer real and personal property into a trust and then name themselves as joint trustees with rights of survivorship. After the death of the second spouse, the estate is distributed to the beneficiary or beneficiaries named in the trust. The creation of a trust is a legal process that is best handled by attorneys. It’s not inexpensive to establish a trust, but it can save money and a great deal of hassle in the long run by the avoidance of probate. The costs to maintain the trust include payment for the trustee for minimal fees and operating expenses.

Answer 277

Is one created according to the terms of the will of a deceased person. Unlike living trusts, testamentary trusts do not avoid probate.

Answer 278

1. Cheaper than probate, which reduces beneficiaries’ pay-out by 5–10%. 2. Faster settlement process than probate. Probate = one to two years Trust = two to three weeks 3. Remains private (probate records are public). 4. You retain control of your assets, and can protect your assets in case of divorce. 5. No additional government forms to file because income is reported on a 1040. 6. Low maintenance. Manager ensures that assets are titled in the name of the trust, rather than a personal name. No reports or reviews necessary. 7. Can designate special gifts (if you want certain items to go to certain individuals).

Answer 279

A land trust is similar to other trusts except that it is formed specifically to hold real estate—real property is the only asset within the trust. Usually the person who establishes the trust (the trustor) is also the beneficiary. Land trusts may be created at the time real estate is purchased or after it has been acquired. Under the trust, the owner (who is usually the beneficiary) directs a fiduciary (usually a professional such as an attorney or a third-party trust company) to hold title to the real estate and provides instructions for management and control of the trust during the trustor's life and for disposition upon the trustor’s death. The trustee must abide by the scope of authority outlined in the trust agreement between the trustor and the trustee. Most land trusts are revocable, which means that the trustor may manage the trust, receive any income or other benefits from it, change the terms of the trust agreement, change trustees, or terminate the trust. Upon the trustor's death, however, an existing land trust generally becomes irrevocable (permanent). Land trusts generally continue for a specified term, such as 10, 20, or 30 years. The trustee must either extend the trust term when it expires or sell the real estate and provide the proceeds to the beneficiary.

Answer 280

1. Privacy: The identity of the trust owner is not made public. This can be helpful, for instance, if someone wants to acquire several parcels of land without raising inquiries. Property can be purchased and held in the name of the trustee. In most cases, the trustee may reveal the trustor's identity without the trustor's permission if under court order or subpoena. 2. Ease of conveyance: A beneficiary interest in the land can be conveyed without having to go through the formality of a deed. Beneficiary interest is considered personal property, even though what the interest conveyed is in real property.

Answer 281

The land trust will prevent a bank from accelerating the mortgage note when the property is put into an LLC. Land trusts are often set up with the property owner as the trustee, or with a third party as the trustee and the property owner as a beneficiary. Once title is held in the trust, whether or not the lender learns about it won't impact the property owner. Because the trust is a grantor trust that's revocable, lenders will typically accept that the transfer was done for estate planning. In fact, it's protected under the Garn St. Germain Act (the federal depository act) that prevents lenders from accelerating notes whenever there's a transfer into a grantor trust. What an investor may choose to do at that point is assign the property owner's interest in the land trust to the LLC. In a title search, then, would find that the title to the property originally existed in the owner's name and then it was transferred into a grantor trust. And, if a lawsuit develops, the property owner would have the protection of the LLC because the liability “flows down.” That means it flows from the trust to the LLC, and that's where the liability stops. Land trusts may also be useful if: The state will impose a dock stamp. Moving the property to an LLC would create a taxable event. When a property is paid off, it's unencumbered, and the owner desires anonymity. Each state has different rules and regulations around land trusts, so they do not all behave the same. A property owner wishing to use a land trust should make sure the trust is created specifically for his or her state, and probably get the help of a legal professional, as well.

Answer 282

Ownership in Severalty meaning they have all the rights.

Answer 283

tenancy in common agreement. With a tenancy in common, either of you may sell your interest, or your interest may be passed down to heirs. This type of ownership does not have the right of survivorship, which means that the other owners don't automatically get your share of ownership upon your death. joint tenants, which would include the right of survivorship. If you die, your partner gets full ownership, or if your partner dies, you get full ownership.

Answer 284

conveys personal liability to partnership debts that exceed the partnership assets. General partners are jointly and separately liable for these debts. So if you are in business with one of your partners and he absconds with all of the partnership funds, leaving behind creditors, you are liable to those creditors, as are any and all partners. Creditors don’t care who took the money—they will hold all partners responsible.

Answer 285

always has one or more general partners who assume liability. The other partners are limited in their liability related to the amount of money they have contributed. Limited partners are also limited in authority. To protect their immunity from partnership debts, they may not participate in managing the partnership. Limited partners who participate in managing the partnership may become generally liable. Limited partnerships are a common form of holding real estate. Usually, the general partner is the one who discovers the investment opportunity and brings in limited partners for their funds. The general partner will do the work, and the limited partners will profit or see a loss from their investments according to the partnership agreement, and the success or failure of the project. Principals in an LLC may select many different titles such as President, CEO, Owner as long as the title is not untrue or misleading.

Answer 286

are defined by law. Corporations have tax rates separate from individual tax rates. The articles of incorporation is a document that creates the corporation. Corporations can receive, hold, and transfer title to real property, and may give, or hold a mortgage to secure a debt owed to the corporation. Property owned by a corporation is owned in severalty. he corporation’s bylaws give authority to named individuals who may sign documents on its behalf.

Answer 287

Corporations may be Subchapter S (permitted to function as a corporation but taxed as a partnership). Subchapter S corporations do not pay corporate income taxes, and so they avoid double taxation. In addition, shareholders in a Subchapter S may deduct losses on their income taxes representing their share of the corporation’s losses.

Answer 288

C corporation, which must pay corporate income tax to the IRS. The shareholders in a C corporation see double taxation: once at the corporate level and again at the shareholder level.

Answer 289

are favorable forms of business in terms of taxation and liability. Owners of the LLC or LLP (who are called members, not shareholders) are not personally liable for LLC/LLP obligations, are taxed as partnerships, and do not require a general partner.

Answer 290

Syndicates are groups of investors pooling their money in pursuit of a single investment goal, such as buying an office building. The syndicate is organized by a sponsor who does the investment legwork and property management and who asks many investors to join in the real estate investment, with everyone sharing in the profits. The sponsor can be an individual or a business organization. Syndicates sometimes meet the definition of “dealing in securities” and therefore must adhere to the rules and regulations of the Securities and Exchange Commission.

Answer 291

An investment is a security, as defined by the Federal Securities Act of 1933 if it is: An investment of money A group enterprise Intended to make a profit, and that profit is solely derived from the management effort of others

Answer 292

Are not a business enterprise, per se, but a temporary organization formed by two or more parties to invest in real estate (or other investments). Participants may be corporations, partnerships, LLCs, or other entities. The parties may hold title as joint tenants or tenants in common.

Answer 293

A condo is homeownership in a convenient, secure package. It's a single-family dwelling, but there’s no yard work, no shoveling snow in the winter, and no salesperson or political canvasser knocking on your door just when you sit down to the game. That’s because the building is secure, and the upkeep and maintenance of the common areas are somebody else’s headache. Because they’re so low-maintenance, condos can also make good investments—in the right market. Some condos allow you to lease out your unit to non-owner tenants. You could buy it, and then rent it out to someone else while you go elsewhere. Many owners like that condominium ownership is ownership in real property— ownership rights are fee simple, which is the biggest and broadest form of ownership available. The buyer completes an application and arranges financing, just like the purchase of other types of real property. With a condo, you own real estate—basically, the unit, and all of the space inside the unit, belong to you, and you also share ownership in the common areas. The owner of a condominium property must submit the property into the condominium system by recording with the registry of deeds a master deed or declaration.

Answer 294

With co-op ownership, a non-profit cooperative corporation owns the land, buildings, and all rights and interests in the corporation. Individual shareholders (unit owners/residents) don’t own real estate, they don’t hold title to the property, and they don't receive a deed for the unit. Instead, they own corporate shares, which are considered personal property. Unlike shares in a stock, however, owners can’t just divest themselves of their shares. It’s a bit more complicated than that. This arrangement means co-op ownership isn't fee simple ownership, like condo ownership would be, or a traditional real estate purchase. Residents each have a proprietary lease (a lease from the corporation) for the units they occupy. The lease provides unit owners with the right to use the property, to live there, and to share in the benefits of living there. Co-op buildings may or may not have amenities similar to condominium buildings. Residents usually pay a monthly or annual maintenance fee to the board of directors that manages the cooperative. The board is responsible for all corporate financial and policy decisions but may choose to hire an outside management company. Co-op boards operate like most corporation boards. They must follow the rules established in the bylaws and the articles of incorporation, and they have to be good stewards of the shareholders’ money and interests. Sometimes, co-op residents share the same interests and values. Co-ops are rare in many parts of the United States.

Answer 295

Townhome and townhouse are two names for the same thing. Townhome owners share one or more walls with their neighbors, but they typically have no neighbors above or below. Some townhomes have an attached garage or assigned parking spaces. Ownership of a townhome typically includes ownership of both the structure and the parcel of land associated with the structure. It's important for townhome owners to have a clear understanding of what is required of them as owners and what, if any, restrictions are placed on the property by a homeowners association.

Answer 296

1. Townhome: The owner owns both the structure and the land. 2. Condominium (condo): The owner owns a unit within the structure but no land. Condo owners own an interest in the common elements (or common areas). 3. Cooperative (co-op): Shareholders don't own any real estate, just shares in the corporation. 4. Timeshare: Ownership of property allows the purchaser to use it for periods of time during the year. 5. Planned unit development (PUD): Detached home and townhome owners own both the structure and the land and have responsibility for shared common areas.

Answer 297

1. The Tennessee Horizontal Property Act 2. The Condominium Act

Answer 298

1. The Tennessee Horizontal Property Act, which applies to condominium developments built prior to 2009, refers to condominium units as “apartments.” 2. The Condominium Act, which applies to condominium developments built after January 1, 2009 (but in some cases refers back to provisions of the Tennessee Horizontal Property Act), only cursorily defines units at Tenn. Code § 66-27-203(23): “… a physical portion of the condominium designated for separate ownership or occupancy, the boundaries of which are described in the Declaration.”

Answer 299

A three-dimensional volume defined in the master deed or declaration. Condominium owners don’t own the property on which the condominium resides. They own the air space between the walls and ceiling.

Answer 300

The master deed defines what’s included with the units, and what’s shared as part of the common area. Usually, a unit will be defined top to bottom as all of the interior space, from the outer surface of the finished ceiling to the subfloor, and side to side between the interior walls. Common areas, then, would include the exterior features such as roof, HVAC/plumbing systems, yards, etc. often written in legalese

Answer 301

The declaration sets forth the rules and rights of ownership. There may be rules such as a no pets policy, or limits on activities (such as a home based business) that would impact ownership use. often written in legalese

Answer 302

Set forth the rules of ownership, but involve more detail than would be found in a declaration/master deed. The bylaws may be changed from year to year based on the association’s decisions. Changes to the declaration would be done at the county or state level. Some condominium terms are used differently in different areas, so be sure you know the commonly accepted terms and their definitions for your area. Generally, the declaration will carry more legal weight than the bylaws.

Answer 303

1. Declaration 2. Master deed

Answer 304

MUD is an acronym used to indicate a mixed-use development, which typically is a high-rise development in the form of residential units above retail, entertainment, and commercial spaces. MUDs are convenient to shopping and mass transit and work well for people who want to reduce their reliance on cars.

Answer 305

AKA PD-H Is a planned unit development, which is also mixed use, with both residential and commercial in the same building or group of buildings. PUD developers have to file detailed plat maps with their planning boards that show all of the uses they’re going to have in the development, because they’re planned under special zoning ordinances. A PUD may be comprised of condominium buildings, detached homes, or townhomes. These owners are also responsible for the maintenance of shared common areas. PUDs, especially those made up of detached homes, are typically designed to provide more units in a smaller amount of space than would be typical for a traditional neighborhood.

Answer 306

A timeshare property is one in which there is multiple shared ownership or multiple shared use of a piece of real estate. More than a hotel room, timeshares are condominium-style units that typically consist of one to three bedrooms, multiple bathrooms, a full kitchen, and a living room. They’re nearly always furnished, and amenities such as indoor and outdoor swimming pools are common. Timeshares are nearly always found in resort location.

Answer 307

Is fee simple ownership, conveying all the rights of ownership. Timeshare estates are pieces of real estate owned by multiple, unrelated individuals who, in addition to their ownership rights, each hold the right to occupy the dwelling unit in one- to two-week intervals during the year. If there were 52 owners, each owning the right to use the unit for one week a year, each would own 1/52 of the property. Such an estate may be held as a tenancy in common (in which a separate agreement must be executed to establish the specific time period for use) or an interval ownership (which is an estate for years in which the buyer has ownership of and title to the unit for the time selected and the number of years designated upon purchase). Like other forms of owned real estate, timeshare estates can be sold or passed down to heirs. Some buyers of timeshares purchase them not simply for their vacation value, but for their anticipated appreciation over time. Any investment carries risk, however, and timeshares are no exception. Not all properties will appreciate, and some may decline in value. Resale timeshares often do not recoup the buyers’ initial investment.

Answer 308

A right to use timeshare (also called a timeshare use) doesn’t convey ownership, but simply the right to occupy the property for one or two weeks a year, continuing for a specified number of years. The week or weeks to be used are specified in advance, with buyers of high-season dates paying more than low-season purchasers. Some timeshares allow owners to swap out their weeks if for some reason they can't use their designated week. The majority of the timeshare market is fee simple: 70% fee simple, 30% right-to-use.

Answer 309

A twist on timeshares is a vacation ownership. Vacation ownership is basically a way to prepay for a vacation rather than renting it. Buyers agree to a one-time purchase price and an annual maintenance fee, and in return get their selection of accommodation time and have the right to use the unit for a specified number of years. As with other timeshares, there are two types of vacation timeshares: right-to-use (timeshare use) and fee simple (timeshare estate). In a right-to-use vacation ownership, the buyer receives a lease on the property, usually for one to two weeks a year and for a specified number of years (15 to 50, or the owner’s lifetime). Buyers can usually rent, give, or sell their time to others. Some vacation ownership plans operate on a “points” system where the buyers can book vacations in different locations based on the number of points purchased, with more popular resorts and dates costing more points, and less popular resorts and dates costing fewer points. Fee simple ownership for a vacation timeshare works in the same way as with other forms of timeshare: ownership can be enjoyed, sold, or passed down to heirs. For vacationers who like to camp, a campground membership is another option. The owner of a campground membership buys the right to use the developer’s facilities (e.g., camper and trailer hookup, restrooms) and may use the campground at any time during the year.

Answer 310

Tennessee aims to protect timeshare owners and prospective buyers by regulating advertising and discouraging scams and frauds. Misleading advertising of timeshare properties is illegal.

Answer 311

The documents (called “instruments” in legalese) that create a timeshare estate must contain language specifying the ownership interest, if any, in personal property, and explain how commonly owned property will be maintained and replaced, including provisions for capital improvements and commonly owned personal property belonging to the timeshare estates.

Answer 312

Buyers and sellers must be provided with advance written notice of the right to rescind the transaction. Prior to consummating the transaction, the developer must give the intended buyer a copy of the public offering statement and any amendments and supplements. The contract is voidable by the buyer until receipt of the public offering statement, and: \*For 10 days after signing the contract if the buyer made an on-site inspection of the timeshare project prior to signing. \*For 15 days after signing if the buyer didn’t make an on-site inspection of the timeshare project prior to signing. If the buyer rescinds during the allowable time periods as stated above, no penalty applies and all payments made by the buyer before rescission must be refunded to the buyer within 30 days after cancellation notice.

Answer 313

The statute of limitations for timeshare lawsuits is four years after the date of the purchase.

Answer 314

True Prior to purchasing a timeshare, buyers should read the documents (known as are “instruments”) very carefully. If working with buyer clients, you might suggest they have their attorney review these documents.

Answer 315

False The seller has 30 days to refund any payments made by the buyer prior to rescission.

Answer 316

Campground membership

Answer 317

Right-to-use Fee simple ownership of a timeshare (aka timeshare estate) unit means that the owner may share tenancy in common with other timeshare owners or may have an interval ownership. A right-to-use timeshare is a lease agreement, not an ownership interest.

Answer 318

Condominium Ownership of a condo is real property ownership, but only of the unit and the space inside the unit, as well as shared ownership of common areas.

Answer 319

Timeshare estate A timeshare estate is a piece of real estate owned by multiple, unrelated individuals who, in addition to their ownership rights, each hold the right to occupy the dwelling unit in one- to two-week intervals during the year.

Answer 320

Unit owners Condominium ownership includes ownership of an individual unit as well as a share of the common areas.

Answer 321

30 days If the buyer rescinds during the allowable time periods as stated above, no penalty applies, and all payments made by the buyer before rescission must be refunded to the buyer within 30 days after cancellation notice.

Answer 322

The condo owners A condo owned inside a PUD is similar to a condo owned outside a PUD. All common areas are jointly owned and maintained by the condo owners or the HOA.

Answer 323

1. Clearly defines the property 2. Reveals potential concerns about property boundaries

Answer 324

A method of identifying a property in written words that allows for an unambiguous interpretation of a property's boundaries and location. Legal descriptions appear on deeds and other legal documents because the description is sufficient to adequately describe and define a property so the courts can correctly determine ownership boundaries.

Answer 325

A blueprint or map showing measurements, boundaries, and area of a property; including the location of any improvements (such as a house) on the lot, any encroachments that may exist, and any easements of public record. Sometimes required by lenders to ensure that no encroachments exist.

Answer 326

1. Meets & Bounds 2. Lot & Block 3. rectangular (government) survey system (RGSS)

Answer 327

The metes and bounds method of legal description is one of the oldest land measurement systems used in the U.S. This system was the primary surveying method for the original 13 colonies and is still used today. Metes and bounds uses precise locations, distances, and compass directions to describe property boundaries. The direction and distance of a line forming the boundary of the property are described by metes, while bounds refer to the physical features that define the boundaries of the land. A monument is a permanent landmark sometimes used in metes and bounds legal descriptions to describe very large pieces of property. Historically, stone walls, trees, river banks, and boulders have been used to mark property corners. Modern-day surveyors frequently use long iron rods driven vertically into the ground to mark property corners.

Answer 328

The lot and block system is also known as a plat reference system, because it's a description by reference, plat, or lot and block. It's used mainly in urban and suburban areas for subdivided land. A large tract of land is surveyed and then divided into smaller parcels (pieces of land, such as lots, acres, etc.). Each parcel is identified by a letter or number. Blocks are groups of contiguous parcels bordered by streets that are numbered, as well (think city block). A description of this type may be included in addition to, or in lieu of, a metes and bounds description. A description by reference to a plat may refer to a plat map and lot number as part of a recorded subdivision, and will cite the plat book and page number on which the map is recorded. A licensed surveyor or engineer creates the lot and block system beginning with a subdivision plat. The surveyor/engineer divides the land into numbered (or lettered) lots and blocks, including streets, access roads, and other important features. All lot measurements and distances between points are included, making it a very detailed map. When approved, the plat map becomes part of the legal description. A description by reference to a plat may refer to a plat map and lot number as part of a recorded subdivision. The description will cite the plat book and page number in which the map is recorded so that any interested party can look it up and determine the exact location and dimensions of the property. A property may be described by reference to the section, block and lot on the tax map, or a prior recorded instrument. The more technical details of the legal description are contained in the recorded plat map, so there’s no need to include them in the deed. A legal description of this type may be included in addition to, or in lieu of a metes and bounds description, and, when accurate, it is generally considered by the courts as the preferable system to describe property.

Answer 329

AKA: Public Land Survey System (PLSS) because it was originally used to survey federally owned blocks of land—is regulated by the Bureau of Land Management under the U.S. Department of the Interior. The system is only used in 30 western and southern states. It isn’t used in East Coast states except Florida, and it also isn’t used in Texas. The PLSS is actually a series of surveys that divide land into townships that are six miles by six miles square (for a total area of 36 square miles or 23,040 acres). Townships are further subdivided into 36 one-mile-square (640 acres) sections (each section is one square mile or 640 acres), then into quarter sections, quarter-quarter sections, or irregular government lots. Beginning at an initial point, townships are surveyed in all directions. The north-south line that runs through the initial point is a true meridian (called the principal meridian). There are 37 principal meridians in the national survey, and they are referred to when distinguishing among the various surveys. Surveyors also establish an east-west line from which all measurements originate, called a base line. The east-west lines of a survey are called township lines. The north-south lines are called range lines. As an example, a township might be identified as Township 6, Range 1 West, which would mean that it was the 6th tier of townships north of a base line and in the first column of townships west of a principal meridian.

Answer 330

Direction and distance of a line forming the boundary of a property.

Answer 331

Physical features that define the boundaries of the land

Answer 332

The entire description is based off of the point of beginning.

Answer 333

False This system isn't used by East Coast states, except Florida. Only 30 western and southern states use this system.

Answer 334

North-south lines that do not run through the initial point

Answer 335

East-west lines that do not run through the initial point

Answer 336

The east-west line that runs through the initial point

Answer 337

NW ¼ SE ¼ NE ¼ Section 1, Kennedy Township Right! Those legal descriptions read from right to left, so things get more specific as as you go!

Answer 338

½ × ¼ × ¼ = 1/32 640 / 32 = 20 acres S½ SE¼ NW¼ Section 2, Township Clarkson. That tells us that the parcel is 1/32 (½ × ¼ × ¼ = 1/32). Keeping in mind that the entire section is 640 acres, you divide the 640 acres by 32 (1/32 × 640 = 20) to get 20 acres. The parcel is 20 acres.

Answer 339

include the state, principal meridian name, township and range designations with directions and the section number.

Answer 340

Vertical measurements are needed when discussing air rights (e.g., for a multi-story condominium building) and subsurface rights (e.g., for oil or mineral rights). ## Footnote Describes the points of measurement from which vertical height (or depth) is measured, such as 243 feet above sea level. Sea level is a common reference plane for measurement, but there are others. A reference datum will be established. Surveyors then set benchmarks at specific intervals, using the reference datum as a starting point. This keeps them from having to work backward to the original datum when performing surveys. Instead, they can start at a nearby benchmark. Have you ever seen a benchmark on the steps of a government building or anywhere around the city? We bet you will now. Theyʼre those brass plaques permanently affixed to buildings or posts, numbered to reference their corresponding datum.

Answer 341

Air lots are often used when providing a legal description for a condominium. Theyʼre the measure of the specific section of open space above a property. The air lot will contain both horizontal and vertical dimensions, extending to the inner faces of the walls, floors, and ceiling of the condominium unit.

Answer 342

Developers need vertical measurements to create contour maps, which include the topography and elevations within a piece of land. Contour lines on such a map connect points that have the same elevation, and they can show the slope of the land. Closely spaced contour lines, for instance, indicate a steep slope, because it means that elevation changes quickly in a small area.

Answer 343

An air lot is a legal description illustrated with horizontal and vertical dimensions that’s often used to describe units within a multi-level condominium.

Answer 344

Livable square footage, or finished area, is defined by American National Standards Institute Standard Z765-1996 to include only: Enclosed areas Areas suitable for year-round use (requires permanent heat source, continual power source [i.e., not a space heater]) Areas containing walls, floors, and a ceiling similar to the rest of the house Walls and ceiling must be finished, floors must be covered with installed covering, such as carpet, vinyl, wood, tile, laminate, or stamped and stained concrete. A cement floor or exposed or painted concrete, even with an area rug over it, wouldn’t qualify. Areas accessible from the rest of the living area Spaces lacking stairs or direct access, or accessible only by a ladder (e.g., lofts) aren’t considered living areas. Stairs and landings, however, are included on each level, regardless of whether they’re finished or have permanent heat sources. Ceilings must be at least seven feet high, and there must be at least six feet, four inches under beams, ducts, and other obstructions; there’s height restriction under stairs. If the space has a sloped ceiling, at least half of the finished floor area must meet the seven-foot height requirement. Two-story entries with vaulted ceilings may look awesome and may be finished with heated space, but there’s something missing above: floors. Landings count in livable square footage, as do stairways, but until occupants learn to walk on air, (hovercraft, anyone?) the space needs a floor to count in square footage. Spaces lacking stairs or direct access, or accessible only by a ladder (e.g., lofts) aren’t considered living areas. If it doesn’t, the room can’t be calculated in living area. If it does, all of the space that’s at least five feet high can be included in the square footage.

Answer 345

1 inch /12 inches =.083 10.083\*12= 120.996 Round up 121 sqft

Answer 346

Metes and bounds description

Answer 347

A mete Metes (measures) are the direction and distance of a line forming the boundary of the property.

Answer 348

If it is attached to the main house by a hallway or stairway

Answer 349

An enclosed area in a house that’s suitable for year-round use

Answer 350

A point, surface, or line used as a reference for measuring elevations

Answer 351

A survey A survey is used to create, verify, or correct a legal description. It’s a professional on-site measurement of the lot lines and dimensions of a property.

Answer 352

Measuring elevations

Answer 353

Lot and block

Answer 354

Metes and bounds Metes and bounds uses compass headings and directions. The rectangular system divides land into townships and further divides those into sections.

Answer 355

Metes and bounds

Answer 356

An east-west line used as a reference point Base lines run east-west, and principal meridians run north-south. Both are used in the rectangular government survey system.

Answer 357

Metes and bounds

Answer 358

Lot and block References to plats and plat maps are used in the lot and block survey system.

Answer 359

Plat references

Answer 360

Townships are divided into sections.

Answer 361

Lot and block

Answer 362

There are no national requirements.

Answer 363

Legal description

Answer 364

He can only include it as unfinished square footage. Garages are not counted as finished square footage but may be included as unfinished square footage.

Answer 365

The main floor and the top level, plus stairs and landing

Answer 366

The southeastern-most section of the township

Answer 367

Benchmark enchmarks are permanent markers used for marking datums.

Answer 368

Compass headings and directions The metes and bounds system uses compass headings and directions.

Answer 369

A physical feature that defines the boundaries of the land

Answer 370

Plat map The plat map is a detailed map of the given land, including streets, access roads, and measurements between features.

Answer 371

A 36-square-mile square formed in the use of the rectangular government survey system

Answer 372

The numbers start in the northeastern corner and follow a zigzag pattern.

Answer 373

No, because it lacks direct access from the main living area.

Answer 374

A stairwell leading from finished space to finished space

Answer 375

Point of beginning

Answer 376

Benchmark Benchmarks are permanent reference points used for marking datums.

Answer 377

A north-south line used as a reference point in the rectangular government survey system The north-south line that runs through the initial point is a true meridian (called the principal meridian). There are 37 principal meridians, and they are referred to when distinguishing between the various surveys.

Answer 378

Compass headings and directions The metes and bounds system uses compass headings and directions.

Answer 379

is when an individual agrees to have a security placed against himself or his property.

Answer 380

is when a creditor places a claim on real or personal property through legal means without the owner’s consent in order to collect an unpaid debt

Answer 381

is a claim against an individual and all of their property.

Answer 382

is a lien against a single property.

Answer 383

1. Estate and inheritance tax lien 2. Deceased person's debt 3. Income tax lien 4. Judgment lien

Answer 384

Mortgage Lien

Answer 385

1. Mechanic's Lien 2. Real Property Tax Lien

Answer 386

A type of Voluntary Specific Lien. A mortgage is a specific lien because it affects one particular property. It’s also a voluntary lien because buyers who purchase real property via financing agree to the mortgage lien, which remains in place until the loan is paid off. The property itself serves as the loan collateral. If a buyer defaults on a loan, the lender may foreclose on the property and sell it at auction. Proceeds go toward paying debts in order of lien priority.

Answer 387

General and involuntary lien.

Answer 388

General and involuntary lien When people die, their real property passes to devisees named in the will, or, when people die intestate (without a will), their property passes to heirs according to their state’s laws of descent and distribution. A decedent’s debts are first paid out of any personal property not specifically bequeathed in the will. If debts remain, then bequeathed personal property must go toward payment. Finally, real property must be sold to pay any remaining debt. Devisees or heirs may take title to the property after all attached liens, encumbrances, and creditors have been satisfied.

Answer 389

False The legal proceeding is called an in rem legal proceeding and occurs when the action is brought directly against the real property and not against the individual and the individual’s personal property.

Answer 390

False The collection of the monies for unpaid property taxes is by a forced sale of the property at a tax sale.

Answer 391

A 2005 amendment to T.C.A. § 66-11-124(b) explicitly prohibits the waiver of lien rights in a contract. The provision reads: "Any contract provision that purports to waive any right of lien under this chapter is void and unenforceable as against the public policy of this state."

Answer 392

The mechanic’s lien is proactive, not reactive. It attaches at the beginning of work and should be part of the contract between the homeowner and contractor. The date of attachment is important. Let’s say that a homeowner refinanced or took out a second mortgage to pay for improvements. If the work began before the loan funded, the mechanic’s lien would have priority over the loan in the event of foreclosure.

Answer 393

The homeowner has an “escape clause” in that they have three days after receipt of the notice of right to lien to reject the contractor’s right to lien, and cancel the contract. If the homeowner doesn’t cancel within that time period, the right of rejection is waived.

Answer 394

When the homeowner acts as a general contractor, the homeowner would then have direct contracts with material suppliers and subcontractors, which would mean these individuals or entities could place liens against the property. As well, if the homeowner doesn’t intend to live in the property, it doesn’t qualify as residential property for the purpose of the lien statute, and the prohibition against an indirect lien wouldn’t apply.

Answer 395

A general laborer, subcontractor, general contractor, or material provider who has a contract directly with the owner has a direct lien against the real property. This lien remains in effect for one year after the work is finished or materials are supplied, and until the final decision of any suit filed within the year to collect on the lien. Although recording isn’t required, to protect against other encumbrancers or buyers of the property who don’t have notice of the lien, the direct lien claimant must record a Notice of Lien in the register's office within 90 days of the completion of the work. Provided this notice is filed within that 90-day period, the lien has precedence over later claimants.

Answer 396

Indirect lien claimants would be subcontractors or material suppliers who don’t have a direct contract with the owner. Indirect liens don’t attach to residential property (owner occupied property with four or fewer units). In this case, only the general contractor would have a lien.

Answer 397

Indirect liens attach to commercial property, but there are several stipulations. First, the contractor must send a notice of nonpayment to the owner and general contractor within 90 days of the last day of the month from the date of nonpayment. Such notice must be delivered by a method that confirms delivery (e.g., registered or certified mail, return receipt requested) and must contain information which is normally found on the building permit: Name and address of the claimant A description of the work, services or materials provided The last date on which the claimant supplied materials or performed work An identification of the property on which the lien will be placed Second, a Notice of Lien must be sent. If the indirect lien claimant is a materials provider, this notice must be sent within 90 days of the date on which it last supplied materials or within 90 days of completion of the improvement. If the indirect lien holder is a subcontractor or laborer, the Notice of Lien must be sent within 90 days of completion of the work. The Notice of Lien must be recorded to provide public notice to third parties. To enforce the claim, the indirect lien claimant must file a lawsuit within 90 days after the date of the Notice of Lien.

Answer 398

Direct lien claimants: Within one year after completion of work Indirect lien claimants: Within 90 days after the date of the Notice of Lien

Answer 399

General contractors must serve the owner with notice after completion of the job and receipt of the money under the contract. The Sworn Affidavit to Owner must be sent by registered mail and represent that all subcontractors and suppliers have been or will be paid within 10 days. It also includes a statement that the general contractor will hold the owner harmless from any liens or lawsuits by subcontractors and suppliers. This includes a requirement for the general contractor to pay the owner’s attorney’s fees in defending any lien claim, as well as any court-awarded damages.

Answer 400

Property owners can protect their property from unrecorded mechanic’s liens by filing a Notice of Completion, which notifies contractors that the project has been completed. When the Notice of Completion is filed, contractors have a specific amount of time in which to assert any mechanic’s liens. For residential property, the time limit is 10 days, and for commercial property, the time limit is 30 days. Any claims asserted after the time limit are moot. When the development or improvement of a property is complete, the property owner can file the Notice of Completion in the register of deeds office for the county in which the property is located. The notice must also be provided to the prime contractor, and any other parties that might otherwise have the option of asserting a lien against the property. The notice must include: The name of the owner of the property The name of the prime contractor Identification of the property Date the improvement was completed A statement that the property will be transferred, or all mechanic's liens will be settled more than 10 days from recording An address for lien claimants to send notices An acknowledgment The name of the person who prepared the notice

Answer 401

False Homeowners have three days after receipt of the notice of right to lien to reject the contractor’s right to lien, and cancel the contract. If the homeowner doesn’t cancel within that time period, the right of rejection is waived.

Answer 402

True Indirect liens don’t attach to residential property (owner occupied property with four or fewer units).

Answer 403

is created by statute, or law. For instance, because statutes dictate that real property taxes become a lien on the property until they’re paid, a real estate tax lien is an involuntary, statutory lien, created without any action required on the part of the property owner.

Answer 404

are liens created by a court of common law. For instance, when a court order requires a homeowner to pay a specific amount of money to an injured party, the amount owed by the homeowner would be an involuntary, equitable lien on the home. In this case, the words “equitable” and “equity” have the same root and are derived from the same meaning. The lienholder has an equit(y)able lien on the property. Equitable liens do not give the right of possession; they are simply a charge or encumbrance on the property.

Answer 405

1. Mechanic's Lien 2. Real Property Tax Lien 3. Special Assessment Loan

Answer 406

1. Income Tax Lien 2. Deceased Person's Debt 3. Estate and Inheritance Tax Lien

Answer 407

1. Judgment Lien

Answer 408

Sworn Affidavit to Owner After the contracted work has been completed and paid for, general contractors must send a Sworn Affidavit to Owner to the property owner, which states that the owner is held harmless from any liens or lawsuits by subcontractors and suppliers.

Answer 409

1. Conditions 2. Covenants 3. Restricitions

Answer 410

1. Conditions: Conditions are contingencies on which ownership of a property might be lost if the condition is violated. For instance, a grandmother could pass her property on to an heir on the condition that the heir never marry. If the heir does, ownership would be severed. The property would revert to the grantor, or another heir in this case. 2. Covenants: Covenants are agreements between two or more parties. If the agreement is violated, ownership— or tenancy, in the case of a lease—can be terminated. So if a landlord and tenant have a covenant that states no pets, and the tenant brings in a pet, the lease can be terminated. 3. Restrictions: Restrictions, or restrictive covenants, are a type of deed restriction imposed by a developer who wants to maintain specific standards in a subdivision that’s still under development. The developer doesn’t want early residents in the development to create issues that will impede future sales. For instance, a deed restriction may involve the types and heights of fencing that may be used. Owners may be prohibited from using plastic fencing, parking their recreational vehicles on the street, or placing basketball hoops where they will be in view of the street.

Answer 411

1. Easement appurtenant: The permanent right to use another’s land for the benefit of a neighbor. 2. Easement in gross: A right to use the land (does not necessarily involve an adjoining property). Examples would be utility lines.

Answer 412

1. Easement by necessity: Usually this involves access to a road; without such an easement, the owner requiring the right of passage would be landlocked. 2. Easement by prescription: This is an easement acquired through years of use—one person acquires the permanent right to use another’s property by doing so for a period of time. Use must be hostile, open, exclusive, and notorious.

Answer 413

Shared between two buildings and constructed on the boundary line between two owner's lots

Answer 414

When a building, shrub, fence, etc., illegally crosses over into another's property. Can lead to a claim of adverse possession or an easement by prescription.

Answer 415

is permission to do something on another’s land without actually possessing any interest or ownership in the land. Licenses may be revoked by the owner at any time unless a termination date has been specified by contractual agreement. A license is not assignable or inheritable, and it’s a temporary privilege.

Answer 416

1. The easement owner may release the easement if it is no longer needed 2. A dominant and servient land could be merged into one parcel 3. The easement owner could abandon the easement 4. The necessity of an easement by necessity could be terminated (e.g., by building a new access road for the dominant tenement) 5. An easement with a deadline could expire

Answer 417

is the voluntary conveyance of real property by deed.

Answer 418

is a written and signed legal document that legally transfers (conveys) title to real property from the old owner (the grantor) to the new owner (the grantee). As such, a deed is also called an instrument of conveyance. A recorded deed proves that the previous property owner conveyed the property to the person named as the grantee on the deed. Unless stated otherwise in the contract, transfer of title occurs after the deed is recorded, thus stating publicly that the new owner now owns the property. At this point, the title and property are transferred to the new owners.

Answer 419

1. As required by the statute of frauds, every deed must be in writing. 2. Grantor/grantee 3. Act of conveyance (granting clause) 4. Consideration 5. Legal description 6. Habendum clause 7. Limitations and “subject to” clause 8. Signature of the grantor 9. Acknowledgment/recording 10. Delivery and acceptance

Answer 420

is the person conveying the title. In a typical real estate transaction, this will be the seller. For the title conveyance to be legal, the grantor must be of legal capacity, that is, mentally competent and of the age of majority. The grantor must also specifically be named and positively identified.

Answer 421

is the person receiving title. In a typical real estate transaction, this will be the buyer. In contrast to grantors, grantees do not have to be legally competent and need not have reached the age of majority to receive title. They could not, of course, turn around and convey title if they were not legally competent, but they can receive title. However, a person who can’t grant property under the law may use a guardian’s deed to do so. This would involve the court’s permission. In a deed, the grantor is often referred to as the “party of the first part,” and the grantee is referred to as the “party of the second part.”

Answer 422

AKA: Words of Conveyance, Acts of Conveyance The deed must have words of conveyance that signify the grantor’s intention to transfer title to the grantee. In our sample deed, this wording is contained in the section we just viewed that names and identifies the grantor and grantee. Can you determine which highlighted words meet the requirement for an act of conveyance? As long as the grantor’s intent matches the grantee’s understanding, and the intent conveys the transfer of ownership, the words of conveyance likely meet the legal requirements for this essential deed element.

Answer 423

quitclaim deed

Answer 424

warranty deed

Answer 425

1. full covenant and warranty deed (general warranty deed) 2. bargain and sale deed 3. special warranty deed 4. quitclaim deed

Answer 426

1. Covenant of seisin 2. Covenant of right to convey 3. Covenant against encumbrances 4. Covenant of quiet enjoyment 5. Covenant for further assurances 6. Covenant of warranty

Answer 427

contains the strongest and broadest form of guarantee of title of all the deed types, and also provides the greatest protection to the grantee’s ownership interest. The “full covenant” typically means that six covenants are included. A covenant, as you may remember, is an agreement, contract, or written promise.

Answer 428

The estate is possessed by freehold—the grantor holds the title specified in the deed. Could be part of a full covenant and warranty deed.

Answer 429

The grantor has the legal capacity to convey title and has the title to convey. Part of a full covenant and warranty deed.

Answer 430

With this covenant, the grantor is assuring the grantee that there are no encumbrances against the title other than those set forth in public record or the deed itself. Part of a full covenant and warranty deed

Answer 431

This doesn’t mean the neighbors aren’t noisy—it’s the grantor’s assurance that the grantee won’t be disturbed in the use and enjoyment of the property because of a title defect passed on by the grantor. Part of a full covenant and warranty deed

Answer 432

This is a promise that the grantor will provide any additional assurances that the grantee reasonably requires, and will perform any acts necessary to correct any defects in the title being conveyed. Part of a full covenant and warranty deed

Answer 433

This covenant states that the grantor will warrant and defend the title to the grantee against the lawful claims of others. It’s the best form of warranty for protecting the grantee, because it contains no limits as to the possible claimants protected against. As such, it’s the most important of all the covenants. Part of a full covenant and warranty deed.

Answer 434

may come with or without covenants of warranty. In most states, a bargain and sale deed with a covenant is called a special warranty deed. ## Footnote With either type of bargain and sale deed, the grantor implies good title and possession of the property. If you’re representing a buyer who’s acquiring a property under a bargain and sale deed, determine whether the deed contains specific warranties. A bargain and sale deed with covenants ensures that the grantor hasn’t encumbered the property in any way except as stated in the deed. Without that warranty, a grantor could have sold easements in a checkerboard across the property, making the property virtually worthless to a future owner. Bargain and sale deeds don’t contain assurances about what may have occurred with the property before the current owner came into its possession. Because of this, no such warranties regarding the deed are made to protect the grantee. In addition, the grantor doesn’t warrant the deed for the future. Lenders will lend on bargain and sale deeds, provided appropriate covenants are in place. One without such covenants offers very little protection for the grantee, and so wouldn’t be acceptable to lenders for mortgage purposes.

Answer 435

Doesn’t offer any warranties to the grantee. All it does is release to the grantee any of the grantor’s rights to the property. In fact, the grantor may have no rights to begin with! The deed doesn’t state that the grantor has any title or interest, and it makes no warranties as to the quality of the title. Quitclaim deeds prevent the grantor from later claiming interest in or ownership of the property. Quitclaim deeds are commonly used when there’s a possible heir or other person who may have an interest in the property (such as a former spouse after divorce), which creates a “cloud” on the title. A cloud is a question that lenders and title companies want to clear up. To remove the cloud and create a good and marketable title, the potential claimant will sign a quitclaim deed. Quitclaim deeds are also used to clear clouds due to liens that have been paid but aren’t yet released and due to claims of relatives after estate probation.

Answer 436

Is a type of bargain and sale deed with a covenant. It conveys real property from a decedent’s estate to a buyer. An executor can do this only if the will or court of law granted the executor this authority. An executor’s deed, sheriff’s deed, and many other deed types are types of court-ordered deeds, or deeds executed pursuant to a court order. Court-ordered deeds must have the full consideration stated in the deed, usually because the deed is executed pursuant to a court order, and the court has authorized the sale for a specific amount of consideration, which must match what’s stated in the deed.

Answer 437

Contains no covenant or warranties, but does imply ownership (seisin). A referee’s deed is used in bankruptcy proceedings and foreclosures. In a foreclosure auction, it’s the legal document that gives ownership of the foreclosed property to the highest bidder.

Answer 438

AKA trust Deed ## Footnote is an instrument used in financing real estate purchases. In several states, including Tennessee, deeds of trust are more common than mortgages. Deeds of trust involve three parties: 1. the trustor (the borrower) 2. the beneficiary (the lender) 3. the trustee This third party, the trustee, is typically an independent trust or title company that holds “legal” title to the property as security for the loan. Once the trustor (borrower) repays the loan in full, title reverts to the trustor. Nonjudicial foreclosure is another feature of a deed of trust. If the borrower defaults on the loan, the trustee has the power to sell the property without going to court.

Answer 439

When a trustee conveys real estate to someone other than the trustor, the trustee executes a trustee’s deed. This deed must stipulate that the trustee is acting within the powers and authority allowed by the original deed of trust.

Answer 440

A trustee may return title to a trustor through a reconveyance deed. A trustee might use this type of deed after a loan that was secured by a deed of trust has been paid off. Once the beneficiary alerts the trustee that the loan has been repaid, the trustee will reconvey the property to the trustor. In order to hinder any clouds or other future title issues, reconveyance deeds should be properly recorded.

Answer 441

Transfer tax may be paid by the buyer, the seller, or split between them, according to the terms of their agreement. As with other closing costs, deciding who pays the transfer tax is negotiable between the parties; however, local custom often applies.

Answer 442

In most states, the transfer of a property from one person to another triggers a tax known as a transfer tax. This tax becomes payable when the deed is recorded, sometimes through the purchase of revenue stamps from the recorder of the county in which the property is located. These stamps must be affixed to the deeds and other conveyance documents before those documents can be recorded. Recordation with the stamps in place is proof that transfer taxes have been paid. In states where these stamps aren’t used, the taxpayer pays the transfer tax to the county clerk or recorder as required by state and local law. You will hear both terms—revenue stamps and transfer tax—used interchangeably, but they have the same meaning. Here, we will refer to revenue stamps as a transfer tax.

Answer 443

A person who creates a valid will is known as a testator. (If the testator is a woman, she may be called a testatrix.) When a testator or testatrix dies, we refer to it as dying testate. When a person dies without leaving a valid will, that’s known as dying intestate. Intestate succession determines how a deceased person’s property will be distributed.

Answer 444

A will only conveys an interest once the testator has died; while that testator is alive, the parties named in the will have no rights to or interests in the property. Parties named in a will to receive property are called legatees or devisees. In order to draft a valid will, testators must know what they’re doing. This means the testator must be of legal capacity (be of sound mind) and legal age. To demonstrate legal capacity, the testator must have sufficient mental capacity to understand the nature and extent of the property the testator owns. The testator must also understand that the property will go to persons named in the will, who may or may not be heirs. A testator may alter a will at any time using a separate document called a codicil.

Answer 445

When someone dies intestate, leaving behind no will to dictate how the property is to pass along to others, then that person’s property will be passed along to the descendants (known as heirs) according to Tennessee Code, Title 31, Descent and Distribution. Legally, a decedent’s title to real estate immediately passes either to the persons named in the will (if there’s a will) or to the heirs by descent (if there’s no will). The specific persons entitled to property and the various percentages involved vary by state.

Answer 446

If a will is in probate, that means a court is tasked with determining if it’s valid or not. Probate also ensures that the assets of the estate are distributed according to the deceased person’s wishes. Probate may also oversee the property distribution of someone who died intestate. The personal representative (or in some cases, a family member who’s not the personal representative) petitions the court to begin the probate process. Probate can be a lengthy legal process, taking from several months in many cases, to several years for more complex estates, such as when a will is contested. However, not everything in an estate has to go through probate. Property held in joint tenancy or tenancy by the entirety passes immediately to the other tenant or tenants. For bequeathed property (that’s named in the will), the court has to determine that the will is legal, and hear out any person contesting the will, before the executor or administrator (the person charged with distributing the estate’s assets according to the terms of the will) may give away one dollar. Creditors and estate taxes must be paid first.

Answer 447

1. Biological children born of the marriage 2. Adopted children 3. Posthumous children – children conceived but not born before the deceased’s death, and those born within 10 months of that death who survived at least 120 hours after birth 4. Children born outside of marriage – if there was a marriage ceremony that later turned out to be void, or paternity was determined before or after the deceased’s death in accordance with procedures that Tennessee law recognizes 5. Grandchildren – provided their parent (the deceased’s child) is dead

Answer 448

With the transfer of the deed from the seller to the buyer

Answer 449

The deed that was recorded first

Answer 450

Actual notice

Answer 451

Inquiry notice

Answer 452

Constructive notice

Answer 453

True Once the deed is recorded, the legal ownership of the property is no longer in question.

Answer 454

False The protection that recordation affords the owner of a title is based on the theory of constructive notice, not actual notice.

Answer 455

1. Is a legal document 2. Is used to establish proof of ownership 3. Assures the buyer that the seller has the right to sell the property 4. Is a new deed the seller's attorney prepares, normally based on the seller's old deed 5. Includes both parties' legal names and is typically signed by the seller (grantor) at closing

Answer 456

1. Proves that no encroachments exist with the property 2. Shows the measurements, boundaries, and area of the property 3. Usually paid by the buyer or seller

Answer 457

1. Establishes path and proof of ownership 2. Must be unbroken for the title to be good 3. Established through a search for successive conveyances of title, starting with the current deed and going back in time 40–60 years (usually) 4. The buyer should not agree to close on a broken chain of title

Answer 458

1. Provides a summary of the title history 2. Contains a legal description of the property 3. Summarizes any records related to the title 4. An attorney: \*Reviews the chain of title carefully to ensure it is unbroken and clear \*Updates the abstract of title with an abstract continuation \*Provides a written certificate of title opinion that the title is clear

Answer 459

## Footnote 1. Two types: one insures the policy owner against financial loss if the title to the real estate has defects, and the other protects the lender from the same 2. Protects against title defects existing at the time of title transfer only 3. Issued only if title is acceptable (insurable title) and certificate of title opinion is provided by an attorney

Answer 460

False The seller is responsible for paying for the owner’s policy.

Answer 461

1. Sale or lease of fewer than 25 lots in a subdivision 2. Sale or lease of improved lots with a residential, commercial, condominium, or industrial structure, or the contract requires a structure to be built within two years 3. Real estate investment trusts' securities sale 4. Government sales 5. Sale or lease of lots to builders 6. Sale or lease of real property zoned for commercial or industrial development 7. Cemetery lot sales

Answer 462

Passed in 1968, regulates land sales across state lines in order to keep gangsters, con artists, and other hooligans from selling property to unsuspecting consumers sight unseen. At the act’s inception, it was administered by the U.S. Department of Housing and Urban Development, but the Consumer Financial Protection Bureau (CFPB) is now tasked with overseeing it. To prevent fraudulent activity, developers have to register any subdivisions that have 100 or more non-exempt lots with the CFPB. Before a buyer signs a purchase contract, the developer has to give that buyer a disclosure document called a property report, which contains information about the subdivision. The buyer has a seven-day period after receiving the report to cancel the purchase agreement. If the developer doesn’t provide the disclosure, the buyer can rescind the contract, so developers have plenty of incentive to provide it.

Answer 463

When a property owner dies without a will, the property is distributed to heirs in accordance with inheritance law. But if no heirs or creditors can be found, the state can take the property through its powers of escheat. In some states, the county has this right; in Tennessee, all personal and real property reverts to the state. Tennessee is a custodial state, which means that it will make every effort to find any heirs or distant relatives of the deceased to avoid using the power of escheat.

Answer 464

Condemnation

Answer 465

Condemnation

Answer 466

Inverse condemnation

Answer 467

Inverse condemnation

Answer 468

Inverse condemnation occurs when government takes private property, either physically or by the effect of regulation on the property value, without offering the owner just compensation as is required by eminent domain.

Answer 469

The federal building code

Answer 470

is where a municipality will allow an otherwise prohibited type of construction if the developer will give the municipality something back. Often this relates to the floor-to-area ratio, which you can call FAR for short.

Answer 471

You get the FAR by dividing the gross floor area of a building by the total area of the lot. FAR describes the intensity of use. Building height and site coverage are factors that affect FAR.

Answer 472

Restrict the density of buildings in an area through building design requirements such as floor-area-ratios (FAR), setbacks, lot size, building placement, and open space requirements. Bulk zoning restrictions are separate from use-based zoning controls, which limit the type of use permitted in a given area (e.g., residential, commercial, etc.).

Answer 473

To restrict the density of buildings in an area through building design requirements

Answer 474

Zoning for density and type of use is all well and good, but it falls short of creating cohesive neighborhoods and districts and preserving the charm of yesteryear. For that, we have aesthetic zoning. Aesthetic zoning will specify, for instance, that all buildings in a neighborhood have to be of a certain style, such as Victorian or Craftsman, in order to uphold the architectural integrity of an area.

Answer 475

1. Power used to enact the change be exercised in a reasonable manner 2. Provisions of the zoning ordinance change be clear and specific 3. Ordinances are not discriminatory 4. Ordinances promote public health, safety, and general welfare under the police power concept 5. Ordinances apply to all property in a similar manner

Answer 476

Developers who plan on Federal Housing Administration (FHA) financing in their subdivisions must follow FHA’s minimum building standards. FHA doesn’t lend money directly to homebuyers, but instead insures mortgages approved lenders provide so that low- to medium-income borrowers have access to more flexible and affordable mortgages. Most required FHA standards are included in federal and local building codes. The primary difference between general building codes and FHA’s minimum property standards relate to fixtures. The minimum property standards regulate the durability of a dwelling's fixtures in addition to building standards.

Answer 477

False This statement is false. The primary difference between general building codes and the FHA’s minimum property standards relate to the durability of a dwelling’s fixtures.

Answer 478

Temporary halting of new property development with the community’s best interests in mind.

Answer 479

Permitted deviation in the requirements of the zoning ordinance.

Answer 480

Allowed use in a zone that is not normally permitted in the zone; requires permission of the planning board or another legislative body.

Answer 481

Allows the owner to continue to use the property as originally zoned even though that does not meet current zoning regulations.

Answer 482

Soil types

Answer 483

Planning board

Answer 484

Use variance The existing zoning only allows single-family homes, so a duplex represents a use other than the originally intended use.

Answer 485

Planning board The planning board ensures that community growth is controlled and orderly. It is also responsible for developing the master plan, which includes budgeting for long-term projects.

Answer 486

The EPA’s mission is to protect human health and the environment. Its purpose is to: 1. Ensure that all Americans are protected from significant health risks and environmental issues at their homes, schools, and workplaces. 2. Decrease environmental risks based on the best scientific information available. 3. Develop and enforce federal laws regarding human health and the environment in a way that’s both fair and effective. 4. Study environmental issues and then teach and publish this information. 5. Provide grants to a variety of projects, including those focused on environmental clean-up within communities. 6. Ensure that environmental protection contributes to making both communities and ecosystems sustainable, diverse, and economically productive.

Answer 487

Provides financial and technical assistance to landowners who put conservation practices into place on their agricultural and non-industrial private forestland. These practices focus on natural resource concerns, working to improve soil, plant, animal, water, air and other resources, and are financed through contracts of up to 10 years. The federal government has also taken several steps to protect and clean up the environment, including (but not limited to) the following: 1. Prohibiting the disposal of specific waste items in landfills, including batteries, mercury-containing items, and fluorescent tubes 2. Developing a plan to transform energy use in the country’s commercial buildings by the year 2050, in part by using buildings that produce as much energy as they consume 3. Developing a Fannie Mae loan program that allows the financing of energy-efficient upgrades to homes for up to a maximum of 10% of the home’s appraised value 4. Enforcing the Toxic Substances Control Act, updated in 2016, which allows the EPA the authority to regulate chemical substances

Answer 488

Was established to clean up closed, abandoned, or uncontrolled hazardous waste sites and to respond to spills that may endanger public health or the environment. It also established: 1. Liability for hazardous waste release at these sites, requiring landowners to take responsibility for clean-up, even if they did not cause the waste. 2. The creation of a trust fund to provide for clean-up when a responsible party could not be identified. The Department of Housing and Urban Development (HUD) has to conduct an EIS for every HUD-assisted project to ensure that it doesn’t negatively impact the surrounding environment and that the site itself will not have an adverse effect on end users

Answer 489

1. Investigation property: is reviewed and examined; surrounding properties may also be evaluated. 2. Testing: This phase is prompted by the Phase I results and is only conducted if necessary. If it is, the needed type of testing will be conducted and results shared. If the tests show nothing amiss, then the assessment ends here. If a problem is found, Phase III is put into action. 3. Clean-up: During this phase, governmental agencies may come into play. Whatever clean-up is necessary will be done. 4. Management: During this phase, the project is monitored by the appropriate parties and any ongoing or potential issues are addressed

Answer 490

Was passed, the “innocent landowner” defense amendment was added to CERCLA that says the landowner isn’t responsible for clean-up if the landowner didn’t know about the contamination when the property was purchased. To be found innocent, owners must show that they acted responsibly when they did find out—no attempt was made to cover up the contamination—and must show that they did their due diligence in investigating the property when it was purchased. If landowners can prove this, then they likely won’t be held liable.

Answer 491

The prospective landowner, or the current one who wants to sell, will usually hire a private consultant or engineer to conduct an assessment, which will consist of four phases (see the table below for details).

Answer 492

The owner is absolutely responsible, regardless of who’s at fault.

Answer 493

Each of the responsible parties is personally responsible for the total damages. If only one of the responsible parties is able to pay the damages, that owner must pay the total and then try to collect their share from the others.

Answer 494

Makes not only the current owner, but also prior owners, liable. The parties may agree to cooperate with the clean-up and share the costs, or if there is no agreement, the EPA can hire its own contractors, do the work, and then bill the responsible parties for the cost. If they refuse to pay, the EPA can seek damages in court for up to three times the amount of the actual clean-up costs. Either way, discovery of hazardous materials on a project site can add enormously to both the time and the costs involved in the development, which can negatively affect the investor’s return.

Answer 495

False Liability for contamination doesn’t always lie solely with the hazardous waste site’s owner. Operators, generators of the hazardous substance, and those who arranged for the disposal of the hazardous substance can also be held accountable.

Answer 496

The Clean Air Act was created in 1970 to authorize the Environmental Protection Agency (EPA) to establish air quality standards for the protection of human health and the environment. Due to EPA requirements established in 2010, Freon® (R-22) is no longer used as a coolant in air conditioners, refrigerators, and other cooling appliances. This legislation impacts both residential and commercial properties. If a client is obtaining a home warranty for a property containing cooling appliances built before 2010, your client should ask how a repair need is handled under the plan, as those that contain Freon® can’t be repaired. Of course, homeowners can’t be required to buy appliances mandated by the act in order to qualify for a home warranty plan.

Answer 497

Provides regulation of pollutants such as oil and other hazardous substances discharged into U.S. waters. It also establishes quality standards for surface waters. The CWA makes it illegal to dump pollutants from a point source, such as pipes and ditches, into navigable waters without a permit.

Answer 498

The Resource Conversation and Recovery Act (RCRA) provides authority for the EPA to control all phases of hazardous waste: generation, transportation, storage, treatment, and disposal. Amendments to RCRA in 1986 extended the EPA’s authority to include underground storage tanks that hold petroleum and other hazardous substances

Answer 499

The Toxic Substances Control Act is also administered by the EPA and regulates chemical substances that pose an unreasonable risk of injury to health and the environment.

Answer 500

False This is the purpose of the Resource Conservation and Recovery Act.

Answer 501

False This is the purpose of the Toxic Substances Control Act.

Answer 502

True The EPA manages this law. It forces specific requirements on the use, storage, and disposal of different chemicals.

Answer 503

Brownfields are properties that have been contaminated, or are perceived to be contaminated, by commercial or industrial use. These properties can create a blight on a community, and may be hazardous to the health of the environment and nearby residents. Their presence, and questionable status, can cause declines in property value. In 2002, Congress passed the Small Business Liabilities Relief and Brownfields Revitalization Act. The act’s title is quite a mouthful, so it’s commonly known as the Brownfields Law. Brownfields are abandoned or otherwise unused commercial or industrial sites, many of which are suspected to contain hazardous waste. Contamination may be from several sources, including petroleum, industrial waste, and even methamphetamine labs. The Brownfields Law provides grant funds to communities in order to assess and clean up the many thousands of brownfields that are believed to exist nationally. Many states also have programs to help finance the environmental restoration and reuse of brownfield sites.

Answer 504

Step 1: Identify site and plan project Step 2: Determine if contamination exists Step 3: Clean up the site (if needed) Step 4: Determine how the Tennessee Brownfields Program may assist (when a site is contaminated) Step 5: Redevelop the site

Answer 505

The EPA can seek damages in court for up to three times the actual cleanup costs.

Answer 506

Citytown will apply to the CERCLA trust fund for cleanup costs.

Answer 507

Environmental impact statement

Answer 508

1. Express: A stated (written or oral) agreement between two parties to specific terms. 2. Implied: A contract that is based on the actions or behaviors of the parties, not on words. 3. Bilateral: A mutual contract that involves an exchange of promises or other consideration between two parties. 4. Unilateral: A contract in which consideration (such as a promise) is only given by one party to the other. 5. Enforceable: A contract that will stand up in court. 6. Unenforceable: A contract that will not hold up in court. 7. Valid: A contract that contains all the essential elements. 8. invaild: A contract in which one or more of the essential elements is missing. 9. Void: A contract with no legal force or effect (to do something illegal, for example), which means the parties are not bound by it. 10. Voidable: A contract that may be cancelled by one or more parties for one of several reasons. It may be missing an essential element and thus invalid; it may contain a mistake or a misrepresentation, or it may have been created or executed by a party under duress. 11. Executed: A contract in which all the parties have met all terms of the contract. 12. Executory: A contract in progress; one or more terms of the contract remain undone.

Answer 509

1. Id the contracting 2. Clearly identify the subject matter of the contract. 3. Present the essential terms and conditions of the contract.

Answer 510

The word “parol” comes from the French term parole, meaning "word" or "formal promise." The parol evidence rule provides that in most cases, a written agreement is the final and comprehensive expression of the parties’ agreement, and generally prohibits the introduction of previous verbal or written statements that contradict, augment, or otherwise change the written contract’s terms. However, in certain cases, oral evidence can be used to support or complete an otherwise incomplete or ambiguous contract. Remember that the statute of frauds resolves to ensure that no nonexistent agreement shall be enforced via perjury or fraud. The parol evidence rule supports this by prohibiting parties from stating in court that the written contract they signed wasn’t really what they intended.

Answer 511

Contracts conveying the ownership or interest in real property (and other specific contract types) must be written to be legally enforceable, according to the statute of frauds. But what is the statute of frauds? The statute of frauds was adapted from a 1677 English law for use as a defense in a breach of contract lawsuit. Each state has its own version of the statute of frauds, but, in general, the law prevents injury from fraudulent conduct in certain types of agreements, including property transfers.

Answer 512

1. Marriage contracts (including prenuptial agreements) 2. Contracts that, by their terms, can’t be completed within one year (such as a lease of property that’s for longer than one year) 3. Contracts by the executor of a will to pay a debt of the estate from the executor’s own funds 4. Contracts for the sale of goods totaling $500 or more 5. Contracts in which one party agrees to pay the debt of another

Answer 513

1. Legally competent parties 2. Offer and acceptance 3. Consent 4. Legal purpose 5. Consideration

Answer 514

Consideration

Answer 515

Three years

Answer 516

A. Identifies items that are attached or permanently installed in the house itself and included in the sale of the property B. Identifies items that either the seller wants to include in the sale or that the buyer wants the seller to include in the sale C. Identifies items that either the seller wants to retain or that the buyer wants the seller to remove D. Identifies leased items that will remain with the property and may or may not be assumed by the buyer

Answer 517

Improvements

Answer 518

1. Appraisal 2. Closing Costs/Discount Points 3. Financial Contingency

Answer 519

At closing

Answer 520

True In addition, the buyer must provide the seller with proof that the appraisal has been ordered. If the buyer fails to provide the notice and doesn’t respond within two days to the seller’s written demand for compliance, the buyer is considered in default and the contract is terminated.

Answer 521

5 days Moreover, if the buyer fails to provide proof of funds and then doesn’t respond within two days to the seller’s written demand for compliance, the buyer is considered in default and the contract is terminated. Similarly, if the buyer gets to closing and can’t provide the funds, the buyer is considered in default and the transaction is terminated.

Answer 522

True Per the TAR sales contract, the notification must also include proof that the buyer has secured hazard insurance and ordered and paid for an appraisal.

Answer 523

False Per the TAR sales contract, the buyer may terminate the contract as long as the buyer provides the seller with written notification and a copy of the lender’s loan denial letter prior to closing.

Answer 524

1 day If the buyer fails to provide the earnest money and doesn’t respond within one day to the holder’s written notice, the buyer is considered in default and the contract is terminated.

Answer 525

False In Tennessee, property is conveyed with a general warranty deed.

Answer 526

The agreement is terminated, and the buyer is entitled to a refund of the earnest money/trust money.

Answer 527

For any residential property built before 1978

Answer 528

To allow the buyer to terminate if an issue arised during the inspection that cannot be successfully negotiated

Answer 529

True The buyer and all inspectors must agree to perform the inspections during normal business hours.

Answer 530

True In addition, buyers don’t have the right to require sellers to bring items up to current building codes under the guise of required repairs, unless governmental authorities require it.

Answer 531

The resolution period This period is known as the resolution period. If repairs cannot be negotiated during this time or during an agreed-up extension period, the agreement is terminated and the buyer’s earnest money refunded.

Answer 532

Exclusions

Answer 533

To identify areas of potential concern for buyers so they can specify a contingency to the contract if they want to

Answer 534

In Special Stipulations paragraph

Answer 535

Listing agreement The listing agreement spells out the seller’s obligations to the listing broker. The buyer representation agreement outlines the buyer’s obligations.

Answer 536

False The parties to the contract aren’t bound by anything that isn’t contained in writing in the contract.

Answer 537

False The parties, their heirs, successors, legal representatives, and assigns are all bound to the terms and conditions of the contract.

Answer 538

If the buyer hasn’t already received and acknowledged these specific disclosures, the seller must counter the buyer’s initial offer by disclosing the applicable items.

Answer 539

In the parties’ respective agency agreements

Answer 540

Of a contract means meeting the agreed-upon terms. When both parties fully perform the contract, the contract has been executed, and the parties are now discharged from their duties.

Answer 541

Means that only a portion of what a party has agreed to has been completed. Sometimes partial performance is enough for the other party; sometimes it results in a termination.

Answer 542

Means that a party must do exactly what it agreed to do. So if a seller agreed to sell a property and then later reneged, the buyer can sue for specific performance, meaning the seller must sell the property as agreed. No other property or monetary damages equal specific performance—only meeting the terms of the original contract qualifies.

Answer 543

Occurs when the property is destroyed or made the subject of eminent domain. The parties cannot legally or practically do what they’ve agreed to do, so they are released from their obligations under the contract.

Answer 544

False No other property or monetary damages equal specific performance—only meeting the terms of the original contract qualifies.

Answer 545

Perhaps you’ve heard the phrase “and/or assigns” and wondered what this meant. Often you’ll see this in offers to purchase from investor clients, especially wholesalers who tie up a property and resell it for more than they agreed to pay, taking a small profit. An assignment of a contract occurs when a new party is substituted for one of the original parties. Unless it’s done with the permission of both parties and provisions are included to release the original party from liability, the original party remains responsible to the terms of the agreement if the new party fails to live up to those obligations. The request to assign a contract is most often done at the time the offer to purchase is made. Although contracts for the lease or sale of real estate are generally considered to be assignable without permission of the seller or lessor, assignments may not have any adverse effect on the other party to the contract. In fact, many sale and lease contracts have a clause prohibiting assignment without the agreement of the seller or lessor.

Answer 546

False The request to assign a contract is most often made at the time the offer to purchase is made.

Answer 547

Occurs when one party to an existing contract is substituted with a new party (which may be referred to as novation of parties) or when a new contract is substituted for an old one between the same parties (aka novation of contract). With a novation, the new party takes over the rights and duties of the original party, and the original party is no longer obligated under the contract. All parties to the original contract must agree to the novation. Novation can have complicated legal consequences, so it should never be attempted without an attorney's participation.

Answer 548

Not novation

Answer 549

Not novation

Answer 550

1. P**artial Performance:** , allowing the breach but moving forward on the other terms. This is a remedy that could be retained by either the seller or buyer in a real estate transaction. 2. U**nilateral Rescission:** escind the contract at the sole discretion of the wronged party; the party who performed the breach may not terminate. This is known as unilateral rescission. Again, this remedy could apply to either the buyer or seller, whoever the wronged party was. 3. **Sue for monetary damages:** This would involve a court case and may or may not include legal fees and court costs. This remedy could be used by a seller for a buyer who defaulted when the seller wishes to pursue the buyer for the cost of removing the property from the market, loss of the sale, moving expenses, etc. It could also be used for a buyer who discovered a defect in the property after the sale that the buyer believes the seller was aware of and failed to disclose. 4. **Sue for specific performance:** This means the party must do exactly what had been promised. If a person sold their property but then later decided to hold out for a higher offer and so refused to provide title, the buyer could sue the seller for specific performance, to try to get the seller to provide title as agreed. It would be unusual for a seller to pursue a buyer using this remedy. Traditionally, the courts haven’t favored compulsory purchases of real estate. 5. L**iquidated Damages:** Accept liquidated damages. These are often the seller’s only remedy in a contract for purchase, and usually mean the earnest money deposited. For this reason, sellers often like to see large earnest money deposits. 6. **Mutually rescind:** Mutually rescind the contract. Both parties can agree to not go forward, known as mutual rescission. If the rescission is mutual, the wronged party may or may not be owed liquidated damages, depending on the agreement between them. It is important to get the agreement to rescind in writing, just as with any other contract. Otherwise, the wronged party could later sue based on the breach.

Answer 551

1. Demand: is a bit of a popularity contest. How attractive and move-in ready is a property? What’s the market like? Are there more buyers than sellers, or vice versa? 2. Utility: is related to a property’s function. Is it habitable in its current condition? Does it need updating? Repairs? Does the current zoning match the intended use? If a buyer wants a commercial property, but the current zoning is residential, this impacts the value. 3. Scarcity: is related to demand. If you’ve studied economics, you know that supply and demand are price drivers. The fewer properties there are on the market (the greater the scarcity), the higher the demand. High demand pushes prices upward. 4. Transferability: Refers to the ease with which the seller can convey the property. Factors such as deed restrictions, clouds on title, or tenants in place can make it more difficult to transfer the property, and thus reduce the property value.

Answer 552

1. Anticipation: The value of property today is the current value of the total anticipated future benefits. For example, a commercial property is leased for $12,000 per year for 30 years. The value of the property is based on the income that is expected to be received in the future. 2. Competition: The more similar properties that are on the market, the lower the price will be driven. Competition is related to supply and demand. The greater the supply (the more competition), the lower the demand (and price). Less competition increases demand and drives pricing upward. 3. Conformity: Value is created and maintained when the characteristics of a property conform to the demands of the market. For example, a house built in the middle of a commercial zone (due to zoning changes) would be valued differently than a house in the middle of a neighborhood made up of similar houses. 4. Contribution: A change in a property impacts the value as a whole. Does converting a garage into a family room contribute to or detract from value? That would be in the eyes of the buyer. 5. Highest and Best Use: This is the most profitable use that is both legal (conforms to zoning) and economically feasible (won't cost more than the increase in value). 6. Plottage: The joining or assemblage of two neighboring land parcels increases the property value. In such a case, 1+ 1 often equals 3 or even 5. So two parcels worth $40,000 separately might be worth $120,000 when joined. 7. Regression: This is the value a higher-quality property loses by being near a lower-quality property. 8. Progression: This is the value a lower-quality property gains by being near a higher-quality property. For example, if your neighbor builds on a second story in a quality remodel, the bump in value that your property receives is progression. 9. Substitution: A property’s value is determined by what it would cost to purchase a similar substitute property. If someone offered you a car that is an exact replica of another car but was $3,000 less, it would impact your perceived value of the other car.

Answer 553

1. **Assessed value:** Stakeholers Tax Assessment office. The price placed on a home by a municipality to calculate property taxes. 2. **Depreciated value:** Stakeholders IRS. Calculated for income tax purposes to determine basis for taxable amount. Accelerated depreciated programs have been used by the federal government to stimulate the economy. 3. **Investment Value:** Stakeholders Investor. One way to determine investment value is to calculate the return on investment (ROI). The higher the ROI, the better the investment. Another way to determine investment value is to apply a capitalization rate to the net operating income. Again, the higher the better. 4. **List Price:** Stakeholder Owner. his is the amount for which an owner has offered to sell a property. This is what is found in an MLS listing. 5. **Market Value:** Stakeholder Buyer and Seller. The purchase price agreed to by the buyer and seller sets the market value. Also referred to as the “meeting of minds.”

Answer 554

1. Environmental 2. Social 3. Political 4. Economic

Answer 555

The estimate of value of one specific property as of one specific date for one specific party

Answer 556

The sales comparison approach uses a process of comparison with similar properties that have a known sale price to determine a subject property’s market value. This is the most reliable of the three approaches when appraising single-family homes for market value. The sales comparison approach relies on the value principle of substitution, which says that the value of a property is equal to the value of an equivalent substitute property. However, since every property is different, appraisers follow a process of adjustment to comparable properties (the substitutes) when estimating the value of a subject property.

Answer 557

1. Analyze the subject property to identify its characteristics, particularly those that are in demand in the current market. 2. Identify comparable properties (aka comps) that have been recently sold, and are as similar to the subject property as possible. (Appraisers cannot use property that's currently listed or under contract as a comp.) 3. Compare the comparables to the subject property and make adjustments to the sales price of the comparables (never to the subject property) where they are different. 4. Use the data to arrive at an opinion of value for the subject property on the date of appraisal.

Answer 558

1. **Elements of comparison:** Analyze comparables’ locations, dates of sale, physical property characteristics, and the terms and conditions of the sales transactions. They explain why different prices are paid for comparables. 2. **Units of comparison:** Allow the comparison to be standardized. Units may be price per square foot, per apartment unit, per acre, etc.

Answer 559

1. **Financing terms and cash equivalency:** This is often offered by builders for new construction or as seller concessions in resale transactions. 2. **Conditions of sale:** Was it an arm’s length transaction? Were personal items included, or fixtures excluded? 3. **Market conditions** at time of contract and closing. 4. **Location:** Underwriters assume appraisers understand the local marketplace, and will accept comparables that exceed distance, time, or other guidelines, if the appraiser supports the decision with written, detailed explanation that demonstrates that local expertise. 5. **Physical characteristics:** This includes the site, view, construction quality, amenities, size, etc.

Answer 560

s a process in which an appraiser determines a probable range of values for a property by comparing a group of comparable sales to the subject. The appraiser attempts to include both superior and inferior comparables using comparisons such as age, transaction price, etc.

Answer 561

Substitution

Answer 562

1. **New construction** of both residential and commercial property (which don't have comparable sales data available) 2. **Unique properties**, such as highly energy-efficient houses, residential acreage with excess land, historic houses, and high-dollar houses with many amenities 3. S**pecial-purpose commercial uses**, such as hospitals, some manufacturing plants, hotels, schools, houses of worship, and other single-purpose properties

Answer 563

The cost approach to finding appraised value involves combining separate estimates of value for the building and the land to get the estimated value of the entire improved property. This approach measures value as a cost of production, including the acquisition of the land and the construction costs. Its reliability depends on valid reproduction cost estimates (i.e., the cost of rebuilding) and appropriate depreciation estimates. The cost approach is NOT used in condominium and cooperative properties and isn’t used as often with older properties, because accurately estimating depreciation is difficult. However, it's essential when pricing historic properties. Fannie Mae doesn’t require a cost approach, but many lenders do, particularly when appraising high-value properties.

Answer 564

1. Physical depreciation is a loss in value caused by deterioration in physical condition. 2. Functional obsolescence is a loss in value caused by defects in design, such as a poor floor plan or atypical or inconvenient sizes/types of rooms. Examples include houses where there are bedrooms on a level without a bath(s), or where the only access to a bedroom is through another bedroom. 3. External depreciation or “economic obsolescence” is a loss in value caused by an undesirable or hazardous influence offsite. Examples are heavily trafficked areas, industrial odors, or airport noise

Answer 565

1. **Curable depreciation** refers to an item that can be repaired or replaced, and where the cost to cure the item is less than or the same as the anticipated increase in the property’s value after the item is cured. This includes items of deferred maintenance such a painting or repair of faucets. The cost to cure should be reasonable and economically feasible. 2. **Incurable depreciation** includes items not practical to correct. Examples are a furnace or a roof that hasn’t reached the end of its economic life.

Answer 566

The cost approach determines the indicated value by estimating the reproduction cost of the new improvement and subtracting the amount of depreciation from all causes described above. Then, the appraiser adds an estimate of the site value as if it were vacant and available to be developed to its highest and best use.

Answer 567

1. Use published indexes and tables to source the data, such as Marshall & Swift Tables™. 2. The cost is then adjusted by its loss in value due to depreciation from all causes. 3. Accurate site (land/lot) value is required as a separate figure. (The sales comparison approach is used most commonly to estimate this value.)

Answer 568

It depreciates over 39 years, giving us an annual depreciation of 2.6%.

Answer 569

AKA: Income capitalization approach estimates the present value of any future rights or benefits of owning a particular property. It’s based on the value principle of anticipation. There are a few different techniques that fall under the umbrella of the income approach, but they’re all similar in that they use data about the income from the property and then apply an adjustment to translate future cash flows to a current property value.

Answer 570

GRM = Price ÷ Monthly Gross Rent

Answer 571

is essentially the same as GRM, but it uses all sources of income from the property rather than only rent. The multiplier is found from a comparable property by dividing the sales price by the property’s annual gross income from all sources. You can then apply the multiplier to the subject property’s income to determine value. Larger properties generally have multiple income sources—such as laundry, vending machines, or parking meters—rather than smaller income properties, where rent is often the only source of income. Therefore, GIM is more suitable for five-unit or larger income properties.

Answer 572

The direct capitalization method calculates a net operating income (NOI) for a property over the next year, then applies a capitalization rate (also called a cap rate) to that income to derive a market value for the property. The capitalization rate is the expected rate of return on investment, and measures the risk of an investment. The higher the cap rate, the higher the risk. The cap rate and market value are inversely related, which means that when one goes up, the other goes down, and vice versa. The formula to calculate cap rate is R = I ÷ V R= Cap Rate V= Property Value I= Net Operting Income Net Operating Income (NOI)= Gross income – losses – expenses.

Answer 573

This method is similar to direct capitalization, but projects farther into the future than one year. It also considers the potential value of the property upon resale. An expected rate of return is applied to income from the entire holding period to find the current property value. Think of it as the total return of the investment expressed in an annual rate. Yield capitalization is most often used for larger properties where the investor wants a value based on long-term holdings, along with the effect of debt repayment and potential resale of the property on the ultimate return on investment.

Answer 574

After performing the various approaches used in the valuation process and arriving at the different values, the appraiser will reconcile each value by weighting (or more heavily considering) the value derived from one or two approaches over the others. Greater weight is given to the approach that's best for that specific type of property.

Answer 575

Bracketing

Answer 576

Broker's price opinion

Answer 577

federally related transaction: transactions for sale, lease, purchase, investment, refinancing, or exchange of real property in which a federal financial agency or regulatory authority is involved. Also included are transactions in which real property or interests in real property are used to secure a loan, including mortgage-backed securities. The agencies referred to here include the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation (FDIC). Residential properties in federally related transactions valued at $400,000 or less are exempt from these federal appraisal requirements. It's important to understand that a "federally related transaction" does NOT include loans that are guaranteed (VA) or insured (FHA) by the federal government, nor does it refer to loans that will be sold to a GSE (such as Fannie Mae or Freddie Mac). These loans have their own separate appraisal requirements. Some estimates indicate that 90% of all real estate-related financial transactions engaged in by federally regulated institutions aren't federally related transactions. This means that as a licensee, you may never encounter a transaction that must follow these federal appraisal rules. But now you know about them, just in case!

Answer 578

That federally related appraisals must be conducted by an appraiser who's either a licensed or certified appraiser

Answer 579

**Step 1. State the problem** What's the purpose of this appraisal? What am I trying to solve? By defining the problem, it informs my approach, and what kind of data I need to gather. **Step 2: List the data needed and where to find it** The data needed will obviously change, depending on the problem I’m trying to solve. It’ll also change, depending on the property type—commercial or residential, multi-family or single-family, condo or detached, old or new, yadda yadda (this is also all part of the problem statement). **Step 3: Gather the data** This is a long step, and it takes the most of my time. There are two types of data, and there are three approaches to valuation, so let’s talk about that next. Types of Data **General data:** What’s going on in the national economy, the region, the city, and the neighborhood? Demographics, income level, employers moving in or moving out, employment figures, cost of living, population growing or shrinking, all of that. Way different than a CMA or BPO, eh? **Specific data:** The site, positioning on the site, improvements, etc. **Step 4: Determine the property’s highest and best use** not from how it is right now, but from its highest and best use. That means, if there were no building there, what might be there instead? Usually for single-family residences, highest and best use is as it is right then. It’s zoned for single-family, it has single-family, that’s it. For commercial properties, highest and best use comes into play a lot. It’s a warehouse now, but what if it were a 10-unit condominium complex? Or a manufacturing plant? See what I mean? Even in residential properties, what if it could be a multi-family instead of a single-family? Sometimes that’s possible. **Step 5: Estimate the value of the land** **Step 6: Estimate property value using three approaches to value** For this step, I value the property in three different ways: the sales comparison approach, the cost approach, and the income approach. **Step 7: Reconcile the data** This doesn’t mean I add up the data and split the difference. I actually weight one approach more than the others. For instance, for a single-family residential, the sales comparison will usually be weighted more heavily. For a theater, which is a one-off kind of property, I might use the cost approach. And for a rental, of course the income approach is heaviest. **Step 8: Report the appraised value**

Answer 580

1. **Restricted appraisal report (which may only be used by the client)** A restricted appraisal report contains minimal detail. It may be prepared for a specific client for an explicit, limited purpose. Otherwise, it does not satisfy the needs of most lenders and institutions. A restricted appraisal report may be provided in either narrative (developed as a word-processed document) format or form (meaning developed with appraisal software with the end goal being a standardized report). The form report may be likened to a property report card, where the bulk of the appraisal is completed by checking and filling in boxes, together with an actual analysis portion. Because a restricted report is simply a matter of filling out a form, analysis can be generated automatically in many cases, offering an economical way to get a snapshot of a property. 2. **Appraisal report (the most common form of appraisal report)** A restricted appraisal report contains minimal detail. It may be prepared for a specific client for an explicit, limited purpose. Otherwise, it does not satisfy the needs of most lenders and institutions. A restricted appraisal report may be provided in either narrative (developed as a word-processed document) format or form (meaning developed with appraisal software with the end goal being a standardized report). The form report may be likened to a property report card, where the bulk of the appraisal is completed by checking and filling in boxes, together with an actual analysis portion. Because a restricted report is simply a matter of filling out a form, analysis can be generated automatically in many cases, offering an economical way to get a snapshot of a property.

Answer 581

1. **Appraiser Qualifications Board** Determines the qualification criteria for state licensing, certification, re-certification of appraisers. 2. **Appraisal Standards Board** Determines the rules for creating an appraisal and reporting its results. It also encourages the use, understanding, and implementation of the Uniform Standards of Professional Appraisal Practice (USPAP) as required by FIRREA. 3. **Appraisal Practices Board** Responsible for finding and distributing thoughts on known valuation methods and techniques.

Answer 582

The Uniform Standards of Professional Appraisal Practice (USPAP) are the generally accepted standards for professional appraisal practice in North America. The USPAP also describes the way in which an appraisal is communicated. The USPAP doesn’t recommend definite approaches be used in the appraisal process. Instead it requires that appraisers be familiar with available methods and know how to correctly use them.

Answer 583

1. ***Registered Trainee*** **Appraisal Scope** May not independently appraise **Education** Prior to registering with the commission, a registered trainee applicant must complete 75 hours of qualifying education, within five years preceding the date of application, and successfully pass the applicable final examinations. 15-hour Appraisal Foundation’s National USPAP course, or its equivalent 30-hour course in appraisal principles 30-hour course in appraisal practice or procedures. Beginning January 1, 2015, both the trainee and supervisory appraiser must complete a seven-hour supervisory appraiser/trainee appraiser course established by the AQB. **Experience** This includes: No prior experience required, or accepted for credit. To gain experience credit for licensure or certification, the appraiser assistant must register with the commission, and have a supervising certified appraiser in Tennessee who has been registered with the commission for at least 36 months. 2. ***State Licensed*** **Appraisal Scope** May appraise noncomplex one- to four-family residential units having a transaction value less than $1 million, and complex one- to four-family residential units having a transaction value less than $250,000. May also appraise other types of real property having a transaction value less than $250,000 thousand dollars. May appraise agricultural properties, including those with up to two dwelling units, with a value up to, but not including, $1 million. **Education** Thirty semester credit hours of college-level education from an accredited college, junior college, community college, or university, or an Associate’s degree or higher (in any field) and 150 hours of approved qualifying appraisal education courses completed with successful passage of course final exams: 30 hours on basic appraisal principles (in not less than 15- hour increments 30 hours on basic appraisal procedures in not less than 15-hour increments 15 hours on residential market analysis and highest and best use 15 hours on residential appraiser site valuation and cost approach 30 hours on residential sales comparison and income approaches in no less than 15-hour increment 15 hours on residential report writing and case studies 15-hour Appraisal Foundation's National USPAP course or its equivalent **Experience** 1,000 hours over a minimum of six months. Experience must be in conformance with the Uniform Standards of Professional Appraisal Practice. 3. ***State Certified Residential*** **Appraisal Scope** May appraise all types of non-complex one-to-four-family residential property without regard to transaction value and other types of real property having a transaction value less than two hundred fifty thousand dollars. $250,000. May appraise agricultural properties, including those with up to two dwelling units, with a value up to, but not including, $1 million. **Education** Bachelor’s degree or higher from an accredited college or university, plus: 200 hours of qualifying education courses, with the successful passage of the course final exams. The 200 hours includes: All of the requirements for state certified licensed appraiser plus: 15 hours on statistics, modeling, and finance 15 hours on advanced residential applications and case studies 20 hours of electives **Experience** 1,500 hours over a minimum period of 12 months. Experience must be in conformance with the Uniform Standards of Professional Appraisal Practice. **State Certified General** **Appraisal Scope** All types of real property **Education** Bachelor’s degree or higher from an accredited college or university, plus: 300 hours of qualifying education courses, and passing the course final exams. The 300 hours include: 30 hours on basic appraisal principles, in not less than 15- hour increments 30 hours on basic appraisal procedures, in not less than 15-hour increments 30 hours on general appraiser market analysis and highest and best use, in not less than 15-hour increments 15 hours on statistics, modeling, and finance 30 hours on general appraiser sales comparison approach, in not less than 15-hour increments 30 hours on general appraiser site valuation and cost approach, in not less than 15-hour increments 60 hours on general appraiser Income approach, in not less than 15-hour increments 30 hours on general appraiser report writing, in not less than 15-hour increments 30 hours of electives, in not less than 15-hour increments The 15-hour Appraisal Foundation's National USPAP course or its equivalent **Experience-** 3,000 hours (including at least 1,500 hours of nonresidential appraisal experience) over a minimum period of 18 months. Experience must be in conformance with the Uniform Standards of Professional Appraisal Practice.

Answer 584

AI offers the Member of the Appraisal Institute (MAI) as its highest designation, which requires: 1. A four-year college degree or equivalent 2. Satisfactory completion of AI curriculum 3. Successfully passing examinations 4. A practical demonstration of an appraisal of an income property 5. At least 4,500 hours of experience over at least three years (a maximum of 1,500 appraisal hours may be counted per year) Additional institutes and societies for appraisers, all of whom have the goals of education, high standards, and designation programs, are: 1. American Society of Appraisers 2. Farm Managers and Rural Appraisers 3. National Society of Real Estate Appraisers 4. The National Association of Independent Fee Appraisers

Answer 585

The buyer provides information to a lender about income, assets, debt, and how much money is available for a down payment. The lender uses these numbers to provide the buyer with a pre-qualification letter that estimates the amount for which the buyer might qualify but doesn’t verify any of the information. This letter helps the buyer understand what price range to shop in, and there’s usually no cost to the buyer.

Answer 586

The buyer actually applies for a loan with a lender. The information about income, assets, debt, and money available for a down payment is accompanied by some supporting documentation. The buyer might also be required to pay an application fee at this point. The lender will verify the buyer-provided information, determine the buyer’s ability to finance, and decide what that magic number might be. While there’s no guarantee at this point that the buyer will receive final approval for the loan, a loan pre-approval is generally viewed more favorably than a pre-qualification because of the verification of buyer-provided information. It’s a good way to show a seller that the buyer’s offer is viable. However, until a property has been identified, or the buyer’s financial condition is such that the lender can easily pre-approve a loan, pre-approval is rare.

Answer 587

Once an offer on a home is made and accepted, it’s time for the buyer to work with the lender (or mortgage broker) to select a loan. The buyer completes an application and provides required supporting documentation to the lender.

Answer 588

$90,000 sale price

Answer 589

A budget mortgage Because it includes principal, interest, and prorated taxes and insurance, it allows her to “budget” for her housing expenses.

Answer 590

1. **Amortized loan:** Any loan in which periodic payments go toward both principal and interest. In a typical amortized loan, most of the initial payments go toward interest, with ever-increasing amounts going toward the principal (the loan balance), until the loan is paid off. For instance, a 30-year fixed-rate loan will be fully amortized in 30 years. 2. **Budget mortgage:** A typical amortized mortgage loan that includes principal, interest, taxes, and insurance in each (usually monthly) amortized payment. A common acronym for this kind of loan is PITI (principal, interest, taxes, and insurance). 3. **Fixed-rate loan:** A loan where the principal and interest payment remains the same over the life of the loan. 4. **Growing equity mortgage:** This is a fixed-rate mortgage where the monthly payments increase over time according to a set schedule. The interest rate remains the same, and there’s no negative amortization. The first payment is a fully amortizing payment. As the payments increase, the amount greater than a fully amortizing payment is applied directly to the principal balance, reducing the life of the term and increasing the borrower’s interest savings. 5. **Adjustable rate mortgage (ARM):** A loan where the rate is adjusted, usually annually, based on the behavior of the economic index with which it’s associated (e.g., the consumer price index). The margin is the number of percentage points added to the index to determine the rate and is constant throughout the life of the mortgage; the index value is the variable. If the index is 5% and the margin is 2%, the fully indexed rate is 7%. If the index is 8%, the margin is still 2%, so the indexed rate is 10%. An adjustable rate mortgage with a lifetime cap has a maximum rate that may be charged at any point over the life of the mortgage. So if an ARM has an interest rate of 5% and a lifetime cap of 7%, the maximum that may be charged is 12%. Lifetime caps are part of the mortgage’s interest cap structure, which includes an initial, periodic, and lifetime cap. The initial cap is the value that limits the amount that interest can adjust at the mortgage’s first interest rate adjustment. The period cap (or periodic cap) limits the amount the rate can adjust at subsequent adjustment dates. An adjustable rate loan is typically an amortized loan. 6. **Renegotiable rate:** A mortgage loan alternative that allows the interest rate to be renegotiated periodically. The loan can be either long-term with periodic adjustments or short-term with more frequent rate adjustments. 7. **Interest-only:** The borrower only pays the interest on the loan for a set number of years—usually between five and seven. After the term is over, the borrower must either pay off the entire loan principal in a lump-sum payment, or will need to finance the principal through another loan. Also known as term or straight-term loan. 8. **Graduated payment:** A payment that gradually adjusts (usually upward) based on a pre-determined schedule and amount. The initial payments are less than what would be a fully amortizing payment, which creates negative amortization. This type of payment plan can make payments easier in the beginning when income is often lower. 9. **Low documentation (low-doc):** This type of loan is designed for the self-employed or those paid on commission. A high credit score and slightly higher interest rates are characteristic of these types of loans. Since 2008, the standards for mortgage qualifying have become stringent to the point that low-doc loans are now rarely available.

Answer 591

1. **Bridge loan (swing loan):** A temporary (usually 90-day) loan that provides funds in addition to an existing loan until permanent financing can be obtained. A bridge loan is often used for buyers who haven’t yet sold one property, but want to purchase a new one. Best used when the buyer’s current home is already under contract. 2. **Construction mortgage:** Temporary financing for construction purposes. The developer submits plans for a proposed project, and the lender makes a loan based on the property appraisal value and the construction plans. The entire loan isn’t given at once; disbursements are made at intervals as phases of construction are completed. Upon completion, the lender makes a final inspection, closes the construction loan, and converts the loan into permanent, long-term financing. Construction loans involve risk for the lender (they are essentially loaning on land, air, and a promise to build) and usually come with a higher rate. 3. **Balloon loan:** A loan with a lump sum payment, usually at the end of a loan period. The balloon payment on a loan may be paid as an interest-only loan for a period of time and then be paid off all at once. It may also be a partially amortized loan, in which case it’s paid off through a series of amortized payments with a balloon payment at the end of the term. For example, a lender may agree to amortize the loan over a 30-year period with a balloon payment at the end of 10 years. This equates to lower monthly payments, but borrowers must be able to pay off the entire loan at the end of 10 years.

Answer 592

1. **Home equity loan:** A loan from the equity of a home. If the property is owned free and clear, the home equity loan is a first mortgage. If not, it’s a second or junior mortgage. Rates on home equity loans tend to be higher than conventional loans, and their term rates shorter. 2. **Home Equity Line of Credit:** Often called a HELOC, this loan isn’t used for a home’s primary financing, but is based on the equity in a home. Borrowers typically use HELOC for major purchases such as vacations, tuition, or home repairs or upgrades. The entire credit line may or may not be disbursed up front. Borrowers use what they need at a given time. Most HELOCS require a monthly interest-only payment. The balance may be paid back over time or as a lump sum (balloon payment) by the end of the term. 3. **Reverse mortgage:** Also called a reverse annuity mortgage, this is designed for those who want to use the equity in their homes to stay in their homes. With a reverse mortgage, the lender makes payments to the homeowner for a specified period of time and gains corresponding ownership. 4. **Blended rate loan:** Usually applies during refinancing. Lender charges less than the prevailing interest rate, but more than the original interest rate. Typically used if current interest rates are higher than original rates. Benefits lender by raising the return on older loans, and benefits the borrower by allowing them to refinance and potentially take cash out while maintaining a lower interest rate than the current market provides. Some lenders will use a blended rate option for buyers assuming a previous loan. Blended loans are available on FHA, VA, and some conventional loans. 5. **Land contract:** Also known as a contract for deed, land installment contract, or installment sale agreement, this is a contract between a seller and buyer in which the seller acts as the lender for the buyer, who purchases the property for an agreed-upon price. Just as with a traditional lender, the buyer makes installment payments to the seller, who retains the title to the property while the buyer gets the right of possession. Often, there’s both a down payment, and at the end of the contract, a balloon payment. When the loan balance is paid in full, the seller gives the buyer title.

Answer 593

1. **Lease with option to buy:** The buyer and seller negotiate a sale price, which is written into the lease. Sellers will often apply a portion of the rent toward the purchase to entice the buyers to close more quickly. 2. **Purchase money mortgage:** Seller financing in which a mortgage is given by the buyer to the seller toward the purchase price. Buyers use this as down payment financing. The seller is the mortgagee and the buyer is the mortgagor. The purchase money mortgage may be a first mortgage, a junior mortgage, or a junior wrap-around (explained below) mortgage. 3. **Wrap-around mortgage:** Seller financing that wraps the new buyer’s mortgage around the seller’s existing mortgage. The seller continues to make payments on the first mortgage, and the buyer makes the payments to the seller on the wrap-around mortgage.

Answer 594

1. **Blanket mortgage:** Used in commercial applications. Two or more properties are pledged as security for loan repayment in a blanket loan. A release clause allows parcels to be removed from the lien, usually when the loan balance lowers to a specified amount. 2. **Package mortgage:** A mortgage in which personal property is included with the real property in the sale. This might be used in the case of a furnished condominium, for instance, but it’s more commonly used in commercial real estate where business assets are included as collateral. 3. **Shared equity mortgage (equity sharing):** This is used most often in commercial lending. The borrower agrees to the lender’s participation in the net income from the commercial property or enterprise in order to obtain the loan. The lender may receive interest and a share of the profits.

Answer 595

With a straight-line loan (also called straight-line amortization or constant amortization), the portion of the payment applied to the principal remains the same with each payment, and the interest amount varies according to the outstanding loan balance. This means that the amount of each payment changes, and the borrower makes higher installment payments at the beginning of the loan when the loan balance is higher and more interest is due. Over time, the amount of each installment payment lowers the outstanding balance.

Answer 596

Purchase money mortgage

Answer 597

Obtain a pre-qualification letter.

Answer 598

Making an application for a loan

Answer 599

**Automatic Termination** The PMI Act of 1998—the Homeowner’s Protection Act—requires lenders of loans created after 1998 to automatically cancel PMI when the borrower’s equity is scheduled to reach 22% (an LTV of 78%), based on the original value (the lower of the purchase price or appraised value). Borrowers must be current on payments for this to occur **Borrower-Requested Termination** Borrowers may request that lenders terminate PMI when the principal balance on the loan is scheduled to reach 80% of the home’s original value. Borrowers must be current on payments and have a good payment history; they must request the termination in writing and may be required to prove that no junior liens on the property exist. Borrowers may have to provide evidence, such as an appraisal, that the property value meets an 80% LTV. This process can take several years, of course, because payments are primarily interest in the beginning. If the market is appreciating, however, or if borrowers have made substantial improvements to the property, they may reach this point earlier in their loan term. **Final Termination** If borrowers are current on payments, the lender must terminate PMI one month after the loan reaches the midpoint of its amortization schedule, even if the LTV isn’t yet 78%. This is most likely to occur for borrowers who start out with a negatively amortized loan (interest only), some sort of balloon payment, or a balloon mortgage. .

Answer 600

The Federal Housing Administration insures loans for lenders that meet certain underwriting criteria. Borrowers must pay a mortgage insurance premium (MIP) for the life of the mortgage loan, so it’s wise to encourage them to weigh all of their options before deciding which type of loan works best for them. Borrowers pay a portion of the MIP at closing; the remaining premium is prorated and built into the monthly mortgage payments. FHA doesn’t set a maximum sales price or focus solely on borrowers with lower credit scores and smaller down payments. There is a maximum loan amount, however, so borrowers must pay anything above that in cash.

Answer 601

Unlike an Federal Housing Administration (FHA)-insured loan from the federal government, VA loans are guaranteed by the U.S. Department of Veterans Affairs. The VA works with lenders that it has approved for it loan programs. The amount guaranteed may not always be 100% of the loan. This means that if a borrower defaults on a VA loan, the VA will reimburse the lender for a portion of the loan’s value unlike other loans that require mortgage insurance. Borrowers may be held responsible for repaying the VA for the amount paid to the lender if they default. The VA directly funds loans only for housing for Native Americans living on federal trust land.

Answer 602

1. Large adjustments to sales price without supporting comparable data, or a request that the list price be changed to reflect appraised value. 2. The buyer requests a particular appraiser. 3. The seller contributions include large décor or improvement allowances. 4. The mortgage broker refers a pre-qualified buyer to an agent. 5. It's suspected that the buyer doesn't intend to live on the property. 6. The buyer’s credit history is limited and provided by companies that either charge high interest rates, or the buyer’s loan payoff history doesn’t include interest payments. 7. The stated income is unrealistic. 8. Drastic increase in income from a recent raise or new job. 9. Missing or inconsistent information on purchase and sales agreement.

Answer 603

**1. Property flipping:** Illegal when a home is bought, appraised for more than it’s worth, and sold within a short time frame. Kickbacks to the parties are commonplace. **2. Inflated appraisals:** An appraiser intentionally submits a misleading report to a lender that indicates an inflated property value. **3. Silent second:** A property buyer accepts a second mortgage without disclosing it to the original lender. Often used when a buyer can’t afford the down payment on a home. **4. Nominee loans/straw buyers:** Concealing a buyer’s identity by using another person’s name and credit information to obtain a loan. **5. Equity skimming:** An investor receives title to a property— often by using a straw buyer—doesn’t make the mortgage payments, and usually rents out the home until foreclosure occurs. **6. False identity:** Borrowers may use a stolen or fictitious identity to obtain a home loan. **7. Undisclosed buyer rebate:** The seller or another party provides funds that aren't included in the settlement statement. In order to be legal, rebates must be disclosed to the lender and must appear on the settlement statement.

Answer 604

**Why Does It Exist?** The Consumer Credit Protection Act (CCPA), created in 1968, includes the Truth in Lending Act. The intent of the legislation was to safeguard the consumer in the use of credit by requiring full disclosure of the terms and conditions in any offers of credit. **What’s Its Purpose?** TILA requires lenders to make disclosures that allow consumers to compare the costs of making a purchase using credit from different lenders, and to compare the cost of using credit with the cost of using cash. **How Does It Affect Real Estate Sales?** Mortgage lenders must follow TILA disclosure requirements. The statute is implemented through the rules codified in Regulation Z, which applies to all advertising that promotes credit. For the licensee, this means any real estate advertisements that include credit terms. When and How Will a Real Estate Professional Encounter or Be Obliged by the Requirements Related to This Act? Regulation Z covers all of the ins and outs about who, when, and what needs to happen to properly disclose credit in an advertisement. In general, the goals are to make credit information “clear and conspicuous” to consumers, and to allow informed decision-making. An ad can show the APR without requiring all of the other credit terms to be disclosed. That’s because the APR by itself gives consumers a simple way to compare loans. But if certain other “trigger” terms are included in the ad, this would require the full disclosure of all terms. **These “trigger” terms are:** Down payment Payment amount Number of payments Interest rate (other than APR) These trigger terms only apply if the ad states specific numbers. If the ad simply mentions financing in a general way, such as “low down payment” or “easy financing,” no additional disclosure is required. In addition to the advertising rules, lenders must also provide consumers with a disclosure statement within three days of making their loan application. This disclosure must include the actual annual interest rate on the loan, the APR, and any finance charges that apply. For borrowers who are either refinancing or obtaining a new loan on their current residence, the disclosure statement must also include the right to rescind up to three days after closing on the loan.

Answer 605

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act or simply Dodd-Frank) was created in response to the 2008 subprime mortgage crisis, which impacted national and global economies. Dodd-Frank was established in part to provide stricter regulation and oversight of the financial services industry. Key to this mission was the creation of the Consumer Financial Protection Bureau (CFPB), which promotes fairness and transparency for mortgages, credit cards, and other consumer financial products and services. The CFPB enforces the Real Estate Settlement Procedures Act (RESPA) and requires that consumers receive disclosures at various times in the transaction while outlawing kickbacks that increase the cost of settlement services or limit consumer choice. **History** In 1968, the Federal Reserve Board (FRB) enacted the Truth in Lending Act (TILA). The regulations within this act are known as Regulation Z (Reg Z). When TILA was enacted, the FRB administered Reg Z, but since 2011, the CFPB has overseen it. TILA requires that lenders disclose the annual percentage rate, loan terms, and total borrower costs before extending credit to borrowers. Separately, the U.S. Department of Housing and Urban Development (HUD) implemented Regulation X, which in turn implemented the 1974 Real Estate Settlement Procedures Act (RESPA). Regulation X is administered by the CFPB under the Dodd-Frank Act. **The Dodd-Frank Act** In 2010, the Dodd-Frank Act went into effect, which changed previous RESPA and TILA requirements. Congress put both acts under one umbrella and made the CFPB responsible for RESPA and TILA. Lender disclosures required under RESPA have been combined with disclosure requirements under TILA. Together, these disclosures are called the TILA /RESPA integrated disclosures (TRID). The TRID forms are the Loan Estimate and Closing Disclosure, which lenders are required to provide to borrowers at specific times. RESPA also outlaws kickbacks that increase the cost of settlement services or limit consumer choice. Under these provisions, lenders must disclose the following information to consumers: The loan type for which they’re applying All loan fees A projected payment table Estimated closing (settlement) costs **Why does it exist?** HUD enacted RESPA, a consumer-protection statute, to protect consumers against abusive lending practices, and ensure timely and accurate disclosure of settlement costs. RESPA helps homebuyers be better shoppers and eliminates illegal kickbacks and referral fees among settlement service providers (that's any entity providing services related to the settlement process, like mortgage brokers). For instance, a mortgage broker might pay a real estate licensee a fee for every client sent to the broker. This is illegal under RESPA because it limits consumer choice (the licensee would likely not offer referrals to mortgage brokers that don’t provide referral fees), and increases consumer costs (the mortgage broker would add this cost into the consumer’s fees without identifying it or disclosing it to the consumer). RESPA does permit licensees (through their brokerage firms) to offer cash rebates of licensees' commission to buyer and sellers as long as no part of the rebate is required for referral of business. RESPA requirements apply to all settlement service providers, including real estate brokers, lenders, title companies, appraisers, closing attorneys, surveyors, etc. RESPA's

Answer 606

**Why Does It Exist?** The Equal Credit Opportunity Act (ECOA) was a response to discriminatory practices by lenders that made credit unavailable to people or offered less favorable terms based on protected class status, and not on their credit-worthiness. **What’s Its Purpose?** ECOA prohibits creditors from discriminating against protected classes or asking for certain types of information. The intent is to make credit equally available to all credit-worthy applicants. Protected class status includes race, color, religion, national origin, sex/gender, marital status, age (over the age of 18), or dependence on public assistance. **How Does It Affect Real Estate Sales?** Lenders and real estate professionals who arrange financing must follow the requirements of the act. The ECOA Valuations Rule requires creditors to disclose to applicants that they have the right to receive copies of appraisals and written valuations, and to automatically send a free copy of home appraisals and other written valuations promptly after they’re completed, regardless of whether credit is extended, denied, incomplete, or withdrawn. The rule applies to all written valuations (not just appraisals) developed in connection with an application for a covered transaction. It covers all first liens on dwellings, including closed-end mortgage loans and open-end loans. **When and How Will a Real Estate Professional Encounter or Be Obliged by the Act’s Requirements?** You should be aware of the rules, and notify your clients if the rules have been broken so they can pursue legal remedy. **Other Notes** This is also known as Regulation B (implementing the rules of the act). This act was amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010; it is currently enforced by the Consumer Financial Protection Bureau.

Answer 607

**Why Does It Exist?** The Home Mortgage Disclosure Act (HMDA) of 1975 was created when it became clear that some financial institutions had contributed to the decline of certain geographic areas by failing to provide adequate home financing to qualified applicants with reasonable terms and conditions. **What’s Its Purpose?** The key purpose of HMDA is to provide the public and elected officials with sufficient information to enable them to determine whether financial institutions are fulfilling their obligations to serve the housing needs of the communities and neighborhoods in which they’re located. HMDA requires many financial institutions to maintain, report, and publicly disclose information about mortgages. This helps public officials make decisions and policies, and it reveals lending patterns that could be discriminatory. **How Does It Affect Real Estate Sales?** HMDA, when applied correctly, opens up sales opportunities throughout a community, and not simply in affluent, predominantly Caucasian sectors. When and How Will a Real Estate Professional Encounter or Be Obliged by the Act’s Requirements? Licensees should be aware of the program, and investigate and report if it appears that a neighborhood is being redlined. **Other Notes** Currently the Consumer Financial Protection Bureau has authority over HMDA. Initially, HMDA reporting requirements only included the number and dollar amount of loans by census tract. In 1989, the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) expanded the data lenders are required to disclose. Lenders must now identify the race, gender, and income of loan applicants, as well as whether an application was accepted or denied.

Answer 608

**Why Does It Exist?** The Community Reinvestment Act (CRA) was created in response to the practice of redlining. **What’s Its Purpose?** CRA requires lenders to meet the needs of their communities by investing in development and rehabilitation efforts, especially those that enable low- and moderate-income individuals and families to afford a home. Lender compliance is reviewed through the lender’s report that shows its community’s geographic boundaries, identifies the community reinvestment credit offered, and includes comments from the public about how the lender is doing in meeting the community’s needs. Periodically, the lender is reviewed by a federal financial agency, such as the Comptroller of the Currency, the Federal Reserve’s Board of Governors, the FDIC, or the Office of Thrift Supervision. The lender must post a public notice that it’s subject to this review, and make the results available. **How Does It Affect Real Estate Sales?** If you’ve noticed the rehabilitation of a community in your area, you may have this act to thank. It’s helped to reverse the trends of deteriorating neighborhoods in many instances. When and How Will a Real Estate Professional Encounter or Be Obliged by the Act’s Requirements? Requirements affect lenders only. **Other Notes** This act is not without controversy. It’s been revised numerous times since its inception, and its effectiveness has been called into question, and there has even been speculation that it may negatively impact some communities. Some have argued that it forced banks to make riskier loans and thus helped to create the situation that led to the housing crisis. Such claims have not been substantiated, however.

Answer 609

Eliminating illegal kickbacks and referral fees among settlement service providers and requiring lender disclosures as part of a residential real estate transaction involving credit

Answer 610

Home Mortgage Disclosure Act The Home Mortgage Disclosure Act requires many financial institutions to publicly disclose information about mortgages, allowing public officials to make informed policy decisions and revealing potentially discriminatory lending patterns.

Answer 611

Loan flipping

Answer 612

Falsely inflated appraisal

Answer 613

Requiring full disclosure of the terms and conditions in any offers of credit

Answer 614

Requires financial institutions to maintain, report, and publicly disclose information about their mortgages

Answer 615

this is the document that explains who owes money to whom, how much, and how it will be repaid. When it’s used in combination with a mortgage or deed of trust, it must also refer to that security instrument. The note will be attached to the security instrument, or in some cases, the note and the security agreement are seen together in the same form. The parties to a promissory note are the maker (borrower) and the payee (creditor). The borrower makes the promise to pay the creditor.

Answer 616

The mortgage document is a security instrument that describes the agreement between the borrower and the lender to use the property as collateral (security) for the loan. It creates a voluntary lien against the borrower’s property so that the lender can foreclose if the borrower doesn’t live up to the terms of repayment on the attached promissory note. In typical mortgages, title is held by the lender. However, sometimes, although the property is still used as collateral, the buyer keeps the title. This is called hypothecation. The two parties to a mortgage are the mortgagor (borrower, who grants the lien on the property) and the mortgagee (the lender).

Answer 617

The deed of trust, which can also be called a trust deed, is another type of security instrument. Like the mortgage, it’s an agreement to use the property as collateral for the loan. There are three parties involved in a deed of trust: 1. The borrower is the trustor or grantor who grants the security interest in the property. 2. The lender is called the beneficiary. 3. The third party is the trustee, which is the entity that arranges for the property to be released from the lien and reconveyed to the property owner once the loan is paid off. If the borrower defaults, the trustee arranges for the foreclosure.

Answer 618

With this type of finance instrument, the promise to repay and the security instrument are both included in the same document. The contract for deed is sometimes called by other names, but contract for deed essentially describes the agreement. It’s usually used when a seller, rather than an institutional lender, is financing the buyer’s purchase. The agreement between the parties allows the seller to retain possession of the property title while the buyer pays off the purchase price and occupies the property. The contract allows the buyer to take possession of the property as long as the requirements for repayment are being met. Once the loan is paid off, the seller delivers the deed to the buyer, and the new deed is recorded, completing the agreement. Other names for the contract for deed are: land contract, real estate contract, contract for sale, agreement for deed, installment sale, and articles of agreement. The parties to a contract for deed are the vendee (the buyer/borrower) and the vendor (the seller/lender).

Answer 619

In order for negotiable instruments to be truly negotiable, as defined by Article 3 of the Uniform Commercial Code, they must meet certain requirements. They must: 1. Be in writing 2. Have a time limit on the payment (e.g., “on or before January 1, 2016”), or must be payable upon demand. Some negotiable instruments are not payable on demand (for example, drafts, promissory notes, and CDs) while others, such as checks, are. 3. Contain a promise or order to pay; The negotiable instrument may not contain any conditions for payment; it must be unconditional. 4. Specify the amount of money to be paid; If interest is charged for the money owed, the rate of interest, which may be fixed or variable, must appear either on the instrument itself or be referenced in an associated document. 5. Be signed by the person/entity who is making the promise or agreement to pay; An authorized agent of the maker/drawer may sign the negotiable instrument for the maker/drawer.

Answer 620

False Some negotiable instruments aren't payable on demand (for example, drafts, promissory notes, and CDs) while others, such as checks, are. The negotiable instrument is payable on demand if no definite time is stated.

Answer 621

Is ownership of the property and gives the holder the right to transfer the property.

Answer 622

Is the right to possess the property based on a financial interest it also gives the holder the right to obtain legal

Answer 623

In title theory states, the legal title to the property is held by the lender (or trustee). Borrowers receive equitable title, meaning they have the right to use and occupy the property until they've repaid the loan. Once the loan is repaid, the lender transfers the title to the borrower. Most title theory states use the deed of trust as a standard fiance instrument for home loans. Because the lender (or Trustee) already has title to the property, it's much easier for a lender in a title theory state to foreclose on a property.

Answer 624

In lien theory states, the borrower holds both legal and equitable title to the property, but the mortgage document places a lien on the property. The lien gives the lender the right to seize and sell the house should the borrower default. This lien shows up on the property title, and the property can't be transferred without the debt to the mortgagee being satisified.

Answer 625

1.Power of Sale Standard in the deed of trust, but may also be included in a mortgage. This clause allows the trustee (or the mortgagee, in the case of a mortgage) to sell the property in order to recover losses from borrower default using a non-judicial foreclosure process. 2. Defeasance Clause or Reconveyance Clause This clause states that the borrower will regain full title once the debt is fully repaid. Mortgages use the defeasance clause. The lender is required to execute a satisfaction of mortgage. Deeds of trust use a reconveyance clause. The trustee is required to execute a deed of reconveyance to give full title to the trustor. 3. Late Charge Provisions Charges for loan payments that are received after their due date are usually stipulated in the promissory note attached to the security instrument. 4.Acceleration Clause If the borrower fails to make a payment or to abide by the terms of the agreement (for example, by not paying property taxes), this is the clause that describes this as a default, and which creates a consequence of making the entire debt immediately due and payable. 5. Alienation Clause Also known as the due-on-sale clause, this allows the lender to make the entire loan due and payable immediately if the property is sold or otherwise transferred. The presence of this clause can affect the ability of a buyer to assume the loan.

Answer 626

**1. Lock-in clause:** This is a form of pre-payment penalty. The borrower isn’t allowed to pay the loan in full prior to a specific date, allowing the lender to continue making money from the interest on the loan. Prepayment penalties of any sort have largely been outlawed and are not allowed on most government loans. The lock-in clause is something that is only likely to be included on very high-yield mortgages where the lender wants to ensure earnings for a specific time period. **2. Subordination:** A subordination clause allows the security instrument’s lien position to be placed in a lower priority to a new loan using the same property as collateral. For example, a developer purchasing a vacant lot may need a construction loan as well as the loan for purchasing the land. The subordination clause in the mortgage makes it possible to obtain the construction loan. Without it, the developer is unlikely to find a lender willing to finance the development of the lot. **3. Cross-default:** This clause automatically puts a borrower in default on all loans if the borrower defaults on any loan where the clause is included. **4. Pre-payment clause:** This provision allows the borrower to prepay the loan at any time without penalty. **5. Exculpatory:** This clause protects the borrower’s other assets in case of foreclosure. In a judicial foreclosure, a lender can choose to ask for a deficiency judgment, which would allow the lender to include a request for money over and above the proceeds from the foreclosure sale. The exculpatory clause protects the borrower from that possibility. **6. Partial release clause:** This clause is usually seen in an instrument used for a new subdivision. It requires the lender to release a portion of the property from the lien when a part of the debt has been paid. This allows a developer to acquire title to one lot in the subdivision and to convey it to a buyer without having to pay off the entire loan. The clause is called the partial satisfaction clause when used in a mortgage, and a partial reconveyance clause when used in a deed of trust. **7. Non-recourse clause:** Because a note and mortgage or note and deed of trust are negotiable instruments, this clause can be included to protect the original mortgagee/beneficiary if the security instrument is sold and the borrower subsequently defaults. If the security instrument doesn’t include this clause, the entity that sold the security is required to reimburse the security’s buyer if the borrower defaults. With the non-recourse clause, the entity that buys the security is responsible for taking action to recover the remaining balance of the loan if the borrower defaults. (In actual practice, the borrower interacts with a loan servicer to make payments, and that loan servicer will take action against the appropriate party if the borrower defaults.) **8. Non-disturbance clause:** If a tenant is renting a property, and the property is sold or the lender seizes the property due to borrower default, this clause prevents the tenant from being evicted. In essence, it assures the tenant that his or her rental agreement will be honored.

Answer 627

**Assumption** With or without an alienation clause, a buyer may ask to assume a loan. Why? Well, when interest rates are low, there’s no real advantage to doing so. But at times when interest rates are high, and the seller has an existing loan that was originated when interest rates were low, a buyer may be eager to assume such a loan. At the same time, a lender would really like to have the buyer get a new loan at the higher market interest rates, and would be hoping that the original security instrument included that alienation clause, which would allow the lender to refuse the assumption. But if the alienation clause isn’t in the original instrument, or if it is and the lender agrees to an assumption, the buyer can assume the original loan with all its original conditions. In this case, both the original borrower and the new borrower are liable for the loan’s payment. If the new borrower defaults on the loan, the lender can foreclose, sell the property, and ask for a deficiency judgment from the new borrower if the proceeds from the sale don’t pay off the loan. If the lender still doesn’t get the money it’s owed, the original borrower can still be sued for that money. If more than one assumption occurs on a particular loan, then all the borrowers are liable when a default occurs. There are a few situations where the lender can’t enforce an alienation clause. The federal Garn-St. Germain Depository Institutions Act of 1982 prohibits the enforcement of an alienation clause when the property is being transferred between a parent and a child, to a relative as a result of the borrower’s death, between spouses, or as a result of a divorce. A lender is more likely to agree to an assumption in these situations, if the buyer wishes to assume the loan. An assumption is officially documented with an assumption agreement signed by the buyer and the seller, which stipulates that buyer will be taking over payments for the note held by the lender. An assumption will usually require that the new borrower meet the lender’s qualification standards. In some cases, the lender may even alter the terms of the loan when it’s assumed, and there may also be an assumption fee to pay. **Benefits to Seller** One benefit to the seller with an assumed loan is that, in a slow market or when mortgage money is tight, a loan assumption might make the difference between selling the house or not. A buyer with enough cash to pay the difference between the existing loan balance and the negotiated sales price may still not be able to get a mortgage; provided the buyer can demonstrate adequate creditworthiness to the seller, an assumption may make the sale. **Detriments to Buyer** As with any real estate transaction, a loan assumption may have many pitfalls. It’s important that buyers and sellers seek legal advice to ensure that everyone is protected. 1. Buyers still face loan qualification by the lender in order to assume a loan. 2. A hefty chunk of cash might be required as a down payment in order to cover the gap between the existing mortgage amount and the negotiated sales price. This may mean that the buyer’s investing a good deal more cash in an assumed transaction than would be required for a new loan. 3. Buyers will usually pay a loan transfer fee, which will offset some of the savings gained from paying no loan origination fee.

Answer 628

**Subject To** In certain situations, a buyer may not want to assume a loan, but instead will buy the property “subject to” the existing financing. The buyer gets the deed to the property, but rather than assume the loan with the lender’s consent, the new buyer makes the payments on the seller’s loan as if nothing has changed. Why would sellers let someone else take responsibility for a loan in their name? Investors buying a property that’s at risk of foreclosure may find that a seller is more than willing to take this risk. The seller is already in a poor situation, and is about to lose the property. As long as the new buyer makes the loan payments on time, the seller’s credit score won’t suffer, and the risk of foreclosure is removed. This may sound a little dodgy, but it’s legal (assuming that there isn’t an alienation clause in the security instrument). Typically a lender won’t care who makes the payments, as long as the loan’s being paid. If the lender does become aware that title’s transferred and someone other than the original borrower is paying on the loan, it may not be worth it to the lender to pursue the matter as long as the loan continues to be paid. A lender will prefer to have a performing asset rather than spend time and money to accelerate the loan, which may also result in the lender having to foreclose. **Release of Liability and Novation** Whether a buyer assumes a loan or makes the purchase subject to the existing financing, the original borrower remains liable until the loan is paid off. With an assumption, that liability can be removed by requesting a release of liability or a novation. Release of liability is simply a written agreement that the lender won’t hold the original borrower liable for the loan in case of default. A novation is a little different. It’s a process that replaces the original borrower with the new borrower as the maker of the note. Obviously, replacing the responsible party would have to be done with the lender’s consent and cooperation, so novation isn’t a part of a purchase that’s made subject to existing financing.

Answer 629

1. Discount point 2. Alienation clause The alienation clause requires the property owner to obtain lender permission for a buyer to assume the loan, or risk having the loan accelerated. 3. A prepayment penalty 4. The lender executes and records a satisfaction of mortgage and returns the note to the borrower.

Answer 630

1. Request a novation 2. Late charge provision 3. The buyer and seller both sign an assumption agreement. 4. Contract for deed 5. Note with deed of trust

Answer 631

Caveat emptor means “let the buyer beware.” In real estate, it means that the buyer is responsible for performing due diligence on the property, and the seller isn’t responsible for disclosing everything, or for protecting the buyer. In most states, the seller must proactively disclose any known defects. In caveat emptor states, while sellers can’t lie outright or actively conceal a problem—and must honestly answer prospective buyers’ questions when asked—they aren’t obligated to point out the home’s flaws or defects to buyers. From a litigation standpoint, a caveat emptor state puts the burden on the buyer to prove that the seller deliberately withheld information or covered up a material defect. Let’s say that a seller knows that the roof leaks in heavy rains. If the property’s in a full seller disclosure state, the seller must put the buyer on notice that the roof may leak. In a caveat emptor state, the seller doesn’t need to say anything unless the buyer directly asks. The seller may not, however, paint over a leaky patch or lie if the buyer asks, “Does the roof ever leak?” Bottom line: Both caveat emptor and full disclosure state buyers should always ask about, investigate, and follow up on any red flags.

Answer 632

Insurers will sometimes look at a given property’s insurance history to determine how the number of claims, the types of claims, and certain property conditions align with their underwriting rules. A property’s insurance rules can be found in a report called the Comprehensive Loss Underwriting Exchange, or CLUE, report. The CLUE report not only helps home insurance underwriters, but it can also help buyers determine whether a particular property has hidden issues (and whether it may be difficult or expensive to obtain insurance). A CLUE report contains: Insurance company names and policy numbers Claim information, including dates, loss types, and loss payments A CLUE report may be blank if claims were filed more than seven years ago, or if the property were insured by a company that doesn’t participate in CLUE. Property owners can obtain a free copy of a CLUE report once per year. A buyer wouldn’t be able to request one for a property under consideration, but the buyer could ask the seller to get one for review.

Answer 633

1. 10 years 2. To protect themselves from any claims after closing. 3. Review the inspection report with her and discuss options. 4. Seven

Answer 634

Start by determining which jurisdiction has authority for permits in that area. It’s probably either the local city or county office. Permits are usually cataloged by your street address. You’ll want to contact the appropriate office and determine whether permits were pulled and whether they were closed (finalized). For sewer work, the county should have a sanitarian who would have these answers. In some cases, it’s possible that a septic tank still exists even if the sewer has been connected to public sewer. If permits were not pulled, the city (or county) may require the unpermitted additions to be partially or fully disassembled in order to inspect the quality of the work to make sure it was done up to code levels. If it were not done properly, it will need to be corrected or restored to its original state—a costly endeavor. In some cases, the homeowner can obtain a permit after the fact by paying a fee. If you’re representing a buyer, it’s best to get this out of the way before the buyer purchases the property. If you’re representing a seller who may have inherited an unpermitted property, investigating the issue can open up a can of worms your seller will then have to address. In other words, proceed with caution.

Answer 635

1. Dissolution: Surface rock that's soluble to weak acids dissolves over time, and cavities form below the land surface. 2. Cover Subsidence: This type of sinkhole develops gradually and are almost always found in areas where the covering sediment is permeable and contains sand. Slow, downward erosion of granular sediment causes fissures beneath the surface, which can lead to surface depressions. 3. Cover Collapse: This occurs when the covering sediments consist primarily of clay. Gradually, sediments spill into cavities in the clay surface and form a structural mound beneath the surface. This mound eventually breaches the ground surface, causing a sudden sinkhole.

Answer 636

1. Soil 2. Tax abatement 3. 4.0 picocuries per liter of air 4. Neighborhood website

Answer 637

Tennessee’s Residential Property Disclosure Act, under Title 66, Chapter 5, Part 2: Residential Property Disclosures, establishes the requirements for sellers’ residential property condition disclosure. The Tennessee Association of REALTORS® has published a form for its members that may be used for this purpose. It’s called “TN Residential Condition Property Disclosure.” Under this law, sellers of single-family residential real properties that include four or fewer single-family units must provide buyers with a written disclosure of the property’s condition, as known by the seller, whether or not the seller or buyer are represented by a real estate licensee. Such disclosure must be provided prior to the full execution of a sales contract by all parties.

Answer 638

**1. A full disclosure statement:** This statement must be in written form and must detail the seller’s knowledge of the condition of the property, including any material defects known. The disclosure form must advise the buyer of the right to obtain professional advice or inspections of the property. It must also contain a statement that the information contained in the disclosure is the representations of the seller, and not the representation of the real estate licensee or representing either party, and contains no implied warranty. **2. A statement of no representation:** A residential property disclaimer statement may be made stating that the owner makes no representations or warranties as to the condition of the real property or any improvements thereon and that buyer will receive the real property "as is," with all defects which may exist, if any, except as otherwise provided in the purchase contract. A no-representation statement is permitted only when the buyer waives the required full disclosure statement.

Answer 639

Commercial properties (i.e., non-residential properties and residential properties or containing more than four dwelling units) are exempt from the disclosure law. Generally, transfer of interest between family members, transfer as part of an estate or between co-owners, and transfers of foreclosure properties, auction properties, and bank owned properties would be exempt from disclosure law. New construction is exempt (although a builder warranty must be provided) and sellers who’ve not lived in the home for three years prior to closing are also exempt.

Answer 640

If the seller fails to provide the disclosure or disclaimer statement, it doesn’t give the buyer the right to terminate the contract, but the buyer may seek other legal action.

Answer 641

False If a buyer is represented by a licensee, it’s that licensee’s duty to explain to the buyer the buyer’s rights and obligations with regard to the disclosure.

Answer 642

1. Lauren must complete the Tennessee Residential Property Condition Disclaimer Statement form. 2. The buyer’s agent

Answer 643

This settlement method is preferable to a face-to-face closing in certain situations, such as when contentious issues arose during the contract period. With a closing in escrow, the two parties simply hand in their particular documents to an escrow agent—a neutral third party, typically a title company, trust company, or escrow company representative—who takes care of the rest. Among other documents, the seller typically completes and turns in: 1. The deed 2. Evidence of marketable title (and an affidavit of title, if required) 3. Existing property insurance policies (flood insurance, hazard insurance) 4. Statement from the seller’s lender, stating the exact loan payoff or the amount of principal the buyer will assume (depending on the loan terms) The buyer is responsible for turning in, among other things: 1. Loan documents 2. Proof of insurance (if the seller’s policies don’t transfer) 3. The remaining balance due (closing costs, etc.), usually in the form of a certified check The escrow agent reviews the documentation for accuracy and completion, ensures that the title is marketable, and then forwards the sales proceeds to the seller. The agent also records the deed and other necessary documents.

Answer 644

The parties agree to a meeting place—usually the title company, lender’s office, or one of the real estate agent’s offices. If both the buyer and the seller sit down together, it’s not unusual for this to be the one and only time they do. Other parties in attendance may include: 1. Real estate licensees representing the parties 2. Parties’ attorneys 3. Lender representative 4. Title insurance company representative The closing agent in charge of conducting the closing is usually a title company or lender representative or an attorney. Before the closing date, the closing agent will have reviewed the title insurance policy or title certificate, land survey, purchase agreement, and other items pertinent to settlement. The agent also prepares a closing statement itemizing each party’s financial obligations and how those are assigned. Once the parties review the documentation, the formal exchange follows: the parties sign all required documentation (and there’s a lot, such as the deed, lender documents, etc.). After the seller signs the deed and hands it over to the buyer or the closing agent, the documents are collected and recorded in the proper order (e.g., the seller’s loan payoff\* is recorded before the buyer’s new mortgage document). Many areas of the state endorse “split closings,” when buyers and sellers close the transaction at their own title attorney office or closing agency. It’s customary that the licensee be present at the closing, but the lender representative may or may not be.

Answer 645

In 1968, the Federal Reserve Board enacted Regulation Z (Reg Z), which implemented the Truth in Lending Act (TILA). TILA requires that lenders disclose the annual percentage rate, loan terms, and total borrower costs before extending credit to borrowers. In addition, the Department of Housing and Urban Development (HUD) implemented Regulation X, which in turn implemented the 1974 Real Estate Settlement Procedures Act (RESPA). RESPA requires lenders to provide various loan disclosures to borrowers at specific times. Under these provisions, lenders must disclose the following information to consumers: 1. The loan type for which they’re applying 2. All loan fees 3. A projected payment table 4. Estimated closing (settlement) costs In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act went into effect, which changed previous RESPA and TILA requirements in a couple of ways. First, Congress made the Consumer Financial Protection Bureau (CFPB) responsible for RESPA and TILA. This act also implemented TILA-RESPA Integrated Disclosures (TRID). TRID requires that lenders use the TRID disclosure forms—the Loan Estimate and Closing Disclosure—for all federally related new residential mortgage applications. The TRID disclosure forms aren’t required for a cash or a seller-financed transaction, so the buyer and seller will likely see some other form of settlement sheet. Risky or toxic loan features are also defined as: 1. Payback terms longer than 30 years 2. Negative amortization payment option (where the principal amount increases) 3. Interest-only payments 4. Balloon payments 5. Lender fees and points that total more than 3% of the loan (which includes payments to all affiliates of the lender as well)

Answer 646

The Closing Disclosure (CD) (also known as the Buyer's Closing Disclosure or BCD) is a written, detailed statement of final loan terms, prorations, and closing costs that the borrower should compare to information on the Loan Estimate and the sales contract. Lenders must provide the Closing Disclosure to borrowers at least three business days before closing, which allows consumers time to compare final loan terms with the previous Loan Estimate. Lenders must have proof of receipt. Consumers can also use this three-day period to consider any questions they need to raise before closing. Both the Loan Estimate and the Closing Disclosure were developed to make loan information easy to understand for consumers as well as all other parties involved. Important items, such as interest rates and monthly payments, are conspicuous. For example, the Loan Estimate displays the total interest the buyer will have paid off in five years. These forms must be used for most consumer mortgages. However, they’re NOT used for the following types of loans: 1. Home equity lines of credit 2. Reverse mortgages 3. Mortgages secured by a manufactured home 4. Mortgages secured by a dwelling that’s not attached to real property (land) In those cases, other disclosure requirements apply under RESPA and TILA.

Answer 647

1. At the closing 2. 3 3. The lender's attorney 4. The buyer 5. The buyer and the lender’s attorney 6. Real Estate Settlement Procedures Act

Answer 648

Typical prorated items are: 1. Interest on assumed loans 2. Taxes 3. Rent 4. Utility bills

Answer 649

1. Unpaid real estate taxes 2. Rent the seller collected from the tenant for a period of time in which the buyer will own the property 3. Interest on the seller’s mortgage that the buyer assumed (if applicable) 4. Utilities billed and not paid in advance

Answer 650

1. Prepaid taxes 2. Rent paid by the seller under a lease assigned to the buyer 3. Utilities billed and paid in advance

Answer 651

Full-Month Calculation 1. Annual taxes owed ÷12 months = taxes owed per month 2. Taxes owed per month x number of full months past = accrued taxes owed by seller at closing Mid-Month Calculation 1. Annual taxes owed ÷12 months = taxes owed per month 2. Taxes owed per month x number of full months past = accrued taxes owed and not yet paid by seller 3. Taxes owed per month ÷ 30 days = taxes owed per day 4. Taxes per day x 15 days = taxes per day for partial month 5. Taxes owed per month and not yet paid by seller + taxes per day for partial month = accrued taxes owed by seller at closing

Answer 652

A short sale occurs when the market value of the property (and the eventual sales price) is less than the net proceeds the borrower will get when selling it. The only option for sellers who don’t have enough money to make up the difference between what’s owed and the sales price is to request permission from their lender (or lenders) to repay less than the total amount owed.

Answer 653

it’s selected for them due to circumstances—they got in over their head, or their financial situation has changed due to job loss, increased mortgage payments (for adjustable rate loans), and inability to refinance because there’s no equity left in the property. Emotions are often high, nerves frayed, and sellers just want to get out from under their debt load. They have no incentive to leave the property in pristine condition (and likely won’t). That said, they have no reason to turn down an offer, either, and are usually quick to sign. But the offer still must get by the lender.

Answer 654

1. one mile 2. acre 3. one sqft 4. yard 5. one square mile

Answer 655

13.5 yard \* 3 = 40.5 Feet

Answer 656

15 feet × 25 feet = 375 square feet

Answer 657

multiple the price per square foot ($200 in this case) by the square footage of the house (1,500). 200 \* 1500 = 300,000

Answer 658

12,500 500\*20=12,500

Answer 659

3420 380,000\*10%=38,000 380,000-38,000=342,000 342,000\*1%=3,420

Answer 660

1% of loan value

Answer 661

$1,335.67 First, find the square footage (5.5 × 43,560 = 239,580). You're given one dimension of the rectangle, so find the other: 239,580 ÷ 400 = 598.95 front feet. To find the price per front foot, $800,000 ÷ 598.95 = $1,335.67 per front foot.

Answer 662

$2,604.17 Since we know that one square mile is 640 acres, we can convert each parcel to acres. The first parcel is 640 acres (one square mile). The second parcel is half that size (1 mile x 1/2 mile), or 320 acres. Thus, the total acreage is 960. Divide the sales price by the total acreage (2,500,000 ÷ 960), or $2,604.17.

Answer 663

25% Right to qualify for a conventional loan, the minimum is 25%. So, if a lender is using 25% as its threshold, the borrower's house payment can't exceed 25% of gross income.

Answer 664

28% Right! To qualify for a conventional loan, the housing ratio generally can't exceed 25% to 28%. So, if a lender is using 28% as its threshold, the borrower's house payment can't exceed 28% of gross income.

Answer 665

33-36 To qualify for a conventional loan, the total debt-to-income ratio generally can't exceed 33% to 36%. This means that all of the borrower's debt (house, car, loans, etc.) can't exceed 33 to 36% of gross income.

Answer 666

A house payment of $900 puts this couple at the 25% mark for housing debt-to-income. Let's take a look at total debt.

Answer 667

1000 Here, a house payment of $1,000 puts the buyers at the top of the total debt-to-income ratio. Does that mean they can afford $1,000 and not $900? Best to leave this question to the expert (the lender), who will tell the borrowers what they qualify for.

Answer 668

28.6% Take their monthly debt obligations ÷ monthly gross income.

Answer 669

( loan balance x interest rate) ÷ number of payments annually

Answer 670

1. $874.50 The loan amount is $254,400 ($318,000 x .8). The first month’s interest is $874.50 ([$254,400 x .04125] ÷ 12). 2. 180 The borrower will have 180 payments (assuming the loan isn’t paid off early). This is 12 monthly payments per year for 15 years: 12 x 15 = 180.

Answer 671

$1,064 Calculate the debt and housing ratios that buyers need to meet both lending ratios. While Gunther qualifies for a payment of $1,368 under the total DTI, he only qualifies for $1,064 under the housing ratio ($3,800 x 28%).

Answer 672

$1,042.29 In the first month, Juan pays $1,044.79 in interest ([$295,000 x .0425] ÷ 12). His monthly payment (stated in the question) is $1,750, so that means he paid the principal down $705.21 ($1,750 – $1,044.79). His new principal balance is $294,294.79 ($295,000 – $705.21). We use the new principal balance amount to calculate interest for the next month. Juan pays $1,042.29 in interest ([$294,294.79 x .0425] ÷ 12).

Answer 673

23% he housing ratio is 23%: ($1,000 + $150) / $5,000 = .23 x 100 = 23%.

Answer 674

6.29% Annual payment ÷ loan balance = interest rate. $1,830 x 12 to get the annual payment of $21,960. Then divide the annual payment by the loan amount: $21, 960 ÷ $349,000 = .0629, or 6.29%.

Answer 675

$1,108,292.40 To find the total amount paid back, multiply the monthly payment by the total number of payments: $3,078.59 x 360 = $1,108,292.40.

Answer 676

$2,333.33 $400,000 × 0.07 = $28,000; then $28,000 ÷ 12 = $2,333.33

Answer 677

$608,292.40 First, multiply the monthly payment by the total number of payments. Then subtract the original loan value: $3,078.59 x 360 = $1,108,292.40 ‒ $500,000 = $608,292.40.

Answer 678

$875 The formula is loan balance × interest rate ÷ months per year. Loan balance is: $200,000 × .0525 = $10,500; $10,500 ÷ 12 = $875

Answer 679

23% The housing ratio is 23%: ($1,000 + $150) / $5,000 = .23 x 100 = 23%.

Answer 680

Appraised value for the property Assessment ratio for the property type Residential and farm is 25% Commercial and industrial is 40% Tax rate

Answer 681

1. $1,295 The transfer tax rate in Tennessee is $0.37 per $100 ($350,000 X .0037). 2. $322 ake the amount financed ($280,000) and multiply it by the mortgage tax rate of 0.00115.

Answer 682

Taxes owed ÷ 12 months = taxes owed per month AND taxes owed per month × number of full months passed = accrued taxes owed by the seller at closing You take the tax amount, divide it by 12 months to get the amount per month. You then take the per-month amount and multiply it by the number of full months to arrive at the amount the seller owes for taxes accrued and not yet paid.

Answer 683

Sometimes these items are prorated based on a 360-day statutory year (aka "banker's" year): 30 days x 12 months.

Answer 684

The other method is to prorate based on a 365-day calendar year. These calculations use the exact number of days in each month of the year.

Answer 685

150 You calculate the taxes per month ($900 ÷ 12 = $75), and then calculate the accrued taxes owed and not yet paid by the seller ($75 × 2 months = $150).

Answer 686

875.04 First, you calculate the taxes per month ($1,400 ÷ 12 = $116.67), and then you calculate the accrued taxes owed and not yet paid by the seller for the number of full months ($116.67 x 7 = $816.69). However, because you have a partial month, you also have to calculate the taxes per day ($116.67 ÷ 30 = $3.89; $3.89 × 15 = $58.35) and then add that to the taxes per month amount ($816.69 + $58.35 = $875.04).

Answer 687

$1,190 First, find the daily rent rate by dividing $2,100 by the number of days in the month (30). Then multiply this amount by the number of days the lessee will occupy the property (17).

Answer 688

$50,000 To find the sales price, take the amount the seller wants to net and divide it by 95% or .95 (this amount is 100% minus the 5% commission rate).

Answer 689

$100,000 ($40,000+$50,000) / 95% = $100,000

Answer 690

Credit of $721.50 Since she already prepaid the property taxes, first determine the tax daily rate: $1,350 ÷ 365 = $3.70. Next, determine how many days from closing until the end of the year, which is 195 days. Next, multiply the daily rate you calculated in the first step, $3.70, by how many days from closing, 195: $3.70 X 195 = a $721.50 seller credit. Any prepaid seller's homeowners insurance will be refunded to the seller outside of closing, so this doesn't appear on the closing statements.

Answer 691

6.5% Jared was paid $12,239.50, which is 70% of the amount paid to his broker as commission. That makes his firm’s commission $12,239.50 ÷ .70 = $17,485. Multiply that by two for the total commission the firm grossed, since it's shared 50/50 with a cooperating brokerage (the brokerage that brings the buyer to the sale), giving you $34,970. Then divide by the total sales amount for the brokerage’s commission rate: $34,970 ÷ $538,000 = 0.065, or 6.5%.

Answer 692

1. The physical removal of the tenant, accomplished by legal process. 2. The substitution of tenants, putting the responsibility for the lease contract in the new tenant’s hands (although it doesn’t fully relieve the former tenant from liability should the new tenant fail to pay). Most leases have language that an assignment requires the landlord’s written permission. 3. A situation in which the tenant is prohibited from quiet enjoyment of the premises and vacates. In such cases, the tenant is evicted for all practical purposes because enjoyment of the premises is not available. 4. A type of possession in which a tenant stays after the right to possess has terminated.

Answer 693

1. A type of leasehold estate in which the duration of the lease is unknown at the time it is created. 2. A fixed termination type of lease that may be for a day, week, month, year, several years, or any definite period of time. When the specified date occurs, the lease terminates automatically. 3. A tenant who refuses to leave after the expiration of a lease. 4. The legal relationship between the parties who sign the lease. Grants possession, but not title, to the tenant, and is for a limited period of time.

Answer 694

1. The right of a tenant to renew a lease upon the expiration of a lease period (seen frequently in commercial leases). 2. Involves possessory interest that’s automatically renewed at the end of each period specified in the lease (e.g., month-to-month). 3. Illegal eviction in which the landlord has taken matters into his own hands and evicts the tenant without using legal procedures. 4. An agreement for a new occupant to live in the premises and pay rent to the former tenant, who pays the landlord.Requires landlord’s written permission; doesn’t relieve the former tenant from liability.

Answer 695

1. The person signing the lease must be a competent, sane adult. A lease to a person who’s incompetent in the eyes of the law can be voided by that person. 2. This should include the street address and unit number, as well as what is and isn't included with the lease of the property. For long-term leases, it’s also prudent to include the legal description. 3. The beginning and ending dates of a lease are clearly stated in the lease. Leases are usually expressed in annual terms. There should be no room for interpretation between the parties.The term may vary. It may be for six months, or month-to-month, or any duration the parties agree on.

Answer 696

1. The person signing the lease must be a competent, sane adult. A lease to a person who’s incompetent in the eyes of the law can be voided by that person. 2. This should include the street address and unit number, as well as what is and isn't included with the lease of the property. For long-term leases, it’s also prudent to include the legal description. 3. The beginning and ending dates of a lease are clearly stated in the lease. Leases are usually expressed in annual terms. There should be no room for interpretation between the parties.The term may vary. It may be for six months, or month-to-month, or any duration the parties agree on. 4. Unless the lease provides otherwise, rent is due in arrears, similar to the way a mortgage payment is paid. This means that the tenant will pay for rent after having lived there a month. Most landlords dislike this, and therefore most leases stipulate that the tenant will pay rent in advance.Rent is the landlord’s consideration. So what’s the tenant’s consideration? It’s possession, and the right to quiet enjoyment of the property. When payments will begin is also included in this provision. The grace period and late fees are stipulated in this part of the lease as well.

Answer 697

1. The security deposit serves as a landlord’s informal insurance against the tenant damaging the property, or any other breach of the lease agreement. The landlord is required to keep the security deposit in a bank account, in either an escrow or non-escrow account. 2. For leases of a year or longer, the statute of frauds requires that they be in writing to be legally enforceable. Shorter-term leases may also be in writing, but that’s not required for the lease to be legally binding. However, putting all leases in writing, no matter their term, protects the interests of both parties. For written leases, both parties should sign the lease. 3. For leases longer than three years, Tennessee code 66-7-101 stipulates that they must be in writing and also authenticated and registered. This means such leases must be signed by the parties to the lease, the signatures must be authenticated by at least two witnesses, and the leases must be registered with the county clerk in in the county where the property is located. 4. The signatures of the parties indicate their acknowledgment of their agreement to abide by the lease terms.

Answer 698

1. The rules and regulations provisions state how the tenant will use the property and what activities will be allowed. The lease provides that the tenant may use the premises reasonably for its intended purpose. It’s understood that the lessee may use the premises for any lawful purpose. Make sure the tenant reads these restrictions carefully, in case there’s an item of disagreement. 2. Whether or not a tenant is responsible for the monthly utility expenses is covered here, as well as provisions about placing the utilities in the tenant’s name. 3. This provision outlines the circumstances under which the lease can be cancelled due to the property being destroyed by fire or other circumstances in which the premises are left substantially impaired or otherwise unfit for human habitation. If the tenant didn't cause the issue, either party can end the lease, and the tenant will receive a prorated rent refund. 4. If the tenant breaches any of the lease terms, the landlord may, in writing, demand that the tenant vacate either immediately or at a later date. Or the landlord may simply begin a formal eviction process. If the tenant doesn’t comply with the landlord’s notice to vacate, the landlord can proceed with a formal eviction. If the tenant fails to pay rent, the landlord may terminate the lease at his or her own discretion.

Answer 699

False An oil and gas lease expires 10 years after the date it was executed. If the land is producing oil or gas, the lease may be extended.

Answer 700

1. A periodic estate : A periodic estate renews automatically at the end of each period specified in the lease agreement. 2. Estate for years: An estate for years may last for any specified period of time, not necessarily just for "years."

Answer 701

1. True 2. True

Answer 702

1. Doesn’t apply 2. Doesn’t apply 3. Applies 4. Doesn’t apply 5. Applies 6. Doesn’t apply

Answer 703

1. false 2. Ture 3. true

Answer 704

1. False 2. True 3. True 4. False

Answer 705

Real estate development : Real estate development property managers are most likely to work with real estate developers and investors. They may or may not also handle the leasing of the building to tenants after the building's constructed.

Answer 706

Depreciable basis ÷ 27.5 years Depreciable basis ÷ 39 years

Answer 707

These exchanges are also known as tax-deferred exchanges or 1031 exchange. Basically, under section 1031 of the Internal Revenue Code, an owner of real property can sell that property and then reinvest the proceeds in a “like-kind” property and defer paying any capital gains taxes. To qualify as “like-kind,” the exchange must be done according to the rules in the tax code; it doesn’t mean you have to replace an apartment building with an apartment building, etc. Instead, both the relinquished property and the replacement property must be held for productive use in trade, business, or for investment.

Answer 708

1. The investment must be held for investment or business purposes. 2. Proceeds from the sale must be passed through the hands of a qualified intermediary and must not be received directly by the investor, or they’ll become taxable. 3. All proceeds must be reinvested; any cash proceeds retained will be taxable. 4. The replacement property must have an equal or greater level of debt than the relinquished property (if not, the investor will have to either pay taxes on the difference or put in additional cash funds to offset the lower level of debt in the replacement property). 5. All timelines must be met (e.g., property identification within 45 days; closing within 180 days from the closing date on the relinquished property). No grace period exists.

Answer 709

1 45 Days 2. 0 3. Title VIII of the Civil Rights Act of 1968 prohibits housing discrimination based on race, color, national origin, and religion.

Answer 710

1. It established legalized racial segregation. 2. Separate but equal 3. The Supreme Court found that the city ordinance requiring racially segregated neighborhoods was unconstitutional.

Answer 711

1. True 2. False 3. False 4. True

Answer 712

1. U.S. citizen 2. race, color, national origin, and religion 3. sex 4. familial status and disability 5. seniors

Answer 713

1. Federal Fair Housing Act of 1968 2. Brown vs. Board of Education 3. Sex 4. Jones vs. Alfred H. Mayer Co.

Answer 714

1. The Office of Fair Housing and Equal Opportunity 2. FHEO : The Office of Fair Housing and Equal Opportunity provides administration and enforcement of federal fair housing laws. 3. HUD 4. Tennessee Human Rights Commission

Answer 715

1. True 2. False Each member serves a six-year term. 3. True 4. False 5. True

Answer 716

1. Fasle 2. False 3. True

Answer 717

1. False: The Tennessee fair housing law doesn’t exempt private clubs the way that the federal Fair Housing Act does. 2. False : Tennessee fair housing law exempts only one-to two-unit owner-occupied buildings; the federal Fair Housing Act allows an exemption for one- to four-unit buildings. 3. True 4. False

Answer 718

1. False 2. True 3. True 4. True 5. True 6. False

Answer 719

1. Passive fraud : You not only should have known better, but you did know better and intentionally remained silent, so you're guilty of passive fraud.

Answer 720

1. The principal broker’s and all affiliate brokers’ 2. 7 3. 2 4. one year

Answer 721

1. 120 days 2. 24 hours 3. Follow the firm’s process for such events. 4. Race, color, religion, national origin, creed, sex, familial status, and disability

Answer 722

1. Because Tennessee law requires her to maintain these records for three years. 2. Timeshare use 3. Brokerage name 4. 3 years 5. $1,000 6. Dual Agency

Answer 723

1. Notify commission and pay a fee 2. Complete a transfer application

TN Real Estate 60 Hr course Flashcards

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