REAL eSTATE EXAM
Land
Surface, all natural things attached to it, subsurface, and air above the surface
real estate
land + manmade permanent attachments
real property
real estate + bundle of rights
constitution
guarentees private ownership of real property
immobility
land cannot be moved from one site to another; its location is forever fixed
indestructibility
land is permanent and cannot be destroyed, does not depreciate
non-homogeneity
land is non-homogeneous; no two parcels of land are exactly the same since they have a different location
legal title
full legal ownership of propert and the bundle of rights as they apply to it, contrasts with equitable title
equitable titile
an intrest that gives a lienholder or buyer the right to acquire legal title to a property if certain contractual conditions occur
property is either
real or personal
property is either
tangible or intangible
airspace=
air rights
surface(of the earth)=
surface rights
subsurface=
subsurface or mineral rights
water rights consist of
appropriation, riparian rights, littoral rights
doctrine of prior appropriation
state controls water usage, grants usage permits
riparian rights
applies to river and streams, if waterway is navigable: owners own land to water's edge, if not navigable: owners own land to midpoint of waterway
littoral rights
applies to seas and lakes, abutting property owners own to high water mark, state owns underlying land
real property
land, fixtures, attachments
personal property
chattels, trade fixtures, emblements
trade fixtures
personal property items temporarily attached to real estate in order to conduct buisness
emblements
plants or crops that are considered personal property despite being attached to land
conversion
real to personal property reffered to as severance, personal to real property reffered to as affixing
factory-built housing
units are real or personal property: real if permanently affixed to ground; otherwise personal
differentiation criteria (2)
item is real or personal property depending on why, how item is attached to real estate
intention; adaptation; functionality; relationship of parties; contract provisions
federal regulation (3)
grants right of ownership
controls broad land usage standards
regulates anit-discrimination laws
state regulation (2)
governs real estate business
sets regional usage standards
local regulation (2)
levies real estate taxes
controls specific usage
judicial regulation (2)
applies case law and common law to disputes
contracts with statutory law
possession / possessory
estate in land
non-possession / non-possessory (2)
private: encumbrance
public : public intrest
bundle of rights
PUTEE
PUTTE stands for
Possession, Use, Transfer, Exclusion, Encumberable
estates in land (3)
include right of possession
leasehold= limited duration
freehold: duration is not limited
freehold (own) (2)
absolute
defeasible
life estates (2)
conventional
legal
leasehold (lease) (3)
estate for years or periodic
estate at will
estate at sufferance
fee simple
not limited by ones lifetime
absolute
highest form of ownership interest
defeasible
reverts to previous owner per conditions
life estate
passes to another on death of named party
remainder
named party to receive estate
reversion
previous owner to recieve estate
conventional life estate
limited to life tenant/ named party
ordinary
estate passes to remainderman or previous owner when life tenant dies
pur autre vie
limited to lifetime of another, passes to remainderman or previous owner
legal life estate (2)
created by operation of state law as oppsed to a property owners agreement
designed to protect family survivors
homestead
rights to one's principal residence
estate for years
specific, stated duration, per lease; expires at end of term
periodic
lease term renews automatically upon acceptance of rent ; renews indefinitely if lanlord accepts rent
estate at will
for indefinite period subject to rent payment; cancelable with notice
estate at sufferance
tenancy against landlord's will and without an agreement
tenancy in severalty
sole ownership of a freehold estate; passes to heirs
tenancy in common (2)
co tenants individually own undivided interests; no survivorship; can convey to outside parties
any ownership share possible
joint tenancy (2)
equal undivided interest jointly owned (survivorship)
requires 4 unities to create: time, title, intrest, possession
tenancy by the entireties
husband and wife own equal undivided interest; applies to same sex couples in some states
community property
joint property ownership by spouses as opposed to separate property
unity of ownership
owners hold single title jointly
equal ownership
owners always hold equal shares
transfer
may transfer to new ownerr as a tenancy in common intresr with remaining joint tenants
survivorship
on death, interest and rights pass to other joint tenants
creation
requires "four unities" PITT
(P)ossession
acquire same possessory rights
(I)nterest
acquire equal, undivided interests
(T)ime
acquire interest at same time
(T)itle
acquire interest with same deed
community
all other property earned or acquired during the marriage
separate (2)
aquired before marriage, gift or inheritance
aquired with seprate-property funds, income derived from separate property
trustor
gives title, deed, trust agreement to trustee
trustee
renders fiduciary duties to trustor and beneficiary
beneficiary
receives ownership benefits
living / testamenary trust
conveyance of real, personal property during one's lifetime
land trust
grantor and beneficiary are same party; beneficiary uses, controls property but does not appear on public records
condominiums
ownership of a unit of airspace plus an undivided interest in the common elements as tenant in common with other owners
cooperatives
ownership of; shares in owning corporation, proprietary lease in a unit
time shares
lease or ownership interest in property for periodic use on a scheduled basis
lease
tenant leases property per the lease's schedule
freehold
tenants in common own undivided interest, pay expenses per seprate agreement
encumbrances
non-possessory interests limiting legal owner's rights
appurtenant
attaches to the estate, dominant tenement's right to use or restrict adjacent
in gross
does not attach to the estate; personal- not transferrable, emds upon death of easement holder; commercial
license
personal right to use a property, non-transferrable, revocable, ceases upon death of owner
encroachment
unauthorized intrusions of one oner's real property onto another's; may require survey to detect
deed restrictions
conditions, covenants imposed on property by deed or subdivision plat; goes with property upon transfer
deed conditions
created upon property transfer; if violated, ownership may revert to previous owner
deed covenants
created by mutual agreement; enforeable by injuction
liens (2)
debts; claims attaching to real and personal property as security for debt
recorded on title effectively reducing equity in the amount of the lien
voluntary / involuntary
mortgage lien / tax lien
general / specifc lien
against any and all assets / against car or house
superior / junior
paid before juniors / paid after superiors by date of recording
deed in lieu of forclosure
"power of sale" granged to lender; no deficiency judgement; no redemtion period after sale
notice
how ownership is evidenced to the public
actual notice
knowledge acquired directly through demonstrable evidence
constructive notice
knowledge one could have obtained, as presumed by law; imparted by recording in public records
documentary stamp tax (transfer tax)
tax on conveyance of real property bases on price of property conveyed
heir
beneficiary or devisee
holograpic will
will in testor's handwritting
nuncupative will
oral will writtin by witnesses; generally not valid for property transfer
witnessed
in writing and two witnesses
validity of will
legal age; mentally competent; entitled "last will & testament;" signed, witnessed voluntary
dies testate with heirs(in order)
first to creditors, then to homestead, then to heirs by will
dies intestate with heirs (in order)
first to creditors, then homestead, then to heirs by law of descent
dies intestate, no heirs (in order)
first to creditors, then to state by escheat
adverse possession
"unwanted owner" may claim ownership to a property; must show "claim of rights" as reason; must be continuous for a statutory period of time
title record features
intruments affecting tittle must be recorded; gives public notice of ownership, condition of title; protects lien holders; determines property marketability
chain of title
successive property owners from original grant to present
cloud on title
unrecorded claims
suit to quiet title
lawsuit to settle claims
abstract of title
witten chronology of recorded owners, transfers, encumbrances
lease is both
an intrument of conveyance and contract of covenants between tenat and landlord; conveys temporary, exclusive use of premises in exchange for rent
teanants rights
use, possession, quiet enjoyment, profits
tenant obligations
pay rent; maintain premises; follow rules
lanlord rights
recieve rent; repossess upon expiration; monitor tenant compliance
landlord obligations
property condition, habitability, support services
gross lease
landlord pays expenses; tenant pays higher rent than net
net lease
tenant pays some or all expenses; rent is less than gross
perecentage lease
landlord recieves rent minimum plus percentage of retailer's sales
residential lease
gross lease hybrid; short term; uniform terms reflect landlord tenant standards
ground lease
landlord owns and leases ground but does not own improvements
proprietary lease
for cooperative unit owners; indefinite term; assigned to new unit owner on sale
leasing of rights
leasehold transfer or rights for limited use; examples air, mineral, water rights
building codes
a standard of construction of an improved property established by local government officials
certificate of occupancy
a document confirming that a newly constructed or renovated property has fully complied with all building codes and is ready for occupancy
concurrency
a planning policy that requires developers to correct foreseen negative impacts of a development during the construction period of the project itself rather than afterward
condemnation (2)
a decree that a parcel of private property is to be taken for a public use under the power of eminent domain
a goverment order that it is no longer fit for use and must be demolished
deed restriction
a provision in a deed that limits or places rules on how the deeded property may be used or improved
eminent domain
a power of a goverment enitity to force the sale of private property for subsequent public use
land use control
regulation of how individual owners use property in a municipality or planning district. control patterns are in accordance with master plan
master plan
acts as a blueprint for subsequent zoning or ordinances and rulings
police power
a gov. legal authority to create, regulate, tax and condemn real property in the interest of the publics health, safety, and welfare
non conforming use
a legal or illegal land use that is not consistent with the current zoning ordinance
restriction
a limitaton on the use of a property imposed by deed, zoning, state statue, or public regulation
special exception
a land use in conflict with current zoning that is authorized because of its perceived benefit to the public welfare
variance
a land use the conflicts with current zoning but is aithorized for certain reasons, including undue hardship to comply and minimal negative impact to leave it alone
zoning ordinance
a municipal land use regulation
the zoning appeals are
zoning board of adjustment, nonconforming use, varience, speacial exception, amendment
Planned Unit Development (PUD)
zoning designed to regulate use of whole tracts of land with a singular design
legal descriptions
to accurately loctate and identify the boundaries of a parcek of real property to a degree acceptable by courts of law in the state where the property is located
metes and bounds method
descrubes perimeter by landmarks, monuments, distances, angles; starting at point of beginning (POB), following perimeter, return to POB
lot and block system (recorded plat method)
used to describe properties in residential, commercial, industrial subdivions; tracts of land divided into lots, then grouped into blocks
rectangular survey system (government survey)
simplify and standarize property descriptions; all land in system surveyed using longitude ans latitude lines; lines created uniform grids of squares called township
meridians
north-south lines six miles apart
parallels
east-west lines six miles apart
tier
east-west strip of area between parallels also called township strip
township
the six-mile by six-mile square at ghd intersection of a range and a tier
section of township
1 miles x 1 miles square; 1 section = 640 acres; 36 sections per township
contract law
an agreement between two or more parties who have a "meeting of the minds," and have pledged to perform (or refrain performing) some act
vaild
meets all requirements
valid but unenforceable
certain oral contracts; if performed, cannot change outcome
void
not valid; unenforceable
voidable
may be rescinded due to subsequent discoveries: if performed, cannot change outcome
competent parties
legal age, mental competency, legitimate authority
mutual consent
clear unequivocal offer and acceptance with an underlying meeting of the minds
valuable consideration
exchange of valuable consideration for performance by the other party
legal purpose
promise, intent and content must be lawful; if illegal, contract is void - cannot contract to the law
voluntary, good faith
no duress, coercion, fraud, or misrepresentation
termination of an offer
acceptance; rejection; revocation; expiration; counteroffer; death or insanity of either party
specific performance
suit to force party to fulfill contract promises
puffing
licensee boasting about property's benefits
fraud
misstatement or failure to disclose material facts
misrepresentation
misstatement or concealment of fact
single agency
seller or buyer agency; tenant or landlord representation
dual agency
representing both sides; potentially illegal or conflict or interest : written consent
subagency
outside brokers and agents who help listing agents
fuduciary duties
to client: loyalty; obedience; disclosure
exlusive right to sell
given to one broker; must be written, expire; broker gets commission if property transfers during period
exclusive agency
exclusive expecting owner, broker gets commission unless owner sells; must expire; oral or written
open listing
non-exclusive; procuring cause gets commission; no commission if client procures customer
net listing
all sale proceeds above seller's minimum price go to the broker
multiple listing
MLS ; owners consent to rules and provision of MLS
buyer agency agreement
creat a fiduciary relationship with the buyer; must have expiration date & valid listing
supply
the quantity of a product or service available for sale, lease, or trade at any given time
demand
the quantity of a product or service that is desired for purchase, lease, or trade at any given time
interaction (2)
if supply increases relative to demand, price decreases
if demand increases relative to supply, price increases
market value
an estimate of the price at which a property will sell at a particular time
assessed value
the value of a property as estimated by a taxing authority as the basis for ad valorem taxation
depreciation
loss of value
deterioration
wear and tear from use and aging
functional obsolescence
outmoded physical or design features: curable or incurable
economic obsolescence
loss of value due to adverse changes in surroundings: incurable
curabilty
cost to cure is less than resulting contribution to value
incurable
cost to cure exceeds contribution to value
gross rent multipliers (GRMs)
simplified income-based methods to estimate value; method consists of applying a multiplier to the estimated gross rent of the subject
GRM =
price divided by monthly rent
value =
GRM times monthly rent
promissory
promise to repay loan
mechanics
borrower gives lender promissionry note and mortgage; lender gives birrower funds and records a lien
mortgage
pledge of property as collateral for loan
hypothecation
use of real property as a collateral for a mortgage loan
PITI
Principal, Intrest, Taxes, Insurance
charges and lien
borrower is liable for paying any charges, liens, or exoenses that may have priority over the mortgage or trust instrument
loan to value ratio (LTV) (2)
relationship of loan amount to property value; expressed as a percentage
80% LTV = loan is 80% of property value
truth in lending and regulation z
lender must disclose finance charges and APR prior to closing; borrower has limited right of rescission, but excludes primary residence
equal credit opportunity act (ECOA)
prohibits discrimination in lending based on race or color, religion, national origin, sex
FHA loans
insured loans granted by approved lenders to qualified borrowers
VA loans
granted by approved lenders to qualified veterans
RESPA
clarify, disclose costs; eliminate kickbacks, undisclosed fees
antitrust
cannot collude on prices; fix prices , connot conspire with other companies to restrict trade or unjustly impair a competitor