National Real Estate Exam Prep
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Unilateral Contract
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Contract containing ONE promise given in exchange for completing an act. NO obligation to act.
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Bilateral Contract
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Contract containing TWO promises. Example: A listing agreement is a bilateral contract
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Client/Principal
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A person who has entered into an agency relationship w/ a licensee & with whom there is a written contract
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Customer
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Any 3rd party w/ whom a licensee works
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In-Company Transaction
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Transaction in which the buyer and seller are both represented by the same brokerage.
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Management-Level License
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A licensee who is employed by or affiliated w/ a brokerage who has supervisory responsibility over other licensees.
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Statute of Frauds requires the following:
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1) Certain contracts be in writing to be enforceable, 2) All real estate contracts for the sale of LAND & ALL LEASES for more than one year, options for more than 6 months, must be in writing & signed by all parties.
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Novation
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Substituting a new obligation for an old one. Also, a transfer of rights and/or duties under contract.
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If the original party to an agreement is replaced due to novation, are they liable?
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No
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Mailbox Rule
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Acceptance that becomes effective as soon as it is sent in the mail, unless the contract specified a certain means for delivery.
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Grantor is the
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Owner
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Grantee is the
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Buyer
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Optionor is the
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Seller
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Optionee is the
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Buyer
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Lessor is the
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Landlord
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Lessee is the
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Tenant
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Vendor is the
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Seller
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Vendee is the
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Buyer
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Mortgagor is the
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Buyer
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Mortgagee is the
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Lender
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Trustor is the
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Buyer
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Trustee is the
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3rd Party to the transaction
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Regulation Z dictates
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Disclosure Requirements in Credit Transactions, including the disclosure of the Annual Percentage Rate (APR)
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Regulation Z applies to:
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ALL REAL ESTATE credit transactions except for commercial loans. For non-real estate transactions, it covers up to $25,000.
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The Cooling Off Period is a condition of:
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Regulation Z. It gives the customer the right to rescind the transaction for up to 3 business days following the transaction for liens placed on a principal residence.
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RESPA stands for
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Real Estate Settlement Procedures Act
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RESPA requirements include:
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1) Lenders must give borrowers a good faith estimate of closing costs. 2) Lenders must give borrowers a HUD booklet describing closing costs, settlement procedures & borrowers rights. 3) Closing agent must prepare a HUD stmt detailing how much was paid to what companies for what services 4) Borrower must be given right to inspect HUD stmt 1 day before close. 5) Lenders & other parties must give full disclosure of all business relationships. 6) Lender must disclose to borrower if the loan is likely to be sold to another investor.
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RESPA prohibits:
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1) Kickbacks & fees for services not performed in connection w/ the closing 2) It limits the amount of escrow reserves a lender can hold 3) The sale may not be on the condition on the use of a certain title co or escrow co. chosen by the seller.
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Annexation is
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the act of bringing something or putting something on the land. When determining annexation, value of the item is RARELY considered. The RELATIONSHIP if the parties is more important.
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Doctrine of Emblements
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says that a TENANT farmer may return to pick the 1st crop after the land has been sold.
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Fixtures
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Man made attachments
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Bundle of Rights
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1) Right of use 2) Right of enjoyment 3) Right of disposal
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Riparian Rights
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Rights of the landowner ADJACENT to a river Remember \"R\" - riparian/river
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Littoral Rights
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rights of a landowner adjacent to a lake Remember \"L\" - Littoral/Lake
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Appurtenances are rights that go along with real estate and include:
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Air Rights, Water Rights, & Mineral rights to name a few.
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Fee Simple (also called Fee Absolute)
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The best interest in real estate recognized by law; it represents the most complete ownership.
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Life Estate
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The estate CANNOT be passed on to the life estate holder's heirs.
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Pur Autre Vie
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A life estate that is dependent up the life of another.
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Estate for Years is a type of leasehold that:
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Has a specific expiration date or specific term.
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Period to Period is a type of leasehold that:
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Has no specific expiration but the length is specified (like a month to month lease)
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Joint Tenancy
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2 or more ownership holders own a fraction of UNDIVIDED interest. Rights of survivorship apply.
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The types of deeds are:
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1) Warranty Deed 2) Special (or limited) Warranty Deed 3) Quitclaim Deed 4) Special Purpose Deed 5) Transfer on Death Deed.
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Warranty Deed
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Offers the greatest protection that a deed can give.
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Special Warranty Deed (Limited warranty deed)
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1) Owner warrants only that he has not done harm to the title 2) Covers only the period of time when the sellers owner the property.
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Quitclaim Deed
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The seller agrees to convey whatever interest, IF ANY, they have in the property.
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The reason a deed is recorded is
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for protection against a third party.
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Elements necessary to a valid deed:
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1) signed & acknowledged by grantor 2) Lists marital status of the grantor 3) Use words of conveyance - also called a granting clause 4) Names & addresses of grantees 5) Acknowledged by Grantor in front of Notary Public 6) Signed in front of two witnesses (in most states) 7) Legal description 8) Delivery & acceptance of deed
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Lot & Block System
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Subdivision
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Township
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36 Square Miles
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Eminent Domain
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The RIGHT of the government to condemn & take the property.
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Condemnation
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The PROCESS of the government taking a property by eminent domain.
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Escheat
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The state takes property upon an owners death if there is no will & no heirs exist.
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Adverse Possession
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A person takes possession & use of a property belonging to another. Possession must be open, notorious, hostile & uninterrupted for a certain period of time.
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Abstract of Title
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A complete history of ownership.
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Encumbrance
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A claim or liability that attaches to the land & is held by one who is NOT the fee owner.
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Examples of Specific Liens
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real estate taxes, mortgages, mechanics liens
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Easement
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Right to use a property for a specific use
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Easement in Gross
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An entity's personal right to use property. The receiver DOES NOT own the adjoining property. Example: utility easement
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Easement Appurtenant
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Runs with the land.
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Easement by Necessity
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Created when no other access to land exists...right of ingress & egress
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Easement by Prescription
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Created through continual use over a certain period of time. It must be continual, visible, & w/o approval. Example - a private road becomes public.
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License
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A privilege granted to an individual for a specific purpose. It is NOT assignable to others.
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Accretion
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Physical addition to the land by natural forces.
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Alluvium (also Alluvion)
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The soil on a shore or bank of a river
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Lis Pendens
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A pending notice of a lawsuit giving notice of a possible claim to the property
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Writ of Attachment
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A document filed during a lawsuit that prevents a debtor from conveying the property
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Fixtures
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items of personal property attached to real property that are not removed by the seller
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Trade Fixtures
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Personal property used in a business and can be removed by the lessee when the lease terminates.
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Appraisal
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is an estimate or an opinion of value
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Market Value
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An estimate of probably price on the date of the appraisal.
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Market Price
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What the property actually sells for
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The 3 approaches to value are:
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1) Market Data Approach (single family homes) 2) Cost Approach (commercial property) 3) Income Approach (income producing property)
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Blockbusting
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Encouraging owners to sell their properties because minorities are moving into a neighborhood
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Steering
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Trying to influence a buyer's housing choice using race, religion, ethinicity, national origin, or ancestory factors as the reasoning.
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Redlining
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Denying loans in certain areas due to race, religion, sex, familial status, or a disability.
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The Civil Rights Act of 1866 Covers:
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1) Race 2) Color 3) Ancestry (it's the only act that covers this) It applies to all property (Real & Personal) There are no exceptions
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The Federal Fair Housing Act Covers:
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1) Race 2) Color 3) Religion 4) Sex 5) National Origin 6) Disability 7) Familial Status It applies ONLY to housing & land for housing Exceptions: 1) FSBO 2) FSBO - 4 plex 3) Religious Groups 4) Private Clubs
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The Federal Equal Credit Opportunity Act applies to:
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1) Race 2) Color 3) Religion 4) Sex 5) National Origin 6) Age 7) Marital Status 8) Receipt of Public Assistance
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A real estate broker is a
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Special Agent
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Dual Agent
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One broker representing both the buyer & the seller in a single transaction
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A salesperson
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is a subagent of the client, has no direct relationship to the principal, is only responsible to the broker.
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Puffing
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an opinion or exaggeration of the property's benefits.
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Fraud
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Intentional misrepresentation of facts
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Violations of the Sherman Antitrust Act include
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1) Price Fixing 2) Allocation of the market
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Exclusive Right to Sell Listing
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1) Only one broker is authorized to sell 2) the broker receives a commission no matter who finds the buyer
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Exclusive Agency Listing
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1) Only one broker is authorized to sell 2) If the owner finds a buyer, no commission is owed
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Open Listing
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1) Any # of brokers may be retained 2) The broker who sells the property receives the commission.
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After a purchaser signs a sales contract, the salesperson must do which of the following? 1 Keep the original contract & give the purchaser a copy the next day. 2. Give the purchaser a copy immediately 3. Mail the purchaser a copy after the statutory 3 day cooling off period 4. None of the above
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Answer: 2, Give the purchaser a copy immediately
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Which one of the following is NOT real property? 1 Wall to wall carpeting installed over plywood subfloor 2 Built-in dishwasher 3 drapes 4 sump pump
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Answer: 3, Drapes
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An unlicensed admin for a property manager can ONLY do which of the following tasks? 1 Collect rents 2 Publish a listing 3 Take a listing 4 Negotiate a contract
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Answer: 1, collect rents
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All of the following are examples of a specific lien, except: 1 Property Taxes 2 Judgment 3 Mechanic's lien 4 Mortgage
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Answer: 2, Judgment
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Baker conveys a life estate to her grandson & stipulates that upon her grandson's death the title will pass to her nephew. What is the nephew's interest called? 1 Estate in reversion 2 Estate for years 3 Estate in Remainder 4 Periodic estate
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Answer: 3, Estate in Remainder
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If a spouse owns a parcel of land separately, the spouse is said to own it: 1 As a joint tenant 2 As a tenant in common 3 As a tenant by the entireties 4 in severalty
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Answer: 4, in severalty
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Taxes are levied on a property owner to pay for improvements that benefit only that property are called: 1 Fees 2 General Property Taxes 3 Special Excise Taxes 4 Special Assessments
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Answer: 4, Special Assessments
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The market price of real estate is generally the same as: 1 Sales Price 2 Appraised Value 3 Highest and best use 4 Mortgage loan value
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Answer: 1, Sales price
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A mortgage note must be: 1 a negotiable instrument 2 Signed by the mortgagor 3 Signed by the mortgagee 4 Recorded to be valid
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Answer: 2, Signed by the mortgagor (the borrower)
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The Federal Truth in Lending Law: 1 Requires a lender to estimate a borrower's approximate loan closing costs before accepting a loan. 2 regulates advertising that contains information regarding mortgage terms 3 prevents brokers from using a phrase like \"FHA financing available\" in any ad 4 Dictates that mortgage applications be made on specific government forms
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Answer: 2, regulates advertising that contains information regarding mortgage terms
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The rights of the owner with property abutting the bank of a stream are called: 1 Littoral rights 2 riparian rights 3 avulsion 4 dominant tenenments
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Answer: 2, riparian rights
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What is the primary purpose of a deed? 1 Transfer of title 2 proof of ownership 3 recordation 4 legal evidence
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Answer: 1, transfer of title
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Who would NOT need a real estate license? 1 An attorney selling real estate in an estate 2 a salesperson working on a commission for a builder 3 a property management company 4 a friend selling a neighbor's lot for $1,000
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Answer: 1, an attorney selling real estate in an estate
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The responsibility for recording a deed lies with the: 1 grantor 2 grantee 3 county 4 state
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Answer: 2, the grantee
