Randall School of Real Estate Principles and Practice – Flashcards

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Feudal System
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Land is owned by a king or lord, workers could not own the land
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Allodial System
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Real estate is easily available and affordable
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Bundle of Rights
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Surface rights- most obvious to the eye Sub-Surface rights- allow owner to drill for oil Air-Rights-
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Characteristics of Land
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Physical and Economic
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Physical Characteristics of Land
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Fixity-remaining in a fixed location Permanence-it never wears out Non-Homogeneity- no two parcels are identical
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Economic Characteristics of Land
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Scarcity-insufficient land, prices rise Situs-location of land and its proximity to valuable resources Durability
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Public Sector Controls
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Can control or restrict use of that land Police Power
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Police Power
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Zoning Restrictions- restrictions as to the use of the land Eminent Domain-permits a unit of government to Condemn the land in question for some specific governmental purpose. (power of government to determine land use)
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Private Sector Controls
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property owner controls who inherits land after death by a will
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Escheat
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if no will exists the estate is returned to the sovereign state
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Restrictive Covenents
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limit rights to all those who live in the subdivision for a limited amount of time
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Real Property
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whatever is erected or affixed to the land (cannot be moved)
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Personal Property
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aka Chattel (ex. chairs beds money clothing and jewelry) (tests of a fixture: the intent of the owner, the method of annexation, the adaptation of the property)
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Fixture
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personal property becomes real property
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Deed
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The Way in which real estate ownership is transferred
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Bill of Sale
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the way in which ownership of personal property is transferred
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Ways to acquire real estate
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inheritance, receive as a gift, purchase it, and Adverse possession
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Adverse Possession
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a means of involuntary transfer, a person may gain title to another persons land by taking possession in a notorious, actual, visible, outright and hostile (without Permission) manner for an uninterrupted time(10 years)
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Color of Title
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indicates a suggestion of interest
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Easement by prescription
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property owner allows his property to become a corridor through which people travel to arrive at another piece of property, the law specifies that after a certain amount of time the passage becomes a permanent right of way (does not grant ownership interest)
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alienation
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the transfer of title of real property of from a seller to a buyer
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Testator
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has the right to name the executor of an estate
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Testate
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died, left a will
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Devise
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gift of real estate by will
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Codicil
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addition to a will
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Rectangular System Of Survey
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Grid of navigation Baseline is at the bottom of the state Principle Meridians run N to S
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Section of Land = 1 Square mile
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640 acres
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Mile
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5280 feet
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Acre
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43560 square feet
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Plat
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a map that recites the boundaries of an area of land as surveyed
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Metes
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Measures and distances
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Check
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contains 16 townships and is 24 miles square
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Correction Lines
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compensate for the curvature of the earth
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Survey
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the measurement and establishment of the boundaries of a particular property, usually identified by metal stakes imbedded in the ground or the corners of the lot line
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Township
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contains 36 sections
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Lot and Block System
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used in platting subdivisions
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Section
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640 Acres
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Monument
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a Marker set by surveyer
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Special/Conditional use permit
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allows the holder of the permit to use their property in a manner that does not conform to the properties around it for a certain amount of time
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Nonconforming Use
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when current use does not conform to current zoning, but the use was in effect before the zoning was (grandfather Rights)
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Spot Zoning
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zoning on lot for a different use that the zoning of surrounding land
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Variance
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when an owner requests an exception to the zoning requirements for that area
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Down Zoning
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occurs when the zoning of an area is changed and the change results in a loss of value to the property owners
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Assemblage
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purchasing several different properties and combing them to make one parcel
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Plottage Value
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the increase in value after assemblage
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Sanitary Improvement District
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offers tax free interest to the investors, provides the developer with investor's funds.
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Warrants
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no fund checks bought by the underwriter, used to improve the land
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Special Assessments
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are added to the cost of the individual lots as they are sold
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General Obligation
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is paid off by the future property owners through a mill levy assessed to their property
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Easements
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the right to travel over the land of another. Can be created by: Law, between individuals, or by use.
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Easements appurtenant
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easement that involves two adjacent properties. It would grant the right to ingress and egress to one property over the land of another property.
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Dominant
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the property that is benefited by the easement. The easement is called a appurtenance.
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Appurtenance
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The name of the easement for the dominant party. It is part of the real estate, it is beneficial to the real estate, and it will be conveyed to the new owner when the property is sold or leased
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Servient Tennent
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the property across which the easement is run. The servient cannot hinder the ingress and egress of the dominant tennent. Easement is referred to as an encumbrance
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Ecumbrance
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is a part of the real estate it is negative to the property, and any new owner or lessor must honor the encumbrance unless unless it is removed before conveyance.
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Easement in gross
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benefits the party that holds the easement in gross
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Easement of Necessity
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is one that is created in a court of law. Parcel of land cannot be "landlocked" without ingress and egress. the owner may seek a easement of necessity if no adjacent properties grant an easement across their land
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License
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personal, revocable privilege
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Encroachment
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when one person's property intrudes on another person's property
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Building Codes
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determine material and construction standards for buildings
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Deed restriction
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can restrict architectural styles of buildings and preserve the view from a particular lot
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Zero Lot line
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homes can be built on the lot line
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Freehold Estate
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an estate of indefinite or uncertain duration. Holding a freehold estate gives the owner one of the following types of title: 1. fee simple absolute 2. fee simple determinable 3. fee simple conditional subsequent 4. Life Estate
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3 Characteristics that distinguish a fee simple estate
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1. of indefinite duration, it perpetuates 2. freely inheritable; the owner may will it to another 3. transferable; the owner may give it away or sell it
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Fee simple Absolute
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title holder has the most control. Power to retain, sell, will, or mortgage the property. NO LIMITS
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Fee Simple Determineable
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the owner's right has been set or determined by the past owner (grantor) of the estate. The holders rights expire automatically on the occurrence of a stated event.
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Fee Simple Defeasible
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allows the title to be defeated since it has been qualified by the grantor
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Life Estate
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a life interest in Real Estate. The holders possess all the rights normally associated with holding title, except they cannot commit waste. ( do anything to diminish the value) and it ceases to exist upon the death of the holder
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Estate in Reversion
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life estate that returns to original owner after the new tenant dies
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Estate in Remainder
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title of the property is passed on to a third party named in the deed after the death of the tenant
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Non-Freehold Estates
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an estate of specified duration which may be sold assigned or willed the owner of the non-freehold property is the lessee, the person is leasing the property to another
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Deed
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the instrument used to convey a title (paper/document)
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Title
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specifies the quality of the estate
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Estate
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defines the quantity of the estate ( the amount the holder owns)
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A deed must contain:
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1. Must carry the signature of the grantor 2. All parties must be of sound mind or a court appointed guardian will sign the deed and act for the grantor 3. If there are several persons who have rights, interests or ownership they all must sign the deed 4. The deed cannot be recorded unless the grantor signs the deed in the presence of a person authorized by law to notarize the documents 5. Delivery of the deed must take place and the deed must be accepted in order for conveyance to take place 6. Grantee's name must be present on the deed 7. Consideration 8. Words of conveyance (the grantor states that he is granting and conveying his interests in the property) 9. Legal Description
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Constructive notice
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Recording the deed. it is not mandated by law that a deed needs to be recorded to be valid
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Actual Notice
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having actual knowledge of who actually holds the property
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Grantor
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Seller
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Grantee
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Buyer
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General Warranty Deed
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the grantor warrants clear title from all defects offering the grantee the greatest protection of any deed
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Severalty
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sole ownership, an individual owns real property solely by himself, no one else is named on the deed
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Joint tenancy
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two or more people take title with the right of survivor ship. upon the death of one of the owners his share is automatically transferred to the surviving owner(s)
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4 Unities required to create a joint tenancy
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1. Unity of Time - all joint tenants came into the ownership at precisely the same time 2. Unity of title - they all hold the same title 3. Unity of Interest - all joint tenants own all of the property 4. Unity of Possession - all joint tenants have equal right to use and enjoy the property
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Partition Action
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must occur in order for a party to break joint ownership against the will of the other joint tenants
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Tenancy in Common
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conveys title to two or more persons without the right of survivor ship and the four unities are not required
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Tenancy by the Entirety
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is established between a husband and wife
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Community Property
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all of the property acquired by husband and wife during marriage with the following exceptions: 1. Prior to marriage 2. After marriage by inheritance or gift 3. Income from separate properties
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Partnerships
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formed to conduct business jointly with another, sharing in the work, expenses and profits.
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Deed of Trust
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secures payment of a trust
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Covenant
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agreement that secure payment of a trust
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Livery of seizin
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transfer of possession
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Dower
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right a wife has in husband's estate
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Curtesy
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interest a husband has in wife's estate
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Grant Deed
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Grantor warrants only his or her ownership
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Acknowledgement
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sworn under oath
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Habendum Clause
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to have and to hold clause
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Statute of Frauds
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Listing and purchase agreements, options, leases, mortgages, and real estate management contracts must be in writing to be enforceable in the court of law
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Statute Of Frauds requires that:
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1. The subject matter is defined 2. the identity of the parties is revealed 3. Essential conditions and terms of the contract are set forth in the written document
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Elements of a Contract
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1. Agreement 2. Consideration 3. Capacity 4. Legality 5. Signatures of both parties
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assignee
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the person to whom a contract is assigned
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Assignor
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the party who assigns his interest in the contract to another
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Optionee
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has the exclusive right to purchase the real estate of the optionor for a specific time period at the specific terms spelled out in the option
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Unilateral
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one person is promising to act (listing contract since the seller is promising to pay a commission)
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Bilateral
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requires both parties to act
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Fraud
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misrepresentation of a material fact with an intention to deceive which resulted in damage
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Duress and Undue Influence
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require the offender to so harass and upset the party with threats and strong persuasion that the person gives in and signs the contract
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Dual Contract
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a second contract written for purposes of obtaining a larger loan from the lender
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Latent Defect
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Hidden from view
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Novation
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substitution of a new contract
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Laches
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delayed too long in asserting legal right
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Executory Contract
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performance not yet completed
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Specific Performance
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court remedy, compelling compliance
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Agency
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one parties hires another to act on his behalf instead of doing it himself
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Principal
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the client, the party who hires the agent to represent their interests
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Agent
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a licensee who represents the client
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Customer
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a party who does not have representation with the licensee
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Special/Limited Agency
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permits the agent to perform one specific act - upon completion the agency is terminated. Limited time, limited purpose, and limited powers are given to the agent
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General Agency
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ongoing relationships with multiple functions entrusted to the agent and the agent has a great deal of authority,allowing the agent to perform tasks on behalf of the principal as outlined in the contract
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Universal Agency
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unlimited power of attorney, which allows the agent to act on behalf of the principal on all matters
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Ostensible Agency
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agency by implication
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Agency by Ratification
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will exist when the property owner accepts a purchase agreement which specifies that the agent is representing the seller
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Seller or landlord agency
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you list a property to either sell it or lease it and thus a fiduciary relationship is formed and you are representing the seller/landlord
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Buyer or tenant Agency
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you are representing the buyer or the tenant in a real estate transaction and the seller or landlord is the customer
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Buyer self representation
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the buyer has agreed to represent himself or hire his own agent
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Subagency
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both the seller and the listing broker must agree that agents from another firm can show the property as the seller's agent under subagency selling agent represents listing agent
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Dual Agency
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with written disclosure to both parties, the agent represents both their interests represents buyer and seller
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Facilitator
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the agent acts as a third, disinterred party, representing neither party to a transaction - there is no representation by an agent
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Agent Duty
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owes absolute loyalty and honesty to the client, the customer will be treated fairly and the agent will not misrepresent the property. Must disclose defects
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The Basic requirements of Nebraska Agency Relationship Law are:
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A Licensee is considered a buyer's or tenant's limited agent unless: 1. the designated broker enters into a written agency agreement with a seller or a landlord 2. There is a subagency with another designated broker 3. By agreement with the party to be represented. In Nebraska a buyer is the agent's client unless the agent has written authority stating otherwise 4. the agent is acting as a dual agent. A licensee may work with a single party in separate transactions serving in different agency representations. Each designated broker is required to adopt a written agency policy that describes the agency relationships that broker offers to consumer A licensee does not need a written agreement to show property as a buyer's agent Disclosure of a licensee's agency representation must be made to the consumer at the earliest practicable opportunity "during or immediately following the fist substantial contact" The agent musst, during or immediately following the first substantial contact: 1. provide the individual with a copy of the Real Estate Commission prepared agency disclosure pamphlet, and 2. disclose in writing the brokerage relationship the agent is offering or the party the agent is representing 3. if the licensee will be treating the consumer as a customer, not a client, the information provided will include: a. a statement that the licensee is an agent for the other party and is not an agent for the customer, and b. a list of the "tasks" that the licensee intends to perform for the customer
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Specific Assistance (substantial Contact)
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a. Asking for accepting information which could compromise the consumer's bargaining position: motivation, price, financing terms. b. showing a specific property or properties by pre-arrangement (pre-arranged showings are always specific assistance) c. other meetings with a consumer
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Not Specific Assistance
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a. preliminary conversations regarding the market in general, general real estate values and general financing terms b. conveying publicly available information about properties (asking price, location, style, amenities) c. asking for or accepting information about non-compromising information about the consumer, such as their real estate needs or desires, or general preferences for location price range, features , etc.
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Comparable Market Analysis (CMA)
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Comparing similar properties that have recently sold to the subject. A minimum of three properties, sales price is given a + or a - to adjust to the subject property
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Proceeds to Seller
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an estimate given to the seller that indicates approximately what the net proceeds from the sale will be if the property sells for the listed price
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Exclusive Right to sell (Listing Agreement)
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no matter who sells the property, the listing firm will receive a portion of the property
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Exclusive Agency (Listing Agreement)
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the seller retains the right to sell the property himself through himself through his own efforts and not be obligated to pay a commission
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Open Listing (Listing Agreement)
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gives no security to any of the brokers that the seller lists with; only the firm who produces this listing wins with this listing
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Net Listing (Listing Agreement)
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Permits the real estate firm to retain the balance paid over and above a net amount that has been set by the owner
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Expiration of Listing
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In Nebraska, the listing must have a set termination date with no automatic extensions
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Multiple Listing
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Brokers pool their listings and cooperate on sales
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RPA Section D
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deals with abstracts and title insurance. When an abstract is used, the seller pays to have it extended or brought up to date. When using title insurance, the property title will be examined by the title company and insured. Cost of title insurance is equally split between purchaser and seller
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RPA Section E
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clarifies both the receipt of the earnest deposit and the and how it will be handled by the licensee
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RPA Section F
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addresses property taxes. If taxes are paid current Provision A is used. If taxes are paid in arrears (taxes paid in 2016 will meet 2015 tax obligation) provision B is used.
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RPA Section G
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states the date of closing and the date that possession will be given to the grantee
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RPA Section H
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states that the buyer will pay for a termite inspection except in the case of a VA loan. If Damage is found repairs are at the seller's cost
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RPA Section I
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deals with the condition of property condition. Places the responsibility of carefully inspecting the property on the buyer. Seller is responsible for any heating, air conditioning, water heater, sewer, plumbing and electrical systems, and any built in appliances
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RPA Section J
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seller carrying the responsibility for any material damage to the property prior to conveyance
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RPA Section K
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informs the buyer that the property is located in a sanitary Improvement District
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RPA Section L
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if an escrow closing is to occur and the cost of the escrow closing
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RPA Section M
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buyers receipt for the for a copy of the written offer and for the earnest deposit
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RPA Section N
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sellers response for the purchaser's offer
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RPA Section O
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provides the space for the acknowledgement by the notary public
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RPA Section P
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provides space for both buyers and sellers to acknowledge receipt of the accepted purchase agreement
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Escape Clause
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allows buyer both buyer and seller to rescind the contract if the property does not appraise for the contract price
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RPA Section Q
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requests the purchaser to bring funds to closing in cash, certified check or cashiers check
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RPA Section R
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requests seller to place property insurance on any personal property left on the premises since the seller's insurance terminates upon closing
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Full Disclosure
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seller must price the property at its true value. All Offers must be presented to the seller for his acceptance or rejection. The buyer's financial capability must be revealed to the seller along with an explanation of the conditions of the contract.
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Property Condition Disclosure Statement
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seller provides and signs. Discloses information about the property condition. i.e condition of the electrical system, structural disclosure, condition of appliances.
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Assignment
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rights and responsibilities held by one are passed to another
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Primary Mortgage Market
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the institution where the borrower has personal contact to obtain financing to purchase real estate - often the local savings bank
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Conventional Loan
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requires 20% down payment
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Private Mortgage Interest Loans (PMI)
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fill the gap between conventional and FHA or VA loans requiring 5% or 10% down payment
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Amortized Loans
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equal payments that gradually reduce the debt since the borrower pays on the unpaid balence
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