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Appraisal

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An appraiser's opinion of value, based on established methods of valuation and the appraiser's professional judgement.

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Brokerage

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A point of contact between two or more people negotiating the sale of property.

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Property Management

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A person or company hire to manager property on behalf of its owner.

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Financing

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The business of providing funds for purchase and development or real estate.

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HO-1

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Basic homeowner insurance policy. Covers damage caused by fire, lightning, hail, and a number of other perils. It's the default when property has been empty for a certain length of time.

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HO-2

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Broader homeowner insurance policy. Includes more comprehensive coverage.

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HO-3

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Special homeowner insurance policy. More coverage, including replacement cost and personal liability.

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HO-6

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Condominium insurance policy. Covers the portion of the property that condo owner owns. Maybe customized to comply with the condo association's bylaws.

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HO-4

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Renter's insurance policy. Similar to HO-3 but it does not cover real estate property owned by someone else.

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Landlord's Policy

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Landlord's insurance policy. Is the reverse of HO-4 policy and covers only real property.

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Subdivision

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The process of splitting a single property into smaller a parcels.

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Developement

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Involves the construction or improvements on land.

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Real Estate Counseling

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Providing clients with competent real estate advice based on professional judgement and expertise.

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REALTORS®

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National Association of REALTORS® (NAR) is conposed of state, regional and local associations. All REALTORS® are licensees but some licensees are not RESLTORS®

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Types of real estate

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Residential, Commercial, Industrial, Agricultural and Special Purpose

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Seller's Market

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Occurs when demand exceeds supply.

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Buyer's Market

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Occurs when supply exceeds demand.

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Factors affecting supply

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A shortage of skilled labor force and construction costs increase. Government control and financial polices.

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Factors affecting demand

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Population or Demographics changes

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Real property

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That which is immovable

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Personal property

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That which is movable

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Bundle of legal rights

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Include: Possession, Control, Enjoyment, Exclusion and Disposition

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Chattel

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Personal property

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Land

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Earth's surface extending downward to the center of the earth, including those things that permanently attached by nature.

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Appurtenant

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Anything that by right, is used by the land for its benefit. Such rights include subsurface (mineral) rights, air rights and water rights.

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Subsurface (mineral) rights

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Include minerals and other substances located below the surface of the land; each may be transferred separately,

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Air Rights

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Air above the land may be sold independently of the land itself.

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Water rights

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Include: Riparian rights, Littoral rights and Prior appropriation

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Riparian rights

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Owners located along flowing water, such as rivers or streams, and to owners who have water located within the subsurface of their land.

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Littoral rights

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Owners whose land borders on large , navigable but nonflowing lakes and oceans to the mean high-water mark.

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Prior appropriation

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Where water is scarce, the ownership is often determined the state

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Real Estate

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Includes the earth's surface extending downward to the center of the earth and upward into space, including all things permanently attached by nature or people.

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Improvements

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Those things that have been placed on land by people.

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Physical characteristics of real estate

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Include: Immobility, Indestructibility and Nonhomogeneity

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Economic characteristics of real estate

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Include: Relative Scarcity, Improvements, Permanence of investment and Area preferences

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Immobility

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Land, which is the earth's surface. The geographic location of a parcel can never be changed

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Indestructibility

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Land is indestructible

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Nonhomogeneity

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Two parcels of land can never be the same geographically

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Relative Scarcity

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Although total supply is fixed, land is not scarce in this country.

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Improvements

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Improvements can effect the value of land and the community.

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Permanence of investment

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Fixed investments such as drainage, electricity, water and sewerage.

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Area Preferences

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Or Situs refers to people's choices and preferences for an area.

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Square mile

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640 acres

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Acre

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53,560 square feet

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Legal description

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Describes no other property but the one in question

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Metes-and-bounds description

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Make use (distance and direction) and (landmarks, monuments) of boundaries and measurements. The description starts at a designated point called a point of beginning POB and proceeds around the boundaries to the tract by reference to linear measurements and directions returning to the point of beginning for closure.

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Monuments

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Fixed objects either natural or artificial

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Benchmark

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Permanent reference point used in descriptions

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Rectangular Survey System

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Two intersecting lines: principal meridians lines running north and south and base lines running east and west.

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Ranges

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Land on either side of the principal meridian is divided into six mile wide strips by line running north and south.

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Township

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Lines running east and west and parallel to the base line six mile apart and contain 36 sections.

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Subdivision lot and block

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Method by which land is described using s plat map such as neighborhoods or new developments.

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Datum

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A point, line or surface from which elevations measured for air lots. New York Harbor mean sea level is the standard.

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Chattel

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Personal property which is movable. Including growing crops (amblements)

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Fixture

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Once personal property but is now affixed to the real estate. For example wall-to-wall carpeting

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MARIA

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Courts apply five test to determine whether something is a fixture or still personal property; 1 Method of attachment, 2 Agreement between parties, 3 Relationship of the parties, 4 Intention of the parties and 5 Adaptation of the item to the real property.

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Trade fixtures

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An item attached to a rented space or building by a tenant for use in conducting business.

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Emblements

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Growing crops that produce annually as a result of someone's labor. Emblements are regarded as personal property even before harvest.

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Manufactured Housing

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Housing constructed in a factory and identified by a red label-the manufacturer's certificate.

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Governmental powers

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PETE: Police power, Eminent Domain, Taxation and Escheat

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Police Power

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Through legislation, states may establish laws to preserve order, protect the public health and safety, etc.

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Eminent Domain

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The right of government to acquire private land for public use. The action is called condemnation. The land must be used for public use and fair compensation must be paid to the owner.

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Inverse condemnation

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The legal action for compensation taken by a property owner because the action of government entity has negatively impacted the value of the property.

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Taxation

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A charge on real property to raise funds to meet operating costs of government.

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Escheat

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The process by which property ownership transfers to the government when A property becomes ownerless when the owner dies intestate (without a will) and no known heirs.

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Estate in land

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The character and extent of ownership interest that a person has in real property. Two major classification are; Freehold estate and Leasehold estate or nonfreehold estate.

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Freehold estate

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Estates that my be for an indefinite time, existing for a lifetime or longer. Include: Fee Simple Absolute, Fee Simple Defeasible and Life Estates

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Leasehold estate

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An estate of a predetermined duration. Include: Estate for years, Periodic estate from period to period, Estate at will, Estate at Sufferance

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Fee Simple Absolute

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An estate in which the holder is entitled to all rights of property ownership. Upon death of the owner all rights passes to the heirs or as provided in a will. Fee, Fee simple and Fee Simple Absolute are basically all the same.

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Fee Simple Defeasible

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An estate the can be inherited but is subject to the occurrence or nonoccurrence of an event. There are two types; an estate subject to a condition subsequent and an estate qualified by a special limitation.

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Conventional life estate

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An estate that is limited to the life of the owner or to some other designated person. It is NOT an inheritance, that is the rights can not be passed onto the owner's heirs. Two types; Ordinary Life Estates and Pur Autre Vie

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Ordinary Life Estates

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Is a Fee Simple Estate that is based on life tenant's life.

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Pur Autre Vie estate

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Is a Fee Simple Estate that is based on life another's life.

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Remainder interest

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A third party named in a will after the death of the life estate owner.

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Reversionary interest

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If the creator of the life estate does not convey remainder interest to a third party, the upon death, full ownership reverts back to the original fee simple owner. If deceased, it reverts to the heirs set forth in the will. Interest or estate is call a reversion.

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Legal life estates (statutory estates)

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Are estates created by law. Curtesy is a husband's life estate in the real estate of his deceased wife. Dower is a life estate of a wife's life estate in the real estate of deceased husband.

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Homestead

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An estate created by law that protects a portion of the value of a family's home from debts.

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Community Property

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Consists of all property, real and personal, acquired by either spouse during marriage. Upon the death of one spouse, the survivor automatically owns one-half of the property.

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Leasehold estate

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An estate of predetermined duration. Classified as definite or indefinite. Four most important are; Estate for years, Estate from period to period, Estate at will and Estate at sufferance.

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Encumbrances

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Is a charge or burden on a property that may diminish its value or obstruct the use of the property but does not prevent the transfer of title. Two general types; Money encumbrances or liens and Nonmoney encumbrances which affect the physical condition and use of the property.

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Money Encumbrances

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Include: liens, real estate tax, first and second mortgages, mechanics' liens, judgements and attachments.

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Nonmoney Encumbrances

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Include: encroachments, licenses, restrictions, Appurtenant Gross easements.

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Liens

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Is a monetary claim or charge on property by which the property is made security for the performance of some act. They can be viewed be voluntary or involuntary.

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Voluntary liens

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Are when the owner of a property agrees to use the title to real estate as security for debt.

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Involuntary liens

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Are when a lien is placed on the title to real estate by statue or by court order against the expressed will of the owner.

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Specific liens

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Are those that are secured by one or more specific parcels of real estate.

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General liens

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Usually affect all of the debtor's nonexempt property, both real and personal.

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Real estate tax lien

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State and local government have the right to levy taxes on real property. Two types: General or ad valorem and special assessment or improvement taxes.

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Mechanics' lien

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A right granted by statute to give those who perform labor or furnish materials for improvements of real property. Based on the enhancement of value theory.

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Judgement liens

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A final order or decree of the court. The judgement is called a money judgement. The details of the judgement is out in writing called an abstract of judgement. Until that is recorded, it has no effect I the property. However, it does create a cloud on the title.

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Writ of execution

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If a money judgement is awarded and is not paid. The creditor may force payment through sale of the property.

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Lis pendens

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Notice that affects title before judgement is determined. This gives constructive notice to all interested parties.

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Easement

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A right acquired by one party to use land of another for special purpose.

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Easement Appurtenant

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An easement that is annexed to the ownership and used for the benefit of another party's land; for example, access to a property may only exist on a neighbor's property.

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Serving estate

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The tract over which the easement runs

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Dominant estate

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The tract that is to benefit from the easement.

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Easement in gross

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Is a mere personal interest in or right to use the land of another and not appurtenant to any ownership estate in the land. Such as commercial easement for utilities.

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Termination of easements

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Include: Mutual agreement expressed by the parties. Necessity, Prescription, Condemnation and Implication.

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Private restrictions

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Agreement that affect the use of property are called deed restrictions or CC&Rs for subdivisions.

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Covenants, Conditions and Restrictions CC&Rs

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Established by a subdivided for new subdivisions. Most have time limitations.

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Licenses

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Privilege to enter land of another party for specific purpose.

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Encroachment

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Arises when a portion of a building, fence or driveway illegally extends beyond its owner's land into a neighbor's land.

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Spot survey

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A physical inspection of all improvements located on a property.

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Public restriction

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Those that are imposed on private property by government authorities because that are necessary to protect the public.

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Part =

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Whole x percentage rate

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Percentage rate =

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Part / Whole

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Whole =

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Part / Percentage rate

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Prorating Through the day of closing

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Seller is responsible for the day of closing

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Prorating to the day of closing

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Buyer is responsible for the day of closing

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Paid in arrears

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Meaning the seller will owe the buyer

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Calendar year

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365 days

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Banker's year

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12 months X 30 days = 360 days

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Prorate

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To divide proportionately

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Abstract of title

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The condensed history of a title to a particular parcel of real estate, consisting of a summary of the original grant and all subsequent conveyances and encumbrances affecting the property and a certification by the abstractor that had history is complete and accurate.

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Acceleration clause

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The clause in a mortgage or deed of trust that can bad enforced to make the entire debt due immediately if the borrower defaults on an installment payment or other covenant.

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Accession

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Acquiring title to addition or improvements to real property as a result of the annexation of fixtures or accretion of alluvial deposits along the banks of streams.

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Accretion

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The increase or addition of land by the deposit of sand or soil washed up naturally from a river, lake, or sea.

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