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Agent

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The individual who is authorized and consents to represent the interests of another person in dealings with a third person.

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Principal

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The individual who hires the agent and delegates to that agent the responsibility of representing the principal's interests.

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Agency

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The fiduciary relationship between the principal and the agent by which the agent is authorized to represent the principal in one or more transactions.

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Fiduciary

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The relationship type in which the agent is held in a position of special trust and confidence by the principal.

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Client

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Term synonymous with the principal in a real estate transaction for whom a real estate broker acts as agent.

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Customer

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A third party or non-represented consumer who is not a principal but for whom some level of service may be provided and who is entitled to fairness and honesty.

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Nonagent

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Someone who works with a buyer and a seller (or a landlord and a tenant), assisting one or both parties with the transaction without representing either party's interests.

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Implied Agency

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Occurs when the actions of the parties imply that they have mutually consented to an agency relationship.

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Express Agency

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An agency relationship based on a formal agreement between the parties.

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Escheat

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Occurs when the state takes control of property after the owner dies leaving no will or lawful heirs.

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Requirements to Create a Joint Tenancy

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PITT: Unity of Possession Unity of Interest Unity of Time Unity of Title

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License

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A revocable personal privilege to enter the land of another for a specific purpose.

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Partition Suit

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The division of co-tenants' interests in real property when the parties do not all voluntarily agree to terminate the co-ownership.

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Tenancy by the entirety

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The joint ownership, recognized in some states, of property acquired by husband and wife during marriage.

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Procuring Cause

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The effort that brings about the desired result. Under an open listing, the real estate professional who is the procuring cause of the sale receives the commission.

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6 Acceptable Reasons for Termination of Agency

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1. Completion, performance, or fulfillment of purpose of agency 2. Destruction or condemnation of property 3. Expiration of terms of the agency 4. Mutual agreement of all parties to the contract 5. Breach by one of the parties 6. Operation of law, such as bankruptcy of the principal

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Transaction Broker

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Helps both the buyer and the seller with paperwork and formalities in transferring ownership of real property, but who is not an agent of either party.

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Designated Agent

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A real estate professional authorized by a broker to act as the agent for a specific principal in a particular transaction; also may be called assigned agent or appointed agent.

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6 Real Estate Types/Categories

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1. Residential 2. Commercial 3. Mixed Use 4. Industrial 5. Agricultural 6. Special Purpose (churches, schools, cemeteries, municipal service buildings, parks

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Land

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The earth's surface extending downward to the center of the earth and upward to infinity.

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Real Estate

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Land + all human made improvements permanently attached/annexed to it.

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Real Property

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The interests, benefits, and rights that are automatically included in the ownership of real estate; aka a bundle of legal rights

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Appurtenance

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A right or privilege associated with the property although not necessarily a physical part of it. It "runs with the land." Ex. parking spaces, easements, water rights, and other improvements. Usually transfers to the new owner when the property is sold.

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Riparian Rights

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Common-law Water rights granted to land owners along the course of a river, stream, or similar flowing body of water.

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Littoral Rights

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Common-law Water rights granted to owners of land bordering commercially navigable lakes, seas, and oceans.

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Accretion

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Increases in the land resulting from the deposit of soil by the water's action; an owner is entitled to this additional land.

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Erosion

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Gradual and sometimes imperceptible wearing away of the land by natural forces.

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Avulsion

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The sudden removal of soil by an act of nature.

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Chattel/Personal Property

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Items that do not fit into the definition of real property; movable objects

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Emblements

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Growing Crops, such as corn, that are produced annually through labor and industry; are generally considered personal property.

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Severance

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The process by which an item of real property can become personal property; a tree cut down and thus severed from the land.

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Annexation

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The process by which an item of personal property can become real property; a sidewalk built from concrete purchased by the owner.

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Fixture

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Personal property that been so attached to alnd or a building that, bu law, it becomes part of the real property.

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Legal Tests of a Fixture (MARIA)

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Method of Annexation- how permanent Adaptability of the item for the land's ordinary use Relationship of the parties- tenant over landlord, buyer over seller Intention of the person in placing the item on the land Agreement of the parties

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Trade Fixtures

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An article owned by a tenant, attached to a rented space or building, and used in conducting a business.

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4 Economic Characteristics of Real Estate

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1. Scarcity 2. Improvements 3. Permanence of Investment 4. Area Preference (most important)

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3 Physical Characteristics of Real Estate

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1. Immobility 2. Indestructibility 3. Uniqueness, aka nonhomgeneity

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The 2 Types of Law Governing Real Estate Agency Relationships

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1. Common Law- tradition and previous court decisions 2. Statutory/Administrative Law- laws enacted by the legislature and created by commissions

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Fiduciary Responsibilities (COLD-AC)

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Care- knowing all of the facts pertinent to the principal's affairs Obedience Loyalty- putting the interests of your client before all others, including yourself Disclosure- material facts Accounting Confidentiality- lasts beyond the contract

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3 Types of Agency Relationships

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1. Universal Agent 2. General Agent- property manager 3. Special Agent

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Disclosure of Agency

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Regardless of role, we must disclose our status as a licensee and any interest we have in the property or the parties.

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Single Agency

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Representing one side or the other

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Dual Agency

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Representing both sides of a transaction only after receiving both parties' Written Informed Consent

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Termination of Agency

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An agency may be terminated for any of the following reasons: *Completion, performance, or fulfillment of the purpose for which the agency was created *Death or incapacity of either party *Destruction or condemnation of the property *Expiration of the terms of the agency *Mutual agreement by all parties to cancel the contract *Breach by one of the parties *By operation of law, as in bankruptcy

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Puffing

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Exaggeration of a property's benefits.

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Fraud

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Intentional misrepresentation of a material fact in such a way as to harm or take advantage of another person.

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Negligent Misrepresentation

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When an agent should have known that a statement about a material fact was false.

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Latent Defect

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A hidden structural defect that would not be discovered by ordinary inspection.

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Commingling

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The illegal act by a real estate professional of placing client or customer funds with personal funds. Must use a separate account, such as escrow or trust.

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Conversion

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The illegal use of maney received on behalf of the principal.

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Fee Simple Estate/Fee Simple Absolute

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Ownership in which the holder is entitled to all rights to the property by law, limited only by public and private restrictions.

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Fee Simple Defeasible

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Ownership subject to the occurrence or nonoccurrence of some specified event.

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Life Estate

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Ownership and all of the rights assoc. with ownership, except for the right of disposition beyond one's own life.

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Pur Autre Vie

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A life estate based on the lifetime of a person other than the life tenant.

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Remainderman

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The person to whom a property will pass when the life estate ends.

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Reversion

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The creator of a life estate may choose not to name a remainderman, in which case the property returns to the grantor.

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Legal Life Estate

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A life estate established by state law.

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Dower

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The life estate of a wife in the real estate of her deceased husband.

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Curtesy

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The life estate of a husband in the real estate of his deceased wife.

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Homestead

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A legal life estate in real estate occupied as the family home which provides protection against unsecured creditors.

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Encumbrance

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A type of interest in real estate that does not rise to the level of ownership or possession, yet still gives an individual, business, or other entity some degree of use or control of the property.

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Lien

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An encumbrance in the form of a charge against property that provides security for a debt or an obligation of the property owner. Real estate taxes, mortgages, judgments, and mechanics' are all types of this.

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Private Restrictions on the Use of Real Estate

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An encumbrance affecting the use of real estate passed through a deed or Covenant, Condition, or Restriction.

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Easement

answer

An encumbrance involving a right to use the land of another for a particular purpose.

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Easement Appurtenant

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An encumbrance attached to the ownership of real estate that allows the owner of that property the use of a neighbor's land. Runs with the land and can be transferred to future owners.

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Dominant Tenement

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The parcel that benefits from an easement appurtenant.

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Servient Tenement

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The parcel over which an easement appurtenant runs.

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Easement in Gross

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An individual or company interest in or right to use someone else's land.

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3 Ways of Creating An Easement

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1. Written agreement between the parties that establishes the easement right. 2. Easement by Necessity 3. Easement by Prescription

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5 Ways of Terminating An Easement

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1. When the need no longer exists 2. When the owner of either the dominant or the servient tenement becomes sole owner of both properties 3. By the release of the right of easement to the owner of the servient tenement. 4. By the abandonment of the easement 5. By the nonuse of a prespective easement.

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Encroachment

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When a building, fence, or driveway illegally extends beyond he boundaries of its owner's land or legal building lines, this occurs.

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Lis Pendens

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A pending assertion of a right.

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The 4 Government Powers (PETE)

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1. Police Power 2. Eminent Domain, through the process of condemnation 3. Taxation 4. Escheat

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The 3 Basic Ways Real Estate May Be Owned

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1. Ownership in Severalty 2. Co-Ownership 3. Trust (For the Benefit of Another)

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Ownership in Severalty

answer

When a property is owned by one individual, corporation, or entity.

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The 4 Forms of Co-Ownership

answer

1. Tenancy in Common 2. Joint Tenancy 3. Tenancy by the Entirety 4. Community Property

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Tenancy in Common (TIC)

answer

Default form of Co-Ownership outside of marriage in which each tenant holds an undivided fractional interest in the property. The fractional interests need not be equal and interests are willable.

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Joint Tenancy

answer

Form of Co-Ownership typically used in familial situations with right of survivorship. Must meet 4 Unities (PITT) requirement.

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The 4 Unities Requirement of Joint Tenancy

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1. Unity of Possession 2. Unity of Interest 3. Unity of Title 4. Unity of Time

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Trust

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A device by which one person transfers ownership of property to someone else to hold or manage for the benefit of a third party.

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4 Types of Real Estate Ownership by Business Organizations

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1. Partnership (general or limited) 2. C Corp 3. S Corp 4. LLC

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Condominium Ownership

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Ownership of a defined area in a larger building or community including residence and fractional interest in common areas.

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Co-Op Ownership

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Ownership in shares of a residence in the form of personal property.

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Time-Share Ownership

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Dividing ownership into Annual Occupancy Intervals.

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The 3 Basic Methods of Describing Real Estate

answer

1. Metes and Bounds 2. Rectangular Survey System 3. Lot and Block Method

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Metes and Bounds

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Real Estate description method relying on a property's physical features to determine the boundaries and measurements of the parcel, using a Point of Beginning (POB), monuments, and other physical and nonphysical markers.

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Rectangular Survey System

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Real estate description method dividing the land into rectangles based on two sets of intersecting lines: principal meridians and baselines.

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Range lines

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Lines in a Rectangular Survey System running north and south spaced 6 miles apart. Intersect with Township lines to form 36 sq mi townships.

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Township lines

answer

Lines in a Rectangular Survey System running east and west and spaced 6 miles apart. Intersect with range lines to form 36 sq mi townships.

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Township

answer

A 6 sq. mi. x 6 sq. mi. square divided into 36 1 sq. mil. (640 acre) sections.

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Sections

answer

1 sq. mi. that is divided into halves and quarters.

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640 Acres

answer

# of Acres in 1 Square Mile

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43560 sf

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# of Sq Ft in 1 Acre

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36

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# of 1 sq mi sections in a township

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Lot-and-Block (recorded plat) Method

answer

Real estate description method using lot and block numbers referred to in a plat map filed in the public records of the county where the land is located.

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Statute of Frauds

answer

Law requiring that all deeds be in writing for the sake of enforceability.

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9 Requirements for a Valid Deed

answer

1. Grantor is legally competent 2. Grantee is named with reasonable certainty 3. Statement of Consideration 4. Granting clause- words of conveyance 5. Habendum clause- begins with "To have and to hold" and defines strings attached 6. Legal Description of Real Estate 7. Exceptions and Reservations 8. Acknowledged (notarized) signature of grantor 9. Delivery and Acceptance

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4 Types of (Non-trust) Deeds

answer

1. General Warranty 2. Special Warranty 3. Bargain and Sale 4. Quitclaim

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5 Promises of a General Warranty Deed

answer

1. Covenant of seisin-grantor warrants they own the property and have the right to convey title 2. Covenant against encumbrances 3. Covenant of further assurances 4. Covenant of quiet enjoyment 5. Covenant of warranty forever

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Covenant of seisin

answer

Promise in a General Warranty Deed that the grantor owns the property and has the right to convey it

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Covenant against encumbrances

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General Warranty Deed promise that the property is free from liens or encumbrances, except any specifically stated in the deed.

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Covenant of further assurances

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General Warranty Deed promise that the grantor will obtain and deliver any instrument needed to make the title good.

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Covenant of quiet enjoyment

answer

General Warranty Deed promise that that the grantee's title will be good against any 3rd party who might bring a court action to establish superior title to the property.

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Covenant of warranty forever

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General Warranty Deed promise that the grantor will compensate the grantee for the loss sustained if the title fails at any time in the future.

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2 Promises of a Special Warranty Deed

answer

1. The grantor received title 2. The property was not encumbered during the time the grantor held title

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Bargain and Sale Deed

answer

Deed with the Implication that the grantor holds title and possession.

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Quitclaim Deed

answer

Deed that makes no promises or implications and is used to convey less than fee simple ownership and to cure title defects

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Reconveyance Deed

answer

Deed used by a trustee to return title to the trustor.

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Involuntary Alienation

answer

Title to property transferred without the owner's consent.

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Dedication

answer

Voluntary transfer of real property to the government.

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Adverse Possession

answer

A means of involuntary transfer in which an individual makes a claim to certain property, takes exclusive possession of it by excluding the rue owner, and uses it.

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Characteristics of Adverse Possession (ONCHA)

answer

Open- obvious to anyone who looks Notorious- known by others Continuous- uninterrupted Hostile- without the true owner's consent Adverse- against the true owner's right of possession

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Devise

answer

The gift of real property by will

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Bequest or Legacy

answer

A gift of personal property by will

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Probate

answer

A formal judicial process to properly allocate and distribute the assets of the deceased.

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Priority

answer

Rights in time.

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Abstract of Title

answer

A summary report of what the title search found in the public records.

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Marketable Title

answer

Requirement of systematic process to disclose no serious title defects, not expose a purchaser to the hazard of litigation, and convince a reasonably informed and prudent purchaser that they could sell or mortgage the property at a later time.

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Title Insurance Commitment

answer

The best if not only acceptable proof of title

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Chain of Title

answer

The succession of conveyances, from some accepted starting point, whereby the present holder of real property derives title.

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Standard Coverage Title Insurance

answer

Protection against: 1. Defects found in public records 2. Forged documents 3. Incompetent grantors 4. Incorrect marital statements 5. Improperly delivered deeds

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Extended Coverage Title Insurance

answer

Standard Coverage Title Insurance plus protection against defects discoverable through the following: 1. Property inspection, including unrecorded rights of persons in possession 2. Examination of survey 3. Unrecorded liens not known by policyholder

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Fee Earned

answer

Refers to the point in time an agent delivers a willing, ready, and able buyer on the seller's terms

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Fee Paid at Closing

answer

Refers to the point in time when an agent who has earned a fee should receive compensation.

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5 Antitrust Laws

answer

1. Price-fixing 2. Group Boycott 3. Allocation of Customers 4. Allocation of Markets 5. Tie-In Agreements

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E-Sign and UETA

answer

Regulations covering electronic contracting

Tucker School of Real Estate: EXAM 1 – Flashcards

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