Land can has 3 different categories and who owns it?
Air
Surface
Subsurface
All in which can have 3 different owners
Which of the following provides a buyer with the best assurance of clear, marketable title?
1 Certificate of title
2 Title insurance
3 Abstract of title
4 General warranty deed
2
Chattel
Cattle -> moveable, personal property
Accession
If not removed, it becomes real property.
I.e. Pizza oven
Test of a fixture
MARIA
methods, attachment, relationship, intention, adaptation
Real estate is convey with ____________?
Personal property is convey with ____________?
Deed; Bill of Sale
Land has 2 types of characteristics
Economic (value of property)
Physical
Economic (value of property) vs physical Characteristic
P.M.S.S - Permanence of investment, modification(fixity), scarcity, situs(area and location preference
Immobile, indestructible, non-homogeneous
4 types to describe the legal description
Metes and Bound - oldest form, has a benchmark and point of beginning (TX uses)
Lot, block, and subdivision - common in 1-4 residential contract (TX uses)
Rectangular survey system/US survey - longitude, latitude, meridians, baseline to create townships
D
1 township = ______ sections = ______ acres
1 acre = _________ sqft
1 mile = __________ ft
36; 640; 43,560; 5280
Is street address considered legal description?
NO and cannot be obtained from tax statements
Define Encumbrances and does it prevent alienation?
Limit/affect title and physical condition
It does not prevent alienation( transfer of ownership)
Define:
Involuntary
Statutory
General
Mechanical
Involuntary: Created by statue/law
Statutory: created by state law
General: affect all property owned
Mechanical: specific, involuntary, statutory = against land + improvement
Government Power (4)
PETE
Police Power - 14th amendment - zoning powers
escheat
Taxation
Eminent Domain
Define:
Zoning
Variance
Nonconforming
Buffer zone
Building codes
Define:
Zoning: divide city and design to protect public
Variance: something different then est. Zoning
Nonconforming: grandfathered into zoning
Buffer zone: transitional area between 2 zones
Building codes: comply to city ordinance on construction standa
Ad valorem
Tax (highest lien); in Wisconsin the government can tax a special assessment tax for the use. means "based on value
Statutory redemption
Homestead
Investment
After tax foreclosure, previous owner can redeem their house by paying the tax lien, penalty, and cost associated.
If homestead, 2 years. Investment, 6 months.
Equitable right of redemption
Prior to foreclosure sale where the owner can pay cost default, attorney, and late fees to keep the house and not move forward with foreclosure
Tax abatement
Tax decrease so company can move into the area
Rollback taxes
Occur when agriculture land -> house land. Pay for past due taxes
Escheat
No will, no heir, abandonment = property to state
2 main types of easement
Appurtenant - "runs with the land"
Dominant - benefits from
Servient - burden from
I.e lake access easement
Gross - "does not pass with land" - personal
I.e power cable easement
Easement by prescription(perspective)
Easement by prescription(perspective) - use of another persons land for length of time. Open. Visible use. (TX is 10 years)
Easement termination
Merger, release(dominant release servient), abandonment
Joint Tenancy
2 or more owners.
undivided interest, equal ownership with right of survivor ship. Last remaining survivor take ownership in sverality.
Time, Title, Interest, Possession
Tenancy in common with separate agreement for use is
time share
Tenancy by Entirety
ownership by hubby and wife with right of survivorship (not recognized in texas)
Dower vs Courtesy right
wife receive hubby estate - dower
courtesy is the man receive wife estate
Deed of Trust
Trustsor
Trustee
Beneficary
loan docs = allow for non judiciali foreclosure = 3 people document
giver
receiver (incharge )
lender
time shared ownership
multiple owner with undivided interest with right to use facility for fixed time
corporation
double taxation; liabilities are seperate
Limited Liability Corporation (LLC)
designate 1 manager to act for it. Sue LLC, not individual, no member/manager liable for debt, ll,liability.
Liens come in and are organized how?
by date of work. FIrst in time, is first in line after tax lien
Elements of Valid Deed (LEDCCC)
legal decription
Execution(grantor sign)
Delivery and acceptance
Competent party
Consideration
Conveyance
deed
INSTRUMENT convey title
General Warrant Deed
protect against defect title aagainst all previous owners
Warrant Title
good, clear title
Covenant of Seisin
grantor prove is owner, right to convey title
covenant of emcumbrances
no encumbrances on title, except those listed on deed
Quitclaim
cure defect on title, transfer whatever with no warranty
common use when transfering within family like when i marry tim and i want to add my name to his townhome deed
Sheriffs Deed
given by court
Bargain and sale deed
grantor guaranteed grantor has title but not guarantee title is free of defects
Voluntary Alientation
exchange of gift (love and affection), sale, devise and devisee
Involuntary Alientaiton
foreclosure, condemnation, adverse posession
Recording Title
not necessary for valid deed but gives constructive notice
Cloud on title
title has encumbrances
OTP
protect owner (buyer)
Mortgage title policy
Protect lender
Right to Subrogation
insurer pursue third party to reclaim insurance loss
Value
number of goods offered in exchange for given product
Market Value
price willing seeler would sell; willing buyer would buy
Market Price
amount property sold for
Characteristic of Value
Demand
Utility
Scarcity
Transferable
Conformity
max value depend on neighborhood standards
Contribution
value of improvement contribute to property
Competition
more competition= decrease price
Increaseing and Diminishing Reutnrs
when improvement don't add value
Anitipation
depend on expect benefit
Highest and Best
greatest return on money
Regression vs Progression*
property value less due to surrounds. Progression is opposite
Steps to Appraisal
Purpose
Data
Approach
Reconciliation
Report
Appraisal contains
Date
Purpose
Opinion Value
Legal Description
Signature of Appraiser
Reconciliation of 3 approaches
Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA)
required certified people to appriser >250K transactions
Uniform Standards of professional Appraisal Practice (USPAP)
quality control standards. "code of ethics" for appraisers
Members of Appraisal Institute (MAI)
membership club
Gross Rent Multiplier
Price/Rent
Element of Valid Contract
Competent
Offer and Accept
Consideration
Legality of Object
Reduced to writing and signed
Void vs Voidable
illegal vs can be terminated based on duress
unenforceable contract
oral contract
Discharge of contract
completely perform contract
partial/substantial peformance
illegal to preform
mutual agreement to cancel
operation of law ie.minor
contingency
Statue of Fraud
Statue of Limitation
in writing for contract
timing
Amendment vs Addendum
to change vs to add
Offer/counteroffer may be withdrawn at
anytime prior to notification of acceptance (Recission)
EMD
if suing, what happen to EMD
evidence of good faith deposit where Broker must deposit into trust account by End of 48 hours(2 days)
stay in trust account
Computing time
act occurs day zero. Calendar day used
If seller default, buyer can if:
1. cancel contract - recover EMD
2. sue for specific performance
3. sue for compensatory damage
if buyer default, seller can:
1. cancel contract
2. sue for specific performance
3. sue for compensatory damage
4. contract forfeit, keep EMD
Subagent
2 comapnies, buyer-customer. Represent client of another broker not yours
agency always created at _______ level
broker
Termination of Agency:
close sale
Property Destruction
Epsire term of agency
Mutual termination
Renunciation/Revoke Broker
Bankrupt of owner
Death of broker
Fiduciary Duty to agent --> buyer and seller are _____
OLD CAR
obedience
loyalty
disclosure
confidentiality
accounting
reasonable car
Fiduciary Duty to broker --> agent and seller are _____
CRIP
compensation
reimbursement
indemnification
Performance
Constructive Eviction
landlord neglect property so tenant can terminate contract. Must vacate to claim this
when collecting rent and secuirty deposit
require RE license to collect. money held in trust account
Termination of agreements
Property management agreement
Broker agreement
auto-renew every 30 days after expiration
definite termination date
referral fees are paid between
brokers
protected class
handicap, race, color, religion, sex, familial status, origin
Title V111 of civil right act of
1968 = prohibit race, color, religion, origin
community development act of
1974 = prohibit sex
fair housing amendment of
1988 = prohibit handicap and familial status
First violation of Fair Housing Penalty
another offense w/in 5 years
Max = 10k, not exceeding 25k
max 50K if 2 or more violations in past 7yaers
Prohibited Advertising
preference and limitation discrimination of protected class i.e. catholic, wheelchair
reference location i.e. near temple
pictorial representation - depicting 1 segment of population
media cannot target one population to exclusion of others
Americans with Disabilities act (ADA)
required if 15+ employees or business open to public
Brokerage firm must
set written policies
responsible for all occupational acts of RE License
all compensation to RE is through broker
Diligence vs Due Diligence
Hard Work
investigation prior to signing contract
Sherman Anti Trust Act
common violations - price fixing, boycotting.
found guilty as misdemeanor or felony, punishable 100k max and 3 years of prison (violator)
penalty 1MM Max (corp)
Person suffer loss cause anti-trust activities can recover damage and attorney fee (civil suit
Errors and Omissions
malpractice insurance carried by license
General LIability
protect against liability of lawsuit/claims.Property owner has it
Homeowners Insurance
purchased by homeowner. covers liabiity and hazard insurance(fire, storm damage), not flood.
Lead Based Paint
built before 1978 must disclose
Asbestos
natural occurring mineral, resistant to heat and chemicals, used in 1980s in buildings materials, exposure can lead to lung cancer
disclosure required. matieral can be encapsulated (enclosed)
Radon
gasin rock, soil, water. colorless, odorless, tasteless.
its comes thorugh the foundation of homes Cuase lung cancer
Testing not required
Mold
mositure to grow, can be found in insulation.
no later than 10 day after mold remediation has passed inspetion --> issue Cert of mold remediation
alll certs w.in 5 years must be disclosed to buyer
Rule of capture
landlord can pump as much ground water as he/she chooses
Undergorund Storage Tank (usT)
at least 10% of volume underground. 1988 increase law for proper operation and maintenance
Customer
assist; agent owes honesty and fairness to the client.
Reliction
New land acquired if water recedes
Brownsfield land *
abandon and uninhabitale. common for commercial and industrial purpose. Contamination from dry cleaner and gas station
Flood Plain
land adjacent to stream/river to base valley causing flooding
Federal Emergency Mangaement Agency (FEMA)*
flood map service center is public source for flood hazards
Federal Environmental Legislation
protect air quality, water, hazardous waste
Clean Air Act (CAA)
law regulate air emission
Clean water Act (CWA)
law regulate water
Open Beach Law
at gulf of mexico, no structure permitted to build within easement
Doctrine of Prior Appropriation
the right to use a water source for irrigation.
Environment Protection Agency (EPA)
protect environment
Comprehensive Environment Response, Compensation, Liability act (CERLA)*
1980; clean up toxic waste spills, created superfund
Superfund Amendment and re-authorization act (SARA)
pay for clean ups. EPA involved in soil clean up from underground tanks. Discolored soil = BAD
WEtlands
water overs soil; wetlands monitored/protected by EPA
Enviro assessment, threatened, or endangered species and wetlands addendum
TREC pro form; must be disclosed if any hazards on ite and set as a contingency to inspection prior to purchase
Material Fact
anything reasonable person would find important in deciding to contract
subject to
form of assumption; sold subject to morgage. upon default, original borrower is still liable
Conventional Vs Non-conventional loans
not agency, lender rely on own reports sold to FDMC.
2 types: Conforming and nonconforming
backed by federal govt like FHA, VA, USDA
conforming vs Non-conforming
types of conventional loan.
conforming: meet FNMA or FDMC to be sold in secondary market
nonconforming: held in own lender portfolio because doesn't meet secondary market requirement
A trustee(bank) have the duty to _____ or _____
1. release from lien
2. non-judicial foreclosure with the power to sale clause
primary mortgage market
banks, credit union, mortgage loan companyj
Secondary Market responsible for
mataining active market for mortgagors
secondary lender
investor purchasing pre-existing mortgages
Rural Development guaranteed housing loan program (USDA)
offered to rural
equity loan
owner borrow money against equity of home
Reverse Annuity Mortgage
equity loans. 62 years old receive payment to remain in home
Mortgage Clause
provide add'l coverage to lender - tell how lender name and address appear on legal docs
FHA Requirement
insures loans - protect lender
no prepayment penalty
FHA appraiser
paid by seller/borrower
qualified lending institution
insurance paid cash/finance in loan
FHA 203B - fixed rate
FHA 203K - rehab loan
What does this stand for:
FNMA
FHLMC
GNMA
Federal national mortgage association
federal housing loan mortgage corporation
Government national mortgage association
VA requirement
guarantee loans - 0% down
no prepayment penalty
VA appraiser
Limit on Loan amount= 4x entitlement
Receive Cert of Reasonable Value
Loan qualification
income, debt, assets, credit history
LTV
lender borrower against Appraised value
Mortgage Insurance Premium
FHA only; insure lender risk
Community Reinvestment Act
take money = loan money. Bank takes then bank lends. the circle of money
Right of Recssion
3 days to notify lender. Apply to refi, second lien loans, home equity ONLY
TILA RESPA INTEGRATED DISCLOSURE (TRID) define. and effective what year?
what does TILA and RESPA stand for
know before you owe"
2015
truth in lending act and real estate statement procedures act
Consumer Financial Protection Bureau (CFPB)
its primary goal is:
government responsible for consumer protection in financial sector
easier to use
consumer understanding
comparison shopping
avoid costly surprises at closing
Loan Estimate ( LE)
receive w/in 3 business days after application - 3 page document from lender
Closing Disclosure (CD)
lender provide 5 page document including loan terms, monthly payment, closing cost
Real Estate Statement Procedure Act
ensure knowledge of settlement cost BEFORE closing
Primary aims of RESPA
eliminate kickbacks - seciton 8 of RESPA
advance disclosure
reduce amount homebuyer may place in escrow
reform/modernize local record keeping
Rebate
RE agent can rebate portion of commission. cannot tie to referrals
equalcreit opportunity act (ECOA)
lender make loan to all qualified regardless of source. NO discrimination
Fair credit reporting act
provide accurate data
Federal interstate land sales full disclosure act
file report with HUD prior to sale of land. to avoid fraud
Predatory lending
lender malicious practice during loan origination. I.e. trick borrower to thinking interest rate is lower than is
Due to Consumer Financial Protection Bureru (CFPB):
Loan estimate replace___
Closing Disclosure replace _________
LE replaced good faith estimate form
statement HUD 1 settlement
implemented oct 2015
exception vs reservation
with holds from operation of the deed
creation by the deed of a new right in favor of the grantor
Habendum clause
to have and to hold" define/limit quantity of estate granted by deed
Doctrine of relation back
title relates back to date which deed was deposited into escrow
Equity
current market value minus sum of all liens
Equity Buildup
payment towards principal and gain from appreciation
Interest
imputed interest
fee lender charges
interested charged, regardless of periodic payments made
buydown mortgages aka graduated payment mortgage
low interest at beginning by lender charging prepaid interest for short time. the interest goes up to set up rate
subprime loan
high risk borrower 1-5% higher
Discount rate
set by federal reserves. interest federal reserves charge banks
Fixed rate payment
aka amortized loan. pay constant amount
Annual percentage rate (APR)
effective interest rate/ effective yield
lender cost(origination, discount, closing cost) plus interest rate = APR
Income tax purposes, homeowners an deduct form gross income:
mortgage interest on 1st and 2nd home
RE tax
Origination fee(lender processing fee)
discount points in year of purchase
prepayment penalties on loans paid off early
Closing cost to a buyer are
Origination fee, homeowner insurance, mortgage insurance, down payment, recording fee, transfer fee, tax
Banks/Statutory year vs calendar year
who pays for the day of closing
360 w/ 30 day month vs 365
seller
mortgage payment paid on ____
taxes and insurances paid ___
what gets porated
1st of each month; annually
tax, insurance, rent, interest, prepaid HOA fee
Texas has no transfer fee, but doe require___________
seller pay________________
buyer pay________________
recording fee;
doument to furnish clear title
recording deed and mortgage
recapture
recover tax benefit of deduction/credit previously taken
straight line depreciation
IRS on residential vs nonresidential
based on IRS and can claim deduction on income tax return
27.5 yrs after 1987
39 years after 1993
Foreign Investment and Real Property Tax Act*
foreigner pay income tax based in disposition gains. Transferee(buyer) to withhold tax of 10% of gain from foreigner transfer (seller)
Boot*
additional capital or property to make difference in exchange. taxed at exchange
alternative minimum tax
flat rate tax; if tax exceed regular income tax
26% or 28% individuals
20% corps
taxpayer relief act 1997
homeowners only. exclude capital gain realized on principal residence. must live 2 or 5 years. No age requirement
married 500K max
sngle 250K max
vacancy ratio
income lost; vaancy loss divided by GPI = ratio
URLTA
UNIFORM RESIDENTIAL LANDLORD AND TENANT ACT