What is property?
Any 'thing' that can be possessed, used, enjoyed, controlled or conveyed
Tangible Property
All real property and physically defined personal property, such as buildings, goods, animals, and minerals
Intangible Property
Property that cannot be seen or touched but exists only conceptually, such as corporate stocks. Such property is not governed by Article 2 of the UCC.
A deed is a special form of written contract used to convey a permanent interest in real property. Unlike most contracts, a deed requires:?
Only the grantor to be legally competent and of legal majority age
The covenants in a deed are the most important differences among types of deeds. Which of the following covenants promises that the grantor truly has good title and the right to convey it?
Covenant of seizin
Although deeds can only deliver what a grantor actually owns, they can still vary in "quality." Which of the following types of deeds is considered to be the "highest quality" because it contains the full set of legal promises the grantor can make?
General Warranty Deed
Once a document conveying an interest in real property is placed in the public records it is binding on the public, whether or not they make an effort to learn of it. Based on the common law tradition, this policy is known as the:
Doctrine of Constructive Notice
The ________________ requires that any contract conveying a real property interest be in writing in order to be enforceable?
Statute of Frauds
Unlike other forms of evidence of title, title insurance guards the grantee against certain risks. However, there are a number of important limits to title insurance. Which of the following is an example of the limits to title insurance?
It does not protect the grantee from the threat of physical damage to the property.
The most flexible method of land description, capable of describing even the most irregular of parcels, can be described as a very precise, compass-directed walk around the boundary of a parcel. This method is commonly referred to as:
Metes and bounds
In order for a deed to be a valid conveyance of property, there must be an observable, verifiable transfer of the deed to the grantee. Typically this is accomplished when the grantor hands the deed to the grantee at closing. Which of the following basic r
Delivery
The Summit is a:
Student housing complex
Under Larimer County policy, a home located in a floodway cannot be rebuilt if it is damaged at
_______________ or more of its value.
50%
True or False: This regulation applies regardless of the reason for damage
True
Why did owners of The Laboratory appeal the planned construction of the parking garage?
It will obstructs their views
Which of the following solutions to the parking shortage was appealed by nearby businesses:
The construction of a parking garage
Developers were permitted to provide less parking for the property because
Land use code permitted it
Property rights can be divided into two classes, real and personal. Which of the following is an example of real property?
Commercial building
Interests in real property that include possessions are referred to as:
Estates
Which of the following types of ownership estates is the most complete bundle of rights, and therefore carries the greatest value?
Fee simple absolute
Nonposessory interests (i.e. bundles of real property rights that do not include possession) include all of the following EXCEPT:
Leasehold interests
A lien is an interest in real property that serves as security for an obligation. Which of the following is an example of a general lien?
Lien arising from a court judgement unrelated to ownership of the property
Direct co-ownership implies that each co-owner holds a titled interest in the property, but without exclusive possession with respect to the other co-owners. Which of the following types of direct co-ownership is considered the closest to the fee simple a
Tenancy in common
Property rights created from marriage have a clear implication for real estate transactions. Which of the following marital property rights gives a spouse a one-half claim on all property acquired "from the fruits of the marriage?
Community property
Bill and Mike go in together to purchase 342 acres of land to use for hunting and family vacations. Ten years later, Bill dies and Bill's wife wants to sell his half of the land. Mike informs her that, unfortunately, she has no claim to the land and that
Joint tenancy
Real estate can be viewed as a bundle of rights. How these bundles of rights are grouped together determines the type of ownership interest an individual (or group of individuals) can stake claim to. In an ordinary life estate with remainder interests, wh
Disposition
When viewed as a tangible asset, real estate can be defined as the land and its permanent improvements. Improvements on the land include:
fences
The largest source of revenue for local government is:
Property Taxes
As of 2011, the single largest asset category in the net worth portfolios of households is:
Housing
Real estate markets differ from other asset classes by having all of the following characteristics except:
Homogenous product
Real estate values derive from the interaction of three different sectors in the economy. Which of the following sectors serves to allocate financial resources among households and firms requiring funds?
Capital market
3 ways Real Estate is used as a term:
Tangible property, intangible property (bundle of rights associated with the ownership/use of physical assets), industry and profession
Tangible assets
a. Improvements to the land (infrastructure)
b. Structures- improvements on the land
c. Land- raw, developed
Size of an acre
43,560 Square Feet
Intangible Assets
Bundle of rights- exclusive possession of the real property, use and enjoyment, disposition, can be bundles many ways
Bundle of Rights
intangible rights/interests associated with the physical land/buildings
How Local gov't generates income
Property Taxes
Three Real Estate Markets
User/space, Public Capital and Private Capital, Government
User/space Market
1. where S&D interact
2. Highly segmented and localized
3. Rental prices vary for physically similar space across locations and property types b/c of segmentation
4. Rental rates get determined
Public Capital Market
a. Capital $ invested and RE owned indirectly
b. Pooled with many investors
c. Small homogenous shares of ownership traded in public exchanges
d. High degree of liquidity
e. Informationally and transactionally efficient
Private Capital Market
a. Direct investment by one or more investors
b. Limited pooling
c. Illiquid
d. inefficient
Government Market
1.Local- greatest influence on RE (land use, infrastructure, etc)
2.State- least influence on land use- primary influence through licensing
3.Federal- 2nd greatest influence (taxation)
What determines the value in the property market?
Interaction between user and capital markets determine value in property market
Rights
i.claims and benefits that the gov't is obligated to enforce
ii.Nonrevocable- without due process
iii.Enduring- don't fade/diminish over time
iv.For tangible property to be of value must have rights to possess and use that property.
Three Key Property Rights
a.Possession/exclusion- most valuable property right
b.Use/benefit
c.Convey/dispose
Right of Possession/ Exclusion
The property is owned by the title holder, and the holder can deny people access to the property.
Right of Use/ Benefit
occupy, use, harvest, extract
Right of Convey/ Dispose
sell, lease, mortgage
Three Dimensions of Property rights
a. Surface - of the land
b. Air Rights - up to Federally reserved air space
c. Subsurface Rights - (below the surface) as far as technology allows
Fixtures
Real property that was personal property
Rules:
1. Intention - dominant rule
2. Manner of Attachment - extent of damage
3. Character/Adaptation
4. Relation of Parties
5. Interests/Estates
Estate
Real property interest that includes possession/exclusion
Freehold Estates With Inheritance
a. Fee Simple Absolute - all possible rights
b. Fee Simple Conditional - all rights, but revocable if specific condition is violated
Freehold Estates Without Inheritance
a.Life estate with remainder interest
i.Ordinary life estate w/ remainder interest - created by owner
ii.Legal life estate w/ remainder - imposed by law
Nonfreehold/Leasehold (Tenancy) Estates
1.Tenancy for Years - specific period of time
a.Must be written if for more than one year
i.Statute of Frauds
2.Periodic Tenancy -
a.No definite length of time
b.Often oral agreement <= 1 year
3.Tenancy at will/tenancy at sufferance
Non-Possesory Interests
Bundles of Real Property Rights that do not include possession
Easements
Right to use or prevent use of the land of another for a specific and limited purpose
Easement Appurtenant
right of use possessed by a dominant parcel of land over an adjacent servient parcel
a. Benefits dominant parcel & burdens servient parcel
b. Runs with the land - rights/obligations inseparable from parcels involved and pass with title
Easement in Gross
right/benefit held individually
a. Transferable
b. Unrelated to another parcel
c. Benefits person, not property
License
- Grants permission, rather than conveying a real property right
Restrictive Covenants
private restrictions and obligations
Types of Restrictive Covenants
1.Restriction - architectural standards, no RV's, pet restrictions
i.Height
2.Obligation- HOA dues, pick up dog poop
3.Methods of Creation
a .Deed Restriction - In deed when conveying parcel to new owner
b.CCR's - Created By Owner / Developer - recorded a
Liens
Security/Collateral for an Obligation
Specific Liens - arise from ownership and use of the property
arise from ownership and use of the property
a.Voluntary- mortgage
b.Involuntary- mechanics lien, property tax lien
Direct Co-Ownership: Undivided Interest
- All share right of exclusive possession, cannot obstruct use, may hold different size of economic shares, right to disposition
Priority is Key to Enforcement
? First - Taxes
? Second - Mortgages and Mechanic Liens
? Third - Judgment Liens
...
Direct Co-Ownership: Cooperative
Corporation owns property, owner holds shares in corporation and proprietary lease, control over neighbors
Direct Co-Ownership: Tenancy in Common
Default Form
� Undivided interests in possession/exclusion and use/enjoyment
� May own different fractional interests
� Can will to whoever specified in will
Direct Co-Ownership: Joint Tenancy
Difficult to create, easy to destroy
� Right of Survivorship - surviving owner becomes 100% sole owner, restricts inheritance to heirs of last surviving owner
Direct Co-Ownership: Condominium
- Combines single ownership and TIC
� Created by condominium declaration
Direct Co-Ownership: Timeshares
Right of possession, use/enjoyment divided into time intervals
Indirect Co-Ownership: Equitable Distribution
Equitable distribution is the distribution of property and debt obligations used by courts in most states when dividing marital property during divorce proceedings
Indirect Co-Ownership
iv. Entity owns property
v. Best for investment/business purposes
- Marital property rights
Indirect Co-Ownership: Community Property
o 50/50 ownership acquired out of fruits of marriage
o Transfers require both spouses signature regardless of how title held
Deed
a legal document signed and sealed and delivered to effect a transfer of property and to show the legal right to possess it
Why is conveyance of real property complicated?
a. Real Property includes both the physical asset an the bundle of rights
i. Conveying real property involves both aspects
ii. Rights to land are enduring; rights today depend on transactions long ago
Deed requirements
In writing, identify particular grantee, contain a statement that grantor intends to convey property, describe property with sufficient certainty to enable a party familiar with locality to identify the premises to exclusion of other premises. Delivered t
Grantee
The person to whom property is transferred by deed.
Grantor
the individual who conveys the ownership rights of real property (must be of legal age and competent)
Recital of Consideration
Statement in a deed of the amount that is being paid for the property.
Words of Conveyance
Affirms intention to convey real property & determines the type of deed
Covenants
Legally binding promises for which the grantor becomes liable.
Covenant of Seizin
promise that grantor has good title and the right to convey it
Covenant Against Encumberances
no liens, mortgages, easements, etc. to diminish the value of the property, other than what the grantee knows about
Covenant of Quite Enjoyment
-promise that property won't be claimed by someone with a better claim to title
Habendum Clause
That part of a deed beginning with the words "to have and to hold," following the granting clause and defining the extent of ownership the grantor is conveying.
Description of Land
must be unambiguous and enduring. 3 methods - metes an bounds, plat lot and block number, government rectangular survey
Acknowledgement
confirmation that grantor acted voluntarily
Delivery
observerable, verifiable intent that deed is to be given to grantor
General warranty deed
Highest quality deed with most covenants Includes 3 covenants: seizen, quit enjoyment, no encumbrances
Types of Deeds
general warranty deed, special warranty deed, quit claim deed
Special warranty Deed
includes all three covenants, but no encumbrances is limited to the time the grantor owned the property
Quit Claim Deed
deed that gives no warranties or guarantees
Voluntary Conveyance
Transfer of title from a delinquent homeowner to a lender to satisfy the balance on a loan in default. The delinquent borrower transfers title on a voluntary basis, in order to avoid foreclosure.
Involuntary Conveyance
A transfer of title without the owner's permission. When court settles conveyance of property in case of divorce, probate, bankruptcy, condemnation, or foreclosure.
Actual Notice
Knowledge of a fact given to a person by being presented with notice
Constructive Notice
Constructive is a fiction that a person got notice even though actual notice was not personally delivered to him/her.
Statute of Frauds
A state statute under which certain types of contracts must be in writing to be enforceable.
Title
The title of a property is the evidence or documentation that an owner is in lawful possession of the property, such as a property deed.
Chain of Title
A history of conveyances and encumbrances affecting the title from the time the original patent was granted, or as far back as records are available, used to determine how title came to be vested in current owner.
Title Search
The examination of public records relating to real estate to determine the current state of the ownership
Title Abstract
The compilation of all documents summarizing the chain of title into a chronological volume and then given to an attorney for final interpretation.
Metes and Bounds
A method of land description which involves identifying distances and directions and makes use of both the physical boundaries and measurements of the land.
Title Insurance Commitment
Insurance policy protecting grantee (insured) if change to title arises and defects are found... most common form of evidence of title today
a. Two important limits to title insurance.
3 Powers of Government that limit private property use and affect property value
Regulate Land Use, Eminent Domain, Power of Government to tax real property
Subdivision Plat Lot and Block Number
1. Survey plat map recorded in public records identifies parcels by block and lot number
2. Reference to plat, lot and block number sufficient to legally describe parcel
a.Plat shoes additional features
Government Rectangular Survey
1. Acre is the basic unit of measurement
2. Reference Points: Baseline & Principal Median
3. Locate / Describe a property relative to the reference points
4. Units
3 reasons why the market system may not operate to maximize net social benefits of land use
a. Externalities
i.A side effect or consequence
ii.Traffic, noise, light, etc
1.Need for land use regulations
b.Incomplete Information - definition and example
i.Unknown quality or condition of existing structures
1.Building standards.. need for building
Eminent Domain
Allows the govt to take property for public use but also requires the govt to provide just compensation for that property
Condemnation
The PROCESS of the government taking a property by eminent domain.
Just Compensation
Fair market value at time of taking measured in terms of loss to the owner (not benefit to government)
...
...
Deed
A special form of written contract used to convey a permanent interest in real property. Must be delivered to be valid
General Warranty Deed
Includes the full set of legal promises the grantor can move, highest quality deed
Special Warranty Deed
Identical to the general warranty deed, except that it limits the time of the grantors warranties to her time of ownership
Quitclaim Deed
Has none of the covenants of the warrant deed... also its words of conveyance read something like "I...hereby quitclaim... as opposed to I...heraby grant or convey
Judicial Deed
One issued as a result of court ordered proceeding
The deed of bargain and sale
None of the covenants of a warranty deed
Trustees Deed
Issued by the trust in a court supervised disposition of property
Covenants
Legally binding promises for which the grantor becomes liable
Three Normal Covenants
Covenants of Seizin
Covenants against encumbrances
Covenants of quiet enjoyment
Which of the following is not a requirement of a valid deed
Competent Grantee
The interest being conveyed by a deed is specified in the:
Habendum Clause
The highest quality form of deed is the
General Warranty Deed
A deed used mainly to clear up possible "clouds" or encumbrances to title (conflicting interests) is the:
Quitclaim Deed
If a landowner sells the front part of a parcel of land, retaining the back portion as a landlocked parcel, and if there is an existing informal path across the front parcel to the back one, the seller is likely to retain the party as a(n)
Implied Easement by Prior Use
If a neighboring landowner drives across a person's land openly and consistently for a number of years, the neighbor may acquire an easement by
Prescription
If documents conveying interests in real property are properly recording in the public records, they are binding or enforceable on all persons, regardless of whether those persons are aware of the documents by the
Doctrine of Constructive Notice
Which of these is a widely used form of "evidence of title
Title Insurance Commitment
The most common form of legal description for urban residential property is the:
Plat Lot and Block Number
Factors that make it uniquely difficult to establish clear title in real estate compared to most personal property items include:
Length of the ownership history in real estate
A deed used mainly to clear up possible 'clouds' or encumbrances to title (conflicting interests) is the:
A. General warranty deed.
B. Special warranty deed.
C. Deed of bargain and sale.
D. Quitclaim deed.
E. Judicial deed.
Quitclaim deed
The 'highest-quality' form of deed is the:
A. General warranty deed.
B. Special warranty deed.
C. Deed of bargain and sale.
D. Quitclaim deed.
E. Judicial deed.
General warranty deed.
Factors that make it uniquely difficult to establish clear title in real estate compared to most personal property items include:
A. Size of real estate.
B. Length of the ownership history in real estate.
C. Value of real estate.
D. Land use controls.
E.
Length in ownership history in rel estate
The interest being conveyed by a deed is specified in the:
A. Words of conveyance.
B. Habendum clause.
C. Property description.
D. Exceptions and reservations clause.
E. Covenant of seizin.
Habendum clause
The most common form of legal description for urban residential property is the:
A. Street address.
B. Tax parcel number.
C. Plat lot and block number.
D. Metes and bounds description.
E. Government rectangular survey.
Plat lot and block number
Which of these is not a requirement of a valid deed?
A. Competent grantor.
B. Competent grantee.
C. In writing.
D. Habendum clause.
E. Delivery.
Competent grantee
If a landowner sells the front part of a parcel of land, retaining the back portion as a 'landlocked' parcel, and if there is an existing informal path across the front parcel to the back one, the seller is likely to retain the path as a (an):
A. Easement
Implied easement by prior use
Which of these is a widely used form of 'evidence of title'?
A. Abstract of title.
B. Title insurance commitment.
C. Torrens certificate.
D. Title certificate.
E. General warranty deed.
Title insurance comitment
If documents conveying interests in real property are properly recorded in the public records, they are binding or enforceable on all persons, regardless of whether those persons are aware of the documents, by the:
A. Statute of Frauds.
B. Recording statu
Doctrine of constructive notice
In order for a deed to be valid, it must
A) contain the property address.
B) be signed by the grantee.
C) voluntarily delivered to and accepted by the grantee.
D) be recorded in public records.
E) all of the above.
voluntarily delivered to and accepted by the grantee.
The part of a deed that specifies the type of interest being conveyed
A) is the habendum clause.
B) is the exceptions clause.
C) is the reservations clause.
D) is the covenant of seizin.
E) are the words of conveyance.
is the habendum clause.
The law requiring contracts that convey an interest in real property to be in writing is the
A) doctrine of constructive notice.
B) recording statute.
C) doctrine of stare decisis.
D) statute of frauds.
E) statute of limitations.
statute of frauds
In order to create a potential claim for adverse possession, the adverse possessor must
A) continuously posses and use the property.
B) not permit others to share in the use of the property.
C) ensure that they only use the property as the owner has speci
a and b only
A person who wants the highest level of protection and assurance that a title is free of defects or clouds should obtain
A) a title insurance commitment.
B) a chain of title.
C) an attorney's opinion of title.
D) a title abstract.
E) any of the above.
title insurance comitment
A parcel described as 'the northeast quarter of the southeast quarter of section 14' contains how many acres?
A) 160 acres
B) 120 acres
C) 80 acres
D) 40 acres
E) 20 acres
40 acres
The most precise method of land description for an irregularly shaped, valuable parcel in the central business district would be the
A) subdivision lot and block method.
B) metes and bounds method.
C) government rectangular survey method.
D) plat method.
metes and bounds method
Which is NOT associated with an involuntary conveyance?
A) patent
B) eminent domain
C) foreclosure
D) condemnation
E) all of the above are associated with an involuntary conveyance
patent
John purchased a large parcel of land with a lake located at the rear of the property. He wants to sell the front half of the parcel and keep the lakefront parcel in the rear for himself. Since there is no other existing access to the rear parcel, what wi
an easement of necessity
The basic powers of government to limit private property does NOT include
A) the power to restrict owners from selling land.
B) the power to acquire property for the benefit of the public.
C) the right to tax property.
D) the power to regulate land use.
E
A) the power to restrict owners from selling land
A law requiring any contract conveying a real property interest to be in writing in order to be enforceable is a modern application of the:
A. Statute of Frauds
B. doctrine of constructive notice
C. habendum clause
D. actual notice
A. Statute of Frauds
Cooperative
A form of co-ownership, historically used for apartment buildings, is not considered a form of true direct co-ownership, but rather qualifies as a proprietary corporation
Tenancy in common
Direct co-ownership implies that each co-owner holds a titled interest in the property, but without exclusive possession with respect to the other co-owners. Which of the following types of direct co-ownership is considered the closest to the fee simple a
Tenancy by the entirety
Which of the following types of direct co-ownership is a form of joint tenancy for husband and wife
Joint tenancy
Bill and Mike go in together to purchase 342 acres of land to use for hunting and family vacations. Ten years later, Bill dies and Bill's wife wants to sell his half of the land. Mike informs her that, unfortunately, she has no claim to the land and that
Real estate
Rights to land its permanent structures", rights are claims or demands that our government is obligated to enforce, rights that are nonrevocable, and rights are enduring.
Personal rights
Personal freedoms derived primarily from the Bill of Rights and other amendments and clauses of the US Constitution.
Property rights
Rights to things both tangible and intangible.
Fixture
An object that formerly was personal property but has become real property. Determination of property types is dependent on the manner of attachment, the characteristic of the article, and the intention of the parties.
Interest
Bundle of rights.
Estates
Interests in real property that include possession.
Freeholds
The more substantial and complete estates that are indefinite in length.
Fee simple absolute
The most complete bundle of rights possible, and has the greatest value.
Fee simple conditional
Ownership subject to a condition or trigger event.
Ordinary life estate
The rights of disposition of the fee simple absolute are unbundled and separated completely in this type of estate.
Remainder estate
In this estate the homeowner retains all rights of exclusive possession, use, and enjoyment for her lifetime even though the property has been sold...the new owner does not take possession until after the homeowners death.
Legal life estates
Estates created out of law and commonly out of marriage.
Leasehold
Interests that are possessory interests and are limited in time, have a diminished right of disposition because the property ultimately reverts to the landlord, and are not titles interests.
Tenancy for years
A leasehold interest for a specific period of time.
Periodic tenancy
A leasehold interest that has no definite term at the start.
Tenancy at will
A leasehold interest where the landlord and tenant agree that the tenant will stay as long as he/she wishes until landlord or tenant give notice.
Tenancy at sufferance
Occurs when a tenant that is supposed to vacate does not.
Easement
The right to use land for specific and limited purpose.
Easements appurtenant
An easement involving an relationship between two parcels of land: the dominant parcel, and the servient parcel.
Dominant parcel
The parcel in an easement appurtenant that is receives the benefit of the use or right.
Servient parcel
The parcel in an easement appurtenant that is constrained or diminished by the easement.
Easement in gross
The right to use land for a specific, limited purpose unrelated to any adjacent parcel.
License
The permission for a person to use another's land for a specific and limited purpose.
Restrictive covenants
Impose limits on the uses of land and can be created when land is conveyed to a new owner by placing a restrictive clause in the deed that conveys the property.
Deed restriction
The term used to the refer to when only the owner who created the restriction or that owner's heirs can enforce the restriction.
Lien
An interest in real property that serves as security for an obligation.
General lien
A lien that arises out of actions unrelated to ownership of the property.
Specific lien
A lien derived directly from events related to a property.
Attach
To place lien on a property.
Mortgage
An interest in property as security for a debt.
Mechanics lien
A lien that arises from construction and other improvements to real estate.
Property tax lien
A lien that arises from not paying property tax on real estate.
Tenancy in common
The "normal" or most common for of direct co-ownership, the form of co-ownership that is the closest to the fee simple absolute estate as possible.
Assessment lien
lien assessment by local governments to ensure that those who receive the primary benefit of neighborhood improvements will be charged their "fair share.
Attach
to place a lien on real property
Community property
The automatic right of a husband and wife in property acquired by their spouse during marriage
Condiminium
An ownership form that combines a fee simple estate for ownership of individual units and tenancy in common for ownership of common area - describes an ownership form not a type of construction
Condominium bylaws
The official rules and regulations that govern condominium corporation
Condominium declaration
The master deed creating or establishing the condominium corporation
Cooperative
A form of individual ownership of apartments, the property is owned by corporation, of which each resident is a shareholder entitled to a proprietary lease for a particular apartment.
Deed Restriction (restrictive covenants)
limitations imposed on the use of land and structures by clauses in a deed
Dominant parcel
A parcel that benefits from a servient parcel in an easement appurtenant
Dower
A common law provision that grants a wife 1/3 life estate in all of the real property of a decedent husband
Easement
A right that the owners of another property may have to use one's land for a specific and limited purpose
Easement appurtenant
a right of use that continues from owner to owner that involves a relationship between two parcels of land: a dominant parcel that benefits from a servient parcel.
Easement in gross
The right to use land for a specific, limited purpose unrelated to any adjacent parcel
Elective share
provision that gives a surviving spousee a share of most of the wealth of the decedent
Estate
Interests in real property that include possession
Fee simple absolute
an estate in land that provides the owner with a complete set of legal rights, limited only by the powers of government
Fixture
Personal property that becomes real property by virtue of its permanent attachment to the realty
Freehold
Estate interests in real estate having unlimited duration; titled interests
General lien
A security interest or lien that arises out of actions unrelated to ownership of the property
Interest
Rent or a charge paid for the use of money (e.g. a mortgage loan, a share or right in property). Interest may also refer to the bundle of rights held by owners of real property.
Joint tenancy
A form of co-ownership in which two or more owners hold equal shares and have equal rights of possession. The surviving partners divide the interests of a deceased partner
Leasehold
The interests or rights of a lessee or tenant in a leased property, including the possessory interests that are a temporary conveyance of the rights of exclusion, use and enjoyment, but not the right of disposition. The tenant receives these rights in exc
Legal life estate
a life estate created by the action of law
License
The permission to use another's land for a specific and limited purpose
Lien
An interest in real property that serves as security for a loan obligation. In case of default the holder of the lien is entitled to have the property sold to satisfy the debt.
Mechanics' lien
Liens that arise from construction and other improvements to real estate
Mineral rights
rights to the subsurface, including rights to oil, gas, coal, and other substances that are mined, and can be separated from land ownership
Mortgage
a lien on real property as security for a debt. A special contract by which the borrower conveys to the lender a security interest in the mortgaged property
Ordinary life estate
estate in which the property owner retains all rights of exclusive possession, use, and enjoyment for life while a subsequent owner holds a remainder interests that follows life estate.
Periodic tenancy
any lease agreement that has no definite term at the start
Personal property
Objects that are movable and not permanently affixed to the land or structure, including furniture and tenants fixtures that are often purchased in conjunction with real property acquisitions
Personal rights
rights in property that include (exclusive) possession, use (enjoyment), and disposition
property tax lien
automatic lien placed by local governments to assure payment of property taxes
Real Property
rights associated with ownership of land and all permanent attachments to land
Remainder estate
The ownership interest subsequent to a life estate which, upon the death of a life estate owner, becomes a fee simple absolute interest
Restrictive convenants
(see deed restrictions)
Reverter
An uncertain interest held by the previous owner (or heirs) associated with a conditional fee
Right of survivorship
The rights of surviving partners in a joint tenancy to divide the interest of a deceased partner
Rule of capture
The owner of an oil or gas well could claim all that is pumped from it, regardless of whether the oil or gas migrated from adjacent property
Separate property
In community property states, property that the husband or wife acquired prior to the marriage, or gifts or inheritance received during the marriage
Servient parcel
a parcel that is constrained or diminished by an easement appurtenant
Specific lien
An interest that derives directly from events related to a property, such as property tax and assessment liens, mortgages, and mechanic's liens
Tenancy at sufference
A tenancy that occurs when a tenant is supposed to vacate does not, but continues to pay rent, and the landlord accepts it
Tenancy at will
A tenancy granted by landlords to tenants allowing them to remain in possession without a written agreement
Tenancy by the entirety
a form of joint tenancy ownership for husband and wife
Tenancy for years
A leasehold interest for a definite period of time exceeding one year
Tenancy in common
The "normal" form of direct co-ownership, which is as close to the fee absolute estate as is possible, subject to the provision that one owner cannot use the property in a manner that infringes on the rights of co-workers.
Timesharing
Property occupancy arrangement in which multiple individuals have use of property buy, unlike traditional forms of co-ownership, the interests are at different time intervals rather than simultaneous. A time-sharing arrangement may involve true co-ownersh
Which of the following is not a form of property right?
License
(other choices were: lien, easement, leasehold, mineral rights)
Which of these easement is most likely to be an easement in gross?
Power line easement
(other choices are: common wall easement, driveway easement, drainage easement, sunlight easement)
Rules used by courts to determine whether something is a fixture include all except:
Law of capture
(other choices are: intention of parties, manner of attachment, character of the article and manner of adaption)
Which of these is a titled estate?
All of these: fee simple absolute, fee simple conditional, conventional life estate, legal life estate
Which of these forms of co-ownership could best be described as "normal ownership" except that multiple owners share identically in one bundle of rights?
Tenancy in common
(other choices are: joint tenancy, tenancy by the entirety, condominium, estate in severalty
Which of these marriage-related forms of co-ownership gives each spouse a 1/2 interest in any property that is "fruits of the marriage"?
Community property
(other choices are: dower, curtesy, elective share, tenancy by the entirety)
Which of these liens has the highest priority?
Property tax lien
(other choices are: first mortgage lien, mechanic's lien, second mortgage lien, unable to say because it depends strictly on which was created first)
Restrictive covenants for a subdivision usually can be enforced by:
A and B, but not C
(a) subdivision residents (b) lenders with mortgage loans in the subdivision (c) local government
Timeshare programs can involve which of the following claims or interests
All of these are possible
Fee simple ownership, leasehold interests, license, condominiium
Every condominium buyer needs to know the details of which document(s):
A and B, but not C
(a) condominium declaration, (b) bylaws (c) proprietary lease
A principal definition of real estate is as a bundle of rights associated with the possession, use, and disposition of property. Each of the following is a fundamental characteristic of property rights EXCEPT:
they apply only to tangible assets
(other choices: they are enforceable by the government, they are non-revocable, they are endurable)
Property rights can be divided into two classes, real and personal. Which of the following is an example of real property?
Commercial buildings
(other choices: vehicles, stocks and bonds, patents)
A fixture is an object that formerly was personal property but has become real property. Of the following four rules for determining whether an object has become a fixture, which is the most dominant (i.e., if there is a conflict, which rule prevails)?
Intention of the parties
(other choices: manner of the attachment, character of the article and manner of adaptation, relation of the parties)
Which of the following items would most likely be considered a fixture?
Custom bookshelves
(other choices: refrigerator in a single-family residence being sold, fence installed by the tenant of a rental property, antique chandelier)
Property rights can be dismantled into lesser bundles, referred to as interests, which can then be held by different individuals. Interests in real property that include possessions are referred to as:
estates
(other choices: fixtures, townships, licenses)
Which of the following types of ownership estates is the most complete bundle of rights, and therefore carries the greatest value?
Fee simple absolute
(other choices: fee simple conditional, ordinary life estate, legal life estate)
Suppose an older homeowner lives adjacent to an expanding university that is interested in acquiring her residence for future university use. To allow the homeowner to retain all rights of exclusive possession, use, and enjoyment during her lifetime, yet
remainder estate
While leasehold interests are considered estates, they differ from freehold estates in all of the following respects EXCEPT:
leasehold estates are possessory interests
(other choices are: leasehold estates are limited in time, the right of disposition is diminished with a leasehold estate, leasehold estates are not titled interests)
Nonposessory interests (i.e. bundle of real property rights that do not include possession) include all of the following EXCEPT:
leasehold interests
(other choices are: easements, restrictive covenants, liens)
An easement is the right to use land for a specific and limited purpose. Which of the following easement involves a relationship between two parcels of land, is a permanent feature of both parcels involved, and gives the dominant parcel some intrusive use
Affirmative easement appurtenant
Which of the following is an example of a negative easement appurtenant?
A scenic easement used to restrict construction on adjacent parcels so as to preserve a valued view
An important distinction both practically and conceptually is the difference between an easement and a license. In contrast to an easement, a license:
grants permission to use another's land for a specific and limited purpose
A lien is an interest in real property that serves as security for an obligation. Which of the following is an example of a general lien?
Lien arising from a court judgment unrelated to ownership of the property
(other choices are: property tax and assessment liens, mortgage lien, mechanics' lien)
Which of the following types of liens is automatically superior to any other lien?
Property tax and assessment lien
Co-ownership can occur in a variety of ways, with significant variation in how the bundle of rights is jointly held. All of the following entities are forms of direct co-ownership EXCEPT:
Partnership
(other choices are: tenancy in common, tenancy by the entirety, condominium
Direct co-ownership implies that each co-owner holds a titled interest in the property, but without exclusive possession with respect to the other co-owners. Which of the following types of direct co-ownership is considered the closest to the fee simple a
Tenancy in common
Which of the following types of direct co-ownership is a form of joint tenancy for husband and wife?
Tenancy by the entirety
Which of the following types of direct co-ownership combines single person ownership with tenancy in common?
Condominium
Which of the following forms of co-ownership, historically used for apartment buildings, is not considered a form of true direct co-ownership, but rather qualifies as a proprietary corporation?
Cooperative
When multiple individuals have use of a property, but their interests are not simultaneous, this type of co-ownership is referred to as a:
Timeshare
While most real property in the United States is privately owned, government regulations limit private property use and therefore play an important role in the determination of property value. Proponents of government intervention argue that regulation is
externalties
Externalities can play an important role in determining a property's price, either by adding value through positive externalities or by diminishing value through negative externalities. Which of the following is most likely to be considered a negative ext
public assistance facilities such as homeless shelters
Development taking place in rural areas well beyond the urban fringe is commonly referred to as:
urban sprawl
it was not until the late 1960's that land use controls moved to the forefront of public interest, as the belief that the environment was an endless and costless resource was replaced with the notion that the world was a closed system with limited space,
spaceship earth
After a structure is built, it is impractical for even a building expert to fully assess the quality of the construction and the safety hazards it may harbor. This is an example of which of the following problems that plagues private real estate markets?
incomplete information
Growth management laws at the state level require local jurisdictions to plan for and meet certain requirements. One such requirement prohibits local development unless adequate infrastructure, schools, police/fire protection, and social services have bee
concurrency requirement
A contemporary planning movement that explicitly advocates a traditional grid pattern of development designed to give pedestrian life priority over motor vehicles (e.g., including narrowed streets with houses close to the street and garage access through
new urbanism
Which of the following tools of public land use control represents the earliest method of police power to regulate land use? (Hint: Standards for energy efficiency and sustainability are the most recent trends in the application of this land use control)
building codes
When a zoning ordinance is revised, some existing land uses then fall outside the new zoning classification. These land uses are referred to as:
nonconforming uses
When land use controls impose exceptional hardship and loss of value, a relief mechanism must be provided. This relief is referred to as a:
variance
In order for the board of adjustment to approve a variance, all of the following conditions must be met EXCEPT:
the condition is common to other parcels of land in the vicinity
A traditional zoning ordinance includes all of the following EXCEPT:
perfomance standards
State and federal control of land uses has increased greatly over the past 40 years due in part to an increased awareness of environmental hazards. Which of the following federal environmental control laws was responsible for establishing the "Superfund
comprehensive environmental response compensation and liability act
Negative externalities can diminish a property's value by imposing costs on the community at large. In order to offset this detrimental impact, economists advocate "internalizing" these externalities by implementing:
impact fees
A major problem in buildings constructed prior to the early 1970's, which of the following environmental hazards commonly associated with insulation has been the focus of costly
cleanups at many public buildings, especially schools?
asbestos
The right of government to acquire private property, without the owner's consent, for public use in exchange for just compensation is referred to as:
eminent domain
All of the following statements are true in describing the determination of just compensation EXCEPT:
the value of property is determined solely by its current use
Real estate taxes represent the largest single source of revenue for a large portion of local governments. Most property taxes are applied in relation to the value of the property, or in other words, they are:
ad valorem taxes
A developer plans to place a subdivision slightly outside the city limits in an area that is rapidly developing. However, the city claims to have the right to control urban development even in the proposed area. The right the city is attempting to invoke
extraterritorial jurisdiction
Special assessments are levied to pay for specific improvements that benefit a particular group of properties. All of the following characteristics of special assessments are true EXCEPT:
they are considered ad valorem taxes
One of the main criticisms of property taxes is that the property tax of lower income households is higher than that of higher income households, as a percentage of their respective incomes. In other words, taxes are criticized for being:
regressive
In the state of Florida, for example, homeowners may qualify for a tax exemption in which up to $50,000 will be deducted from the assessed value of the property before taxes are calculated as long as the property owner occupies a home as the family's prin
homestead exemption
Zoning ordinances that tend to exclude lower income groups by large lot size, or that do not adequately provide low- and moderate-income housing are referred to as:
exclusionary uses
A public planning movement that explicitly advocates a cul-de-sac hierarchy of development, an automobile oriented society, and separated land use is more commonly referred to as:
traditional residential planning
Eminent domain is the right of government to acquire private land, without the owner's consent, for public use, with due process and just compensation. The legal procedure for exercising the right of eminent domain is referred to as:
condemnation
Traditional zoning regulations are criticized for often being too rigid in forcing uniform types of development. One proposed solution to this issue allows traditional zoning requirements to vary in exchange for an enhancement to the community, such as th
planned unit development
In the history of eminent domain, the Kelo v. New London, Connecticut decision of the U.S. Supreme Court in 2005 affirmed the possibility of a community being:
able to use eminent domain to acquire property for private development if it serves public purpose even if the current land use is not blighted
In efficient financial markets, unregulated competitive bidding should bring about the most productive use of an asset and the price paid for that asset should reflect fair value based on its usefulness. In real estate, this is not always the case. For ex
locational monopoly
Nearly half of states in the U.S. use the sale of tax lien certificates to manage defaulted property taxes. The certificates are auctioned to the public at:
a discount from the face value of the property taxes due
Given the following information, compute the property tax rate for the community in percentage terms. Total budget expenditures: $108 million, Total non-property tax income: $50 million, Total assessed value of all properties: $2 billion, Total exemptions
4%
Tax rates are usually stated in mills. Assuming the tax rate in percentage terms is 6.5%, convert this rate to mills.
65 mills
Given the following information, compute the effective tax rate for the particular piece of property in percentage terms. Market value of property: $325,000, Assessed value of property: $250,000, Exemptions: $50,000, Taxes paid: $5,363.
1.65%
Given the following information, compute the taxable value for the particular piece of property in dollar terms. Market value of property: $500,000, Assessed value of property: 85 % of the market value of the property, Exemptions: $50,000, Taxes paid: $8,
375,000
Given the following information, calculate the total annual tax liability of the homeowner. Market value of property: $350,000, Assessed value of property: 40 % of the market value, Exemptions: $2,000, Millage Rate: 33.95 mills.
$4,685.10
Given the following information, calculate the effective tax rate expressed in mills. Market value of property: $280,000, Assessed value of property: 50 % of the market value, Exemptions: $2,000, Annual tax liability: $4,685.10.
A. 1.69 mills
16.73 mills
Given the following information, calculate the total annual tax liability of the homeowner. Market value of property: $350,000, Assessed value of property: 40 % of the market value, Exemptions: $2,000, State Millage Rate: 0.25 mills, County Millage Rate:
1,925.10
A city's potential for growth or its susceptibility to decline is determined by a set of economic activities that the city provides for the world beyond its boundaries. Economists refer to this set of activities as a city's:
economic base
The demand for access between land uses is considered the "gravity" that holds a city together. These relationships between land uses are commonly referred to as:
linkages
A city's economic base can be viewed in terms of a multiplier process, in which the money that is brought in through export activities is then respent within the city. Which of the following economic activities is the least likely to be considered a high-
computer assembly
The magnitude of an economic base multiplier depends upon the amount of money that "leaks" out through expenditures outside of the city limits. The economic multiplier tends to be higher with each of the following EXCEPT:
the less isolated the city is from other cities
in contrast to base activities, local economic activities (or secondary activities) serve the local business and households that are recirculating the income derived through the city's economic base. In other words, we can distinguish local economic activ
manufacturing center
Because a city's output capacities change slowly over time, it is important to understand the supply side (long-run) factors affecting urban growth. Which of the following would NOT be considered a supply-side factor that impacts a city's economic growth?
city's export activity
Cities such as New York are able to host a variety of complex industries because of the development of specialized resources that support their growth. When specialized resources emerge in response to demand from multiple industries, this is referred to a
agglomeration economies
The growth of the motion picture industry in Los Angeles, the petrochemical industry in Houston, the software industry in "Silicon Valley," are all examples of how the growth of an industry within a city can create cost advantages for future growth. Econo
industry economies of scale
According to the bid-rent model, which of the following changes in the model's underlying assumptions would most likely result in a decrease in rents for properties closest to the central business district (CBD)?
an increase in the average traveling speed of the individuals commute
According to the bid-rent model, which of the following individuals would be the one most likely to live closest to the central business district (CBD)? (Hint: Assume that work locations are located adjacent to each other at the center of the CBD)
a doctor at the city hospital who must walk to work
Within the framework of the bid-rent model, as rents increase with proximity to the central business district (CBD), the tendency is for development to:
build upward on lots within the CBD to allow multiple tenants
An early model of land use is the concentric ring model of urban form developed by E.W. Burgess. Of the following land uses, which would be closest to the downtown area of the central business district (CBD) according to Burgess' model?
a zone of transition containing warehousing and other industrial land uses exists between the downtown area and the residential area
Which of the following models of urban form is characterized by radial corridors or wedges representing the pattern of residential land use in relation to the location of the central business district (CBD)?
sector model
The location of competitors within a particular land use area may be influenced by whether the types of services and products are convenience activities or comparison activities. Which of the following is an example of a comparison activity?
apparel store
Providers of convenience activities find it profit-maximizing to disperse over the region of potential customers to the point where each establishment is equidistant from another and is separated by the minimum distance that allows sufficient customers to
central place pattern
Most research oriented universities have many different colleges, each with separate administrations, students, curricula, and facilities. However, the university continues to exist as a total unit because of:
industry economies of scale
A fishing company was formed in Juneau, Alaska. Over the next decade, a canning plant, a processing plant, and a boat repair facility also opened in Juneau. This is an example of:
industry economies of scale
Six suburban office buildings have been constructed along six consecutive blocks in Roseland, New Jersey. This is an example of:
clustering
Understanding the revenue generating ability of the core export activities of a local area has important implications on the market value of real estate. When the income that these activities generate is re-spent within the community on other local goods
multiplier process
An important effect of agglomeration economies on real estate is its impact upon market risk. Based on your understanding of this relation, which of the following statements is TRUE?
Properties located in a city with more advanced development of agglomeration economies will carry less risk and therefore suffer a smaller price decline during an economic downturn.
Based on your understanding of the effect of agglomeration economies in real estate, you would expect institutional investors to most favor real estate investments in which of the following areas?
large urban markets
Using the following information, determine the location quotient for this industry. Percentage of employment in financial services industry within the local community: 15%, Percentage of employment in financial services industry for the entire U.S.: 4.4%.
3.4
An individual works downtown and pays $600 per month in rent for an apartment located 10 miles from her office. She has calculated that she spends 30 minutes per day driving each way to the office and it costs her $4 per day in gas and lost productivity.
680
Using the following information, determine the location quotient for Motor City. Employment in Motor Vehicle Manufacturing within Motor City: 12,643; Total Employment in Motor City: 560,379; Employment in Motor Vehicle Manufacturing (nationally): 152,750;
15.7
A new faculty member at the local university pays $1500 per month to rent an apartment in the downtown area. She teaches on campus 3 days a week and works from home the remaining 2 days. On the days in which she must commute, given the heavy traffic conge
2700
Based on the following information, determine the location quotient for Amusement City and whether this city has a competitive advantage in the amusement industry. Employment in Amusements and Recreation in Amusement City: 54,446; Total Employment in Amus
7.24, yes, the city has a competitive advantage in this industry
Estimating the market value of real estate is complicated by the unique characteristics of real estate markets. In contrast to stock markets, real estate markets are characterized by all of the following EXCEPT:
market prices are revealed almost instantaneously to prospective buyers
Real estate appraisers generally distinguish among the concepts of market value, investment value, and transaction value. Which of the following statements best describes the concept of market value?
it is an estimate of the most probable selling price of a property in a competitive market
In real estate markets, a transaction occurs only when the investment value of the buyer exceeds the investment value of the seller. The buyer's investment value is the ________ that he or she would be willing to pay for a particular property, while the s
maximum; minimum
While it is often sufficient to rely on informal methods of estimating the market value of real estate assets, the complexity and large dollar value of many real estate decisions dictate that formal estimates based on methodical collection and analysis of
appraisal
Real estate professionals have long supported strict standards of ethics and practice. Followed by all states and federal regulatory agencies, which of the following imposes ethical obligations and minimum standards that must be followed by all real estat
Uniform Standards of Professional Appraisal Practice (USPAP)
As part of the data analysis step in the appraisal process, it is necessary to consider the highest and best use of the property in question. In regards to determining highest and best use, all of the following statements are true EXCEPT:
no financial limits are considered when determining the property's best use
While there are several conventional approaches used to estimate the market value of real estate, which of the following is typically considered the most reliable approach?
sales comparison approach
It may be appropriate for a real estate professional to utilize different approaches for estimating the market value of a property depending upon the particular property type and use. Which of the following approaches would be most applicable when conside
income approach
If all appraisal methods are appropriate for use in valuing a particular property, there is a clear order of preference that real estate professionals adhere to. Which of the following depicts the preferred order, with the most preferable approach being l
sales comparison approach, income approach, cost approach
Several techniques can be used to obtain an indication of land value. The cost approach to valuation would most likely be used for which of the following properties?
education facility
Most appraisers would say that report writing is one of the most important functions that they perform. Assume that an appraiser is putting together a report for a single family home. Which of the following reporting options would be the most commonly use
summary appraisal report
Real estate appraisal is often considered "more art than science," since identifying truly comparable properties is a subjective process. Therefore, it is essential that a comparable property transaction at least meets the requirement that it was fairly n
arm's length transactions
While there is no specific number of comparables that is required for every appraisal assignment, how many comparable sales are considered adequate as long as the properties are very similar to the subject property?
three
When employing the sales comparison approach, appraisers must consider numerous adjustments to convert each comparable sale transaction into an approximation of the subject property. Adjustments are divided into two groups: transactional adjustments and p
location
Favorable mortgage financing may have a significant impact on the transaction price of the particular property. If the comparable property was known to have had favorable financing terms negotiated into the transaction price, which of the following adjust
the transaction price of the comparable property should be adjusted downward
Adjustments for physical characteristics are intended to capture the dimensions in which a comparable property differs physically from the subject property. If the only physical difference between the subject property and the comparable is that the compar
the transaction price of the comparable property should be adjusted upward
The sequence of adjustments to the transaction price of a comparable property would make no difference if all adjustments were dollar adjustments. However, if percentage adjustments are involved then the sequence does matter. In making adjustments to a co
financing terms, market conditions, location
The cost approach to valuation assumes the market value of a new building is similar to the cost of constructing it today. Which of the following terms refers to the expenditure required to construct a building of equal utility using modern construction t
replacement cost
Accrued depreciation is the difference between the current market value of a building and the total cost to reproduce it new. One reason for this difference is related to changes in tastes, preferences, technical innovations, or market standards. This is
functional obsolescence
Which of the following would be categorized as a cause of external obsolescence?
increased traffic flow due to more intensive use in the local area
At the conclusion of the traditional sales comparison approach to valuation, the appraiser evaluates and reconciles the final adjusted sale prices into a single value for the subject property. This single value is commonly referred to as:
indicated value
In using transaction data to determine the current value of the subject property, it is important to recognize that general market conditions may have changed since a particular transaction occurred. Property A sold 18 months ago for $235,000 and Property
.19%
A comparable property sold 15 months ago for $105,000. If the appropriate adjustment for market conditions is 0.25% per month (without compounding), what would be the adjusted price of the comparable property?
108,937.50
Given the following information, determine the value of having an additional bathroom. Assume that the comparable properties are similar in all other attributes besides those listed in the table below.
Comparable 1---150,000
Comparable 2---140,000
Compara
10,000
Given the following information, determine the value of having an additional bedroom. Assume that the comparable properties are similar in all other attributes besides those listed in the table below.
comp 1---$250,000
comp2---$265,000
comp3----$275,000
c
25,000
Suppose that we observe two comparable properties that have each sold twice within the past two years. Property A sold 24 months ago for $350,000 and Property B sold 18 months ago for $325,000. If the two properties were sold today at $375,000 and $340,00
.28%
Suppose that an appraiser has just completed her analysis using the cost approach to valuation. She has determined that the market value of the subject property is $400,000. If the added value of the site was $80,000 and accrued depreciation amounted to $
370,000
Assume you have been hired to appraise a local hospital. Your best estimate of the reproduction (or replacement) cost of the building is $3,700,000. However, upon evaluating the use of land in the local area, you have deemed the value of the site to be wo
4,000,000
let's assume that we are about to appraise a house using the cost approach. The home was originally constructed in the early 1900s and is one of the last of its kind in this area. The cost of constructing an exact replica of this residence is estimated to
290,000
Suppose that an appraiser has come to the following conclusions in evaluating the subject property. Due to the dramatic shift in the perceived safety of the neighborhood, values of any residential properties in the area of the subject property have fallen
10,000
Which of the following measures is considered the fundamental determinate of market value for income-producing properties?
net operating income
Net operating income is similar to which of the following measures of cash flow in corporate finance?
earnings before deductions for interest, depreciation, income taxes, and amortization (EBIDTA)
The process of converting periodic income into a value estimate is referred to as income capitalization. Income capitalization models can generally be categorized as either direct capitalization models or discounted cash flow models. Which of the followin
value estimates are based on a multiple of expected first year net operating income
The starting point in calculating net operating income is the total annual income the property would produce assuming 100 percent occupancy and no collection losses. This is commonly referred to as:
potential gross income
The distinction between market rent and contract rent is important due to differences in lease terms. Office, retail, and industrial tenants most commonly occupy their space under leases that run:
three to five years
One complication that appraisers may face is the variety of lease types that may be available for a particular property type. Which of the following statements best describes a "graduated" or step-up lease?
the lease establishes schedule of rental rate increases over the term of the lease
In calculating net operating income, vacancy losses must be subtracted from the gross income collected. The normal range for vacancy and collection losses for apartment, office, and retail properties is:
between five and fifteen percent
The expected costs to make replacements, alterations, or improvements to a building that materially prolong its life and increase its value is referred to as:
capital expenditures
Operating expenses can be divided into two categories: variable and fixed expenses. Which of the following best exemplifies a fixed expense?
local property taxes
Which of these is most likely to be regarded as a capital expenditure rather than an operating expense?
roof replacement
Most appraisers adhere to an "above-line" treatment of capital expenditures. This implies which of the following?
capital expenditures are subtracted in the calculation of net operating income
The going-in cap rate, or overall capitalization rate, is a measure of the relationship between a property's current income stream and its price or value. Which of the following statements regarding cap rates is true?
it is analogous to the dividend yield on a common stock
For smaller income-producing properties, appraisers may use the ratio of a property's selling price to its effective gross income. This is an example of a:
gross income multiplier
gross income multiplier analysis assumes that the subject and comparable properties are collecting market rents. Therefore, it is frequently argued that an income multiplier approach to valuation is most appropriate for properties with short-term leases.
apartments
When using discounted cash flow analysis for valuation, the appraiser must estimate the sale price at the end of the expected holding period. This price (assuming selling expenses have yet to be accounted for) is referred to as the property's:
terminal value
When using discounted cash flow analysis for valuation, an appraiser will prepare a cash flow forecast, often referred to as a:
pro forma
When calculating the net operating income of a property, it is important to identify any expenses that will be incurred in attempts to maintain the property. All of the following would be considered operating expenses EXCEPT:
mortgage payments
The cap rate is an important metric that investors use to analyze the state of commercial real estate markets. When interpreting cap rate movements, an increase in cap rates over time would indicate that:
property values have decreased
Given the following information, calculate the overall capitalization rate. Sale price: $950,000, Potential Gross Income: $250,000, Vacancy and Collection Losses: $50,000, and Operating Expenses: $50,000.
15.8%
Given the following information, calculate the net operating income assuming below-line treatment of capital expenditures? Property: 4 office units, Contract Rents per unit: $2500 per month, Vacancy and collection losses: 15%, Operating Expenses: $42,000,
60,000
Given the following information, calculate the effective gross income. Property: 4 office units, Contract rents per unit: $2500 per month, Vacancy and collection losses: 15%, Operating Expenses: $42,000, Capital Expenditures: 10%
102,000
Given the following information, calculate the effective gross income multiplier. Sale price: $950,000, Potential Gross Income: $250,000, Vacancy and Collection Losses: 15%, and Miscellaneous Income: $50,000.
3.6
Given the following information, calculate the appropriate going-in cap rate using mortgage-equity rate analysis. Mortgage financing = 75%, Typical debt financing cap rate: 10%, Sale price: $1,950,000, Before Tax Cash Flow (BTCF): $390,000.
12.5%
Given the following information, calculate the appropriate going-in cap rate using general constant-growth formula. Overall market discount rate = 12%, Constant growth rate projection: 3% per year, Sale price: $1,950,000, Net operating income: $390,000, P
9%
Given the following information, calculate the effective gross income multiplier. Sale price: $2,500,000; Effective Gross Income: $340,000; Operating Expenses: $100,000; Capital Expenditures: $36,000.
7.35
Three highly similar and competitive income-producing properties within two blocks of the subject property have sold this month. All three offer essentially the same amenities and services as the subject property. The sale prices and estimated first-year
11.4%
Suppose that you are attempting to value an income producing property using the direct capitalization approach. Using data from comparable properties, you have determined the overall capitalization rate to be 11.44%. If the projected first year net operat
388,986.00
Suppose that an income producing property is expected to yield cash flows for the owner of $10,000 in each of the next five years, with cash flows being received at the end of each period. If the opportunity cost of investment is 12% annually and the prop
92,790.45
Suppose that examination of a pro forma reveals that the fifth year net operating income (NOI) for an income producing property that you are analyzing is $138,446 (you can assume that this cash flow occurs at the end of the year). If you estimate the proj
1,615,203.00
Analysis of a subject property's pro forma reveals that its fifth year net operating income (NOI) is projected to be $100,282 (you can assume that this cash flow occurs at the end of the year). If you estimate the projected rental growth rate for the prop
974,610.00
Property rights can be divided into two classes, real and personal. Which of the following is an example of real property?
Commercial Building
Which of the following items would most likely be considered a fixture?
Custom Book Shelves
Which of the following types of ownership is the most complete bundle of rights, and therefore carries the greatest value?
Fee Simple Absolute
While leasehold interests are considered estates, they differ from freehold estates in all of the following respects except:
The right of disposition is diminished with a leasehold estate
Which of the following types of liens is automatically superior to any other lien?
Property tax and assessment lien
Direct co-ownership implies that each co-owner holds a titled interest in the property, but without exclusive possession with respect to the other co-owners. Which of the following types of direct co-ownership is considered the closest to the fee simple a
Tenancy in Common
Which of the following types of direct co-ownership is a form of joint tenancy for husband and wife?
Tenancy by the entirety
Which of the following types of direct co-ownership combines single person ownership with tenancy in common?
Condominium
Which of the following forms of co-ownership, historically used for apartment buildings, is not considered a form of true direct co-ownership, but rather qualifies as a proprietary corporation?
Cooperative
When multiple individuals have use of a property, but their interests are not simultaneous, this type of co-ownership is referred to as a:
Timeshare
Bill and Mike go in together to purchase 342 acres of land to use for hunting and family vacations. Ten years later, Bill dies and Bill's wife wants to sell his half of the land. Mike informs her that, unfortunately, she has no claim to the land and that
Joint Tenancy
The city of Grand Rapids installed a new water main on Oak Street. The city then decided to charge the property owners along Oak Street a proportional cost of the new water main. If a property owner refuses to pay their proportional share of the cost, the
Assessment Lien
Real estate is property, which can be either a tangible or an intangible asset. Which of the following would be considered an intangible asset?
Mortgage
As of 2008, the single largest asset category in the net worth portfolios of households is:
Housing
Primarily through land use controls and property tax policy, which of the following branches of government has the largest influence on real estate values?
Local Government
What proportion of U.S households own their home?
Two-Thirds
The national government can have a significant impact on the value of real estate through:
Income tax policy
The required rate of return that an individual demands on a real estate investment is determined in the:
Capital Market
Net operating income is similar to which of the following measures of cash flow in corporate finance?
Earnings before deductions for interest, depreciation, income taxes, and amortization
The process of converting periodic income into a value estimate is referred to as income capitalization. Income capitalization models can generally be categorized as either direct capitalization models or discounted cash flow models. Which of the followin
Value estimates are based on a multiple of expected first year net operating income.
The starting point in calculating net operating income is the total annual income the property would produce assuming 100 percent occupancy and no collection losses. This is commonly referred to as:
Potential Gross Income
One complication that appraisers may face is the variety of lease types that may be available for a particular property type. Which of the following statements best describes a "graduated" or step-up lease?
The lease establishes schedule of rental rate increases over the term of the lease.
The expected costs to make replacements, alterations, or improvements to a building that materially prolong its life and increase its value is referred to as:
Capital Expenditures
The going-in cap rate, or overall capitalization rate, is a measure of the relationship between a property's current income stream and its price or value. Which of the following statements regarding cap rates is true?
It is analogous to the dividend yield on a common stock.
When using discounted cash flow analysis for valuation, the appraiser must estimate the sale price at the end of the expected holding period. This price is referred to as the property's:
Terminal value
Given the following information, calculate the appropriate going-in cap rate using general constant-growth formula. Overall market discount rate = 12%, Constant growth rate projection: 3% per year, Sale price: $1,950,000, Net operating income: $390,000, P
9%
Given the following information, calculate the effective gross income. Property: 4 office units, Contract rents per unit: $2500 per month, Vacancy and collection losses: 15%, Operating Expenses: $42,000, Capital Expenditures: 10%
102,000
A comparable company sold 15 months ago for $105,000. If the appropriate adjustment for market conditions is 0.25% per month. What would the adjusted price of the comparable company?
$108,937.50
Which of the following measures is considered the fundamental determinate of market value for income-producing properties?
Net Operating Income
Net operating income is similar to which of the following measures of cash flow in corporate finance?
Earnings before deductions for interest, depreciation, income taxes, and amortization (EBIDTA)
Operating expenses can be divided into two categories: variable and fixed expenses. Which of the following best exemplifies a fixed expense?
Property Taxes
Which of these is most likely to be regarded as a capital expenditure rather than an operating expense?
Upgrade of insulation.
Given the following information, calculate the overall capitalization rate. Sale price: $950,000, Potential Gross Income: $250,000, Vacancy and Collection Losses: $50,000, and Operating Expenses: $50,000.
15.8%
Given the following information, calculate the net operating income assuming below-line treatment. Property: 4 office units, Contract Rents per unit: $2500 per month, Vacancy and collection losses: 15%, Operating Expenses: $42,000, Capital Expenditures: 1
$60,000
Certain mortgage loans contain a due-on-sale clause, which gives the lender the right to terminate the loan at sale of the property. Which of the following types of loans is the most likely to contain a due-on-sale clause?
Conventional home loan
Standard mortgage loans require monthly payments composed of two components: interest and principal repayments. When scheduled mortgage payments are insufficient to pay all of the accumulating interest, causing some interest to be added to the outstanding
Negatively amortizing
In a mortgage agreement, the borrower conveys to the lender a security interest in the mortgage property. The lender, i.e. the individual who receives the mortgage claim, is known as the:
Mortgagee
Violations of the requirements of a note that do not disrupt the payments on the loan tend to be viewed as "technical" defaults. In practice, how many days must a payment be overdue in order for lenders to treat a default as serious?
90 days
When a borrower defaults on the payment requirements of a loan, there are several options that the lender has at its disposal. When the lender allows the borrower simply to convey the property to the lender, this is commonly referred to as
Deed in lieu of forclosure
Foreclosure is considered the ultimate recourse of the lender because it allows the lender to bring about sale of the property to recover the outstanding indebtedness. All of the following statements regarding foreclosure are true EXCEPT
When a lender forecloses on a property, it extinguishes all superior liens, bringing about a free and clear sale of the property
The difference between judicial foreclosure and power of sale in the treatment of defaulted mortgages can be significant. All of the following statements regarding power of sale are true EXCEPT
The foreclosed property is sold through a public auction administered by the court.
The risk of bankruptcy tends to travel with the risk of foreclosure since both can result from financial distress
Known popularly by its section in the federal bankruptcy code which of the following types of bankruptcy is a court supervised workout for tr
Chapter 11 bankruptcy
Most real estate loans have a definite term to maturity, stated in years. The majority of home loans will typically have a term to maturity between
15-30 years
Congress has enacted a number of regulations that have established criteria for evaluating home loan applicants and mandating disclosures in the origination of home loans. Which of the following congressional acts requires important disclosures concerning
Truth-in-lending Act (TILA)
Considered the most common type of home loan, which of the following refers to any standard home loan that is not insured or guaranteed by an agency of the U.S. government?
Conventional home loan
Created by Congress to promote an active secondary market for home mortgages, Fannie Mae and Freddie Mac purchase loans that meet specific underwriting standards such as loan size, documentation, and payment to income ratio. The loans that Fannie Mae and
Conforming conventional loans
Lenders generally require private mortgage insurance (PMI) for conventional loans over 80 percent of the value of the security property. PMI protects a lender against which of the following?
Losses due to default on the loan
Many older, retired households are considered "house rich, cash poor." Which of the following forms of loans has been designed to help mitigate this problem by offering additional monthly income to these homeowners in exchange for a portion of their housi
Reverse mortgage
In recent years, home equity loans have become a popular form of second mortgage. their popularity has been a result of all of the following except
Shorter terms than other consumer debt
Suppose a homeowner is reluctant to refinance until he is reasonably sure that the interest rates are not going to fall appreciably from where they currently are. In this case the borrower appears to be concerned about which of the following costs associa
Opportunity Costs
Total mortgage debt outstanding at the end of 2008 approached $14.6 trillion. Which of the following types of mortgage loans accounts for the greatest percentage of mortgage debt outstanding?
Residential (1-4 family)
The emergence of mortgage securities propelled the development of mortgage companies, an entity significantly different from the thrifts and banks that previously dominated the mortgage landscape. Which of the following parties is responsible for providin
Mortgage banker
Throughout the process of originating and selling mortgages, mortgage companies face a number of risks. Therefore, it is important for a lending institution to evaluate the risks of mortgage loan default through a process commonly referred to as:
loan underwriting
Despite many innovations in the lending process that made mortgage loans more accessible and affordable to the general public, many potential borrowers faced considerable barriers in qualifying for a loan and making a down payment. Which of the following
Subprime mortgage loan
The successful conveyance of real estate depends on a well-formed contract for sale since the contract dictates the rights and type of deed involved, as well as choreographs the entire transaction. Which of the following features of the contract for sale
Contract terms
Any contract,whether it is for the sale of real estate or some other entity, must contain five basic elements. However, any contract for the sale of real estate must adhere to two additional requirements. Which of the following contract elements is an add
Written Form
While the principal parties to a transaction must be legally competent for a contract to be valid, it is possible for a party acting on behalf of a principal to obtain this legal right. In order for personal representatives and trustees to be authorized t
Power of attorney
Both parties to a valid and enforceable contract must provide consideration. In a contract for the sale and purchase of real estate. which of the following depicts the seller's consideration?
The property to be given up.
The distinction between legal title and equitable title is an important concept in the contract for sale of real estate. When the buyer obtains equitable title, the seller can no longer sell the property to someone else, even though the legal title has no
the contract for sale is signed.
Contracts for sale may contain sections that cause implementation of the contract to depend on the successful completion of some prior action such as the buyer's ability to obtain financing on specified terms. This type of contract is commonly referred to
contract with contingencies
Since the seller often has utilized the property for a portion of the year in which the transaction is being made, certain costs associated with the property will be prorated at the closing. All of the following items are subject to being prorated EXCEPT:
Broker commission
If property owners fail to pay their taxes in a timely fashion, this can create a first lien on the mortgaged property. In order to protect against this, lenders often require that borrowers add what fraction of their estimated tax bill to their required
1/12
Recording documents in the public records informs anyone who may have a potential interest in a property of both the owner and lender. In so doing, it provides what is commonly referred to as ____________ of an interest in real property.
constructive notice
The laws of some states require that real estate brokers provide buyers and sellers with a list of estimated closing costs before signing a contract for sale. At the closing, it is typically which of the following party's responsibilities to pay the full
Seller
Certain closing costs will be prorated to account for the period of time during which the seller occupied the house. If a transaction is scheduled to close on May 17, 136 days into a 365-day year, calculate the amount that the buyer will be credited if th
$372.60
Development taking place in rural areas well beyond the urban fringe
Urban sprawl
Which of the following tools of public land use control represents the earliest method of police power to regulate land use? (Hint: Standards for energy efficiency and sustainability are the most recent trends in the application of this land use control)
Building Codes
When a zoning ordinance is revised some existing land uses then fall outside the new zoning classification
Non conforming use
When land use controls impose exceptional hardship and loss of value, a relief mechanism must be provided. This relief is referred to as a:
Variance
State and federal control of land uses has increased greatly over the past 40 years due in part to an increased awareness of environmental hazards. Which of the following federal environmental control laws was responsible for establishing the "Superfund
Comprehensive Environmental Response Compensation and Liability Act (CERPLA)
A major problem in buildings constructed prior to the early 1970's, which of the following environmental hazards commonly associated with insulation hasbeen the focus of costly cleanups at many public building, especially schools?
Asbestos
The right of government to acquire private property, without the owner's consent, for public use in exchange for just compensation is referred to as:
Eminent domain
All of the following statements are true in describing the determination of just compensation EXCEPT:
The value of the property is determined solely by its current use
The right to pay unpaid taxes, plus interest and penalties, before public sale and to reclaim full title of the property is referred to as:
Equity right of redemption
police power
the constitutional power that enables state and local government to regulate land use
externalities
the unintended and unaccounted consequences of one land user upon others
positive externalities
the beneficial effects on property value from vistas, nearby parks, good schools
negative externalities
unaccounted negative effects of a land use on the value of surrounding properties
congestion
a pervasive form of externality in urban life
urban sprawl
development taking place in rural areas well beyond the urban fringe
economic and environmental impact statements
an analysis of the project's effect on the surrounding areas
concurrency
prohibition of further development without adequate infrastructure
affordable housing allocation
the encouragement of reasonable and fair components in new housing construction for lower income families
urban service area
boundaries that are delineated around a community within which the local government plans to provide public services
extraterritorial jurisdiciton
power to plan and control urban development outside their boundaries
board of adjustment
the board charged with reviewing petitions for variances
non conforming use
when a zoning ordinance is revised some existing land uses then fall outside the new zoning classification
variance
a zoning ordinance that must provide some relief mechanism for cases where the regulations impose exceptional hardship and loss of value
growth moratorium
prohibition of development
eminent domain
the right of government to acquire private property, without the owner's consent, for public use in exhcange for just compensation
condemnation
the legal procedure involved with eminent domain.
comprehensive government planning
-Project future population growth
-Determine requirements for water and waste disposal
-Project needs for public services (utilities, streets, schools, parks and recreation, safety)
-Projected demand for various land uses (public, residential, nonresident
uses for urban planning
1. storm water management
2. traffic management
3. schools and other services
traditional planning
-Separated uses
-Automobile oriented
-Priority placed on easy ingress and egress
-Uniform density
-Cul-de-sac hierarchy in neighborhoods
new urban planning
located above retailers
externalities
the unintended and unaccounted for consequences of one land user upon others. something external to the property that effects its value (can be negative
features of traditional zoning
-Use classifications: Residential, commercial, industrial, automotive
-Use districts (zoning map)
-Setback requirements
-"Bulk" or density limits (minimum lot size, height -limits, maximum floor area ratios)
-Special use districts: Service stations, hospi
features of subdivision regulations
-Standards for streets, sewers, and water systems
-Adequate water supply for fire safety
-Adequate drainage and run-off retention
-Open spaces
-Lot layout
-Easements for utilities
-Traffic and pedestrian safety
planning and zoning administration
-Planning and Zoning Commission created in ordinances
-Requested changes must:
-Be compatible with a comprehensive plan
-Be justified if they require change in the comprehensive plan
-Not have undue effect on surrounding land uses or the community
-Commis
zoning change
changing the use of a lot
board of adjustment
-Reviews petitions for variances
-Decisions are final rather than advisory to the elected officials
-Only appeal is through the courts
nonconforming use
-Use is inconsistent with and precedent to zoning map
-Cannot be substantially changed
-Must be continuous
-Can be "amortized" away, (e.g. billboards, can be required to be discontinued after 5 years)
variance
exception to requirements due to hardship. slight modification in requirements, but final use is the same
exclusionary zoning
unreasonable lot size; inadequate provision for low- and moderate-income housing. discriminates against lower income families
planned unit development (PUD) (land use control)
-Mixed density
-No setback requirements
-Open community spaces
-Community facilities
-Mixed uses
-Negotiated "contract" with land use authorities
performance standards (land use control)
-Runoff limits
-Noise and emission limits
-Traffic limits
-Tree removal restrictions
impact fees
-fee charged by community and paid by a developer that is commensurate with the externalities created by a development. intended to cover the development's impact on such things as roads, sewer systems, schools, and police and fire protection
-Favorite of
growth restrictions
-Temporary moratoriums (prohibition of development)
-US Supreme Court refuses to review Petaluma, Ca. limit on the number of new housing units.
-Also Boulder, Co. and Boca Raton, Fl.
eminent domain
Right of government to acquire private land, without the owner's consent, for public use, with due process and just compensation.
condemnation
legal procedure for exercising the right of eminent domain.
-Public use vs. public purpose
-Just compensation based on highest and best use
-Problems of excessive use
inverse condemnation
action initiated by a property owner against the government, to recover the loss in property value attributed to government activity
eminent domain controversy
-Concept of "public use" expanded to "public purpose"
-Wide-spread subsequent condemnation of "blighted areas" for private redevelopment
-Driven by local government hunger for an increased property tax base
environmental controls
-Clean Air Act (dry cleaners)
-Clean Water Act
-Comprehensive Environmental Response Compensation and Liability Act (CERCLA): (big impact on investments)
-Occupational Safety and Health Act (OSHA)
-Endangered Species Act
abestos and fiberglass
-abestos was primary material used for insulation
-if released into the air, tiny fibers can enter lungs and reduce breathing capacity
polychlorinated biphenyls (PCBs)
-typically used in electrical equipment
-when broken, exposure to PCBs can cause cancer and other health problems
leaking underground storage tanks (LUSTs)
-potentially huge problem for real estate investors
-septic tanks and oil tanks, stored fuel, buried wastes
-often unmapped and forgotten about
radon
-naturally occurring radioactive gas found in soils containing uranium, granite
-can enter buildings through openings in the floor
-mitigation involves increasing ventilation or sealing floor and foundation cracks
mold
-black mold
-caused by leaks, excess humidity, condensation, or flooding
3 phases of environmental assessments
1. search records to see if there was anything that could've contaminated the property
-air and water samples
-historical property records
-site inspection
2.
more invasive tests
to confirm indications from Phase 1
3. Complete assessment of extent of the
property taxes
-Primary source of local government revenue
-Reliable and countercyclical
-primary source of revenue for schools and LOCAL government
-taxes are AD VALOREM (based on value)
taxing authorities
-city
-county
-school
-improvement district
-transportation authorities
-water management districts
property tax exemptions
-religious organizations
-nonprofits
-educational institutions
-state property
-homestead
(not 100% exemption, just a deduction)
special assessments
-taxes for specific public improvements affecting a property.
-street, sewer, etc.
-usually charged on a per front foot basis
-non ad valorem
special assessments and community development districts
-Many large subdivisions have private community development districts
-Create and maintain neighborhood infrastructure
-Utilities
-Drainage and water retention
-Streets, bikeways, walkways
-Recreation facilities
-Issue tax-exempt bonds and impose property
issues w/ property tax
-regressive (property tax of lower income households is higher than that of higher income house holds, as a percentage of their respective incomes)
-uneven across geographic areas
-poorly administered
Which of the following tools of public land use control represents the earliest method of police power to regulate land use? (Hint: Standards for energy efficiency and sustainability are the most recent trends in the application of this land use control)
building codes
New urbanism" is a term used to describe:
The theory that residentail and commercial uses should be integrated, streets and parking should discourage through traffic, and neighborhoods should be pedestrian oriented.
Negative externalities can diminish a property's value by imposing costs on the community at large. In order to offset this detrimental impact, economists advocate "internalizing" these externalities by implementing:
impact fees
Growth management laws at the state level require local jurisdictions to plan for and meet certain requirements. One such requirement prohibits local development unless adequate infrastructure, schools, police/fire protection, and social services have bee
concurrency requirement
Elements of traditional zoning include all except:
performance standards
The most accurate conclusion about the regessivity of the property tax is that it is:
Regressive, but when benefits are considered, the net result is not regressive.
A contemporary planning movement that explicitly advocates a traditional grid pattern of development designed to give pedestrian life priority over motor vehicles (e.g., including narrowed streets with houses close to the street and garage access through
new urbanism
Development taking place in rural areas well beyond the urban fringe is commonly referred to as:
urban sprawl
State and federal control of land uses has increased greatly over the past 40 years due in part to an increased awareness of environmental hazards. Which of the following federal environmental control laws was responsible for establishing the "Superfund
Comprehensive Environmental Response Compensation and Liability Act (CERPLA)
The authority for approving site plans for large projects ultimately rests with the:
Elected governing commission or council
Externalities
indirect or unintended consequences imposed on society that may not be understood or anticipated
Comprehensive Plan
general guide to a community's future growth and development
Economic and environmental impact statements
proposals for large scale developments must be accompanied by ____________________
Concurrency requirement
Growth management laws at the state level require local jurisdictions to plan for and meet certain requirements. One such requirement prohibits local development unless adequate infrastructure, schools, police/fire protection, and social services have bee
Affordable housing allocation
a requirement that encourages or mandates a "reasonable and fair" component of new housing construction for lower income families
Urban service area
an area delineated around a community within which the local government plans to provide public services and facilities and beyond which urban development is discouraged or prohibited.
Extraterritorial jurdiction
some states give local gov the power to plan and control urban development outside their boundaries until annexation can occur
Smart growth
Legislation and regulations to limit suburban sprawl and preserve farmland
New Urbanism
Development, urban revitalization, & suburban reforms creating walk-able neighborhoods with housing diversity & jobs
Nonconforming uses
A nonconforming use is a use in existence when the zoning ordinance is passed that is not permitted in the district under the new zoning ordinances
Variance
a zoning ordinance must provide some relief mechanism for cases where the regulations impose exceptional hardship and loss of value
Exclusionary zoning
Zoning that tends to exclude lower-income groups and is prohibited.
Dedicated
one very practical reason for the variety of officials is that roadways and utilities in subdivisions are usually ______ to the local gov; meaning the local gov maintains them
Board of adjustment
in local zoning law, a board of citizen's that makes appeals to zoning variances. Boards rulings are final and can only be undone in court
Planned unit development (PUD)
(PUD) A term sometimes used to describe a planned development. A planning and zoning term describing land not subject to conventional zoning to permit clustering of residences or other characteristics of the project which differ from normal zoning.
Performance Standard
traditional zoning fails to address concerns for urban systems such as traffic, watershed, green space, air quality, or other aspects of the environment. A __________ can fill this void.
Impact fee
if development imposes externality costs on the community at large, the developer should pay an _______
Growth moratorium
prohibition of development
PCB
Polychlorinated biphenyls
LUSTs
leaking underground storage tanks
Radon
naturally occurring radioactive gas
Public purpose
in eminent domain cases, expansion by courts of the public use concept, no longer requiring actual physical use by the condemning agency to take property
Just compensation
market value of the property
Inverse condemnation
An action brought by a property owner seeking just compensation for land taken for public use when the taker of the property does not intend to bring eminent domain proceedings. Property is condemned because its use and value have been diminished due to a
Regulatory taking
A government regulation that effectively takes land by restricting its use, even if it remains in the owner's name.
Ad Valorem taxes
are applied in relation to the value of the property
Tax rate
established by evaluating both its budget and the value of the tax base
Mills
tax rates are presented in _____ or dollars per $1,000
Millage rate
A tax rate stated in tenths of a cent. For example, a millage rate of 150 mills on property assessed at $100,000 would result in a property tax of$1,500 ($100,000 x .150).
Tax-exempt properties
Properties against which local jurisdictions may not levy taxes, usually including churches, synagogues, public schools, and government property.
Homestead exemption
a law that allowed citizens to pay taxes on only part of the value of their property
Tax assessor
The person who assigns value to property for tax purposes
Assessed value
The value of an asset determined by tax authorities for the purpose of calculating taxes
Taxable value
assessed value for property taxes less exemptions
Effective tax rate
The actual percentage of one's income that one pays in taxes, after deductions and tax credits. tax paid/market value of property
Principal Anticipation
utility
accrued deprecation
the difference between the current market value of a building for a building and what the total cost to construct new
physical deterioration
loss in value over time associated with aging and decay of physical condition
functional obsolescence
a loss of value with in the structure due to changes in taste, preference, technical innovations or market standards
external obsolescence
loss of value due to influences external to site that effect value