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STUDY GUIDE FOR THE NY REAL ESTATE EXAM

Terms in this set (61)

Ø Failing to provide adequate disclosure regarding any or all of the following:
a) if licensees purchase property listed by their firm, they must make their position clear to the seller,

b) the licensee must make clear their position regarding the party for whom they are acting in a residential real estate transaction-seller, buyer or both.

Ø Receiving compensation from more than one party in a real estate transaction without the knowledge and consent of all parties.

Ø Being a party to an exclusive listing contract that contains an automatic continuation of the listing beyond the specified termination date.
Listing contracts are renewed by the signing of a written renewal agreement.

Ø Drawing up legal documents such as deeds or mortgages, giving an opinion as to the legal validity of any document, performing a title examination.
A licensee may not perform any service that is performed by an attorney.

Ø Brokers are prohibited from commingling or mixing the funds of others with their business or personal funds and are required to maintain adequate records regarding the deposit and disbursement of funds from their accounts.

Ø Entering into a net listing contract.
A net listing contract occurs when a seller authorizes a broker to procure a specified amount for the property and
-then allows the broker to keep as a commission any money above the specified amount from the sale.

· Discrimination because of race, creed, color, national origin, age, sex, disability, familial or marital status in the sale rental or advertisement of housing or commercial space covered by law

· All ads placed by a broker must indicate that the advertiser is a broker. Ads that do not contain this are called BLIND ADS.

· DOS Hearings and Appeals
Ø Article 78 proceeding is the method for appeals against regulatory agencies such as DOS.

Ø DOS may impose a fine not to exceed $1000.
· The revocation or suspension of a broker's license suspends the license of the salespersons and associate brokers affiliated with the broker.
· If license is revoked, must wait ONE YEAR for relicensure
· An encumbrance is anything that lessens the bundle of rights in real property.

· At execution and foreclosure of liens, priority is based upon the time [day and hour] were recorded in office of county clerk.

· In New York, liens for real property taxes and special assessments receive the highest priority of all liens!!!!!.

· Taxes levied by a local government constitute a specific lien against the real estate.

· Mechanic's lien is a specific lien filed by a person who provides labor to a property.

· Materialmen's lien is a specific lien filed by a supplier of products required in the construction.

· New York law requires that a mechanic and materialmen's lien for residential property be filed with the county clerk where the property is situated within 4 months from the date when the labor or materials were furnished. The time and date of filing determines the priority of the lien. In New York, mechanic's liens must be renewed annually.

· Lis pendens means pending litigation. This filing is a legal notice that a lawsuit has been filed concerning the specific property.

· If one has a possessory interest in property, that individual cannot own an easement. The common terminology for easement is right-of-way.[legal trespass]

· Easements in gross are also called commercial easements in gross. The category is usually owned by the government, an agency of the government, or a public utility.

· Easement appurtenant category includes all easements that are no in gross. The land that benefits from easement appurtenant is called the dominant tenement. The land that must suffer and allows the use is called the servient tenement.

· A license is defined as permission to do a particular act or series of acts on another's land without possessing any estate or interest in the land. A license is not assignable, not inheritable, and is a temporary privilege.

· PROFIT legal term the right to take products of the soil from someone else's land.
which in New York is codified in the General Obligations Law, state that contracts involving the creation or conveyance of an interest in real property must be written to be enforceable.

· Oral testimony is not sufficient to create a contract involving the transfer of title to real property.

· A form of agreement that terminates contracts is novation-the substitution of a new contract for a prior contract or the substitution of a new party for an old party.

· Assignment is when a new party to the contract agrees to satisfy the former party's obligation.

· Statute of Limitations
Ø If a party to a contract fails to bring a lawsuit against a defaulting party within a time period set by statute, the injured party loses the right of remedy. In New York, the time limit by statute to bring legal action against a party in a real estate transaction is 6 years.

· Specific performance means that the contract will be completed as originally agreed.

· Liquidated damages are an amount of money to be paid upon certain breaches of the contract.

· The time is of the essence rule means that the closing must take place on or before the exact date stipulated in the contract.

· Installment Sales Contract The buyer contracts to obtain legal title to the property by paying the purchase price in installments, and the seller agrees to transfer the legal title to the buyer by delivering a deed upon the buyer's full payment of the purchase price.

· Lease With Option To Buy An option is an express unilateral contract.
Another name for "PERSONAL PROPERTY" is "CHATTEL"
· Riparian rights belong to the owner of property bordering a flowing body of water
(R-river)

· Littoral rights apply to property bordering a stationary body of water (L-lake)

· The real estate term for improvements both on and to the land is FIXTURE.

· Trade fixtures-items of personal property that a business owner installs in rented building space.

· Fee Simple Absolute-provides the most complete form of ownership and bundle of rights in real property.

· The life estate is ownership, possession and control for someone lifetime.

· With a life estate, two outcomes are possible upon death,
Ø an estate in remainder,
Ø An estate in reversion.
Remainder interest is a fee simple present interest.

· An estate at sufferance describes a tenant who is originally in lawful possession of another's property but refuses to leave after his right to possession terminates.

· A tenant who does not leave upon expiration of the lease is termed a holdover tenant.

· When title to real property is held in the name of only one person or entity, it is called ownership in severalty.

· Right of survivorship means that if one or more of the co-owners die, the surviving co-owners automatically receive the interest of the deceased co-owner.

· A special characteristic of joint tenancy is the right of survivorship.

· Join Tenancy must have 4 unities= time, title ,interest, possession.

· By acquiring as a joint tenancy, each joint tenant gives up the right of inheritance.

· Ownership as tenants by the entirety is limited to husband and wife.

· A corporation is an artificial being-invisible, intangible, and existing only pursuant to law.

· Syndicates denote multiple joint participation in a real estate investment.

· A joint venture is an organization formed by 2 or more parties for the purpose of investing in real estate or any other type of investment.

· The greatest form of ownership in real property is fee simple absolute.
A mortgage is a loan that constitutes a lien against the real property. The mortgage is a two-party instrument between the lender and borrower.
· The borrower who gives the mortgage is called the mortgagor.

· The lender who receives the mortgage is called the mortgagee.

· Acceleration clause - enables the lender to declare the entire balance remaining immediately due and payable if the borrower is in default.

· Alienation clause-entitles the lender to declare the principal balance immediately due and payable if the borrower sells the property during the mortgage term and makes the mortgage unassumable.

· In making a mortgage, the lender requires the borrower to sign promissory note-providing evidence that a valid debt exists.

· Equity of Redemption After default, and up to the time a foreclosure sale is held, the borrower has an equitable right to redeem his property by paying the principal amount of the debt, accrued interest, and lender costs incurred in initiating the foreclosure.

· A JUNIOR MORTGAGE REFERS TO ANY MORTGAGE THAT IS SUBORDINATE TO ANOTHER MORTGAGE.
Negative amortization-when a loan payment amount is not sufficient to cover interest due, the shortfall added back into the principal, causing the principal to grow larger after payment is made.

· Graduated payment mortgage-the monthly payments are lower in the early years of the mortgage term and increase at specified intervals until the payment amount is sufficient to amortize the loan over the remaining term.

· Blanket mortgage-two or more parcels of real estate are pledged as security for payment of the mortgage debt. The blanket mortgage usually contains a release clause that allows certain parcels of property to be removed from the mortgage lien if the loan balance is reduced by a specified amount.

· Purchase Money Mortgage-another type of seller financing, is a mortgage given by a buyer to a seller to cover part of the purchase price. Here the seller becomes the mortgagee and the buyer becomes the mortgagor.

· Conventional loans
Ø In the uninsured conventional loan, the borrower's equity in the property, the difference between the value of the property and its liabilities, provides sufficient security for the lender to make the loan. Therefore, insurance to protect the lender in case of the borrower's default is not necessary.

· The Federal Housing Administration (FHA) does not make mortgage loans, instead, FHA-insured loans protect lenders against financial loss.

· VA Guaranteed Loan Program -offers a loan that guarantees repayment of the top portion of the loan to the lender in the event the borrower defaults.

· Secondary Mortgage Market-buys and sells mortgages created in the primary mortgage market.

· Truth-in-Lending Act (TILA) - Requires 4 chief disclosures: annual percentage rate, finance charge, amount financed, and total amount of money to be paid toward the mortgage in both principal and interest payments.

· Regulation Z does not regulate interest rates, but instead provides specific consumer protections in mortgage loans for residential real estate, and advertises credit terms available. The only specific thing that may be stated is the annual percentage rate, and it must be spelled out in full.

· USURY LAWS are used by New York State to fix a maximum allowable interest rate.

· BUY DOWN is an choice given to the borrower to volunteer to pay discount points

· Construction loan
The building plan, also known as the blueprint, is a detailed architectural rendering of the structure that usually includes the plans for the mechanical systems.
· The New York State Department of Health (NYSDOH) has regulations for sanitary and safe water that act as the guideline for well water.
· Percolation is movement of water through soil.
· The footing is the concrete base below the frost line that supports the foundation of the structure.
· Of the 3 types of foundations built in New York, full basements are the most common (more than 80%), followed by slab-on-grade and crawl space.
· Slab-on-grade construction-concrete slab is poured directly on the ground and therefore eliminates the crawl space or basement.
· Floating slab-pouring the footing first and then pouring the slab.
· Framing refers to the wooden skeleton of the house.
· Studs-used vertically for the wall.
· Joists-for floor and ceiling.
· Rafters-roof framing system
· The sill plate is the first wooden member of the house and is used as the nailing surface for the floor system.
· The girder is the main carrying beam, either a steel beam or several wooden members fastened together.
· The bearing walls support the ceiling and/or the roof and include the outside wall frame.
· Platform framing is the most common type of framing used in residential construction.
· The pitch is the slope of the roof.
· Eaves are the overhangs, which are part of the sloped roof.
· Flashing is a metallic material that is used in certain areas of the roof and walls to prevent water seepage into the structure.
· Sheathing is a plywood covering placed over the exterior framing members.
· R-factor means the degree of resistance to heat transfer of the walls, the larger the
R-factor, the greater the degree of insulation
HEATING:
Ø HOT WATER SYSTEM
Ø FORCED WARM AIR SYSTEM. When hot air is blown through the same ducts as air conditioning.
· "BTU" is BRITISH THERMAL UNIT
· A fuse is a device that will melt and open the circuit, causing electrical power to stop when overheating occurs.
· Circuit breakers will trip, or switch the electrical power for a given circuit off if the current increases beyond the capacity of the system.
The Federal Safe Drinking Water Act of 1974 is the guideline for New York's drinking water regulations. New York State Department of Health (NYSDOH) is the regulatory agent that oversees the safety of drinking water.
· One of the biggest concerns about the safety of water is that highly corrosive water may contain dangerous amounts of lead.
· The installation and approval of individual residential on-site wastewater treatment systems of less than 1,000 gallons per day in NY are regulated by NYSDOH.
· 1,000 gallons or more overseen by NYSDEC
· Only an individual licensed by NYSDEC may apply pesticides.
· NYSDEC oversees wetlands, and must be larger than 12.4 acres to be protected.
· Asbestos is a fibrous material found in rocks and soil is a carcinogen
· Friable refers to the crumbly or flaky texture of asbestos when hand pressure is applied.
· Asbestos has been identified as a carcinogen, and is dangerous when inhaled.
· Lead is a metallic element found worldwide in rocks and soils. It can be present in drinking water, interior and exterior paint and in soil.
· The Residential Lead Based Paint Hazard Reduction Act of 1992 sets forth procedures disclosing the presence of lead based pint for sales of properties built prior to 1978. Penalties for noncompliance up to $10,000.
· Many homes built prior to 1988 contain plumbing systems that use lead-based solder in pipe connections.
· Radon is a colorless, odorless, tasteless, radioactive gas found worldwide as a by-product of the natural decay of uranium present in the earth. Radon from surrounding soil enters a home through small spaces such as cracks in basements
· Under the State Environmental Quality Review Act (SEQRA) the state environmental quality review is a process that requires government to assess the environmental significance of actions for which they have discretion to review, approve, fund, or undertake.
· The environmental impact statement is a report that describes and analyzes a proposed action that may have a significant effect on the environment.
The Superfund Amendments and Reauthorization Act (SARA) (1986) an amendment to "CERCLA" expanded the definition of persons liable for cleanup costs.
· Underground storage tanks are utilized by business and industry because the tanks are out of sight and are also protected against vandalism and fire.
· Chlorofluorocarbons (CFCs) known as "freon"are manmade chemical substances that were used in refrigerators, air conditioners, Styrofoam, aerosol, and cleaning agents.
· Hydro chlorofluorocarbons (HCFCs) are used in home air conditioners and are nontoxic.
· Federal law mandates that in the sale or lease of pre-1978 residential properties, sellers or their agents must distribute a lead hazard pamphlet and disclose any known information concerning lead paint. The parties must agree to a 10-day period for a lead paint assessment.