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Real Estate - Study Aid
Terms in this set (244)
tenancy for years
Created by a lease for a fixed term (6 months, 5 years, etc.)
To find the square footage of a one-story house, multiply the length X width breaking into squares and then adding them together.
The method for legal description of property which refers to a subdivision map. Usually generated by a developer or subdivider. From block (largest unit) to lot (smallest unit).
They are actually "prepaid interest". 1 discount point equals 1% of the loan amount. 4 points equal 4% of loan items. When a lender "discounts a loan", he charges the borrower discount points.
Any property that can be moved! Also called rights in real property that are held for less than a lifetime. E.g. fructus industrials (emblements), mobile homes not permanently attached to land or a temporary. movable shed, an item of chattel (Hab & Gut). Also, the rights of a tenant under a LEASE if real property, e.g. a lease on a store! It is conveyed by means of a BILL OF SALE.
A growing crop such as corn and wheat, called fructus industriales (generally considered personal property)
One that makes an offer to another (e.g. buyer). In reaching an agreement through the process of offer and acceptance, the seller can be both, offeror or offeree.
One that receives an offer from another (e.g.seller). In reaching an agreement through the process of offer and acceptance, the buyer can be both, offeror or offeree.
Fair Housing Law
Federal law that forbids discrimination on the basis of race, color, sex, religion, handicap, familial status, or national origin in the selling or renting of homes and apartments.
A party who assigns or transfers an agreement or contract to another.
option to purchase
A contract that gives one the right (but not obligation) to buy a property, within a certain time, for a specified amount and subject to specified conditions.
One who gives or sells an option. The person giving the right to buy (E.g. seller). During the option period, the interest in the property held by the optionor is the "legal title", but optionee holds "equitable title".
In an option, the person receiving the right to buy. E.g. the potential buyer of the property covered in the option. In the option period, the optionee holds no legal interest.
easement by necessity
The right of an owner to cross over another's property for a special necessary purpose. One can't land-lock another from getting to their property. When a seller grants an easement to prevent the buyer from becoming landlocked.
A means of acquiring title to real estate where an occupant has been an actual, open, notorious, exclusive, hostile, and continuous occupancy for property for the period required by state law.
The price paid for a house established market value.
It provides that, if title is alienated (transferred to another) without the lender's prior written consent, the lender may, at its option, call the loan due at once and require immediate payment in full of all sums owed. Also called "due on sale" clause.
Allows the lender to declare the entire unpaid loan balance due upon a default of any of the terms or conditions of the document, including failure to pay insurance premiums, property taxes, or principal and interest on the debt.
A provision in a lease that requires the tenant to pay more rent based on an increase in costs.
or fee simple absolute, or fee simple estate. Absolute ownership of real property; owner is entitled to the entire property with unconditional power of disposition during the owner's life, and upon his death the property descends to the owner's designated heirs. An indefeasible estate.
estate at will
The occupancy of real estate by a tenant for an indefinite period, & the tenant may vacate at any time. The landlord may also evict the tenant at any time. When a tenant remains in possession of leased property beyond his legal tenancy & WITH the owner's permission. It is terminated by the death of either party.
estate in severalty
... or tenancy in severalty. Ownership of property by one person of one legal entity (corporate ownership).
estate for life
An interest in property that terminates upon the death of a specified person.
estate for years
An interest in land allowing possession for a specified and limited time.
An estate/interest in land in which ownership is for an indeterminate (unbestimmt) length of time, i.e. a lifetime or longer. Freehold is the "ownership" interest in property.
A tenant's right to occupy real estate during the term of a lease, generally considered to be a personal property interest.
Ownership of realty by 2 or more persons, each whom has equal shares of the property with the same deed, at the same time. It comes with the right of survivorship, i.e. the interest of a deceased owner automatically gets transferred to the remaining surviving owners. The form of concurrent (zusammenwirkende) ownership which requires the 4 unities of possession, interest, time, & title & survivorship (PITTS).
tenancy in common
An ownership of realty by 2 or more persons, each of whom has an undivided interest, without the right of survivorship.
Claim of ownership of commonly-owned assets or property (as in tenancy-in-common) where each co-owner has unrestricted claim to all the assets or entire property, but no co-owner has exclusive claim to any single asset or part of the property.
qualified fee estate
... or conditional fee, or defeasible (anfechtbar) fee, or fee simple defeasible estate. An estate of potentially unlimited duration and doesn't terminate upon death of owner. However, the estate has certain qualifications (conditions). The term "defeasible" is used to indicate that, if the event specified in the conditions were to occur, the estate would or could be defeated.
Its conditions or terms are CALL: consideration. agreement ("meeting of the minds), legal objective, & legally competent parties.
An obligation given by one party contingent on the performance of another party, but without obligating the second party to perform. Before the act is performed, the promise of the promisor is a mere unilateral offer. (E.g. offer to purchase)
A contract under which each party promises performance. (E.g. an offer that has been accepted by a seller)
One that has no legal force or effect; unenforceable
Capable of being voided, but not void unless action is taken to void it.
A contract created in words, by either written or oral agreement.
A contract that results from the actions of the parties involved, rather than from words.
A contract under which one or more parties has not yet performed.
A contract whose terms have been completely fulfilled.
The gov't right to take private land for the public good, upon the payment of just compensation (owner's entitlement).
incurable physical deterioration
A defect that cannot be cured or that is not financially practical to cure.
metes and bounds
A more accurate method of describing the boundaries of a property, providing specific length & directions of sides of the property beginning at the point of beginning, measuring all sides & returning at the original point of beginning.
A promise by the grantee to either do or not do something with regard to the property. Covenants provide warranties as to title status.
A covenant or deed restriction that limits the property.
A clause in a deed that may be inserted by a seller to limit/control the private use of land. It can only be changed by court action. E.g. it may control the style or size of homes.
A legal mechanism for local gov't to regulate the use of privately owned real property by specific application of police power to prevent conflicting land uses & promote orderly development.
The right of the gov't to make reasonable rules for the use of land & enabling zoning restrictions & building codes (acceptable construction standards). Power reserved to the state government to regulate the health, safety, and morals of its citizens.
A broker received a 5% commission, which amounted to $7,500, for selling a property. What was the sales price?
A mortgage, used in the purchase of new residential property which, in addition to real property, covers certain personal property items and equipment. (Washer, dryer, drapes, refrigerator, stove). A mortgage arrangement whereby the principal amount loaned is increased because personal and real property serve as collateral.
A single mortgage that includes more than one parcel of real estate as security. The partial release clause allows for removing one or more properties from a blanket loan.
Civil Rights Act of 1866
Covers discrimination in the sale or of real or personal property & prohibits discrimination based on race - only!
Civil Rights Act of 1968
Also called Fair Housing Act: prohibits discrimination in the sale or lease of real property based on race, color, religion, and national origin.
Housing & Community Development Act of 1974
Extends the protected classes to include discrimination based on sex.
A monetary claim which one person has upon the property of another as security for a debt. legal claim until a debt on it is repaid. A charge against property making it security for payment of a debt, judgment, mortgage, or taxes; it is a type of encumbrance (Verschuldung, Grunstueckslast)
Fair Housing Amendments Act of 1988
Extended the discrimination class to include familial status & physical or mentally impaired, including AIDS victims & alcoholics. A building may be covered under the provisions of this act if it has 4 or more units. 1st violation charges imposed by HUD: $10,000 w/ max of $50,000 of civil damages. No max for punitive damages imposed by Federal court.
Against a certain property only. Also called „special" lien. E.g. mortgage lien (voluntary), ad valorem tax lien (statutory), mechanic's lien (involuntary).
A lien which attaches to all property owned by the lienee. Against all of the property owned by the debtor.
A lien which can be filed by anyone who supplies labor or materials in the construction or repair of property. It's given by law upon a building or other improvement upon land, and upon the land itself, as security for the payment for labor done and material furnished for improvements.
A parcel of land has a market value of $100,000. The mill rate of 30 mills, & the assessed value of the property is $70,000. What is the amount of taxes for this specific parcel?
tax rate, 1 mill = 1/10th of a cent or $0.001. Residual value. City tries to evaluate how much money they need, and spread it amongst property owners.
A termination of the equity of redemption of a mortgagor or the grantee in the property covered by the mortgage. E.g. The lender forecloses to gain possession of mortgaged land after the borrower missed 3 payments. If a foreclosed property sells for less than the outstanding debt, lender may sue the borrower.
The right of a lessor to regain possession of the leased property upon the termination of a lease. The act or process of returning to a former state or condition.
Mortgage insurance premium- insurance in ALL FHA loans - insures the whole loan.
A factor an appraiser considers in using the capitalization approach to value.
Protects the borrower & is available at the borrowers option but is not required by law; however, a LENDER will normally require it. It's a bAn insurance policy which protects the insured against a loss which might be sustained by a defective title, or any liens or encumbrances. Protects the borrower & is available at the borrower's option but is not required by law; however, a LENDER will normally require it. It's a BUYER'S expense.uyer's expense.
The owner of a personal residence is permitted to deduct mortgage interest & local property taxes paid when calculating his income taxes.
When a property is sold, the deed transfer tax is usually charged to the SELLER and paid when a deed is recorded.
documentary transfer tax
Also called deed tax. A fee charged for recording the deed which the seller usually pays. It is based on $0.50 per $500. E.g. Sale price is $110,000, divide it by 500 = 220 (round up if necessary) x $0.50 = $110.
A written contract pledging real property the borrower owns or will own to secure the debt. A lien which arises when a mortgage is used to finance a home.
A tax imposed for recording mortgages. Usually paid by the BUYER. Based on $0.15 per $100. E.g. take the mortgage amount (Sale price $90,000 on 90% conventional loan = 90,000 x 0.9 =81,000/100=810 x $0.15 = $121.50.
A periodic estate terminates by breach of contract and automatically renews for a period equal to the initial lease duration and NOT terminated by death of either party. Also called an estate from year-to-year. E.g. a month-to-month apartment lease.
Brokers/agents are not required to know everything about every question a consumer may ask. They should, however, recommend their clients or customers to seek advise from a qualified professional.
(Zubehoer zu einem Grundstueck) A right, privilege or improvement associated with land (it runs with the land). E.g. an assigned parking space, sth. that adds to its greater enjoyment, such as the right to cross another's land (i.e. right-of-way).
The right to use, privilege, or interest that one party has in the land of another.
Real Estate Settlement Procedures Act - requires special information booklet, requires good faith estimate, requires uniform settlement statement. A law that states how mortgage lenders must treat those who apply for federally related real estate loans on property w/ 1-4 dwelling units. Intended to provide borrowers with more knowledge when they comparison show for mortgage money.
highest & best use
The possible use of a property that would produce the greatest net income and thereby develop the highest value. A parcel of property is valued at a higher amount if used for property rather than residential property, e.g.
Americans with Disabilities Act
ADA. This law states that public accommodations must remove barriers that limit access to the facility by individuals with disabilities (if doing so is READILY achievable).
You list a home for $186,300. The price is only 15% more than the seller paid for originally. What did he pay for the house?
A single tax payer who sells a home can exclude gain on the sale up to $250,000 ($500,000 for married couples), but only once every 2 years, provided the taxpayer has lived in the house for at least 2 of the past 5 years.
Certificate of Reasonable Value
(CRV) A document issued by the VA which states the value of the subject property based on an approved appraisal. For a VA guaranteed loan, the CRV must be greater than or equal to the loan amount, which establishes a ceiling on the max VA mortgage loan principal.
unreasonable escrow amounts
Collecting unreasonable escrow amounts for advance tax and insurance payments is prohibited by federal law.
An air pollutant/GAS that is a colorless chemical used to manufacture building materials and many HOUSEHOLD PRODUCTS such as particleboard, hardwood plywood paneling, and urea-formaldehyde foam insulation.
A heat-resistant fibrous silicate mineral that can be woven into fabrics, and is used in fire-resistant and insulating materials such as brake linings. Used in older buildings as pipe wrap, boiler insulation, floor tile, & ceiling coating. With age it becomes friable (brittle) & crumbles like dust which can become airborne. Breathing these particles may cause several serious lung illnesses.
A property is sold for $217,000 w/ an 80% conventional loan. What is the down payment?
The act of transferring one's interest, all or part of one's rights to another arising under an executory contract (i.e. an offer has not been accepted by the seller). Also, the transfer of ALL rights that a tenant holds in a leased property.
Truth in Lending Act
Truth in Lending Act (Finance Regulations)
Also called the Consumer Credit Protection Act. This act requires the lender to disclose to the borrower all cost of credit. A secondary purpose is to allow borrowers to rescind some contracts. It's administered by the Federal Trade Commission (FTC) through a set of regulations known as "Regulation Z". It also regulates advertising about credits!
A lease whereby, in addition to the rent stipulated, the lessee (tenant) pays such expenses as taxes, insurance, & maintenance. The landlord is thereby "net' of those expenses.
Tenant pays rents, landlord (lessor) pays all expenses of property; most common form of residential lease.
A lease in which the tenant pays a fixed rent for an initial period but the rent increases automatically by preset amounts, as contained in the escalation clause.
A lease, commonly used for commercial property, whose rental is based on the tenant's gross sales at the premises; it usually stipulates a base monthly rental plus a percentage of any gross sales above a certain amount. E.g. shopping mall
An owner's rights in land that borders on or includes a stream, river, or lake. These rights include access to and use of the water, under or adjacent to one's land. Remember "R" - Riparian/River
Rights of a landowner adjacent to large navigable lakes or oceans.
Remember "L" - Littoral/Lake
The channeling of prospective home purchasers or renters, by real estate brokers or salespersons, into racially homogeneous neighborhoods, and actively discouraging them away from neighborhoods of different racial or ethnic composition. Violation of the Fair Housing Laws which occurs as a result of the behavior of a licensee while dealing w/ buyers.
Basically ownership. The sum of all facts on which ownership of a specific piece of real property is founded.
An offeree's response to an offer in which the offeree rejects the original offer and at the same time makes a new offer. When a counteroffer is made, original offer is automatically terminated.
A borrower in a mortgage loan transaction.
A lender in a mortgage loan transaction.
The individual who conveys the ownership rights, title, or an interest in real property to a grantee. Ownership of a life estate in reversion reverts back to the grantor.
A person who receives a conveyance/transfer (title) of real property from a grantor.
The landlord in a lease/estate less than freehold.
The tenant in a lease. The holder of an estate less than freehold.
A written agreement creating an agency relationship between principal (buyer or seller) and agent. An agency relationship is established between the broker and the seller/client.
private mortgage insurance
PMI; insurance provided by private carrier that protects a lender against default by the borrower; usually 90 & 95% loans require PMI.
A written document, properly witnessed, providing for the transfer of title to property owned by the deceased, called the testator.
Having made and left a valid will.
Dying without a will or without heirs. The condition of a property owner who dies w/out leaving a valid will. Title to the property will pass to the decedent's heirs as provided in the state law of decedent.
A living person who makes a will. He also appoints the executor of a will.
A gift of real property by a will to the devisee.
The legal process of proving in court that the will of someone who has died is valid, and of administering the estate and the estate's assets of a dead person.
Representing both parties (two principals, buyer and seller) to a transaction. This is unethical unless both parties agree to it, and it is illegal in many states. A licensee who is working for a seller & working WITH a buyer in the same transaction does NOT involve dual agency. Only if the licensee works FOR the buyer as well.
The amount of commission earned by a broker is determined by negotiation between the broker and his client (seller).
A seller has not paid annual property taxes of $1,256 before closing which occurs on Dec 2. If taxes are paid based on a tax year of Oct 1 -Sep 30, what is the amount of the seller's prorated tax payment?
exclusive agency listing
The owner employs only one broker but retains the right to personally sell the property, and thereby not pay a commission. However, if any other real estate company sells the property, the listing broker is still entitled to the commission stipulated. It's an expressed & bilateral listing.
exclusive right to sell listing
Under this listing arrangement, the broker employed is entitled to a commission no matter who sells the property during the listing period (even the seller). Must be written to be valid or enforceable & must have specific ending date. It's most common type of listing agreement.
If you have a single agency agreement for a seller (a listing) you should disclose to a prospective buyer, as soon as reasonably possible, that you represent the seller.
A person empowered to do anything the principal (seller or buyer) could do personally. This type of agreement is virtually unlimited & the agent has LEGAL authority to transact matters of ALL types. A real estate agent typically does NOT have this authority.
One who is authorized to execute the principal's business of a particular kind, or all the principal's business at a particular place, if not all of one kind. E.g. property manager (are usually licensed brokers); also, most real estate agents are general agents for their broker.
Also called limited agent. One authorized by the principal (buyer or seller) to execute specific acts. E.g. a real estate broker is usually a special agent. A listing agreement between a real estate broker & a homeowner creates a special agency.
All real estate agents are independent contractors working under the supervision of a qualifying broker.
A relationship in which the agent is placed in the position of trust and confidence to the principal (could be buyer or seller).
When receiving multiple offers for a property, present all offers to the seller at the same time. Shopping offers is illegal and unethical.
When a licensed person in another state desires to obtain a license in Alabama, he can do so by completing a special 6-hour course and passing a 40-question state exam.
commission board of directors
8 members of the AL Real Estate Commission must have been actively engaged as a salesperson or broker for at least 10 years. The commission has 9 members. One member is a non-licensed consumer but must own real property.
An individual who performs only clerical tasks for a broker is not required to have a real estate license.
All trust funds must be deposited in a separate federally insured account located in Alabama. When a salesperson accepts trust funds (earnest money) from a buyer, he must IMMEDIATELY turn the funds over to their broker.
trust fund discrepancy
If there is a disagreement among the parties as to how trust funds should be disbursed, the broker may disburse the funds according to a court order or a written agreement signed by all parties.
The AL real estate recovery fund was developed to cover damages $25,000 for single & $50,000 for multiple transactions suffered by members of the public. The recovery fund is funded from the initial license fees only. A licensee is permitted to recover from the recovery fund if he suffers damages when acting as a principal.
In AL, a written listing agreement must include a fixed expiration date!
Only licensed real estate agents can receive any type of compensation from a transaction (i.e. commission, referral fee, etc.) and must flow through the qualifying broker!
A broker who provides limited representation to a buyer, a seller, or both in a real estate transaction, but does not represent either in a fiduciary capacity or as a single agent. According to RECAD (Real Estate Consumer's Agency & Disclosure Act) at the 1st contact with a consumer, a broker is considered a transaction broker.
In Alabama, all real estate licenses expire on Sept. 30th of the final year of the license period. New licenses are issued on even years (e.g. 2018, 2020, etc.)
A qualifying broker must keep all records pertaining to a real estate transaction for 3 years.
The commission is the excess above the seller's net price and ILLEGAL IN ALABAMA!!!
Real Estate Brokerage Services Disclosure Form
According to RECAD (Real Estate Consumer's Agency & Disclosure Act), a licensee is required to provide a consumer with this written form to disclose brokerage relationships as soon as reasonably possible & before any confidential information is disclosed. The licensee is required by law to sign this form.
A contract that specifies that something NOT be done.
Abstract of title
A summary of all instruments affecting title and all encumbrances affecting the property. This is used to establish title.
right of first refusal
A right to buy property which has no fixed price and no time limit.
A suit in court to force a party to a contract to complete the requirements of the contract.
A short purchase contract used in some states to secure a real estate transaction until a more formal contract can be prepared by an attorney.
A contract of sale under which the seller retains legal title while the buyer takes possession. E.g. land contract, contract of deed, contract for title, & bond for title.
Tenancy at Sufferance
When a tenant remains in possession of leased property beyond his legal tenancy and WITHOUT the owner's permission. It is terminated by the death of either party.
ad valorem taxes
I.e. according to valuation. The primary source of general revenues on which local gov'ts operate normally is from these taxes. They are based on the value of real property, its land & improvements.
An owner of residential property for personal use may deduct this of mortgage only.
An unauthorized intrusion of a building, fixture, or other improvement to real property onto the land of another. Encroachments can constitute either a nuisance or trespass & may be discovered by observation or survey.
When an encroachment intrudes onto the air above another's land.
An item of personal property that is adapted to a particular parcel of real property, e.g. garage opener, storm windows, or a personal item that became a fixture through designation by buyer and seller. A personal item may become a fixture through attachment, adaption, or agreement.
A trade fixture is considered personal property and may be removed from leased real property only BEFORE THE LEASE EXPIRES.
rights of ownership
The right to use, possess, enjoy and dispose of something.
An estate held for the duration of someone's life. E.g. Jack grants an estate in land to Martha w/ the stipulation (Abmachung/Klausel) that ownership reverts to him on Martha's death. In this case, Martha (in this case called a LIFE TENANT) owns a life estate. Life estates are NOT inheritable.
estate less than freehold
An interest in land or a "rental" interest in property which is held for less than a lifetime. Personal property!!!
The process used to acquire property under the right of eminent domain. Also called "taking".
covenant of seizin
The deed covenant that states that the grantor owns the property and has the right to convey.
The type of deed which contains no warranty as to title. A legal instrument that is used to transfer interest in real property. When it is properly completed & executed, it transfers any interest the grantor has in the property to a recipient (grantee).
The right of the state to assume ownership of property when it is abandoned.
A law that limits the permitted uses of land and maximum density of development in a community. An act of city or county or other authorities specifying the type of use to which property may be put in specific areas.
A lien which results from a legal action in court and attaches to all real and personal property of the lienee.
A written instrument which transfers ownership interest in real property during the lifetime of the owner. If a deed is recorded, it is presumed to be delivered & accepted and must be delivered during the grantor's
When the owner of the servient estate may grant an easement appurtenant which allows the owner of the dominant estate to use a driveway across the servient estate to get to the street. It "runs with the land".
easement in gross
An easement which affects only one property (servant estate). E.g. telephone, sewer, gas, & power lines...These belong to the gov't or businesses & are called commercial easements & are transferable. Personal easements in gross are NOT transferable, e.g. granting a person to access a lake for fishing.
Owners of a condominium unit each holds a fee interest and receives a separate property tax bill for their unit. The condo association on the other hand receives a tax bill on all common areas of the complex!
In a condo development, the funds for payment of taxes, maintenance costs, and insurance for common areas come from these fees.
The substitution of a new contract between the two parties which terminates and replaces an existing (old) contract or the substitution of new parties for an existing contract. E.g. when a home buyer assumes an existing loan and the lender releases the original borrower.
Uniform Vendor & Purchaser Risk Act
This act governs the deposition of an executory contract when real property involved in a sales contract is destroyed. If a property is destroyed before the title or possession has passed, the buyer is NOT obligated to go through with the sale & entitled to his money back.
Statute of Frauds
This statute governs whether real estate contracts must be written to be enforceable. E.g. in Alabama - deeds, real estate sales contracts, & leases for more than 1 year must be written & signed by grantor to be enforceable.
If one of the parties to a contract dies, the contract is terminated only if it requires an act that only the deceased person could perform. To the contrary, in the absence of a provision, real estate sales contracts are NOT terminated by the death of one of the parties.
A type of lease which contains a provision for future rent increases based on general increases in operating costs.
The act of transferring ownership with a deed.
A lien which arises when a mortgage is used to finance a home.
The legal removal of a tenant from a leased property because of a violation of the lease terms. Caused by tenant.
When the landlord allows a situation to occur which makes it impossible for the tenant to enjoy the premises under the terms of the lease. E.g. landlord lets an electricity company turn the electricity off and therefore the tenant won't have any electricity which makes it unbearable to live there. Caused by landlord.
The transfer of SOME of the rights and interest in leased property.
Members of the Alabama Real Estate Commission serve a term of ...
In general, the fees collected by the Alabama Real Estate Commission must be deposited with the ...
Exempt from licensing requirements
A person performing only clerical or admin tasks for a broker, a state or federally chartered financial institution acting under a court order, public officials when conducting official business, & a person acting, w/out compensation, under a duly authorized power of attorney to carry out a specific real estate transaction.
To receive a broker's or salesperson's license in Alabama, a person must be at least ... years old.
at least 2 out of 3 years
To receive an Alabama broker's license, a person must have been an active real estate licensee for...
If a license is denied, the applicant has ... to request a hearing before the Commission.
1 for each location or branch office
If a broker plans on maintaining > 1 place of business, he is required to have 1 license for each location or branch office. If a real estate company maintains > 1 place of business, It is required to have 1 broker for each location or branch office. An individual may serve only 1 location as qualifying broker unless ALL companies give written consent.
If a qualifying broker dies
The company must designate another officer, member, or salesperson to apply for a temporary qualifying license within 30 days and the company will be permitted to operate under this temporary license for 6 months.
When an AL broker cooperates with an out-of-state broker, a copy of the WRITTEN COOPERATIVE AGREEMENT must be filed with the AL Commission within ...
pay a penalty
If a licensee fails to submit the renewal requirements by Aug 31 of the final year of the license period & wishes to renew during the 1st year of the new license period, he must meet renewal requirements & pay a penalty.
If the location of a real estate business changes, the fee for the change is $25 for each license affected by the change.
Latent structural defects
Disclosing latent structural defects to a potential buyer is acceptable business practice and must be disclosed to a potential buyer by the licensee.
AL Real Estate Commission
... is responsible for coordinating the approval of real estate schools, investigating alleged violations of the license law, and issuing licenses.
When an AL broker cooperates with an out-of-state broker on the sale of property located in AL, the AL broker is responsible for verifying that the cooperating broker is licensed as a broker in another state & the earnest money is held in escrow by the AL broker unless parties agree to have it held elsewhere.
2 partnerships operating at same address
If a broker conducts business under two partnerships operating at the same address, the broker MUST obtain a letter of consent from all partners. He also needs to hold 1 license per corporation located at the same office.
Within 7 days
After a transaction is consummated (vollzogen, vollendet), a qualifying broker must disburse trust funds to the appropriate party within 7 days.
A licensee is working with a buyer on a transaction involving the sale of a single-family residence. When the buyer signs a written offer, the licensee must provide the buyer with an ESTIMATED closing statement & an ACTUAL, DETAILED closing statement at closing.
Someone who is employed by someone else and has the legal authority to act for someone else.
A person who hires or appoints an agent.
The relationship established between a principal and an agent
The type of listing which allows more than one broker to have a valid listing on the same property. A commission is paid to the broker who is procuring (vermittelnd, beschaffend) cause of the sale. It can be oral or written to be valid & enforceable & is expressed AND unilateral. A RE broker must have written permission to advertise the property
The words used to remember the methods of terminating an agency. Revocation or Renunciation, Expiration of listing period, Agreement of parties, Death of either party, Incapacity of either party, and Extinction of property.
The acronym used to remember the responsibilities that a real estate broker has to a principal. Loyalty, Obedience, Written offers must be submitted, Personally act for principal, Account for monies, Inform the principal, and NOT be negligent.
When a broker deposits money held for a principal in his own personal or business account.
Failure to close
If a broker fails to close because of a failure on the buyer's part, the listing broker's commission is NOT earned. If a listing broker procures a ready, willing, & able buyer but the sale fails to close because of a failure on the part of the seller, the commission IS earned by the broker.
power of attorney
A written instrument giving authorization to a person to act as an agent on behalf of another for one specific act or transaction. The person to whom a power of attorney is granted is called the "attorney-in-fact".
A listing in which the listing broker charges a fee for his time and expense before the property sells.
Real Estate Consumer's Agency & Disclosure Act deals with agency relationships & agency disclosure & went into effect in 1996. According to RECAD, a broker MUST have a written agreement to act as a single agent, subagent, or limited consensual dual agent. Not true for COMMON LAW!
The acronym used to remember the duties a licensee has to all parties according to RECAD. Confidentiality, Accountability, Skill & care, Honesty, Written Offers. & Written disclosure of personal interest.
The practice of inducing panic selling on the basis of race or another minority. Also called "panic peddling".
Discrimination against families
A housing development for the elderly is exempt from the laws regulating discrimination against families with children if 80% of the units are occupied by at least one person over 55 & if it provides special services for those over 55 & is developed for & marketed to those over 55.
Equal Credit Opportunity Act
The act that prohibits discrimination in the credit application process because an individual receives income from a public assistance program.
For an impairment to be considered a disability by the ADA it must be substantially limiting and affect one or more major life activities.
(unangemessene Haerte) An action requiring significant difficulty or expense when considered in light of a number of factors. If a particular accommodation would be an undue hardship, the employer must try to identify another accommodation that will not pose such a hardship. E.g. a significant disruption in business ops, change in nature of business, or financial expense.
A public accommodation is obligated to furnish an auxiliary aid or service to an individual with a disability unless it causes undue burden or alters service provided, then an alternative auxiliary aid must be provided.
A public accommodation is obligated to remove barriers ONLY if doing so is readily achievable. If rearranging display racks causes a significant loss in the sales area of a store, the change is NOT considered readily achievable, then an alternative to barrier removal must be provided.
According to the ADA, elevators are not required for new facilities that have less than 3 floors or less than 3,000 square feet on each floor But, if a new 2-story building houses offices for health care providers in this building, an elevator is required because there are health care offices.
An impartial estimate or opinion of value. Its purpose is to determine the value of the property (the present worth of all rights to current and future benefits of ownership).
The price which an informed buyer and seller agree on when neither is unduly pressured and the property has been on the market for a reasonable time.
The word to use to remember the basic elements of value. Demand, Utility, Scarcity, and Transferability.
The fact that one parcel of land is never an exact replacement for another reflects the fact that land is...
The fact that a buyer will buy with the expectation of receiving future benefits and an investor's expectation of receiving a financial return on his investment in real property are both examples of the principle of ...
The principle that the price that a property will sell for is affected by similar properties of equal desirability is called the principle of ... E.g. If a 4-bedroom traditional homes in a neighborhood were selling for $100,000 & a buyer offered to pay $100,000 for a 4-bedroom traditional home in that neighborhood.
(Uebereinstimmung, Aehnlichkeit) The principle which states that the max value of a parcel of property is attained when the property is used in a manner that is consistent with surrounding property is known as the principle of ... E.g. 2 identical homes sell at different prices in 2 different neighborhoods.
Combining two or more adjacent properties into one parcel is called ...
The increase in value when two or more adjacent properties are combined into one parcel is called ...
market data approach
The pricing approach based on a comparison of the subject property to similar properties. This approach uses "comparables" as a major part & most often used for residential properties or to determine a price for a vacant lot considering its "highest & best use". Also called "sales comparison approach".
principle of substitution
The market data approach to pricing is based on an assumption of the ...
This approach is often used when comparables are not available & for pricing based on what it costs to replace the improvements. Its estimated replacement cost is reduced by the depreciation. E.g. for pricing a school or fire station.
square foot method
The method for determining the replacement cost for a building which is based on the size of the building. It is used most often, but least accurate.
A reduction in value due to outdated features of the property itself, a type of depreciation. E.g. A three story house with a steep narrow staircase.
The type of depreciation which arises from external factors to the property. E.g. a parcel of property that loses value when an airport is built nearby.
The process for converting future income into a current value.
In the income approach using capitalization, the price for a property is determined by dividing the annual net income by this rate. As the capitalization increases, the price of the property decreases and vice versa.
gross rent multiplier
A comparison factor that compares gross rent purchase price. This is NOT a formal approach to pricing & used informally in selected applications to determine a price of income property. E.g. If an investor wanted to rule out some properties before proceeding with formal pricing on others, he might use the GRM. Simply multiply GRM by the gross annual rent to get an estimate.
A negotiable & written instrument in which a borrower promises to repay money borrowed from a lender. It gives evidence of a borrower's debt & states the terms for repayment. PREPAYMENT & ACCELERATION CLAUSE are always included. A mortgage without a promissory note is meaningless & unsecured.
The clause which determines whether a note can be prepaid and whether there is a penalty for prepayment. A prepayment penalty is optional.
The means by which a mortgage provides security for a note. In hypothecation of real property with a mortgage, possession of the property is held by the borrower & the mortgage is held by the lender.
The clause in a mortgage which makes the mortgage null & void when the mortgage is paid in full. Defeasance & granting (conveying legal title) clause are always included in a mortgage.
certificate of reduction
The document completed by a lender that shows how much of a loan remains to be paid.
A clause in a mortgage which waives a priority of recordation.
The difference between the market value and the outstanding principal balance on any loans against the property. At the time a loan is originated, the owner's equity is equal to the down payment.
A loan in which both principal and interest are paid during the term of the loan. Payments are equal.
Also called term loan. The principal is paid in one payment at the end of the term.
purchase money loan
A loan from the seller to the buyer to finance all or part of the purchase price of real property. Also called "taking back" a mortgage. This loan can be used with any mortgage priority.
When the principal amount on a loan increases during the term of the loan & results from unpaid interest.
primary mortgage market
The places where lenders originate loans are collectively. Banks and savings and loan associations are part of it. Versus the secondary market whose function is to buy loans from primary lenders w/ its oldest & largest member being Fannie Mae (Federal National Mortgage Ass.).
The Federal Housing Association promotes homeownership by insuring loans & providing them to lenders. The down payment required is typically smaller than on conventional loans. The max amount is set by the FHA w/ the min DP of 3.5% of the appraised value or sales price whichever is less. The interest rate is often less than on a conventional loan. Prepayment penalty is prohibited.
The VA promotes home ownership for military veterans by "guaranteeing" loans, because the money to pay losses comes from general tax revenues. Insurance premiums are not required. Interest rate is negotiated w/ the lender. Prepayment & alienation clauses are prohibited! To assume a VA loan after 1988, a buyer must qualify!
The acronym for remembering the 5 ways of creating easements. Private grant, Prescription, Condemnation, Reservation, Necessity. The "O"s are not standing for anything.
offer & acceptance
The last requirement in the process of offer and acceptance is the communication of acceptance!
A gift of personal property in a will.
certificate of estoppel
(rechtshemmender Einwand) The document by which a borrower verifies the amount still owed on a loan and the interest rate.
THIS SET IS OFTEN IN FOLDERS WITH...
Leasing & Property Management 3
Leasing & Property Management 4
Fair Housing 2
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