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Real Estate National Terms
Terms in this set (135)
government right to acquire private land for public good when offering compensation
private land becomes the government's if owner has no heirs
just the property being taxed, involuntary
is the appraisal of value for tax purposes
- based heavily on the sale prices of equivalent properties
which is portions of land located near running bodies of water such as lakes
are areas of land where groundwater is close to or at the surface of the ground
Resource Conservation and Recovery Act (RCRA)
defines the regulations that generate, transport, store, use, treat, dispose and clean hazardous waste.
Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA
9 billion superfund for waste cleanup;
retroactive liability (responsibility of previous owner w. Proof)
strict liability (owner is responsible to injured party with no excuse)
joint liability (owners are responsible on the whole)
Superfund Amendments and Reauthorization Act (SARA)
- 1986 More gov $, stronger cleanup regulations, innocent landowner immunity
Federal National Mortgage Association (FNMA) 1938
- private corporation whose stocks, bonds and security notes are traded on the New York Stock Exchange
- backed by the full faith and credit of the US government
- buys FHA, VA and conventional loan packages and sells "seasoned loans" to investors.
Government National Mortgage Association (GNMA) 1968
GNMA buys these subsidized mortgages at below market interest rates in order to stimulate housing production in areas with special housing needs. These mortgages are then resold at current market prices at a loss to HUD
Federal Home Loan Mortgage Corporation (FHLMC) 1970
deals with privately insured, highly leveraged (90%, 95%) loans (conventional)
FHA Federal Housing Administration 1934
Pay 95% loan on appraised value or sale price Consumer pays 5%
* If theres a default, the lender forecloses as with any other loan but FHA will make-up the loss to the lender
Veterans Administration (VA) Loans 1944
* "entitlement" loans called "GI" Loans
guarantee a portion of the loan against loss due to defaults by the borrower
The Truth in Lending Act (TILA) May 29, 1968
Uniform system for disclosures (protects consumers)
Loan Estimate Form
a disclosure which will state important information to the consumer about the approved loan, must be provided to the consumer within 3 business days and 7 days before settlement allowing the consumer time to consider the loan terms but also to shop the potential loan for a better product
a form of private restriction that is written into deeds or leases that limits the use of property, for example, restrictions on the type, size, architectural style, height or use of the building
Doctrine of Laches:
if a person is not fined for violating deed restriction within a timeframe then it is void
State enabling acts
Which of the following grants zoning authority to municipal governments
is the highest probable price in terms of money that a property will bring in an open market in a fair sale
s the actual price paid for a property
is the total dollar expenditure used to bring an improvement into existence: labor, materials, supervision, etc.
is an estimate or opinion of value as determined by an appraise
takes into consideration the product's usefulness to a specific consumer
is value to a particular investor based on his or her investment requirements measured in present worth of anticipated future benefits
is the current worth of a business operation (does not focus on real property)
Insurance value represents the amount of coverage necessary to replace or reproduce improvements in the event of damage
estimates how much it would cost to replace the improvement with improvements that look the same and have the same functionality and use, but are made with current practical construction techniques
calculates the cost of reproducing the structure exactly as it was
is the value assigned to a piece of property for tax purposes
The original cost of the product plus the cost of any capital improvements minus tax applicable depreciation taken during the life of the property is known as book value
according to IRS
represents the amount of money that a lender will loan. It is based upon a percentage of the market value of the property that is being used as collateral
value under eminent domain
states that the value of a property will be set by the cost of purchasing an equally desirable substitute
is an econ concept suggesting that market or neighborhood forces outside of a property may have an effect on value
is the concept that states that combining two or more adjacent parcels of land will result in an increase in value. This process is assemblage.
NOI ÷ Cap Rate = Value of Property
permits the lender to "call in" the entire debt upon a default of payments
Paying back an equal payment each month include both interest and principal in each payment
making money made on the "spread" in interest rates
the most secure loans.. not government insured but are controlled by the market place (Loan to value ratio)
a loan made for a specified period of time and requires only interest payments until the end of the time period with no repayment of principal during the life of the loan
Fully Amortized Loan
aka direct reduction loans
require payment of equal installments made consistently over the life of the loan
includes real and personal property in the same loan. Lenders generally do not want to grant a 30-year mortgage on a refrigerator so not popular with residential homes
partially amortized loan
- 20-30 year loan with ballon loan after 5-10 years
- a balloon loan is any loan that has one or more payments that are larger than the regular payments
Open-end loan aka mortgage for future advances
- The borrower obtains a line of credit based upon a percentage of the value of the collateral used as security. He may then obtain money advances (known as draws) during the term of the loan, until the limit has been reached
is usually short term (six months to two years) in nature, with the funds advanced in states as construction occurs
wrap around loan
a loan that "wraps" the second mortgage around the first. It enables a borrower with an existing mortgage to obtain additional financing through a second lender
purchase money mortgage
where the seller agrees to accept a part of the purchase price in the form of a promissory note secured by a mortgage on the property
(title does transfer to the buyer and the seller holds a lien position on the property.)
adjustable rate mortgage (ARM)
an amortized loan designed to lower the monthly payments in the initial years of the loan.
- interest rate changes w/ indexes, like Prime Rate or Treasury Bills, bc lender is allowed to vary the interest rate as conditions change.
graduated payment mortgage:
graduated payment loan steps-up the monthly payments at a pre-determined rate until after an agreed upon time period
a loan that is secured by two or more properties as collateral
reverse annuity mortgage
The lender makes monthly payments to the borrower up to a pre-determined maximum amount
growing equity mortgage (GEM)
has a fixed interest rate, but is arranged to have the principal payment increase according to an index or schedule
Commercial Banks and Savings Associations
known as thrifts, have historically been the nation's largest source of money for residential real estate financing.
the lender holds the title until the loan is repaid
title to the buyer
stating that if title to the property is transferred, the entire balance is immediately due and payable at the option of the mortgagee.
allows the lender to adjust the interest rate on the loan as was agreed upon at the origination of the loan. This clause is a necessary element for adjustable rate mortgages (ARM's)
either transfers title to the property to a trustee (title theory) or creates a lien on the property (lien theory)
signed when a lender sells a mortgage note to another investor, the purchaser of the note, or the assignee, will require verification of the outstanding loan balance
the holder of a first mortgage can volunteer to become a second mortgagee and allow the second mortgage to move into the first position
requires the lender to give the mortgagor a release or satisfaction of mortgage when the debt has been paid in full and the promissory note is cancelled.
used to release the borrower from any personal liability on the loan. The lender further agrees to accept only the mortgaged property as collateral for the loan
power of sale
a process that allows the lender, and typically the trustee, to sell the mortgaged property upon default by the borrower. The sale itself is held at public auction after a 90-120 day waiting period, and the property is free of junior liens and the foreclosing mortgage
when a mortgagor goes into default, the mortgagee must file a foreclosure action in court, asking the court to allow the sale of the property at auction and to apply the proceeds to the debt
allows the lender to proceed against the borrower's other unsecured assets
Deed in Lieu of Foreclosure
a borrower may voluntarily convey title to the mortgaged property back to the lender. In return, the lender agrees to cancel all remaining debts owed to that lender.
equity of redemption
a mortgagor can retain title at any time prior to the foreclosure auction by paying the balance owed plus interest due and any other fees due, including the sheriff's fee
statutory right of redemption
the borrower has the right to redeem the property after the foreclosure has been completed
Dodd-Frank Wall Street Reform
- prohibits certain predatory lending practices in the mortgage finance industry.
- extending credit to an applicant with little to no income
- packing a loan with insurance and other fees
laws establishing the maximum rate of interest or profit on a loan transaction
a contract between principal parties such as a real estate purchase agreement. By law, both parties are expected to act in their own best interest
law of agency
defines the rights and duties of the principal and the agent. In real estate, these obligations are written in both the contract and state licensing laws
individual who hires and gives the authority to the agent to represent his or her interests (BUYER or SELLER
the individual authorized to represent the interests of the principal. usually the broker of the firm is the agent
licensee within the brokerage firm is the agent
the purpose of the contract is for one party, the principal, to contract with another party, the agent, to act in the principal's best interest. Like a Buyer Representative Contract
gives the agent authority to do anything for the principal that the principal could normally do for himself (agree to contracts, etc.
authority over the regular business activities of a property and property management contract
the rights and obligations of the special agent are specifically laid out as a part of the brokerage agreement.
a licensee who represents both the buyer and the seller (and sometimes landlord and tenant)
Disclosed dual agency
is when the agent represents both sides of the transaction with their knowledge and consent
a salesperson for a broker who is authorized to act as the agent for one of the parties (does not represent all of the firm)
when the broker represents either the seller or the buyer in the transaction Seller agency Buyer agency
when a broker, usually representing the seller, appoints other licensees to assist in the sales duties and perform certain sales activities on the principal's behalf
(nonagent) is usually a licensee who takes part in a transaction as a third party, and is generally paid a fee to perform some service or possibly assisting in the escrow or closing process of the transaction
the selling of a contract to someone else unless there's a prohibitory clause
the substitution of a new contract or person for a previous one
are listings wherein for a stipulated time only one broker may be employed for the purpose of marketing the property.
Exclusive Right to Sell:
This is the most common form of listing used in real estate because it is the listing that gives the broker the most commission protection.
the broker is required to share his commission with the other brokers if the other broker produces a buyer
Exclusive Agency Listing:
This employs one broker as the sole agent for the property for a definite period of time, but leaves with the owner the right to find his or her own buyer without the obligation to pay a commission to the broker.
This is a listing wherein the owner lists the property for sale with one or more brokers and reserves the right to list the property concurrently with as many other brokers as he or she may desire
(only the broker who produced the buyer will receive any commission)
is a listing with a provision that the seller will receive a pre-determined net amount from any sale of the property and any amount over that will be the commission to the listing broker
Multiple Listings arrangement
between a group of brokers, wherein all broker-members of the multiple listing service "pool" their listings in order to give maximum exposure
allows the broker to purchase the listed property. (Must disclose if they plan to resale for profit)
- Oral lessee make them unenforceable
bilateral contract between a landlord (lessor) and a tenant (lessee) setting the terms for tenant occupancy and length
Gross Lease aka fixed:
the tenant pays a fixed amount of rent and the landlord assumes all the expenses (taxes, insurance, maintenance and repairs) of owning the property.
the tenant pay a fixed amount of rent and agrees to pay some or all of the landlord's other expenses as well
the tenant pays a minimum fixed rent and also agrees to pay a portion of business income as additional rent. Retailing
Graduated Leases aka step up
tenant agrees to periodic increases in rent. Graduated leases can be part of either a gross or net lease agreement
allows rent to be increased or decreased periodically based on changes in the government's cost-of-living index
- protects the insured against loss resulting from certain defects in the title, such as forgery or defect in the public record
all title insurance policies are designed to cover all legal costs incurred in defending the title against claims.
Abstract of title
condensed history of all instruments on record affecting the title to the property. Prepared by a title abstractor after researching public records
Attorney's opinion of title
the title attorney examines the abstract for flaws and prepares a written opinion of the condition of ownership. This opinion is used by the title insurance company to determine coverage and premiums necessary
cloud on title
any sort of encumbrance causing issues to the owner's full title or enjoyment to the property
action legal process of bringing suit in court to settle disputes over title, title defects, or to clear clouds
A certificate of title accompanied by the owner's signature is filed with the registrar's office and used to verify future transfers.
the written instruments that transfer title (legal interest) from one party (grantor) to another (grantee).
the decedent's real estate and personal property pass to her or his heirs according to state statute since there was no will in place.
the will (filed with the court and probated to pass title to the devisees) decides what happens to the property, subject to certain requirements of state law.
Type of involuntary alienation. Accumulation of soil/ rock because of water being deposited
Type of involuntary alienation. Sudden tearing away of land bc of water
Type of involuntary alienation. New land exposed as water receded
Covenant of seisin (seizen) -
the grantor has the power and authority of title and has the right to convey that stated interest.
Covenant against encumbrances -
the grantor warrants that the property is free from any encumbrances except those specifically stated in the deed.
Covenant of quiet enjoyment -
the grantor guarantees that the title is good against third parties and that the grantee can fully enjoy the property without interruption from others
Covenant of further assurance -
the grantor promises to obtain and deliver any instrument required to correct and future defects in the title or related instruments.
Covenant of warranty forever
he grantor guarantees that if the title is challenged in the future that the grantor will bear any expenses relative to the future title defense. Highest type of deed
Delivery and acceptance
the moment in time when title rights are actually transferred The purpose of recording a deed is to give public, legal, and constructive notice to the world that the title has been transferred
what you actually know, typically by seeing, reading, or hearing the referenced information if deed goes unrecorded
everyone is held to search and know what's on the public record.
court doctrine that bars a legal claim because of undue delay to assert the claim. In other words, the statute of limitations has expired on making a claim and therefore no further action may be taken
Lis pendens (action pending) -
A recorded document that creates constructive notice that an action, a lawsuit, relating to a specific property has been filed in a court that may affect the value of the property or the right to transfer it. Once filed, any judgment by the court is binding as of the time the action was filed even though the judgment may come at a much later date.
to cancel a contract or legal obligation by putting a new one in its place
Writ of Attachment
writ filed during a lawsuit that prevents the debtor from transferring the property involved in the suit
consideration with a monetary measure of value
Statute of Limitations
laws that limit the length of time within which a party may sue
Statute of frauds
law that requires that certain contracts be in writing before they can be Enforced in a court of law. Contracts for the sale of land and leases of more than one year are generally required to be in writing and signed by all parties.
Quiet Title Action
court action to establish the title rights to a specific property. An example of this process is when there is a cloud on the title and the court action to clear up the disputed title claims. Often the purpose is to establish which parties have what legal rights in the property.
law that states that no prior or contemporary oral or extraneously written agreement can change the terms of a contract. In other words, the document speaks for itself and cannot be altered by oral testimony or explanation.
SELECT TENANTS BASED ON
1. rent-to-income ratio;
2. credit record;
3. rent payment pattern;
4. household size.
Sliding split commission
based on production, where as production increases, the percentage of the commission retained by the broker decreases and the percentage paid to the salesperson increases.
structure where once a salesperson has generated an agreed amount of income to the broker, the salesperson is paid 100% of the commissions.
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