Upgrade to remove ads
Terms in this set (70)
the physical land and all permanent attachments
legal interest in land and all permanent attachments
a legal interest in other types of physical property (cars, furniture, clothing, electronics)
personal property that becomes permanently attached to a structure on land and are transformed into real property
Test for a fixture
test of intent- what is the intent of the involved parties
test of attachment- removal of item will leave the property damage
test of adaptability- item was specifically designed for use in a given space
trade fixtures- items of personal property brought into a structure for the purpose of running a business always remain personal property
legally, property rights are considered to include the following specific rights:
possession, use, enjoyment, disposal
interest in real estate
the degree to which one party has control over a parcel of real estate
estates in land
collections or bundles of property rights
freehold estates (ownership interests)
leasehold estates( rental, leased interest)
free simple Estates
the most common and complete form ownership. other than restrictions imposed by government, there are no other limitations or conditions on ownership
qualified fee estates
the ownership is conditional and if a stated condition or event comes to pass the owner could lose his right to the real estate
an ownership interest that is tied to the lifetime of a specified person. life estates are often used as a way to set up property inheritance across generations
grantor/fee simple->B(life estate)->c (life estate)
ownership interest in real estate tat exists along side a qualified fee estate. If the stated event or condition comes to pass, the person hold the reversionay estate has the right reclaim the property
the last person in a string of life estates. the person regains the same property rights that the initial grantor held
estate for years
the most common type of leasehold estate. it creates an exact duration of tenancy
estate from year to year
this type of leasehold estate specifies a duration of tenancy, but it automatically renews in successive periods unless either party gives proper notice of intent to terminate
Estate at will
created when a landlord consents to the possession of the property by another person without any agreement as to the payment of rent or the terms of tenancy
estate at sufferance
occurs when the tenant holds possession of the property without consent or knowledge of the landlord after the termination of one of the other three estates
governmental Restrictions on ownership
police power, taxation, escheat, eminent domain
deed restrictions, encumbrances: liens, easements
claim against a property that arises from indebtedness not related to property ownership
claim against property related to indebtedness due to ownership of that specific collateral.
taxes, mortgage, mechanic's lien
two or more parcels of land bound together in a real estate interest that "runs with the land" for future generations
Easement in Gross
an interest by one person in the real estate of another; only good for that specific parcel of land
a term that links a particular person as owner of a particular property
the written instrument used to covey title from one person to another
general warranty deed
the most common and desirable form of deed(sometimes simply referred to as warranty deed). contains the following covenants: covenant of seizin, covenant of quiet enjoyment, covenant of further assurance , warranty forever
covenant of seizin
owner has the right to the property that he claims to have as well as the right to convey title
covenant of quiet enjoyment
nobody exists with a higher claim to the property than the new owner
covenant of further assurance
the seller is legally bound to assist the buyer with future issues related to the quality of title
all past owners are bound by the covenant of further assurance
Special warranty deed
essentially the same as the general warranty except only the most recent owner is bound by the covenants ( in other words, there is no "warranty forever")
conveys whatever rights, interests, and title that the seller(could be none) has to the buyer. No warranties are made about the nature of these rights and interests or of the quality of the title to the property.
the means by which buyers of real estate seek out evidence that the owner has the rights the property that he claims to have as well as the right to convey ownership. the seller will also arrange for compensation if a flaw in the title becomes known after closing.
abstract of title
a historical summary of the publicly recorded documents that affect a title
laws enacted on the state level to establish a procedure for placing on file and maintaining documents regarding claims to real estate interests.
the means by which buyers of real estate seek out evidence that the owner has the rights to the property that he claims to have as well as the right to convey ownership. the seller will also arrange for compensation if a flaw in the title becomes known after closing
abstract of title
a historical summary of the publicly recorded documents that affect a title
laws enacted on the state level to establish a procedure for placing on file and maintaining documents regarding claims to real estate interests. This usually involves going to the county courthouse to record claims such as deeds, mortgages, liens on real estate, land contracts, long-term leases, easements, restrictive covenants, and options to buy
abstract and opinion methods
first, there is a search of all public records affecting title on the property. second, a lawyer will examine all the documents and render an opinion on the character of the title
title insurance method
follows the same two first steps as the abstract and opinion method but goes one step further to allow the buyer to purchase the right to be compensated for loss that could occur in the future due to a flaw in the title. usually the lender's title insurance policy is required while a buyers title insurance policy is merely recommended.
a loan agreement acknowledging indebtedness and promise to repay. the promissory note sets out the terms and conditions of the loan.
components of promissory note
amount borrowed, rate of interest, maturity date
dollar amount, due date, and number of payments to be made by the borrower
reference to the real estate serving as security for the loan as evidenced by a mortgage document
the way in which payments are used to meet obligations: usually to late fees, then to interest, then to principal
occurs when borrower fails to perform one or more covenants under the terms of the note. it usually occurs because of nonpayment of amounts due.
penalties for late payments
specified grace periods in which late payments can be made up without lender declaring that lender is in default. lender does not give up right to declare default.
used by lenders when they believe borrowers will make up late payments. they believe that benefits from this course of action will exceed the time and the expense of declaring the loan and embarking on foreclosure proceedings and, perhaps, forcing the sale of the property.
governs the consequences of early repayment- prepayment penalties are common in commercial loan
any breech of contract by the borrower an trigger the request for full repayment of the outstanding loan balance
non recourse clause
provision under which the lender will not hold the borrower personally liable for default- most commercial loans are non-recourse but residential loans have full recourse
loan assumption clause
indicates under what conditions another borrower could take over the existing loan
this gives the lender the right to sell the note to another party without approval of the borrower
Release of lien by lender
lender agrees to release the lien on the property when the loan is fully repaid
a security agreement giving the lender certain rights to real estate pledged as collateral in the event of default
fund for taxes and insurances
the mortgagor will usually have property tax, fire and casualty insurance, and mortgage insurance premiums bundled in with his loan payments. the funds will be placed in escrow or trust and paid by the mortgage (lender)
the mortgagor is required to have adequate insurance coverage against loss or damage due to fire, windstorms, hail, explosion, smoke etc. in some areas flood or hurricane insurance may also be required.
charges and Liens
the mortgagor is required to make payment on any taxes, assessments, and claims against property that could have priority over the mortgage
preservation and maintenance of the property
the mortgagor is required to keep the property in good condition and not to engage in any behavior destructive to the property
the mortgagor is required to pay the outstanding loan balance immediately upon transfer of title
Borrower's Right to Reinstate (Equity Right of Redemption)
the mortgagor can reinstate the original terms of the loan and end foreclosure proceedings at any time up until the point that the property is sold at auction. The mortgagor will have to do the following:1.Pay all sums that would have been due to that date if no acceleration clause had been triggered.2.Cure default of any other covenants or agreements.3.Pay all expenses incurred by the lender in enforcing the mortgage.4.Take any action necessary to ensure that the lender's rights in the property have not been altered.
Restructuring the loan
lower the interest rate
extend the amortization period
accrual of the interest
Transfer the mortgage to a new owner
this is also referred to as purchasing the property "subject to" the existing mortgage.The buyer purchases the property for some small amount of money up front and agrees to make payments on the existing mortgage, but the seller remain liable for the outstanding balance of the loan.This is a good deal for a buyer and is sometimes used by investors who want to limit the amount of cash tied up in a property they do not intend to hold in their portfolio.This is a risky deal for the seller who remains liable for the debt but does not possess the property.
alternatives to foreclosure
The potential payout to an investor purchasing property subject to the existing mortgage (ignoring any monthly carrying costs to simplify the problem) resembles the payout for a call option in finance.
when the lender allows the borrower to sell the property for less than the outstanding balance due on the mortgage. the lender must believe it will net more money from the short sale than it would by foreclosing on the property
judicial foreclosure, foreclosure by advertisement
Borrowers who can no longer meet their mortgage obligation may be able to simply convey title to the lender rather than face foreclosure. The process of voluntary conveyance is also known as deed in lieu of foreclosure
The borrower submits to the jurisdiction of the court and waives any right to assert defense against foreclosure.
The borrower agrees with the creditors to the terms on which they will turn their assets over to fulfill their debt obligations prior to bankruptcy proceedings in court.
Lender sues on the debt, obtains judgment, and executes the judgment against the property of the borrower. The lender will obtain a decree of foreclosure and sale on the property announcing that the property is under foreclosure and will be for sale by auction on a certain date. The lender gets the proceeds and if there is a balance after covering the amount due to the lender, the borrower will get the remaining funds. Pros: Everyone involved gets a chance to have their side represented.Cons: Slow and expensive
Foreclosure by Advertisement
A judgment is not needed to foreclose on a property. The lender simply advertises for a statutory period of time that the given property is being foreclosed and will be up for auction on a certain date. Pros: Quick and inexpensiveCons: If the borrower wants to contest the foreclosure, he has to go before a judge to get an injunction.
Statutory Right of Redemption
Allows the original owner to buy back the property after foreclosure proceedings are complete. This right must be established by state law, and each state governs the length of time to exercise this right. The owner would need to pay the bid price at auction plus the cost of any improvements to the property since the sale plus a 10% premium. A quitclaim deed might be used to have the original owner sign over his rights to the property (his right of redemption) to the new owner.
YOU MIGHT ALSO LIKE...
Real Estate Investments - Lipscomb - EXAM I
Real Estate Finance and Investments
OTHER SETS BY THIS CREATOR
operations management mid term
OTHER QUIZLET SETS
Biology Test 6
World History Final (Imperialism)
AP US HISTORY: Fritz Ch 10