224 terms
Erinh24

NC Real Estate Law & Brokerage Practice

my personal flash cards to study law and brokerage practice for the NC real estate license exam.
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manufactured home
aka mobile home or trailer. personal property that becomes real property when hitch and axles are removed, home is permanently attached and DMV title is canceled. Built to federal HUD building codes. Y3
modular home
never movable by itself; always real property once it has been assembled. Built to NC state building codes. Y3
fructus naturales
"fruits natural" naturally occurring vegetation that does not require annual planting and cultivation (flowering bushes, trees, etc.) Y3
fructus industrialies
"fruits industry" farming; crops that require annual planting and cultivation (corn, wheat, etc). aka emblements Y3
chattel
aka personal property aka personalty; any personal effects that are not real; movable; use a bill of sale to transfer ownership Y3
fixture
an item that used to be personal property but has been permanently attached to real property
related: trade fixtures, agricultural fixtures Y3
IRMA
Total Circumstances Test - is it real or personal?
Intent of person attaching item (is it supposed to be temp?); Relationship of attaching person (owner or tenant?); Method of attachment (removal causes damage?); Adaptability (has property or item been altered to work together) Y3,4
trade fixtures
items attached to real property by a tenant under a commercial lease; personal property of the tenant ex. refrigeration, sink, shelves
if not removed by end of lease, it becomes real property of the owner Y4
agricultural fixture
items attached to real property by a tenant under a farm lease; becomes real property when attached and remain when tenant leaves Y4
UCC
Uniform Commercial Code
if personal property is purchased on credit, it remains personal property until paid off (ex. new furnace or kitchen); creditor can still come and remove it if buyer defaults Y4
fee simple
aka fee simple absolute; absolute ownership with no time limit; highest form of estate; only form of real estate that agents are authorized to sell. Y5
freehold estate
ownership that lasts at least a lifetime
related: fee states, nonfee estates Y4
nonfreehold estate
possessor does not own the property; possession does not last a lifetime (ex. lease) Y4
estate
an interest in real property that includes a present or future right of possession
related: freehold estates, nonfreehold estates Y4
subjacent support
right to have surface property supported from beneath Y9
lateral support
right to have adjacent property support the natural boundaries of the land Y9
subsurface rights
aka mineral rights; right to use the space below ground level and to extract natural resources Y9
air rights
right to air above the land itself Y9
avulsion
sudden loss of land due to force of nature like hurricane or flood Y9
erosion
gradual reduction in land due to water action Y9
reliction
gradual increase in land by permanent recession of body of water Y9
accretion
increase in land due to gradual accumulation of soil Y9
foreshore
strip of land between high and low tide lines; owned by state of NC Y9
water ownership
no tide non-navigable bodies of water - land owner owns to center of body of water
no tide navigable bodies of water - land owner owns to water's edge
oceans and lakes with tides - landowners owner to water's edge
foreshore - state of NC owns Y9
appurtenance
a right or privilege that goes with the ownership of the land B18
riparian rights
the right of landowners on a shore of a river, stream or lake to use the water (swim, boat, fish, etc) Y9
littoral rights
the right of landowners on a shore of an ocean or a large lake with tides to use the water (swim, boat, fish, etc) Y9
real property
land, improvements to the land, improvements on the land, and rights inherent to the land Y3/B619
categories of real property
Residential - housing
Commercial - businesses
Industrial - factories
Agricultural - farming
Special Purpose - government, churches, cemeteries, etc B9
provisional broker
a real estate licensee who performs real estate activities under the supervision of a licensed broker-in-charger B618
broker
a licensed agent who negotiates the sale, purchase or rental of property on behalf of others for a fee or commission B604
land
Earth's surface, below the surface to the center of the Earth, above the surface to infinity; immobile, indestructable, and unique (uniqueness=heterogeneity) B2
encumberance
any right or interest in land which normally diminishes the value of the estate Y10
lien
right to collect a debt out of someone else's real property Y10
general lien
a lien against someone's current and future real and personal property Y10
judgment lien
a general lien owed as a result of a judgment imposed by a court of law; becomes valid when judgment is docketed; valid for 10 years; should be attached in the county where the property is located Y10
docketed
when a judgment is entered and indexed in a judgment book at the county courthouse Y10
specific lien
a lien against a specific piece of real estate Y10
mortgage or deed of trust
a specific lien on a piece of real estate used as collateral for a loan Y10
IRS lien
a general lien owed to the federal government Y10
NC Dept of Revenue lien
a general lien owned to the state of NC Y10
personal property tax lien
a general lien owned on personal property Y10
mechanic's lien
a specific lien for failing to pay a contractor or subk for services performed on a property; must be filed within 120 days of the last day that labor/materials were furnished; valid from first day labor/materials were furnished Y10
special assessment lien
a specific lien for failing to pay for a special assessment (improvement) on the land Y10
real property tax lien
aka ad valorem tax lien; a specific lien for taxes to the county and/or city in which property is located Y11
ad valorem
amount of tax varies in accordance with the value of the property being taxed B49
Machinery Act
governs standards for real estate property taxation, tax assessment, tax appraisal and requirements for tax-exempt status B49
octennial reappraisal
real property is reassessed for ad valorem taxes every 8 years
horizontal adjustement
every 4 years between octennial reappraisial in which ALL property within a county/city can be adjusted up/down by a percentage. may or may not happen Y11
easement
a right or privilege one entity has in the land of another related: appurtenant easement, easement in gross Y11
appurtenant easement
an easement that runs with the land itself; continues indefinitely, transfers with title Y11
dominant estate
land that receives the benefit of the easement Y11
servient estate
land that has the easement attached to it Y11
easement in gross
an easement granted to a person or entity for a lifetime; is void when entity ceases to exist Y11
prescriptive easement
easement acquired through adverse use. Related: adverse possession Y11
restrictive covenants
aka protective covenants, deed restrictions; a private restriction which limits use of real property; are private land use controls and must be enforced in a civil court Y12
defeasible fee estate
may be lost on the occurrence or nonoccurence of a specified event; aka qualified fee estate; related: fee simple determinable, fee simple subject to a condition subsequent B26
fee simple determinable
requires that a specified activity or land use continue; if owner no longer uses the land for that purpose, ownership reverts automatically back to original owner (ex. Land can only be used for church purposes) Y5
fee simple subject to a condition subsequent
states what action or activity that an owner cannot perform; if owner performs that action, former owner can retake possession through court proceedings (ex. Do not sell alcohol on property) Y5
pur autre vie
estate for the life of another; one person is given the right to use the property as long as another person is alive; can use estovers of the land, must pay ad valorem taxes and interest on pre-existing loans; entitle to all income and property arising during the life tenancy (ex. A daughter-in-law live in a house as long as grandchildren are alive) Y5
life estate
a freehold estate in which a tenant has the right to a certain property for his/her lifetime; at death the property reverts to original owner or passes to a remainder man Y5
estovers
"leftovers" of the land. Life estate tenants live off the land but cannot do anything to waste the life estate (ex. Use wood, but not sell timber rights); Y5
nonfreehold estate
temporarily transfer possession, not ownership. Have a definite end period at some point; aka leasehold estate Y6
estate for years
has a definite term with a beginning and end date; terminates automatically without notice ex. Hotel room, beach house rental Y6
estate from year-to-year
aka periodic tenancy; tenancy of indefinite duration; automatically renewed; notice must be given to terminate this tenancy ex. Renting an apartment Y6
notice required to terminate periodic tenancy
week-to week tenancy - 2 days notice; month-to-month tenancy - 7 days notice; year-to-year tenancy - 30 days notice; leases for longer than 30 days require 30 days notice of termination Y6
estate at will
tenacy at both the pleasure of the landlord and tenant; normally on a friendly basis and either party can terminate at any time without notice Y6
estate at sufferance
tenant entered into the estate lawfully, but now retains possession unlawfully; possession is on a hostile basis and eviction is required to terminate ex. refusing to leave a rented house Y6
severalty
sole ownership; ownership by only one person or entity Y6
concurrent ownership
ownership by more than one person or entity Y6
tenancy by the entireties
exists only between husband and wife; survivorship always exists automatically Y7
tenancy in common
two or more people who are not married; survivorship can not exist; each owner may encumber has part of the property; each owner has the right to force a division of the property by asking for a partition on the property Y7
joint tenancy
owners have equal undivided interest that they acquired at the same time; can be joint tenants with the right of survivorship; normally exists for same-sex couples or couples planning to be married; Y7
NC Condominium Act
in effect for all condos created on or after October 1, 1986; developer records: a) declaration with a description at the register of deeds b)detailed plat giving physical description of the complex c) a set of bylaws to provide for internal management of the unit owners Y8
consumer protection provisions of nc condo act
a) purchaser of a new condo with a copy of a public offering statement before sales contract can be signed b) purchaser of a new condo has the right to cancel within 7 calendar days c) purchasers of a resale condo must be given a resale certificate stating the monthly common expense assessment and any other fees Y8
townhouse ownership
owner owns individual unit, including shared walls and the land underneath; pay monthly dues to the homeowner's association and maintains the common areas Y9
cooperative ownership
owners own shares of stock in a corporation that owns the entire property; have a stock certificate as evidence of your ownership and owners lease units within the cooperative; have a proprietary lease Y9
voluntary alienation
voluntarily transferring title by deed through a sale or gift; deed is tangible evidence of title to real estate Y12
grantor
the seller that gives the deed Y12
grantee
the buyer that receives the deed Y13
devise
when one gives a title to real property in a will Y12
bequeath
when one gives a title to personal property Y12
testate
a person dies with a last will and testament Y12
intestate
a person dies without a last will and testament Y12
intestate succession law
tells how property will be distributed if you die intestate Y12
involuntary alientation
giving up title to real estate involuntarily Y13
lien foreclosure sale
occurs when one defaults on a loan or fails to pay property taxes Y13
adverse possession
occurs when a person occupies another's property for the statutory period (7 years if possessor has color of title; 20 years otherwise) related: OCEAN Y13
OCEAN
Open (well known); Continuous (uninterrupted); Exclusive (not shared with another); Adverse (intent to take land); Notorious (hostile, no permission by owner) B77
escheat
occurs when state takes title to real estate because there are no heirs Y13
eminent domain
the state's power or right to take private property Y13
condemnation
the state uses eminent domain and actually takes title of private property and pays fair compensation Y13
police power
the right of the government to restrict the uses of private property in order to promote the health, safety and welfare of the general public Y13
illegal use
a use that is in direct violation of an existing zoning ordinance. Can be detected and punished at any time Y13
nonconforming use
when existing land use does not conform to a new zoning ordinance but is allowed to continue under a grandfather clause; normally cannot expand, enlarge or improve the use Y13
lis pendens
a recorded notice informing all interested parties that a legal action has begun which may affect the title of a real property Y12
encroachment
an improvement that extends across the boundary lines of a property without authorization and encroaches on an adjacent property; the only encumberance not discovered by a title search Y12
variance
allowing an individual to deviate from normal zoning ordinances if they can prove undue hardship Y14
special use permit
aka conditional-use permit; allows a particular property to be used for a special purpose which is in the public interest ex. church or hospital in a residential area Y14
spot zoning
when a parcel of real estate for special zoning that is inconsistent with zoning in the area; illegal Y14
building codes
specific requirements with respect to the construction of buildings to make them safer; NC codes are less stringent than federal (HUD) codes Y14
bulk regulations
building restrictions that apply to all property in an area (ex. Minimum setback from street) Y14
subdivision ordinances
city and county laws that govern the development of land including streets, water, sewage and parks Y14
street status disclosure
requires sellers to disclose whether neighborhood streets are public or private; a material fact Y14
interstate land sales full disclosure act
a sellor or lessor of 25 or more lots of unimproved land is required to file a statement of record with HUD and to provide each purchaser or lessee with a printed property report disclosing pertinent information at least 3 days before contract creation Y15
deed
a written instrument that transfers an interest in real property from the grantor to the grantee
closing
the moment when the deed is actually recorded at the register of deeds Y15
required elements of a deed
1. must be in writing 2. grantor must be true owner of the real estate 3. both grantor and grantee must be named in the deed 4. property must be adequately described 5. language in deed must be adequate to show conveyance 6. the grantor must sign the deed 7. deed should be delivered by the grantor and voluntarily accepted by the grantee Y15
general warranty deed
grantor promises to defend the title forever against anyone making a claim; includes from original title Y16
special warranty deed
grantor promises to defend the title against anymore making a claim covering the time the seller actually owned the property Y16
quit claim deed
releases the person who signs it from any interest that he/she may have the property; used to remove a cloud on title Y16
trustee's deed
given by trustee at a deed of trust foreclosure sale Y16
sheriff's deed
given at execution sale for a judgment against the property owner Y16
tax deed
given at a tax foreclosure sale Y16
deed of gift
used to give a gift of real property; must be recorded within 2 years to be valid Y16
timber deed
used to transfer timber rights Y16
mineral deed
used to transfer subsurface rights Y16
covenant of seisin
part of a general warranty deed in which grantor warrants that he/she is the legal owner of the property and has the right to convey title B67
devisee
a person who receives real property by will B78
beneficiary
a person receiving personal property by will B78
marketable title
title must be: 1. free from any significant liens and encumberances; 2. disclose no serious defects; 3. be free of doubtful questions regarding validity; 4. protect a purchaser from any threat of quiet enjoyment; 5. convince a reasonably well-informed person that it could be sold or mortgaged at fair market value B78
title search
examination of all public records that might affect a title B78
chain of title
shows the record of ownership of the property over a period of time B78
abstract of title
condensed history of the title B79
marketable title act
provides that if a chain of title can be traced back for 30 years and no other claim has been recorded during that time B79
title insurance
a contract by which a title insurance company agrees to indemnify (compensate) the insured against any losses sustained as a result of defects in a title B79
ALTA
American Land Title Association policy - extended title license insurance policy to cover risks that may be discovered only through inspection of the property B78
Connor Act
state law that provides that many real estate documents are not valid as to third parties unless they are recorded; pure race state - first one to record the deed prevails B82
ETJs
extra-territorial jurisdictions; allows a municipality to regulate development in areas adjacent to, but not within, the corporate limits (1 to up to 3 miles) B89
overlay district
a type of zoning that is superimposed over another type of zoning ex. a residential flood plain B91
historic preservation zoning
to preserve historic buildings and sites that are irreplaceable
aesthetic zoning
when an area is zoned strictly for aesthetic or appearance considerations B91
subdivision
all divisions of a tract or parcel of land into two or more lots, building sites or other divisions for the purpose of sale or building development B92
plat map
a map of the subdivision indicating the location and boundaries of individual properties B617
subdivision process
initial planning stage - analyze property for highest and best use; final planning stage - final plans are approved, budgets prepared; start-up stage - carries the subdividing process to a conclusion B95
CO
certificate of occupancy - given by the building inspectors once completed structure has been inspected and found satisfactory B96
flood hazard areas
areas bordering on rivers and streams which are subject to federal regulations concerning improvements and construction in those areas; required to have flood insurance if federally related mortgage is used B96
laches
the loss of a right through undue delay or failure to assert it B98
metes and bounds
a type of property description in which a surveyor begins at a readily identifiable point of beginning and describes the boundaries of a property through a series of calls (direction and distance between landmarks or monuments); must return to POB Y16
townships
aka government survey; a type of property description in which each township contains 36 equal sections of land which are 1 mile long and 1 mile wide; not used in NC Y17
references to a recorded plat
a type of property description uses a subdivision lot number and page number of a map book in the courthouse to describe real estate Y17
reference to a prior recorded deed
a type of property description that makes reference to a deed that has already been recorded for the property (prior deed should have metes & bounds desc) Y17
informal reference
a type of property description that only uses a street address or house number to describe the property; acceptable use for a lease but not to convey ownership; should be combined with a reference to recorded plat Y17
excise tax definition
aka revenue stamps/deed stamps; a deed transfer tax paid by the seller; is required to be noted on a deed by state law B610
MLS
multiple-listing service; when brokers share information about properties they have listed B105
caveot emptor
"let the buyer beware" - sellers do not have to disclose any facts about the property being sold. NC is a caveot emptor state B605
broker-in-charge
the full broker responsible for notifying the NC Real Estate Commission of changes, maintaining the trust account; maintaining all transactions properly and supervising all provisional brokers; required for each brokerage firm and branch office B605
lease
a contract that temporarily transfers possession of real estate but not ownership Y18
gross lease
tenant pays fixed rent; landlord pays taxes, maintenance, insurance, principal and interest on any mortgage loan Y19
net lease
tenant pays fixed rent plus some or all of the taxes, maintenance and insurance; landlord pays interest and principal on any mortgage loan Y19
ground lease
tenant pays ground rent plus taxes, maintenance and insurance and builds his/her own building on the property and pays interest and principal on any building loan Y19
fixed lease
aka flat lease; rent is set at a fixed amount for the life of the lease Y19
graduated lease
rent automatically increases at pre-set intervals Y19
precentage lease
tenant pays a minimum monthly base rent plus percentage of gross sells over a certain amount (often used in commercial leases for shopping centers) Y19
index lease
aka variable lease rent automatically increases or decreases according to some index such as the cost-of-living index Y19
full service lease
rent includes all expenses of the occupancy because landlord provides everything such as utilities, cleaning, etc Y19
actual eviction
aka summary ejectment; landlord evicts tenant for breaching the lease Y19
constructive eviction
when the landlord breaches the contract and the tenant leaves voluntarily; ex. landlord doesn't provide adequate heating Y19
NC residential rental agreement act
1. landlord must provide fit premises, comply with business codes, keep common areas safe, provide smoke detectors 2. tenant must keep leased premises fit and safe and not damage or remove property 3. tenant cannot be evicted by landlord for up to 12 months in retaliation for asserting legal rights Y20
self help eviction
taking an action to force a tenant out of the property (change the locks, turn off utilities, impound tenant's personal property, etc); is illegal in NC Y20
NC tenant security deposit act
1. must be placed in trust account in an insured NC bank or landlord must be bonded (if landlord is a licensee, deposit must be in trust acct); 2. can only be used for non-payment of rent, damages, unpaid bills; cost of rerenting or court costs; 3. tenant must be given itemized statement within 30 days Y20
maximum security deposit amounts
week-to-week - 2 weeks rent
month-to-month - 1.5 months rent
leases longer than month-to-month - 2 months rent Y21
pet fees
can be non-refundable and must be "reasonable". service animals (ex. seeing-eye dogs) cannot be charged pet fees Y21
NC vacation rental act
applies to short-term recreational rents for less than 90 days when the primary residence is somewhere else; provides for expedited evictions and addresses mandatory evacuations; if property is sold, new owner must honor rentals scheduled for next 180 days Y21
law of agency
aka common law; body of law that governs the relationship that exists between agents and principals Y21
agent
party who represents and acts on behalf of the principal in a real estate transaction under a brokerage contract; it is always the firm, not the individual licensee Y21
fiduciary
one in whom trust and confidence is placed; reference to a principal-agent relationship B610
principal
aka client; person who hires agent to represent him/her in a real estate transaction Y22
customer
aka third party; persons in real estate transaction who does not contract with and is not represented by the agent Y22
subagent
one who is employed by a person already acting as an agent; has the same duties to the client as the agent (ex. all individuals working for the same firm); unless contracted as buyer's agent, agents are subagents of the seller Y22
brokerage (agency) contract
it creates the agency relationship and establishes the scope of the agent's authority to work on client's behalf; every agreement except certain buyer agency agreements must be in writing from the time of the formation; must be for a definite period and terminate without notice Y22
buyer agency agreement
can be oral if there is no time limit on the agreement; must be in writing with a time limit if it is an exclusive agreement or no later than presentation of the first offer Y22
universal agency
agent is authorized to handle all of the principal's business under a power of attorney; real estate firm will rarely be one Y23
general agency
agent is authorized to perform a broad range of acts in connection with the principal's business; many property managers are general agents Y23
special agency
agent is authorized by a principal to do one or more specific acts according to detailed instructions; does not have the authority to bind the client; typical real estate contracts are this Y23
seller agency
the firm and employees represent only sellers in real estate transactions Y23
buyer agency
the firm and employees represent only buyers in real estate transactions Y23
single agency
when firm and employees represent only the buyer or only the seller in a particular transaction Y23
dual agency
when firm and employees resent both the buyer and seller in the same real estate transaction; need informed written consent of the seller and informed written consent of buyer before offer is presented; agent owes fiduciary duties to both buyer and seller equally; undisclosed dual agency is always illegal Y24
designated agency
a type of dual agency in which the BIC appoints one licensee to represent only the seller in a particular transaction and appoints another licensee to represent only the buyer; cannot share confidential information; each principal gets better representation Y24
working with real estate agents brochure
a brochure to be presented to consumer at first substantial contact explaining agency options (buyer/seller); ask consumer to sign and agent must keep on file for at least 3 years; if FSC is over phone, mail to consumer within 3 days Y25
first substantial contact
the time when the licensee's discussion with a buyer begins to focus on the buyer's specific property needs and desires or on his/her financial ability; anything that can be used against the buyer during negotiations; auctioneers are exempt Y25
LOADS
agent's duties to the principal:
Loyalty - agent must represent the best interests of the principal
Obedience - agent must obey the lawful instructions of the principal in accordance with the contract
Accounting - agent must maintain accurate records of all funds that relate to the principal
Disclosure - full and prompt disclosure of all material facts to the transaction and may affect the rights and interests of the principal
Skill, Care and Diligence - agent should have higher than average skill and expertise in real estate matters and use the skill on the principal's behalf Y26
agent's duties to 3rd party
Honesty and fairness - must be honest with all parties in the transaction
Material statement of fact - must disclose all material facts to all parties in the transaction Y27
willful misrepresentation
agent has actual knowledge of a material fact and intentionally lies about it B126
willful omission
agent has actual knowledge of a material fact and intentionally keeps his/her mouth shut regarding it B128
negligent misrepresentation
agent unintentionally misinforms regarding a material fact because they have no actual knowledge or have incorrect information B127
negligent omission
agent has no actual knowledge of a material fact but should reasonably have known of such a fact B128
puffing
opinion statements that exaggerate a property's benefits B125
principal's duties to agent
good faith - principal must cooperate with the firm
compensation - principal must assure compensation Y28
material facts in NC
presence of leaking polybutylene pipes even if repaired or replaced; use of synthetic stucco siding even if replaced; use of property as a meth lab; structural defects, pending zone changes, inoperative appliances, issues with: wiring, plumbing, drainage, percolation Y27
non-material facts in NC
stigmatized properties - death or crime that occurred on property; haunted house; sexual predator in the neighborhood; mere presence of mold Y27
tort
a wrongful act, injury or violation of legal right to a person or property of another; references when an agent does this while acting for the principal B623
contract
an agreement between two or more competent parties to perform or abstain from performing an act that is supported by legal consideration (something of value, usually money) Y29
classes of contracts (9)
express; implied; unilateral; bilateral; executed; executory; valid; void; voidable Y29
express contract
a contract that is stated in words, oral or written Y29
implied contract
a contract that is suggested from the conduct of the parties showing intent of contract (ex. neighbor paints a fence for another neighbor, implies payment/consideration) Y29
unilateral contract
a contract involving a promise on the part of one party if another party does something. only one party is obligated to act. ex. a real estate firm promises to pay a $5,000 bonus to all agents who close at least 4 sales in one month Y29
bilateral contract
a contract in which a promise is made by one party in exchange for a promise by another party. both parties must act. most real estate contracts are bilateral Y29
executed contract
a contract that has been performed in full. executed may also mean that a contract has been signed Y29
executory contract
a contract that has not been fully performed ex. a signed real estate contract in which the transaction has not been closed Y30
valid contract
a contract that satisfies all legal requirements and is fully enforceable in a court of law Y30
void contract
a contract that is not enforceable in a court of law. one of the parties must disaffirm the contract to make it void. ex. selling a home orally is legal, but is unenforceable as it's not in writing Y30
voidable contract
a contract in which performance can be voided by one of the parties based on some legal principal ex. a minor and adult make a contract and the minor can get the contract voided Y30
essential elements of a contract (5)
mutual assent - offer and acceptance, meeting of the minds, mutual agreement
consideration - anything bargained for and given in exchange for a promise
capacity of the parties - parties must be adults, sane and in their right minds
lawful objective - no illegal or immoral performance
certain contracts must be in writing; see statute of frauds Y31
mail box rule
the postmark date is considered to be the date that the contract is actually communicated if the addressee is the other party in the transaction Y30
offer termination conditions (7)
revocation or withdrawal by the offeror
rejection by the offeree
seller's response to buyer's offer form (rejection of offer)
a counteroffer
lapse of an unreasonable time period
an event that destroys the property
death of either principal Y31
statutes of fraud (definition)
states that certain contracts must be in writing in NC to be valid and enforceable Y31
statutes of fraud (required contracts)
any contract for the sale or conveyance of real property
any contract lasting longer than 3 years from the making
any contract not to compete in a certain business
any contract promising to pay debts for someone else
any contract promising to repay debts after bankruptcy options to purchase real estate Y31
UETA
Uniform Electronic Transaction Act (UETA). contracts can be created electronically and an electronic signature is binding; no court case has tried to test the enforceability of this act Y32
legal remedies for contract breach (3)
money damages, specific performance, rescission Y33-34
money damages (3)
compensatory damages - money to make injured party whole
consequential damages - punitive damages, damages for possible gains
liquidated damages - a specific amount determined in advance (ex. earnest money, tenant security deposit) Y33
specific performance
injured party can sue based on the uniqueness of the land Y34
rescission
returns the injured party to his/her original positions prior to signing the contract; usually granted when it can be proved there is no 'reality of consent' Y34
types of listing contracts (3)
exclusive right to sell - one firm is guaranteed to receive a commission, regardless of who brings in a buyer
exclusive agency listing - firm gets commission if they find buyer; owner can sell house him/herself
open listing - whoever brings in a buyer, gets a commission Y35
heated living space
adequate heated by permanently installed heating system, finished to generally acceptable standards, directly accessible from other living areas; stairs count on both levels and you can walk on it Y37
termination of listing contracts
death or insanity of owner; dissolution of the brokerage firm; death or insanity of individual broker working alone; destruction of the property; breach of the contract; property is sold and transaction is closed Y37
offer to purchase
an offer by a prospective buyer of real estate Y38
sales contract
aka purchase contract; an offer to purchase that has been accepted by the offeree Y38
due diligence period
allows the buyer to fully investigate the property, negotiate any repairs, apply for necessary funding, order an appraisal and survey, etc. buyer may pay seller a non-refundable due diligence period fee Y39
cash sale
means seller will receive the full price as stated in the sales contract less his/her closing expenses even if the buyer needs a loan for the financing Y40
installment land contract
a property is sold with seller financing; seller retains legal title and the deed to the property until all of the purchase price is paid; buyer doesn't receive deed until the property is paid for; if buyer defaults, buyer loses property, seller has cloud on title Y41
option to purchase
a contract that gives one person the right to buy or lease a specific property at a specific price for a specified period of time from the owner Y41
property management limitations (4)
1. cannot make capital improvements to the property
2. cannot pay owner's income taxes
3. cannot establish the depreciation schedule to be used
4. cannot reinvest profits for the owner Y43