-something that can be owned

-rights and interests in what is owned

-2 categories: real & personal

-immovable property

-ownership carries w/ it bundle of rights

1.Control

2. Possession

3. Use

4. Disposition

(C-PUD)

-personal property can be come real property if attached to the land in such a way as to become these.

ex. naturally growing crops which replenish themselves (fruit trees) are considered real prop. Grow out of the land & are attached by roots.

Method of Attachment

Adaptability of the item

Relationship of the parties

Intention

Agreement between the parties

(MARIA)

-items incidental to the land

ex. Covenants, Water Company Stock, Water rights, Mineral rights & Easements

-addt'l thing that runs w/ or is sold w/ the land.

-doesn't exist apart from the land to which it belongs

-the private taking & use of public property.

ex. water rights from a river or a lake

-rights of a landowner to water flowing adjacent to his/her land w/in the normal activities of a stream or river.

Riparian- (R)- River

-rights a landowner to water abutting their land; a shoreline

ex. ocean or lake

-movable property

-aka chose

ex. Emblements, Leasehold Estates

-tenant's crops growing & produced annually through labor & industry

-replanted every year

-personal property

-when fruit is removed &/or sold- considered personal property too.

-called Chattel Real

- personal property

-concept tells how long someone whas interest in the prop. & what kind of interest it is

-2 types: Freehold & Less-than Freehold estates

-held by: tenants renting apt. & owners living in condo

-inv. some kind of ownership int. in prop.

-3 types:

Fee simple Absolute

Fee Simple Defeasible

Life Estate

highest degree of ownership

indefinite period of time

Grantor A conveys to B for life of C.

B has right to use, possess, can sell, lease, or encumber estate.

upon death of C, it reverts back to original owner

-inv. leasing or renting int. in the prop.

-inv. rights of tenants who rent or lease prop.

-considered personal property

-the Lessor in the lease

-has parted w/ the right of exclusive possession during the existence of the lease.

-known as chattel real

-considered personal property

-lease which cont's for definite period of time fixed in advance, as agreed btwn landlord & tenant.

-could be less than 1yr

ex. 6 months

-continues for certain periods of time as agreed btwn landlord & tenant.

Most commonly found type is:

Month to Month (M/M) tenancy

-tenant has rightfully come into possession of the prop. but remains in possession after the expiration of the term.

-Tenant holds estate at sufferance.

-method of holding title

types:

Ownership in severalty

Joint tenancy

Tenancy in common

Community property

-owned by 2 or more pers.

-jointly & equaly owners of undivided interest in real property

-to create must have: Time, Title, Interest, Possession

-right of survivorship:

if 2 J/Ts own prop. & 1 dies, the surviving J/T b/comes sole owner.

Joint Tenancy- con't

(rights & obligations)

-single J/T cannot will his/her int. to another party

-nor is the estate subject to probate

-phrase: 'W/ right of survivorship' does not need to appear  in deed

-surviving J/T not liable to creditors of the deceased who hold unforclosed liens on the property.

Joint tenancy- con't 2

(Rights & obligations 2)

-J/T can sell his/her int. in the prop.

-if 2 J/Ts exist & 1 sells, the joint tenacy is dissolved & the 2 owners now hold title as tenants in common.

-if 3 J/Ts , each holding 1/3 int. & 1 sells the new owner comes on title as a Tenant in Common, but teh 2 orig. J/Ts con't w/ their J/T ownership.

-method of holdin title by 2 or more persons who are owners of undivided int. in the title to real property

-may own an unequal ownership int.

-NO right of survivorship therefore a T in C owner

can will his or her int. to their heirs.

-only unity: possession

-all property acquired by husband & wife during marriage other than separate property.

-if husb. & wife. are named in a deed & deed does not state that they have taken title as J/T or w/ the right of survivorship, they have taken title simply as Community prop.

-any right or int. in the land possessed by a non-owner of the prop., which affects the value or use of the owner's estate, but does not prevent thte owner from transferring his/her int.

-a burden on the property

-2 basic categories:

affect title; money encumberance

affect physical condition; non-money encumberance

-an encumberance which affects title

-a charge imposed on property, when the property is made security for the performance of an act, usually the payment of a debt.

-inv.: Money

ex. when lender records deed of trust securing a purchase money loan, the lender creates a lien against the property.

-trust deed-

-used when a buyer borrows money from a lender to purhase a property & the title to the prperty is held in trust by a neutral third party until the loan is paid off.

-is a security device, aka security instrument

-used to secure a loan

-recorded in public records & shows there is a lien on the property.

-3 parties:

borrower/trustor(buyer,

lender/beneficiary,

neutral 3rd party/trustee (who holds temp. title, not full title, until the lien is paid)

-to remove a trust deed lien (i.e. when debt is paid) the lender causes this to be recorded

-party to sign the deed: trustee

-when a seller carries back a deed & a lien is created against the property

-is placed on prop. by someone who provides labor & material for the prop. and has not been paid.

-must be: verified & recorded to be valid

-may take priority earlier than the date it was recorded

- Preliminary 20-day notice must be filed by claimant prior to recordin a mech. lien.

other notices re: mech. liens:
notice of non-responsibility

notice of ceasation

notice of completion

-may be filed by:

orig. contractor -w/in 60 days

claimant other than contractor- w/in 30 days of filing for record of notice of completion

any claimant- if not. of compl. is not recorded w/in 90 days after completion

-lien imposed on aproperty w/o consent of the owner

ex.

lis pendens

attachment liens

tax liens

judgemente liens

-Latin for "pending law suit"

-judicial action brought by one party against another

-freezes an asset before the outcome of a lawsuit is known

-is good for 3 years

-liens that a property owner voluntarily initiates

ex. trust deed or mortgage

-re: as anti-lien

-purpose: to protect the homeowner against creditors proceeding to enforce judgement liens.

-protects:

head of the household up to $75,000 from judgement liens

others within the household up to $50,000.

-right to enter and use another's land

-2 types:

Appurtenent easements

Easements in Gross

-can be created for any period of time

-method of obtaining an easement

-requirements:

1. continuous/uniterrupted use for 5 yrs.

2. use is hostile & adverse (w/o license or permission)

3. use is open & notorious (owner knows of use or presumed to have known of use.

-type of encumberance

-restricts the free use of land by an owner

-originate: from public & private sources

public restric.: gen. found in zoning ordinances

private restric.: gen found in the deed, CC&Rs, or memorandum of agreement

-Covenant, conditions, & restrictions

-usually exist whenever there is a HOA

-a promise

-violation: can involve financial sanctions.

-restriction that involves more serious consequences than a covenant,

b/c condition may contain forefiture clause

which could bring about change of ownership

-if public restric. & private restric. pertaining to the same prop. do not read exactly the same...

the most restrictive restriction controls.

-have to be developed for the overall benefit of the public, particularly for the protection of:

the public health

safety

morals

general welfare

-May not be discriminatory

-form of trespass

-trespass by a structure only (not person)

-individ. prop. being encroached upon must take action w/in three(3) years to have it removed.

-if friendly agrmnt not possible btwen parties, offended party's remedy is sue neighbor for trespass

-Principal instrument of transfer

-legal document that transfers ownership or a piece of property.

-a device to accomplish something

-in real estate: usually a formal legal document created to affect the rights of the parties to an agreement.

-it is a valid deed that is:

executed

delivered

& accepted

-phrase sometimes used in deed

-means "and others"

-phrase sometimes used in a deed

-means "and wife"

-conveyance

-is a transfer of title

-acknowledged, notorized, or recorded.

-Can still transfer property w/o these things.

-given by recording the deed or by taking possession of the prop.

-even if an individual is ignorant of the recording or possession, he has still received constructive notice.

-1st party to recieve construc. noti. after recieving a deed is the one granted ownership in court.

-occurs when an individual actually knows of a thing or fact.

-it is notice given and received.

-must contain the word 'grant', and contain two (2) implied warranties:

1. that the grantor has not already conveyed to another person

2. that the estate is free from encumbrances suffered by the grantor

-transfers only the int. the grantor has at the time the conveyance is executed.

-contains NO express or implied warranties.

-provides that when a married person dies w/o a will, all community property passes to the surviving spouse.

-provides that when a married person dies w/o a will, separate property is divided 1/2 to surviving spouse & 1/2  to an only child....or 1/3 to surviving spouse & 2/3 to two or more children.

-will that is handwritten

-one that is entirely written in the maker's own handwriting.

-method of acquiring legal title.

-if...

1. P person has possession of prop.

2.O possession is open (A), actual & notorious

3.N possession is notorious

4.C posss. is continuous

5. H possess. is hostile & adverse to the int. of real owner

6. uninterrupted for 5 years, accompanied by payment of real prop tax. for 5 yr period

(PANCHO)

-add'tn to prop. by man or natural forces.

man- occurs when man builds a fence on neighbor's prop. (fence b/comes neighbors OR acceads to the neighbor if there is no agreement w/ the neighbor for the builder to remove it.

-gradual increase of the earth on the shore of an ocean or the bank of a stream resulting from the action of water.

-the sediment or soil that is deposited is called alluvium.

-an agreement to do or not to do a certain thing.

-2 types: express AND implied

-2 types of content: bilateral & unilateral

-2 extents of performance: executed & executory

-4 classification of legal affect: void, voidable, unenforceable or valid

-one in which the promise of one party is given in exchange for the promise of the other party.

-both parties have made a committment.

-agreement lacks any legal effect

-is not a contract at all!!

-one that is binding and enforceable and has all the essential elements required by law:

1. Capable parties

2. Mutual consent

3. Lawful object

4. Consideration

CMLC- Cow's Milk Lacks Color

-parties capable of entering into a contract incl: everyone except minors, convicts, & persons of unsound mind.

-minors may acquire title by: gift or inheritance.

-in R.E. contracts is evidenced by an offer of one party and acceptance by the other party

-must be genuine, free of will, & if clouded by an influence (e.g. fraud, duress, or mistake) the contract may be voidable.

-something of value offered in an agreement, and is required in every executory contract.

-referred to by words like: good, sufficient, adequate & valuable.

-three(3) years for inverse condemnation & encroachment.

-four(4) years for a written contract.

-concept found in the civil code

-a representation stated herein: law states that an agent is one who represents another called the principal, in dealings with third persons.

-Duties to the principal in mnemonic COALD.

Care

Obedience

Accounting

Loyalty

Disclosure

-in an agency relationship, the agent has authority to do everything necessary and proper to effect the purpose of the agency, and to make representations as to relevant facts pertaining to the transaction

-is usually established by express agreement

-consideration not essential to creation

-sometimes called employment contract

-is usually a bilateral contract where:

the seller is promising compensation and the broker is promising diligence.

-set up so that regardless of who sells the property, the listing broker gets paid.

Right to sell= Right to commission.

-procurring cause is not an issue for the listing broker.

-one in which the agent represents a single client known as the principal.

-the principal could be a buyer or a seller

-invl. acting w. the utmost care, integrity, honesty, and loyalty towards the client.

-In a single agency transaction, the seller's agent regards the buyer as a customer, not a client.

-Agent owes a customer honesty & fairness.

-occurs when a broker makes a low offer on a property, sometimes through a "dummy buyer." He then turns around and sells the prop. to another buyer at a higher price. (the diff. is the sec. prof.)

-an agent cannot make a secret profit or any undisclosed compensation when representing a principal

-agent acting in excess of authority- may be held liable for damages.

-licensee misrepresents a prop to a buyer- could be disciplined, have a civil suit filed against them for $damages, or be prosecuted criminally.

-Broker failure to disclose- may result in:

1. civil liability 2. Disciplinary action 3. crim. prosecu.

-actual involves the intent.

-constructive involves negligence.

-a person apppointed to act on behalf of another under a power of attorney.

-cannot act on behalf of his principal if the principal dies or is determined to be incompetent.

-listing agent-must disclose to seller whether he is acting as a single agent for him or as a dual for both...as soon as practicable.

-failure to disclose- violation of agency disclosure law b/c it puts seller at a disadvantage.

Agent must: Disclose, Elect, and Confirm

(DEC)

-disclosure of dual agency- agent often elects & confirms after initial disclosure to the seller.

-Consent of all parties- Required

-may be terminated by:

agreement btwn the parties

expiration

revocation

death/incapacity of either the principal or the agent

accomplishment of purpose

extinction of the subject matter

-death of members of a corp. does not terminate and agency or contract

-principal has right to revoke agency but not if agency is coupled with an interest or broker has found a buyer. if done it could make principal liable for damages

- leasing real property for more than 1 yr

-purchasing real property

-listing real property

- an agreement to pay the debt of another

-a lease of real property for 1 year or less

-a listing for personal property or a business opportunity

-brokers sharing a commission

-must be approved by the DRE before being used.

-must include the $ amount & due date, & they must incl. wording that does not guarantee the transaction

-those collected for credit reports & independent appraisal fees, & any unused portion that is going to be returned, the contract does not require approval by the DRE.

-an offer to purchase is considered a rejection of the original offer.

-if seller counters an offer, the seller(the offeree) has become the offeror

-a seller may work with multiple counteroffers before an agrmnt is estab. Such negot.should be disclosed to all buyers.

-a contract w/handwritten info. will override pre-printed clauses.

-a concept found in deposit receipts or purchase contracts.

-if buyer dies before seller accepts offer: buyer's death constitutes revocation of the offer

-if buyer dies before the seller's acceptance has been communicated to the buyer: also terminates offer

-if a buyer w/drawls before the seller accepts the offer the buyer gets deposit back.

-provision stating if a deposit is to be forfeited upon the breach of contract by the buyer

-L.D. in the standard CAR(CA Association of REALTORS) purchase contract is 3% of the purchase price or the amount of the deposit, whichever is less.

-turnover of the deposit to the court for resolution by the broker when a dispute involves the disposition of the deposit.

-if the buyer and seller are unable to resolve a dispute re: an earnest money deposit, the escrow holder may file an interpleader action to resolve the dispute.

-a written employment contract btwn a principal & an agent.

-establishes a contract btwn a seller & the broker

types: exclusive agency listing, exclusive right to sell listing, & open listing

-the kind of listing where the seller of the property can list with multiple brokers.

-the only broker to get paid is the procurring cause of the sale.

-a definite termination date.

-a broker may be entitled to a commission after the listing expires due to the protection period clause in a listing.

-to enforce P.P. clause in a listing...broker must submit to seller w/in 5 days of expiration a list of prospec. buyers for which the broker is responsible.

-found in a listing, protects the agent from liability when a seller gives false information.

-will resemble in many respects a exclusive listing btwn a seller & broker.

-establishes a single agency relationship

side note: seller can sue a broker for not fulfilling an ORAL promise.

-written agreement stating that the buyer shall have the right to purchase the property at a fixed price w/in a certain time.

-does not bind the optionee to performance.

-broker with listing & option to purchase must:

disclose all material facts to the principal & receive the seller's written permission to excercise the option.

-An option is an agreement to keep an offer open for a set period of time

-the transfer by a lessee of the lessee's complete leasehold interest.

-the original lessee may still have some obligation under the lease.

-if lease does not prohibit, a tenant may transfer all or a portion of his rights and int. in the leasehold estate.

-occurs when a lessee is the lessor of a portion of a prior lease on the same property.

-if a tenant transfers rights to a portion of the premises or for a period of time less than that remaining on the lease.

-the orig. tenant remains liable to the landlord for all obligations under the lease and for all acts and omissions committed by the sub-tenant.

-a lease signed and delivered by the landlord is enforceable by the tenatn even if the tenant fails to sign the lease.

-a lease is valid when it has

Length of time

Amount of rent

Names of parties, and

Description of property.

(LAND)

-for furnished residential property- may req. increased SD.

-may req. up to two months rent as SD addn'tl for an unfurnished res. prop. & and an equal to 3 months rent as SD for a furnished res. prop.

-the law implies a covenant on the part of the landlord to provide the tenant w/ possession & quiet enjoyment of the premises.

-To a leaseholder, "quiet enjoyment" means possession w/o disturbance by the holder of paramount title.

-landlord of residential dwelling has a leagal duty to keep the dwelling in a habitable condition

-if landlord is guilty of menace & threats against a tenant, the contract is voidable by the tenant.

-a landlord who seeks to remove a defaulting tenant from possession of the premises would bring an unlawful detainer action against the tenant.

-occurs when circumstances arise which allow the tenant to lawfully abandon the lease.

-incl.. the landlord failing to make necessary repairs, making unwarranted and extensive alterations, actual eviction, or the prop. being condemned through eminent doman.

-if a landlord transfers his/her interest in a leased prop., the lease remains in force  and effect.

-court decision (re: disclosure)

-broker in a transaction are req. to make a reasonlably competent and diligent visual inspection of the property and disclose to a buyer all facts materially affecting the value or desireability of the prop. that such an investigation would reveal.

-Red flag items should be noted and disclosed.

-cuz of the E vs. S decision, sellers & agents are req. to provide to buyers a transfer disclosure statement concerning the condition of the property

-must be provided to the buyer of residential prop. (1-4 units) even when the prop. is sold as is.

-need not be provided in a case of a transfer between spouses due to:

divorce

transfer due to court order

probate

-if a defective transfer disclosure statement is delivered to a buyer, the buyer has 2 years to seek damages.

-the seller and agent must disclose to the buyer that the property is or may be situated in an earthquake faultzone.

-Earthquake fault lines on designated maps are 1/4 mile wide.

-The Natural Hazards Zone Disclosure Statement will include information about earthquake faultzones.

-must be disclosed to all potential buyers of residential prop.

-Flood Hazard & Boundary Maps are provided by FEMA (Federal Emergency Managment Agency)

-frequent flooding-more than 1x in 10 yrs=

-special flood zone area-w/in a 100-yr flood bndry

-Moderate flood hazard-btwn 100 & 500 yr fld bndry

-Minimal risk-above a 500yr fld bndry

-2 essentials: binding contract & conditional delivery of transfer instruments to a third party

-purpose- to impliment and sometimes supplement the original contract.

- a stakeholder, not legally concerned w/ the controversies btwn the parties

-could file for an interpleader action to force the litigation of disputes

-doesn't have and must not exercise discretionary authority

 -does not act as mediator, advisor, or participate in customer controversy, or arbitrate disputes.

-doesn't offer legal avice, but must suggest that disagreeing parties consult an attorny or a broker.

-must remain strictly neutral

-an escrow b/comes effective when all parties have signed identical escrow instructions.

-a broker may conduct escrow when the broker is a party to the transaction.

-are voluntarily completed by full performance & closing, or they are terminated by mutual consent & cancellation.

-cancellation does not necessarily cancel the purchase contract.

-buyers & sellers rec'v closing statments from escrow.

-buyer -debited for purchase price b/c he agreed to pay

-seller- credited for prepaid prop. tax there might be in transaction

-to assess, distribute, or divide proportionately

-to prorate properly the property taxes, escrow would credit the seller with any prepaic property taxes.

-prorated items in escrow usually refer to recurring costs:taxes, insurance, and interest.

-designed to req. the seller to pay for his share of recurring costs and the buyer to pay for his share.

-the most common type of policy acquired by most people purchasing a home.

-protects agains risks of record, forgery, and the fact that a deed was not properly delivered.

-developed to prtect non-resident lenders (out-of-state lenders) and expand the risks normally insured against, beyond risks of record

-has adopted an owners  extended coverage policy.

-no policy of T.I. protects against defects in known to the insured to exist at the date of the policy but not previously communicated in writing to the insurer.

-no policy of T.I protects agains zoning b/c zoning regs. concern the conditino of the land rather than the condition of title.

-to deposit personal property w/ a lender as security for a debt.

-an individual working in real estate lending has to have a real estate license if their company is reg. by the Depart. of R. E. (DRE)

-an individ. working in real estate lending does ot have to have a real esate license if their company, for ex. a bank, is reg. by the Depart. of Corporations (DOC)

-a junior mortgage w/ a face value of the amount that it secures, plus the bal. of any senior liens on the prop. It inc. all of that indebtedness.

-trustor on the AITD- pays seller of prop.

-person who signs the note (initial owner of home)- responsible party for the payment to the lender of a senior loan

-allows the int. rate to increase or decrease accord. to a published index.

-allows the int. rate to adjust periodically by a set margin to a certian index.

-the written commitment of a borrower to a loan obligation.

-a.k.a.- 'I.O.U.'

-a written, unconditional promise or order to pay a certain amount of money, at a definite time, on demand.

ex. checks, bank drafts, promissory notes.

-when it has been paid, the beneficiary asks the trustee to prepare sign and record a deed of full reconveyance.

-beneficiary- in a trust deed= lender

-in a trust deed loan is the 3rd party who rec'vs naked legal title from the trustor and has the right to sell the prop. in the event of default.

-will do 1 of 2 jobs either:

reconvey or foreclose

-"trustee" has 2 "E"s, for 2 jobs either reconvey or foreclose

-When the trustor defaults, the beneficiary instructs the trustee to record a notice of default.

- After recorded...the trustee must wait at least 90 days before publishing the date of the sale.

-after 90 days, the trustee publishes a notice of sale in a newspaeper of general circulation and posts a notice on the property.

-is permitted to reinstate the loan up until 5 days before the sale.

-owns the prop. until the sale and would be permiteed to sell it or redeem it until the sale takes place.

-if he does not reinstate, the trustee conducts the trustee sale and issues a trustee's deed to the highest bidder.

-trustor authorizes the trustee's sale through the power of sale clause when he signs the deed of trust.

-if the beneficiary elects a judicial foreclosure in a deed of trust, the trustor has 1 yr equity rights of redemption

-he has conveyed essence of legal title to the trustee, but retains equitable title.

-can reinstate a note secured by a trust deed, but has rights of redemption after a judicial foreclosure

-obtained when the first trust deed and the buyer's down payment are not sufficient to meet the purchase price.

-are made by private individuals loaning money either directly or through a mortgage broker.

-when a seller is the source of funding of a note carried back which is secured by a trust deed.

-assume-it relieves the seller from being the princl. debtor on the property.

-subject to- the seller remains primarily liable  to the lender for the loan repayment

-those liens on the same prop. are prioritized based on the time of their recording.

-type of acceleration clause in a loan

-aka due on sale clause.

-allows lender to call the loan due and payable if the seller transfers title to the encumbered prop.

-is often not enforced in a tight money market or when houses are not selling well.

-states that interest equals princ. x rate x time.

- i=prt

-the rate that the borrower is actually paying.

-it is commonly called the (APR) (Annual Percentage Rate)

-if there is conflict in the terms of the note and the deed of trust, the terms of the not will generally control.

-part of the US dept. of Housing and Urban Develpement (HUD) & was established in 1934

-does not loan the money, but ensures home loans.

-insures mortgages for the purchase of existing and newly built single-family homes and condos, home improvements, the purchase and repair of houses needing rehab, the purchase of 2  to 4 unit prop. & the refinancing of existing mortgages.

-charges mortgage insurance premium (MIP) to insure a mortgage. NO prepayment penalty!

-points charged on loans to increase yield for the lender and obtain the market interest rate. The borrowers usually pays FHA points, but this is negotiable btwn buyer & seller.

-req. an impound acct for prepaid items: prop. taxes, & hazard insur.

-type that insures loans for prop. improvement & the purchase of manufactured home: Title I loan.

-Most common for single family homes: Title II loan, section 203B

-type authorizing mortgate ins. for purchase of rehab. of a home: Title II loan, section 203K

-guaranteed by the U.S. Dept. of Veterans Affairs

-will allow a qualified veteran to buy a home or, condo, buy a mobile home, or refinance an existing mortgage on a dwelling owned and occupied by the veteran.

-usually req. no downpayment

-req. no prepayment penalty

-buyer or seller may pay the loan discount points.

-the veteran buyer has a right to rec'v a certificate of reasonable value (CRV) b4 completing the purchase.

-may be obtained through any lending agency.

-offered through the veterans farm and home purchase program estab. in 1921.

-purpose: enable eligible vets to purchase a home, a farm, or a mobile home to be used as a primary residence.

-arranged under a contract of sale.

-Dept of Veterans Affairs- purchases the home for the vet and retains title until the debt is completely paid.

- inc. savings & loans, commercial banks, mortgage bankers and is where the consumer originates a real estate loan.

-originates mortgage loans by lending directly to borrowers.

-are privately owned companies often affiliated w/ banks or savings and loans.

-originate conventional and FHA/VA loans.

-like to make Large commercial loans for the long term.

-like to work through mortgage companies and avoid working directly with the borrower.

- where investors purchase real estate loans originated by other lenders

- the lenders in the Primary MM replenish their funds by selling loans in the secondary MM.

-Players in M:

Federal National Mortgage Association (FNMA)

Fannie Mae

-Federal Home Loan Mortgage Corporation (FHLMC)

Freddie Mac

-Government National Mortgage Association (GNMA)

Ginnie Mae

-a device whereby the seller(vendor) agrees to convey title to real property after the buyer(vendee) has met conditions specified in the contract.

-conveys equitable title to the vendee but retains legal title in the vendor.

- aka an installment sales contract, a contract of sale, an agreement of sale, a conditional sales contract, or a land sales contract.

-relationship btwn vendor & vendee like that of beneficiary(lender),  and the trustor(borrower).

-vendor may not use vendee's impound money for any other purpose w/o the vendee's permission.

-CalVet loan-set up as a land contract w/ dept. of Vet affairs holding legal title.

-req. that borrowers, buyers, & sellers, rec'v closing cost information for federally related loans for the purchase or refinance of 104 owner-occupied residential units.

-the lender can charge nothing for the prep. of the Uniform Settlement Statement.

-req. that a Good Faith Estimate of the loan costs be given to the borrowere w/in 3 bus. days of the originating broker or lender's receipt of the application.

-prohibits the rec'v of referral fees (kickbacks) when prividing settlement services on residential loans 1-4 units and on federally related loans.

-purpose- req. creditors to disclose credit terms to consumers to enable consumers to make comparisons btwen various credit sources and to make better informed decisions.

-to implement- Board of governors of the federal reserve system issued a reg. known as Regulation Z.

-req. the creditor to be responsible for furnishing Truth in Lending disclosures to the consumer.

-Exempt. from coverage under Reg Z is extended primarily for a: business, commercial or agricultural purpose.

-consumer has right to rescind when the loan is secured by a lien against the consumer's existing principal dwelling.

-an ad that refers to the finance charge as a rate must state the annual percentage rate (APR)

- when selling a trust deed, if this occurs on a note that is different from the int. rate on the note, must also state the int. rate & the discount.

-refered to by the DRE as Valuation & Market analysis

-what something is worth in a given marketplace

-two categories: utility value & market value

-4 Essential elements of value:

Demand

Utility

Scarcity

Transferability

(DUST)

-value directed toward a particular use.

-aka subjective value

-rep. the amount of $ for which a prop. can be sold in prevailing market conditions at a given time and place

-aka objective value

-the most probable price the prop. should bring on the open market with a willing buyer and seller.

-the desire in the marketplace for a particular commodity.

-to be effective, must be supported by purchasing power.

-the capacity to satisfy a need or a desire.

-does not nec. equal value.

-is what an indiviudal spent in the past or anticipates spending in the future to acquire or produce a property.

-does not nec. equal value

-what one pays or asks to rec'v for a property.

-stats that max. value is achieved when land uses are compatible and a reasonable degree of architectural harmony is employed.

-great help in stabilizing values are:

land use regs & zoning.

-states that the value of a prop. will tend to be set by the cost of acquiring an equally desirable substitute property.

-states that values of prop. will change w/ fluctuations in supply and demand.  if supply inc. but demand remains constant, values will decrease. if demand inc. but supply remains constant, values will incr.

-states that the highest and best use of land is that use that will produce the greatest net return to the land over a given period of time.

-it is the use that makes the land most profitable.

-it is the 1st step an appraiser must take when appraising vacant land

-Growth, stability, decline, and revitilization

-all props and neighborhoods go through this.

-recog. to create, maintain, modify and destroy value as they interact:

Physical and environmental characterization

Economic influences

Political and Gov'tl regs.

Social ideals and standards

(PEPS)

-recognizes certain well-defined steps to arrive at an opinion of value.

-basic steps-6 :

1. Define the problem

2.Make a preliminary survey

3. Collect general and specific data

4. Analyze the data

5. Reconcile the analysis

6. Estimate and report the value

-a written statement of the appraiser's opinion of value

-valid for a specific date only

-3 types: Letter form report, Short form report, Narrative report

-the most comprehensive type of appraisal report.

-the type used is heavily used influenced by the intended use of the report.

-would contain a definition of value being given.

-all professional appraisal reports contain a definition of being given...in narrative, its found in the statement of purpose.

-appraiser- date the parties agreed to the contract

-lender- date the property was inspected aka effective date of the appraisal, or date of value.

- Market data approach

-Cost approach

-Income approach

(MCI)

-aka market data method

-simplest & most common approach used by brokers & salespeople

-principle of substitution

-used for appraisal of residences & land.

-data obtained from # of sources:

the appraisers own files

public records,

multiple listing services

buyers & sellers

-made in teh areas of property characteristics and non-property characteristics.

-getting and indication of the value of the subject property from sales in the marketplace is accomplished by making adjustments to the sales prices of the comparables.

-comparable better-subject- if it has a feature that the subject prop. does not have, the appraiser would subtract the value of that feature from the sales price of the comparable sale prop.

-subject better-add- if it is lacking a feature that he subject prop. has, the appraiser would add the value of that feature to the sales price of the comparable sale property.

-limitations occur in times of rapidly changing economic conditions.

-the best comparable sales for the sales comparison approach are the most recent and similar.

-aka replacement cost approach

-views value as a combination of the value of the land as if vacant, & the cost to reconstruct the building as new, less accrued depreciation.

-tends to set the upper limits of value

-used to appraise unique properties and to offer an additional indication of value on residential prop.

-the cost of constructing the exact replica of the appraised building

-the cost of constructing a building today of the same size, quality of construction, and use.

-appraisal term defined as loss in value from any cause.

-the diff btwn:

the replacement cost new of a prop & its value.

-caused by 3 gen. influences:

1. physical deterioration

2. functional obselescence

3. external obselescence.

-incl. wear & tear from use, deferred maintenance, and damage

-caused by depreciation inherent w/in the prop itself

-can be curable or incurable

-are causes of depreciation inherent w/in the prop. itself.

-ex. incl. lack of modern facilities, out-of-date equipment, changes in style, and changes in utility demand.

-can be curable or incurable

-curable- is loss in value that is physically and economically feasible to correct.

-incurable- is loss in value that is physically impossible or too expensive to correct.

-is economic obsolescence

- ex. incl. zoning or legislative restrictions, change of locational demand, bad location, or backing up to the freeway, airport, or railroad tracks.

-almost always incurable.

-an appraisal concept that tells us how old a structure appears to be.

-based on the quality of construction and maintenance of the structure.

-attributes an equal amount of depreciation each year of the economic life of a building.

-aka the straight line method

-aka capitalization approach

-value is concerned w/ the present worth of future benefits that may be derived from the prop.

-front 25% of commercial lot regarded to hold 40% value of the lot. (a depth table is used in these calcs)

-based primarily on the appraisal concepts of comparison, substitution and anticipation

-concept of comparison utilized in this approach as the best way to select the capitilization rate.

- the rate of return based on the capital value of the property.

-it is the relationship btwn the annual net income and the property value.

-determ. by 3 methods:

1. market comparison (preferred)

2. band of investment

3. summation

SGI Scheduled gross income            
-VAC vacancy factor                         

EGI Effective (adjusted) gross income

-EXP Expenses                                  

ANI Annual net income                     

-Debt Serf Principle & interest mort. pmt

CASH FLOW                                    

-1. Capitilization rate & 2. Annual net income

-ANI is not provided... must be determined from:

Gross scheduled income

Vacancy factor

Effective gross income

Annual net income

-incl. fixed expenses & variable expenses.

-fixed incl. prop taxes & insurance

-variable incl. management, maintenance, utilities, and replacement reserves.

-subtract the total of all expenses from effective gross income

-mortgage interest would not be deducted to determine ANI

-an indirect method of capitilization, measuring the value of tangible and intangible factors found in small income props.

-found by dividing the sales price of a small income property by the monthly or annual income.

-under 20  would refer to annual rental income

-If a small income prop. rented for $1200 per month, & sold for $180,000, the monthly GRM would be 150 ($180,000 / $1200)

-the annual GRM (150) would be 12.5

(1200 / 12=14400. $180,000 / $14,400=12.5)

-using this data, if a small income prop rented for $1,500 per month, the indicated value would be 225000.

(Annual GRM 12.5 x 12 months= 150 monthly GRM;

$1,500 x 150=$225,000)

-real prop. that is leased, sold, or morgaged must be adequately described.

-the most prevalent legal descriptions for real prop. are tract map, U.S. Gov't survey systems, & metes and bounds.