Term
| What is included in real property |
|
Definition
| Land, improvements, and rights |
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|
Term
|
Definition
| Anything that is attached to and transfers with the land |
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Term
|
Definition
| Items attached to the land with the intent of being permanent and increasing the value of the land |
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|
Term
| What are the three rights in real property? |
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Definition
| Rights in land, rights of ownership, governmental rights |
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|
Term
| What are the three rights in land? |
|
Definition
| Air, surface, and subsurface rights |
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Term
| What does the doctrine of prior appropriation determine? |
|
Definition
| Who and in what order land owners control the beneficial water rights attached to their properties |
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Term
| What is a riparian water right? Example? |
|
Definition
| Rights to a flowing body of water ; A river |
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Term
| What is a littoral water right? Example? |
|
Definition
| Rights to a standing body of water ; A lake |
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Term
|
Definition
| The addition to land through natural processes |
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Term
|
Definition
| The sudden loss of land, from being washed away or another violent act |
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Term
| What do water rights not include? |
|
Definition
|
|
Term
| What is a vertical lease? |
|
Definition
| A lease wherein the three rights of land are leased to different tenants |
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|
Term
| What is real estate transferred by? |
|
Definition
|
|
Term
| What is personal property? What is another name for personal property? |
|
Definition
| All property that is not real property and is not permanently attached to the land ; Chattel |
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Term
| How is personal property transferred if included in the sale of real property? |
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Definition
| A bill of sale included in the purchase contract |
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Term
| What is a fixture? What, included in the sale of real property, is never a fixture? |
|
Definition
| Personal property that has been attached to an improvement so as to become real property and is an appurtenance ; Land |
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Term
| What are the three "A"s to test the intent of a fixture? |
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Definition
| Attachment, adaptation, agreement |
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Term
| How is attachment evidenced when testing the intent of a fixture? |
|
Definition
| The permanence of method, is it built in (a fixture) or freestanding (personal property) |
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Term
| How is adaptation evidenced when testing the intent of a fixture? |
|
Definition
| Is the item specific to the individual property |
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Term
| How is agreement evidenced when testing the intent of a fixture? |
|
Definition
| Is it in the purchase contract |
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Term
| What is not important in determining if an item is a fixture or not? |
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Definition
| The size, value, or location of an object |
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Term
|
Definition
| Tenant installed additions that are a necessary part of the tenant's trade or business |
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Term
|
Definition
| Annually cultivated crops that belong to the party who planted them |
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|
Term
| How are trade fixtures or emblements transferred? |
|
Definition
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|
Term
| If personal property (to the buyer) or a fixture (stay with the seller) is to transfer in a sale, how is this accomplished? |
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Definition
| Personal property must be included in writing, a fixture must be excluded in writing |
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Term
| What are the three most common methods of providing a legal descriptions? |
|
Definition
| Metes and bounds, rectangular (government) survey, and recorded plat (lot, block, and subdivision) |
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Term
| What is the purpose of a survey? |
|
Definition
| Used or create of confirm a legal description |
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Term
| What are monuments? How are they used? |
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Definition
| Visible markers ; Used in a survey that establish property boundaries |
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Term
| What is an Improvement Location Certificate (ILC)? |
|
Definition
| A lessor survey that locates improvements on a property but is not used to legally set property boundaries |
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Term
| What would both a survey or an ILC reveal? |
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Definition
| Encroachments and zoning violations |
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Term
| What is the Metes and Bounds system? What are two key reference items used by this system? What phrase WILL be used with this system? |
|
Definition
| A survey using feet and compass degrees to define property boundaries; Monuments and a point of beginning ; "Starting at" or "commencing at" |
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|
Term
| What is the Rectangular (Government) Survey? |
|
Definition
| A survey system developed by the US government that locates a parcel of land within a grid based on its location with reference to meridians, ranges, base lines and tiers |
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Term
| What direction do meridians, ranges, base lines, and tiers run? |
|
Definition
| Meridians and ranges run North to South, base lines and tiers run East to West |
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|
Term
| How is a township formed? How large is a township? How many sections are contained in a township? |
|
Definition
| Created by the intersection of range and tier lines ; 36 square miles (6 miles by 6 miles) ; 36 sections |
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|
Term
| What is a range? What is a tier? |
|
Definition
| A vertical row of townships running north-south ; A horizontal row of townships running east-west |
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|
Term
| How many acres are in one square mile (1 mile by 1 mile)? How many acres are in 1 section? How many square feet are in 1 acre? |
|
Definition
| 640 acres ; 640 acres ; 43,560 square feet |
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Term
| What is the recorded plat system? What is another name for the recorded plat? |
|
Definition
| A plat (map) that is created by a survey that shows the location and boundaries of individual lots in a subdivision which, once approved but before building, is recorded ; Lot, block, and subdivision system or lot and block system |
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|
Term
| Where is the recorded plat most commonly used? |
|
Definition
|
|
Term
| What are master development plans used for? What is a buffer zone and what is its purpose? |
|
Definition
| To control growth ; An area of land used to separate two significantly different land use zones |
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|
Term
| What are the purpose of land use restrictions? |
|
Definition
| To protect against uncontrolled growth, protect public health, and preserve compatibility |
|
|
Term
| What do all new construction and most renovations require? What are these used for? |
|
Definition
| A building permit ; To ensure that property owners are in compliance with building codes |
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Term
| Who sets the minimum construction and safety requirements in the form of codes? What codes may go beyond the minimum standards? If there is a conflict between the two, which codes are used? |
|
Definition
| The state ; City or county codes ; The most stringent |
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|
Term
| What are building codes primarily concerned with? What are examples of types of standards do building codes set? Does one code blanket all of a property? |
|
Definition
| The structural integrity and safety of buildings ; The types of material that can be used and where they can be used at ; No, there are separate codes for plumbing, electrical, fire, and so on |
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|
Term
| When are certificates of occupancy obtained? |
|
Definition
| After a building fulfills all the requirements of a building permit |
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|
Term
| At what level are zoning laws and ordinances set? What do they specify? |
|
Definition
| At the city or county level ; The specific types of construction allowed for an area, identifies setbacks, etc |
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|
Term
| What is a nonconforming use? |
|
Definition
| An allowance made to an owner to continue present use that no longer complies with current zoning, often known as grandfathering in |
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|
Term
| What is a variance? What does a variance not change? |
|
Definition
| An allowance made to an owner to vary or deviate from strict compliance with zoning in order to relieve or prevent economic hardship ; Regulations |
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Term
| What is a conditional use or special use permit? |
|
Definition
| An allowance made to an owner or particular property to be used for a special purpose that is in the public's best interest |
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|
Term
| What is overlaying zoning? Example? |
|
Definition
| Zoning in addition to basic underlying zoning ; A school zone within a residential zone or a special tax district within a commercial zone |
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Term
| What are a few examples related to zoning that are a buyer's responsibility to verify? |
|
Definition
| The current zoning use and rules will meet the buyers needs, the property is not in a floodplain, the property has proper street access, and any building permits were pulled and completed to obtain a certificate of occupancy on a new build |
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|
Term
| How is square footage of a property calculated? Why is the equation traditionally in a certain order? What is a frontage premium? |
|
Definition
| A=W x L ; The first number (width) describes the frontage feet of a property ; A dollar amount above the average price per square foot that is charged on the frontage feet of a property |
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|
Term
| All property other that real estate is known as (BLANK) |
|
Definition
|
|
Term
| Real estate consists of three things: (BLANK), (BLANK) and (BLANK) |
|
Definition
| Land, improvements, and rights |
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|
Term
| If a seller is taking a fixture, it must have been (BLANK) from the purchase contract |
|
Definition
|
|
Term
| Ownership rights to a creek is known as (BLANK) rights |
|
Definition
|
|
Term
| When articles of personal property, including landscaping, are permanently attached to the improvements, they become (BLANK) |
|
Definition
|
|
Term
| Before a new building can be inhabited, a (BLANK) is required |
|
Definition
|
|
Term
| Permission to vary from strict compliance with zoning requirements may be obtained in the form of a (BLANK) |
|
Definition
|
|
Term
| When a previously established use does not comply with the requirements of a new zoning ordinance, it may be allowed to continue as a (BLANK) |
|
Definition
|
|
Term
| Townships, sections, and meridians are used in the (BLANK) form of legal description |
|
Definition
| Rectangular (Government) survey |
|
|
Term
| A legal description that uses compass degrees is (BLANK) |
|
Definition
|
|
Term
| The type of legal description used in most urban areas is the (BLANK) |
|
Definition
| Lot, block, and subdivision, or recorded plat |
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|
Term
| A (BLANK) may be used to separate two incompatible zoning uses |
|
Definition
|
|
Term
| Real estate and fixtures are transferred with a (BLANK) |
|
Definition
|
|
Term
| Personal property is transferred with a (BLANK) |
|
Definition
|
|
Term
| If the buyer is keeping the seller's personal property, it must be (BLANK) in the purchase contract |
|
Definition
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|
Term
| What does the acronym PETE stand for? Combined, what do these 4 words represent? |
|
Definition
| Police power, eminent domain, taxation, and escheat ; Governmental rights to privately owned land |
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|
Term
| What is police power? What are a few examples of police power? |
|
Definition
| The governmental right to control land through the enactment and enforcement of laws governing land use ; Planning, zoning, and building codes |
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|
Term
| What is eminent domain? What is the process used in eminent domain? |
|
Definition
| The right to take private land for public use ; Condemnation |
|
|
Term
| Where are property taxes paid? How are property taxes enforced? |
|
Definition
| In the county in which a property is located ; Enforced though a foreclosable lien |
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|
Term
| What other liens do property tax liens take priority over? |
|
Definition
|
|
Term
| What does ad velorem mean? Where is this used? |
|
Definition
| At assessed value ; Property taxes are assessed ad velorem |
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|
Term
| Who determines a properties assessed value? Who uses the assessed value of a property? |
|
Definition
| The county assessor ; The county assessor |
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|
Term
| What is a special assessment? Where would a special assessment be found? |
|
Definition
| Charges against a specific property or properties that benefit from a public improvement ; On the county assessment role |
|
|
Term
| What is escheat? When is this right exercised? |
|
Definition
| The government's right to take property that has been abandoned ; When an owner dies with no will (intestate) and without heirs |
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|
Term
| How can a tax rate be expressed? |
|
Definition
| As part per 100 (percentage) or part per 1000 (mill rate) |
|
|
Term
| What is the difference between an or and an ee? |
|
Definition
| An or is one who gives, an ee is one who receives |
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|
Term
| What is an estate in land? What is a freehold estate? What is a leasehold estate? |
|
Definition
| The amount and kind of legal interest in real property ; Ownership for an indefinite duration ; Possession for a definite duration |
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|
Term
| What is a fee simple absolute estate? What is another name for a fee simple absolute estate? |
|
Definition
| An estate with the complete bundle of rights in a piece of land with maximum control of the property that lasts forever ; Fee estate, fee simple |
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|
Term
| What is a fee simple defeasible estate? What is another name for a fee simple defeasible estate? Normally, what kind of transfer is involved with a fee simple defeasible estate? |
|
Definition
| A fee simple absolute estate, but with deed restrictions where if the restriction is violated, the property may revert to the grantor ; Qualified fee ; A gift |
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|
Term
| What is a life estate? Upon the death of a life tenant, what happens to the estate? |
|
Definition
| An estate that is measured by the life of the grantee or by another life (pur autre vie) ; Estate returns to fee simple absolute and goes to the party named in the deed, either the grantor (revertor) or a third party (remainderman) |
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|
Term
| Which types of estates are transferable and which estates are inheritable? |
|
Definition
| A fee simple absolute, fee simple defeasible, and a life estate are transferable, but only a fee simple absolute and fee simple defeasbile estate are inheritable |
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|
Term
| In a leasehold estate, what is the duration of possession? What type of estate does the tenant/lessee have? What type of estate does the landlord/lessor have? |
|
Definition
| A fixed term ; A leasehold estate ; A leased fee estate with a reversionary interest |
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|
Term
| What is an estate for years? What is not required to terminate this estate? What would not terminate this estate? |
|
Definition
| A lease with a specific termination date ; advance notice of the termination (because the date is in the lease) ; The death of the landlord or tenant or the sale of the property |
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|
Term
| What is a periodic estate or estate from period to period? What is required to terminate this estate? |
|
Definition
| A lease with no specific termination date that renews automatically for a set period of time ; Advanced notice |
|
|
Term
| What is an estate at will? What would terminate this estate? |
|
Definition
| A lease with an indefinite duration, the tenant my occupy at the landlord's discretion with no fixed term ; Notice, death, or sale of the property |
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|
Term
| What is an estate at sufferance? If the owner/landlord accepts rent, what type of estate is formed? |
|
Definition
| A holdover after legal tenancy expires where an owner/landlord may evict or accept rent ; A periodic estate |
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|
Term
| What is an encumbrance? What are the typical types of encumbrances? |
|
Definition
| Any claim, right, or interest held by a party who is not the legal owner of a property ; An easement, encroachment, lien, or deed restriction |
|
|
Term
|
Definition
| The right to use the land of another for a specific purpose that is appurtenant and transfers with the deed |
|
|
Term
| What are the 2 types of easements? What are the 3 ways an easement can be created? |
|
Definition
| An appurtenant easement and easement in gross ; By express contract, prescription, or by necessity |
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|
Term
| What is an appurtenant easement? Example? |
|
Definition
| An easement that transfers with the land which has a dominant and servient tenement (holder) ; A driveway across a neighbors property for ingress and egress |
|
|
Term
| What is an easement in gross? What setting are these easements typically used in? |
|
Definition
| An easement that has no dominant tenement, only servient tenements ; A commercial easement held by a company, government, or person |
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|
Term
| What is an easement by express contract? |
|
Definition
| An easement created by written agreement between landowners granting an easement, sometimes for compensation |
|
|
Term
| What is an easement by necessity? When is this easement granted? Who is this easement available to? |
|
Definition
| An easement granted by the courts to a private owner to prevent property from being landlocked ; Only when there is no other access to a property ; Only private owners |
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|
Term
| What is an easement by prescription? |
|
Definition
| An easement recognized by the courts after open, continuous, exclusive, actual, and notorious use of another's land for a statutory period of time |
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|
Term
| What are the 5 ways an easement can be terminated? Describe them |
|
Definition
| By express contract, release, merger, abandonment, or necessity ; Express written contract-written agreement by both parties to an easement, Merger-holder of a tenement acquires the land with the other tenement to an easement, Release-by the dominant interest via a quitclaim deed, Abandonment-holder of an easement take affirmative action to abandon the easement and must be proved in court, Necessity-an easement by necessity is terminated when there is no longer a need for the easement |
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|
Term
| What is a deed restriction? Who are these usually imposed by? |
|
Definition
| A privately created control on land use that protect property values and interests of property owners and are appurtenant ; A developer of a subdivision or someone relaying a fee simple defeasible deed |
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|
Term
| If there are multiple zoning or deed restrictions, which one will prevail? What may deed restrictions not be based on? |
|
Definition
| The strictest rule ; A protected class |
|
|
Term
| What is a lien? What does a lien allow a creditor to do if payment is withheld? |
|
Definition
| A claim on land to secure the payment of a dept ; Foreclose on a property |
|
|
Term
| What are the 4 lien classifications? |
|
Definition
| Voluntary, involuntary, specific, and general |
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|
Term
| What releases a property from an unrecorded lien? A recorded lien? |
|
Definition
| A lien waver ; The recording of the satisfaction of a lien |
|
|
Term
| What is a specific lien? What are the three main examples of a specific lien on real property? |
|
Definition
| A lien that attaches only to specific real or personal property ; A government lien for property tax or a special assessment, a mortgage lien for the securement of a loan, and a mechanics lien for the improvement of real estate |
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|
Term
When does a mechanic's lien take effect?
What must a seller do with a mechanic's lien before selling a property? |
|
Definition
| When work began or materials were delivered ; Clear it to transfer title |
|
|
Term
| What lien has priority over all other liens? |
|
Definition
| Government lien for property tax or special assessments |
|
|
Term
| What is a general lien? Example? |
|
Definition
| A lien that is attached to all property, including land and personal property ; A judgement lien |
|
|
Term
| What is a homestead exemption? Who does this exemption protect a homeowner from? Typically, what does this exemption not protect a home owner against? |
|
Definition
| An exemption created by state statute to protect a primary residence against creditors ; Judgments and debits for personal loans and credit cards ; Mortgage liens, property tax liens, or mechanic's liens |
|
|
Term
|
Definition
| The unauthorized use of another person's land or a physical object intruding onto neighboring property |
|
|
Term
| If a real estate agent working with a buyer believes an encroachment exists on a property, what should be done? |
|
Definition
| Recommend the listing broker has a survey of the property completed |
|
|
Term
|
Definition
| A revocable permission that grants a right to use the property |
|
|
Term
| List two ways the government can acquire privately held land |
|
Definition
| Eminent domain and escheat |
|
|
Term
| If there is a conflict between a local, state, or federal rule, the (BLANK) will apply |
|
Definition
|
|
Term
| A right of use or enjoyment that one person has in the lands of another for a specific purpose is an (BLANK) |
|
Definition
|
|
Term
| A tenant's right to possess real estate for the term of a lease is a (BLANK) |
|
Definition
|
|
Term
| A tree limb that overhangs into a neighbor's yard is an example of an (BLANK) |
|
Definition
|
|
Term
| An easement is not (BLANK), but a license is |
|
Definition
|
|
Term
| A claim that one person has against the land of another to secure payment of a debt is a (BLANK) |
|
Definition
|
|
Term
| A person who has not been paid for work performed on real property may record a (BLANK) |
|
Definition
|
|
Term
| A party wall or a shared driveway is an example of an easement (BLANK) |
|
Definition
|
|
Term
| The right of an owner to occupy a parcel of real estate forever is a (BLANK) |
|
Definition
|
|
Term
| The type of lien that takes priority over all others is the (BLANK) for property taxes (also known as a property tax lien) |
|
Definition
|
|
Term
| As part of their right to govern land use under police power, local municipalities enact and enforce (BLANK) |
|
Definition
|
|
Term
| A freehold estate is an estate of ownership with a(n) (BLANK) |
|
Definition
|
|
Term
| A leasehold estate is an estate of possession with a(n) (BLANK) |
|
Definition
|
|
Term
| Zoning laws are set at a (BLANK) |
|
Definition
|
|
Term
| Deed restrictions are created as a form of (BLANK) over land use |
|
Definition
|
|
Term
| What is ownership in severalty? |
|
Definition
| Ownership by an individual, weather it be by a single person or by a single cooperation, partnership, trust, etc |
|
|
Term
|
Definition
| Two or more people or firms joining together as an entity to own real estate |
|
|
Term
| In a limited partnership, what is each partners liability equal to? |
|
Definition
| The share of the partners ownership |
|
|
Term
| What is concurrent ownership? |
|
Definition
| ownership by two or more persons who share ownership with fractional but undivided interest |
|
|
Term
| What should buyers obtain when deciding on a form of concurrent ownership? |
|
Definition
|
|
Term
| What is tenancy in common? |
|
Definition
| Co-ownership without the right of survivorship where shares can be unequal, and ownership is subject to probate after a tenants death |
|
|
Term
|
Definition
| Co-ownership with the right of survivorship where shares must be equal and is NOT subject to probate after a tenants death |
|
|
Term
| What type of tenancy overrides a will? |
|
Definition
|
|
Term
| What type of tenancy must be specified in a deed? |
|
Definition
| Joint tenancy, as tenants in common is generally the default |
|
|
Term
| What 4 unities must joint tenancy have? |
|
Definition
| Possession, interest, title, and time (PITT) |
|
|
Term
| What is tenancy by the entirety? |
|
Definition
| A special form of ownership available to married couples in some states |
|
|
Term
| Condominiums, cooperatives, and other forms of common interest ownership are often regulated under what? |
|
Definition
| A state's common interest ownership act |
|
|
Term
| Common interest communities generally have the authority to levy what against an owner through owner association dues? What are they for? |
|
Definition
| Mandatory assessments ; For the maintenance of common elements |
|
|
Term
| What is a condominium? What type of real estate would be set up as a condominium? |
|
Definition
| Real estate which parts of are designated for separate ownership and parts of are designated for common ownership ; Any, commercial, residential or industrial |
|
|
Term
| What is a common element? |
|
Definition
| Parts of real estate that are designated for common use |
|
|
Term
| What is a limited common element |
|
Definition
| parts of real estate that are reserved for the use of one or more units to the exclusion of other units ; Assigned parking spaces, storage units, and balconies |
|
|
Term
| Each unit owner in a condominium automatically becomes a part of what? |
|
Definition
| The owners association of the condominium |
|
|
Term
| What are some key operations of an owners association? What would an owners association NOT do? |
|
Definition
| Manage common elements; Adopt rules regulations, bylaws; Impose and collect assessments; Set rules for rentals ; Develop land |
|
|
Term
| What kind of interest does a deed transfer when buying a condominium unit? |
|
Definition
| Fee simple interest in the unit plus undivided interest in common elements |
|
|
Term
| How does a condominium unit owner own a common element? |
|
Definition
|
|
Term
| What, generally, is the main difference between a condominium and town house? |
|
Definition
| The owner of a town house most likely would own the land underneath the structure |
|
|
Term
| What is a cooperative? What do buyers into a cooperative receive? What do they not receive? |
|
Definition
| A corporation owned property that allows stockholders (owners) occupancy on that property ; Buyer's would receive stock in the owning corporation and a proprietary lease ; Buyer's would not receive a deed |
|
|
Term
| When purchasing a time share, what does they buyer receive? How to purchasers own units? What is a time share most commonly used for? |
|
Definition
| Interest in real estate that allows the right to use the property for certain periods of time ; Owned as tenants in common ; Most common for resort properties |
|
|
Term
|
Definition
| The act of conveying real estate ownership |
|
|
Term
| What is a private grant? What instrument is used in a private grant? |
|
Definition
| Conveyance of title from individual to individual ; A deed |
|
|
Term
| What is a public grant? What instrument is used in a public grant? |
|
Definition
| Conveyance of title from government to an individual ; A land patent |
|
|
Term
|
Definition
| Conveyance of title from an individual to government |
|
|
Term
| What is the purpose of a deed? |
|
Definition
| To voluntarily transfer title between the grantor and grantee |
|
|
Term
| What will the seller of real property always be required to provide the buyer? |
|
Definition
|
|
Term
| What does a deed not do in terms of assurance of ownership? What instead does it do? |
|
Definition
| Guarantee or prove ownership ; Provides strong evidence of ownership |
|
|
Term
| What are the essential elements of a deed? |
|
Definition
Competent grantor
Execution by the grantor
Delivery to and acceptance by the grantee
Identifiable grantee
Legal description
Words of conveyance
Consideration |
|
|
Term
|
Definition
|
|
Term
| When does title pass to a grantee? |
|
Definition
| Upon acceptance by the grantee |
|
|
Term
| What does a legal description describe? What does it not describe? Why? |
|
Definition
| The location and boundaries of land ; Appurtenances ; Appurtenances are presumed to transfer with the land unless specifically excluded |
|
|
Term
|
Definition
| Money or something of value |
|
|
Term
| What does a Habendum clause convey? |
|
Definition
|
|
Term
| What does a general warranty deed include? What are it's 5 covenants (warranties)? |
|
Definition
| The most promises or covenants (protections) for the buyer ; The covenant of seisin, the covenant of quiet enjoyment, the covenant against encumbrances, the covenant of further assurance, and warranty forever |
|
|
Term
| What is the covenant of seisin? |
|
Definition
| The grantor owns and has the right to convey the property |
|
|
Term
| What is the covenant of quiet enjoyment? |
|
Definition
| The grantee will be free from future disturbances by others claiming legal interest in the property |
|
|
Term
| What is the covenant against encumbrances? |
|
Definition
| The grantor has disclosed all encumbrances against the property |
|
|
Term
| What is the covenant of further assurance? |
|
Definition
| The grantee will have future cooperation in signing additional documents |
|
|
Term
| What is a warranty forever? |
|
Definition
| The guarantee of defense of title against claims such as liens or easements |
|
|
Term
| What does a special (limited) warranty deed include? What does it not offer protection against? |
|
Definition
| Protection against defects of title and encumbrances arising during the ownership period of the grantor and the covenant of seisin ; Previous claims |
|
|
Term
| What is a quitclaim deed? What is this deed often used for? |
|
Definition
| A deed offering no covenants or warranties ; Clearing clouds on title |
|
|
Term
| What does a bargain and sale deed offer? |
|
Definition
| Only the covenant of seisin |
|
|
Term
|
Definition
| The process of distributing all of a deceased person's assets |
|
|
Term
| What must wills go through in order for the devisee to receive real property? |
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
| What is the advantage of a will? |
|
Definition
| All heirs are known and there is no chance of escheat |
|
|
Term
| What is the act of devising? |
|
Definition
| Transferring a deceased person's interest in real property |
|
|
Term
| What is the act of bequeathing? |
|
Definition
| Transferring a deceased person's interest in personal property |
|
|
Term
| What does it mean to die intestate? |
|
Definition
|
|
Term
| What does the law presume an owner will to their real property to protect interest in it and against those who would trespass on it? |
|
Definition
| Regularly inspect it and give notice to cease and desist to trespassers |
|
|
Term
| What may happen to an owner who does not regularly inspect their property? |
|
Definition
| May lose their rights of ownership if another party possesses or uses the property for a statutory period of time |
|
|
Term
| A title obtained for adverse possession or a prescriptive easement is obtained how? |
|
Definition
| By a court procedure and ruling |
|
|
Term
| Adverse possession does not apply to what type of possession? |
|
Definition
| Use by permission or license |
|
|
Term
| What is adverse possession? |
|
Definition
| Ownership recognized by the court after open, continuous, exclusive, actual, and notorious possession of another's land for a statutory period of time |
|
|
Term
| What does the acronym OCEAN stand for? What is it in relation to? |
|
Definition
| Open, continuous, exclusive, actual, and notorious ; Adverse possession or an easement by prescription |
|
|
Term
| What is an easement by prescription? What is another phrase for this? |
|
Definition
| An easement recognized by the courts after open, continuous, exclusive, actual, and notorious use of another's land for a statutory period of time |
|
|
Term
| What does a seller's disclosure typically cover? |
|
Definition
| All material facts and defects, land/soil and environmental conditions, structural issues, lot size, encumbrances, etc |
|
|
Term
| Who completes a property disclosure? How do they complete the disclosure? |
|
Definition
| Always the seller ; To the best of their knowledge |
|
|
Term
| What is a material fact or defect? |
|
Definition
| A fact or defect, that if known, might change a decision |
|
|
Term
|
Definition
| A hidden defect that is not easily discoverable by an inspection |
|
|
Term
| What must sellers and brokers disclose to buyers? |
|
Definition
| All material and latent defects known to either the seller or broker |
|
|
Term
| Upon discovery of a material defect, what must a listing broker do? |
|
Definition
| Disclose to all parties to the transaction or potential transaction |
|
|
Term
| Who would be responsible if a seller misrepresented a latent defect and a brokers visual inspection did not discover said latent defect? |
|
Definition
|
|
Term
| A written legal document by which ownership of real property is transferred from one party to another is a (BLANK) |
|
Definition
|
|
Term
| The two parties to a deed are the owner/(BLANK) and the buyer/(BLANK) |
|
Definition
|
|
Term
| In order to convey title, a deed must be signed by the (BLANK) |
|
Definition
|
|
Term
| Title does not pass to the grantee until the deed is (BLANK) |
|
Definition
|
|
Term
| Assurance to grantees that they will not be disturbed by someone else with a lawful interest in the property is the covenant of (BLANK) |
|
Definition
|
|
Term
| The type of deed that is considered the best deed for a grantee is a (BLANK) |
|
Definition
|
|
Term
| A deed that conveys whatever interest in the property the grantor holds at the time of conveyance, has no liability for the grantor, and contains no covenants or warranties is a (BLANK) |
|
Definition
|
|
Term
| A deed with the warranty of seisin that applies only to the period the grantor owned the property is a (BLANK) |
|
Definition
|
|
Term
| Property owned by one person is said to be owned in (BLANK) |
|
Definition
|
|
Term
| A form of concurrent ownership in which each tenant owns an undivided ownership share in the entire property and has no right of survivorship is (BLANK) |
|
Definition
|
|
Term
| A form on concurrent ownership in which all owners have equal shares in the property and the right of survivorship is (BLANK) |
|
Definition
|
|
Term
| An undivided interest in a resort condominium as a tenant in common for a specific period each year is a (BLANK) |
|
Definition
|
|
Term
| A (BLANK) has a will and knows who will inherit her real and personal property |
|
Definition
|
|
Term
| (BLANK) does not require co-owners to go through probate to obtain title |
|
Definition
|
|
Term
| A person who holds a proprietary lease and owns shares of stock in a corporation that owns the building owns a (BLANK) |
|
Definition
|
|
Term
| Public recording system policies and procedures are set at what level? |
|
Definition
|
|
Term
| Recording a document does not |
|
Definition
| Prove the validity of a document |
|
|
Term
| What kind of notice does recording give? |
|
Definition
| Constructive or legal notice |
|
|
Term
| What establishes the priority of lien interest? |
|
Definition
|
|
Term
| A deed that is not recorded is still what? |
|
Definition
|
|
Term
| To have actual notice about a property's physical claims to title, such as parties in possession or encroachments, what must a person do? |
|
Definition
|
|
Term
| To have constructive notice about a parties legal claims to title, such as liens or person's listed on the title, what must a person do? |
|
Definition
|
|
Term
| What are a few examples of documents that are usually recorded? |
|
Definition
| Deeds, mortgages and deeds of trust, contracts for deed, easements, and long term leases |
|
|
Term
| What do most states require of a document so that they can be recorded? |
|
Definition
|
|
Term
| A deed that is not recorded lacks what type of notice of ownership? |
|
Definition
| Legal or constructive notice |
|
|
Term
| What is a subordination clause? Which loan will often have a subordination clause? |
|
Definition
| A clause in a mortgage or deed of trust which allows a subsequent mortgage to take or change priority ; A loan in second position |
|
|
Term
| What is marketable title? What is another name for marketable title? |
|
Definition
| Ownership (or title) free from reasonable doubt |
|
|
Term
| What is the most common original source of title? |
|
Definition
| Land patent from the government |
|
|
Term
| What process is used to establish the chain of title |
|
Definition
|
|
Term
| What does a title search establish? |
|
Definition
|
|
Term
| What is the chain of title? |
|
Definition
| A history of successive recorded ownership documents linked together |
|
|
Term
| What would cause a title to be clouded? |
|
Definition
| If errors or missing documents are found in a title search |
|
|
Term
| What does a seller have to do in regards to a clouded title in order to convey a property? |
|
Definition
|
|
Term
| What may be required to clear a clouded title? |
|
Definition
| Small issues may be corrected, some issues may require a quitclaim deed to clear another's legal interest in a title, some issues may require a suit to quiet title |
|
|
Term
| What is an abstract of title? How is an abstract of title created? |
|
Definition
| A historical summary of all recorded documents affecting title to a given parcel of land ; Created through a title search |
|
|
Term
| What would an abstract of title show? |
|
Definition
| All current and past recorded interests in a property |
|
|
Term
| Who issues a certificate of title? |
|
Definition
|
|
Term
| What is the best method for insuring a title is marketable? |
|
Definition
|
|
Term
| What is a title report? What does a title report show? What does it not show? |
|
Definition
| A report that states the current condition of the title and is a commitment to insure ; The current status of recorded encumbrances ; Does not show a history of past owners or encumbrances |
|
|
Term
| The title policy commitment lists policy exceptions, what are these? |
|
Definition
| Defects and encumbrances that have been discovered or may exist, and would not be covered by the policy |
|
|
Term
| What is a standard exception? What is a special exception? |
|
Definition
| Items never covered ; Items specific to the property discovered by the title examiner |
|
|
Term
| Who does an owner's title insurance policy protect? What is this policy's coverage cost based off of? |
|
Definition
| Protects owners/buyers and their heirs while they have an interest in the property associated with the policy ; The sale price of the property |
|
|
Term
| Who does a mortgagee's title insurance policy protect? What is this policy's coverage cost based off of? |
|
Definition
| Protects mortgagees/lenders while they have an interest in the property associated with the policy ; The loan amount given to the buyer |
|
|
Term
| What does a standard owner's title insurance policy protect against? What does it exclude? |
|
Definition
| All problems with title found after closing ; Exceptions and problems found before closing and listed in the title report |
|
|
Term
| What does an extended owner's title insurance policy protect against? |
|
Definition
| In addition to what a standard policy would cover, problems that are not a matter of public record but would probably be discovered by inspection (actual notice) of the property |
|
|
Term
| How often is the premium for title insurance paid? |
|
Definition
| Only once when the policy is issued at closing |
|
|
Term
| What is a suit to quiet title? |
|
Definition
| A court hearing to determine ownership, recognize valid claims, and quiet invalid claims |
|
|
Term
| What is a suit to quiet title used for? |
|
Definition
| Clearing a clouded title, and establishing ownership under adverse possession |
|
|
Term
|
Definition
| A recorded notice of a pending lawsuit affecting title to a property |
|
|
Term
| What organization's purview do environmental issues usually fall under? |
|
Definition
| The Environmental Protection Agency (EPA) |
|
|
Term
| What would a real estate professional do if a suspected environmental issue/problem existed that might affect a property? |
|
Definition
| Inform and recommend (but never advise) that further investigative action should be taken by a professional in that related field |
|
|
Term
| Even if a seller believes a suspected environmental issue has been cured or removed, a real estate professional must still |
|
Definition
| Disclose the suspected issue |
|
|
Term
|
Definition
| A mineral used in building material that can cause respiratory disease |
|
|
Term
| When is asbestos harmful? How is asbestos generally ingested? |
|
Definition
| Only if the asbestos fibers become friable (broken) and may become airborne; From inhaling the microscopic particles |
|
|
Term
| What is asbestos removal called? What is it called when it is sealed in place? What is often a better choice for small amounts of asbestos? |
|
Definition
| Abatement ; Encapsulation ; Encapsulation |
|
|
Term
| If a building is to be demolished or largely renovated, what must be done to any asbestos contained in the building? |
|
Definition
| The asbestos must be abated |
|
|
Term
| What is a method of curing an asbestos issue that has a lesser risk of exposing the fibers? |
|
Definition
|
|
Term
| When did asbestos become stigmatized in its use in building materials? |
|
Definition
|
|
Term
| What are the risks of elevated levels of lead? Who is most at risk of lead poisoning? |
|
Definition
| Serious and potentially fatal neurological damage, developmental delays, and others ; Children and pregnant women |
|
|
Term
| Federal law requires LBP disclosure of housing built when? When is this required? |
|
Definition
| Before January 1, 1978 ; For the sale of any property, even if a licensee is not involved |
|
|
Term
| Brokers must inform sellers of their requirement to perform what in regards to lead based paint? What is the seller not required to do? |
|
Definition
| Disclose the location of any known LBP, provide a copy of any report done on the home, give a copy of the EPA LBP pamphlet, and offer buyers a 10-day opportunity to have the home tested (which may be waived) ; Have a lead inspection completed or pay for the removal of any known LBP |
|
|
Term
| The listing broker is responsible for gathering signatures from who in the purchase contract in regards to LBP |
|
Definition
| Seller, buyer, and all real estate professionals involved in the transaction |
|
|
Term
| Who must sign the LBP disclosure in the purchase contract and assume responsibility for making sure all parties are in compliance? |
|
Definition
|
|
Term
| What is radon? When does it create a hazard? |
|
Definition
| A naturally occurring odorless radioactive gas ; When it is trapped in a building |
|
|
Term
| Radon is relatively easy to test for but is impossible to detect without what? Once discovered, how is radon dealt with? |
|
Definition
|
|
Term
| How is radon typically mitigated? |
|
Definition
| By adding a ventilation system to move the gas outside |
|
|
Term
| What is carbon monoxide? What is the scientific symbol for carbon monoxide? |
|
Definition
| An odorless gas that is a product of combustion ; CO |
|
|
Term
| How is carbon monoxide tested for? |
|
Definition
| With a CO monitor/detector |
|
|
Term
| How is toxic mold created? Where can mold grow? |
|
Definition
| By an excess buildup of humidity or moisture ; Anywhere there is oxygen, moisture, and an organic food source |
|
|
Term
| What is process called that removes mold? |
|
Definition
|
|
Term
| When must sellers disclose a mold issue? |
|
Definition
| If mold was, or is present |
|
|
Term
| What are a few environmental issues that can affect a property? |
|
Definition
| Asbestos, lead based paint, radon, carbon monoxide, mold, formaldehyde, chlorofluorocarbons, electromagnetic fields, and methamphetamine labs |
|
|
Term
| What are some indications of a mold issue? |
|
Definition
| Musty smell, water damage, high humidity, or water leaks |
|
|
Term
| What is an environmental impact statement (EIS)? |
|
Definition
| A report that describes the potential impact of a proposed project on local and regional air, wetlands, land, and environment |
|
|
Term
| When is an environmental impact statement (EIS) required? When may an EIS be required? |
|
Definition
| Government projects ; Private developments |
|
|
Term
| What determines if or when a stigmatized issue must be disclosed? |
|
Definition
|
|
Term
| What is a stigmatized property? What are a few examples of stigmatized issues? |
|
Definition
| Those that may be deemed undesirable because of activities that occurred there ; Suicide, criminal activity, HIV or AIDs |
|
|
Term
| What is an escrow agent or title company closer? |
|
Definition
| A disinterested third party who assists in carrying out a transaction according to the terms of the purchase contract |
|
|
Term
| What does a closing statement detail? |
|
Definition
| Accounting of each party's debits and credits to the transaction |
|
|
Term
| What is a debit to a buyer? Examples? |
|
Definition
| Anything that increases the amount of money the buyer must bring to closing ; Sales price, loan origination fees, recordation fees |
|
|
Term
| What is a credit to a buyer? Examples? |
|
Definition
| Anything that decreases the amount of money the buyer must bring to closing ; Earnest money, a loan (loans are always buyer credits) |
|
|
Term
| What is a debit to a seller? Examples? |
|
Definition
| Anything that decreases the amount of money the seller takes from closing ; Brokerage fees, existing loan payoff, seller financing |
|
|
Term
| What is a credit to a seller? Examples? |
|
Definition
| Anything that increases the amount of money the seller takes from closing ; Sales price |
|
|
Term
| What is a proration? Examples? |
|
Definition
| The dividing of costs between the buyer and seller as of the date of closing ; Property taxes, rents, utilities |
|
|
Term
| If a payment was made in advance, who is debited and who is credited? |
|
Definition
| Debit buyer credit seller |
|
|
Term
| If a payment was made in arrears, who is debited and who is credited? |
|
Definition
| Debit seller credit buyer |
|
|
Term
| A proration will always be shown as what at closing? |
|
Definition
| An equal amount with a debit to one party and a credit to the other |
|
|
Term
| What is never prorated? Why? |
|
Definition
| Seurity deposit ; The full amount transfers to the new owner to hold for the tenant |
|
|
Term
| What is the proration calculation? |
|
Definition
| (Amount of money for the billing period divided by the days in the billing period) multiplied by the days owed |
|
|
Term
| The priority of a recorded instrument is determined by the date of (BLANK) |
|
Definition
|
|
Term
| When an attorney or title insurance company traces the ownership of a parcel of land to the beginning of its recorded history, the process is known as a (BLANK) |
|
Definition
|
|
Term
| A recorded notice stating that a pending lawsuit may affect title to a particular property is a(n) (BLANK) |
|
Definition
|
|
Term
| A document that summarizes all recorded interests affecting title to a given parcel of land is a(n) (BLANK) |
|
Definition
|
|
Term
| All the documents that comprise the history of the title are the (BLANK) |
|
Definition
|
|
Term
| Protection against incomplete or defective records of the title to land can best be obtained by securing (BLANK) |
|
Definition
|
|
Term
| In many cases it is better to (BLANK) asbestos than to (BLANK) it |
|
Definition
|
|
Term
| A defect or problem that is not covered by standard or extended title insurance is a(n) (BLANK) |
|
Definition
|
|
Term
| When protating, an item paid in advance will be a (BLANK) to the buyer |
|
Definition
|
|
Term
| Defects in title are covered only if they are found (BLANK) closing |
|
Definition
|
|
Term
| An item pain in arrears will be a (BLANK) to the buyer |
|
Definition
|
|
Term
| Most deeds, to be recorded must be (BLANK) |
|
Definition
|
|
Term
| A new load will show on the closing statement as a buyer (BLANK) |
|
Definition
|
|
Term
| Shared items, such as property taxes and water bills, will be (BLANK) between the buyer and the seller |
|
Definition
|
|
Term
| (BLANK) is an odorless, colorless gas that, if found, is often mitigated by adding ventilation |
|
Definition
|
|
Term
|
Definition
| A voluntary, binding agreement between two or more competent parties to do, or not do, a specific thing |
|
|
Term
| What is an implied contract? Where is an implied contract never valid? |
|
Definition
| A contract where actions, not words, indicate intent ; In the transfer of any interest in real estate |
|
|
Term
| What is an express contract? |
|
Definition
| A contract where intent is indicated by oral or written words |
|
|
Term
| To be enforceable, the majority of real estate contracts must be what type of contract? |
|
Definition
| Express written documents or agreements |
|
|
Term
| What is a bilateral contract? Example? |
|
Definition
| A promise exchanged for a promise, where both parties are bound to perform ; Purchase contract |
|
|
Term
| What is a unilateral contract? Example? |
|
Definition
| A promise exchanged for performance, where only one party is bound to perform if the other performs first ; Option contract |
|
|
Term
| When is a contract valid? |
|
Definition
| When it meets all legal requirements and contains all essential elements |
|
|
Term
|
Definition
| When it lacks one or more of the essential elements of a valid contract |
|
|
Term
| When is a contract voidable? |
|
Definition
| When one party may disaffirm it because the party is a minor or was subject to duress, fraud, or misrepresentation |
|
|
Term
| What are the stages of a contract? |
|
Definition
| Letter of intent (optional), offer, negotiation, acceptance, contract, and termination |
|
|
Term
| What is a letter of intent? What does a letter of intent not contain? When are they most often used? |
|
Definition
| A way for a buyer to seek information about a potential transaction ; Legal obligation ; Commercial sales |
|
|
Term
| A meeting of the minds is formed through what? |
|
Definition
| Offering and counter offering until both parties agree to the terms |
|
|
Term
| A strike-through change must be what to be enforceable? |
|
Definition
| Initialed and dated by all parties |
|
|
Term
| When is a contract formed? |
|
Definition
| Upon meeting of the minds and communication of acceptance by the parties |
|
|
Term
| Termination of the offer prior to acceptance can occur how? |
|
Definition
| A counteroffor, revocation by the offeror, rejection by the offeree, lapse of unreasonable time, destruction of the property, or death of either party |
|
|
Term
|
Definition
| Termination of the original offer and creation of a new offer |
|
|
Term
| Once under contract, how may the contract be changed? |
|
Definition
| An amendment must be negotiated and signed by all parties |
|
|
Term
| If the terms of a contract aren't adhered to by a party, that party would be in what? |
|
Definition
|
|
Term
| How is a purchase contract terminated? What would not terminate a purchase contract? |
|
Definition
| Either by a party exercising a contingency and terminating, by breach by a party, or at closing with conveyance of the deed ; Death of a party to the contract |
|
|
Term
| What does it mean to have contractual capacity? |
|
Definition
| Must be 18 years old or an emancipated minor, and must be sane and sober |
|
|
Term
| What does it mean to be a legally competent party? |
|
Definition
| Must be 18 years old or an emancipated minor, and must be sane and sober |
|
|
Term
| A person determined to be incompetent by a judge cannot enter into what? |
|
Definition
|
|
Term
| A mutual agreement is achieved by a? |
|
Definition
|
|
Term
| When does an offer become binding? |
|
Definition
| Upon communication of acceptance |
|
|
Term
|
Definition
| One that, if known, might change a decision and must be disclosed |
|
|
Term
| What is contractual intent? |
|
Definition
| The intent to be bound by a contract |
|
|
Term
| What intent may not be present in a contract? |
|
Definition
| Intent to commit fraudulent acts or misrepresent |
|
|
Term
| What is puffing? Is it legal? Example? |
|
Definition
| The act of making a claim that anyone would understand is not literally true ; Yes ; The best view in the city |
|
|
Term
| A seller must disclose all material defects and facts even if selling a property as what? |
|
Definition
|
|
Term
| What does phrase caveat emptor mean? |
|
Definition
|
|
Term
| A meeting of the minds cannot be made under what conditions? |
|
Definition
| Duress, menace, undue influence, or mutual mistake |
|
|
Term
| A contract must have what type of purpose? |
|
Definition
|
|
Term
|
Definition
| Money, promises, or something of value? |
|
|
Term
| What can never be considered consideration? |
|
Definition
|
|
Term
| What are the essential elements of a real estate contract? |
|
Definition
| Competent parties, meeting of the minds, lawful objectives, consideration, in writing and signed |
|
|
Term
| The statute of frauds requires that, in order to be enforceable, certain contracts must be what? |
|
Definition
| In writing and signed by all parties expected to perform |
|
|
Term
| The statute of frauds requires that all contracts for the transfer of interests in real estate be in what form? |
|
Definition
| Express written contracts |
|
|
Term
| What sets the amount of time parties will be given to file a claim or lawsuit? |
|
Definition
| The statute of limitations |
|
|
Term
| What is the difference between executory and executed? |
|
Definition
| Executory has not yet been fully performed and executed all duties have been fully performed |
|
|
Term
|
Definition
| Material attached to and made part of an offer |
|
|
Term
| What is an amendment/modification? |
|
Definition
| A modification of contract terms by mutual agreement |
|
|
Term
|
Definition
| Transfers contract rights but not liability |
|
|
Term
|
Definition
| The transfer of contract rights and liability through a new contract that replaces the original |
|
|
Term
| When a contract duty is required that cannot be legally performed the contract becomes what? |
|
Definition
|
|
Term
|
Definition
| A duty, that if not performed, terminates a contract |
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|
Term
| What is a legal impossibility? |
|
Definition
| A duty required by the contract that cannot be legally performed |
|
|
Term
| What is mutual rescission? |
|
Definition
| All parties agree to return to their original condition before the contract was executed, mutual contract termination |
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Term
| Most contracts are not terminated by what? |
|
Definition
|
|
Term
| How does a breach of contract occur? |
|
Definition
| When one party is in default without a legal excuse |
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Term
| What sets forth the amount of time that the nonbreaching party has to take legal action against the breaching party? |
|
Definition
| The statute of limitations |
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Term
| What are the remedies a nonbreaching party to a contract could take? |
|
Definition
| Acceptance of partial performance, specific performance, receiving liquidated damages, and suing for actual damages |
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Term
| What is acceptance of partial performance? |
|
Definition
| Choosing not to sue for breach of contract |
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|
Term
| What is specific performance? |
|
Definition
| Suing to force performance for completion of contract |
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Term
| What are liquidated damages? When is this available? Example? |
|
Definition
| Retaining a breaching party's deposit ; Available only when specified in the contract ; Earnest money or a damage deposit |
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Term
|
Definition
|
|
Term
| Name a few types of real estate contracts |
|
Definition
| Purchase contract, option, lease-purchase, right of first refusal, sale-leaseback, lease |
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Term
| What type of contract is a purchase agreement? |
|
Definition
| Bilateral written expressed |
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Term
| What are typical contingencies in a purchase contract? |
|
Definition
| Financing, appraisal, or inspection |
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|
Term
| What are the essential elements of a real estate purchase contract? |
|
Definition
| Buyer's and seller's signatures, property description, price and terms, and in writing and signed |
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Term
| What is an option contract? |
|
Definition
| A potential buyer purchases the right to buy in the future from a seller who agrees to sell within a set period for a set price |
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|
Term
| What type of contract is a option contract? |
|
Definition
| Unilateral written contract |
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Term
| If a buyer decides not to buy in an option contract, what recourse does the seller have? |
|
Definition
| None except to keep the buyers option fee |
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|
Term
|
Definition
| A nonrefundable fee to hold an option for a buyer |
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|
Term
| What is a lease-purchase contract? |
|
Definition
| Used when a tenant wants to purchase property but can't get financing for the full amount |
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|
Term
| What is a right of first refusal contract? |
|
Definition
| A potential buyer purchases the right to buy in the future from a seller |
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Term
| What is the difference between an option contract and a right of first refusal contract? |
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Definition
| A right of first refusal gives more flexibility because there is typically no set price and the seller can sell to others if the first right is not exercised |
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Term
| What is a sale-leaseback contract? |
|
Definition
| A contract where an owners sells property to an investor and then leases it back |
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Term
|
Definition
| A contract for possession of a property |
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|
Term
| What are the types of leases? |
|
Definition
| Gross/fixed lease, net lease, percentage lease, variable lease, and ground (land) lease |
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|
Term
| What are the parties to a lease? |
|
Definition
| The lessor and the lessee |
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|
Term
| What are the essential elements of a lease? |
|
Definition
| Name of lessor and lessee, description of the property, rent terms |
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Term
| What is a gross or fixed lease? What is this lease most common for? |
|
Definition
| A lease where the tenant pays a fixed rent and the landlord pays all expenses ; Residential leases |
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|
Term
|
Definition
| A lease where the tenant pays a base rent plus expenses like property taxes, insurance, and maintenance |
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|
Term
| What is a percentage lease? What is this lease most common for? |
|
Definition
| A lease where the tenant pays rent based on a percentage of the gross income (sales) ; Retail properties |
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|
Term
| What is a variable lease? What are the two types of variable leases? |
|
Definition
| A lease where the tenant pays a rent that increases and decreases at predetermined levels ; Graduated and index |
|
|
Term
|
Definition
| A lease used to rent unimproved property where improvements usually become the landlord's property at the end of the lease |
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|
Term
| What type of lease would give a landlord the most stable income? |
|
Definition
|
|
Term
| What is the termination of a lease based on? |
|
Definition
| The expiration date of the lease or required notice of termination |
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|
Term
| What is an estate for years termination based on? What is it never based on? |
|
Definition
| The expiration date ; Death of a party |
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|
Term
| What is a periodic estates termination based on? What is it never based on? |
|
Definition
|
|
Term
| What is an estate at wills termination based on? |
|
Definition
|
|
Term
|
Definition
| A court action brought by the landlord against a tenant who is in breach of the lease |
|
|
Term
| What is constructive eviction? What does a tenant not do with a constructive eviction? What must they do? |
|
Definition
| Termination of a lease if a tenant must vacate due to a landlord's act or failure to act ; Pay rent ; Move |
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|
Term
| What are the points for evaluation in risk management? |
|
Definition
| Avoid, control, transfer, and retain |
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|
Term
| What does ACTR stand for? What is it in relation to? |
|
Definition
| Avoid, control, transfer, and retain ; Risk management |
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|
Term
|
Definition
| A process used to avoid risk |
|
|
Term
| What does it mean to avoid a risk? |
|
Definition
| Remove the source of a risk |
|
|
Term
| What does it mean to control a risk? |
|
Definition
| Preparing for an emergency before it happens |
|
|
Term
| What does it mean to transfer a risk? |
|
Definition
| Shifting a risk to another party |
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|
Term
| What does it mean to retain a risk? |
|
Definition
| Deciding that the chances of the event occurring are too small to justify the expense of any response |
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|
Term
| What are the types of insurance for property owners? |
|
Definition
| Tenant's rental, fire and hazard, flood, liability, casualty, surety bond, and owners association |
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|
Term
| What is E&O insurance? What/who does it cover? What does it not cover? |
|
Definition
| Errors and omissions insurance ; Covers brokerage firms, brokers, and salespersons for liability for errors and negligence in listing and selling activities ; Criminal acts, fraud, failure to disclose material facts, violations of civil rights, and antitrust laws |
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|
Term
| A contract whose terms have been explicitly declared either verbally or in writing is a(n) (BLANK) contract |
|
Definition
|
|
Term
| When only one party to the contract makes a promise, the result is a (BLANK) contract |
|
Definition
|
|
Term
| A contract in which one party has the right to void the contract is a(n) (BLANK) contract |
|
Definition
|
|
Term
| A contract created by the actions of the parties is a(n) (BLANK) contract |
|
Definition
|
|
Term
| A contract with a minor will be (BLANK) |
|
Definition
|
|
Term
| A lease contract in which the tenant pays rent only is a (BLANK) |
|
Definition
|
|
Term
| The protection for buyers in a contract that allows them to get their earnest money back if they cannot qualify for a loan is known as a (BLANK) |
|
Definition
|
|
Term
| A unilateral contract in which Buyer Allen has the right to purchase a property from Seller Betty if Buyer Allen chooses to do so is a(n) (BLANK) |
|
Definition
|
|
Term
| A party attempting to enforce an oral executory contract for the purchase of real estate would be stopped by the (BLANK) |
|
Definition
|
|
Term
| (BLANK) means that there was an offer and acceptance, there was no fraud, misrepresentation, or mistake, and the consent was genuinely and freely given |
|
Definition
|
|
Term
| The party who makes an offer to another is known as the (BLANK) |
|
Definition
|
|
Term
| An accepted offer becomes binding on the offeror upon (BLANK) |
|
Definition
| Communication of acceptance |
|
|
Term
| Actual knowledge to enter into a contract by intentionally deceiving a party is (BLANK) |
|
Definition
|
|
Term
| Something of value given in exchange for something else of value is (BLANK) |
|
Definition
|
|
Term
| (BLANK) is not consideration but may be required as part of liquidated damages in a purchase contract |
|
Definition
|
|
Term
| Additional material attached to and made part of an an offer is an (BLANK) |
|
Definition
|
|
Term
| To modify a written contract, both parties must sign an (BLANK) |
|
Definition
|
|
Term
| The buyer has equitable title in an (BLANK) contract |
|
Definition
|
|
Term
| The right of parties to a contract to sue each other to perform the contract terms is (BLANK) |
|
Definition
|
|
Term
| When the seller keeps only the earnest money or other things of value of a buyer who is in default, the contract remedy used is (BLANK) |
|
Definition
|
|
Term
| What is an appraisal? Who can perform an appraisal? |
|
Definition
| An estimate or opinion of market value supported by an analysis of relevant property ; A licensed appraiser |
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|
Term
| What is the most common function of an appraisal? Who generally for? |
|
Definition
| Most appraisals seek to estimate market value ; A lender |
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|
Term
| What is an appraisal required for? For what types of loans? What is it not required for? |
|
Definition
| All federally related loans ; Conventional, FHA, and VA loans ; Seller-carry loans |
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|
Term
| A real estate licensee would perform what instead of an appraisal? |
|
Definition
| CMA (competitive market analysis), a BPO (brokers price opinion, or a BOV (brokers opinion of value) |
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|
Term
| A broker may charge a fee for a CMA/BPO/BOV, but should make it clear that it is not a what? |
|
Definition
|
|
Term
|
Definition
| The most probable price that a property should bring when a seller would sell and a buyer would buy, the property is exposed on the open market for a reasonable time, both parties are familiar with the property, and neither party is under abnormal pressure to sell or buy |
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|
Term
|
Definition
| The actual sales price that a property brought in a sale |
|
|
Term
| What are the essential elements of value? |
|
Definition
| Demand, Utility, Scarcity, and Transferability |
|
|
Term
| What does the acronym DUST stand for in terms of value? |
|
Definition
| Demand, Utility, Scarcity, and Transferability |
|
|
Term
|
Definition
| There in a finite supply of land |
|
|
Term
| What does transferability mean? |
|
Definition
| A property must have marketable title |
|
|
Term
| What is a property's highest and best use? |
|
Definition
| The use that produces the best return on investment over time |
|
|
Term
| What would a property's highest and best use be included in? What would it not be included in? |
|
Definition
| An appraisal ; A CMA/BPO?BOV |
|
|
Term
| What does supply and demand determine? |
|
Definition
| Sales prices and rental rates |
|
|
Term
| What is the principle of substitution? |
|
Definition
| Substituting a property that meets the same criteria of time, function, and utility as the subject property |
|
|
Term
| What is the most important principle of an appraisal? |
|
Definition
|
|
Term
| What principle is used in all three approaches to valuation? |
|
Definition
|
|
Term
|
Definition
| A property's value tends to move towards that of its surrounding properties |
|
|
Term
| What is regression? What principle is this a part of? |
|
Definition
| When the value of an overimproved property declines ; Conformity |
|
|
Term
| What is progression? What principle is this a part of? |
|
Definition
| When the value of an underimproved property increases ; Conformity |
|
|
Term
| When is value in a neighborhood most stable? |
|
Definition
| When all properties are similar/conformity is high |
|
|
Term
|
Definition
| The increasing or decreasing returns on improvements made to real estate |
|
|
Term
| What is an increasing return in terms of real estate? |
|
Definition
| Improvements that add more value than they cost |
|
|
Term
| What is a decreasing return in terms of real estate? |
|
Definition
| Improvements that add less value than they cost |
|
|
Term
| What is the value of an improvement? |
|
Definition
| What the market would pay for that improvement |
|
|
Term
| What is the sales comparison/market data approach to valuation? What is it the most important for? |
|
Definition
| Estimates value based on adjusted sales price of similar properties that were recently sold ; Residential property and vacant land |
|
|
Term
| In the sales comparison approach, how are properties adjusted? |
|
Definition
| The subject property is never adjusted, previously sold comparable properties are adjusted up or down to get a value similar to the subject property |
|
|
Term
| In the sales comparison approach, which property is never adjusted? |
|
Definition
|
|
Term
| In a rapidly changing market, what should the age of comparables be? |
|
Definition
| Preferably those that have sold withing 6 months, but no more than 12 months |
|
|
Term
| What are the primary elements of comparison and adjustment in the market data approach? |
|
Definition
| Lot size, date of sale, days on market, amenities, and square footage |
|
|
Term
| In the sales comparison approach, which property is adjusted? |
|
Definition
| The comparable properties |
|
|
Term
| What valuation method uses the paired sales analysis? |
|
Definition
| Competitive market data/sales comparison |
|
|
Term
| What is the paired sales analysis? |
|
Definition
| Comparison of two properties that are nearly identical, with the exception of the item being adjusted like a bedroom or bathroom |
|
|
Term
| In the paired sales analysis, what is value based on? |
|
Definition
| What the market would pay for the improvement |
|
|
Term
| What is the cost comparison approach to valuation? When is it used? What type of property is it commonly used for? |
|
Definition
| Estimates value based on reproduction or replacement cost of improvements minus depreciation plus land value ; Used when comparable sales or income of property is lacking ; Most common method for new construction and unique or special purpose properties |
|
|
Term
| What is an example of a unique or special purpose property? |
|
Definition
|
|
Term
| What are the three steps to the cost approach? |
|
Definition
| Estimate the cost to build the improvements as if built today, estimate and deduct accrued depreciation, and add the land value |
|
|
Term
| What element of real estate will never depreciate? |
|
Definition
|
|
Term
| How is land usually evaluated in the cost comparison approach? |
|
Definition
| Using the market data approach |
|
|
Term
| What is the formula for the cost comparison approach to valuation? |
|
Definition
| Cost to build new - Depreciation + Land value |
|
|
Term
| What does reproduction mean in terms of the cost comparison approach to valuation? What type of property is reproduction generally used for? |
|
Definition
| Cost to build a replica with the same or highly similar material ; Historical properties |
|
|
Term
| What does reproduction mean in terms of the cost comparison approach to valuation? |
|
Definition
| Cost to replace improvements with the same functionality and utility |
|
|
Term
| What is depreciation? What is another word for depreciation? What are the three types of depreciation? |
|
Definition
| The loss of value for any reason ; Obsolescence ; Physical, functional, and economic o |
|
|
Term
| What is physical obsolescence? Is this curable? |
|
Definition
| Deferred maintenance and wear and tear that cause depreciation ; Typically yes |
|
|
Term
| What is functional obsolescence? Is this curable? |
|
Definition
| Design or other inadequacies that cause depreciation ; May or may not be curable |
|
|
Term
| What is economic obsolescence? What are other terms for this? Is this curable? |
|
Definition
| External factors that cause depreciation ; Locational or external obsolescence ; Typically no |
|
|
Term
| What is the income approach to valuation? When is it used? What type of property is it commonly used for? |
|
Definition
| Used for properties that generate income ; Buying an investment property ; Apartment building, shopping center, or office building |
|
|
Term
| How do investors determine what they will pay for a property? |
|
Definition
| Based on the rate of return or cap rate |
|
|
Term
| What is a capitalization rate or cap rate? |
|
Definition
| A calculation of future income based on a property's net operating income (NOI) |
|
|
Term
|
Definition
| The process of converting estimated future income into present value |
|
|
Term
| How do you calculate net operating income or NOI? |
|
Definition
| NOI equals cap rate times value |
|
|
Term
| What is a gross rent multiplier? When is it primarily used? |
|
Definition
| A simplified alternative to capitalization that takes into account gross income but not vacancies, bad debt, or expenses ; Single family rental homes |
|
|
Term
| What are the formulas for calculating value using the gross rent multiplier? |
|
Definition
| Annual gross rent multiplier times annual potential gross rent equals value -or- monthly gross rent multiplier times monthly potential gross rent equals value |
|
|
Term
|
Definition
| The process of taking all three approaches to value and compiling them into one value |
|
|
Term
| How is the process of reconciliation completed? |
|
Definition
| Each approach of valuation is weighted and used to determine a subject property's estimated value, with the most weight given to the approach that is the most appropriate for the property type |
|
|
Term
| The process of converting a future income stream into an expression of present value is (BLANK) |
|
Definition
|
|
Term
| The cost of replacing an improvement with another of similar quality but not an exact replica is (BLANK) |
|
Definition
|
|
Term
| Loss in value due to causes external to the property is (BLANK) |
|
Definition
| Economic/Locational/External obsolescence |
|
|
Term
| A method of valuing a property by comparing the subject property to similar properties that have recently sold is the (BLANK) approach |
|
Definition
|
|
Term
| Demand, utility, scarcity, and transferability are essential elements of (BLANK) |
|
Definition
|
|
Term
| An appraisal is an (BLANK) of value |
|
Definition
|
|
Term
| To obtain the value using the capitalization approach, an appraiser would divide the (BLANK) by the capitalization rate |
|
Definition
| NOI or Net operating income |
|
|
Term
| All three approaches to value use the principle of (BLANK) |
|
Definition
|
|
Term
| An appraiser calculates accrued depreciation in the (BLANK) approach |
|
Definition
|
|
Term
| When an appraiser determines the accrued depreciation, outdated electrical fixtures would be considered (BLANK) obsolescence |
|
Definition
|
|
Term
| An appraiser estimating operating expenses is used the (BLANK) approach |
|
Definition
|
|
Term
| The market data approach is also known as the (BLANK) approach |
|
Definition
|
|
Term
| The step in which the appraiser weighs all approaches of valuation to determine a final value is (BLANK) |
|
Definition
|
|
Term
| An appraiser determining the value of a shopping center would use the (BLANK) approach |
|
Definition
|
|
Term
| The best approach to determine the value of a library would be the (BLANK) approach |
|
Definition
|
|
Term
| How does title theory work? |
|
Definition
| The borrower gives legal title to the lender and retains equitable title until the loan debt is fully repaid |
|
|
Term
| How does lien theory work? |
|
Definition
| The borrower retains both legal and equitable title and the lender puts a lien on the property until the loan debt is fully repaid |
|
|
Term
| What is the function of a mortgage or deed of trust? |
|
Definition
| To act as a security for the promissory note |
|
|
Term
| What acts as collateral for a loan on real property? |
|
Definition
| A mortgage or deed of trust |
|
|
Term
| What is a promissory note? |
|
Definition
| A legal instrument that evidences a debt that is secured by a mortgage or deed of trust |
|
|
Term
| What are the key elements of a promissory note? |
|
Definition
| Promise of a borrower to repay a fixed amount, terms of repayment, and the signature of the borrower |
|
|
Term
| What is an acceleration clause? |
|
Definition
| A clause stating that if the borrower defaults, the lender can demand immediate repayment of the entire balance |
|
|
Term
| What does a promissory note alone not do? |
|
Definition
| Create a lien on a property |
|
|
Term
| What is a mortgage or deed of trust? |
|
Definition
| An instrument that pledges property as security for a debt |
|
|
Term
| In the majority of home loans, what type of interest is used? |
|
Definition
| Simple, non-compounding interest |
|
|
Term
| Who is the mortgagor? Who is the mortgagee? |
|
Definition
| The borrower ; The lender |
|
|
Term
| How many parties are there to a mortgage? Who are they? |
|
Definition
| Two ; The mortgagor and mortgagee |
|
|
Term
| Who is the trustor? Who is the trustee? Who is the beneficiary? |
|
Definition
| The borrower ; A public or private party who holds a deed of trust ; The lender |
|
|
Term
| How many parties are there to a deed of trust? Who are they? |
|
Definition
| Three, The trustor, the trustee, and the beneficiary |
|
|
Term
| What essential elements of a valid contract must a deed of trust have? List them |
|
Definition
| All of them: Competent parties, meeting of the minds, lawful objective, consideration, and be in writing and signed by all parties to the transaction |
|
|
Term
| What are the provisions of a mortgage or deed of trust? |
|
Definition
| Defines rights and obligations, acceleration clause, defeasance clause, due-on-sale clause, prepayment clause, power of sale clause |
|
|
Term
| What is an acceleration clause? |
|
Definition
| A clause stating the lender may demand payment in full in case of a default by the borrower |
|
|
Term
| What is a defeasance clause? How is this conveyed to a mortgagor? To a trustor? |
|
Definition
| A clause stating when the debt is paid in full, the lien must be removed ; Satisfaction of the mortgage ; Deed of reconveyance |
|
|
Term
| In terms of a mortgage or deed of trust, what proves payments are in full and are recorded by the borrower? |
|
Definition
| A satisfaction for a mortgage and a deed of reconveyance for a deed of trust |
|
|
Term
| What is a due on sale clause? What is another name for this clause? |
|
Definition
| A clause stating that when a property is sold, the lender may demand immediate repayment of the entire debt |
|
|
Term
| What is a prepayment clause? What may this include for the borrower? |
|
Definition
| A clause that sets the terms for how and when the borrower can pay off the loan ; Penalties for early payoff |
|
|
Term
| What is a power of sale clause? |
|
Definition
| An optional state allowed provision in a mortgage, and standard provision in a deed of trust, that allows mortgagee/trustee the power of nonjudicial foreclosure |
|
|
Term
| What are some reasons for the acceleration or foreclosure of a loan? |
|
Definition
| Nonpayment of principal and interest, nonpayment of taxes, removal of improvements without lender consent, insurance lapse, waste, or alienation without consent |
|
|
Term
| What is waste of a property? |
|
Definition
| deferred maintenance or any other activity that lowers the value of a property below what is owed |
|
|
Term
| What does the loan to value ratio or mortgage ratio determine? |
|
Definition
| How much money can be borrowed and if private mortgage insurance will be needed |
|
|
Term
| How is the maximum percentage of value that a lender will loan to a borrower determined? |
|
Definition
|
|
Term
| What determines the value in the loan to value ratio? |
|
Definition
| The sales price or appraised value, whichever is lower |
|
|
Term
| How is equity calculated? |
|
Definition
| Market value today-Total debt today=Equity |
|
|
Term
|
Definition
| The effect of using borrowed money to finance an investment |
|
|
Term
| A higher leverage means what? |
|
Definition
| The higher the LTV and more money borrowed |
|
|
Term
| A lower leverage means what? |
|
Definition
| The lower the LTV and less money borrowed |
|
|
Term
| What is the disadvantage of higher leverage? |
|
Definition
| The higher the leverage the greater the risk of default on the loan |
|
|
Term
| What is the advantage of leverage? |
|
Definition
| Being able to control a large asset with little cash investment |
|
|
Term
| What is a discount point? When is it paid? |
|
Definition
| One point is 1% of the loan amount paid to the lender at funding to lower the interest rate on a loan |
|
|
Term
| Why does a lender charge discount points? |
|
Definition
| To increase the yield on a loan |
|
|
Term
| What is a loan origination fee? |
|
Definition
| A charge by the lender to process and issue a loan |
|
|
Term
| When is a discount point paid? |
|
Definition
|
|
Term
|
Definition
| Charging an interest rate in excess of what is permitted by law |
|
|
Term
| What determines the maximum interest rate limits and the types of loans affected by usury law? |
|
Definition
|
|
Term
| What is foreclosure governed by? |
|
Definition
|
|
Term
|
Definition
| The procedure whereby title to property is used as security for a debt is taken by a lender and sold to satisfy the debt |
|
|
Term
| What does foreclosure do in terms of liens against a property? |
|
Definition
|
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Term
| What are the types of foreclosure? |
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Definition
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Term
| What can the borrower do to cure a foreclosure during the equitable redemption period? |
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Definition
| Paying all missed payments plus interest and penalties |
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Term
| What may result in a deficiency or personal judgement after a REO sale of a property? |
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Definition
| Insufficient sale proceeds |
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Term
| What is a deed in lieu of foreclosure? What does a deed in lieu not do to other liens? |
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Definition
| To avoid foreclosure, a borrower deeds property held as security to the lender ; Erase 2nd and subsequent liens |
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Term
| Why might a lender not accept a deed in lieu of foreclosure? |
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Definition
| If the property had 2nd or subsequent liens, the lender would take title to the property subject to those liens |
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Term
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Definition
| The sale of a property by the borrower where the market value of the property will not bring sufficient funds to pay off the loan balance |
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Term
| What is a term loan? What is another name for this type of loan? |
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Definition
| Interest only payments until maturity, with a balloon payment of the entire principal at the end of the loan term ; Straight loan |
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Term
| What is a partially amortized loan? |
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Definition
| Equal payments of principal and interest until maturity, with a balloon payment of the remainder of the principal at the end of the loan term |
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Term
| What is a fully amortized loan? What is another name for this type of loan? |
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Definition
| Equal consecutive installments of principal and interest until maturity, when the principal balance reaches zero ; Fixed rate loan |
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Term
| What is the most common loan for residential single family homes? |
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Definition
| A fully amortized or fixed rate loan |
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Term
| What is an adjustable rate mortgage? What is another name for this type of loan? Who would this not be a good loan for? |
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Definition
| Similar to a fully amortized loan, but the interest rate fluctuates subject to a set economic index ; An ARM ; Borrowers with a set income, such as a retiree |
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Term
| What is a budget mortgage? |
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Definition
| A mortgage where payments include PITI: principal, interest, taxes, and insurance |
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Term
| What is PITI? What is this in reference to? |
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Definition
| Principal, interest, taxes, and insurance ; A budget mortgage |
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Term
| What is a package mortgage? What is an example of a property this would be used for? |
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Definition
| A mortgage that includes real property plus personal property ; A furnished condominium |
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Term
| What is a blanket mortgage? Who typically takes out a loan like this? |
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Definition
| A single loan that includes more than one parcel of land to be used as security ; A developer |
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Term
| What is a construction mortgage? |
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Definition
| Interim financing made available in installments as improvements are completed |
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Term
| What is a reverse mortgage? What is another name for this type of loan? |
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Definition
| A loan where the a lender pays a borrower monthly payments of principal with each disbursement |
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Term
| What is a home equity loan? |
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Definition
| A loan where a borrower borrows against the equity they have in a property |
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Term
| What does the Truth in Lending Act provide for in terms of a home equity loan or HELOC? What does HELOC stand for? |
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Definition
| A three day right of rescission after approval of the loan ; Home equity line of credit |
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Term
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Definition
| A loan where a higher than prime rate is charged because the borrower and/or property used as security is a higher risk than a prime borrower |
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Term
| What is predatory lending? Who, generally, are targets of predatory lending? |
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Definition
| An umbrella term for unfair or illegal lending practices ; The elderly, minorities, those who are less educated, and those who do not speak English as a first language |
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Term
| What do predatory lending practices include? |
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Definition
| Making loans to those who cannot repay, Urging borrowers to refinance repeatedly, originating loans with high prepayment penalties, using different terms at application and and pressuring different terms at closing, offering only subprime rates to borrowers who qualify for prime rates, offering interest only loans |
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Term
| What is a purchase money mortgage? What are other names for this type of loan? |
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Definition
| A loan where full title is transferred to the buyer, and the seller takes a lien on the property at closing ; A seller carry second or seller carryback |
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Term
| What is a contract for deed? What are other names for this type of loan? |
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Definition
| A loan where buyer receives title to the property only after the full amount is received by the seller via installment payments ; Land contract or installment contract |
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Term
| What is a licensees role in terms of seller financing? |
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Definition
| To make sure both parties understand the risks that may be involved |
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Term
| The borrower's right to cure a default and stop for closure is (BLANK) |
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Definition
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Term
| An (BLANK) would not be recommended for a retiree on a fixed income |
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Definition
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Term
| The clause that appears in both the note and mortgage that allows the lender to demand immediate payment of the entire debt if the borrower defaults is a(n) (BLANK) |
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Definition
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Term
| A loan that is repaid in one single lump sum at the end of its life is called a straight loan or a (BLANK) |
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Definition
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Term
| A loan in which payments are scheduled so the entire principal balance is repaid b the maturity date is a (BLANK) loan |
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Definition
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Term
| A disadvantage of a term or partially amortized loan is the final (BLANK) payment |
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Definition
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Term
| A (BLANK) is used when more than one property is pledged as security for a single loan |
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Definition
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Term
| A mortgage given by the purchaser to the seller in partial payment for the property is a (BLANK) |
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Definition
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Term
| The difference between a property's market value and the debts against it is (BLANK) |
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Definition
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Term
| A loan that allows a borrower to make smaller payments of interest and principal but has a balloon payment at the end is a (BLANK) loan |
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Definition
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Term
| If a borrower sells the property and loan without permission of the lender, the clause that allows the lender to call the loan due and payable is the (BLANK) |
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Definition
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Term
| Points charged by the lenders are computed as a percentage of the (BLANK) |
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Definition
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Term
| The higher the loan to value ratio, the higher the (BLANK) |
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Definition
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Term
| A contract that gives a buyer the right to occupy the property now and receive a deed after payment in full of the purchase price is a (BLANK) |
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Definition
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Term
| The mortgagee makes payments to the mortgagor in a (BLANK) |
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Definition
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Term
| What defines a conventional mortgage? What can the LTV be up to in a conventional mortgage? |
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Definition
| Debt repayment is based solely on the borrower's ability to repay and the loan is not insured by the government ; 80% |
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Term
| What defines an insured conventional mortgage? What is this loans advantage over a conventional loan? |
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Definition
| Private mortgage insurance protects lenders from loss due to a deficiency when the LTV is above 80% ; The borrower makes a smaller down payment |
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Term
| What does PMI protect a lender against? |
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Definition
| The shortfall between the amount obtained in a foreclosure and the outstanding mortgage debt |
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Term
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Definition
| The full amount of a loan |
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Term
| When does a borrower/mortgagor pay PMI? |
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Definition
| When the LTV of a loan is above 80% |
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Term
| What defines an FHA insured loan? What can the LTV be up to? |
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Definition
| The FHA provides its own mortgage default insurance for a mortgage made by an approved lender ; 97% |
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Term
| A property must be owner occupied to receive what kind of loans? |
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Definition
| FHA insured and VA guaranteed |
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Term
| In an FHA loan, where do the funds originate from? Where do they never originate from? |
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Definition
| An FHA approved lender ; The FHA |
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Term
| What does an FHA loan insure? |
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Definition
| The lender against a borrower default |
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Term
| What types of loans will never contain a prepayment penalty? |
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Definition
| FHA insured and VA guaranteed |
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Term
| What is a loan payoff based on in an FHA insured loan? |
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Definition
| The original terms of the loan |
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Term
| What types of loans must contain an escape clause? |
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Definition
| FHA insured and VA guaranteed |
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Term
| What types of loans will never contain a due on sale clause? |
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Definition
| FHA insured and VA guaranteed |
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Term
| What defines a VA guaranteed loan? What can the LTV be up to? |
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Definition
| The VA provides its own mortgage default insurance to eligible veterans for a mortgage made by an approved lender ; 100% |
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Term
| Who is eligible to receive a VA guaranteed loan? Who is not? |
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Definition
| Active or retired military ; Parents of active or retired military or citizens who have not served |
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Term
| What is the only type of loan wherein no down payment is required? |
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Definition
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Term
| What entity regulates the supply of money and interest rates in the US |
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Definition
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Term
| What is the primary mortgage market? |
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Definition
| The institutions that originate loans for borrowers |
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Term
| What do mortgage bankers do? |
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Definition
| Provide financing as they are direct lenders |
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Term
| What do mortgage brokers do? |
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Definition
| Bring together borrowers and lenders acting as an intermediary |
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Term
| What is the secondary mortgage market? |
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Definition
| The institutions that buy loans that have already been originated by a lender |
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Term
| Why are existing loans bought from banks in the secondary market? |
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Definition
| To provide money to the primary mortgagees to make new loans |
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Term
| How are mortgages generally sold? |
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Definition
| As mortgage-backed securities |
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Term
| What changes when a mortgage is sold on the secondary market? What remains the same |
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Definition
| The address or company that a borrower sends a payment to ; The terms of the loan |
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Term
| What are the three main secondary mortgage market organizations? |
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Definition
| FNMA (Fannie Mae), GNMA (Ginnie Mae), and FHLMC (Freddie Mac) |
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Term
| What is the FNMA? What types of loans does the FNMA buy? What does FNMA stand for? What is its common name? |
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Definition
| A government sponsored organization ; Buys all types of mortgages ; Federal National Mortgage Association ; Freddie Mac |
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Term
| What is the GNMA? What types of loans does the GNMA buy? What does GNMA stand for? What is its common name? |
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Definition
| An agency within HUD ; Buys FHA and VA mortgages ; Government National Mortgage Association ; Ginnie Mae |
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Term
| What is the FHLMC? What types of loans does the FHLMC buy? What does FHLMC stand for? What is its common name? |
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Definition
| A government sponsored corporation ; Buys conventional mortgages from savings and loan organizations and commercial banks ; Federal Home Loan Mortgage Corporation ; Freddie Mac |
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Term
| What is a conforming loan |
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Definition
| A loan that meets the standards of Fannie Mae and Ginnie Mae that can be readily sold in the secondary market |
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Term
| What is a nonconforming loan? |
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Definition
| A loan that is larger than Fannie Mae standards and may be more difficult to sell in the secondary market |
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Term
| What are the two laws enforced by the Consumer Financial Protection Bureau? |
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Definition
| The Truth in Lending Act and the Real Estate Settlement Procedures Act |
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Term
| What does the Truth in Lending Act cover? What is it's main focus on bringing clarity to? |
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Definition
| All consumer lending, not just real estate ; Lender costs in a transaction |
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Term
| What does the Real Estate Settlement Procedures Act cover? What is its main focus on bringing clarity to? |
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Definition
| Real estate professionals, including lenders and title companies ; All costs of a real estate transaction |
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Term
| What does RESPA standardize? |
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Definition
| Closing practices for one to four family properties financed by federally related loans |
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Term
| What types of loans are related to RESPA? |
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Definition
| Those that are federally related, conventional loans funded by regulated lenders, and loans that will be sold on the secondary market |
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Term
| What regulation implements TILA? |
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Definition
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Term
| What is the purpose of TILA? |
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Definition
| To promote the informed use of consumer credit by requiring the advance disclosures of loan terms and costs |
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Term
| TILA applies to all real estate loans with the exception of what |
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Definition
| Corporations, business or commercial loans, seller financing |
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Term
| What is the true cost of obtaining credit expressed as? |
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Definition
| A loans APR, or annual percentage rate |
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Term
| The APR is always higher than what? |
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Definition
| The nominal interest rate |
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