Term |
Definition |
Bundle of Rights |
Right & interest of having title such as possession, control, exclusion, sell, and of enjoyment |
Real Property |
- goes with the property |
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- Generally immovable |
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Personal Property |
− goes with the person |
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− Generally movable |
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Chattel Real |
cows moove - personal property |
Fixture |
- was personal and is now real |
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- MARIA Method, Adaptability, Relationship, Intention, Agreement |
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Trade Fixture |
- personal because it goes with a business |
Riparian Rights |
river - moving body of water |
Littoral Rights |
Lake - body of water standing still |
Accretion |
additional of land |
Avulsion |
tearing away of land |
Reliction |
gradual recession of water leaving land permanently uncovered. |
Appurtenances |
Runs with the land |
Freehold Estate |
no fixed duration of ownership. |
Fee Simple Estate |
- highest possible ownership.. |
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- also know as fee simple absolute |
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Fee Simple Defeasible |
Possesses the property as a fee simple subject to a condition |
Life Estate |
ownership of land for the duration of a person's life |
Less than Freehold Estate |
limited period of time |
Estate for Years |
- defined period of time |
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- for example 6 months or july 3rd - september 8th |
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Periodic Tenancy |
− period to period such as month to month |
Estate at Will |
end at any time |
Estate at Sufferance |
landlord is suffering as tenant is in possession passed agreed upon time. |
Lease |
- possession but not ownership from lessor to lessee |
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- considered personal property |
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Percentage Lease |
based on a percentage of gross receipts |
Net Lease |
tenant pays taxes, insurance and maintenance |
Gross Lease |
tenant pays fixed amount |
Sandwich Lease |
primary party is lessee and a lessor |
Tenant Improvement Allowance |
allowance to customize generally for business purposes. |
Subleases |
Grants possession but not responsibility |
Assignment |
Grants possession and responsibility |
Surrender |
agreement to return the property to the owner (landlord) before the lease ends. |
Constructive Eviction |
landlord fails to do something that he/she has a legal duty to provide. |
Deeds |
evidence of transfer |
A Grant Deed |
transfer of real property from one person or entity to another person or entity. Each party transferring an interest in the property, or "grantor", is required to sign it. |
A Quitclaim Deed |
Deed releasing a person's interest with no warranties. Typically in non-sale situations |
Warranty deed |
deed that guarantees a clear title to the buyer of real property. |
Special Warranty Deed |
Seller only warrants or guarantees the title against defects that may have arisen during the period of ownership of the property. |
General Warranty Deed |
Seller warrants or guarantees the title against defects that may have arisen during the entire life of the property. |
Title |
ownership |
Chain of Title |
history of ownership which shows conveyances and encumbrances. |
Abstract of Title |
summary |
Cloud on Title |
Defect in title ie.. single women married |
A Quiet Title Action |
lawsuit in order to establish a party's title |
Alienation of Title |
capacity of property or a property right to be sold or transferred |
Title Insurance |
Ensure clear and marketable title |
Standard Policy of Title Insurance |
Standard coverage includes: |
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- Defects that are found in public records |
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- Forged documents |
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- Incompetent grantors |
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- Incorrect marital statements |
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- Improper delivery of deeds |
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ALTA Policy of Title Insurance |
Protects real property owners and mortgage lenders against losses from defects in titles. |
Extended Policy of Title Insurance |
Includes everything in a standard policy plus defects found in a property inspection. Which would include unrecorded rights of parties in possession, examination of survey. unrecorded liens, not known by a policy holder. |
Severalty |
sole ownership |
Concurrent Estate |
ownership with others |
Joint Tenancy |
TTIP right of survivorship |
Tenancy in Common |
unity of possession |
Encumbrances |
Limitation |
Easement |
Right to cross |
dominant tenement |
Gaining the benefit of the easement |
servient tenement |
Suffers the burden of an easement. |
Easement by Prescription |
granted after used the property in a hostile, continuous and open manner for a statutorily prescribed number of years |
Appurtenant Easement |
right to use adjoining property that transfers with the land |
Easement in Gross |
no dominent tenament |
Government Powers |
PETE - Police Power, Escheat, Taxation, Eminent Domain |
Police Power |
States ability to regulate for the betterment of the health, safety, morals, and general welfare of community. |
Zoning |
Police power that divides and into areas for designated uses |
Variance |
Exception to the roll |
Down Zoning |
Commercial to residential |
Grandfather Clause |
exempt from new rule, |
Nonconforming Use |
A type of zoning variance where a parcel of land may be given an exception from current zoning ordinances due to improvements made by a prior owner or before the current zoning ordinances made the desired use non-conforming under local law. |
Building Codes |
protect public health, safety and general welfare |
Escheat |
Reversion of property to the state when the owner dies without heirs. |
Intestate |
no will |
Testate |
has a will |
Probate |
executor for the estate of a deceased person sells property in order to divide the property among the beneficiaries. |
Holographic Will |
written by hand |
Taxation |
financial charge by a state to fund various public expenditures |
Marginal tax rate |
percentage taken from your next dollar of taxable income |
1031 Tax Deferred Exchange |
- Defer taxes |
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- identify 45 days, acquire within180 days of closing previous property. |
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Boot |
Fair market value of other Property received in an exchange |
Ad Valorem |
Latin for according to value |
Eminent Domain |
Government ability to take private property for public use |
Condemnation |
Process of compensating a person when property is taken by eminent domain. |
Inverse Condemnation |
Sueing the government for just compensation when property is taken |
Encroachment |
When a structure is built in part on a neighbor's property. |
Liens |
money owned |
General Liens |
lien against all personal property |
Specific Liens |
lien that is on a single property |
Voluntary Lien |
lien that exists because of an action taken by a debtor |
Involuntary Lien |
Liens that were imposed on a individual. i.e. .. taxes and judgment liens |
Mechanics Lien |
Lien on behalf of those who have supplied labor or materials that improve the property. |
Judgement Lien |
Lien placed by the court |
Lis Pendis |
lawsuit pending involving either the title to the property or a claimed ownership interest in it. |
Injunctions |
Court order that compels a party to do or refrain from specific acts. |
Constructive Notice |
Signifies that a person should have known as a reasonable person would have. |
Actual Notice |
Personally given to somebody |
Escrow |
neutral third party |
Debit |
money owed |
Credit |
money received |
Short Rate |
A higher periodic rate for a shorter term than what was originally contracted |
Impounds |
Money set aside by a lender to pay for reoccurring costs that take priority over the loan such as taxes and insurance. |
RESPA |
Eliminating kickbacks and referral fees which add unnecessary costs to settlement services. |
TILA |
- Inform use of consumer credit |
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- Require disclosures about its terms and cost to standardize the manner in which costs associated with borrowing are calculated and disclosed. |
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Fair Housing Act |
1968 act banning refusal to sell or rent a dwelling to any person because of race, color, religion, sex, or national origin. |
Jones vs. Mayer |
1968 court case that bared all racial discrimination, private as well as public, in the sale or rental of property based on the thirteenth amendment. |
Sherman Anti-Trust Act |
bans anti competitive behavior such as price fixing |
Americans with Disabilities Act |
1990 act prohibiting discrimination against people with disabilities in employment, transportation, public accommodation, communications, and governmental activities. |
Material Fact |
a fact that, if known, might have caused a buyer or seller of real estate to make a different decision |
Steering |
buyers - You should live by “those” people |
Blockbusting |
sellers - You better sell because you do not want to live by “those” people |
Panic Selling |
sellers - You better sell because you do not want to live by “those” people |
Panic Peddling |
sellers - You better sell because you do not want to live by “those” people |
Redlining |
denying services such as a loan, either directly or through selectively raising prices, to residents of certain areas based on race or ethnicity. |
Misrepresentation |
the action or offense of giving a false or misleading account of the nature of something. |
Actual Fraud |
fraud committed with the actual intent to deceive and thereby injure another |
Constructive Fraud |
- person gained an unfair advantage over another by unfair methods. |
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- Intent does not need to be shown |
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Statute of Limitations |
States time frames for certain contracts |
Novation |
latin for new as it relates to contracts |
Codicil |
amendment |
Agency |
ACOLD Accountability Care Obedience Loyalty Disclosure |
Fiduciary |
A position of trust, good faith and honesty |
Actual Authority |
Expressly conferred by a principal to an agent to act on the principal's behalf. |
Ostensible Authority |
Authority granted by acceptance of action on the princeiples behalf. |
Dual Agent |
buyer & seller have the same BROKER |
General Agent |
− authorized to perform any and all acts associated with the job. |
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− A real estate licensee acting in the capacity of a property manager. |
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Special Agent |
− Limited authority granted to him or her through a principal. |
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− Relationship with the principal is not expected to be continuous. |
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− Listing contract creates a special agency. |
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Estoppel |
prevents asserting something contrary to what is implied by a previous action or statement. |
Listing |
bileteral employment contract |
Exclusive Listing |
- one broker can be paid |
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- no need to show procuring cause in order to be compensated. |
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Exclusive Agency Listing |
− Owner sells agent gets nothing |
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− You need to show your are the procuring cause in order to be compensated |
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Exclusive Authorization and Right to Sell Listing |
Broker gets paid if property sold regardless of procurance cause |
Open listing |
− Seller can hire multiple brokers |
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− Broker that proves procuring cause would be compensated |
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Net Listing |
Money received above and beyond a designated amount |
Protection Period Clause (Safety Clause) |
Compensated after listing expires if you can prove your are the procuring cause |
Contingency Clause |
defines a condition or action that must be met in order for a real estate contract to become binding |
Hold Harmless Clause |
- also known as a liability waiver |
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- agreement whereby parties agree not to hold the other party responsible for any loss, damage, or legal liability that may arise under the agreement. |
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Interim Occupancy Agreement |
Staying after sale |
Deposit |
Placing something of value to show that you are serous about your offer. |
Value |
What a willing buyer will pay on the open market |
Essential Elements of Value |
STUD - Scarcity Transferability, Utility, Demand |
Principle of Substitution |
no prudent person would pay very a property when another one readily available that has the same use, design and income for less. |
Principle of Contribution |
How much does an item contribute to the net income of a property? |
Principle of Regression |
The value of a more expensive home placed in a neighborhood of less expensive homes will drop in value. |
Principle of Progression |
Progression states that the value of less expensive properties will increase when placed in the area of more expensive properties. |
Principle of Highest and Best use |
- How much of a net return you can get by building on the property? |
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- If the use is temporary, it would then be considered the Interim use |
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Appraisal |
Estimate of value |
Narrative Appraisal |
A comprehensive appraisal report is a “complete” appraisal. |
Market Data (Comparison) Approach |
- Examination and comparison of actual sales of comparable properties. |
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- Best used to find values of houses and vacant lots. |
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Cost (Replacement) Approach |
− Finding out how much would it cost to replace the building brand new |
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− Better for new buildings not old. |
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Capitalization (Income) Approach |
- Converts Income into value. |
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− A property that can prove to bring in more income will increase the value. |
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− Most appropriate for a shopping center. |
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Gross Multipliers |
price divided by rent |
Cap rate |
Higher Cap rate represents higher risk |
Acre |
43,560 |
Depreciation |
loss in value to any cause |
Physical Deterioration |
wear and tear |
Functional Obsolescence |
poor planning |
Economic Obsolescence |
outside causes |
mortgage |
a voluntary, specific lien |
Mortgage brokers |
- Intermediary between consumers and lenders. |
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- Mortgage broker originates loans while the mortgage lender funds loans. |
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Take-Out Loan |
- Long-term loans replace interim financing, such as a short-term construction loan. |
- Usually mortgages with fixed payments that are amortizing. |
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Subject To |
seller liable, buyer not liable |
Assume |
relieves seller, buyer is liable |
Hypothecate |
Pledging an asset as collateral for a loan while retaining ownership |
Subordination Clause |
Current debts will take priority over debts made in the future. |
Prepayment Clause |
provision that permits a borrower to satisfy a debt before it is due date. |
Prepayment Penalty |
regulates what the borrower is allowed to pay off and when. |
Due-on-sale clause |
Balance of the loan may be called to repay in full upon sale |
Primary Mortgage Market |
Where Lenders make mortgage loans directly to borrowers |
Secondary Mortgage Market |
resale marketplace |
Insurance companies (as a lender) |
- Prefer income producing properties and long term large industrial projects. - - Frequently demand to be able to do a participation loan |
savings and loan association |
A state or federally-chartered financial intermediary that accepts deposits from the public and invests those funds primarily in residential mortgage loans |
FHA |
- Small downpayment required |
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− insures the lender, does not make loans. |
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- unconventional loan because they are backed by the government. |
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- no pre-payment penalty |
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- Single family homes, one to four units owner occupied |
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VA Loan |
− Does not require a down payment, however the lender can require one. |
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- owner occupied house, condominium, or townhouse |
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GNMA |
A governmental part of the secondary market that deals primarily in recycling VA and FHA mortgages. |
FNMA |
federally sponsored private corporation which provides a secondary market for housing mortgages. |
mortgage banker |
A direct mortgage lender. |
Interest |
rent on money |
Leverage |
borrowed capital to increase the potential return of an investment |
Amortization |
the paying off of debt |
Negative Amortization |
interest paid but debt increases |
Balloon Loan |
loan that does not fully amortize over its term |
Appreciation |
increase in value over time |
Construction Loan |
short-term loan used to finance the building of a property. |
Obligatory Advances |
Money given during a construction loan at agreed upon stages. |
participation loan |
A loan that requires interest plus a portion of the profits as payment. |
Interim Loan |
short term financing |
Commingling |
mixing of funds |
Puffing |
gross exaggeration of facts |
Caveat Emptor |
latin for buyer beware |
Essentials of a Valid Contract |
Mutual consent, lawful object, consideration, capable parties |
Void Contract |
Lacks one of the 4 essential elements |
Voidable Contract |
Option to rescind |
Bilateral Contract |
promise for a promise example would be a exclusive listing |
Unilateral Contract |
promise for a act example would be a open listing or a option contract |
Executed Contract |
a contract that has been fully performed |
Executory Contract |
a contract that has not yet been fully performed |
The Statute of Frauds |
states what contracts must be in writing |