Massachusetts Real Estate Salesperson License

Comprehensive Environmental Response, Compensation and liability Act o 1980 (CERCLA)?

"Superfund Act" Cleans up sites contaminated with hazardous substances and to create liability for those that contaminate properties. Liability runs with the land.

Habendum Clause

"To have and to hold" clause in a deed that defines or limits the type of interest being conveyed.

What is the fine for acting as a Broker without a License?

$500

What is the basic RE Transaction?

- Hired to list property - Market/list on MLS, etc - Buyer's contact you to see - Show the property - Offer submitted - Inspection - Contingencies - Creation and signing of P&S, 5% of Sales Price is Deposited in Escrow Account. Finance Contingencies apply here as well. - Sale takes place (settlement/closing) - You and buyer's agent will be paid - Approximately 3-6 months average time

Penalties for Antitrust Violations

1 million fine per offense for Corporations and fines for up to $100k and 3 years imprisonment for individuals. There are no standard commissions, contracts and other hiring terms....they are always negotiable!!!

What is an Escrow Fund/Trust Accounts?

1. Special bank accounts for holding Client's deposits to be handled by Broker only. 2. Brokers may have only one Escrow account. 3. Commingling is strictly forbidden. 4. No Salesperson Access. 5. Interest not mandatory but if yes the client must agree who gets it in writing. (Statute of Fraud) 6. Brokers must maintain Escrow Records (copies of checks, dates, transaction info) for 3 years which the RE Board may inspect at any time. 7. Conversion of a deposit into commission requires written permission from both parties. If not, can result in loss of license. 8. Court order needed to remove funds if there is a dispute.

1099 -v- W2 Employee?

1099=Independent Contractor, paid by job or commission, set own hours, can turn down work, etc, no taxes withheld, but may take many write-offs (Many Residential RE Agents) W2=Salaried of paid hourly, employer controls what and how you do (Commercial RE Agents), taxes withheld by employers

What is the School Section in a Township?

16th because it was always traditional used for school purposes.

RE Salesperson License requirements?

18 years old, 40 hour class, pass the exam, must affiliate with a broker to practice and may not accept direct client payments

When was the RE Board of Registration founded?

1960

License suspensions:

1st=60 days, 2nd=90 days, 3rd=you're out!

How often are RE Licenses renewed?

2 years from you next birthday. 12 hours of Continuing Ed Classes must be completed before renewal.

Broker's License requirements?

3 years salesperson experience, 40 hour class, pass the exam, $5,000 bond and pay a fee.

How many days in a year and what is the fiscal calendar?

360 and July 1st to June 30th.

How big is an acre?

43,560 feet

How many feet in a mile?

5280

How big is a township?

6 Miles by 6 Miles and contains 36 square miles (23,040) acres

How many acres are in a square mile?

640

How big is a link?

7.92 inches

Lis Penden?

A Lis Pendens is a publicly recorded notice that a property's ownership is subject to litigation. It is an issue with property ownership, and is therefore classified as a "cloud on title."

Government Rectangular Survey System

A Rectangular (Government) Survey System grid was started by establishing an initial point. They arbitrarily selected a point, marked it with a monument or iron marker. All future surveys referenced that point. Not used in the original 13 states...not in MA. It divides land into rectangles using intersection Principal Meridians(North/South) and Base Lines(East/West). There are 37 Principal Meridians in the US.

Bargain and Sale Deed?

A bargain and sale deed implies an interest or rights to convey property, but it does not warrant (promise) title to it.

Dual Agent

A broker can work for both buyer and seller on the same property if the broker obtains the informed consent of both parties; this is known as disclosed dual agency. This applies even when broker designates two other agents in his office; the broker is still the agent for both the buyer and the seller, since the broker is legally hired by their agents' clients.

Simple Interest Loans?

Debt is calculated daily. The "simple" in a simple interest loan means that interest is only calculated on the outstanding principal balance. Simple interest does not compound and increase the loan balance. The amount of interest to be paid for each monthly payment cannot increase.

Trustee's Deeds?

Deeds executed by a trustee to convey RE to anyone other than the trustor.

Deeds Executed pursuant to a court order?

Deeds issues as a result of the order of a will or a court.

Tenancy in Common?

Default form of Co-ownership. Co-owners who purchase property w/out specifying type of ownership own in common. Ownership may be equal or unequal, bu all have an interest in th entire property that cannot be compromised. It is inheritable.

Equity right of redemption?

Defaulted borrower can stop the foreclosure process by paying the amount due plus foreclosure costs.

HUD?

Department of Housing and Urban Development.

Master Deed?

Describes how the building and it's condominium or homeowner's association (the building's governing body) will be set up.

Endangered Species Act of 1973?

Designed to protect critically imperiled species from extinction as a "consequence of economic growth and development un-tempered by adequate concern and conservation."

Environmental Impact Statement?

Determines what, if any, environmental impacts a development might have on an area under the NEPA (National Environmental Policy Act).

Devisees?

Devisees are heirs who receive real property in a will.

Who is a Devisee?

Devisees are heirs who receive real property in a will.

Fully Amortized loans?

Direct Reduction loans. Loans that are completely paid off when the last payment is made. Fully amortizing payment refers to a periodic loan payment where, if the borrower makes payments according to the loan's amortization schedule, the loan is fully paid off by the end of its set term. If the loan is a fixed-rate loan, each fully amortizing payment is an equal dollar amount.

Townships?

Divided into 36 sections 1 mile by 1 mile and numbered from 1-36 running east to west then west to east on alternating lines. The Northeastern Corner is always the 1st section.

Lot and Block Survey?

Divides property into blocks, then subdivides into lots using the metes and bounds for each lot.

Timeshares?

Divides time where the owner only owns a specific part of the year in fee simple along with a shared interest in the common areas. Also pays maintenance fees. AKA interval ownership, prepaid vacation, floating use period.

Dedication?

Donation of property rights permanently or temporarily for the public use. i.e. for use as a park.

Asbestos?

EPA banned all usage in 1989 and was overturned by the courts in 1991. Was used as insulation. Flocked/Popcorn ceilings were banned in 1978 but installers could use their existing stock until 1986.

Unit Deed?

Each individual owner owns their own condo and a shore of the common areas in proportion to their unit's fair market value via a Unit Deed.

Battery operated CO Detectors?

Effective March 31, 2006 all homes in Massachusetts equipped with fuel burning equipment that produce carbon monoxide or have indoor parking (garage) adjacent to living areas must have Carbon Monoxide (CO) detectors installed on every level of the home. New home construction or renovations must have hard-wired detectors; older homes may be brought into compliance with battery-operated detectors. Thus, the minimum requirement for ALL homes is battery operated detectors.

ESA?

Emotional support animal. Landlord can ask for Dr's note but not the reason why.

Truth in Lending Act/TILA or Reg Z?

Enforced by the Consumer Financial Protection Bureau (CFPB). Provides consumers with a full disclosure of costs of credit.

EPA?

Environmental Protection Agency

National Flood Insurance Program? NFIP

Established by Congress in 1968. Property owners in high risk flood zones to get flood insurance in their community participates in NFIP and they have federally backed mortgage. Administered by FEMA (Federal Emergency Management Agency).

Mortgage Covenants?

Everything the borrower promises to do.

Wills?

How the property of the deceased is transferred.

1031 Exchange?

IRC Section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like-kind exchange. Gain deferred in a like-kind exchange under IRC Section 1031 is tax-deferred, but it is not tax-free.

Private Mortgage Insurance (PMI)?

Insurance provided by a private carrier that protects a lender against a loss in the event of a foreclosure and deficiency. May make less than 20% downpayment but must pay monthly insurance premium on behalf of the lender until their LTV dips below 78%

Encroachments?

Intrusion of an improvement on a neighboring property (misaligned fence) Failure to take action against and encroachment may result ina aloss of the land (ONCHA/20 years)

What is Inverse Condemnation?

Inverse condemnation is something that property owners can claim to receive compensation when an adjacent public land use lowers their property value.

If the capitalization rate increases, what happens to the value?

Investors (buyers) want to have a high cap rate, meaning the value (or purchase price) of the property is low. Conversely, landlords (sellers) want to see a low cap rate because the selling price is high. ... Even though Property A has a higher net operating income (NOI), the interest is higher. The Capitalization Rate is equal to Net Operating Income (NOI) divided by Market Value.

Easements Appurtenant?

Involve two adjoining lots of land.

Easements Appurtenant?

Involve two adjoining lots of land. One owner has a right of way across the others property for some limited purpose. May created by: Deed, Implication, Necessity or Prescription.

Common Contract Clauses?

Ironclad Merger, Severability Clause, Contingency Clause.

Tenancy by the Entirety?

Is co-ownership for married couples only. It gives married couples and their families special creditor protections that are not available to other owners of real estate. It means that property may not be sold without the agreement of both parties. The right of survivorship exists to the extent that if one spouse dies, his/her interest reverts to the other spouse.

Define Realtor?

It is National, not state and is optional. NAR (National Assoc. of Realtors) Largest Trade Assoc. and one of the most powerful lobbying groups in North America. Pay a fee to join your local chapter (MAR). Also, if a Broker is a Realtor, all Salespeople/Agents associated with the office must be Realtors as well.

Debt to income ratio? DTI?

The amount of debt a person or a household has in relation to his or her income. Lenders use this ratio to decide if more debt can be taken on by the borrower. A person's debt-to-income ratio is determined by dividing total monthly debts by gross monthly income.

APR/Annual percentage rate?

The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents the actual yearly cost of funds over the term of a loan. This includes any fees or additional costs associated with the transaction...including interest rate, points, loan fees and a disclosure of mortgage penalties. Doesn't include any 3rd party fees, muni tax, atty fees, credit reports, appraisal fees, survey fees or other closing costs.

Assignor/Assignee under Executory?

The assignor is the person assigning the contract and is not relieved of obligations should the assignee fail to perform under the contract.

Treble?

Triple.

Reconveyance Deeds?

Trustees use to return property to trustors (remove property from a trust).

TILA-RESPA Integrated Disclosure? TRID?

Truth in Lending and RESPA Act rules combined post 2015.

Forfeiture?

Type of liquidated damages, loss of deposit made during the creation of the contract. If its the buyer backs out, Seller gets to keep it. If Seller backs out, Buyer gets to keep it. It's the innocent party who gets to keep it. Both party have to agree to who gets the money.

USGBC?

US Green Building Council.

Greenfields?

Uncontaminated lands.

Due on Sale Clause

It is a clause in a loan or promissory note that stipulates that the full balance of the loan may be called due (repaid in full) upon sale or transfer of ownership of the property used to secure the note. The lender has the right, but not the obligation, to call the note due in such a circumstance. ie. closing of a sale of property, giving property as gift, transferring of property ownership.

What is the Capitalization Rate?

It is the rate of return on a real estate investment property based on the income that the property is expected to generate. This metric is used to estimate the investor's potential return on his or her investment. Capitalization Rate = Net Operating Income / Current Market Value

LTV ratio?

It is the ratio of the borrowers principal loan balance to the appraised value of the property. Loan to Value Ratio

Blockbusting, panic selling/panic peddling?

is trying to convince members of a neighborhood to sell their homes because members of a minority group are moving into the neighborhood is a violation of State and Federal Laws. This is not Duress.

Fiscal year for MA Real Estate?

July 1, 2016-June 30, 2017 = Fiscal 2017

Land and Surface Rights?

Land is the surface of the earth. Surface Rights often extend to approx. 30 feet below the land's surface.

Service Animals?

Landlord/Condo Association may ask if it is a service animal and what task it performs.

Lessor/Lessee?

Landlord/Tenant.

Brownfields?

Lands previously used for commercial purposes and are contaminated by hazardous waste/pollution.

MGIC (Mortgage Guarantee Insurance Corporation)?

Largest PMI provider.

Statute of Frauds?

Law requiring that RE contracts to be in writing to be legally enforceable.

Environment Limitations?

Laws and restrictions to limit what property owners can do to their property in regards to protecting the environment.

LEED Certificate?

Leadership in Energy and Environmental Design. It's a suite of rating systems for the design, construction, operation and maintenance of green buildings, homes and neighborhoods. Established in 1998 by the USGBC. Financial and permitting incentives. Buildings rated on 100 possible base points across 5 categories. Sustainable sites, Water efficiency, Energy and atmosphere, Materials and resource, indoor Environmental Quality.

What happens when landlord sells the place during your lease?

Leases run with the land, which means that if the landlord sells the leased premises before the lease has ended the new owner is obligated to honor the lease.

Deed?

Legal document that transfers title(ownership) to real estate..receipts for real estate.

Syndications?

Legal entities investing in a single piece or pieces of RE.

Homestead?

Legal life Estate granted to the owners of a family home. Provides protections from the forced sale of the home to satisfy debts up to a certain amount. Usually you can only have one Homestead at at time.

What is the right of Egress?

Legal right to exit or leave a property.

Adverse Possession?

Legal term for Squatter's Rights. If a piece of property is used openly and without permission for more than 20 years, the squatter may take legal action to the property. ONCHA

Contracts?

Legally binding agreements between tow or more parties agreeing to do, or not to do, some act.

Megan's Law?

Legislation requiring that communities be alerted to the presence of sex offenders. MA prohibits misuse/misrepresentations of those registries. Best to provide the Buyer with the info needed to access the registry and check it for themselves.

Title Theory State? Massachusetts

Lender holds legal title to the mortgaged property until the mortgagor satisfies the terms and obligations of the loan.

Pour Autre Vie?

Life Estate based not on the life of the tenant's term of life but on some arbitrary third party's life as named by the original grantor. "for another's life".

Legal Life Estate?

Life Estate created by low often in cases of Dower rights (surviving spouse is grated a lie estate for real property that was not willed to them but that was owned by their spouse at their spouse's time of death). Dower Rights have been abolished in MA. Many states entitle up to a 1/3 interest in deceased spouse's RE in lieu of what was in the will. The right is inchoate before the spouse's death.

Life Estate in remainder?

Life Estate when the life tenant dies, legal title will transfer to some third party originally names by the grantor (remainderman).

Life Estate in reversion?

Life Estate when the life tenant dies, legal title/ownership will transfer back to the original grantor.

Who has present interest?

Life Tenant/owner. May not commit waste (property damage, legally compromised or risk of foreclosure) which would compromise the remainderman's future interest.

If an owner of a life estate in remainder dies without a will, the estate will pass to???

Life tenants cannot transfer their property by will, because their right to the property automatically terminates on death. The life tenant's lack of a will is therefore irrelevant; ownership will transfer to the remainderman.

Periodic Tenancy?

Like a Tenancy at will but with fixed intervals (month to month) both parties may terminate at the end of the period.

Deed Restrictions?

Limitations written into the Deed. They create a fee simple defeasible estate. If violated, the grantor who wrote the restriction (or their heirs) has the right to demand forfeiture of title and the ownership would revert back to the grantor. Conditions run with the land and are binding on all subsequent owners of the property.

Units of Measurement used in a survey?

Link=7.92 (8) inches, Foot=12", Yard=3 feet, Rod=16'6", Chain=66', Furlong=660', Mile=5,280', Acre=43,560', Square Mile=640 Acres.

Types of Contracts?

Listing Agreement, Flat Fee(Entry Only Listing),Open Listing, Exclusive Agency, Exclusive Right to Sell

Government Limitations?

Local, State and Federal Governments strictly regulate what property owners can do with their property.

MA Oil and Hazardous Material Release Prevention and Response Act (Chapter 21 E)?

MA Superfund Law that regulates the transportation, storage, and disposal of oil and other hazardous waste in accordance with the Federal CERCLA, Oil Pollution Act and Clean Water act.

Home Inspection Regulations?

MA buyers must be given MA home inspection brochure when they sign a P&S but are not required to get a home inspection. Seller's agents may not recommend specific home inspectors but instead provide the state provided list of all inspectors to avoid conflict of interest. Exclusive buyer's agents are allowed to recommend specific instructors.

Tristram's Landing v. Wait

MA court case that governs when RE Brokers have earned a commission.

Physical Location State?

MA is one. Out of state licensees are not permitted to perform RE in MA but may receive a commission for transaction in MA as slong as any services they performed on behalf of clients occurred outside of MA.

Wetlands Protection Act?

MA law Enforced bye Department of Environmental Protection (DEP). Requires 100 foot buffer zone from wetlands with a minor change permitted after 50 feet.

Types of RE Advertising?

MLS, Open House, Trulia, Zillow, Neighbors, etc.

Voluntary Liens?

Make a piece of property for collateral for some debt. Two types: Mortgage and Installment Sales Contract(Conditional SalesContract/Contract for Deed/Land Contract)...similar to rent to own.

Contingency Clause?

Makes the agreement contingent (reliant) on something occurring.

Subordination Clause?

Makes the mortgage junior to any future mortgages.

After what date must homes in MA have carbon monoxide detectors?

March 31, 2006

Dodd-Frank Act?

legislation passed in 2010 aimed at reforming the banking industry and offering consumers greater protection.

Federal Reserve?

the central bank of the United States. The banks' bank. Created in 1913 to maximize employment, stabilize prices and moderate interest rates. It regulates banks and conducts much of the country's monetary policy. It is private but has Congressional oversight.

Usury?

the illegal action or practice of lending money at unreasonably high rates of interest.

Erosion?

the process of eroding or being eroded by wind, water, or other natural agents. "the problem of soil erosion"

Proration formula

total bill / total days x days owned = prorated $ amount. $3,000/30 days=$100 per day. Seller keeps however many days have been used and buyer gets the rest.

Penalties for Fair Housing violations?

up to $16k for a first violation, $37,500 for the second, and up to $65k for repeat offenders in addition to civil penalties btw $50-100k. A HUD Equal Opportunity poster must be posted in every RE office

MCAD?

Massachusetts Commission Against Discrimination (state commission hearing discrimination cases) Findings against and agent will result in an automatic license suspension for 60 days and a second violation within two years results in a 90 day suspension.

MGL 93A?

Massachusetts has a statute that specifically enables the Attorney General and consumers to take legal action against unfair or deceptive conduct in the marketplace, called Massachusetts Consumer Protection law.

What do you need to put a sign on someone's property?

Massachusetts law requires written permission to place a for sale sign on someone's property (though you do not need a written LISTING agreement, since the listing could be an open listing).

Special Agent?

May only represent the principal on a particular matter or transaction. Real Estate Broker, Property Manager, etc.

Universal Agent

May represent the principal on any matter.

General Agent?

May represent the principal on matters related to one particular business or activity.

Time is of the essence?

Meaning that timely performance under the contract is required.

Zoning Ordinances/Laws?

Means of regulating and controlling land use.

Meghan's Law?

Meghan's Law is the term for sex offender registry laws. In Massachusetts, Meghan's Law strictly punishes the misuse and misrepresentation of the sex offender registry.

Privity of Estate?

Privity of estate is the interest two parties simultaneously share in the same property. i.e Periodic Interest, Leasehold (rental agreements)

Erosion?

Process by which the surface of the earth is worn away by natural action, water, wind, etc.

What are the two types of Insurance carried by Brokers?

Professional Liability Insurance (errors and omissions insurance)-Provides protection against mistakes made by Brokers or Salespersons providing RE Services to their clients. Human and Innocent mistakes happen... General Liability Insurance

TCPA-Telephone Consumer Protection Act and the Junk Fax Prevention Act?

Prohibit most unsolicited fax ads.

Civil Rights Act of 1866?

Prohibits discrimination based on race.

Things to watch out for when buying a condo:

Special Assessments (extra fees to repair or upgrade building), Lack of Capital Reserve ($ held in reserve fund account by condo assoc and investors for building improvements), Low Owner Occupancy Rates.

Property Managers?

Special agents of the property owner. They act in best interest of owner, paid as a % of gross effective rental income.

Escrow Account?

Special bank account for holding client $. Brokers maintain escrow records for at least 3 years.

Where do licenses come from?

State Legislature creates the laws about licenses. The Board of Registration of RE & Salespersons deals with issuing licenses and rule administration and enforcement. The Board is part of the Division of Professional Licensure.

Underground Storage Tanks? USTs

Storage tanks for chemicals or gas/fuel tanks that are more than 10% buried in the ground. Banned in MA under 21E and represent a hazard. Disposal requires the presence of the Fired Dept and DEP. Personal Removal and disposal is prohibited.

Three methods of taking over a seller's lien:

Subject to=best for buyer Assumption of=Buyer and seller both responsible. Novation=Seller's note is cancelled and a new note is written between the lender and new buyer. Best for the seller.

take over mortgages

Subletting the mortgage. If the seller doesn't have a due on sale clause, the buyer can take over the seller's debt. The buyer would pay the seller their equity and receive a deed and right to redeem title by paying off the loan. The original loan would stay in place.

Avulsion?

Sudden loss of land by action of water. Avulsion is the sudden removal of land from one property, and the addition of that land to another property, by the action of water. It sometimes happens to beachfront properties during storms.

Condo Conversion?

A building made into Condominiums.

Avulsion?

Sudden separation of land from one property and its attachment to another esp. by flooding or a change in the course of a river.

Void Contract?

Suffer from some problem and are invalid. e.g. illegal act. VOIDABLE - can be voided by courts

Blockbusting?

A business process of U.S. real estate agents and building developers to convince white property owners to sell their house at low prices, which they do by promoting fear in those house owners that racial minorities will soon be moving into the neighborhood.

Sale-Leaseback Lease?

A property owner sells their property to an investor and simultaneously rents it back (usually for a long term). Done because businesses can pull their equity out of the property without giving up use and enjoyment and rent is tax deductible for business.

Land Descriptions and Surveys?

A property's address, and description and a title reference. Drafted by a Licensed Surveyor.

Quitclaim Deed

A quitclaim deed is a deed that makes no promises about the quality of title (ownership) being conveyed. Banks typically use quitclaim deeds when selling foreclosed property so that they do not have liability for title defects affecting the property.

Agency for Toxic substances and Disease Registry? ATSDR

Created by CERCLA Allows the EPA to identify who is responsible for contamination of sites and force them to clean up. If no one can be found, the EPA can clean up the site using a special trust fund.

The Real Estate Board?

Created in 1960. 5 Members. 5 year terms, one expiring each year. 3 of the Members must be brokers with at least 7 years experience and 2 Members must be unlicensed and represent the public. One Member is appointed Chairperson. They are unpaid and must meet at least 4 times a year with at least 3 Members present.

Title?

Ownership. Not a physical document. The Deed transfers title.

Who makes up the Board of Registration of RE & Salespersons?

- 5 Member Board est. in 1960 - Appointed by the Governor - One is appointed Chairperson - 3 are Brokers with at least 7 years experience - 2 are not licensed, represent the public - 5 year terms, no pay - Meet 4 times a year with at least 3 of the Members present. Written records of meetings are available to the public on Division of Pro Licensure's website

Prepayment Penalty Clause? in a note

A clause in a mortgage contract that says if the mortgage is prepaid within a certain time period, a penalty will be assessed. The penalty is usually based on percentage of the remaining mortgage balance or a certain number of months worth of interest. Uncommon in residential loans but common in commercial loans.

Cloud on Title?

A cloud on title is any document, claim, unreleased lien or encumbrance that might invalidate or impair the title to real property or make the title doubtful. Clouds on title are usually discovered during a title search.

Conditional Use Permit?

A conditional use permit allows a use that otherwise would not be permitted in the area under zoning laws, with the caveat that it is restricted to a specific use case deemed in the public interest.

FICO score?

A credit rating developed by Fair Isaac & Company in the late 1950s, now widely used by lenders and employers. It consists of digit numbers ranging from 300-850. (Equifax, Transunion, Experian)

General Warranty Deed?

A deed in which the grantor fully warrants good, clear title to the premises. Used in most real estate deed transfers, a general warranty deed offers the greatest protection of any deed.

Special Warranty Deed?

A deed in which the grantor warrants, or guarantees, the title only against defects arising during the period of his or her tenure and ownership of the property and not against defects existing before that time, generally using the language, "by, through, or under the grantor but not otherwise."

Bargain and Sale Deed?

A deed that carries with it no warranties against liens or other encumbrances but that does imply that the grantor has the right to convey title. The grantor may add warranties to the deed at his or her discretion

Quitclaim Deed?

A deed to relinquish any interest in property which the grantor may have, without any warranty of title or interest.

Defeasible Estate?

A defeasible estate is created when a grantor transfers land conditionally. Upon the happening of the event or condition stated by the grantor, the transfer may be void or at least subject to annulment.

The CAN-SPAM Act? Controlling Assault of Non-Solicited Pornography & Marketing Act of 2003?

A federal law that placed guidelines on mass commercial emails that do not provide both the address of the sender and some means of unsubscribing or opting out.

Section 8 Housing?

A federal program designed to provide renters with affordable housing via a voucher system that subsidizes rentals by private landlords.

Gross Lease?

A gross lease is a type of commercial lease where the tenant pays a flat rental amount, and the landlord pays for all property charges regularly incurred by the ownership, including taxes, utilities and water.?

Ground Lease?

A ground lease is an agreement in which a tenant is permitted to develop a piece of property during the lease period, after which the land and all improvements are turned over to the property owner.

Apparent/Ostensible Agency?

Apparent or Ostensible Agency is when authority does not exist, however it appears to. In this scenario, the agent appears to be the listing agent, even though there has been no authority given, verbal or written by the seller to this agent.

Fixed Rate Mortgage (FRM)?

A home loan that has a fixed interest rate for the entire term of the loan.

Ground Lease?

A lease of land only, on which the tenant rents the land and can build whatever they want on it. When the lease expires, any improvements built by the tenant are owned by the landlord. Often a ground lease is 99 years.

Net Lease?

A lease requiring the tenant to pay not only rent but also costs incurred in maintaining the property, including taxes, insurance, utilities, and repairs. Most often Commercial.

Graduated Lease

A lease where the rent will increase periodically in amounts specified in the lease, as contained in the escalation clause.

Net Lease?

A lease where the tenant pays some or all of the leased property's operating expenses (taxes, maintenance fees, management fees, etc) on top of their rent.

Reappraisal Lease?

A lease whose rent is based on an appraiser's opinion rather than negotiation between the tenant and landlord.

Percentage Lease?

A lease, commonly used for commercial property, whose rental is based on the tenant's gross sales at the premises; it usually stipulates a base monthly rental plus a percentage of any gross sales above a certain amount. Anchor stores in malls usually...

Foreclosure?

A legal procedure whereby property used as security for a debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms in the note.

Short Sale

A lender agrees to accept sale proceeds, even if less than the debt. aka "underwater" owe more than they can sell the house for.

Adjustable Rate Mortgage (ARM)?

A loan characterized by a fluctuating interest rate, usually one tied to a bank or savings and loan association cost-of-funds index.

Graduated Payment Mortgage (GPM)

A loan in which the monthly principal and interest payments increase by a certain percentage each year for a certain number of years and then level off for the remaining loan term. Aimed at homebuyers with predictably rising incomes eg Doctors Payments begin below the normal, fully amortized payment and are then increased for a set period of years. Some lead to negative amortization.

Share Appreciation Mortgage SAM?

A loan where an investor makes a down payment for the buyer in exchange for a share of the property equity or appreciation value.

Growing Equity Mortgage (GEM)?

A loan where payments are credited directly to loan principal which allows homeowners to pay off the loan quicker and save on interest.

Balloon Mortgage?

A loan with an amortization period that is longer than it's payment period. The monthly payments are lower than would be necessary to pay off the loan by the end of the payment period which makes the payments affordable but it also means that there will be unpaid principal that needs to be paid with the final loan payment...balloon! These loans are usually refinanced to pay for the balloon payment.

Metes and Bounds Survey?

A method of land description which involves identifying distances and directions and makes use of both the physical boundaries and measurements of the land. Bounds/Directions and Metes/Distances.. Most Common method.

Due on Sale Clause (Alienation Clause)?

A mortgage clause that gives the lender the right to call the whole loan balance due when ownership of property transfers. Prevents transferring the mortgage to a third party.

Conditional Title?

A mortgage conveys conditional title to the lender (mortgagee) in order to secure repayment of the debt described in the note.

Purchase Money Mortgage?

A mortgage given by the seller to the buyer to cover all or part of the sale price. Seller financing/Seller carry back loans.

Participation Mortgage?

A mortgage loan wherein the lender has a partial equity interest in the property or receives a portion of the income from the property. An agreement between a mortgagee and a mortgagor which provides the lender with a certain percentage of ownership in the project once the lender makes the loan. Commercial Real Estate.

Pledged Account Mortgage (PAM)?

A mortgage loan which requires the borrower to make graduated payments and at the same time provides the lender with full monthly payments. This unique feature is accomplished by the borrower pledging a savings account to the lender from which supplemental payments are made on behalf of the borrower during the first few years of the loan. The regular payments are lower than usual. Used to mitigate high interest rates.

Home Equity Line of Credit (HELOC)?

A mortgage loan, usually in second position, that allows the borrower to obtain cash drawn against the equity of his home, up to a predetermined amount. Usually good fro 10 years. Junior Lien.

Wraparound Mortgage?

A mortgage that encompasses any existing mortgages and is subordinate to them. A mortgage that includes a first and second mortgage instead of having two different ones.

Blanket Mortgage?

A mortgage which covers more than one piece of real estate. Often used by a developer in the financing of undeveloped lots. Contains a partial release clause.

Partial Release Clause?

A part of a mortgage, which provides for the release of part of the property (used as security in the loan) upon payment of a certain amount of the mortgage. Blanket mortgage.

Percentage Lease?

A percentage lease is a type of lease where the tenant pays a base rent plus a percentage of any revenue earned while doing business on the rental premises. It is a term used in commercial real estate.

Attorney in Fact?

A person who is authorized to perform business-related transactions of behalf of someone else. The principal must sign a Power of Attorney.

Attorney in fact.?

A power of attorney creates an attorney in fact, who can sign documents and have them be legally binding on the grantor of the power of attorney.

Redlining

A process by which banks draw lines on a map and refuse to lend money to purchase or improve property within the boundaries and any type of credit discrimination.

RE financing involves two legal instruments:

Note=evidence of the debt and Mortgage=security for the note

Reciprocity Agreement?

A reciprocity agreement allows a state to recognize another state's license. This permits licensees to receive a license in another state without retaking the real estate classes, or test. Massachusetts has full reciprocity with a number of states: CT, RI, WV, NE, IA, TN, MI, CO, GA, PA, and NM.

Short Sale?

A short sale is a sale for a price "short" of what the seller owes on their home loan. The bank settles for the difference between the sales price and the loan balance. Short sales are often used by homeowners to avoid foreclosure.

Mortgage?

A specific type of loan that is used to buy real estate.

Lien Theory State?

A state where the mortgage lender has a lien on the property and the borrower has title.

Capital Gains Tax?

A tax levied on the returns that people earn from capital investments, like the profits from the sale of stocks or a home. GCT can be either short term (less than 12 months) or long term (more than 12 months) from 0-20% depending on the seller's income for that year.

Devise?

A testamentary disposition of land or realty; a gift of real property by the last will and testament of the donor. When used as a noun, it means a testamentary disposition of real or Personal Property, and when used as a verb, it means to dispose of real or personal property by will.

What is a Trust?

A trust is a legal arrangement where property is held by an independent entity (the trust) on behalf of a beneficiary, and administered by a trustee.

Fee Simple Defeasible Interests?

A type of Freehold that is limited in some way and can be lost if some limitation is violated or condition triggered.

Fee Simple Absolute Interests? Also Fee?

A type of Freehold that is the default type of ownership, it is not limited, and is inheritable. Owner entitled to entire bundle of rights. Indefinite and only limited by public and private restrictions, i.e. zoning and building codes.

Unilateral Contract?

A unilateral contract is an agreement where only one party makes a promise, e.g. an option (where the optionee can decide to execute the contract, or not, at their option).

Absolute title?

Absolute title is free from any attachment, judgment, or lien, and is accepted as a sole document of title required for selling the property or obtaining a mortgage. Also called perfect title.

When you sign a contract it is...

Accepted - When you sign, the contract is accepted. During the term of the contract it is executory. When the contract is completed, it is executed.

Accretion?

Accretion is the gradual deposit of land by wind or water (e.g. sand washing up on a beach).

Subletting?

Act of transferring a portion of one's interest to a third party. i.e. 1 month of a 12 month lease.

Assigning?

Act of transferring all of the remaining interest to a third party.

Rental Fee disclosure?

Agents renting RE must provide every prospective tenant with a written notice at their firs meeting that states whether the prospective tenant will pay a fee as well as the amount, timing and manner of payment and whether a fee is due if a tenancy is not created. Must be signed by the agent tenant and date it. If tenant refuses, the notice must reflect it. Agents don't have to work with them. Brokers maintain copies for 3 years.

When must a real estate agent provide a prospective tenant with a fee notice?

Agents renting real estate must provide each tenant with a written notice at their first meeting which states whether the prospective tenant will pay any fee, the amount, manner, and time the fee is to be paid, and whether any fee will be payable if a tenancy is not created.

Who can recommend an Inspector?

Agents representing the seller may not recommend specific home inspectors, but must instead provide the state provided list of all inspectors since it is a potential conflict of interest. Exclusive buyer's agents are allowed to recommend specific inspectors to their clients.

Executory Contract?

Agreed to but not yet complete. Ex. lease month 4 of a 12 month lease...

P & S Contracts?

Agreement about how the sale will work. Totally negotiable and drafted by an attorney. Must include to be valid: Names of all buyers and sellers, Legal Description of the Realty(address), Offer and Acceptance, Consideration (5% deposit for buyers), Terms and Condition, Contingencies, The date of performance (closing date).

March 31, 2006?

All homes in MA that are equipped with burning equipment that produces Carbon Monoxide or have an adjacent garage are required to have Carbon Monoxide detectors on every level. New home construction or renovations must have hard wired detectors and older homes may be brought into compliance with battery-operated detectors.

March 31, 1991?

All new and renovated residential 4+ floor homes must have a handicapped accessible design features for the first floor and any other floors serviced by an elevator.

Rental Lead Paint Law?

All proper built prior to 1978 and occupied by a child less that 6 years old must be tested and de-leaded if need be. Landlord incurs all of the costs and tenants cannot live there while it is being de-leaded. Landlords cannot deny tenants on the basis of lead paint. NO EXCEPTIONS. The only time a child under the age of 6 can occupy a lead paint property is for short term...31 days or less, i.e vacation rentals

Swing Loans?

Allow a homebuyer to borrow against a new home they're purchasing to carry two mortgages while they sell their old home.

Reverse Annuity Mortgage (RAM)?

Allows senior citizens, 62 or older, on fixed incomes to utilize the equity buildup in their homes by receiving regular monthly payments from the bank. The loan plus interest is repaid when the homeowner passes away or sells their home.

Rider?

Amendment to the initial agreement, P&S

Codicils?

Amendments to wills.

If someone dies intestate...

An administrator will be appointed by the courts and the laws of descent and distribution will govern who receives the property. If no heirs, the property escheats to the state.

Management Agreement?

An agency relationship is created between a property manager and an owner of a specific property when they sign a management agreement.

In the event that the Real Estate Board renders an unfavorable decision against an agent, how many days does the agent have to return their license?

An agent must forward their real estate license to the Board within 7 days of receipt of notice of suspension or revocation, even if the agent files an appeal to the Board's decision.

Balloon Loan?

An amortization schedule longer than the payment schedule. Is a loan where the amortization schedule (the schedule by which regular payments would fully pay off the loan) is shorter than the payment schedule (when the loan must be paid by). This results in a "balloon payment," which is a large payment at the end of the loan that discharges any unamortized debt.

Easement Appurtenance?

An easement appurtenant is an easement that benefits one parcel of land, known as the dominant tenement, to the detriment of another parcel of land, known as the servient tenement. Easements appurtenant are attached to the land and are transferred automatically when the servient or dominant tenement is sold to a new owner.

What is ONCHA?

An easement referencing Open, Notorious, Continuous, Hostile and Adverse...use of right of way for more than 20 years.

Excise Fee?

An excise fee is another term for recording stamps, and are an expense paid by the grantor (seller) when the deed is recorded at the county registry of deeds.

Recording stamps?

An expense paid by the seller/grantor when their deed is recorded at the county registry of deeds. In MA the cost $2.28 per $500 recorded value, rounded up to an even $500.

Mass Housing?

An independent quasi public agency created in 1966 that provides financing for affordable housing in MA. Provides financing for affordable housing construction, oversees affordable housing developments and provides low down payment and affordable loans for first time homebuyers.

Mortgage brokers?

An intermediary who brings mortgage borrowers and mortgage lenders together, but does not use its own funds to originate mortgages. Offers loans from a variety of lenders, middleman, charges a fee.

Sale-leaseback?

An owner sells their property to an investor, and simultaneously rents it back (often for a long term). It provides relief from debt service, capital, favorable tax treatment.

Discriminatory Advertising?

Any advertising that states or indicates a preference, limitation, or discrimination on the basis of race, color, religion, sex, national origin, handicap, or familial status in offering housing for sale or rent.

Alienation of Title?

Any loss of ownership.

Predatory Lending?

Any of a number of fraudulent, deceptive, discriminatory, or unfavorable lending practices. Many of these practices are illegal, while others are legal but not in the best interest of the borrowers. Lenders fail to disclose loan costs, risks and steering borrowers toward unfairly hight rates.

What is an improvement?

Any structure directly or indirectly attached to the land is called an improvement.

203b program?

Anyone qualifies for FHA Financing as long as they are buying a primary residence (live in for at least 2 years) that meets FHA requirements. Generally for 1-4 family owner occupied and under the FHA's price limit (determined by the county.

Who needs a RE License?

Anyone who does any of the following for a fee: Advertises, holds herself out as engaged in the biz of selling, renting, leasing, negotiation, exchanging, purchasing and dealing in RE or options for RE.

What is Personal Property?

Anything not attached to the Land or improvements on the land. aka chattel or moveable property.

Improvements on the land?

Anything permanently attached (directly or indirectly) to the land. Ex. a house is an improvement.

Material Defect?

Anything that would objectively impact a buyer's decision to purchase a piece of RE. Anything about the house but also the area around the property that are rooted in the land (permanent).

Personal -v- Real Property?

Attachment, Adaptability, Intention and Agreement. Intention is most important because it creates 2 exceptions: Trade Fixtures (business property), Emblements (crops planted and harvested not intended to be permanent)

Apparent/Ostensible Agency?

Authority that does not exist, even though it appears to.

Implied Agency?

Authority that exists because of the principal and agent's actions, even though it is never directly stated.

Defeasance Clause?

Automatically relieves the collateral of the bank's claim when the loan is paid back.

Building Codes?

Basic requirements for construction w/out necessarily prescribing implementation.

Stachybotrys?

Black Mold....linked to health issues and poor air quality. In rentals, black mold disclosure must be disclosed by landlord.

Co-op Board, Co-op fees?

Board of Trustees. Co-op Board oversight is more difficult because of approval from Board. This allows the creation of housing for a specific group of people i.e "artist's only". Must be legal, beware of Fair Housing Law. Monthly fees for upkeep of the building.

Non-recourse loans?

Borrower is not personally liable on loan deficiency in a foreclosure. No personal guarantee; therefore the only security is the property. Commercial RE.

Who is required to disclose known facts that materially affect the property?

Both seller's and buyer's agents are required to inform the buyer of any material defects impacting the subject property, even if the seller wants to keep the defects confidential.

Bridge Loans?

Bridge loans provide short-term funding until longer-term or additional financing is found. Designed to bridge the borrower over some gap in cash flow.

Special Agent?

Brokers are the special agent to the transaction (the agent hired by the seller to conduct a specific transaction).

Massachusetts Fair Housing Law?

Builds on the Federal law bu for more protected classes and sometimes in some more restrictive way. Discriminatory advertising is prohibited.

How are Easements appurtenant created?

By Deed

4 Ways Easement Appurtenance are created?

By Deed, By Implication, By Necessity and by Prescription=Use of the right of way for more than 20 years (ONCHA).

How must buyers be notified of the agency relationship at an open house?

By sign, poster, literature, or property description forms.

Essential Elements of a Real Estate Contract?

COLIC •To remember elements of a valid and enforceable real estate contract: C Competent parties. O Offer and acceptance (meeting of the minds) L Legal purpose. I In writing and signed (statute of fraud) C Consideration (valuable or good) COLIC

Recission?

Cancellation of contract.

Novation?

Cancellation of the lease contract and a transfer of the remaining portion of the lease to a third party in a new contract. This is the only one that relieves the lessee of their obligations under the lease.

LEED Rating system:

Certified = 40-49 Silver = 50-59 Gold = 60-79 Platinum = 80 and above

Steering?

Channeling prospective buyers or tenants to particular neighborhoods based upon their race, religion, national origin, or ancestry.

Involuntary Liens?

Claims against a property imposed by a third party (usually the Government or a court). Property tax liens Federal tax liens Mechanic's Liens (Contractors) Judgements (final ruling), Attachments (court order seizing property for use to satisfy a possible future judgement)

Modular or Factory built Homes?

Homes manufactured in pieces in a factory and later assembled on the property.

Alluvium?

Clay, silt, sand, gravel or similar deposited by running water.

Define Qualified Buyer?

Client who is ready, willing and able!

Principal?

Client, Seller, Buyer, Landlord. Has vicarious liability for their agents actions.

Executed Contract?

Completed and finished. Ex. end of a lease, 12th month of 12 month lease.

Condominiums?

Condos are a way to subdivide a building into separate units, creating fee simple ownership of individual units and shared ownership of the common areas as tenants in common. Most states have condominium laws referred to as a horizontal property act.

Massachusetts General Law Chapter 93A?

Consumer Protection Act. 1967, (amended in 1969 allows for private right of action) designed to protect consumers from unfair and deceptive practices employed by some businesses. Gives consumers the ability to easily bring a claim against a business and receive compensation for any monetary loss they suffered. Consumer only has to send the business a letter and provide the business with 30 days to respond. RE licenses are treated as businesses. Double or triple(treble) damages plus attorney's fees can be awarded if their is an actual violation.

Severability Clause?

Contract is still valid if one of its clauses in deemed void. i.e. one roommate moves out, etc.

Assigned Contracts?

Contracts can be assigned which is the transfer of a party's rights and obligations to another party. Ex sublet on a lease

Private Limitations/CC&R's?

Contractual limitations on ownership created by deed or separate agreement. Two basic kinds are Covenants and Deed Restrictions.

Damages?

Court awarded money compensating the innocent party for the harm suffered by the breach of contract.

Specific Performance?

Court order forcing the party in violation of the contract to comply with its terms. If seller backs out=seller cannot back out if they have accepted an offer just because they receive a better offer after...

Package Mortgage?

Covers both real property and personal property such as dishwashers, stoves, ac, washer/dryer, refrigerators. A chattel mortgage is secured by personal property only.

Title Insurance?

Insurance Policy for protection against undiscoverable title defects. i.e. forged deeds, undisclosed heirs, etc.

Thomas purchases a property for $200,000 with a down payment of $40,000. His finances the rest of the purchase at 10% interest for 15 years with payments of $1,363.72. What is his outstanding balance after his first payment?

Explanation: $200,000 purchase price - $40,000 down payment = $160,000 loan amount. $160,000 x 10% = $16,000 first year's interest / 12 months = $1,333.33 first month's interest. Monthly payment $1,363.72 - $1,333.33 interest = $30.39 applied toward principal. $160,000 principal - $30.39 paid = $159,970 outstanding principal balance after first payment.

Express Agency?

Explicitly stated verbally or in writing.i.e via a listing contract.

State Law -v- Federal Law?

Fed=US/State=Massachusetts State law builds on Fed law and is more specific. In a conflict, Fed law usually wins.

Freddie Mac?

Federal Home Loan Mortgage Corporation. Founded in 1970. Conventional and FHA/VA Loans

Fannie Mae?

Federal National Mortgage Association. The government-sponsored enterprise responsible for guaranteeing and funding home mortgages founded n 1938. Conventional and FHA/VA loans

Coastal Zone Management Act? (CZMA)

Federal law to protect coastal zones from the harmful effects of real estate development. It limits or completely eliminates development in those zones.

Two types of Defeasible interests?

Fee Simple Determinable-automatically lost when the limitation is violated. Fee Simple Subject to a Condition Subsequent-lost when legal action is brought pursuant to the violation of the limitation.

What is Fee Simple?

Fee simple is sometimes called fee simple absolute because it is the most complete form of ownership. A fee simple buyer is given title (ownership) of the property, which includes the land and any improvements to the land in perpetuity.

Which best describes the relationship between broker and client?

Fiduciary. Real estate agents (both brokers and salespersons) owe fiduciary obligations (obligations of trust) to their clients. Remember the acronym OLD CAR for the specific obligations.

Liens?

Financial Limitations on your ownership of property associated with debts or payment obligations.

Liens?

Financial limitation on your ownership associated with debts or payment obligations.

USDA Financing?

Financing for Farmers low to middle income in rural areas.

Sherman Antitrust Act (1890)

First federal action against monopolies, it was signed into law by Harrison and was extensively used by Theodore Roosevelt for trust-busting. However, it was initially misused against labor unions. Forbids price fixing, group boycotting, division of the market by geography or services offered(market allocation) and contingent sales(tying or tie-in arrangements) which are making a sale contingent on the purchase of another item.

Massachusetts Landlord Regulations?

First month, last month and security deposit = one month's rent and a reasonable lock and key fee. 5% interest paid 30 days of year anniversary each year.

Gross lease?

Flat rent fee to encompass rent and all fees...

What is FSBO?

For Sale by Owner

6D Closing Certificate?

For the sale of every condo unit. Establishes the status of the condo fees as of the date the unit is sold. Condo fees never go away...the run with th land!

Involuntary Alienation of Title?

Forced loss of ownership...tax foreclosure...

Life Estates?

Freehold Interests that exist as long as the owner of the property (the "life tenant") is alive. The life tenant's deed will state who receives the life estate (usually "remainderman") upon their death in a habendum clause.

Equitable Title?

Future right to gain legal title.

Partnership/General Partners/Limited Partners?

General Partners have management role and have full liability for the financial obligations. Limited Partners are passive investors and only liable for their invested capital.

Trusts?

Generally created during a person's life "LIVING TRUST" or upon their death "TESTAMENTARY TRUST". TRUSTOR creates the trust and conveys property to a TRUSTEE, who cares for the trust's estate on behalf of any BENEFICIARIES (recipients of $ from trust).

Rights of First Refusal?

Gives prospective buyer right to match any offers made and to purchase the property at the offered price in lieu of the original offeror.

Inverse Condemnation?

Gov't action in an adjacent lot of land causes a diminished property value.

Severance Damage?

Gov't takes only part of the land (eminent) the owner may receive severance damage.

Ginnie Mae?

Government National Mortgage Association. Founded in 1968. FHA low-income housing.

Monetary Policy?

Government policy that attempts to manage the economy by controlling the money supply and thus interest rates.

Law of Agency?

Governs the relationship between clients and agents in a real estate transaction.

The Law of Agency?

Governs the relationship between clients and agents in a real estate transaction.

Grantor and Grantee?

Grantor= gives the deed "or" - giving Grantee=receives the deed "ee" - receiving

What is GRM?

Gross Rent Multiplier. The Gross Rent Multiplier (GRM) is how many months of rent it takes for a property to pay for itself. To calculate the GRM, divide the property value by its rent:

Bundle of Rights?

Grouping of property rights that can be separately transferred. Rights include: possession, exclusion, control, disposition and enjoyment

ALJ?

HUD Administrative Law Judge.

Holographic will?

Handwritten wills.

Valid Contract?

Has all fo the essential elements fo a contract. Legally binding.

Legatees?

Heirs receiving personal property in a will.

Devisees?

Heirs receiving real property in a will.

Buyer's Agency Agreement?

Hiring Agreement for the Buyer. Buyer's agent isn't paid by the buyer directly and is instead compensated with a split of the listing agent's commission. ON THE EXAM COMMISSION IS ALWAYS A COST TO THE SELLER.

Listing Agreement?

Hiring agreement for a Real Estate Agency selling the property. Negotiable. What Broker is selling. Their Fee. Broker's authority. Deadline for Sale.

Tenancy at Sufferance?

Holdover tenancy (when tenant stays pas the lease expiration date without the lessors permission. Lessor must evict the tenant to regain possession of the property.

"Stick Built Homes"?

Homes built on a property using traditional construction methods.

Freehold Interests in RE?

Ownership.

Unenforceable Contract?

If a court deems it unfair, impossible or otherwise unenforceable.

Leases run with the land?

If the lessor sells the lease premises before the lease has ended, the new owner must honor the lease.

When are quarterly MA property taxes paid?

In Massachusetts, property taxes are paid on a fiscal year running July 1 to June 30; they are due in quarterly payments on the first of August, November, February, and May each year.

What is the most common deed in MA?

In Massachusetts, there are three types of deeds: a quitclaim deed, a warranty deed, and a release deed. By far the most common deed used in Massachusetts is the quitclaim deed

Life Estate in Reversion?

In a Life Estate in Reversion the grantee's death title passes back to the original grantor. The duration of ownership is thus limited by the grantee's life. Freeholds and Ownership in Severalty are unlimited by default, and Estates for Years are leaseholds (and thus not a form of ownership).

Dominant Tenement? Servient Tenement?

In an Easement, The Dominant Tenement is the property with the right. The one encumbered is the Servient Tenement. Right of the property, run with the land.

Liquid Mineral Rights?

In many states Liquid Mineral Rights are not owned by the landowner, instead she has the right to capture them under the Doctrine of Capture. Other states use Utilization Pooling where the landowner does own a fraction of whatever liquid mineral rights exist under the property.

ONCHA?

In reference to Squatter's Rights: Open Notorious Continuous Hostile Adverse to the interest of the true owner

Inchoate?

Inactive.

Reliction?

Increase of the land by the sudden retreat of the sea or a river.

Accretion?

Increase or Property by gradual natural action by wind or water.

Alluvion?

Increasing of land are along a shore by deposited alluvium or by the recession of water.

Cooperatives?

Indirect ownership. LLC is formed for limited purpose of providing housing. People living in the building own stock/shares in the company (LLC) which gives them a right to a proprietary lease to their unit. They do not own their unit, the own the company that rents them their unit.

Fixtures?

Individual Improvements attached to the property, eg window blinds.

What is the right of Ingress?

Ingress means entrance. Legal right to enter a property.

Valuable Consideration?

Money

Equity

Monies in excess of debt.

Lender of a mortgage?

Mortgagee.

Buyer of RE getting a loan?

Mortgagor.

What is MLS?

Multiple Listing Service. It's a marketing tool used by Salespeople to show their listings.

Joint Tenancy?

Must be chosen by all co-owners and specified in the deed. All co-owners must hold four unities. It creates Right of Survivorship meaning that if one of the co-owners dies, their interest is divided amongst the surviving co-owners. NOT Inheritable

Mold?

Must be disclosed but does not prohibit the sale.

RE Licenses points...

Must be renewed every two years on your birthday. 12 hours of continuing ed Salesperson can become broker after 3 years of work experience/at least 25 years per work. All $ paid to the agent/salesperson must come from their employing broker. All offers (written and verbal) must be presented to the client.

Guidelines for a case to fall under 93A?

Must involve a business. One must have suffered actual monetary damages. Complaining party must write a 30 day demand letter.

Do you need a RE License to sell your own home?

NO. Note that people doing real estate transactions for themselves and NOT acting as an agent do not need to hold a real estate license to sell their property. Selling your own property is potentially a conflict of interest issue, and it requires written disclosure to prospective purchasers of the property. An agent shall not buy, sell, rent, mortgage or acquire any interest in property, or represent a client in which the agent or agent's kin (by blood, marriage, or business associate) has a personal financial interest unless the agent fully discloses in writing to all parties of the transaction the nature of their interest, and the parties provide the agent with a written acknowledgement of the disclosure.

What is the average commission?

NONE - ALWAYS NEGOTIABLE!!!!!

Hazardous Materials?

Need to be disclosed as defects but they do not prohibit the sale of RE.

Net Lease?

Net lease refers to a contractual agreement where a lessee pays a portion or all of the taxes, insurance fees and maintenance costs for a property in addition to rent. Net leases are most commonly used with commercial real estate. In the purest form of a net lease, the tenant is expected to pay for all the costs related to a property as if the tenant were the actual owner.

NOI and ROI?

Net operating Income. Return on Investment.

Nick earns $5000 commission on a sale. He was paid 2% of the sale as his split. What was the sale price?

Nick's commission is 2% of the sales price, so the sales price is $5,000 / 0.02 = $250,000.

If seller finds their own buyer....

No commission...just like in Open Listing.

FIRPTA (Foreign Investment in Real Property Tax Act)?

Non US Citizens selling property have 10% of the proceeds held by the buyer and forwarded to the IRS.

Offer?

Non-binding until accepted in writing AND acceptance is communicated to the offeror. Thus creates a contract to enter into P&S. within a certain timeframe (usually 10-14 days) Once an offer is withdrawn in writing, it becomes void. Offeror=Buyer Offeree=Seller Seller must sign the Offer to accept it. Verbal Offers are non-binding per SOF

Straight and Simple Interest Loans?

Non-compounding interest only loans. The Principal is paid in one lump sum on the last payment.

Three ways to get around Zoning?

Nonconforming use-Grandfathered-existed before enactment of law/ordinance. Variance-Special permission to do something otherwise forbidden. Conditional/Special Use-limited variance-used only for what applied for i.e Supermarket

Mandatory Agency Disclosures?

Notice provided by RE Agents that discloses the relationship of the agent with the prospective buyer or seller. Must be provided at the time of the first meeting for the purpose of discussing specific property. All agency disclosure records and notices are subject to the inspection of the Board. Buyer/Seller signs and dates and gets the original and the employing broker keeps a copy for 3 years. If they decline to sign it, agent must note the date it was given and it was declined and the reason.

Lis Pendens?

Notice recorded to inform the public that the property is subject to litigation.

Essentials of a Contract?

OFFER and Acceptance - Signatures needed (Statue of Frauds) i.e. lease in a rental CONSIDERATION - Must be sufficient though value doesn't matter LEGAL OBJECT - Must be legal, contract to do something illegal is not a legal contract. REALITY OF CONSENT & COMPETENCE - Freedom from misrepresentation, fraud, undue influence or duress (physical or any other threat). Parties must also be competent=sober, sound mind, legal age or emancipated minor.

What are the Fiduciary responsibilities of a RE Agent/Salesperson?

OLDCAR-Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable Care.

Fiduciary Obligations?

Obligations of trust: OLD CAR - Obedience - Loyalty - Disclosure - Confidentiality - Accountability - Reasonable Care

Reasons Board can Suspend/Revoke a RE License?

Obtained/renewed using false representation. Undisclosed dual agent. Non-disclosure they are principal in RE transaction. Intoxication. Failure to return client $ in a reasonable amount of time. Payment of referral fees/commission to unlicensed persons. Commingling. Induce to break contract for personal gain. Failure to provide copy of RE contract to one of the parties . Failure to disclose conflict of interest. Accepting a net listing. Must explicitly agree on commission/fee. Any violation of Mass Fair Housing Law.

Negative Amortization?

Occurs when the loan payment is not sufficient to cover the interest cost and results in the unpaid interest being added to the original balance, causing the loan amount to increase.

Moe, Larry and Curly own a house together as joint tenants. Moe decides to sell his interest in the house to Shemp. If Curly passes away, who will own Curly's interest?

Once Moe sold his interest to Shemp, Shemp would own as a TENANT IN COMMON with Larry and Curly who would continue to own as joint tenants. The property cannot escheat to the state, if there are heirs.

Certificate of Title?

Once the Land Court makes a decision about who owns the property, it issues a decision, which registers the land. Once registered, the land belongs to the person named on the certificate. Transfers of registered land must be recorded and is not valid until a new Certificate is issued in the name of the new owner.

Exclusive Right to Sell?

One broker is hired to sell the property and will earn a commission even if the owner sells the property during the contract term without the broker's assistance.

What is one link equal to?

One link is equal to approximately 7.9 inches.

Breach of Contract?

One of the parties to the contract doesn't do what they agreed to.

Point?

One percent of the loan not the purchase price.

Tenancy/Owners by the Entirety?

Only for MARRIED COUPLES. Same as joint tenancy but includes creditor protections and an automatic homestead protection for $500,00 in MA. On Divorce, defaults back to tenancy unless the couple chooses otherwise.

Flat Fee/Entry Only Listing?

Only on MLS, doesn't show property

Land Trusts?

Only own Real Estate. Often used for land Conservation and typically last for some limited period of time.

ONCHA

Open, Notorious, Continuous, Hostile and Adverse ... referring to Easement by Prescription.

Registration of the Promotional Sale of Out of State Properties?

Out of State property developments must be registered with the Board by their developer at the developer's expense. Developer must note this registration on their ads. Brokers who accept out of state property development listings must inform the Board w/7 days of accepting the listing.

Puffing?

Overselling a property in a misleading way or a failure to disclose a material defect.

Condo Fees?

Owners are responsible for there proportionate share of common area expenses.

Super priority lien?

Owners who fail to pay condo fees are at risk of foreclosure. Up to 6 months of unpaid fees against the Unit.

Severalty?

Ownership by one person (even a corporation) is ownership in severalty. Estate in severalty. (Law) an estate which the tenant holds in his own right, without being joined in interest with any other person;

Severalty?

Ownership held by one person. Ownership of RE severed from any co-owners.

Riparian Rights?

Ownership rights for land owners whose property borders a river or other waterway. Property bordering a navigable river has rights up to the accretion line (the edge). Those adjoining non-navigable rivers have rights to the midpoint of the water. Mostly used by Eastern States.

Littoral Rights?

Ownership rights of property bordering lakes and oceans. Land owners own up to the accretion line (edge of the water, most often high tide) in most states.

Co-Ownership?

Ownership shared by two or more persons, including corporations.

Four Basic Government/Public Limitations on property owners?

PETE POLICE POWER-Gov't regulation of private property in the best interest of the public. i.e local zoning ordinances and business codes. EMINENT DOMAIN-Gov't right to sell private property if it's in the best interest of the public. Gov't must pay fair market value under the 5th amendment. TAXES-Municipal property taxes are the primary source of revenue for local town/city governments. ESCHEAT-If a property owner dies without a will or heirs, their property transfers to the government.

Amortization?

Payment of debt in equal installments.

Licensing Law Exemptions?

People buying and selling for themselves. Lawyers. Regular Salaried employees, especially apartment managers. Public Officers performing official duties. Auctioneers, appraisers and bank/lender employees. Executors, Administrators or Guardians. Trustees.

Appraisers?

People who estimate what buyers will pay for real estate and their estimates of value are known as appraisals. Appraisers must have a license.

Aside from Novation, leases can be terminated:

Performance(at end of their time), Surrender(cancel before expiration), Action of Law(Eminent domain, tax sale, bankruptcy), Destruction, Foreclosure, Actual Eviction, Constructive Eviction (landlord violates COQE).

Power of Sale?

Permits the lender to take the property and sell it in the event of a default on the terms of the loan.

Easements in Gross?

Personal Easements granted in writing to someone who does not own the adjoining property. They automatically extinguish when the person holding the right passes away.

Easements in Gross?

Personal easements granted in writing to someone who does not own an adjoining lot. (the seller of a piece of property writes into the deed that they have dock rights) They immediately extinguish when the person holding the right passes away.

Chattel?

Personal property

Licenses?

Personal, revocable and non-assignable permission to enter someone else's property for a particular purpose (ticket holder in sporting events, etc.)

Licenses?

Personal, revocable and non-assignable permission to enter someone else's property for a reason e.g. sporting event.

A Datum?

Point used to measure elevation.

Police Power?

Police power is the right of government to enact laws regulating private activities for the public good. The right to enact zoning ordinances stems from the government's police power.

Non-freehold Interests?

Possessory rights that don't include ownership, ie rentals.

If the Potential Gross Income of a property is $100,000, with vacancies of 5%, Operating Expense of $10,000, what is its semi-annual NOI?

Potential Gross income - Vacancies = Effective Gross Income - Operating Expense = NOI (Net Operating Income). So: $100,000 x .05 = $5,000, $100,000 - $5,000 = $95,000 - $10,000 = $85,000 / 2 (semi-annual NOI) = $42,500 (answer).

Attorney in Fact?

Power of Attorney creates it and allows RE Agents to attend closing and sign documents on behalf of their client. i.e client out of the country, military families move fast...

Liquidated Damages?

Pre-arranged amount of money paid in the event of a breach of contract.

Lead Paint Hazard?

Prevalent in homes built before 1978.

Closing Statement?

Previously HUD-1 form. Details the actual costs of closing no later than 3 days before the closing date.

Loan Estimate Form?

Previously the Good Faith Estimate detailing estimated settlement costs must be given to consumer no later than 3 working days after the loan application.

PITI?

Principal, Interest, Taxes, Insurance

Principal, Special Agent, Subagent?

Principal=Client, hires Special Agent Special Agent=Broker, hired and paid by Principal directly Subagent(Agent's Agent)=Salesperson/Agent Broker pays you as a subagent working on their behalf. You will be client's subagent and the Broker's agent

Exemptions to the Fair Housing Act?

Private Individuals who own 3 or fewer single-family houses provided that they have not sold more than one property in the last 24 months. Owner occupied buildings with no more than four units Single family housing sold or rented without the use of a real estate professional Housing operated by organizations and private clubs that limit occupancy to members. DISCRIMINATION ON THE BASIS OF RACE AND PUBLIC ASSISTANCE ARE NEVER EXEMPT!

Manufactured or Mobile homes?

Sometimes held to different building code standards, they must also satisfy the regulations.

Federal Fair Housing Law of 1968?

Prohibits discrimination in housing based on a number of protected classes..race, color, religion, or national origin. It covers RE Agents, Sellers, Buyers, Landlords, Appraisers and anyone else involved in a RE transaction. Sex was added to the list in 1974. 1988 Protection for the disabled both mental and physical and familial status. The Americans with disabilities Act of 1990 also addressed the rights of the disabled.

FTC Do Not Call List?

Prohibits unsolicited business calls to residential phone numbers on the DNC list as well as mobile phones. Fines for violations are up to $40,654 per call!

Stigmatized property disclosure?

Properties that were sites of deaths, murders, suicides, criminal activity and paranormal activity. Seller's Agent is not obligated to disclose but it he/she is asked directly by the buyer/buyer's agent, they must truthfully respond with any information they are aware of. The Buyer's Agent does, however, have a duty to disclose to the buyer.

Appurtenances?

Property Rights that exist outside the boundaries of the property itself. Easement, right of way, is an example or a deeded parking space in a condo.

Community Property States?

Property acquired during the marriage cannot be sold or devised without the consent of both spouses even if only on actually bought it.

Et Con property?

Property owned with a husband.

Et Ux property?

Property owned with a wife.

Et al property?

Property owned with others.

In a municipality with a millage rate of $30 per $1000, what would be the remaining pro-rated annual tax payment based on the fiscal year be for a $200,000 home assessed at 50% of its value sold on September 1st?

Property tax is typically paid on a fiscal year from 7/1-6/30. September 1st thus indicates that ten months of tax are remaining. 200,000 x 0.5 = $100,000 assed value/ $1000 = 100 payments x $30 per payment = $3,000 annuals tax/ 12 = $250 per month. $250 x 10 (months remaining) = $2,500 total tax.

Millage rate?

Property taxes are paid in mills (dollars per $1000 of value).

When do you pay property RE taxes in MA?

Property taxes are payable on 8/1, 11/1, 2/1, and 5/1 in Massachusetts.

Sales Lead Paint Law?

Prospective buyers of property built prior to 1978 must be notified of their lead paint rights. Buyer is granted a 10 day lead paint inspection provision by federal law which they may waive. If a child under 6 lives in the home, or someone becomes pregnant, property owner must de-lead within 90 days...NO EXCEPTIONS!!!

MGL 151B?

Protected classes are: age, sex, marital status, sexual orientation, gender identity and expression, veteran status, race/color, religious creed, public assistance status, ancestry, disability, genetic information, national origin and familial status. The owner occupancy exception to fair housing is limited in MA. Owner occupied 2 family homes.

Mortgagee/Lender Protection?

Protection for lender up to the outstanding loan balance.

Mortgagor/Owner Protection?

Protection for the purchaser up to the full purchase price or property.

Massachusetts Department of Environmental Protection (DEP)?

Provides for liability relief and financial incentive under the Brownfields Act of 1998 to encourage cleanup and redevelopment of brownfields.

Examples of practices that might fall under MGL 93A?

Puffing, Refund/return policy not upheld, Not meeting it's warranty agreement, Engaged in False advertising.

ECOA (Equal Credit Opportunity Act)?

Purpose of the law is to keep lenders and brokers from discriminatory practices and to ensure that all applicants have equal rights of opportunity when being considered for a loan. Considered on basis of income, stability and source or income, net worth and credit rating. Passed in 1974 similar to FHA.

Property Taxes? Ad Valorem Tax ("at value")?

RE taxes paid to the town or city. Calculated against the assessed value (tax value) of the property. They pay for local services ie schools, trash pick-up, etc.

Fernando verbally hires Rachel to sell his home, located at 17 River Road. He promises to only list the property with Rachel to incentivize her to get top dollar for his listing. Rachel and Fernando's relationship is best described as:

Rachel has an agency relationship with Fernando, which means this is a fiduciary relationship (a relationship of trust). Their relationship is not exclusive because it is verbal (exclusive listings must be written), and it is an enforceable agreement (listings may be verbal, and are not subject to the Statute of Frauds). "Professional" is not correct because it is not the best answer to the question (watch out for this on the real licensing exam - be sure to read all of the answers!).

Radon?

Radioactive, odorless and colorless. Homes should be tested, 1 in 15 is impacted.

3 ways the US Department of the Treasury can raise money?

Raising revenue (taxes) Borrowing by creating bills, notes, bonds but this may have the effect of "crowding out" private borrowers making credit less freely available to them. Printing Money but since it is affected by supply & demand, it reduces the value of money (inflation).

Loan Flipping?

The practice of frequently refinancing loans that result in little more than the generation of additional loan fees.

REITS?

Real Estate Investment Trusts. Investing in portfolios of RE or real estae loans (REMICS) and provide a return that is meant to trak the performance of the nat'l RE market.

REMIC?

Real Estate Mortgage Investment Conduits, or REMICs, invest in portfolios of mortgages. A real estate mortgage investment conduit (REMIC) is a special purpose vehicle that is used to pool mortgage loans and issue mortgage-backed securities (MBS). Real estate mortgage investment conduits hold commercial and residential mortgages in trust and issue interests in these mortgages to investors.

REO?

Real Estate Owned property. When foreclosed properties don't sell at auction and the bank owns the property.

Form 1099-S?

Real estate Sales must be reported to the IRS including: Sales price, names fo the parties, tax ids/ss#, any other pertinent information on a Form 1099-S by the lender or escrow agent.

Blind Advertising?

Real estate licensees (both brokers and salespersons) may not advertise under their own name only; this is known as blind advertising and is prohibited. Salespersons must include their broker affiliation, and brokers must note that they are a broker.

What is a Deed?

Receipt for Real Estate. Ownership of property is transferred/conveyed using a deed.

Real Estate Financing?

Receiving or providing money for the purchase of RE.

Recording Stamps?

Recording stamps are an expense paid by the seller (grantor) when their deed is recorded at the county registry of deeds; the stamps are a fee for recording and have no impact on the quality of the title. They may also be referred to as documentary, excise, revenue, transfer or conveyance stamps.

Recordation of Deed?

Recording. Act of making the title transfer public record at the county registry of deeds.

Clean Water Act of 1972 (CWA)?

Regulates pollution of navigable and connected waters. Goal is to eliminate hight amounts of toxic substances into water.

Who has future interest?

Remainderman/grantor in a life estate in reversion.

Non-Freeholds?

Rental possession, no ownership!

MA Licensing Law?

Requires a real estate license for anyone that does something on behalf of someone else and gets paid for it.

Children's Online Privacy Protection Act (COPPA)?

Requires that businesses provide consumers with detailed privacy policy if they collect info via websites, mobile apps, etc. Strictly limits the collection of personal info from children under the age of 13 even if the site is not targeted toward children.

Covenant?

Restrictions created by the developer or a subdivision (a property development) or planned unit development (mixed use development) and recorded in the county registry of deeds. They must be enforced consistently and uniformly against all property owners and must be reasonable and within the public interest.

Easement?

Right of Access

Mineral Rights?

Right to the space below the land along with any natural resources such as oil, precious metals, etc. Solid Mineral Rights and Liquid Mineral Rights.

Easements?

Rights fo way across neighboring property.

Rights of Ingress?

Rights of entrance.

Rights of Egress?

Rights of exit.

Easements?

Rights of way across another property. The property with the right is Dominant Tenement and the encumbered property is Servient Tenement.

Air Rights?

Rights to the space above the land. Vertical Interests may be sold or leased separately from the surface rights. Up to 80 feet now. 80-500 feet belong to FAA. Used to be "heaven to hell" Cuius est solum..."

Bylaws of the Association?

Rules of the condo building.

3 basic approaches to evaluate value of real estate?

Sales Comparison Approach, Income Approach, Cost Approach.

Broke v Salesperson?

Salesperson works for Broker. Salesperson cannot handle client $ Brokers must be bonded.

Difference between RE Salesperson and RE Broker?

Salesperson works for a Broker. Broker has at least 3 years experience, $5,000 Bond, 40 Hour Class and pass the Exam. Cannot hold both licenses at the same time. Broker can operate independently, accept direct client payments and handle Escrow Funds.

Second Mortgages/Junior Liens?

Same as regular mortgages but they come second or third, etc.

Type of Agency?

Seller's Agent Buyer's Agent Disclosed Dual Agent-works for both if broker gets informed consent of both parties Designated Agent-Same Broker Designated Agent Facilitators-non-agents, transaction brokers, contract brokers,

Good Consideration?

Services or anything deemed valuable other than money.

Declaration of Trust?

Sets up a Board of Trustees to manage the condo association.

Certificate of occupancy?

Shows that a building has been inspected and found to satisfy the building codes.

Ways to get rid of Offer?

Signed Acceptance, withdrawal before it has been signed, end of time limit, destruction of the object of offer, counter offer

The tax rate in a town is $50 per $1000 of assessed value. How much would tax be on a home assessed at $223,400?

Since we already know the assessed value of the home, we can calculate the tax bill based on the rate of $50 per $1000 like so: $223,400 / $1,000 = 223.4 x $50 = $11,170 tax bill (rounded up to $11,200 in answer A, which they sometimes do on the real estate test - watch out for that!).

Property types?

Single Family Home-One unit only Multifamily Home-Several different units (apartment buildings, two family, etc) Condominiums-Subdivided units contained within shared common areas Cooperatives-Shared property owned by a Company or Corporation Mixed Use Developments-Retail and Residential Condominiums Planned Unit Developments-Mixed use land developments that are often exempted from certain zoning regulations.

Aeolian Soil?

Soil deposited by wind, such as sand dunes or silt.

Rental/passive income?

Tax liability. To reduce, owners may write off depreciation. Loss given to you by the IRS based on th economic life of the property=27.5 years for residential, 39 years for commercial. Only improvements may be depreciated not the land. Land is infinite in it's economic life.

Tenancy in Common?

Tenancy in common is the holding of title by different persons, under different titles, each person having an equal right to occupy all of the property involved. Default form of co-ownership. Co-owners who purchase property without specifying a type of ownership own in common. Ownership interests may be equal or unequal. All co-owners have an interest in the entire property that cannot be compromised. It is inheritable.

Leaseholds?

Tenancy/Estate/Interest for years. Written of possession of RE for a period of time with a specified expiration date.

Gross Lease?

Tenant pays rents, landlord pays all expenses of property; most common form of residential lease

Covenant of Quiet Enjoyment

Tenant's right to undisturbed enjoyment of the leased property.

Separate Property States (MA)?

Tenants by the entirety may sell or devise separately, like joint tenants.

Modified Gross Lease?

Tenants pay fixed rent for first year. Any increases in operating expenses over the first/base year, are paid by the tenant.

Bank A holds a first mortgage on Jim's property for $100,000. Jim gets a second mortgage with Bank B for an additional $25,000. Jim unfortunately loses his job, defaults on his payments, and is foreclosed on. At auction the property brings in $80,000. How much does Bank B receive from the sale?

The $80,000 of auction proceeds failed to satisfy Jim's first mortgage of $100,000, meaning the second mortgage receives nothing. The second mortgage would only be paid after the first mortgage is completely paid off.

Subagent?

The Agent's Agent. In Real Estate it's the Salesperson, Co-Broker, etc. Works indirectly for the principal via the special agent's authority and works directly for the special agent.

Who hires the appraiser?

The Bank but they buyer probably pays.

License hearings...

The Board and its agents have the power to conduct public hearings upon written complaint or of it's own initiative. Provide the accused w/at least 10 days written notice of the hearing and will hold a hearing at a place of their choosing (usually their offices at 1000 Washington, Boston). Accused may have legal representation but are not entitled to it (no public defender). Board has subpoena power and may call witnesses. License suspensions/revocations can be appealed within 20 days to a superior court but the licensee must return their license to the Board within 7 days of suspension/revocation.

Who enforces the the RE Licensing Laws?

The Board of Registration of RE Brokers and Salespersons! (The Real Estate Board)

Clean water Act?

The Clean Water Act, or CWA, regulates the pollution of navigable waterways.

A homeowner's insurance underwriter would use which of the following when underwriting a property?

The Comprehensive Loss Underwriting Exchange records past consumer claims, and is used in homeowner's insurance underwriting.

Comprehensive Loss Underwriting Exchange?

The Comprehensive Loss Underwriting Exchange records past consumer claims, and is used in homeowner's insurance underwriting.

Do Not Call List Fines?

The FTC Do Not Call List prohibits unsolicited business calls to residential phone numbers on the Do Not Call List, as well as mobile phone numbers. Fines for violations are up to approximately $40,000 ($40,654) per call as of 2017

3 primary powers of the Fed?

The Fed Funds rate=rate for interbank lending. Discount Rate is the rate that the Fed loans to banks. Reserve Requirement=How much banks must maintain on hand as cash against their deposits. Federal Open Market Committee (FOMC)=buying and selling of debt to and from member banks of the Fed. The more it buys, the more $ is available for the banks to lend out and vice versa! Also stabilized the cost of borrowing for the US Govt.

What is the FHA?

The Federal Housing Administration (FHA) is a government program that insures lenders that make loans with more than 80% loan-to-value ratio (LTV) for homebuyers. These loans are meant to make homeownership more easily achievable for American homebuyers.

FHA?

The Federal Housing Administration gave both the construction industry and homeowners a boost by insuring bank loans for building new houses and repairing old ones. Created in 1934 as part of the New Deal. Insures lenders that make loans with more than 80%-96.5% LTV. There is always some kind of downpayment even if it's small. Lower FICO requirements, higher LTV and no pre-payment penalties. Helps people afford to buy housing. FHA loans before 1989 are assumable...no due on sale. The FHA only insures the loans...paid for by the borrower.

The Federal Reserve/The Fed?

The Federal Reserve was established with the goal of maximizing employment, stabilizing prices, and moderating interest rates. Its powers and authorities have expanded over time, but the three most relevant relate to the discount rate, reserve requirement, and FOMC. Depreciation is a tax concern controlled by the IRS, not the Federal Reserve.

Who is covered by mortgagee title insurance?

The Lender. Title insurance insures against losses resulting from undiscoverable title defects to a particular parcel of realty. There are two types of title insurance: mortgagor (owner) protection or mortgagee (lender) protection.

Massachusetts Real Estate Board?

The Massachusetts Real Estate Board is made up of three real estate brokers with at least seven years of experience, and two unlicensed persons ("lay people") who represent the public. One of the members is appointed the chairperson. All members of the Board are appointed by the governor and have five year terms, including the chairperson.

RESPA?

The Real Estate Settlement Procedures Act (RESPA) is a federal law requiring lenders to provide borrowers with information on closing costs for financing 1 to 4 family residential homes and sets forth additional prohibitions. Banks must provide a bona fide ("good faith") estimate of the amount and range of charges for real estate settlement to a borrower within 3 days of the loan application.

Who must sign an Option Contract?

The Seller. An option is a type of contract between an owner and a potential buyer or lessee to buy or lease in the future at specified terms. The owner granting the option is the grantor or optionor; the person giving consideration is the optionee.

Who makes the Real Estate Licensing Laws?

The State Legislature.

Wetlands Protection Act?

The Wetlands Protection Act is a Massachusetts state law requiring a buffer zone of 100 feet from wetlands for development, with minor changes permitted after 50 feet subject to approval.

Wetlands Protection Act?

The Wetlands Protection Act is a Massachusetts state law requiring a development buffer zone of 100 feet from wetlands, with minor changes permitted after 50 feet with approval.

U.S. Department of the Treasury?

The primary federal agency responsible for the economic security of the United States. Established in 1789 to manage government revenue.

Discount Points?

The borrower owes less interest every month because they have paid some of the interest up front. Used to lower the mortgage interest rate. Borrower can use it to buy down the loan interest rate.

Acceleration Clause? in a note

The clause in a mortgage or deed of trust that can be enforced to make the entire debt due immediately if the borrower defaults on an installment payment or other covenant. "Calling in the note"

Proration?

The division of expenses between buyer and seller in proportion to the actual usage of the item represented by a particular expense. ALSO CALLED: Adjustment. Date of closing belongs to the seller if not specified otherwise.

Doctrine of Laches?

The doctrine of laches provides that an unreasonable delay is asserting one's rights (such as in filing a lawsuit) causes the loss of such rights; the person is estopped from asserting/enforcing their rights.

Garn-St. Germain Act

The due on sale clause cannot be triggered on death, devising of the property, leasing, marriage, divorce or transfer to a family trust.

Real Estate Settlement Procedures Act (RESPA)?

The federal law that requires certain disclosures to consumers about mortgage loan settlements. The law also prohibits the payment or receipt of kickbacks and certain kinds of referral fees. Banks need to provide a bona fide estimate of the amount and range of charges for RE Settlement.

All of the following details of a real estate sale must be reported to the IRS?

The financial details of the transaction must be reported to the IRS on a form 1099-S (the seller's name, their social security number, the sales price, etc.). The appraised value of the property does not need to be reported, since it does not impact the seller's tax liability.

Tammy is looking to invest in property, and develop a number of lots sized 125' x 125', the minimum sized permitted by zoning. The site she is considering is 3 acres in size. Zoning will also require that she set aside 50,000 square feet for access ways. If she sells each lot for $100,000 what will she make?

The first thing we need to know to solve this problem is how big an acre is: 43,560 square feet. We can use this to convert the acres to square feet by performing the following calculation: 43,560 x 3 = 130,680 square feet. Tammy has to set aside 50,000 sqft for roads, so she will have 130,680 - 50,000 = 80,680 buildable square feet of land. Each lot Tammy will build is 125 by 125 feet, so each lot is 125 x 125 = 15,625 square feet. She can therefore build: 80,680 / 15,625 = 5 lots x $100,000 = $500,000. Always round DOWN on the number of lots, since you can't sell a partial lot.

Grantor?

The grantor is the one who transfers title to real estate to the grantee.

Habendum Clause?

The habendum clause (latin for "to have and to hold") transfers any limited estate being granted. The clause in a deed stating that the grantors are conveying all interests and rights that they have and hold.

Fee Simple Indefeasible?

The highest form of ownership. Fee simple indefeasible is the most complete form of ownership without limitations on rights of ownership aside from any public or private restrictions.

What is Real Property?

The land, anything attached to the land, and all of the various rights associated with ownership of the land. aka: Real Estate(just the land and property attached) , Realty or Immovable Property.

Probate?

The legal process by which the deceased's belongings are distributed. It will take place in the county where the deceased last lived or where any RE owned by the deceased is.

Condemnation?

The legal process for taking land (eminent domain).

Secondary Mortgage Market

The market where mortgage originators can divest their holdings, and existing mortgages are resold either at a discount or a premium. The originating lender may receive fees or the mortgagor may simply forward payments to the loan's new owner. Mortgagor doesn't need to consent but must be informed per "Helping Families Save their Home Act".

What are the maximum damages under MGL 93A?

The maximum damages under Massachusetts General Law 93A (the Massachusetts Consumer Protection Act) are triple (or "treble") damages plus attorney's fees.

Construction Financing

The method of financing used when a borrower contracts to have a house built, as opposed to purchasing a completed house.

Conflict between Public and Private Property Limitations?

The more restrictive rule wins.

Index Lease?

The rental is tied to some commonly agreed to price index such as the Consumer Price Index or the Wholesale Price Index.

Escheats?

The reversion of property to the state on the owner's dying without legal heirs.

A township's "school section" is section number?

The school section in a township is the 16th section.

Tiers/Township lines? Townships?

The squares created by the intersection of tiers and range lines are known as Townships

Sublease?

The transfer of part of the term of a lease, but not the remainder of it, to someone else.

Violations of COQE?

Trespassing, Failure to maintain the premises(sanitary/building codes), Failure to provide services promised(no running water)

Tom purchases an investment property, puts work into it, and receives a return of 44% over his total investment. He did $27,000 in renovations on the property, and sold for $303,000. What was the purchase price?

This is a tricky one. Tom's total investment is his purchase price plus his renovations. We don't know what that total investment is, but we do now what he sold the property for ($303,000), and his return on his total investment (44% over his investment, or 144% total). We can therefore calculate his total investment as $303,000 / 1.44 = $210,416.67. This investment, less the costs of renovations, is his purchase price: $210,416.67 - $27,000 = $183,416.67 (rounded to $183,417 in the answer).

Testate?

Those who die with a will.

Intestate?

Those who die without a will.

Title V? (septic)

Title V requires septic systems to pass inspection within 2 years prior to sale (3 if pumped every year), or 6 months after the sale.

A seller needs to clear $514,000 to discharge their existing loan. They have costs of $5,000, back taxes of $7,600, and are paying a commission of 4.5%. How much should they sell for?

To calculate the sale price, first add the seller's costs (treating their net profit as a cost, since they must receive it when they sell their house): $514,000 + $7,600 + 5,000 = $526,600. Next, divide the seller's costs by the difference between 1 and the commission to find their sales price: $526,600 / 0.955 = $551,413.61 (rounded up to $551,414 in the answer).

Habendum Clause?

To have and to hold. A Habendum Clause is a "to have and to hold" clause in a deed which defines or limits the quantity of the estate granted. For a life estate, the deed will specify in a habendum clause who receives the life estate upon the grantee's death. Such a clause is not necessary to convey a fee simple interest.

Why must real estate brokers be bonded

To insure Trust Accounts. Every licensed broker, including corporations and inactive licensees, must provide the Board with a surety bond of $5,000 for the benefit of any person harmed by the loss of trust (escrow) funds through fault of the broker; it is not insurance for the broker.

Why do we have licenses?

To protect the public, for the public good. Much of the Government's ability to regulate private transactions stems from Police Power which is the right of the Gov to enact laws to protect the public.

UETA?

Uniform Electronic Transaction Act.

Contract Statuses?

Unilaterally-one party makes a promise to do something the other doesn't necessarily make any promise. Bilateral-involve a simultaneous exchange of promises. One=Uni Both=Bi

Four Unities of Joint Tenancy?

Unity of interest (each joint tenant must have an equal interest including equality of duration and extent), Unity of title (the interests must arise from the same document), Unity of possession (each joint tenant must have an equal right to occupy the entire property) and Unity of time: the interests of the joint tenants must arise at the same time.

Four Unities?

Unity of possession, unity of time, unity of interest and unity of title.

Rental commissions?

Up to one month's rent

Zoning Laws examples?

Use (residential/commercial), Heights,Setbacks (distance from lot lines), Lot size, Buffer Zones (transitions between zoning areas/industrial to residential).

A21 Certificate?

Used in MA to certify that commercial property is free of contamination.

Deeds of Trust?

Used to transfer interests in RE into a trust. Used in some states in lieu of a mortgage.

Hypothecates?

Using as collateral.

Veterans Affair Financing?

VA is like FHA for honorably discharged Veterans. Part of the GI Bill in 1944 and is provided for by DVA. No downpayment is required and the fees can be rolled into their loan. Only no down payment loan available to borrowers. VA loan before 1988 are assumable...no due on sale.

Voidable Contract?

VOIDABLE - can be voided by courts, may also be enforced by the party who was harmed by their creation. i.e. intoxication, minor

Tenancy at will?

Verbal agreement for right to possess property without any specified term or stated interval. Either party may terminate at any time.

Open Listing?

Verbal or written agreement where the seller can hire as any agents as they want, who all compete for the commission. No commission is earned if the Seller finds a Buyer without broker's help.

Nuncupative will?

Verbal/oral will and is not enforceable in most states.

Torrens System (Land Court)?

Way of dealing with conflicts about property ownership.

1031 Like Kind Exchanges?

Way to defer Capital Gains Taxes. Property owner must reinvest the proceeds form the sale in property of the same type within approximately 6 months. Defers taxes, does not eliminate them.

A brokerage pays an agent 1.5% commission on the first $500,000 of any sale, plus 2% of any selling price over that. What was the sale price if the total commission was $10,000?

We would first determine what the commission would be on the first $500,000 (500,000 x .015) which is $7500. We would then subtract from the total amount of the commission which was $10,000 (10,000 - 7,500) which equals $2,500. We would then divide by the commission rate over $500,000, which is 2% (2,500 / .02) which equals $83,334. We would then add that back to $500,000. The total sale price was $583,334.

Public Assistance Programs?

Welfare. It is protected without exception in MA.

When is a contract accepted?

When it is signed.

Annexation?

When property was personal and is now real, planting a sapling...

Severance?

When property was real and is now personal, digging up a tree...

Agents must disclose...

When they represent themselves (family, business associates) Must be in writing. Agent may not lease or buy property if they are representing the owner w/out written disclosure.

Bankers?

Work directly for the lender, offer loans/programs/products that the bank has and do originate loans.

Exclusive Agency?

Written agreement where the seller only hires one broker. Where the seller of buyer hires one broker who earns the commission and who may co-broke with other brokers with permission of the owner. Must be in writing and have an expiration date.

Ironclad Contract? (Integration/Merger/Entire Agmt)

Written contract is the totality of the agreement.

Options?

Written contracts where the owner of a piece of property (optionor), in exchange for consideration, grants another party (optionee) the right to purchase or lease property within a certain time frame at the pre-agreed terms. i.e. "rent to own" Commission not paid unless the option is exercised.

Lease?

Written conveyance of possession, but not ownership, of RE for some specific period of time. aka Tenancy for years, estate for years, interest for years or demise.

Power of Attorney?

Written document that allows someone to act in a legally binding way on behalf of someone else.

Deeds Criteria?

Written, Grantor legally competent, Name the grantee, Involve the exchange of consideration, Complete and accurate description of the land, Granting clause, Delivery and Acceptance.

Ronaldo is interested in purchasing a $350,000 rental property with a biannual NOI of $12,000. What would Ronaldo's ROI be?

Yearly net income ($12,000 x 2) / $350,000 rental property price = 6.857% return on investment; rounded up to 6.86%.

Doctrine of Laches?

You lose your rights if you fail to assert them within a reasonable timeframe and can be used to render contract unenforceable.

Taxpayer Relief Act of 1997?

Your primary residence is sheltered from CGT and depends on your marital status: Single taxpayers=$250k, Married taxpayers=$500k.

Massachusetts Chapter 40A?

Zoning laws - Zoning Enabling Act. Comprehensive or master plans drafted by a planning commission used to plan their future development.

Default?

failure to pay back a loan

Prima facie?

first appearance...failure to post the HUD Equal Opportunity poster...

No law banning asbestos in MA but....

if it is been poor repair or in a friable (crumbled state) MA mandates that it be removed. RE Agents should disclose presence of asbestos under MGL93A.