Real Estate

Penalties for violating Regulation Z

$10,000 each day the violation occurs--creditor may be liable to a consumer for twice the amount of the finance charge, for a minimum of $100 and a maximum of $1,000, plus court costs, attorney's fees, and any actual damages.

Fair Housing Amendments Act

(1988) Added families with children and people with physical or mental disabilities--also maded noncompliance repercussions more severe.

Freddie Mac

(FEDERAL HOME LOAN MORTGAGE CORPORATION) also now a government-owned enterprise that provides a secondary market for mortgage loans, primarily conventional loans.

Fannie Mae

(FEDERAL NATIONAL MORTGAGE ASSOCIATION) became a government-owned enterprise in 2008. Priot to this, it was organized as a private corporation that issued its own stock. Now, it provides a secondary market for mortgage loans. Deals in conventional and federal housing administration (fha) and Department of Veterans Affairs (VA) loans. Fannie Mae buy a block or pool of mortgages that may then be used as collateral for mortgage-backed securities that are sold on the global market

Ginnie Mae

(GOVERNMENT NATIONAL MORTGAGE ASSOCIATION) has always been a governmental agency. It is a division of the Department of Housing and urban Development (HUD), organized as a corporation without capital stock. Administers special-assistance programs and guarentees mortgage-backed securities using FHA and VA loans as collateral.

Straight Loans

(also known as term loan or interest-only loan) essentially divides the loan into two amounts to be paid off separately. The borrower makes periodic payments of interest only, followed by the principal in full at the end of the terms. today, they are generally used for home improvements and second mortgages rather than for residential first mortgage loans.

Nonagent

(facilitator, intermediary, transactional broker, etc) a middleman between a buyer and a seller (or a landlord and a tenant), who assists one or both parties with the transaction without representing either party's interests. Nonagents are often subject to specific statutory responsibilities. Licensees may be known as nonagents with a customer relationship.

Open listing

(nonexclusive listing)--seller retains the right to employ any number of real estate firms as agents. Firms can act simultaneously, and the seller is obligated to pay a commission to only the firm that successfully produces a ready, willing, and able buyer.

Features that appear in real estate contracts:

-the sales price and terms; -a legal description of the land; -a statement of the kind and condition of the title and the form of deed to be delivered by the seller; -the kind of title evidence required, who will provide it, and how many defects in the title will be eliminated; and -a statement of all the terms and conditions of the agreement between the parties, and any contingencies.

Requirements of a Valid Lease

1. Capacity to contract: parties must have legal capacity. Legal Objectives: the objectives of the lease must be legal 3. Offer and acceptance: the parties must reach a mutual agreement on all the terms of the contract 4. Consideration: lease must be supported by valid consideration, an exchange of promises. Because a lease is a contract, the rent and other terms may not be changed unless both parties agree to the changes in writing and executed in the same manner as the original lease. For most residential leases, the street address of apartment number is usually sufficience. If supplemental space is part of it, it should be clearly identified.

At a minimum, a designated broker must keep the following bank trust account records

1. Duplicate receipt book or cash receipts journal recording all receipts 2. Sequentially numbered, nonduplicative checks with check register, or check stubs 3. Validated duplicate bank deposit slips or daily verified bank deposit 4. Client's accounting ledger summarizing all moneys received and all moneys disbursed for each transaction or each property management account, contract, or mortgage collection account 5. In conjuction with client ledgers, separate ledger sheets for each tenant, lessee, vendee, or mortgagor. 6. Reconciled bank statements and cancelled checks for all trust bank accounts

What are the four types of involuntary alienation (transfer) if title:

1. Escheat - property taken by state when deceased has no heirs 2. Eminent Domain - property taken by public or government agency 3. Foreclosure - property taken by creditor for nonpayment of debt secured by real property 4. Adverse Possession - property seizure occurring when someone who is not the lawful owner takes possession o f property.

Appraisal Process divided into two basic classes.

1. General data, which covers the nation, region, city, and neighborhood. Most important is the neighborhood, where an appraiser finds the physical, economic, social, and political influences that directly affect the value. 2. Specific data, which covers details of the subject property and expenses of properties similar

Types of Rules and Regulations

1. Interpretive rules: agency's interpretation of laws it administers 2. Procedural rules: establish the procedures tha apply to agency hearings

When describing a lot from a recorded subdivision plat, three identifiers:

1. Lot and block number 2. Name or number of the subdivision plat 3. Name of country and state Example:Lot 71, Happy Valley Estates 2, located in a portion of the southeast quarter of Section 23, Township 7 North, Range 4 East of the Seward Principal Meridian in ____ County, ____ [state].

What are the two primary sources of rules regulating real estate licensing in WA

1. Revised Code of Washington (RCW) 2. Washington Administrative Code (WAC)

Four methods of cost approach

1. Square-foot method: cost per square foot of a recently built comparable structure is multiplied by number of square feet. Easiest method of cost estimation. 2. Unit-in-place method: replacement cost is estimated based on the construction cost per unit of measure of individual building components. 3. Quantity-survey method: quantity and quality of all materials (such as lumber, brick, and plaster) and the labor ar estimated. These factors are added to indirect cost to arrive at the total cost of the structure. •Index method: factor representing the percentage increase of construction costs up to the present time is applied to the original cost of the subject property. It is used only as a check against other methods

Plants

1. Trees, perennial shrubbery, and grasses that do not require annual cultivation are known as fructus naturales. These are considered real estate. 2. Annually cultivated crops, such as fruit, vegetables, and grain are known as emblements and are considered personal property. Farmer who sells his property won't have to dig up growing corn plants and haul them away, unless contract says so; can come back and harvest.

When was asbestos banned

1978.

How much real estate does the EPA estimate asbestos is present?

20 percent of the nation;s commercial and public buildings have asbestos-containing materials (ACMs) Asbestos was used to cover pipes, ducts, and heating and hot water units.

If a liense is inactive for more than _____ years, the license must successsfully complete a 30-clock hour course in real estate

3

To count toward renewal, a course must be commenced within ___ months before prooof date for renewal

36 months.

Hypothecation

A borrow is required to pledge specific real property as security (collateral) for the loan. Debtor retains the right of possession and control, while the creditor receives and underlying equitable right in the pledged property.

Buyer Representation

A buyer who contracts with a licensee to locate property and represent the buyer's interests in a transaction is the principal--the licensee's client. The licensee, an agent, is strictly accountable to the buyer. ••buyer's agent may receive a flat fee or a share of the commission or both, depending on the••

Amendent

A change or modification to the existing content of a contract. Anytime words or provisions are added to or deleted from the body of the contract, the contract has been amended.

Liens

A charge against property that provides security for a debt or an obligation of the property owner. If the obligation is not repaid, the lienholder is entitled to have the debt satisfied from the proceeds of a court-ordeed forced sale of the debtor's property.

Taxation

A charge on real estate to raise funds to meet the public needs of a government.

Liens

A charge or claim against a person's property made to enforce the payment of money. When the security is in the form of real estate, the security is called a lien. If a lien is not pais in the alloted time, the lienholder may foreclose on the lien, potentially forcing the sale of the property

Encumbrance

A claim, charge, or liability that attaches to real estate. It is not an estate, so it does not allow possession. May be divided into two classifications: •Liens •Encumbrances--restrictions, easements, licenses, and encroachments

Contracts

A contract must be •voluntary •an agreement or a promise •made by legally competent parties •Supported by legal consideration •for a legal act

Listing Agreement: Termination of the Contract

A contract should provide a way for the parties to terminate the agreement. Under certain circumstances, an agreement can be canceled if the seller arbitrarily refuses to sell or cooperate

Mechanics' Liens: Judgment

A decree issued by a court. When the decree establishes the amount a debtor owes, it is referred to as a money judgment. A judgment is a general, involuntary, equitable lien on both real and personal property owned by the debtor.

Truste's Deed

A deed executed by a trustee. Used when a trustee conveys real estate held in trust to anyone other than the trustor. Trustee's deed must state that the trustee is executing the instrument in accordance with the powers and authority granted by the trust instrument.

Branch Office Licenses

A designated broker may apply to the director for authority to establish one or more branch offices under the same name upon the payment of a fee. A duplicate license for each of the branch offices must show the location of the real estate firm and the particular branch. ••Each branch office is required to have a branch manager who is a managing broker authorized by the designated broker to perform the duties of a branc manager.

Plat

A detailed map that illustrates the geographic boundaries of individual plats--ut shows the blocks, sections, streets, public easements, and monumnets in the prospective subdivision.

Trusts

A device by which one person transfers ownership of property to someone else to hold or manage for the benefit of a third party. Ex: grandfather wishes to ensure the college education of his granddaughter, so he transfers his oil field to the grandchild's mother. Grandfather: trustor Granddaughter: beneficiary Mother: trustee Trustee is a fiduciary, who acts in confidence or trust

Environmental impact statement (EIS)

A document outlining the scope and purpose of a development project, describing the environmental context, suggesting alternative approaches to the project, and analyzing the environmental impact of each alternative.

Fee simple determinable

A fee simple defeasible estate that may be inherited. This estate is qualified by a special limitation. "as long as or while or during" owner gives land to church example.

Acknowlegment

A formal declartion under oath that the person who signs a written document does so voluntarily and the signature is genuine. Declaration is made before a notary public or an authorized public officer, such as a judge, justice of the peace, or some other person prescribed by state law. An acknowledgement (formal declaration before a notary public) is not essential to the valididity of the deed unless it is required by state statute.

FEMA's Definition of Flood

A general and temporary condition of partial or complete inundation of two or more acres of normally dry land or two or more properties from •Overflow of inland or tidal waves; •An unusual and rapid accumulation or runoff of surface waters; •Mudflows or mudslides on the surface of normally dry land; or •The collapse of land along the shore of a body of water

Polychlorinated biphenyls (PCBs)

A group of industrial compounds used to manufacture plastics and insulate electrical transformers, and responsible for many environmental problems

Severance

A growing tree is real estate until the owner cuts it down, literally severing it from property. (separating it from land)

Terminating Joint Tenancies

A joint tenancy is destroyed when any one of the four joint tenancy is terminated. A joint tenant is free to convey interest in the jointly held property, but doing so destroys the unities of time and title. New owner cannot become a joint tenant. Rights of other joint tenants, however, are unaffected.

Renewal Options

A lease may contain a clause that grants the lessee the privilege of enewing the lease (called a renewal option). Lessee must, however, give notice of intent to exercise the option. Some leases grant the lessee the option to purchase the leased premises

Business Organizations

A legal entity that exists independently of its memebrs. Ownership by a business organization makes it possible for many people to hold an interest in the same parcel of land.

Corporations

A legal entity-an artifical person-created under the authority of the laws of the state from which it receives its charter. Managed and operated by board of directors. Because the corporation is a legal entity, it can own real estate in severalty or as a tenant in common.

License Reinstatement

A licensee who wants to reinstate within two years of cancellation may have his license reinstated by satisfying any of the following options: •Submit an application to the director providing proof of the following Successful completetion of 60 clock hours of approved real estate course work. A minimum of 30 clock hours must include real estate law Payment of all back renewal fees with penalty at the current rate Payment of reinstatement of $100 or Satisfy the procedures and qualifications for initial licenseing

Vendor's lien

A lien belonging to a vendor (or seller of a property) for the unpaid purchase price of the property, where the vendor or the seller has not taken any other lien or security, such as a mortgage, beyond the personal obligation of the purchaser. Vendors' liens in real estate are uncommon and arise out of the use of owner financing to sell property.

Nondisturbance Clause

A mortgage clause stating that the mortgagee agrees not to terminate the tenancies of lessees who pay their rent should the mortgage foreclose of the mortgagor-lessor's building.

Multiple Listing

A multiple-listing clause may be included in an exclusive listing. It is used by licenses who are members of the multiple listing service (MLS). A participating licensee makes a unilateral offer of cooperation and compensation to other member licensees. Licensee must have the written consent of the seller to include the property in an MLS.

Radon

A naturally occurring radioactive gas classified as a class A carcinogen

Universal Agent

A person empowered to do anything the principal can do personally. Authority is virtually unlimited.

Testate

A person who dies testate has prepared a will indicating how the deceased's property will be disposed of.

License

A personal privilege to enter the land of another for a specific purpose. A license differs from an easement in that it can be terminated or canceled. If the right to use another's property is given orally or informally, it generally is considered a license rather than an easement.

Datum

A point, line, or surface from which elevations are measured or indicated. For the purpose of the United States Geological Survey (USGS) datum is defined as the mean sea level at New York Harbor. A surveyor would use a datum in determining the height of a structure or establishing the grade of a street.

Redlining

A process by which banks draw lines on a map and refuse to lend money to purchase or improve property within the boundaries.Often a contributor to detereoration of older neighborhoods.

Blockbustin

A process by which real estate agents convince white property owners to sell their houses at low prices because of fear that persons of color will soon move into the neighborhood

Home Inspection

A profession that allows practitioners the chance to combine their interest in real estate w/their professional skills and training in the construction trades or in engineering. Professional home inspectors conduct thorough visual survey of property's structures

Property Management

A property manager is a person or company hired to maintain and manage property on behalf of its owner. By hiring a property manager, the owner is relieved of such day-to-day management tasks as finding new tenants, collecting rents, etc. Scope of manager's work depends on the terms of individual employment contract (management agreement)

Agency Statutes

A rapidly growing number of state legislatures are enacting agency reform legislation. Such reform laws are either in place or under consideration in most states. While each state's agency statute is different, many still incorporate the common-law fiduciary principles. For instance, most statutes, including Washington's, contain language requiring agents to: •Exercise reasonable care and skill in performing their duties •Obey the client's specific directions •Account for all money property received •Promote the client's best interests at all times •Disclose material facts concerning the transaction •Perform according to the terms of the brokerage agreement •Keep confident all confidential information received from the client •Generally comply with the terms of the statute

Bail Bond Lien

A real estate owner who is charged with a crime that will result in a trial may post bail in the form of real estate rather than cash. Creates a specific, statutory, voluntary lien against the owner's real estate.

Inspection Contingency

A sales contract may be contingent on the buyer's obtaining certain inspections of the property. Inspections may include those for wood-boring insects, lead-based paint, structural and mechanic systems, sewage facilities, and radon or other toxic materials.

Home Equity Loans

A source of funds using the equity built up in a home. The original mtg loan remains in place; the home equity loan is a junior to the original lien. It can be used for a variety of finan ial needs, such as to: *finance the purchase of expensive items; •Consolidate existing installment loans or credit card debt; and •Pay medical, education, home improvement, or other expenses. Can be taken out as a fixed-loan amount or as an equity lone of credit--with the home equity line of credit, referred to as a HELOC, the lender extends a line of credit that the borrower can use at will.

Buffer Zones

A strip of land, usually as a park or similar use--separates land dedicated for one use from land dedicated for another use.

Improvement Location Certificate

A survey that provides only the location of the structure and improvements as related to property boundaries

Leasehold Estate

A tenant's right to possess real estate for the term of the lease is called a leasehold estate (less-than-ffreehold)

Delivery and Acceptance

A title is not considered transferred until the deed is actually delivered to and accepted by the grantee.

Subdivision

A tract of land divided by the owner, known as the subdivider, into blocks, building lots, and streets

Exceptions and Reservations

A valid deed must specifically note any encumbrance, reservations, or limitations that affect the title being conveyed. Many deed restrictions have time limits and often include renewal clauses.

Mortgage Liens (deed of trust lien)

A voluntary lien on real estate given to a lender by a borrower as a security for a real estate loan. Becomes a lien on real property when the lender records the documents in the county where the property is located. Lenders generally require a preferred lien, referred to as a first mortgage lien.

Listing Agreement: Evidence of Ownership

A warranty deed, title insurance policy, or abstract of title with an attorney's opinion can be used for proof of title

Buydowns

A way to temporarily lower the interest rate on a mortgage or deed of trust loan. Relatives or the seller might want to help a buyer qualify. In any case, a lump sum is paid in cash to the lender at the closing--the payment offsets and reduces the interest rate during the mtgs first year. The assumption is that the borrower's income will increase, making it more likely that the borrower will be able to pay the increased monthly payments after 1 to 2 years.

ADA and Fair Housing Act

ADA exempts the folllowing two types of property from its requirements: •Covered by the Fair Housing Act •Exempt from coverage by the Fair Housing Act Some properties are subject to both. For example: an apartment complex, the rental office is a place covered by the ADA, but individual unit is covered by the FHA

Land Contracts

AKA contract for deed or an installment contract. Real estate is usually sold on a contract for specific financial reason. For instance, mortgage financing may be unavailable to a borrower. The buyer (called the vendee) agrees to make a down payment and a monthly loan payment that includes interest and principal. The seller (vendor) retains legal title to the property and the buyer is granted equitbale title and possesson.

Primary Mortgage Market: Insurance Companies

Accumulate large sums of money from the premiums paid by their policyholders. While some of the money is used in reserve, much of it is free to be invested in profit-earning enterprises, such as long-term real estate loans.

Contingencies

Additional conditions that must be satisfied before a sales contract is fully enforceable Includes the following three elements: •The actions necessary to satisfy the contigency •The time frame within which the actions must be performed •Who is responsible for paying any costs involved

Federal Emergency Management Agency (FEMA)

Administers the flood program. The Army Corps of Engineers has prepared maps that identify specific flood-prone areas throughout the country.

General Liens

Affect all the property, both real and personal, of a debtor. This includes judgments, estate and inheritance taxes, decedent's debts, corporate franchise taxes, and Internal Revenue Service taxes. A lien attached to real property at the moment it is filed and recorded. In contrast, a lien does NOT attach to personal property until the personal property is seized.

Single Agency

Agent represents only one party in any singe transaction. That licensee cannot

hud complain: admin law judges

Aggrieved person has the right to seek relief through administrative proceedings. Hearings held before administrative law judges (ALJs). Has the authority to award actual damages to aggrieved parties and potentially impose monetary penalties.

Tie-in Agreements

Agreements to sell one product only if the buyer purchases another product as well. The sale of the first (desired) product is tied to the purchase of a second (less desirable) products.

Expiration of listing Period

All exclusive listings should specify a definite period which the licensee is to be employed. Failing to specify is ground for the suspension or revocation of a real estate license.

Listing Agreement: Encumbrances

All liens will be paid in full by the seller or be assumed by the buyer at the closing.

Listing Agreement: The Signature of the Parties

All parties identified in the contract must sign, including all individuals who have a legal interest in the property.

Classification: RESIDENTIAL

All property used for single-family or multifamily housing, whether in urban, suburban, or rural areas

Time-shares

Allow multiple purchasers to share ownership of a single property, usually a vacation home or resort property. Each owner is entitled to use the property for a certain period each year, usually a week or month. Owners pay a maintenance fee, too.

Reverse Mortgage

Allows people 62 or older to borrow money against the equity they have built in their home. Opposite of conventional mortgages in that the homeonwer's equity diminshes as the loan amount increases. The borrower is charged a fixed rate of interest, and no payments are due until the property is sold or the borrower defaults, moves, or dies.

Judicial Foreclosure

Allows the property to be sold by court older after the mortgagee has given sufficient public notice. After presentation of the facts in court, the property is ordered sold. A public sale is advertised and held, and the real estate is sold to the highest bidder. This process is used in Washington and it is the sheriff who is responsible for selling the property.

Right of First Refusal

Allows the tenant the opportunity to buy the property before the owner accepts an offer from another partty. Also, owner may give the tenant credit toward the purchase price for some percentage of the rent paid.

The Comprehensive Plan

Also known as a master plan. it is not a regulatory document, but rather a guide for planning change. Usually a long-term, perhaps 20 years

Growing-Equity Mortgage

Also known as a rapid-payoff mortgage. Uses a fixed interest rate, but payment of principal are increased according to an index or a schedule. Thus, total payment increases, and the loan is paid off more quickly.

Closing Statement

An accounting of the parties' debits and credits.

Inverse cONDEMNATION

An action brought by a property owner seeking just compensation for land taken for public use when the taker of the property does not intend to bring eminent domain proceedings. Property is condemned because its use and value have been diminished due to an adjacent property's public use.

Escrow Contract

An agreement between a buyer, seller, and an escrow holder, setting forth the rights and responsibilities of each. An escrow contract is entered into when earnest money is deposited in a real estate firm's escrow account. If the offer is not accepted, the earnest money deposit is immediately returned to the would-be buyer.

Trade Fixture

An article owned by a tenant and attached to a rented space or building or used in conducting business is a trade fixture. Examples: bowling alleys, store shelves, and barroom and restaurant equipment. **Trade fixtures must be removed on or before the last day that the property is rented**

Listing Agreement: The Closing

An attorney, title company, or escrow company should be considered and retained as soon as possible.

Listing Agreements

An employment contract between a real estate firm and a seller. It is a contract for the real estate professional services of the firm, not the transfer of the real estate. Under the law of agency and most state license laws, only a designated broker can act as an agent--an affiliated licensee who performs these act only does so in the name and under the supervision of the designated broker.

Buyer Agency Agreement

An employment contract. The licensee is employed as the buyer's agent. Buyer is the principal--not the seller. Gives the buyer a degree of representation possible only in fiduciary relationship

broker

An entry-level licensee who is affiliated with and supervised by a managing and designated broker

Appraisal

An estimate or opinion of value based on supportable evidence. Appraisal report is an opinion of market value on a property given to a lender or a client with detailed and accurate information--professional service performed for a fee.

Options

An option contract by which an optionor "generally an owner" gives an optionee (prospective buyer or lessee) to right to buy or lease the owner's property at a fixed price within a certain period. Option is enforceable by the optionee ONLY (a unilateral contract). Must ocntain all the trms and provisions required for a valid contract.

Building Codes

An ordinance that specifies minimum standards of construction for buildings to protect public safety and health.

Owner as Principal

An owner may employ a real estate firm to market, lease, maintain, or manage the owner's property. Such an arrangement is known as property management. The designated broker is made the agent.

Transfer by Adverse Possession

Another means of involuntary transfer. An individual who makes a claim to certain property, takes possession of it, and, most important, uses it, may take title away from an owner who fails to use or inspect the property for a period of years. In Washington, uninterrupted use must be 10 years for adverse possession to occur. In order to establish title, there must be proof of nonpermissive use that is open, notorious, exclusive, and adverse for the statutory prescriped period.

Improvement

Any artificial thing attached to the land, such as a building or a fence, as well as infrastructures, such as sewers

Counteroffer

Any change by the seller to the terms proposed by the buyer creates a counteroffer. The original offer ceases to exist--it has been rejected. An offer or counteroffer may be withdrawn at ANY time before it has been accepted, even if the person making the offer or counteroffer agreed to keep it open.

Codicil

Any modification, amendment, or addition to a previously executed will is contained in a separate document called a codicil.

Creditor

Any person who extends consumer credit more than 25 times each year or more than 5 times each year is the transactions involve dwellings as security.

Listing Agreement: Real Property and Personal Property

Any personal property that will be sold must be explicitly identified.

Addendum

Any provision added to an existing contract without altering the content of the original. An addendum is essentially a new contract between parties that includes the original contract's provisions by reference, meaning the addendum mentions the original contract.

The Listing Agreement: The Names of All Parties to the Contract

Anyone who has an ownership interest in the property must be identified and should sign the listing to validate it.

Recording a Lease

Anyone who inspects the property receives actual notice; therefore, it is usually considered unnecessary to record a lease/ Leases of three years or longer often are recorded as a matter of course.

Credit to the Buyer

Anything that decreases the amount of money the buyer must bring to the closing

Unenforceable Contract

Appear on the surface to be valid; however, neither party can sue the other to force performance. Example: an oral agreement for the sale of a parcel of real estate would be enforceable because SOF requires real estate sales contracts to be in writing.

Real Estate Settlement Procedures Act (RESPA)

Applies to any residential real estate transaction involving a new first mortgage loan. RESPA is designed to ensure that the buyer and the seller are both fully informed of all settlement costs.

A real estate professional who performs a visual survey of a property's structure and prepares a report for the purchaser or an owners is a(n)

Appraiser

Equitable Lien

Arises out of common law. A court-ordered judgment that requires a debtor to pay the balance on a delinquent charge account would be an involuntary equitable lien.

Estate at Sufferance

Arises when a tenant who lawfully possessed real property continues in possession of the premises without the landlord's consent after the rights expire. This can arise when a tenant for years fails to surrender possession at the lease's expiration When a tenant fails to surrender possession, or holds over, the tenant is responsible for the payment of monthly rent at the existing terms and rate. If it contains a holdover clause, that lease governs the right of both the landlord and the tenant

Sale-and-leaseback

Arrangement whereby the owners of property sell the property and then lease it back again for an agreed period and rental. Often used when extra capital is needed on a construction project. Original owners can pull out their equity to use.

Sale-and-leaseback

Arrangements are used to finance large commercial or industrial properties. The land and the building, usually used by the seller for business purposes, are sold to an investor. The real estate is then leased back by the investor to the seller, who continues to conduct business on the property as a tenant. Buyer becomes the landlors and the original owner becomes the tenant.

ARELLO

Association of Real Estate License Laws Offices - promotes uniform policies and state license laws.

Antitrust Laws

At the federal level, the Sherman Antitrust Act provides specific penalties for a number of illegal business activities. Each state has its own antitrust laws as well. •Prohibit monopolies •Restrains of trade--behaviors that interfere w. the free flow of goods and services in a competitive marketplace.

Special Agent (Limited Agent)

Authorized to represent the principal in one specific act or business transaction only. A real estate licensee is usually a special agent. Doesn't have authority to bind the principal to any contact.

Safe Drinking Water Act

Authorizes the EPA to establish national primary drinking water standards. Prohibits the dumping of wastes into wells used for drinking water. The states are primarily responsible for enforcing the act. Water suppliers must report risk within 24 hous.

Fee for services

Based on charges for separate real estate activities that the client desires (unbundling of services)

The Income aPPROACH

Based on present value of the rights to future income. It assumes the the income generated by a property will determine its value. Apartment buildings, office buildings, and shopping centers is based on anticipation.

Life estate

Based on the lifetime of the person

Cost Approach

Based on the principle of substitution. Includes 5 steps: 1. Estimate the value of the land as if it were vacant 2. Estimate the current cost of constructing buildings 3. Estimate amount of accrued depreciation 4. deduct the accrued depreciation forom construction cost 5. Add land value.

Finacing

Business of providing funds to make real estate transactions possible. Most transactions are finance by means of mortgage loans or trust deed loans secured by property.

Classification: COMMERCIAL

Business property, including office space, shopping centers, stores, theaters, hotels, and parking facilities.

Breach of Contract: suit for specific performance

Buyer asks the court to force the seller to go through with the transfer of property as previously agreed (sale)

Buying "Subject To"

Buyer may take the property in one of two ways. Property may be purchased "subject to" the mortgage or deed of trust, or the buyer assume the mortgage or deed of trust and agree to pay the debt. When the property is sold "subject to," the buyers are not personally obligated to pay the debt in full.

Property sale contingency

Buyers may made the sales contract contigent on the sale of their current home. Protexts buyers from owning two homes at the same time.

Shoreline Management Act

By regulating development within 200 feet of the high water mark, this act tries to preserve Washington shorelines (including coastal shorelines, the shoes of lakes larger than 20 acres, and the shores of streams that flow at more than 20 cubic feet per second) applirsd yo anyone advetising 26 or more unimproved lands to the public as part of a comon promotional plan. Even if the lots are located in another state, they are covered by this act if they are prooted in washington DOES NOT APPLY: *FEWER THAN 26 LOTS •iN WHICH EACH LOT IS FIVE ACRES OR LARGER •wHERE ALL THE LOTS HAVE BUILDING ON THEM, OR IF THE DEVELOPER PLANS ON BUILDING ON THE LOTS WITHIN TWO YEARS •wHEN TH ELOTS ARE SOLD TO BUILDERS FOR DEVELOPMENT •whEN ALL THE LOTS ARE SOLD TO ONE PURCHASER; OR 8whEN ALL THE LOTS ARE WITHIN CITY LIMIT

What are the six fiduciary duties from common-law for agency

C-are O-bedience L-oylaty D-isclosure A-ccounting C-onfidentiality

Designated Agency

Called Split agency in Washington--process that accommodates an in-house sale in which two different agents are involved. Designated broker assigns one agent to represent the seller and one to represent the seller.

Party Wall

Can be an exterior wall of a building that straddles the boundary line between two lots, or it can be a commonly shared partition wall between two connected properties.

Creating Joint Tenancies

Can be created only by the intentional act of conveying a deed or giving the property by will or living trust. Deed must specifically state the parties' intention to create a joint tenancy, and the parties must be explicitly identified as joint tenants.

Interest

Charge for the use of money. Lender charges a percent of interest on the principal over the time of the loan. Interest may be due at the end or beginning of each payment period. Payments made at the end are known as payments in arrears--most mortgages call for end-of-period payments due on the first of the following month. may be paid at the beginning and are known as payments in advance.

Usury

Charging an interest rate in excess of the maximum rate allowed by law. Many states have enactd laws limiting the interest rate that may be charged on loans.

Classification: SPECIAL PURPOSE

Churches, schools, cemeteries, and government-held lands

Broker protection clause

Clause in the listing agreement that provides that the property owner will pay the listing licensee a commission if, within a specified number of days after the listing expires, the owner transfers the property to someone the licensee originally introduced to the owner.

Suit to Quiet Title

Cloud of title makes it necessary to establish ownership by court action. A suit might be required when a grantor acquired title under one name and conveyed it under another name.

Tenant Improvements (build-outs)

Commercial and industrial property managers often called on to make tenant improvements. Construction alterations to the interior of the building to meet a tenant's particular space needs. Range from simply repainting to completely gutting the interior. Trade fixtures (personal prop belonging to tenant)

Riparian Rights

Common-law rights granted to owners of land along the course of a river, stream, or similar body of water. They generally include the unrestricted right to use the water. Owner cannot interrupt or alter the flow of the water or contaminate it in any way. An owner of land that borders a nonnavigable waterway owns the land under the water to the exact center of the waterway. Land adjoining comercially navigable rivers is usually owned to the water's edge.

Budget Comparison Statement

Compares the actual results with the original budget, often giving either percentages or a numerical variance of actual vs projected.

Zoning Permits

Compliance with zoning can be monitored by requiring that property owners obtain zoning permits before they begin any development.

Air Lots

Composed of the airspace within specific boundaries located over a parcel of land. Condominium laws passed in all states require that a registered land surveyor prepares a plat map that shows the elevations of floor and ceiling surfaces and the vertical boundaries of each unit with reference to an official datum

Enabling Acts

Confer zoning powers to local municiapal governments if nt statewide or nationwide zoning ordinances exist.

Limited Partnership

Consists of one or more general partners and limited partners. It is run by the general partner(s). Limited partner is not legally obligated to participate, and each can be held liable for business losses only to the amount invested. General partnerships are dissolved and must be reorganized if one partner dies, withdraws, or goes bankrupt. In a limited partnership, the agreement may continue following th edeath or withdrawal of one of the partners.

Ownership by Married Couples: Community Property

Consists of real and personal property acquired by either spouse during the marriage. Any conveyance or encumbrance of community property requires the signature of both spouses. Spouses can will their half of the community property to whomever they desire, but upon the death of one spouse, the surviving spouse automatically owns one-half of the remaining property.

What are the two types of notices? (Public Records)

Constructive and Actual

Bargain and Sale Deed

Contains no express warranties against encumbrances. However, it does imply that the grantor holds title and possession of the property. The grantee has little legal recourse if title defects appear later. The buyer should purchase, or the seller provide, title insurance for protection. A covenant against encumbrances initiated by the rantor may be added to a standard bargain and sale deed--it would be equivalent to a special warranty deed.

Special Warranty Deed

Contains two basic warranties: •That the grantor received the title •That the property was not encumbered during the time the grantor held the title, except as otherwise noted in the deed. In areas where a special warranty deed is more commonly used, the purchase of title insurance is viewed as providing adequate protection to the grantee. May be used by fiduciaries because they lack the authority to warrant against acts of predecessors in title (former owners)

Property Management Advertising

Content cannot market to one protected class. Newspaper adv, brochurs, and direct-mail pieces.

Lease

Contract between an owner of real estate (lessor) and a tenant (lesee) A lease is a contract to transfer the lessor's rights to exclusive possession and use of the property to the tenant for a specified period. The lease establishes the length of time the contract is to run and the amount the lessee is to pay for the use of property. The lease agreement combines two contracts: 1. a conveyance of a possession of the real estate 2. a contract to pay rent and assume other obligations. LANDLORD RETAINS A REVERSIONARY RIGHT TO POSSESSION AFTER THE LEASE TERM EXPIRES

Management Agreement

Contract creating a general agency relationship between the owner and the property manager. Serves as a reference for future disputes, too. Property managers are usually empowered to make many more decisions on behalf of the owner than a licensee can make on behalf of a seller or buyer. After entering into an agreement with a property owner, manager handles the property the same way the owner would. MANAGEMENT AGREEMENT SHOULD BE IN WRITING. •DESCRIPTION OF PROP •TIME PERIOD •DEFINITION OF MANAGEMENTS RESPONSIBILITIES •STATEMENT OF THE OWNER'S PURPOSE AND RESPON •EXTENT OF AUTHORITY •EPORTING •COMPENSATION. ALSO, MANAGER SHOULD BE INCLUDED AS ADDITIONAL INSURED ON THE PROPERTY LIABILITY POLICY •ALLOCATION OF COSTS •ANTITRUST PROVISIONS: CAN'T PRICE FIX COMMISSION. •EQUAL OPPORTUNITY STATEMENT.

Title Insurance

Contract under which the policyholder is protected from losses arising from defects in title--insurance company determines whether the title is insurable based on review of public records. After examining the public records, title company issues preliminary report of title or a commitment to issue a title policy. Includes: *Name of the insured party •Legal description of real estate •The state or interest covered •Conditions and stipulations under which the policy is issued; and •A schedule of all exceptions, including encumbrances and defects found

Subdivision Density

Control that includes minimum lot sizes and population density requirements.

Primary Mortgage Market: Credit Unions

Cooperative organizations whose members place money in savings accounts. In the past, credit unions made only short-term consumer and home improvment loans--now they routinely originate longer-term first and second mortgage and deed of trust loans.

Blanket Loans

Covers more than one parcel or lot. Usually used to finance subdivision development. Usually includes a provision known as a partial release claus--permits the borrower to obtain the release of any one lot or parcel from the blaket by repaying a certain amount of the loan.

Creating an Easement

Created by a written agreement between the parties. Always involved two separate parties, one of whom is the owner of the land over which the easement runs. Two other ways are easement by necessity and easement by prescription.

Involuntarily lien

Created by law and may be either statutory or equitable

Statutory Lien

Created by statute. A real estate tax lien, is involuntary and statutory, it is created by statute, without action of the property owner

Voluntarily Lien

Created intentionally by the property owner's actions, such as when someone takes out a mortgage loan.

Month-to-month Tenancy

Created when a tenant takes possession with no definite termination date and pays monthly rent. Often used in residential leases.

Easement by Necessity

Created when an owner sells a parcel of land that has no access to a street or public way except over the seller's remaining land is an easement by necessity.

Estate from Period to Period (period tenancy)

Created when the landlord and tenant enter into an agreement for an indefinite time. Lease does not contain a specific expiration date. Tenancy continues indefinitely until proper notice of termination is given. Automatically renewable under the original terms of the agreement until one of the parties gives notice to terminate.

Purchase-Money Mortgages

Created when the seller agrees to finance all or part of the purchase price and consits of a first or junior lien depending on whether prior mortgage liens exist.

How to enforce judgment

Creditor must obtain a writ of execution from the court--directs the sheriff to seize and sell as much of the debtor's property as is necessary to pay both the debt and expenses of the sale. When real property is sold to satisfy a debt, the debtor should demand a legal document known as a satisfaction of judgment.

Estate in Land

Defines the degree, quantity, nature, and extent of an owner's interest in real property. To be an estate in land, an interest must allow possession, meaning the holding and enjoyment of the property either now or in the future, and must be measured according to time.

Law of Agency

Defines the rights and duties of the parties in a real estate transaction--the principal, the agent, and the customer. In real estate transactions, contract law and real estate licensing laws--in addition to the law of agency--interpret the relationship between licensees and their clients.

To have value in the real estate market, a property must have what characteristics? (4)

Demand Utility Scarcity Transferability

Features of independent contractor

Designated broker cannot dictate how licensee does it. Can't require licensee to keep certain office hours or attend meeting. ICs are responsible for paying their own income and social security taxes. Under the qualified real estate agent category in the internal revenue code, the following three requirements are needed to establish IC status: •Individual must have a current real estate license •Licensee must have a written contract with the firm that specifies that the licensee will not be treated as an employee •At least 90% of the individual's income as a licensee must be based on sales production, not hours worked

Legal Description

Detailed way of describing a parcel of land for documents such as deeds and mortgages that will be accepted in a court of law.

Planned Unit Development: Zoning

Development where land is set aside for mixed-use purposes, such as residential, commercial, and public areas. Zoning regulations may be modified for PUDs.

Disclosed Dual Agency

Disclosure is intended to minimize the risk for the licensee. The disclosure alerts the principals that they might have to assume greater responsibility for protecting their interests than they would if they had independent representation

Environmentl Hazards

Disclosure of environment hazards may be required. For instance, federal law requires the disclosure of lead-based paint hazards.

Modular homes (prefabricated)

Each room in a modular home is preassembled at a factory, driven to the building site on a truck, then lowered onto its foundation by a crane. Workers finish the structure and connect plumbing and wiring.

Tenancy in Common

Each tenant holds an undivided fractional interest in the property. A tenant in common may hold one-half or one-third interest. The ownership interest is divided-not the property. Because the co-owners own separate interests, they can sell, convey, mortgage, or transfer their individual interest without the consent of the other co-owners.

Land

Earth's surface to the center of the earth and the airspace above the land, including the trees and water

Real Property: TWO CARACTERISTICS

Economic & Physical

Percentage Lease

Either a gross lease or a net lease may be a % lease. Often used for retail business leases. Rent is based on a minimum fixed rental rate plus a % of the gross income received by the tenant doing business--percentage is negotiable and varies.

Wraparound Loans

Enables a borrower with an existing mortgage or deed of trust loan to obtain additional financing from a second lender without paying off the first loan. Second lender gives the borrower a new increased loan at a higher interest rate and assumes payment of the existing loan. Borrower makes payments to the new lender on the larger loan and the new lender makes payments on the original loan out of the borrower's payments.

National Flood Insurance Act of 1968

Enacted by congress to help owners of property in flood-prone aread by subsidizing flood insurance and by taking land-use and land-control measures to improve future management for floodplain areas.

Testamentary trust

Established by will after the owner's death.

Good Faith Estimate (GFE)

Estimate of Costs Involved in Obtaining Financing and Purchasing the Property. (No longer used for most mortgages.) Issuing a new GFE starts the 3 day waiting period over again

Sales Comparison Approach (market data approach)

Estimate of value obtained by compring the property being appraised--the subject property--with recently sold comparable properties. Usually considered the most reliable of the three approaches.

Suit or Complaint Notification

Every licensee must, within 20 days after service or knowledge there of notify program manager of any criminal complain where they are named as a defendant •Entry of a civil court order, verdict, or judgment, against the licensee in any court of competent jurisdiction in which the subject matter therein involves any real estate business-related activity by the licensee.

Real Estate License Exam Administration

Exam tests the applicant on: •Appropriate knowledge of the english language •An understanding of the principles of real estate conveyancing, the general purposes and legal affect of deeds, mortgages, land contracts of sale, exchanges, rental and option agreements, and leases •An understanding of the principles of real estate, the general purposes and legal ffect of deeds, mortgages, lang contracts of sale, exchanges, rental and option greements.

Title Search

Examination of all of the public records to determine whether any defects exist in the chain of title. Begins with the present owner and traces backard to origin. Time beyond which the title must be searched is limited by states that have adopted the Marketable Title Acts.

Deed executed pursuant to a Court order.

Executors' and administrators' deeds, masters' deeds, sheriffs' deeds, and many other types are all deeds executed pursuant to a court order. **Full sale price is listed as consideration, usually.

Executory Contract

Exists when one or both parties still have an act to perform.

Renewing a real estate firm's license

Expire two years after their issue date. Firm must provide the following to the department for renewal: •Renewal fee •Notice of any change in controlling interest •notice of any change in the firm's registration or certificate of authority filed w/ secretary of state.

Converted-use properties

Factories, warehouses, office buildings, hotels, schools, barns, churches, and other structures that have been converted to residential use. Developers often find renovation of such properties more aesthetically and economically appealing than demolishing a perfectly sound building to build a new one.

Classification: AGRICULTURAL

Farms, timberland, ranches, and orchards

Accessibility

Federal Fair Housing act makes it illegal to discriminate on physical disability. Tenants have the right to make reasonable modifications at their own expense. If it would interfere with a future tenant's use, the landlord may require that the premises be restored at the end of lease term

megan's law

Federal legislation that promotes the establishment of state registration system for kidnappers, sex offenders, etc.

Profit and Loss Statement

Financial picture of the revenues and expenses used to determine whether the business has made money or suffered a loss. It may be prepared monthly, quarterly, semiannually, or annually. Gross receipts - operating expenses - total mortgage payment + mortgage loan = net profit

Listing Agreement: The Broker Protection Clause

Firms may be well advised to protect their interests against possible fraud or reluctant buyer's change of heart.

Priority of Liens

First filed, first paid. Exception: real estate taxes and special assessments generally take priority over all other liens.

Strict Foreclosure

First, appropriate notice must be given to delinquent borrower. Once the proper papers have been prepared and recorded, court established a deadline for the balance to be paid in full. if the borrower does not pay it off by that date, the full legal title goes to the lender--no sale takes place.

Monuments (Metes-and-bounds methos)

Fixed objects used to identify the POB, all corners of the parcel or ends of boundary segments, and the location of intersecting boundaries. Today, monuments are iron pins or concrete posts placed by the U.S. Corps of Engineers, other government departments, or trained private surveyors. Actual distance between monuments takes precedence over any linear measurements in the description

Liens on Title follow the _____

Follow the property, not the property owner. A buyer should insist on a title search before closing a real estate transaction so that any recorded liens are revealed.

Advertising by Real Estate Licensees

Following acts are grounds for disciplinary action under Washington statutory law: 1. Making, printing, publishing, distributing false statements, descriptions or promises 2. knowlingly commiiting any material fraud, misrepresentation, concealment, or scheme 3. Advertising in any manner without including the real estate firm's name or assumed name; although real estate licenswees advertising their personally owned property only have to disclose that they hold a real estate license. 4. Any conduct in a real estate transaction that shows bad faith, dishonesty, or incompetence.

How long is the application good for as an interim license?

For 45 days

Life Estate

Freehold estate limited in duration to the life of the owner or the life of some other designated person. It is not inheritable

E-Sign

Functions as the electronic transactions law in states that have not enacted the UETA, and some sections of E-sign apply to states that have enacted UETA.

An affiliated licensee is a ____ agent of the designated broker

General

Estate and Inheritance Taxes

General, statutory, involuntary liens that encumber a deceased person's real and personal property. Usually dealt with in probate court

Estate at Will

Gives the tenancy the right to possess property with the landlord's consent for an unspecified or uncertain term. It is a tenancy of indefinite duration; it continues until it is terminated. An estate at will will automatically terminate by the death of either the landlord or the tenant.Tenant has the obligations and rights of a lessor-lessee relationship, including the duty to pay rent at regular intervals. it is rarely used.

Erosion

Gradual and imperceptible wearing away of the land by natural forces, such as wind, rain, and flowing water.

Cooperative

Has units that share common walls and facilities within a larger building. Owners don't actually old the units--instead, corporation holds the title. Unit owners purchase stock in the corporation, not their individual units. Owners receive proprietary leases and a share of stock.

Living Trust

Have become a major estate-planning tool to minimize the time and costs of probate. The property owner (trustor, grantor, or settler) transfers ownership of real and personal property to a trustee. The trustee is often the trustor in this scenario. Upon the death of the trustee, property passes to beneficiary.

Secondary Mortgage Market

Helps lenders raise capital to continue making mortgage loans. It is especially useful when money is in short supply; it stimulates both the housing construction market and mortgage market. In the secondary market, loans are bought and sold only AFTER they have been funded. Lenders routinely sell loans to avoid interest rate risks and to realize profits on the sales.

Fee simple

Highest estate recognized by law

Exterior Finishing System (EIFS)

Highly effective moisture barrier that also tends to seal in moisture--trapping water in the home's walls and resulting in massive wood rot.

Manufactured Homes

Homes built in factories meeting HUD specifications are called manufactured homes. They may be placed on individually owned land, but more than a third are sited in communities. Tenants may be renting only the "pad," the land on which the home is sited, or the home itself. Managers of these communities must be good at building community spirit

Office of Broker Actively Licensed in another State

If a broker is actively licensed in another jurisdiction, the broker must maintain trust account and transaction records for a period of three years in the state of Washington in one location, which can be the office of one of the following •An escrow agent licensed in the state of Washington •A real estate broker licensed in the state of Washington •An attorney at law licensed to practice in the state of Washington •A title company used for all Washington transactions for the broker The trust account and transaction records must be open and accessible to representatives of the department aof licensing

Seller representation

If a seller enters a listing agreement with a real estate firm, the designated broker becomes an agent, the seller is the principal, the broker's client.

Liquidated Damages

If one party breaches the contract, the parties may agree on a certain amount of money that will compensate the nonbreaching party. Such money is called liquidated damages. If a sales contract specifies that the earnest money deposit is to serve as liquidated damages in case the BUYER defailts, the seller will be entitled to keep the deposit if the buyer refuses to perform without good reasn.

Gross Income Multiplier (GIM)

If the buyer is interested in purchasing five or more units.

Easement by Prescription

If the claimant has made use of another's land for a certain period of time defined by state law, an easement by prescription may be acquired. (10 to 21 years)

Deficiency Judgment

If the foreclosure sale does not produce enough cash to pay the loan balance in full, the mortgage may be entitled to a personal judgment against the borrower for the unpaid balance--known as a deficiency judgment.

Constructive Eviction

If the leased premises becomes unusable for the purpose stated in the lease, the tenant may have the right to abandon them. The tenant must prove that the premis in unusable AND must leave the premises while the conditions that made the premises uninhabitable exist.

Acceptance

If the seller agrees to the original offer or later counteroffer EXACTLY as it is, the offer has been accepted and a contract is formed. An offer is not considered accepted until the person making the offer has been notified of the other party's acceptance.

Real Property: physical characteristics

Immobility: it is true that some of the substances of land are removable and the topography can be changed, but geographic location can't be changed Indestructibility - land is also indestructible. This permanence of land, coupled with the long-term nature of improvements, tends to stabilize investments in real property. Uniqueness (nonhomogeneity) - concept that no two parcels of property are exactly the same or in the same location.

Zoning Ordinances

Implement the comprehensive plan and regulate and control the use of land structures within designated land-use districts, in part by separating conflicting land uses. If the comprehensive plan is the big picture, zoning is the details.

Management Activities

Important for a firm to maintain good public relations--community involvement and charitable giving. PSAs regarding special projects also help, too

National Do Not Call Registry

In 2003, federal do-not-call legislation was signed into law. It is managed by the Federal Trade Commission (FTC) It is a list of telephone numbers from consumers who have indicated their preference to limit the telemarketing calls--applies to any plan, program, or campaign to sell goods or services through intestate phone calls. --Does not limit calls by political organizations, charities, collection agencies, or telephone surveyors.

Risk Management

In considering the possibility of a loss, PM must decide whether it is better to: •Avoid it by removing source of risk •Control it by preparing for emergency before it happens •Transfer it by insurance •retain it by deciding the chance is too small to justify the expense of any other response

Binder

In some states, licensees may prepare a shorter document known as a binder. Binder states the essential terms of the offer and acknowledges that the licensee has received the purchaser's deposit.

Tax Sale: equitable right of redemption

In states that permit redemption, the bidding at a tax sale is based on the interest rate the defaulted taxpayer would have to pay to redeem the property; that is, the person who bids the lowest redemption rate becomes the successful bider.

Title Theory States

In title theory states, the mortgagor actually gives legal title to the mortgagee and retains equitable title. Legal title is returned to the mortgagor when the debt is paid in full.

Transfer Tax Stamps

In washington, it is known as the Washington Real Estate Excise Tax. Tax is usually payable when the deed is recorded. In some states, the taxpayer purchase stamps in office which the deed is recorded. Other sates require the taxpayer to pay the clerk the appropriate tax amount in accordance with state and local law. May be paid by either the seller or the buyer, or split between them. In Washington, the excise taxes are the obligation of the seller and enforced against the seller in the same manner used to foreclose mortgagges. Rate is 1.28 plus up to .75 combined: up to 2.03 of sales price

Income: PM

Includes gross rentals collected, delinquent rental payments, utilities, vending, contracts, late fees, and storage charges. Any losses from uncollected rental payments or evictions are adjusted in order to arrive at the total adjusted income.

Routine Maintenance

Includes minor carpentry and plumbing repairs, upkeep of heating, air-conditioning, and landscaping Big decision: hire outside maintenance company or hire on-site maintenance employees

Package Loans

Includes real and personal property. Usually include furniture, drapes, the kitchen range, refrigerator, etc.

Extended Coverage as provided by an American Land Title Association (ALTA) policy

Includes the protections of a standard policy plus additional protections. Protects the homeonwer against defects that may be discovered by inspection of the propertY: rights of parties in possession, examination of a survey, and unrecorded liends.

Accretion

Increases in the land resulting from the deposit of soil by the water's action.

Expeditious Performance

Intentional or negligent delays in performance will be considered detrimental to the public interest and aviolation of the license law.

Competition: Value

Interaction of supply and demand. Excess profits tend to attract competition. The success of a retail store may cause investors to open similar stores in the area.

Allocation of customers or markets

Involves an agreement between real estate firms to divide their markets and refrain from competing for each other's business. May be on a geographic basis or by markets, such as by price range or category of housing.

Counseling

Involves providing clients with competent, independent advice based on sound professional judgment. A real estate counselor helps clients choose among the various alternatives involved in purchasing, using, or investing in property. They furnish clients with the information needed to make informed decisions.

Corrective Maintenance

Involves the actual repairs that keep the building's equipment, utilities, and amenitites functioning. Repairing a toilet, fixing a leaky faucet, and replacing a broken air-conditioning unit are acts of corrective maintenance.

Interstate Land Sales Full Disclosure Act: Exclusions

It does not apply to subdivisions consisting of fewer than 25 lots or to those in which each lot is 20 acres or more. Lots offered for sale solely to developers are also exempt, as are lots on which buildings exist or where a seller is obligated to construct a building within two years.

Internet Advertising

It is important to check state laws before engaging in internet advertising. •All electronic communication by a real estate licensee must include the licensee's name, office address, and the real estate firm affiliation. •Real estate professionals must disclose their status as a real estate licensee on each page of a website that contains an advertisement • Listing a licensee's name without their affiliated firm's name is prohibited. •Advertisement must be a true representation and not misleading.

Listing Agreement: Leased Equipment

It must be determined whether leased equipment--security systems, cable television boxes, water softeners, special antennas00will be left with the property. If so, seller is responsible of notifying the lessor of the change of property ownership.

Earnest Money Deposits

It's customary, although not essential, for a purchaser to provide a deposit when making an offer to purchase real estate. This deposit is referrred to as earnest money. It is evidence of the buyer's intention to carry out the terms of the contract in good faith. Check is given to the licensee, who usually holds it for the parties in an escrow account.

Deed of Trust

LLenders may prefer to use a three-party instrument known as a deed of trust. a TRUST DEED conveys naked title or bare legal title--that is, title without the right of possession. iN STATES WHERE DEEDS OF TRUST ARE PREFERRED, FORECLOSURE PROCDEDURES ARE USUALLY SIMPLER AND FASTER THAN MORTGAGE LOANS.

Real Estate

Land plus permanent human-made additions

Oil and Gas Lease

Landowner receives a cash payment fo executing the lease. If no well is drilled within the period stated, the lease expires. Most oil and gas leased permit the oil company to continue its rights for another year by paying another flat rental fee. If oil or gas is found, landowner usually receives a percentage of its value as royalty. As long as oil or gas is obtained in significant quantities, the lease continues indefinitely.

Primary Mortgage Market: Investment group financing

Large real estate projects are often financed as joint ventures through group financing arrangeements like syndicates, limited partnerships,a dn real estate investment trusts

Freehold estates

Last for an indeterminable length of time, such as for a lifetime or forever. A freehold estate continues for an indefinite period and may be passed along to the owner's heirs.

Civil Rights Act of 1866

Law prohibits ay type of discrimination based on race in the sale or rental of housing.

Execution of corporate deeds

Laws governing a corporation's right to convey real estate vary from state to state. Basic rules that must be followed: •A corporation can convey real estate only by authority granted in its bylaws or on a proper resolution passed by its board of directors--if it is a large portion may require authorization by shareholders. • Deeds can only be signed by an authorized officer. An attorney SHOULD be consulted for all corporate conveyances

Discharge of lease: death

Lease does not terminate if the parties die or if the property is sold. There are two exceptions to this rule: 1. A lease from the owner of a life estate ends when the tenant's life ends. . the death of eithe rparrty terminates a tenancy at will.

Estate for Years

Leasehold estate that continues for a definitie period. May be years, months, weeks, or even days. Always has specific starting and ending dates. NO NOTICE IS REQUIRED BECAUSE THE LEASE AGREEMENT STATES A SPECIFIC EXPIRATION DATE.

Constructive Notice

Legal presumption that information may be obtained by an individual through due diligence. Because the information is readily available to the world, a prospective purchaser or lender is responsible for discovering the interest.

Probate

Legal procedure for verifying the validity of a will and accounting for the decedent's assets. Process can take several months to complete. A will cannot supersede state laws of dower and curtsey--enacted to protect the inheritance rights of a surviving spouse. •Proves or confirms the validity of a will •Determines the prices assets of the deceased person, and •Identifies the people to whom the assets are to pass.

Foreclosure

Legal procedure in which property pledges as security is sold to satisfy the debt. Brings the rights of the parties and all junior lienholders to a conclusion. Passes title to the person holding the mortgage, or deed, or to a party who purchases the property at a foreclosure sale.

The Torrens System

Legal registration system used to verify ownership and encumbances. Provides evidence of title without the need for an additional search of public records. An owner of real property submits a written application to register a title--the application is submitted to the court clerk of the county in which the real estate is located.

Voluntary Alienation

Legal term for the voluntary transfer of title. The owner may voluntarily transfer title by either making a gift or selling the property. The transfer during their lifetime, owners must use some form of document to show the conveyance.

Puffing

Legal--an exaggeration of property's benefits. Must be careful that none of their statements are fraudulent.

Discount Points: FHA-insured loan

Lender may charge discount points in

Alienation Clause

Lender may want to prevent future purchaser from being able to assume the loan--especially if interest rate is low. Provides that when the property is sold, the lender may either declare the entire debt due immediately or permit the buyer to assume the loan at an acceptable interest rate.

Assuming a mortgage

Lender must execute a novation agreement in writing. Novation makes the buyer solely responsible for any default on the loan.

Scoring and Automated Underwriting

Lenders have been using credit-scoring systems to predict prospective borrowers' likelihood of default for many years. Using credit scoring in automated underwriting systems, it is somewhat controversial as there is an absence of human discretion.

Advantages of cooperative ownership

Lending institutions view the shares of stock as acceptable collateral for financing. Tenants in cooperatives also enjoy certain tax advantages. IRS treats cooperatives as it does fee simple interest in homes or condominiums in regard to deductibility of loan interest, property taxes, and homeless' tax exclusions. Sometimes, licensees are restricted from selling cooperatives.

Broker's Price Opinion (BPO)

Less expensive alternative of valuating property often used by lenders working with home equity lines, refinancing, portfolio management, loss mitigation, and collections. Many are simply "brive-bys" that verify the existence of the property along with a listing of comparable sales. CANT BE USED IF THE MATTER INVOLVES A FEDERALLY RELATED TRANSACTION THAT REQUIRES AN APPRAISAL. Must clearly state that it is a BPO, NOT an appraisal.

Use of Premises

Lessor may restrict a lessee's use of the premises through provisions included in the lease. As per the lease agreement, "the premises shall be occupied only by the previously mentioned tenants. Tenants shall use the premises for residential purposes only and for no other purpose without the landlord's prior written consent." Use restrictions are particularly common in leases for stores or commercial space.

Township Tiers

Lines running east and west, parallel to the base line and six miles apart, are referred to as township lines. Designated by consecutive numbers north and south of base line

Depreciation

Loss in value for any reason. Land doesn't depreciate unless the result of a negative condition of the property: •physical deterioration - crack in foundation, cost of major repair may not warrant the financial investment •functional obsolescence: means a loss in value from the market's response to the item. Outmoded or unacceptable physical or design features are curable. costs of air conditioning a building often cause the absence of air to be uncurable. External OBSOLESCENCE: ENVIRONMENTAL, SOCIAL, OR ECONOMIC FORCES/ lOSS IN VALUE CANNOT BE REVERSED BY SPENDING MONEY. Example: close proximity to a polluting factory.

Construction Loans

Made to finance the construction of improvements on real estate such as homes, apartments, and office buildings. The lender commits to the full amount but disbursed the funds in payment--these payments are known as draws. Draws are made to the general contractor or the owner for the work that has been completed since previous payment.

Primary Mortgage Market

Made up of the lenders that originate mortgage loans. lenders make money available directly to borrowers. A loan is a means of financing an expenditure; from a lender's point of view, a loan is an investment through two sources: •Finance charges collected at closing, such as loan origination fees and discount points •Recurring income, the interest collected during the term of the loan

Corporate Propery Managers

Manage properties for corporations that invest in real estate. Allows a corporation to invest in real estate and increase its capital without needing the specialized knowledge of property management. Typically, corporate property managers are employees of the corporation.

Tax and Insurance Reserved

Many lenders require that borrowers provide a reserve fund to meet future real estate taxes and property insurance premiums. Called an impound or escrow account.

Disclosures

Many states have enacted mandatory disclosure laws, which help consumers make informed decisions. Many licensees have instituted procedures for making disclosures and recommending technical experts.

Professional Organizations

Many trade organizations serve the real estate business. The largest is the National Association of REALTORS (NAR). It is composed of state, regional, and local associations. The NAR has the following affiliated institutes, societies, and councils: •Counselors of real estate (CRE) •Commercial Investment Real Estate Institute (CIREI) •Institute of Real Estate Management (IREM) •REALTORS Land Institute (RLI) •REALTORS National Marketing Institute (RNMI) •Certified Real Estate Brokerage Manager (CRB) •Certified Residential Specialist (CRS) •Graduate, Real Estate Institute (GRI) •Council of Residential Specialists (CRS) •Society of Industrial and Office REALTORS (SIOR) •Women's Council of REALTORS (WCR)

Market Value versus Market Price

Market value is an opinion of value based on an analysis of date. Data may include not only an analysis of comparable sales but also an analysis of potential income, expenses, and replacement costs. mARKET PRICE IS WHAT IT ACTUALLY SELLS FOR.

Value: Conformity

Maximum value is created when a property is in harmony with its surrounds.

Substitution

Maximum value of a property tends to be set by ow much it wouuld cost to purchase an equally desirable and valuable substitute property

Firm's License Requirements

May be a sole proprietorship, a corporation, or a partnership with another broker Requirements: •Designates a managing broker as the designated broker and provides the director with the name of the owner or any others with a controlling interest in the firm. •Assures that no person with no controlling interest is the subject of a final departmental order suspending or revoking any type of real estate license •Does NOT adopt a name that is the same or similar to currently issued licenses or that implies the firm is a nonprofit or research group, or is a public bureau or group.

Nonconforming use

May be allowed to continue even after new zoning ordinance prohibits it. If it can continue indefintely, it is "grandfathered in"

Listing Agreement: The Date the Contract is Signed

May be different from the date the contract actually becomes effective.

Temporary Broker's Permit

May be issued to legally accredited representative of a deceased or incapacitated designated broker, the senior qualified managing broker or other qualified representative of the deceased, which will be valid for four months. Purpose is to allow the "temporary designated broker" to complete any pending transactions.

General Agent

May represent the principal in a broad range of matters related to a particular business or activity. A property manager is typically a general agent for the owner. Most licensees are general agents for their designated broker.

Actual Notice

Means not only that the information is available, but also that someone has been given the information and actually knows it. An individual who has searched the public records and inspected the property has actual notice--also known as direct knowledge.

Valid Contract

Meets all the essential elements that make it legally sufficient or enforceable.

National Association of Real Estate Brokers (NAREB)

Members are known as realists, also adheres to Code of Ethics. Remains dedicated to equal housing opportunity. Other professional associations: • American society of appraisers (asa) • National Association of Independent Fee Appraisers (NAIFA) • Real Estate Educators Association (REEA) • Real Estate Buyer's Agent Council (REBAC) • National Association of Exclusive Buyer's Agents (NAEBA) • Building Owners and Managers Association (BOMA) • Certified Commercial Investment Managers • American Society of Home Inspectors (ASHI)

Three parts of determining a FIXTURE: 3 As

Method of annexation: how permanent is the method of attachment? Can the item be removed without causing damage to the property? Adaption to real estate: is the item being used as personal property or real property? Example: a refrigerator is usually personally property, BUT if it has been adapted to match kitchen cabinetry, it is a fixture. Agreement: have the parties agreed on whether the item is real or personal property in an offer to purchase?

Undisclosed Dual Agency

Might occur unintentionally or inadvertently. Sometimes the cause is carelessness. A other times, a licensee does not fully understand the fiduciary responsibilities. Giving a buyer any specific advice on how much to offer can lead the buyer to believe that the licensee represents the buyer's interests and is acting as the buyer's advocate.

Measuring Land unITS

Mile: 5,280 feet 1760 yards 320 rods ROD: 16.5 feet, 5.50 yards Square Mile: 640 acres Acre: 43,560 square feet Cubic yard: 27 cubic feet Square yard: 9 square feet Square foot: 144 square inches Chain: 66 feet; 4 rds; 100 links

Licensing a Corporation, Partnership, or Limited Liability Company

Minimum Requirements: •A managing broker is designated as the "designated broker" that provides the director with the name of the owner or owners or any other with a controlling interest in the firm •No person with controlling interest is subject of a final department order suspending or revoking any type of real estate license •The business does not adopt a namethat is the same or similar to curently issued licenses or that impplies it is a nonprofit, etc.

Cash Flow Report: PM

Monthly statement that details the financial status of the property. Sources of income and expenses are noted, as well as net operating income, and net cash flow. Most important financial report because it provides current financial status of a property.

Loan-to-value Ratio (LTV)

Mortgage loans are generally classified based on their loan-to-value ration. LTV is the ratio of debt to value of the property. Value is the sales price or the appraisal value, whichever is less.

Professional Association

Most areas have local associations of building and property owners and managers that are affiliates of regional and national associations. Many of these professional organizations provide information and contacts for all aspects of property management. Well-known assosciations: building owners and managers assocaition international (boma): commercial real estate building owners and managers institute international (bomi): education programs for commercial property and facility management Community associations institute: hoa, etc.

Zoning Hearing board

Most communities have established zoning hearing boards (zoning board of appeals) to hear testimony of the effects a zoning ordinance may have on specific parcels of property.

Sales Contracts

Most important document in the sale of real estate. It establishes the legal rights and obligations of the buyer and the seller. May be called an offer to purchase.

Prepayment Penalty

Most mortgage loans are paid in installments over a long period. As a result, interest may add up to more than principal amount of loan. Some mortgage notes contain a prepayment clause which requires that the borrow pay a prepayment penalty against the unearned portion of the interest for any payments made ahead of schedule. Lenders may not charge prepayment penalties on mortgage loans insured or guaranteed by the federal government or on those loans that have been sold to fannie mae or freddie mac.

Exemption from General Taces

Most state laws exempt certain real estate from taxation. Most common examples: •Cities, •Various municipal organizations •State and federal governments, •Religious and charitable organizations •Hospitals, and •Educational institutions

Redemption (equitable right)

Most states give defaulting borrowers a chance to redeem their property through the equitable right of redemption.

Maintenance of Premises

Most states require a lessor of residential property to maintain dwelling units in a habitable conditions--landlors must make necessary repairs to common areas. However, lessees of commercial properties usually maintain the pemises and are often responsible for making their own repairs.

Transfer Tax

Most states require some form of transfer tax, conveyance fee, or tax stamps on real estate conveyances. This expense is most often borne by the seller, although customs vary. In addition, many cities and local municipalities charge transfer taxes. In Illinois, state and county transfer taxes are usually paid by the seller in accordance with most sales contracts. Some local ordinances establish additional municipal transfer taxes that are to be paid for by the seller, the buyer, or both.

Liens for Municipal Utilities

Municipalities have the right to impose a specific, equitable, involuntary lien on the property of an owner who refuses to pay municipal utility services.

Resort housing

Must be able to care for and maintain often-vacant properties and be able to attract and manage short-term tenants. Many of these properties are located in high-risk areas for natural disasters; therefore, managers must be ready to work with insurance adjusters, too.

Mortgage brokers

NOT lenders--intermediaries who bring borrowers and lenders together. Locate potential buyers, process preliminary loan applications, and submit the application to lenders for final approval.

Improvements

Neither the landlord nor the tenant is required to make any improvements to the leased property. The tenant may make improvements with the landlord's permission. In many commercial leases, tenants are permitted to install TRADE FIXTURES, those articles attached which are required by tenants to conduct their businesses. They may be removed before the lease expires, provided that the tenant restores the premises to the previous condition.

Principal of taking

No land can be taken for or seized by government without just compensation.

GFE indicates which closing costs may not change:

No tolerance--fees that may not increase before closing: lender charges for taking, underwriting, and processing the loan application 10 percent tolerance: settlement services for which the lender selects the provider or for which the borower selects the provider from the lender's list, title services, and title insurance.

Standard Coverage Policy Title insurance:

Normally insures the title as it is known from the public records--insures against such hidden defects as forged documents, conveyances by incompetent grantors, incorrect marital statement, and improperly delivered deeds.

Lis Pendens

Not itself a lien, but a notice of a possible future lien. Notifies prospective purchasers and lenders that there is a potential claim against the property.

Implied Agency

Occurs when the actions of the parties indicate that they may have mutually consented to an agency.

Negligent Misrepresentation

Occurs when the licensee should have known that a statement about a material fact was false. Similarly, a licensee who accidentally fails to perform some act--for instance, forgetting to deliver a counteroffer--may be liable for damages that result from negligent omission

Designated Agent (split agency)

Occurs when the real estate firm's designated broker assigns one agent n the firm to represent the seller, and a different agent to represent the buyer.

Group Boycotting

Occurs when two or more businesses conspire against another business or agree to withhold their patronage to reduce competition. It is illegal under the antitrust laws.

Assessment

Official process of real estate being valued for tax purposes by county or township assessors or appraisers. Generally based on the sales price of comparable properties, although practices may vary. If the property owner disagrees with the assessments, they can take their objections to a local board of appeal or board of review.

Release of the Mortgage lien or deed of trust

Once all loan payments have been made and the note has been paid in full, the borrow will want the public record to show that the debt has been satisfied and that the lender is divested of all rights conveyed under the mortgage or deed of trust. under provisions of the defeasance clause, the lender is required to write a satisfaction (Release or discharge) when the note has been fully paid.

Destruction of Premises

Once the sales contract is signed by both parties, the buyer assumes the risk of any damage to the property that may occur before the closing. However, laws and court decisions in many states have placed the risk of loss on the seller. The Uniform Vendor and Purchaser Risk Act--specifically provides that the seller bear any loss that occurs before the title passes or the buyer takes possession

Exclusive-Right-To-Sell Listing

One firm is appointed as the seller's sole agent. If the property is sold within the effective date of listing, the seller must pay commission, regardless of who sold the property.

Exclusive-Agency Listing

One firm is authorized to act as the exclusive agent of the principal, but the seller retains the right to sell the property without the obligation to pay the firm.

Executed Contract

One in which all parties have fulfilled their promises; the contract has been performed.

Property Management: Financial Reports

One primary responsibility of property manager is maintaining financial reports, including an operating budget, cash flow report, profit and loss statement, and budget comparison statement.

Private Mortgage Insurance

One way a borrower can obtain a conventional mortgage loan with a lower down payment is by obtaining private mortgage insurance (PMI). In this program, the buyer purchases an insurance policy that provides the lender with funds in the event that the borrower defaults on the loan. Only a percentage of the loan is insured. On loans originating after July 1999, federal law requires that PMI automatically terminate if a borrower has accumulated at least 22 percent equity in the home and is current on mortgage payment. 22 percent of equity is based on the purchase price of the home.

Developer

One who attempts to put land to its most profitable use through the construction of improvements.

Subdivider

One who buys undeveloped land, divides it into smaller, usable lots and sells the lots to potential users.

Ready, willing, and able buyer

One who is prepared to buy on the seller's terms and ready to take positive steps toward consummation of the transaction. if the transaction is not consummated, the real estate license may still be entitled to a commission if the seller: •had a change of mind and refused to sell •has a spouse who refused to sign the deed •had a title with uncorrected defects •Committed fraud w/ respect to the transaction •was unable to deliver possession within reasonable time •insisted on terms not in the listing (right to restrict property) •Had a mutual agreement w/ the buyer to cancel the transaction

managing broker

One who is qualified to act as a designated broker, but instead works under the supervision of a desinated broker

Restrictions on use of license names

Only the person named on the license may act or operate under the name apearing on the license.

Mortgage banking companies

Originate mortgage loans with money belonging to insurance companies, pension funds, and individuals, and with funds of their own. Make real estate loans with the intention of selling them to investors and receiving a fee for servicing the loans. .

Exemptions to the Fair Housing Act

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 orginizations and private clubs that limit occupancy to members Sake or rental of a signle-family home is exempt when: the owner is an individual who does not own more than three such houses\A real estate licensee is not involved in the transaction, and discriminatory advertising is not used.

Littoral Rights

Owners whose land borders commercially navigable lakes, seas, and oceans. Enjoy unrestricted use of available waters but own the land adjacent to the water only up to the average high-water mark. All land below the point is owned by the government

Termination of Co-ownership by Partition Suit

Partition is a legal way to desolve the relationship when the parties do not voluntarily agree to termination. If the court determines that the land cannot be divided into separate parcels without destroying value, the real estate will be ordered sold; proceeds will then be divided among the co-owners according to their fractional interests.

Americans with Disabilities Act

Passed by Congress in 1991, this act banned discrimination against the disabled in employment and mandated easy access to all public and commerical buildings. Applies when 15+ employees.

growth Management ACT (GMA

Passed by the Washington Lesislature in 1990. Seeks to prevent uncoordinated and unplanned growth lacking in common goals which does not conform to the piublic's interest in the conservation and wise use of lands. Twenty-nine counties, including King and Clark, are either required to fully plan under the GMA or have chosen to do so. They contain about 95% of population

Term of Lease

Period for which the lease will run, should be stated precisely, including the beginning and ending dates together with a statement of the total period of the lease. A lease for an inordinate amount of time or an indefinite term usually will be ruled invalid.

Benchmark

Permanent reference points that have been established throughout the United States. Usually embossed brass markers. Principal reference use is for marking datums

Certificate of Occupancy

Permission by the municiap inspector to occupy a completed building structure

Time-Share

Permits multiple purchasers to buy interests in real estate; most common with resort properties. Purchaser receives the right to use the facilities for a certain priod.

Fixture

Personal property that has been so affixed to land or a building that, by law, it becomes part of the real property. (Ex: heating systems, elevator equipment, radiators, kitchen cabinets, light fixtures, and plumbing.)

Out-of-State Licensees Requirements

Persons with licenses deemed equivalent to licenses held by Washington licensees as determinedby the record may perform these acts: •Works in cooperation with a WA real estate designated broker who holdsa valid, active managing broker license issued under this chapter. •Enters into a written agreement with the Washington firm, through its designated broker •Deposits all documentation required by this section and records and documents related to the transactionwith the Washington broker, managing boker, or firm for a period of three years after the date the documentation is provided.

Market

Place where goods can be bought and sold. A market may be a specific place, such as the village square. It also may be a vast, complex, worldwide economic system for moving good and services around the globe. Function: provide a setting for supply and demand to establish market value, making it advantageous for buyers and sellers to trade.

Town House

Popular form of housing in urban areas. The rights to the use of common areas pass with the title. Town-home ownership, which is typically fee simple ownership, should not be confused with condominium interest, where the land is held as part of the general common elements.

Price-fixing

Practice of setting prices for products or services, rather than letting competition in the open market establish those prices. In real estate, price-fixing occurs when competing real estate firms agree to set sales commissions, fees, or management rates. It is illegal. **must make it clear to clients that the rate stated is only what that firm charges**

Management Plan

Prepared by the property manager. Outlines the details of the owner's objectives with the property as well as what PM expects to accomplish and how. In preparing for the plan, the PM analyzes three factors: •Owner's objectives, •Regional and neighborhood market, •and the specific property. While it is a document for the present, it is forward-looking.

Interstate Land Sales Full Disclosure Act

Prevents fraudulent marketing that may arise when land is sold w/out being seen by the purchasers. Requires seller to file statements of record w/HUD before they can offer unimproved lots in interstate commerce by telephone or through mail. Statements contain numerous disclosures about the property

Progression: Appraisal

Principal that states that between dissimilar properties, the value of the lesser-quality property is favorably affected by the presence of better-quality property.

PITI

Principal, interest, taxes, and insurance--expenses that comprise a monthly payment

Plottage

Principle that holds that merging or consolidating adjacent lots into a single larger one produces a greater total land value than the sum of the two sites valued separately. Example: land worth $35,000 each might have a combined value of $90,000 if consolidated. Process of merging the two is called assemblage. Plottage is the amount that the value that is increased

Covenants, conditions, and restrictions (CC&Rs)

Private agreements that affect land use. They must be enforced by an owner of real estate and included in the seller's deed to the buyer.

covenants, conditions, and restrictions (CC&Rs)

Private agreements that affect the land use. They may be enforced by an owner of real estate and included in the seller's deed to the buyer. Enforced by the hoa

Deed Restrictions

Private restrictions that affect the use of the land. Once placed in the deed, they "run with the land"

Condemnation

Process by which the government exercises eminent domain right, by either judicial or administrative proceedings. Ex: Kelo v. City of New London

Escheat

Process by which the state may acquire privately owned real or personal property. State laws provide for ownership to transfer, or escheat, to the state when an owner dies and leaves no heirs.

Loan Origination Fee

Processing of a mortgage application is known as loan origination. When this is done, a transfer fee is charged by most lenders--typically 1 percent of loan amount.

Equal Credit Opportunity Act: pm

Prohibits a lender from denying a loan based on a person's race, color, religion, national origin, sex, marital status, age, and receipt of publical assistance. must use same lease application

Title VIII of the Civil Rights Act of 1968

Prohibits discrimination in housing based on race, color, religion, or national origin. In 1974, the Housing and Community Development Act added sex to the list of protected classes. In 1988, the FHAA included disability and familial status

Equal Credit Opportunity Act

Prohibits lenders and others who grant or arrange credit to consumers form discriminating against credit applicants on the basis of: •Race •Color •Religion •National Origin •Sex •marital status •age •dependence on public assistance. Furthermore, lenders and other creditors must inform all rejected credit applicants of the principal reason for the denial or termination of credit. Notice must be provided in writing within 30 days.

Operating Budget: PM

Projection of income and expense for the operation of property over a one-year period.

Stigmatized Properties

Properties that society has found undesirable because of events that occurred there or because a known sex offender lives in the area. Megan's Law requires all states to release information to the public about known convicted sex offenders. If it is stigmatized by rumors of being haunted, a licensee should seek legal counsel when dealing with it.

Housing for the Near-Elderlyy and Elderly

Property managers responsible for operations of facility, as well as housekeeping, meal services, social event planning, and medical emergency planning.

Classification: MIXED USE

Property that allows for two uses, commercial and residential, in the same building

Mortgage Contingency

Protects the buyer's earnest money until a lender commits the mortgage loan funds.

Community Association Management

Provide a comprehensive array or services to volunteer boards. Many states now require at least a real estate license or an association management license for those who specialize in managing associations. (condo and homeowners association)

Blanket opt-out provision (Advertising listings)

Provides that those MLS participants interested in keeping their listings of of a competitors' web sites cannot then display other firm's listing. Real estate agents that opt out can at the direction of a seller, make an exception and display the seller's property on the MLS web site.

Quitclaim

Provides the grantee with the LEAST protection of any deed. Carries NO covenants and NO warranties--only whatever interest the grantor may have when the deed is delivered is conveyed. The grantor only "remises, releases, and quitclaims" the grantor's interest in the property, if any. Usually, a quitclaim deed is the only type of deed that may be used to convey less than a fee simple estate. Used when a grantor allegedly inherits property, but is not certain that the decendent's title was valid. One of the most common uses of the quitclaim deed: transferring property from one family member to another.

General Warranty Deed

Provides the greatest protection to the buyer because the grantor is legally bound by certain covenants or warranties. Basic warranties are as follows: •Covenant of seisin: grantors warrant that they own the property and have the right to convey title to it Covenant against encumbrances: grantor warrants that the property is free from encumbrances, except for any specifically stated in the deed. Covenant of quiet enjoyment: grantor guarantees that the grantee's title will be good against third parties who might bring court actions to establish superior title to the property. Covenant of further assurancce: the grantor promises to obtain and deliver any instrument needed to make the title good. Covenant of warranty forever: the grantor promises to compensate the grantee for the loss sustained if the title fails at any time in the future. **covenants not limited to matters that occured during the time the grantor owned the property; they extend back to its origins.

Kickbacks and referral fees

RESPA prohibits the payment of kickbacks or unearned fees in any real estate settlement service.

Change: vALUE

Real estate is subject to natural phenomena such as tornadoes, firs, and routine wear and tear. Real estate business is subject to market demand, like any other business.

Land Trusts

Real estate is the ONLY asset. The title to the property is conveyed to a trustee, and the beneficial interest belongs to the beneficiary. Beneficiary is also the trustor. Public records usually do not name the beneficiary. A land trust may be used for secrecy when assembling separate parcels. A beneficial interest can be transferred by assignment, making the deed unnecessary.

Real Property

Real estate plus "bundle of legal rights" Defined as the interests, benefits, and rights that are automatically included in the ownership of land and real estate. Bundle of rights: •Right of possession •Right to control the property within the framework of the law •Right of enjoyment (to use the property in any legal manner) •Right of exclusion (to keep others from entering the property) •Right of disposition (to sell, will, transfer, or otherwise dispose of or encumber the property.)

Ownership by Married Couples: Separate Property

Real or personal property that was owned solely by either spouse before the marriage, acquired by gift or inheritance during the marriage, as well as purchased with separate funds during the marriage. Any income earned from a person's separate property remains part of that separate property

Chain of Title

Record of property's ownership

Promissory Note

Referred to as the note or financing instrument. It is the borrower's personal promise to repay a debt according to agreed terms. The note exposes all the borrower's assets to claims by secured creditors. A note need not be tied to a mortgage or a deed of trust. A note used as a debt instrument without any related collateral is called an unsecured note. Unsecured notes are used by banks and other lender to extend short-term personal loans. Negotiable intrument--like a check or bank draft. The lender who holds the note is reffered to as the payee and may transfer the right to receive payment to a third party

Agency--in legal terms

Refers to a strict, defined legal relationship.

Internet Advertising--Full Disclosure

Refers to both licensed firm disclosure and licensee disclosure and includes the licensee's and firm;s name in all advertising.

Priority

Refers to the order of when documents or liens were recorded.

Community Reinvestment Act of 1977 (CRA)

Refers to the responsibility of financial institutions to help meet their communities' needs for low-income and moderate-income housing. In 1977, congress passed the CRA. Under the CRA, financial institutions are expected to meet the deposit and credit needs of their communities. The law requires any federally regulated financial institution to prepare a statement containing: •A definition of the geographic boundaries of its community; •An identification of the types of community reinvestment credit offered, such as residential housing loans, housing rehabilitation loans, small-business loans, commercial loans, and consumer loans; and •Comments from the public about the institution's performance. Financial institutions are periodically reviewed by one of the three federal financial regulatory agencies: the Comptroller of the Currency, the Federal Reserve's Board of Governors, or the Federal Deposit Insurance Corporation. The institutions must post a public notice that their community reinvestment activities are subjec tot federal review

Assignment

Refers to the transfer of rights or duties under a contract . Rights CAN be transferred to third party. Majority of contracts have a clause to either allow or forbid assignment.

Preventive Maintenance

Regularly schedules, such as painting and seasonal servicing of appliances and systems. Most neglected maintenance responsibility.

Truth in Lending Act and Regulation Z

Regulation Z, which was enacted pursuant to the Truth in Lending Act by the Federal Trade Commission (FTC), requires that credit institutions inform borrowers of the true cost of obtaining credit. Regulation Z does not apply to business or commercial loans or to agricultural loans of any amount.

Renting the Property

Rental of the property is essential to ensure the long-term financial health of the property. A licensee acting as leasing agent is concerned solely with renting space

Growth Management Act

Requires uniform standards to control growth and grant approval of development projects. Seeks to prevent uncoordinated and unplanned growth lacking common goals

Rental rate for residential space vs commercial

Residential space is usually stated as the monthly rate PER UNIT commercial leases are stated according to either annual or monthly rates PER SQUARE FOOT.

Vacation Ownership

Resorts offer consumers condominium-style vacations with flexible opportunities.

IRS Tax Lien

Results from a person's failure to pay any portion of federal taxes as income and witholding taxes. General, statutory, involuntary lien on all real and personal property. It's priority, but based on the date of filing; it does not supersede previously recorded liens

Appurtenance

Right of privilege associated with the property, although not necessarily a part of it. Typical appurtenances include parking spaces in multiunit buildings, easements, water rights, and other property. An appurtenance is connected to the property, and ownership of the appurtenance normally transfers to the new owner when the property is sold.

Easement

Right to use the land of another for a particular purpose. An appurtenant easement is attached to the ownership of one parcel and allows this owner the use of a neighbor's land. Two adjacent parcels of land must be owned by two different parties.

Subsurface Rights

Rights to the natural resources below the earth's surface. An owner may transfer surface rights w/ out transferring subsurface rights.

The Federal Reserve System

Role is to maintain sound credit conditions, help counteract inflationary and deflationary trends, and create a favorable economic climate. Divides the country into 12 federal reserve districts. All nationally chartered banks must join the fed and purchase stock in its district reserve banks.

Real Property: Economic Characteristics

Scarcity - land in a given location or a particular quality is generally considered finite Improvements - building an improvement on one parcel of land can affect the land's value and use as well as that of neighboring tracts. Permanence of investment - capital and labor used to build an improvement represents a large fixed investment (sewage, drainage, etc., always remain) Area preference - "location, location, location" refers to people's preference for a specific area. Preference can be based on convenience, reputation, and history

Environmental Assessors

Scientific or technical experts who can provide the most comprehensive studies.

Asbestos: Encapsulation

Sealing off of disintegrating asbestos

Specific Liens

Secured by specific property and affect only that particular property. Includes vendors' liens, mechanics' liens, real estate tax liens, and liens for specific assessments and utilities.

Open-end loans

Secures a note executed by the borrower to the lender. Also secures any future advances of funds made by the lender to the borrower. Allows the the borrower to open the mortgage or deed to increase the debt to its original amount, or the amount stated in the note

Land Contracts (contract for deed or a bond for title)

Seller (also known as the vendor) retains legal title. The buyer (vendee) takes possession and gets equitable title to the property. Buyer agrees to give the seller a down payment and pay regular monthly installments of principal and interest over a number of years. **Seller is not obligated to execute and deliver a deed to the buyer until the terms of the contract have been satisfied** Frequently occurs when the buyer has made enough payments to obtain a mortgage loan and pay off the balance due on the contract.

Listing Agreement: Home Warranty Program

Seller or buyer can purchase a home warranty. Covers such items as plumbing, electrical, and heating systems, water heaters, duct work, and major appliances.

Uniform Electronic transactions Act (UETA)

Sets forth basic rules for entering an enforceable contract using electronic means. Attempts to remove barriers in electronic commerce that would otherwise prevent contract enforceability. UETA's four provisions are the following: •A contact cannot be denied its legal effect just because an electronic record was used •A record or signature cannot be denied its legal effect just because it is in an electronic format. •If a state's law requires a signature on a contract, an electronic signature is sufficient. •If a state's law requires a written record, an electronic record is sufficient.

Variable Lease

Several types of leases allow for increase in the rental charges during the lease periods. A graduated lease provides for specified rent increases at future dates. Index lease allows rent to be increased or decreased periodically based on changes in the CPI or another indicator

Protenant Legislation

Sevral states have adopted some variation of UNIFORM RESIDENTIAL LANDLORD AND TENANT ACT. This model law addresses the need for both parties of a lease to fulfill basic obligation: •The landlord's right of entry •Maintenance of the premises •The tenant's protection against retaliation by the landlord for complaints, and •The disclosure of the property owners' name and address to the tenants.

Brownsfields Law

Signed into law in 2002. Provides funds to asess and clean up brownfiels, clarifies laibility protections, and provides tax incenties toward enhancing state and tribal respnse programs.

Americans with Disabilities Act (ADA)

Significant effect on responsibilities of the property manager. Any emploee with 15 or more employees must adopt nondiscriminatory employment procedures. Title III of ADA prohibits dscrimination in commercial properties and public accommodations. New construction and remodeling must meet higher standards of acccessibility and usability because it costs less to incorporate accessible fatures in the design than to retrofit.

Fee simple subject to a condition subsequent

Similar to a fee simple determinable. Unlike Fee Simple Determinable, the estate does not automatically terminate upon violation of the condition of ownership. The owner has the right of reentry, but must go through the court to assert this right.

Redemption (statutory right)

Some states allow defaulted borrowers a period to redeem real estate after the sale. Mortgagor who can raise the necessary funds to redeem the property within the statutory period pays redemption money to the court.

Highrise Developments

Sometimes called mixed-use developments (MUDs), combine office space, stores, theaters, and apartment units into a single vertical community. Usually are self-contained, offer laundry facilities, shops, pools, etc.

Planned Unit Developments (PUDs)

Sometimes referred to as "master-planned" communities, merge diverse pieces of land into one self-contained development. Owners do not have direct ownership interests--a community association is used to maintain them. It may be just a small home or an entire city

Water Rights

Special common-law rights held by owners of land adjacent to rivers, lakes, or oceans and are restrictions on the rights of land ownership.

Tenancy by the entirety

Special form of co-ownership used in some states that allows the husband or wife to inherit the other spouse's ownership upon death. Each spouse has an undivided interest in the property. (The term entirety refers to the fact that the owners are considered one indivisible unit because early common law viewed a married couple as one legal person.) Have rights of survivorship. Washington does not recognize tenancy by the entirety.

Trigger Terms: Advertising

Specific credit terms, such as down payment, monthly payment, dollar amount of the finance charge, or term of the loan, are referred to as trigger terms. These terms may not be advertised unless the advertisement includes the following: •Cash price •Required down payment •Number, amounts, and due dates of all payments •Annual percentage rate •Total of all payments to be made over the term of mtg.

Mechanics' liens

Specific, involuntary lien that gives security to persons or companies that perform labor or furnish material to improve real property. It is available to contractors, subcontractors, architects, equipment lessors, surveyors, laborers, and other providers. A person claiming a mechanic's lien must file a notice of a lien in the public record of the county where the property is located within a certain time after the work has been completed. The person who did the work must have had a contract with the owner or the owner's authorized representative.

Net Listing Provision

Specifies that the seller will receive a net amount of money from any sale, with the excess going to the listing licensee as commission. It is illegal in many states and discouraged in others.

Liquidation Damages Clause

Specifies the amount of money to which the seller is entitled if the buyer breaches the contract.

The forms of property ownership are controlled by the _____

State

Corporation Franchise Tax Lien

State governments generally levy a corporation franchise tax on corporations as a condition of allowing them to do business in the state. Such a tax is a general, statutory, involuntary lien on all real and personal property owned by the corporation.

Police Power

State's Authority. A police power is used to enact environmental protection laws, zoning ordinances, and building codes.

Certificate of Title

Statement of opinion of the title's status on the date the certificate is issued. Not a guarentee of ownership--certifies the condition of the title based on examination of public records. Certificate may be prepared by a title company, licensed abstractor, or attorney. **Doesn't show all potential liens, not perfect

Granting Clause (Words of Conveyance)

States the grantor's intention to convey the property. Possible wordings: •I, JKL, convey and warrant •I, JKL, remise, release, alienate, and convey •I, JKL, grant, bargain, and sell •I, JKL, remise, release, and quitclaim

Regulation Z: Advertising

Strict regulations of real estate advertisements that refer to mtg financing terms. General phrases like "flexible terms available" may be used, but if details are given, they must comply with the act. The APR--which is calculated based on all charges rather than the interest rate alone--must be stated.

Retirement Community

Structured as PUDs. They provide shopping, recreational opportunities, and health care facilities. Security and convenience are a major benefit

Subdivision & Development

Subdivision is the dividing of a single property into smaller parcels. Development involves the construction of improvements on the land. Off-site improvements, such as water lines and storm sewers, are made on public lands to serve the new development. On-site improvements, such as new homes or swimming pools, are made on individual parcels.

Novation

Substitution of a new contract for an existing contract.

Avulsion

Sudden removal of soil by an act of nature. An event that causes the loss of land much less subtly than erosion.

Abstract of Title

Summary report of what the title found in public records. Person preparing the report is the abstractor--abstractor searches all public records and then summarizes the various events and proceedings

Subsurface Rights

Surface rights can be legally described in the same manner as air rights. However, they are measured below the datum, rather than above it. They are used not only for coal mining, petroleum drilling, and utility line location.

Primary heirs

Surviving spouse and close blood relatives (children, parents, brothers, sisters, aunts, uncles, and first and second cousins).

Special Assessments

Taxes charged on real estate to fund public improvements to the property. Property owners in the improvement area are required to pay for the improvements because their properties benefit directly from them. Example: the construction of paved streets, curbs, gutters, sidewalks, storm sewers, or street lighting.

Gross Lease

Tenant pays a fixed rent, and the landlord pays all taxes, insurance, repairs, utilities, and maintenance connected with the property. Residential and commercial office leases are usually gross leases.

Net Lease

Tenant pays all or most of the property charges in addition to the rent. rental is net income for the landlordd after operating costs have been paid. This lease is most often associated with large commercial and industrial leases.

Security Deposit

Tenants are often required to provide a security deposit, which is held by the landlord during the lease term--used if the tenant defaults on payment of rent or destroys the premises. To safeguard against nonpayment of rent, landlords may require an advance rental payment or a contract for a lien on the tenant's property. **Lease should specify whether a payment is a security deposit or an advance on rent. If it is a security deposit, the tenant is usually not entitled to apply it to the final month;s rent. If it is an advance on rent, the landlord must treat it as income for tax purposes.

What does a mean when a contract provides that "time is of the essence"

That the contract must be performed within a specified time--party that doesn't complete in certain time is liable for breach

VA-Guaranteed Loans

The Department of Veterans Affairs (VA) is authorized to purchase or construct homes eligible veterans and their spouses. A veterans who meets any of the following is eligible: •90 days of active service for veterans of WWII, the Korean WaR, vIETNAM CONFLICT, AND THE PERSIAN GOLF WAR •A minimum of 181 days of active service during interconflict between 47 and 1980 Two full years of service during any peacetime since 1980 •Six or more years of continuous duty as a reservits in the Army, etc, etc. VA loan is a misnomer--VA does not lend money; it guarentees loans made by lending institutions approved by the agency.

FHA-insured Loans

The Federal Housing Administration (FHA), which operated under HUD, neither builds homes nor lends money. An FHA loan refers to a loan that is insured by the agency. These loans must be made by FHA-approved lending institutions. Provides security to the lender, in addition to the real estate. ••Allows for high-LTV** If the purchase price exceeds the FHA-appraised value, the buyer may pay the difference in cash as part of the down payment.

Flood Insurance Reserves

The National Flood Insurance Reform Act of 94 imposes certain mandatory obligations on lenders to set aside funds for flood insurance on new loans for property in flood-prone areas. If a lender or servicer discovers that a secured property is in a flood hazard area, it must notify the borrower. The borrower then has 45 days to purchase flood insurance. if buyer fails to do so, lender must do it.

Dual Agency

The agent represents two principals in the same transaction. Arises when the designated broker is the agent of the buyer AND the seller.

Three-Day Right of Recission

The borrower has three days in which to rescind (Cancel) the transaction by notifying the lender--this right of rescission does not apply to owner-occupied residential purchase-money or first mortgage or deed of trust loans. However, does apply to refinancing a home mtg or to a home equity loan.

Duties of the Mortgagor or Trustor:

The borrower is required to fulfill certain obligations created by the mortgage or deed of trust. Usually include the following: •Payment of the debt in accordance with the terms of the note •Payment of all real estate taxes on the property given as security •Maintenance or adequate insurance to protect the lender •Maintenance of the property in good repair at all times •Receipt of lender authorization before making any major alteration on the property

Steering

The channeling of prospective home purchasers or renters, by real estate brokers or salespersons, into racially homogeneous neighborhoods, and actively discouraging them away from neighborhoods of different racial or ethnic composition.

Listing Agreement: The Commission

The circumstances under which a commission will be paid must be specifically stated in the contract. The fee can be either a percentage or flat rate.

Listing Agreement: Antitrust Wording

The contract should indicate that all commissions have been negotiated between the seller and the real state firm. It is illegal for commissions to be set by any regulatory agency, etc.

Listing Agreement: The licensee's Authority and Responsibilities

The contract should specify whether the licensee may place a sign on the property and advertise; it should address when the property can be shown, allowing reasonable notice to the seller. It should also address whether or not the licensee may accept earnest money on behalf of the seller, and the responsibilities for holding the funds.

Reversionary Interest

The creator of the life estate may choose not to name a reimainderman

Reimander Interest

The creator of the life estate may name a remainderman as the person to whom the property will pass when the life estate ends.

Tax Benefits of Home Ownership

The federal government allows homeowners to deduct from their income some or all of the mortgage interest paid, as well as real estate taxes and certain other expenses. Tax considerations may be an important part of any decision to purchase a home.

Equal Credit Opportunity Act (ECOA)

The federal law that prohibits discrimination in the extension of credit because of race, color, religion, national origin, sex, age, or marital status.

Agency

The fiduciary relationship between the principal and the agent wherein the agent is authorized to represent the principal in a certain transaction.

Fee Simple Estate

The highest interest in real estate recognized by law. It is ownership in which the holder is entitled to all the rights to the property by law. This estate is intended to run forever; upon the death of its owner, it passes to the owner's heirs.

Conversion

The illegal use of client money

Principal

The individual who hires the agent and delegates to that agent the responsibility of representing the principal's interests. in the real estate business, the principal is the buyer or the seller or the landlord or the tenant.

Agent

The individual who is authorized and consents to represent the interests of another person. in the real estate business, a firm's designated broker is the agent and shares the responsibility with the licensees who work for the firm.

Fraud

The intentional misrepresentation of a material fact in such a way as to harm or take advantage of another person. Includes not only making a false statement, but also intentionally concealing or failing to disclose important facts.

How to terminate a perior to period

The landlord or the tenant must give proper notice. The form and timing of the notice may be established by state statute. Normally, the notice must be given one period in advance.

Possession of Premises

The lessor, as the owner of the real estate, is usually bound by the convenant of quiet enjoyment that the lessee can occupy the premises without the interference from the owner or anyone else. Lease usually stipulates the conditions under which the landlord may enter the property to perform maintenance, make repairs, or for other states purposes.

Lien Theory States

The mortgagor retains both legal and equitable title. Mortgagor simply has a lien on the property as security for the mortgage debt. If the mortgagor defaults, the mortgagee must go through a formal foreclosure proceeding to obtain legal title. WASHINGTON IS A LIEN THEORY STATE.

Metes-and-Bounds Method

The oldest type of legal description. Metes means to measure and bounds means linear directions. Starts at a designated place on the parcel called the point of beginning (POB). POB is also the point of ending (POE). From there, the surveoer proceeds around the properties boundaries. boundaries are recorded by referring to linear measurements, monuments, and directions.

Listing Agreement: Warranties by the Owner

The owner is responsible for certain assurances and disclosures--is the property suitable for its intended purpose, repairs, etc.

Condominium Ownership

The owner of each unit holds a fee simple title to the unit. Individual unit owners also own a specified share of the undivided interest in the remainder of the building and land, known as common elements as tenants in common. Limited common element: balcony, reserved parking

Client

The principal

Survey

The process by which boundaries are measured by calculating the dimensions and area to determine the exact location of a piece of land

Fiduciary

The relationship in which the agent is held in a position of special trust and confidence by the principal

Joint Tenancy

The right of survivorship. Upon the death of the joint tenant, the deceased's interest transfers directly to the surviving joining tenant(s)--there is one less owner. The last survivor takes title in severalty and has all the rights of sole ownership, including the right to pass the property to any heirs.

Eminent Domain

The right of the government to acquire privately owned real estate for public use.

Title

The right to ownership of land; it represents the owner's bundle of legal rights. Also serves as evidence of ownership or possession of a parcel or real estate.

Doctrine of Prior Appropriation

The right to use any water, with the exception of limited domestic use, is controlled by the state rather than by the landowner adjacent to the water. To secure water rights in prior appropriation states, landowner must demonstrate to a state agency that their plans are for beneficial use, such as crop irrigation.

Listing Agreement: Indemnification (Hold Harmless) Wording

The seller and the licensee may agree to hold each other harmless

Property Conditions

The seller has a duty to discover and disclose any known defects that threaten structural soundness or personal safety.

Marketable Title

The seller is required to deliver marketable title to the buyer at the closing. To be marketable, a title must •Disclose no serious defects and not depend on doubtful questions of law or fact to prove valididty •Not expose a purchaser to hazard litigation or threaten the quiet enjoyment of the property •Convince a reasonably well-informed and prudent purchase, acting on business principles and with knowledge of the facts and their legal significance.

Listing Agreement: nondiscrimination

The seller must understand that the property will be shown without regard to race, color, sex, of the prospective buyer.

Recording Expenses

The seller usually pays for recording charges (filing fees) necessary to clear all defects and furnish the purchaser with a marketable title. Items customarily charged to the seller include the recording of release deeds or satisfaction of mortgages, quitclaim deeds, affidavits, and satisfaction of mechanics' liens. The buyer pays for recording charges that arise from the actual transfer of title. Such items usually include recording the deed that conveys title to the purchaser and a mortgage or deed of trust executed by the buyer.

Listing Agreement: The Listing Price

The seller's proceeds will be reduced by unpaid real estate taxes, special assessments, mortgage debts, and any other outstanding obligations

Customer

The third party or non-represented consumer for whom some level of service is provided and who is entitled to fairness and honesty.

Value: Contribution

The value of any party of property is measured by its effect on the value of the whole parcel. Installing a swimming pool may not add value equal to cost, but remodeling might.

Listing Agreement: The Proposed Dates for the Closing and the Buyer's Possesion

These dates should be based on an anticipated closing date. The listing agreement should allow adequate time for the paperwork involved (including the buyer's qualification for any financing) and the move-in date to be arranged by the seller and the buyer.

Primary Mortgage Market: Thrifts, savings associations, and commercial banks

These institutions are known as fiduciary lenders because of their obligations to protect and preserve their depositors' funds. Thrifts is a generic term for savings associations. Mtg loans are perceived as secure investments for generating income and enable these institutions to pay interest to their depositors.

Special Information Booklet

This HUD booklet, which must be given at the time of application or provided within three days of loan application, provides the borrower with general information about settlement (closing) costs. It also explains the various provisions of RESPA, including a line-by-line description of the Uniform Settlement Statement.

VA-Guaranteed Loan: Certificate of Eligibility

This certificate is used to determine what portion of a mortgage loan the VA will guarantee. It does NOT mean that the veteran automatically receives a mortgage, it merely sets forth the maximum guarantee to which the veteran is entitled.

Regulation of Appraisal Activities

Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) requires that any appraisal used in connection with federally related transaction be performed by a competent individual. Appraisal of residential property valued at $250,000 or less are exempt and need not be performed.

Involunary Alienation

Title to property may be transferred without the owner's consent by involuntary alienation. Usually carried out by operation of law--such as by condemnation or a sale to satisfy delinquent tax or mortgage liens.

Involuntary Alienation

Title to property may be transferred without the owner's consent. Usually carried out by the operation of law--such as by condemnation or a sale to satisfy delinquent tax or mortgage liens. When a person dies intestate (with no will), the title to the real estate passes to the state by the state's power of escheat because there are no heirs.

Equitable Title

Title transfers only upon delivery and acceptance of a deed. After both the buyer and the seller have executed a sales contract, the buyer acquires an interest in the land. This interest is known as equitable title. Equitable title may give the buyer an insurable interest in the property.

Acceleration Clause

To assist the lender in a foreclosure. If a borrower defaults, the lender has the right to accelerate the maturity of the debt. This means that the lender may declare the entire debt due immediately. Without this clause, the lender would have to sue the borrower every time a payment was overdue

Procuring Cause

To be considered the procuring cause, the licensee must have started or caused a chain of events that resulted in the sale. Example: conducting open houses, placing advertisements in the newspaper, and showing the house.

Signature of Grantor

To be valid, a deed must be signed by all the grantors named in the deed. Most states permit a power f attorney (written specific authority) to sign legal documents for the grantor. Power-of-attorney is not necessarily an attorney-at-law

Enabling Acts

To enact nondiscriminatory legislation to: •Preserve order •Protect the public health and safety, and •Promote the general welfare of citizens

Attachments

To prevent a debtor from conveying title to such previously unsecured real estate while a court suit is being decided, a creditor may seek a writ of attachment. It is a court order against the property of another person--the court retains control of property.

Rectangular Survey System: Sections

Township squares are subdivided into sections and subsections called halves and quarters, which can be further divided. Each township contains 36 sections. 1 starts in upper east corner. Section 16 is for school

Concierge Services

Training and managing of concierge staff for office buildings and other settings. Responsible for anything from arranging for taxi rides to assisting with visual aids equipment for a conference.

Deed of Trust

Trustor conveys real estate to a trustee for the benefit of a beneficiary.

Annexation

Turning personal property into real property (ex: buying cement, stone, and mixing them into concrete to construct a sidewalk across the land, the landowner has converted personal property into real property).

Penalties for violating antitrust laws

Under the federal Sherman Antitrust Act, people who fix prices or allocate markets may be subject to a maximum $1 million fine and ten years in prison. For corporations the penalty may be as high as $100 million

What are the two characteristics of real estate

Uniqueness and immobility Uniqueness: means that no matter how identical they may appear, no two parcels of real estate are ever exactly alike; each occupies its own unique geographic location. Immobility: refers to the fact that property cannot be relocated to satisfy demand when supply is low.

Four groups of unities (PITT) needed to create joint tenancy

Unity of Possession--all joint tenants holding an undivided right to possession Unity of Interest--all joint tenants holding equal ownership interests Unity of time--All joint tenants acquiring their interest at the same time. Unity of title--All joint tenants acquiring their interests by the same document.

In more concrete terms, the GMA guides the development of comprehensive plans and development regulations for the fastest growing counties and cities in the following categories

Urban Growth: Comprehensive p;ans should encourage development in urba areas where adequate public facilities and services exist or can be provided efficiently. Reduce Sprawl: Comprehensive plans should minimize coverting land into sprawling, low-density developments Transporation: encourage a variety of efficient transporation systems coordinated with county ad city compp lans

Gross Rent Multiplier (GRM)

Used as a multiplier of the gross monthly income of a property o produce an estimate of the property's value. Used if the buyer is interested in purchasing a one to four-unit residential property.

Reconveyance Deed

Used by a trustee to return title to the trustor. Example: when a loan secured by a deed of trust has been fully paid, the beneficiary notifies the trustee. Trustee then reconveys the property to the trustor.

Attorney's opinion of title

Used in some areas of the country as evidence of title. It is an opinion of the condition of the title based on the review of the abstract. Similar to certificate of title, it does not protect against defects that cannot be discovered by public records. Many buyers purchase title insurance for these potential defects.

Discount Points

Used to increase the lender's yield (rate if return) on its investment. Example: the interest that a lender charges for a loan might be less than the yield an investor demands. To make up the difference, lender charges the borrower discount points. One discount point equals 1 percent of the loan amount and is charged as prepaid interest at the closing.

Lease Purchase

Used when a tenant wants to purchase the property but is unable to do so. Purchase agreement is primary consideration and the lease is secondary. Part of periodic rent is applied toward the purchase price until it is reduced to an amount for which the tenant can obtain financing or purchase the property outright.

Lot and Block System

Uses lot and block numbers referred to in a plat map filed in the public records of the county where the land is located. Used mostly in subdivisions and urban areas. First, a large parcel of land is described by either the metes-and-bounds method or by rectangular survey. The block refers to the name of the subdivsion under which the map is recorded.

Marketing Costs: property managemen

Usually figured on a cost-per-prospect-per-lease basis. If a 3-bedroom apartment rents for $1500 and is typically viewed by 10 prospects, an $800 newspaper advertisement would cost $80 per prospect.

Primary Mortgage market: Pension Funds

Usually have large amounts of money available for investment. Because of the high yields and low risks, pension funds have begun to participate actively in financing real estate projects.

Leasing Agents

Usually independent contractors working on a commission basis and secure lessees.

Destruction of Premises

Usually, residential tenant are permitted to reduce their rent payments in proportion to the amount of space they are unable to use. If the property was destroyed as a result of the landlord's negligence, the tenant can recover damages. On the other hand, tenants who have constructed buildings on leased land, often agicultural or industrial land, are still obligted for the payment of rent if the improvements are damaged or destroyec.d

Certificate of Reasonable Value (CRV)

VA issued a certificate of reasonable value for the property being purchased--states the property's current market value based on a va-approved appraisal.

Assumption Rules for VA-Guaranteed Loans

VA loans made before March 1, 1988 are freely assumable, although an assumption processing fee will be charged. For loans after this date, the VA must approve the buyer and the assumption agreement. Original veteran borrower remains perosnally liable for the repayment of the loan unless the VA approves a release of liability.

Anticipation: Value

Value is created by the expectation that certain events will occur. The value of a house may be affected if rumors circulate that an adjacent property may be converted to commercial use.

Assumption Rules for FHA-Insured Loans

Vary depending on the dates the loans were originated: •FHA loans before 86 generally have no restrictions on their assumptions. •For an FHA loan originating beteen 86 and 89, creditworthiness is required. •For FHA loans originating on december 15 1989 and later, no assumptions are permitted w/out complete buyer qualification

Conventional loans

Viewed as the most secure loans because their loan-to-value ratios are often lowest. Traditionally, the ratio is 80 percent of the value of the property or less. A conventional loan is not government-insured or guaranteed, in contrast to FHA-insured and VA-guaranteed loans. ••To qualify for a conventional loan under Fannie Mae guidelines, the borrower's monthly housing expenses, including PITI must not exceed 28 percent of total monthly gross income. Also, the borrower's total monthly obligations, including housing costs plus other regular monthly payments must not exceed 36 percent of total monthly gross income--loans that meet these criteria are called conforming loans and are eligible to be sold in the secondary market.

Community Property Rights

Views married couples as equal partners in the marriage. Any property obtained during a marriage is considered to be obtained by mutual effort. Washington has adopted this concept.

Creation of a lien must be VISE:

Voluntary - created by action of property ownr Involuntary - created without the property owner's express permission Statutory - created by statute Equitable - created by a court based on common law

Classification: INDUSTRIAL

Warehouses, factories, land in industrial districts, and power plants

Rectangular (Government) Survey System

Was established by congress in 1785 to standardize the description of land acquired by the newly formed federal government. Principal meridians - run north and south Base lines - run east and west **Both are reference to degrees of longitude and latitude. Each principal meridian has a name or number and is crossed by a base line. There are 37 principal meridians in the US. Principal meridian is divided into six-mile-wide strips by lines that run north and south, parallel to the meridian --these are called ranges and are designated by consecutive numbers east or west of principal. Ex: range 3 east would be between 12 and 18 miles east of principal meridian

Manufactured housing (mobile home)

Was once considered a temporary residence. Now are principal residences or stationary vacation homes.

Ground Lease

When a landowner leases unimproved land to a tenant who agrees to erect a building on the land. Most often used in commercial property development. Typically involve separate ownership of the land and the buildings. Must be for a long enough term to make the transaction desirable for tenant investing in building.

Intestate

When a person dies without a will. Real estate and personal property pass to the decedent's heirs according to the state's statue of descent and distribution ••Before this can occur, the estate must go through judicial process called probate, all claims against the property must be satisfied**

Offer

When a prospective buyer is interested in purchasing property, licensee helps the consumer prepare an offer to purchase

Actual Eviction

When a tenant breaches a lease or improperly retains leased premises, the landlord may regain possession through a legal process known as actual eviction. The landlord must serve notice on the tenant before commencing the lawsuit. Most lease terms require at least a ten-day notice in the case of default. In many states, however, only a five-day notice is necessary when the tenant defaults in the payment of rent. When a court issues a judgment for possession to a landlord, the tenant must vacate the property. If the tenant fails to leave, the landlord can have the judgment enforced by a court officer, who forcibly removes the tenant and the tenant's possessions. The landlord then has the right to re-enter and regain possession of the property. In some states, distrain is allowed for non-payment of rent.

Breach of Lease

When a tenant breaches any lease provision, the landlord may sue the tenant to obtain a judgment to cover past-due rent, damages to the premises, or other defaults. Likewse, when a landlord breaches any lease provision, tenant is entitle to certain remedies.

Sublease

When a tenant transfers less than all the leasehold inerests by leasing them to a new tenant, the original tenant has subleased (sublet) the property. The original tenant remains responsible for rent being paid by the new tenant and for any damage done to the rental during the lease term. ••Only allowed when lease permits them Sublease or assignment usually does not relieve the orignal lessee of the obligation to pay rent. The landlord may waive the former tenant's liability, though. The sublessor's (original lessee's) interest in the real estate is known as a sandwich lease.

Holdover Tenancy

When an esate from period to period is created due to a tenant with an estate for years remains in possession after the term expires If no new lease agreement has been made, a holdover tenancy is created. The landlord may evict the tenant or treat the holdover tenant as one who holds a periodic tenancy.

Equalization

When it is necessary to correct inequalities in statewide tax assessments an equalization factor is used to achieve uniformity.

Habendum Clause

When it is necessary to define or explain the ownership to be enjoyed by the grantee, a habendum clause may follow the granting clause. Begins with "to have or to hold"

Balloon Payment Loan

When the periodic payments are not enough to fully amortize the loan by the time the final payment is due, the final payment is larger than the others. Final payment is called a balloon payment--it is a partially amortized loan because some of the principal is still owed at the end of the term.

Nonjudicial Foreclosure

When the security instrument contains a power-of-sale clause. no court action is requires. In states that recognize deed of trust loans, the trustee is given the power of sale. To institue, a trustee of mortgagee may be required to record a notice of default at the county recorder's office.

Trust

Where a neutral individual holds title for the benefit of another.

Township Squares

Where the township lines and the vertical range lines intersect--a square is formed. Townships are 6 miles square and contain 36 square miles. Description is abbreviated as T3N, R4E 4th Principal Meridian.

Severalty

Where title is held by one individual or corporation

Co-Ownership

Where title is held by two or more individuals

Transfer of Title by Will

Will is made by an owner to convey title to real or personal property after death. This differs from a deed, which must be delivered during the lifetime of the grantor. While the testator, the person who makes the will, is alive, any property included in the will can still be conveyed by the owner. Gift of real property is known as a devise--person who receives real property by will is known as a devisee. The other two gifts by will are a bequest, which is a gift of personal property, and a legacy, which is a gift of money.

Assignment of Mortgage

Without changing the provisions of a contract, a note may be sold to a third party, such as an investor or another mortgage company. The original mortgagee endorses the note to the third party and executed an assignment of mortgage.

Subordination Agreements

Written agreements between lienholders to change the priority of a mortgage judgment and other liens. The holder of a superior or prior lien agrees to permit a junior lienholder's interest to move ahead of the superior or prior lien.

Conditional Use Permit

Written governmental permission allowing a use inconsistent with zoning but necessary for the common good, such as locating an emergency medical facility in a predominantly residential area.

Deed

Written instrument by which an owner intentionally conveys the right, title, or interest in the parcel of real estate to someone else. Statute of frauds requires that ALL deeds be in writing. Owner who transfers the title is the grantor and the person who acquires the title is the grantee.

Washington Statute of Limitations for written vs oral contracts

Written: generally six years Oral: generally three years

Density Zoning

Zoning ordinances that restrict that maximum average number of houses per acre that may be built within a partiular area--generally a subdivision.

Designated Broker

a broker designated in writing by an employing broker to serve as a single agent/transaction broker for a seller/buyer/tenant (does not include a brokerage firm that consists of only one licensed person) May act as a designated broker fro more than one firm Jody can be designated broker of firm A and B but she can't be designated broker for A and managing broker for B Must have a printed endorsement on their managing broker's license listing the names of all firms for which they serve as designated broker

Fromaldehyde

a colorless, toxic, potentially carcinogenic, water-soluble gas, CH 2 O, having a suffocating odor Used widely in the manufacture of building materials and many household products because of its prservative characteristics.

Fee simple defeasible

a qualified fee estate that is subject to the occurrence or nonoccurrence of some specified event.

Easement in gross

an individual or company interest in or right to use someone else's land. A railroad's right-of-way is an easement in gross, as are the rights-of-way of utility easements. Commercial easements in gross may be assigned, conveyed, and inherited. Personal easements terminate when easement holder dies

housing for older persons

certain properties can be restricted to occupancy for elderly people. Housing intended for people 62 or older

Laws that Affect Real Estate

contracts, property, agency, and real estate licensing, with requirements differing from state to state; • State and local land-use and zoning laws; and • Federal and state environmental regulations and tax laws.

Bulk Zoning

control density and avoid overcrowding by imposing restrictions such as setbacks, building heights, and percentage of open area or by restricting new construction projects

Who is ECOA enforced by

depends on the type of financial institution doing the enforcing. Generally enforced by the Federal Trade Commission and Department of Justice.

Comprehensive Environmental Response, Compensation, and Liability Act

enacted by Congress on December 11, 1980, and designed to clean up sites contaminated with hazardous substances

Graduated commission splits

ex: a designated broker might agree to split commissions 50/50 up to a $25,000 licensee's share, 60/40 for shares from $25,000 to $30,000, and so on.

Electronic contracting

federal acts that govern electronic contracting: the uniform electronic transactions act (UETA) and the Electronic signatures in global and national commerce act (E-Sign)

Impact fees

fees that municipalities charge builders of new housing or commercial developments to help offset the costs of extending services

What are the two types of real estate taxes

general (valorem taxes) and special assessments or improvement taxes. both are levied against specific parcels of property and automatically become liens on those properties.

Adjustable-rate mortgages (ARMs)

generally originate at one rate of interest, then fluctuate up or down during the loan term, based on an objective economic indicator. Common components of ARM include: •the index is an undeterminable exonomic indicator that is used to adjust the interest rate in the loan. •Usually, the interest rate is the index rate plus a premium, called the margin. The margin represents the lender's cost of doing business. •Rate caps limit the amount the interest may change.

Air Rights

governed by state and local laws and ordinances

Features of a designated broker employing a licensee as an employee

governing working hours, office routine, attendance in sales meetings, assignment of sales quotas, and adherence to dress codes. By law, employers must withhold social security taxes and income taxes.

Types of listing agreements

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Superfund Amendments and Reauthorization Act

innocent landowner immunity states pollution cause be a 3rd party. property acquired after the fact

Comprehensive Loss Underwriting Exchange (CLUE)

is a database of consumer insurance claim history

Computerized Loan Origination (CLO) system

is an electronic network for handling loan applications through remote computer terminals linked to several lenders' computers. With a CLO, a real estate licensee can call up a menu of mortgage lenders, interest rates, and loan terms and then help a buyer select a lender and apply for a loan right from the brokerage office.

Nonagency (transactional broker, facilitator, coordinator, or contract broker)

is not an agent of either party. A nonagent's job is simply to help both the buyer and the seller with the necessary paperwork and formalities involved in transferring ownership of real property.

Lead-Based pAINT

lEAD WAS USED AS A PIGMENT AND DRYING AGENT IN AKYD OIL-BASED PAINT. coMMON ON DOORS, WINOOWS, AND OTHER WOODWOK. lEAD IS PRESTN IN ABOUT 75 PERCENT OF ALL PRIVATE HOUSING BUILT BEFORE 1978.

General Real estate tax: ad valorem tax

latin for "according to value" based on the value of the property being taxed and are specific, involuntary, statutory liens. They are charged by various government agencies and municipalities, including •States •Counties •Cities, towns, boroughs, and villages; •School districts; •Drainage districts; •Hospital districts; •Water districts; •Sanitary districts; and •Parks, forest preserves, and recreation districts.

Competitive Market Analyysis

licensees prepare a competititve market analysis for their sellers and buyers. A CMA is distinctly different from an appraisal report. CMA features properties similar to the subject property in size, location, and amenities. Based on: •Recently closed properties •properties currently on the market •properties that did NOT sell.

Restrictive Covenants

limitations to the use of property imposed by a past owner or the current owner and are binding on future grantees

Uniform Settlement Statement

lists all of the costs and fees to be paid at the closing

Designated Broker

managing broker who has been endorsed as the designateed broker for the firm to which he or she is registered

Asset Management

monitor a portfolio of properties similar to a securities portfolio by analyzing the performance of the properties and making recommendations to the owners of the properties. Help clients decide what type of real estate to invest in and which is the best to purchase. Also when to dispose of property

Transfer Declaration form (transfer statement or affidavit of real property)

must be signed by both the buyer and the seller or their agents. States the following: •Full sales price of the property; •its legal description •The type of improvement •The address, date, and type of deed; and •Whether the transfer is between relatives or in accordance with a court order. Certain deed may be exempted from the tax, such as the following: •Gifts of real estate •Deeds not made in connection with a sale •Conveyance to, from, or between government bodies •Deeds by charitable religious, or educational institutions. •Partitions •Tax deeds •Deeds pursuant to mergers of corporations •Deeds from subsidiary to parent corporations for cancellations of stock

How much can be held as cushion in an escrow account?

no more than one-sixth of the year's total disbursements

Chlorofluorocarbons

nontoxic, nonflammable chemicals containing atoms of carbon, chlorine, and fluorine. in AIR CONDITIONARS regfrigerators and freezers. Also used in aerosol sprays,, paints, solvents, and foam-blowing applications.

Amortized Loans

partially pays off both principal and interest. Most mortgage and deed in trust loans are amortized loans. Also known as direct reduction loans. Most are paid monthly, some are quarterly or semiannually

Express Agency

parties formally express their intention to establish an agency and state its terms and conditions. An agency relationship between a seller and a broker is generally created by a written employment contract commonly called a listing agreement, which authorizes the broker to find a buyer or tenant. An express agency relationship between a buyer and a broker is created by a buyer agency agreement.

State Environment Act (SEPA)

patterned after the National Environmental Policy Act (NEPA). SEPA states that any state or local gonvernment action that has a significant impact on the environment must be accompanies by an environmental impact statement (EIS)

Regression: Appraisal

principal that stated between dissimilar properties, the value of the better-quality home is affected adversly by the lesser-quality.

Fair Housing Act

prohibited discrimination in renting or selling houses

Fair Housing Act: pm

prohibits discrimination in the sale, rental, or financing of housing based on race, color, religion, NO, sec, etc. Blockbusting: encouraging people to rent or sell a property by claiming that the entry of protected class of people will have a negative impact on property values. Steering: channeling of protected class members to certain buildings or neighborhoods

Zoning: variances

provides relief if zoning regulations deprive an owner of the reasonable use of the property. Owner must demonstrate the unique circumstance that makes it necessary

Fee simple defeasible

qualified esate subject to occurrence or nonoccurrence of some specified event

______ Taxes take priority over all other liens

real estate taxes and special assessments

Interest-only mortgage

requires the payment of interest only for a stated period of time with the principal balance due at the end of the term. Interest-only mortgages have been used for short-term financing in the past, but today, they have become a popular option

Personal Property

sometimes called "personality" is all of the property that can be owned and that does not fit the definition of real property. Personal property is movable.

aesthetic zoning

specify certain types of architecture for new buildings

Mortgage Servicing disclosure statement

tells the buyer that the bank will be servicing the loan discloses if the bank will not be servicing the loan

Recording

the act of placing documents in public records--specific rules are a matter of state laws. Gnerally, all recording acts provide that any document that affects any estate, right, title, or interest in land must be recorded in the county or town where the land is located to serve as public notice. To be eligible, document must be drawn and executed according to recording rules of state.

Value: Highest and Best Use

the most profitable single use of property that is legal and feasible, is known as the highest and best use. Use must be: •Physically possible •Legally permitted •Economically or financially feasible, and •The most profitable or maximally productive. Can change w/social, political, and economic forces.

Accession

the process of an owner acquiring the personal property from a tenant as a result of the tenant's failure to remove their trade fixture

Incentive zoning

to ensure that certain uses are incorporated into developments, such as requiring the street floor of an office building to house retail establishments.

True or false: a licensee cannot sue unless buyer agency in writting

true

Broker's License Requirements

•18 years of age or older •A high school diploma or equivlent •Successful completion of 90 hours of instruction in real estate Each course must be completed within two years prior to applying for the broker's liense and be approved by the director The applicant must pass a course examination approvd by the director for each course Passing the broker's license examination ••BROKER IS LICENSED TO ONE FIRM AT A TIME

When the sales or listing agreement specifies no time for the payment of the commission, it is usually earned when:

•A completed sales contract has been executed by a ready, wiling, and able buyer •The contract has been accepted and executed by the seller; and •Copies of the contract are in possession of all parties To be entitled to a sales commission, an individual must: •Hold a real estate license •Be the procuring cause of the sale, and •Be employed by the buyer or the seller under a valid contract

Minimum level of services a listing broker is bound to provide

•Accept delivery of and present offers and counteroffers to the client •Assist the client in developing, negotiating, and presenting offers and counteroffers •Answer the client's questions about offers, counteroffers, and contigencies.

Three principal responsibilities of a property manager:

•Achieve the objectives of the property owners, •Generate income for the owners, and •Preserve and/or increase the value of the investment property. Through agency law, property manager becomes responsible for maintaining property.

What can a property manager assistant NOT DO

•Advertise that they are engaged in property management business •Hold trust funds

Under the common law of agency, an agent owes the principal six duties:

•Care •Obedience •Loyalty •Disclosure •Accounting •Confidentialiy

Termination of Agency

•Completion, performance, or fulfillment of the purpose for which agency was created •Death or incapacity of either party •Destruction or condemnation of the property •Expiration of the terms of the agency •Mutual agreement by all parties to cancel the contract •Breach by one of the parties •By operation of law, as in bankruptcy of principle.

Managing Real Estate Broker's license Requirements

•Eighteen years of age or older •High school diploma or equivalent •Minimum of three years of licensed experience as a full-time broker in this state or in another jurisdiction having comparable requirements within the five years previous to applying for the maanging broker's license examination--or otherwise qualified with practical experience. •Pass he managing broker's license examination and complete classes within three years of applying.

Basic Form Insurance

•Fire & lightning •Glass breakage •Windstorm and Hail •explosion •Riot and civil commotion •damage by aircraft •damage from vehicles •damage from smoke •vandalism and malicious mischief •Theft •Loss of property removed when it is endangered

Requirements for a valid deed

•Grantor who has the legal competency to execute the deed •Grantor named with reasonable certaintly to be identified •Statement of consideration •Granting clause (words of conveyance) •Habendum clause (to define ownership taken by grantee) •Accurate legal description of property conveyed •Any relevant exceptions or reservations •Signature of the grantor, which must be acknowledged (notarization) •Delivery of the deed and acceptance by the grantee to pass title. **Deed also may inlclude a description of any limitations on the conveyance of a full fee simple estate and a statement of any exceptions and reservations (subject to)

Sharing Commissions

•It is unlawful for any licensed firm, broker, or managing broker to pay any part or share any of his or her commission to any unlicensed person •It is unlawful for any unlicensed broker or managing broker to pay any part of his or her commission to any person, except through the firm's designated broker. Exception: A commission may be shared with a manufactured housing retailer on the sale of manufacturing housing sold in conjuction with land. •Licensees can hire assistants on salary or hourly wage. They must pay a regualr wage and not pay them a portion of commission

Services Requiring a License

•Listing, selling, purchasiing, exchanging, optioning, leasing, renting of real estate •Negotiating or offering to negotiate either directly or indirectly.

Duties that a personal assistant can perform

•May be a greeter at open houses/model units and distribute pre-printed promotional literature and provide security, but may not answer questions or interpret information concerning prop., price, or terms.

Three methods of describing real estate

•Metes and bounds •Rectangular or government survey •Lot and block (Recorded plat) Currently, the Federal Bureau of Land Management and the USDA Forest Service are developing the National Integrated Land description information

Tax Deductions for Home Owners

•Mortgage interest payments on first and second homes (for mortgage balances below $1 million, or $500,000 if married filing separately) •Real Estate taxes (but NOT interest paid on overdue taxes) •Certain loan origination fees •Loan Discount Points •Loan Prepayment penalties

Keeping a rental property in good condition involves which three types of maintenance?

•Preventive •Repair or corrective •Routine

Agent's duties to third parties (customers)

•Reasonable care and skill in performance •Honest and fair dealing, and •Disclosure of all facts that the licensee knows or should reasonably be expected to know that materially affect the value or desirability of the property

What are the three valuation techniques

•Sales comparison approach •Cost approach •Income aproach

Firm's License Requirements--what applicant must provide the director with

•The firm name and unified business identifier number •Washington business mailing and street address, contact telephone number, if any, and a mailing and physical address for either the firm's trust account or business records location •internet home page sites and business email addresss •Application fee prescribed by the director •Any other information the director may require.

Four requirements for unities are the following

•Title is acquired by one deed •The deed is executed, signed, and delivered at one time. •The deed conveys equal interests to all of the parties •The parties hold undivided possession of the property as joint tenants

A listing agreement may be terminated for the following reasons:

•When the agreement's purpose is fulfilled, such as when a ready, willing, and able buyer has been found •When the agreement's term expires •If the property is destroyed or its use is change d by some force outside the owner's control, such as zoning change or condemnation by eminent domain. •If title to property is transferred by law, as in the case of bankruptcy or forclosure •If the designated broker and seller mutually agree to cancel •If either the designated broker or the seller dies or becomes incapacitated.

Terminating an Easement

•When the need no longer exists •When the owner of either the dominant or the servient tenement becomes sole owner and the properties are merged under one legal description. •By the release of the right of easement to the owner of the servient tenement •By the abandonment of the easement (the intention of the parties is the determining factor); or •By the nonuse of a prescriptive easement.

Broad-form policy

•falling objects •damage due to weight of ice, snow, or sleet; •collapse of all or part of building; •bursting, cracking, burning, or bulging of a steam or water heating system or of appliance used to heat water •Accidental discharge, leakage, or overflow of water or steam from within a plumbing, heating, or air-conditioning system. •Freezing of plumbing, heating, and air-conditioning systems •damage to electrical appliances, devices, fixtures, and wiring from short circuits

tWO FORMS OF LEad hazard inspection

•paint inspection •Risk assesment