Texas Principles of Real Estate 1

Customer

The party the agent brings to the principal as seller or buyer of the property.

Redlining

The practice of refusing to make loans or otherwise denying financial assistance for housing in a particular area.

Value

The present worth of future benefits.

Capital Gains

The profit realized from the sale of real estate or other investment. Capital loss occurs when an investment property or another type of investment is sold at a loss.

Police Power

The right of any political body to enact laws and enforce them, for the order, safety, health, morals and general welfare of the public. Zoning and building codes

Bundle of Rights

The rights of an owner of a freehold estate to possession, enjoyment, control, and disposition of real property. Sub-surface, surface, and aerial rights, and water rights.

Customer

we work with customers or buyers

List the five canons of professional ethics and conduct with 100% accuracy.

§531.1 Fidelity A real estate broker or salesperson, while acting as an agent for another, is a fiduciary. Special obligations are imposed when such fiduciary relationships are created. They demand: that the primary duty of the real estate agent is to represent the interests of the agent's client, and the agent's position, in this respect, should be clear to all parties concerned in a real estate transaction; that, however, the agent, in performing duties to the client, shall treat other parties to a transaction fairly; that the real estate agent be faithful and observant to trust placed in the agent, and be scrupulous and meticulous in performing the agent's functions; and that the real estate agent place no personal interest above that of the agent's client. §531.2 Integrity A real estate broker or salesperson has a special obligation to exercise integrity in the discharge of the license holder's responsibilities, including employment of prudence and caution so as to avoid misrepresentation, in any wise, by acts of commission or omission. §531.3 Competency It is the obligation of a real estate agent to be knowledgeable as a real estate brokerage practitioner. The agent should: be informed on market conditions affecting the real estate business and pledged to continuing education in the intricacies involved in marketing real estate for others; be informed on national, state, and local issues and developments in the real estate industry; and exercise judgment and skill in the performance of the work. §531.18 Consumer Information The Commission adopts by reference the Consumer Protection Notice TREC No. CN 1-2. This document is published by and available from the Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188, www.trec.texas.gov. Each active real estate broker and sales agent shall provide the notice adopted under subsection (a) by: displaying it in a readily noticeable location in each place of business the broker maintains; and providing a link to it in a readily noticeable place on the homepage of each business website, labeled: "Texas Real Estate Commission Consumer Protection Notice", in at least 10 point font; or "TREC Consumer Protection Notice", in at least 12 point font. For purposes of this section, business website means a website on the internet that: is accessible to the public; contains information about a license holder's real estate brokerage services; and the content of the website is controlled by the license holder. For purposes of providing the link required under subsection (b)(2) on a social media platform, the link may be located on: the account holder profile; or a separate page or website through a direct link from the social media platform or account holder profile. §531.19 Discriminatory Practices No real estate license holder shall inquire about, respond to or facilitate inquiries about, or make a disclosure of an owner, previous or current occupant, potential purchaser, lessor, or potential lessee of real property which indicates or is intended to indicate any preference, limitation, or discrimination based on the following: race; color; religion; sex; national origin; ancestry; familial status; or disability. For the purpose of this section, disability includes AIDS, HIV-related illnesses, or HIV infection as defined by the Centers for Disease Control of the United States Public Health Service.

Government Survey System

A method of specifying the location of a parcel of land using prime meridians, base lines, standard parallels, guide meridians, townships and sections. Rectangular survey system. Used by congress when taking over lands early on. Not used in Texas!

Bench Mark

A monument used to establish the elevation of the point, usually relative to Mean Sea Level, but often to some local datum.

Agent

A person authorized to act on behalf of another.

Real Estate Broker

A person or an organization acting as the agent for others in negotiating the purchase and sale of real property or other commodities for a fee.

Real Estate Salesperson

A person performing any of the acts included in the definition of real estate broker but while associated with and supervised by a broker.

Cluster Housing

A planned subdivision in which a single large tract of land is divided into smaller individual plots, each with a detached house. Think subdivisions or planned communities.

Eminent Domain

A right of the government to acquire property for necessary public use by condemnation; the owner must be fairly compensated. Make way for a railroad or a highway

Range Lines

A series of government survey lines running north and south at six-mile intervals starting with the principal meridian and forming the east and west boundaries of townships.

Range

A strip or column of land six miles wide, determined by a government survey, running in a north-south direction, lying east or west of a principal meridian.

Riparian Rights

A system for allocating water among those who possess land along its path. It has its origins in English common law. Riparian water rights exist in many jurisdictions with a common law heritage, such as Canada, Australia, and states in the eastern United States. Water rights

Cost Approach

An analysis in which a value estimate of a property is derived by estimating the replacement cost of the improvements, deducting therefrom the estimated accrued depreciation, then adding the market value of the land.

Availability

Be available when we need you.

information

Be who they say they are, and they must be the owner. Check ownership records. Information stating something wrong with the numbers or the presentation of the home. Get appraisal if needed.

Whats covered under homeowners insurance

Bundles insurance needed for home-ownership; windstorm, theft, liability, covers replacement costs, personal property, medical payments, loss of use, HOB - most common

Explain the difference between the Federal Fair Housing Act and the ADA, and provide at least one example of a protected class under each Act.

Fair Housing act provides protection to individuals of any race, color, religion, gender, nationality, handicap and familiar status while the ADA protects individuals with physical or mental impairments.

Explain the difference between a special agent and general agent, and express agency and implied agency, and provide at least one example of each.

See below

Explain the difference between an executory and executed contract.

See below

Explain the difference between an express and implied contract, and provide at least one example of each.

See below

Performance of a contract

Specific time or date; agreed upon acts are upon completion. Reasonable time unless specified otherwise. "Time is of the essence" - A condition of a contract expressing the essential nature of performance of the contract by a party in a specified period of time. 1-4 family residential contract.

List the eight steps in the HUD fair housing complaint process with 100% accuracy.

Step 1 - Intake 1. Anyone can file a complaint with HUD at no cost. Fair housing complaints can be filed by any entity, including individuals and community groups. Those that file fair housing complaints are known as complainants. Those against whom fair housing complaints are filed are called respondents. 2. Fair housing complaints can be filed with HUD by telephone (1-800-669-9777), mail, or via the Internet. This number does not make outgoing calls. If you receive a call from this number, you have been contacted fraudulently. Please report this to the FCC https://www.fcc.gov/consumers/guides/spoofing-and-caller-id. Follow this link to fill out a fair housing complaint form online. 3. After HUD has received the initial information, an intake specialist will contact the complainant and interview him or her to collect facts about the alleged discrimination. Initial interviews are normally conducted by telephone. The intake specialist will then review the allegations to determine whether the matter is jurisdictional. 4. If HUD has the authority to investigate, it will file the complaint. If the allegations do not fall within HUD's jurisdiction, for example if the complaint does not allege housing discrimination, HUD cannot accept the complaint and must close the case. 5. If the alleged discrimination occurred within a state or locality in HUD's Fair Housing Assistance Program*, HUD will refer the complaint to that agency. That agency must begin to work with the complainant within 30 days, or HUD can take the complaint back. *All the agencies in the Fair Housing Assistance Program have laws that are substantially equivalent to the federal Fair Housing Act. Step 2 - Filing 1. If HUD accepts the complaint for investigation, the investigator will draft a formal complaint on HUD's standard form and provide it to the complainant, typically by mail. The complainant must sign the form and return it to HUD. 2. Within 10 days after receipt of a signed complaint, HUD will send the respondent notice that a fair housing complaint has been filed against him or her along with a copy of the complaint. At the same time, HUD will send the complainant an acknowledgement letter and a copy of the complaint. 3. Within 10 days of receiving the notice, the Respondent must submit to HUD an answer to the complaint. Step 3 - Investigation 1. As part of the investigation, HUD will interview the complainant, the respondent, and pertinent witnesses. The investigator will collect relevant documents or conduct onsite visits, as appropriate. 2. HUD has the authority to take depositions, issue subpoenas and interrogatories, and compel testimony or documents. Step 4 - Conciliation 1. The Fair Housing Act requires HUD to bring the parties together to attempt conciliation in every fair housing complaint. The choice to conciliate the complaint is completely voluntary on the part of both parties. Any conciliation agreement signed by HUD must protect the public's interests. 2. If the parties sign a conciliation agreement, HUD will end its investigation and close the case. However, if either party breaches the agreement, HUD can recommend that the U.S. Department of Justice (DOJ) file suit to enforce the agreement. Step 5 - No Cause Determination 1. If, after a thorough investigation, HUD finds no reasonable cause to believe that housing discrimination has occurred or is about to occur, HUD will issue a determination of "no reasonable cause" and close the case. 2. If the complainant disagrees with HUD's determination that there was no reasonable cause to believe that discrimination occurred or was about to occur, the complainant can file a civil court action in the appropriate U.S. district court. Step 6 - Cause Determination and Charge 1. If the investigation produces reasonable cause to believe that discrimination has occurred or is about to occur, HUD will issue a determination of "reasonable cause" and charge the respondent with violating the law. HUD will send a copy of the charge to the parties in the case. 2. After HUD issues a charge, a HUD Administrative Law Judge (ALJ) will hear the case unless either party elects to have the case heard in federal civil court. Parties must elect within 20 days of receipt of the charge. Step 7 - Hearing in a U.S. District Court 1. Within 30 days after either party elects to go to federal court, DOJ will commence a civil action on behalf of the aggrieved person in U.S. district court. 2. If the court finds that a discriminatory housing practice has or is about to occur, the court can award actual and punitive damages as well as attorneys fees. Step 8 - Hearing before a HUD ALJ 1. If neither party elects, a HUD ALJ will hear the case. An attorney from HUD will represent the aggrieved party before the ALJ. 2. When the ALJ decides the case, the ALJ will issue an initial decision. 3. If the ALJ finds that housing discrimination has occurred or is about to occur, the ALJ can award a maximum civil penalty of $16,000, per violation, for a first offense, in addition to actual damages for the complainant, injunctive or other equitable relief, and attorneys' fees. 4. Within 15 days of the issuance of the ALJ's initial decision, any party adversely affected by the ALJ's initial decision can petition the Secretary of HUD for review. 5. The Secretary of HUD has 30 days after the initial decision to affirm, modify, or set aside the ALJ's initial decision, or remand the initial decision for further proceedings. If the Secretary does not take any action within 30 days, the decision will be considered the Department's final decision. 6. After the Department has issued a final decision, any party aggrieved by the Department's final decision can appeal to the appropriate court of appeals.

Explain the purpose of the DTPA, and list at least three examples of a misleading act under the DTPA.

Texas Deceptive Trade Practices Consumer Protection Act - See below

Real Property

The aggregate of rights, powers, and privileges conveyed with ownership of real estate. Includes everything

Price

The amount a purchaser agrees to pay and a seller agrees to accept under the circumstances surrounding a transaction.

Principal

The employer of an agent.

Blockbusting

The illegal practice of inducing homeowners to sell their properties by making representations regarding the entry, or prospective entry of minority persons into the neighborhood.

Air Rights

The landowner's ability to Reserve air space above the property

Mineral Rights

The landowner's ability to take minerals from the earth or to sell or lease this right to others.

Land

The material of the earth, whatever may be the ingredients of which it is composed, whether soil, rock, or other substance, and includes free or unoccupied space for an indefinite distance upwards as well as downwards. A bundle of rights ex) surface rights, underlying soil and attached to it, mineral rights, air rights, anything attached to it, all the way up and all the way down to the center of earth..very specific

Township Tiers

The northern and westernmost tier of sections in each township are designed to take up the convergence of the east and west township boundary lines or range lines, as well as any error in the survey measurements, and therefore these sections vary slightly from being one square mile or 640 acres (260 ha).

Market Comparison Approach

A means of comparing similar type properties, which have recently sold, to the subject property. Commonly used in comparing residential properties.

Identify at least three ways a contract can be performed, and provide an example of each.

1) Agreement of the parties - both agree to void contract 2) Full performance - when a property closing complete 3) Impossibility of contract - one or more parties get injured, the property get destroyed, the government passes a law which makes the transaction illegal 4) Operation of law - Operation of law describes how the rights and liabilities of parties may be changed by the application of law...seller files bankruptcy, seller dies. Something which would not allow the buyer or the seller to move forward.

List the essential elements of a valid contract, and identify these elements in the post assessment.

1) Competent parties - free from any mental handicap and legal age; void if person(s) are incompetant 2) Offer and acceptance - meeting of the minds; or mutual ascent; objective intent of the parties. Definitive and understood by both parties 3) Consideration - act or a promise that is offered by a party; its the mutual exchange of promises; by entering contract; now buyer is obligated to buy. Good and valuable between parties. Its not the earnest money. Anything bargained for and exchanged. Parties must agree and no fraud or due influence 4) Legality of contract - not illegal or against public policy 5) In writing and signed - due to the statute of frauds stating that all contracts must be in writing and both parties must sign to agree

Identify how many linear feet are in a mile, and how many square feet are in one acre.

5280 linear feet in a mile; 43560 sq ft in an acre

Explain the purpose of a listing contract, and identify what parties sign the contract.

A contract in which a property owner employs a real estate broker to market the property described in the contract. Between a principal and a broker.

Executory contract

A contract in which something remains to be done by one or both of the parties.

Executed contract

A contract that has been fully performed

Express Contract

A contract that has been put into words, either spoken or written. Listing agreements, Buyer representation agreements, option agreements, leases. Intentions in words, it can be oral but difficult to enforce.

Civil Rights Act of 1866

A federal law that prohibits all discrimination on the basis of race.

Fair Housing Act of 1968

A federal prohibition on discrimination in sale, rental, financing, or appraisal of housing on the basis of race, color, religion, gender, national origin, handicap, or familial status. Was hard to enforce and wasn't considered a success.

Monument

A fixed object and point established by surveyors to establish land locations. Tree or a stream, post or spikes

Cooperative

A form of ownership in which stockholders in a corporation occupy property owned by the corporation under a lease. Corporation which owns cooperative building. Owners owned shares of stock which owns the co-op.

Condo

A form of ownership of real property recognized in all states that consists of individual ownership of some aspects and co-ownership in other aspects of the property. As estate in real estate wherein an owner owns an interest in a single apartment/unit, an a shared interest in the common areas of the building. Each owns their particular unit, each with a separate deed.

Civil Rights Act of 1964

A law that prohibited discrimination on the basis of race, sex, color, national origin, or gender in any housing program receiving federal money.

Time-shares

A license or contractual or membership right of occupancy in a project which is not coupled with an estate in the real property. Think vacation homes or rentals.

metes and bounds

A term used in describing the boundary lines of land, setting forth all the boundary lines together with their terminal points and angles. Surveyor defines the perimeter of the property which is measured, boundaries, direction, and distances. Think of a picture frame. Regarding the picture, the surveyor is describing the frame. The land is within the confines for the frame. Starts at a section corner some other marker, referenced by the original marker by original survey on record. Directions, county, city...Describes several points; points can be a tree, a post, a rod, an iron pipe; something which is clearly identifiable..using bearing to determine direction in degrees, n,s,w,e. Generally, in clockwise matter from the POB..measured in feet..Continue from that point to next point; fence 20 degress for 150 ft W 45 degrees S 200 ft ..etc..desribe until completely described

Assessed Value

A valuation placed upon a piece of property by a public authority as a basis for levying taxes on the property.

Contract

A voluntary, legally enforceable promise between two legally competent parties, to perform some legal act in exchange for legal consideration.

Implied agency

Agency that exists as a result of actions of the parties. ex) diner, valet

Obedience

Agents are required to obey instructions given by the Principal. ex) The property can only be shown during set hours, The seller's identity cannot be revealed to prospective buyers, The broker cannot reduce the asking price

Disclosure

Agents must disclose all pertinent information to their client. This includes presenting ALL offers to the client Present every offer to the Principal Present all known information about the offer/buyer

Loyalty

Agents must work in the best interests of their client. This includes putting their client' s interests above their own. Because of their fiduciary relationship, agents cannot reveal any confidential information they may know about the seller to prospective buyers. Revealing confidential information may give the buyer an unfair advantage in the negotiations.Even if the seller gives the broker permission to reveal confidential information, the agent should obtain the permission in writing!

Care

Agents should only offer/perform services for which they have an expertise. Agents are required to meet the standards of skill, care, and diligence in all of their transactions. Also known as reasonable care or skill. Do things you are only experienced in, refer to more experienced agents for help.

Chattel

All property that is not land and is not permanently attached to land; everything that is movable.

Personal Property

All property that is not land and is not permanently attached to land; everything that is movable.

Express agency

An agency relationship created by oral or written agreement between principal and the agent. Ex) Listing agreement, Exclusive right to sell

General Agent

An agent with full authority over one property of the principal, such as a property manager.

Special Agent

An agent with limited authority to act on behalf of the principal, such as created by a listing. A listing or buyers agent

Implied Contract

An agreement that has not been put into words, but is implied by the actions of the parties. Diner, Valet. By Acts and conduct.

Texas Deceptive Trade Practices Consumer Protection Act(DTPA)

Buyer has the responsibility to inspect and understand what they are purchasing; misleading acts; protects consumers against deceptive or misleading acts or practices; advertising, selling, offering, of real estate; representing something is new or original, stating something is something its not - quality, advertising with no intent of selling properties as advertised, making false statements of fact especially in price reduction, misrepresenting the authority of an agent.

Summarize the fiduciary duties owed by a principal to their agent, and provide at least one example of each duty.

C.I.I.A - see below

Summarize the fiduciary duties owed by a seller's agent to the seller, and provide at least one example of each duty.

C.O.A.L.D. - See below

Identify four types of subdivisions

Condominiums, Cooperatives, Timeshares, and cluster housing

List at least two of purposes of TRELA.

Defines and sets forth strict operating restrictions for its licensees and specifies penalites for non-compliance. Found in 1101 of the Texas Occupations code as TRELA. 1) Protect the public from incompetent or dishonest salespersons or brokers and 2) to define minimum standards of licensing for salespersons and brokers. and to maintain high professional standards in the real estate industries, as well as to protect licensees; brokers and salespersons from unfair or improper competition

Client

Disclosure of facts known about the property

Land Rights

Everything attached to the land naturally which can be mined or extracted.

Base lines

Imaginary east-west lines which intersect meridian lines to form a starting point for the measurement of land. Latitude and longitude

Principal Meridians

Imaginary north-south lines which intersect base lines to form a starting point for the measurement of land. Crossed by a baseline. Latitude and longitude.

Township

In the survey of public lands of the United States, a territorial subdivision six miles long, six miles wide and containing 36 sections, each one mile square, located between two range lines and two township lines.

Trade fixtures

Items that are installed by a commercial tenant and are removable upon termination of the tenancy.

Real Estate

Land and everything permanently attached to land. Everything including eveything permanently attached to it by man; well, sewer, infracture, house. Not the rights just everything attached to it.

Income Approach

One of the three methods of the appraisal process generally applied to income producing property, and involves a three-step process - (1) find net annual income, (2) set an appropriate capitalization rate or "present worth" factor, and (3) capitalize the income dividing the net income by the capitalization rate.

Summarize the four government powers in real estate, and provide at least one example of each.

PETE - see below

Fixtures

Personal property that has become real property by having been permanently attached or adapted to real property.

Compensation

Principal is liable for paying broker or agent; client has to pay commission, when a buyer is willing to purchase property once closed

Emblements

The crops and other annual plantings considered to be personal property of the cultivator.

Explain the purpose of the Equal Credit Opportunity Act(1974) and amended in 1976, and provide at least three examples of criteria lenders can use to qualify a potential borrower.

Provide the individual the ability to secure loans and assistance when purchasing a home.Made credit available to all applicants. Doesn't not apply to seller financing. Cant discrimination against applicants. Only judged by financial and credit criteria; income, net worth, employment, credit rating, job stability.

Indeminification

Reimburse the broker if broker suffers financial injury during agency; if prospective buyer wants to sue broker or listing agent; the seller has liability to indeminify broker

Depreciated Value

The basis of a depreciable asset used to compute the taxable gain from its sale; the basis is acquisition cost plus capital improvements less accrued depreciation.

Steering

The channeling of home seekers to a particular area, or areas, on the basis of race, religion, country of origin, or other protected class either to maintain the homogeneity of an area, or to change the character of an area in order to create a speculative situation.

Insured Value

The cost of replacing a structure completely destroyed by an insured hazard.

Novation

The substitution or exchange of a new obligation or contract for an old one by the mutual agreement of the parties.

Cost

The total dollar expenditure for labor, materials, and other items related to construction.

Accounting

This fiduciary duty refers to financial accounting. ex) Agents must account for all funds they receive on behalf of their clients, Agents must also keep accurate records of all receipts and expenditures regarding their client's funds

List at least three actions that violate the federal fair housing laws.

To deny to sell or rent, on the making of a genuine offer or refuse to renegotiate the sale or rent, or, otherwise make unavailable or deny a dwelling to any person because of race, color, religion, sex, familial status, or national origin that is a discriminatory law practice additionally, to discriminate any persons for the terms and conditions or privileges of sale or rental..

Commingling

To mingle or mix, for example, a client' s funds in the broker ' s personal or general account.

obtaining a real estate salespersons license.

To satisfy the first sets of requirements to become a real estate agent, individuals must be: Eighteen years old A citizen or legal resident of the United States and reside in Texas Able to fulfill the agency's standards for integrity, honesty, and trustworthiness Next, the applicant needs to: Complete 180 hours of specific courses Submit an application Agree to a background check and have fingerprints collected Successfully complete the TREC exam Obtain the sponsorship of a licensed Texas real estate broker

Township squares

a section is an area nominally one square mile (2.6 square kilometers), containing 640 acres (260 hectares), with 36 sections making up one survey township on a rectangular grid.[1]

Seller disclosure notice

anything seller is aware of anything wrong with property; must disclose; everything should be listed which seller is aware of

Duties of TREC.

make rules and regulations, full force and effect of law, protect public, inspect/accredit education programs, advise with reference to laws administered, NOT mediate between disputes, NOT recommend licensees, conduct hearings/final decisions in contested cases, suspend/revoke licenses in violation of Act or rule

puffing

making exaggerating or unsubstantiated statements; making something look better than what it is

Datum

mean sea level at NY Harbor

Tax benefits of owning real property - at least two

mortgage interest payments(first and second home), property taxes, certain loan origination fees, loan discount points, mortgage insurance