FINAL FINAL REAL ESTATE EXAM REVIEW

Maryland Statute §8-105 states

"If the effect of any provision of a lease is to indemnify the landlord, hold the landlord harmless, or preclude or exonerate the landlord from any liability to the tenant, or to any other person, for any injury, loss, damage, or liability arising from any omission, fault, negligence, or other misconduct of the landlord on or about the leased premises or any elevators, stairways, hallways, or other appurtenances used in connection with them, and not within the exclusive control of the tenant, the provision is considered to be against public policy and void. An insurer may not claim a right of subrogation by reason of the invalidity of the provision."

What must sellers provide to buyers when their homes are built before 1978?

"Protect Your Family ... " lead safety pamphlet Licensees should also ensure buyers know they have a 10-day window to have a lead inspection or risk assessment performed, if they'd like.

Delivery and acceptance relies heavily on the _____ concept

"Time is of the essence" i.e. if a buyer submits an offer with an acceptance deadline and the seller fails to respond by that deadline, the offer is technically void; if a seller presents a counter-offer with an acceptance deadline and the buyer fails to respond by that deadline, the counter-offer is technically void.

"I understand why you want a buyer representation agreement," your buyer tells you. "But what's in it for me?" You answer:

"Without it, you are unrepresented." Without a buyer representation agreement, a buyer is unrepresented

The UETA defines an electronic signature as

"an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign."

In some states, listing licensees must make a reasonable effort to discover material and adverse material facts. In these states, licensees may be required to disclose what they

"know or should know" about a property

Penalties for antitrust violations may be as much as

$1 million and 10 years in prison; for corporations, penalties may be as much as $100 million.

You clients are looking at buying a $200,000 property with a 30-year loan at a 5% interest rate. How much would their principal and interest payment be per month? Plug in the numbers using the amortization chart in your resources see what the payment per month would be. Remember: The monthly payment multiplier is per $1,000 of the mortgage.

$1,073.64

How much money can you take out of a traditional IRA to buy/build a home?

$10,000even though you'll avoid the 10% early withdrawal penalty on the money, you'll still owe income tax on any amount you—and your spouse—withdraw ***you can only use this $10,000 from the IRA ONCE

Nico is buying a home for $625,000. His earnest money deposit is 8%. He wants to avoid private mortgage insurance (PMI) on his conventional loan, and he owes 5% in closing costs. How much money should he bring to closing?

$106,250 Conventional loans often require 20% down to avoid PMI ($125,000), and Nico has paid a $50,000 deposit ($625,000 x .08). Closing costs are $31,250 ($625,000 x .05). He needs $106,250 to close ([$125,000 - $50,000] + $31,250).

A seller wants to break even after the broker's commission of 5% and loan balance of $300,000 are paid. At what price must the house sell?

$315,789 In order to calculate this, start with 100% minus a 5% commission, which is 95% or .95. Take $300,000 and divide this amount by .95.Question 7 of 150

A buyer is purchasing a property for $400,000. His lender's loan-to-value ratio is 80%. How much is the loan origination fee?

$320,000 400,000/ .8 = 320,000

Phyllis bought a beach townhouse for $475,000 and put down $50,000 in earnest money. At closing, she paid $150,000, the balance of her intended down payment. The mortgage tax in the area is $.35 per $100 (or portion thereof). Calculate what Phyllis will pay for the mortgage tax.

$962.50 A mortgage recording tax is based on the loan amount. Phyllis will pay a mortgage tax amount of $962.50 on her loan amount ($275,000 x .0035).

MD Sales Contract: Notice to the Parties andProperty Tax Notice

'Notice to the Parties,' lets buyer know that neither agent nor broker is making any representations about specific aspects of the property Includes: 1) WATER quantity, quality, color, or taste of operating conditions of public and or private water systems 2) LOCATION, size, or operating condition of on-site sewage disposal systems 3) EXTENSIONS OF PUBLIC UTILITIES by local municipal authorities, existence or availability of public utilities and any assessments, fees, or costs for public utilities which might be imposed by local municipal authorities or private entities... 4) LOT SIZE, EXACT LOCATION (buyer may verify exact size and location through a survey at their expense) 5) EXISTING ZONIG OR PERMITTED USES OF PROP including whether any improvements to the property required permits and if so, whether such improvements were completed pursuant to permits issued and or whether any permits were issued/complied w (buyers should contact govt agency or engineer to verify zoning) 6) WHETHER PROPERLY LICENSED CONTRACTORS HAVE BEEN USED TO MAKE REPAIRS, renovations, and improvements to the prop -brokers/agents are not advising parties as to certain issues about surrounding soil, noise, planned land use, including soil quality, flood hazard areas, environmental laws, land use, easements, hazardous materials, lead - based paint, asbestos, or other related issues; information about these issues may be available from the appropriate governmental authorities-buyer and seller assume responsibility for selecting and compensating their vendors -protection of homeowners in foreclosure act notice - if mortgage on prop is at least 60 days in default on the date of contract acceptance, seller has right to rescind contract within 5 days after date of contract acceptance -includes Property Tax Notice - 60 Day Appeal

How would you calculate the transfer tax if it's $.35 per $1,000 of the sales price ($400,000)? 400,000 x .35 x 1,000(400,000 ÷ 1,000) x .35(400,000 ÷ 1,000) x 35400,000 ÷ 35 x 1,000

(400,000 ÷ 1,000) x .35Divide the sales price by 1,000 (400,000 ÷ 1000= 400), then multiply by .35 (400 x .35 = 140).

Special use permit (aka conditional use permit)

(aka conditional use permit): Allows use that's not normally permitted but is considered an "allowable" use within that zoning, such as a church within a residentially zoned area

Periodic estate (a type of leasehold estate)

(aka estate from period to period) is a lease that automatically renews at the end of its term (such as a month-to-month lease).

Livable square footage/area - GLA

(aka gross living area or GLA) shows the locations and dimensions of a prop may be defined differently depending on the purpose of the measurement. GLA may include stairways and closets.GLA may include finished attic or basement square footage if ceiling height is at least seven feet.

Contract discharge

(aka performance, execution) means that the parties have met all contract terms and are discharged from their contractual obligations

Non-agency relationships

(aka transactional or facilitator roles) are those in which the licensee doesn't represent the consumer in an agency capacity but instead provides non-agency assistance that doesn't require the licensee to exercise judgment or discretion. State statutes govern non-agent duties. oth facilitator and transaction broker roles can be different from state to state based on statutory law. In fact, some states may use other terms to describe a non-agency relationship between a licensee and consumer. When it comes to general (not state-specific) concepts, the terms "facilitator" and "transaction broker" are used interchangeably to describe a non-agency relationship.

Contract rescission

(cancellation) generally results from an operation of law, such as breach of contract, destruction of the object of the contract, etc. If the contract is rescinded, it is terminated, and the parties are legally returned to their position before there was a contract. For example, if one party breaches the agreement, the other may legally have the right to rescind the agreement.

Valuation

(formal appraisal) is the process of forming an opinion of a property's value.

Direct costs

(hard costs): labor and materials

Waste disposal sites

(landfills) are typically huge excavated areas where waste is buried underground. Federal, state, and local governments regulate waste site placement, construction, and content. Rural properties or properties that were once in rural areas but have been swallowed up by a metro area may also contain sites where property owners once dumped trash. Inactive waste sites are often capped (covered with soil). Ventilation pipes are placed from the base of the waste site through the cap to expel accumulated natural gases caused by decomposition of the waste. Test wells are installed and monitored to test for groundwater contamination.

MD Sales Contract: Wood Destroying InsectInspection

(termites) buyers have the right to obtain a written report from a Maryland-licensed pest control company stating that there's no evidence of an infestation or damage from a current or prior infestation from termites or other wood-destroying insects within three feet of the residence -buyer pays for inspection -includes the garage and any outbuildings that are within three feet of either the residence or the garage

Requirements relating to security deposits (pt. 2)

) The landlord must deposit each tenant's security deposit into an escrow account in federally insured bank or savings institution in Maryland within 30 days of its receipt. (In lieu of depositing these funds into an escrow account, a landlord may hold security deposits in bank-issued insured certificates of deposit, or in securities issued by the State of Maryland or the federal government.) The total of all monies must equal the total amount of all security deposits for which the landlord is liable. 2) Landlord-held security deposits are protected by law from the landlord's and tenant's creditors. 3) The landlord must return security deposits within 45 days of lease termination; on security deposits of $50 or more, the landlord must also pay the tenant simple interest on that deposit. 4) The specific interest rate varies, based on Maryland law. 5) The landlord must send the tenant notice of withholding the security deposit within 45 days of lease termination, which must include written statements of the actual amounts spent in the repair of damages.

Qualified loan characteristics

***MEETS THE ABILITY TO REPAY RULE prior to granting a loan, the lender has made a good faith, reasonable determination of a consumer's ability to repay the loan (lenders who do this are granted certain protections from liability) at bare minimum, lenders must consider the following factors: 1) current of reasonably expected income or assets 2) current employment status 3) the monthly payment on the covered transaction (mortgage) 4) the monthly payment on any simultaneous loan or mortgage on the same property 5) the monthly payment for mortgage-related obligations 6) current debt obligations, alimony and child support 7) the monthly debt-to-income ratio or residual income 8) credit history ***borrower's debt-to-income ratio is no more than 43%

General warranty deed

***MOST COMMON DEED (also called a full covenant and warranty deed) offers the greatest warranty to buyers and is the preferred type of deed in most situations Includes 6 covenants (promises): *Three covenants provide present warranties: - Covenant of Seisin - Covenant of Right to Convey - Covenant Against Encumbrances *Three covenants provide future warranties: - Covenant of Quiet Enjoyment - Covenant of Further Assurances - Covenant of Warranty or Warranty Forever

Material facts and defect disclosure (part 1)

**Material facts may have a different impact on different buyers depending on their needs, interests, and values -Adverse material facts -Latent defects The seller may not be required to make affirmative disclosure but may be compelled to give information if specifically asked; sellers may be required to disclose only known "adverse material facts." Even the disclosure of latent (not visible or easily detected in a cursory inspection) defects may or may not be required, depending on state law. Most jurisdictions have some sort of written disclosure or disclaimer form that sellers are required to complete and provide to buyers.

There are some exceptions or special circumstances allowing for the exclusion of some prospective renters that would otherwise be protected. For example:

**The Housing for Older Persons Act of 1995 specifically permits some housing facilities to discriminate based on familial status. This exemption permits senior housing facilities and communities to refuse to sell or rent homes to families with minor children. The facilities must meet certain requirements to be eligible for the exemption. **A private club that restricts its membership may rent or sell housing to its members only as long as it doesn't offer housing to the general public. **Religious organizations that sponsor housing may restrict residency to members of that organization as long as the religion doesn't discriminate against protected classes when allowing membership to the organization. ****The Mrs. Murphy exemption (if a dwelling has four or fewer rental units and one of the units is owner-occupied, the property is exempt from the federal Fair Housing Act if the owner doesn't run discriminatory advertising) doesn't apply if the property owner is represented by a real estate licensee.

Example of eminent domain

*For example, eminent domain could be used to take private property needed for a planned freeway project. -The government must fairly compensate private owners for property taken through eminent domain.

Implied Contract Laws

- A contract is a legally binding agreement. All parties to a contract must perform the contract terms or be considered in breach of contract. - The parties have a right to form and execute the contract free from undue influence (taking advantage of someone based on a relationship) or duress (wrongful pressure, coercion, or force involving a threat). - The parties should operate in good faith to execute the contract with no deceptive practices. - All parties must comply with contract terms in a timely manner (time is of the essence). - All parties have the right to a transaction that's free from fraud or misrepresentation.

ADA - property management

- ADA requirements impact any organization that provides goods or services to the general public. - ADA standards for accessible design (SAD) apply to new construction and remodeling of public accommodations and commercial buildings. - Community spaces in apartments built before 1990 must be ADA compliant. All public spaces must be fully accessible in apartments built after 1990.

The Office of Fair Housing and Equal Opportunity (OFHEO) states:

- Aggrieved parties, including licensees, can file fair housing complaints through FHEO for up to one year following the time the alleged discrimination occurred. Licensees may not file on behalf of another aggrieved party. - A fair housing specialist reviews the complaint, determines if a potential violation exists, and, if so, files a formal complaint. - The formal complaint may be referred to a local or state agency, or may be investigated by FHEO after HUD assigns investigators. - The investigation involves notifying the alleged violator and gathering evidence needed to determine whether a violation did occur. - If found guilty of federal fair housing violations, licensees may face lawsuits and payment of compensatory damages, attorney fees, or civil penalties. -Real estate licenses may also be subject to license suspension or revocation.

Contracts signed under the following circumstances are unenforceable:

- Contract is for an illegal purpose - One or more of the contract parties was under duress or undue influence - One or more of the contract parties committed misrepresentation - Contract terms are patently unfair or violate public policy - Contract contains errors

Three covenants provide present warranties: (General Warranty Deed)

- Covenant of Seisin - Covenant of Right to Convey - Covenant Against Encumbrances

Examples of predatory lending

- Encouraging debt- Making loans to unqualified buyers (consumers who can't really afford the loan) - Flipping loans (talking the consumer into refinancing over and over so they can charge fees) - Not disclosing all fees related to the loan - Not disclosing the true nature of the loan obligation - Including toxic loan features (e.g., terms exceeding 30 years, negative amortization, usurious interest rates) can occur in the subprime loan market

What tenants can do if their landlord fails to meet their obligations (according to URLTA):

- Make repairs and deduct the repair costs from rent (keep receipts and submit with the rent payment) - Find alternative temporary housing (if current housing lacks essential services, rent may be waived until the issue is resolved) - Sue to recover damages (may be done in serious cases) - Terminate the lease agreement

Responsibilities of an escrow/closing agent

- Properly manage any escrow funds, including distributing escrow funds (based on instructions from the parties or the court) in case of a dispute. - Manage transaction documents and instructions from the parties. - Perform (or delegate the performance of) the title search. - Work with lenders and other necessary third parties to get required information. - Manage contract instructions, broker commissions, and title policy. - Prepare closing documents and conduct the closing meeting. - Record required documents. - Verify funding of buyer's loan and arrange payoff of seller's loan. - Distribute funds. - File 1099-S forms as necessary.

Typical prorations include

- Property taxes and HOA dues - Fuel (propane or oil tank) - Water and sewer charges

Common fireplace and chimney problems

- be sure to ask sellers when the chimney/fireplace was last inspected/serviced to determine how well it functions/has been maintained - CREOSOTE -DRAFTS -CRACKS/SLOPING

Common plumbing problems

- clogged or leaking toilets- faulty hot water that leaks or does not warm up - older homes may have original galvanized steel pipes that can rust and reduce water pressure -soggy ground around the home or low water pressure could indicate waterline problem - leaking or blocked sink drains - water damage to ceilings or walls could indicate a burst pipe

What Recourse Does the Optionee Have If the Seller Does Breach the Contract?

-A court order for specific performance, which means a court forces the seller to sell the land to the buyer: Obviously, this remedy is only applicable if the optionee wants to exercise the option to purchase the property. -Monetary damages, including reimbursement of money the optionee has spent with regard to the deal (such as ordering a survey), or the optionee could be awarded the monetary difference between the price that optionee paid for other land and the price of the subject land of the option contract.

Before beginning the dispossession proceedings, the landlord must typically provide:

-A notice of one month for tenancies with a fixed term and no renewal provisions, or for renewable monthly tenancies. -A notice of one week for renewable weekly tenancies -A notice of three months for renewable yearly tenancies

Prohibited rental lease provisions in MD (9)

-A provision allowing the landlord's attorney to plead "guilty" on the tenant's behalf on a claim related to the lease, especially for the failure to pay rent -A provision in which the tenant agrees to waive the right to a trial by jury -A provision in which the tenant agrees to waive the tenant's legal rights or remedies against the landlord -A provision in which the tenant agrees to a shorter period for the landlord's notice to quit than is required by law, in the event that the tenant breaches the terms of the lease (A longer period is okay, provided that the parties agree to this.) -A provision allowing the landlord to charge a late-payment penalty for rent if that penalty is more than 5% of the amount of rent due for the period for which the rent is late -A provision that allows the landlord to take possession of the leased premises or any of the tenant's personal property, except where the lease has been terminated under the law, and the tenant has abandoned the personal property -A provision that allows the automatic renewal of the lease term for more than a month, if the tenant has not specifically signed or initialed that provision -A provision that requires the tenant to give the landlord more notice to terminate the tenancy than the landlord is required to give to the tenant for the same reason -Any exculpatory clause, which acts as a "hold harmless" clause, in which the effect is to release the landlord from any liability to the tenant for any loss, damage, or liability that arises due to the landlord's omission, fault, negligence, or other misconduct on or about the leased premises; this is addressed in detail in the Code of Maryland, §8-105

Requirements that apply to surety bonds

-A surety bond may only be used if the landlord and tenant agree to it. -The amount of the surety bond (or, if used in combination with a security deposit, the combined amount of the security deposit and surety bond) must not exceed the amount of two months' rent per dwelling unit. -The tenant must pay for the cost of the bond; that cost will not be returned to the tenant. -Surety bonds cannot earn interest (unlike security deposits). -A landlord cannot require that a tenant use a surety bond. -To protect the tenant, the law imposes several requirements for the landlord to use a surety bond; most of these requirements are similar to those imposed for the landlord to use a security deposit.

A landlord's duties—and by extension, the duties a property manager will perform—vary, depending on the property management agreement. However, unlike the landlord or owner, the property manager's license may be at stake. These general duties Include (PART 1):

-Abide by fair housing, civil rights, and Americans with Disabilities Act (ADA) laws. -Prepare and oversee budgets as outlined in the property management agreement. -Properly receive, account for, and disburse security deposits. -Properly account for prepaid rent and rent received. -Disclose names and addresses of those responsible for building management, rent collection, repairs, complaints, and issue notices as required by the state. -Ensure a unit is vacant for a new tenant. -Check vacated units for damage and cleanliness. -Keep the property safe, clean, and habitable. -Adhere to building codes. -Perform or arrange for necessary repairs. -Oversee common area maintenance. -Manage serviceability of all major systems. -Provide adequate notice to tenants regarding entry for repairs or maintenance (except in case of emergency). -Adhere to legal eviction processes when an eviction due to failure to pay rent or other breaches of the lease agreement becomes necessary.

Your client, Cassandra, asks you at what stage in her property ownership life cycle she'll be impacted by income tax issues. You tell her that it's likely that she'll be affected at _____________.

-Acquisition -Ownership -Reversion

A landlord's duties—and by extension, the duties a property manager will perform—vary, depending on the property management agreement. However, unlike the landlord or owner, the property manager's license may be at stake. These general duties Include (PART 2):

-All parties (landlord, property manager, and tenants) are obligated to abide by the lease terms. -Landlords may restrict a lessee's use of the premises to those activities for which the property is intended; i.e., prohibiting any use other than residential or a specific type of business. -Tenants are afforded the rights of quiet enjoyment and possession during the lease term. *Quiet enjoyment of the leased property means the right to use the property without undue interference from the landlord or others and the right to live in safety and comfort* -Tenants have the right to possess (use) the property for its legal intended purpose. -Neither the landlord nor the tenant is required to make improvements to the property. Tenants must receive the landlord's permission to make property improvements. -Residential tenants aren't required to perform maintenance but must maintain the property in the same condition in which they received it. Tenants should promptly report all maintenance or safety issues.A tenant, either commercial or residential, is generally responsible for those areas of the property under his direct control. In general, most states require that tenants: * Keep the property safe, clean, and sanitary. * Avoid damaging the property and report maintenance, infestation, or safety issues. * Allow landlords or maintenance staff to enter the property as required. * Pay rent and adhere to lease terms. * Obey local laws and regulations.

Qualities of Subprime Borrowers

-Bad credit or lack of credit history -Low income or poor debt-to-income ratios -Large loans relative to the securing property (high loan-to-value ratio) -Maxed out credit cards

Building Code standards

-Condition -Occupancy -Maintenance -Rehabilitation -Renewal of existing buildings

Three covenants provide future warranties: (General Warranty Deed)

-Covenant of Quiet Enjoyment - Covenant of Further Assurances - Covenant of Warranty or Warranty Forever

6 Covenants in a General Warranty Deed

-Covenant of Seisin -Covenant of Right to Convey -Covenant Against Encumbrances -Covenant of Quiet Enjoyment -Covenant of Further Assurances -Covenant of Warranty/Warranty Forever

Federal law requires that a landlord who is leasing a property that was built before 1978 must:

-Disclose any known lead-based paint hazards on the property to the tenant before the lease is final (as required under Title X, The Federal Residential Lead-Based Paint Hazard Reduction Act of 1992) -Give the tenant the EPA's "Protect Your Family From Lead in Your Home" pamphlet explaining the dangers of lead-based paint hazards ***it may be illegal for a landlord to require that a family disclose the blood lead levels of their children prior to the approval of their rental application, or to discriminate by refusing to rent to families with children or families with lead-poisoned children

Federal Housing Administration

-FHA doesn't lend money directly to homebuyers, but instead insures mortgages approved lenders provide so that low- to medium-income borrowers have access to more flexible and affordable mortgages -most required FHA standards are included in federal and local building codes -the primary difference between general building codes and FHA's minimum property standards relate to the durability of a dwelling's fixtures

Factors of borrower creditworthiness (4)

-Income -Two types of debt ratio -Employment history -Credit

Seller's agent duties

-Invest your time and energy in marketing and selling the property. -Inform the seller of the responsibility to make all required property condition disclosures. -Negotiate contract terms in accordance with the seller's wishes. -Ensure that the buyer's earnest money is deposited by the contracted deadline. -Communicate all offers and counter-offers to the seller.

Example of mortgage covenants: lender's promises

-Keep escrow funds (for prepaid taxes and insurance) safe in a lending institution. -Use the escrow funds to pay the escrow items.

Maryland law's definition of "serious or dangerous conditions" includes, but isn't limited to:

-Lack of heat, light, electricity, or hot or cold running water (unless those utilities were the tenant's responsibility, and were shut off because the tenant failed to pay the bill) -Lack of adequate sewage disposal facilities-Rodent infestation in two or more units -Lead paint hazards the landlord hasn't reduced -Structural defects that present serious threats to the tenants' physical safety -Any serious fire or health hazard

Major business points in the lease from the landlord's standpoint are the following:

-Lease rates.-Concessions (from the landlord's perspective, the fewer concessions, the better). -Work orders - if the work order (build-out) is within normal parameters (those that would appeal to many types of tenants), this is preferable to a highly customized layout. -Expenses and escalations. Escalations are rent increases. Generally a maximum annual increase is set. Obviously the landlord will want to minimize expenses and maximize escalations as much as possible. -Occupancy date (the sooner the tenant moves in, the sooner the landlord can begin collecting lease payments).-Firm term length: Longer leases are more favorable, particularly when rent escalations are included.

Marketable title vs. Insurable title

-Marketable has a higher standard ***BUT, there could be title defects that aren't discovered in even the most stringent title search. ***The safest decision for buyers is to receive marketable title that's backed by a title insurance policy.

Five basic tests to determine if an item is real or personal property: MARIA

-Method of annexation -Adaptability for use -Relationship of the parties -Intention in placing -Agreement of the parties

Marketable title

-NO CLOUDS -NO DEFECTS -NOT NECESSARILY A PERFECT TITLE, but a potential buyer would not object its current title

Requirements of a Valid Sale Contract

-Offer and acceptance -Consideration -Legally competent parties -Legal purpose -Made voluntarily

Example of mortgage covenants: buyer's promises

-Pay on the mortgage. -Pay property taxes. -Replenish escrow funds if they run low. -Pay charges and assessments against the property (so no liens can be placed, which would endanger the lender's interest in the property). -Keep the property in good condition (again, protecting the lender's collateral for the loan). -Maintain property and hazard insurance.

Tests to Determine Validity of Zoning Ordinances

-Power used to enact the change be exercised in a reasonable manner -Provisions of the zoning ordinance change be clear and specific -Ordinances are not discriminatory -Ordinances promote public health, safety, and general welfare under the police power concept -Ordinances apply to all property in a similar manner

Federal laws outline seven protected classes (Fair Housing):

-Race -color -religion -sex-disability -familial status -national origin Some courts have upheld that discrimination based on sexual identity is protected under the prohibition of discrimination based on sex.

2 types of Ground Leases

-Redeemable -Irredeemable

Facts about Subprime Lenders

-Refinanced loans represent a higher share of loans originated for subprime lenders, as compared to prime lenders. -Subprime lenders originate a larger share of their total loan originations in predominately black census tracts, as compared to prime lenders. -Subprime lenders are more likely to have terms like "consumer," "finance," and "acceptance" in their lender names. -Predatory lenders often work in the subprime market, so borrowers should research their options before making a loan commitment.

Lead paint based laws landlords MUST comply to, and properties must meet these requirements before renting out:

-Register the property with the Maryland Department of the Environment (MDE) and pay the registration fee -Renew the registration o or before December 31 each year -Give each tenant the Maryland Department of the Environment's "Lead Poisoning Prevention: Notice of Tenant's Rights" and the EPA's "Protect Your Family From Lead in Your Home" pamphlets -Perform full risk reduction measures (lead hazard treatments) in the property, get a Risk Reduction Certificate, and give each tenant a copy of that certificate before the tenant moves in applies to all publicly and privately owned residential dwellings—single or multiple units—leased for human habitation within Maryland

Types of zoning

-Residential -Commercial -Industrial -Vacant land -Agricultural -Public open space -Parklands -Recreation area -Institutional area -Incentive -Bulk

Buyer's agent duties

-Show them properties that meet their criteria and fall within their budget. -Ensure that they receive all required property condition disclosures from the seller. -Ensure that they understand the importance of due diligence, including a professional inspection of the property. -Review transaction documents with them, clarifying anything that could be confusing, without stepping outside the scope of your license (in other words, refer buyers to an attorney for interpreting any legal consequences or language). -Negotiate contract terms that are fair and agreeable to them.

Material facts and defect disclosure (part 4)

-Some states limit required property disclosure to adverse material facts physically located on the property; others specifically call for the disclosure of any material fact that would influence decisions about the property.

Material facts and defect disclosure (part 3)

-Some states make it the responsibility of the listing agent at the time of listing a property for sale to ask their clients about red flags in order to be in a position to know about material facts. -A licensee is required to disclose either known adverse material facts or all known material facts according to specific state laws. Disclosure should be made before contractual agreement takes place. -Information that must be disclosed by the licensee is anything that meets the MAAP standard: material, adverse, actually known, and related to physical condition.

If tenants fail to meet their obligations, landlords may be able to:

-Sue for unpaid rent -Terminate the lease agreement -Begin eviction proceedings

Exemptions to Federal Fair Housing Laws

-The Housing for Older Persons Act of 1995 -Owner-occupied buildings with no more than four units -Single-family housing sold or rented without a broker's assistance (if the owner doesn't own more than three properties at one time) -Housing operated by religious organizations or private clubs that limit occupancy to members

The "Notice to Buyer and Seller of Buyer's Rights and Seller's Obligations under Maryland's Single Family Residential Property Condition Disclosure Law" form begins by identifying the types of transactions to which the Maryland disclosure law does not apply, as follows:

-The initial sale of single-family residential property that has never been occupied, or for which a certificate of occupancy has been issued within one year before the parties enter into a contract of sale -Any transfer that is exempt from the transfer tax, except land installment contracts of sale and options to purchase real property -A sale by a lender or the lender's affiliate or subsidiary, where the property was acquired by foreclosure or deed in lieu of foreclosure -A sheriff's sale, tax sale, or sale by foreclosure, partition, or by a court-appointed trustee -A transfer by a fiduciary while administering a decedent's estate, guardianship, conservatorship, or trust -A transfer of single-family residential real property that the buyer is to demolish, or convert into a nonresidential use -A sale of unimproved real property (land without houses or buildings)

2 Types of time shares

-Time share ESTATE -Time share USE

MEAT of MD residential property disclosure statement form

-Water and sewer systems, including water supply problems, the source of household water, water treatment systems, and fire sprinkler systems -Insulation, including where it exists -Structural systems, including the roof, walls, floors, foundation, and any basement -Plumbing, electrical, heating, and air-conditioning systems -Infestation of wood-destroying insects, existing damage, or prior treatment/repairs from them -Exterior drainage on property, gutters, and downspouts -Land use matters, including any known zoning violations, non-conforming uses, setback requirements, and more -Hazardous or regulated materials, including asbestos, lead-based paint, radon, underground storage tanks, and licensed landfills -Whether the smoke detectors will provide an alarm in the event of a power outage -If the property relies on fossil fuel combustion for heat, ventilation, hot water, or clothes dryer operation, whether a carbon monoxide alarm is installed on the property -Whether the property is located in a flood zone, conservation area, wetland area, Chesapeake Bay Critical Area, or Designated Historic District -Any material defects, including latent defects, that affect the property's physical condition -Any homeowners association restrictions

Condominium declaration

-a description of the property, each unit, how the building is governed, and how dues are assessed -it also states who's responsible for repair and maintenance, and how ownership of the common areas is shared among unit owners -a declaration is recorded in the county public records, for anyone to view

Property tax key points

-a perpetual cost of home ownership -recurring expense that does;t go away when you pay off your mortgage

An entity applying for AMC registration may not be owned in whole or in part, directly or indirectly, by

-a person who has had a license or certificate to act as an appraiser refused, denied, canceled, revoked, suspended, or surrendered in any state -another entity that is owned by a person who has had a license or certificate to act as an appraiser refused, denied, canceled, revoked, suspended, or surrendered in any stateowners of 10% or more of an AMC must attach an Affidavit of Ownership form that includes contact information. Owners of 10% or more of an AMC must not have had a license or certificate to act as an appraiser refused, denied, canceled, revoked, suspended, or surrendered in any state unless it was later granted or reinstated

Home occupation

-a work-at-home situation -only the residents of the dwelling can conduct business there -the business purpose must be SECONDARY to the use of the dwelling -it also cannot change the character of the dwelling in any way that would violate the zoning ordinance i.e. no neon signs or hot air promotional balloons tied to your roof

Remedies available to parties when there's a breach of contract

-accept partial performance -rescind the contract unilaterally -sue for damages (monetary) -sue for specific performance -accept liquidated damages -mutually rescind the contract

Ministerial act

-act performed for a non-client in a transaction that doesn't involve discretion or the exercise of the licensee's own judgment -ministerial acts include processing paperwork, arranging a home inspection, or assisting with a loan application -ministerial acts assist in the completion of pre- and post-contract matters *must get consent from your client to do ministerial work for customers

Environmental hazards outside the home - GROUNDWATER CONTAMINATION

-activities near water may contaminate groundwater -leaking tanks or septic systems -mining, landfills or pesticides

Straight line loans

-also called straight line amortization or constant amortization the portion of the payment applied to the principal remains the same with each payment, and the interest amount varies according to the outstanding loan balance **this means that the amount of each payment changes, and the borrower makes higher installment payments at the BEGINNING of the loan when the loan balance is higher and more interest is due over time, the amount of each installment payment lowers the outstanding balance

Demographics (how it affects the market)

-an increase in the number of retirees in a given population would negatively impact the demand (and thus price) for large, single-family homes -a corresponding increase in demand for senior housing and senior condos would also be expected an influx of higher wage earners to a given area would increase the demand for higher priced housing, which would create a corresponding price increase for all housing an increase of first-time homebuyers would create a demand for affordable housing, increasing entry-level prices, which would have a trickle-up effect on those moving up

Pest infestation prevention/treatments

-annual inspections -remove moisture -hire professionals

Common buyer debts at closing

-appraisal and credit report fees -inspection costs -mortgage recording tax -title insurance -loan fees -attorney's fees

Prepayment plans

-biweekly plans -1/12 plan -lump sum plan -set dollar over plan -snowball

What four things may be covered by a home warranty that the builder provides?

-broken gate/fence -leaky faucet -crack in foundation -improperly hung door

How can you find out the level of radon in your home?

-buy a test kit -hire a professional -lab performs tests and reports findings

Residential zoning

-can be single or multi-family homes -multi-family can be anything from a duplex to a high-rise apartment building -includes accessory use, home occupation, and group homes

Radon can enter your home through

-chimney cracks -floor joists-water -soil tracked in from outside -floor drains -sump pumps -cracks in concrete -porous walls

Exterior Property Conditions/Issues

-damaged roofing could be evidence of storm damage -smoke damage or discoloration in the attic or near windows, chimneys, or other openings may be a sign of a previous fire -missing, cracked, or displaced shingles could be evidence of wind damage -sagging or discolored ceilings, uneven or soft floors, or a musty smell can indicate flood damage -water lines or discoloration on a building or wall can be evidence of flooding -standing water for 24+ hours after heavy rain could be evidence of drainage issues

Factors influencing value: DUST

-demand-utility-scarcity-transferability

Seller motivation: supply and demand

-determine the competitive environment -when there are more homes on the market, this drives prices down -when there are fewer houses on the market, sellers can demand more for their properties because there will be relatively higher demand than supply

How to tell whether permits have been pulled

-determine which jurisdiction has authority for permits in that area. It's probably either the local city or county office permits are usually cataloged by your street address contact the appropriate office and determine whether permits were pulled and whether they were closed (finalized)

Duties to customer (DRHP)

-disclosure-reasonable skill and care -honesty and fair dealing -prompt presentation of all written offers and counter offers

Terms of a listing agreement

-doesn't have to be on a specific form -must be written in unambiguous language -it must be signed by all parties to the agreement -you are responsible for selecting the correct forms for the appropriate geographic area and for the type of transaction -some agencies have their own listing agreements

Mortgage clauses

-due-on-sale/alienation -acceleration -defeasance -prepayment penalty -satisfaction of a mortgage (release)

Common buyer credits at closing include

-earnest money -mortgage amount -seller concessions (such as a seller paying some of the buyer's closing costs)

What affects a lending climate?

-economy -inflation -how many people can afford to borrow money -how many foreclosures there are in the area

Ownership terms

-estate in severalty -co-ownership

Lease terminations

-expiration -mutual agreement -eviction -self-help eviction -constructive eviction -abandonment

Real estate contracts are

-express -bilateral -valid -enforceable -executory/executed

Easements may be removed through

-express agreement -the dominant estate owner's abandonment -merger of estates -when there's no longer a need for the easement

Where is lead found?

-exterior/interior paint -drinking water -soil -dust -pipes

Licensee representing sellers have an obligation to ensure that a copy of MD Residential Property Disclosure and Disclaimer Statement form is:

-given to the seller to complete WITHOUT advice or participation of the licensee -checked to ensure all blanks are completed -made available to the buyer or buyer's agent

Simple contract

-has 3 years from a contract breach to sue the other party on a contract that is signed "under seal," a party to the contract has 12 years to sue the other party

Rebuttal Presumption

-higher priced loan because the lender assumes more risk -subprime loan (usually offered to consumers who have insufficient or marginal credit history) -lenders are presumed to have verified the borrower's ability to repay the loan -borrower in default must show income/assets were insufficient to meet living expenses at the time the loan was granted

Funds available for lending (how it affects the market)

-if there is excess supply of funds, but not that much demand, banks will generally lower interest rates to increase demand for their money -with lower interest rates and more buyers, you may see a domino effect causing upward pressure on home values

Homeowners Associations (HOAs)

-if you move into a lot within a development that has an HOA, you're automatically subject to certain rights, responsibilities, and obligations, including the obligation to pay the HOA's assessments -the restrictions can vary by development and HOA, but they can include architectural changes, design, color, landscaping, or appearance -they can dictate the type of number of vehicles you have at the property, or even how you use those vehicles -can also place restrictions on occupancy density -can dictate whether you're allowed to rent your property

Partnership

-includes a tenancy in common agreement -either of you may sell your interest, or your interest may be passed down to heirs -NO SURVIVORSHIP amongst tenants -you could also own as joint tenants, which WOULD HAVE SURVIVORSHIP amongst tenants; if you die your partner gets full ownership and vice versa - can be more than 2 people ***CAN BE GENERAL OR LIMITED PARTNERSHIPS

Debt reduction caveats

-increase savings -budget -get funds from sources other than your down payment -lenders like to see 2 months of cash reserves -pay down credit card balances wisely -use HELOCs wisely

Other market conditions that impact value

-inflation -unemployment rates -consumer confidence -taxes (property, income, sales) -funds available for lending

What factors does a FICO score consider?

-info in the credit reports within the 3 bureaus 1) payment history 2) amounts owed 3) length of credit history 4) new credit 5) types of credit in use

Who can terminate an agreement after a breach of contract?

-innocent party -guilty party with innocent (aggrieved) party's permission -both parties mutually

Where can asbestos be found?

-insulation -ceiling tiles -vinyl floor -wall and ceiling paint -insulation around hot water and steam pipes -rocks and soil -heating systems

Article 11

-is all about COMPETENCE -requires a specific type of report or different data set: "-Identification of the subject property -Date prepared -Defined value or price -Limiting conditions, including statements of purpose(s) and intended user(s) -Any present or contemplated interest, including the possibility of representing the seller/landlord or buyers/tenants -Basis for the opinion, including applicable market dataIf the opinion is not an appraisal, a statement to that effect

Types of Liens

-judgment -voluntary -involuntary -specific -general -property tax -income tax -mechanic's

Rent escrow law

-landlords make sure that all residential rental premises are free of defects, and do not pose any hazards to the occupants a tenant can pay the rent into an escrow account, where he tenant's rent is paid into an escrow account, where it is held until the landlord has completed the repairs

Benefits of LEASING a commercial space VS. BUYING

-leasing is more appealing - better cash flow -down payment of 10-30% is usually required when purchasing a space -business owners would rather not spend that money when it could be used in the business building ownership can also bring a set of headaches—responsibility for maintenance and operations, for instance—that divert the owner from the core business

Cooperative living

-look just like condos and are in similar buildings/on the same block -in attached residential buildings -non-profit cooperative corporation owns the land, buildings, and all rights and interests in the corporation -Individual shareholders (unit owners/residents) don't own real estate, and don't receive a deed for the unit; instead, they own CORPORATE SHARES, which are considered personal property -unlike shares in a stock, however, owners can't just divest themselves of their shares -NOT FEE SIMPLE OWNERSHIP -residents have a proprietary lease (lease from corporation) for units they occupy -unit owners have the right to use property, live there, and share benefits with other co-op owners -Residents usually pay a monthly or annual maintenance fee to the board of directors that manages the cooperative -OWNERS DON'T OWN REAL ESTATE - just shares in the corporation that owns the real estate

Criteria to determine an appraised price

-market value -age -square footage -location -recent sales -considered cost to replace property -mortgage value -investment value (sometimes) -lenders don't care about market value, they want to know MORTGAGE VALUE

Safe harbor status

-meets all criteria for a qualified mortgage -consumer can't later claim that the lender didn't comply with the ability to repay requirements -lower-priced loan because the lender assumes less risk-prime loan (as opposed to subprime) -offers borrower the great legal certainty that the lender is complying with the ability-to-pay rule (borrower can legally challenge a lender if that borrower believes the loan doesn't meet the definition of a qualified mortgage)

Examples of items to note in an inspection

-moisture intrusion -evidence of pest intrusion -safety or health hazards -roof condition -drainage issues inspections focus on structure, operating systems, and major elements that make up the home

Maryland Residential Property Disclosure and Disclaimer Statement Overview

-notice to seller and purchaser -latent defects -MD Residential Property Disclosure statement -MD Residential Property Disclaimer statement -sign form

Environmental hazards outside of the home - UNDERGROUND STORAGE TANKS

-older tanks may leak -piping or vents may stick out of ground -common in older homes, commercial, or industrial -residential use: may contain household heating oil -industrial use: may contain fuel or chemicals used to store heating oil/chemicals ; may be found in older homes or former industrial sites MAY LEAK and contaminate soil

When qualifying for a loan, there should be no toxic loan features, such as:

-payback terms longer than 30 years -negative amortization payment option (where principal amount increases) -interest-only payments -balloon payments-lender fees and points that total more than 3% of the loan (includes payments to all affiliates of the lender as well)

Reasonable ADA accommodations include

-permitting tenants to make reasonable disability-based modifications at the tenant's expense and deviating from policies that would interfere with the tenant's ability to enjoy the property. Common deviations include: - assigning a parking space close to the building when the parking policy is that there are no assigned spaces -permitting transfers to a ground-floor unit, adding grab bars -allowing assistance animals when there is a "no pets" policy.

How to spot an underground storage tank

-pipes going nowhere (or into an outer wall) -vents sticking out of ground

Recording mortgages

-priority of a lien (mortgage) is determined by the date of recording -first mortgage -second mortgage -subordination agreement

Closing the loan

-promissory note may be sold to another lender -it's held by lender until everything is "repaid in full"

Environmental location issues

-property being located in a flood zone -property is located in a conservation area -property is a registered historic building -property borders a wetland -zoning

Environmental hazards outside the home - WASTE DISPOSAL SITES

-property may have been used as dump site -landfill indicators: discolored soil, soft spots, mounds -commercial properties should be inspected -landfill gases contain carbon dioxide, methane volatile organic compounds, hazardous air pollutants, and odorous compounds that can affect health and the environment

3 other commercial lease types I may encounter (not as common)

-proprietary lease -ground lease -oil and gas lease

Police power - building codes

-purpose is to ensure a safe, properly functioning environment for the building's occupants -without them, unscrupulous builders and their subs might cut corners on safety -fire and building codes work together -states can't change national code requirements—they can only make them stricter -if there's a conflict, the stricter code prevails -if there's no state or local code to cover a situation, the national code applies

Exemptions from appraisal licensing and certification

-real estate brokers and salespersons in the ordinary practice of their business (e.g., for providing comparative market analyses) (CMAs may not be referred to as "appraisals," however) -public officer performing official duties -consultant who, as part of her consulting services, offers a valuation or analysis of real estate or standing timber (this valuation may not be referred to as an appraisal or used in connection with obtaining a loan) -an employee directed to value a property for his employer, provided the valuation is not referred to or used as an appraisal -a representative of a lender who is offering a valuation in connection with a financial transaction where an appraisal by a state-certified or state-licensed appraiser is not required

What's the safest decision for buyers to receive marketable title?

-receive marketable title but back it up with a title insurance policy

How to prepare for mortgage financing:

-reduce debt -improve credit -raise down payment -research first-time buyer programs

How are the home loan programs available through the NHF made possible?

-relationships w financial institutions -relationships with housing finance agencies -relationships with housing related entities

4 rent issues

-rent receipts -records of rent payments -failure to demand rent -failure to pay rent

Group homes

-residential facilities for unrelated individuals with physical, mental, or behavioral disabilities -there is no single legal definition of a group home -group homes also include adult foster homes, residential rehabilitation centers, etc-residents don't like the idea of a group home and take steps to try to prevent them -some residents take umbrage with group homes, saying that a single-family residence means a single family residence and to not throw a bunch of adults into the residence

Other property ownership rights

-right of profit -mortgage right

Common seller credits at closing

-sale price of the property -prepaid taxes or utilities

Categories of Lenders

-savings and loan -commercial banks -credit unions -mortgage bankers/brokers -some insurance companies -investment groups

Agents who rep the seller

-seller's agent -sub agent

Townhomes/townhouses

-share one or more walls with their neighbors, but with no neighbors above or below -it's bound to be quieter than a lot of condos or apartments -some townhomes are two levels with the garage at the side, but others are three levels and include a garage underneath -some townhomes don't have garages, but instead use assigned parking spaces-homeowners don't deal with yard work -homeowners' association covers big expenses such as roof repairs and exterior maintenance -HOA dues -the owner owns both the structure and the land

Common roof problems to look out for

-shingles -gutters -flashing -soffit -fascia

Condos

-single-family dwelling -but there's no yard work, no shoveling snow in the winter -that's because the building is secure, and the upkeep and maintenance of the common areas are somebody else's headache -low maintenance -good investments -can sublet your condo -OWNNERSHIP IN REAL PROPERTY -you share ownership with common areas but have ownership over your personal unit -FEE SIMPLE transactions-right to possess-includes a title search, deed transfer, and recording -can be owned in severalty, as joint tenancy, as tenants in common, or tenants by the entirety -the owner owns a unit within the structure, but no land -HOA dues as well

Radon is commonly found in

-soil -private wells

The following must be installed and in working order in a rental property before rented out:

-sprinkler systems must be installed in all ewly constructed hotel, dormitory, multi-family residential dwelling, townhouse, and lodging or rooming house, except if such structure is not serviced by public water -must install smoke detectors in all four- to nine-unit hotels and multi-family buildings built before 1975, and in all hotels and multi-family buildings with more than nine units Smoke detectors must be installed and maintained—by the occupant—for all one- to three-family dwellings built before 1975, with at least one smoke detector per floor, including the basement carbon monoxide detectors must be connected to a central system in each sleeping area -EXCEPTION: residential units that are powered solely with an electric power supply, and that do not have an attached garage, do not need to be fitted with these detectors

Market conditions include

-supply vs. demand -interest rates -other economic factors -demographics -market timing

Common electrical problems

-switches that are warm to the touch -lights that burn out frequently or dim when other items are used -burnt out or discolored outlets -faulty appliances -old or damaged circuit breaker panels

Market timing (how it affects the market)

-the amount of time properties remain on the market before they sell -determine how the area in which your client's property is located compares to the local market figures overall

Co-op boards

-the board is responsible for all corporate financial and policy decisions, but may choose to hire an outside management company -Co-op boards operate like most corporation boards-they must follow the rules established in the bylaws and the articles of incorporation, and they have to be good stewards of the shareholders' money and interests

Where assumption is possible, the following applies:

-the borrower will need to qualify for the assumption, and a down payment on the assumable amount may be required -if interest rates on the assumable loan are higher than prevailing market rates, it doesn't make sense to assume the loan.In addition to the assumed loan, the buyer will need to pay the seller for any equity in the property -this will need to be paid as a down payment or another loan-assumption fees of a few hundred dollars to more than a thousand dollars will apply -while the buyer may assume the debt, the lender may specify different terms, making any advantages to the assumption moot

Step 3 of valuation process: Gather the data

-this step takes the most time ***2 types of data: 1) General data: What's going on in the national economy, the region, the city, and the neighborhood? Demographics, income level, employers moving in or moving out, employment figures, cost of living, population growing or shrinking, all of that. 2) Specific data: The site, positioning on the site, improvements, etc .***3 approaches for valuation: 1) sales comparison 2) cost to reproduce 3) income and expense approach

Why is it important to record a deed?

-title can transfer once deed is recorded -recordation ensures the buyer's ownership (title) is protected -it provides constructive notice of the sale/purchase, which means that the record is publicly available to anyone who does a records search

Option contract required elements

-to be enforceable, there must be CONSIDERATION -it must state how long the OPTION PERIOD is -it must clearly state the sales price of the property -it must COMPLY WITH STATUTE OF FRAUDS, which means it must be: 1) Written 2) Signed by the optionor ***additionally, the option contract must clearly state any other terms or conditions that apply to the optionee's exercise of the option to purchase the property. **For example, the optionee might, under the contract terms, be required to exercise the option only by written notice to the optionor, or the optionor's attorney.

Permitting process

-to get a permit, you submit drawings and plans for your project to the building department -if they're approved, the department will issue a permit and you have to display this at the job site -while you're working on your project, expect to be visited by local government inspectors who will ensure you're doing the job right, which means you're complying with code -they'll come out, take a look at your permit, check out what you've just done, depending on their type of inspection— electrical, plumbing, whatever, and sign off on your permit, or request change -if you do a good job, your gold star is the certificate of occupancy

Items included in a site plan

-topography of the land -drainage -locations of streets/sidewalks -types/sizes of proposed buildings-open spaces -zoning

Common seller debts at closing

-transfer taxes -broker commission -attorney's fees -recording documents to clear title -existing mortgage satisfaction

HUD vs. Toone (2012) CASE STUDY

-transgender female moved into an RV park with another person landlord denied the woman's request to wear female clothing in common areas of the park, stating that there were children around the pool and it wasn't "the type of atmosphere we want to promote on private property." There was no existing dress code at the park. -SEX led to more discriminatory rules created by the landlordThe respondent was prohibited from discriminating because of sex against any person in any aspect of the sale or rental of a dwelling. As such, the respondent must pay monetary damages: a civil penalty of $16,000 against each complainant for its violation of the act and additional relief as may be appropriate

Police power - escheat

-when a property owner dies without having a will in place, the property is distributed to heirs in accordance with inheritance law but if no heirs or creditors can be found, the state can take the property through its powers of escheat if you don't want to lose your property without compensation, pay your taxes and don't die without a will

Some people become ground leaseholders after a purchase or inheritance. In such a case, the new ground leaseholder must:

-within 30 days, provide notice to the ground lease tenants of their right to redeem the property; and -invite the ground lease tenants to contact the new leaseholder for the details of redeeming the property

HUD vs. Keating (2012) CASE STUDY

-woman was pregnant and the landlord said that her giving birth to another child would be too many people in the APT-FAMILIAL STATUS The respondent was prohibited from further violations and must pay damages to compensate the complainant and her family for emotional distress, loss of housing, and inconvenience. The respondent was also charged with a civil penalty and ordered to pay additional relief.

The Maryland State of Frauds requires that all contracts for the transfer of any interest in real property that are for more than _____________ must be in writing and signed by the parties to the contract.

1 year

What three items does a contingency normally include?

1) A deadline for the removal of the condition 2) Who is responsible for the accompanying actions or costs involved 3) The actions necessary to remove the condition

Property management agreements should include:

1) A description of the property to be managed 2) The term of the agreement (definite beginning and ending dates, and provisions for termination) 3) A description of all of the manager's duties (and any restrictions on the manager's duties, if any) 4) A statement describing the owner's purpose (what the owner wants the manager to accomplish) 5) A description of the owner's responsibilities 6) An explanation of the manager's authority 7) Any reporting the manager owes (frequency, types of reports, and details to be included in reports; state property management rules and laws often dictate which of these will need to be included) 8) Compensation to be paid (management fee or compensation calculation) 9) An antitrust provision (as with other real estate-related compensation, compensation and fees are negotiable) 10) A statement of management costs the manager will pay (such as office rent, employees, etc.) vs. what the owner will pay 11) An equal opportunity statement (residential property management activities must comply with fair housing laws)

Deeds MUST BE IN writing and include:

1) A specifically named and identified legally competent grantor (possesses mental capacity and is of legal age). The grantor's name must be exactly the same throughout the deed. 2) A specifically named grantee who can be identified based on the name in the deed. 3) Act of conveyance (the granting clause such as "... does hereby bargain, grant, deed, and convey ...") which signifies the grantors intent to convey the property. 4) Named consideration, such as "for one dollar" or "for good and valuable consideration;" the consideration indicates that the grantor received something of value in exchange for the title. 5) Legal description 6) Any limitations or subject to clauses. This clause describes any interest that the grantor has reserved for him-/herself. It also describes deed restrictions and encumbrances that "run with the land." 7) Habendum clause, which defines the type of interest and rights the grantee will have. Not every deed needs the habendum clause, but if the interest is less than fee simple, this is generally where it is described. 8) Grantor's signature. 9) The signed deed is delivered to and accepted by the grantee. 10) Deeds are acknowledged in order to be suitable for recording. Acknowledgement means that the party signing (in the case of a deed, the grantor) has gone before a competent party (typically a notary) and indicated that the signature is their own and that they signed voluntarily.

Property taxes and special assessments

1) AD VALOREM TAXES - are based on the value of the real estate. General property taxes may pay for items such as schools, police, fire, etc. 2) SPECIAL ASSESSMENT TAXES - are imposed only on properties that benefit from the improvement, such as a tax to install a sewer line or city water line on one specific street. Other examples may include paved streets, curbs, sidewalks, or street lighting. Property tax liens take priority over all other property liens in most states.

Natural processes associated with water rights (5)

1) Accretion 2) Alluvion 3) Erosion 4) Avulsion 5) Reliction

Legal eviction processes when an eviction due to failure to pay rent or other breaches of the lease agreement becomes necessary (3 types of eviction):

1) Actual eviction 2) Constructive eviction 3) Self-help eviction

Fair Housing laws related to advertising

1) Advertising practices may not limit or attempt to limit access to properties or services on the basis of any protected class 2) Licensees should be careful not to discriminate in advertising. 3) This includes not using exclusive or discriminatory language or images, as well as not advertising exclusively in a publication that is likely to exclude people based on any protected class.

4 conditions of joint tenancy

1) All owners must have the same type of interest in the property 2) All must receive their title at the same time from the same source 3) All must have the same percentage of ownership 4) And all must have the right to undivided possession in the property

What 4 disclosures must lenders make according to the Truth in Lending Act?

1) Annual percentage rate 2) Total principal and interest to be paid toward the mortgage 3) Finance charge 4) Amount financed

Types of hazards

1) Asbestos 2) Lead 3) Radon 4) Mold 5) Chlorofluorocarbons (CFCs) 6) Formaldehyde 7) Polychlorinated biphenyls (PCBs) 8) Groundwater 9) Waste disposal sites

2 best sources for a down payment

1) Assistance programs 2) Savings

Agencies included in federally related transactions

1) Board of Governors of the Federal Reserve System 2) Federal Deposit Insurance Corporation (FDIC)

Sources of down payment funds

1) Buyer savings 2) Assistance programs (e.g. nonprofits such as churches and 3) synagogues) 4) Gifts from family or friends ("aged" is best) 5) Modify tax withholdings and put extra cash in savings 6) Borrow from a retirement account

How Can a Contract Be Terminated If the Optionor (Seller) Breaches the Agreement?

1) By refusing to sell to the optionee who properly exercises the option to buy the property 2) By cancelling the option early, without the optionee's consent 3) By selling the property to someone else, but not selling it with the breach: If the new owner weren't told about the existing option, then the optionee has no rights to purchase that land. **In this case, the original optionor is still in breach of the option contract. However, if the optionor sells the land with the option contract, then the new owner is bound by that option, and the optionee may enforce the option against the new owner of the property.

Electronic Record Keeping

1) Can't be erased or edited 2) Are made in the regular course of the licensee's business 3) Are easily identifiable 4) Use a record retention system that uses an indexing system that provides easy access, sufficient quality control, and chronological arrangement

Primary advertising technology issues are related to

1) Client security 2) Confidentialty

Primary mortgage market lenders

1) Commercial banks 2) Savings and loan associations 3) Credit unions 4) Mortgage brokers 5) Mortgage bankers

Economic Principles of Value

1) Conformity 2) Competition 3) Substitution 4) Contribution 5) Plottage 6) Assemblage 7) Regression 8) Progression 9) Anticipation

Types of Seller Disclosure Forms

1) Consent for Dual Agency 2) Maryland Residential Property Disclosure and Disclaimer Statement 3) Federal Lead-Based Paint Disclosure form (for properties built prior to 1978; Though there is nothing to disclose or sign here, buyer must also be provided with a copy of the EPA pamphlet, Protect Your Family From Lead in Your Home)

Other types of deeds include

1) Court-ordered deeds - such as the executor's deed (to convey property from a decedent's estate) 2) Sheriff's or Referee's deed - used to convey foreclosed property or property sold for tax liens

Potential Encumbrances of Title

1) Deed restriction 2) CC&Rs

What 2 funds can a roth IRA be used for?

1) Down payment 2) Closing costs

3 types of LEASEHOLD estates

1) ESTATE AT SUFFERANCE: The tenant stays after the right to possess has terminated. The tenant is known as a holdover tenant. 2) ESTATE AT WILL: The lease's duration is unknown when it's created. 3) ESTATE FOR YEARS: The lease terminates automatically when the specified period (day, week, month, year, etc.) ends. 4) PERIODIC ESTATE: The lease automatically renews at the end of each period specified in the lease.

2 Categories of Easements

1) Easement Appurtenant 2) Easement in Gross

Types of Easements (2)

1) Easement by Necessity 2) Easement by Prescription

Two Categories of Comparison when Conducting an Appraisal Sales/market Comparison

1) Elements - which look at physical and locational characteristics 2) Units - which look at the numbers

Types of Leasehold Estates (5)

1) Estate for years 2) Periodic estate 3) Estate at will 4) Estate at sufferance

Types of listing agreements

1) Exclusive agency 2) Exclusive right-to-sell agency 3) Open listing agreement

5 Basic Ways Agency Can Terminate

1) Expiration 2) Completion (performance) 3) By force of law 4) Through destruction of the property or death of the principal 5) By mutual agreement

Types of Agency Agreements

1) Express agency 2) Implied agency

3 causes of depreciation (cost approach)

1) External depreciation 2) Function obsolescence 3) Physical deterioration

2 main types of government mortgage loans

1) FHA-insured 2) VA-guaranteed

MD Commission has the authority to summarily order the suspension of a licensee's license if that licensee has done any or all of the following:

1) Failed to account promptly for any money held in trust; 2) Failed to display all records, books, and accounts of money held in trust to the Commission on demand; 3) Been convicted of a felony under US federal or any state law; or 4) Failed to disclose to the Commission that the licensee has been convicted of a felony under US federal or any state laws by the later of: within 10 days after the conviction or within 10 days following release from incarceration (resulting from the conviction)

The 2 categories of fee simple defeasible estates are

1) Fee simple determinable 2) Fee simple subject to condition subsequent

Types of fee simple estates

1) Fee simple/Fee absolute estate 2) Fee simple defeasible 3) Fee on condition (form of fee simple defeasible)

Appraisers will make adjustments for a number of factors, applying the elements of comparison in this specific order, including: Sales/market Comparison

1) Financing terms and cash equivalency Example A house that sold for $300,000 but for which the seller paid $12,000 toward customary buyers' closing costs has the equivalency of $288,000. 2) Conditions of sale 3) Market conditions at the time of contract and closing 4) Location 5) Physical characteristics

3 Types of Distressed Property Sales (Special Closing Processes)

1) Foreclosure 2) Short sale 3) REOs

Types of Estates/Ownership

1) Freehold estate 2) Leasehold estate 3) Life estate

3 most common deed types

1) General warranty 2) Special warranty 3) Quitclaim deeds

Elements of a DEED

1) Grantor name 2) Be executed by a competent grantor (usually the seller of the property), who is at least 18 years of age. Yes, a minor can transfer real property, but such a transfer would be voidable by the minor. 3) Grantee name (usually the buyer, but in any case, the new owner) 4) Be prepared in writing by an attorney or by one of the parties 5) A legal property description that is accurate and leaves no room for interpretation (for instance, 123 Elm Street would not work) and/or if it is a supplemental instrument, it must contain references to all prior recordings in the jurisdiction which the instrument supplements

There are 3 different methods for estimating value within the income approach:

1) Gross Rent Multiplier 2) Gross Income Multiplier 3) Capitalization

Two Debt Ratios (borrower creditworthiness)

1) Housing expense to income ratio 2) Total payment obligations to income ratio

The most common mortgage fraud schemes

1) Illegal property flipping 2) Loan flipping 3) Inflated appraisals 4) Silent second 5) Nominee loans/straw buyers 6) Equity skimming 7) False identity

Physical Land Characteristics (3)

1) Immobility 2) Indestructibility 3) Uniqueness/Nonhomogeneity

Cases where there is an option to purchase agreement or a land installment contract, the disclosure or disclaimer statement must be delivered to the purchaser(s) before the execution of the contract:

1) In the case of an option to purchase agreement, or a lease agreement containing an option to purchase provision 2) In the case of a land installment contract

Types of zoning (5)

1) Incentive zoning 2) Bulk zoning 3) Aesthetic zoning 4) Downzoning 5) Density zoning

What two things does the Fed regulate to maintain a balanced economy?

1) Interest rates 2) Available funds

Three things could you say to prospective clients who don't want to come in for a meeting

1) It is part of my service to meet with my buyers before we begin to work together. This avoids misunderstandings down the line. 2) It is my policy to meet before we begin working together. It will help me serve you better if we can put faces to our voices. 3) I have a short client questionnaire that will really help me drill down on your needs and will save us from looking at the wrong types of properties.

Owner financing (installment and land contract/contract for deed)

1) Land contract/contract for deed 2) Purchase money mortgage 3) Wrap around mortgage

2 Processes of foreclosure in MD

1) Lis pendens 2) Assent to foreclosure

Estimating value

1) MARKET VALUE is the most probable price a property will sell for in an open market if neither the buyer nor the seller is under duress. 2) VALUE is a property's objective worth and may not equal price or cost. 3) COST is the amount to recreate that property if it disappeared off the face of the earth today. 4) MARKET PRICE is the amount a buyer paid for a property and the seller accepted.

Common property manager duties can include:

1) Maintaining and delivering financial reports (such as the operating budget, cash flow reports, profit statements, and budget comparisons) 2) Renting properties (including researching the market and setting rental rates) 3) Marketing properties (such as performing advertising and promotional activities) 4) Screening and selecting tenants (again, residential property managers must be sure to comply with local, state, and federal fair housing laws) 5) Handling security deposits and collecting rent (following strict guidelines for these trust funds, avoiding conversion and commingling, and maintaining records of these funds) 6) Maintaining relations with tenants and handling tenant problems 7) Maintaining the property (through preventive, corrective, and routine maintenance) 8) Complying with local, state, and federal regulations

Many new construction homes come with home warranties backed by the builder. These may cover workmanship and materials, as well as systems and appliances: (new construction)

1) Major systems (heating, air, electric) - covered up to 2-5 years 2) Both the FHA and VA require new-home builders to provide a Warranty of Completion of Construction to protect buyers of newly built homes financed with FHA or VA loans.

3 Primary types of Legal Descriptions

1) Metes and bounds 2) Rectangular Government Survey System (RGSS) 3) Lot and block 4) Monument (sometimes used)

Zoning actions include (4)

1) Noncomforming use 2) Moratorium 3) Special use permit 4) Variance

Offers/Purchase Agreement names

1) Offer to purchase 2) Sales agreement 3) Contract of purchase and sale 4) Purchase agreement 5) Earnest money agreement 6) Agreement of sale

Common reports property managers must produce

1) Operating budget 2) Cash flow report 3) Profit and loss statement 4) Budget for comparison statement

2 Types of Land Characteristics

1) Physical 2) Economic

Income tax implications for homeowners include:

1) Potential deduction of points paid and prepaid interest at acquisition. 2) Potential deduction of property taxes, mortgage interest, and depreciation during the ownership phase. 3) Exclusion of some or all of the gain on the sale of a personal residence, depending on circumstances.

2 types of prorations

1) Prepaid 2) Accrued

Benefits of a land trust agreement

1) Privacy: property can be purchased and held in the name of the trustee; not made public 2) Ease of conveyance: doesn't require formality of a deed; beneficiary interest is considered personal property even if the property is conveyed in real property

To determine the investment value of a property, enders look at:

1) Property appraisal 2) Loan-to-value (LTV) ratio 3) Property type

Market cycles and other factors affecting property value

1) Reduced customer confidence - new buyers wary of purchasing and homeowners hesitant to trade up. 2) Higher unemployment - reduces the number of buyers, putting downward pressure on housing prices. 3) Higher taxes - decrease buying power 4) Lower taxes - increase buying power 5) Higher interest rates - reduce buyer affordability 6) Lower interest rates - increase buyer affordability. 7) Higher demand than supply - means buyers are competing for the same properties, driving prices up 8) Lower demand than supply - or fewer buyers, puts downward pressure on housing prices

Zoning classifications (8)

1) Residential 2) Commercial 3) Combination/mixed use 4) Industrial 5) Agricultural 6) Open space 7) Parkland 8) Recreation area

TRID Exemptions

1) Reverse mortgages 2) Home equity lines of credit (HELOCS) 3) Manufactured housing loans that aren't secured by real estate -other RESPA still otherwise applies 4) Most commercial and business loans are also exempt from RESPA, unless the loan is made to purchase or improve a rental property of one to four units.

Bundle of Rights/Property Ownership Rights

1) Right of Enjoyment 2) Right of Disposition 3) Right of Possession 4) Right of Control 5) Right of Exclusion

3 categories of water rights

1) Riparian 2) Littoral 3) Doctrine of Prior Appropriation

What two things does the Fed try to avoid?

1) Runaway inflation 2) Serious deflation

General steps in the Appraisal Process

1) STATE THE PROBLEM. This means to identify the specific property, the rights associated with it, the purpose of the appraisal, and what type of value needs to be estimated. 2) IDENTIFY DATA NEEDED. 3) GATHER AND ANALYZE DATA. Appraisers look at general city, neighborhood, demographic, and other data, as well as property-specific data. 4) DETERMINE HIGHEST AND BEST USE. What would the best use of the property be if there were no existing building on it? This matters more for commercial properties, though residential properties in a mixed-use neighborhood can be impacted. 5) ESTIMATE THE LAND VALUE(as if the land were vacant). 6) USE ONE OR MORE OF THE 3 APPROACHES TO VALUATION (sales comparison, cost, or income approach), depending on property type. 7) RECONCILE VALUES TO DETERMINE THE FINAL APPRAISED VALUE. This isn't an average of the various estimates calculated. Through a reconciliation (correlation) process, the most weight may be given to one or two of the comparable properties or even to the appraisal method used (sales comparison, income, or cost approach) and how well it matches the subject property. 8) DEVELOP AND DELIVER APPRAISAL REPORT.

Economic Land Characteristics (4)

1) Scarcity 2) Improvements 3) Permanence on Investment 4) Situs/Location/Area Preference

Specific duties of licensees (based on traditional duties)

1) Seek a sale at a price and on terms acceptable to the seller 2) Showing buyers properties that meet their criteria 3) Ensure that all offers and counter-offers are presented in a timely fashion 4) Ensure that clients receive copies of all signed documents

Two types of lease eviction

1) Self help 2) Constructive

5 common additional provisions added to sales contract

1) Specific closing and settlement instructions 2) Option to purchase a home warranty 3) The selection of a closing agent 4) Agreement on specific documents that will be provided 5) Transfer of warranties on built-in appliances and HVAC systems

Termination of co-ownership

1) Termination of joint tenancies 2) Termination of co-ownership by partition

Abatement and mitigation of hazardous waste

1) The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) 2) The Superfunds Amendments and Reauthorization Act (SARA)

Situations requiring appraisal by certified appraiser

1) The Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) of 1989 requires that appraisals performed in conjunction with federally related transactions must be completed by state-certified or licensed appraisers. Federally related transactions are not FHA insured or VA guaranteed and will not be sold to a GSE such as Fannie Mae or Freddie Mac. Residential properties valued at $400,000 or less are EXEMPT from federal appraisal requirements. 2) Purchases financed with a loan insured by the Federal Housing Administration (FHA) must be appraised by a state-licensed appraiser who's approved by the U.S. Department of Housing and Urban Development 3) Purchases financed with a loan guaranteed by the U.S. Department of Veterans Affairs (VA) must be appraised by a VA certified, state-licensed appraiser. 4) Key mortgage industry players, including Fannie Mae, Freddie Mac, and the Federal Housing Finance Agency (FHFA) implemented

In what two ways is the Inclusions/Exclusions section used?

1) The buyer can indicate what items he wants the seller to leave behind that the seller would normally remove 2) The seller can indicate items that he wants to remove that would normally remain

Security Instrument Clauses

1) The defeasance clause orders the lender or trustee to immediately release full title to the borrower once the loan is paid in full. The lender is then prevented from pursuing additional payment after the payoff. 2) An acceleration clause makes the entire debt due immediately if there's borrower default. Before a foreclosure occurs, lenders must send an Acceleration Letter to the borrower (often not sent until two to three months in default). 3) A due-on-sale clause (also known as alienation clause) requires the borrower to repay the loan when transferring ownership to another. 4) A pre-payment penalty clause permits the lender to charge a specified amount for interest lost when a borrower sells or pays off a loan early. Prepayment penalties are rare in today's mortgage market.

Maryland Residential Property Disclaimer Statement

1) The disclaimer statement is only a single page in length. It, too, begins with a "Notice to Owners," but this one tells the owners to only sign this statement if they've chosen to sell the property without making any representations and warranties about its condition, except what's provided in the sales contract and the listing of latent defects. 2) Next, the disclaimer states that, except for latent defects, the sellers make no representations or warranties as to the real property's or its improvements' condition, and the purchaser will be receiving the real property as-is, with all defects, including latent defects, that may exist, except as otherwise provided in the sales contract. Finally, the sellers must complete the statement regarding any latent defects about which they actually know. 3) Once the form is completed, the owners must sign, verifying that they've carefully examined the statement, and that they've been informed of their rights under Section 10-702. Beneath the owners' signature lines, there are lines for the purchasers to sign, acknowledging that they've received this statement and have been informed of their rights under Section 10-702.

Both the grantee and grantor must sign in the following property transfers:

1) The property belongs to a minor 2) The transfer of property involves a corporate buyer or seller

Financing and lending process application though closing

1) The residential loan process begins with the potential borrower's loan application. 2) Lenders may prequalify borrowers based on borrower-provided (not lender-verified) information. 3) Lenders may preapprove borrowers based on verified loan application information. 4) During loan processing, the lender collects information about the borrower's income and credit. 5) Lenders also review the property's value (as the collateral for the mortgage loan), typically through the appraisal process. 6) When a borrower has an accepted offer on a property, the full application process begins. The lender will continue the loan processing steps, likely asking for additional buyer documentation as necessary. The borrower will also select the loan product (FHA, VA, conventional, etc.) and financing terms desired. 7) A loan processor verifies that correct information and documentation are in place, including W-2 forms or other income-verifying documents and property-related information, such as appraisals and title reports. 8) When application materials are complete, the lender submits the loan package to underwriting. 9) The underwriter analyzes the loan documentation and recommends approval, denial, or a conditional approval pending additional information from the buyer. 10) When the loan is approved, the buyer is cleared to go to closing.

When the seller and buyer sign and date the disclosure or disclaimer statement, what three things are they acknowledging?

1) The seller is acknowledging that the statement that has been provided is complete and accurate as of the date it is signed. 2) The buyer is acknowledging receipt of the statement. 3) Both are acknowledging that they have been informed of their rights under Section 10-702 of the Maryland Real Property Article.

Maryland law states that the following are effective only if the deed is executed and recorded:

1) The transfer of a fee or freehold estate 2) Any estate for a term of more than seven years (including deeds and leases for more than seven years)

Common Sales Contract Clauses include: (7)

1) Time is of the essence 2) Choice of law 3) Indemnification 4) Contingency 5) Arbitration 6) Mediation 7) Statute of limitations

Other Types of VALUE

1) Value in use 2) Assessed value 3) Mortgage value 4) Insured value 5) Investment value

3 possible seller responses to buyers' sales contract

1) accept 2) counter-offer 3) reject

2 Duties that survive agency termination

1) accounting 2) confidentiality: price negotiations, motivation for transaction, reasons for involvement in transaction, negotiating strategy

Types of Loans (19)

1) adjustable rate loan 2) amortization loan 3) balloon payment 4) fixed-rate loan 5) graduated mortgage 6) growing equity mortgage 7) pledged account mortgage 8) straight line mortgage (constant amortization) 9) straight mortgage/term mortgage (interest only) 10) home equity loan) 11) reverse mortgage 12) bridge loan 13) purchase money mortgage1 4) wrap around mortgage 15) land contract1 6) construction mortgage 17) blanket mortgage 18) shared equity mortgage 19) package mortgage

MD Statute of Frauds specifically requires the following:

1) all contracts for the transfer of any interest in real property for more than one year must be in writing 2) oral transfers of interest in real property for more than one year convey only a tenancy at will. Under a tenancy at will, Maryland state laws require a 30-day notice to vacate the property. However, some Maryland counties require longer notice be provided 3) leases for one year or less that are NOT prepared by a real estate licensee do not have to be in writing to be enforceable; this time frame is measured beginning on the date the lease is entered into, not on the date the lessee's occupancy begins 4) The Maryland Real Estate Commission's regulations require that anytime a licensee helps to prepare an agreement, it must be put into signed, written form

An investment is a security if it is:

1) an investment of money 2) a group enterprise 3) intended to make a profit, and that profit is solely derived from the management effort of others

9 Principles of Value

1) anticipation 2) competition 3) conformity 4) contribution 5) highest and best use 6) plottage 7) regression 8) progression 9) substitution

What are the two PMI cancellation scenarios?

1) automatically when the borrower's equity reaches 22% of the original property value2) by request when the borrower's equity reaches 20% of the original property value this can occur automatically when the loan balance hits 78% or by borrower request when the loan balance hits 80% equity. Borrowers should, however, contact their lender for questions about cancelling PMI

When considering loan risk, which two items will lenders consider in equal measure?

1) borrower 2) property

What 2 things do lenders look for before lending out their money?

1) borrower's creditworthiness 2) the property itself and whether it offers solid value

Process of assumption

1) buyer asks seller if seller will consider an assumption, and what the loan balance is 2) buyer requests an application from the seller's lender-without that lender's approval, the buyer can't assume the loan -the buyer should ask for an assumption package 3) buyer gathers financial information (W-2s, tax forms, pay stubs, an accounting of assets, etc.) 4) buyer completes loan application 5) buyer signs assumption agreement (between seller and buyer)-this may also happen before applying with the lender-buyer should also sign a release from liability for the seller -without this in place, the seller is still liable for the mortgage in the event the buyer fails to make payments 6) loan closes

Types of agents at brokerages

1) consumer 2) customer 3) principal 4) client 5) fiduciary 6) agent 7) universal agent 8) special agent (limited agent) 9) general agent 10) single agency 11) dual agency 12) sub-agency

2 categories of mortgage loans

1) conventional 2) government

8 Types of Loans

1) conventional loans 2) FHA insured loans 3) VA guaranteed loans 4) USDA/rural loan programs 5) amortized loans 6) adjustable-rate mortgage loans 7) bridge loans 8) owner financing (installment and land contract/contract for deed)

When physical depreciation and functional obsolescence are present, appraiser determines if situation is curable or incurable

1) curable depreciation: refers to an item that can be repaired or replaced, and where the cost to cure the item is less than or the same as the anticipated increase in the property's value after the item is cured -i.e. deferred maintenance such a painting or repair of faucets 2) incurable depreciation: items not practical to correct -i.e. furnace or a roof that hasn't reached the end of its economic life

2 sides to Debt-to-Income Ratio

1) debt: decrease it without deleting your reserves or down payment savings 2) income: increase it and be able to show longevity

TRID disclosures apply to

1) financed home purchases 2) most loan assumptions 3) refinances 4) home improvement loans

Mortgage makeup

1) first section of the mortgage identifies the parties and dates the agreement-it also references the note that may either be part of the instrument or a separate instrument 2) legal description is given of the property 3) borrower's assurance to the lender that there are no known or undisclosed encumbrances on the title 4) next, there are covenants between the borrower and the lender

4 techniques in income approach

1) gross rent multiplier 2) gross income multiplier 3) direct capitalization 4) yield capitalization

Other less common types of commercial leases

1) ground lease 2) loft lease 3) lease purchase 4) sale and leaseback 5) sub-surface leasing rights

2 situations in which an owner may reject a tenant based on sex, marital status, gender identity, and/or sexual orientation

1) if the building has four or fewer rental units, and the owner lives in one of those units as the owner's principal residence 2) if the owner is renting out a room(s) in the owner's own single-family principal residence **owners may never discriminate against anyone based on that person's race, color, religion, familial status, national origin, or disability

5 essential elements to a valid real estate contract

1) legally competent parties 2) offer and acceptance 3) legal purpose 4) consideration 5) consent

Duties agents can't provide to both parties in a dual agency

1) loyalty 2) disclosure

4 Most Common Commercial Lease Types

1) net 2) gross 3) percentage 4) graduated

3 circumstances that require the cost approach - appraisals

1) new construction - residential and commercial 2) unique properties - high energy houses. residential acreage with excess land, high dollar houses with many amenities 3) special purpose commercial uses - such as hospitals, manufacturing plants, hotels, etc NOT USED IN CONDO AND CO-OP PROPERTIES OR OLDER PROPERTIES, bc it's hard to estimate depreciation

How can buyers improve their credit score

1) obtain their credit report, check for errors 2) if errors are found, dispute them with a credit bureau to find source of error

Antitrust violations

1) price fixing 2) tie-in arrangements 3) market allocation 4) group boycotting 5) per-se antitrust violation

Financing Instruments

1) promissory note 2) security instruments (accompanied to a promissory note) 3) deed of trust 4) mortgage 5) security intrustment clauses

Financing instrument documents

1) promissory note 2) security instrument clauses

Priority of liens

1) property tax lien 2) mechanic's liens (if work began before the mortgage lien was recorded) 3) first mortgage lien 4) all other liens by date of recording.

Two qualified mortgage types

1) qualified mortgage with safe harbor status 2) qualified mortgage with rebuttable presumption

Two focuses of a planning board

1) quality of life - parks, schools, open spaces, and clean air 2) livability - you can afford to be there—to buy a home or run a business

10 reasons you NEED A TRUST

1) saves money 2) avoids probate 3) retain control of your assets 4) eliminate time to settle estate 5) trust remains private 6) no govt forms to file 7) trust is low-maintenance 8) trust can act as a prenup agreement 9) designate special gifts 10) estate tax is eliminated/reduced

2 requirements when filing a report with the IRS

1) seller must pay for any filing 2) the buyer and seller are required to provide all necessary info to the settlement officer who will file a report with the IRS

Business types that own real estate (6)

1) sole proprietorship 2) partnership 3) corporation 4) limited liability company (LLCs) and limited liability partnership (LLPs) 5) syndicates 6) joint ventures

Requirements for contract validity

1) statute of frauds 2) offer and acceptance 3) consideration 4) legally competent parties 5) legal purpose 6) voluntary

What three items are required to be eligible for a VA-guaranteed loan?

1) suitable credit 2) sufficient income 3) valid certificate of eligibility

3 Net Expenses

1) taxes 2) insurance 3) maintenance

Examples of Co-Ownership

1) tenancy in common 2) joint tenancy 3) tenancy by the entirety

For there to be a use variance, the owner has to prove:

1) that the economic benefit or use of the property is eliminated due to the zoning-this claim would have to be accompanied by financial evidence of some sort 2) that the hardship is unique to this property and not something endemic to the neighborhood 3) that the requested variance will not alter the essential character of the neighborhood 4) that the hardship that is being claimed is not self-inflicted

Ways agency terminates in MD (10)

1) the client's goals were met during term of agency agreement (sale completed) 2) the specified term in the agency agreement expires 3) the client and agent mutually agree to dissolve the relationship 4) the client or agent becomes incapacitated or dies. This type of termination is related to operation of the law and is more complex than we cover here. If the issue arises, consult with licensed legal counsel. 5) the property is destroyed for any reason, making it unmarketable 6) the client or broker files for bankruptcy 7) the client revokes the agreement prior to the agreement's expiration date. 8) clients can revoke an agency relationship with no penalty if they lack confidence in the agency or believe the agency to be untrustworthy. If a client revokes the agreement for no specific reason or without good cause, the client may be in breach of contract. 9) the agent renounces the agreement prior to the agreement's expiration date. 10) the client elects not to consent to dual agency

Prior commitments (that need to still be fulfilled after the termination of an agency)

1) the client, agent, or both parties may be responsible for damages or liabilities incurred during the agency relationship 2) the client may be required to pay a commission to the agent even if the client revokes the agency relationship. For instance, if a seller terminates an agency agreement by withdrawing the property from the market prior to the expiration of the listing agreement, the agent may still be entitled to compensation 3) the agent may need to follow through on agency-related actions for the client until the agency relationship terminates

Requirements relating to security deposits

1) the deposit must not be more than an amount equal to two months' rent (a tenant who is overcharged has the right to recover up to three times the extra amount charged). 2) The landlord must give the tenant a receipt for the security deposit, regardless of how that deposit is paid. This receipt is required to be included in the written lease. (A landlord who does not comply with this requirement must pay the tenant $25.) 3) The lease or security deposit receipt must explain a tenant's right to receive a written list of all damages to the rental property upon the tenant's written request for it within 15 days of occupancy.

Terminating easements (5 ways)

1) the easement owner may release the easement if it is no longer needed 2) a dominant and servient land could be merged into one parce l3) the easement owner could abandon the easement 4) the necessity of an easement by necessity could be terminated (e.g., by building a new access road for the dominant tenement) 5) an easement with a deadline could expire

Drawbacks of tax abatement programs

1) the neighborhoods that qualify may be less desirable 2) after the abatement ends, your housing expense will jump significantly 3) if you fall behind on your property tax, the abatement is likely to be cancelled

2 options if you're unable to obtain financing and seller has received written notice

1) the sellers can—at their discretion—send buyer a written notice that the contract is null and void 2) buyers can send the sellers written notice, including evidence of their inability to obtain financing, and then buyer can declare the contract null and void

Parts of the "Notice to Buyer and Seller of Buyer's Rights and Seller's Obligations under Maryland's Single Family Residential Property Condition Disclosure Law" form

1) types of transactions to which the MD disclosure law does not apply 2) second part explains what is required under the disclosure law, under Section 10-702 of the Maryland Code, and addresses the specific topics that are covered in the disclosure and disclaimer statement 3) right of rescission 4) nforms buyers that their rights under Section 10-702 of the Maryland Code may not be waived in the sales contract, and any attempted waiver is void 5) property condition disclosure 6) parties should seek professional advice regarding property

For area variances, it has to be determined that the variance would be:

1) undesirable or a detriment to the nearby properties (we decided it would not be) 2) achieved by any other means (it could not be) 3) substantial (we decided it was close enough—it wasn't like the lot were 5,000 square feet) 4) detrimental to the physical or environmental conditions in the neighborhood (we decided it would not be)

How to determine cost

1) use published indexes and tables to source the data, such as Marshall & Swift Tables™ 2) the cost is then adjusted by its loss in value due to depreciation from all causes 3) accurate site value is required as a separate figure (the sales comparison approach is used most commonly to estimate this value)

9 states that have community property rights

1)Arizona 2)California 3)Idaho 4)Louisiana 5)Nevada 6)New Mexico 7)Texas 8)Washington 9)Wisconsin

How much of a home's value do property taxes account for?

1-3%

ARMs typically have a lower interest rate for an initial period of

1-several years

Types of Co-Ownership

1. tenancy in common 2. joint tenancy 3. tenancy by the entirety

How many days after the sale contract is accepted that a risk inspection for lead based paint must be conducted?

10 days

FSA (Farm Service Agency) loans can be up to

100% of the purchase price, set for 33 years (38 for very low-income borrowers), and provide loan guarantees for up to 95% of the loss of principal and interest.

Financing and lending process application though closing (Cont.)

11) Prior to closing, the lender and closing officer confer so the closing agent can include necessary loan information on the buyer's settlement sheet. 12) Immediately prior to closing, the lender may run additional credit and employment reviews to verify employment and determine if the borrower has incurred additional debt. 13) Most lenders require that borrowers maintain current fire and hazard insurance policies and that the policy name the lender as a co-insured party. 14) If the property is located in a designated flood zone, the lender will require that borrowers maintain flood insurance. 15) At closing, the buyer signs all loan and real estate documents. The lender funds the loan when the seller has conveyed the property. 16) Lender funds and buyer funds (the original earnest money deposit and the down payment) combine to pay off the seller's existing mortgage loan, pay the buyer's closing expenses, and provide the balance due to the seller. - Keep in mind, if a mortgaged property is being sold, the alienation (or due-on-sale) clause gives the lender (so the seller's lender for the existing mortgage) the right to declare the entire amount due (in which case the funds are used to pay off the existing mortgage) or allowing the buyer to assume the loan. A buyer's assumption of the seller's existing loan is something that must be written into the contract and the buyer would still need to be approved by the lender's underwriting process. Under an assumption arrangement, the seller's name is still on the promissory note, and the buyer promises the seller (in writing, of course) to pay the loan. *** In the event of default, the lender looks to both the seller and buyer.

Reba is selling a three unit property and makes an offer of sale to the tenants. Within how many days must the tenants submit a statement of interest to exercise their right to purchase?

15 days if the tenants are collectively exercising the right, an additional seven days if tenants are acting individually

1 hectare =

2.47 acres

Conventional loans often require ____% down to avoid ____

20%, PMI

Housing debt-to-income ratio

25% to 28% if a potential buyer falls within these ranges, he may qualify for a home loan, depending on credit score and other factors

Jane is purchasing a property for $310,000 and plans to finance $250,000. What is the loan-to-value ratio? (Round to the nearest percentage.)

250,000 / 310,000 =81%

How many parties does a deed of trust include?

3 1) the trustor (borrower) 2) the beneficiary (the lender) 3) trustee (an independent third party who holds the deed of trust).

Statute of limitations for a Maryland real estate contract record keeping is ____ years?

3 you, your broker, your former client, or any other transaction party could be sued within that time frame and you'll need to be able to cough up the corresponding paperwork faster than you can say "subpoena"

How many parties does a deed of trust involve?

3 borrower, lender, and trustee

Lenders must provide the CD minimum _____ days before closing

3 days

Buyer must respond to seller in writing with buyer's decision (to move forward) within (pest infestation damages)

3 days from receipt of seller's notification of seller's decision

What is a standard listing term?

3 months

If a wronged party wishes to pursue a remedy for a breach of contract in the courts, Maryland requires the party to initiate legal action within

3 years

Recent sales you're comparing in a CMA should have been sold in the last ______ months as they will carry more weight

3-6 months A couple of months' time can make a big pricing difference if the market is heating up or cooling down.

FHA borrowers must pay a minimum down payment of

3.5%

FHA loans require a minimum down payment of

3.5%

Lenders NEED to respond to all loan applications within

30 days

Credit scores range from

300-850

A lot measuring three-fourths of an acre is for sale. How many square feet is this?

32,670

Total debt-to-income ratio

33% to 36% if a potential buyer falls within these ranges, he may qualify for a home loan, depending on credit score and other factors

Payment history is X% of your credit score

35%

Statutory year

360 days

Actual/calendar year

365 days

How many principal meridian lines in the U.S are there?

37

1 acre =

43,560 square feet

Mortgage is approved based on maximum monthly charges in the first ___ years

5

Within how many days before settlement or occupancy does the buyer have to make a final inspection of the property?

5 days

How long must a roth IRA be open for before you can withdraw funds for a down payment?

5 years

How long must brokers maintain all trust money records?

5 years starting on the date of closing or 5 years after listing date if not closed

How long are licensees and brokers required to keep copies of the real estate forms on file?

5 years!!!!

1 mile =

5,280 feet

FHA borrowers must have a minimum credit score of

580 to qualify for a 3.5% down payment; borrowers with credit scores between 500 and 579 may have to put down as much as 10%.

Beamed ceilings must be at LEAST

6 feet 4 inches under the beam

Every township is ____ miles or ____ square miles

6 miles, 36 square miles

How long is an MCCR member's term?

6 years

How long is the term of a MD Commission of rights member?

6 years

Elements of a DEED (cont.)

6) The actual consideration (the compensation given for the transfer of the property) or be accompanied by an affidavit that states the actual amountGranting clause (e.g., "hereby conveys ...") 7) Any exceptions to the deed 8) Acknowledgement of a witness 9) Delivery and acceptance of the deed (acceptance by the grantee is assumed) 10) Special local documentary requirements apply by county (check with local county for details)

Jared has a 70/30 split with his brokerage firm, and his firm has a 50/50 split with cooperating brokerages. Last month, he earned $12,239.50 in commissions from his home sales, which totaled $538,000. What is the brokerage's commission rate?

6.5% Jared's take of $12,239.50 is 70% of the commission, so his firm's commission is $12,239.50 ÷ .70 = $17,485. Multiply that amount by two to get the total commission the firm grossed: $34,970. Divide that amount by the total sales amount to find the brokerage's commission rate: $34,970 ÷ $538,000 = 0.065, or 6.5%.

Conventional loans typically require credit scores of

620 and above

1 square mile =

640 acres

Ceiling height must be at LEAST

7 FEET

Private mortgage insurance is required on conventional loans where the loan-to-value ratio is in excess of

80%

How many does must someone serve in the military to be approved for a VA loan?

81 days active duty or 3 months during war

How many commission members does the MCCR have?

9 -all appointed by the governor -serve 6 year terms -meet once per month

1 square yard =

9 square feet

Alistair bought a townhouse for $285,900. He got a 90% loan and the lender charged him 3-1/2 discount points. How much did Alistair pay in discount points?

9,005.85 The sales price is $285,900, and 90% of that (aka our loan amount) is $257,310. The discount amount is 3-1/2 points, (.035) multiplied by $257,310 = $9,005.85.

Lenders lock in interest rates of no more than _____ days

90 days If the closing process takes more than 90 days, borrowers may face an interest rate change.

How long does it take to complete an uncontested foreclosure?

90-100 days

What is a riskier loan: 90/10 or 80/20?

90/10 bc the LTVR is higher

Buyer Beware

= caveat emptor Other states subscribe to a "buyer beware" (aka caveat emptor) doctrine and are not considered full disclosure states. In these states, the seller makes no representations about property conditions, and the burden is on the buyer to perform due diligence.

A contract under seal

= specialty contract is created when a statement in the body of the contract says that it was made "under seal," and/or when the words "witness my seal" appears above the signature block

Example of Calculating the Interest Amount

A $70,000 loan has an interest rate of 6.5%. Remember, 6.5% is the same as .065. Multiply these numbers together ($70,000 and .065) and you get an annual interest amount of $4,550. To see what that would be on a monthly basis, just divide the annual amount by 12 and that will give you the monthly interest amount: $4,550 ÷ 12 = $379.17.

What can help establish the boundary lines of a property and may help identify both encroachments and easements?

A SURVEY

Situation in which the borrower may be required to pay for PMI:

A borrower is purchasing a $100,000 home using a conventional loan of $90,000 with a $10,000 down payment

Bridge/Swing loans

A bridge or swing loan is a temporary, short-term loan that provides funds until buyers can obtain permanent financing. Some borrowers who qualify financially may obtain a bridge loan when their current home hasn't yet sold but they are ready to purchase a new home. The bridge loan basically covers the down payment. A bridge loan is typically secured by the borrower's existing home. Lenders may structure the bridge loan so that borrowers make only interest payments during the loan term and then pay off the entire loan when the previous home sale closes.

Example of high supply, low demand in the market

A building glut in Gray Oaks means there are hundreds of homes on the market. There are relatively few buyers, so sellers must compete on price. This has the effect of lowering overall pricing in Gray Oaks.

Discount Point Example

A buyer purchases a $350,000 property and gets a $315,000 loan. Two discount points is 2% × $315,000 = $6,300.

Bart just toured his fourth patio home of the day. To help him remember what he saw in each one, he's making notes about décor, updates, and inclusions that will stay with the property. Which of the following items is NOT considered personal property and would therefore stay with a home?

A chandelier in the foyer

Cloud on title

A cloud on title (title defect) is any encumbrances, such as a lien or inheritance claim, that prevents the seller from providing clear, marketable title.

Selecting comparables in a CMA

A comparable property (called a comparable or comp) is one that's quite similar to the subject property in terms of size, style, condition, number of rooms, and location. Properties used as comps should also be arm's length transactions, which means that the parties to the sale are unrelated and that no one is under duress or pressure to complete the sale. -review active, expired, and sold listings

What is a contract clause?

A contract clause is a section or provision within a contract that addresses a specific point of law or aspect of the agreement.

What is a voidable contract?

A contract that may be cancelled by one or more parties

What is a void contract?

A contract with no legal force or effect

Nonconforming Loan (conventional loan)

A conventional loan THAT FAILS to meet Fannie Mae and Freddie Mac guidelines for credit scores, LTV, and/or loan amount is considered non-conforming. Lenders may still fund non-conforming loans but will usually charge a higher interest rate and/or require mortgage insurance to minimize risk.

Regression

A decline in value due to the decline in value of neighboring properties

What is the purpose of A DEED when title passes?

A deed is a written and signed legal instrument of conveyance. The deed is the document that legally transfers (conveys) title to real property from the owner (grantor) to the new owner (grantee). Title officially changes hands when the grantor delivers the deed to the grantee and the grantee accepts it.

Deed Poll

A deed signed only by the grantor must be delivered to and accepted by grantee for it to be effective when these are accomplished, the title is transferred from the grantor to the grantee

Freehold estate

A freehold estate is an interest in real property where the owner's possession of the property isn't of fixed duration, as it would be in a lease (leasehold estate).

Taxation

A governmental police power that permits it to meet the need for public works by funding through a stable source of income that shares the burden among many citizens

Wrap Around Mortgage

A junior mortgage which provides an owner additional capital without refinancing the first mortgage. (The original mortgage is not disturbed)

Example of land measurement (2)

A land parcel is 7,500 s.f. It's 75 feet deep. What is the frontage? 7,500 ÷ 75 = 100. The property is 75 feet deep by 100 feet long (frontage).

Improvements (economic land characteristic)

A land's value can be positively or negatively affected by the improvements made on it.

Your client asks what a latent defect is. What is your response?

A latent defect is a material fact that would not necessarily be found with a careful inspection and poses a potential health or safety hazard to occupants of the property.

Option to buy

A lease with option to buy consists of 2 DIFFERENT AGREEMENTS between the parties. 1) One is a lease 2) The other is an option to purchase The lessor/optionor and lessee/optionee agree to specific terms that will govern the sales contract in the event the optionee decides to exercise the right to purchase during the term of the option. The optionor is obligated to sell if the optionee decides to exercise the right to buy, but the optionee is not obligated to buy. The lease is a bilateral contract, and the option is an example of a unilateral contract.

What describes a situation of self-dealing?

A licensee sells her own property without informing all parties that she's licensed

According to the Code of Ethics, which of these statements is most accurate when accepting compensation?

A licensee shall not accept compensation from more than one party to a transaction without the full knowledge and consent of all parties.

Fiduciary responsibilities

A licensee's fiduciary responsibilities (duties) include obedience, loyalty, disclosure, confidentiality, accounting, and reasonable skill and care (OLD CAR). Fiduciary duties are owed to clients, but not customers. Non-agents don't have fiduciary duties. 1) obedience 2) disclosure 3) confidentialty 4) accounting 5) reasonable skill and care 6) loyalty

Voluntary lien

A lien placed on property with the knowledge and consent of the property owner.

Example of an adjustable rate mortgage calculation

A loan has a margin of 2% and is based on an index, which is at 3%. The loan's initial interest rate is 5%. The loan's cap structure is 2/2/5. At the first adjustment, the index is at 4%, so the new interest rate is 6%. This is a 1% adjustment, below the initial cap of 2%. At the next adjustment, the index is at 8%, which would put the new rate at 10%. This is more than the periodic cap of 2%, so the adjustment is set at the capped rate of 2% more than the previous rate, making it 8%. Since the lifetime cap of the loan is 5%, at no time may the loan's interest rate rise above 10% (5% more than the initial rate of 5%). because the index may fluctuate up or down, mortgage payments may go up or down over time

Purchase Money Mortgage

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

Mortgage

A mortgage involves two parties: the lender and the borrower. - States that use a mortgage as the security instrument are referred to as lien theory states because the mortgage places a lien against the property it secures. - The lender holds the lien, and the borrower holds legal title to the property. - If foreclosure becomes necessary, the lender may have to use a judicial foreclosure process; e.g., the lender must go through the courts to foreclose. - If the mortgage document includes a power of sale clause, however, the lender may use a non-judicial foreclosure process. - Mortgage lenders issue a satisfaction or release of mortgage to acknowledge the borrower's loan payoff. - Lenders also mark the promissory note "paid" and return it to the borrower

Example of land measurement (1)

A parcel of land is three-quarters of a mile by 2,800 feet. The price is $2,500 per acre. How much is the land worth? 5,280 × .75 (3/4 of a mile) = 3,960 feet 3,960 x 2,800 feet, or 11,088,000 square feet 11,088,000 ÷ 43,560 (square feet in an acre) = 254.55 acres $2,500 × 254.55 = $636,375

Monument (not a commonly used legal description)

A permanent physical marker used in a metes-and-bounds description that can be man-made or natural. It may be a tree, creek, rock, or a stake placed in the ground

Lot and block (legal description)

A plat with the lot descriptions is recorded in the land records. Lot-and-block divisions include streets, access roads, and other important features. Begin with a reference to either metes and bounds or RGSS, then divide the land into lots with numerical descriptions of each parcel.

Property Manager's Fiduciary Duties

A property manager is usually considered a general agent. As a general agent and fiduciary for the owner, a property manager is authorized to perform all day-to-day property management-related duties on the owner's behalf. Common fiduciary duties performed by property managers include (OLD CAR): -obedience -loyalty -disclosure -confidentiality -accounting -reasonable skill and care

Property tax example

A property sells for $350,000 with a transfer tax rate of .03%. Convert .03% to a decimal (.03 ÷ 100 = .0003). Multiply sales price by rate: $350,000 × .0003 = $105. A property sells for $225,000 with a transfer tax rate of $1.25 per $1,000 of the sales price. ($225,000 ÷ 1,000) × $1.25 = $281.25.

Situs/Location/ Area preference (economic land characteristic)

A property's value depends in large part on its location.

Competition

A property's value is determined in part based on what else is available.

Conformity

A property's value is determined in part by how well it conforms to its surrounding area (how similar it is to other properties in the neighborhood).

Substitution

A reasonable person will not pay more for a property if a comparable one can be had for less.

Right-of-way and Easements

A right of way provides a pass-through to other property but doesn't allow usage of the land.

For existing homes, either buyers or sellers may purchase home warranties:

A seller might offer a warranty because they protect sellers from any claims after closing if appliances or systems need to be fixed.

Negligent Misrepresentation

A statement made by a person who should have known it to be false; becomes fraud when it's intentional.

Leases for rental of 5+ dwellings must include

A statement that the premises will be available in a reasonably safe, habitable condition (or, if that's not the agreement, then a statement concerning the condition of the premises) The landlord's and tenant's specific obligations regarding the heat, gas, electricity, water, and repair of the premises

Misrepresentation

A statement, photo, or ad that a reasonable buyer would consider to be reliable. Misrepresentations, even when unintentional, can lead to a voidable contract.Licensees must use caution to avoid misrepresentations in advertising.

Avulsion (water process)

A sudden loss of land by a swift, large-scale change in water flow

Title abstract

A title abstract (abstract of title) is a SUMMARY OF THE PROPERTY'S TITLE HISTORY. Attorneys and title companies who prepare abstracts research public records as well as other information to identify the title history. Few states require an abstract of title.

Made Voluntarily (Requirement for contract validity)

A voluntary contract means the parties entered into the agreement voluntarily. Mistakes, misrepresentation, fraud, duress, or undue influence create a situation in which the consent is not real.

Lamar closes on his new home next week. It's a 37-year-old split level, so his agent asked if he's interested in purchasing a home warranty. "Why would I need a warranty?" he wondered. "Didn't the home inspection identify all of the issues?" What's the agent's best response to Lamar's question?

A warranty covers things the inspection didn't address, like appliances, as well as structural issues that occur WITHIN THE FIRST YEAR

Agency is created solely through the

AGREEMENT, not compensation

Key mortgage industry players, including Fannie Mae, Freddie Mac, and the Federal Housing Finance Agency (FHFA) implemented the Appraiser Independence Requirements (AIR) in 2010.

AIR's intent is to ensure that appraisals reflect an accurate, unbiased property value by requiring that appraisers be: -Certified or licensed in the state in which the appraised property is located -Knowledgeable about the local real estate market -Qualified to appraise the subject property -AIR also prohibits lenders from attempting to influence or coerce an appraiser with respect to the opinion of value.

Who sets the standards for measuring structures?

ANSI

When is the seller required to deliver possession of property to buyer?

AT SETTLEMENT

Martha made an offer to buy Drake's home, and he accepted it. Under the terms of the agreement, Martha was supposed to make an earnest money deposit of $10,000, but she only put down $5,000. Drake accepted the lesser deposit, and the sale was ultimately finalized. This is an example of ______.

Accepting partial performance

Square feet =

Acres × 43,560 = square feet

Implied agency

Actions of the parties may create IMPLIED AGNECY, which is to be avoided. All agency agreements should be in writing.

Mortgage bankers (lender)

Actually do the lending they have in-house loan processors and underwriters i.e. Wells Fargo Mortgage -mortgage bankers can close pretty quickly because they fund their own loans, but their choice of offerings is narrow because it's limited to their own products

Snowball prepayment plan

After paying off another debt, for instance a student loan debt or a car payment, put that amount toward principal each month.You won't feel the hit in your budget because you are already used to paying this amount. i.e. Your mortgage is $1200. Your car payment is $200. You sell or pay off your car. Make mortgage payments of $1400, with the extra $200 going toward principal.

When is an earnest money check deposited?

After purchase offer is accepted by seller

Ground lease amendments (of 2007 & 2012)

All ground leaseholders are required to register their leases with the State Department of Assessments and Taxation (SDAT). Registered leases are listed online in a registry of properties that are subject to ground leases. All previously irredeemable residential ground leases became automatically subject to redemption as of September 30, 2010. However, any leaseholders who wanted to keep their ground leases preserved as irredeemable were able to do so by recording their intentions through filing a notice of intent to preserve irredeemability by the deadline of September 30, 2010. All leaseholders who did this received a 10-year extension on the leases. Every 10 years, leaseholders who want to retain this irredeemable status must file their renewal notices within six months before the expiration of the 10-year period. If the leaseholder fails to renew this intention in time, then the land automatically becomes subject to redemption by the ground tenant. To redeem—or buy out—the lot of land, the ground tenant must capitalize the ground rent at 6%.

Graduated lease (commercial)

Allows specific rent increases at future dates. It's a TYPE OF VARIABLE LEASE that permits an increase/decrease in rent during the lease period. The increase can be based on a number of factors, such as changes to appraised value, index, or time. Graduated leases are often used for longer terms than other common lease types. Tenants may be able to get into a lease at a lower cost that gradually increases over time. This can be beneficial for new businesses. The lease also provides protection to property owners, who can increase rent as property values or costs increase over time.

The Federal Reserve System

Also called the Fed, divides the U.S. into 12 federal reserve districts, and each district is served by a district federal reserve bank. All national banks have to be part of the Fed and must purchase stock in the district banks

Offers/purchase agreements general requirements

Although the form used to make the offer may be titled sales contract, it is not a contract but an offer that isn't a contract until the parties come to acceptance.

Per Diem interest formula

Amount of annual interest ÷ number of days in a year (360 in a statutory year; 365 in a calendar year) = per diem interest.

Down payment/amount to be financed

Amount of down payment + earnest money deposit + loan amount being assumed or obtained = sale price Down payment is calculated as a percentage the sales price based on the lender required LTV Sales price - down payment - earnest money deposit = amount to be financed

Discount point formula

Amount paid for points = loan amount × number of points (followed by a % sign).

Adjustable-rate mortgage loans (ARM)

An adjustable-rate mortgages (ARM) is one in which the interest rate fluctuates based on some selected economic index. Rate adjustments are based on index rates, such as London Interbank Offered Rate (LIBOR), from which lenders determine their margins and the rate charged per adjustment. ARMs typically have a lower interest rate for an initial period of one to several years.

Amortized Loans

An amortized loan is one in which the loan principal is paid down over the life of the loan. 1) Fully amortized loan 2) Partially amortized loan

Capitalization rate or cap rate

An annual rate of return from an income-producing property. Used by appraisers to estimate value of rent generating properties. Used by investors to compare one investment to another. Determine cap rate: Divide net operating income by value (or sales price) (I ÷ V = R). Capitalization is always based on net annual operating income numbers.

Appraisal

An appraisal is a formal opinion of value that a real estate appraiser assigns, based on supportable evidence, for a specific purpose, party, and property, as of a specific date, and in accordance with Uniform Standards of Professional Appraisal Practice (USPAP).

Inflated appraisals

An appraiser secretly works with a borrower and provides a misleading appraisal report to the lender

Jeung gave her agent an earnest money check, and the seller accepted Jeung's offer. What will happen to the check now?

An escrow agent will hold the funds in a trust account until the agreement's terms are satisfied

Plottage

An increase in value that occurs by combining adjacent parcels of land into a single parcel

Casey signed a contract form offering a purchase price of $309,000 on Karen's home and gave his agent a $5,000 earnest money deposit. Karen's out of town, though, and her agent can't reach her. At this point what does Casey have?

An offer

______ is a standardized measure for interest rates and other costs of the loan.

Annual percentage rate

What principle is the income approach based upon?

Anticipation

What is Antitrust?

Antitrust involves businesses that conspire to restrict competition or trade, resulting in diminished choices or higher prices (or both) for the consumer.

Fixture

Anything permanently attached to the land or to permanent structures on the land are part of real property and are included (conveyed) with a sale of real property unless the parties negotiate differently.

What do appraisers do?

Appraisers estimate the value of a building or a piece of land. They may specialize in either commercial or residential property. Appraisers typically appraise a property before it's sold, mortgaged, or taxed.

Adjustments to comparable properties Sales/market Comparison

Appraisers make adjustments to the comparable properties' sales prices in order to make the appraised value reflect the differences in features, location, condition, and even timing of the sale. So if the subject property has 2,400 square feet of living space and the comparable has 2,600 square feet, the appraiser will SUBTRACT from the comparable property's sales price to reflect the value of the 200-square-foot difference.

When is the Cost Approach most commonly used?

Appraisers use and rely on this approach when the property is unique and is NOT BEING USED TO GENERATE RENTAL INCOME. A movie theater, hospital, church, or school fall into this category. It is also used in newly constructed or unique high-value homes.

Land measurements

Are stated in terms of square feet, square miles, perimeter, frontage foot, linear miles, acres, and hectares.

Area of a rectangle

Area of rectangle = length × width (6 × 4)

Area of a square

Area of square = side × side (4 × 4)

Area of a triangle

Area of triangle = 1/2 base length × height

Improvements

Artificial attachments to land that include things such as fencing, buildings, and walkways

Regulation of environmental hazards

As a licensee, you don't have to know how to investigate environmental issues, but should know how, where, and when to seek expert assistance. Licensees should be aware of a variety of hazardous substances that might be present in or on properties they show, list, or sell.

Licensees and sellers are required to disclose

As known easements and encroachments are material facts

Ground lease amendments (of 2007 & 2012) (pt 2)

As of January 22, 2007, the creation of new irredeemable ground leases on residential properties (intended for the use of four or fewer dwellings) is prohibited. All residential ground leases for terms of 15 years or longer can be redeemed at any time that the tenant chooses to do so, with the tenant providing 30 days' notice to the leaseholder. The sum of the redemption depends on the original date the lease was created (leases created between April 6, 1888, and July 1, 1982, may be redeemed at 6 percent, and leases created on or after July 2, 1982, may be redeemed at 12 percent), a sum that the parties agree upon at the time of redemption, or if a lower redemption sum is included in the lease, that sum. The leaseholder may not eject a ground tenant from the property and its improvements if the tenant fails to pay the ground rent. Instead, the leaseholder must provide written notice to the ground tenant, and then obtain a lien against that tenant if the rent is unpaid for six months. This applies regardless of any provisions in the lease that might allow for the leaseholder's reentry onto the property. There is a three-year limitation on the amount of back rent that can be collected on ground rent that is late.

Landlords, ADA, and assistance animals

Assistance animals are not considered pets, and landlords may not charge a pet deposit or additional rent due to the presence of an assistance animal.

Adesha made an offer on a three-bedroom townhouse in Hanover on April 5. The sellers accepted her offer on April 6, and all signatures were finalized by April 7. Adesha still hasn't received the property disclosure/disclaimer statement. Until when can Adesha rescind the contract without penalty?

At any time before she receives the disclosure/disclaimer statement If they don't, and the parties still enter into the contract, the buyer may rescind the contract any time before receiving the disclosure/disclaimer form.

Owners may reject occupancy by families with children under 18 if:

At least 80% of the occupied units have at least one adult age 55 or older. All residents are required to be age 62 or older Other Exceptions Owners may refuse to sell/rent to individuals convicted of manufacturing/selling illegal drugs. Owners aren't required to rent to families when it would exceed legal occupancy limits. Religious organizations and private clubs may limit occupancy to members. If rental housing involves a shared kitchen or bath, gender preference may be allowed.

Sunshine Act

At the federal level, the Sunshine Act is part of the Freedom of Information Act (FOIA). Each state usually has its own version of FOIA or a sunshine law. (public has the right to know about urban/zoning planning)

Easement Appurtenant (category of easements)

Attached to a specific parcel of land, transfers ("runs") with the land, and gives the "dominant tenement" rights to use adjoining property/servient tenement

How does the FTC determine the severity of an advertising penalty?

BASED ON SEVERITY 1) Cease-and-desist order (which becomes effective immediately) 2) Corrective advertising 3) Civil penalties 4) Consumer and other monetary remedies 5) Informational remedies

Common foundation issues

BASEMENT CRACKS/LEAKS - or other signs of basement moisture could indicate foundation problems INTERIOR - misaligned doors and windows, cracked sheetrock EXTERIOR - separation around garage door

Exclusive right-to-sell agency

BEST ONE rovides the listing agent with a commission no matter who brings the buyer to the transaction. Exclusive right-to-sell agreements include definite start and end dates. Other licensees can't represent the buyer during the term of an exclusive right-to-represent agreement.

Survivorship in tenancy by the entirety

BETWEEN SPOUSES ONLY; when one spouse dies, the other gets inheritance

Who holds equitable title with a deed of trust?

BORROWERS, which means that they have possessory rights (can live in and use the property) and have the right to obtain legal title once they've paid the loan off.

Commercial banks (lender)

Bank of America, Chase, Citigroup, and the like—make consumer and business loans, offer investment products, and take deposits

What deed is most often used in foreclosure sales?

Bargain and Sale Deed

Montgomery County additional lease requirements

Before a tenant executes any lease of an initial term of 125 days or more, if the property being leased is within a condominium or development, the owner of that rental property must provide the tenant with—to the extent possible—a copy of the applicable rules, declaration, and recorded covenants and restrictions (CC&Rs) that dictate how the property may be used. A lease for such property must include a statement that the tenant must comply with any such conditions. A landlord may not prohibit a tenant, who is an elderly person (defined as 60 years old or older), from keeping a household pet, unless specifically prohibited in writing at the time occupancy took place. The landlord can limit the number, type, and size of such animals, however.

Determine net operating income:

Begin with potential gross income, asking if every unit were rented for a full year, what could the owner expect to collect in rent? Subtract the probable loss as a result of projected vacancy from potential gross income to estimate effective gross income. Subtract operating expenses from effective gross income to arrive at net operating income.

Metes and bounds example

Beginning at a stake and stones about 30 feet from the center of the brook that runs across the road South westerly from the dwelling house of the late Jebediah Smith now occupied by the widow Callie Thornton and in the west line of the highway leading by the dwelling house now occupied by the widow Callie Thornton ...

Which of these incentives would BE LEGAL according to Maryland license law?

Ben runs a "Spring into Summer" ad offering sellers a reduced commission rate for the next three months. Licensees can't use contests or offer prizes to influence someone to enter into a brokerage agreement. Nor can they use them to influence a buyer to make an offer. Incentives may be offered provided they are available to all on the same basis.

Example of tenancy at sufferance/holdover tenant/proceedings

Bill and Ted have a two-year lease on a single-family house, which is owned by Martin. Their lease expired a month ago and Martin wants them out because he has another tenant who will pay twice what Bill and Ted are paying. Although Bill and Ted sent their usual rent to Martin, he did not deposit their checks. Instead he returned them and threatened holdover proceedings if they did not vacate immediately.

Why is it important for a buyer to know if any easements or encroachments exist on a property?

Both easements and encroachments affect the property's lot size, enjoyment, and use, which can affect a property's value.

Transfer tax formula

Both taxes are usually quoted as an amount per $100 or an amount per $1,000 and the method for calculating is similar to taxes. Amount per $100 = (sale price/loan amount ÷ 100) × tax rate. Amount per $1,000 = (sale price/loan amount ÷ $1,000) × tax rate.

Retroactive liability

Both the current owner and prior owners are liable. - If liable parties aren't doing cleanup, the EPA can hire its own contractors, do the clean-up work, and then bill the parties.

Area of irregular shapes

Break irregular shapes into basic shapes (square, rectangle, triangle), calculate area of each, then add for total area.

Sue and Jim are hoping to expand their family, which means moving to a larger home. They're closing on their new home soon, but haven't yet sold their current one. Which type of loan will help them afford both homes for a short period of time?

Bridge loan a bridge loan is best used when the buyer's current home is already under contract

Calculating housing and total debt-to-income ratios (STEP 2)

But Step 1 is only part of the qualifying process. We want to make sure that they still fall within the total debt-to-income ratio. Take their gross income again and multiply by the total debt-to-income ratio of 33%, and we get $1,650.

Which of these agreement terms is typically a standard part of the sales contract?

Buyer's option to purchase a home warranty

Proposed uses or changes in uses that should trigger inquiry about public or private land use controls

Buyers should inquire about the location of the property and whether it's currently or will in the future be located in a protected zone, such as a wetland or a historical district. Buyers should also inquire about the property's zoning classification and whether there are any anticipated changes in the current classification of the property itself or the surrounding neighborhood. Some sellers disclose tax abatements, but buyers should check this independently. Sellers and licensees may be required to disclose if the property currently is or is planned to be in a flight path.

Sale, Financing, Settlement or Lease of Other Real Estate (Maryland Sales Contract Addenda/Disclosures term)

Buyers use this addendum to identify if the property purchase is contingent upon the sale, financing, settlement, or lease of an existing home.

On-Site Sewage Disposal System Inspection (Maryland Sales Contract Addenda/Disclosures term)

Buyers use this form if to add a contingency that the property's the private on-site sewage disposal system be inspected by a qualified inspector

Material facts and defect disclosure (part 2)

Buyers who learn about undisclosed adverse issues prior to closing may terminate the agreement and try to get their earnest money back. -Stigmatized properties

Purchase Price Escalation (Maryland Sales Contract Addenda/Disclosures term)

Buyers who want the opportunity to compete against other offers may include this form as part of their offer to establish the terms by which their offer will escalate and to identify their maximum price for the property.

Fresh out of community college and newly licensed as a real estate salesperson, Ben just took on a short sale as his first listing. Ben told his broker, Janine, that he could handle the transaction and had just advised his seller client that he could do it with minimal damage to the client's credit rating. Janine immediately took Ben off the listing and assigned it to a more experienced licensee. Why?

By predicting the seller's credit rating outcome, Ben crossed the line into giving advice that requires additional licensure.

to look for homes for Marcus, Marcus believes she'll do just that. Which of these statements about this situation is correct?

CC&Rs

Types of mold in the home

CEILING MOLD - exterior ceilings and walls are more likely to mold than interior ones because water is more likely to come under the eave of the house BATH MOLD - bathtubs and showers are particularly dangerous because water will catch in corners and stand (without adequate ventilation) WINDOW MOLD - doors, shutters, windows are all susceptible to mold WATER PIPES - pipes in the wall or floor are mold-prone

Who is most at risk from lead?

CHILDREN

Sellers are required to provide _____, ______ title to properties conveyed

CLEAR, MARKETABLE

Mechanic's liens create a

CLOUD ON TITLE

Fee simple estate/Fee simple absolute

CONVEYS MOST RIGHTS -refers to a form of ownership, not tenancy, so the owner of a fee simple estate can will the property and/or successor can inherit the property -can be sold -is inherited -may be limited by public and private restrictions (i.e. zoning ordinances) -the owner holds rights to the property on the surface of the land, above the land, and below the land -must pass through probate before passing estate on to heirs

Which of the following is defined as what it would take to recreate that property if it disappeared off the face of the earth today?

COST Replacement cost is: what it would cost to replace he building on land as it is now

What lenders consider when computing debt ratios

Can consider extenuating circumstances (such as a borrower's excellent credit history or anticipated future earnings), CURRENT FEDERAL LENDING rules state that all debts for qualified mortgages CAN'T exceed 43% of the borrower's income!!!!!

U.S. Department of Housing and Urban Development (HUD) vs. Pontoriero (2009) CASE STUDY

Caucasian testers were quoted lower rental rates and were treated more courteously than the African-American testers were. The respondent also made discriminatory comments and statements to Caucasian testers about African-Americans -Pontoriero (owner/landlord) refused to show rental housing to the black complainants -RACE AND COLOR The respondent violated the Fair Housing Act by engaging in discriminatory housing practices. The respondent was prohibited from discriminating because of race and/or color in any aspect of sale, rental use, or enjoyment of a dwelling and was therefore required to take the necessary steps to remedy the effects of the illegal, discriminatory conduct, to prevent similar incidents in the future, and to pay damages and a civil penalty for each violation and additional relief as deemed appropriate

Anticipation

Changes in value may be caused by the expectation of events. A suburban residential property that is located near the site of a proposed public transportation facility may see an increase in value before the actual benefit is realized.

When can borrowers pay discount points?

Closing - to permanently reduce a loan's interest rate

What kind of loans are exempt from RESPA requirements?

Commercial and business loans

Which of the following is NOT true regarding the Maryland Commission on Civil Rights?

Commission members serve four-year termsMCCR is made up of nine governor-appointed members and an executive director who serve six-year terms.

Who uses an option contract, and when do they use it?

Commonly, an option can be attached to a lease. It allows the lessee (renter) the option to purchase the property at the end of the lease term or within the timeframe noted in the option contract. This is usually known as a lease option, or a lease with an option to buy. This is often used to give the lessee time to come up with the money to purchase the property. OR Option contracts are entered into to allow the optionee the time to raise money to purchase a property. Sometimes a real estate investor chooses to make the relatively low-risk investment in an option on an undeveloped piece of land—especially if the property is in a prime location—and then take the option period to find investors and developers. The original investor (optionee) charges these investors and developers a higher price than the option amount, and after exercising the option contract, flips the property for a nice profit.

Margaret has received her Closing Disclosure Form from her lender. To protect her interests what should she do with it?

Compare it to the Loan Estimate

If a seller wants to sell property without making any representations and warranties about the prop's condition:

Complete and sign the disclaimer; otherwise, you'll need to complete and sign the disclosure part of the form You also explain that regardless of whether your client chooses to sell the property "as is" using the disclaimer statement, or chooses to disclose defects about the property's condition using the disclosure statement, both require the owner to disclose information about any latent defects about which the owner has actual knowledge

Another term for master plan

Comprehensive plan

Straw Buyers

Conceal their real identity behind someone else's name and credit

Dean and Michael have an oral contract. Dean said he would sell Michael his bike in return for Michael's vinyl album collection. What does the record collection represent?

Consideration

Which loans involve increased risk for the lender and therefore usually come with a higher rate?

Construction

The Dodd-Frank Wall Street Reform Act of 2010 (Dodd-Frank Act) handed RESPA responsibility to

Consumer Protection Finance Bureau (CFPB).

Executory Contract

Contracts are EXECUTORY until all of the promises in the contract have been completed. A contract for the sale of real estate is executory until the deed is delivered and accepted.

Conventional Loans

Conventional loans aren't government insured or guaranteed. Lenders view conventional loans as some of the most secure because they may require a down payment of 20%, thus reducing the LTV to 80% Conventional loans can be: 1) Conforming 2) Nonconforming (These loan limits vary by region based on the agency's determination of whether a given market is an average or a high-cost area)

Under a land trust, the owner directs a _____ to hold title to the real estate

Corporate fiduciary

Insured value

Cost to replace or rebuild a property

What is typically exempt from usury laws?

Credit cards, retail installment contracts, and consumer leases

Which type of lender is a member-based non cooperative that provides credit for auto loans and home loans, takes deposits and offers savings vehicles and money markets?

Credit union

Critical Area

Critical Area refers to all land and water areas within 1,000 feet beyond the boundaries of state or private wetlands, the Chesapeake and Atlantic Coastal Bays, and the tidal tributaries ofthese

Reserves

DEALS W PAYING TAXES AND INSURANCE lenders will require you to keep a reserve fund (aka escrow account or impound account) FOR and INSURANCE federal regulations limit this amount, but buyers should be prepared to put as much as 14 MONTHS' worth of PREPAID property taxes and insurance in reserves at closing time

Real property is conveyed from one owner to another using a

DEED

What types of properties shouldn't be used as comparables in a CMA?

DISTRESSED PROPERTIES properties sold as foreclosures, short sales, or other distressed property sales shouldn't be used as comps unless the licensee is pricing a property for sale under similar conditions.

Department of Labor, Licensing, and Regulation abbreviation

DLLR

Days on market

DOM

total payment obligations to income ratio example

Darla calculated her monthly debt payment (i.e., her total payment obligation). She pays $550 a month for her car and $450 a month for a student loan. She's also paying off a credit card to the tune of $300 a month. If she gets the mortgage she wants, she'll pay $800 a month for it, so her monthly debt obligation would be $2,100. Her monthly income is $6,600. That puts her total debt obligation at 32%. Most lenders prefer a ratio lower than 36%, so Darla's numbers look good. This IS a mortgage she'll likely qualify for.

In an amortized mortgage, the monthly payment is the same each month. The part used to pay the principal increases each month, while the amount going toward interest ______.

Decreases

4 Characteristics of Value (DUST)

Demand, utility, scarcity, and transferability

Where buyers can get help with mortgage financing

Department of Housing and Community Development's Division of Development Finance (a.k.a. the Community Development Administration or CDA)

Which agency enforces Title II under the Americans with Disabilities Act of 1990, when it relates to state and local public housing, housing assistance, and housing referrals?

Department of Housing and Urban Development

Property Managers and Escrow Accounts (PART 2)

Depending on the terms of the property management agreement, property managers may be required to get the landlord's explicit permission to disburse funds from a trust account. Commissions or fees are typically drawn from a trust account on a schedule outlined in the property management agreement. Monthly and quarterly are common commission schedules. The property manager should have an accounting system in place to document all cash received and disbursed through the trust accounts. This is in addition to any cash accounting system used for operating accounts.

Callum is working with Darby, who received an honorable discharge from the Air Force. Callum is preparing to discuss options for down payment assistance with Darby. Which of the following would be Callum's best resource for information for this specific client?

Dept. of Veteran Affairs

Noncomforming use

Deviates from current zoning but is grandfathered in (such as a home built years ago in an area that's now commercially zoned)

The MD Residential Property Disclosure and Disclaimer Statement form (disclaimer statement) must:

Disclose any latent defects about which the seller has actual knowledge, but that a purchaser would not reasonably be expected to ascertain by a careful visual inspection of the premises, and that would pose a direct threat to the purchasers' or occupants' health or safety State that, except for latent defects, the seller makes no representations or warranties as to the real property's or its improvements' condition State that the purchaser will be receiving the real property "as is," with all defects, including latent defects, that may exist, except as otherwise provided in the contract of sale for that property **also tells buyers that they must sign and date a written acknowledgement of receipt on the disclosure or disclaimer statement at the time that statement is provided to them; this statement will then be included in or attached to the sales contract

The MD Residential Property Disclosure and Disclaimer Statement form (disclosure statement) must:

Disclose the items that the Maryland Real Estate Commission (MREC) requires be disclosed about a property's physical condition Include a list of defects, including latent defects, or information about which the seller has actual knowledge regarding the following: -Water and sewer systems, including the source of household water, water treatment systems, and sprinkler systems -Insulation -Structural systems, including the roof, walls, floors, foundation, and any basement -Plumbing, electrical, heating, and air conditioning systems -Infestation of wood -destroying insects-Land use matters -Hazardous or regulated materials, including asbestos, lead-based paint, radon, underground storage tanks, and licensed landfills -Any other material defects about which you have actual knowledge -Whether the smoke detectors will provide an alarm in the event of a power outage -If the property relies on the combustion of a fossil fuel for heat, ventilation, hot water, or clothes dryer operation, whether a carbon monoxide alarm is installed on the property

Example of violating Fair Housing Laws - Stigmatized properties

Disclosing that a previous owner or resident had HIV or AIDS is a fair housing violation. Licensees should never disclose this information.

Determine value using the cap rate formula:

Divide net operating income by cap rate (I ÷ R = V).

1/12 prepayment plan

Divide your monthly payment by 12; add this amount to your mortgage payment each month.Not only will you pay an extra mortgage payment, by dividing the amount by 12, you are repaying 1/12 immediately, which is better than saving the entire amount up and making one extra payment at the end of the year .i.e. Mortgage payment is $1,600/12 = $133.33. Payment = $1,733.33/month.

Depreciation in value reduces

EQUITY

The Grantor-Grantee Index

ESTABLISHES CHAIN OF TITLE When the last grantee is not the next grantor, a gap exists in the chain. Gaps must be resolved, sometimes by branching out from public records, in order for clear title to be given.

How are principal meridians and baselines used in the rectangular government survey system?

Each legal description in this system originates at the intersection of a principal meridian and a baseline.

Joint and several liability

Each of the responsible parties is personally responsible for damages.

Responsibilities for Escrow Accounts

Earnest money funds must be deposited into the proper trust account after the seller accepts the purchase offer and according to the timeline established by the state. Earnest money funds are specific to the purchase contract for which they're written. Buyers must submit earnest money funds for each offer they submit.

The earnest money deposit given in good faith with the contract is NOT the down payment:

Earnest money is applied to the property purchase price

Township lines

East-west lines of a survey

According to SARA

Either buyers or sellers may be liable for cleaning up contaminated property. 1) Strict liability 2) Joint and several liability 3) Retroactive liability

Property condition that may warrant inspections and surveys (part 5)

Electrical, plumbing, and other major property systems, as well as appliances, should be carefully inspected because of the danger they present and the cost to repair or replace them. -Rooms that are too hot or cold, furnace or a/c that won't turn on when temperature is adjusted, or pilot light that won't stay lit -Electrical switches that are warm to the touch, lights that dim when others are in use, burned or discolored outlets, faulty appliances, and old or damaged circuit breakers -Water damage on ceilings or walls, leaking or blocked drains, clogged or leaking toilets, reduced water pressure, or soggy ground around the home - Galvanized plumbing pipes corrode and rust over time, restricting water flow and resulting in bits of debris and mineral deposits appearing in water

Which type of communication does the CAN-SPAM act outlaw?

Email marketing with no "unsubscribe" option

The Planning Board (zoning)

Ensures that community growth is controlled and orderly; the board develops the master plan *****(also known as comprehensive plan), which includes a budget. In a city, this is known as urban planning. Planners often account for topography (the physical and natural features of an area).

Credit bureaus

Equifax, Experian, TransUnion

Personal property

Everything owned that is not real property, aka chattel/trade fixtures

How to determine a loan payment using the amortization table and interest EXAMPLE

Example A 2.000 (rate %) for a 15-year loan term = a factor of 6.43509. Monthly payment = (loan amount ÷ 1,000) × factor.

Interest is calculated on

Example A 2.000 (rate %) for a 15-year loan term = a factor of 6.43509. Monthly payment = (loan amount ÷ 1,000) × factor.

LTV Examples

Example Buyer borrows $315,000 to purchase $350,000 property. LTVR = $315,000 ÷ $350,000 = .9 or 90%. Loan amount = LTVR × value. Example Property value is $350,000. LTVR is 90%. Loan = $350,000 × 90% = $315,000.Value = loan amount ÷ LTVR .Example Buyer borrows $315,000. LTVR is 90%. Value = $315,000 ÷ 90% = $350,000.

Interest and loan payment calculations example

Example Loan amount is $315,000 with a 5% interest rate and a 30-year term. Monthly principal and interest payment is $1,890. To calculate the amount owed after the first payment is made: 1. Loan balance × interest rate = annual interest amount ($315,000 × 5% = $15,750). 2. $15,750 ÷ 12 (months)= $1,312.50 (monthly interest). 3. Monthly principal and interest - first month's interest = amount applied to principal ($1,890 - $1,312.50 = $577.50). Loan amount - amount applied o principal = remaining loan balance ($315,000 - $577.50 =$314,422.50).

Examples of points

Example One point = 1% of the loan amount; so if a lender charges two points on a $250,000 loan, the cost to purchase the discount would be $250,000 x .02 = $5,000 Example A 3-2-1 buydown: 3% interest rate reduction year one, 2% year two, and 1% year three; interest rate returns in full year four

Commission examples

Example Property sells for $350,000 with a 5% commission. Commission = $350,000 × .05 (or 5%) = $17,500. Sale price = total commission ÷ commission rate. Example Broker earns a 5% commission of $17,500. Sale price = $17,500 ÷ 5% = $350,000. Commission rate = total commission ÷ sale price. Example Broker earns $17,500 for selling a $350,000 property. Commission rate = $17,500 ÷ $350,000 = .05 or 5%.

Net to seller examples

Example Sale price is $150,000 with a 7% commission rate. Percent to seller is 93% or 0.93. Net to the seller = $150,000 × .93 = $139,500. Example Using a statutory year, seller's loan balance is $60,000 with a 5% interest rate. The sale closes on June 15, with the last payment made on June 1. Seller interest owed = ($60,000 × 5%) ÷ 360 = $8.33 × 15 = $124.95.

Adjustment Examples

Example Subject and comparable property attributes are nearly identical except the subject has a two-car garage and the comparable has a three-car garage. In the given area, an additional garage bay is worth approximately $7,000. The comparable sold for $328,500. The goal is to determine what the comp would have sold for if it were identical to the subject, so subtract $7,000 from the comparable's sales price, making the value of the subject property $321,500. Example Subject and comparable property attributes are nearly identical except the subject has a three-car garage and a swimming pool (in a climate where a pool is a highly desirable attribute). Garage bays are worth approximately $6,000 and the pool is valued at approximately $22,000. The comparable sold for $422,000. Since the subject is superior to the comp, add the garage bay and swimming pool value to the comp's sales price, for a subject value of $450,000.

Measuring structures examples

Example The living room of Trixie's house is 15 feet by 13 feet. The dining room is 12 feet by 13 feet. How many square feet is this entire area?(15 × 13) + (12 × 13) = 195 + 156 = 351 square feet Example Jonathan's 3,200 square foot home sold for $425,000. The price per square foot is $425,000 ÷ 3,200, or $132.81.

Closing cost example

Example Using a statutory year, the buyer's loan is $315,000 with a 4% interest rate. The sale closes on June 15. Buyer interest owed = ($315,000 × 4%) ÷ 360 = $35 × 16 = $560.

If the radon home tests at or above a level of 4 picocuries per liter

Experts recommend mitigation, which can include sealing cracks and other foundation or basement openings and installing a vent system.

Environmental issues requiring disclosure

External environmental hazards may be difficult to detect. Most states require that sellers disclose known environmental issues, including: 1) Underground storage tanks 2) Groundwater contamination 3) The presence of former waste disposal sites 4) Mining activities 5) Use of agricultural pesticides

T or F: A final and entire agreement cannot be changed.

FALSE

T or F: As part of acknowledgment, the grantee must state the deed signing is voluntary.

FALSE

T or F: Earnest money must be paid in the form of a cashier's check.

FALSE

T or F: Even if a listing agent is aware of an interested buyer, that agent is only required to provide the buyer or the buyer's agent with a copy of the disclosure after the buyer has submitted an offer.

FALSE

T or F: If the deed is delivered to an agent of the grantee, such as an attorney, real estate broker, or the title company issuing the title, a written acknowledgment of acceptance by the grantee is required.

FALSE

T or F: If the parties do not agree to sign a Release of Deposit Agreement, and the buyer is in default, the seller receives the full amount of the deposit.

FALSE

T or F: It is the escrow agent's decision as to whether to establish an interest-bearing account or not for the earnest money deposit.

FALSE

T or F: Landlords who offer five or more residential units for rent in MD without a written lease is legal.

FALSE

T or F: Regardless of whether a buyer is represented by a licensee or not, the seller agent is responsible for explaining to the buyer the buyer's rights and obligations with regard to the disclosure.

FALSE

T or F: Settlement dates are not negotiable once the buyer has entered a date into the sales contract.

FALSE

T or F: The broker who is holding the deposit is not authorized to take money from the deposit amount to pay for filing fees, court costs, attorney's fees, etc.

FALSE

T or F: The buyer does not have to provide the earnest money by a specified date as long as it's deposited before the settlement date

FALSE

T or F: The escrow agent is not allowed by law to charge a fee for establishing an interest-bearing account

FALSE

T or F: The parties to the contract can be bound by any terms, conditions, warranties, or representations that are contained outside of the contract as long as they are in writing.

FALSE

T or F: The sales contract cannot be assigned.

FALSE

T or F: To acknowledge a deed, the grantee must appear before a public officer.

FALSE

T or F: Without a recorded deed, the seller cannot sell the property to another buyer.

FALSE

T or F: Per the Maryland Broker's Act, you are required to disclose only the material facts that you know about to prospective buyers.

FALSE The Maryland Broker's Act requires all licensees to disclose material facts that they know—or should know—to every prospective buyer. This means that you need to do more than just accept the seller's information at face value. You need to check the information that the seller provides.

T or F: all sales contracts are contingent on financing.

FALSE although many buyers cannot afford to purchase a property without the help of a loan, some buyers do not have to make the contract contingent on financing

T or F: Time from offer to closing may be short in a short sale.

FALSE Time from offer to closing may be lengthy because it takes time to work through all the processes.

T or F: A deed can be written in any language when recorded in Maryland.

FALSE , must be in English

T or F: The grantee is not required to sign the deed if the grantee is assuming a mortgage.

FALSE - grantee must sign

T or F: A property can have an easement on their own land.

FALSE - it must be on someone else's land

T or F: by signing and dating property disclosure notice, the buyer is acknowledging receipt of the seller's property condition disclosure statement.

FALSE; both the buyer and seller must sign the notice to acknowledge its receipt, and that their agents have informed them of their rights and obligations under the law

If there is no state or local code, builders must comply with the_____ building code.

FEDERAL

Goldie and Kurt are looking at purchasing their first home. Their credit history is a little shaky and they don't have enough money saved to put down 20%. What type of loan seems most appropriate?

FHA

Which loans are generally assumable?

FHA = federal housing administration loan VA = veteran affairs loan

Common HVAC issues

FURNACE - does not kick on when temperature is adjusted or pilot light won't stay lit HEATING AND COOLING - ask sellers type and age of the heating and cooling system to get an understanding of the potential problems or costs that may arise HOT/COLD ROOMS - could indicate duct problems r a room without temperature control AIR CONDITIONER - does not kick on when temperature is adjusted

Title 9 (VIII)

Fair Housing Act

Which act provides consumers with remedies if they become victims of discrimination in the sale, rental, or financing of housing?

Fair Housing Amendments Act of 1988

Lenders can sell conforming loans to

Fannie Mae or Freddie Mac

What is the purpose of the Fed?

Fed controls how much money is available and what banks can charge for that money to keep the U.S.'s finances in check, avoiding both runaway inflation and serious deflation

Freddie Mac (FMCC)

Federal Home Loan Mortgage Corporation A secondary mortgage institution similar to Fannie Mae

Clean Water Act

Federal Law setting a national goal of making all natural surface water fit for fishing and swimming by 1983, banned polluted discharge into surface water and required the metals be removed from waste provides guidelines for waters, including wetlands.

Fannie Mae (FNMA)

Federal National Mortgage Association The government-sponsored enterprise responsible for guaranteeing and funding home mortgages

Local authorities lack police power over which of the following?

Federal government construction projects

Federal Lead-Based Paint and Lead-Based Hazards Disclosure of Information (Maryland Sales Contract Addenda/Disclosures term)

Federal law requires the sellers of residential dwellings built before 1978 to disclose any known information about the existence of lead-based paint (LBP) on their property; this disclosure also warns buyers of the dangers of LBP, ensures that buyers receive the required EPA LBP pamphlet, and gives buyers the chance to opt in (or waive) their right to conduct an inspection for LBP and LBP-related hazards on the property.

Leon and Beth own 1/13 of a timeshare estate. They own weeks 20 and 21, and also weeks 40 and 41. These weeks are inheritable. What type of ownership is this?

Fee simple

First-Time Maryland Home Buyer Transfer & Recordation Tax (Maryland Sales Contract Addenda/Disclosures term)

First-time Maryland homebuyers use this addendum to ensure they're not charged for any recordation tax or local or state transfer tax.

Example 1 of calculating a loan origination fee

For a $100,000 loan, a lender charges a 1% loan origination fee. Remember, to change a percentage to a decimal, move the decimal point two places to the left. So, 1% is 0.01 as a decimal. Loan origination fee = $100,000 × 0.01 = $1,000

Unlicensed individuals can't be paid on a per-transaction basis; but can perform clerical tasks:

For example, an unlicensed individual may not be allowed to host an open house or showings but could schedule those events or make copies of listing information. An unlicensed assistant could also follow up on transaction party items (such as appraisal, financing, inspection).

There are a number of risks and conflicts of interest if a licensee were to be granted a power of attorney by a client

For this reason, the situation is generally avoided by many brokers. If used, there must be a paper trail and the POA is usually limited to signing on behalf of a client at closing if the client can't attend.

Step 6 of the valuation process: Estimate property value using 3 approaches to value

For this step, I value the property in three different ways: the sales comparison approach, the cost approach, and the income approach

Termination of an agency relationship through TERMINATION BY FORCE OF LAW

Force of law terminations include events that are beyond the control of the parties, such as bankruptcy of the broker or principal, property destruction, or incapacitation of the agent or principal.

Stu is buying Freddie's property. What must occur for the transfer of title to take place?

Freddie must intend to convey the property to STU

What are often constructed on top of landfills?

Golf courses, parks, and housing and office complexes

Ginnie Mae (GNMA)

Government National Mortgage Association A government agency that plays an important role in the secondary mortgage market it guarantees mortgage backed securities using FHA insured and VA guaranteed loans as collateral

Erosion (water process)

Gradual loss of land due to a natural force

Easement in gross (category of easements)

Granted to a specific individual or business rather than attached to the property itself

Covenant of Seisin

Grantor holds title to and possession of the property

Which of these would void a deed intended to convey property?

Grantor is not legally competent

How can you test for asbestos?

HIRE A PRO

The Office of Fair Housing and Equal Opportunity (OFHEO) is a subdivision of what entity

HUD

Who forwards fair housing complaints to the MCCR?

HUD

Ways to uncover material facts

Having your seller complete the disclosure/disclaimer form Checking public records to obtain accurate data and verifying seller-provided information Inspecting the property (Note: You are not expected to inspect a property as thoroughly as a licensed home inspector. This should be a more visual, overall inspection.) Reviewing the property's survey data to verify that the information is accurate

Dexter has been managing Holly's 10-unit apartment building for five years. Holly's on vacation in Europe for a month, but before she left she approved Dexter's plan to sell six of the building's washing machines in order to buy new ones. Dexter got a great deal from the hardware store because his cousin is the manager and there ended up being a surplus of $1,000. Dexter deposited the surplus into his personal account as a bonus to himself for striking such a good deal. What did Dexter do wrong?

He didn't get Holly's approval before pocketing the profits from the sale of the washers.

Jerome let his license expire four years ago when his wife had twins and he decided to become a stay-at-home dad. Now that the twins have started preschool, Jerome would like to resume his real estate practice. What does he have to do in order to reinstate his license?

His license has been expired too long. He has to start the pre-licensing process from scratch.Expired licenses can be reinstated within three years of the expiration date if CE requirements are met. If a license is expired for more than three years, the former licensee must complete all pre-licensing requirements again and be issued a new license.

HELOCs stand for

Home equity line of credit

Thad received multiple offers on his property and is reviewing them with his agent Nora. All of the offers have at least one contingency. Nora recommends that they reject the second offer, because it has a _______ contingency, which is generally the most risky.

Home sale (when buyer must sell their home before financing a new home)

Purpose of home or construction warranty programs

Home warranty programs provide peace of mind by covering system or appliance problems that may develop after a home is purchased. cover structural damage or major construction defects (such as foundation issues) for 10 years. Home construction warranties for new construction generally also cover structural issues The warranty assures that the property was built according to plan and protects the buyer against equipment, material, or workmanship defects.

HOA regulations

Homeowners association (HOA) regulations are typically set up as a covenant (an agreement between the homeowner and the association). HOA regulations subject property owners to certain rights, responsibilities, and obligations, including the obligation to pay the HOA fee. HOAs may regulate aesthetic choices for structures (such as paint or shingle color), or for landscaping (such as the type and number of trees and shrubs that owners may plant). HOAs typically have the authority to levy fines against residents who don't comply with HOA regulations. Any member of the HOA may pursue enforcement in a civil court of law if a resident isn't complying with regulations.

Notice of Contract Terms

How and when parties to a contract send notice regarding contract terms is critical for avoiding breach of contract situations. - Most contracts include a NOTICES CLAUSE that describes how contract-related notice may be made and when notice is considered to have been received. Notice from one party to the other may become necessary during contract negotiation or with a breach of contract and termination situation.

How are deeds acknowledged?

IF THEY'RE RECORDED

Where do lenders place the property tax and insurance amounts collected each month?

IN AN ESCROW ACCOUNT and pay the annual tax and insurance bills when they come due.

Interest bearing EMD vs. Non-interest bearing EMD

INTEREST-BEARING ACCT: the buyer is entitled to receive the interest earned on that account, provided the buyer does not default on the contractif the buyer requests an interest-bearing account, the escrow holder has the right to charge that buyer to open such an account NON-INTEREST-BEARING ACCTS: there is no charge to the buyer for holding money in this type of account

Settlement

Identifies the settlement date and settlement agent

Monthly housing expense to income ratio example

If Lonnie can buy the house she wants, she'll be paying $2,800 a month for the mortgage. Her monthly income is $3,500. Her lender looked at this ratio to decide if Lonnie is more or less likely to default on a loan. In this example, the lender determined that this loan would NOT be a good investment, since the mortgage payment would be 80% of her income.

Basic Concepts/Duties of Property Management

If a real estate licensee wants to be paid to manage properties for others, a written property management agreement must be in place. The licensee and the property owner are the parties to a property management agreement that establishes a general agency relationship. The agreement serves as the guide for managing the property and outlines the duties and responsibilities of both the property manager and the owner.

Intention in placing (MARIA, basic tests to determine if an item is real or personal property)

If an item was intended to be temporary, then it's less likely to be considered real property.

Power of Sale Clause in a Deed of Trust

If foreclosure becomes necessary, a power of sale clause in the deed of trust permits the lender to use a non-judicial foreclosure process; e.g., the lender doesn't have to go to court to enforce foreclosure proceedings.

After the seller backed out of the contract at the last minute, Maryland broker Melody determined that the buyer's earnest money, which she'd deposited in her firm's trust account, should be returned to the buyer. She sent certified letters to the buyer and the seller detailing this decision. What happens next?

If neither party sends Melody a protest within 30 days, she may disburse the funds to the buyer as stated in her letter.If the broker decides to disburse disputed funds, the broker must give the parties 30 days' notice as to how the funds will be distributed. If no one protests in 30 days, the broker may disburse the funds.

Set dollar over prepayment plan

If paying 1/12 extra feels like too much, even an extra $25 per month can make a differenceUsing automatic payments, increase your payment by an amount that feels comfortable, and have the extra portion applied toward principal .i.e. You pay an extra $25 or $50 each month toward principal.

Restrictions on contaminated property

If the EPA determines that hazardous contamination has occurred on a project site, it can shut down development and begin remedial action. This may impact development time and cost. Regardless of the EPA's actions, builders or developers will likely be required to do cleanup prior to developing a contaminated site. The presence of industrial chemicals, underground storage tanks, or pathogenic contamination of groundwater will induce restrictions.

Related to reasonable accommodation of being allowed to have an assistance animal, which statement is true?

If the disability for which the tenant is making the request is obvious, the landlord may not ask why it is needed

Agreement of the parties (MARIA, basic tests to determine if an item is real or personal property)

If the parties have agreed whether an item will stay or go, this is the simplest and first test.

Termination of an agency relationship through DESTRUCTION OF PROPERTY/DEATH OF PRINCIPAL

If the property is destroyed, or if the broker or principal dies or becomes incapacitated, then the agency relationship ends.

Local City/County Certifications/Registrations (Maryland Sales Contract Addenda/Disclosures term)

If the property is located within a city or county that has specific certification or registration requirements, these disclosures must be made part of the sales contract.

Local City/County Notices/Disclosure (Maryland Sales Contract Addenda/Disclosures term)

If the property is located within a city or county that has specific requirements or provisions that could affect how the property may be used, these disclosures must be made part of the sales contract.

Example for a purchase money mortgage

If the property were $200,000, the seller might agree to sell for $150,000 and retain a $50,000 second mortgage, leaving the buyer to finance and provide a down payment on only $150,000. With such an arrangement, if the buyer defaults, the lender is paid first, then the seller as a secondary lender.

Termination of an agency relationship through COMPLETION/PERFORMANCE

If the real estate transaction with which the agent was assisting closes, then the agency relationship terminates.

Step 4 of valuation process: Determine the property's highest and best use

If there was no building there, what might be there instead? Usually for single-family residences, highest and best use is as it is right then-It's zoned for single-family, it has single-family, that's it For commercial properties, highest and best use comes into play a lot. It's a warehouse now, but what if it was a 10-unit condominium complex? Or a manufacturing plant? See what I mean? Even in residential, what if it could be a multi-family instead of a single-family?

Non-disturbance clause

If this provision is included, the mortgagee agrees not to evict tenants who are current on their rent if the mortgagee has to foreclose on the property.

Layla, a licensee, has had a few casual meetings with a potential client, Marcus. Marcus has told Layla the type of home and locations he's interested in. Layla has mentioned a few homes that she thinks Marcus might be interested in. Although Layla hasn't said that she will continue to look for homes for Marcus, Marcus believes she'll do just that. Which of these statements about this situation is correct?

Implied agency

Indestructibility (physical land characteristic)

Improvements may deteriorate over time, but not land itself.

Local Lease Termination Laws

In Montgomery County, both parties can agree to shorter or longer notification periods; this agreement must be noted in writing. In Baltimore City, local laws generally state that a landlord must provide written notices to terminate the tenancy as follows: -60 days' written notice for a tenancy at sufferance, or for a tenancy of under one year-90 days' written notice for a periodic tenancy-30 days' written notice for all other cases

Example of reconciling values to determine the final appraised value (step 7 in appraisal process)

In a market data approach to value, the appraiser may use three comparable properties. One suggests a value of $276,000, another suggests $301,000, and the third indicates $310,000. The appraiser will weigh the one which is most like the subject property more heavily than the other comparables in estimating value.

Relationship of the parties (MARIA, basic tests to determine if an item is real or personal property)

In general, the courts tend to favor a tenant's take on an item over the landlord's, and a buyer over a seller.

Caveat Emptor

In these states, the seller makes no representations about property conditions, and the burden is on the buyer to perform due diligence.

REOs (real estate owned properties)

In this type of sale, ownership has reverted to the lender because of a failed foreclosure sale or because the borrower surrendered ownership of the property to the lender through a deed in lieu of foreclosure are called real estate-owned (REO). REOs may still be subject to homeowner's rights of redemption depending on the state. Owner redemption periods have often expired by the time lenders put an REO property on the market.

Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 states that its purpose, in part, is to require that real estate appraisals used in connection with federally related transactions be performed ______.

In writing, in accordance with uniform standards

What is the most reliable appraisal approach?

Income Analysis!!!!

Which one of these would not be an element of comparison an appraiser would use when applying the sales comparison approach to a property valuation?

Income generated

"Payment terms"

Indicates the amount of earnest money the buyer is putting down

Deed conditions vs. Deed restrictions

Individual owners or grantors of a deed may place deed conditions that apply to that specific property being conveyed Deed restrictions may run with the land forever or may have a time limit. -Deed restrictions may not violate any laws, including fair housing laws. Such a restriction would be illegal and unenforceable.

Which one of the following tasks must a licensee perform for seller clients?

Inform sellers of their responsibility to make all property condition disclosures

Interest

Interest is a fee paid back to a lender for the use of its money; the amount of interest paid with each mortgage payment typically decreases over the life of the mortgage. Interest rates are stated as an annual percentage; e.g., 6% interest rate is 6% for the period of one year, or .5% per month.

Buydown

Interest pre-payment at closing to temporarily reduce interest rate, usually for a period of one to three years.

Tenancy in common

Is a form of co-ownership in which each co-owner is entitled to possession of the whole. -inheritable -upon owner's death, prop doesn't necessarily have to pass to the other owners each person is entitled to possession of the whole; if one dies, that person's ownership is inheritable, and doesn't necessarily pass to the other owner(s) ***- undivided, so if 3 brothers are tenants in common and one tries to forbid the others from entering certain rooms, he technically can't do so

The Uniform Residential Landlord Tenant Act (URLTA)

Is a sample law that states may follow in enacting their own landlord-tenant legislation. **The purpose of this act is to base landlord-tenant law on contract law instead of common law, thereby providing more specific guidance to both landlords AND tenants.

Adverse material fact

Is negative property information that could reduce the property's value

Net lease (commercial)

Is one in which the tenant pays some or all of the property's costs in addition to rent. 1) Triple net lease 2) Absolute net lease ***Net leases are often used for large commercial and industrial leases. These leases TEND TO FAVOR THE LANDLORD'S INTEREST because property costs fall on the tenant.

Community Development Administration (CDA)

Is the housing finance agency for Maryland and is comprised of three branches: multi-family single-family CDA finance

What would you tell your clients that the property disclosure statement is?

It is the seller's representation of the property's condition

Four years ago, licensee Gustav assisted a buyer in her purchase of a foreclosed three-bedroom townhome in Hanover. The buyer recently called Gustav, telling him that she filed a complaint with MREC, claiming that Gustav knew the plumbing was faulty, but didn't disclose this to her. As a result, she's racked up more than $35,000 in plumbing bills since her home purchase. Panicked, Gustav begins searching for the transaction file until his broker tells him he can stop. Why?

It took place 4 years ago Would have had to have been under 3 years ago

ADA and Fair Housing Compliance in Property Management (PART 1)

It's illegal to use race, color, religion, national origin, sex, familial status, or disability to discriminate in the sale, lease, or financing of housing. The following real estate activities are subject to anti-discrimination laws: 1) Sale or rental of housing or residential lots 2) Provision of real estate brokerage services 3) Housing appraisals and financing 4) Advertising housing for sale or rent It's illegal to perform any of the following acts if the action discriminates against anyone in a protected class: 1) Refuse to sell or rent a house. 2) Offer different terms, conditions, or privileges when selling or renting a house. 3) Indicate a preference or limitation when advertising a home for sale or rent. 4) Coerce, threaten, intimidate, or interfere with a person's housing rights.

Example of a month-to-month tenancy

Julie is renting a small studio apartment in Brenda's building after graduating college. She signs a month-to-month lease, because she doesn't know if the local job market has any call for her particular skills. Because of this, she doesn't want to commit to a longer lease. Brenda is willing to have a month-to-month tenant, because the tiny space is hard to rent. If either decides the arrangement is no longer working, they can give appropriate notice to the other and the lease will terminate.

Krening Realty has been found guilty of running deceptive ads. Which of these statements about the potential penalty is NOT true?

Krening's broker may face jail time CANNOT enforce jail time

Do landlord or tenant reps have more opportunities to earn commission?

LANDLORD REPS

A lease with an obligation to buy is often called a

LEASE/purchase agreement It's similar to an option in that it's really two agreements: 1) One is a lease 2) A purchase agreement at some time in the future.

Fannie Mae and Freddie Mac purchase mortgage loan packages from

LENDERS

Sellers and listing agents often choose not to review the inspection report, especially if the buyers terminate the contract based on the report, because they are then

LIABLE to report any adverse findings

Is MD a lien theory or title theory state?

LIEN THEORY which means that the property acts as security for the underlying loan the mortgage places a lien on the property in Maryland, foreclosures by lenders are handled by the courts through a judicial foreclosure proceeding, then the property is sold as part of a public sale

Clients should keep their balances _______ on their credit card

LOW

LTV ratio formula

LTVR = (loan amount ÷ value) × 100

Example of low supply, high demand in the market

Lake properties in Happy Valley are highly desirable and rarely come on the market. When they do, there is usually a sale pending in a few days. Because there are few available at any one time, sellers can demand top dollar for the lake properties in Happy Valley

Real estate

Land, plus all things permanently attached to it naturally or artificially

ADA and Fair Housing Compliance in Property Management (PART 4)

Landlords are required to make reasonable accommodations in order to ensure that people with disabilities are not discriminated against.

Ellen just completed a whirlwind continuing education marathon, taking all 15 of her required CE hours in the span of one weekend with a company called Last Minute Real Estate Education. It's just in the nick of time, too: Ellen's license is set to expire the following week. How will the CE hours get reported to the commission?

Last Minute Real Estate Education must electronically submit Ellen's completion data to the commission.

Which body of law contains the rules governing the relationship between a real estate professional and the person being represented?

Law of agency

Protected habitats

Laws seeking to conserve, protect, or restore habitats aim to prevent the extinction of animals that live in those habitats or to protect the natural habitat itself from further destruction. While habitat loss and destruction can occur due to natural causes, human action contributes to the destruction. Local, state, and federal actions seek to prevent further loss of habitats (and the beings that live in them) and to reverse destruction that has already taken place.

Government disclosure requirements (LEAD)

Lead is most often found in water and paint. Sellers in residential real estate transactions involving properties built before 1978 must provide a lead-based paint disclosure and EPA-produced "Protect Your Family ... " lead safety pamphlet to the buyer. The seller must disclose any known presence of lead-based paint or any property reports that have been prepared related to testing for the presence of lead.

Unilateral Rescission

Legal action taken to repeal a contract by one party when the other party has breached a contract

Debt ratios

Lenders (and underwriters) want to see solid property values (as supported by the appraisal), strong buyer credit scores, and a steady credit and employment history. Underwriters will calculate TWO RATIOS: 1) Housing ratio 2) Debt ratio

What happens when the loan is paid off?

Lenders issue a satisfaction or release of mortgage to acknowledge the borrower's loan payoff. Lenders mark the promissory note "paid" and return it to the borrower.

Private Mortgage Insurance (PMI)

Lenders may require private mortgage insurance (PMI) on conventional loans when the down payment is less than 20% and loan-to-value ratio is in excess of 80%. Loans with an LTV in excess of 80% don't conform to Fannie Mae/Freddie Mac guidelines, so lenders may require PMI to offset the risk.PMI protects the lender in case of borrower default.

Water Quality (Maryland Sales Contract Addenda/Disclosures term)

Lenders require this addendum when water quality tests must be performed on public or private water sources. The buyer and seller agree to which tests will be performed. The buyer is responsible for ordering and paying for the tests.

Qualified Mortgage Loans

Lenders that comply with provisions under CFPB/TRID is a loan category that has certain affordability features. Certain loan attributes are prohibited, including: -Interest-only loans or interest-only periods on a loan -Negative amortization (periodic payments that aren't sufficient to completely amortize the loan by the end of the loan term) -Balloon (lump sum) payments that are required at the end of a loan term to pay the loan off -Loan terms of more than 30 years Qualified mortgages also must adhere to standard lending ratios and can't exceed specified amounts for up-front loan points and fees.

Special flood hazard areas (SFHAs)

Lenders that fall under federal regulations must require borrowers to obtain flood insurance as a condition of obtaining their mortgages.

The property appraisal (lender criteria)

Lenders usually base property value on the appraisal price, but not always. Example Damian bought a house for $300,000, but it appraised at $325,000. His lender uses the actual purchase price to determine the LTV ratio.

Situations requiring appraisal by certified appraiser (Cont.)

Lenders who want to sell their conventional mortgage loans to Fannie Mae must comply with AIR. AIR permits lenders to select residential appraisers from an approved list or panel if the lender employee(s) involved in the selection have no involvement in loan approval. To help ensure they're in compliance with AIR standards, some lenders contract with third-party companies to manage appraisals.

Calculating housing and total debt-to-income ratios (STEP 1)

Let's say you're working with a family whose lending institution uses a housing debt-to-income ratio of 25%, and 33% for total debt to income. This family has a monthly gross income of $5,000 and expenses of $500. To find the maximum house payment they'd qualify for, multiply their gross income of $5,000 by the 25% housing debt-to-income ratio, and you get $1,250.

Transaction parties must be informed if you have a personal interest or conflict of interest in a transaction. Assuming you represent the following parties, which ones would require a personal interest disclosure?

Licensed status disclosure applies when the licensee is acting on behalf of: an immediate family member, an entity in which the licensee has an ownership interest, no matter how small that interest is, or another affiliated licensee or employee of the licensee's brokerage or a team/group of which the licensee is a member.

Disclosure when acting as principal or other conflict of interest

Licensees are required to disclose agency relationships to ensure that relevant parties understand whom the licensee represents. Licensees must disclose their professional status when buying or selling property for themselves. If a licensee has an ownership interest in a given property or has a family or organizational connection to the property owner, this should be disclosed to all parties in the transaction.

Property condition that may warrant inspections and surveys (part 1)

Licensees should encourage all buyers to obtain home inspections and additional tests as necessary, even on new construction. Inspectors will seek to uncover any safety or health hazards on a property during a home inspection, as well as defects that could jeopardize a structure's integrity, such as moisture or pest infestation. Seller disclosures aren't always accurate, and sellers might not be aware of all defects.

Disclosure of Licensee Status (Maryland Sales Contract Addenda/Disclosures term)

Licensees who are either the principal (the buyer or seller) or related to the principal in a real estate transaction use this disclosure to divulge the licensee's licensed status.

Miles =

Linear feet ÷ 5,280 = miles

Which of these documents does NOT provide appropriate agency disclosure?

Listing agreement form The purpose of agency disclosure is to warn the unrepresented party that the licensee represents the other party. **The listing agreement doesn't do this; it establishes the agency relationship between the seller and the seller's broker.

Lawrence is a buyer closing on a home for which he's obtaining financing. Which document will give Lawrence an estimate of the costs he'll likely pay at closing?

Loan Estimate The Loan Estimate, required by the Dodd-Frank Act, provides buyers with the costs they're likely to pay at settlement and discloses the mortgage loan specifics, such as its key features, costs, and risks.

Amount of annual interest formula

Loan balance x interest rate = amount of annual interest

Calculating interest

Loan balance x interest rate = annual interest amount

Some important calculations for EXAM

Loan balance × interest rate = annual interest. Annual interest ÷ loan balance = interest rate. Annual payment ÷ loan balance = interest rate (convert to a %) Annual interest ÷ interest rate = loan balance. Divide annual interest by 12 = monthly interest. Monthly payment × total number payments - original loan value = total loan interest amount. The monthly payment credited toward principal = interest portion - interest from the payment. The remainder goes toward principal

Examples of closing costs

Loan fees Appraisal and survey fees Title insuranceLegal fees Real estate commissions Tax and insurance prepayments Transfer fees The LE furnished by lenders provides an estimate of closing costs the buyer will pay.

Loan origination fee equation

Loan origination fee = loan amount x loan origination percentage

Calculating housing and total debt-to-income ratios (STEP 3)

Looking at their monthly expenses of $500 and a maximum house expense of $1,250 per month does put them above $1,650. Either cutting monthly expenses or keeping the house expense below $1,150 are options for this family.

Lot and block example

Lot 6 of Block 3 of the East Subdivision plat as recorded in Map Book 18, Page 11 at the Recorder of Deeds

Buchanan vs. Warley

Louisville, Kentucky Outlawed segregation in residential areas. One of the early successes of the N.A.A.C.P an ordinance at that time that prohibited blacks from living on a block where the majority of the residents were white. Because most of the houses were occupied by whites, Warley was not allowed to live on the block. Buchanan sued to complete the sale. Warley cited the city ordinance as the reason for not completing the sale

Plessy vs. Fergson

Lousiana "separate but equal" doctrine of legalized racial segregation stated that separate facilities for blacks and whites were constitutional as long as they were "equal." The "separate but equal" doctrine was extended thereafter to cover many areas of public life, such as restaurants, theaters, restrooms, and public schools

Luciana feels it is only fair to any prospective buyers that she reveal any and all defects about the condition of her property. After all, if the roles were reversed and she were the buyer, she would want the seller to be honest with her. Based on this information, which of the following statements is true?

Luciana will complete the disclosure section of the Maryland Residential Property Disclosure and Disclaimer Statement form.

FTC pays particular attention to ads that

MAKE ANY HEALTH AND SAFETY CLAIMS

Zoning should adhere to the area's

MASTER PLAN

What was the MCCR named before it changed in 2011?

MD Commission on Human Rights

In a breach of contract, the innocent party can sue for

MONETARY DAMAGES

Lenders don't care about market value, they care about

MORTGAGE VALUE

Covenant of Warranty or Warranty Forever

MOST IMPORTANT In this most important covenant, the grantor promises to protect and defend the title against lawful claims made by others.

Maryland Real Estate Commission abbreviation

MREC

Pamela has had her real estate broker's license for years. Which agency regulates the rules and requirements Pamela must follow to keep her license?

MREC

MREC received Shanice's complaint against licensee Nick two years and eight months after he helped her buy her one-bedroom condo in Silver Spring. Nick and his broker responded to the copy of the complaint MREC sent them. Three weeks later, Nick and his broker received notice via certified mail that Shanice's claim warranted a hearing, which would take place in a week. What's wrong with this scenario?

MREC must give 10 days' notice before a hearing

Kavita is hosting her first open house. She's put out some refreshments, some printouts of the public MLS listing, and a sign-in sheet so she can (hopefully) get some viable buyer leads from the open house attendees. What other document does she need to display?

MREC's open house notice

Which of the following scenarios best describes a net listing?

Maeve wants to get at least $350,000 when she sells her property and tells her listing agent, Stan, that he can keep anything above that amount.

Mortgage bankers (primary loan lender)

Make loans using in-house loan processors and underwriters FUND THEIR OWN LOANS

Zoning Appeals Board

Many localities have a zoning appeals board which oversees challenges to zoning actions.

Historical landmarks

Many localities have enacted land use regulations to protect the historic character of the area, either due to architectural or historic landmark significance. Some municipalities set up historic preservation commissions whose role is to identify and help preserve historic landmarks. In contrast to other zoning ordinances, landmark preservation ordinances are designed to protect buildings rather than the use of the land. Owners of some designated buildings may be prevented from demolishing or drastically changing the building's exterior, or even interior.

Super Sien Status states

Many states give HOA liens a statutory super lien status, meaning that HOA liens take priority over all other types.

Assume you have done your duty and the most current version of the form is in the seller's hands. The seller has decided to complete the disclosure part of the form. What must you ensure the seller does as part of completing the form?

Mark only those items where the seller has something to disclose.

An example of someone who would need a real estate license

Marsha, an attorney who is selling a client's home, as this is something she typically does as part of her practice

What specifically states that real estate licensees must make reasonable efforts to discover all material facts about each property they list?

Maryland Real Estate Commission's Code of Ethics

What does the MD commission of civil rights (MCCR) enforce?

Maryland's anti-discrimination laws in employment, public accommodations, state contracts, and fair housing laws

Mortgage brokers (primary loan lender)

Match consumers with lenders; don't fund loans

1st course of action for a disputed HOME WARRANTY CLAIM

Mediation If this is unsuccessful, disputed claims will go to arbitration.

Credit unions (primary loan lender)

Member-based cooperatives that take deposits, offer savings vehicles, and provide credit for auto and home loans

Metes and bounds (legal description)

Metes-and-bounds descriptions are characterized by a point of beginning, which is where the description both begins and ends. It also uses monuments to mark boundaries. The monuments are thought to have more credibility than the measurements.

Which of these unlicensed assistants may NOT be compensated for their activities in Maryland?

Michael, who shows properties when salesperson Janine is out of town.

Amelia's portfolio is on fire! She's got four upcoming listings and each of them will list for at least $500,000. Before she can count her commissions, though, she's got some paperwork to get through. Since she wants to stay on the right side of the Maryland Property Condition Disclosure Law, which of these sellers does Amelia need to remind about completing the Residential Property Disclosure/Disclaimer Statement?

Mikey, an investor who's selling a property that he converted into a three-unit apartment building Unimproved properties, new construction, transfer tax-exempt properties, foreclosures/REOs, sheriff's/tax sales, court-appointed transfers, and properties that will be converted to commercial use or demolished are exempt from the disclosure requirement.

Linear feet =

Miles × 5,280 = linear feet

Short Sale

Mission: to for for less than the seller owes against the property. Licensees should encourage buyers to opt for owner's extended title coverage for all distressed property sales. Properties may be in less-than-ideal condition. Unpaid taxes and other liens or encumbrances are more likely to require resolution. Time from offer to closing may be lengthy because it takes time to work through all the processes. More complicated transaction paperwork and the need for additional experts, such as attorneys, may increase costs.

Mold

Mold growth is promoted by excessive moisture and lack of air circulation. Excessive levels of mold can cause allergic reactions or act as a respiratory irritant in individuals who are sensitive to it or immune-compromised. In some cases, molds may release potentially toxic substances. - In residential environments, no federal regulations exist regarding mold testing or abatement. Some states have laws that govern mold remediation. The EPA recommends that an expert be engaged to remediate affected areas of over 10 square feet.

Example of a fee simple determinable estate

Morris gives a plot of land to a local parks district as long as the district only uses it for youth soccer fields. He gives the possibility of reverter to his son Joe, someone else named by Joe, or Joe's heirs if the parks district changes the property's use. If the use changes, the estate automaticallyends and the property reverts to whomever holds the possibility of reverter

Determine net operating income using the cap rate formula:

Multiply cap rate by value (R x V = I).

Property tax calculations

Must first know: -appraised value -tax assessment ratio -tax rate Value × assessment ratio = assessed value. Assessed value × tax rate = annual property tax. Divide by 12 (months in a year) to get the monthly property tax amount. Tax rates are expressed as a rate per dollar amount of value, such as $3 per $100. Divide $3 by $100 to calculate the tax rate. So, $3 ÷ $100 = .03. Tax rates can also be expressed as mills. When mills are used, it's a rate per $1,000. So, 30 mills is the same as $30 ÷ $1,000.

Informed consent is _____ in dual agency

NECESSARY AND IMPORTNT

What is an illegal listing agreement?

NET LISTINGS where the seller agrees to pay you a commission above a specific sales amount, e.g., the house sells for $250,000 and your commission is anything above $225,000

Do VA loans require down payments, mortgage insurance, or charge against pre-payment penalties?

NO

Does closing a card rid of funds shown on the credit report?

NO

Does familial status apply in housing for older persons?

NO

If the buyer provides you with a copy of the inspection report and ends up walking away from the transaction, are you obligated to provide a copy of that report to any new prospective buyers?

NO

Is a buyer representation agreement legally binding?

NO

Is credit pulled again before closing?

NO

Is ground rent held in fee simple estate?

NO

Under MD law, can owners of a leasehold or fee simple estate in residential property that could be or is being used for four or fewer dwellings subject the property ground leases?

NO

Can an agent override a POA?

NO An agent may never override the principal's wishes.

If sellers counter-offer a buyer's offer, the original offer is

NO LONGER IN AFFECT the counter-offer becomes a contract if it's signed by the buyer and accepted by the seller.

Is flood insurance typically covered in homeowner's insurance?

NO!!! Flood insurance is purchased separately

Is asbestos abatement required by law?

NO, but recommended

Is the seller always required to repair all items noted in the report?

NO, but the buyer can request the seller to repair the items noted on the inspection another option is to reduce price of house (even though this isn't very common)

Survivorship in tenants in common

NONE; when a co-owner dies, interest can pass according to decedent's will; the beneficiary becomes a tenant in common

Are under contract properties good comparables?

NOT REALLY These properties aren't true comparables because the final sales price isn't yet known.

Commercial banks (primary loan lender)

National banks that offer consumer and business loans for resale on the secondary mortgage market

What may be experienced with ARMs?

Negative amortization may be experienced with some ARMs. This occurs when a payment fails to cover the amount of interest due. When this happens the difference between interest owed and interest paid is added to the loan's principal.

Nelson manages a building with a strict "no pets" policy. Shanna, who is disabled and uses an assistance animal, wants to rent a unit in the building. What action can Nelson legally take?

Nelson can allow Shanna to rent the unit but can't charge a pet deposit or any extra fees

Net to seller formula

Net to seller = sales price × percent to seller

How can you prevent potential loss of client data?

Never clicking unknown links Never opening unknown emails

Alluvion (water process)

New deposits of land that are the result of accretion

Are title issues common with short sales?

No - they are more so common with foreclosures

What are the main benefits to veterans of the VA loan program?

No down payment, no mortgage insurance and no prepayment penalty

The financing instrument in many mortgaged leased properties includes a: (leases and encumbrances)

Non-disturbance clause

Determining DTI ratio backwards

Now, instead of calculating the amount, let's determine the ratio. What if your clients have total monthly debt of $1,000 and a gross income of $3,500 and wants to figure out their debt-to-income ratio? You'll need to work backwards! Take their monthly debt obligations ÷ monthly gross income. = 28.6%

Example 2 of calculating a loan origination fee

Now, let's say you're working with a buyer whose loan is $275,000. If the lender charges a 2% loan origination fee, that would be $5,500 coming out of your buyer's pocket at closing (along with all other closing costs). Loan origination fee = $275,000 × 0.02 = $5,500

Seller owed interest at closing

Number of days in the month of closing × per diem interest = seller interest owed at closing.

Who Can Enforce an Option Contract?

OPTIONEE (buyer) only the seller is bound (unilaterally to the contract), so buyer has power; can choose whether or not to actually buy it

LTV ratio in lender criteria

Obviously, the lower the LTV ratio, the more likely the lender is to make the loan. Remember that different types of loans require different LTV ratios. The primary lender or the secondary mortgage market dictates these ratios. Examples If a primary lender knows that the secondary mortgage market won't buy mortgages if they're above an 80% LTV ratio, that lender won't make 90% loans (at least, not without private mortgage insurance). Hans wants to get a loan for $200,000 so he can purchase a house worth $275,000. The LTV ratio equals the loan amount divided by the purchase price of the house. In this case, the LTV ratio is 73%. This is less than the normal 80% cutoff rate, so Hans should qualify for this loan.

MD Sales Contract: Buyer Notices (Authorization to Provide TILA-RESPA Integrated Disclosures)

October 2015 - title companies had to get the parties' permission to give the forms to anyone— including their agents

Which element of a valid contract is established by getting the signatures of all parties?

Offer and acceptance

Monique received four offers on her client's listing. Offer A is a written offer that the buyer's agent dropped off at Monique's office. Offer B is an offer that the buyer's agent communicated to Monique over the phone. Offer C is a written offer that Monique received via email. Offer D is a written counter-offer from a buyer that Monique's client countered earlier in the week. Which offers must Monique present to her client?

Offers A, C, and D, since they're all in writing

What office did the Fair Housing Act create?

Office of Fair Housing and Equal Opportunity (FHEO)

Aggrieved parties, including licensees, can file fair housing complaints through the

Office of Fair Housing and Equal Opportunity for up to one year following the time the alleged discrimination occurred. Licensees may not file on behalf of any other aggrieved party.

Sub-surface leasing rights (Other less common types of commercial leases)

Often used for minerals, oil, or gas, a company will enter into a lease agreement with the landowner. The company explores the land, looking for minerals, oil, or gas in exchange for a cash payment to the landowner. If the company finds the item, the landowner usually gets a percentage of the item's value. If nothing is found, the lease expires.

Points (in lending)

One loan point is equal to 1% of the borrower's loan amount. Lenders charge loan points (aka loan origination fees) as compensation for processing a new mortgage loan. Origination fees are typically between 1% and 3% and typically can't be more than 3% of the loan value; these fees may be negotiable between the lender and borrower. Borrowers may choose pay discount points at closing to permanently reduce a loan's interest rate.

Ground lease (Other less common types of commercial leases)

One party owns the land and a different party owns the improvements. Land is leased on a long-term basis, often 50-99 years. The lessee builds and owns an improvement, such as an office building, on the leased land. The rent paid is referred to as ground rent. At the conclusion of the ground lease, the improvements become the lessor's property

Uniqueness/Nonhomogeneity (physical land characteristic)

One piece of land is never exactly like another.

Scraping

Online rental scams are created by con artists by stealing or _________ information about properties from online real estate listing

Bonnie is calculating the square footage of a listing. The upper level of the home is 450 square feet. The main floor is 1,200 square feet, including an unfinished laundry area that's 225 square feet. The 1,200-square-foot basement is finished. Bonnie's MLS system disregards below-grade square footage. What square footage will Bonnie mention in her MLS listing and marketing materials?

Only finished above-ground space should be counted in Bonnie's MLS listing. That means the square footage of the upper floor plus the main floor (minus the unfinished laundry area). Bonnie should report 1,425 square feet (450 + 1,200 - 225). 1,425

Mrs. Murphy Example

Owner-occupied buildings with no more than four units (exemptions/exceptions to federal fair housing laws) may be exempt (commonly known as the Mrs. Murphy exemption). The exemption is disallowed if the owner uses discriminatory advertising or if a licensee becomes involved in the transaction in any way. Similarly, roommates who share a rental unit may show preference when selecting a roommate, but not when advertising for one.

Cultivated crops are called emblements and are considered

PERSONAL PROPERTY Owners don't need to dig up the crops and take them when the land is conveyed, but those owners are entitled to taking what they planted when they move out

Monuments are also known as the _____________________

POINT OF BEGINNING

Who can remove asbestos?

PROFESSIONALS ONLY

MD Sales Contract: Condition of Property andPossession

Paragraph 22 states that the sellers will deliver possession of the property to buyer, and that they're responsible for maintaining the property in substantially the same condition it was in on the date the contract was accepted this means, for example, that if a system fails—let's say the dishwasher breaks—the sellers are responsible for fixing it at least to the current condition also says that unless otherwise specified in this contract, the property is being sold 'as-is': take possession with the property being in the same condition it's in now, with the exception of anything identified in any of the inspections that has to be fixed

MD Sales Contract: Adjustments, SettlementCosts, and Transfer Charges (Settlement Costs)

Paragraph 24 covers settlement costs - there are various fees associated with the purchase title exam and title insurance, loan insurance premiums, all document preparation and recording fees, notary fees, and survey fees, where required buyers are also responsible for paying any additional recording fees, not including those involved in clearing title defects

MD Sales Contract: Adjustments, SettlementCosts, and Transfer Charges (Transfer Charges)

Paragraph 25 covers transfer charges 25(A): 'In General' - states that, unless there's another agreement to the contrary, the parties will equally split the cost of the taxes for recording, or any state or local transfer tax 25(B): refers specifically to the first-time buyer-Maryland law states that first-time homebuyers who plan to occupy the residence don't have to pay the state transfer tax-state transfer tax, which is normally 0.5%, is reduced to 0.25%, and must be paid by the seller-the seller must pay all recordation and local transfer taxes

Variance (aka use variance)

Permitted deviation in the zoning ordinance requirements; typically granted when the zoning has created a hardship or burden on the property owner.

Government controls - POLICE POWER

Police power is the government's authority, at any level, to do what it can to ensure the health, safety, and welfare of its citizens. Police power includes licensing, public services, zoning, and building codes.

Which document is used to give a buyer an overview of the title history and information about what is or isn't covered in an insurance policy?

Preliminary report

Profit and loss statement

Prepared on a monthly, quarterly, semi-annual, or annual basis, this report shows whether the property profited during the period or suffered a loss.

Mortgage value

Price at which the property can be loaned on or sold for at a foreclosure sale

Underwriting

Primary factors in loan underwriting include the income, debt ratio, credit score, and credit history. analyze the borrower's credit, capacity, and collateral. They'll review loan documentation to determine the borrower's ability to repay the loan (capacity), ensure that the property value is adequate to support the loan (collateral), and verify the borrower's financial ratios (credit).

Private land use controls

Private land use controls place restrictions on the appearance or use of land by individuals or private entities, as opposed to those placed by a government body.

Accretion (water process)

Process by which water carries rock, sand, and soil and causes land build-up

Security Instrument

Promissory notes are almost always accompanied by a security instrument that pledges the financed property as collateral for the mortgage loan and gives lenders the right to foreclose if the borrower defaults on the mortgage loan. The security instrument may be either a deed of trust or a mortgage.

Property condition that may warrant inspections and surveys (part 6)

Properties that are located within the boundaries of a natural hazard, a specifically regulated area, or an area designated by insurance companies as high hazard may be difficult and expensive to insure. - Sellers might not disclose issues that make a property uninsurable, so buyers should perform due diligence.- Issues that may make a property difficult or impossible to insure include homes that have had a history of claims based on high-risk issues, such as mold, or those located in areas in which there are high claim rates for weather events, such as high wind and hail storms. Any obvious property additions or alterations deserve an investigation as to whether permits were obtained and work was performed correctly. Unpermitted work could result in partial or full disassembly of the work to inspect it, as well as possible correction or restoration to the original state.

Illegal Property Flipping

Property falsely appraised at a higher value, then quickly sold, with the buyer taking the "equity" in the property

ADA and Fair Housing Compliance in Property Management (PART 2)

Property managers must be familiar with fair housing laws, especially when attracting and selecting tenants or when working with property owners. Blockbusting and steering are illegal under the federal Fair Housing Act and must be avoided.

Property Managers and Escrow Accounts (PART 1)

Property managers use trust accounts for moneys collected from tenants, such as security deposits or property management commissions collected in advance from property owners. Security deposits are used to make repairs if the tenant moves out and leaves the unit in poor condition. Rents that tenants paid in advance should also be kept in escrow until they're due. In many states, having a single clearing account to serve as the trust account for all property owners is acceptable. Some states, or a specific property management agreement, may require the property owner to set up an account for an individual property owner. Funds must be deposited within the length of time outlined in state laws and regulations. This is typically one, two, or three business days from receipt. State laws strictly regulate the use of trust funds. It's illegal for trust funds to be mixed with operating funds (commingling) or for trust funds to be used for any operating or personal purposes (conversion).

Closing costs

Property transfer fees that aren't included in the sales price

Equity example

Property value = $350,000.Loan amount = $315,000. Equity = $350,000 - $315,000 = $35,000. Appreciation in value increases equity. Depreciation in value reduces equity.

Which of the following situations may result in inverse condemnation?

Property values decrease because adjacent property was rezoned

Prorated items

Prorations are shared expenses that either party owes at closing are prorated (divided between) the parties depending on when closing occurs.

Assume you are the seller's agent and you hear of an interested buyer. What is it your responsibility to do?

Provide the prospective buyer with a copy of the seller's disclosure/disclaimer statement.

Loft lease (Other less common types of commercial leases)

Provides for rental of floor space of wide-open loft spaces. The tenant may divide the space but can't make structural changes.

Why are disclosure documents provided when closing a loan?

Put borrowers on notice that the sale of their note may occur, and they will likely be reminded of this fact when signing closing documents, but it's always a good idea to make sure any buyers you work with are aware that this can occur MAKE SURE THEY KNOW WHO THEIR LENDER IS

The VA guarantees up to a _____ of the loan limit amount should the buyer default; this minimizes risk for lenders to make up for the no-down-payment VA loan structure.

Quarter of the loan limit amount

What is an example of BPO?

Real estate professional will often just drive by the property and take photos, then complete paperwork for the lender

Real property

Real estate, land, plus the interests, benefits, and rights included with real estate ownership

The Real Estate Settlement Procedures Act (RESPA) ensures that buyers

Receive an estimate of closing costs (on the Loan Estimate (LE) form) from the lender within three days of loan application and a final disclosure of closing costs (on the CD) at least three business days before closing. This gives the buyer the opportunity to compare the LE with the CD and determine what, if any, changes may have occurred.

How can firms reduce risk of compromising client data?

Reduce risk to firm's computers!!! Standard security system policies and procedures should be in place, communicated, and enforced.

Illegal acts based on discriminatory factors:

Refuse to sell or rent a house Offer different terms, conditions, or privileges when selling or renting a house Indicate a preference or limitation when advertising a home for sale or rent Coerce, threaten, intimidate, or interfere with a person's housing rights

Rectangular Government Survey System (legal description)

Regulated by the U.S. Department of the Interior's Bureau of Land Management, divides land into townships and further into sections and fractions called sections. -includes principal meridian, base line, township lines and range lines

Scarcity

Relates to market supply

Maryland Lead Poisoning Prevention Program Disclosure (Maryland Sales Contract Addenda/Disclosures term)

Rental property sellers are required to register any pre-1978 homes with the Maryland Department of the Environment, and use this disclosure to tell buyers about the registration.

Step 8 of the valuation process: Report appraisal value

Report appraisal value

What is the Community Reinvestment Act?

Requires lenders to meet the needs of their communities by investing in development and rehabilitation efforts including those that enable low and moderate income neighborhoods.

To avoid compromising a licensee's IC status, brokerage firms should avoid

Requiring that licensees work set hours, perform work at a specific location, or attend staff or training meetings Providing 401k, health insurance, or other benefits Compensating licensees based on time worked rather than sales output Supplying tools and materials to the licensee

MREC powers

Reserves the right to inspect licensee records at the office during regular business hours, provided that reasonable notice is given before the inspection licensees must be able to immediately provide records, books, and accounts related to trust money failure to maintain records as described in Maryland law could lead to disciplinary action by the commission and/or civil or criminal action by the appropriate authority

Additional MD lease requirements

Residential rental property owners must, in a written lease or by posting a sign in a conspicuous place on that property, list the landlord's (or other authorized person's) name, address, and telephone number. In Baltimore City, anyone who owns a residential rental unit—occupied or not—must file an annual registration statement with the Baltimore City Commissioner of Housing and Community Development.

In MD, what is it ILLEGAL for landlords to do?

Retaliate by evicting a tenant based primarily on the fact that the tenant notified the landlord or housing inspector that there are lead hazards, or a child with an elevated blood lead level, in the property. Retaliate because the tenant provided notice to the landlord or a public agency about a good-faith complaint regarding a violation of the law, the lease, or a condition on the premises that is a substantial threat to the health and safety of the occupants; or retaliate because the tenant has filed or testified in a lawsuit against the landlord; or retaliate because the tenant has participated in a tenants' organization by: -Arbitrarily increasing rent or decreasing a service to which the tenant is entitled -Evicting or threatening to evict the tenantand/or terminating a periodic tenancy

Which of these statements about the homeowner's rights of redemption is true?

Rights of redemption with REOs may be less of a problem than with other distressed properties

Ron prides himself on providing his buyer clients with consistently stellar representation. His latest buyer client, Tammy, is purchasing a fixer-upper on Walnut Street, just a stone's throw from the railroad tracks. What's Ron's responsibility regarding making sure Tammy is informed about the property's condition?

Ron should make sure that Tammy understands her rights and obligations regarding the property disclosure/disclaimer statement.

Building codes

Rules that specify the standards to which certain building projects must comply. These codes help ensure safe, properly functioning buildings for their occupants. Building codes address the method of construction, materials used, and the building's safety and sanitary standards. State building codes provide bare minimum standards for all residential and commercial buildings in the state, while local codes provide additional regulation. If there is no state or local code, builders must comply with the federal building code. Building permits are issued locally as a signal to a builder or contractor that building codes must be adhered to. During or after completion, building inspectors review work to ensure building code compliance. Most municipalities permit existing construction to be sold and occupied without meeting current building codes.

What is the purpose of rural loan programs?

Rural development loans are government loans specifically for family farms and rural home financing. They offer a longer payback period to reduce monthly payments.

Who has ultimate responsibility for the safety of the seller's family while performing Covered Work?

SELLER

Who ultimately determines what the listing price for the property will be?

SELLER

_______building codes provide bare minimum standards for all residential and commercial buildings in the state, while local codes provide additional regulation.

STATE

Title Theory States

STATES THAT USE A DEED OF TRUST AS A SECURITY INSTRUMENT The lender/trustee holds legal title to the property until the mortgage loan is paid in full.

Meetings held by planning and zoning boards must be open to the public because of

SUNSHINE LAWS

Ari owned an acreage in a rural area. He sold a small portion of it to a neighbor in an informal transaction. There's no record of the sale or change of ownership. A developer has offered Ari several million dollars for the entire acreage, and Ari eagerly accepts the offer. What covenant is Ari in danger of violating?

Seisin The covenant of seisin guarantees that the grantor owns the property that appears in the deed. Because the sale of property to Ari's neighbor was never recorded, his deed still shows that he owns the entire parcel.

Prepaid =

Seller credit, buyer debit

Accrued =

Seller debit, buyer credit

Licensees and their role in the presence of sex offenders

Sellers and licensees need not disclose the presence of nearby sexual offenders. Buyers can be directed to websites or other resources to research information made available by Megan's Law.

Notice & Disclosure of Deferred Water & Sewer Charges (Maryland Sales Contract Addenda/Disclosures term)

Sellers of properties subject to deferred water or sewer charges are required to disclose such charges to buyers. If buyers discover the charges after settlement, the sellers are liable for paying the fees.

Disclosure of Leased Items Addendum (Maryland Sales Contract Addenda/Disclosures term)

Sellers use this addendum to disclose the inclusion or exclusion from the sale of any items on the property, such as solar panels or a fuel storage tank, that are leased.

Conservation Easement (Maryland Sales Contract Addenda/Disclosures term)

Sellers use this addendum to tell buyers if their property is encumbered by one or more conservation easements, or other restrictions that limit or affect the property usage. Sellers must also provide buyers with copies of those easement(s).

Third Party Approval (Maryland Sales Contract Addenda/Disclosures term)

Sellers use this form when written approval of one or more third parties is required to sell the property. The third parties may include: lenders, mortgage insurers, bankruptcy trustees, tax authorities, and/or private parties.

Homeowners Association Notice (Maryland Sales Contract Addenda/Disclosures term)

Sellers who are selling a property located within a homeowners association (HOA) are required to disclose that fact, along with any HOA-related fees and assessments.

The following activities are considered covered transactions related to anti-discrimination laws:

Selling or renting housing or residential lots Providing real estate brokerage services Performing appraisals or providing financing Advertising housing for sale or rent

Dorothy, a Maryland broker, deposited her buyer client's earnest money funds a month ago. The seller backed out of the contract two days before closing and claimed she was owed the earnest money because of the time the property had been taken off the market during contract negotiations. The buyer wants his earnest money back. Which of the following is NOT an option that Dorothy has regarding the dispute?

She can file a claim with the Maryland Real Estate Commission, which would then decide how the funds should be disbursed.Brokers may: hold disputed funds until both parties authorize their disbursement, file a bill of interpleader and deposit the funds with the courts to decide their disbursement, or hold the funds until one party files suit and a court orders disbursement.

Cheyenne has been working with a buyer, though they don't have a signed agency agreement. When he finds a house he likes, Cheyenne helps him fill out the offer paperwork and submits it to the seller's agent. In what capacity is Cheyenne contributing to this transaction?

She is a sub-agent for the seller

Monica's business is booming. She's representing an owner who's selling a $500,000 home on one side of town, and a buyer who's purchasing a $300,000 property on the other side of town. As it happens, the seller and buyer both know each other from church and have been talking to others about Monica's talents, which has brought in several new leads for her to pursue. What type of agency relationship does Monica have with the seller and buyer?

She is each party's agent

Permanence on Investment (economic land characteristic)

Some improvements are long-term, stable investments with stable returns over time.

Info about secondary market

Some lenders carry their own loan portfolios, but most want to be able to free up their funds to make more loans they do this by packaging loans and selling them on the secondary market, either directly to another bank or lending institution, or to their BFFs: Fannie and Freddie.

Property condition that may warrant inspections and surveys (part 4)

Some structural issues are fairly simple to spot, while others are hidden. The presence of any of these issues indicates a need for further investigation by a trained specialist: 1) Discolored or curling shingles, water buildup or ice damming in gutters, damage to flashing, water damage along the fascia, and cracks, holes, or rot on the soffit 2) Missing, cracked, displaced, or otherwise damaged roof components 3) Creosote buildup on the exterior of the chimney, drafts near the fireplace, a cracked or sloping hearth or firebox, and loose or crumbling bricks 4) Cracks in foundation or basement walls, moisture in the basement, misaligned doors and windows, cracks in drywall, and separation around garage doors 5) Damaged or broken window glass and screens, windows that stick or won't stay open, damaged hardware, and leaking or damaged seals 6) Soft or uneven floors along with discoloration along walls and a musty odor 7) Discoloration in the attic or around windows and doors

What is included in measuring structures

Spaces must be contiguous, meaning finished and unfinished spaces must be attached to one another to be included in the total measurement calculation. Finished spaces can only be included if attached to the main property via stairways or hallways

Lands Contaminated with Hazardous Waste

Special purpose landfills contain hazardous waste, such as radioactive materials from nuclear power plants and toxic chemicals. Particularly toxic material is often placed in sealed containers and buried far underground in "tombs" that are designed to remain impermeable for thousands of years

Acres =

Square feet/43,560 = acres

Jones vs. Alfred H. Mayer Co.

St. Louis, Missouri district court ruled in favor of Mayer, saying that the federal law that protected discrimination in housing applied only to state action and did not apply to individual owners' private refusals to sell U.S. Supreme Court disagreed with the district court's interpretation and stated that it applies to all sales and rentals, even private ones, and it would bring the law in line with the 14th Amendment, which addresses citizenship rights and equal protection under the laws stated definitively that racial discrimination is not allowed in any sale of property within the U.S.

Puffery

Statement that appears to a reasonable person as an exaggeration that wouldn't be relied on. Puffing is permissible (though perhaps not wise).

Lien Theory States

States that use MORTGAGES AS A SECURITY INSTRUMENT The mortgage places a lien against the property it secures. The lender holds the lien, and the borrower holds legal title to the property.

Deed of Trust

States that use a deed of trust as the primary security instrument are referred to as title theory states because the lender/trustee holds legal title to the property until the mortgage loan is paid in full. When the loan is paid in full, the lender issues a release of deed of trust and the trustee issues a reconveyance deed. The reconveyance deed is required because the trustee retains the legal property title until the loan is paid.Lenders also mark the promissory note "paid" and return it to the borrower. If foreclosure becomes necessary, a power of sale clause in the deed of trust permits the lender to use a non-judicial foreclosure process; e.g., the lender doesn't have to go to court to enforce foreclosure proceedings.

Steps of a CMA

Step 1) -touring property -taking notes about property, features, amenities, room sizes, updates needed, etc .Step 2) -select 3-6 similar properties that have sold recently in the area, and check at what prices they sold-hardest part Step 3) -make price adjustments based on comparisons of the recently sold properties to the subject property

Valuation process of the uniform standards of professional appraisal practice (USPAP) (7/8 steps)

Step 1) State the problem Step 2) List the data needed and where to find it Step 3) Gather the data Step 4) Determine the property's highest and best use Step 5) Estimate value of the land Step 6) Estimate property value using the 3 approaches to valueStep 7) Reconcile the dataStep 8) Report appraisal

Measuring structures

Structure area is stated in square units, i.e. square feet, square yards, etc. Structure measurement may be used to perform per-square-foot property calculations.

Covenants, conditions, and restrictions (CC&Rs)

Subdivision developers may place covenants, conditions, and restrictions (CC&Rs) (aka restrictive covenants) on all properties within a development. CC&Rs are rules established by developers or homeowners associations that govern properties and owners in the community covered by the CC&Rs.

What principle is the cost approach based upon?

Substitution

What principle is the sales comparison approach based upon?

Substitution

What is novation?

Substitution of one party for another, with the full and complete release of the original party from any obligations under the terms of the contract

Example of a Deed Transfer That May Occur in Maryland

Sylvia, a minor, conveys her real property to her aunt, Josephine. Josephine later sells the property to Ralph. She doesn't bother to tell Ralph that the property was originally conveyed to her by a minor. When Sylvia reaches the age of majority, she can repudiate her transfer, and Ralph's ownership is therefore invalid. Of course there would likely be a lawsuit, and an attempt will be made to make Ralph "whole" by recovering his funds, and perhaps damages, but you can see the possibility for issues here. Because of the danger, it is best to ensure that the chain of title does not include conveyance by a minor.

Pest infestation signs

TERMITES - mud tubes or holes bored into wood; tiny wings or fecal pellets BEETLES - holes bored into wood CARPENTER ANTS - holes bored into wood; unexplained sawdust (frass)

Tenancy in common is generally considered

THE DEFAULT ARRANGEMENT if the deed doesn't specify the tenancy of the co-owners

The value in the LTV ratio is

THE LESSER OF EITHER APPRAISED VALUE OR SALES PRICE

TRID

TILA/RESPA Integrated Disclosures. The Dodd-Frank Act implemented use of these forms for all federally related mortgage transactions. These forms aren't required for home equity lines of credit (HELOCs), seller financing, or reverse mortgages.

TILA/RESPA Integrated Disclosures (TRID)

TRID = a combination of TILA and RESPA Lenders must provide the Loan Estimate (LE) to applicants within three business days of loan application. Lenders must provide the Closing Disclosure (CD) at least three business days before closing TRID disclosures apply to financed home purchases, most loan assumptions, refinances, and home improvement loans

T or F: A Maryland agent working with a buyer who refuses to sign a buyer representation agreement is considered a sub-agent.

TRUE

T or F: As part of acknowledgment, the grantor must state the deed signing is voluntary.

TRUE

T or F: Both special use permits and variances require a public hearing before they're granted.

TRUE

T or F: Bulk zoning applies to both residential and commercial zoning.

TRUE

T or F: By law, any deposits made prior to settlement must be held in an escrow account.

TRUE

T or F: For the purpose of calculating days, the count of days begins on the day following the day an act or notice is required to be performed or made.

TRUE

T or F: If a buyer is not represented by a licensee, the seller's agent is responsible for ensuring that the buyer receives a copy of the completed disclosure and that the buyer understands their obligations with regard to the form.

TRUE

T or F: If the buyer is putting earnest money down, the buyer must specify the exact amount in the Residential Contract of Sale.

TRUE

T or F: If the contract is assigned, the original parties remain obligated to the terms and conditions of the contract until settlement.

TRUE

T or F: If the listing agent is not aware of a prospective buyer until that buyer presents an offer, the listing agent should immediately provide a copy of the form upon receiving the offer.

TRUE

T or F: If there is any dispute or litigation between the buyer and the seller over what happens to the deposit in a breach of contract situation, the broker holding that deposit can pay it into the court handling the dispute.

TRUE

T or F: It is the buyer's responsibility to propose a realistic settlement date.

TRUE

T or F: Maryland law requires that all buyer agency agreements contain a provision for the early cancellation of the agreement by either the broker or the client.

TRUE

T or F: Once a deed is acknowledged by the executing party, it can be recorded in the county clerk's office in the county where the property is located.

TRUE

T or F: The contract contains the final and entire agreement between the parties.

TRUE

T or F: The contract is interpreted and construed by the laws of the State of Maryland.

TRUE

T or F: The earnest money is credited against the buyer's closing costs at settlement.

TRUE

T or F: The sales contract can be assigned with the written consent of both the buyer and seller.

TRUE

T or F: The seller is required to deliver the property free and clear of trash, and 'broom clean' when they leave it.

TRUE

T or F: The settlement date must be a specific date.

TRUE

T or F: There is typically no obligation to share a prior inspection report with a new prospective buyer.

TRUE

T or F: To be recorded, a deed must be acknowledged.

TRUE

T or F: Unless the buyer defaults, any interest that is made on the deposit while it is in an interest-bearing escrow account is given to the buyer.

TRUE

T or F: if a transaction has already closed, the buyer can sue the seller for breach of contract/fraud

TRUE

T or F: A mortgage insurance premium (MIP) applies to all FHA loans for the life of the loan

TRUE it's paid as an upfront charge at closing then as an annual premium until the loan is paid off or refinanced.

T or F: Failure to present the Maryland Residential Property Disclosure and Disclaimer Statement to the buyer opens the licensee up to disciplinary action.

TRUE the failure could result in the buyer rescinding the contract

Savings and loan associations (primary loan lender)

Take savings deposits and make loans

Condemnation

Taking private property for public use, with fair compensation to the owner; exercising the right of eminent domain. 1) Taking 2) Condemnation action 3) Inverse condemnation

Moratorium

Temporarily halts new property development

Eva, Stella, and Lynn own a vacation home two blocks from the beach. Sadly, Stella passed away this winter, and so when summer arrives Eva and Lynn will be sharing the home with Stella's nephew Drew, to whom Stella willed her share of the property. What type of ownership is this?

Tenancy in common This is a form of shared ownership, but only tenancy in common provides for inheritability—the other forms share the rights of survivorship (the existing tenants assume the deceased's share of the property)

Breach of contract remedies at a glance

Terminate: -unilateral rescission -mutual rescission Accept: -accept partial performance -liquidated damages Sue: -for monetary damages -for specific performance

ADA and Fair Housing Compliance in Property Management (PART 3)

The Americans with Disabilities Act, or ADA, is also important for property managers. While the ADA is important in commercial property management, apartment buildings are generally subject to ADA regulations. Landlords and property managers must modify existing practices and rules to accommodate tenants with disabilities. Commercial tenants may be responsible for providing necessary accommodations as provided in the lease agreement.

Implied warrant of habitability (not a rent escrow law)

The Baltimore City Code states that if a landlord offers a lease on a property where humans will live, the landlord is, in effect, implying that the rental premises are fit for human habitation this means that the premises do not have any conditions that endanger the tenants' life, health, and safety, including, but not limited to, vermin or rodent infestation, or the lack of sanitation, heat, running water, or electricity

Who oversees the Federal Telephone Consumer Protection Act?

The FCC (Federal Communications Commission)

Which of these statements accurately describes finance- and housing-related legislation?

The Fair Housing Act of 1968 prohibited discrimination in the sale, rental, and financing of housing based on race, color, religion, or national origin

Farmer Mac

The Federal Agricultural Mortgage Corp - a privately owned and publically traded company established by Congress to create a secondary market for agricultural mortgage and rural utilities loans.

Who provides a search service that homeowners can use to determine if their property lies in a flood zone?

The Federal Emergency Management Agency (FEMA)

FHFA

The Federal Housing Financing Agency

What Happens If a Licensee Mishandles Escrow Funds, Or Does Not Keep Mandatory Records?

The Maryland Real Estate Commission may impose disciplinary actions, including up to a $5,000 penalty per violation on licensees

Additional Contracts and the disclosure/disclaimer statement (Maryland Residential Property Disclosure and Disclaimer Statement)

The Maryland Residential Property Disclosure and Disclaimer Statement must be provided by the seller to the buyer upon or before entering into a contract of sale with the buyer, except: -In the case of a land installment contract, when the disclosure or disclaimer statement must be delivered to each purchaser before the execution of the contract of sale by the purchaser -In the case of an option to purchase agreement, or a lease agreement containing an option to purchase provision, when the disclosure or disclaimer statement must be delivered to the purchaser before the purchaser's execution of the agreement

Which entity helps homeowners in flood zones obtain affordable flood insurance?

The National Flood Insurance Program (NFIP)

USDA Rural Loan Programs

The U.S. Department of Agriculture (USDA)offers some state and local mortgage loan programs. The USDA Farm Service Agency (FSA) offers direct guaranteed loans to farmers and ranchers and for rural housing. -Congressional appropriation funds these loans. Rural development loans are government loans specifically for family farms and rural home financing. They offer a longer payback period to reduce monthly payments.

VA Guaranteed Loans

The U.S. Department of Veterans Affairs (VA) guarantees loans made to qualifying veterans. VA loans don't require down payments or mortgage insurance and have no pre-payment penalties. VA loan eligibility depends on the length and type of service, but in general are available to military members who have served 181 days active duty or three months during war time. Most VA lenders adhere to conventional conforming loan limits. This doesn't limit the amount that buyers may borrow, but borrowers whose loans exceed these limits must make a down payment.

Do Not Call Registry (DNC)

The act prohibits calls to consumers before 8 a.m. or after 9 p.m., anonymous and robo calls, and calls to cell phones. The DNC requires licensees to check the DNC registry at least every 31 days and drop any disconnected, registered, or reassigned phone numbers from their contact lists.

Termination of an agency relationship through EXPIRATION

The agency relationship will end if the agency agreement between agent and client expires.

Buyer Representation Agreement (contract)

The agreement should address compensation as well as obligations the parties have to one another. Other common elements of a buyer representation agreement include a general description of the property sought by the buyer including price, location, size, etc. The buyer's duties per a representation agreement include authorizing the agent to locate and show properties, while the agent's duties include showing properties, assisting in negotiations, notifying the buyer of any material changes, and providing guidance.

Who is required to sign and date the MAR's "Notice to Buyer and Seller of Buyer's Rights and Seller's Obligations under Maryland's Single Family Residential Property Condition Disclosure Law" form?

The buyer, seller, and their agents to acknowledge receipt of the notice that both parties have been informed of their rights and obligations under Maryland law

The property tax aspects of transferring real property include:

The calculation of property tax owed by both the buyer and seller at closing. The possibility that a sale will trigger reassessment of the property and increase taxes. Review of the title commitment to ensure that there are no tax liens against the property. The buyer's potential income tax deduction for property taxes and mortgage interest paid. The seller's potential capital gains tax paid on the financial gain resulting from the property sale. Federal tax laws may permit sellers to exclude proceeds (up to $250,000 or $500,000 if married and filing jointly) of the sale of their primary residence from capital gains taxes.

Chain of title

The chain of title establishes the path of property ownership from its first owner to the current owner. The chain begins with the current owner and works backwards.

Cost Approach (appraisal approach)

The cost approach is based on the concept that the entire property is worth the sum of the value of the land and the value of the improvements on that land. The value of land (as though it were vacant with no improvements on it) plus the depreciated cost of recreating the existing improvement equals the market value. ***The cost approach assumes the land is vacant and bases the opinion of value on highest and best use. Looks at curable depreciation, incurable depreciation, replacement cost and reproduction cost **Depreciation - external depreciation, functional obsolescence and physical deterioration

Maryland salesperson Claire has been licensed for a little over a year. She's a bit of an overachiever, so she's already completed 12 hours of her required continuing education. Her broker Darnell's license is renewing on August 28. Claire must make sure that her license is renewed by ______.

The date printed on her licenseMaryland salespersons, associate brokers, and brokers renew their licenses every two years on the same date their license was issued. The license's expiration date is printed on the license.

Debt ratio

The debt ratio (aka debt-to-income ratio or the back-end ratio) is the total of all the buyer's debt obligations divided by income. The required ratio will vary depending on loan type and lender. - Conventional loan: Typically 33% - 36% - FHA loan: Typically 43% - 50% - VA loan: Typically can't exceed 41%

Debra's listing agent, Raj, just called to tell her that he'd received an offer on her house and an earnest money check for $4,500. "I'm on my way over to go through the offer with you. I think you'll like it!" Debra's excited, and she knows exactly what she wants to spend that $4,500 on. What's wrong with Debra's thought process?

The earnest money doesn't belong to Debra it will be held in escrow

Land

The earth's surface extending downward to the center of the earth and upward to infinity, including permanently attached natural objects

Immobility (physical land characteristic)

The geographic location of land is fixed and can't be changed.

Inverse condemnation

The government takes private property but fails to compensate the owner; property owners are forced to file suit to obtain compensation. The taking may be physical through occupation, or regulatory, where government regulations cause the property to lose economic value.

Eminent domain

The government's power to take private land for public use

Covenant of Quiet Enjoyment

The grantor assures that the grantee's use and enjoyment of the property will be unimpaired and unrestricted, subject to public police powers and private deed restrictions.

Covenant Against Encumbrances

The grantor assures the grantee that there are no encumbrances against the title other than those identified in public records or the deed itself.

Covenant of Right to Convey

The grantor has the right to convey both title to and possession of the property.

Covenant of Further Assurances

The grantor promises to take whatever actions necessary (within his power) to correct any title defects.

Housing ratio

The housing ratio (aka the front-end ratio) is the borrower's projected monthly housing expense (principal, interest, taxes, insurance, second liens, and association fees) divided by income. - required ratio will vary depending on loan type and lender. - Conventional loan: Typically 25% - 28% - FHA loan: Typically 31% - 40% - VA loan: Lenders ignore the front-end ratio

Progression

The increase in property value from increased surrounding property values

Buyers with a new loan also usually owe interest at closing because the first monthly payment is generally made on the first day of the second month after closing:

The interest is based on a per diem. So, if closing is on June 15th, the first monthly payment is made on August 1 and interest is calculated during all of July. Since closing was June 15, the purchaser will owe interest on this loan from the day of closing through the last day of the month.

Tenancy by the Entirety

The joint ownership, recognized in some states, of property acquired by husband and wife during marriage. Upon the death of one spouse, the survivor becomes the owner of the property. Only available to married couples, this form of ownership also includes unity of time, title, interest, possession, and marriage-also has right of survivorship!!! -creditors of one spouse can't attach liens to or sell the interest of the debtor spouse; only creditors with claims against the couple may attach and sell the interest of the property owned in this manner -one spouse can't transfer interest in the property without the consent of the other spouse. Tenancy by the entirety can't be reduced to tenancy in common or joint tenancy -such a change of ownership would require divorce, an annulment, or for the couple to amend the title

Self-help eviction

The landlord takes matters into his own hands and evicts the tenant without using legal procedures.

Some option agreements are a lease with the option to buy:

The lessees have an option to purchase the leased property should they choose to exercise the option. If they violate any of the lease terms while the option is active, they lessor may terminate the option contract.

Seo-yun completed all of her Maryland salesperson licensure requirements and submitted her documentation and licensing fees to the commission. A few days later, her broker presented her with her new license. What's wrong with this scenario?

The license should have also come with a pocket card

Bridget represents Colin, who's buying Hugh's house. Darcy represents Hugh. Hugh completed and signed the Residential Property Disclosure/Disclaimer Statement, and Colin reviewed and signed it. Hugh and Colin also signed the Section 10-702 notice form, and their agents made sure a copy of the form and the disclosure statement were included in the finalized contract. What's missing from this scenario?

The licensees also need to sign the notice form.

Justine's seller client needs to repair the property's roof, and Justine has recommended a contractor to her. In addition to the contractor's name and the date that Justine verified his registration with the Maryland Home Improvement Commission, what else does Justine need to give her seller client?

The link to the Maryland Home Improvement License Search on the DLLR website

Loan to Value Ratio (LTV)

The loan-to-value (LTV) ratio is the percentage of a property's value the bank loaned/will loan on. It's the ratio of the loan amount to the property's value, where value is the lesser of either appraised value or sales price. LTVR = (loan amount ÷ value) × 100.

LTV

The loan-to-value ratio (LTV) is the ratio of the loan amount to the property value (sales price or appraised value, whichever is LOWER); e.g., a $160,000 loan on a $200,000 home gives us an LTV of 80% ($160,000 ÷ $200,000 = .8, or 80%). Stated another way, a 20% down payment on a $200,000 loan is equal to $40,000 ($200,000 × .2 = $40,000). This gives borrowers an LTV of 80%

Front footage

The measurement of a parcel of land by the number of feet of street or road frontage. length of property along a street, highway, or waterway

Alison and Brent are financing their house purchase of $232,500 with an FHA loan. Their credit score qualifies them for the minimum down payment. What do they need to put down?

The minimum down payment for an FHA loan is 3.5%, so Alison and Brent's down payment needs to be $8,137.50 ($232,500 x 0.035).

When a leased property is sold, the existing leases remain in force. The new owner can't just kick existing tenants out. The tenant can continue to occupy the property through the end of the term. Additionally, if the lease agreement includes the right to renew the lease, the new owner must honor that right and allow the tenants to renew at the end of the term.

The original property owner must disclose to any prospective buyers that an existing lease for the property is in place. The new owners have to take property ownership subject to the terms of the existing lease and effectively become the tenants' new landlord, with all the benefits (rent payments) and responsibilities (property management) that come with that role.

Sale and leaseback (Other less common types of commercial leases)

The owner of a building sells the building (usually to an investor) and then leases the building back. Owners will usually do this as a way to raise extra capital. The original owner gains access to the equity, and the new owner has a reliable source of rental income.

Keisha is a real estate salesperson in Maryland. She's got a new listing and is anxious to advertise it for sale. What must she have first so she can do this?

The owner's permission to advertise the property

Police power - eminent domain

The power of the government to take private land for public useis the ultimate police power "We want it, we take it. However, we will pay you for it, and we'll pay fair market value, too" -includes taking and condemnation

Property condition that may warrant inspections and surveys (part 3)

The presence of pests (e.g., of the insect or arachnid variety), mold, and other interior hazards often have telltale signs Interior environmental hazards may include radon, asbestos, and mold. Testing can determine the presence of any of these hazards.

Termination of an agency relationship through MUTUAL AGREEMENT

The principal(s) and agent may mutually agree to terminate an agency agreement.

Assemblage

The process of combing the parcels

Annexation

The process of converting personal property to real property.

Condemnation action

The process of taking title and physical possession of private property using the government's power of eminent domain; the property owner is paid just compensation for the value of the property.

Servient estate

The property on which the easement lies SERVIENT ESTATE SUFFERS THE EASEMENT

Dominant estate

The property or individual who uses the easement holds the DOMINANT estate it's said that the DOMINANT ESTATE ENJOYS THE EASEMENT.

Strict liability

The property owner is responsible for cleanup, regardless of who's at fault.

Why appraise a property?

The real estate and mortgage industries rely on appraisals to ensure that the value of a mortgaged property is sufficient to support the loan amount. Lenders or appraisal management companies generally select and hire appraisers, but the buyer generally pays.

Financing and Lending - lending process application through closing (Cont. Again)

The real estate mortgage industry functions through collaboration between the primary and secondary mortgage markets The primary mortgage market provides loans to borrowers (mortgagors) and is made up of several lender types: 1) Commercial banks 2) Savings and loan associations 3) Credit unions 4) Mortgage brokers 5) Mortgage bankers

If there are only two joint tenants, the death of one dissolves the joint tenancy -

The remaining tenant becomes the owner of an estate in severalty.

Investment value

The return on investment a property may provide

Escheat

The state's power to take the property of a decedent who dies without a will, heirs, or creditors.When the state claims property through escheat, it can dispose of the property to benefit the public.

Taking

The taking of private property by the government for public use through the power of eminent domain.

Constructive eviction

The tenant is prohibited from quiet enjoyment of the premises and vacates prior to termination of the lease agreement.

Title search

The title insurance company performs a SEARCH OF PUBLIC RECORDS in an attempt to discover any potential claims against the property and issues a preliminary report (also called a title commitment) that's a promise to insure the property as long as certain conditions are met.

Contribution

The value of any given change to the property is dependent on the value of the property as a whole. Because of this, the same improvement to different houses may result in an increase in value in one, while the other sees no appreciable change.

Multiple offers

There are several strategies for responding to multiple offers. Countering more than one offer at the same time puts the seller at risk of having agreed to sell one property to two different buyers, which is illegal.

Competitive Market Analysis (CMA)

They help seller clients decide how to price the property and buyer clients decide how much they're willing to pay. CMAs are not appraisals; instead, they're an informal estimate of market value.

Property Inspections (Maryland Sales Contract Addenda/Disclosures term)

This addendum allows the buyer to select and pay for inspections whose primary purpose is to "discover significant and material defects or adverse or dangerous conditions, if any, of the components and systems of the property." These include inspections for such things as structural and mechanical issues, mold, radon, environmental issues, and chimneys.

Seller Contribution (Maryland Sales Contract Addenda/Disclosures term)

This addendum identifies the amount the seller will credit the buyer towards the buyer's settlement costs.

Short Sale (Maryland Sales Contract Addenda/Disclosures term)

This addendum is used when the purchase price isn't enough to pay off existing property liens, brokers' fees, and other sale-associated costs. Third-party approval is required for a short sale.

MD Non-Resident Seller Transfer Withholding Tax (Maryland Sales Contract Addenda/Disclosures term)

This applies only to sellers who aren't Maryland residents. Under the Maryland Tax Code, specific tax requirements may apply to non-residents who are selling property in Maryland.

Income Analysis Approach (appraisal approach)

This approach bases the current property value on potential income that the property can generate for residential investment rental properties, such as single-family homes or residential buildings that comprise two- to four-family units. ****This is the most reliable approach to value when the property being appraised is primarily used to generate rental income, which includes shopping centers, apartment buildings, and office buildings. Investment value can tell an investor the expected rate of return for a property. ***the gross rent multiplier, the gross income multiplier, and the capitalization method for estimating value

Kickout (Maryland Sales Contract Addenda/Disclosures term)

This clause allows a seller to continue to market the house and potentially find another qualified buyer, if the prospective buyers have a contingency to sell their current house in order to purchase the new home. The original buyer must either remove the contingency or decide not to purchase the property.

Charlie represents Sue, a buyer. Charlie is being paid by Claude, the seller, through his brokerage. What's true about this situation?

This doesn't change the agency relationships

Easement by Prescription (type of easement) ILLEGAL

This easement isn't legal, and is created through the continued, uninterrupted, obvious, exclusive, and adverse use of someone's property without permission.

Easement by Necessity (type of easement) LEGAL

This easement type can only be created for the purpose of ingress and egress.

Seller's Purchase of Another Property (Maryland Sales Contract Addenda/Disclosures term)

This form discloses if the seller has a contingency to purchase another property before selling the current property.

Property Subject to Ground Rent (Maryland Sales Contract Addenda/Disclosures term)

This form must be used if the property is sold subject to ground rent, rather than in fee simple, to let the buyers know they're responsible for paying ground rent on the property once they've purchased it.

Notice to Buyer and Seller - Maryland Residential Real Property Disclosure/ Disclaimer Act (Maryland Sales Contract Addenda/Disclosures term)

This form provides notice of the buyer's rights and the seller's obligations under Maryland's Single Family Residential Property Condition Disclosure Law. Sellers of a single-family residential property are required to deliver either a written disclosure or disclaimer of the property's condition to each buyer, on or before entering into a sales contract.

Renovation, Repair, and Painting of Property (lead based paint portion of MD Sales Contract)

This informs you that if certain types of improvements—specifically, 'covered work' on lead-based paint-covered surfaces—were made to a home built before 1978, the contractors must have complied with the EPA's Lead Renovation, Repair and Painting Rule (RRP) this is not required for the seller to work on the seller's own property contractors engaged with seller to renovate, repair, or repaint the property must be certified by the EPA where such work will disturb more than 6 square feet of paint per room for interior projects,more than 20 square feet of paint for any exterior project, or includes window replacement demolition

Trade fixture

This is anything that's attached to leased land or structures that's used in conducting business. Rights and responsibilities differ depending on the commercial lease agreement, but usually tenants may remove trade fixtures when the lease terminates. They must repair any damage created by removing the fixtures.

Mutual agreement

This is best accomplished through mutual written release.

In marketing her new listing, Alice asks the photographer to "touch-up" the photos of the house so that the old roof and siding look as though they are new. Which statement about this is true?

This is deceptive advertising for which both Alice and her broker may be disciplined. This is deceptive advertising for which Alice may be disciplined. Because her broker is responsible for Alice's license-related behaviors, the broker may also be disciplined.

Actual eviction

This is the legal process used to physically remove the tenant.

Adaptability for use (MARIA, basic tests to determine if an item is real or personal property)

This refers to how an item is adapted to the real property. If removing an item would change or eliminate the use of the property, it's likely real property.

Method of annexation (MARIA, basic tests to determine if an item is real or personal property)

This refers to whether the item is attached to the property and how permanent the attachment is.

Budget comparison statement

This report compares actual results from the profit and loss statement to those projected on the operating budget.

MD Sales Contract: Financing

This section says that your obligation to buy the property is contingent upon your ability to obtain a written loan commitment for one of the following types of loans or financing -Conventional Financing Addendum -FHA Financing Addendum -VA Financing Addendum -USDA Financing Addendum -Assumption Addendum -Gift of Funds Contingency Addendum -Owner Financing Contingency -No Financing Contingency-OTHER________

What is title insurance?

Title insurance protects buyers and lenders (through separate policies) against financial loss that might be incurred because of title defects discovered after closing. Title insurance protects sellers by enabling them to convey a clear, marketable title. In the event of a claim, the title company will either pay the debt or take the claimant to court. If the title company pays the claim, it may seek reimbursement from the at-fault party.

What is the goal of the Maryland Real Estate Commission in declaring an area a real estate conservation area?

To curb threats to the racial stability of an area.

In addition to the Understanding Whom Real Estate Agents Represent form, Keira presents the Kellermans with the Consent for Dual Agency form. What is the purpose of this form?

To obtain the clients' consent for the broker/licensee to represent them as a dual agent/intra-company agent

Amortization Chart

To use an amortization chart to calculate a monthly principal and interest payment, find the point in the amortization chart where the interest rate and the term of the loan intersect. This location yields the factor (a number that will appear as a decimal such as 6.43509) you'll use in computing the payment. This factor is per $1,000 of the mortgage.

Brown vs. Board of Education (1954)

Topeka, Kansas 1954- court decision that declared state laws segregating schools to be unconstitutional. Overturned Plessy v. Ferguson (1896) all of the justices agreed to support a unanimous decision declaring segregation in public schools unconstitutional

Total amount paid on a loan formula

Total amount paid on a loan = monthly payment x total number of payments

Commission formula

Total commission = sales price x commission rate

Total number of loan payments formula

Total number of loan payments = 12 (months per year) x number of years of the loan

Traditional Agency Duties (COALD)

Traditional agency duties that spring from old English common law are the foundation for today's six fiduciary duties. Thus, the duties are quite similar: 1) Act in the principal's best interests 2) Disclose any compensation or profit 3) Maintain confidentiality 4) Act with reasonable care and skill 5) Account and care for any property received from or on behalf of the client 6) Obey lawful and reasonable instructions from the principal 7) Do not delegate authority or duty without the principal's consent 8) Avoid and disclose any conflict of interest

In some states, a real property sale triggers a TRANSFER TAX that's collected at closing and payable when the deed is recorded

Transfer tax may be paid by either the buyer or seller, as negotiated between them. Transfer tax rates vary by location, but the rate is usually a percentage of the total sale price or a dollar amount per $1,000 of the sale price.

Example of Fee Simple Subject to Condition Subsequent

Trinity conveys her home to her son, Gabriel, on the condition that the property remain residential. If Gabriel converts the property to some other use, the estate doesn't automatically revert to the original owner; however, Trinity (or her other heirs or successors) has the right to re-acquire full ownership. But she'll have to go to court to do so.

Example of land measurement (3)

Trinity owns a land parcel that is a half mile square. How many acres is it? Each side of the parcel is 2,640 linear feet (5,280 feet in a mile). 2,640 × 2.640 = 6,969,600 square feet 6,969,600 ÷ 43,560 (square feet in an acre) = 160 acres

Effect of economic principles and property characteristics

Types of value that appraisers may be asked to estimate include: 1) Market value 2) Insurance value 3) Replacement value. **Generally, in real estate, the appraiser is asked to estimate market value.

Contracts may be valid but can sometimes be

UNENFORCEABLE For example, a voidable contract is valid, but may not enforceable in a court of law.

Treads and landings are counted in the _______ floor's square footage

UPPER

Credit history

Underwriters also look at credit history, including several factors: -Length of time borrowers have maintained credit -Length of time borrowers have maintained good credit -Late payment history -Available credit used -Types of credit extended (banks, credit card companies, mortgage loans).

Credit Scoring

Underwriters will review borrower credit scores to ensure they fall within the ranges outlined for a given loan product. Credit scores requirements vary depending on whether the borrower is seeking a conventional, FHA, or VA loan.Individual lenders may require higher credit scores that the stated minimum scores as long as they don't do so based on any discriminatory factor.

Which of these was enacted to give electronic signatures, records, and contracts legal recognition equal to that of paper records and signatures?

Uniform Electronic Transaction Act

Once you've exhausted your contributions to a roth IRA, how much can you withdraw?

Up to $10,000 of the account's earnings or money converted from another account without paying a 10% penalty for a 1st time purchase

Operating budget

Usually covering a one-year period, this report projects the income and expenses of operating the property.

Cash flow report

Usually created monthly, this report shows the current financial status of a property. It accounts for income received (such as rent, late fees, etc.) and expenses paid (such as utilities, personnel, repairs, etc.).

Certificate of a reasonable value (CRV)

VA appraisal - loan guaranteed will be lesser of the sales or appraisal price

VA loan amounts in MD

VA will guarantee up to 25% of a loan's value between $144,000 and the conforming loan limit, which is currently $417,000 in most counties this works out to a maximum guarantee of $104,250 that 25% replaces the down payment a lender would normally receive, and it helps veterans get favorable financing terms

Easements affect the use AND ____ of a property

VALUE they have the potential to diminish the property's value.

Property condition that may warrant inspections and surveys (part 2)

Various land/soil conditions may warrant further inspection: -mounded mulch = wood rot -sinkholes = underground storage tanks/buried hazards -protruding vent pipes = underground storage tank -soft spots/mounds = waste disposal site -standing water = drainage issues Property line location, encroachments, and easements may be a concern: -conduct on-site surveys -learn about deed and title history -observe easements/enroachments

Licensees who choose IC status must complete a

W-9 for reporting purposes

Wetlands

Wetlands are areas that are saturated by water in an amount sufficient to support vegetation that grows in the saturated soil. Many states have wetlands regulations, and various federal government agencies share responsibility for protecting U.S. wetlands. -The presence of a wetlands area on a property may impact property value and should be considered in the property appraisal. - Licensees should be familiar with the concept of development limitations on wetlands so they can properly advise clients. - The Clean Water Act provides guidelines for waters, including wetlands. - Only certain structures can be built on wetlands.

Wetlands

Wetlands are areas that are saturated by water in an amount sufficient to support vegetation that grows in the saturated soil. Many states have wetlands regulations, and various federal government agencies share responsibility for protecting U.S. wetlands. -The presence of a wetlands area on a property may impact property value and should be considered in the property appraisal. - Licensees should be familiar with the concept of development limitations on wetlands so they can properly advise clients. - The Clean Water Act provides guidelines for waters, including wetlands. - Only certain structures can be built on wetlands.

Value in use

What a property is worth to the person using it.

Example 2 of calculating LTVR

What if a buyer puts down 20% on a house with a purchase price of $100,000? Twenty percent of $100,000 is $20,000, so the loan amount would be $80,000. Now let's calculate the LTVR: LTVR = ($80,000 ÷ $100,000) × 100 = (0.8) x 100 = 80

Assessed value

What the local taxing authority thinks a property is worth.

Step 1 of valuation process: State the Problem

What's the purpose of this appraisal? What am I trying to solve? By defining the problem, it informs my approach, and what kind of data I need to gather.

Subrogation

When a covered party—such as the property owner or the lender—gives the title insurance company the right to pursue the party who caused the loss instead of the covered party

When does escheat occur?

When a property owner dies without a will in place and no heirs or creditors can be found

Lease purchase (Other less common types of commercial leases)

When a tenant wants to buy a property but can't (either due to financing, title, or tax issues), a lease purchase may be an option. There's both a purchase and lease component to this arrangement. The tenant makes rental payments, and a portion of that payment is applied to the property's purchase price. This continues until the tenant can purchase the property outright.

Equity Skimming

When an investor receives title to a property— often by using a straw buyer—doesn't make the mortgage payments, and usually rents out the home until foreclosure occurs.

Lump sum prepayment plan

When bonus money arrives (tax refunds, etc.), allocate a portion (or all) of it toward principal.The sooner principal is paid down, and lump sum payments are great for this, the less interest you will pay over time. i.e. You receive a tax refund of $2000, and add that to your monthly mortgage payment that month. It reduces your principal owed by $2,000.

Release

When one party to a contract agrees in writing that the other party is no longer held to the provisions of the agreement

Triple net lease

When the tenant is paying for property taxes, insurance, and maintenance along with the rent, the lease is generally referred to as a triple net lease (NNN).

Reliction (water process)

When water gradually recedes and uncovers new land

Additional amendments made to ground lease laws in 2012 (pt 3)

While all ground leaseholders must still register all ground leases, there is currently no penalty for those who do not register. (In addition, for those leaseholders who did not register their ground leases by the September 2010 deadline, and had their ownership rights extinguished under that amendment, those extinguishments have been made void, and all such actions have been reversed.) No additional lease extinguishment certificates may be issued, and any existing extinguishments were made void. All ground lease landlords (leaseholders) must register their leases with SDAT in order to collect rent under the ground lease, and, if necessary, bring civil actions against a leasehold tenant.

Ownership in Severalty/Sole Ownership

With ownership in severalty, one person owns the property with no joint interest by any other person

Debt accounts for X% of your credit score

X=30%

Can any member pursue action against another resident if they aren't complying with HOA regulations?

YES

Can buyers signing the griculturally Assessed Property and Forest Conservation portion of the MD Sales Contract write N/A in blanks for paragraphs that don't apply to them?

YES

Can corporations hold, receive, transfer title, or give, or hold a mortgage to secure a debt owed to the corporation?

YES

Can licensees fill in the blanks on a sales contract form?

YES

Can qualified mortgages be sold on secondary market?

YES

Can silent partners meet the definition of a syndicate?

YES

Can the broker can terminate the agreement at any time, effective immediately, if the seller provides false information or misrepresents any fact to the broker or other third party?

YES

Do licensees legally have to present ALL offers?

YES

Do property tax liens take priority over all other property liens in most states?

YES

Is an escrow account separate from a broker's operating account?

YES

Is insurable title still acceptable to most buyers?

YES

Is taxation a govt. police power?

YES

Is the signed sales contract legally binding?

YES

Is zoning a police power?

YES

Can an Optionee (Buyer) Ever Be Obligated to Exercise the Option to Purchase?

YES MORE COMMON W COMMERCIAL REAL ESTATE option contracts on commercial real estate depend on certain conditions being met— like obtaining a building permit or a zoning change. If these conditions are met, the optionee may be obligated, under the terms of the contract, to exercise the option and purchase the property

Do VA lenders adhere to conforming loan limits?

YES This doesn't limit the amount that buyers may borrow, but borrowers whose loans exceed these limits must make a down payment.

Can title be transferred with outstanding mortgage loan/a lien on the property?

YES! when new buyer purchases prop with the lien in place, the new buyer takes title subject to the existing mortgage

Do you have to let sellers know if you haven't been able to obtain financing for a loan?

YES, before the settlement this says that you'll let the sellers know within a certain amount of time if buyer has been unable to obtain that financing commitment again, a new date is set licensees and buyers talk to buyer's lender to come up with a reasonable date—USUALLY WEEK AHEAD OF SETTLEMENT—then you'll notify the seller and seller's agent of this in writing

Is dual agency legal?

YES, but must take care to keep all confidential information truly confidential. This means they may not disclose one client's confidential information to the other.

Can residents test for radon alone?

YES, there are test kids available

Jorge's firm has just been assigned as the listing brokerage for a foreclosed condo unit in Jorge's own building. Jorge knows that given the unit's condition, it's bound to sell for far less than market value of a nicer unit such as his. Worried that the new listing will bring down his unit's value, Jorge quickly lists his unit at current market price and sells it before the foreclosed listing hits the market—at a price $100,000 less than Jorge sold his unit for. Has Jorge done anything wrong?

Yes, he engaged in self-dealing

Jared wants to purchase property. One of the properties his agent shows him was formerly zoned for commercial use. It has a steep drop off at the back of the property, as well as some soft spots and mounds. Should his agent recommend that he have a home inspector investigate it?

Yes, these are clues that the property may have been used as a waste disposal site.

Victor buys a property from Yolanda for $200,000. Using a land contract, Victor agrees to pay Yolanda in monthly installments of $4,000 over the course of 50 months. Until Victor pays Yolanda the $200,000, who retains the title?

Yolanda

Imagine that you're an active real estate licensee as well as an architect, and you'd like to partner with a builder who's just beginning a development. Which of these creates agency coupled with interest?

You agree to design the houses for this builder in return for getting the listings when the properties are finished.

The Roth IRA exemption (when taking money out for a down payment)

You can withdraw a sum equal to the contributions you've made to your Roth IRA tax- and penalty-free at any time, for any reason this is because you've already paid taxes on the contributions

Scarcity (economic land characteristic)

You can't make more land; what we have now is what we'll always have.

You recently listed an historic home more than 100 years old, which was the site of a suicide many years ago. A spirit is believed to roam the grounds, but the current owner doesn't want this shared with prospective buyers. Which action best demonstrates good faith?

You follow the owner's wishes because the suicide and haunting don't need to be disclosed.

Assume you get back to the office, and another buyer has put an offer on your client's property. What do you do?

You immediately send a copy of the seller's disclosure/disclaimer statement to the buyer's agent.

When can you use your IRA money to buy a house?

You must be a first-time homebuyer!!! -you and your spouse are considered a first-time homeowner if neither of you have owned a house in the past two years

Assume you are the seller's agent. You and your client are sitting down to complete the Maryland Residential Property Disclosure and Disclaimer Statement. What is your first duty with regard to the statement?

You must ensure that the seller has the most current version of the disclosure/disclaimer statement.

Responsibilities of Agent to Customers and third parties

You owe the duties of: 1) Honesty 2) Integrity 3) Fairness 4) Accounting The duty to disclose all known facts (material and/or adverse material) is generally dictated by state law. Licensees need to be aware of state disclosure requirements. The obligations of fairness and integrity requires licensees to disclose their agency relationship with the client to customers they assist, before the third party reveals anything confidential. Licensees have the duty of accounting to customers. Accounting means proper handling of client property, which includes keys, funds, and paperwork.

Let's assume that when you approach the buyer to give them the seller's disclosure/disclaimer statement, you find out that the buyer is not represented by another licensee. What do you do?

You take time to ensure that the buyer understands their obligations with regard to the form.

Special use permits must be granted permission by the

Zoning Board of Appeals

Zoning

Zoning is a police power exercised by a state, county, city, or town government that classifies land based on its current or intended usage.

Slanted ceilings must have at LEAST

a 7 foot ceiling over 50% of the finished floor area) to be included as finished square footage.

How Much Notice Must Be Provided for Lease Termination?

a Maryland tenant may terminate any tenancy by giving the landlord 30 days' notice

What does the FHA and VA require new-home builders to provide? (new construction)

a Warranty of Completion of Construction to protect buyers of newly built homes financed with FHA or VA loans.

If an optionee decides to exercise the option in an option contract, the optionor is required to perform the contract terms, and the contract then becomes

a bilateral contract.

Personal property is transferred using

a bill of sale or receipt

An acceleration clause may be in effect once (used in foreclosures)

a borrower defaults. This clause allows the lender to make the entire loan amount due immediately.

Example of a buydown

a borrower pays the lender two discount points so he can lock into a 5.25% interest rate at closing

What happens when property taxes or insurances rise? (fully amortized loan)

a borrower's monthly mortgage payment will rise accordingly, but the portion that's paid on the principal and interest (the installment payment on the loan) remains constant throughout the loan term even though the installment payment remains the same, the amount of the payment that's applied to the principal and interest do change more of the payment goes toward interest at the beginning of the loan, and principal is paid off rather slowly-each payment is applied loan's principal balance

Example of subtle discrimination

a broker refused to show a house to African-Americans in order to protect them from the known racial prejudice in the area, a predominantly all-white neighborhood

Sole proprietorship

a business of one, or an independent contractor they can use their own name, or their own name in combination with a business name i.e. "Jane Smith, doing business as Wonder Woman"i.e. but you can't use a title without your name: "Wonder Woman" ownership severalty: when only one person owns a piece of prop and title is in that person's name

What could happen if satisfaction of a mortgage isn't recorded?

a cloud could be placed on title without recordation, a subsequent buyer could come along and also purchase the property from the seller—who's getting a great deal, selling the property twice—and record the purchase-first buyer wouldn't be able to claim property

Which of the following os considered a foreign person according to FIRPTA?

a company incorporated in France with regional development offices in the US Corporate entities that are formed outside the U.S. are considered foreign persons for the sake of the Foreign Investment in Real Estate Property Tax Act (FIRPTA)

Notice Regarding Disclosure of Deferred Water and Sewer Assessments (Addenda and Disclosures of the MD Sales Contract)

a contract for the resale of residential real property that is served by public water or wastewater facilities for which deferred water and sewer charges have been established by a recorded covenant or declaration shall contain a notice disclosing info about the deferred water and sewer charges this paragraph was added to emphasize the seller's responsibility to disclose any deferred public water or sewer charges to the buyer before settlement, using the notice and disclosure mentioned in the list of addenda/disclosures, unless the county where the property's located has its own disclosure requirement

A borrow in default may avoid foreclosure through

a deed in lieu of foreclosure, which gives a deed to the lender or mortgagee

Property report

a disclosure document required under the federal Interstate Land Sales Full Disclosure Act provides info about subdivisions/property/land then the buyer has a 7 DAY PERIOD after receiving the report to cancel the purchase agreement -for those who don't provide the disclosure, the buyer can rescind the contract just based on that-developers have plenty of incentive to provide it

DTU (discrimination testing unit)

a fair housing discrimination testing unit receives consumer complaints about housing discrimination and investigates them DTU tests for familial status, race, national origin, religion, and disability

Asbestos

a fibrous material that's dangerous when it begins to deteriorate and becomes friable (easily crumbled or reduced to dust), was used in many materials before the 1970s because of its fire-retardant qualities. Inhaled particles can cause lung damage. - The EPA regulates asbestos use and disposal; some states have enacted laws related to asbestos handling and disposal. - Only licensed professionals should handle asbestos. - No federal laws require abatement of asbestos in residential properties.

Under certain antitrust violation circumstances, penalties may be increased to

a fine of twice the perpetrator's gain or the victim's loss.

First mortgage

a first (or senior) mortgage if a property is foreclosed on, this mortgage is paid out first

Other permitted uses for structures zoned residential may include

a group home, a home occupation, or an accessory use.

What's one of the best ways to protect a buyer's earnest money?

a home inspection contingency

Manufactured home

a home that is constructed with a permanent chassis and wheels because it is made to be transported after it is constructed in a factory, it is towed to its destination and anchored to the ground it can be removed and towed to a different site because the chassis, tongue, axles, and wheels are still attached

Right of first refusal

a landlord selling a leased property give the property's residential tenants the option to purchase the property before that leased property can be sold to someone else

Statute of Limitations in MD

a law that states that, if legal remedy is sought against a person, the pursuer must bring a court action within a specified period of time if a wronged party wishes to pursue a remedy for a breach of contract in the courts, Maryland requires the party to initiate legal action within 3 years in most cases

Eviction (lease eviction)

a legal action by the courts to remove the tenant and the tenant's belongings from the premises after an eviction, the unit returns to the possession of the landlord, who may then lease it again sometimes a landlord will request a lien on the tenant's belongings as security for payment of rent owed

Lis Pendens

a legal notice that a lawsuit is pending that affects the title of a property -this serves as warning to prospective buyers that a pending lawsuit could impact title

Intra-company agent (ICA, designated agent, appointed agent, or assigned agent)

a licensee who is appointed by the brokerage's broker to represent one party in a dual agency (in-house) transactionthis form of agency, where two clients of the same agency are involved in a single transaction, is allowed in Maryland subject to very specific requirements broker appoints one licensee to act as the ICA for one party (the buyer, for example) and a different licensee to act as the ICA for the other party (the seller). In these situations, only the licensee appointed to the client owes fiduciary duties to that client

Subordination agreement

a lien holder will agree to modify the order of priority i.e., a lender may subordinate its mortgage to another mortgage if it is apparent that there will be enough proceeds from the foreclosure to pay off both mortgages

What happens when clients want to sell a home but have outstanding loan debt?

a lien is placed on property

A buydown is essentially

a lump sum prepayment of interest to the lender at closing that buys down the interest rate to below the market rate, either temporarily (e.g., for the first one to three years) or permanently (for the life of the loan) most are temporary Sometimes the lump sum pre-payment is instead added into the cost of the loan, but lenders can't do this without the borrower's express permission

FHA Lending Limit

a maximum loan amount

Qualified mortgage

a mortgage loan that meets specific ability-to-repay rules, including a prohibition on interest-only loans, negative amortization, balloon payments, or excessive loan terms (longer than 30 years)

The Appraisal Foundation

a national organization comprised of representatives of major appraisal organizations and those of related industries

Credit score

a number assigned to a person that indicates to lenders their capacity to repay a loan

Specific performance

a party must do exactly what it agreed to do so if a seller agreed to sell a property and then later reneged, the buyer can sue for specific performance, meaning the seller must sell the property as agreed no other property or monetary damages equal specific performance—only meeting the terms of the original contract qualifies

Periodic Estates: Automatic Renewal Clauses

a periodic estate automatically renews itself for successive tenancy unless one party terminates THIS IS ALSO AN INHERITABLE LEASEHOLD ESTATE which means that if either the owner or the tenant dies, the lease does not automatically terminate the period involved may be any negotiated period of time—even for a single week or month

Variance

a permitted deviation in the requirements of the zoning ordinance requires permission of the ZONING BOARD OF APPEALS could be something as small and insignificant as a nine-and-a-half-foot setback where a 10-foot setback is required, or it could be something more significant

Jim decides to refinance his three-year-old mortgage with a loan balance of $300,000. He has to pay a fee of 5% of the loan amount to the original lender for paying off the mortgage early. What is this fee called?

a prepayment penalty

Private mortgage insurance & conventional loans

a private insurance program which insures the lender for loan amounts in excess of 80% of value protects the portion of a mortgage loan not covered by the down payment it shields the lender if foreclosure becomes necessary lenders figure that if borrowers have more of their own money at stake, they're less likely to default in addition, the higher the down payment, the less the lender has to get out of the property at a foreclosure sale in order to break even

The principle of Highest and Best Use refers to

a property's legal and feasible use that would be the most profitable.

Right of Rescission (Maryland Residential Property Disclosure and Disclaimer Statement)

a purchaser who DOES receive the disclosure or disclaimer statement on or before entering into the sales contract does NOT have the right to rescind the sales contract based on the information contained in that statement a purchaser who DOESN'T receive the disclosure or disclaimer statement before or upon entering into a sales contract has the unconditional right (upon providing written notice to the seller or seller's agent): ***-To rescind the sales contract any time before receiving the disclosure or disclaimer, or within five days following receipt of that statement to the immediate return of any deposits made under that contract -The purchaser's right of rescission terminates if it is not exercised either: *Before applying for a mortgage loan with a lender, provided the lender has given a written disclosure at OR * Before application is made that the right to rescind terminates on application submission **Within five days following receipt of a written disclosure from a lender, who has received the purchaser's mortgage loan application, if the lender's disclosure states that the purchaser's right to rescind terminates at the end of that five-day period

Ground lease

a residential lease or sublease for a specific term—up to a maximum of 99 years—that is renewable forever, subject to the payment of ground rent

Title policies will include (part of title insurance)

a schedule of exceptions, which describes items the policy doesn't cover, such as: -Any liens recorded after the effective date of the title policy, including mechanic's liens, taxes, and special assessments -Any claims not shown in public records -Claims against a title by anyone who lives or lived on the property unless there's a recorded record of tenancy

An example of an exception for a buyer's notice

a seller must not be prohibited from offering owner financing as a condition of settlement

Trust

a special relationship called a fiduciary relationship that is created between the trustee and the trustor written document that transfers title

Who usually is a POA usually granted to?

a spouse, family member, friend, or neutral third party

Assent to foreclosure

a summary proceeding that does not require a specific hearing before the court grants the foreclosure sale

Bridge loan/swing loan

a temporary (for example, 90-day) loan that provides funds for a homebuyer to use as a down payment for a new home, prior to selling the current home is more expensive than an equity loan, but often doesn't require repayment of principal for a few months somewhat risky since the homeowner could be paying for a mortgage on the new home, the mortgage on the old home (until it sells), and the bridge loan all at the same time is best used when the buyer's current home is already under contract

What happens if a landlord does not repair any serious or dangerous defects in a rental unit? (tenants should not refuse to pay rent, as it can result in eviction)

a tenant can pay the rent into an escrow account, which must be set up by the court, and follow all legal requirements. This law gives tenants a way to encourage the repair of dangerous defects on the property

Fee simple determinable estate

a type of fee simple defeasible estate, and an inheritable freehold estate, where the title remains with the new owner as long as the conditions of ownership are being met -if the buyer commits a specific prohibited act, title to the property may automatically be returned to the owner or the owner's successors

Subprime loan

a type of loan that is offered at a rate above prime to individuals who don't qualify for prime rate loans made to high-risk borrowers, at higher interest rates and with higher fees these borrowers usually were turned down by traditional lenders because of poor credit and are seen as less likely to be able to repay a loan are intended to be short-term (about 2-4years), giving borrowers a chance to pay back debts and clean up their credit after this time, borrowers should theoretically be able to refinance into a lower risk, lower-rate loan from a major bank or other financial institution

- Tenants with disabilities must be allowed to reasonably modify their residences to

accommodate their disabilities.

Landmark and historic preservation commissions

accomplish their objectives by recommending ordinances to preserve certain historic neighborhoods, landmarks, buildings, and sites. They also review and approve applications for changes to an existing landmarks that involve construction, demolition, or relocation.

Unauthorized practice of law

acting outside the scope of your license = BAD/ILLEGAL

The Housing and Community Development Act of 1974

added SEX to the list of protected classes Protected classes now read: -Race -color -religion -sex-disability -familial status -national origin -SEX

The Superfunds Amendments and Reauthorization Act (SARA)

added an "innocent landowner" defense to CERCLA. Landowners who performed their due diligence when purchasing a property may be held innocent of clean-up liability if the property is found to be contaminated.

Littoral water rights

address static water, such as a pond, lake, or ocean. Owners with littoral rights have the right to use and enjoy the static water but not divert or contain it.

Riparian water rights

address water that moves through a property, such a river or stream. Riparian rights are classified into one of two categories based on the type of water: 1) navigable 2) non-navigable

FEMA (Federal Emergency Management Agency)

administers the National Flood Insurance Program (NFIP) to help homeowners in flood hazard areas obtain insurance

Group homes can include

adult foster homes, residential rehabilitation centers, etc

General liens

affect real and personal property and include judgment liens, federal and state tax liens, and decedent's debts.

Specific liens

affect the specific real property/properties to which they're attached by agreement or law and include mortgage liens, real property tax liens, mechanic's liens, special assessment liens, vendor and vendee liens, and HOA liens.

Information is material if it

affects a buyer's decision to buy a given property. Different information will be weighted differently based on the buyer.

Who can lender get a deficiency judgment against if lender foreclosures and take the new buyer's prop but it's not enough to pay off the lien?

against the sellers (who didn't pay off their mortgage) lender can technically still foreclose the property when the new buyers take title

Mineral rights

aka subsurface rights, are the rights to drill or dig for minerals on the property.

Records of payments (rent issues)

all Maryland landlords must maintain a system of records showing rent payments, including the dates and amounts of rent paid, and that a receipt was given to cash-paying tenants

MD Sales Contract: Broker Liability/Fee andSeller/Buyer Responsibilities (Broker's Fee)

all contract parties instruct the settlement agent to pay the broker compensation—or broker's fee—at settlement, as was established in their listing agreement, and/or agency representation agreement also says that settlement isn't required before the brokers can be paid

Non-resident licenses in MD

all non-resident licensees (except those who apply for a reciprocal license from Pennsylvania) must sit for the Maryland portion of the licensing exam licensees from some states may also need to sit for the national exam, depending on their resident state's testing requirements commission may also require non-residents to submit additional documentation that proves their professional competence and good character non-resident broker applicants must also pay for a credit report to be submitted to the commission

Acceptance occurs when

all parties have signed a contract, while binding acceptance happens when the signed contract is delivered back to the offeror

Who needs to sign the listing agency?

all persons who have an ownership interest in the property must sign the listing agreement it's your responsibility to ensure that the signatures of all required parties are on the listing agreement the listing becomes effective on the date of the last required signature

Community property rights

all property acquired by either spouse during their marriage is considered community property regardless of which spouse's name is on the title exceptions: property that was gifted, inherited, and in some cases the result of personal injury recovery, which are all considered "separate property" any property purchased during the marriage is owned equally, regardless of whether one or both spouses are on the title

Unless told otherwise, calculate prorations with the seller responsible for expenses and income on closing day. The seller pays expenses through closing day and

all rents due from tenants are credited to the seller through closing day

Exclusive agency

allow only one brokerage to market and sell the property. However, if the seller finds her own buyer, she doesn't pay commission to the brokerage.

Non-exclusive/open buyer representation agreements

allow the buyer to work with many agents during the home search process. If a buyer enters into an exclusive agreement with a broker, any open agreements are terminated.

Open listing agreement

allow the seller to work with multiple agents. They don't always result in a listing agent earning a commission, as only the agent who successfully brings a buyer will be paid.

Incentive zoning

allows otherwise prohibited development in return for the developer providing a community benefit.

Use variance

allows the owner to use the land for a purpose that would otherwise be prohibited by the current zoning to get a use variance approved, the owner has to show that the current zoning restrictions are causing the owner unnecessary hardship

Area variance

allows the owner to use the land in a way that is not normally allowed by the physical or dimensional requirements of the current zoning i.e. the owner of a lot wanted to build a home on a property that was zoned for 10,000-square-foot lots, but the lot was only 9,585

Savings and loan (lender)

also called thrifts—specialize in taking in savings deposits and then lending out through mortgages and other loans they're required to keep their commercial lending at or under 20%, so they're very much tied to consumers and mortgage loans

PITI (principal, interest, taxes, and insurance)

also known as a Budget Mortgage - because it's easy to budget around the known monthly payment. The most common mortgage loan payment includes a portion of the principal balance, current accrued interest, and a 1/12th portion of the expected annual property tax and homeowner's insurance balances due

Land contract

also known as a contract for deed, a land installment contract, or an installment sale agreement, this is a contract between a seller and buyer in which the seller finances the buyer's purchase by retaining the deed to the property while the buyer makes payments toward the purchase price the buyer has the right of possession often there is both a down payment, and at the end of the contract, a balloon payment (which may be a result of the buyer qualifying for a conventional loan) when the loan balance is paid in full, the seller gives the buyer title

Reverse mortgage

also known as a reverse annuity mortgage, this loan is made using the equity in the property, but the homeowner continues living in the home while the lender makes payments to the homeowner and gains corresponding ownership of the property over time when the homeowner leaves the home, the lender sells the property to pay back the amount of the loan and interest this is designed for older homeowners who want to use the equity in their homes to stay in their homes

External Depreciation

also known as economic obsolescence, is caused by factors outside the property (e.g., an airport is nearby, causing noise).

Periodic cap (used in adjustable rate mortgages)

also known as subsequent cap or period cap, limits the amount the rate can adjust

Second mortgage

also recorded, and is placed in junior (subordinate) position to the first mortgage. if a property is foreclosed on, this mortgage is paid out second, if anything is left over from first mortgage payout

Limited partnership

always has one or more general partners who assume liability the other partners are limited in their liability regarding the amount of money they have contributed limited partners have limited authority

Buyer Daphne and seller Kurt signed a sales contract with a definite closing date of May 15. Daphne then learned that she needs to move the closing date to June 15. She'll accomplish this with an ________ to the sales contract.

amendment

Insurance in MD Commercial Leases

amount of insurance specified in the lease is higher than the amount a tenant actually carries and higher than the amount the landlord actually requires tenants may ask the landlord to lower the insurance requirement amounts to meet the amounts the tenant already carries additionally, landlords should specify the amounts of insurance the landlord carries on the building in the lease to provide the tenant with comfort that the building is adequately insured

Per diem rate

amount to be prorated ÷ either 360 or 365.

What type of deed should a grantee always expect receive?

an acknowledgement deed

All TYPES of contracts

an agreement between competent legal parties to do or refrain from doing some legal act in exchange for consideration 1) express (sales) 2) implied 3) bilateral (sales) 4) unilateral 5) enforceable 6) valid (sales) 7) invalid 8) void 9) voidable 10) executed (sales) 11) executory (sales)

Real estate conversation area

an area in which the racial stability has been threatened by the volume of real estate transactions the MD real estate commission has the power to suspend real estate advertising or listing/rental solicitation in a conservation area for up to 24 months

Estate at Will: Notice of Termination

an estate at will may be terminated at will by either party NOT INHERITABLE, which means that upon the death of either party to the lease, the leasehold automatically terminates

Mortgage insurance premium

an insurance required of FHA borrowers that protects a lender against a loss in the event of a foreclosure and deficiency

Buffer zone

and set aside to act as a separation between two conflicting zones

Which institutions make up the secondary market?

annie Mae, Freddie Mac, Farmer Mac, and Ginnie Mae, and lending institutions that buy loans from other lenders and investors make up the secondary market.

Survivorship takes precedence over any devisees named in a will, as well as

any heirs named by laws of descent and distribution

Fiduciary Duty of Confidentiality

any information that could harm your client's negotiating position in a transaction. This includes your client's motivations, time frames, willingness to settle for terms/price other than those offered, and any other information your client deems confidential (unless disclosure is required by law).

A foreign person under FIRPTA is

any person who is either not a resident alien (i.e., holder of a green card) or not a U.S. citizen.

MD Sales Contract: Tax-Related Notices (Maryland Non-Resident Seller)

applies to sellers who aren't residents of Maryland under the Maryland Tax Code, specific tax requirements may apply to non-residents who are selling property in Maryland

If a list price and appraisal price are given in a question regarding loan origination fees, use the _____ price

appraisal price - LENDERS USE THISSSSS

Home inspector (appraisal scope)

appraisal scope: -Written evaluation of one or more of the components of an existing residential building, including the heating system, cooling system, plumbing system, electrical system, structural components, foundation, roof, masonry structure, exterior and interior components, or any other related residential housing component

Certified general real estate appraiser (appraisal scope)

appraisal scope: -for federally related transactions, all types of residential or commercial real property without regard to value or complexity

Certified residential real estate appraiser (appraisal scope)

appraisal scope: -for federally related transactions, one- to four-unit residential properties without regard to value or complexity -commercial properties having a transaction value of less than $250,000

Qualifications for a licensed real estate appraiser (appraisal scope)

appraisal scope: -federally related transactions: non-compplex 1-3 unit residential props w a transaction value of less than $1 million -complex 1-4 unit residential properties having a transaction value of less than $250,000

Appraiser trainee (appraisal scope)

appraisal scope: works under supervision of a supervising certified appraiser

Replacement Cost

approach bases value on the cost to build a functionally equivalent property.

Fannie Mae (FNMA) and Freddie Mac (FMCC)

are Government Sponsored Enterprises (GSEs), which is a privately-held corporation that has a public purpose

Accrued expenses (prorations)

are ITEMS SELLER OWES ON CLOSING but that will EVENTUALLY BE PAID BY BUYER (unpaid current property taxes, for example) and appear in the seller's debit column and the buyer's credit column.

Liens

are a financial claim or encumbrance against a property. Some of the common sources of liens are mortgages, unpaid taxes, unpaid services, and judgments.

Brownfields

are abandoned commercial or industrial sites suspected to contain toxic waste.

The Sherman Act (1890), the Clayton Act (1914), and the Federal Trade Commission Act (1914)

are all federal antitrust laws that protect consumers from tie-in arrangements, group boycotting, price fixing, and market allocation.

Flood zones (aka floodplains)

are an additional environmental concern for homeowners and buyers. Floodplains are low-lying areas of property that are susceptible to flooding because of their proximity to a water source. - Flood zones may be either base (100-year floodplain or 1% chance of a flood in a specific area in a given year) or moderate (500-year floodplain or a .2% chance of flooding in a specific area in a given year). - Lenders that fall under federal regulations must require borrowers who live in special flood hazard areas (SFHAs) to obtain flood insurance as a condition of obtaining their mortgages. - Traditional homeowner's insurance policies DON'T cover flooding. Homeowners must purchase a separate policy or bundle flood insurance with their homeowner's policy. The National Flood Insurance Program (NFIP) helps homeowners in flood zones obtain affordable flood insurance. The Federal Emergency Management Agency (FEMA) provides a search service that homeowners can use to determine if their property lies in a flood zone.

Employment history (borrower creditworthiness)

are borrowers employed, and can they prove it? need documentation to verify income details, such as bank statements, rental or mortgage history, loan balances, W-2 statements, and pay stubs

Contingencies

are conditions that must be met before the agreement of sale is complete and enforceable. Contingencies usually include the actions necessary to remove the condition, a deadline for its removal, and the party responsible for taking the actions to remove the condition. All contingencies to the contract must be satisfied at the specific times and dates called for in the agreement.

GSEs (Government sponsored enterprises)

are corporations that are traded on major stock market exchanges (FNMA and FMCC).

Water rights

are especially important for agricultural use or in areas where a well is needed or water is scarce

Zoning ordinances

are local laws or regulations that implement the comprehensive plan by regulating zoning and land use and are usually enforced at the city level. Zoning ordinances regulate things like lot size, building height, and permitted uses within each zoning classification on a zoning map. Zoning ordinances may not violate the federal Fair Housing Act.

Stigmatized properties

are locations where a death (either homicide or suicide), crime, or haunting or other paranormal activity occurred. Most states do not consider these disclosable issues, but a few states do.

Credit unions (lender)

are member-based cooperatives that provide credit for auto loans and home loans -they take deposits and offer savings vehicles, money markets, and the like -their rates tend to be pretty competitive

Polychlorinated biphenyls (PCBs)

are mixtures of a number of man-made chemicals. PCBs are odorless, tasteless solids or liquids and, prior to being banned in 1979, were used in industrial products and chemicals such as caulking compounds, transformers (including those in fluorescent lighting fixtures), and hydraulic oil. PCBs are classified as carcinogens. Though their use has been banned for many years, products containing PCBs may still be found. In addition, PCBs are thought to build up and remain in the environment (most often in water). Consuming fish from PCB-contaminated water is still a source of concern.

Joint ventures

are not a business enterprise, but a temporary organization formed by two or more parties to invest in real estate (or other investments) -participants may be corporations, partnerships, LLCs, or other entities -the parties may hold title as joint tenants or tenants in common

Parklands zoning

are often public recreation areas administered and controlled by state and local governments

Chlorofluorocarbons (CFCs)

are organic compounds that contain carbon, chlorine, and fluorine. CFCs haven't been linked to health concerns, but they have been linked to ozone depletion. The primary CFC-related concern in real estate is Freon®, which is a coolant used in older refrigerated systems. Amendments to the Clean Air Act in 1990 established new regulations regarding ozone-depleting chemicals, which govern the manufacture, use, and disposal of certain air conditioning, refrigeration, and cooling appliances. The EPA limits use of Freon® (aka R22 refrigerant) and plans a complete ban by 2020, so home warranties may exclude coverage of older HVAC systems that use R22, and homeowners may be required to update, rather than repair, systems that use R22 if they break.

Bounds

are physical features that define the boundaries of the property

Discount Points (pre-paid interest)

are pre-paid interest paid by or on behalf of borrowers at the beginning of the loan to reduce monthly mortgage payments. Discount points (pre-paid interest) = 1% of the loan amount per point. For example, to lower the mortgage interest rate from 5% to 4.25%, the borrower would need to pay 3 discount points, which would then lower the mortgage interest rate 0.75%. Amount paid for points = loan amount × number of points (followed by a % sign).

Enroachments

are structures or objects built on another's land without permission. Encroachments are always by definition ILLEGAL

Payments on a FULLY AMORTIZED LOAN

are sufficient to pay off the loan by the end of the loan term

Roof problems - GUTTERS

are susceptible to water buildup and ice damming

Metes

are the direction and distance of a line forming the property's boundary

Prepaid expenses (prorations)

are those ALREADY PAID BY SELERS but that the BUYER SHOULD PAY A PORTION OF (such as prepaid real estate taxes, utilities paid in advance). These items are credited to the seller and debited to the buyer.

Unfair ads

are those that advertise any business practice or product that's likely to cause injury.

Deceptive Ads

are those that are likely to mislead a reasonable consumer.

Legally Competent Parties (Requirement for contract validity)

are those who have the legal and mental capacity to enter into a contract. Contracts entered into with legally incompetent parties are voidable at the option of the incompetent party, but may be enforced against the competent party

Landlord specialization

as greater risk, and only earns a commission if the tenant client leases space this means one client, one single opportunity because of that greater risk, the reward is often also greater: tenant reps often earn higher commission fees compared to those earned by landlord reps

A license is NOT

assignable or inheritable

Department of Housing and Community Development's Homeownership for Individuals with Disabilities Program (HIID)

assistance is provided through lower interest rates, and the applicant's income must not exceed qualifying amounts, which vary by county

A fair housing specialist reviews the complaint, determines if a violation exists, and, if so,

assists the victim in filing an official complaint.

When should you present and explain the agency disclosure notice?

at initial interview

MD Sales Contract: Non-Assignability to Entire Agreement

ays that neither buyers nor the sellers can assign the agreement to anyone else without both parties' written consent i.e. buyers couldn't assign it to a cousin, for instance, at least not without the sellers' written permission -Paragraph Headings -Computation of Days -Entire Agreement

Equal Credit Opportunity Act (ECOA)

backed up the Housing and Community Development Act by requiring lenders to give businesses and consumers equal access to credit. ECOA prohibits discrimination "on the basis of race, color, religion, national origin, sex, marital status, or age" lenders must offer reasons when rejecting applications, and must respond to all applications within 30 days

Principal (PITI)

balance on the loan/the actual amount owed -as the interest portion of the mortgage payment decreases, the more of the payment is applied to principal

How do firms compensate employee licensees?

based on time worked and must deduct federal and state income taxes from the licensee's paychecks. Firms are also responsible for unemployment and worker's compensation payments and may provide benefits to employees.

Why does the government like property taxes?

bc they're a stable, reliable revenue source

Industrial zoning

be light or heavy manufacturing, and warehouses

Why does sale of note occur?

because lenders that work on the primary market make loans and resell them to lenders that work on the secondary market, service the loan throughout its term, and provide the payment administration

Sufficient quantities of Inhaled or ingested lead-based products may cause

behavioral problems, learning disabilities, seizures, and, in extreme cases, death.

If you're representing the buyer and they want a permit pulled

best to get this out of the way before the buyer purchases the property

In an option to buy lease, the lease is a ____ contract

bilateral contract

Home equity loan

borrower's home equity is used as collateral if the property is owned free and clear, the home equity loan is a first mortgage if not, it is a second or junior mortgage rates on home equity loans tend to be higher than conventional loans, and their term rates shorter

Borrower requested termination of PMI

borrowers may request that lenders terminate PMI when the principal balance on the loan is scheduled to reach 80% of the home's original value borrowers must be current on payments and have a good payment history; they must request the termination in writing and may be required to prove that no junior liens on the property exist borrowers may have to provide evidence, such as an appraisal, that the property value meets an 80% LTV PROCESS CAN TAKE SEVERAL YEARS bc payments are primarily interest in the beginning, but if market is appreciating borrowers may reach this point sooner

Income (borrower creditworthiness)

borrowers must provide the lender with their previous two years of federal income tax returns, which are averaged with their current verified income self-employed people may have more difficulty proving income and meeting the requirements for ability to repay

As an agent with two clients in the same transaction, you owe fiduciary duties to

both parties - you cannot provide undivided loyalty

MD Sales Contract: Mediation of Disputes

both parties agree to mediation as a first attempt at dispute resolution and to split mediation fees, plus related expenses if either party wishes to have their attorney present at mediation, that's fine; each party is responsible for paying for own attorney for that the parties are obligated to mediate any disputes that occur within one year following the actual contract settlement date, or when settlement should've occurred *buyers and sellers split cost of mediation

Bilateral contract

both parties have obligations. Most real estate contracts are bilateral. -For example, a purchase contract contains promises by both parties, so it's bilateral.

Pubic open space

both private individuals and the government can own open space this might be agricultural land, forests, undeveloped shorelines, parks, lakes, etc open space can be as small as a pathway between public areas, or a vacant lot in a large cityit can also be acres and acres of land

MD Sales Contract: Broker Liability/Fee andSeller/Buyer Responsibilities (Broker Liability)

brokers, as well as their agents, sub-agents, and employees, assume no responsibility for the property's condition, or for performance of this contract by the parties to it by signing this contract, buyers—and the sellers—acknowledge that buyers haven't relied on anything the brokers or their representatives have said to the buyer, except for those items specifically stated in this contract **only trust what's in writing**

Properties that have been contaminated by commercial or industrial use may be referred to as

brownfields

Which of the following is most likely to establish workmanship standards when someone is building an addition to their property?

building codes

One area of town has maximum building height requirements and setbacks for the front, side and rear yards. These requirements are all indicative of__________.

bulk zoning

The inspection report is the property of the

buyer buyer must give permission if seller's agent requests it

Home/environmental inspection (Home Inspection and Inclusions/Exclusions portion of MD Sales Contract)

buyer acknowledges that is responsible for cost of home inspections home inspection/environmental inspection contingency MUST BE ADDED IN AN ADDENDUM

If the seller elects to complete the disclosure section of the Maryland Residential Property Disclosure and Disclaimer Statement form, who is required to sign and date it?

buyer and seller

Mortgage interest and insurance are ONLY PRORATED BETWEEN BUYER AND SELLER IF

buyer is assuming seller's loan

What happens if the sales contract doesn't include the fee information?

buyer may back out of the contract and receive a full EMD refund if the buyer discovers the charges after settlement, the seller is liable for paying the remainder, which can be pricey, because some of these assessments go on for 20+ years

MD Sales Contract: FIRPTA, Criminal Activity,and Military Installations (Criminal Activity and Sexual Offenders)

buyer may contact the state, county, or municipal police departments for information about criminal activity or the proximity of sex offenders who live or work near the property, or you can check the sex offender registry on the Maryland Department of Public Safety website this is buyer's responsibility

If seller does NOT notify buyer within the 5 days after receipt of report

buyer may pay for the cost of treatment and repairs exceeding 2% of purchase price IF buyer does not want to cover treatment costs exceeding 2%, buyer may terminate contract upon a written notice delivered to seller

Whose responsibility is it to ensure that a prospective buyer receives a copy of the Maryland Residential Property Disclosure and Disclaimer Statement prior to the buyer making a written offer to the seller?

buyer's and seller's agent

MD Sales Contract: Buyer Notices (Guaranty Fund)

buyers are protected by the Maryland Real Estate Commission's Real Estate Guaranty Fund for losses of up to $50,000 for a claim covers losses that are based on acts—or omissions—by a real estate brokerage if a real estate broker, salesperson, or broker's employee embezzles or otherwise steals money or property from you, or if they do something—or don't do something— which constitutes fraud or misrepresentation

MD Sales Contract: Buyer Notices (Property Owner's Title Insurance)

buyers have the right to purchase an owner's title insurance policy at either standard or enhanced coverage and rates buyers are under no obligation to purchase a policy, and any coverage would be subject to underwriting criteria

MD Sales Contract: Buyer Notices (Single Family Residential Real Property Disclosure Notice)

buyers have the right to receive a disclosure and disclaimer statement from the sellers disclosure and disclaimer statement requires that defects and latent defects—things the buyers might not see on a visual inspection of the property—about the physical condition of the property be disclosed to the buyers

MD Sales Contract: Broker Liability/Fee andSeller/Buyer Responsibilities (Buyer Responsibility)

buyers will be considered in default of this contract if any of the following occurs: 1) you've misrepresented your financial ability to complete the purchase of this house, you fail to apply for financing within the specified time period 2) buyers fail to diligently pursue the financing, you make any misrepresentations on any financing-related documentation 3) buyers take— or fail to take—any action that causes you to be disqualified for financing

How are CC&Rs enforced?

by HOA

How are members of the MCCR appointed?

by governor

How is zoning compliance monitored?

by requiring developers to make application for permits, which are only granted if they're not at odds with zoning ordinances.

A contract is voidable by

by the incompetent or misled party but enforceable against the other party

If using a statutory or calendar year isn't specified

calculate rents based on actual days

If instructed to allocate closing day to the buyer

calculate the seller share up to closing day

What does the DNC prohibit?

calls to consumers before 8 am or after 9 pm -robo calls -calls to cell phones

Lead

can be found in paint, plumbing, dust, soil, and drinking water. Lead causes many health issues, particularly among infants, children, and the elderly. In children, lead-related issues can include behavioral problems, learning disabilities, seizures, and even death. - The federal government doesn't require lead abatement in homes, but some states do require it. - The federal Lead Renovation, Repair, and Painting (RRP) Rule requires contractors who perform tasks that may disturb lead-based paint to be certified and to follow lead-safe work practices.

Reasonable time

can be interpreted differently by the courts, but the courts generally favor the buyers.

Constructive eviction

can occur intentionally or inadvertently when the tenant is prevented from the quiet enjoyment of the premises if the premises have become unlivable due to a breach of warranty of habitability, a tenant may vacate and not be held responsible for lease payments

Quitclaim deed

carries with it no warranties to the grantee. It only releases any of the grantor's property rights to the grantee. The quitclaim deed is typically used to clear up a simple cloud on title.

Tenants must be notified of: (leases and encumbrances)

change in ownership

HUD

charged with enforcing fair housing laws and holding all parties accountable for compliance with these laws and regulations individuals who have experienced housing discrimination can file a complaint with this agency at no cost to themselves Department of Housing and Urban Development (HUD)

If the fixture's status is debatable, the contract should

clarify whether the item will stay or go.

If a fixture should be excluded from the transfer, the sales contract should

clearly identify that the item is excluded from the transaction.

Tenants in common - right to partition

co-owners can request court-ordered partitioning of property to terminate tenancy in common

TLA Exemptions

commercial and agricultural credit, such as a loan to buy an agricultural property for farming purposes, are exempt from TILA disclosure requirements TILA does apply if the purpose of the loan is consumer (personal or family), even if the collateral used isn't personal i.e. Sinclair applied for a home loan. He put up his doggy day care business building as collateral. Because the purpose of the loan is personal, TILA applies.

ellers who terminate an agency agreement before it expires may still owe the agent

commission

Insurance contingencies are

common in sales contracts

Example of a development cost

connection of utilities

Option fee

consideration to a seller in an option contract if the optionee decides not to exercise the option to purchase the property, then the optionor gets to keep the option fee—and sell the property to someone else

What does the recording of a deed constitute?

constructive notice as of the date of recording. CONSTRUCTIVE NOTICE is a legal term that means people are assumed to have knowledge about something—in this case, the deed—because of the fact that it exists in the public record

In a residential real estate sale involving a federally related loan, what entity is required to provide Real Estate Settlement Procedures Act disclosures to the consumer?

consumer's lender

The Federal Trade Commission Act protects

consumers from unfair and deceptive advertising

In the event the seller accepts the buyer's offer, there is a

contract

If the contract of sale for that property does not disclose that the property is subject to ground rent:

contract for sale will require the delivery of a fee simple title to the purchaser, then the seller will be stuck in a bad position

Sellers must pay off all financial liens before

conveying property title

General partnerships

conveys personal liability to partnership debts that exceed the partnership assets are jointly and separately liable for these debts so if you are in business with one of your partners, and he absconds with all of the partnership funds, leaving behind creditors, you are liable to those creditors, as are any and all partners *ALL PARTNERS ARE RESPONSIBLE

Dealing in securities

corporations must adhere to the rules and regulations of the Securities and Exchange Commission

Rentable area COULD include

corridors, meeting rooms, lobbies, restrooms, and a proportionate share of any common areas.

Indicated value

cost approach determines this value by estimating the reproduction cost of the new improvement and subtracting the amount of depreciation from all causes the appraiser adds an estimate of the site value as if it were vacant and available to be developed to its highest and best use

Reproduction cost

cost to build an exact replica of the subject with the same materials and deficiencies

Chimney/fireplace problems - DRAFTS

could indicate a problem with the flue or ventilation problems in the house

In the event the seller does not accept the buyer's offer, typically the seller will extend a

counter offer to the buyer When this happens, the seller becomes the offeror, and the buyer is the offeree.

Brokerage firms found guilty of antitrust violations may be subject to

court-ordered supervision for up to 10 years

Brokerage firms found guilty of litigation due to technology violations may be subject to

court-ordered supervision for up to 10 years.

Restrictions imposed by CC&Rs may take the form of

covenants in the property deed or by a separate document that's referenced in the deed and recorded.

CC&Rs stand for

covenants, conditions, and restrictions

MD Sales Contract: Buyer Notices (Flood Disclosure Notice)

covers 'Flood Insurance Premiums' and 'Flood Insurance Rate Maps' advises buyers that their property may be located in a flood area, or in another area where flood insurance may be required The National Flood Insurance Program (NFIP) establishes flood insurance premiums based on an area's risk of flooding flood premiums are increasing—in some cases, substantially—so buyers should know that flood insurance premiums paid prior to the property sale may be vastly different from those that will apply after the purchase Maryland and FEMA—the Federal Emergency Management Agency—have been updating flood insurance rate maps, so buyers should be aware that their property may be affected

Enhanced/extended coverage policy

covers items that pop up after closing—things like unrecorded easements, building permit violations, etc

Chimney/fireplace problems - CRACKS/SLOPING

cracked or sloping fireboxes and hearths

Federal Trade Commission Act (1914)

created by the Federal Trade Commission Act, INVESTIGATES ANTITRUST VIOLATIONS and penalizes violators.

Credit report

credit history used to arrive at credit score free annually through AnnualCreditReport.com

Benefits of Commercial Leasing

credit ratings are not as crucial for leasing as compared to buying monthly rent is a tax deduction as a business expense. there is no equity loss of owning in a bad market leasing provides a business with the opportunity to rent a greater variety of properties with a good location and to create a better image than one the business might otherwise be able to afford -with many businesses, such as retailers, the business is dependent on location and image, and leasing provides a more affordable solution when the business owner's capital is not tied up in real estate, that money can be used elsewhere in the business, which would allow the business owner to respond to opportunities in the market faster

Any funds borrowed for a down payment are included in

debt-to-income ratio

In the event that a piece of land is located in two or more counties

deed must be recorded in each applicable county

Contingency clauses

define a condition or action that a party must meet in order to not be in breach of contract.

Corporation

defined by law do not exist in bricks, mortar, or even people, but are an intangible, taxable, recognized legal entitycan receive, hold, and transfer title to real property, and may give, or hold a mortgage to secure a debt owed to the corporationthis property is owned in severalty bylaws give authority to named individuals who may sign documents on its behalf corporations have tax rates separate from individual tax rates.

When the transaction goes to closing, the escrow agent

disburses escrow funds when all parties to the transaction, including the lender, are satisfied that all conditions have been met.

Licensees who are buying/renting or selling/leasing property for themselves must:

disclose, in writing, their licensed status no later than when they submit the offer or list/offer the property for sale licensed status disclosure also applies when the licensee is acting on behalf of: -An immediate family member -An entity in which the licensee has an ownership interest, no matter how small that interest is -Another affiliated licensee or employee of the licensee's brokerage or a team/group of which the licensee is a member

If the seller's agent knows about any easements/enroachments:

disclosure applies

Roof problems - SHINGLES

discolored or curling shingles can be a sign that repairs will be needed soon

To lower an interest rate, buyers can purchase

discount points

ECOA (Equal Credit Opportunity Act) prohibits

discrimination in financing based on protected class status, which includes race, color, religion, national origin, sex, marital status, age (over 18), or disability

What is harder to identify, disparate impact or disparate treatment?

disparate impact

All national banks have to be part of the Fed and must purchase stock in the

district banks

Biweekly prepayment plans

divide your mortgage payment in half; pay half of it every two weeksYou will make an extra full mortgage payment each year (26 half-payments = 13 full payments) i.e. Mortgage payment is $1800. Every two weeks, borrower pays $900, making for 26 payments of $900, or an extra $1800 paid each year

How is the break even point calculated?

dividing the base rent by the established percentage percentage charge is stepped up gradually as tenant's business grows

Tenancy by the entirety - right to partition

divorce or annulment terminates tenancy by the entirety; co-owners become tenants in common

Abandonment (lease termination)

does not relieve the tenant from the terms of the lease a tenant cannot simply vacate and expect to be relieved of the obligation to pay rent a landlord who chooses not to accept the return of the premises may pursue the tenant for unpaid rent -a landlord who does accept the return of the premises may also pursue the tenant for lost rent under the old lease, but must make best efforts to re-rent the unit

A buyer's "cash to close" is

down payment and closing costs minus earnest $ and other credits

Trigger terms in ads that would require full disclosure of all terms include

down payment, payment amount, number of payments, and interest rate (other than APR).

Standing water present more than 24 hours after heavy rain or ground sloping toward the house may indicate

drainage problems

If a buyer misses a contingency deadline, they may lose their

earnest money

A sales contract identifies:

earnest money deposit amount, specific closing instructions, closing agent selection, deed type to be presented by the seller, the proration method for rent, taxes, and other closing costs, buyer possession timeline, home warranty transfer, if available, and seller warranty specifics, if offered.

What is a conservation easement?

easement that runs with the land, is recorded in local land records, and becomes part of the chain of title for the property.

Non-possessory

easements fall into this category of rights

Private land use controls include

easements, liens, deed restrictions, and subdivision regulations or HOA rules.

Density zoning

efers to a number of things per unit, such as houses per acre.Spot zoning rezones a specific property for use within another zoning area.

How to avoid implied agency:

efrain from making statements that may be taken as your expert opinion. Don't perform actions that only and agent should perform. Licensees must take care to not create an implied agency situation that may also be considered illegal dual agency.

Who pays a transfer tax?

either buyer or seller

Month-to-Month: Either Party May Terminate with Notice

either party may terminate a month-to-month tenancy agreement by giving one month's notice, or other notice according to the terms of the lease

Datums and benchmarks are used to measure

elevation

The Small Business Liability Relief and Brownfields Revitalization Act

encourages the clean-up and development of brownfields by providing funds for assessment and clean-up efforts, and protects buyers or developers from liability if the site were contaminated prior to ownership.

The Office of Fair Housing and Equal Opportunity, which is a part of the Department of Housing and Urban Development (HUD)

enforces federal fair housing laws.

If there are more than two joint tenants, a deceased tenant's ownership transfers in

equal parts to the remaining joint owners.

Which Activities Are Illegal for Escrow Holders Or Trustees?

escrow holder must never engage in the illegal acts of commingling or conversion

National Homebuyers Fund (NHF)

establishes relationships with financial institutions to offer homeownership programs that include down payment assistance through grants, favorable terms, and more to first-time home buyers and others homeowners can even use its services to manage an existing loan does not directly loan money to consumers

MD's property condition disclosure law

establishes the requirements for the residential property condition disclosure and disclaimer statements under this law, sellers of single-family residential real properties that include four or fewer single-family units must provide buyers with one of the following: -a written residential property condition disclosure statement -a written residential property disclaimer statement

Step 5 of the valuation process: Estimate the value of the land

estimate the value of the land

How often does the DNC require licensees to check the registry?

every 31 days and to drop any disconnected, registered, or reassigned phone numbers from their contact lists.

Buyer's intra-company agent

exclusively represents the buyer in a dual agency situation

Seller's intra-copany agent

exclusively represents the seller in a dual agency situation

Residential properties in federally related transactions valued at $400,000 or less are

exempt from federal appraisal requirements (real property)

MD Sales Contract: Environmental andConservation Notices (Notice Concerning Conservation Easements)

explains that if there's a conservation easement on your property, your contract must contain a notice about that easement in an attached addendum

Fair Housing Amendments Act of 1988

extended fair housing protection to cover familial status and disability and provides remedies to victims of housing discrimination. It requires that owners make reasonable accommodations to property rules, policies, and practices to provide persons with disabilities appropriate access. Familial status references protection given to persons under the age of 18 living with a parent or guardian. The coverage extends to pregnancy or the process of taking custody of a child/children. Protected classes now read: -Race -color -religion -sex-disability -familial status -national origin -SEX -FAMILIAL STATUS =DISABILITY

Example 1 of calculating LTVR

f a home's purchase price is $100,000, and the buyer is putting down $10,000, the buyer needs a $90,000 loan. The $10,000 down payment is 10% of the home's value, and the $90,000 loan is 90% of the home's value. This type of loan scenario is called a 90/10 loan. LTVR = ($90,000 ÷ $100,000) × 100 = (0.9) x 100 = 90

The Office of Fair Housing and Equal Opportunity (OFHEO), a subdivision of HUD, enforces

fair housing laws, including ADA and the federal Fair Housing Act.

The USDA Farm Service Agency (FSA) offers direct guaranteed loans to

farmers and ranchers and for rural housing

LLCs and LLPs

favorable forms of business in terms of taxation and liability owners of the LLC or LLP (who are called members, not shareholders) are not personally liable for LLC/LLP obligations, are taxed as partnerships, and do not require a general partner

In Maryland, you could be fined up to $1,000 per solicitation if you use this method to advertise and a prior business relationship does not exist.

fax machine

Indirect costs

fees and administrative costs

Impact fees

fees that municipalities charge builders of new housing or commercial developments to help offset any environmental impact on the area

When a seller backs out of the contract right before closing and claims they are owed the earnest money because of the time the property had been taken off the market during contract negotiations, and the buyer wants the money back, what should a broker NOT do to solve this dispute?

file a claim with the Maryland Real Estate Commission, which would then decide how the funds should be disbursed.

Taxes and rents are generally prorated regardless of

financing method

When using the sales comparison approach, appraisers consider elements in a specific order. What is that order?

financing terms and cash equivalency conditions of sale market conditions at the time of contract and closing location and physical characteristics

What counts as square footage of a property?

finished spaces if attached to main property via stairways or hallways

Agricultural zoning

for raising and grazing animals, growing crops a property in just about any zone can be put to agricultural use

Non-judicial foreclosure

foreclosure that does not require court proceedings or a judgment of foreclosure - the result of the power of sale clause in a deed of trust

Purchase money mortgage

form of seller financing in which a mortgage is given by the buyer to the seller toward the purchase price buyers use this as down payment financingthe seller is the mortgagee and the buyer is the mortgagor the purchase money mortgage may be a first mortgage, a junior mortgage, or a junior wrap-around mortgage

Wrap around mortgage

form of seller financing in which the seller's mortgage remains in place, but the seller is receiving payments from the new buyer and therefore financing the purchase the mortgage payments the buyer makes are expected to be higher than the payments on the seller's original loan, so the seller isn't paying out of pocket it's generally a relatively short-term arrangement (perhaps five years), made until the buyer is able to qualify for a conventional mortgage, and will then pay off the remaining principal to the seller

What if there's not enough $ to pay off all liens?

former owner may face deficiency judgment after foreclosure lose prop ad owe debt to lien holders

What is a capped landfill?

full landfillsinvolves covering landfill with soil, then planting grass for aesthetics any natural gases caused by waste decomposition are expelled through ventilation pipes test wells are installed and monitored for groundwater contamination

Coverage included in home warranty

generally a home warranty will cover repairs and replacements of most major home appliances and system components (like HVAC or other systems) due to failure, standard usage, and other problems associated with age or wear and tear a builder's warranty will typically offer coverage on workmanship and materials related to specific components, such as the HVAC system, plumbing, electrical, and structural issues

Contract termination

generally means that one of the parties ends the contract before it's fully performed. The terminating party may owe duties or compensation to the other party.

What must lenders do due to the mortgage crisis?

generally research and document a borrower's income, assets, employment, credit history, and loan ratios to help ensure that the borrower has the ability to repay the loan

Census tracts

geographic areas that are developed by the community and the U.S. Census Bureau and are identified by number

General power of attorney

gives broad powers to the agent to act in someone else's behalf.

What if a seller fails to give the lead based paint disclosure form and EPA pamphlet to buyers?

gives buyers information about the risk assessment or inspection for lead-based paint or lead-based paint hazards - this addendum says that your SALES CONTRACT IS CONTINGENT upon the results of such an inspection

Acceleration clause

gives the lender the right to make all monies owed immediately due and payable in the event of borrower default

Ginnie Mae guarantees MBSs that are made up of

government insured or guaranteed loans

Universal agent

has broad authority to act for the principal, such as someone who has power of attorney.

Special agent/limited agent

has limited authority to act on a client's behalf, such as a real estate agent or an escrow officer. This type of agent can't bind a client to a contract

Sub-agency

has traditionally been recognized as a situation in which a licensee brings an unrepresented buyer to a transaction. In states where sub-agency is permitted, that licensee represents and owes fiduciary duties to the seller. Today's buyers are typically represented by a licensee, thus eliminating sub-agency of this type in most transactions. ***not common!

If you can't find a survey of a property

have a new one performed

Step 2 of valuation process: List the Data Needed and Where to Find It

he data needed will obviously change depending on the problem I'm trying to solve. It'll also change depending on the property type—commercial or residential, multi-family or single-family, condo or detached, old or new, yadda yadda (this is also all part of the problem statement.)

Maryland Residential Property Disclosure Statement

he disclosure statement begins with a "Notice to Owners," advising them to complete the statement only if they choose to disclose defects or other information about the property's condition they actually know: -this notice also says that they may wish to obtain professional advice or an inspection of the property, but that they aren't required to conduct a property inspection or investigation to complete this form -the form should be based on the sellers' actual knowledge Next, the form has a "Notice to Purchasers," which says that the information on the form is the owners' representation, and based upon their actual knowledge as of the disclosure date -the notice also states that the disclosure isn't a substitute for a professional home inspection, which the buyer may wish to obtain -finally, it says that the information is not a warranty by the owners "meat" of the disclosure" at the end of the list of disclosure items, the owner is told that if they want to disclose the condition of any other buildings on the property, they should use a separate disclosure form

MD Sales Contract: Home Inspection and Inclusions/Exclusions

here, we check off any items buyer would like the seller to leave behind that would normally be removed, and any items the seller is removing that would usually stay -lists personal and real property -included in the purchase price are all permanently attached fixtures, including all smoke detectors

Unemployment rates (how it affects the market)

high unemployment means there are fewer available buyers in the marketthis increases supply, leading to a decrease in housing prices

Borrowers with higher credit scores and other compensating factors such as cash reserves or additional income sources may qualify for

higher front-end and back-end loan ratios.

Taxes (how it affects the market)

higher taxes can decrease affordability, which can drive prices down as fewer buyers are in the market

Under provisions of the Dodd-Frank Act, the CFPB enforces regulations that prohibit lenders from funding

higher-priced mortgage loans without regard for a borrower's ability to repay the loan. Lenders must take reasonable steps to ensure that consumers have the financial ability to repay a loan that uses a dwelling as collateral.

Growing equity mortgage (type of fixed loan)

his is a fixed-rate mortgage where the monthly payments increase over time according to a set schedulethe interest rate remains the same, and there is no negative amortization; the first payment is a fully amortizing payment as the payments increase, the amount above what would be a fully amortizing payment is applied directly to the principal balance this reduces the life of the term and increases the interest savings for the borrower

When a seller backs out of the contract right before closing and claims they are owed the earnest money because of the time the property had been taken off the market during contract negotiations, and the buyer wants the money back, what should a broker do to solve this dispute?

hold disputed funds until both parties authorize their disbursement, file a bill of interpleader and deposit the funds with the courts to decide their disbursement, or hold the funds until one party files suit and a court orders disbursement.

Real estate escrow accounts

hold money on behalf of others. This includes buyers' earnest money deposits, rental security deposits, and any other funds being held in trust.

HELOC & mortgages

home equity line of credit is a revolving source of potential funds, much like a credit card, that you use as you see fit with a variable interest rate low-cost funds in the form of a "second mortgage"

Players in the primary mortgage market

homebuyers (borrowers) and lenders (commercial banks, credit unions, savings and loans, etc.)

Which of the following duties are owed to customers and other parties to a real estate transaction?

honesty and fairness

If the lease agreement includes the right to renew the lease, the new owner must: (leases and encumbrances)

honor that right and allow tenants to renew at the end of the term based on the renewal terms and negotiations between the parties.

Listing Agreements (contracts)

hould be written for the greatest level of licensee and client protection. Agreements are generally written, but some jurisdictions consider oral listing agreements to be binding. They almost always require a definite end date. Licensee duties documented in the listing agreement include confidentiality, the disclosure of material facts, the obligation to market the property, and the obligation to promptly present all offers and counteroffers. Listing agreements document the licensee's and the seller's duties. Clauses in the listing agreement specify whether the property can be placed on the Multiple Listing Service (MLS), marketed on the internet, or marketed via yard signage.

Demand

how popular/desirable a property is

Example of Operation of Law

i.e. Each property owners' bundle of rights doesn't need to be expressly specified in every purchase and sale agreement. Those rights are already established by law. Another example of operation of law in action is when people die intestate (without a will). Their heirs will inherit their property due to the law of descent and distribution. This type of right exists through the operation of law.

Courts have favored the rights of group homes

i.e. for instance, a 1,000-foot spacing requirement for and between group homes in a nearby town was found to be a violation of the Fair Housing Act -the town was ordered to make a reasonable accommodation on its limitation on the number of unrelated persons who can constitute a family under its zoning ordinance. The ordinance allowed for five. The courts said that allowing eight was a reasonable accommodation.

Principal/sub-agent relationship

i.e.let's say that a seller, Anita, agrees to allow her agent, Bobby, to offer sub-agency. Crystal, who works for another agency, brings a buyer to Anita's house. Crystal is not the buyer's agent; she is Anita's sub-agent. As a sub-agent, Crystal works with the buyer as her customer but owes her fiduciary duties to Anita. Although Crystal can't help the buyer in any way that would be detrimental to Anita, she must treat the buyer honestly and fairly. It is important that sub-agents fully explain their duties to buyers.

To meet the requirements of the statute of frauds, an agreement must clearly identify the contract's subject matter, present the contract's essential terms and conditions, and ______ to be enforceable.

identify the contracting parties

What DOESN'T COUNT as square footage of a property?

if Cheryl's She-Shed is in the backyard of a property, but isn't attached, it doesn't count as finished square footage. sheds, garages

Failure to demand rent (rent issues)

if a landlord fails to demand rent for 20 years in a row, the landlord loses both the unpaid rent and the property itself in this case, a tenant could receive fee simple title to the property

In some areas, lessees must be given the right of first refusal (in a lease contract)

if a leased property is being sold, the lessee occupying the property should be given the right of first refusal, or the option to purchase the property before it is sold to an outsider several Maryland jurisdictions, including Baltimore City, require that a landlord selling a leased property give the property's residential tenants the right of first refusal (the option to purchase the property) before that leased property can be sold to someone else

MD Sales Contract: Environmental and Conservation Notices (Wetlands Notice)

if any part of buyers' property is wetlands, you'll need to get the approval of the Army Corps of Engineers before you can get a building permit issued

Final PMI termination

if borrowers are current on payments, the lender must terminate PMI one month after the loan reaches the midpoint of its amortization schedule, even if the LTV isn't yet 78% this is most likely to occur for borrowers who start out with a negatively amortized loan (interest only) or some sort of balloon payment

What happens when buyers breach the contract

if buyers fail to make a full settlement, or if buyers are in default because they didn't comply with this contract's terms, the sellers can keep their $5,000 deposit, as long as buyers and the sellers sign a written Release of Deposit Agreement stating so if you both can't agree to the release of the deposit, then legal and equitable remedies will apply

MD Sales Contract: Attorney's Fees

if one party breaches this agreement, and the other party hires an attorney, the breaching party can be forced to pay all of the other party's legal expenses if both sides breach, everyone usually pays their own legal fees if a dispute arises that makes the broker a party to the litigation, both parties indemnify the broker for legal and related expenses, unless a judgment results against the broker

What happens if insurance/taxes aren't paid?

if that doesn't happen, the lender will place a lien on the property, since it was pledged as collateral if a disaster strikes, it affects borrower AND the lender's funds

Benefits of commercial leasing (cont.)

if the business grows more quickly than expected, a decision to move to larger premises can be executed faster if the business owner does not have to worry about selling first, which can take time-if, on the other hand, the business is terminated or significantly downsized, the ability to sublet can help minimize the financial loss leasing is not a long-term financial commitment, compared to purchasing, which makes leasing beneficial for businesses just starting out

Under what circumstance could you not show your client a condo/rental unit? (another type of exemption)

if the complex is owned by a religious organization or private club, and the organization restricts the housing to its own members

When to redeem a ground rent property

if the contract of sale for that property does not disclose that the property is subject to ground rent, the contract for sale will require the delivery of a fee simple title to the purchaser, then the seller will be stuck in a bad position - seller can try to redeem property

What happens if the optionee decides to exercise the option?

if the optionee does exercise the option according to its terms and conditions, then a binding contract between the two parties is created both parties must fulfill their contractual obligations

Why is it important for liens to be paid in full before a prop is sold to a new owner?

if the prop transfers to be owner and lien is unpaid, the unpaid lien could trigger a foreclosure

What happens when sellers breach the contract

if the sellers fail to make full settlement or are in default because of their failure to comply with this contract's terms, then you have the right to pursue any rights and remedies that are available buyers can sue them for SPECIFIC PERFORMANCE of this contract, which means youcan force them to sell you their house -option to sue them for monetary damages

How can sellers convey marketable title?

if the title search reveals: -NO DOUBT ABOUT PROPERTY ownership -NO liens or encumbrances that won't be cleared at closing.

When do you display the Understanding Whom Real Estate Agents Represent form?

if you and your buyer client are at a scheduled showing or if you and your buyer are at an open house and your buyer shows interest in the property

When do you display the Open House Disclosure sign?

if you represent the seller at an open house

"Top of the market"

if your CMA suggests a price range of $380,000 to $400,000, pricing at or close to $400,000 would be pricing the home at the top of the market

MD Sales Contract: Environmental andConservation Notices (Forest Conservation Act Notice)

if your property is a tract of land with 40,000 square feet or more, you're required to comply with the provisions of the Forest Conservation Notice

Special use permit/conditional use permit

ight be allowed if someone wants to use a property in a way that isn't really in accordance with zoning regulations, but provided a service that was in the public interest, like a golf course allowed use in a zone that is not normally permitted in the zone that requires permission of the ZONING BOARD OF APPEALS or another legislative body

The Notice Regarding Disclosure of Deferred Water and Sewer Assessments (Addenda and Disclosures of the MD Sales Contract) law DOES NOT APPLY

in a county that has adopted a disclosure requirement that is substantially similar to this law

The Notice Regarding Disclosure of Deferred Water and Sewer Assessments (Addenda and Disclosures of the MD Sales Contract) law DOES NOT APPLY:

in a county that has adopted a disclosure requirement that is substantially similar to this law

The difference between a lease option and a lease purchase is that:

in a lease purchase, the lessee/buyer is obligated to buy, just as the lessor/seller is obligated to sell.

When is a Special Warranty Deed most often used?

in conveying commercial properties

Periodic Estate Termination

in every county but Montgomery County and Baltimore City, the landlord must provide a written notice to the tenant to terminate the lease according to the following: -For a week-to-week tenancy, one week's notice must be provided. -For a month-to-month tenancy, one month's notice must be provided. -For a year-to-year tenancy, three months' notice must be provided.

How is a mortgage's interest cap structure expressed?

in numbers as something like 2/2/5 (the initial, periodic, and lifetime caps)

Where are Lands Contaminated with Hazardous Waste typically located?

in remote areas away from human contact and are subject to strict regulation to prevent the escape of toxic substances.

Site value

in residential appraisals, assessed value of the site is frequently usedsite value is added to the depreciated value of the improvements to estimate the value by the cost approach -i.e. The appraiser determines the site value of the subject is $25,000, and the cost of the improvements is $100,000. The incurable depreciation (due to age of the improvements) is $10,000. The curable depreciation estimate is $2,000 (say, for replacing fencing and broken gutters). No functional obsolescence was noted. The value estimated by the cost approach is $113,000.$25,000 (site value) + 100,000 (replacement cost) - 10,000 (incurable depreciation) - 2,000 (curable depreciation) = $113,000 (estimated value)

Statute of limitations clauses

in the contract states the time frame in which a party can file a lawsuit relative to the contract.

When else can LTV be a factor?

in the loan's interest rate, payment, PMI requirement, and loan type.

MD Sales Contract: Deposit; Deed and Title (Deposit)

in this paragraph, you're authorizing the broker—that's the listing broker in this case, remember— first to just hold the deposit, without depositing it, until you and the seller come to an agreement once you've all reached an agreement and signed the contract, the broker will deposit it into the escrow account

Multi family housing branch of the CDA

inances the development, rehabilitation and preservation of rental and transitional housing, and administers rental assistance programs and the Federal Low Income Housing Tax Credit program

Recreation area zoning

include parks, shorelines, public fishing areas, trails, and waterway access

Tie-in arrangements

include providing a service dependent on the customer/client obtaining (or not obtaining) another service from a specific provider.

Stairwells are

included in square footage measurement

Incurable Depreciation

includes items not practical to correct.

Partially amortized loans

includes partial amortization over the loan term and a balloon payment at the end of the term, where the borrower pays off the loan in one lump sum.

Spot survey

includes the size, location, shape of improvements, and buildings

Usable square footage/area

includes the specific area(s) the tenant will use. If the lease area doesn't encompass an entire floor, usable area includes all office or retail space plus storage areas and private restrooms.

Consumer Credit Protection Act

includes truth in lending act implemented by reg Z - requires full disclosure of terms/conditions of any credit offers

Indemnity in MD Commercial Leases

indemnity provisions in the lease usually require that a tenant pay (indemnify) a landlord for damages in the event a claim is filed against the landlord a tenant's indemnity is usually limited to matters arising in the demised (leased) premises and does not include those claims or losses that arise from the landlord's or the landlord's agents' negligence or willful misconduct additionally, tenants sometimes ask the landlord to indemnify the tenant from and against any and all liability, damage, expense, causes of action, suits, claims, judgments and cost of defense arising out of or in connection with matters arising in the common areas of the building landlords usually agree to these requests from a tenant, as the landlord's insurance covers the common areas and the tenant's insurance covers the demised premises

Appraisal management companies (AMCs)

individuals who or companies that administer a network of independent contract appraisers -AMCs aren't a separate licensing category in Maryland, but they must be registered with the Maryland Commission of Real Estate Appraisers and Home Inspectors and their appraisers must be licensed or certified and must possess the same qualifications and education as individuals who aren't part of an AMC

Inflation - how it affects the market

inflation reduces buying power—if everything costs more, buyers can afford less

Department of Labor, Licensing, and Regulation can provide what to sellers?

info on licensed employees who can provide services such as roof repairs, contracting, etc. provides employee date of registration, etc

Notice to Seller and Purchaser (Maryland Residential Property Disclosure and Disclaimer Statement)

informs both parties of Maryland Code Section 10-702's requirements for the owner of a single-family residential property to provide either: -A Residential Property Disclaimer Statement, which states that the owner is selling the property "as-is," and therefore makes no representations or warranties regarding the condition of the property or its improvements, other than the information supplied in the sales contract, or in a listing of latent defects; OR -A Residential Property Disclosure Statement, in which the seller discloses information and defects about the property's condition that the seller actually knows

MD Sales Contract: Buyer Notices (Property Insurance Brochure)

informs you that the Maryland Association of REALTORS® has published an informational brochure, 'The New Reality of Property Insurance - What You Should Know' -explains the current issues about obtaining insurance coverage for the property you're buying

Escrow funds don't belong to the seller, but

instead should be kept in an escrow/trust account until all contractual conditions have been met.

In land trusts, the trustor

instructs fiduciary party (attorney) to hold title to the real estate and provides instructions for management and control of trust during the trustor's life and for disposition upon trustor's death

.Insurance companies check the Comprehensive Loss Underwriting Exchange database to help determine

insurability of a property

FHA Insured Loans

insures lenders against loss in case of borrower default. FHA borrowers must pay a minimum down payment of 3.5% -MIPs (mortgage insurance premiums) apply to ALL FHA loans for the life of the loan FHA loans are available to anyone who qualifies but may be more attractive to borrowers who have lower credit scores and down payments. FHA imposes a FHA lending limit that it will guarantee for each borrower. These loan limits typically mimic conventional conforming loan limits.

Unknown heirs to property conveyed upon or after the owner's death can become an issue when those heirs step forward to claim

interest in the property Typically attorneys or the courts must step in to assist in settling this type of ownership issues.

Index (used in adjustable rate mortgages)

interest rate is based on an economic index (e.g., the Consumer Price Index) and is adjusted on a periodic basis, such as annually

Margin (used in adjustable rate mortgage)

interest rate is calculated by adding a specified number of percentage points, called the margin, to the associated index the margin is constant throughout the life of the mortgage

Nonconforming loans have higher _____ rates

interest rates

Credit scores impact

interest rates and other loan terms.

Comprehensive master plan

inventories the community's make-up: who lives there, what the businesses and industries are, the population's demographic make-up survey is necessary to identify the community's physical and economic assetsincludes capital budgeting for long-term projects

If you're representing a seller who may have inherited an unpermitted property

investigating the issue can open up a can of worms your seller will then have to address in other words, proceed with caution

What type of value may consumers be interested in if they are looking for the potential rate of return?

investment value

Price fixing

involves an agreement (or collusion) between competitors (brokers) to fix contract terms, services, or products at a specific price or level i.e. such as suggesting there's a "standard" fee for broker compensation.

Market allocation

involves an agreement between brokers to divide up the market and then refrain from competing for business.

Failure to satisfy a contingency if it's stated in the agreement

is a breach in contract

Amendment

is a change to an existing contract between parties. It changes one or more of the original contract terms. For example, if the closing date must be changed, or the buyer decides she wants the curtains to remain and the seller agrees (after the original contract noted the seller was taking them), the parties can execute an amendment outlining the additional agreement between them.

Real Estate Settlement Procedures Act (RESPA) of 1974

is a consumer protection statute designed to protect homebuyers from unscrupulous lending and settlement practices. - The Dodd-Frank Wall Street Reform Act of 2010 (Dodd-Frank Act) handed RESPA responsibility to the Consumer Protection Finance Bureau (CFPB). Licensees are prohibited from paying or receiving a fee, kickback, or anything of value based on referring customers or clients to a settlement service provider. Third-party settlement providers may compensate licensees and brokerage firms only for actual services rendered to licensees and brokerage firms. Licensees and brokerage firms may distribute service provider marketing materials (pens, calendars, etc.) with the service provider's name and contact information. Under certain circumstances, service providers may sponsor educational events for and offer continuing education credits to licensees as long as any costs traditionally borne by the licensee aren't defrayed by the event. This exemption refers to short-term events (a lunch-and learn event, for example), but not necessarily to an all-expense-paid trip to Tahiti in which a short period of time is devoted to training. requires that lenders provide written disclosures to help to make estimated and final settlement costs clear and fair to consumers

Jumbo loan

is a conventional non-conforming loan because it exceeds conforming loan limits but meets other conforming loan requirements

Joint tenancy

is a form of co-ownership in which equal ownership requires unity of time, title, interest, and possession. -includes right of survivorship --> MEANS THAT THE SURVIVING CO-OWNERS WILL own the property if a joint tenant dies

Functional Obsolescence

is a form of depreciation or loss in value caused by defects in design and can occur with outdated structures or systems or when a property is overbuilt for the area.

Curtesy

is a form of legal life estate and refers to a husband's interest in the real estate owned by his deceased wife; curtesy isn't recognized in all states

Dower

is a form of legal life estate and refers to a wife's interest in the real estate owned by her deceased husband; dower isn't recognized in all states

Latent defect

is a hidden property condition that's not likely to be discovered through a general review or inspection.

Datum

is a horizontal point of reference from which surveyors measure depth and height of various land elevations.

Estate for years (a type of leasehold estate)

is a lease that ends on a specific date and must be renewed by mutual agreement between the landlord and tenant.

Estate at will (a type of leasehold estate)

is a lease without an established ending that can be terminated by either party. Includes: -a dower -curtesy -escheat -homestead

Powers of Attorney (POA)

is a legal document that grants legal rights and powers from one person (the principal) to another (the agent or attorney-in-fact) to make decisions on behalf of the principal. The agent's decisions must reflect the principal's preferences and can't exceed the authority granted by the specific power of attorney document. 1) general power of attorney 2) special power of attorney Usually, a POA may be granted to a spouse, family member, friend, or neutral third party. A power of attorney terminates upon the death of the principal or when the principal revokes the POA. Divorce terminates a power of attorney if one had been granted to the former spouse.

Annual Percentage Rate (APR)

is a measure of both the interest rate and other fees associated with a mortgage loan.

Subleases

is a new lease agreement between the tenant/lessee as sublessor and a third party as sublessee for all or a portion of the leased premises. A sublease can be for less than all of the leased premises. An assignment that transfers the entire lease must be for all of the premises. Leases are assignable unless the lease prohibits assignment.

Easements

is a non-possessory right acquired by one party to use another party's land for a special use. These are often acquired through written agreement. Because an easement affects use of a property, they have the potential to diminish the property's value.

Benchmark

is a point where the exact elevation is known and marked with a brass or aluminum plate. Surveyors can use this as a starting point to measure other elevations.

Bracketing

is a process in which an appraiser uses both SUPERIOR AND INFERIOR units of comparison such as age, transaction price, etc., to determine a probable range of values for a property.

Foreclosure

is a property that is being sold by the lender due to the buyer's default. The lender will usually sell the property at auction after proper notice has been provided, and often after allowing the borrower the right to cure the default. If the foreclosure sale doesn't cover the debt owed by the borrower, the lender may seek a deficiency judgment against the borrower to pay the shortage. An acceleration clause may be in effect once a borrower defaults. This clause allows the lender to make the entire loan amount due immediately. A borrow in default may avoid foreclosure through a deed in lieu of foreclosure, which gives a deed to the lender or mortgagee.

Lis pendens

is a recorded document that provides public notice that a foreclosure is coming. Non-judicial procedures are possible in Maryland, but the process for these must follow court approval for the foreclosure

Absolute net lease

is a triple net lease in which the tenant is also responsible for all building expenses and repairs, including roofing and structural repairs.

Homestead

is a type of estate that gives the owner special protections in property used as a family home; not all states recognize the homestead concept

Fee simple defeasible

is a type of freehold estate in which ownership is subject to either the occurrence or non-occurrence of a particular event. permits the recovery of fee simple ownership if certain conditions aren't met -defeasible means that the grantor (seller) has placed a limitation on the deed

Aesthetic zoning

is a way to ensure the visual and architectural consistency of an area.

Ratification

is acceptance after the fact, either through signing paperwork or through the parties' actions. If the parties choose, implied agency can be ratified through signing an agency agreement after the implied agency relationship has been created.

Fee on condition (type of defeasible freehold estate)

is also an inheritable, defeasible freehold estate, but it is recognized by the words "but if" in the deed the estate continues unless a specific even occurs, in which case ownership may revert to the owner or the owner's successors

Addendum

is an addition to an existing document, such as an offer to purchase. It adds terms not addressed in the main body of the contract form.

Express agency

is an agency relationship that's understood and agreed to by the parties. Spoken or written words create express agency.

Group boycotting

is an agreement between two or more parties who conspire to not do business with a particular person or company.

The Uniform Electronic Transactions Act (UETA)

is an attempt to bring some degree of standardization to state laws regarding use of electronic documents and signatures. It gives electronic signatures, records, and contracts the same legal weight as paper records with "wet" signatures (signed by hand in ink). In many states, electronic documents and signatures can be used only if the parties to the contract agree.

Leasehold Estate

is an estate in which the holder has a possessory interest in a property but no ownership

Redlining

is an illegal, discriminatory practice by lenders or insurance companies that refuse or limit business within specific geographic areas based on the demographics of the area rather than on the creditworthiness of the specific borrower, figuratively drawing a "red line" around an area to indicate unwillingness to lend or insure homes in that area.

Carbon monoxide

is an odorless, colorless toxic gas that's formed whenever fuel is burned. Gas and oil furnaces, gas refrigerators, clothes dryers, ranges, water heaters, and space heaters produce carbon monoxide, as can fireplaces, charcoal grills, and wood-burning stoves. The federal government doesn't regulate use and placement of carbon monoxide detectors in residential or commercial real estate, though most states have strict regulations.

Transfer tax

is applied when real property is sold. Rates vary by state and perhaps even locality. Payment may be negotiable between the parties. It is typically paid on the sale price. A mortgage/deed of trust recording tax is a tax on the recordation of the mortgage/deed of trust and is based on the loan amount.

Sales/Market Comparison Approach (appraisal approach)

is based on the principle of substitution and uses the prices for which similar properties have sold recently to estimate the subject property's market value. The similar properties are referred to as "comps" or "comparables." The property being appraised is called "subject property." Since comparable properties are never exactly the same as the subject property, comparable properties must be selected and compared both qualitatively and quantitatively.

Modular home

is built in pieces off-site, then those pieces are transported to the spot where it will spend the rest of its days, and the build is completed there not in the same class as a manufactured home not built with transportation in mind, and does not include a permanently attached chassis, wheels, or any of that other stuff that defines a manufactured home

Omission of a material fact

is considered intentional misrepresentation

Housing operated by religious organizations or private clubs that limit occupancy to members (exemptions/exceptions to federal fair housing laws)

is exempt from fair housing discrimination laws provided the membership rules do not discriminate.

Single-family housing sold or rented without a broker's assistance (if the owner doesn't own more than three properties at one time) - (exemptions/exceptions to federal fair housing laws)

is exempt. No real estate licensee may be involved, and no discriminatory advertising is permitted.

Actual knowledge

is information that's known about the physical condition of a property or that which could be plainly noticed.

The Federal Telephone Consumer Protection Act

is intended to protect consumers from unwanted telephone solicitations

Certificate of Occupancy

is issued only after satisfactory final inspection, and allows people to actually live in what you've built

Usury

is lending money at an excessive (illegal) rate Most states have laws designed to protect consumers from exorbitant fees and interest rates by limiting what lenders charge to reasonable amounts is lending money at an excessive (illegal) rate Most states have laws designed to protect consumers from exorbitant fees and interest rates by limiting what lenders charge to reasonable amounts. Credit cards, retail installment contracts, and consumer leases are typically exempt from usury laws

Special power of attorney

is more narrow in scope and authorizes the agent to act in specific circumstances or transactions. A special power of attorney grants authority similar to that of an agency agreement between a licensee and a client

Bargain and Sale Deed

is most often used in tax or foreclosure sales. It generally has no expressed warranty against encumbrances but does typically imply a warranty that the grantor has title and the right to covey.

Mechanic's lien

is one a vendor of goods or services places on the property and creates a cloud on the property's title.

Insurable title

is one against which there may be known defects (such as easements), but the title company has notified the parties of the defect and has agreed to insure against it (not list it as a policy exception)

Involuntary lien

is one created without the property owner's consent, like a property tax lien.

Estate at sufferance (a type of leasehold estate)

is one in which a tenant (referred to as a holdover tenant) didn't leave when the lease expired.

Executed Contract

is one in which all parties to a contract have met all contract term. A contract for the sale of real estate is executed by the delivery and acceptance of the deed and the payment of the purchase price. (Note that you may also see the term "executed" used to refer a document that's been signed.)

Per Se antitrust violation

is one in which the competing firms agreed to violate antitrust laws. A per se violation means that authorities don't need to make any additional inquiries about the violation to impose penalties. The fact that collusion existed is enough.

Gross lease (commercial)

is one in which the landlord pays all expenses related to the property, such as taxes, repairs, insurance, utilities, maintenance) while the tenant pays a fixed rent. These are sometimes called full-service leases. ***Gross leases are often used for office space.

Voidable contract

is one that appears valid, but one or both parties have a legal right to disaffirm it. This could be because one of the parties lacks legal competence, or because there was a mistake or misrepresentation, causing a failure of reality in consent.

Back up contract

is one that has been accepted contingent on the disposition of the primary contract. Licensees should recommend that clients get legal advice before entering into a back-up contract.

Escalator offer

is one where the buyer offers to top any existing offer by a certain amount, up to a specified cap. A licensee should encourage seller clients to counter-offer an escalator offer with one at the buyer's maximum price (which you can tell because of the cap).

Non-amortized loan

is one where the payments go only toward interest, not to the principal the principal is paid off at the end of the loan term as a lump sum

Agricultural land

is property that is or was previously assessed based on it being used as a farm or for other agricultural use the tax is a surcharge—which means it's payable in addition to any other transfer tax imposed on the property—when the property is sold or otherwise transferred

RGSS example

is read right to left: S ½ SE ¼ NW ¼ Section 14, Township Clarkson

General agent

is responsible for handling all dealings in a given area for a client, such as a property manager. This type of agent may bind a client to a contract.

Fiduciary

is someone in a position of trust who owes loyalty to another.

Agent

is someone who acts on behalf of someone else.

consumer

is someone who uses or purchases a product or service.

Client

is someone who's represented by a real estate licensee (and owed certain agency responsibilities).

Customer

is someone who's working with a real estate licensee but who isn't represented by that licensee (nor owed the full range of agency responsibilities); the customer may or may not be represented by another licensee.

Consideration (Requirement for contract validity)

is something of legal value offered by one party and accepted by another e.g., the buyer's promise to pay the full purchase price, and the seller's promise to transfer marketable title through delivery of a deed.

Deferred water charge

is sometimes referred to as a 'front foot benefit charge' it's a way for the city, county, etc. to recoup the costs of constructing and installing water and sewer systems when an area is developed, by charging residents an annual assessment the assessment must be formally recorded, and may only cover costs incurred during construction

License

is temporary permission for one person, at the discretion of the property owner, to do something on another's land without actually possessing any interest or ownership in the land

Rentable square footage/area

is that actual area a tenant may rent and on which the landlord bases the rent. typically excludes common areas, elevator shafts, stairways, and HVAC and other system equipment areas.

Title VIII of the Civil Rights Act of 1968

is the Fair Housing Act. This act prohibits housing discrimination based on race, color, national origin, and religion.

Equity

is the amount of value or interest a homeowner has in a property less debts against the property (such as a mortgage loan) Equity = value - amount owed

Promissory Note

is the borrower's promise to repay the mortgage loan. Promissory notes are negotiable instruments, which means they can be transferred to another holder.

A special type of ARM

is the fixed/adjustable rate note. It's a legal agreement that permits the borrower to convert a fixed rate mortgage to an ARM or an ARM to a fixed rate mortgage under certain conditions.

Principal meridian

is the north-south line that runs through an initial point in the RGSS. These descriptions also use compass point directions (northwest; southeast; etc.).

Trustor

is the person who creates the trust

Downzoning

is the process of assigning a lower-density use zone to an area previously allowing a higher density.

Dual agency

is the representation of both the buyer and the seller in the same transaction. 1) Single licensee dual agency 2) Designated/appointed agency (aka dual-licensed dual agency) Licensees may legally engage in dual agency only if they practice in a state that permits it, if their brokerage firm permits it, and if they've made the proper disclosures to and written consent received from the buyer(s) and seller(s). If both parties don't agree to dual agency, then the licensee won't be permitted to represent both parties in the transaction. One party would need to work with a different agent or brokerage.

What is the most common title defect?

is the seller's EXISTING MORTGAGE LIEN. That lien is usually resolved at closing when the seller's proceeds are used to pay off the loan.

What is the purpose of a mortgage?

is there to provide security for the loan includes an acceleration clause allowing the lender to call for the entire loan to be paid if the borrower defaults on the loan if the borrower fails to bring the outstanding amount current, the mortgage or deed of trust gives the lender the right to sell the property to satisfy the debt the mortgage or deed of trust is recorded in county land records

What is the purpose of CC&Rs?

is to maintain specific subdivision standards; e.g., architectural, design, or setback (distance from property lines) requirements. CC&Rs are usually set up to expire within a certain number of years. CC&Rs are enforced by the homeowners association.

Predatory lending

is unfair or abusive lending to buyers. Predatory lenders impose deceptive, coercive, and exploitive practices to take advantage of consumers to increase their debt while financing risky loans. Fraudulent lending practices take advantage of consumers, encourage debt, don't consider affordability, encourage multiple refinancing, hide fees from borrowers, and often occurs in the subprime loan market.

The MAR's "Notice to Buyer and Seller of Buyer's Rights and Seller's Obligations under Maryland's Single Family Residential Property Condition Disclosure Law" form

is used as an addendum to the Maryland sales contract this form, as its name indicates, informs the buyer and seller of their responsibilities in the purchase of a single-family home in Maryland

Gross income multiplier (GIM)

is used for the appraised value of five or more units (considered "commercial" property). GIM = Sale price ÷ gross annual income Gross annual income x GIM = value

Gross rent multiplier (GRM)

is used for the appraised value of four or fewer units. GRM = Sales price ÷ the gross monthly rent Gross monthly rent x GRM = value

Broker's price opinion (BPO)

is usually ordered by a lender in a foreclosure situation -they don't want to shell out the bucks for a full appraisal, so they'll hire some real estate broker to give them an opinion of price -basically, it's just a CMA with a different name for a different purpose -sometimes a relocation company will ask a broker to do a BPO -Minimal cost ($50 - $200), which must be paid to the licensee's broker -Performed by a real estate license -Comparable sales method is used -Basic to moderate level of detail -Prepared for a lender (in a foreclosure or short sale situation) or a relocation company

Principal

is usually the party to the transaction who is represented (the client).

Groundwater

is water that is under the earth's surface. Mining activities, landfill drainage, leaking underground storage tanks, contaminated storm drains, and agricultural pesticides contribute to groundwater contamination (and therefore, potential contamination of private and public drinking water sources). A variety of federal and state laws protect groundwater.

Single agency

is when a licensee represents one party, either the buyer or the seller, in a transaction. Single agency firms don't permit licensees to engage in dual agency, even if the state permits it.

Single licensee dual agency

is when a single licensee represents both the buyer and the seller in the same transaction.

Partial performance

is when one party meets some, but not all, of the terms of the contract. The innocent party may agree to accept partial performance, perhaps in return for some sort of compensation.

Designated/appointed agency (dual licensed agency)

is when two separate licensees from a single firm each represent one party (buyer or seller) in the same transaction.

What is the primary mortgage market?

is where banks that originate loans operate they have the cash, and they loan it to borrowers.

Void contract

isn't a contract at all because it lacks one or more of the requirements for a valid contract. It has no legal force or effect; it's UNENFORCEABLE.

Legal points of MD commercial leases that should be reviewed by an attorney

it is important to know which legal items may cause issues for your clients, and to be able to identify legal points within leases that your clients should have reviewed by their counsel Examples of items that require legal review are: -Rent set-offs: A tenant's right to set off rent if the landlord hasn't paid a utility bill, for instance, and under what conditions a set-off is allowed Government regulation: If the government states that all buildings over 25,000 square feet must have a specific fire safety feature, who pays for it?

What if there is money left over after paying off liens?

it is used to pay the expenses of the sale, and anything left goes to the former owner of the home

Prepayment plan concepts

it is usually best for borrowers to pay off the principal of their mortgage as quickly as possible if they want to reduce the amount they will pay in interest over time interest is paid before principalsmall portion of first few payments go toward principal principal gradually increases over time anything extra the borrower puts toward the mortgage payment can be applied directly to the principal immediately, reducing the principal, which reduces the amount the interest is based on

If permit was not done properly

it will need to be corrected or restored to its original state—a costly endeavor in some cases, the homeowner can obtain a permit after the fact by paying a fee

An offer isn't a contract UNTIL

it's signed (accepted by) the seller and delivered (physically or electronically) to the buyer or the buyer's agent.

What if the sellers don't want to correct the lead based paint hazards?

it's up to you to send them a written notice, either saying that you're declaring the sales contract null and void OR that you're removing this contingency from the contract and proceeding to settlement

Termination of joint tenancies

joint tenants may sell their personal share of ownership; however, the buyer of that share does not become a joint tenant, because the required four unities do not exist the new buyer didn't receive a title at the same time as the other tenants, so the unity of time is destroyed, therefore, the new owner is a tenant in common -remaining tenants continue as joint tenants with right of survivorship shared between them, and the new buyer, as a tenant in common, has an inheritable share

A buyer's agent should caution buyers to use contingencies to protect themselves, but not

kill the deal with too many contingencies

Some states require the seller and the licensee to affirmatively (proactively) disclose all

known material facts

A client may revoke the agency relationship before the agreement's fulfillment or expiration due to

lack of trust in the agent or agency (which may be accomplished without penalty) or without good cause (which likely constitutes a breach of contract)

Land acquisition costs

land area x the cost per unit

Subdivision

land that's divided into lots for development

URLTA provides tenant rights if the

landlord fails to meet obligations.

Net leases tend to favor the

landlord's interest bc property costs FALL ON TENANT

Distraint

landlord's right to seize the tenant's property and sell it if tenant has not paid in 3 months

Failure to pay rent (rent issues)

landlords have the right to file a petition for unpaid rent if the tenant has not paid rent in three months in some cases, the landlord may file a petition, asking the district court to seize and sell the tenant's personal property for unpaid rent

Oil and gas lease

landowner receives a cash payment for executing the lease the lease typically gives the oil or gas company time to determine whether oil or gas exists, and a deadline by which drilling must begin if the option to drill is not exercised within the stated timeframe, the lease expires if it is exercised, the landowner generally receives royalties on the oil or gas extracted

Net leases are most commonly used for

large commercial and industrial leases

Leases usually run with the land, which means that if property ownership changes: (leases and encumbrances)

lease terms remain in effect until the lease expires (unless the lease provisions state otherwise)

If the ground tenant stops paying rent

leaseholder can record a lien on the property, and then foreclose on it; if this occurs, the leaseholder takes title to it, along with its improvements (including all buildings/homes on it), leaving the ground tenant with nothing

MD specific lease component requirements

leases for more than 7 years: -must be recorded leases for fewer than 7 years: -do not need to be recorded, because the tenant's possession of the property is considered the constructive notice of that tenant's rights tenant's rights: -lease must include a written notice from the landlord to the tenant regarding the tenants' rights, which include the rights to: * request written reports of property condition inspections * request to be present at final move-out inspection peaceable and quiet entry: means that if the lease begins on the first of the month, you must be able to take possession of the premises on that date, and not any later

Investment groups (lender)

lend specifically to people who want to avoid conventional financing—such as other investors

Title theory definition

lender (actually a third-party) holds legal title, and can use non-judicial foreclosure (lender has title)

Defeasance clause

lender agrees to discharge the mortgage once the borrower's paid off the loan in full

Judicial foreclosure

lender doesn't hold title to the property, so if the borrower defaults, the lender usually has to get a court order that allows it to seize and sell the home

Lien theory definition

lender holds a lien on the property, but not title, and therefore must use judicial foreclosure (lender has lien).

Lenders establish an escrow account into which 1/12 of the anticipated property taxes and homeowner's insurance is paid each month. The lender then pays these bills when they come due, protecting the

lender's interest in the property

Loan origination fees = points

lenders charge borrowers a fee at closing for processing new loan applications calculated as a percentage of the loan amount, loan origination fees are usually somewhere between 0.5% and 3% of the loan ***sometimes called points one point is equal to 1% -if a mortgage broker, for instance, charges a loan origination fee of three points, this is a 3% loan origination fee loan origination fees are nearly always negotiable

What is the purpose of the secondary mortgage market?

lenders want to loan the money at one price, then package and sell the loans to investors on the secondary market for slightly more money they earn a profit by keeping money moving in and out of their system the secondary mortgage market services those loans

Perimeter

length and width of all sides added together

Front foot (frontage)

length of property running along a street/hwy multiply the front foot (width of the property) x the price offered

For REO properties, time from offer to closing may be

lengthy because of the more complicated processes involved, including potential lender foreclosure audits to ensure that the foreclosure process was completed properly.

MD Sales Contract: Buyer Notices (Limited Warranty)

lets buyers know that if a warranty plan is being offered with the property you're purchasing, it may be a limited warranty, covering only certain items if you're offered a warranty, you should request a brochure that describes the exact plan and the extent of coverage it offers

Property Tax Notice - 60 Day Appeal (MD Sales Contract: Notice to the Parties andProperty Tax Notice)

lets you know that if a property is transferred to a new owner after January 1, and before the beginning of the new taxable year, that new owner may submit a written appeal regarding the property's value or classification, on or before 60 days after the transfer date

Employees at brokerages

licensees are expected to adhere to the firm's rules regarding work hours, work processes, required training, etc.

A common real estate violation occurs when

licensees delegate activities requiring a license to AN UNLICENSED ASSISTANT

If a licensee is found guilty of a fair-housing violation

licensees may face lawsuits and payment of compensatory damages, attorney fees, or civil penalties.

Service provider recommendations in MD

licensees who recommend service providers to customers and clients in conjunction with a real estate transaction must first check to make sure those providers are currently licensed they must verify at least annually that any home improvement contractors they recommend to clients are licensed by the Maryland Home Improvement Commission when providing a contractor name to a client, licensees must also provide the date they verified the contractor's licensure and give the client a link to the Maryland Home Improvement License Search on the DLLR website *THIS RULE APPLIES TO ALL TYPES OF SERVICE PROVIDERS, lenders, mortgage brokers, real estate appraisers, home inspectors, home improvement contractors, plumbers, electricians, and HVAC contractors

Subject to the existing mortgage (type of sale)

lien is still there—it serves to protect the lender's right to foreclose—but the note that accompanied the original mortgage was in previous client's name, not the new buyer

Insurance companies (lender)

like Nationwide, also finance mortgage loans

Caps (used in adjustable rate mortgages)

limits on how much an interest rate can rise

Initial mortgage cap (used in adjustable rate mortgages)

limits the amount the interest can go up at that time

Adjustable rate mortgage limits

limits, or caps, on how much the interest rate can rise from the current rate when it's adjusted the first interest rate adjustment (for example, after the first year) has an initial cap that limits the amount the interest can go up at that time at subsequent adjustment dates, the periodic cap (also known as subsequent cap or period cap) limits the amount the rate can adjust there's also a lifetime cap, which is the maximum amount the interest rate can rise from the initial rate through the life of the loan

Licensees can, for others and for compensation:

list or offer to list, sell or offer to sell, buy or offer to buy, negotiate or offer to negotiate the sale, purchase, transfer, etc. of real property. The compensation can be in the form of a commission.

Which of the following strategies would help to make a 'Choose Your Neighbor' marketing letter non-discriminatory in its effect?

listing property on MLS

What happens if a loan doesn't meet requirements of a conforming or qualifying mortgage?

loan carries a HIGHER RISKit's offered at a higher interest rate, and it's harder to sell it on the secondary market non-conforming loans and unqualified mortgages are more likely to be sold to hedge fund concerns or private investors these loans also must meet approved debt-to-income ratios and can't include excess upfront points and fees.

Loan points are the same thing as

loan origination fees

Ability-to-repay rule

loan ratios to help ensure that the borrower has the ability to repay the loanlenders follow this rule by making a qualified mortgage

Flood zones (floodplains)

loodplains are low-lying areas of property that are susceptible to flooding because of their proximity to a water source. - Flood zones may be either base (100-year floodplain or 1% chance of a flood in a specific area in a given year) or moderate (500-year floodplain or a .2% chance of flooding in a specific area in a given year). - Lenders that fall under federal regulations must require borrowers who live in special flood hazard areas (SFHAs) to obtain flood insurance as a condition of obtaining their mortgages. - Traditional homeowner's insurance policies don't cover flooding. Homeowners must purchase a separate policy or bundle flood insurance with their homeowner's policy. The National Flood Insurance Program (NFIP) helps homeowners in flood zones obtain affordable flood insurance. The Federal Emergency Management Agency (FEMA) provides a search service that homeowners can use to determine if their property lies in a flood zone.

FHA loans are more attractive to borrowers with

low credit scores and down payments

Tax abatement programs

lowers the property's taxes for a set amount of time. These are typically offered for new construction or when a property lies in an area designated for rehabilitation or renovation. Tax abatements for elderly homeowners are also common. Buyers may receive an unhappy surprise when the unrevealed abatement ends and their property taxes skyrocket.

Density zoning rules

make effective use of space without turning our citizens into sardines these rules include minimum lot size, dwelling size, setbacks and boundaries

A financing or mortgage contingency

makes the sale contingent on the buyer obtaining financing, and an appraisal contingency makes it contingent on the property appraising at or above the sales price.

Home sale contingency

makes the sale contingent on the buyer selling an existing home or property. A home inspection contingency makes the sale contingent upon a satisfactory home inspection.

Blockbusting

manipulates owners into the fear that the entry of a protected class will negatively impact property values to encourage an owner to rent or sell. is the act of inducing property sales by threatening that the changing demographics or the entry of a minority resident will decrease values. Licensees who engage in this behavior for their own profit are guilty of violating fair housing laws. - This fear is used to convince owners to sell or rent at a lower price.

Mediation for new home warranties

many warranties provide mediation of disputed claims, followed by mandatory binding arbitration

Plat map

map of a subdivision that represents a tract of land, showing the boundaries and location of individual properties, streets, easements, and other pertinent information. A developer submits the plat map to a planning board or zoning commission.

Which choice correctly identifies the three classes that Maryland protects in addition to the seven federally protected classes?

marital status sexual orientation gender identity

What drives property value down?

market being flooded w properties

MAAP

material adverse actual affects the physical condition of the property

Licensees aren't required to perform inspections, though some states do require that licensees disclose known

material facts

In many states, both the buyer's and seller's agent have the responsibility to disclose something discovered during the inspection to all parties if it's

material, adverse, actual, and affects the physical condition of the property (MAAP).

MD Commercial lease renewal

may be automatic, and most require the landlord's consent commercial leases often provide for renewals or options to renew because of the expense in moving a commercial enterprise, most commercial tenants want written into the lease an option to renew an option to renew clause sets forth the method for renewal and the terms of the renewed lease

Surety bonds

may be purchased in lieu of paying part or all of a security deposit to a landlord to protect that landlord as a security deposit would

Insurance (PITI)

may include mortgage, homeowner's, or flood insurance

Contract law

may still be upheld and prior commitments may still need to be fulfilled when a client or agent terminates an agency relationship prior to the agreement's expiration date

PMI termination

may terminate automatically or at the borrower's request under certain circumstances

Fiduciary Duty of Obedience

means following a client's lawful instructions. Licensees may not obey a client's illegal or unethical instructions.

Indemnification clauses

means one or both parties commit to compensate the other for any harm, liability, or loss arising out of the contract.

Estate in severalty

means one person owns the property, and all other interests are severed

Fiduciary Duty of Accounting

means proper handling of client property, which includes keys, funds, paperwork, and the property itself. This means no commingling or conversion of the earnest money, among other requirements.

Fiduciary Duty of Loyalty

means putting your client's interests ahead of others, including your own. It also means working in the client's best interests.

Time is of the essence clauses

means that both parties faithfully agree to perform responsibilities within the time limits of the contract.

Agency coupled with interest

means that the agent has some form of ownership of, security interest in, or possession of the principal's property. The agent's compensation depends on continuance of the agency agreement. -For example, a licensee sells an undeveloped acreage for a reduced cash price plus the right to an exclusive-right-to-sell listing agreement on the developed lots. Agency coupled with interest continues until the interest in the property ends. Death or incapacitation of the principal doesn't void an agency coupled with interest arrangement.

Legal Purpose (Requirement for contract validity)

means that the contract results in a legal outcome.

Fiduciary Duty of Disclosure

means that you must disclose to your client any facts that are relevant to the transaction (aka material facts; e.g., any information, including agency-related information, that might have an impact on the transaction).

Contract for deed

means the contract has to be fulfilled (the agreed-upon price paid off in full) before the deed is turned over to the buyer while the buyer is making payments, the seller is the owner the buyer has possession and equitable title; the seller retains ownership and in most cases buyers cannot even sell their interest without the owner's permission -annoying process

Performance of contract

means to meet all terms of the contract it is possible to partially perform a contract partial performance occurs when a party does some, but not all, of what the party has agreed to do

Assignment

means to transfer contractual rights or duties to a new party. Some contracts have provisions either permitting or prohibiting assignment. Unless the contract specifically prohibits assignment, contracts are generally assignable. Unless the parties agree that the original buyer or tenant is to be released from contract obligations, the original party remains liable if the new party fails to meet the contract's obligations.

Measuring detached structures

measurements are taken at floor level to the exterior finished surface of the outside walls. When measuring, round to the nearest inch or tenth of a foot. Report square footage as a whole number.

Other financial liens against the title may include:

mechanic's liens (liens filed by someone who worked on the property but didn't get paid) and property tax liens.

Conforming Loan (type of conventional loan)

meets the loan limit and other criteria (related to borrower qualifications) that Fannie Mae and Freddie Mac set. Lenders can sell conforming loans to Fannie Mae or Freddie Mac. Homebuyers who wish to borrow more than the loan limit must make up the difference through a larger down payment or finance with a jumbo loan.

Monuments are used within a

metes-and-bounds description to mark points at which there is a change in direction as one follows the boundary of the parcel.

"Serious or dangerous conditions" do not include

minor defects, like a lack of air conditioning, fresh paint, or carpeting, small cracks in the walls, and any non-dangerous housing code violations

Security deposits (rental properties)

money that a tenant pays to a landlord, as a way to financially protect the landlord against property damage to the rental, expenses incurred if the lease is breached, or unpaid rent security deposits can be withheld to cover any of the aforementioned costs

How to calculate Deb-to-Income Ratio

monthly debt payments / gross monthly income i.e. Bobby's gross income= $4800 mortgage = $1800 auto loan = $275 credit card = $325 student loan = $200 =$2600 2600/4800=54.2% OR a mortgage of $1200 same payments = 2000/4800= 41.7% Bobby can put more money down to reduce his loan amount-shop for lower priced homes-pay off his other debt-increase his monthly income

What is a benefit to business owners for leasing instead of buying real estate for their business?

monthly rent is a tax deduction as a business expense

What drives property value up?

more buyers than sellers

MBSs

mortgage backed securities

Common sources of liens

mortgages, unpaid taxes, unpaid services, and judgments.

Deed holder in a title theory state

mortgagor

In a lien theory or title theory state, who retains rights of ownership?

mortgagor

Sale with assumption of a mortgage (type of sale)

most conventional loans aren't assumable, and they require the lender's approval you see assumptions more often with FHA loans and VA loans if a buyer does assume the seller's mortgage, the buyer assumes liability for the mortgage and personal liability for the promissory note seller also remains responsible for the mortgage and note as well, unless the lender releases the seller from that liability -SELLERS MUST CONSULT THEIR ATTORNEY to get them released from liability—and then make sure the mortgage is recorded

How do primary and secondary markets work together?

most lenders want to sell their loans to the secondary market as quickly and easily as possible the secondary market wants to buy loans that are reasonably safe investments

Delivery and acceptance of a contract

most often comes into play after a buyer makes an offer and while the contract is still being negotiated.

Request to assign a contract

most often done at the time the offer to purchase is made

Shared equity mortgage

most often in commercial lending the borrower agrees to the lender's participation in the net income from the commercial property or enterprise in order to obtain the loan the lender may receive interest and a share of the owner's profits

Maryland Residential Property Disclosure and Disclaimer Statement

must be provided to the buyer for the transfer of residential real estate (one to four residential dwelling units), whether by agent or For Sale by Ownerthe property disclosure must be provided to the buyer before or at the time the buyer executes a purchase agreement with the sellerprovides the following info:1) The property's structural condition2) The operating condition of the property's systems (heating, air conditioning, plumbing, and electrical)3) The condition of the property's appliances and whether the seller has knowledge of any defects4) Any known exterior or environmental issuesit's your duty to provide this form to the seller and explain it's the seller's obligation to complete it. In addition, you must make every effort to provide this form to prospective buyers in a timely manner-let sellers know that completing this form does not relieve the seller from the legal requirement to make voluntary disclosure of all material property defects to the buyer failure by either party to provide this statement to a prospective buyer before presenting the buyer's written offer to the seller could result in disciplinary action for the offending licensee. This is because failure to present the form could result in the contract being voided by the buyer

Controlling person

must not have had a license or certificate to act as an appraiser refused, denied, canceled, revoked, suspended, or surrendered in any state unless it was later granted or reinstated; and must be of good character as determined by the commission

Listing agreement section components

name/contact info agency/listing agreement property listing (purpose) listing term/rights of the parties following expiration or termination of agreement listing price showing instructions marketing/MLS/internet advertisement grant release of property data to broker fair housing insurability/insurance/seller responsibility repairs broker's compensation authority to cooperate with other brokers ministerial acts lead based paint notice regarding disclosure of deferred water and sewer assessments authority to disclose existing offers home warranty notice of property condition disclosure/disclaimer violation notices conservation easements flood disclosure notice MD non-resident seller FIRPTA FHA loan notice legal construction addenda receipt

If a transaction DOES NOT go to closing, the escrow agent

needs written directions from both parties indicating how to disburse the funds. In the absence of agreement, state laws dictate how funds should be handled.

Any interest rate change of more than one-eighth of a percent requires a new CD, triggering a

new 3 day waiting period

Aging of credit

new accounts lower the average account age, which can negatively impact credit don't have a lot of 'hits' on your credit if you apply for a bunch of cards or loans over an extended period of time, even if you don't take them out, this can harm credit

Amendments to the Clean Air Act in 1990 established

new regulations regarding ozone-depleting chemicals, which govern the manufacture, use, and disposal of certain air conditioning, refrigeration, and cooling appliances.

How many months' rent can a security deposit be worth?

no more than 2 months

Range lines

north-south lines

If buyers can't obtain financing for their home, do they lose their earnest money?

not necessarily; the next line addresses this it says that the deposit must be disbursed according to the terms of the Deposit paragraph of this contract it also says that, provided that buyers complied with all of their obligations under this contract, their deposit will be returned to them

Licensees must present all written offers and counter-offers to their clients in full, in hard copy or electronic format; oral offers are

not required to be presented but are definitely recommended

MD Sales Contract: Environmental andConservation Notices (Notice to Buyer Concerning the Chesapeake and Atlantic Coastal Bays Critical Area)

notice that some properties are located in the 'Critical Area' of the Chesapeake and Atlantic Coastal Bays, where additional regulations concerning zoning, land use, and resource protection apply

MD Sales Contract: FIRPTA, Criminal Activity,and Military Installations (Military Installations)

notice to buyers that the property may be located near a military installation that conducts operations that may cause high noise levels

Obtaining professional advice (Maryland Residential Property Disclosure and Disclaimer Statement)

obtaining professional advice (Maryland Residential Property Disclosure and Disclaimer Statement) both the buyer and seller must sign to acknowledge that the licensee(s) have informed them of their rights under Section 10-702 of the Maryland Code both agents—if both parties have agents—must also sign the form

Police power - local authority

ocal authorities determine what goes on in their communities in the areas of: -Zoning -Subdivision development -Budgeting -Site plan review -Building codes

Radon

occurs naturally in the environment and can be found in soil and well water. - Radon enters a home through the building's cracks and crevices, and experts believe it can cause lung cancer. - Homeowners can purchase radon self-test kits and then send them to a lab for analysis.- Results are measured in picocuries. - If the home tests at or above a level of 4 picocuries per liter, experts recommend mitigation, which can include sealing cracks and other foundation or basement openings and installing a vent system. - Radon mitigation isn't required by federal law; some states may have mitigation requirements.

Assignment of a contract

occurs when a new party is substituted for one of the original parties unless it's done with the permission of both parties and provisions are included to release the original party from liability, the original party remains responsible to the terms of the agreement if the new party fails to live up to those obligations

Steering

occurs when members of protected classes are guided (or steered) toward certain areas, buildings, or neighborhoods by a property manager or real estate licensee. - For example, only showing families with children units on the first floor is an example of steering. Even phrases like "kid friendly" could be perceived as steering.

Novation

occurs when one contract is substituted for another. The agreement may be between the same parties, or a new party may be substituted (this is novation of the parties). The intent between the parties is to discharge the old obligation, releasing the original party from those obligations.

Breach of Contract

occurs when one party fails to meet contract obligations. The innocent party may take any one of several actions as a remedy to the breached contract.

Offer and Acceptance (Requirement for contract validity)

occurs when the parties enter into an agreement voluntarily with full understanding of contract terms.

Impossibility of Performance

occurs when the property is destroyed or made the subject of eminent domain the parties cannot legally or practically do what they've agreed to do, so they are released from their obligations under the contract

Physical Deterioration

occurs with wear and tear, damage, and improper maintenance

PARTY RECEIVING THE OFFER

offeree

The party EXTENDING THE OFFER

offeror

The Division of Occupational and Professional Licensing

offers AMC application forms such as: -AMC application -AMC Controlling Person application -AMC Affidavit of Ownership application -Consent to Service of Process application (which allows the AMC to be legally served by the director of the Maryland Commission of Real Estate Appraisers and Home Inspectors)

What does commercial real estate include?

office buildings, industrial property, medical centers, hotels, malls, retail stores, farmland, warehouses, garages, and large multi-family residential properties licensees are usually hired to find a rental space licensees could work with tenants or landlords

Gross leases are often used for

office space

MD Sales Contract: Buyer Notices (Notice of Buyer's Right to Select Settlement Service Providers)

on the purchase of a single-family dwelling, a salesperson must not require a buyer to use a particular title insurance company, settlement company, escrow company, mortgage lender, or title lawyer, as a condition of settlement on the property purchase

Summary dispossession

once a landlord has given the required notice to a tenant, or has a court order for termination of tenancy, that landlord can file a simple court suit to dispossess (or "oust") a tenant from the property (and take the property back, or repossess it)

Testamentary trust

one created according to the terms of the will of a deceased person unlike living trusts, testamentary trusts do not avoid probate beneficiaries will be responsible for the cost of administering this trust

Net listing

one in which the broker contracts with the seller to receive all net proceeds from a sale above a specified sale price. Net listings are illegal in most jurisdictions because they create a conflict of interest and encourage unethical behavior such as trying to sell a property for more than its value.

Every section is _____ square mile or ____ mile squared

one square mile or one mile squared

Time share estate

one way of doing time -shares, where we own a part-interest in this unit, which is part of a time-share complex -ownership allows owners to use the unit this same week every year-the other owners of the time-share each get their own week to use it, and there's a management firm that takes care of things like upkeep -It's kind of expensive; If we aren't able to use the unit during our designated week, we can try to exchange time with someone in another unit in this project, rather than lose the week altogether

Typically, how long does a landlord hold rent in escrow?

one, two, or three business days from receipt.

Unilateral contract

only one party makes a promise. An option contract is one example of a unilateral real estate contract.

Institutional area zoning

or hospitals, jails and prisons, courthouses, college campuses, and public schools often possible for institutional use to be permitted in a residential or commercial zone depending on the zoning ordinance

Option contract

or option, is an offer to purchase a specific piece of real estate without the obligation to buy it. In an option contract the potential buyer (optionee) is usually required to pay an option fee to the seller (optionor). If the optionee decides not to exercise the option and purchase the property, the optionor typically retains the option fee.

Escrow agents

oversee trust or escrow account money. Often the broker acts as the escrow agent; a title company representative or attorney may also serve as the escrow officer.

What types of properties are VA loans limited to?

owner-occupied homes, not investment properties however, loans can be used for home construction or improvements for up to a four-family dwelling

Sole proprietorship is an example of

ownership in severalty

Estate

ownership/interest in a prop

Suspected fair housing violations may be investigated by a civil rights organization using a

paired testing system to determine if discrimination has taken place.

Joint tenancy - right to partition

partition suit may jeopardize joint tenancy

Ground tenant

pays periodic ground rent to the landowner (who holds the ground lease); in return for that rent, the ground tenant obtains the use of the property to build upon it typically, the ground tenant then owns the improvements (including buildings) on that rented land

Those who violate the DNC may be subject to

penalties in excess of $40,000 per violation/separate call

Property type (lender criteria)

people are more likely to let an investment property go into default than they are their own homes therefore, lenders usually accept higher LTV ratios for an owner-occupied properties

Wholesalers

people who tie up a property and resell it for more than they agreed to pay, taking a small profit

In Caveat Emptor states, licensees should encourage buyer to

perform due diligence on a prop

What happens when a specific date isn't provided?

performance must take place within a "reasonable time"

Legal description

permits a specific parcel of property to be located by a trained surveyor.

Fixtures that are removed from the improvement before an agreement of sale become

personal property again through the process of severance.

Package mortgage

personal property is included with the real property in the sale this might be used in the case of a furnished condominium, for instance, but it's more commonly used in commercial real estate where business assets are included as collateral

MD Sales Contract: FIRPTA, Criminal Activity,and Military Installations (Foreign Investment Taxes-FIRPTA)

pertains to foreign investors provides that a buyer of a residential real property located in the US must withhold federal income taxes from the payment of a purchase price if the purchase price exceeds $300,000 and is the seller is a foreign person if the price is above $300,000, seller represents that seller is not a non-resident alien, foreign corporation, foreign partnership, foreign trust or foreign estate and agrees to execute an affidavit to this effect at settlement

Disability/handicap is a

physical or mental impairment that substantially limits one or more of a person's major life activities.

PUDs

planned unit developments usually mixed use that allow both residential and commercial development

Unities of tenants in common

possession only

Optionee

potential buyer

Taxes, unrecorded liens, and unrecorded deeds are all

potential title problems that may not be discovered in a title search.

What does suspension of advertising or listing/rental solicitation in a conservation areas do?

prevent panic selling, blockbusting, or reduced market values that may occur without such a suspension the suspension doesn't apply to advertising in regularly distributed newspapers and magazines or radio/television ads it primarily applies to targeted methods, such as direct mail, telemarketing, and door-to-door solicitation

Estoppel

prevents one party from suing another, because the party's actions or statements implied that he or she agreed with the other party

The Sherman Antitrust Act (1890)

primary purpose is to PREVENT MONOPOLIES that would cause a restraint of trade.

Each parcel is described by referencing the

principal meridian and base line that is appropriate to the township in which the parcel is located.

PITI

principal, interest, taxes, insurance

If a seller fails to comply to Notice Regarding Disclosure of Deferred Water and Sewer Assessments (Addenda and Disclosures of the MD Sales Contract) LAW

prior to settlement, buyer is entitled to rescind in writing the sales contract without penalty or liability on rescission, buyer is also entitled to the full return of any deposits made on account of the sales contract if deposits are held in a trust by a licensed broker, the return of deposits to a buyer under this law shall comply w procedures under section 17-505 of Business Occupations and Professions Article of Buyer written notice in accordance with this requirement AND: AFTER SETTLEMENT, seller shall be liable to buyer for the full amount of any fee or assessment not disclosed unless seller was never charged a fee or assessment to defray the cost of public water or wastewater facilities by the developer, a successor of the developer, or a subsequent assignee

Public and private lands may be protected by law BUT

private lands can also have conservation easements applied to specific areas.

Holdover proceeding

processes by which the landlord can evict a tenant on any grounds other than the nonpayment of rent, such as staying beyond the term of the lease—can also vary by county

A property manager's primary goal is to

produce the greatest net return for the owner.

Civil Rights Act of 1866

prohibits housing discrimination based on race or color. There are no exemptions under this law. It is never legal to discriminate on the basis of race. This act protects the rights of U.S. citizens to buy, sell, convey, inherit, and possess property. The act failed to have an immediate impact on discrimination because no agency was assigned to enforce it.

Equal Credit Opportunity Act (ECOA) or 1974

prohibits lenders from making credit unavailable or offering less-favorable terms based on protected class status (race, color, religion, national origin, sex, marital status, or income source) vs. creditworthiness.

Brokerage firms and the managing or supervising broker are responsible for

proper supervision of unlicensed employees and must be particularly careful to not allow unlicensed assistants to perform tasks that require a license.

Why does the bank own REO properties?

properties went through foreclosure process and didn't sell at auction

MD Sales Contract: HOAs to Leases (Ground Rent)

property is subject to ground rent and the ground rent is not timely paid, the ground lease holder may bring action a lien could be placed on property purchaser has certain rights/responsibilities of ground rent

Taxes (PITI)

property taxes, which is the cost of public services divided by the value of a property for the area

What is considered separate property in community rights?

property that was gifted, inherited, and in some cases the result of personal injury recovery

Inverse condemnation in downzoning

property value is diminished due to adjacent land being taken for public use

Co-ownership

property with ownership by more than one person, also called concurrent ownership

Fair Housing Laws are designed to

protect citizens from discrimination. States can't make laws that remove rights that federal laws grant to citizens, though they can pass more restrictive laws or add additional classes to those protected by federal law.

Administered and enforced by the Department of Housing and Urban Development (HUD), Title II of the Americans with Disabilities Actof 1990 prohibits

protected class-based discrimination in the delivery of commercial and public programs, services, and activities.

The Housing for Older Persons Act of 1995

provided exceptions for housing specifically designed for seniors. The exception allows those who live in senior developments in which at least 80% of the units are occupied by at least one person who is 55 or older to discriminate on the basis of age. They may not discriminate on the basis of any other protected class

Sale leaseback

provides 100% financing and allows the investor to realize the tax benefits of real property ownership as well as the security of owning a building with a (generally speaking) solid tenant

Loan Estimate (LE)

provides buyers with the costs they are likely to pay at settlement and discloses the mortgage loan specifics, such as its key features, costs, and risks.

The Brownfields Law, enacted in 2002

provides direct funds, mostly in the form of grants, to assess and clean up brownfields.

Closing Disclosure (CD)

provides final loan details, including the loan terms, projected monthly payments, fees and other closing costs.

Single family home branch of CDA

provides homebuyer assistance programs for low- to moderate-income homebuyers by way of mortgage loans and helps with down payments and closing costs the single-family branch of the CDA also helps rehabilitate single-family rental housing, including lead paint reduction and weatherization assistance, and also provides financing for people with special needs

- The U.S. Department of Housing and Urban Development (HUD) enforces the ADA as it relates to

public housing, housing assistance, and housing referrals

Payers in the secondary mortgage market do what?

purchase lender loan packages and re-package them into mortgage-backed securities (MBS). They sell the MBSs to investors.

What CAN'T a landlord do if a tenant abandons their lease?

pursue a tenant for six months' lost rent if the landlord does not attempt to find new tenants during that time (for example)

Lenders in primary market do what?

put together packages of conforming loans and sell them to the secondary mortgage market to free up funds that provide additional consumer loans.

Qualifications for a licensed real estate appraiser (qualifications)

qualifications: -150 hours of courses approved by MD Commission of Real Estate Appraisers & inspectors -associate's degree, or higher, from an accredited college, junior college, or community college or 30 semester credit hours of college-level education from an accredited college, junior college, community college or university -at least 2,000 hours of appraisal work experience over a period of at least two calendar years (24 months)

Certified residential real estate appraiser (qualifications)

qualifications: -200 hours of courses approved by the commission -bachelor's degree or higher from an accredited college or university -at least 2,500 hours of appraisal work over a period of at least two calendar years (24 months)

Home inspector (qualifications)

qualifications: -72-hour on-site home inspector training course approved by the commission and pass the National Home Inspector Examination -criminal background check (for new applicants) -no repeat courses in the same cycle for credit

Appraiser trainee (qualifications)

qualifications: -within the five-year period prior to the date of submission of an application for a real estate appraiser trainee license, complete 75 tested hours of commission-approved real estate appraisal courses of which 15 hours shall be in the subject of the Uniform Standards of Professional Appraisal Practice and a commission-approved course oriented toward trainee appraiser expectations and responsibilities

Certified general real estate appraiser (qualifications)

qualifications: -300 hours of courses approved by the commission -bachelor's degree or higher from an accredited college or university -3,000 hours of appraisal work over a period of at least 30 months, at least 1,500 hours of which in nonresidential real property appraisal work

CDA finance branch of CDA

raises capital in the national municipal bond markets to fund below-market interest rates for home buyers, for non-profit and for-profit entities which construct and rehabilitate multifamily properties, and for local infrastructure projects

MD Sales Contract: Adjustments, SettlementCosts, and Transfer Charges (Adjustments)

random charges you might not think about: payments made in advance— or after the sellers have already moved out—which must be credited accordingly everything from ground rent to water and sewer charges, plus charges for homeowners associations, and various taxes and assessments, plus other charges, must be adjusted to the day of settlement

Deed of trust conveys

real estate to a trustee for the beneficiary named in the trust agreement. For example, in states that use a non-judicial foreclosure process, the deed is conveyed to a trustee who holds it until the mortgage loan is paid in full OR until the borrower defaults and the lender must foreclose.

Licensees must ALWAYS practice this fiduciary duty

reasonable skill and care

Living trust

reated during a person's lifetime and is often used when minor children are involved the property may be placed within the trust for their use in their lifetime or when they reach the age determined by the person who creates the trust trustee manages it in the meantime

After the loan package analysis, the underwriter will

recommend application approval or denial or may request more documentation.

ALWAYS DOCUMENT your

recommendations to clients

Why is recording a mortgage/satisfaction of mortgage important?

recording protects the new buyer's interest in the property, and it also puts the public on notice about the new ownership

Air rights

refer to the right to use the area in the sky above a property.

Curable Depreciation

refers to an item of physical deterioration or functional obsolescence where the cost to cure the item is less than or the same as the anticipated increase in the property's value after the item is cured.

Disparate Impact

refers to practices that have a greater effect on one protected class over another

Severability

refers to the concept that if a court deems a term in the contract to be unenforceable, the remainder of the contract remains enforceable.

Procuring Cause

refers to who started the chain of events leading to the sale, which often means whose actions produced a ready, willing and able buyer i.e. Lisa, a salesperson, shows a property to Tim, and the next week Tim buys it from Marcia (the listing agent), Lisa may still be owed compensation because she started the chain of events that led to Tim's purchase

Replacement cost

reflects the cost to build a functionally equivalent improvement

Example of disparate impact

refusing to rent to anyone on Social Security would affect more people with disabilities than people without

Bulk zoning

regulates the density of a given area by requiring certain building height limitations, lot width, setback requirements, etc. - Bulk zoning applies to both residential and commercial zoning.

Drawbacks of Commercial Leasing

rental rates can include annual increases based on market conditions the landlord holds the right of reversion at lease end. The tenant may be required to move at the end of the lease the tenant may have little or limited control over what the owner of the property decides to do. If the building owner sells, the tenant may have to relocate, which causes disruption and extra expense -this can result in a loss of goodwill that has been gained an potentially a loss of customer base -if the business has no equity in the property, the lease repayments essentially build the property owners' equity if the business has no equity in the property, the lease repayments essentially build the property owners' equity there can be many obligations and hidden costs in a lease, which can be onerous for tenants if they are not aware of them

The warrantor (third party usually) of the home warranty agrees to

repair and pay for covered defects and restore any portion of the home damaged by fulfilling warranty obligations.

Housing providers may inquire as to the nature of a non-apparent disability if an applicant

requests ADA-related accommodations or services

FHA and VA in home warranty

require builders to purchase third-party warranties to protect buyers of newly built homes that are financed using FHA or VA loans

Surveys

required to verify, clarify, correct, or create a legal description a professional on-site measurement of the lot lines and dimensions of a property, including the location of any improvements (such as a house) on the lot, any encroachments that may exist, and any easements of public record

Fiduciary Duty of Reasonable Skill and Care

requires agents to operate within the scope of their expertise and advise clients to seek expert advice on matters that are outside of the agent's scope of knowledge. It also refers to the expert performance of a licensee's tasks. Licensees should always encourage clients to seek an attorney's advice before signing contracts.

The federal Lead Renovation, Repair, and Painting (RRP) Rule

requires contractors who perform tasks that may disturb lead-based paint to be certified and to follow lead-safe work practices.

Automatic PMI Termination/Homeowner's Protection Act/PMI act of 1998

requires lenders of loans created after 1998 to automatically cancel PMI when the borrower's equity is scheduled to reach 22% (an LTV of 78%), based on the original value (the lower of the purchase price or appraised value) borrowers must be current on payments for this to occur

Truth in Lending Act (TILA) of 1968

requires lenders to disclose credit terms and conditions when advertising triggers loan terms, so as not to mislead consumers. Regulation Z requires mortgage lenders to follow TILA disclosure requirements for real estate advertisements that include credit terms.

The Equal Credit Opportunity Act (ECOA) of 1974

requires lenders to give consumers equal access to credit. The act prohibits discrimination based on race, color, religion, national origin, sex, marital status, or age with respect to granting credit and requires lenders to respond to all loan applications within 30 days, giving reasons for any application rejections.

Statute of Frauds

requires that certain types of contracts, such as for a property ownership transfer, be in writing to be legally enforceable and to prevent injury from fraudulent conduct

Due-on-sale/alienation clause

requires the borrower to repay the loan on the property when selling or transferring ownership of the property

Land Contract/Contract for Deed

requires the buyer to make installment payments to the seller for property purchase. The seller retains the title while buyer gets equitable title.

Latent defects (Maryland Residential Property Disclosure and Disclaimer Statement)

requires the owner to disclose information about any latent defects about which the owner has actual knowledge this requirement applies even if the owner is selling the property as-is and is filling out the Residential Property Disclaimer Statement Latent defects are defined under Maryland law as material defects in real property or an improvement to real property that: -A purchaser would not reasonably be expected to notice by a careful visual inspection of the real property -Would pose a direct threat to the health or safety of the purchaser or any occupant of that property, including any tenants or person the purchaser invited onto the property

Mediation clauses

requires the parties to attempt mediation prior to engaging in arbitration or a legal action.

Arbitration clauses

requires the parties to resolve or attempt to resolve their disputes through an arbitration process.

Properties that could still be subject to ground lease

residential properties with 5+ dwelling units, commercial properties, condos and co-ops, and mobile home sites

The ADA requires business owners to make a reasonable effort to

resolve usage barriers for people with disabilities. For example, lifts or ramps should be in place for wheelchair accessibility.

Protected lands and those under conservation easements may

restrict development and prevent certain uses that may be destructive.

If a property faces both a public and private restriction regarding the same issue, the most _______one takes precedence.

restrictive

Percentage leases are commonly used for

retail businesses/malls

Most land trusts are

revocable, which means that the trustor may manage the trust, receive any income or other benefits from it, change the terms of the trust agreement, change trustees, or terminate the trust; upon the trustor's death, however, an existing land trust generally becomes irrevocable (permanent)

Right of Profit

right to make/harvest something for profit

Possessory

rights to occupy the property

If a landlord fails to meet their obligations, tenants need to provide the landlord with written notice of the issue and that they'll exercise their

rights under the act if not resolved in a timely matter.

Judgment

same thing as an attachment lien - when the courts place an encumbrance on the property of a defendant in a lawsuit for monetary damages

Carpenter ants leave behind a

sawdust-like material called frass when they burrow through wood.

Accessory use

say you wanted to create a mother-in-law suite inside a single-family home use that's subordinate to the main use of a single-family home

Prior appropriation water rights

says that the first party to physically take water from a source and put it to beneficial household, agricultural, or industrial use will continue to have a claim to the water

Paragraph Headings (MD Sales Contract: Non-Assignability to Entire Agreement)

says that the headings in this contract are for reference only, and don't define or limit anything within those paragraphs

MD Sales Contract: Tax-Related Notices (Internal Revenue Service Filing)

says that the parties agree to provide all necessary information to the settlement officer, so a report can be filed with the IRS, as required by the IRS Code

Property taxes are the largest funding source for local services such as

schools, roads, and police/fire protection

Specific Performance Suit

seeks to force a party to make good on the promises made in some way.

Endangered Species Act

seeks to protect species and their habitats and is administered by the U.S. Fish and Wildlife Service and the National Marine Fisheries Service.

In full seller disclosure states, whose responsibility is it to complete the seller disclosure form which will be reviewed by prospective buyers?

seller

Optioner

seller

A key concern when SELLERS OFFER INSURABLE TITLE RATHER THAN MARKETABLE TITLE

sellers may not have to clear up title problems that come up before closing

Independent contractors (ICs)

set their own hours, pay their own expenses, and determine how best to meet their own goals. Brokerage firms must supervise them related to licensing law, but they operate independently related to how they perform their tasks. Firms can require that licensees maintain membership in a REALTORS®association.

Dedication

setting aside a piece of land for a public work, such as a park or path

Who is charged with disbursing the broker compensation?

settlement agent

Party wall

shared between two buildings and constructed on the boundary line between two owner's lots

Buyers offer earnest money to

show they intend to follow through with a transaction.

Survey sketch

shows the locations and dimensions of a prop

Yield capitalization

similar to direct capitalization, but projects farther into the future than one year it also considers the potential value of the property upon resalean expected rate of return is applied to income from the entire holding period to find the current property value TOTAL RETURN OF INVESTMENT expressed in an annual rate used for LARGER PROPERTIES where the investor wants a value based on long-term holdings, along with the effect of debt repayment and potential resale of the property on the ultimate return on investment

Land trusts

similar to other trusts except that it is formed specifically to hold real estate—real property is the only asset within the trust usually the person who establishes the trust (the trustor) is also the beneficiary may be created at the time of purchase of the real estate or after it was acquired

What types of contract is a real estate contract considered?

simple

Maryland Lead Poisoning Prevention Program (lead based paint portion of MD Sales Contract)

simply says that this program requires landlords of residential dwellings to register the dwelling with the Maryland Department of the Environment if it was built before 1978, and pay a minimal fee

Computation of Days (MD Sales Contract: Non-Assignability to Entire Agreement)

simply specifies that the term, 'days,' as used in this contract or any addenda to this contract, refers to calendar days -includes weekends and holidays -it defines a day as beginning at 12:00:00 a.m., and continuing through 11:59:59 p.m. Eastern time says that when you're calculating days by which any act must be completed, or a notice must be given, regarding this contract or any addenda to it, the count of days begins on the day after the day upon which any act or notice was required to be made

Roof problems - SOFFIT

small animals and insects are attracted to the wood beneath the overhang, so pay attention for cracks, holes, and rotting

Why do many licensees work as ICs?

so they can deduct business expenses on their income tax returns. This benefits the brokerage firm, too, because it's not required to pay workers compensation, Medicare, social security, or unemployment insurance for ICs.

Signs of a waste disposal site

soft spots, sinkholes, mounds, expanding soil, discolored soil, stunted vegetation

Assumptions - how they work

some buyers, rather than take out a new loan (or in addition to doing so) will take over the payments of the seller's existing loan this isn't always possible—many lenders include a due-on-sale clause that requires the seller to repay the entire loan in full when selling the property

What do states require for warranty coverage?

some states require a builder to provide warranties in phases: six years for major defects, one year for minor defects, etc. in other states, builders provide coverage for up to 10 years for major structural defects—anything that makes the home unsafe or puts the homeowner in danger

Mobile home

something that was built before 1976 those constructed without any regulation, before 1976; manufactured homes are built according to HUD construction and safety standards otherwise, they share the common elements of a home that can be transported because of attached chassis, tongue, axles, and wheels

Land contracts - seller financing

sometimes known as a contract for deed, installment contract, or land sales contract with seller financing, the seller agrees to provide credit to the buyer for a portion (or sometimes all) of the funds required to close the transaction the buyer makes payments directly through the sellerseller retains title - SELLER FINANCING

Are clouds on title common with REOs?

sometimes, though lenders hoping to unload the property may clear those up before putting it on the market.

Land trusts generally continue for a

specified term such as 10, 20, 30 years - trustee must extend trust term when it expires or sell the real estate and provide proceeds to beneficiary

Choice of law clauses

specifies that any dispute arising under the contract shall be determined in accordance with the law in a particular jurisdiction.

Gross living area

square foot of living space, measured from outside the building, above ground, enclosed, heated, habitable space

Square feet / 9 =

square yards

Chimney/fireplace problems - CREOSOTE

stains on the outside of the chimney - may indicate an unlined flue, also look out for crumbling bricks or tilting chimneys as these could be signs of foundation problems

If the lease area does encompass an entire floor, the usable square feet encompasses everything inside the exterior walls of the building EXCEPT FOR

stairwells and elevator shafts.

Appraisal Foundation's Appraiser Qualifications Board

state licensing or certification qualifications must conform to federal requirements appraisers must follow the Appraisal Standards Board's Uniform Standards of Professional Appraisal Practice (USPAP). Qualification requirements are defined for the three Es: education, examination, experience

MD Sales Contract: HOAs to Leases (Sale/Settlement or Lease of Other Real Estate)

states that if this sales contract or your loan were contingent on the sale, settlement, or lease of another property, another addendum would be attached to this contract

MD Sales Contract: Deposit; Deed and Title (Deed & Title)

states that once you've paid the purchase price at settlement, the property's deed must be transferred from the seller to buyer In Maryland, the sellers convey the property with a special warranty deed they must sign any documentation the lender, title insurance company, and other named entities require them to sign they must also authorize the settlement agent to obtain the pay-off information from their existing lenders

MD Sales Contract: Default

states that the parties agree to make a full settlement of this contract, and that failure to do so constitutes a breach of contract then it goes into pretty specific detail about the consequences—known as 'remedies'—of a breach of contract on the responsible party

MD Sales Contract: HOAs to Leases (HOAs)

states that the property isn't part of an HOA—homeowners association—that is subject to mandatory association fees, unless there's an addendum to this effect attached to the contract

MD Sales Contract: HOAs to Leases (Leases)

states that the seller must not negotiate a new lease or renew any existing lease on the property, if that lease term extends past the settlement or possession date

MD Sales Contract: Broker Liability/Fee andSeller/Buyer Responsibilities (Seller Responsibility)

states that the sellers agree not to default on their mortgage before settlement the sellers agree to comply with any violation notices or requirements against or affecting the property, and the property must be transferred to you free of any such issues if something should occur that leaves the property completely or substantially damaged—before you've taken title or possession of the property—and provided you aren't responsible for that occurrence, then you have the option of sending the sellers written notice that the contract will be considered null and void

MD Sales Contract: Home and/or Environmental Inspection

states that you may—at your own expense—make the contract contingent upon home and/or environmental inspections if you want any inspection contingencies, we must attach the addenda to this contract i.e. adding being contingent on a home AND environmental inspection

Entire Agreement (MD Sales Contract: Non-Assignability to Entire Agreement)

states that, unless this contract is amended in writing, as we discussed earlier, it contains the final and entire agreement of the parties, and as such, the parties will not be bound by any terms, conditions, oral statements, warranties, or representations that aren't contained in writing in this contract ***finally, this contract must be governed by the laws of the State of Maryland

2 Types of corporations

subchapter S: permitted to function as a corporation but taxed as a partnership -do not pay corporate income taxes and avoid double taxation -may deduct losses on their income taxes representing their share of the corporation's loses subchapter C (C corporation): must pay corporate income tax to IRS-these shareholders see double taxation

The Clayton Act (1914)

supports the Sherman Act by PROHIBITING MERGERS that would result in a monopoly.

Syndicates

syndicates are groups of investors pooling their money in pursuit of a single investment goal, such as buying an office building the syndicate is organized by a sponsor who does the investment legwork and property management and who asks many investors to join in the real estate investment, with everyone sharing in the profitsthe sponsor can be an individual or a business organization *dealing in securities*

In order to remove an easement through abandonment, the dominant estate owner must

take some action that shows a clear intent to stop using the easement.

Construction mortgage

temporary financing for construction purposes. The developer will submit plans for a proposed project, and the lender will make a loan based on the value of the appraisal of the property and the construction plans the entire loan is not given at once; disbursements are made at intervals as phases of construction are completed upon completion, the lender makes a final inspection, closes the construction loan, and converts the loan into permanent, long-term financing construction loans involve risk for the lender (they are essentially loaning on land, air, and a promise to build) and usually come with a higher rate

URLTA provides landlords rights if the

tenant fails to meet obligations

If a joint tenant sells his or her interest, the buyer doesn't become a joint tenant with the other owners; the buyer is a

tenant in common with the remaining joint owners. That's because the unities of time and possession don't apply.

How can a tenant claim constructive eviction?

tenant must actually leave while the conditions that make the premises uninhabitable exist the lease is then terminated, and no rents are due; however, the tenant may have to go to court to prevail against a claim of unpaid rent

Holdover tenant

tenant who remains in possession of leased property after the expiration of the lease term still subject to the terms of the original lease agreement, except, of course, for the length of that lease if the landlord does not wish for the lease to continue, and the tenant will not vacate the property upon request, then the landlord may remove the tenant by initiating a holdover proceeding

Month-to-month tenancy

tenants who do not have one of the above lease types and who pay rent on a monthly basis are called month-to-month tenants they may still have a lease agreement, but the lease will specify the month-to-month arrangement can also be created if a tenant under a lease stays beyond the lease's terms, and the landlord continues to accept rent from that tenant; that holdover tenant is a month-to-month tenant either party may terminate a month-to-month tenancy agreement by giving one month's notice, or other notice according to the terms of the lease

If a client refuses to be shown homes in all types of neighborhoods/or who discriminate against others, you have the right to:

terminate the agency agreement

If the seller misses a contingency deadline, the buyer may have the right to

terminate the contract

The presence of mud tunnels in walls may indicate

termite infestation

Which type of pest may make mud tubes—tunnels that run along your walls—or shed tiny wings?

termites

Common wood-eating pests include

termites, carpenter ants, and powderpost beetles

Amortized loans

that are those that are paid off over time. Each periodic payment (usually monthly) is credited first towards current monthly interest on the loan with the remainder used to pay off a portion of the principal.

Notices Clause

that describes how contract-related notice may be made and when notice is considered to have been received. i.e. a purchase or listing contract may permit contract parties to select whether notices may be delivered electronically.

Liquidated Damages Clause

that limits buyer damages to a return of the earnest money if the seller breaches the contract.

A tenancy in common owner's debts can attach to

that owner's ownership interest.

Interest (PITI)

the "fee" paid paid back to the lender for the use of their money -interest portion generally decreases over the life of the mortgage

The TRID-required settlement statement is called

the Closing Disclosure (CD). Working with the lender, the closing officer prepares the CD, incorporating all the figures and calculations required for the loan and other closing costs.

The primary impact of prohibited advertising on licensees comes from

the Do Not Call Registry (DNC)

Income tax lien

the IRS will file a general lien against all property belonging to that person for various taxes owed and unpaid

Right of Enjoyment (bundle of rights in property ownership)

the ability of the owner to use the property in any legal manner

Who often acts as the escrow agent?

the agent's broker

Straight-line mortgage (constant amortization)

the amount applied to principal remains constant over the life of the loan each payment becomes lower as the loan balance is reduced with each payment

The Net to Seller formula calculates

the amount the seller receives after paying commission and other expenses The closing officer ensures that the seller's loan and all interest is paid unless the buyer is assuming the loan. The seller pays per diem interest for the month of closing. Percent to seller = 100% of sale price - commission %. Net to seller = sales price × percent to seller.

What could happen if an unlicensed assistant performed real estate activities in which licenses are required?

the assistant and the broker could be cited for violating license law.

Which of the following statements about down payments are true?

the balance of the down payment must be paid to the settlement agent at settlement

What happens if the buyer does not receive the Maryland Residential Property Disclosure and Disclaimer Statementstatement on or before they sign the purchase offer?

the buyer can rescind the contract of sale in writing at any time before receiving the disclosure the buyer can rescind the contract of sale in writing within five days of receiving the disclosure

Pledged account mortgage (type of graduated payment mortgage)

the buyer deposits funds into a savings account held by the lender this fund, plus any earned interest, is used to supplement mortgage payments the purpose is to reduce payment amounts in the early years

What happens if the optionor sells their prop to another buyer not in the option contract?

the buyers (optionees) still have the contract, but with the NEW owner is a breach of contract by seller

If permits were NOT pulled on a property

the city (or county) may require the unpermitted additions to be partially or fully disassembled in order to inspect the quality of the work to make sure it was done up to code levels

HUD vs. Schimnich (2012) CASE STUDY

the complainant, a blind person with back issues, sometimes required the use of a walker. She also suffered from mental disorders, including depression and post-traumatic stress disorder -woman had a service dog but Schimmich's community had a no-pet policy She informed him that the dog was a support animal, and he again said, "No pets." The complainant tried to show the respondent the dog's support animal certification paperwork, but he refused to see it, saying he didn't care what it said the respondent was prohibited from discriminating on the basis of disability. Damages were awarded, including a $16,000 civil penalty and any additional relief as appropriate. -DISABILITY

Ground rent disclosure

the contract of sale must include information explaining that if the ground rent is not paid, the new owner could lose the entire property to the ground leaseholder, and that the buyer's leasehold could be terminated

For sewer permits

the county should have a sanitarian who would have these answers it's possible that a septic tank still exists even if the sewer has been connected to public sewer

Why should buyer know if homes on a street are all on septic systems, but the county plans to extend the sewer to Elm Street within the next two years?

the county will likely impose an installation fee on Elm Street residents to cover the costs

Fee simple determinable (fee simple defeasible estate)

the current property owner conveys ownership to a new owner as long as some event does or doesn't occur

Fee Simple Subject to Condition Subsequent

the current property owner conveys ownership to a new owner on a specific condition

Accepting and binding acceptance must take place within

the dates outlined in the contract. If dates aren't specified, then they must occur within a "reasonable time."

Filtering down

the decline in value of properties in neighborhoods that were once middle or upper-middle income used housing gets released and is passed down to successively lower income levels until the bottom of the market is eventually served lenders used to refuse to provide mortgages to buyers leaving redlining areas fair lending laws now encourage lenders to loan to lower-income buyers so that communities can take advantage of the filtering down process and can maintain housing in multiple price ranges

Time share use

the developer still owns the property, and people have purchased the right to use it for a designated week/weeks every year. -it's probably most similar to owning a condo -there's an owner's association, and fees and so forth for maintenance -could eventually sell time share, just like any real estate, but would have to get a Certificate of Resale from the owner's association -allows purchaser to use for periods through the year

Transferability

the ease with which another person can purchase the property; a property with a title defect may suffer a loss of value because of the difficulty of being able to transfer title to another.

Base line

the east-west line from which measurements originate.

The Doctrine of Laches refers to

the enforcement of restrictive covenants. If property owners don't protect their rights to enforce these covenants, they can lose them.

With the death of an estate owned in severalty:

the estate passes either according to instructions in the owner's will or according to state law.

What can investment value tell an investor?

the expected rate of return for a property.

Roof problems - FASCIA

the front board along your roof line is easily damaged by moisture

What happens if a component provided by a manufacturer is defective?

the homeowner may be required to work out the issue with the manufacturer most major components and appliances typically have a manufacturer's warranty of at least one year that would be used if the issue is a defect, rather than a wear-and-tear-related failure

Once a ground tenant builds a home on a property (subject of the ground lease)

the homeowner owns the home, but must continue making periodic payments to the leaseholder ground tenant does not breach the terms of the ground lease, and continues making timely payments to the leaseholder, the homeowner may continue living on the property

What does the Internal Revenue Service (IRS) regulate?

the independent contractor/brokerage firm relationship and requires a written agreement between the IC and the firm indicating that the firm will not treat the individual as an employee for federal tax purposes. The IRS will review a number of factors to determine whether or not a firm has misclassified any individual as an IC when that person has been treated as an employee.

Adjustable rate mortgage

the interest rate is based on an economic index (e.g., the Consumer Price Index) and is adjusted on a periodic basis, such as annually the interest rate is calculated by adding a specified number of percentage points, called the margin, to the associated index the margin is constant throughout the life of the mortgage

If ground tenant fails to pay rent, breaches the terms of the lease, or if the lease expires:

the land will revert to the leaseholder (the landowner)

Mutual agreement (lease termination)

the landlord and tenant can mutually agree to cancel a lease before its expiration

FICO (Fair Isaac Corporation)

the largest and best known of several companies that provide software for calculating a person's credit score

The time frame of all leases in Maryland is measured beginning on the date _____, not on the date the lessee's occupancy begins

the lease is entered into

The greater the number of contingencies on an offer:

the less attractive it is to the seller

The fewer adjustments that need to be made when comparing comparables for an appraisal

the less subjective the appraiser needs to be with respect to the value (not cost) of those differences.

Operation of Law

the manner in which parties automatically acquire rights or liabilities due to established rules of law, and not through an agreement or act of their own. In certain cases, a contract can't dictate rights and duties due to operation of law Contracts between minors and adults are voidable by the minors without creating a breach of contract. Other operation of law situations include fraud and one party altering the contract without the written consent of the other party. Both of these are breaches of contract and void the contract as a result of operation of law.

Roof problems - FLASHING

the material around pipes, vents, or other protrusions is a prime spot for damage or water leaks

What gives the lender the right to sell the property if the borrower defaults?

the mortgage

Beneficiary

the one who benefits from the trust

The role of general partners in a partnership

the one who discovers the investment opportunity and brings in limited partners for their funds the general partner will do the work

If earnest money EXCEEDS the down payment plus closing costs

the overage is refunded to buyer at closing

When a ground property is listed for sale

the owner (or licensee who represents the owner) must include on the for-sale signs the amount of the annual ground rental and the cost of capitalization; these amounts must be shown in numbers that are as large and clear as the numbers listing the price of the property

Right of Control (bundle of rights in property ownership)

the owner controls the use of the property

Easement termination by merger occurs when

the owner of either the servient or dominant estate purchases the other property

Just as with tenancy in common, any owner's debt can attach to

the ownership interest of that owner

Acknowledgment (in a deed)

the party signing (in the case of a deed, the grantor) has gone before a competent party (typically a notary) and indicated that the signature is their own and that they signed voluntarily.

Air lot diameters are measured based on

the perimeter of the land parcel directly beneath. Air lot heights are established by the city or other governing authority that has jurisdiction

As-of-right zoning

the permitted use of a property i.e. n a single-family zoning district, an as-of-right use of the lot would include the construction of a single-family home, but it wouldn't include the construction of a factory, a duplex, or an office building

Capacity to contract term(in a lease contract)

the person signing the lease must be a competent, sane adult a lease to a person who is incompetent in the eyes of the law can be voided by that person

Trustee

the person who carries out the trustor's wishes (executor)

Topography

the physical and natural features of an area

Police power - taxation

the power of taxation is one of the inherent burdens on private land ownership unpaid taxes become a lien on real estate

Reverse redlining

the practice of charging non-white borrowers higher fees or interest rates

Amortization & Amortized loan

the process of paying off a loan by making periodic payments of principal and interest initially, most of the payment will go toward interest, with ever-increasing amounts going toward principal until the loan is paid off for instance, a 30-year fixed-rate loan will be fully amortized in 30 years

Right of Possession (bundle of rights in property ownership)

the property is owned and may be possessed by the title holder

Property taxes are calculated based on

the property's assessed value. Governments like property taxes as a revenue base because they're a stable, reliable revenue source.

Utility

the property's function

Earnest money is credited to

the purchase price of the property, but it may be used to compensate the seller if the buyer breaches the contract.

If earnest money is less than the down payment:

the purchaser brings the remainder of the down payment to closing

Right of Exclusion (bundle of rights in property ownership)

the right to decide who may or may not access the property

Right of Disposition (bundle of rights in property ownership)

the right to sell or convey the property

When a ground rent property is irredeemable

the seller will not be able to buy it out, which means that seller will be unable to deliver the fee simple title required under that contract -seller would be in breach of contract

IN FULL DISCLOSURE STATES:

the seller's agent has a responsibility to notify the seller of the duty to disclose all known material facts. the buyer's agent has a responsibility to counsel the buyer about due diligence and home inspections and to follow up on red flags.

STATES THAT DON'T REQUIRE FULL DISCLOSURE:

the seller's agent has a responsibility to notify the seller of the following duties: to disclose items that are required to be disclosed, to be honest, and to not hide defects. The buyer's agent's responsibilities are the same as in caveat emptor states, with the added tasks of obtaining and reviewing the property disclosure statement.

Property Condition Disclosure (Maryland Residential Property Disclosure and Disclaimer Statement)

the seller's representation; it is not the representation of any involved real estate licensee the seller's disclosure is also not a substitute for a home inspection by an independent professional home inspection company this notice suggests the seller consider obtaining such an inspection the seller is not required to inspect or investigate the property to complete the disclosure statement DO NOT constitute a warranty by the seller to any property or other conditions, including latent defects, about which the seller has no knowledge seller is not liable for any error, inaccuracy, or omission in the statement if the information wasn't within the seller's actual knowledge, or was provided to the seller by a governmental organization, or by the report or opinion prepared by a licensed engineer, contractor, or other expert, dealing with matters within that person's professional license or expertise

What if a seller agrees to fix title defects?

the settlement date can be extended for up to 14 days while they do this there are additional provisions for situations in which the sellers cannot remedy the defect the way buyers take the title may have significant legal and tax consequences - seek professional advice

When state and federal laws differ, as they sometimes do with fair housing and/or human rights, which of these statements is true?

the state law may not remove rights granted to citizens under the FEDERAL LAW

Escheat

the state's power to claim property when an owner dies without a will and without heirs or creditors

Percentage lease (commercial)

the tenant pays a base rent plus an additional charge that's a percentage of the tenant's gross sales once a specific 'breakpoint' is met. The landlord usually pays all the property's costs (as seen in a gross lease), but this may not always be the case. ***Percentage leases are often used for retail businesses and malls.

Home inspections can help determine

the true condition of a property

If you've had the roth IRA for at least five years:

the withdrawn earnings are both tax- and penalty-free

When advertising real estate services, licensees must make sure

their broker affiliation is apparent

If seller's agent isn't aware of any easements or encroachments:

then the buyer will typically discover them as part of performing due diligence prior to the purchase of the property

If a current termite infestation/any damage is found

then the sellers must pay to have the infestation treated and the damage repaired if the cost of this is more than 2% of the property's purchase price, then the sellers have the option to cancel this contract, unless you decide to pay for the cost of that treatment and repair over that 2% limit

According to the DNC, licensees may call customers whom

they have had an established business relationship for 18 months after the last interaction.

should clients close unused cards when preparing to finance a mortgage?

they should not close unused cards as a strategy to raise scores—it won't help they also shouldn't open a bunch of cards they don't need to increase their available credit this can lower a credit score.

Credit (borrower creditworthiness)

they want to know how much available credit a borrower has, and the ratio of existing debt to income credit history and scores lenders get this information themselves, rather than relying on the borrower to provide it.

If sellers default/breach contract

they'd have to reimburse buyers the money they've spent paying for those things associated with the sale

Why don't primary lenders want to hold onto loans?

they'd run out of money pretty fast if they had to wait 30 years for borrowers to pay these loans back

Additional finished buildings are usually included as GLA only if

they're attached to the main house by a hallway or stairway.

Covered, enclosed exterior areas are included as GLA (aka gross living area) only if

they're heated using the same heat system as the other areas of the property.

As Is (Maryland Sales Contract Addenda/Disclosures term)

this addendum allows the parties to agree that the property is either sold "as-is" with no inspections or contingencies, or with a buyer-paid inspection and the buyer reserving the right to terminate based on the results

Cash Appraisal Contingency (Maryland Sales Contract Addenda/Disclosures term)

this addendum lets the buyer request that the seller reduce the purchase price to the appraised value the buyer must pay for the appraisal.

What happens when the borrower contests the foreclosure, declares bankruptcy, or seeks delays or adjournments?

this can add significantly to the time it takes to foreclose

Prepayment penalty clause

this clause puts the borrower on notice that if the loan is paid off before a specified period of time, the lender may be owed additional interest if borrowers pay off the loan too quickly, the lender may not realize enough profits to cover its expenses protects lenders

MD Sales Contract: Signatures

this final paragraph is called 'Electronic Delivery' and it states that, in accordance with applicable laws, buyers agree that they and/or the sellers can use e-signatures to sign and/or initial this document buyers need to check "First-time Homebuyers" box to make sure they receive the state transfer tax reduction, and pay no state transfer taxes-at settlement, buyers have to complete the required affidavit -sellers then respond

Condominium Resale Notice (Maryland Sales Contract Addenda/Disclosures term)

this form is required for the resale of a condominium and contains the seller's disclosure and a resale addendum

Affiliated Business Disclosure Notice (Maryland Sales Contract Addenda/Disclosures term)

this form lets the parties know of any business relationship an agent has with the settlement service providers listed in the disclosure notice

Graduated mortgage (type of fixed loan)

this is a fixed-rate mortgage with payments that gradually adjust (usually upward) based on a predetermined schedule and amount the initial payments are less than what would be a fully amortizing payment, which creates negative amortization however, this type of payment plan can make payments easier in the beginning when perhaps income is lower

Fixed-rate loan

this is a loan where the principal and interest payment remains the same over the life of the loan

Balloon payment loan

this is a lump sum payment, usually at the end of a loan period

Straight mortgage/term mortgage

this is a mortgage in which the periodic payments go to interest only and the entire principal amount is due at the end of the term

Buyer's waiving rights (Maryland Residential Property Disclosure and Disclaimer Statement)

this notice informs buyers that their rights under Section 10-702 of the Maryland Code may not be waived in the sales contract, and any attempted waiver is void the buyer's rights to terminate the contract as established under Section 10-702 are waived "conclusively" if they haven't been exercised before: -The buyer closes on or occupied the property for a sale, whichever occurs first -The buyer occupies the property for a lease with an option to purchase

Maximum building height (bulk zoning)

this rule specifies how tall a building can be and is used in conjunction with setback requirements

Rear yard setback (bulk zoning)

this rule specifies the distance required between a building and its lot's rear property line

Front yard setback (bulk zoning)

this rule specifies the distance required between a building and its lot's street-facing edge

MD Sales Contract: Agriculturally Assessed Property and Forest Conservation

this says that your property may be subject to an Agricultural Land Transfer Tax imposed by the Property Tax Code of Maryland anyone who owns at least five contiguous acres of land can make an agreement with the Department of Natural Resources (DNR) to place the land in the program the owner has to pay to have the agreement recorded in thecounty or counties where the land is located when the land sold, the owner has to notify any prospective buyer about the agreement, as well as notify the DNR within 30 days of the sale

Alternate Financing (financing portion of MD Sales Contract)

this section says that you may also apply for alternate financing at your own discretion, as long as you 'timely and diligently' applied for the financing you indicated earlier in paragraph 9 (Financing), paragraph 10 (Financing Application and Commitment), and the provisions of Paragraph 28 (Buyer Responsibility) such alternate financing may not increase costs to seller or exceed the time allowed to secure the financing commitment provided in paragraph 10

Fair housing laws summary

throughout history, members of certain groups have been given different levels of service or were denied service by people in the real estate industry

Unities of tenancy by the entirety

time title possession interest person

Timeliness

time is of the essence means that the parties are agreeing to proceed in good faith and not unduly delay the process a court may determine a "reasonable time" or they may consider the contract to be invalid because a specific time or date was not provided

Unities of joint tenancy

time, title, interest, possession

Lack of sole ownership can create

title defects For example, if a divorce decree stipulates that one party retains ownership of the couple's property but no deed is recorded to convey the other party's ownership rights, the seller must track down the non-owner party to have that party execute a quit claim deed to clear the title.

Co-operative ownership

title to land and building is held by a corporation -personal property -ownership may follow occupancy agreement and can be approved/disapproved by the board

Condo ownership

title to unit held by unit owner -real property -ownership may be transferred similar to other properties

Who does a developer submit a plat map to?

to a planning board or zoning commission.

Trust agreement

to create a trust, the trustor will convey property to the trustee with instructions for how the trustee is to hold and manage it on behalf of the beneficiary (document) often the trustor and trustee will be the same person until the trustor dies, in which case the new trustee is named within the trust. In the case of a married couple, the spouses may transfer real and personal property into a trust and then name themselves as joint trustees with rights of survivorship after the death of the second spouse, the estate is distributed to the beneficiary or beneficiaries named in the trust.

Why do lenders use LTV?

to determine required down payment amounts when initially writing mortgage loans or when homeowners apply for a home equity loan or a home equity line of credit.

The role of limited partners in a partnership

to protect their immunity from partnership debts, they may not participate in the managing of the partnership limited partners who do may become generally liable limited partnerships are a common form of holding real estate limited partners will profit or see a loss from their investments according to the partnership agreement, and the success or failure of the project

Which of the following is a reason a lender might charge a prepayment penalty?

to recover lost money in anticipated interest

Total amount of interest on a loan formula

total amount of interest on a loan = monthly payment x total payments) - original loan value

Federally related transactions

transactions for sale, lease, purchase, investment, refinancing, or exchange of real property in which a federal financial agency or regulatory authority is involved real property or interests in real property are used to secure a loan, including mortgage-backed securities agencies referred to here include the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation (FDIC) the loan will not be sold on the secondary market and isn't guaranteed or insured by a government entity such as FHA or VA

Mortgage right

transferring an interest to a mortgagee for the term of a loan

Loan term

typically 15 or 30

Special Warranty Deed

typically warrants only against title defects acquired during the grantor's ownership of the property. It guarantees that the grantor owns and may convey the property, and warranties that the property is free of any debts or encumbrances not noted in the deed. A special warranty deed is most often used in conveying commercial properties.

Rent receipts (rent issues)

under Maryland law, all landlords must provide rental payment receipts if either of the following occurs: 1) the tenant pays in cash 2) the tenant requests a receipt

A vent pipe protruding from the ground may also be a sign of an

underground storage tank

While walking around the exterior of a rural home she's inspecting, Juanita noticed a metal vent pipe sticking out of the ground 25 feet from the house. She documents this because it may be a sign of what potential environmental hazard?

underground storage tank

A sinkhole or settling beyond what's typically expected may be a sign of

underground storage tanks, or other buried hazards

Joint tenancy interest in whole property

undivided - each co-owner has right to possess entire prop and can't claim certain areas

Tenants in common interest in whole property

undivided - each co-owner has right to possess entire prop and can't claim certain areas

Oral contracts may be valid but

unenforceable or difficult to enforce

In an option to buy ease, the option is a ___ contract

unilateral contract

When a breach occurs, the innocent party may ____ the contract

unilaterally terminate

Assuming licensee Shannon has actual knowledge of all of the following property issues, which should she disclose to prospective buyers?

upstairs bathroom has a leaky toilet

Proprietary lease

used by owners of cooperative apartments who purchase shares of the corporation that own the building; the proprietary lease holder does not own the apartment, but a proprietary lease to the residential unit

Section 502 direct loan

used for low-income borrowers in rural areas can provide payment assistance, a type of subsidy that reduces the mortgage payment for a short period of time the amount of assistance is based on the adjusted family income

Formaldehyde

used in a variety of building products, is a colorless chemical with a strong odor. It's emitted as a gas and is classified as a volatile organic compound (VOC). It's considered to be a "probable" carcinogen, and in a substantial portion of the population, is a respiratory, eye, and skin irritant. Pressed wood products (including laminated furniture and plywood), carpeting, and ceiling tiles are the most common offenders. Recent EPA regulations require use of certified products and labeling of certain products to reduce the impact of this chemical.

Blanket mortgage

used in commercial applications where two or more properties are pledged as security for repayment of the loan for example, a developer may purchase property and subdivide using a construction loan-once the parcels are ready for sale, the construction loan is converted to a blanket mortgage that covers all the parcels in the subdivisions -when a parcel sells, the release clause allows that individual parcel to be removed from the developer's loan without initiating a due-on-sale clause, which would require the entire loan to be repaid

How do property managers use operating accounts?

used to pay expenses related to managing the property, such as maintenance, utilities, contractor expenses, or staff salaries. Rent is deposited into these accounts. Trust accounts, also called escrow accounts, hold funds belonging to others.

How can loan payments be determined?

using amortization charts

Graduated leases are a type of

variable lease

Contracts entered into with legally incompetent parties are ______

voidable by the INCOMPETENT PARTY, but can still be executed by the competent party

A mortgage lien is (voluntary or involuntary)

voluntary because the property owner chooses to have a mortgage

Forest Conservation and Management Program (Agriculturally Assessed Property and Forest Conservation portion of the MD Sales Contract)

was designed to encourage the preservation or development of land for productive woodland purposes—and to increase the income of Maryland residents who sell timber buyer is notified that this transfer may be subject to the Forest Conservation and Management Program imposed by section 8-211 of the Tax-Property Article, Annotated Code of MD

The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)

was established to clean up closed, abandoned, or uncontrolled hazardous waste sites and spills.

Soft spots and mounds may indicate that the property was used for

waste disposal

Step 7 of valuation process: Reconcile data

weight one approach more than the other. For instance, for a single-family residential, the sales comparison will usually be weighted more heavily. For a theater, which is a one-off kind of property, I might use the cost approach. And for a rental, of course I'll weight the income approach the heaviest.

Cost

what is would cost to recreate that property if it disappeared off the face of the earth today -labor -materials -legal services -zoning -architectural design -financing-taxes -interest -overhead & profit

What blocks the process of filtering down?

when lenders refuse to loan on properties in middle- and lower-income areas due to redlining or refuse to lend to entire races, this blocks the process of filtering down

Self help eviction

when a landlord acts without a court's involvement, violating statutory law by physically removing the tenant and the tenant's belongings from the premises, or prevents the tenant from accessing the premises by, for instance, changing the locks IS ILLEGAL without a court order to change locks, shut off utilities, etc.

Expiration (lease termination)

when a lease ends as stated in the contract

Sub-agency in MD

when a licensee from a competing firm works under the listing agent a licensee who works for one firm but who is engaged by another firm to perform agency functions on behalf of that firm's client is known as a sub-agent-is legal in MD, but many brokerages don't allow this practice to prevent confusion/liability issues for clients

What happens when a property doesn't appraise?

when an appraiser determines a property's value to be less than the sales price, the lender won't approve the loan—it'll only underwrite the lesser of the two values most buyers will have an appraisal contingency written into the contract which allows the buyer to back out and receive a refund of earnest money if this happens you can also provide the appraiser with a copy of your CMA, provided it justifies the sales price, and copies of competing offers at or above the sales price be prepared to challenge an appraisal if you believe it's incorrect, but be sure of your position

Property tax lien

when an owner does not pay property taxes a lien is levied against that property

When is a Sales/market Comparison most commonly used in appraisals?

when appraising single-family homes

Satisfaction of a mortgage

when it's paid in full

How Sales Price Adjustments are made to Comparables

when making adjustments to account for differences between a subject property and the comparable property, make the adjustments to the comparable property's sales price -SUBTRACT from the comparable's sales price if the comparable prop HAS a feature that the subject prop does not -ADD to the comparable's sales price if the comparable property DOES NOT HAVE a feature the subject property has

Survivorship in joint tenancy

when one joint tenant dies, that person's share automatically goes to the other surviving joint tenant(s)

Commingling

when operating and trust funds are mixed - this is ILLEGAL Taking money out too soon or putting it into escrow too late (10 banking days).

A recorded easement should appear

when performing a title search as well as on any surveys of the property

Attachment lien

when the courts place an encumbrance on the property of a defendant in a lawsuit for monetary damages (also known as a judgment)

When is a manufactured home considered real property?

when the parts that make it transportable are removed and it becomes affixed to the land - otherwise if it can be mobilized it's personal prop can be real estate if the land upon the house is situated is part of a transfer of ownership/lease transaction

When can borrowers request PMI termination?

when the principal balance drops below 80% of the loan balance. Depending on market conditions and property updates, this may permit borrowers to remove PMI earlier in the mortgage loan term.

When must lenders terminate PMI?

when the principal balance is scheduled to reach 78% of the original property value or when the mortgage loan reaches its originally scheduled amortization midpoint.

Consumer confidence (how it affects the market)

when this is reduced, it makes new buyers leery of purchasing, and current homeowners hesitant to trade up major employer moving into—or out of—an area: Ghost towns are created when whole industries dissolve, or natural or human-caused disasters such as floods create a mass exodus

When does the 1-year home warranty begin? (new construction)

when title is conveyed to the buyer, the date construction is finished, or upon occupancy, whichever is first.

Conversion

when trust funds are used for personal expenses - ALSO ILLEGAL

Disparate treatment

when you act differently with one protected class than with another

Non-conforming use

when zoning is first placed in an area or an area is rezoned, so the zoning is new, any existing uses that don't comply with the zoning are grandfathered in there is nothing wrong or illegal about a non-conforming use; however, when the owner sells the property that's non-conforming, the new owners will usually have to comply with the current zoning allows the owner to use the property as originally zoned even though that does not meet current zoning regulations

Subprime loan market

where borrowers who can't qualify for a conventional loan are easy to take advantage of it's also a risk for any borrower who doesn't understand how mortgages work or who isn't encouraged to understand all of the ramifications of the loan term

Free and clear (type of sale)

where the seller is released from all liability

Mini Sherman Acts

which also apply to restraint of trade within these locales, whether interstate commerce exists or not -calls for both civil and criminal enforcement and grants the attorney general the power to enforce antitrust law on behalf of the state by filing suit against the individual or company engaging in antitrust activities -businesses and consumers may also file private lawsuits, and recover attorney fees and damages if successful; however, suits must be filed within 4 years of the alleged violation

What is a Habendum Clause?

which defines the type of interest and rights the grantee will have. Not every deed needs the habendum clause, but if the interest is less than fee simple, this is generally where it is described.

Commercial zoning

which encompasses retail, restaurants, hotels, service businesses such as doctor's offices, and other business types-can include industrial zoning

Lifetime cap (used in adjustable rate mortgages)

which is the maximum amount the interest rate can rise from the initial rate through the life of the loan

Actual notice

which means that the parties have personal (NOT PUBLIC) knowledge of a particular event

Constructive notice

which means that the record is publicly available to anyone who does a records search

CD identifies

who pays what at closing

Enroachments are not recorded BUT

will appear on any surveys completed after the enrichment came to be

Fully amortized loans

will be paid in full after the last scheduled loan payment (or sooner if the borrower makes additional principal payments during the loan term). The monthly principal and interest payment amount is the same each month. The principal portion of the payment increases each month, while the interest portion decreases.

How should a trust be created?

with the help of an attorney

Purchase money mortgage - seller financing

with this arrangement, the buyer is able to obtain a loan for a large part of the purchase price, and the seller agrees to finance the rest of the balance the buyer or the bank obtains the title to the property the parties spell out the terms for foreclosure in the event of buyer default often the banks will sell the property in foreclosure and then give the original seller a part fo the proceeds sellers may assist buyers is through the use of a second mortgage for a portion of the required down payment

When a non-U.S. resident (foreign person) sells real property in the U.S., the Foreign Investment in Real Property Tax Act (FIRPTA) requires that buyers

withhold 15% of the gross sales price at closing. This withholding is typically handled by the closing agent, but the buyer is responsible for ensuring that the funds are withheld and submitted to the IRS. The withholding is designed to ensure that the IRS receives any capital gains tax owed on the sale. When the seller submits a U.S. tax return, the amount withheld at closing may be refunded in full or in part, depending on the taxes owed with the return.

When should a seller let a buyer know they will pay to repair pest infestation damages? (pest infestation damages)

within 5 days from receipt of report

Vacant land

without buildings; unimproved landcan be land that was never built on or land that was built on but was brought back to its natural state

Mulch mounded against a house or other structure with wood frame siding can hold moisture against the siding, leading to

wood rot

Many small holes through wooden beams could indicate the presence of

wood-boring beetles

Tenant representatives

work with commercial tenants to help them find places that meet the specific needs of their business, and to get them a good deal on that space experienced tenant representatives can help in lease negotiation, explain any potentially confusing clauses (naturally, without going outside the scope of their expertise), help compare lease benefits and drawbacks, and help the tenant spot charges in the lease that would result in higher rent or other expenses

Mortgage brokers (lender)

work with multiple lenders to search for and negotiate the best deal for a particular borrower's circumstances they don't loan the money out themselves, so they're not tied to a specific suite of loan products

Easements are often agreed to in

writing

Contract termination based on the inability to meet a contingency or on the other party's failure to meet a deadline typically requires

written notice to the other party

If broker files an interpleader case in court asking the judge to determine who's entitled to the deposit

you and the sellers agree and irrevocably authorize the broker to deduct all costs the broker incurred to file such action from the deposit the broker is holding this amount cannot exceed $500, or the amount of the deposit being held, whichever is less

Floor to area ratio

you get the FAR by dividing the gross floor area of a building by the total area of the lot FAR describes the intensity of use building height and site coverage are factors that affect FAR i.e. a low floor-to-area ratio covers more of the lot with building square footage if the building is all one story. But the same FAR would describe a two-story building that covered only half of the lot, assuming both buildings had the same amount of floor area.

Termination of Co-ownership by partition