RE National Overview
For discriminatory housing practices, a violator may be fined:
$10,000 for a first offense $25,000 for two offenses within the previous five years $50,000 for three or more offenses within the previous seven years
A licensee using a franchise trade name or advertising as a member of a cooperative group, when advertising other than specific properties for sale or lease, must include the following legend in the advertisement in a manner reasonably calculated to attract the attention of the public:
'Each (Franchise Trade Name or Cooperative Group) Office is Independently Owned and Operated.''
A borrower obtains a 10-year interest only loan of $50,000 @ 6%. How much interest will he or she pay?
($50,000 x .06 x 10) = $30,000
A borrower obtains a 10-year amortized loan of $50,000 @ 6% with monthly payments of $555.10. How much interest will he or she pay?
($555.10 x 12 x 10) - $50,000 = $16,612
The seller must furnish a purchaser one of the following:
- A residential property disclosure statement regarding the condition of the property, including any material defects known to the owner. The form must include all items listed on the disclosure form provided in 66-5-210, including: - a notice that the prospective purchaser and the owner may wish to obtain professional advice or inspections a notice that the information contained in the disclosure consists of the representations of the owner and are not the representations of the real estate licensee or sales person
A valid contract must include:
- Competent parties (There must be at least two mentally competent parties of legal age with legitimate authority to contract. Legal age of competency in Tennessee is 18.) - Mutual consent (There must be a meeting of minds, a mutual agreement to terms through the process of offer and acceptance.) - Valuable consideration (There must be a two-way exchange of valuable consideration as compensation for performance by the other party.) - Legal purpose (A contract that proposes an illegal act is void. Voluntary, good faith act) - The parties must create the contract in good faith as a free and voluntary act. (Fraud or misrepresentation makes a contract voidable.)
What happens if someone acts without a license?
- It is a class B misdemeanor - A person who violates the license requirement is liable for at least the amount of any money received for the illegal services and as much as three times the amount, as determined by a competent court. - If the violator is a corporation, the corporation is ineligible to be licensed for a year following conviction - The Commission may, in a lawful proceeding respecting any person required to be licensed by the Commission, (in addition to or in lieu of any other lawful disciplinary action), assess a civil penalty for each separate violation of a statute, rule, or order pertaining to the Commission. The schedule of penalties, listed in the Rules of the Real Estate Commission, ranges from fifty dollars ($50.00) to one thousand dollars ($1,000.00) per violation. - The Commission may fine a person who is required to be licensed by the Commission, but acts without a license one thousand dollars for each violation. Each day of a violation may be considered a separate violation.
A joint tenancy is terminated when any of the four unities is broken.
- Sale of an interest: if there are three joint tenants and one sells his interest to a fourth party, this fourth party becomes a tenant in common with the remaining two joint tenants. - Bankruptcy of any of the joint tenants. - Foreclosure of the property. - Partition suit: as stated above under Tenants in Common
What are the requirements to be a commissioner?
- TN Resident - Good moral character - seven members who have been principally engaged as a licensed broker or affiliate broker in Tennessee for at least five years prior to the date of appointment - two members from outside the real estate industry, specifically not engaged in the businesses of real estate broker, affiliate broker, real estate financing or real estate development; these two must reside in different grand divisions of the state - three members each from the eastern, middle and western grand divisions of the state
TN Conveyances and transfers
- Tennessee uses deeds of trust to secure debt. The trustee has "power of sale": the trustor conveys the deed to the trustee to hold until the debt is paid or the loan is defaulted. In case of default, the trustee may sell the property and use the proceeds to pay the loan. (66-5-103) - Tennessee does not require a title search or title insurance. Most lenders will require a lender's title insurance policy. - Surveys are not required by law. A lender may require one.
Before refusal, suspension or revocation of a license, the commission:
- The Commission must notify the accused applicant or licensee in writing of its receipt of a complaint. - The accused applicant or licensee has ten days to file an answer to the complaint with the Commission and with the complainant. - The Commission investigates and determines whether to set a hearing. If it decides the complaint is improper or there is no reasonable cause that the violation occurred, it will publish an order to that effect. - A majority vote of the Commission must be reached to revoke or suspend a license. If the complainant has also filed a complaint in a court of law and the matter is pending, the Commission may withhold its decision until the court action has been concluded.
What is a limited agency?
- The agency relationship created between a licensee and a client to provide real estate services - The licensee may function as an intermediary in negotiations between parties to a transaction unless the parties choose to negotiate directly. - The licensee owes certain duties to all parties to the transaction, and other specific duties to the client the licensee represents as an agent.
Requirements to receive an FHA loan:
- The borrower is charged a one-time insurance premium which provides security to the lender in addition to the real estate in case of borrower default. - There is a one-time charge paid at closing by the borrower or some other party. (seller) There is also a renewal premium paid monthly. - The lender can charge points, and either the borrower or the seller can pay them.
What must a principal broker do to release an affiliate broker from their firm?
- The principal broker must promptly and properly grant a licensee request for release from the firm. - When the contract between a broker and affiliate broker is terminated, the broker must sign and date the form provided by the Commission.
What happens after the principal broker signs the release form?
- The principal broker's supervisory responsibility over an affiliate ends. - The licensee may not engage in any real estate transactions or act under a contract with another firm until the change of affiliation form, accompanied with the proper fee, has been completed and transmitted to the Commission. - The licensee may not take or use any property listings secured through the firm, unless specifically authorized by the principal broker. - The licensee, within ten (10) days after the date of release, must complete the required administrative measures for change of affiliation, temporary retirement, or if ineligible for temporary retirement, placement in ''inactive'' status. -The affiliate broker must make sure that the form and fee are promptly submitted, and must display his or her license prominently at the new broker's principal office.
If a licensee is found in violation of the Real Estate Act, or of any rule under the Act, the fund pays out, at the direction of a court order:
- To an individual for actual or compensatory damages, up to fifteen thousand dollars ($15,000) per transaction. - A maximum of thirty thousand dollars ($30,000) on behalf of any individual licensee.
What are the continuing education requirements for brokers?
- Within 3 years from the date of issuance of an original broker's license, (for renewal), the broker must satisfactorily complete an additional one hundred twenty classroom hours in real estate at any school, college, or university approved by the Commission. - Every two years, beginning with the license period immediately after the one in which the licensee completes the one hundred twenty hours of education, the holder of a broker's license originally issued after January 1, 2005, must satisfactorily complete sixteen classroom hours in real estate courses at any school, college, or university approved by the Commission.
When can a landlord retake the premises?
- after 30 days of absence and failure to pay rent on time, landlord may retake premises - if tenant is 15 days late in paying rent and appears to be absent, landlord may take premises
The following forms and copies must be provided during a sale:
- an agency disclosure in addition to the purchase agreement - a residential property disclosure or disclaimer for a residential sale - a lead-based paint disclosure form if a residence was built before 1978 - A licensee must furnish all signatories with a copy of any listing, sale, lease, or other contract relevant to a real estate transaction at the time of execution. - If a broker acts as closing agent he or she must provide copies of the closing documents to each customer or client.
An unlicensed employee, assistant or secretary may:
- answer the phone and forward calls - give information on the listing agreement as limited by the broker - fill out and submit listings to any multiple listing service - follow up on loan commitments after a contract has been negotiated - assemble closing documents - secure public information from courthouses, utility districts, etc. - have keys made for company listings - write ads for approval of licensee and principal broker and place ads - receive, record and deposit earnest money, security deposits and advance rents under direct supervision of principal broker - type contract forms for approval by licensee and principal broker - monitor licenses and personnel files - compute commission checks - place signs on property - order repairs as directed by the license - prepare fliers and promotional information for approval by licensee and principal broker - deliver documents and pick up keys - place routine phone call on late rent payments - schedule appointments for licensee to show listed property - gather information for a comparative market analysis - hand out objective written information on a listing or rental - give a key to a prospect or unlock property - disclose the current sales status of a listed property
In a time-share contract, the purchaser may cancel:
- at any time before the offering statement has been received. - within ten (10) days from the date of the signing of the contract if the purchaser has made an on-site inspection of the time-share project prior to signing - within fifteen (15) days from the date of signing of the contract if the purchaser has not made an on-site inspection of the time-share project prior to the signing of the contract of purchase
A valid listing agreement must:
- be in writing - have a termination date - specify a selling price
If landlord fails to provide essential services, tenant may:
- deduct cost of services from rent - recover damages - procure substitute housing and not pay rent until fixed - recover cost of substitute housing
It is a discriminatory practice to advertise in any way that:
- goods or services will be denied to any individual on account of the individual's race, creed, color, religion, sex or national origin - the patronage of any individual is unwelcome on account of the individual's race, creed, color, religion, sex, age or national origin
To other licensees involved in the same prospective transaction, the licensee must:
- immediately disclose, on initial contact, the licensee's role in the transaction, including any agency relationship - immediately notify the other licensees and any parties to the transaction of the change in status if the licensee's role later changes The previous disclosure requirements do not apply in the case of transactions involving: - commercial properties - the lease or rental of residential properties - properties to be transferred by public auction - transfers of residential properties of more than four (4) units)
An unlicensed employee, assistant or secretary may not:
- make cold calls by telephone or in person to potential client - show properties for sale and/or lease to prospective purchasers - host public open houses, licensee open houses, home show booths or fairs - answer questions concerning properties listed with the firm, except information contained on the listing agreement as limited by the principal broker - prepare promotional material or advertising of properties for sale or lease without the approval of the principal broker - discuss or explain listings, contracts, offers, or other similar matters with persons outside the firm - be paid on the basis of real estate activity, such as percentage of commission or any amount based on listings, sales, etc. - act as a go-between with a seller and buyer such as when an offer is being negotiated - negotiate or agree to any commission split or referral fee on behalf of a licensee
Rules for Security Deposits
- must be deposited in a special account - tenant may dispute landlord's list of repairs - if tenant vacates with amounts, landlord may apply the deposit to the unpaid debt
If a licensee pleads guilty or is convicted of any offense listed in the License Act, the licensee must:
- notify the Commission within sixty days of the conviction - provide certified copies of the conviction
The following are exempt from the rules against discriminatory housing practices:
- owner-occupants of properties consisting of one to two dwelling units, as opposed to the federal exemption for owner-occupants of one to four units - housing that has an occupancy percentage of 90% of units by at least one person who is age 55 or older, rather than 80% in the federal law
The Licensing Act does not apply to:
- property owners representing themselves in a transaction - attorneys-in-fact acting under a power of attorney from an owner or lessor - attorneys-at-law providing legal services - resident managers acting for a broker or owner-- but duties must be limited to supervision, showing, leasing, and collecting of rents and deposits; no negotiating of rents, deposits, or leases - corporations acting through an authorized officer to engage in a transaction involving real estate owned by the corporation-- but the officer may not receive compensation based on the value of the real estate involved - individuals who work for firms that provide vacation lodging services-- but the firm must have a firm license
"Commercial real estate" means any real estate other than:
- real estate containing one (1) to four (4) residential units - real estate on which no buildings or structures are located and which is zoned for no more than one (1) to four (4) family residential units The term does not include single family residential units such as condominiums, town houses, or homes in a subdivision when sold, leased, or otherwise conveyed on a unit-by-unit basis.
Disclosed dual agency is legal in Tennessee, but because it is fraught with difficulties and problems in terms of fulfilling duties to clients, it is mostly avoided in favor of a:
- single agency (representing one party) - designated agency (representing one party) - facilitator relationship (no agency)
What must be in writing in a exclusive buyer representation agreement?
- that the buyer should make all arrangements to view or inspect a property through the licensee and should not directly contact other licensees - that the buyer should immediately inform any other licensee the buyer may come into contact with that he or she is represented by the licensee - whether the buyer will owe a commission in the event the buyer purchases a property without the assistance of the licensee through another licensee or directly from an owner
A licensee using a franchise trade name, or advertising as a member of a cooperative group, must clearly and unmistakably indicate in the advertisement adjacent to any specific properties advertised for sale or lease in any media:
- the licensee's name - broker or firm name - firm telephone number (as registered with the Tennessee Real Estate Commission)
According to the statute of frauds, the following contracts must be in writing to be enforceable:
- the sale of goods for the price of five hundred dollars ($500) or more - the sale of real estate or a real estate lease for a term longer than one year - exclusive right-to-sell - exclusive agency - exclusive right to represent buyer - purchase contract - employment contract
What is land?
- the surface area of the earth - everything beneath the surface of the earth extending downward to its center - all natural things permanently attached to the earth - the air above the surface of the earth extending outward to infinity Land, therefore, includes minerals beneath the earth's surface, water on or below the earth's surface, and the air above the surface. In addition, land includes all plants attached to the ground, or in the ground, such as trees and grass. A parcel, or tract, of land is a portion of land delineated by boundaries.
The contract authorizing a broker to place funds in an escrow or trustee account must clearly specify:
- the terms and conditions for disbursement of funds - the name and address of the person who will actually hold the funds
Exemptions from the Landlord and Tenant Act
- transient occupancies, such as hotel and motel rentals - condominiums and cooperatives - occupancy in a residence that is under a contract for deed - rental agreements entered into before July 1, 1975
A complaint to the Commission must be filed within the longer of:
- two years from the date of commission of the alleged violation or the complainant's discovery of the violation - the applicable statute of limitations if the violation also constitutes a criminal offense - ten days after the completion of a successful prosecution of the violation as a criminal offense
When may a broker properly disburse funds from an escrow or trustee account?
- upon a reasonable interpretation of the contract which authorizes him to hold such funds - upon securing a written agreement which is signed by all parties having an interest in such funds, and is separate from the contract which authorizes him to hold such funds - at the closing of the transaction - upon the rejection of an offer to purchase, sell, rent, lease, exchange, or option real estate - upon the withdrawal of an offer not yet accepted to purchase, sell, rent, lease, exchange or option real estate - upon filing an interpleader action in a court of competent jurisdiction - upon the order of a court of competent jurisdiction
The Tennessee Real Estate laws and regulations are contained primarily in two documents:
-The Tennessee Real Estate Broker License Act of 1973 (Title 62, Chapter 13), which regulates the real estate brokerage profession in Tennessee. -The Rules of the Tennessee Real Estate Commission (Rules 1260), which assist the Commission in carrying out its duties. Other laws relevant to real estate licensees include: - Uniform Landlord and Tenant Act (Title 66, Chapter 28), regulating residential leases - Horizontal Property Act (Title 66, Chapter 7), regulating condominiums - Notice of Completion Statute (Title 66, Chapter 11-143), regarding liens - Tennessee Lead-Based Paint Certification Act of 1997 (Title 68, Chapter 131, Part 4), regulating lead-based paint disclosure - Hazardous Waste Management Act of 1983 (Title 68, Chapter 212, Part 2), regulating liabilities for pollution - Tennessee Consumer Protection Act of 1977 (Title 47, Chapter 18, Part 1), regulating fair trade practices - Tennessee Anti-Trust Law (Title 47, Chapter 25, Trade Practices), regulating fair trade practices
A real estate licensee or property owner cannot be held liable for failure to disclose that:
-an occupant of the house was afflicted with HIV or other disease presumed not to be communicable through occupancy of the house -an event occurred on the property that had no effect on the physical structure or its environment -the property was the site of a homicide, felony, or suicide
The owner of a residential property must make a property condition disclosure or disclaimer if:
-the transfer is a sale, exchange, land sales contract, or lease with option to buy -the property consists of one to four (4) dwelling units, site-built or non site-built
How long does a person have after an alleged violation to file a written sworn complaint with the Human Rights Commission?
180 days - The H.R. Commission will give the complainant an acknowledgment of the complaint and give the respondent (alleged violator) a copy of the complaint within ten days of the filing. - The H.R. Commission will begin investigating the complaint within 30 days of the filing to determine whether the respondent has engaged in discriminatory behavior.
Every ___ years, the affiliate broker must complete ____ hours of continuing education requirements
2 years, 16 hours
Each township has ___ sections
36
The time-share developer must maintain the following records for a period of at least ____ years
4
How many Commissioners are there?
9
What is a designated agency?
A designated agent is a licensee appointed by his or her managing broker to be the designated and individual agent of a party with whom the licensee has entered into a written representation agreement, to the exclusion of all other licensees employed by or affiliated with that managing broker.
What is a fee simple estate?
A freehold estate of potentially unlimited duration
What is the difference between a general and specific lien?
A general lien is one placed against any and all real and personal property owned by a particular debtor. An example is an inheritance tax lien placed against all property owned by the heir. A specific lien attaches to a single item of real or personal property and does not affect other property owned by the debtor. A conventional mortgage lien is an example, where the property is the only asset attached by the lien.
What is a homestead legal life estate?
A homestead is one's principal residence. Homestead laws protect family members against losing their homes to general creditors attempting to collect on debts.
What is a judgment lien?
A judgment lien attaches to real and personal property as a result of a money judgment issued by a court in favor of a creditor. The creditor may obtain a writ of execution to force the sale of attached property and collect the debt. After paying the debt from the sale proceeds, the debtor may obtain a satisfaction of judgment or release of judgment to clear the title records on other real property that remains unsold.
What is a land trust?
A land trust allows the trustor to convey the fee estate to the trustee and to name himself or herself the beneficiary. The land trust applies only to real property, not to personal property. The agreement, or deed in trust, grants the beneficiary the rights to possess and use the property, and to exercise control over the actions of the trustee. The trustee holds legal title and has conventional fiduciary duties.
What is a legal life estate?
A legal life estate is created by state law, as opposed to, being created by a property owner's agreement. Provisions vary from state to state. The focus of a legal life estate is defining and protecting the property rights of surviving family members upon the death of the spouse. Also known as marital rights, a legal life estate makes it impossible for one partner to sell the property without the consent of the other partner, or to own property in one name only.
What is a life estate?
A life estate is a freehold estate that is limited in duration to the life of the owner or other named person. Upon the death of the owner or other named individual, the estate passes to the original owner or another named party. The holder of a life estate is called the life tenant. The life tenant does not have the right to pass ownership to his or her heirs.
Special Agent
A special agent is also known as a limited or specific agent. Under a special agency agreement, the principal delegates authority to conduct a specific activity, after which the agency relationship terminates. In most cases, the special agent may not bind the principal to a contract. In most instances, real estate brokerage is based on a special agency. The principal hires a licensed broker to procure a ready, willing, and able buyer or seller. When the objective is achieved, the relationship terminates, although certain fiduciary duties survive the relationship.
Mechanic's lien is classified as
A statutory lien
Land gain or loss due the action of water
Accretion-- an increase of land created by deposits of soil by the natural flow of water. Erosion-- a gradual loss of land caused by flowing water or wind. The opposite of accretion. Avulsion-- a loss of land by a sudden and large-scale change in water flow (e.g. the ocean washes away the water front during a typhoon, or heavy rains change the flow of a stream). In either event the owner still owns the land underlying the water's previous location. Reliction-- Increase in land due to the receding of water from the shore. Alluvion-- the actual soil, rock and other matter moved by flowing water which results in accretion.
FHA loan - house must appraise at
Acquisition Cost or sale price whichever is lower.
What is not a protected house regarding housing?
Age
A special warranty deed differs from a general warranty deed in that the grantor's covenant in the special warranty deed
Applies only to a definite limited time
Annual taxes on the property are $1,000. The year is ¾ over.
Credit buyer (CB)/ debit seller (DS) $750
There are five economic characteristics of land. These make the acronym D.U.S.T.S
DEMAND - The more demand there is for a particular property, the more valuable it is to consumers looking for real estate. UTILITY OR USEFULNESS - A three bedroom house is more useful to more consumers than a one or two bedroom house. SCARCITY - A property will sell quickly if only a few properties in a particular area are on the market. TRANSFERABILITY - When loans are available, and rates are low, real estate is readily transferable from seller to buyer. SITUS - (meaning Site) - The unique attractiveness of a property's location is a major determinant of the other economic characteristics. Lack of any of these items diminishes the market value (the price a buyer will be willing to pay) of the property. End of Page
What is a dower and curtesy legal life estate?
Dower is a wife's life estate interest in the husband's property. When the husband dies, the wife can make a claim to portions of the decedent's property. Curtesy is the identical right enjoyed by the husband in a deceased wife's property. Property acquired under dower laws is owned by the surviving spouse for the duration of his or her lifetime.
What is elective share legal life estate?
Elective share is a state-level statute enabling a surviving spouse to make a minimum claim to the deceased spouse's real and personal property in place of the provisions for such property in the decedent's will.
What is escheat?
Escheat provides another example of the state's interest in real property. Since property cannot be without an owner, if an owner dies without a will and without heirs, the property reverts to the state. Similarly, if the property is abandoned (by failure to pay taxes), the ownership of the property goes to the state. Escheat is this process of reversion to state ownership.
A borrower has a $500 monthly payment on a $100,000 interest-only loan. What is the loan rate?
First, multiply $500 by 12 to get the annual amount of interest, $500 x 12 = $6,000 annual interest. Next, divide the annual interest amount by the loan, $6,000 ÷ 100,000 = 0.06, and the loan rate is 6%
A borrower has a $500 monthly payment on a 6% interest-only loan. What is the loan principal?
First, multiply $500 by 12 to get the annual amount of interest, $500 x 12 = $6,000 annual interest. Next, divide: $6,000 ÷ 0.06 = $100,000 loan principal.
Commissioners are appointed by _________ for a term of ____ years
Governor, 5
What are FHA graduated payment mortgages?
Graduated payment mortgages are aimed particularly at young families who expect to see their earnings rise over the next five to ten years. As such, payments for interest and principal are less than the actual costs in the early years and gradually rise to make up the difference.
Who oversees the FHA?
HUD
In residential real estate-related transactions, discrimination on the basis of the protected classes above is explicitly declared illegal, with the addition of two more protected classes:
Handicap Familial status
Safety Clause
Here the broker and sellers agree to a specific number of days after the listing expiration during which the broker may still receive a commission. Also called a carryover clause, this clause is enforceable if the owner, or his or her new agent, sells the property to a buyer whose name appears on a list of persons to whom the original broker showed the property during the listing period. The broker must give this list to the owner within a specified number of days after the listing expiration.
What properties are exempt from judgment liens?
Homestead properties and joint tenancy estates
What should a broker do if a dispute arises on how to disburse escrow funds?
If a dispute arises anyway, the broker may file a "Petition to Interplead Funds" with the appropriate court and request the court to resolve the dispute.
What is an act of waste?
If a life tenant damages or misuses the property in any way
What does adaptation mean when deciding if something is real or personal property?
If an item is uniquely adapted to the property, or the property is custom-designed to accommodate the item, it may be deemed real property whether the item is easily removable or not. House keys, a garbage compactor, and a removable door screen are examples.
What is an equitable lien?
If court action imposes an involuntary lien, the lien is an equitable lien. Ex - judgment lien placed on a property as security for a money judgment.
What are statutory liens?
If statutory law imposes an involuntary lien, the lien is a statutory lien. Ex - real estate tax lien
When would a buyer be expected to pay Private Mortgage Insurance?
If they did not pay a 20% down payment and did not have a VA or FHA loan
Land has three unique physical characteristics:
Immobility-- Land is immobile, since a parcel of land cannot be moved from one site to another. In other words, the geographical location of a tract of land is fixed and cannot be changed. One can transport portions of the land such as mined coal, dirt, or cut plants. However, as soon as such elements are detached from the land they are no longer considered land. Indestructibility-- Land is indestructible in the sense that one would have to remove a segment of the planet all the way to the core in order to destroy it. Even then, the portion extending upward to infinity would remain. For the same reason, land is considered to be permanent. Heterogeneity-- Land is non-homogeneous, since no two parcels of land are exactly the same. Admittedly, two adjacent parcels may be very similar and have the same economic value. However, they are inherently different because each parcel has a unique location.
What is joint tenancy?
In a joint tenancy, two or more persons collectively own a property as if they were a single person. Rights and interests are indivisible and equal: each has a shared interest in the whole property, which cannot be divided up. Joint tenants may only convey their interests to outside parties as tenant-in-common interests. One cannot convey a joint tenant interest. Joint tenancy relationship must be created by a written agreement in many states. The agreement must specify that there is an intention to create a joint tenancy. The defining characteristics and requirements of joint tenancy are: - Unity of ownership-- Whereas tenants in common hold separate title to their individual interests, joint tenants together hold a single title to the property. - Equal ownership-- Joint tenants own equal shares in the property, without exception. If there are four co-tenants, each owns 25% of the property. If there are ten co-tenants, each owns 10%. If a joint tenant dies, the rights go to the other tenant. All owners must acquire property at the same time.
What is an estate at sufferance?
In an estate at sufferance, a tenant occupies the premises without consent of the landlord or other legal agreement with the landlord. Usually such an estate involves a tenant who fails to vacate at the expiration of the lease, continuing occupancy without any right to do so.
What is an estate in trust?
In an estate in trust, a fee owner-- the grantor or trustor-- transfers legal title to a fiduciary-- the trustee-- who holds and manages the estate for the benefit of another party, the beneficiary. The trust may be created by a deed, will, or trust agreement.
Which liens are inferior?
In order of rank: Federal income tax liens State corporate income tax liens State intangible tax liens Judgment liens Mortgage liens Vendor's liens Mechanic's liens (priority by date work was performed)
Which liens are superior?
In order: Real estate tax liens Special assessment liens Federal estate tax liens State inheritance tax liens
Lis Pendens
In the foreclosure suit, a lis pendens gives public notice that the mortgaged property may soon have a judgment issued against it. Lis pendens is a Latin term that means "action pending" or "pending litigation." This notice enables other lienholders to join in the suit against the defendant.
An office building sells for $3,200,000 at a cap rate of 6.25%. What is its NOI?
Income = $3,200,000 x 6.25% = $200,000 Income = value x rate
What are Federal And State Inheritance Tax Liens?
Inheritance tax liens arise from taxes owed by a decedent's estate. The lien amount is determined through probate and attaches to both real and personal property.
Rules of the Tennessee Real Estate Commission (Rule 1260) consist of the following parts:
Licensing Rules of Conduct Rental Location Agents Rules of Procedure for Hearing Contested Cases Educational Requirements Time-share Programs
What are littoral rights?
Littoral rights concern properties abutting bodies of water that are not moving, such as lakes and seas. Owners of properties abutting a navigable, non-moving body of water enjoy the littoral right of use, but do not own the water or the land beneath the water. Ownership extends to the high-water mark of the body of water. The legal premise underlying the definition of littoral rights is that a lake or sea is a navigable body of water, and, therefore, public property owned by the state. By contrast, a body of water entirely contained within the boundaries of an owner's property is not navigable. In such a case, the owner would own the water as well as unrestricted rights of usage.
A borrower has a monthly payment of $632.07 on a loan with a monthly constant of 6.3207. What is the loan amount?
Loan amount = ($632.07 ÷ 6.3207) x 1000 = $100,000 Loan amount = monthly payment/loan constant x 1000
A borrower obtains a loan for $100,000 with a monthly payment of $632.07. What is the loan constant?
Loan constant = ($632.07 ÷ $100,000) x 1,000 = 6.3207 Loan constant = monthly payment / loan amount x 1000
What is a special assessment lien?
Local government entities place assessment liens against certain properties to ensure payment for local improvement projects, such as new roads, schools, sewers, or libraries. An assessment lien applies only to properties that are expected to benefit from the municipal improvement.
A borrower obtains a 30-year $100,000 amortized loan @ 7% with a $665.31 monthly payment. What is the principal paid in the second month?
Month 1: $100,000 x .07 (÷) 12 = $583.33 1st month's Interest; Payment $665.31 - $583.33 = $81.98 First Month's Principal;$100,000 - $81.98 = $99,918.02 New Principal Balance Month 2: $99,918.02 x .07 (÷) 12 = $582.86 Second Month's Interest; Payment 665.31 - 582.86 = $82.45 Second Month's principal. (you can subtract the $82.45 from the principal balance of $99,918.02 to obtain the new principal balance and continue the steps to fully show principal and interest amounts for the length of the loan. End of Page
A borrower obtains a loan for $100,000 with a 6.3207 constant. What is the monthly payment?
Monthly payment = ($100,000 ÷ 1,000) x 6.3207 = $632.07 Monthly payment = loan amount / 1,000 x loan constant
How to convert section fractions to acres?
Multiply the denominators of the fractional descriptions together. Divide 640 by the resulting number.
How to calculate net operating income (NOI)
NOI = Potential Gross Income - Vacancy loss + Other income - Operating expenses
Can cash rebates, cash gifts, or cash prizes be given to someone without a real estate license?
No
Is a postdated check or non-cash item acceptable for payment of a deposit or earnest money?
No, unless otherwise provided in the offer.
Do contracts have to be in writing to be valid and enforceable?
Not always
What does intention mean when deciding if something is real or personal property?
One's original intention can override the test of movability in determining whether an item is a fixture or not. If someone attached an item to real property, yet intended to remove it after a period of time, the article may be deemed personal property. If a person intended an article to be a fixture, even though the item is easily removable, the article may be deemed a fixture. For example, an apartment renter installs an alarm system, fully intending to remove the system upon lease expiration. Here, the alarm system would be considered personal property.
What are emblements?
Plants and crops requiring human intervention and labor are called emblements. Emblements, despite their attachment to land, are considered personal property. If an emblement is owned by a tenant farmer, the tenant has the right to the harvested crop, whether the tenant's lease is active or expired. If the tenant grew the crop, it is his or her personal property, and the landlord cannot take it.
When must earnest money must be deposited into an escrow or trustee account upon acceptance of an offer?
Promptly - in this case interpreted to be 72 hours or within 3 business days.
How to calculate return on equity?
ROE = Cash Flow/ Equity
How to calculate return on investment?
ROI = NOI / Price
An office building has $200,000 net income and sold for $3,200,000. What was the rate of return?
Rate = ($200,000 NOI ÷ 3,200,000 price) = 6.25% Rate = income / value
What is Truth in Lending sometimes referred to as?
Regulation Z
What are restrictive covenants?
Restrictive covenants are most commonly associated with subdivisions and community management associations and are intended to maintain consistency within the neighborhood. While viewed as a benefit by most, they do limit the owner's use of the property and are binding on future owners
What are riparian rights?
Riparian rights concern properties abutting flowing water, such as streams and rivers. If a property abuts a stream or river, the owner's riparian rights are determined by whether the water is navigable or not navigable. - Navigable-- if the waterway in question is navigable, it is considered to be a public easement. In such a case, the owner's property extends to the water's edge, as opposed to the midpoint of the waterway. The state owns the land beneath the water. However, the landowner has right to all accretions, which is the land resulting from the soil build-up caused by the natural action of the river or stream. - Non-navigable-- if the property abuts a non-navigable stream, the owner enjoys unrestricted use of the water and owns the land beneath the stream to the stream's midpoint.
How do you calculate GRM?
Sales Price/Monthly Income
How to calculate GIM?
Sales price/annual income
If a license is revoked, is there a way for it to be re-issued?
Six members of the TN RE Commission must vote to reissue it
What is fee simple defeasible?
Some deeds create what starts out as a fee simple, but attach some sort of condition or limitation. These are called fee simple defeasible (or conditional) estates. In defeasible estates, ownership can continue indefinitely, provided the use of the property conforms to certain stated conditions.
What is the difference between strict foreclosure and judicial foreclosure?
Strict foreclosure, the original form of foreclosure, involves a lawsuit filed by the lender against the borrower. Strict foreclosure is a court proceeding that gives the lender title directly, by court order, instead of giving cash proceeds from a public sale. This procedure is usually available only when the value of the property is less than the value of the debt.
A town has a tax rate of 5% and a tax requirement of $8,000,000. What is the tax base?
Tax base = ($8,000,000 ÷ 5% ) = $160,000,000 Tax base = tax requirement / tax rate
What is Tenancy By The Entireties?
Tenancy by the entireties is a form of ownership reserved exclusively for spouses. It features: - Survivorship - On the death of a spouse, the decedent's interest passes automatically to the other spouse. - Equal, undivided interest - Each spouse owns the estate as if there were only one owner. Fractional interests cannot be transferred to outside parties. The entire interest may be conveyed, but only with the consent and signatures of both parties. - No foreclosure for individual debts - The estate is subject to foreclosure only for jointly incurred debts. Termination - The estate may be terminated by divorce, death, mutual agreement, and judgments for joint debt. Essentially this is joint tenancy plus marriage! Owners must be legally married. Can a married couple take title any other way than tenancy by the entireties? Yes, married couples may choose to take title as tenants in common, or as joint tenants. The tenancy terminates when there is: Death of either spouse - survivor now owns the property Divorce - parties become tenants in common Mutual agreement - parties agree to sell the property Foreclosure There is no right of partition: one spouse cannot sell the property without the agreement of the other spouse.
What is tenancy in partnership?
Tenancy in partnership is a form of ownership held by business partners, as provided by the Uniform Partnership Act (UPA). The UPA is a model law with provisions governing business partnerships.
Who enforces the TN Human Rights Act?
The TN Human Rights Commission. However, the Tennessee Human Rights Commission must notify the Real Estate Commission in writing if any broker or affiliated broker is found to be in violation of the law or has failed to obey any order issued by the Human Rights Commission.
What is conversion?
The act of misappropriating escrow funds for the broker's business or personal use. More serious than mere commingling, conversion is effectively an act of theft: using monies which do not belong to the broker. - Carries serious consequences, including license revocation.
What is commingling?
The act of mixing the broker's personal or business funds with escrow funds. A broader definition includes failure to deposit earnest money into escrow in a timely manner. - May be cause for license suspension or revocation. - The broker may, however, deposit properly documented non-escrow funds necessary to maintain the account and avoid service charges.
What is the covenant of seisin?
The covenant in a deed which states that the grantor is the owner and has the right to convey the title
What is estate at will?
The estate at will, also called a tenancy at will, has no definite expiration date and hence no "renewal" cycle. The landlord and tenant agree that the tenancy will have no specified termination date, provided rent is paid on time and other lease conditions are met. For example, a son leases a house to his father and mother "forever" or until they want to move. Landlord lets you stay without a lease. Notice can be given by either party without warning. Death of either party immediately terminates tenancy.
What is fee simple absolute?
The fee simple absolute estate is a perpetual estate that is not conditioned by stipulated or restricted uses. It may also be freely passed on to heirs. For these reasons, the fee simple absolute estate is the most desirable estate that can be obtained in residential real estate.
What happens to the licensee's license if they plead guilty or are convicted of any offense listed in the License Act?
The licensee's license is automatically revoked sixty days after a licensee's conviction unless the licensee makes a written request to the commission for a hearing during that sixty-day period. Following a hearing, the Commission may impose any sanction permitted by the Licensing Act.
What is a real estate tax lien?
The local legal taxing authority annually places a real estate tax lien, also called an ad valorem tax lien, against properties as security for payment of the annual property tax. The amount of a particular lien is based on the taxed property's assessed value and the local tax rate.
When should a broker tender every written offer to purchase or sell obtained on a property until a contract is signed by all parties?
The same day received
Statute of Limitations
The statute of limitations restricts the time period for which an injured party in a contract has the right to rescind or disaffirm the contract. A party to a voidable contract must act within the statutory period.
What is tenancy in common?
The tenancy in common, also known as the estate in common, is the most common form of co-ownership when the owners are not married. The defining characteristics are: - Two or more owners - Any number of people may be co-tenants in a single property. - Identical rights - Co-tenants share an indivisible interest in the estate, i.e., all have equal rights to possess and use the property subject to the rights of the other co-tenants. No co-tenant may claim to own any physical portion of the property exclusively. They share what is called undivided possession, or unity of possession. - Interests individually owned - All tenants in common have distinct and separable ownership of their respective interests. Co-tenants may sell, encumber, or transfer their interests without obstruction or consent from the other owners. (A co-tenant may not, however, encumber the entire property.) If a tenant in common dies, the interest goes to their heirs. interest can be sold and they do not have to purchase at the same time.
Zoning laws regulate the following:
The use of the land Lot sizes Types of structures permitted Building heights Setbacks (how far back from the street an improvement can be built) Density (the ratio of land area to improved area) Types of animals that can or cannot be kept on a property (no pet cougars, etc...) Violation of zoning regulations renders a title unmarketable.
What does the Uniform Residential Landlord and Tenant Act (Title 66, Chapter 28) address/do?
This act primarily addresses the lease contract, deposits and advances, obligations of landlord and tenant, the landlord's rights of access, and standards for eviction. The act aims to: - equalize and standardize rights of landlord and tenant - protect tenants from unethical practices - prevent unfair, complex leases and their enforceability - set standards for improving oral, vague, or unbalanced lease agreements
Tyler's broker license has been inactive for two weeks. What is the procedure to reactivate it?
To submit the proper form and pay the fee for a change of status
What is alienation?
Transfer of title to real estate, also called alienation, occurs voluntarily and involuntarily. When the transfer uses a written instrument, the transfer is called a conveyance.
An office building has $200,000 net income and a cap rate of 6.25%. What is its value?
Value = ($200,000 ÷ 6.25%) = $3,200,000 Value = income / rate
What is the cost approach formula?
Value = Land value + (Improvements + Capital additions - Depreciation)
To a buyer or seller who is not represented by any licensee in a transaction, a licensee who personally assists the prospective buyer or seller must:
Verbally disclose the licensee's status as facilitator, agent, subagent or designated agent in the transaction before any real estate services are provided.
What is warehousing?
Warehousing refers to the process whereby banks and other lenders make mortgage loans to consumers for the purpose of quickly selling those loans on the secondary market. The "warehousing" occurs when individual loans are bundled, often with a common element such as the size of the mortgage or credit worthiness of the borrowers, and sold as a single unit.
What is subrogation
When a claim is settled by a title insurance company, the company acquires all rights and claims of the insured against any other person who is responsible for the loss.
What is tenancy in severalty?
When a single party owns the fee or life estate
What is condemnation?
When the owner and the government cannot negotiate a satisfactory voluntary acquisition of the property, the government can institute the process of condemnation to take a property by eminent domain. When this happens, the process is called a "taking."
When can a non-judicial foreclosure take place?
When there is a "power of sale" provision in the mortgage or trust deed document, a non-judicial foreclosure can force the sale of the liened property without a foreclosure suit. The "power of sale" clause in effect enables the mortgagee to order a public sale without court decree.
During the course of a lawsuit, the plaintiff creditor may secure a ________________ to prevent the debtor from selling or concealing property. In such a case, there must be a clear likelihood that the debt is valid and that the defendant has made attempts to sell or hide property.
Writ of attachment (for judgment lien)
Can the TN Real Estate Commission issue, revoke, and suspend licenses?
Yes
What is a lien?
a creditor's claim against personal or real property as security for a debt of the property owner. If the owner defaults, the lien gives the creditor the right to force the sale of the property to satisfy the debt.
Resource Recovery Act (1970), the Resource Conservation and Recovery Act (1976), the Comprehensive Environmental Response, Compensation and Liability Act (Superfund, CERCLA) (1980), the Superfund Amendment and Reauthorization Act (1986)
addressed disposal of solid and toxic wastes and measures for managing waste. In addition, the Superfund act provided money for hazardous waste disposal and the authority to charge cleanup costs to responsible parties.
Water Quality Improvement Act (1970), the Water Pollution Control Act amendment (1972), the Clean Water Act Amendment (1977)
addressed standards to control water pollution and industrial wastes from the standpoints of future prevention, as well as remediation of existing pollution.
What is real estate?
air, water, land, and everything affixed to the land
Temporary retirement is only permitted if
all educational requirements have been completed.
Agency coupled with interest
an agency relationship in which the agent has an interest in the property that is being sold. This type of agency cannot be revoked by the principal, nor is it terminated if the principal dies. For example, a broker agrees to finance a condominium development if the developer agrees to give the broker the exclusive right to sell the finished condo units. Since the broker has a special interest in the transactions, the developer would not be able to revoke the listing agreement after the broker has provided the financing.
How to calculate sales price with GIM?
annual income x GIM
How to calculate capitalization rate?
annual net operating income / Value
How to calculate value with the capitalization rate
annual net operating income / capitalization rate
The Closing Disclosure must be delivered to the borrower _____________________
at least three days before closing
Clean Air Amendment (1970)
authorized the EPA to establish air quality standards for industrial land uses, as well as for automobile and airplane emissions.
Lead-based paint ban (1978) and Residential Lead-based Paint Hazard Reduction Act (1992, 1996)
banned lead in the manufacture of paint and established disclosure requirements and guidelines for testing and remediation.
If an item is paid in advance, use _______ days to calculate costs and Debit the ________(or whoever is returning the costs)/Credit the ________
buyer; buyer, seller
If the item is RENT, use _________ days to calculate rents and Debit the ________ (who should have the rent) and Credit the ________.
buyer; seller, buyer
how to calculate capital gain?
capital gain = amount realized - adjusted base, where amount realized = sale price - selling costs
VA loan - house must appraise at
certificate of reasonable value or sale price whichever is lower
To an unrepresented seller, the verbal disclosure of agency status must be
confirmed in writing prior to execution of a listing agreement or presentation of an offer to purchase, whichever comes first.
To an unrepresented buyer, the verbal disclosure of agency status must be
confirmed in writing prior to the preparation of an offer to purchase.
National Environmental Policy Act (1969)
created the Environmental Protection Agency (EPA) and the Council for Environmental Quality, giving them a mandate to establish environmental standards for land use planning. The act also required environmental impact surveys on large development projects.
Tennessee fair housing law is similar to the federal law, with the addition of a protected class, ___________.
creed
Tennessee brokers may not prepare
deeds, installment sales contracts, mortgages or deeds of trust, or title documents.
The Hazardous Waste Management Act of 1983 (Title 68, Chapter 212, part 2) regulates
disposal of hazardous substances. The commissioner of environment and conservation issues orders for remediation of sites determined to be in violation of regulations or standards.
What is the difference between estate for years and estate from period to period?
estate for years has a definitive end date (could even be checking in to a hotel for a night) while estate from period to period does not have an end date
To be engaged by a principal broker, a licensee (other than a property manager) must live no more than
fifty miles from the firm office, unless the principal broker demonstrates to the Commission's satisfaction that adequate supervision can be provided.
Which of the following MUST the holder of a reciprocal (nonresident) real estate license do?
file with the commission an irrevocable consent agreement
Can you use the rectangular survey system for irregular shapes?
for an irregular shape, such as a triangle, the rectangular system is inadequate as a method of legal description. The full description has to include a metes and bounds or lot and block description.
Rectangular survey system is also referred to as
government survey method
landlord may not recover possession by diminution of services or otherwise except
in case of abandonment, surrender, or as specified in the Act
Insurance is required for all loans with
less than 20% down payment
Tennessee brokers may prepare
listing and sales agreements and buyer representation agreements without being considered to be practicing law without a license.
What is the recorded plat method also referred to as?
lot and block system
A licensee may temporarily retire his or her individual or firm license by
making written request accompanied by the license and the fee for change of status.
What are improvements?
man-made structures attached to the land (ex - fences, streets, buildings, wells, sewers, sidewalks and piers)
In the rectangular survey system, The north-south, longitudinal lines on the survey grid are
meridians
The three accepted methods of legally describing parcels of real estate are:
metes and bounds rectangular survey system, or government survey method recorded plat method, or lot and block method
How to calculate sales price with GRM?
monthly rental income x GRM
What is personal property?
ownership of anything that is not real estate, and the rights associated with owning the personal property item. Items of personal property are also called chattels or personalty. Chattels are transferred by means of a bill of sale. The Uniform Commercial Code regulates the transfer of chattels and the use of chattels as security for debts.
What is real property?
ownership of real estate and the bundle of rights associated with owning the real estate.
In the rectangular survey system, The east-west, latitudinal lines are called
parallels
When must the written disclosure or disclaimer statement be delivered to the purchaser?
prior to the acceptance of a purchase contract.
What is property?
property is not only the item that is owned but also a set of rights to the item enjoyed by the owner. These rights are commonly known as the "bundle of rights" and include the rights to: - possess - use - transfer - encumber - exclude In owning property, one has the right to possess and use it as the law allows. The owner has the right to transfer ownership of the item (sell, rent, donate, assign, or bequeath). The owner may also encumber the item by mortgaging it as collateral for debt. Finally, the owner has the right to exclude others from use of the item.
What is the Overall purpose of the The Tennessee Real Estate Broker License Act of 1973
protect the public from irresponsible or unscrupulous persons dealing in real estate. This law establishes the Tennessee Real Estate Commission and provides the basis for the licensing and regulation of the real estate profession.
protected classes regarding employment and public accomodations
race creed color religion sex age national origin
In the rectangular survey system, The north-south area between consecutive meridians is called a
range
For licenses expired for more than a year, the licensee must
reapply for licensure, meet educational requirements, and pass all required examinations, or appear with their principal broker before the Commission to request a waiver of reexamination.
What does The Tennessee Real Estate Broker License Act of 1973 (Title 62, Chapter 13) do?
regulates the real estate brokerage profession in Tennessee. It consists of six parts:
If an item is paid in arrears, use ________ days to calculate costs and Debit the __________/ Credit the _________
seller; seller, buyer
An expired license may be reinstated without examination within
sixty (60) days after the expiration date if the licensee: - provides proof of compliance with prerequisites or conditions - pays any penalty fee arising from the failure to comply - pays an additional penalty fee; not more than one hundred dollars ($100) per month
All required documentation and fees to renew license must be received by the Commission no later than
sixty (60) days before the expiration date.
Escrow records must show
the depositor of the funds the date of deposit the date of withdrawal the payee of the funds
What can a landlord do if a tenant stays past termination of the agreement?
the landlord may sue for possession and damages
If the Commission suspends or revokes the license of the licensee found in violation,
the license may not be reinstated until the licensee has repaid the full amount plus interest to the fund.
A real estate licensee representing an owner of residential real property as the listing broker has a duty to inform the owner of
the owner's rights and obligations concerning property disclosures.
The parties to an agency relationship are
the principal (a client), the agent (a broker), and the customer (a third party).
A real estate licensee representing a purchaser has the duty to inform the purchaser of
the purchaser's rights and obligations concerning property disclosures.
Many states use metes and bounds description to describe properties within
the rectangular survey system.
What is capital gain?
the tax profit realized from the sale of a property.
If the web site displays "thumbnails" (descriptions using five or fewer selection criteria) of multiple listings,
there must be a disclaimer stating that the listings may not belong to the firm whose web site is being viewed.
The principal broker is charged with keeping records of completed transactions for a period of
three years
In the rectangular survey system, The east-west area between two parallels is called a
tier or township strip
What does assigning a contract for the sale of real estate mean?
transfer one's rights under the contract
The primary purpose of a deed is to
transfer title
When do licenses expire?
two years from the date the license was issued or renewed
When should a broker deliver true executed copies of an accepted offer to purchase or any counteroffer, signed by the seller, to both the purchaser and the seller?
within three business days
