Real Estate

Distinguish actions that would cause a license to be subject to suspension or revocation.

A suspension of a license is considered a short term, temporary penalty that can last up to 10 years. Generally a suspension is the penalty for an illegal act which was less serious in its violation than a revocation of license would demand. The Commission has flexibility to determine what punishment it will give, from the least penalty to the most, based on the Discipline Guidelines. An example as listed in the guidelines is 475.42(1) (j) which states: No broker or sales associate shall place upon the public records any false, void or unauthorized information that affects the title or encumbers any real property. The penalty guideline states: The usual action of the Commission shall be to impose a penalty of a five-year suspension to revocation. No licensee can act in a real estate capacity with a suspended license until the suspension is lifted, however, the licensee MUST complete all education requirements and renewals during his or her period of suspension. Revocation of a real estate license is permanent and as such it is a very serious punishment. The only exceptions to this rule is when a licensee filed for renewal without completing his continuing education or post-licensure course by the expiration date; or if he filed an application which contained fraudulent or false information. In these cases the individual cannot apply for a sales associate's license for a period of five years after the filing of the Final Order revoking the license unless the Commission specifies a lesser period of time in the Final Order, the lesser period of time based upon mitigating factors presented by the individual. This is otherwise referred to as Revocation without Prejudice. The Commission may refuse to issue a license or renew a license if they feel that the individual does not meet qualification standards of honesty and integrity. This is referred to as moral turpitude, and may be a consideration in any future attempts to gain a state approved license which deals with the public. When the active broker's license is revoked, all sales associates and broker associates licenses are placed in involuntarily inactive status. If it is a partnership or corporation, the partnership or corporation must re-qualify with a new partner. While resolving replacement of the broker, no real estate business may be conducted. The Florida Real Estate Commission is authorized to do a number of tasks. These are: deny a license refuse to renew a license suspend a license revoke a license issue citations A Citation is issued for minor violations of the law when public welfare is not threatened. A complete list of violations for which citations can be issued is listed in 61J2-24.003. Citations are issued by the Division of Real Estate. The licensee has 30 days to pay the citation (fine) or request a hearing. If the licensee does not respond in 30 days, more serious discipline may occur.Generally citations are monetary punishments. These funds collected are considered administrative fees and go into the Florida Real Estate Recovery Fund. An example of a citation is:475.22(1) and 61J2-10.024: Failed to maintain the required office entrance sign.The penalty is: $100.00 impose fines The FREC has the right under law to fine anyone found guilty of a violation of Chapters 455 or 475 a fine for each violation of the law. The fine for each offense is not to exceed $5,000 for each violation of Florida Statutes Chapter 475 and $5,000 for each offense under FS Chapter 455. The fines are frequently given in connection with another punishment such as revocation or suspension. The money is collected and transferred to the Real Estate Recovery Fund. Reference is 475.25 (1) Disciplinary Guidelines 61J2-24.001 is a list of violations that clearly defines the usual punishment for each count is during a formal or informal hearing. An example of the Guidelines is (g) 475.25 (1) (f) Convicted or found guilty of a crime related to real estate or involves moral turpitude or fraudulent or dishonest dealing. The usual action of the Commission shall be to impose an administrative fine of $1000 to $2500 and 30 day suspension for a first offense. For second and subsequent violations, $2500 to $5000 fine and suspension for up to six years or revocation. Impose probation Probation as a penalty, unless otherwise stated, is for a period of 90 days starting within 30 days after the filing of the Final Order. The probation order contains specific instructions to take a class or grant an audit which must be completed in a 90 day period unless the licensee asks and is granted an extension of time. Extensions are granted for illness or unavailability of a required course. A licensee can be released early from probation if the terms of the probation are completed and the required information being submitted to the Division of Real Estate Legal Section. A licensee who is on probation may not conduct any real estate business during that time. issue Notice of Noncompliance The FREC has set forth the rules, and statutes that are considered minor violations and for which the DBPR can provide a licensee, registrant or permit-holder with a Notice of Noncompliance. A violation is minor if it does not result in economic or physical harm to a person or adversely affect the public health, safety, or welfare or create a significant threat of such harm. The notice of noncompliance shall only be issued for an initial offense of a listed minor violation. The DBPR issues the Notice of Noncompliance subject to the statute or rule that has been violated. The notice must identify which rule or statue is violated and how to comply with the statute or rule. The DBPR allows 15 days for compliance and notifies the licensee of this. The time begins from the time the licensee receives the Notice. If the licensee does not comply with the Notice in the time allowed, it will result in an issuance of a citation or regular discipline. The Notice of Noncompliance is delivered by certified or registered mail. Remember: the Notice of Noncompliance can only be issued for an initial offense! The broker does not have to cease operations with a Notice, but must comply with it immediately.

Depreciation

DEPRECIATION: A loss in value due to any cause; any condition that adversely affects the value of an improvement. For appraisal purposes, depreciation is divided into 3 classes according to its cause: physical deterioration, functional obsolescence, and external obsolescence. The three types of depreciation are: Physical Deterioration Functional Obsolescence Economic Obsolescence Physical Deterioration - is a reduction in utility, usefulness or value resulting from physical condition. The deterioration can be divided into either curable(painting/routine maintenance) or incurable types (installing siding on a building which also needs major interior repairs). This form of depreciation is caused by the action of the physical elements, such as wind or snow, or just ordinary wear and tear. Functional Obsolescence - is a loss of value of an improvement due to functional inadequacies, often caused by age or poor design. Outmoded plumbing fixtures, inadequate closet space, poor floor plan, excessively high or low ceilings, or antiquated architecture are all examples of functional obsolescence. Functional obsolescence may be curable such as putting in a new electric stove instead of wood burning stove. Functional obsolescence may be incurable, as in the case of wide columns in a building that cannot be removed. Economic, Environmental, or External Obsolescence - A loss of value (typically incurable) resulting from factors that exist outside of the property itself; a type of depreciation caused by environmental, social, or economic forces over which an owner has little or no control. This can also be called locational, economic or environmental obsolescence. This type of obsolescence is almost always INCURABLE. Effective Age: Differs from the actual age (chronological age) by such variable factors as depreciation, quality of maintenance, and the like. Remodeling can extend the economic life of a structure by reducing or mitigating the impact of actual age and increasing the structures life expectancy. Example: If a person maintains a building keeping it in good repair, the "Effective Age" is reduced. Chronological Age: Actual age in years of the building, based on building date. The "Chronological Age" of a building cannot be changed. If the building is 20 years old, the "Chronological Age" is 20 years. Value Physical Life: Actual age or life of a structure that is considered habitable as opposed to economic life. Example: A building sitting vacant without a tenant has a "Physical Life" but there is no economic life because there is no income. Economic Life: Estimated period where an improved property will yield a return over and above economic rent. In the case of an older structure, economic refers to the period during which the remaining improvements are depreciated for tax purposes. Economic life is the period which an improvement has value in excess of its salvage value. This is also called service life or useful life. Economic Rent: Also called "market rent", this is the amount of rental income a property can generate in an open, free market at any given time, compared to contract rent which is the rent agreed to by the parties. Incurable vs. Curable - When a property has repairs or updating that is economically feasible, it said to be curable. When the cost is too high, or impossible to fix, or due to outside influences beyond the owner's control, it is said to be incurable.

10 principles of value

Highest and Best Use - is the possible use of a property that would produce the greatest net income and thereby develop the highest value. Example: An area of the municipality has developed into commercial office buildings. If there is a vacant piece of land or a single family home in the area one could assume that the highest and best use for this property at that time would be for an office building. The appraiser must look at the property as if it were vacant and as it now sits as improved property. Sometimes the best use of property is to destroy existing buildings and rebuild new ones. 2. Substitution- the maximum value of a property tends to be set by the cost of purchasing an equally desirable and valuable substitute property. (Comparison shopping- basis for market data approach.) Example: this is the principle used when determining value based on the Market Data or Sales Comparison approach to value. This principle is based on the fact that similar properties will bring similar values. (substituting one property for another) 3. The Law of Supply and Demand: Demand and supply are opposites: the lower the supply, the higher the demand: the higher the supply, the lower the demand. 4. Conformity: An appraisal principle of value based on the concept that the more a property or its components are in harmony with the surrounding properties or components, the greater the value. (The more the properties are alike, the more they retain value.) Example: A million dollar home in a neighborhood of one hundred thousand dollar homes will not usually return the investment. Conversely, a one hundred thousand dollar home in a neighborhood of million dollar homes may benefit because of the value of the million dollar homes. 5. Regression and Progression: Regression and progression occurs between dissimilar properties. This means the value of the better quality property is affected adversely by the presence of the lesser quality property and a lesser house will benefit from a larger house. 6. Anticipation: Property can increase or decrease in value in expectation of something in the future such as appreciation or rezoning. Examples: If a person discovers that an airport is going to be built in an area and buys the land in "anticipation" of a future value. Another example would be if a person has knowledge that a zoning change is about to take place which will make the property more valuable and buys the property in "anticipation" of a future value increase. 7. Contribution: means the value of any component may or may not give value to the whole. For example: a fully remodeled kitchen or bathroom adds to the value of a property. If a kitchen or bathroom has not been remodeled, it would subtract from value. While a finished basement that is below grade is nice to have, the seller may not realize full cost of the improvement when he sells the home. Appraisers may not give full value to the improvement if it does not have a walkout from that level. These types of components either add or subtract from value. 8. Assemblage: is the combining of two or more adjoining lots into one larger tract to increase their total value. Example, an investor wants to buy property in an area because he/she believes that it will have a future value. He/she purchases one building after another until all the property desired is "assembled". Individually the properties had a lower value, but once it is all "assembled" into one piece, it should be worth more money. "Plottage" value is the increased value resulting from the combining of adjacent lots into one larger lot. 9. Competition is when one business attracts another business of similar type; together they may make more money than they would have singularly. Shopping areas in large cities attract shoppers every day because they draw the consumer to the area. Too little shopping does not draw consumers; too much competition is ruinous. 10. Change - real property is constantly changing- expanded, stabilizing, declining or rebirth. A subdivision is built, ages, decays and is reborn with renovation. Shopping areas lose appeal popularity; they revitalize and come back to life again. Housing expands, decays, renews, and expands again.

Escrow impounded account

Escrow (impound) account: Most lenders require the borrower put money in a special account for the payment of taxes and insurance (and sometimes private mortgage insurance). This assures the lender that the taxes and insurance will be paid while the borrower has a loan. The federal government has rules regarding the amount of money allowed to be escrowed by the lender. More about the amount of money allowed will be in the Lending Law section.

Property Restrictions

List and describe the various types of governmental and private restrictions on ownership of real property. encumbrance is anything that burdens or limits the title of a property. Deed Restrictions- A grantor making the deed may make certain restrictions on the use of the property. For example, the owner may say that no alcohol can be served on the premises, or that only certain types of homes can be built. Most of the deed restrictions are called Restrictive Covenants. These restrictive covenants run with the land forever, unless some legal remedy is sought to remove them. Typical restrictive covenants deal with subdivision requirements and may limit housing to certain types and sizes; may prohibit above ground pools; may limit the number of pets or parked cars, etc. Deed restrictions exist in many Homeowner's Associations and Condominiums. A buyer has a right to know about any covenant which would be limiting to him prior to closing and it should be disclosed. A restriction is a use encumbrance. Restrictive covenants limit the use of a property. There are two types of restrictions: Limiting restrictions: State things you can never do (No fences, no dog runs etc.) Affirmative restrictions: State things you must abide by. (Set back requirements, minimum square footage, front of house must be brick etc. Who can enforce these restrictions? Enforcement of restrictions is always done by a court of law. Who can bring an action asking for enforcement? Anyone who is under the same restrictions who feels there has been a violation. All restrictions are placed on the public record (recorded in the county where the property is located for constructive notice.)A new restriction can be placed on a property by a vote of trustee in a new subdivision and that restriction would be enforceable Easements- Another form of restriction on the property is called an easement. An easement is an example of an encumbrance.* Easements give someone else (dominant estate) the right to USE a part of the property while the owner(servient estate) retains the ownership rights. Easements are non-possessory rights, just the right of ingress (enter) and egress (exit) For that reason, an easement is said to be an interest (claim) on the property, but not an estate: Implication, Reservation, Necessity, Condemnation, and express agreement. Appurtenant Easement: easements for adjacent properties. These easements run with the land and can't be sold separately. The two parties of an appurtenant easement are Dominant tenement, the property benefiting from the easement and Servient tenement, the property burdened by the easement. Easements in Gross: Gross easements are NOT tied to any land, but are instead owned by a person or company. For that reason, they are considered a personal interest. Gross easements are usually commercial in nature and can be sold to others. A utility easement is an example of an easement in gross. Easements by Necessity: (Operation of Law) are also sometimes referred to as "easement by necessity" or "easement by implication" and are created by a court of law. Easement by Prescription: Easement by prescription is an easement by adverse possession. The claimant has used the property for the time period set by law. (Under Florida Law it is 20 years). If the time element has been fulfilled, the claimant can go to court to get the right to use the land forever. easements can be terminated by:The purpose of the easement no longer exists. (a new road is built, etc.) The holder of the easement abandons it for the statutory time period. A merger of the properties occurs so an easement is not needed.Destruction of the property or the easement (such as being at the bottom of a new dam filled with water.)The owner of the easement issues a Quit Claim deed back to the property owner that granted the easement. Excessive use occurs as determined by the courts.

Disclosure rules do not apply to

Non residential transactions The rental or leasing of real property, unless an option to purchase all or a portion of the property improved with four or fewer residential units is given Auctions Appraisals Dispositions of any interest in business enterprises or business opportunities, except for property with four or fewer residential units. Open houses

Time associate has to inform FREC of address change

When a sales associate changes his or her address, he or she has 10 business days to notify the FREC. Failure to notify the FREC may result in a fine to that sales associate. Sales associates and brokers are also required to keep their email addresses current with the DBPR as some requests and communications are now being electronically transmitted.

List the real estate included under the different fair housing acts

This law specifically prohibits discrimination in the sale, lease, or rental of real property. Also prohibited is discriminatory advertising related to these activities or any financing or brokerage service. It created the protected classes of race (already in the Civil Rights act of 1866), color, religion, and national origin. The law says: It is illegal to discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of race, color, religion and national origin. Prohibited Acts Refusing to sell, rent or negotiate with any protected class; Changing terms, conditions or service for different individuals as a means of discrimination; Stating or advertising that the property is restricted; Telling persons that a property is not for sale or rent when it is; Giving different terms for loans to buy or repair or denying a loan altogether; Denying membership in any multiple listing services (MLS) or any broker's organization. All these acts are illegal unless an owner is selling his own property by himself without discriminatory advertising or using the services of the broker. Discriminatory advertising is advertising in any media with the purpose of discriminating for or against a certain group of the protected classes. The advertisement implies acceptance (or denial) of certain groups. For an example, an advertisement for rent only in a Spanish-speaking neighborhood and not in general newspapers may presume that the broker is promoting Spanish-speaking housing. Ads that use phrases such as "women-only", "females-only" and "no children" are clearly discriminatory and illegal. Ads which want "Asians Only" are clearly discriminatory. Even directions such as near "St. Paul's Catholic Church" can imply that Catholics-only need apply. The law includes mortgage loan originators and lenders as well as real estate professionals. No one can discriminate unless they meet the exemptions on the previous screen. In addition to those mentioned above, the following acts in financing are also illegal when the decisions are based on race, color, national origin or religion. Refusing to make a mortgage loan Refusing to provide information regarding loans Imposing different terms or conditions on a loan Discriminating in appraising property Refusing to purchase a loan Setting different terms or conditions for purchasing a loan. There are 4 exceptions to the law: An owner of no more than three single family dwellings at any one time is exempt. The owner can only use these exemptions once in 24 months. An owner of an apartment building containing up to four units is exempt if the owner occupies one of the units as a personal residence Religious organizations are exempt with properties owned and operated for the benefit of their members only and not for commercial purposes, provided that membership in the religious organization is not restricted on account of race, color, or national origin. A private club (such as the Elk's Club) which is not open to the public is exempt if the properties that the club does own, provides lodging only for the benefit of the membership, and not for commercial purposes. These exemptions are NOT available if any the following has occurred: discriminatory advertising has been used. the services of a real estate broker were used (either in renting, leasing or selling) ognize the groups protected under the 1968 Fair Housing Act, Race Religion color National Origin Sex Handicap Familial Status List the property exempt from the 1968 Fair Housing Act, Housing for older adults is exempt from the familial status protection section of the Federal Fair Housing Act of 1988 if: The housing is occupied only by those 62 years or older The housing is designed for occupancy by older persons. The housing is occupied by at least one person 55 years of age or older per unit. (where 80 percent of the units are occupied by individuals 55 or older) This means that retirement communities would be exempt from Federal Fair Housing if they follow the exceptions listed above. Some groups are not covered by the Federal Fair Housing protected classes. These are age, marital status, and occupation

Tenants in common

An individual interest in group ownership. It is presumed by law unless otherwise stated. Interests may be unequal or equal. One person can own a larger share of the property than another. There is an undivided interest in the property. All the owners have an interest in the whole property. (Can't divide up the house!) One owner can sell one's interest without getting the approval of other owners. Do not need the permission of other owners to sell an individual interest in the property. The interest of each owner is inheritable. It passes to heirs, not other partners. One owner can force the others to either buy him out or file a Partition Law Suit in which the courts sell either the person's shares or the whole property.

A property management agreement must contain

1) The name and address of the owner 2), The name and address of the property manager, 3) The address and legal description of the property, 4) The start and end date of the agreement, 5) Specific services to be rendered, 6) Extent of the property managers' authority 7) Procedures for reporting on the status of the property, 8)Method and schedule of compensation, 9) Signature of owner, 10) Signature of the property manager.

Identify who does not need a license.

1. An owner selling his/her own property 2. Anyone acting as an Attorney in Fact. This is an individual authorized to act for another using a document known as a Power of Attorney. 3. An employee of a public utility, rural electric cooperative, a railroad or state or local government so long as the individual acts within the scope of his or her own employment and no compensation other than salary is given. This individual may buy, sell, exchange, auction or lease any property for the use of his or her employer 4. A full-time graduate student enrolled in a FREC-approved degree program, appraising at a college or university. The student must act under the direct supervision of a licensed broker or certified appraiser and is engaged only in activities related to the approved degree program. 5. Any person, partnership, or corporation which for another for compensation rents or advertises for rent transient occupancy; or any public lodging establishment licensed under another section 6. Certain property management and rental individuals and companies are also exempt from Florida Real Estate Law. These are: 7. A salaried employee of an owner or of a registered broker for an owner of an apartment community who works in an onsite rental office of the apartment community in a leasing capacity. 8. Any salaried employee who is a manager of a condominium or cooperative apartment complex whose activities or duties include renting of individual units as long as the rental period is no greater than 1 year. It is illegal to pay a finder's fee to an unlicensed person under any other circumstance. Any individual, corporation, partnership, trust, joint venture or other entity involved in selling, exchanging, or leasing its' own property. (not salary), he will need a license. . Only Florida licensed brokers (and their sales associates) can sell Florida property. A broker licensed in another state must sell the property in that state and no other, so a Missouri broker cannot come into Florida and sell Florida property but he can collect a referral fee from a Florida broker when the property sells. The only Finder's fee paid is that to a tenant of a residential complex listed on Screen 25. Otherwise, it is illegal to pay a Finder's Fee to any other unlicensed person. A broker can be fined up to $1000 and have a suspended license for 5 years if he pays an unlicensed person anything. 9. Any person, partnership, corporation or other legal entity for another and for compensation or other valuable consideration, sells, offers to sell, advertises for sale, buys, tries to buy or negotiates the sale or purchase of radio, television or cable enterprise which is licensed by the Federal Communications Act of 1934. However, if the sale or purchase involves land, buildings, fixtures and other improvements to the land a broker must be retained for portion of the transaction which involves the land, buildings, fixtures and all other improvements to the land. 10. An owner of one or part of one or more timeshares for the owner's own use who later offers one or more such periods for resale, 11. A person selling or exchanging cemetery plots, 12. Unlicensed partners performing real estate services in connection with property owned by the partnerships, if the profits are distributed in proportion to the ownership interests of the partners

Federal Gov

1. Federal agencies such as HUD (Department of Housing and Urban Development), Federal Housing Administration (FHA) and Veterans Administration (VA) 2. Laws such as Federal Fair Housing, the Real Estate Settlement Procedures Act (RESPA), Truth in Lending Act 3. Taking of land for National parks, wildlife and wetland areas 4. Environmental rules and regulations 5. Inheritance taxes

The appraisal process

1. State the problem- The appraiser determines why he/she has been hired to make an appraisal on the property. As stated earlier, is the job to determine market, insurance, salvage, and/or tax value? 2. Gather, record and verify the necessary data- Using all of the tools available the appraiser uses the three appraisal processes (Market data or sales comparison, cost, and income approaches). 3. Analyze and Interpret using the following information: Neighborhood Analysis: A gathering of facts about a neighborhood to determine the appeal to the buyer. These facts include: employment stability, convenience to employment, convenience to shopping, adequacy of public transportation, recreation facilities, adequacy of utilities, property compatibility, protection from detrimental conditions, police and fire protection, general appearance of properties, appeal to the market, zoning ordinances, topography and building codes. The analysis may also include a description of the neighborhood's status vis a vis growth, stability, equilibrium, or decline. Site Analysis: gathering of facts about a particular location. These include: estimate of highest and best use, identification of key features and identification of possible legal or physical problems. 4. Estimate Land Value - For appraisal purposes, land never depreciates in value. 5. Estimate the value of the property by each of the three approaches to value (explanation to follow) Market Data (sales comparison) Cost (or Summation) Income 6. Reconcile estimated values for the final value estimates - This is the final step in the appraisal process, in which the appraiser reconciles the estimates of value received from the sales comparison, cost and income approaches to arrive at a final estimate of market value for the subject property. An Appraiser never averages comparable sales to obtain a final value. The appraiser evaluates all three methods of appraising property, market data (sales comparison), cost, income, and determines which would be best to use for the property in question. Lastly, the appraiser may apply the income approach if the property is income producing. Usually, this is not the case in a residential property. 7. Report final value estimates - Types of Appraisal Reports: Letter: A short business letter stating all essential data but not including supporting data. Short or Form: Contains all basics of a regular appraisal and is used primarily for homes. Narrative: The most comprehensive of all appraisal reports. Used for commercial and investors

State Gov

1. recording of deed, transfers of property 2.estate taxes 3. rules regarding inheritance

Local Gov

1. zoning laws 2. occupancy permits 3. taxation of real property Ad valorem 4. business permits for real estate professionals

Lien payout priority

1.Cost of the sale (paid to the county for advertising, legal fees etc.) This is normally paid with the price of the purchase. Property taxes (These do not have to be recorded.) 2. Ad Valorem Taxes, Special Assessment Taxes, and any Community Development District Taxes 3. First mortgage or Deed of Trust or the first lien 4.?All other mortgages and other types of liens recorded by date of recording including mechanic and materialman's liens. 5. If there is excess money left from the sale, the mortgagor (the borrower) will receive the money. If there is not enough money for all the liens to be paid, the court may issue a deficiency judgment against the borrower. The total assets of the borrower are then available for collection by the debt holder. Everything is available to the debt holder including cars, boats, campers, airplanes etc.

Subordination Agreements

: Occasionally, a lender may be willing to take a secondary position in the line of foreclosure. For example, if the first mortgage has a balance of $20,000 and a new second has a balance of $50,000, the second may wish to become the first and the first become the second in the line of priority. If both lenders are agreeable, they sign a subordination agreement which changes the priority for foreclosure. The mortgage in the secondary position is called a junior mortgage.

Down Payment:

A buyer usually wants to pay a certain amount "down" on the mortgage to keep the loan payments low. For example, a buyer may wish to pay $20,000 in cash and borrow the remainder in a loan. The amount of money the borrower has to spend will determine the down payment. The Earnest Money Deposit is part of the down payment, but not all of it. The balance of the down payment is paid at closing.

Cooperatives

A cooperative form of ownership differs from that of a contemporary estate in that the entire property is owned by a corporation. To obtain a unit within the building or community, the buyer purchases stock in the corporation. The stock ownership carries with it the right of occupancy (called a proprietary lease). The owner of the share in the Coop is also considered a unit owner for that portion of ownership. Property taxes are paid by the corporation. The taxes are then prorated based upon the shares of stock that accompany unit ownership. This pro-rated amount is tax deductible, as is mortgage interest. In addition to unit expense, a shareholder also pays a monthly fee for maintenance of the buildings, lands, or amenities. Failure to pay the monthly fee can cause the corporation to issue a lien that may result in foreclosure. The transfer of property is accomplished by the sale of stock. Cooperative Disclosure: Florida Law requires certain disclosures under The Cooperative Act Chapter 719. A copy of the law is available on the internet under Florida Statutes. Any buyer in a co-op must be provided with a series of paperwork for disclosure purposes including information with a question and answer sheet, the management contract, the estimated operating budget, copy of floor plan of the unit and survey of the property.

Amortized Loans

Amortized means to "put to death", from the French word mort, meaning death. An amortized loan is one where regular monthly principal and interest are paid throughout the whole loan period.For example, a loan of $350,000 is obtained at 8% interest for 30 years. The monthly P& I would be $2,568.18 per month. This would mean that during the 360 months of the loan (30 years x 12 months per year) the payment would remain at $2,568.18 per month. This is also known as a fully amortized, fixed rate mortgage.An amortized loan will pay off the loan with interest over the lifetime of the loan.When payments are made on an amortized mortgage the interest is the highest part of the payment. Over time as payments are made, the amount of interest decreases in the payment as the amount of the principal payment increases. At the mid-point of the mortgage payoff, the principal and interest payment will be the same, at which point the principal will be the highest part of the payment.Amortized mortgages may be paid monthly, or bi-monthly. Making a bi-monthly payment can shorten the time a mortgage is paid off - i.e. a 30 year mortgage would be paid off in 15 years.

Types of Commercial Leases:

A gross lease requires a tenant to pay only rent, usually on a square foot basis while the landlord pays all of the other expenses like taxes, insurance etc. A net lease requires the tenant to pay rent plus a portion or all of other expenses such as taxes and insurance. Often referred to as a net net, net net net, or a triple net lease depending on the amount of expenses paid by the lessee, this lease may not only refer to a commercial property but may also be charged on a residential property. A percentage lease requires the tenant to pay rent based on a percentage of his gross profits and is usually used in start-up business. The rent will increase as the business has more sales. A ground lease gives the tenant the right to build or use the land for a specific time period, up to 99 years. This provides the lessor an avenue to maintain ownership of the land but allows someone else to use it for a long time period. A large portion of Hawaii homes are built on ground leases. An index lease or variable index lease is a lease that goes up or down, based on a specific index such as the Federal Reserve's cost of funds, as agreed to by the parties. A graduated lease has gradual increases built in so that the lessee has increased rent payment as time progresses. A sale Subject to lease occurs when a buyer purchases a property that is currently leased. The lessee retains his rights to the property until the end of his lease regardless of who owns the property. The lessor will change with the owner and all deposits and rents will be transferred to the new owner, but the lease will remain until its expiration.

Liens

A lien is a debt or charge against the property. It is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation. The owner of the property, who grants the lien, is referred to as the lienee and the person who has the benefit of the lien is referred to as the lienor or lien holder. There are TWO Types of Liens; Voluntary and Involuntary A Voluntary lien is one that the owner was willing to place on the property such as a mortgage lien or to secure building upon a property. A Mechanic's Lien-Chapter 713 F.S., is a *Statutory Lien that governs construction liens, more commonly referred to as mechanic's liens. Florida law governing mechanic's liens can be very complex. The purpose of this lien is to protect contractors, subcontractors, suppliers and homeowners. Its purpose is to provide a method to assure full payment to a contractor who builds on a property. For owner's, Florida's mechanic's lien statute requires subcontractors to provide notice of possible liens, which allows owners to avoid double payment to a contractor, subcontractor, material supplier or laborer, for the same services or materials. A Statutory lien is based on state, local and federal written laws and is a lien that cannot be automatically discharged through bankruptcy. It can be based upon taxes, rent, maintenance services, construction, a mortgage, or usage. An Involuntary lien is one that was placed on the property without the owner's consent or willingness. All liens except a mortgage lien are involuntary - such as special assessment liens, mechanic's liens etc. General Liens are a result of losing a judgment case. A general lien is against all the assets of the person who lost the law suit and effects all real and personal property. (car, boat, house, or business) An Equitable lien is always either a judgment lien or a mortgage lien and is based on a doctrine of fairness and a written contract. An Income Tax lien is a general lien because income tax is initially based on a person. If that person does not pay his taxes, the IRS sues to get a judgment; then the court awards a judgment against all the assets of the individual including his property. Specific Liens are liens applied to a specific piece of property and affect only that piece of property. (An example of a specific lien is a property tax lien on 123 Mulberry Lane) The priority of liens in foreclosure is important: it indicates who gets paid first. 1. Cost of the sale (paid to the county for advertising, legal fees etc.) 2. Property taxes (These do not have to be recorded.) Ad Valorem Taxes Special Assessment Taxes 3. First mortgage or Deed of Trust 4. All other mortgages and other types of liens recorded with priority established by date of recording including mechanic and materialman's liens.

ARM Adjustable rate mortgage

ARM (for adjustable rate mortgages), this type of loan means that the interest rate can fluctuate up or down. It is always tied to some type of financial index; increases are capped for each period and for the term of the loan.The interest rate of the loan is usually the index plus a premium called the margin. The rate of interest on the loan goes up or down, depending on the index, margin, period of adjustment and caps. Periodic caps limit the amount of interest rate that may be charged during any one adjustment period. For example, if the loan has a 2% cap, it can only go up 2% during any one adjustment period, or down a maximum of 2%.A life time cap is over the period of the loan, usually 5, 10, 15, or 30 years. If the life time cap is 5% the maximum the loan can go up or down during the life of the loan is 5%. Most adjustable loans have both periodic and lifetime caps, which limit interest rate increases. It is possible to have negative amortization. If the payment is not high enough to cover the fully indexed amount, the mortgage balance can increase so that the balance is more than the original loan. Some companies provide teaser rates for the first year. These loans may have higher caps, in the second year, the additional unpaid interest increases either the mortgage balance or the payment. All borrowers should be made aware of any negative amortization loan, ask about it and understand it, or completely avoid it.

Qualifying the Buyer

Ability to repay the loan- Uniform Residential Loan Application Income Employment history Mortgage to income ratio - The ratio between the monthly housing expense and stable monthly income or a Total Obligation Ratio of income to total expenses. Assets Liquid savings, checking, certificates of deposit etc. Other (personal property, real estate) Liabilities Revolving and installment accounts Child support and alimony payments Pledged assets, unsecured loans Debt Coverage ratio - The ratio of annual net income to annual debt service. For example, a lender may require that a qualified corporate borrower have net income of 1.5 times the debt service of the loan being approved. Attitude Credit report Explanation of derogatory items (judgments, late payments, tax liens etc.) Mortgage history rating Besides the buyer needing to be qualified to purchase real estate, the property also has to qualify.

Clauses in a mortgage or Deed of Trust:

Acceleration Clause: If a borrower defaults on the loan (does not make payments, etc.) the lender can call the entire balance due and payable immediately. Without this clause in the mortgage or deed of trust, the lender would not have the power or right to foreclosure without suing each month for the monthly payment. Alienation Clause: (also called the "due on sale" clause). The mortgagee or beneficiary declares the entire balance of the loan due and payable when any interest in the property is transferred without the written consent of the lender. When this clause is present, the loan cannot be assumed by new purchaser. The reasoning for this is that the lender wishes to know who owns the property, that the purchaser is qualified, and that the property is held intact and unencumbered for the duration of the loan. Prepayment and Prepayment Penalty Clause: This is a clause which allows the borrower or mortgagor to pay the loan earlier than the schedule called for in the mortgage contract. Occasionally, the lender may charge extra interest or an additional fee if the loan is paid off before the normal completion date (for example, if a loan is paid off in 10 years rather than 30 years.) If a prepayment penalty is present, the mortgage document will state the penalty for paying off the loan early, usually six months interest or a flat fee. Many newer mortgages and deeds of trust do not have a prepayment penalty. However, most subprime loans do contain a prepayment penalty. Defeasance Clause: This is the clause that provides for a satisfaction piece to be issued when the mortgage (deed of trust) has been paid in full. Borrower's Right to Reinstate after Acceleration: If the buyer is in default (has not made his payments), the buyer is entitled to the opportunity to reinstate his loan after the bank has issued notice to him of his default. Generally, five days before the sale of the property on the courthouse steps the buyer has the opportunity to make up all past due payments, along with any penalty fees to bring the loan current. The loan will then proceed normally. Due on sale clause - states that the full balance of the loan may be called due (repaid in full) upon sale or transfer of ownership of the property used to secure the note. This prevents the seller from allowing a purchaser to assume the loan for a specific property. Hazardous Substances: This clause forbids the presence, use, disposal, storage and release of any hazardous substances that is a violation of the Environmental Law or creates an environmental condition which would adversely affect the value of the property. Hazardous substances are defined as toxic or hazardous such as gasoline, kerosene, other flammable or toxic petroleum products, toxic pesticides and herbicides, volatile solvents, materials containing asbestos or formaldehyde and radioactive materials.

Appraiser levels

Although real estate professionals are empowered to perform appraisals, they cannot perform an appraisal for any federally related real estate transaction. Valuation required for mortgage approval and underwriting must be provided by a non-biased third party with no interest in the actual deal. Registered Trainee Appraiser Requirements for this license include successfully completing 100 classroom hours of Board-approved courses covering the topics required by the FREAB in subjects related to real estate appraisal. Certified Residential Appraiser Requirements for this license include Successfully completing 200 classroom hours of board-approved courses covering the topics required by the FREAB in subjects related to real estate appraisal. This must include 15 hours of the Uniform Standards of Professional Appraisal Practice. CRA's must also have an associate's college degree. Certified General Appraiser Requirements for this license include successfully completing 300 classroom hours of board-approved courses covering the topics required by the FREAB in subjects related to real estate appraisal. This must include 15 hours of the Uniform Standards of Professional Appraisal Practice. Provide proof of satisfactory completion of either a 4 year bachelor's degree or higher, OR a total of 30 semester hours consisting of: English Composition; Micro Economics, Macro Economics; Finance; Algebra; Geometry or higher mathematics; Statistics; Computer Science; and either Business Law or Real Estate Law. Also must include any 2 or the following courses: Accounting; Geography; Agricultural Economics; Business Management. Or Real Estate. Appraisers Must provide certified reports of value which comply with current USPAP requirements. Reports must be retained for 5 years after the appraisal and up to two years after a court appearance (whichever is longer). Real Estate Professionals and Appraisals 475, Florida Statute allows sales associates to appraise real property for any non-federally related real estate transactions. However, any real estate professional who provides an appraisal for a non-federally related transaction must comply with the most current USPAP requirements. This includes the ethics set forth in the standards as well as report retention and format. Most customers do not require anything as comprehensive as an appraisal from a real estate professional. Most times a simple valuation of the property will do to provide an idea of a price to offer, or a price opinion for a bank to value a short sale. A Comparative Market Analysis provides an insight as to properties currently on the market, pending, sold and the listed prices of expired properties on the market. It may not be referred to as an appraisal as its purpose is to provide the seller of a property a range of prices to list a property for sale, and provide the buyer a range of prices to use in giving an offer to purchase. A CMA may also provide information to a seller on market absorption (absorption analysis) providing average days on the market for homes in a specific price range, homes currently on the market, and anticipated time frame for sale of the sellers' property if market conditions remain the same. A Broker's Price Opinion is a property valuation provided to a lending institution for distressed properties on the market. These opinions became valuable in determining short sale approval prices and, in some cases, foreclosure sale prices during the housing crisis from 2008-2012. Since these valuations were not considered appraisals, no USPAP standards are required

APR

Annual Percentage Rate - an expression of the relationship of the total finance charge to the total amount to be financed. Use of APR permits the consumer to compare rates. This is standardized yardstick expressing the true annual cost of borrowing. This law does not include a computation of unearned finance charges. Legal fees to prepare deeds, survey fees, recording fees, title insurance premiums, are not included in the finance charges but discount points, loan origination fees and other lender fees are included. Other provisions of Truth in Lending: In order to be considered a creditor under Truth in Lending, a lender must lend funds 25 times a year and/or must lend the funds for at least 5 housing loans annually. An owner of property advertising acreage for sale could advertise "down payment." The owner is not considered a lender under Truth in Lending guidelines. Truth in Lending applies to consumer credit transactions of $25,000 or less and to any security interest in a consumer's principal residence other than a purchase money mortgage. When the loan creates a security interest in residential real estate, the Rescission Clause may apply. rescission Clause - (Does not apply to residential purchase money or first mortgage or deed of trust loans.) However, consumers, as well as the occupant, who have an ownership interest in the property have the right to rescind. The consumer must notify the lender by midnight of the third business day, following the closing of the transaction. The Right to Rescind as well as other consumer credit protection disclosures is found in the Truth in Lending Act, which is part of Regulation Z

Time associate has to notify FREC of employer change

Any time a sales associate changes employers (brokers) he must notify the FREC within 10 days on the current form prescribed by the DBPR.

Sales Associate Continued Education

Anyone who applies to take the examination has two years to take the examination before the application expires. Reference: 475.181 The commission may deny an application for licensure, registration or permit or renewal thereof; may place a licensee, registrant or permittee on probation; may suspend a license registration or permit for a period not exceeding 10 years; may revoke a license, registration or permit; may impose an administrative fine not to exceed $5,000 for each count of obtaining a license by fraud, misrepresentation or concealment, or any violation of 4, or any violation of 455 F.S. or 475 F.S.- The commission may establish fees to be paid for application, examination, reexamination, licensing and renewal, certification and recertification, reinstatement, and record making and record keeping. The fee for initial application and examination is reviewed annually. The commission may also establish fees which are adequate to ensure its continued operation. Fees shall be based on estimates made by the department of revenue required to implement regulation of real estate practitioners. License Renewal Period: The current license renewal period is every two years, with the exception of the first license period. Real estate licenses are renewed by DBPR, only, on March 31st and September 30th. The first license period must be at least 18 months and not exceed 24 months. If a license was obtained in May of 2007, that license would renew by March 31st of 2009. September of 2009 would exceed the two-year time frame. A renewal notice will be sent to the last known address of the licensee 90 days prior to the expiration date. No licensee can conduct real estate without renewing his license. Conducting real estate after the expiration date without renewing the license is a violation of license law. A license is a written document issued by the Department of Business and Professional Regulation. The license indicates that the FREC has certified to the Department that an individual is qualified before the license is issued. The commission shall certify for licensure any applicant who satisfies the Florida statute requirements. Anyone who applies to take the examination has two years to take the examination before the application expires. If it is the first time that the licensee is renewing a sales associate's license, it will be necessary to take a POST LICENSE course prior to renewal. The course is 45 classroom hours or its equivalent online and a failure to take this course will result in the license becoming null and void. The term null and void means the license never existed. If the license becomes null and void, the individual must meet all pre-license requirements and retake courses and state required exams again. A broker renewing for the first time must have completed a schedule of two (2) thirty-hour POST LICENSE courses, each requiring a written school exam. Failure to complete this course will make the broker's license null and void and return the licensee's status to that of a sales associate. The licensee must again reapply for a broker's license, retake the required courses and state required exams again. Any subsequent renewal after the first renewal requires continuing education. A sales associate or broker must take 14 hours of continuing education prior to renewal. Continuing education must consist of 11 hours of specialty education and three (3) hours of core law. The course/s may be taken by live instruction, by internet, or correspondence. Failure to complete continuing education in the prescribed time will result in the licensee becoming involuntarily inactive. There are two types of Inactive Status licenses: Voluntary: A licensee may choose this status if he does not want to practice real estate currently but may wish to reactivate the license later. An inactive licensee holds a license but may not practice real estate while inactive. He may not collect any referrals, commissions or fees while at this status. A voluntary inactive license must be renewed, must pay the same fee as an active license and must complete continuing education as an active licensee. This will entitle the licensee to remain inactive for an indefinite period. To change the status back, the licensee completes the correct form and without additional fee may activate the license. Involuntary: A licensee may have this status imposed upon him by the FREC if he fails to renew an active license fails to pay the required renewal fee fails to maintain educational requirements (such as post-licensing or continuing education) works under a broker whose license is no longer in effect The licensee who has an involuntary status may bring the license back to either voluntary inactive or active status by paying all back fees and bringing educational requirements to current status. If the licensee does not bring the license back from involuntary license status within two years, the license will automatically be canceled. If the supervising broker's license becomes suspended, inactive, or is revoked - all licensees under that broker become involuntarily inactive.

Military Application Req

Application Requirements The applicant must have served in a branch of the United States Armed Forces, including National Guard units. The applicant must provide a DD-214 or NGB-22 form as proof of honorable discharge. The Military Veteran Fee Waiver Request must be submitted with your application for licensure. Temporary License: A spouse of an active duty member of the Armed Forces of the United States may be issued a temporary license to practice a profession in Florida. The applicant's spouse must be on active duty and assigned to a duty station in Florida. The applicant must hold a valid license for the profession in another state, the District of Columbia, any United States territory or possession, or a foreign jurisdiction. The temporary license is valid for six months.

Blanket Mortgage

Blanket Mortgage: is a loan on several pieces of property. Blanket mortgages contain a partial release clause. This clause is one where the mortgagee agrees to release certain parcels from the loan of the blanket mortgage upon payment by the mortgagor of a certain sum of money. A developer could use this type of mortgage so that as lots are sold, he could repay part of the mortgage without having to repay all of it.

Ballon Payment

Borrowers also use a partially amortized mortgage. This is called a balloon payment loan. At the end of the time period of a balloon payment, the final payment is huge so the buyer must be prepared to pay the balance or refinance with a new loan before the final payment is due. This is sometimes used by borrowers who are using the loan for a short term until they inherit a large sum of money or have other financial gains. Small payments at the beginning, one large payment at end of time period!

Joint Tenancy:

Called a Unity of Ownership, several things must happen before this can take place. The acronym used to help remember this is TTIP. Time: all owners must take title at the same time Title: one deed transferred property from the grantor (seller) to the grantees (buyers). Interest: each person must have equal interest. There cannot be unequal interest in a joint tenancy. Possession: undivided interest in the whole property. Joint tenancy cannot be created by operation of law, nor can it be created after the fact. Joint tenancy creates the right of survivorship which means when one partner dies, the other co-owners will inherit rather than the heirs. This is to avoid probate. How can joint tenancy be terminated? One partner sells his/her interest in the property. If there are three joint tenants and one sells his interest to a fourth party, the fourth party becomes a tenant in common with the remaining two joint tenants. Partition Law suit: the court can dissolve the ownership. Bankruptcy of any of the joint tenants Foreclosure of the property.

Consumer Credit Protection Act: Truth In Lending Law: (Regulation Z)

Consumer Credit Protection Act: Truth In Lending Law: (Regulation Z) The purpose of this law is DISCLOSURE. The law requires lenders to disclose to buyers the true cost of obtaining credit so that the borrower can compare the costs of various lenders. The regulation requires that the consumer be fully informed of all finance charges, as well as the true annual interest rate, before a transaction is consummated. The truth in lending law does not control interest rates; does not control costs to close a transaction. Truth In Lending applies to residential loans, federally related 1-4 family properties, non -commercial, and family farms. Commercial transactions are not covered under the Truth in Lending law Two major sections of Truth In Lending Annual Percentage Rate (A.P.R.) Advertising

Conventional Loans

Conventional loans are neither guaranteed nor insured by the federal government. Loans are made by local lenders through savings and loans, mortgage brokers, mortgage bankers, banks and credit unions. A minimum down payment of 20% must be made. Most loans are packaged by the lenders and sold in the secondary market to the Federal Home Loan Mortgage Corporation. Assumptions of these loans are rarely allowed; almost all of the loans contain an alienation clause. Prepayment clauses in the loans will depend on what type of loan is used- adjustable, fixed etc. Conventional Insured Loans Unlike the conventional loans listed above, these loans require less than 20% down payment but they also require mortgage insurance which protects the lender (not the home buyer!). PMI (Private Mortgage Insurance) is charged at the beginning of the loan and may also be part of the monthly payment so the payment becomes PITI, Principle, Interest, Taxes, Insurance and PMI Insurance. The mortgage insurance is purchased from a private company, not the federal government. Both the real estate professional and the buyer should understand that PMI is to protect the lender from default of the buyer, not insure the buyer's life. Typical payment of Conventional Insured: Principal and interest payment $700 Taxes $150 Insurance $ 70 PMI $60 Total $980 per month

Buyers Closing

Credited to the Buyer: Earnest money New loan Prorated taxes, advance rents Security deposits Loan(s) to be paid Interest on loan Commission Prorated taxes Security deposits or prepaid rents Title insurance for the owner Preparation of the deed State transfer tax on the deed Attorney's fees Debited to the Buyer: Sale price Title insurance -lender (mortgagees) Preparation of mortgages and deed Recording of deed Recording of mortgage Documentary tax on Note Intangible tax on mortgage Attorney fees Interest Adjustment

Sellers Closing

Credited to the seller: Sale Price Prorations such as rent or water Debited to the Seller: Loan(s) to be paid Interest on loan Commission Prorated taxes Security deposits or prepaid rents Title insurance for the owner Preparation of the deed State transfer tax on the deed Attorney's fees

DUST Four characteristics of value

Demand - how much call is there for this property? Utility - how useful is the property in connection with the buyer's needs? Scarcity - how hard to find is the property, how much of this type of property in this price range is there? Transferability: Can the seller provide a marketable title? Is the property free of encumbrances unless clearly stated? Will a lender be willing to loan on the property? Situs: is the Latin word for location. In real estate, the term "Location, Location, Location is often used to describe the value of property. In this case, Situs is everything!

Demand is the desire to purchase the amount and type of real estate that is for sale or for rent within a certain price range.

Demand is influenced by: Price of real estate in the area. Even with a large demand for real estate in an area, if the price is too high, the general population will not be able to purchase what they want. If the price is too low, the demand is served until the price rises again out of range. Population of household composition: The number of people in area and the composition of a family group will influence how much demand there is for a certain type of housing. If the population is young with new families the demand will be different than the area which has retired people with smaller family needs. DIncome of consumers: Because the population and real estate are always changing, it may be that a once popular area may not be as popular as young people earn more money and want newer, more expensive housing. Availability of mortgage credit: Even the most dedicated home buyer cannot buy if there is no money to be borrowed. In the tight money market of the late 1970's, there was little money available and what was available was terribly expensive. This slowed the demand for housing greatly. Consumer tastes or preferences: Consumer tastes change as technology changes. A one-car garage is not acceptable to most buyers in the 2000's where it was once the accepted norm. Continually-changing trends in housing change the buyer's list of wants in a house and change the market.

HUD handeling 1968 fair housing complaints

Describe the HUD process for handling a complaint under the 1968 Fair Housing Act, The person making the complaint may make a complaint to either the Federal District Court or the Department of Housing and Urban Development (HUD). Department of Housing and Urban Development will: Refer it to a Federal District Court Appoint an administrative law judge to hear the case. The administrative law judge has the following options: Issue an injunction to make the party act. Per Section 180.671(a) (1), (2), and (3), the maximum penalty that the Administrative Law Judge may impose upon a respondent who is found to have engaged in a discriminatory housing practice is increased from $11,000 to $16,000, from $32,500 to $37,500, and from $60,000 to $65,000. OR, the aggrieved party, with or without filing a complaint, may file a civil suit in Federal District Court within two years of the act, unless the complaint has been filed with HUD, in which case the period is one year. The Federal Civil Penalties of 1990 requires HUD to make inflation adjustments based on the Consumer Price Index to these penalties when necessary. Complaints brought under the Civil Rights Act of 1866 must be taken directly to Federal Cou

Bundle Of Rights

Describe the bundle of rights associated with real property ownership In the United States, a set of legal rights accompanies the purchasing of real property. The definition for these rights is beneficial interests associated with real property. These rights in the property include the right to: Possession, Enjoyment, Disposition, Control, Exclusion. These rights could be broken down further into the following actions: sell use lease encumber (borrow upon) exclude (No trespassing!) will occupy cultivate exchange explore share mortgage trade license (means to give permission to others to use the property) dedicate (means to give private property for public use, such as streets or parks) All of these go with the property when it changes ownership. The right to abandon the property is not included in this list. Abandonment is the act of voluntarily surrendering or relinquishing possession of real property without vesting this interest in any other person. A person who moves out of the country, but continues to pay taxes, is NOT considered to have abandoned their property. However, an owner's failure to pay real estate taxes is sometimes taken as evidence of intent to abandon. Rights in real estate can be sold individually or collectively. Each right is separate and distinct. When the entire bundle of rights is sold, it is known as the Livery of Seisen which means "I own it and I have the right to sell it."

Discount Pts/Loan origination

Discount points: A discount point is pre-paid interest. A lender charges discount points to make more money on a loan. One point equals one percent of the loan amount. These extra points are not included in the loan and may be charged to obtain a lower-than-market rate for the borrower or a better yield (profit) on the loan for the lender. For example, one point on a $100,000 loan is $1000. It is important for the real estate professional to understand how discount points affect the actual interest paid and to note the rate so that when the buyer reviews the truth in lending with his or her closing statement they can understand the actual costs of borrowing. Loan Origination fee: Lenders charge a fee to originate (prepare the paperwork) necessary for the loan. One point equals one percent of the loan value. The cost of originating a $500,000 loan would be $5,000. These fees help the lender increase the profit margin and cover expenses. Yield: The return on an investment or the amount of profit, stated as a percentage of the amount invested; the rate of return. In real estate, yield refers to the effective annual amount of income that is being accrued on an investment. The yield, or profit, to a lender is the spread or differential between the cost of acquiring the funds lent and the interest rate charged.

Easements

Easements- Another form of restriction on the property is called an easement. An easement is an example of an encumbrance.* Easements give someone else (dominant estate) the right to USE a part of the property while the owner(servient estate) retains the ownership rights. Easements are non-possessory rights, just the right of ingress (enter) and egress (exit) For that reason, an easement is said to be an interest (claim) on the property, but not an estate: Implication, Reservation, Necessity, Condemnation, and express agreement. Appurtenant Easement: easements for adjacent properties. These easements run with the land and can't be sold separately. The two parties of an appurtenant easement are Dominant tenement, the property benefiting from the easement and Servient tenement, the property burdened by the easement. Easements in Gross: Gross easements are NOT tied to any land, but are instead owned by a person or company. For that reason, they are considered a personal interest. Gross easements are usually commercial in nature and can be sold to others. A utility easement is an example of an easement in gross. Easements by Necessity: (Operation of Law) are also sometimes referred to as "easement by necessity" or "easement by implication" and are created by a court of law. Easement by Prescription: Easement by prescription is an easement by adverse possession. The claimant has used the property for the time period set by law. (Under Florida Law it is 20 years). If the time element has been fulfilled, the claimant can go to court to get the right to use the land forever. easements can be terminated by:The purpose of the easement no longer exists. (a new road is built, etc.) The holder of the easement abandons it for the statutory time period. A merger of the properties occurs so an easement is not needed.Destruction of the property or the easement (such as being at the bottom of a new dam filled with water.)The owner of the easement issues a Quit Claim deed back to the property owner that granted the easement. Excessive use occurs as determined by the courts.

ECOA

Equal Credit Opportunity Act (ECOA) Prohibits discrimination in loan underwriting on the basis of sex, marital status, race, religion, age or national origin. Prohibits discriminatory treatment of income from alimony, child support, public assistance, or part-time employment; Prohibits inquiry about, or consideration of, child bearing plans or potential for child bearing.

Equity

Equity is the difference between the amount owed on the property and the value of the property. When the seller sells the property, after all the costs have been subtracted, the remaining money is the equity. The equity may be used to reinvest in other property or taken in cash.

Advertising Rental Property

Explain the rule regarding the advertisement of rental property information or list or negotiation of rentals. When a broker provides a list of rental property for a fee and acts as an information broker to a tenant, the FREC requires that the broker give the tenant a contract that specifies that the tenant has the right to: Request a refund of 75% of the fee (if requested within 30 days) if the tenant does not find a rental; and Request a refund of 100% of the full fee (if requested within 30 days) if the information is inaccurate. The penalty for advertising obsolete or otherwise inaccurate rental lists is a fine up to $1,000 and/or up to one year in prison. This is a first degree misdemeanor.

Freddie Mac

Federal Home Loan Mortgage Association (Freddie Mac) BUYS CONVENTIONAL LOANS "Freddie Mac" created by Congress in 1970 The Federal Housing Financing Agency is the regulator. The real estate professional must be able to recognize these three major players in the secondary market by their full names, nick names and initials.

Fannie Mae

Federal National Mortgage Association or Fannie Mae - (FNMA) - Born out of the great depression, the purpose of FNMA was to buy existing loans from banks thus freeing up cash so that more loans could be made. The American dream of homeownership resulted from this agencies ability to move money in the market. Sells seasoned mortgages and deeds of trust to individual investors and financial institutions. A seasoned mortgage is one that has been in existence for some time and has a good record of repayment by the mortgagor. Fannie Mae was established in 1938 for the purpose of purchasing FHA loans from loan originators to provide some liquidity for government insured loans. Quasi Government Corp - was government when originally formed, but is now a private corporation Buys FHA loans, VA loans, and conventional loans Referred to as "Fannie Mae" Largest purchaser in secondary market

Novation

For a true assumption of the loan by a second borrower, the lender must agree to hybrid of assumption and assignment of the mortgage by the first borrower to a second borrower. Along with this transfer of the loan, liability is also transferred to the second buyer by the lender in a novation. The novation is a new contract substituted for a first contract (in this case a substitution of names and liability) with all other terms remaining the same. Novation is a rare occurrence in today's mortgage market.

3 Types of Estates

Freehold: this term indicates ownership, and an indefinite period of time or Leasehold: this term indicates renting or leasing for a fixed term. Fee Simple Absolute: This form of ownership is always clearly stated on the transfer papers (the deed) to the property. It can be called any or all of the three words, but it means the highest and best form of ownership. It means that it has the largest bundle of rights possible. It has unlimited duration and it is inheritable. It is subject only to government powers. (P.E.T.E.)*

General Warranty Deed

General Warranty Deed: The highest and best deed. This is the type most often used in residential transactions. A general warranty deed promises the following: The Covenant of Seisen: This promises that the seller owns the property and has the right to convey it to another. The word seisen comes from an old English word which means "that belonging to the property." In England prior to the general population being able to read and write for themselves, sample of the trees and grass from the property were taken to the town square and, in the presence of witness, given by the grantor to the grantee. Property was then considered conveyed by the seisen. The Covenant against Encumbrances: an encumbrance is a burden on the property such a lien or a tax. The grantor assures the grantee that there are no encumbrances against the property unless they are spelled out in the deed. This means that the grantor assures the grantee that he (the grantor) has not sold the water rights or given an unknown right away that is not listed in the written public record. If there is a violation of this covenant, the grantee can sue the grantor. The Covenant of quiet enjoyment: means that the grantee can live in peace without any other claims on his property disturbing him. Usually, through the purchase of owners' title insurance, the seller would guarantee this covenant. Specifically, this deals with anyone who may have a Color on the Title or claim on the property. All of these claims should be disposed of before the grantee gets the property. The Covenant of Further Assurance: is given by the Grantor to assure the grantee that should further paperwork or legal work need to be done to correct the title, the grantor will provide. The Covenant of Warranty Forever: the grantor will defend and protect the title for any defects that were created during the grantor's ownership of the property or before.

Ginna Mae

Government National Mortgage Association or Ginnie Mae - (GNMA) - Ginnie Mae is controlled by an agency of the Department of Housing and Urban Development. This is a mortgage subsidy program offered by Congress from time to time through the Government National Mortgage Association. When assistance is needed, GNMA is authorized to purchase certain mortgages at below market interest rates so that borrowers can be granted low interest loans. GNMA then sells these loans in the secondary market at deep discounts, the discount loss being the amount of the subsidy. Buys FHA loans or VA loans Referred to as "Ginnie Mae"

Will Players

Grantor gives to the Grantee a Deed Testator makes a will Devisor gives to a Devisee a Devise Testator gives to a Beneficiary a Bequest. A will is a written instrument (paper) that describes how the testator (will maker) wishes to have his world goods- real and personal property disbursed. It is considered by the court to be the testator's final wishes for distribution. If a person dies with a will he/she dies "Testate". If a person dies without a will he/she dies "Intestate". The maker of a will is a testator. Although not used as much in modern law, a female maker of a will is called a "testatrix". Essentials of a Valid Will In order for a will to be valid, certain items must be in place: The testator must be of legal age. (18 or older) The testator must be of sound mind. The will must have the proper wording. There can be no undue influence, menace or duress from others on the testator. There must be the correct number of witnesses as determined by the state. A holographic will is a will that is written, dated and signed in the testator's own handwriting but not witnessed. Holographic wills are not valid in Florida. Probate means: a formal court hearing to establish the validity of a will after the death of the individual. This is usually a lengthy and sometimes costly procedure. Having a will does not avoid probate, but it does establish the person or persons to whom the testator wishes to leave his/her property.

Home Equity Loan

Home Equity Loan many times the home owner will wish to borrow against the equity of the home in order to make major capital repairs, like an addition or a new roof or pay off bills. A home equity loan allows the borrower to use the home equity and place a second loan in a junior position in order to get cash. The amount that can be borrowed depends on the lender. The borrower should be certain that he can afford the double payments (both the first and second) and can afford the cost of getting the new loan.Great care should be used by the borrower not to borrow more money on equity that the borrower can handle since a foreclosure on the second deed (the home equity loan) can result in foreclosure of the first as well. If the borrower cannot make the payments, he could lose his home.

An applicant who is not currently licensed who lives in a state without a Mutual Agreement with the state of Florida must follow all of the educational and testing procedures as a person who is a resident of Florida.

If a resident becomes a non-resident, notification must be sent to the Commission within 60 days of the change. Failure to do so is a violation of license law. A nonresident must also complete Post-licensing and Continuing Education classes as required by the Commission.

Interest Bearing Accounts

If the broker chooses, he may place the escrow money in an interest-bearing escrow account. He may do so only if the following is stated in writing with all parties to the transaction: the name of the party who is to receive the interest, and the date the earned interest must be disbursed. The broker must have the written permission of all parties to the transaction. The escrow account shall be in an insured account in a depository located and doing business in Florida. To disburse the principal and interest to the designated party, the broker must transfer the principal and interest to a non-interest bearing escrow account before disbursement.

Florida green belt law

In order the preserve Florida's farming community, the legislature in 1959 passed the Green Belt Law. This taxes agricultural land at a lower rate than the encroaching cities around the land, and preserves the land for future agricultural use. Without this protection, owning farm land and paying taxes would be prohibitive. The law requires that all county appraisers must annually classify all property within the county. This stops speculators from purchasing farm land and paying taxes at a lower rate. Gardens and lawns do not fall under the category of farm lands for agricultural use. Requirements for Green Belt protection are: The length of time the land has been so utilized; Whether the use has been continuous; The purchase price paid; Size, as it relates to specific agricultural use; Whether an indicated effort has been made to care sufficiently and adequately for the land in accordance with accepted commercial agricultural practices, including, without limitation, fertilizing, liming, tilling, mowing, reforesting, and other accepted agricultural practices; Whether such land is under lease and, if so, the effective length, terms, and conditions of the lease; and Such other factors that may from time to time become applicable.

Describe the major provisions of the Interstate Land Sales Disclosure Act and the Florida Uniform Land Sales Practices Act

In order to provide consumer protection in interstate land sales, a property report must be given to all prospective buyers 3 business days before a sale contract is signed if the development exceeds 25 lots. The contract to purchase may be revoked at the purchaser's option on a lot covered by the act until midnight of the seventh day following the contract. Action to revoke the contract may be brought by the purchaser for 2 years if the property report was not given to the purchaser.

Involuntary Alienation

Involuntary alienation: means the grantor (owner of the property) did not have a choice; that the law determined that the property would be transferred as in eminent domain or other government interferences. Foreclosure Escheat- If property owners die without a Will and with no heirs their property "Escheats" or belongs to the state Eminent Domain- means the taking of private property for public good, such as the taking of a home so a new highway could be built. The property owner must be paid "just" compensation for the property. The property must be for the public good* The owner must have due process in the courts. Condemnation: is the court action used when the right of eminent domain is exercised Adverse possession- O.P.A.T.C.H. O- The claim must be open for all to see P- Possession must be in the hands of the claimant A- The claim must be actual, clearly visible for everyone to see T- The claimant must have paid taxes for the time of possession. C- The claim must be continuous for the statutory period of time. In Florida, the minimum is 7 years. H- The claim must be HOSTILE to the owner's title- meaning that another person has encroached within the boundary of the owner; contrary to the legal description of the owner. If the claimant can prove in a court of law that all of these conditions were met, it is possible that the claimant will get that portion of land. The land would then be transferred by involuntary alienation to the claimant. This procedure would require legal counsel for the parties. PETE Police Power, Eminent Domain, Taxation, and Escheat powers in our properties.

A sales contract

Is always a bilateral contract because it contains promises from both the seller and buyer. In a sales contract, the seller is called the vendor and the buyer is called the vendee. The Vendee makes the offer, Vendor Accepts the offer and the sales contract is in effect once the contract is signed and delivered to all parties. The following information must be contained in a sales contract: names of the parties (seller and buyer) legal description of the property or street address or both consideration given/purchase price financing or cash terms quality and evidence of title to be conveyed name, phone number and address of the Escrow holder type of deed to be used- General Warranty is presumed unless otherwise stated Estate to be acquired - Fee simple unless otherwise noted terms of expenses and statement of prorations any personal property to be included date, time and place of closing when possession will occur signatures of the parties any disclosures required by law Earnest Money is part of the consideration and is given by the purchaser to the seller as an indication of the purchaser's good faith

Contract for deed (installment contract)

It is best to use the services of an attorney to make sure that all the needs of the buyer and seller are met. Occasionally, for a variety of reasons usually related to taxes, a seller may wish to sell his property by an installment land contract. This contract is a bilateral contract, with both parties performing but the time frame is different than a regular sales contract. In an installment land contract, the purchaser buys the property but does not receive complete title until the end of a time period. (For example, 5-10 years). The purchaser pays a certain amount of money each year and the seller retains the title until the final payment is made. The advantage to the sale for the seller is that he does not receive a large sum of money at one time, for which he may be taxed. Especially in large pieces of ground the amount can be very large and the seller may wish to spread the payment over 5-10 years in order to reduce the tax burden. The buyer may like the advantage of having the seller finance the loan, rather than seek such a large mortgage from a lender.

Life Estates

LIFE ESTATES: Although this is classified as a Freehold Estate, this type is not an inheritable type of Freehold as are the other types. This type of Freehold has all the other rights under the bundle of rights except the right to inherit. In either reversion or remainder, a life tenant owns an incomplete bundle of rights. The property cannot be inherited by the life tenant's heirs. As a life tenant, the life tenant cannot: will waste All persons on the deed, life tenant and remainderman must sign to sell the property. Conventional Life Estates: This type of Freehold Life Estate is based on a person's life but upon death of that person, the estate will go to one of two types of situations. 1. An Estate in Reversion: The grantor (owner of the estate) gives his interest to another party called a life tenant. The life tenant is the person, upon whose life the property relies. At the death of the life tenant, the property goes back to the grantor or his heirs. In other words, the owner of a property gives a second person the chance to live in a property for his lifetime; at the end of his life, the property goes back to the original owner or his heirs. The life tenant cannot will the property nor can the life tenant's heirs inherit the property. When the property returns to the grantor, it returns to Fee Simple Absolute without conditions and is inheritable. 2. An Estate in Remainder: The grantor (original owner) gives a life tenant possession of the property during the lifetime of the life tenant. The grantor names a third party (called the Remainderman) at the time the property possession is given. At the death of the life tenant, the property is given to the remainderman, rather than the original owner. When it returns

Lot & Block

Lot and Block number on a plat map- In addition to metes and bounds and the Rectangular Survey System, there is a third form of legal description referred to as the 'lot and block' system. The system utilizes a map referred to as a plat map. The Plat Map is laid out with a complete legal description by section, number, etc. However, once the plat has a complete legal description, smaller areas in the plat are referred to as "subdivision A". Each lot within that subdivision refers to the lot and block where the property is located. An example would be Lot 12, Block 6, Quiet Village Subdivision, Jacksonville, FL. Each plat is recorded in the county where the property is located so that anyone wishing to find the full legal description can refer to that plat.

Fixture Test courts

Method or Degree of Attachment: How is the item attached? If it is permanently attached such as a central air conditioning unit (fixture) as opposed to a temporarily attached window unit (personal), the item has become a fixture. Adaptability: How does the item fit in its environment? A water heater "fits' in the house, next to the furnace but the portable dishwasher may not "fit" in the kitchen. Intent or Agreement of the Parties: What do the buyer and seller agree upon? The martin bird house tower may become personal property if the buyer and seller agree in the contract, even if the bird house has been cemented in the ground. Damage: How much damage will the removal of this item cause? The removal of a wall-to-floor bookshelf may cause a great deal of damage to a wall if the owner has to remove a lot of nails to get it free. If the parties agree that it is personal and there is damage, the owner must repair the damage.

Assumption of a mortgage Alienation clause

Most non-governmental loans are not assumable. They contain the alienation clause (due on sale clause) which prohibits the transfer of interest from one party to another without the written authorization of the lender.

Rectangular Government survey-

The remainder of the country uses the U.S. Rectangular Government Survey or a combination of both metes and bounds and U.S. Rectangular Government Survey in order to determine where a property is located. The system is arranged in a series of grids with lines going north and south and other lines going east and west. Principal Meridians run North and South and Base lines run East and West.

Brokers License Requirements

Must have held a current, active, valid real estate broker's license for at least 24 months during the preceding 5 years in any other state, territory or jurisdiction of the United States or in any foreign national jurisdiction. In addition, non-resident brokers may need to complete a 60 hour post-license course which requires a written school exam. Is required to successfully complete a FREC approved pre-license course for brokers. This course is called FREC II. The course is 72 classroom hours of 50 minutes each. The content includes fundamentals of real estate appraisal, finance, brokerage management operations and closing statements. A passing score is a minimum of 70%. Is required to submit a completed application, electronic fingerprints and pay the FREC approved fee Brokers also take a computer-based exam to obtain a Florida Broker's license. It is administered by Pearson VUE and the student must attain a score of 75% or higher for a passing grade.

monthly statement-reconciliation

Once a month, the broker shall have a written statement made comparing the broker's total liability with the reconciled bank balances of all trust accounts. This includes the sum total of all deposits received, pending and being held by the broker at any point in time. The minimum information to be included in the monthly report is the date used to reconcile the balances, the name of the bank(s), the name(s) of the account(s), the account number(s), the account balance(s), deposits in transit, outstanding checks identified by date and check number, an itemized list of the broker's trust liability, other items necessary to reconcile the bank account with the balance per the broker's checkbook(s) and other trust account books and records disclosing the date of receipt and source of funds. The broker must review, sign and date the monthly statement-reconciliation. If the accounts do not balance with the broker's bo

The Homeowner's Right of Appeal

Once the assessed value has been established and the homeowner has been notified, the homeowner has certain rights of appeal of the assessed value. The homeowner seeks an adjustment within 25 days from the county property appraiser, or his representative. If the county appraiser finds in the homeowner's favor, the appraiser has the right to make a change and lower the assessed value. If the appeal has been rejected by the county appraiser, the homeowner may file an appeal with the Value Adjustment Board, a local group made up of 3 county commissioners and 2 local school board members, all elected members. If this group agrees with the homeowner, the board can change the assessed value. If the board agrees with the county appraiser, the board rejects the homeowner's request. If the previous board and county appraiser have both rejected the homeowner's request, the homeowner may file suit in the courts after he pays taxes under protest. This is called a Certiorari proceeding which means the court will review the matter. If the court finds for the homeowner, it will direct the county appraiser to re-examine the value with the appropriate methods of value; if it finds for the country appraiser, the homeowner loses his appeal.

Types of Listings

Open Listing: The seller retains the right to hire any number of brokers to sell his property. Whoever provides the seller with a ready, willing and able purchaser is entitled to a commission. If the seller sells the property without the broker, he pays no commission. This is considered a unilateral contract because the broker is the only one who must perform and the seller has no responsibility other than to pay the broker after performance. This type of listing benefits the seller only. Exclusive or Exclusive Agency Listing: Only one broker is allowed to act on behalf of the seller but if the owner sells the property himself, no commission is paid to the broker. If the broker sells the property, he will be entitled to a commission. The seller must make the house available for the broker to show, provide entry, and inform the broker if there is a change in the property's availability, and the broker must work to advertise and sell the property. This type of listing benefits the seller as the broker could lose money in marketing a property should a buyer walk up to the seller's house and make an offer. Exclusive Right to Sell Contract: In this type of listing, the listing broker is always entitled to a commission regardless of who procures the buyer. It provides the most protection to the broker. If the owner of the property procures the buyer, the owner will be required to pay the listing broker. Both parties must perform in this type of listing - the seller has specific requirements that he must perform; such as having the property available for viewing by potential buyers, allowing a lockbox, informing the broker of any changes in the property's status as well as the broker's responsibility to advertise and sell. Because this type of listing is a bilateral agreement, it should be in writing.

Entireties

Ownership by marriage only. Owners must be husband and wife. There is a right of survivorship. Each has an equal and undivided interest. The property is inheritable by the other partner upon death. How can Tenancy by the Entireties be terminated? Death of either spouse-survivor becomes owner in severalty Divorce (parties then become tenants in common) Mutual agreement,to sell the property Foreclosure Note: There is not a right to Partition, one spouse cannot sell the property without his/her spouse agreeing to the sale. Can a married couple take title any other way than tenancy by the Entireties? Yes, many times couples for personal reasons will take title as tenants in common or as joint tenants.

Math

PIP Sandwich Balance Payment Interest Principal Balance LTV LTV% = Loan Amt/Amt borrowed Discount pts Lenders yield increase by 1/8 1/8+rate =yield Buy down find the difference by 1/8 to find the number of points needed Qualifying the buyer Piti/GMI @. Housing expense ratio Piti+ME/GMI @ Qualifying the property rati Effective gross income- operating expense OE/EGI Appraisals Cost approach Sqft•$$$= cost of reproduction Cost of depreciation or value A. Depreciation value = reproduction cost/life•xlife B. Value= cost of reproduction - depreciation value Adjustable sales Sells price of subject property +/- target property. 4. Income capitalization approach Income/Cap rate =Value Preceded by stack equation 5. Gross rent multiplier CMA- sales price/annual rent GIM•unit price= value gross income multiplier Annual rent if target property • GIM= value Net listings. Sells price + closing cost (100-commission) Proration taxes rent maintenance Hoa 1. Find out he date in the month to identify who the charge is owed too #days*amount/total days month/year SIN tax doc stamp taxes S= Seller state documentary tax on deed paid on the sells price • .007 per 100 dollars or .70 IN= who moved in buyer (intangible .002/note . .35) *property subject to a mortgage no more taxes Example sells price 280,010 round up 2,803 • .70 640 divided by each parcel denominators Sqft=acre 43560=1 7=4+3 11+5+6 Special assessment Sq ft * cost= total %x city/owner Always divide by 2 at the end Profit loss Made/paid= profit loss % (sells price-purchase amount)/purchase amount Tax depreciation Residential 27.5 commercial 39 Amount paid (purchase price+closing cost) • bldg % (exclude land value) = $ Divide by 27.5/39 Mills into decimals move 3 places to the left Property taxes Assessed value • tax rate = tax liability Property 49,000 1 homestead 1 25,000 assessed value Tax liability- savings= property taxes Additional saving

PITI Payment

PITI payment: this stands for principal, interest, taxes and insurance. The borrower pays a certain amount of payment each month consisting of these elements. This is also called a budget mortgage payment. Principal: When used in a money reference, principal is the loan amount borrowed or the remainder of the amount owed.

Explain the penalty for a first degree and second degree misdemeanor and what real estate activities are first degree misdemeanors.

Penalties issued by a Court of Law The Department and the FREC do not issue criminal prison sentences. They only respond as shown in the previous slides. The commission shall promptly report to the proper prosecuting authority any criminal violation of any statute relating to the practice of a real estate profession regulated by the commission. The courts, however, may issue criminal punishments to licensees. Violations which will lead to a First Degree misdemeanor are: failing to provide accurate and current rental information for a fee The penalty for a First Degree misdemeanor is not more than $1000 fine (for each offense) and/or not more than one year in jail. Violations which lead to a Second Degree misdemeanor are all other licensee violations (Chapter 475) not listed above. Criminal violations include a fine up to $500 and imprisonment for a period of not more than 60 days. Because a corporation is an entity rather than a person, it can be fined only. These fines are criminal, not administrative. CIVIL PENALTIES Buyers or sellers or tenants may seek legal action against brokers when they feel they have been victimized. The Commission has no authority to order any commission (compensation) paid to be returned to these alleged victims. Civil courts can and do seek the recovery of compensation. The courts can also order the broker to pay damages if appropriate. Provide examples of Unlicensed Practice of Law Unlicensed real estate activity, and falsifying an application are third degree felonies and may be punished with a fine of not more than $5,000 and/or up to 5 years in jail. Illustrate Presumptions for a party Performing Real Estate Services

Homestead exemption

Permanent Florida residents, even if they do not live in Florida all year are entitled to claim a Florida Homestead Exemption. The exemption must be filed by March 1st of each year and it is renewed every year thereafter. The constitution of Florida allows up to $50,000 for the homeowner's homestead exemption. Thus, for example, if a property is assessed at $250,000, it will only be taxed as a $200,000 residence if the homeowner qualifies for the full $50,000 exemption. The homestead exemption amount is actually a base exemption of $25,000, plus as much as an additional 25,000. There is a graduated scale for the second $25,000 based on the value of the property. All owners may not be entitled to the full $50,000 exemption. Note also that the additional $25,000 does not apply to school taxes. The homestead exemption may be applied to the primary residence. When the reduced valuation is applied to tax rates, the homeowner enjoys a consequent reduction in ad valorem property taxes. Another important factor: For the property owners who are Florida residents and have qualified for homestead exemption the property is subject to a limitation in assessment increases, commonly known as Amendment 10. Save Our Homes limits increases in the assessed value to no more than 3% or the CPI (Consumer Price Index), whichever is less. Thus, once the homestead is established and no marital interest is transferred, the homeowner is protected by the 3% annual cap. Additional $500 homestead exemptions: Widows and Widowers (not remarried) Legally blind individuals Completely disabled persons who are non-veterans Disabled There are three additional categories that may allow for more exemption: Disabled Veterans: A disability of 10% or more entitles such veteran to an additional $5,000 worth of exemption. A permanent, total disability caused by a service related event entitles such individual to a 100% exemption from taxes on homestead property. Age 65 and older: Certain counties have an ordinance allowed by Florida law, which gives an additional $50,000 exemption to residents who are 65 or older with a household income of NOT more than $20,000. The county has a choice with regard to passing such ordinance and the $20,000 income amount may be adjusted for inflation. This is known as the local option for age 65 and older. Quadriplegics and other low income individuals: A homestead property owned by a quadriplegic, and certain other individuals in a wheelchair, is exempt. None of these exemptions are automatic. They must be applied for in person initially between January 1 and March 1. Renewal is subject to county regulations.

Special Purpose Deeds

Personal representative's deed used by an executor to convey a decedent's estate; also called an executors deed̋. Guardian's deed used by a court-appointed guardian to transfer property of minors or mentally incompetent person Sheriff's deed- used to convey foreclosed property sold at public auction Deed of trust-used to convey property to a third party trustee as collateral for a loan; on satisfaction of a the loan. on satisfaction of the loan terms, the trustee uses a reconveyance deed to convey the property back to the borrower Deed in trust used to convey property to the trustee of a land trust. not to be confused with deed of trust Master deed- used to convey land to a condominium developer; accompanied by the condominium declaration when recorded Partition deed used to convey co-owned property in compliance used with a court order resulting from partition suit. A partition suit terminates an estate when one or more co-owners want to end their relationship and are unable to do so without assistance of the court Patent Deed- Used to transfer government property to private parties Tax Deed- Used to convey property sold at a tax sale Distinguish among the various types of leases.

Income approach

Pick Violets Every Other Night P- Potential Gross Income V - Vacancy and Collection Losses E - Effective Gross Income O - Operating Expenses N - Net Operating Income Order of the stack is important when solving income equations: P - V = E E - O = N Steps Involved: Estimate annual potential gross income. Subtract an appropriate allowance for vacancy and collection losses to arrive at an effective gross income. Deduct operating expense. Operating expenses are those items that contribute directly to the operation of the business. (These do NOT include debt service or mortgage payments). This is Net Operating Income.(NOI) If you are given the monthly income and no other information in a problem you must assume that it is the net income. The first step is to multiply by 12 (unless you are given the annual numbers) to find the annual net income, and then finish the problem Estimate the price a typical investor would pay for the income produced by this particular class and type of property. This is accomplished by estimating the rate of return that an investor would demand for this investment. This rate of return is called the Capitalization (Cap) Rate. Cap rate can also be considered the risk factor in buying a property. The higher the risk (cap rate), the lower the sale price should be. Finally, the capitalization rate is applied using this formula: Net Operating Income divided by Capitalization Rate = Value Net Operating Income ________________________________________________ Sale Price or Value | Capitalization Rate The higher the cap rate the lower the sells price

Market Conditions

Price levels: The Board of REALTORS® keeps careful records of property that is for sale and has been sold through the MLS system. By using the computer with this information, a knowledgeable real estate professional will know what price properties are for sale and where there are gaps in inventory. Vacancy Rates: In both residential and commercial real estate, the vacancy rate (unoccupied property) is a major indicator of the rental market. A normally accepted vacancy rate is about 5-7% which indicates that there is movement and that the prices are appropriate to the market. A higher rate such as 50% means that renters are not able to rent, the price is too high, or there is little movement in the market. Vacancy rates: too high a vacancy means too little movement; too low means the demand is high and the prices or rents are too low. Sales Volume is also available to the real estate professional. How many properties of a certain price and type are available? How many total sales and the average price are also available. In a slow market, there will be little activity; in a busy market, there will be a lot of activity. Area preference is also indicated by the statistics in the volume of sales and the average days on the market activity. The buyer may want a certain area based on schools, churches, or employment opportunities. Market adjustment: The market is not always balanced. Occasionally, when there are too many buyers and too little property the market is said to be a seller's market. When there are too many homes and not as many buyers, it is said to be a buyer's market. Price/Sales information: How much property has sold in the last month, and at what price is a key indicator of how the market is functioning. Building permits: give an indication of how much new building has begun in the previous month and also how much renovation is going on. The more housing starts, the hotter the real estate market.

RESPA

REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA) was created to ensure that the buyer and seller in a residential real estate transaction involving a new first mortgage loan have knowledge of all settlement costs. RESPA applies to all residential real estate closings that involve an institutional lender. RESPA covers loans secured with a mortgage placed on a one-to-four family residential property. These include most purchase loans, assumptions, refinances, property improvement loans, and equity lines of credit. HUD's Office of RESPA and Interstate Land Sales is responsible for enforcing RESPA. RESPA does not apply to loans secured by mortgaged property larger than 25 acres, installment land contracts, contracts for deed, construction loans, or home improvement loans. RESPA prohibits kickbacks or unearned fees paid to lender for referring customers to insurance agencies, etc. R E S P A K (a memory tool to help you remember that RESPA prohibits KICKBACKS to real estate licensees).

REQUIRED DISCLOSURE IN SALES CONTRACT

Radon gas Energy Efficiency brochure Lead-based paint disclosure The seller of any home built before 1978 is required to sign a "Lead disclosure form" and seller must disclose the presence of any known lead-based paint in the home. Homeowner Association disclosure It is the responsibility of the Seller to disclose to the Buyer that they are purchasing a home in a community where, (a), there is a mandatory OR voluntary homeowners' association, or, (b) there are, or will be, recorded restrictive covenants governing the use and occupancy of properties in the community, or, (c), there are assessments. The disclosure must be given to the Buyer before a sales contract is executed. If it is not given until after contract execution by the Buyer, the Buyer has the right to cancel the contract within 3 days of receipt of the disclosure, or prior to closing, whichever occurs first. This right cancels after closing. Flood insurance disclosure If the property is in a flood plain, this must be disclosed to the buyer and if flood insurance will be required. Condominium and cooperative disclosures, documents and FAQ's In sales within these unique residences, the buyer has a three day right of rescission upon receipt of all documents that apply to the condominium. These documents must be supplied by the seller and the buyer cannot waive this right. This right cancels after closing. Building Code Violation disclosure; any seller who has been cited for building code violations must disclose this to the buyer. Most brokers utilize contracts provided by Florida Realtors®, either a contract known as the FR/BAR which is an agreed upon contract between the State Association of REALTORS® and the Florida BAR association or the Contract for Residential Sale and Purchase (CRSP-12) which is a Florida Realtors® specific contract. There are slight differences between the two contracts but both are effective. FR/BAR contract riders should not be used for a CRSP contract and "C" addendums should not be used with FR/BAR contracts.

Reverse Annuity Mortgage

Reverse Annuity Mortgage: Senior citizens over the age of 62 can benefit from this mortgage. The lender makes payments to the homeowner each month based upon the accumulated equity rather than giving the money as a lump sum. The loan must be repaid upon the death of the owner or the sale of the property. Sometimes this is advantageous to the senior citizens who own their own home, who are house rich and cash poor. Care must be taken to find out all about this type of loan. The discount points and other fees on this loan can be unusually high.

Comparable sales approach

Sales Comparison Approach (also called Market Data Approach): This approach is used for appraising residential property or vacant land. This approach compares the subject property to similar properties and makes adjustments on the basis of the date of the sale, the location, the physical features and/or amenities. An appraiser is asked to appraise a residential property. Example, the appraiser finds a property which has sold located in the same neighborhood, and wants to use it as a comparable sale. The comparable has more bedrooms than the subject, one less bath, and one less garage. The appraiser will have to subtract the extra bedrooms, from the comparable sold price, add a bathroom to the comparable sold price, and add a garage to the comparable sold price to make the properties equal. Memory Tools: SBA: If the subject property is better, add value to the comparable. CBS: If the comparable property is better, subtract value from the comparable. Example: the comparable has a fireplace and the subject property does not, subtract the fireplace (value) from the comparable. The subject property has a fireplace and the comparable does not, add the fireplace (value) to the comparable. Adding and subtracting is always done to the comparable sold price, never the subject property.

Sources of home financing

Savings and Loans - Specialize in long term residential loans. They are one of the largest lenders of residential funds. They may be either federally or state chartered. They are part of the Federal Home Loan Bank system. Deposits must be insured for at least $100,000. Banks - Make short term loans. They are becoming more active in home mortgage loans, FHA, and VA. Examples of short term loans are: Automobile, mobile home, and household loans. Insurance companies - Prefer large commercial projects, but will make residential loans. They like to have an equity position. They are sometimes partners with developers. This type of lending is called: Participation financing - A mortgage in which the lender participates in the income of the mortgaged property beyond a fixed return, or receives a yield on the loan in addition to the straight interest rate. Mortgage Loan Originators - The Dodd Frank Wall Street Mortgage and Consumer Protection Act created criteria for those who take or assist applications and negotiate terms of mortgages. Mortgage Loan originators who finance any federally related transactions must be registered with the Nationwide Mortgage Licensing System (NMLS). Those originators who are not required to be registered with the Nationwide system must be licensed through the Florida Office of Financial Regulation Mortgage Brokers - A person, corporation, or firm not otherwise in banking or finance, which negotiates, sells, or arranges loans for compensation. They do not finance loans. Mortgage Bankers provide their own funds for loans. Sometimes this person or entity services the loan as well. Private individuals such as sellers financing their own properties or private investors, through mortgage brokers. Sellers who finance more than one property in a two year timeframe may be required to register as a Mortgage Loan Originator. Local governments for bond programs such as community improvement money.

Distinguish among the three categories of residential construction

Spec" homes mean speculation homes, built without having a specific buyer in mind. Sometimes these homes are used as displays; many times they are used for buyers who need a house in a hurry and can't wait to have a new home built. "Spec" homes help keep construction crews busy during off-peak times. Tract homes are built to a certain set of guidelines used for a particular subdivision. These homes are very similar in design to other homes in the subdivision and usually vary only by color of paint, color of carpet etc. The square footage and layout is the same in each home of the same model A custom home is one that is built for a specific buyer, usually using an architect and drawings that the buyer has formulated. Custom homes are built one at a time and are generally much more expensive than other homes.

Other Deeds

Special Warranty Deed- limits the time frame of the covenants to the time that the seller actually owned the property. Any color or Cloud of Title previous to the grantor's ownership is up to the grantee to settle. This type of deed is usually used by large corporations in business real estate or banks that have foreclosed on a property. Bargain and Sale Deed- indicates the grantor has ownership of the property - and that's all. No other covenants are made. This type of deed is given for properties which have been auctioned. Trustees, fiduciaries and officers of the court often use this deed. Quit Claim Deed- says that the grantor "quits" or releases any interest that he may have had in the property,if he had an interest. There are no covenants made in this deed. It uses the granting words of "release, remit and quitclaim" to convey the property. This deed is commonly used to correct spelling of a grantor's or grantee's name or other mistakes made in another deed. While it is a deed of conveyance and used commonly, it will send a 'red flag' message to anyone examining the title to study the ownership more carefully. This is further the result of a Quiet Suit to title, as described above.

Cost Approach

Steps involved in the COST APPROACH: Estimate the value of the land alone as if vacant. Determine either the replacement or reproduction cost of the building. Deduct all accrued depreciation from the replacement cost. Add the estimated land value to the depreciated replacement or reproduction This approach is used on buildings which do not have market data because they are unusual properties (school, post office, library, etc. or a building without income). Reproduction cost: to replace with the same materials as original construction (much more expensive!) Replacement cost: to replace with current materials and methods with utility and function similar to original. Reproduction cost- Example -Historical building would usually be restored using the original materials as much as possible. Replacement cost- Example - If a modern house burned, it would be rebuilt using current materials and methods of construction. Cost can be determined by one of three methods which are: Square foot cost- using outside measurement, how many square feet times a cost for either replacement or reproduction. Unit in place: In the "Unit In Place Method", the replacement cost of a structure is estimated based on the construction cost per unit of measure of individual building components, including material, labor, overhead and builder's profit. Most components are measured in square feet, although items such as plumbing fixtures are estimated by cost. The sum of the components is the cost of the new structure. Quantity survey method: The quantity and quality of all materials (such as lumber, brick, and plaster) and the labor are estimated on a unit cost basis. These factors are added to indirect costs (for example, building permit, survey, payroll, taxes and builders profit) to arrive at the total cost of the structure. Because of the detail and the time consumed, this method is usually used only in appraising historical properties. It is, however, the most accurate method of appraising new construction.

Supply is the amount of real estate offered for sale or rent in a given price range. Supply is influenced by:

Supply is the amount of real estate offered for sale or rent in a given price range. Supply is influenced by: Availability of skilled labor: When construction is on going in an area, the demand for skilled workers such as carpenters, roofers, sheet metal workers and other trades is high. When there is a supply of skilled workers, there will be more housing available. Availability of construction loans and financing: Financing must be available to developers and builders as well for short-term construction loans. Builders need leverage to help with their risk and cash flow. Availability of land: either new land or reclaimed old land is essential to new construction. Availability of materials: items such as lumber, dry wall, cement, and roofing materials are essential to builders. These must be available at a reasonable price within a reasonable time. Without a supply of materials, construction will slow and stop.

TILA-RESPA

TILA-RESPA Integrated Disclosure Rule (TRID) Lenders must give a copy of the booklet, "Your home loan toolkit" to every person at the time of application for a loan. Lenders must provide a Loan Estimate of settlement costs at the time of loan application or within three business days of application. A Closing Disclosure, a form designed to detail all financial particulars of a transaction, must be delivered to the borrower at least three days before closing. The actual time frame is based on the method of delivery. The settlement agent must also provide the seller with the Closing Disclosure, which may be done at consummation.

Types of value

Tax values used for property taxation Insurance values for homeowner's policies Value in use is the history of income for a commercial property Liquidation value is the value of the property if it required a fast sale Investment value is the importance to an investor

TAF

The Appraisal Foundation (TAF) was founded in 1987 as a source for advancing professional standards for appraisers. The Foundation is a private, not-for-profit corporation, responsible for establishing, improving and promoting minimum uniform appraisal standards and appraiser qualifications criteria" The Foundation is Headquartered in Washington, DC, and directed by a 24-member Board of Trustees. The Board appoints members to and provides financial support and oversight of the three independent Boards: the Appraisal Practices Board (APB), the Appraiser Qualifications Board (AQB), and the Appraisal Standards Board (ASB). Appraisal practice in the United States is regulated by each state

APB

The Appraisal Practices Board (APB) was created in 2010. The APB is charged with the responsibility of identifying and issuing opinions on recognized valuation methods and techniques, which may apply to all disciplines within the appraisal profession. The APB offers voluntary guidance in topic areas in which appraisers and users of appraisal services feel are the most needed. Compliance with all guidance issued by the APB is entirely voluntary.

ASB

The Appraisal Standards Board (ASB) establishes the rules for developing an appraisal and reporting its results. In addition, it promotes the use, understanding and enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP) as required by FIRREA

AQB

The Appraiser Qualifications Board (AQB) establishes the qualification criteria for state licensing, certification and recertification of appraisers. FIRREA mandates that all state certified appraisers must meet the minimum education, experience and examination requirements promulgated by the AQB. The AQB has also developed voluntary criteria for personal property appraisers.

The FREC

The Commission is composed of seven members: Four members must be licensed brokers, licensed for at least 5 years preceding appointment One member may be a broker or sales associate but must have held an active real estate license for two years preceding the appointment. Two members must be consumers who have never held a real estate license. One of the members must be 60 years of age or older. The chairperson presides at all meetings; in the absence of the chairperson, the vice chairperson presides. Four of the members of the Commission constitute a quorum to do business. The principal office of the Commission is located at 400 West Robinson Street, Orlando, FL 32801-1772 Commission term of office is 4 years. Members may not serve more than two consecutive terms but may serve several different set of terms. Chairperson and Vice Chairperson are elected annually by members. The Commission has no staff or employees. All office functions are provided by the Division of Real Estate Commission members earn no salary; they are paid a per diem and expenses for all days spent on Commission activity. The members are appointed by the Governor, subject to confirmation by the Senate. The current members may continue their present terms unless removed for cause. The Commission "shall foster the education of brokers, broker associates, sales associates and instructors concerning the ethical, legal and business principles which govern their conduct."

Wrap around mortgage

This mortgage is also rarely used except in a time of high interest rates. A wrap-around mortgage requires additional financing from a second lender; one payment for two loans. The new lender pays the first loan but charges a higher interest rate for a second deed of trust (second mortgage). The original loan must be assumable with no alienation clause and must be the type of loan where the original first mortgage is not disturbed. Example: A buyer wants to purchase a property but interest rates are high and the buyer cannot obtain a complete new loan at the high rate. The purchaser discovers that the seller has an FHA or VA loan. The buyer assumes the first and "wraps the second around the first" to make one loan payment. The advantage to this type of payment is that the buyer has a lower total interest rate. The disadvantage is that if the second lender does not make the payment to the first on the time schedule set by the first, late fees can be charged

The Dodd Frank Act of 2012/Loan Originators

The Dodd Frank Act of 2012 changed some specific criteria to establish extensive requirements applicable to mortgage lending industry, including detailed requirements concerning mortgage originator compensation and underwriting, high-cost mortgages, servicing, appraisals, counseling and other matters which apply to financing real estate. In as such, all mortgage loan originators; those who finance (Lenders) and those who work to bring lenders and consumers together (Mortgage brokerage) must be registered with the newly created Consumer Financial Protection Bureau (CFPB). Coverage of Mortgage Lending Provisions - Includes mortgage originators who take or assist applications and negotiate terms of mortgages. Excludes creditors (except creditor in table funded transaction for anti-steering provisions) servicer employees, agents and contractors, persons or entities performing real estate brokerage activities and certain employees of manufactured home retailers from "originator" definition. Nonfederal chartered banks and savings associations who broker or lend for mortgages MUST be registered with the Florida Department of Agriculture to provide Mortgage Loan Origination services. Sellers of a property who provide financing may be required to register with the Florida Department of Agriculture as a Mortgage Loan Originator if they finance more than two properties in a two year timeframe.

FHA loans

The Federal Housing Administration (FHA) insures loans for lenders of real property made by qualified or approved lending institutions. The Department of Housing and Urban Development (HUD) oversees the FHA. If a buyer wants to obtain an FHA loan, a licensee should send them to a qualified lender, such as a savings & loan or a bank. Following are the requirements to receive an FHA loan: FHA loans require a down payment as low as 3.5%. This down payment may be a gift if needed by the buyer but not a loan. Since these loans may be obtained for such a low down payment, the borrower is charged a one-time insurance premium at closing. This insurance provides security to the lender in addition to the real estate in case of borrower default. The one-time charge is paid at closing regardless of any down payment by the borrower or some other party (seller) and may be rolled into the loan amount. This charge is called an Up Front Mortgage Insurance Premium (UFMIP). For loans made with a low down payment, the FHA also charges the borrower an insurance amount with each payment until the loan to value ratio falls to 78%. The insurance is called MIP or Mortgage Insurance Premium. Lenders may charge points to increase their yield. Either the borrower the seller, or both can pay them. Each point is 1% of the loan amount. A discount point is pre-paid interest. No prepayment penalties are allowed on FHA loans. Loans are assumable with certain qualifying conditions depending upon when the original loan was obtained. The mortgaged real estate must be appraised by an approved FHA appraiser. FHA regulations set minimum standards for the type and construction of buildings and credit-worthiness of borrowers. FHA does NOT build homes nor does it lend money itself. The term "FHA Loan" refers to a loan that is insured by the Federal Housing Administration. FHA loan limits are based upon the area where the property is located. The ratios that FHA uses are different than that of conventional lenders. FHA uses a Housing Expense ratio (HER) to determine if a buyer is qualified for the loan. The gross monthly income times 29% is for the housing payment and 41% is for all obligations. Because this a federal program, the ratios, rules and interest rates change often. The real estate professional is advised to check with local lenders on the ratios and the maximum sale price.

Types of Title Insurance

The Owner's Policy is a title policy made out for the price of the property at the time of closing. This policy is for protection against claims of others which may not have surfaced prior to closing. (For example, a mechanic's lien shows up.) The value of the policy never goes down and may go up if there is an inflation clause added. There are some strict legal words in the policy so the buyer should read it carefully before purchasing. The owner's policy is also called the Mortgagor's policy. This policy only protects the owner for the purchase price of the property and is NOT transferrable. Either the home seller or the home buyer may buy an owner's policy. In many areas, sellers pay for owner title policies as part of their obligation to show good faith in granting a General Warranty Deed in the transfer of title to the home buyer. The lender also seeks protection against claims on the property so the buyer purchases a lender (Mortgagee's) policy to protect the lender as a condition of obtaining the loan. The mortgagee's policy decreases in value as the loan amount goes down but the Mortgagor's policy does not. This policy is transferable and paid by the buyer in most cases.

Pre-L Course Exam passing requirements

The Sales Associate's course for pre-license consists of 63 classroom hours of 50 minutes each. The course includes the basic fundamentals of principles and practices, basic real estate and license law. It is called FREC I. At the end of the course, a 70% or higher score on the Commission-prescribed end-of-the-course examination is necessary to complete the course. Students failing the Commission-prescribed end-of-the-course examination must wait at least 30 days from the date of the original examination to retest. Within one year of the original examination, a student may retest a maximum of one time. Otherwise, students failing the end-of-the-course examination must repeat the course prior to being eligible to take the end-of-the-course examination again.

Advertising and Sign Requirements

The branch office must have an entrance sign located on the door of, or adjacent to the front entry. The sign must contain the NAME of the BROKER who is registered as the broker of record for that office. If the office has a trade name, the Trade name must be located on the sign, followed by the broker of record's name. A partnership or corporation shall contain the name of the firm or corporation or trade name along with at least one of the brokers. At a minimum the words "Licensed Real Estate Broker" (or "Lic. Real Estate Broker") must appear immediately below the broker/s name/s. The name of sales associate/s or broker associates may also appear if they are located under the required lines and clearly separated from the broker's identification, and that they show the type of license for each person listed. List the requirements related to the regulation of advertising by real estate brokers. Brokers must always advertise in a manner that alerts the public that they are dealing with a real estate professional. All advertisements in the name of the brokerage are the broker's responsibility, no matter who composed it. All advertising must contain the name of the brokerage firm which is registered with the Department. Such name must be conspicuous within the advertisement

Tax exemption

The first type of real estate property exemption is called Immune Property. This is property that the county will not be taxing at all, including federal and state buildings, municipal buildings and airports, etc. The second group is called Exempt or Partially Exempt properties. These are properties such as churches and nonprofit organizations that own properties. The county appraiser actually determines the Taxable Value of the property but the owners of the property are not required to pay. In other words, the Exempt properties are subject to taxation, but the owner is released from the obligation.

Metes and Bounds

The metes and bounds system is the oldest of all the measuring systems used in the United States. It relies on monuments and point of beginning. It includes compass readings in degrees, minutes and seconds. Surveyors use specific equipment to measure the direction and angles.The term metes refers to distance while bounds refers to a direction. A surveyor begins at a starting point called the point of beginning (POB). The measurements are done in a 360° reading of the compass with north being both 0° and 360°. The survey ends at the place it started- the Point of Beginning or POB. Monuments,(fixed objects) are used to establish this point of beginning. These are physical things such as the Old Dutch Mill, the Stone Fence, the stately old pine, are considered the least reliable part of the measurement since monuments sometimes disappear over time.

What's on the License

The name of the Governor The Seal of the State of Florida The name of the Secretary of the Department The effective date and expiration date of the license The license number and status The licensee's name The approved name that the licensee (if a broker) operates under

Three Parts of a Deed

The names of the three parts are Premises, Habendum and Testimonium. To be valid the deed must contain these items. Premises: Name of the grantor (correct legal name), Name of the grantee ( correct legal name), Accurate legal description of the property (legal description on record). Habendum: Recitation of consideration "for one dollar and other valuable consideration", Granting Clause - words of conveyance- these are the promises of the seller. Habendum Clause - defines ownership taken by the grantee. The clause which clarifies the purpose of the deed with the phrase "to have and to hold". Designations of any limitations of ownership, Exceptions and Reservations - references to any restrictions and covenants, etc., of a subdivision. Appurtenances Testimonium: Signed wishes of the grantor (Acknowledgement) - where the grantor transfers the property of his own free will. In Florida, signatures of two witnesses Delivery by the grantor and acceptance by the grantee. Legal transfer takes place when the deed is voluntarily accepted by the grantee. Date is not required but is frequently in place if the deed is recorded in the county where the property is located.

Buy down financing

The payment is subsidized at the beginning by a builder or other party for a 3 to 5 year period. Thereafter, the purchaser takes over and pays the regular payment amount. This is a financing technique used to reduce the monthly payment for the borrower during the initial years. Usually the cost to the builder is built into the home. Payments on the loan will increase after the subsidy ends.

Assumption or subject to mortgage

The phrase "subject to" is included in most assumptions. It means that the original borrower maintains the liability for paying off the loan even if he has sold the property to someone else. The lender is saying to the borrower, "You may sell your property to anyone you choose, but you will retain the liability for the loan, even if you no longer own the property." If the second borrower defaults, he can simply walk away and the first borrower will be charged with the costs of foreclosure and bad credit reports. Novation: For a true assumption of the loan by a second borrower, the lender must agree to hybrid of assumption and assignment of the mortgage by the first borrower to a second borrower. Along with this transfer of

Describe the major provisions for the Florida Residential Landlord and Tenant Act, Florida Residential Landlord and Tenant Act (83 F.S.)

The purpose of the Landlord and Tenant Act is to provide equal protection under the law for both landlords and tenants. This law deals with non-residential tenancies, residential tenancies, and self service storage. The law describes landlord and tenant obligations as they apply to this act. Deposits and Advance Rents: An advance rent or security deposit received by a broker or owner must be handled in one of three ways. Money is placed in a non-interest bearing account and not commingled with other funds. Money is placed in an interest-bearing account with the interest to be paid to the tenant at a rate of 75% of any annualized annual interest or 5% at the option of the landlord. A surety bond is posted in the county to the clerk of the circuit court where the property is located for the total amount of the money given in rents and deposits or $50,000 whichever is less and the tenant is paid 5% interest per year simple interest. This method allows for commingling of funds. The tenant has to be informed where and in what manner the money is being held within 30 days of the contract date, including the bank's name and address, the rate of interest, and the date interest payments will be made. For real estate brokers who manage properties, it is expected that deposits be handled as set forth in 475 F.S., Escrow management. Upon completion of the rental period the landlord has 15 days to return the deposits unless the landlord wishes to make a claim on the money, then he has 30 days to make a claim after the tenant vacates the property. Florida Landlord and Tenant Act The landlord may enter the dwelling unit when necessary under any of the following circumstances: (a) With the consent of the tenant; (b) In case of emergency; (c) When the tenant unreasonably withholds consent; or (d) If the tenant is absent from the premises for a period of time equal to one-half the time for periodic rental payments. If the rent is current and the tenant notifies the landlord of an intended absence, then the landlord may enter only with the consent of the tenant or for the protection or preservation of the premises. (3) The landlord shall not abuse the right of access nor use it to harass the tenant. Vacating Premises Following are timeframes for notice when tenancy is for time shown: When the tenancy is from year to year, notice not less than 60 days prior to the end of any annual period; When the tenancy is from quarter to quarter, notice not less than 30 days prior to the end of any quarterly period; When the tenancy is from month to month, notice not less than 15 days prior to the end of any monthly period; and When the tenancy is from week to week, notice not less than 7 days prior to the end of any weekly period. Termination of Rental Agreement by the tenant: If the landlord does not maintain the property, the tenant has a procedure to follow to terminate the agreement. The tenant must give written notice to the landlord citing noncompliance and the intent to vacate if the situation is not corrected. The landlord has 7 days to correct the situation. If the landlord does not remedy the situation in 7 days; the tenant is entitled to terminate the agreement Termination of the Rental Agreement by the landlord: Landlord must give written notice demanding rent within three days or possession of the property. If rent is not paid in the proper time frame, the landlord must use formal eviction to evict tenant. If possession is given; the landlord must give written notice of the security deposit or advance rent. Eviction requirements: Notification must be given to tenant in writing demanding possession of premises. Notice may be mailed, hand delivered, or tacked to the door of the unit being noticed A three day notice shall be given for non-payment of rent. If tenant is being evicted for cause, a seven day notice is delivered. If tenant does not surrender possession three days or seven days after notification, landlord must file a complaint for eviction. Tenant is allowed seven days to file a reply. If tenant stays without answering, the landlord must obtain a final judgment from the court. After obtaining the judgment in favor of the landlord, the sheriff is given a writ to obtain the premises for the landlord 24 hours after posting. After the execution of the writ of possession, landlord may remove personal property from the premises.

VA Loan

The veteran must have served 181 days active service in the military since 1940. The VA requires that a veteran assumes liability for the loan. If a veteran does not pay the mortgage as agreed there will be a foreclosure. The property must be owner-occupied for at least one year. A qualified veteran may borrow up to 100% of the loan with no down payment. Veteran must first apply for a Certificate of Eligibility in order to obtain a VA loan. The house must qualify with an appraisal and is issued a Certificate of Reasonable Value. The amount of the loan is limited to the amount shown on the Certificate of Reasonable Value. Loans may be assumed by non-veterans, but veterans may still liable. VA will lend money in rural areas where there is no financial institution available. Points can be paid by either the seller or the buyer. VA does not allow prepayment penalties to be charged if a veteran pays off a loan early. If a veteran has died his/her widow or widower may be eligible for a VA loan. In order to be eligible for a VA loan, the widow or widower may not be married again at the time of application. If a loan is assumed by another veteran and the seller has used all of his/her eligibility, the seller cannot use his/her eligibility again, unless he is given a novation because he/she will still be liable for the loan. FHA and VA will allow buyer to pay more than appraised value, if they pay the difference in CASH. The basic intention of the VA direct home loan program is to supply home financing to eligible veterans in areas where private financing is not generally available and to help veterans purchase properties with no down payment. Eligible areas are designated by the VA as housing credit shortage areas and are generally rural areas and small cities and towns not near metropolitan or commuting areas of large cities. VA loans allow veterans to qualify for loan amounts larger than traditional Fannie Mae / conforming loans. VA will insure a mortgage where the monthly payment of the loan is up to 41%d of the gross monthly income vs. 28% for a conforming loan assuming the veteran has no monthly bills. The maximum VA loan guarantee varies by county. As of 1 January 2012, the maximum VA loan amount with no down payment is usually $417,000, although this amount may rise to as much as $1,094,625 in certain specified "high-cost areas". Once a VA loan is paid in full or the member sells the property and frees the loan, they may re-apply for another VA loan.

Mortgage/Note

The word mortgage or Mortgage Instrument is a loan secured by real property. To mortgage a property is to pledge a property as collateral for the money borrowed on the property. There are two types of security instruments for a real estate loan: a mortgage and a Note. A mortgage is the security interest of the lender in the property, which may entail restrictions on the use or disposal of the property. Restrictions may include requirements to purchase home insurance and mortgage insurance, or pay off outstanding debt before selling the property. The Promissory Note or Note is the promise to repay the mortgage by the mortgagor. It is evidence of the debt owed by the borrower. When a lender decides to sue to collect money owed on a mortgage, they sue on the note. Hypothecation is an alternate term used when one pledges to secure a loan with something of value. The property that the buyer is purchasing is hypothecated to secure the mortgage. The Promissory Note: A promissory note should have several essential elements, including the amount of the loan, the date by which it is to be paid back, the interest rate, and a record of any collateral that is being used to secure the loan. Other interest-rate options, like discounting or compensating balance requirements, can also be included.. Default terms (what happens if a payment is missed or the loan is not paid off by its due date) should also be spelled out in the promissory note.

Promissory note

There are two parts to a mortgage loan: a pledge (or promise to pay) and the collateral. The promissory note is the promise to repay the debt. The promissory note defines the payment terms including the interest rate, the date of repayment, prepayment penalties if any, purchase price and penalty if there is a default. The promissory note is the lender's personal property and it is a readily negotiable item. The note can be sold to another financing company either on the primary or secondary market. Note: The implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2014 requires the lender to disclose if they will service the loan or sell the loan to another finance company. (The primary and secondary markets will be discussed later.) The note can be included in the financing process as either a separate document or included in the mortgage or deed of trust. The note makes the borrower personally liable for the loan.

Estoppel Certificate

This is a letter that shows the current balance of the loan and is used by lenders when selling the note from one lender to another. The estoppel certificate states the amount that is currently due and it "stops" the new lender from charging any more than that amount. In essence, it is a "pay-off letter" from one lender to another. Estoppel certificates are further used when closing the sale of a home to show the total payoff amount for the loan.

Loan-To Value Ratio (LTV):

This is a phrase most often used by lenders. The ratio represents the amount of the loan in relation to the sales price or appraised value. If the loan is $80,000 and the value is $100,000, the LTV is 80%; meaning 80% of the value is being borrowed. The ratio also shows that the buyer will be required to pay a $20,000 cash down payment.

Bridge Loan

This is a short term loan for the buyer, usually six months to one year in duration. It is used to get into a new house to complete the sale by providing money borrowed on the old house. This is a second mortgage on the old house and the buyer will end up paying payments on two houses simultaneously until the old house is sold and closed. The terms for each bridge loan are set by the lender; some bridge loans require monthly principal and interest payments, others charge a large interest payment at the end of the loan period.

Package loan

This type of loan is used in resort areas a great deal, since the mortgage includes the fixtures, appliances and other personal property in the same loan. These loans are used primarily in business opportunities wherein a commercial store or restaurant has personal property that are a part of that business

Brokers Continued Education

Two post-license courses are required during the first licensure period as a broker. These courses consist of two, thirty hour courses, which require a written school exam. Failure to complete this requirement causes the broker's license to become null and void and reverts the licensee's status to Sales Associate. The content of the classes include advanced appraisal, advanced property management, real estate marketing, business law, advanced real estate investment, advanced marketing, technology, advanced business planning, time management and real estate brokerage office operations. Brokers who take these courses do not have to take the 14 hour continuing education courses during their first renewal period as a broker/broker-associate. The post-license education requirements do not apply to any applicant or licensee who has received a 4-year degree in real estate from an accredited institution of higher education.

Qualifying the property

Type of property (residential, commercial, agricultural) Location Area zoning Value range Neighborhood Actual age/Effective age/Remaining economic life Condition (repairs and predications) Special clearances (code compliance, well and septic certifications etc.) Overall marketability Qualifying the Title Abstract and opinion - A full summary of all consecutive grants, conveyances, wills, records and judicial proceedings affecting title to a specific parcel of real estate, together with a statement of all recorded liens and encumbrances affecting the property and their present status. The abstract of title does not guarantee or ensure the validity of the title of the property. It is a condensed history that merely discloses those items about the property that are of public record. It does not reveal such things as encroachments and forgeries. Chain of Title - The recorded history of matters that affect the title to a specific parcel of real estate, such as ownership, encumbrances and liens, usually beginning with the original recorded source of the title. The chain of title shows the successive changes of ownership, each one linked to the next so that a "chain" is formed. Title insurance- A comprehensive indemnity contract under which a title insurance company warrants to make good a loss arising through defects in title to real estate or any liens or encumbrances thereon. Title insurance protects a policyholder against loss from some occurrence that has already happened, such as a forged deed somewhere in the chain of title. All of these above issues must be to the satisfaction of the lender. In other words, for the title to qualify the abstract, chain of title, and the title insurance policy must meet the standards of the lender.

There are four types of agency.

Universal agent: handles all delegated business of the Principal. The Universal agent has the Power of Attorney and is called an Attorney-in-Fact. An example would be a person who is hired or appointed by an estate to handle the real estate affairs of a deceased individual. A General Agent: handles multiple transactions of a principal/client. One example in real estate would be property management. All sales associates who work under a broker are general agents of that broker, meaning that they have a fiduciary responsibility and a loyalty to that broker. Agency coupled with an Interest: when the real estate licensee is a partner in the ownership of the property as well as represents the partners in an agency relationship. A Special Agent: handles one transaction for one seller of one property. This is the most common type of real estate representation. The broker can represent several sellers on one house each at one time but never the seller and buyer for a transaction.

The adjusted basis

When a home is purchased initially, the original purchase price is called the basis. The homeowner is allowed to add certain expenses to the basis. These are settlement costs such as abstract fees, charges for installing utility services, legal fees for title search and preparation of deed, recording fees, survey fees, transfer taxes, owner's title insurance. Any charges in connection with getting a mortgage loan cannot be included. So, say you paid $75,000 for the home plus $1000 in allowable costs for closing. The basis now becomes $76,000. In addition to these items you may also include any: additional and other improvements that have a useful life of more than 1 year special assessments for local improvements and amounts you spent after a casualty to restore damaged property Decreases Closing cost and commission Decreases to basis. These include any: Gain you postponed from the sale of a previous home before May 7, 1997, Deductible casualty losses, Insurance payments you received or expect to receive for casualty losses, Payments you received for granting an easement or right-of-way, Depreciation allowed or allowable if you used your home for business or rental purposes, Residential energy credit (generally allowed from 1977 through 1987) claimed for the cost of energy improvements that you added to the basis of your home, Credit you claimed for improvements added to the basis of your home, Nontaxable payments from an adoption assistance program of your employer that you used for improvements you added to the basis of your home

Recognize events that would cause a license application to be denied.

When a license is denied by the FREC, a copy of the order is mailed to the applicant by registered or certified mail, setting forth the reasons for denial and advising the applicant has 21 days from date of receipt to request a hearing. Florida Real Estate Commission Any of the following may be the basis for denial of a license: Did not file an application in the proper form or pay the correct fee, Did not correct an error or omission on an application, Did not take the examination within two years from date of application, Did not pass the state exam or cheated on the exam, Did not prove qualifications for licensure, Has a reputation for bad business dealings or incompetence, Is being investigated by another state for an act that would be a violation of Florida law, Has committed an act in the previous year that could have resulted in discipline had the applicant been licensed at the time. Refusal to renew a license may be the following: Did not file the proper paperwork in a timely fashion, Did not pay the appropriate fee, Did not take the continuing education or post-license courses, Is being investigated in another state for an act that would be a violation of Florida law, Has committed an act while licensed which resulted in discipline.

Broker escrow rules

When a sales associate obtains money to be deposited in the escrow account, it must be given to the broker immediately. This means no later than the end of the next business day. When a broker receives money to be deposited in an escrow account, he must deposit it immediately within three business days. (Holidays and weekends are excluded) The broker must be a signatory on all escrow accounts. If there is more than one broker, then a broker licensee must be designated as the signatory. If the deposit is in securities, intended by the depositor to be converted into cash, the conversion shall be made at the earliest practical time, and the proceeds shall be immediately deposited in the account. A broker may maintain more than one escrow account and maintain up to $1000 of his own money in each sales escrow account or up to $5,000 in a property management account. The broker must reconcile the accounts no more than 30 days from the date of the last reconciliation was performed or should have been performed. This requirement cannot be delegated to any other person. A broker is NOT required to have an escrow account. When earnest money or deposit funds are entrusted to a title company or attorney, the licensee who prepares the contract, must indicate on that purchase agreement the contact information for the depository where the funds will be held. Included must be: Escrow Agent Name Address Phone, email, and FAX Other requirements: Within 10 BUSINESS DAYS of the date of receipt, the broker shall make a written request to the title company or attorney to provide a written verification of receipt of the deposit. Within 10 days of verification of deposit, the broker shall provide the seller (if unrepresented) or seller's broker a copy of written verification. To mix personal and public money is called Commingling and is illegal under Florida law, with the exception of $1000 that a broker may deposit in the escrow (or trust) account to keep the account open. Conversion means taking money that should be held in escrow for the parties and using the money for the broker's own needs (such as operating money). This is an illegal act.

Capital gains tax

a tax levied on profit from the sale of property or of an investment. The sale of real estate may result in capital gains taxes under certain circumstances. To determine if gain is taxable, these three items must apply: It is a residence and you owned the home for at least two years You have lived in the home as the main home for at least two of the past five years You have not sold more than one home in the past 24 months. If the owner meets these tests, he is entitled to a $250,000 exclusion as a single person or $500,000 as a couple filing jointly. This is no longer a one-time exclusion, nor is it limited to those 55 and older. There are additional benefits if the property has been sold because of health (such as moving into a nursing home). For more information go to: http://www.irs.gov/taxtopics/tc409.html To determine the taxable amount, subtract the adjusted basis from net proceeds of the sale. Know the Sales price Know the amount of selling expenses Subtract the adjusted basis Find the amount of gain or loss

Describe the four settlement procedures available to a broker who has received conflicting demands or who has a good-faith doubt as to who is entitled to disputed funds.

doubt as to who is entitled to disputed funds. If the broker has a good-faith doubt (meaning the broker honestly doubts the claim of a party), the broker reports the situation to the FREC. The broker has 30 days from the last party's demand to implement one of the procedures set up for escrow disputes. These are After the broker notifies the FREC of the problem, the broker may wish to request: An Escrow Disbursement Order (EDO) from the FREC. Once the EDO is requested, the broker must follow the instructions of the FREC. If the EDO is overturned on appeal, the broker may be liable for civil damages in a civil suit. However, if the broker has followed the EDO, damages to the broker can be reimbursed from the Real Estate Recovery Fund without jeopardy to the broker's license, and the broker is not required to repay the Fund. The FREC may refuse to issue a Disbursement Order, in which case the other procedures must be used. Mediation: Both parties agree in writing to mediation by a mediator. If the issue is not solved within 90 days, the licensee must use the other types of dispute procedures. Arbitration: If the buyer and seller cannot agree, the issue is submitted to arbitration and a third party (arbitrator) makes a decision for one party or the other. If this fails, the parties go to Litigation. Litigation: is simply a law suit, asking the courts through a process called Interpleader to determine the rightful owner of the disputed escrow. The court issues a declaratory judgment which is a binding determination of the rights and status of the parties. Once the dispute is settled, the broker must notify the FREC within 10 days that the dispute is over. A situation that is considered good faith doubt is when one party to the dispute does not respond to the broker's correspondence about the escrow money when a transaction fails to close on time or if the buyer (or his spouse) refuses to close at all. Escrow is held in an account until it needs to be turned over to the closing source. If a contract does not close, or a portion of the escrow claimed by the brokerage, the broker's portion will be apportioned into the broker's operating account for disbursement as required. Occasionally, however, there is a dispute over the return or disbursement of earnest money. It is the responsibility of the broker to then notify the FREC within 15 business days from the last party's demand. There are three exceptions to this rule: if it is a property utilizing HUD (Department of Housing and Urban Development www.hud.com) if the buyer of a condominium unit delivers written notice to cancel as provided under the Condominium Act 718 F.S. if the buyer is unable to satisfy a financing contingency within the time frame as provided by the contra

Mortgage or deed of trust

is obtained by pledging property as collateral and promising to repay the loan with payments and times agreed upon with the mortgagee. A mortgage is an encumbrance upon a property. There are two theories used when pledging property for a mortgage. These theories determine how the mortgage company holds interest in the property. Each of these affect how a foreclosure would take place if it became necessary for non-payment of the loan. In a lien theory state, the borrower keeps legal title to the property during the period of the loan and the lender places a lien against the property. Florida is a lien theory state. In a title theory, also known as a deed of trust state, the borrower gives l title through a deed of trust to the lender, who is referred to as the beneficiary during the time of the loan. The borrower keeps a possessory right to the home and holds an "equitable title". With a deed of trust, a third party trustee is involved and holds "naked title" to the property. This means the trustee can sell the property without court action in a case of default. A deed of reconveyance is issued upon full payment of the loan to return title to the trustor.

Loan Servicing:

is the collecting of the mortgage payment by the lender or by a group he selects to collect it. Usually a loan servicing company is paid a percent of the lender's proceeds to service the loan.

Interest:

is the fee or amount the borrower pays to use someone else's money. For example, a mortgagor borrows 100,000 for a loan at a rate of 7% interest for 30 years. This means the borrower will pay 7% each year on the unpaid balance of the loan. The higher the interest payment, the higher the mortgage payment will be. Interest on housing is currently deductible on Federal Income Tax.

Take Out Commitment:

is the second phase of lending on commercial development. An interim lender will want the permanent lender to give a letter of commitment before beginning a commercial development. It is never used in residential lending.

Condominiums

means that form of ownership of real property comprised entirely of units that may be owned by one or more persons, and in which there is, appurtenant to each unit, an undivided share in common elements. Common elements may include walls, courtyards, patios, walkways, doors, windows, and any other elements defined within the "Declaration of Condominium" Each homeowner in a condominium owns their unit in fee simple. Each is given a deed which contains a legal description of the space that the condominium occupies. In addition, the condominium owner is given an undivided interest in common areas which may include a percentage based upon individual unit ownership, square footage, or an amount based upon maintenance requirements anticipated for the unit. Property tax is levied separately on each unit. Transfer of the unit to another is by deed. Each condominium owner is required by Florida law to be given a copy of the FAQ's, Declaration, financials, Rules and Regulations, and By Laws so that the owner is aware of his rights and responsibilities. Upon determining a want to declare a condominium, a developer must record a Prospectus, Declaration, Bylaws, and Rules and Regulations with the local Clerk of Court for the county in which the Condo is being built. All purchasers and lessors for more than five years will receive copies of these documents. In addition to the prospectus or offering circular, each buyer shall be furnished a separate page entitled "Frequently Asked Questions and Answers". This page shall, in readable language, inform prospective purchasers regarding their voting rights and unit use restrictions, including restrictions on the leasing of a unit; shall indicate whether and in what amount the unit owners or the association is obligated to pay rent or land use fees for recreational or other commonly used facilities; shall contain a statement identifying that amount of assessment would be levied upon each unit type, exclusive of any special assessments, and which shall further identify the basis upon which assessments are levied, whether monthly, quarterly, or otherwise; shall state and identify any court cases in which the association is currently a party of record in which the association may face liability in excess of $100,000; and shall further state whether membership in a recreational facilities association is mandatory, and if so, shall identify the fees currently charged per unit type.

Deed in lieu of foreclosure

the borrower does not want to go through foreclosure, he may choose to use a deed in lieu of foreclosure instead, if the lender is willing. In this deed, the borrower gives all rights and claims to the property to the lender in settlement of the debt. However, this procedure has a high cost. If a deed in lieu of foreclosure is given, a borrower may not be able to get a new loan on a different property for 7 years or more. A deed in lieu of foreclosure is considered by lenders a significantly bad credit risk just as bankruptcy is. Effects of Foreclosure on the Property

Residential Real Estate Transaction

the sale of improved residential property of four units or fewer, the sale of unimproved residential property intended for use of four units or fewer, or the sale of agricultural property of 10 acres of fewer .