30 Hour Fundamentals Course

Validity of will requirements:

-the testator be of legal age and mentally competent -the testator indicate that the will is the "last will and testament" -the will be signed -the completion of the will be witnessed and signed by --the witnesses -the will be completed voluntarily, without duress or coercion

Water rights include:

1. Riparian 2. Littoral 3. Doctrine of prior appropriation

Life tenant responsibilities

1. No waste 2. Right to estovers 3. Cannot will the property 4. Pay property taxes 5. Pay assessments levied 6. Duty to make repairs

How large is 1 section?

1 mile wide and one mile deep.

Natural rights

1. Accretion 2. Erosion 3. Avulsion 4. Reliction 3. Alluvial plain

How many members are part of the Pennsylvania Real Estate Commission?

11 members.

How long are scores valid and what score is needed to pass?

3 years, and the applicant must score 80% or higher to have passed the exams.

How many acres does 1 section contain?

640 acres.

Adhesion contract

A "standard-form" contract, such as that between a large retailer and a consumer, in which the stronger party dictates the terms.

Exclusive right to sell

A listing where one broker will earn a commission when the property is sold, no matter who sells it.

Municipal utility lien

A municipality may place a utility lien against a resident's real property for failure to pay utility bills.

Subagent

An "agent of an agent." A broker who brings the buyer to the listing agent is a subagent of the listing broker. Licensees who work for the listing broker or for the selling (cooperating) broker are the subagents of their respective brokers.

Actual notice

Express information or fact; that which is known; direct knowledge.

Areas of regulation

Government entities regulate the following aspects of real property interests: -The bundle of rights: a possession, usage, transfer, encumbering and exclusion -Legal descriptions -Financing -Insurance -Inheritance -Taxation

Bargain and sale deed

Grantor has the right to convey title, however no warranties against encumbrances.

Ownership

Having a proprietary or beneficial interest through which the real estate company earns income or produced a direct or indirect economic benefit.

Vendee's lien

Held by the purchaser for the purchase price paid if the seller defaults on the delivery of the deed.

Severable rights

Land can be laterally severed into surface rights, air rights, and subsurface rights.

Mortgage lien foreclosure

Liquidation of collateral property by judicial, non-judicial, or strict foreclosure.

Seller's agent

Listing agent who acts alone, acts in cooperation with a listing agent, or acts as a seller's subagent to find or obtain a buyer for residential real property.

Signed written documents

Listing agreements must be in writing and signed by the seller to be enforceable. In other words, if the agreement is not in writing, the broker could not sue for the commission if the situation were to arise. Even though such a situation would be rare, if a seller wrote the following on a piece of paper and signed it, it would likely be an enforceable document.

Special assessment lien

Local government entities place assessment liens against certain properties to ensure payment for local improvement projects, such as new roads, schools, sewers, or libraries. An assessment lien applies only to properties that are expected to benefit from the municipal improvement.

Building permits

Local governments enforce zoning ordinances by issuing building permits to those who want to improve, repair, or refurbish a property. To receive a permit, the project must comply with all relevant ordinances and codes. Further zoning enforcement is achieved through periodic inspections.

Natural appurtenances

Made by nature such as trees, creeks, streams

Approved will

On pre-printed forms meeting the requirements of state law.

How many times a year do office's need inspection?

No more than 4 times a year.

Nonhomogeneous

No two pieces of real estate are exactly the same.

Tenancy

Occupancy of the property by legal means.

Short sale

Occurs when a lender allows a borrower in default on mortgage loan payments to sell the mortgaged property for less money than necessary to satisfy the loan in order to avoid the delay and expense of a foreclosure sale. The lender usually forgives the mortgage balance owed after the sale.

Tangible property

Physical, visible, and material. Examples: Boats, cars, jewelry, appliances, computers, art work.

Where do the public meetings held the Commission occur?

Pittsburgh, Philadelphia, and Harrisburg.

Your internet site

Place your new listing on your own or your company's Internet site as soon as possible after getting the listing. As with the MLS, as soon as the information on the property has been uploaded to your site, print off a copy and send it to the sellers with the weekly activity report.

Fructus naturales

Plants that do not require annual cultivation and are considered real property such as trees.

What happens in the vase of death of a sole proprietor broker?

The estate must notify the Commission within 15 days following the death of the broker to tell the Commission that the estate has appointed another licensed broker to serve the termination of the deceased broker's business.

Transfer

Rights and interests can be bought, sold, assigned, leased, exchanged, inherited, or transferred from one owner to another.

Listing term (listing agreement clause)

Shows the beginning and ending dates of the listing period.

Real estate brokerage

The business of bringing people together in a real estate transaction.

Master deed

The principal conveyance document used in condominium developments.

Promulgate

To announce; to make known.

Volume measurement

Volume is the amount of something that a container can hold. For example, the amount of water required to fill a swimming pool is the volume of water that the swimming pool can hold. Formula: Volume=Hight (or Depth) x Width x Length

When does a criminal background check need to be completed?

Within 90 days of submission to the Commission.

Two different types of accounts that brokers must have:

-An escrow account -An operating account

Examples of written documents:

-Offers;-Exclusive listing agreements; -Agreements of sale; -Statements of estimated cost and return; -Rental listing referral agreements; -Consumer Notice Disclosure; -Disclosure summary for Time-share; -Comparative market analysis disclosure; -Cemetery broker's disclosure.

Valid contract

-One which meets the legal requirements for validity -It is in writing and enforceable with a statutory time period

The agreement between a rental listing referral agent and a prospective tenant must contain:

-The rental specifications desired by the prospective tenant such as location and rent; -The following statement in bold print: "We are a referral service only. We are not acting as real estate salespersons or brokers. We do not guarantee that the purchaser will find a satisfactory rental unit through our service. Our only purpose is to furnish the purchaser with lists of available rental units."

In addition to the requirements for all written documents, the following elements must also be present:

-The sale or lease price; -The commission, fee or any other compensation expected on the sale or lease price; -The duration of the agreement; -On an exclusive-right-to-sell agreement, a statement in bold type that the broker earns a commission on the sale of the property during the listing period no matter who sells the property.

Types of zoning:

-residential -commercial -industrial -agricultural -public -planned unit development (PUD)

Economic characteristics (D.U.S.T.S.)

1. Demand 2. Utility or usefulness 3. Scarcity 4. Transferability 5. Situs

Two types of real estate exist in history

1. Feudal system 2. Allodial system

M.A.I.D. - Test for determining if something is a fixture

1. Method of annexation 2. Adaptability 3. Intent of the parties 4. Damage

An exclusive listing agreement must be one of the following:

1. The exclusive agency of the broker 2. The exclusive right-to-sell exclusive right-to-lease

How many square feet are in 1 acre?

43,560 square feet.

Principal

A person who chooses to be represented by an agent. The principal is also called the client.

Notice of title

Actual or recorded public evidence of real property ownership.

Deposit (listing agreement clause)

Authorizes the listing agent to accept and hold any deposits on the seller's behalf which will be applied to the purchase price.

Which salesperson does not have any educational requirements?

Cemetery.

Annexation

Changes personal property to real property. Example - When a tree is planted; the tree annexed to the property so it becomes part of the real property.

Debt ratio qualification

Financial institutions have to qualify a borrower prior to issuing a loan. Income ratio and debt ratio are two methods of qualification.

Forced air

Forced air heating is probably the type most commonly installed in North America. The three types of air furnaces are electric, oil-fired, and gas-fired. A forced-air system draws room air through ductwork and a filter into a furnace, where the air is heated. The warmed air is then blown back to rooms through ductwork. The system includes an air filter, blower, heat exchanger/element/coil, and various controls. Like any other kind of central heating system, thermostats are used to control forced air heating systems.

Converting decimal into percents

Formula: Decimal number x 100 = Percentage number Example: 0.022 x 100 = 2.2%

Co-brokerage transaction

Frequently, sellers list their properties to be sold with a broker who is a member of a multi-list organization. This makes it possible for brokers and their salespeople of different companies to sell each other's properties. This also results in a listing and seller broker. Usually earnest money (sales deposit) will hold the escrow.

Tax assessment

General property taxes are levied on an ad valorem basis, meaning that they are based on the assessed value of the property.

Tenendum clause (conveyance clause)

Identifies property being conveyed, in addition to land.

Testate proceeding

If the decedent died with a valid will, the court hears the claims of lienors and creditors and determines their validity. First in line are the superior liens: those for real estate taxes, assessment taxes, federal estate taxes, and state inheritance taxes. If the estate's liquid assets are insufficient to pay all obligations, the court may order the sale of personal or real property to satisfy the obligations.

Commingling

Illegally mixing deposits or monies, collected from a client, with one's personal or business account. Taking money out too soon or putting it into escrow too late (10 banking days).

How is volume expressed?

In CUBIC feet (not in square feet).

When a broker advertises "sales volume" or production:

It can only mean a closed transaction.

Freehold

Ownership in real property, an estate.

Parties (listing agreement clause)

Shows the name of the owners and the name of the real estate office that is obtaining the listing.

Entire contract (listing agreement clause)

States that this agreement supersedes all previous discussions, negotiations and agreements between the seller and the broker. Therefore, anything that is not written into this agreement is not part of the agreement.

Public land use control: zoning

The primary tool by which cities and counties regulate land use and implement their respective master plans. The Constitution grants the states the legal authority to regulate, and the states delegate the authority to counties and municipalities through legislation called enabling acts.

Probate

The process of proving in court that the will of someone who has died is valid, and of administering the estate of a dead person.

Sale proceeds

The resulting assets from the sale, exchange, or disposal of collateral subject to a security agreement.

Allodial system

The right for individuals to own property.

Subagent obligations to the seller

The subagent owes the same fiduciary responsibilities to the seller as the listing agent owes to the seller. They must always be working for the seller's best interests and not for the interests of their buyer customers.

Common types of encumbrance

The two general types of encumbrance are those that affect the property's use, and those that affect legal ownership, value and transfer. Restrictions to use include: -Easements -Encroachments -Licenses -Deed restrictions Restrictions to ownership, value and transfer include: -Liens -Deed conditions Easements and liens are the most common types of encumbrance. An easement, such as a utility easement, enables others to use the property, regardless of the owner's desires. A lien, such as a tax lien, can be placed on the property's title, thereby restricting the owner's ability to transfer clear title to another party.

Structural plumbing is made up of two systems:

The water system that comes into the home for drinking, cooking and washing and the drainage system for wastewater. Building codes specify how each system must be installed.

Front footage

The width of the lot and the expanse of road exposure that a lot offers. It is typically used to describe commercial lots and parcels.

Competent parties

Those entering into the contract must be of legal age and must be mentally competent.

Broker's are responsible for:

Those salespersons and associate brokers who he employs.

`AIDA standard

Time tested method for writing good advertising. -Attention -Interest -Desire -Action If you want your ads to get results, they must capture the reader's attention, arouse interest in your product, create a desire for the product and then prompt the reader to action.

Delivery and acceptance of a deed

Title is conveyed when a deed is delivered to the grantee or the grantee's agent and is accepted by that party.

Declaration restriction

Use restriction in multiple property declarations; enforced by court injunction. The declaration of a subdivision, Planned Unit Development, condominium, and commercial or industrial park contains private use restrictions. These have the same legal effect as a deed restriction, as the declaration attaches to the rights in the property. A private party cannot, however, extinguish a declaration restriction by agreement or quitclaim deed.

Ownership, title, and authority (listing agreement clause)

Warrants that the owners are the only title-holders of the property and therefore have authorization to sell it.

Percentage of profit and loss

When figuring percentage of loss, subtract the selling price of the property from the original purchase price. Using the T formula shown above, place the result of the subtraction above the line and then divide by the original purchase price. Example: Greg purchased a lot for $10,500. After a zoning dispute, it is sold for $7,025. What was percentage of loss? $10,500 - $7,025 = $3,475$3,475 ÷ $10,500 = .33Percentage of Loss = 33% Percentage of Profit When computing percentage of profit, divide the amount of profit by the original purchase price. Example 1: Greg purchased a lot for $10,500 and then sold it for a profit of $3,000. What was the percentage of profit? $3,000 ÷ $10,500 = .285Percentage of Profit = 28%

Evaluating your advertising

You must be able to tell which advertising methods are producing sales for you and your company. It does little good to put money into advertising if you can't tell how well each method is working. You need to implement a method to track each of your ad types and determine if the cost is justified by the amount of business the ads are bringing in. Many firms assign a code to be printed at the bottom of a newspaper ad or print piece. Another technique is to use a specific telephone number for a type of ad, so all calls that come in on that number are tied to those ads. Many firms use a telephone log which is maintained by the receptionist or the person on floor duty. When a call comes in, the person taking the call gathers information about where the caller saw the ad and enters the information into the log.

Photos

You'll need several good photos of the home, both inside and outside. Using a good digital camera, take the photos as soon as possible after you get the listing so you can start using them in flyers, ads and mailings. You'll also want them for your Internet site.

Capturing attention in ads

Your ad should be attractive enough to encourage the readers to keep reading. Some suggestions include: -Try bold type, all caps or a unique-looking font for the headline. Headlines are read 10 times more often than the body of an ad, so make sure yours is a good one. -Use color if available. -Be clever. Asking a question or making a bold statement as your headline could work well. -Vary the layout, making use of white space in creative ways.

Undeclared improvements

Enhancements to a property without benefit of a building permit or notification to the taxing authority.

Closed transaction

Either a listing or sale made after a deed is delivered.

Cost approach to value

A value method based on the principle of substitution; the value of a building cannot be greater than the cost of purchasing a similar site and constructing a building of equal value.

The following are negotiable and shall be addressed in an agreement/disclosure statement with the licensee:

-The duration of the employment, listing agreement or contract. -The fees or commissions. -The scope of the activities or practices. -The broker's cooperation with other brokers, including sharing of fees.

Validity of a conveyance contract

-be in writing -contain a legal description of the property -be signed by one or more of the parties

Land's 3 physical characteristics of land

1. Immobility 2. Indestructibility 3. Uniqueness (nonhomogeneous, heterogeneity)

Real estate includes:

1. Land plus appurtenances 2. Man-made appurtenances 3. Natural appurtenances 4. Air rights, gas rights, solar rights, light and sound rights, mineral rights, and surface rights 5. Water rights

Landlord

The lessor in a residential real property transaction. This includes an owner who lists residential real property for lease with an agent, whether or not a lease results, or who receives an offer to lease residential real property.

Associate broker

A broker who chooses to work as a salesperson for another broker (the employing broker). *You may not use a broker's license for an associate broker's license.*

Promotional land sales

A broker who plans to engage in sales of a promotional nature to PA residents for property located outside of PA is required to register with the Commission.

Radon

A colorless, odorless, radioactive gas that occurs naturally in the soil throughout the United States. It enters buildings through foundation and floor cracks, wall seams, sump pits, and windows, among other ways. At accumulations above certain levels, it is suspected of contributing to cancer. Excessive radon can be removed by special ventilation systems. Professional and home inspections are available.

Depreciation

A decrease in value due to physical deterioration, functional or economic obsolescence.

Regulation of business practices

All facets of the industry are regulated by federal, state, and local laws; agents must understand relevant laws and adapt business practices accordingly.

A "taking"

When the owner and the government cannot negotiate a satisfactory voluntary acquisition of the property, the government can institute the process of condemnation to take a property by eminent domain.

Deed restrictions

Clauses in a deed limiting the future uses of the property. Deed restrictions may impose a vast variety of limitations and conditions—for example, they may limit the density of buildings, dictate the types of structures that can be erected, or prevent buildings from being used for specific purposes or even from being used at all.

Riparian rights

Concern properties abutting flowing water, such as streams and rivers. If a property abuts a stream or river, the owner's riparian rights are determined by whether the water is navigable or not navigable. One's riparian rights to use flowing water are subject to the conditions that: -The usage is reasonable and does not infringe on the riparian rights of other owners downstream -The usage does not pollute the water -The usage does not impede or alter the course of the water flow Like littoral rights, riparian rights attach to the property.

Title evidence

Evidence of marketable title and assurance that someone other than the insured will take whatever action is necessary to make the title marketable, if the need arises. Forms of title evidence include abstract of title, certificate of title, title registration (also known as the Torrens system), and title insurance (the most widely used type).

Cemetery salesperson

Employed by cemetery broker to offer or sell to the public the ownership or right to use any cemetery lot. *There are no minimum educational requirements to obtain cemetery salesperson's license.*

Escheat

Escheat provides another example of the state's interest in real property. Since property cannot be without an owner, if an owner dies without a will and without heirs, the property reverts to the state. Similarly, if the property is abandoned (by failure to pay taxes), the ownership of the property goes to the state. Escheat is this process of reversion to state ownership.

An exclusive listing agreement

Essentially an employment contract between the broker and the seller. It contains many essential elements of the agreement between the partied. According to the commission, certain key elements must be in place.

Tax districts

Established to collect funds for providing specific services, e.g., schools, fire protection, parks, community colleges, libraries, road maintenance.

Income ratio qualification

Financial institutions have to qualify a borrower prior to issuing a loan. Income ratio and debt ratio are two methods of qualification.

Representation

Having the agent take the place of the client in the transaction so far as all communication and negotiating is concerned.

When the broker advertises about his production or Market Position in the market,

He must identify the municipality that the market comprises.

Intestate proceeding with heirs

If the decedent died without a valid will, the estate passes to lawful heirs according to the state's laws of descent and distribution, or succession. Laws of descent stipulate who inherits and what share they receive, without regard to the desires of the heirs, or the intentions of the deceased.

Heterogeneity

Land is non-homogeneous, since no two parcels of land are exactly the same. Admittedly, two adjacent parcels may be very similar and have the same economic value. However, they are inherently different because each parcel has a unique location.

Ordinance validity

Local planners do not have unlimited authority to do whatever they want. Their zoning ordinances must be clear in import, apply to all parties equally, and promote health, safety, and welfare of the community in a reasonable manner.

Constructive notice

Notice given to the world by recorded documents. All people are charged with knowledge of such documents and their contents, whether or not they have actually examined them. Possession of property is also considered constructive notice that the person in possession has an interest in the property.

Real property

Ownership of real estate and the bundle of rights associated with owning the real estate.

Subsurface rights

Ownership rights in a parcel of real estate to the water, minerals, gas, oil, and so forth that lie beneath the surface of the property.

Abandonment

Property that has been abandoned for a statutory period may also escheat to the state or county.

Rights in property

Sell, use, lease, encumber (mortgage), enjoy, exclude, will (give after death), occupy, cultivate, exchange, explore, share, trade, license, and dedicate.

Relationship of salespersons and associate brokers

Should be one of trust and reliance with the broker providing guidance and education to the employed salespersons and associate brokers. The salesperson must communicate with the broker (or the broker of record) to determine problems and situations as they arise. In general, the broker is responsible for the actions of his employed licensees.

Deed of trust

Used to convey property to a third party trustee as collateral for a 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.

Situs

(Meaning Site) - The unique attractiveness of a property's location is a major determinant of the other economic characteristics.

Institutional advertising

(Sometimes called corporate advertising) attempts to establish a positive image of the company, its services and its reputation in the minds of the public. This form of advertising aims at increasing sales by informing the public of the company's capabilities.

If a person or entity is found guilty

-1st offense is a fine not to exceed $500 or suffer imprisonment for not more than 3 months; -2nd or subsequent offense, is guilty of a felony of the third degree.

Dual agent duties:

-A broker may act as a dual agent only with the written consent of both parties in addition to the Consent Notice. The Consent Notice must include a statement of the terms of compensation. -Taking no action that is adverse or detrimental to either party's interest in the transaction. -Unless otherwise agreed to in writing, making a continuous and good faith effort to find a buyer for the property and a property for the buyer, unless either are subject to an existing contract. -Confidentiality, except that a licensee is required to disclose known material defects about the property. -Whenever the designation takes place, it is essential that the broker and the licensees use reasonable care to ensure that confidential information (like the sale price the seller would accept) is not disclosed or used.

Examples of interests:

-An owner's enjoyment of the complete bundle of rights -A tenant's temporary enjoyment of the right to use and exclude -A lender's enjoyment of the right to encumber the property over the life of a mortgage loan -A repairman's right to encumber the property when the owner fails to pay for services -A buyer's right to prevent an owner from selling the property to another party under the terms of the sale contract -A mining company's temporary right to extract minerals from the property's subsurface -A local municipality's right to control how an owner uses the property -A utility company's right to have access to the property in accordance with an easement -The length of time a person may enjoy the interest -The portion of the land, air, or subsurface the interest applies to -The public or private nature of the interest -The inclusion or exclusion of legal ownership of the property

Waiver of continuing education

-Any licensee may request a waiver of continuing education by filing with the Commission on or before March 31 of the renewal year unless the applicant proves satisfactorily to the Commission that it was impracticable to do so. -Commission may waive the requirements in the event of hardships such as illness, emergencies, military service, etc. -Commission grants waivers for U.S. military licensees who are on active duty and submitted a request. -Commission will grant waiver to a licensee who seeks to renew a current license that was initially issued within 6 months of the license renewal date and has submitted a waiver request. -Commission will grant a waiver to a licensee who seeks to renew a current license that was reactivated from a non current status within 6 months of the renewal and has submitted request. -A licensee, who is a qualified continuing education instructor, is eligible for a waiver of one hour of continuing education credit for each hour of actual classroom instruction in an approved continuing education topic.

The law allows a broker to release for:

-Consummation of the transaction; -Termination of the transaction with no dispute; -A court order.

5 economic characteristics of land (D.U.S.T.S.)

-Demand -Utility or usefulness -Scarcity -Transferability -Situs Lack of any of these items diminishes the market value (the price a buyer will be willing to pay) of the property.

Brokers dealing with an escrow account must:

-Deposit all money accepted by all licensees who work for a broker and hold these monies until consummation or termination of the transaction involved; -Account for full amount of all monies given to broker at time of consummation or termination; -Have each salesperson or associate broker give the broker promptly a receipt of moneys for a transaction for which he is engaged on behalf of the broker-employer; -Immediately deposit monies belonging to others in a separate custodial account or trust fund maintained by the broker with a bank or recognized depository until the transaction is consummated or terminated. At this time the broker must account for the full amount received; -Not deposit advance fees into the broker's business or person account or be commingled with any funds he may have on deposit; -Keep personal and business money separate from escrow money. Broker can not commingle funds. -Keep careful and good records of all funds deposited in the escrow account indicating; --The date he received the money, --From whom he received the money, --Date deposited, --The dates of withdrawals, --Pertinent information related to the transaction, --Show clearly whose account the money is deposited, --To whom the money belongs.- Have records of the escrow account available for inspection by the Commission; -Have each separate or escrow account designate the broker as trustee and each account must provide for withdrawal of funds without previous notice; -Have records available to the commission immediately after proper demand or after written notice or upon written notice given to depository.

Estimated costs of the seller at settlement

-Estimate settlement date -Property -Broker -Purchase price -Payment on account -Balance -Estimated closing costs: -PA transfer tax -Local realty transfer tax -Federal documentary -Stamps -Notary fee -Mortgage discount -Unpaid annual taxes -Broker's commission --Total expenses --Estimated closing credits tax refund --Estimated charges --Estimated net proceeds

Buyer's estimate cost and return info:

-Estimated settlement date -Property -Broker -Purchase price -Payment on account -Balance at settlement -Estimated closing expenses -Title search and insurance -Conveyance or preparation of papers charge -Recording fees -Deed -Mortgage -Mortgagee's charges -Appraisal Fee -Credit report -Origination and placement fees -Mortgage service charge -Fire insurance -Misc. charges -Local realty transfer tax -Notary fees -Other charges --Total closing expenses -Costs for rebates and advance rebates -To seller - insurance -Annual taxes -Water-sewer rents -Advances by the buyer -Insurance-Taxes (escrow) --Total costs for rebates and advances --Total estimated costs at settlement --Estimated monthly payments -First lein $________, _____ years at _____% interest -Principal and interest -Monthly FHA mortgage insurance -Insurance premium -Real estate taxes -Fire insurance -Water-sewer rents --Total estimated monthly payments

Broker requirements:

-Exercise professional skill and care; -Deal honestly and in good faith; -Present all written offers, written notices and other communications in a timely manner; -Account for all monies entrusted to the broker by others; -Timely disclose to the consumer any conflicts of interest; -Advise the consumer to seek expert advice when needed; -Ensure all services that are provided to the consumer are done in a reasonable, professional, and competent manner; -Advice the consumer the status of the transaction; -Disclose any financial interest the broker has in the business including financial service, title company, etc.

What are licensees prohibited from?

-Failing to maintain proper escrow accounts, records of accounts, commingling money; -Failing to preserve for three years following its consummation records relating to any real estate transaction; -Acting for more than one party in a transaction without the knowledge and consent in writing of all parties for whom he acts; -Advertising property without the written consent of the owner; -Failing to voluntarily furnish a copy of any contract relevant to all signatories at the time of execution.

Properties exempt from property taxes:

-Government-owned properties-- real properties owned by federal, state, and local governments are immune from real property taxation (also true in all other states) -Properties owned by non-profit organizations-- real properties owned by churches and non-profit organizations are exempt from real property taxation (also true in all other states) Miscellaneous exemptions may be granted to classes of property owner, such as: senior citizens, widows, and disabled individuals. States and municipalities may also offer property tax reductions or exemptions to certain industries to encourage economic growth.

Water heaters

-Gas water heaters are very popular. These units have an insulated tank where water is heated and stored until it is needed. They offer fast recovery times and can offer more economy than electric water heaters. The standing pilot light gas water heater has a pilot light which remains lit 24 hours a day, 7 days a week and consumes gas to stay lit, while a gas-fired water heater with electronic ignition only lights a pilot light when it necessary to fire the main burners. -Electric water heaters are also storage tank units and are very popular because they are inexpensive and easy to install. Electric heat is 100 percent efficient, but the cost per KWH of electricity is more than the cost of using a gas-fired water heater. Electric hot water heaters are also slow to recover as compared with gas-fired water heaters. However, maintenance of the electric water heater is easier as it requires very little maintenance. -Tankless hot water heaters are basically "on-demand" water heaters. When the consumer opens the hot water faucet, a flow switch senses the flow of water and the water heater fires up and begins heating the water passing through its heat exchanger. Within seconds hot water comes out of the faucet. There is no tank to maintain or worry about leaking in the future. These systems are economical and last many more years than a regular water heater with a tank. They require little maintenance. Since they are on-demand, the tankless water heater only uses fuel when hot water is needed. -Solar hot water heaters are generally composed of solar thermal collectors, a fluid system to move the heat from the collector to its point of usage. The system may use electricity for pumping the fluid, and have a reservoir or tank for heat storage and subsequent use. The systems may be used to heat water for a wide variety of uses, including home, business and industrial uses. Many people who use hot water boilers for their heat also use a domestic hot water coil in their boiler, which produces hot water for domestic use. The hot water boiler domestic coil is located inside the boiler heat exchanger and uses a constant supply of water which it heats as it passes through the coil. This water supply is separate from the water supply which is in the boiler loop. It is not the same water and has a different pressure than the water which is used for heating the home.

Escrow money disputes

-If any disputes between parties arise regarding escrow money, the sponsoring broker should continue to "hold" the money until one of the following takes place: The sponsoring broker receives a written release from both parties or both parties' duly authorized agents (power of attorney or attorney at law). The disbursement must be according to the terms of the written directions and take place not later than the next business day following the sponsoring broker's receipt of the required written release. -An interpleader action is filed. After a civil action is filed by either the sponsoring broker or one of the parties, the courts will determine the disposition of the funds, at which time payment may be made to the court. -Note: If an interpleader action is filed by the sponsoring broker, and the broker is so authorized by the real estate contract, he or she may withdraw from the escrow account the amount of money needed to reimburse the sponsoring broker for costs and reasonable attorney's fees associated with that action. This does NOT include any costs and attorney's fees associated with that broker's attempt to collect a commission or fee. -The funds are turned over to the State Treasurer and become unclaimed property due to inactivity of the account, inability to locate the parties, or inability of the parties to reach a resolution. Funds become "unclaimed" in either of these circumstances: --Five years have passed. --Six months have elapsed since the sponsoring broker has received a written demand from one of the principals or the principal's authorized agent.

Regarding escrow, the commission says:

-If the sales deposit (earnest money) is given by the buyer to the listing broker, the listing broker assumes the duty and responsibility for escrow. -If the sales deposit is given by the buyer to the selling broker with the selling broker giving prior notice to the buyer that the selling broker will turn the money over to the listing broker, the listing broker then assumes responsibility for escrow. -If prior notice is given by the selling broker to the buyer, the prior notice must include: --The name of the listing broker --The selling broker's acceptance of the buyer's deposit if not on behalf of the listing broker as a subagent for the listing broker. --That the listing broker is a licensed real estate broker who is required to hold the deposit in escrow; --That the listing broker be designated as payee, if the buyer's deposit is in the form of a check.

What to do when the escrow money is in dispute

-If there is a dispute about money being held in escrow, the broker must retain the money in escrow until the dispute is resolved. -If the dispute will not likely happen for several weeks, the broker may, following 30 days' notice to the parties, petition the county court having jurisdiction in the manner to interplead the rival claimants.

Buyers agent duties:

-Loyalty to the buyer/tenant by acting in the buyer's/tenant's best interest. -Confidentiality, expect that a licensee is required to disclose known material defects about the property. -Making a continuous and good faith effort to find a property for the buyer.tenant, except while the buyer is subject to an existing contract. -Disclose to others that the broker has been employed as a buyer's broker/agent; -Disclosure to other parties in the transaction that the licensee has been engaged as a buyer's agent. -A buyer's agent may be paid fees, which may include a percentage of the purchase price, and, even if paid by seller/landlord, will represent the interests of the buyer/tenant. -If you enter into a written agreement, the licensees in the real estate company owe you the additional duties identified above under buyer agency. The exception is designated agency.

Sellers agent duties:

-Loyalty to the seller/landlord by acting in the seller's/landlord's best interest. -Confidentiality, except that a licensee has a duty to reveal known material defects about the property. -Making a continuous and good faith effort to find a buyer for the property, except while the property is subject to an existing agreement. -Disclosure to other partied in the transaction that the licensee has been engaged as a seller's agent. -A seller's agent may compensate other brokers as subagents if the seller/landlord agrees in writing. Subagents have the same duties and obligations as the seller's agent. Seller's agents may also compensate buyer's agents and transaction licensees who do not have the same duties and obligations as sellers agents. -The seller's agent does not break a duty to the seller/landlord by showing other properties to the prospective buyer/tenant or by listing competing properties. -If you enter into a written agreement, the licensees in the real estate company owe you the additional duties identified above under seller agency. The exception is designated agency.

Commission's standards for escrow:

-Mixing money belonging to others or adding business or personal money to the escrow account (except for service charges) is a very serious offense; -A broker cannot commingle money (or interest earned on an escrow account) that is supposed to be in escrow with any other funds-business, personal, or operating; -A broker may deposit business or personal funds to provide for service charged charges by the bank or depository in order to keep a minimum balance; -A broker cannot misappropriate money that is required to be held in escrow for any reason for any account.

Escrow account requirements:

-Must be in federally or state-insured bank or recognized depository; -Must designate the broker as trustee; -Is an account that provides for withdrawal of funds without prior notice; -Must be used only or escrow purposes.

Personal ads

-Name Tag - This is very important. If you are a REALTOR® make sure your name tag says so. Also include any professional designation such as GRI. -Business Card - Don't take your card for granted. Make it unique so that it will stand out from the rest. Make sure it has your picture. -Car Signs - These magnetic signs are inexpensive and get results. Be sure the signs include your name, your firm's name and logo and your phone number.

Broker duties:

-Negotiates with or aids a person in locating or obtaining for purchase, lease or acquisition of interest in real estate; -Negotiates the listing, sale, purchase, exchange, lease, time share and other interests, financing or option for real estate; -Manages real estate; -Represents himself or itself as a real estate consultant, counselor or house finder; -Promotes the sale, exchange, purchase or rental of real estate; -Undertakes to perform a comparative market analysis.

Licensed broker conditions after death of proprietor broker:

-No new listings are permitted; -Unexpired listings are permitted to continue unless the seller elects to cancel; -Unexpired listings will automatically expire after 90 days; -Pending agreements of sale or lease are permitted to close; -No new licensees may be hired.

Why tax land?

-Property tax revenue is predictable. The fair market value of property is generally very stable. -The taxes are hard to avoid. Because the taxes are tied directly to the property, people tend to pay the taxes rather than suffer the potential consequences of non-payment. More than 95 percent of the levied taxes on real property are paid, especially since most lenders require that the property taxes be paid into an escrow account monthly.

Types of relationships allowed by Pennsylvania law:

-Seller's agent -Buyer's broker -Dual agent -Designated agent -Transactional agent

Definition of a salesperson

-Sells, or offers to sell, real estate or lists real estate for sale; -Buys or offers to buy real estate; -Negotiates the purchase, sale or exchange of real estate; -Negotiates a loan on real estate; -Leases or rents real estate, or offers to lease or rent real estate or places real estate for rent; -Collects rent for the use of real estate, or offers or attempts to collect rent for the use of real estate -Assists a broker in managing property; -Performs a comparative market analysis.

Dual agency types

-Single licensee dual agency -Broker dual agency

If there has been a violation of the act, the Commission may:

-Suspend or revoke any registration; -Refer the complaint to the Consumer Protection Bureau of the Office the Attorney General; -Seek in injunction or temporary restraining order to prohibit the complained activity in the Commonwealth.

Records of escrow accounts must contain:

-The name of the party from whom the broker received the money; -The name of the party to whom the money belongs; -The name of the party whose account the money is deposited; -The date the broker received the money; -The date the broker deposited the money into the escrow account; -The date the broker withdrew the money from the escrow account.

Following actions or circumstances can terminate an offer:

-acceptance: the offeree accepts the offer, converting it to a contract -rejection: the offeree rejects the offer -revocation: the offeror withdraws the offer before acceptance -lapse of time: the offer expires -counteroffer: the offeree changes the offer -death or insanity of either party

A contract is valid only if it meets all of the following criteria:

-competent parties -mutual consent -valuable consideration -legal purpose -voluntary act of good faith

Accommodating demand must identify:

-facilities requirements for local government -new construction requirements for streets, schools, and social services facilities such as libraries, civic centers, etc. -new construction required to provide power, water and sewer services

Subdivision plat approval requirements:

-location, grading, alignment, surfacing, street width, highways -sewers and water mains -lot and block dimensions -building and setback lines -public use dedications -utility easements -ground percolation -environmental impact report -zoned density

Goals of land use control

-preservation of property values -promotion of the highest and best use of property -balance between individual property rights and the -public good, i.e., its health, safety and welfare -control of growth to remain within infrastructure capabilities -incorporation of community consensus into regulatory and planning activities

Growth patterns

-residential density and commercial intensity -effects of industrial and commercial land uses on residential and public sectors, i.e., where to allow such uses -effect of new developments on traffic patterns and thoroughfares -effects on the environment and environmental quality (air, water, soil, noise, visual aspects) -effect on natural resources that support the community -code specifications for specific construction projects

Exemptions from transfer tax

-transfer within the immediate family -consideration less than a certain amount -transfer between government entities or non-profit -organizations -trust deed transfer and reconveyance -tax deed

In terms of validity and enforceability, a court may construe the legal status of a contract in one of four ways:

-valid -valid but unenforceable -void -voidable

Who does not need a PA Real Estate License?

1. An owner selling or leasing their own property. 2. An employee of a public utility company performing utility work is excluded. 3. An officer or employee of a partnership or corporation whose business is the discovery, extraction, distribution, or transmission of energy of mineral resources, if the purchase, sale or lease or real estate is a common and necessary transaction of the principal business. 4. An attorney-in-fact working as an attorney and receives fees as an attorney and not as a real estate broker. 5. An attorney-in-fact, who is acting under the power of attorney, provided this is not used to avoid the law (such as a property manager so the property manager does not need a license).

Validity of a deed

1. Be delivered and accepted. 2. Have a competent grantor and legitimate grantee. The grantor must be living, of legal age, and mentally competent. If grantor is a corporation, the signing party must be duly authorized. The grantee must be living or have legal existence, but need not be of legal age or mentally competent. 3. Be in writing. 4. Contain a legal description. 5. Contain a granting clause. The deed must express the grantor's present desire and intention to transfer legal title to the grantee. 6. Include consideration. The deed must be accompanied by valuable (monetary) or good (love and affection) consideration, but the amount need not reflect the actual price in most cases. 7. Be signed by the grantor. The deed must be signed by the grantor, but need not be signed by the grantee unless the deed contains special provisions requiring the grantee's acceptance. Grantors may give power of attorney to other parties, authorizing them to execute deeds on their behalf. The power of attorney authorization should be recorded to ensure a valid conveyance. 8. Be acknowledged. Recording is not necessary to make a deed valid. However, it is in the grantee's best interests to do so. Recording the deed gives the public constructive notice of the grantee's ownership.

Torrens certificate

A Torrens certificate is considered to be conclusive evidence of the present ownership and status of title.

Tenant agency

A broker can enter into an agency relationship with a tenant. The tenant could employ the broker to locate property that will meet his or her specific needs. The tenant is the principal. The broker owes fiduciary duties to the tenant in this arrangement, just like any other agency relationship.

No waiver of escrow duties

A broker may not relieve himself of escrow responsibility with a written waiver between any or all of the partied to the transaction, or between any or all of the brokers involved in the transaction.

Designated agent definition

A broker with the written consent of the principal may designate licensees to act exclusively as the agent of the seller/landlord and designate licensees to act exclusively as the agent of the buyer/tenant in the same transaction.

Time-share unit

A building or portion of building that is permanently affixed to real property and designed for separate occupancy.

Cemetery broker's disclosure

A cemetery broker must disclose to all purchasers a statement describing the purpose of the Real Estate Recovery Fund and the telephone number of the Commission where consumers can receive further information about the Fund.

Comparative Market Analysis (CMA)

A comparison of the prices of recently sold homes that are similar to a listing seller's home in terms of location, style, and amenities.

Disclosure summary

A consumer notice, done for disclosure purchases for the purchase or sale of residential or commercial real estate or for the lease of residential or commercial real estate when the licensee is working on behalf of the tenant.

Guardian's deed

A deed executed by a court-appointed guardian to convey title to property owned by a minor, insane person, or the aged.

Patent deed

A deed given by the government to a private individual as evidence of transfer of title from government to the public person.

Deed in lieu of foreclosure

A deed given by the mortgagor to the mortgagee when the mortgagor is in default under the terms of the mortgage. This is a way for the mortgagor to avoid foreclosure.

Deed

A deed is a legal instrument used by an owner, the grantor, to transfer title to real estate voluntarily to another party, the grantee.

Quitclaim deed

A deed to relinquish any interest in property which the grantor may have, without any warranty of title or interest.

Tax deed

A deed used to convey title to property sold by the government for nonpayment of taxes.

Nolo contendere

A defendant's plea declaring that he will not make a defense but not admitting his guilt.

Fiduciary

A faithful relationship where the person who places the other in higher esteem than himself; one who is also confidential.

Avulsion

A forcible pulling away of a part or structure by act of nature such as hurricane.

Time-share

A form of ownership interest that may include an estate interest in property and that allows use of the property for a fixed or variable time period.

Acknowledgement

A formal declaration by the person signing, indicating recognition of the importance and validity of the written notice. The form state, "I acknowledge that I have received this notice."

Section fraction (refer to image in course)

A fraction of a section is legally described by indicating its size and location within successively larger quarters or halves of the section. In other words, the description proceeds from the smallest unit to the largest.

Life estate

A freehold estate that is limited in duration to the life of the owner or other named person. Upon the death of the owner, the estate passes to the original owner or another named party.

Nonconforming use

A land use inconsistent with current zoning classification, but which is permitted to remain because it predated the current zoning. To be allowed to remain, the use must be uninterrupted, and the property structures cannot be substantially improved. A board usually treats this kind of situation by allowing it to continue either: -indefinitely -until the structures are torn down -only while the same use continues, or -until the property is sold

Judgment lien

A legal claim on all of the property of a judgment debtor which enables the judgment creditor to have the property sold for payment of the amount of the judgment.

Tenant

A lessee in a residential real property transaction. This includes a person who executes an offer to lease residential real property from a landlord through an agent, or who has engaged the services of an agent with the objective of entering into a residential real property transaction as a lessee.

The broker must give the Commission or its authorized representative, upon written request or under an office inspection,

A letter addressed to the bank or depository where the escrow account is maintained, containing authorization to release records pertaining to the escrow account.

Advertising (own property)

A licensee who sells or leases his own property must disclose that he is a real estate licensee in advertisements for the property. This does not apply if the property is listed with a real estate company.

Liens definition

A lien is a creditor's claim against personal or real property as security for a debt of the property owner. If the owner defaults, the lien gives the creditor the right to force the sale of the property to satisfy the debt. The creditor who places a lien on a property is called the lienor, and the debtor who owns the property is the lienee.

Lien effects on title

A lien is an encumbrance that restricts the free and clear ownership of the property. If a property is being sold, all liens should be paid in full before the property transfers ownership. Depending on the kind of lien, non-payment could trigger a foreclosure action and if the property has transferred ownership, the new owner is in danger of losing the property. Title insurance can protect the buyer in such a situation. The title search will uncover any liens against the property and serve as notice to the prospective buyer of the condition of the title. We'll talk more about title insurance in a later chapter.

Vendor's lien

A lien that belongs to a vendor for the unpaid purchase price of land, where the vendor has not taken any other lien or security beyond the personal obligation of the purchaser.

Superior lien

A lien that takes priority over all other liens. Superior liens in their rank order include: -Real estate tax liens -Special assessment liens -Federal estate tax liens -State inheritance tax liens

Amortizing loan

A loan on which the borrower makes monthly payments that include interest on the loan plus some part of the loan balance.

Interest-only loan

A loan that only requires the payment of interest for a stated period of time with the principal due at the end of the term.

Subdivision plat

A map of a subdivision indicating the location and boundaries of individual properties.

Gross income multiplier (GIM)

A method of appraising income-producing properties based on a multiple of the annual gross income.

Converting mill rates

A mill is equal to one-tenth of one cent and is used to state the property tax.The milage rate is the tax rate states in tenths of a cent. Definition: 1 mill = $.001; a mill rate of 1 mill per $1,000 = .1%; a 1% tax rate = 10 mills

Multiple listing service

A multiple listing service (MLS) is an organization of member brokers who agree to cooperate in the sale of properties listed by other brokers in exchange for a share of the broker's resulting commission. Once the listing agreement is signed, the licensee will discuss other forms that will need to be filled out in order to place the listing into a multiple listing service. The listing agreement itself will NOT be submitted to the MLS. However, the MLS does need information about the property that it can distribute to all the MLS members through the MLS publications. Some states have specific forms that they require their licensees to use; other states leave that to the local brokers or Board of REALTORS® to work out. You need to ask your broker how you will be handling the collection of information for the MLS. Depending on the form used in your area, you may collect any or all of the following information for submission to your local MLS. -County in which the property is located -Tax ID of the property -Listing office ID, name and phone number -Listing agent's ID, name and phone number -Co-listing office ID and the co-agent ID -Area, community or district -Street number and street name -City and zip code

Loan constants

A number expressed as a percentage or decimal that calculates a mortgage payment which would retire the loan in the expressed time allotted or term of the loan.

What happens in the case of illness or injury to a broker of record?

A partner or corporate officer must file with the Commission designating a new broker of record within 15 days of the appointment. That broker of record acts as an interim broker of record until the original broker of record can return.

Percentage lease

A percentage lease is when the landlord receives a percentage of gross sales or net profits as the rental payment for a property.

Rate of return, investment value, and income

A percentage relationship between the investment price and the returns.

Revocation

A permanent loss of license, although a person may apply after 5 years for reinstatement.

Real Estate education provider

A person or institution who offers real estate education regardless of whether the learning is instructor-led or independent, excluding colleges, universities, or institutes of higher learning accredited by the Middle States Associated of Colleges and Secondary Schools or equivalent accreditation.

Listing agent

A person who has entered into a listing agreement with a seller or landlord and will act as the agent of the seller or landlord for compensation.

Other internet sites

A popular Internet site is www.realtor.com which belongs to the National Association of REALTORS®. NAR maintains this site as a place for buyers all across the country to find suitable properties. Brokers can post at least one picture and a detailed description of each of their properties on this site. There are limitations however; so you need to contact NAR for specifics on how to upload information to their site.

Leasehold

A possession of real estate such as leasing rather than ownership; an estate.

Limited agency

A principal gives an agent the power to perform specific acts, but not to bind the principal- also called special agency.

Voluntary and involuntary liens

A property owner may create a voluntary lien to borrow money or some other asset secured by a mortgage. An involuntary lien is one that a legal process places against a property regardless of the owner's desires. If statutory law imposes an involuntary lien, the lien is a statutory lien. A real estate tax lien is a common example. If court action imposes an involuntary lien, the lien is an equitable lien. An example is a judgment lien placed on a property as security for a money judgment.

Homestead exemption

A provision in some states that allows specified taxpayers (usually owners of their principal full-time residences) to apply for a deduction of a certain amount from the property's assessed value in calculating the annual property tax liability. The non-homestead class is then defined as all real property that is not included in the homestead class. This would include commercial, industrial and utility properties as well as some vacant land.

Tax rate

A rate based on the financial needs of the local government often expressed in mills. tax requirement/tax base = tax rate (millage rate)

Market analysis are done by:

A real estate professional, and not an appraiser.

Commercial easement in gross

A right to use the land of another. It does not benefit any particular property. The right is transferable and freely inheritable. Typical examples include utility easements, railroad right-of-ways and billboard easements. The easement in gross is the most common type of easement. Almost all parcels of property are subject to one or more utility easements.

Appurtenance

A right, a privilege, or an improvement belonging to, and passing with, the land.

Interest

A right, claim, title, or legal share in a property.

Broker-salesperson relationship

A salesperson is licensed to perform transactions on behalf of his or her licensed broker. The broker is ultimately responsible for the actions of his or her affiliated licensees. Therefore, the salespersons must perform all activities in the name of the broker. A salesperson may engage in only those activities assigned by the broker. And the salesperson may receive compensation for performed activities ONLY from the employing broker. Since the salesperson is acting as the agent of the broker, he or she has no authority to make contracts with or accept compensation from any other party - including another broker, the buyer, the seller or a referral agency. A broker can hire a salesperson as: -An employee -An independent contractor

Consumer notice

A specific form adopted by the State Real Estate Commission in Pennsylvania to disclose information about permitted business relationships and specific agency procedures in real estate transactions. This notice must be presented at an initial interview to any consumer of real estate services.

In the case of an exclusive-right-to-lease,

A statement in bold type that the broker earns a commission on the lease of the property during the listing period no matter who leases the property, including the lessor.

Special assessment

A tax or levy customarily imposed against only those specific parcels of real estate that will benefit from a proposed public improvement like a street or sewer.

Rectangular survey system - township

A township is the area enclosed by the intersection of two consecutive meridians and two consecutive parallels, as the shaded square marked "A" in the exhibit illustrates. Since the parallels and meridians are six miles apart, a township is a square with six miles on each side. Its area is therefore 36 square miles.

Non-agency

A transaction broker is not an agent for either party, but instead acts as a neutral party between both sides. When serving in this capacity, a licensee: -Must advise the consumer that he or she is not acting as an agent or advocate for the consumer and should not be provided with confidential information -Owes the additional duty of limited confidentiality and may not disclose the following information: -The seller or landlord will accept a price that is less than the asking listing price. -The buyer or tenant will pay a price greater than the price submitted in a written offer. -The seller or landlord or the buyer or tenant will agree to financing terms other than those offered.

Rectangular government survey

A type of legal description that describes a parcel of land using a set of fractions and the corresponding section, township and range numbers. While legal descriptions will be covered in detail in the National Appraisal chapter, students must learn how to calculate the size of the parcel described using this method.

Easement for light and air

A view easement, considered a negative easement. In the case of negative easement, the dominant tenement can prevent the subservient tenement from doing something on the land because it could impact the dominant land.

Holographic will

A will written entirely by the testator with his own hand.

Abstract of title

A written, chronological summary of the property's title records, and other public records affecting rights and interests in the property. It includes the property's chain of title and all current recorded liens and encumbrances, by date of filing.

Abandonment (form of contract termination)

Abandonment occurs when parties fail to perform contract obligations. This situation may allow the parties to cancel the contract.

Neighborhood canvass letter

About a week or so after getting the listing, some agents send a letter to the residents of the neighborhood. The letter introduces the listing to the residents and asks for their help in locating a buyer. If you choose to use this marketing tool, be sure to include a property flyer with the letter and an indication that you will be calling the resident within some short timeframe.

Intangible property

Abstract, having no physical existence in itself, other than as evidence of one's ownership interest. Examples: Stock certificates, contracts, patents, copyrights, bonds, trademarks, franchises, listing agreements.

Corporeal

Actual possession of the property.

Pennsylvania Real Estate Commission

Administers and enforces the laws of the Commonwealth of Pennsylvania relating to real estate activities

Producing good ads

Ads should be written according to the advertising principles that will attract readers and motivate them to contact you. The media does not monitor ads for results, so often what you see in the newspaper or other advertising venues are poor examples of real estate advertising.

Subagency advantages and disavantages

Advantages -It is an easy way for the cooperating broker to share in the commission. -It does not require any written agreement from the buyer. Disadvantages -It can be too easy for the subagent to act like a buyer's agent and run the risk of undisclosed dual agency. We'll discuss the definition of undisclosed dual agency and its consequences a bit later in this unit. -Both the seller and the listing broker are liable for the actions of the subagents. -The subagent owes fiduciary responsibilities to the listing broker and to a seller the subagent doesn't really know. -Problems can come up if a licensee acts as a subagent with a buyer customer and a buyer's agent with another buyer on the same property.

Bait and switch advertising

Advertising one product (the "bait") at a very attractive price, then informing the customer that the advertised product is either unavailable or of poor quality, convincing the customer to purchase a different, more expensive product. NOTE: Vague generalities and/or obvious exaggerations collectively called puffery -- are not deceptive.

Retention and production of record

All brokers must maintain careful records. These records refer to anything that occurred during a transaction. Records can include disclosure summaries, listing agreements, amendments to contracts, offers, contracts etc. These should be maintained for THREE YEARS after the consummation or termination of a transaction.

Listing ownership

All of these situations have some effect on a listing agreement. -Death of the broker -Brokerage firm goes out of business -Broker loses his or her license -Listing agent transfers to a different real estate firm If the broker dies, loses his or her license, or the firm goes out of business, the state's real estate licensing agency may choose to appoint a temporary broker to close any transactions that are pending. If not, all the broker's listings will terminate. If the listing agent transfers to another firm, the listing agreement will stay with the original broker, unless that broker gives permission for the licensee to take the listing with him or her and the seller agrees.

Signature section (listing agreement clause)

All the sellers sign and date the agreement and provide their address and other available information. The licensee fills in the firm's name, signs the document, and then provides other information about the firm.

Zoning variance

Allows a use that differs from the applicable ordinance for a variety of justifiable reasons, including that: -compliance will cause unreasonable hardship -the use will not change the essential character of the area -the use does not conflict with the general intent of the ordinance

Outdoor ads

Although expensive, billboards and other large free-standing signs help keep you and your firm's name in the public eye and may prompt prospects to call you when they need an agent. Buildings, buses, cars, taxis, benches and fences are other places to put messages about you and your company.

For-sale sign

Always carry at least one sign with you and put up the sign as soon as you leave the house after obtaining the listing. If you are putting up a temporary lawn sign, let the sellers know when you will bring the larger, more permanent sign.

Exclusive agency

An agency in which a principal grants an agent an exclusive territory and does not allow another agent to compete in that territory.

Landlord agency

An agency relationship in which the broker represents and advocates for the landlord (mimics seller's agency in terms of fiduciary duties and responsibilities). The landlord could employ the broker to: -Market a property for rent to tenants -Manage a property under a property management agreement

Buyer's agent

An agent who contracts to locate residential real property for a buyer or who finds a buyer for a property and presents an offer to purchase to the seller or seller's agent and negotiates on behalf of the buyer.

Implied agency agreement

An agent who does not have a contract with a buyer performs acts on the buyer's behalf, such as negotiating a price that is less than the listing price. In so doing, the agent has possibly created an implied contract with the buyer, albeit unintended. If the buyer compensates the agent for the negotiating efforts, the existence of an implied agency agreement becomes even less disputable.

Dual agent

An agent who is acting as a buyer's agent and a seller's agent or as a tenant's agent and a landlord's agent in the same transaction.

Single agent

An agent who represents only one person in the transaction, either the buyer or the seller. The other party to the transaction would be the single agent's customer.

Contracts

An agreement between two or more parties who, in a "meeting of the minds," have pledged to perform or refrain from performing some act. A valid contract is one that is legally enforceable by virtue of meeting certain requirements of contract law. If a contract does not meet the requirements, it is not valid and the parties to it cannot resort to a court of law to enforce its provisions.

Void

An agreement that does not meet the tests for validity, and therefore is no contract at all. Neither party can enforce a void contract.

Alluvial plain

An area of fertile soil deposited by river floodwaters. Deposited soil is called alluvion.

Easements general features

An easement is an interest in real property that gives the holder the right to use portions of the legal owner's real property in a defined way. An easement does not give any possessory rights, just the right of ingress (enter) and egress (exit). For that reason, an easement is said to be a non-possessory interest in property owned by someone else. A common term for an easement is a right-of-way. Easement rights may apply to a property's surface, subsurface, or airspace, but the affected area must be defined. The receiver of the easement right is the benefited party; the giver of the easement right is the burdened party. Essential characteristics of easements include the following: -An easement must involve the owner of the land over which the easement runs, and another, non-owning party. One cannot own an easement over one's own property. -An easement pertains to a specified physical area within the property boundaries. -An easement may be affirmative, allowing a use, such as a right-of-way, or negative, prohibiting a use, such as an airspace easement that prohibits one property owner from obstructing another's ocean view. The two basic types of easement are appurtenant and gross.

Definition of encumbrance

An encumbrance is an interest in and right to real property that limits the legal owner's freehold interest. In effect, an encumbrance is another's right to use or take possession of a legal owner's property, or to prevent the legal owner from enjoying the full bundle of rights in the estate. An encumbrance does not include the right of possession and is therefore a lesser interest than the owner's freehold interest. For that reason, encumbrances are not considered estates. However, an encumbrance can lead to the owner's loss of ownership of the property.

An estate in land

An interest that includes the right of possession. Depending on the length of time one may enjoy the right to possess the estate, the relationship of the parties owning the estate, and specific interests held in the estate, an estate is a freehold estate or a leasehold estate.

Implied contract

An unstated or unintentional agreement that may be deemed to exist when the actions of any of the parties suggest the existence of an agreement.

Fructus industriales (emblements)

Annual plantings that require cultivation. Considered personal property.

Statute of frauds

Any contract for the sale of real property must be in writing to be enforceable; that leases for more than one year must be in writing to be enforceable. Concerns the enforceability of a contract, not its validity.

Cemetery broker

Any person engaging in or carrying on the business or acting in the capacity of a broker within this Commonwealth exclusively within the limited field or branch of business which applies to cemetery lots, plots and mausoleum spaces or openings.

Investment property

Any property that is held by its owners for investment purposes.

Valuable consideration

Anything of value offered as an inducement. (Money, ring, boat, etc.)

Net operating income (NOI)

Approach to calculating value which is the gross income less all operating expenses.

Material facts

Are important facts needed to make a decision to buy; information such as a leaky roof would impact the costs for the buyer if he needed to fix it, etc.

Magazine ads

Area homebuyer magazines are effective vehicles for reaching the newcomer market and are available in most areas. Some such magazines focus on new home developments.

Acknowledgements

At the bottom of the form is a place for the sellers' signatures verifying that the information on the form is accurate "to the best of their knowledge." There are also spaces on the form for the buyers to sign. Often their signatures mean that the buyers are recognizing the following: -They have a duty to pay attention to any material defects and discover any problems with the property for themselves. -The disclosures in the statement are made solely by the seller and not by any real estate licensees. -Licensees are not responsible for any inaccuracies made by the seller, unless they knew the information was inaccurate. -Disclosure information is not intended to be part of any written purchase agreement between buyer and seller. -They have received copies of the Disclosure Statement signed by the seller. -If the home was built prior to 1978, they have received the appropriate lead-based paint information. In some cases, the disclosure form also contains two waiver provisions: -Waiver of Right to Revoke Offer - If the buyers sign this waiver, they are saying they have read the disclosure statement, approve it, and are giving up their right to revoke the purchase offer. -Waiver of Right to Receive Completed Property Disclosure Statement - If the buyers sign here, they are giving up their right to receive the seller disclosures

When did the commission increase credit hours?

August 2018 and those registered after the change must complete the 45-hour course instead of the 30 hour course.

Prima facie

Based on the first impression; accepted as correct until proved otherwise.

The qualified association must

Be solely owned by licensees who are affiliated with the same broker. In order to receive a commission/compensation from the employing broker, the registered entity must report the formation of or change in this entity to the commission within 30 days of formation or change.

Broker's and seller's duties (listing agreement clause)

Broker agrees to use due diligence to achieve the purpose of the listing agreement. The seller agrees to consider all good faith offers on the property, to make the property available for showings, to take responsibility for all information the seller provides to the broker and to hold the broker harmless for any claims resulting from the information given to or withheld from the broker.

Rents

Broker's do not have to hold these in escrow that he received for a lessor in property management. These funds must be deposited in a rental management account which is also separate from the broker's escrow and general business accounts.

Pipe size

Building codes dictate the minimum pressure (the lowest pressure that will allow the system to operate safely and efficiently) for plumbing fixtures. The codes also dictate the maximum pressure allowed, which is the highest pressure that will not cause damage to the system. Pipes that are too small or those that have a mineral deposit buildup prevent the pressure from moving the water to the fixtures. Pressure regulating valves can reduce and maintain the correct water pressure within the system, while a booster pump can increase the pressure if needed.

Buyer agency

Buyer agency is the relationship whee the licensee, upon entering into a written agreement, works only for the buyer/tenant.

Severance

Changes real property to personal property.

County and local standards, laws, and regulations

Cities, counties and local governments have the power to impose their own land use regulations and building codes. These laws may not be in opposition to any federal or state laws; however, they can be more restrictive. Local laws tend to cover those issues that are specific to the area and are enforced by local agencies, such as planning boards and local building code departments. Any legal matters that arise are handled by the local courts.

Deed Restrictions

Clauses in a deed limiting the future uses of the property. Deed restrictions may impose a vast variety of limitations and conditions. Typical deed restrictions concern: -required minimum area of a residence -setback -prohibition against construction of sheds or secondary buildings -prohibition against conducting certain commercial activities

Community property

Community property is a form of ownership that distinguishes property into categories of separate (owned by one party) and community (owned equally by both parties). Community property requires the consent of both parties to transfer or encumber. On the death of an owner, the laws of descent treat separate and community property differently. These differences are explained further in the chapter on "Forms of Ownership."

Littoral rights

Concern properties abutting bodies of water that are not moving, such as lakes and seas. Owners of properties abutting a navigable, non-moving body of water enjoy the littoral right of use, but do not own the water or the land beneath the water. Ownership extends to the high-water mark of the body of water. The legal premise underlying the definition of littoral rights is that a lake or sea is a navigable body of water, and, therefore, public property owned by the state. By contrast, a body of water entirely contained within the boundaries of an owner's property is not navigable. In such a case, the owner would own the water as well as unrestricted rights of usage. Littoral rights attach to the property. When the property is sold, the littoral rights transfer with the property to the new owner.

Environmental regulation

Construction is also subject to environmental regulations. Most legislation is overseen by the Environmental Protection Agency (EPA). Applicable legislation includes the following: -National Environmental Policy Act of 1969 -This act requires that an environmental impact statement be filed with the appropriate state or local agency before implementing any new construction or development. This procedure helps to ensure that the proposed project will not have a negative impact on the environment. Other regulations cover waste disposal, soil and water contamination, air quality, lead treatment, mold, toxic building materials, and radon treatment. Refer to the unit on Land Use Control and Regulation for more details.

Demand

Consumer willingness and ability to buy products. The more demand there is for a particular property, the more valuable it is to consumers looking for real estate.

Adjusted basis

Cost plus improvements, minus depreciation.

County and local government taxes

Counties, cities and municipalities, townships and special tax districts levy taxes on real property to raise funds for providing local services. It is common for the county to collect all real property taxes and distribute it among the other taxing bodies.

A broker may deposit his OWN money into an escrow account to:

Cover service charged to this account assessed by the banking institution.

Habendum clause (conveyance clause)

Describes the type of estate being conveyed (fee simple, life, etc.)

Commission splits

Determine how much each involved entity earns when a property sells. No standard commission split exists.

Income capitalization approach

Determines the rate of return considered to be a reasonable return on investment - given the risk.

Disclosures of business relationships

Disclosure must be made to tenants seeking to lease residential or commercial real estate. -Licensee who is working on behalf of the tenant shall provide disclosure summary; -Licensee who is working on behalf of the owner shall provide the disclosure summary to tenants seeking to lease residential or commercial real estate.

Advertising and discrimination

Discriminatory advertising is defined as advertising that indicates a preference, limitation or discrimination based on race, color, religion, handicap, sex, familial status or national origin. But it is sometimes difficult to know what actually constitutes discriminatory advertising. It is probably safe to say that any advertising that describes the property would be considered acceptable, while advertising that describes buyers could be considered discriminatory, especially if the buyers are from a protected class.

Lockbox (listing agreement clause)

Discusses lockbox use and states that persons using the lockbox are not insured against theft, damage, vandalism, etc. that could be attributed to lockbox use. The seller may indicate that he or she does not want a lockbox used.

4 Main types of leasehold estate

Distinguished mainly by the period of time for which the owner's rights are temporarily transferred, are: -Estate for Years -Estate from Period to Period -Estate at Will -Estate at Sufferance

Dual agency

Dual agency is a relationship where the licensee acts as the agent for both the seller/landlord and the buyer/tenant in the same transaction with the written consent of all parties.

Informed consent

Dual agency must be disclosed to both the buyer and the seller. Both parties must agree in writing to the dual agency relationship. If the dual agency relationship is not disclosed and agreed to in writing, it is known as undisclosed dual agency. If this situation occurs, the agent has breached his or her fiduciary responsibilities to the client and has also violated the license law in most states.

Reinstatement and redeption

During the notice of default and notice of sale periods, the borrower may pay the lender and terminate the proceedings. Exact reinstatement periods vary from state to state. There is no redemption right in non-judicial foreclosure.

Rules and regulations by the commission to regulate ads of lotteries, contests, prized, certificated, gifts, and lots:

Each advertisement by a licensee for the solicitation, sale or offering for sale of real estate that uses lotteries, contests, or offers prizes, certificates or free lots must contain: -A description of each prize, certificate, gift or lot offered; -The requirements for winning these prizes; -The limitation on the number of prizes, etc. offered; -The Fair Market Value*of each prize, etc. offered and if the advertisement is in print, the statement of Fair Market Value must be in the same size type as the description of the prize, etc.; -The odds of winning each prize. If the ad is in print, the statement of odds shall be the same size type as the description of the prize and must appear immediately adjacent to each prize. A licensee who solicits, sells or offers for sale real estate using the mail or by offering prizes must maintain records that contain: -The number and description of each prize awarded; -The name and address of the person who won the prize; -The name and address of each person who responded to the ad but did not win a prize.

Individual owner billings

Each property owner's tax bill is determined by multiplying the tax rate for each taxing district times the taxable value of the property. Taxable value is the assessed value after all exemptions and adjustments have been taken into account.

Master escrow account log

Each sponsoring broker must keep a master escrow account log identifying all escrow bank account numbers and the name and address of the bank where the escrow accounts are located. This log must specifically include all bank account numbers opened for individual transactions, even if those account numbers fall under another umbrella account number.

Escrow records

Each sponsoring broker who accepts earnest money must maintain a bookkeeping system that complies with sound accounting principles. The sponsoring broker must keep the system in his or her office or place of business. (Check your own state rules for the specifics of the recordkeeping required by your state.) In most cases, the system must consist of at least the following escrow records: -Master escrow account log -Journal -Ledger -Monthly reconciliation statements

Easement transfer

Easement appurtenant rights and obligations automatically transfer with the property upon transfer of either the dominant or servient estate, whether mentioned in the deed or not.

Time-share salesperson

Either an employee or an independent contractor who sells or offers to sell time share.

Electric heat

Electric heating in homes is usually in the form of baseboard heaters along the walls of a room, although it can be in the form of a heat pump (which we'll talk about on an upcoming screen). Electric heating has several advantages: it can be precisely controlled to allow a consistency of temperature within very narrow limits; it is cleaner than other methods of heating because it does not involve any combustion; it is considered safe because it is protected from overloading by automatic breakers; it is quick to use and to adjust; and it is relatively quiet.

Telephone directory ads

Every real estate office should have a listing in the yellow pages. Use of the classified-display type ad described on a previous screen could prove cost-effective for a firm. Even though it's an expensive advertising method, you can be sure that almost every home in the state will have a copy of the yellow pages.

Agency relationships (listing agreement clause)

Explains that the broker represents the seller. The broker will not represent the buyer; however, if the listing agent finds a buyer, it may be necessary for the broker to act in the capacity of a dual agent. This section also informs the seller that the broker represents other sellers.

IRS common law rules

Facts that provide verification of the level of control and independence fall into three categories: -Behavioral - Does the company control or have the right to control what the worker does and how the worker does his or her job? -Financial - Are the business aspects of the worker's job controlled by the employer? (These include things like how a worker is paid, whether or not the employer reimburses expenses, or who provides tools/supplies.) -Type of Relationship - Are there written contracts or employee-type benefits, such as a pension plan, health insurance, or sick pay? Will the relationship continue and is the work performed a key aspect of the business?

Capital gain formula

Formula: 1. Capital gain = Amount realized - Adjusted basis, where 2. Amount realized = Sale price - Selling costs

Area of trapezoid

Formula: A=a+b/2 x h

Converting a percentage into a decimal

Formula: Percent number/100 = Decimal number Example 2.2/100 = .22

Area of squares and triangles

Formulas: Area of a Rectangle or Square= Width x Depth/Length (Horizontal) or Width x Height (Vertical)Width= Area ÷ Depth/Length (Height) Depth/Length (Height)= Area ÷ Width

Gross rent multiplier (GRM) formulas

Formulas: 1. Sales price=Monthly rental income x GRM 2. Monthly rental income=Sales price/Gross Rent Multiplier 3. GRM=Sales price/Monthly rental income 1. What is the value of a house with monthly rent of $1,200 and a GRM of 112? $1,200 rent x 112 GRM = $134,400 2. What is the GRM of a house with monthly rent of $1,200 and a value of $134,400? $134,300 price ÷ $1,200 rent = 112 GRM

Grounds for receiving judgment

Fraud, misrepresentation, and deceit in real estate transaction.

Consent agreement and order

Governed by federal and state laws, which vary by jurisdiction. It is generally a voluntary agreement worked out between two or more parties to a dispute. It generally has the same effect as a court order and can be enforced by the court if anyone does not comply with the orders.

Easement by condemnation

Government entities can create easements through the exercise of eminent domain, wherein they condemn a portion of a property and cause it to be sold "for the greater good." A typical example is a town's condemnation of private land to create a new municipal sewer system. Most work to create new highways, roadways and sidewalks and to install utilities is the result of eminent domain.

Buyer's estimates cost and return statement

I/we have read and received a copy of the estimated settlement cost and estimated monthly carrying charges prior to the signing of an agreement of sale to purchase the property noted above.I/we understand that the above costs are estimated and based on the best information available at this date and that they are subject to change, particularly in the case of the escrow charges, such as taxes, water and sewage, rent and insurance. -Must be signed by a witness as well as the buyer(s).

Acceleration and filing

If a borrower has failed to meet loan obligations in spite of proper notice and applicable grace periods, the lender can accelerate the loan, or declare that the loan balance and all other sums due on the loan are payable immediately.

Employee status

If a broker hires a salesperson as an employee, he or she can require the salesperson to follow rules regarding such things as: -Working hours -Office duty -Meetings -Dress code The broker can require an employee to perform his or her work in a certain order or work at a specified location. Salespersons who are employees usually have their expenses paid by their broker and the broker usually supplies whatever tools the employee needs to conduct business. Employees could also receive health insurance or profit-sharing benefits from the broker. When paying employees, the broker must withhold the following from the salesperson's wages: -Federal income tax -State income tax -Social Security tax -Medicare tax The broker would also be responsible for paying federal and state unemployment taxes, workers' compensation and, possibly, disability insurance. And there are also quarterly and annual government reports to file. Most real estate assistants, both licensed and unlicensed, are considered employees for income tax purposes.

Lapse of time (form of contract termination)

If a contract contains an expiration provision and date, the contract automatically expires on the deadline.

Easement by prescription

If someone uses another's property as an easement without permission for a statutory period of time and under certain conditions, a court order may give the user the easement by prescription, regardless of the owner's desires. For a prescriptive easement order to be granted, the following circumstances must be true: -Adverse and hostile use - The use has been occurring without permission or license. -Open and notorious use - The owner knows or is presumed to have known of the use. Continuous use - The use has been generally uninterrupted over the statutory prescriptive period.

Non-navigable

If the property abuts a non-navigable stream, the owner enjoys unrestricted use of the water and owns the land beneath the stream to the stream's midpoint.

Navigable

If the waterway in question is navigable, it is considered to be a public easement. In such a case, the owner's property extends to the water's edge, as opposed to the midpoint of the waterway. The state owns the land beneath the water. However, the landowner has right to all accretions, which is the land resulting from the soil build-up caused by the natural action of the river or stream.

Prompting action in ads

If you have succeeded in generating attention, interest and desire, your ad should result in the readers taking action. An action that you want a reader to take includes: -Calling you or your office -E-mailing you or your office -Visiting your office -Visiting your website -Attending an open house Be sure you end all of your ads with your contact information. It's the only way to track if your ads are getting results.

Writing non-discriminatory advertising copy

In 1995, the Department of Housing and Urban Development (HUD) which enforces fair housing laws sent some guidelines to its staff to help them when investigating allegations of discrimination. The memo addressed some words and phrases which are not acceptable to use and others which, if used, would not constitute a violation or be considered discriminatory. The HUD memo addressed only a small set of possibilities, but it seems to indicate that the staff should not move complaints forward if the ads appeared reasonable and did not favor or disfavor a protected group. Organizations have published lists of words to help write ads that will not be discriminatory. One particularly good list was compiled by the Miami Valley Fair Housing Center, Inc. in Dayton, Ohio. Click on the link below to see the list. You can print a PDF copy of the list from a link on the site.

Landlord's rights and obigations

In conveying the leasehold estate, the landlord acquires a leased fee estate, which entails the rights to: -Receive rent -Re-possess the property following the lease term -Monitor the tenant's obligations to maintain the premises The lease defines the landlord's obligations, which principally are to: -Provide the necessary building support and services -Maintain the condition of the property

Example how 2 different ownerships can be in one piece of property

In many states, oil, gas, and other mineral rights are separate estates. For example, a landowner might sell to an oil company his or her rights to any oil or gas found in the land, but keep the rights to all other minerals found on the land.

Surety bail bond lien

In some states, a real estate owner may put up real estate instead of cash to pay bail if he or she has been charged with a crime. A surety bail bond lien is recorded if the owner can prove that he or she has a net worth of at least twice the amount of the bail. Homestead property cannot be levied against for surety bail bond lien.

Buyer-paid fee

In this arrangement, the buyer pays his or her buyer broker directly upon the closing of the property purchase. When this arrangement is in place, the buyer agent will inform the seller and the listing broker that compensation will be direct and the buyer agent will refuse the offer of a commission split for the cooperating sale.

Rectangular survey system - identifying a township (refer to image in course)

Individual townships are identified by their tier and range identification taken together, with the tier designation named first. For example, a township two tiers south of the base line and three ranges east of the principal meridian would be denoted as "T2S, R3E." The townships marked "C," "D," and "E" in the exhibit would therefore have the following identifications: C: T3N, R6E D: T3N, R2W E: T3S, R5E A full legal description of a township would also include the township's county and state in addition to the principal meridian and base line from which it was measured.

Federal and state inheritance tax liens

Inheritance tax liens arise from taxes owed by a decedent's estate. The lien amount is determined through probate and attaches to both real and personal property.

Commercial zoning regulates:

Intensity of usage, by limiting the area of store or office per site area. Intensity regulation is further achieved by minimum parking requirements, setbacks, and building height restrictions.

Ownership of a freehold estate

Is commonly equated with ownership of the property, whereas ownership of a leasehold estate is not so considered because the leaseholder's rights are temporary.

Product advertising

Is directed toward the particular properties a company has for sale. With this form of advertising, one firm's ads are in direct competition with the ads of other firms.

A leasehold estate

Is distinguished by its specific duration, as represented by the lease term. Both leasehold and freehold estates are referred to as tenancies. The owner of the freehold estate is the freehold tenant, and the renter, or lessee, is the leasehold tenant.

Retention of records

It is the responsibility of the broker to maintain records regarding disclosures as well as records of actual transactions for three years. The only exception to this rule is the acknowledgement section where the prospective buyer/tenant recognizes the disclosure. If the transaction does not become completed, the acknowledgement section must be held for six months. The same applies to leases and time-share acknowledgement sections

The marketing plan

It's vital for you to have a written plan for how you will market each of your listings. Some activities will be the same from one listing's marketing plan to another, but other tasks will be unique to the particular property based on its specific characteristics. ` The marketing approach you take will consist of: -Traditional Tools -E-Tools -Ancillary Tools

Escrow item example:

Items such as a diamond ring or a boat can be placed in escrow. They can be accepted by the broker so long as all partied to the transactions are aware and have agreed in writing to this fact. Do not confuse escrow items that are used by a homeowner for paying taxes and insurance. These are not the same monies and do not apply in this unit.

Man-made appurtenances

Items that are added to a property such as houses, fences, barns, swimming pools.

Indestructibility

Land is indestructible in the sense that one would have to remove a segment of the planet all the way to the core in order to destroy it. Even then, the portion extending upward to infinity would remain. For the same reason, land is considered to be permanent.

Industrial property

Land used for industrial purposes, such as warehouses, factories, distribution centers and power plants.

Tenancies

Leasehold and freehold estates. The owner of the freehold estate is the freehold tenant, and the renter, or lessee, is the leasehold tenant.

Activity reports

Let your sellers know that your weekly report will include, as applicable: -Number of inquiries on the property that week -Number of showings -Advertising done that week -Open houses held -Number of open house visitors -Comments made by other agents or prospective buyers You can also send along copies of any ads you placed that week, a copy of the MLS pages, copies of pages from any websites where the property has been listed and information about any e-mails that you sent to promote the home.

Tax lien

Lien against real property for the failure to pay property taxes. Generates an encumbrance against the property, which is removed when the taxes are paid. They take priority over other liens, meaning that when title to a property is transferred, the tax lien should be paid first.

Scarcity

Limited quantities of resources to meet unlimited wants. A property will sell quickly if only a few properties in a particular area are on the market.

Items included and excluted (listing agreement clause)

Lists any personal property that may be included as part of the sale or any real or personal property that is being excluded from the sale. This will avoid any later misunderstandings.

Property (listing agreement clause)

Lists the physical address of the property, including city and county. In some situations, the licensee may need to attach a signed copy of a legal description.

Closing costs - prorations: expense paid in arrears (tax)

Logic: Credit buyer and debit seller for seller's share Example: Annual taxes on the property are $1,000. The year is ¾ over. 1. Buyer's share is ($1,000 x 25%) = $250 2. Credit buyer (CB)/ debit seller (DS) $750

Nuncupative will

Made orally, and written down by a witness; generally not valid for the transfer of real property

Promotional item ads

Many firms use gifts, such as pens, pencils, notepads, magnets, calendars and key chains, imprinted with the company name and logo or an agent's name to give away to consumers. These "giveaways" can be distributed at business or social events, trade shows, open houses or when going door-to-door. They are also great as gifts to former clients, to help keep your name fresh in their minds.

Shopping guide ads

Many newspapers publish homebuyers' guides advertising current real estate offerings. These guides are free to the public. Shoppers can pick up copies of the guide at the supermarket or other local retail establishments.

The T-bar method

Many real estate math problems have formulas that fit into the T-bar method. This is the basic set up of the T-bar: Part of Total Number/(Divided by)Total number x Rate T-Bar Formula for area of a rectangle or square area: Area of a Rectangle or Square Area in Sq/Ft divided by Width x Depth/Length/Height T-Bar Formula for Front Footage: Cost of lot/Width x Price per Foot T-bar formula for annual interest: Annual interest in $ ----------------------------- Loan Amount | Rate %

Market analysis

Many times a seller has an inflated idea of what his property should sell for. Occasionally, the seller will have a lower price in mind than what the market will actually bring. It is the job of the licensee to make sure that the owner understands how much can be obtained in the sale of the property. A market analysis falls under the category of opinion. Brokers train their licensees on how to create a market analysis so that the client can make a more informed decision about what to offer or what to accept for a property. If the broker and his or her affiliated licensees are members of the MLS, there is usually a training class on how to use that information to know what similar properties are selling for. The market analysis should be shared with a seller during the listing meeting. However, it should NOT be left with the seller, unless the seller has decided to go ahead with the listing and has signed the listing agreement.

When do real estate licenses expire?

May 31 of every even-numbered year. The Commission mails renewal notices 2 to 3 months prior to the license expiration date.

Director of the Bureau of Consumer Protection

May appoint a designee to serve for this position on the Real Estate Commission to: 1. Investigate commercial and trade practices affecting consumers. 2. Conduct studies to investigate and research affecting consumers' interests. 3. Advice the legislature on matters of consumer interests. 4. Investigate fraud and deception of sale. 5. Promote consumer education on fraud, deception, and misrepresentation.

State government taxes

May legally levy taxes on real property, but most delegate this power to counties, cities, townships and local taxing districts. Some states place limits on how local governments may levy such taxes. States may impose a tax lien against property for failure to pay any real property taxes which the state has levied or delegated to local taxing bodies.

Lins pendens

Means "action pending" or "pending litigation." Gives public notice that the mortgaged property may soon have a judgement issues against it.

Reciprocal license

Means that if the other state recognizes the PA real estate license without further requirements, PA will recognize that state's licensees who with to have a license in PA.

Newspaper ads

Newspaper advertising is probably the most common and often the most effective form of advertising for residential property. All newspaper ads should have the brokers name, phone number and internet address. Any ad that does not identify the advertiser as a broker is known as a blind ad. The only exception to this rule is a licensee advertising his or her own property that is not listed with the broker. Blind ads are illegal in many states. Typical forms of newspaper advertising include: -Classified ads -Display ads -Classified-display ads -Press releases

Inactive licenses

No real estate business normally associated with a salesperson or broker may be conducted while a license is inactive. Inactive licensees who do not activate their licensees during the five year period of being inactive may only activate their licenses after that time by taking both sections of the salesperson's course and receiving a passing grade on both.

Press releases

Not really an "ad" per se, a press release is free advertising. Many of the stories in the real estate section of the paper are adapted from press releases. This is a real plus for the company that is the subject of the article, since readers tend to be much more impressed with a news story that showcases the expertise of the firm than an ad written by the firm itself.

Single licensee dual agency

Occurs when real estate licensee tries to represent the seller as a client and the buyer as a client in the same transaction.

Foreclosure process

On default, the foreclosing mortgagee records and delivers notice to the borrower and other lienholders. After the proper period, a "notice of sale" is published, the sale is conducted, and all liens are extinguished. The highest bidder receives unencumbered title to the property.

Express contract

One in which all the terms and covenants of the agreement have been manifestly stated and agreed to by all parties, whether verbally or in writing.

Witnessed will

One prepared by an attorney, that is typed and signed by the maker and two witnesses.

Special-purpose deed

One tailored to the requirements of specific parties, properties, and purposes.

Fully amortized loan

One where the payments remain the same over a period of time and the principal and interest within the payments are paid in different increments (principal increasing each payment and interest decreasing each payment) over the life of the loan. An interest-only loan pays down the interest owes, none of the principal.

Trade fixtures

Or chattel fixtures, are items of a tenant's personal property that the tenant has temporarily affixed to a landlord's real property in order to conduct business.

Granting clause (conveyence clause)

Or premises clause, the only required clause; contains the conveyance intentions; names the parties; describes the property; indicates nominal consideration

Reddendum clause (conveyance clause)

Or reserving clause -- recites restrictions and limitations to the estate being conveyed, e.g., deed restrictions, liens, easements, encroachments, etc.

Bundle of rights in real property

Possession Disposition Enjoyment Exclusion Control In the bundle of rights associated with owning a parcel of real estate, foremost is the right of possession.

Covenant clauses

Present the grantor's assurances to the grantee. A deed of conveyance usually contains one or more of the following covenants, depending on the type of deed.

Estoppel

Prevents a person from claiming a right or interest that is inconsistent with the person's previous statements or acts. As a basis for involuntary alienation, the doctrine of estoppel can prevent an owner from re-claiming a property that was transferred under false pretenses.

Indestructable

Real estate cannot be destroyed, it is permanent.

Immobility

Real estate cannot be moved from place to place.

Statue of limitations

Refers to a the period of time during which a patient may file a suit.

Escrow account

Refers to the amount where the money of other people is kept by the broker. This is sometimes called a "trust account." Broker is responsible for all monies entrusted to his care and must be able to account for all funds.

Regulation

Regulated by government to some degree. Includes usage, taxation, and housing administration.

Commercial zoning

Regulates the location of office and retail land usage. Some commercial zones allow combinations of office and retail uses on a single site. Sub-zones in this category may limit the type of retail or office activity permitted; for example, a department store versus a strip center.

Demolition

Remove properties that are no longer viable for the market.

Who does not need to be affiliated with a broker?

Rental Listing Referral Agent Salesperson licensee.

Commercial property

Retail and office properties, industrial real estate. Can potentially generate income from a business's usage.

Incorporeal

Rights in property, rather than possession of land.

Investment ownership

Risks capital in order to buy, hold, and sell real properties. Provides capital and liquidity to the market.

Roof framing

Roof construction must be strong enough to withstand anticipated snow and wind loads. Framing members must be securely fastened to each other, to sheathing and to exterior walls to enable the roof system to serve as a structural unit. A rafter is a structural member which supports the roof of the building. Carpenters build rafters to frame the pitch or slope of the roof. The roof ridge beam is the highest part of the frame and forms the top line of the roof. The rafters are attached to the ridge beam at the peak of the roof. The roof sheathing is made up of wood structural panels or 1-inch board lumber which provides a solid base for roof coverings. Structural panels are manufactured in various thicknesses and are usually 4'x8' in surface dimension. Recommended spans, spacing between panel edges, and the board thickness are stamped on the panel face. Structural panels are installed with the long dimension perpendicular to rafters and with the panel continuous over two or more spans.

How to determine listing amount using comparative market analysis (CMA)

Rules: 1. Never adjust the subject! 2. If the comparable is superior to the subject, subtract value from the comparable. 3. If the comparable is inferior to the subject, add value to the comparable. Examples: 1. The subject has a $10,000 pool and no porch. A comparable that sold for $250,000 has a porch ($5,000), an extra bathroom ($6,000), and no pool. Adjustments to comp: $250,000 (+10,000 - 5,000 - 6,000) = $249,000 indicated value of subject 2. A comparable has 3 bedrooms and the subject has 4. The appraiser estimates the value contribution of a bedroom to be $10,000.Adjust the comparable by entering +$10,000 in the CMA.

Independent contractor status

Salespersons working as independent contractors are paid by the job (commission rather than an hourly or weekly salary), they must usually pay their own expenses and they must provide their own tools. The broker does not withhold anything from the commission he or she pays the independent contractor. If the licensee makes more than $600, the broker must file an IRS Form 1099-MISC for that licensee to report how much he or she earned for the year. A salesperson operating as an independent contractor must pay his or her own income tax, self-employment taxes, Social Security tax and Medicare tax. In addition, the salesperson cannot receive anything from the broker that would make it look like he or she is an employee, such as health insurance, paid sick days or a pension plan.

Extending a listing

Schedule a meeting with your sellers a few weeks before the listing is set to expire. Review with them everything you have done to market their property and let them know what other marketing plans or ideas you may have.

Interplead

Seeking a court decision to determine who should receive the funds help for two parties by a disinterested third party (Let the judge decide).

Campground membership salesperson

Sell interests, other than in fee simple ownership, which gives the purchaser the right to use a unit of real property for the purpose of placing a recreational vehicle, trailer, tent, tent trailer, pickup camper, or other similar device on a periodic basis consistent with the membership giving the use and occupancy rights between other similar uses.

The independent contractor may

Set up his own office hours, meetings, and purchase of equipment. He makes his own plan of work. The independent contractor does not receive any benefits associated with working for the broker, other than office space. Most licensees are independent contractors. Employee may receive a pension or insurance benefits or receive milage reimbursement.

Modifying a listing agreement

Since the listing agreement is a valid contract once all parties have signed it, it can only be modified with the written consent of all the parties.

Soil and water quality

Soil, groundwater, and drinking water supplies are vulnerable to pollution from leaking landfills; improper waste disposal; agricultural runoff; industrial dumping in waterways; highway and rail spills; industrial emissions; internal combustion emissions; and underground tanks leaking fuels and chemicals, to mention but a few sources

Retainer

Some brokers, more so in commercial than in residential transactions, negotiate their agency agreement to state that they will receive a non-refundable up-front retainer fee. This helps the broker screen out buyers who may not really be serious about buying. In this type of situation, at closing the retainer is credited to the amount of commission the buyer owes and the broker receives the balance.

Changes to property condition

Sometimes, after the date that the seller completes the disclosure statement, he or she becomes aware of additional information, or some change takes place that makes something in the disclosure statement inaccurate. If the seller takes no corrective action prior to the closing date, the buyer will have the right to exercise one of the following two options.-The buyer can approve and accept the amendment.-The buyer can rescind the purchase agreement within three business days after receiving the amended disclosure statement.

Doctrine of prior appropriation

State government determines how much water and for how long a period the land owner can receive water for purposes of irrigation.

Types of involuntary title transfer

State law regulates all forms of involuntary alienation, whether such transfer occurs by the laws of descent, abandonment, foreclosure, eminent domain, adverse possession, or estoppel.

Title certificate

Summary of the condition of title as of the date of the certificate, based on a search of public records by an abstractor or title analyst. The certificate does not guarantee clear title against defects, unrecorded encumbrances, or encroachments.

Tax base totaling

Tax base equals the total of assessed values of all real property within the area, excluding exemptions. tax base = assessed values - exemptions

Tax district budgeting

Taxing body determining its funding requirements to provide services for the year. This requirement is formalized in the annual budget. Then the county or district looks at its sources of revenue, such as sales taxes, business taxes, income taxes, state and federal grants, fees, and so forth. The part of the budgeted expenditures that cannot be funded from other income sources must come from real property taxes. This budgetary shortfall becomes the ad valorem tax levy. The tax levy is derived every year, since budget requirements and revenue tallies are performed on an annual cycle.

Suspension

Temporary loss of license for a stated time period. The commission may require auditing or education as a condition for reinstating the license.

Estate at sufferance

Tenant remains on the property, without the landlord's permission, after the lease has expired.

Sign ads

The "For Sale" signs your firm uses are a very effective advertising medium. Signs can be odd-shaped and very colorful to distinguish your firm from the competition. Attaching "progress" riders to the sign, such as "In Escrow" or "Sold" shows the public that your firm gets results.

National electric code

The National Electric Code covers the installation of electrical conductors, equipment, and optical fiber cables for the following: -Public and private buildings, structures, mobile homes, recreational vehicles, and floating buildings -Yards, lots, parking lots, carnivals, and industrial substations -Installations of conductors and equipment that connect to the supply of electricity -Installations used by the electric utility, such as office buildings, warehouses, garages, machine shops, and recreational buildings, that are not an integral part of a generating plant, substation, or control center

The Real Estate Licensing and Registration Act

The Pennsylvania law that protects the public interest by governing real estate practices and the activities of licensees.

Enforceability

The ability of a properly formed contract to be enforceable in a court of law; determined by examining whether the contract is a product of genuine assent and is in writing (under certain circumstances).

Single agency

The agent can represent only one party - either the buyer or the seller - in a single transaction, but never both. He or she owes fiduciary duties to one principal and can provide advice to that client. All other parties to the transaction receive services as customers, not clients. In other words, the licensee owes honesty and fair

Cash flow

The amount of money moving in and out of a business in a month.

Setbacks

The amount of space local zoning regulations require between the property line and any improvements. The setback line is the boundary line that delineates the setback area. To calculate the remaining area of the lot that can be built on, subtract the setbacks from the dimensions: -The front yard and back yard setbacks are subtracted from the depth. -The side yard setbacks are subtracted from the width.

Seller's net

The amount that the seller profits (gets to keep in his pocket) after paying the expenses involved in the sale (commission rate, closing costs and any existing mortgage).

Annual interest

The annual amount of money someone pays to borrow money. Annual interest is calculated yearly, not monthly.

Identification of the property

The best way to identify a property is through the legal description. A street address can be and is often used, but it should be supported by the legal description, attached to the listing document. If the licensee does not have a copy of the description at the time the listing is prepared, he or she can have the seller sign it with a note on the legal description line that states the description will be provided by the agent at a later time. The agent can obtain the legal description from a title insurance company or from the seller's deed

Laws of agency

The body of law that determines the rights and duties owed by an agent to a principal.

If money held in escrow is expected to be held six months or longer,

The broker is encouraged to deposit the money into an interest bearing escrow account. The interest on an interest bearing account will be disbursed in the same manner as the principal amount, unless the parties direct otherwise by agreement. A broker cannot collect the interest on an interest-bearing account unless the broker is a lessor as provided for in the Landlord Tenant Act.

Sale of property or change in property management occurance

The broker may transfer the security deposit from the broker's escrow account to the escrow account of the lessor, or the lessor broker upon notification in writing to each tenant from whom the broker received a deposit.

After the disclosure is delivered

The buyer has no right of rescission if the seller takes whatever corrective action is necessary to restore the accuracy of the disclosure prior to the closing date. If any act, occurrence, or agreement comes up or becomes known after the property closes which causes the disclosure statement to be inaccurate in any way, the seller has no obligation to amend the disclosure statement, and the buyer no longer has the right to rescind the transaction. If the seller of a residential property fails or refuses to provide a disclosure statement to the prospective buyer, the prospective buyer's right of rescission will apply (unless the buyer has waived the right of rescission) until the earlier of these dates: -Three business days after receipt of the disclosure statement. -The date the transaction closed For purposes of exercising this right, closing is said to have occurred when the buyer has paid the purchase price and the property has been conveyed through the delivery and recording of the deed or other applicable document. Once the property has closed, the seller has no obligation to deliver any disclosure statement, and the buyer does not have the right to rescind, even if new information comes to light.

Conversion

The classification of an item of property as real or personal is not necessarily fixed. The classification may be changed by the process of conversion. Severance is the conversion of real property to personal property by detaching it from the real estate, such as by cutting down a tree, detaching a door from a shed, or removing an antenna from a roof. Affixing, or attachment, is the act of converting personal property to real property by attaching it to the real estate, such as by assembling a pile of bricks into a barbecue pit, or constructing a boat dock from wood planks.

Statutory deeds

The covenants are defined in law and do not need to be fully stated in the deed.

Sheriff's deed

The deed given to the purchaser of property at a sheriff's sale as part of the foreclosure process against the owner of the property.

Determinable

The deed to the determinable estate states usage limitations. If the restrictions are violated, the estate automatically reverts to the grantor or heirs. For example, a deed may read that Mrs. Becker gives a 20-acre parcel of land to the Mayfair Foundation as long as it is used for educational purposes. The key words here are "as long as." If at some point the Mayfair Foundation builds a retail space on the property, the title would terminate automatically and would revert to Mrs. Becker or her heirs.

Escrow

The depositing of money, legal documents, and instructions with a third party to be held until the conditions of a contract are fulfilled.

Recorded plat method - description format

The description of a recorded plat property first presents the property's lot number or letter, then the block identifier and the subdivision name. Note that this is only a portion of the full legal description, which must describe the subdivision's location within a section, a township, a county, and a state. For example, if the subdivision in the exhibit is situated in the southeast quarter of Section 35 of Township T28S, R19E, of the Tallahassee Principal Meridian, the legal description of the lot marked "7" would be: "Lot 7, Block 8 of the Grand Oaks Subdivision of the SE 1/4 of Section 35, Township T28S, R14E of the Tallahassee Principal Meridian in Pinellas County, Florida."

Fee simple estate

The fee simple freehold estate is the highest form of ownership interest one can acquire in real estate. It includes the complete bundle of rights, and the tenancy is unlimited, with certain exceptions indicated below. The fee simple interest is also called the "fee interest," or simply, the "fee." The owner of the fee simple interest is called the fee tenant. Fee simple estates, like all estates, remain subject to government restrictions and private interests. There are two forms of fee simple estate: absolute and defeasible.

Initial interview

The first contract between a licensee and a consumer of real estate services where a substantive discussion about real estate occurs.

Net income

The gross income minus all operating expenses.

Wall finishing

The high resistance of wood frame construction to hurricane, earthquake and other natural forces is provided when wall sheathing is nailed to the outside edges of exterior wall studs, plates and headers. Wall sheathing includes plywood, particleboard and other structural panels such as wafer-board, oriented-strand board, structural insulation board and one-inch board lumber. This sheathing must be applied in strict accordance with manufacturer's nailing requirements to provide a rigid, yet resilient, wood frame system. Some structural panels function as both sheathing and siding. Siding can also be metal or vinyl. For interior wall finishing, contractors use plasterboard, wallboard, drywall, or sheetrock.

Electrical system

The installation of an electrical system should take into consideration both present day and future needs. The standard service is 120/240 volts of electricity. The electricity is brought into the building through a system of outside cables which can be either above ground or below ground.

Video tours

The latest technology is the video tour. Video tours are shot with a digital movie camera, edited, and then produced on DVD. The quality is truer than what is produced by virtual tour software, but the cost is also higher. The primary benefit is that the high-quality final DVD product can be duplicated and distributed to out-of-town buyers to view on their private DVD players. In addition, brokers can have a "library" of videos available at the office. Video tours are not appropriate for all listings, but a full-motion tour can be positioned as an "extra" and "special" offering to sellers of high-end properties.

Dower curtesy

The legal right or interest that one spouse has in the property of the other spouse.

Deficiency suit

The lender does not obtain a deficiency judgment or lien in a non-judicial foreclosure action. The lender instead must file a new deficiency suit against the borrower.

Listing agreement

The listing agreement is a legally-binding contract that creates an agency relationship authorizing a broker to serve as the agent for a principal in a real estate transaction. Most listing agreements are bilateral employment contracts - meaning that the owner hires the broker and promises to pay a commission in exchange for the broker's promise to locate a "ready, willing and able" buyer or tenant for the owner. Listing agreements must be in writing to be enforceable. Oral listings do not afford a broker any legal protection. If the listing agreement is not in writing, a broker could not collect his or her commission if the seller refused to pay. The three most common types of listings are: -Open Listing -Exclusive Right to Sell Listing -Exclusive Agency Listing

Specifics of compensation

The listing agreement must show the broker's compensation as a fixed amount. It is usually indicated as a percentage of the sale price, but it could be a specific flat fee. As we mentioned when we talked about net listings, the compensation may NOT be indicated as whatever is left over from some net price the seller has in mind to receive.

Real estate tax lien

The local legal taxing authority annually places a real estate tax lien, also called an ad valorem tax lien, against properties as security for payment of the annual property tax. The amount of a particular lien is based on the taxed property's assessed value and the local tax rate.

Minimum contract price

The lowest amount that the seller can sell the property for and still cover all of his expenses (commission, closing costs and existing mortgage) and receive the desired net proceeds at the closing.

Loan payments

The monthly amounts paid on the loan that usually includes a principal portion and an interest portion. The interest portion is not applied to the principal balance and therefore DOES NOT AFFECT the principal balance owed.

General warranty deeds

The most commonly used deed. It contains the fullest possible assurances of good title and protection for the grantee. The deed is technically a bargain and sale deed in which the grantor promises to defend against any and all claims to the title.

Contract creation

The mutual consent required for a valid contract is reached through the process of offer and acceptance: The offeror proposes contract terms in an offer to the offeree. If the offeree accepts all terms without amendment, the offer becomes a contract. The exact point at which the offer becomes a contract is when the offeree gives the offeror notice of the acceptance.

Rectangular survey system - range

The north-south area between consecutive meridians is called a range. The area labeled "B" in the exhibit is a range. A range is identified by its relationship to the principal meridian. All ranges are six miles wide.

Rectangular survey system - meridian

The north-south, longitudinal lines on the survey grid are meridians. The principal meridian is the single designated meridian for identifying townships in the principal meridian's geographical "jurisdiction." There are 37 principal meridians in the national survey. In the exhibit, the principal meridian is the Tallahassee Principal Meridian. Every 24 miles east and west of a principal meridian is a guide meridian (not indicated in the exhibit) that is used as a correction for the curvature of the earth. Common meridians are approximately six miles apart, measuring from a guide meridian, and form the east and west boundaries of the townships.

Voluntary, good faith act

The parties must create the contract in good faith as a free and voluntary act. A contract is thus voidable if one party acted under duress, coercion, fraud, or misrepresentation.

Sales contracts: percent of listing price definition and formula

The percentage listing price is a ratio of the offer to the listing price. Formula: Percentage of listing price = Offer ÷ Listing price Example:A property listed for $150,000 receives an offer for $120,000. The offer's percentage of listing price is: $120,000 ÷ $150,000 = 80%

Complainant

The person with a complaint, usually in regards to harassment to the Pennsylvania Real Estate Commission.

Fair market value

The price or value that a prospective buyer would expect to pay or be charged for, for a similar item of like quality and quantity in a retail outlet that offers the item for sale to the general public.

Identifying a range

The principal meridian divides all ranges into east ranges and west ranges. A range to the west of the principal meridian is identified by an "R" for range, a number representing its ordinal position from the principal meridian, and a "W" representing that it is west of the principal meridian. For example, the third range west of the principal meridian would be denoted "R3W." A range east of the principal meridian is designated "E" instead of "W." Thus the fifth range east of the principal meridian would be identified as "R5E."

Rectangular survey system - sections of a township

The rectangular survey system divides a township into thirty-six squares called sections. Each side of a section is one mile in length. Thus the area of a section is one square mile, or 640 acres. As the next exhibit illustrates, the sections in a township are numbered sequentially starting with Section 1 in the northeast corner, proceeding east to west across the top row, continuing from west to east across the next lower row, and so on, alternately, ending with Section 36 in the southeast corner.

Public land use control

The regulation of land use by government organizations in the form of zoning laws, building codes, subdivision ordinances, and environmental protection laws. Other examples of public land use control are: -subdivision regulations -building codes -eminent domain -environmental restrictions -development requirements

Easement non-exclusive use

The servient tenement, as well as the dominant tenement, may use the easement area, provided the use does not unreasonably obstruct the dominant use.

Converting section fractions into acres

The size in acres of a subsection of a township is a fraction of 640 acres, since there are 640 acres in a section. For example, the acreage of a quarter section is one quarter of 640, or 160 acres. One half of that one quarter is 80 acres. A quick method of calculating the acreage of a parcel from its legal description is as follows: Multiply the denominators of the fractional descriptions together. Divide 640 by the resulting number. For example: SE 1/4 of a Section = 640/4 = 160 acres W 1/2 of the NW 1/4 of a Section = 640/ (2 x 4) = 80 acres E 1/2 of the NE 1/4 of the NE 1/4 of a Section = 640/(2 x 4 x 4) = 20 acres

Escrow records - journal

The sponsoring broker must keep a journal for each escrow account. This journal must show the chronological sequence in which funds are received and disbursed by the sponsoring broker. -For funds received, the journal must include the date the funds were received, the name of the person on whose behalf the funds are delivered to that broker, and the amount of money received. -For funds disbursed, the journal must include the date, the payee, the check number, and the amount disbursed. -Every entry must show the running balance after each receipt or disbursement.

Escrow records - ledger

The sponsoring broker will maintain a ledger for each transaction. The ledger will: -Show the receipt and the disbursement of funds affecting a single particular transaction such as between buyer and seller, or landlord and tenant, or the respective parties to any other relationship. -Include the names of all parties to a transaction, the amount of funds the sponsoring broker received, and the date the broker received the funds. -Show the date of disbursement, the payee, the check number, and the amount disbursed, when funds are disbursed. -Segregate one transaction from another transaction. The sponsoring broker will keep a separate ledger or a separate section of each ledger (as he or she chooses) for each of the various kinds of real estate transactions, such as leases and sales. If the ledger is computer generated from the same data entry from which the journal is generated, the sponsoring broker must maintain copies of the bank deposit slips, bank disbursement slips, or other bank receipts, to account for the data on the ledger.

Chain of title

The succession of conveyances, from some accepted starting point, whereby the present holder of real property derives title.

Ad valorem taxation

The tax rate is equal to a fraction of the market price of each unit purchased.

Tax liability

The total amount of taxes owed.

Tax base

The total tax-assessed value of all real property in a particular jurisdiction.

When handling money for another under an agreement of cemetery property,

The transaction is considered closed when the buyer receives a copy of the agreement of sale.

Agency relationships

There are four common types of agency relationships that exist: -Single agency -Seller/Landlord agency -Buyer/Tenant agency -Consensual dual agency

Recording system

There are no federal recording standards. Each state prescribes procedures and requirements for recording in public title records: forms, proper execution, acknowledgment, and witnessing.

The Commission required that every comparative market analysis contain this disclosure:

This analysis has not been performed in accordance with the Uniform Standards of Professional Practice which require valuers to act as unbiased, disinterested third parties with impartiality, objectivity and independence and without accommodation of personal interest. It is not to be construed as an appraisal and may not be used as such for any purpose.

Sales contracts: earnest money deposit definition and formula

This calculation is used to determine an appropriate amount of earnest money to include with an offer. Formula: Deposit = Offering price x required or market-accepted percentage Example: A seller requires a 2% deposit on a property listed for $320,000. The required deposit (assuming a full price offer) is: $320,000 x 2% = $6,400

Transferability

Title may not be transferrable if there is a legal issue, making the property have little value until it is clear. When loans are available, and rates are low, real estate is readily transferable from seller to buyer.

Torrens system

Title passes only when the deed has been registered on the certificate of title and a transfer certificate has been issued to the new owner.

Buyer protection

Title records protect the buyer by revealing whether a property has marketable title, one free of undesirable encumbrances. The buyer is legally responsible for knowing the condition of title, since it is a matter of public record. Recording a transaction also protects a buyer by replacing the deed as evidence of ownership.

Lienholder protection

Title records protect the lienholder by putting the public on notice that the lien exists, and that it may be the basis for a foreclosure action. Recording also establishes the lien's priority.

Public notice

Title records protect the public by giving all concerned parties constructive notice of the condition of a property's legal title, who owns the property, who maintains claims and encumbrances against the property.

Purpose of the consumer notice

To advice the consumer that the broker (or salesperson) is not representing the consumer in the transaction. The licensee must make it clear who he is representing from the initial interview.

Amount of growth for a master plan

To formulate a growth strategy, a plan initially forecasts growth trends then estimates how well the municipality can keep pace with the growth forecast. The outcome is a policy position that limits building permits and development projects to desired growth parameters.

Purpose of taxation

To raise funds to pay for municipal services. The collection of taxes provides important revenue for the local government and for area schools. Property taxes are based on the assessed value of the property. These values are also used to calculate the amount of state aid for education. County and local governments establish tax districts to collect funds for providing specific services. The boundaries of such districts typically do not coincide with municipal boundaries. The major tax district in most areas is the school district. Other important tax districts are those for fire protection, community colleges, and parks.

Reprimand

To scold; find fault with by letter, becoming a permanent part of the licensee's record.

Establishment of priority lien

Two factors primarily determine lien priority: -the lien's categorization as superior or junior -the date of recordation of the lien All superior liens take precedence over all junior liens regardless of recording date, since they are considered to be matters of public record not requiring further constructive notice. Thus, a real estate tax lien (senior) recorded on June 15 has priority over an income tax lien (junior) recorded on June 1.

Discriminatory advertising

Used by agents to profit from quick sales. This is expressly forbidden by Fair Housing Acts and the PA Human Relations Act as well as Professional and Vocational Standards. Will be considered by the Commission as bad faith which can lead to the loss of license in addition to Federal charges. Examples include: -Panic selling -Panic peddling -Blockbusting They are all unscrupulous agents going into neighborhoods, trying to panic sellers into selling.

Personal representative's deed

Used by an executor to convey a decedent's estate, also called an executor's deed.

Voluntary alienation

Voluntary alienation is an unforced transfer of title by sale or gift from an owner to another party. If the transferor is a government entity and the recipient is a private party, the conveyance is a public grant. If the transferor is a private party, the conveyance is a private grant. A living owner makes a private grant by means of a deed of conveyance, or deed. A private grant that occurs when the owner dies is a transfer by will.

Voltage and amperage

Voltage is a measure of how much pressure the electrons in a circuit are under. Amperage is a measure of the amount of electrons moving through the circuit. For example, when a light is on, there is a voltage across the filament of the bulb that is pushing amperage through the circuit. When the switch is off there is voltage across the switch, but there is no current flowing because it is "blocked" by the switch. Most of the time you can identify whether an appliance, a tool, or a fixture such as a lamp, is 110 or 220 volts by looking at a tag that is attached to the appliance or fixture. Also, the plugs and receptacles for the two types of voltage are different. In most cases, 110 volt plugs have either two straight prongs or three straight prongs, while 220 plugs have three prongs, one straight and two that are L-shaped. Amperage is measured in amperes which can then be converted into watts or kilowatts to determine the amount needed in the electric capacity for usage projected for the building. If the wire size or service is not strong enough for the building's needs, the circuits can overheat, resulting in blown fuses or tripped circuit breakers. A fuse is a protective device containing a wire that melts and breaks the circuit when the current exceeds a certain value. Melted or "blown" fuses can be replaced with new ones. A circuit breaker is an automatic switch that stops the flow of electric current in a suddenly overloaded or otherwise abnormally stressed electric circuit. Circuit breakers "trip." Unlike fuses, they don't need to be replaced, just reset. The panel where the fuses or circuit breakers are located may have an amperage rating written on it. However, the only sure way to know the service size is by looking at the service entrance cables for a size indication. The number of fuses or circuit breakers is not an indicator of size, although each fuse or breaker can be identified as to the number of amps it can carry. This rating is specified in the National Electric Code.

Wall framing

Wall framing refers to both the exterior and interior walls. We talked a little about the exterior framing on a previous screen. As we said, the wall studs are usually 2 x 4 in size with 16-inch spacing. Those walls that support the ceiling and the roof are called bearing walls. Non-bearing walls are part of the interior framework and do not support the building itself. The studs are arranged in a row with their bottom ends bearing on a long wooden member called a bottom plate or sole plate and their tops capped with another plate called a top plate. Double top plates are used in load-bearing walls and partitions. The double top plate is sometimes called a flitch beam and is made up of two or more structural timbers bolted together with a steel plate sandwiched between them for added strength. Headers are required at window and door openings to carry vertical loads across the opening. Headers may be supported by doubled studs or, where the span does not exceed 3 feet, framing anchors may be used with single supporting studs. Headers are also known as lintels. They support the ceiling and the roof over the doors and windows.

Vending requirements

Water and wastes are carried from the kitchen, laundry and bathroom fixtures through a system of pipes that lead to the main structure drain. A venting system is made up of pipes that allow air to flow to and from the drainage system. The vent system allows gases and odors to circulate up through the system and escape into the outside air. Every plumbing fixture should be connected to a vent pipe that leads to a roof vent pipe. The local building code dictates the venting requirements.

In-house sales

When a broker listing a house also sells the house (or another broker in that firm does). The broker really has just two options in such a situation: -The broker can treat the buyer (or tenant) strictly as a customer, being sure the buyer (or tenant) understands that the firm is employed by the seller (or landlord) and working for the seller's (landlord's) best interests. -If the buyer (tenant) wants client representation from the broker, the broker must inform both parties of the potential for dual agency, and then can broach the idea of either consensual dual agency or designated agency, as described earlier in this unit.

Reporting of crimes and disciplinary actions

When a licensee has been convicted of or pled guilty or nolo contendere to any felony or misdemeanor, the licensee must report the verdict or plea within 30 days of the verdict or plea to the Commission.A licensee must notify the Commission of any disciplinary action taken by a real estate licensing authority in another jurisdiction (state) within 30 days of receiving notice of the disciplinary action. This means that if a nonresident salesperson or broker has a license in another state and the other state gives a disciplinary action to that licensee, the state of Pennsylvania will need to be notified by the licensee.

Agreement for sale of a time-share or campground membership

When an agreement for the purchase of a time share or campground membership is created, a statement regarding the purchaser's right to cancel must be written in at least 10 point size, immediately above the signature line for the purchaser in the following form: "You, the purchaser, may cancel this purchase at any time prior to midnight on the fifth day following the date of this transaction. If you desire to cancel, you are required to notify the seller, in writing, at (insert address). Such notice shall be given by certified return receipt mail or by any other bona fide means of delivery which provides you with a receipt. Such notice shall be effective upon being postmarked by the United States Postal Service or upon deposit of the notice with any bona fide means of delivery which provides you with a receipt. "This clause is to be separately initialed by the purchaser and a copy given to him at the time of signing.

Roof finishing

When roof rafters are installed, they typically extend beyond the structure walls to form an overhang. The overhangs are called eaves. The eaves are the lowest part of the roof. The contractor then installs a thin impermeable material called flashing to prevent water penetration and/or provide water drainage between the roof and the walls. Flashing is often installed over exterior door openings and windows as well. The term fascia is used to describe the horizontal "fascia board" which caps the end of rafters outside the building. The fascia can be used to hold the rain gutter. The finished surface below the fascia and rafters is called the soffit.

Amortization loan

With this loan, the amount of principal paid each months can be calculated using 3 factors: Principal Balance, Interest rate, and Monthly Payment.

Lien priority

Within the superior and inferior categories, a ranking of lien priority determines the order of the liens' claims on the security underlying the debt. The highest ranking lien is first to receive proceeds from the foreclosed and liquidated security. The lien with lowest priority is last in line. The owner receives any sale proceeds that remain after all lienors receive their due.

Wiring materials

Wiring runs throughout the structure from the electric panel box through the walls to the outlets. Outlets can be plugs, switches and light fixtures. -Aluminum versus Copper Aluminum wiring is used where the current is the heaviest, usually where the current comes into the building. It is also used for heavy appliances, such as dryers and air conditioners. Aluminum wiring has been known to cause overheating in outlets and switches that are not designed for use with aluminum wire, so older buildings should be inspected to be sure there are no potential wiring problems. Copper wiring does not overheat and it can carry both large and small loads. Most new buildings have copper wire throughout, except at the service entrance where aluminum is still used. -BX Cable BX cable is technically known as armored cable or "AC." It has a flexible aluminum or steel sheath over the conductors and is fairly resistant to damage. -Romex Cable Romex is a brand name for a type of plastic insulated wire, sometimes called non-metallic sheath. The formal name is NM. This cable is suitable for use in dry, protected areas that are not subject to mechanical damage or excessive heat. Most new homes are wired almost exclusively with NM wire. -Conduit A pipe made from plastic, steel or aluminum that is used for protection and routing of electrical wiring, conduit can be used for both above ground and underground applications. -Greenfield Conductors This is a type of flexible metal conduit (FMC) similar to armored cable, except that the conductors are installed by the electrician. With armored cable, the armor is wrapped around the conductors at the factory to form a complete cable assembly. FMC is often referred to as Greenfield after the person who submitted the product for listing in 1902. FMC is not suitable for wet locations and it should not be buried underground or in concrete. It is easy to use and work with in small, confined spaces.

Your marketing plan

Your standard items might include all of the following, plus others: -Install the lockbox -Put up the "For Sale" sign -Enter the listing into the MLS. -Place a classified ad in the weekend paper. -Host agent and MLS home tours. -Send a weekly activity report. -Compile comments from agents and visitors. Customized items in your marketing plan could include: -Do a virtual or video tour. -Install a "talking house" sign. -Place an ad in a "specialty" newspaper. -Hold an evening wine and cheese reception for agents. The customized activities in your plan are limited only by your ability to devise unique strategies to showcase a particular property.

MLS listing information

You will probably collect the following information: -Listing price -Whether or not the property will be advertised on the Internet -Whether the address should be shown to the public -Selling office commission and comments regarding such -Number of bedrooms -Total number of bathrooms -Lot size, with an indicator of whether the number is square feet or acres -Year built -Listing date -Expiration date -School district code with spaces to write in the names of the schools -Occupant type: owner-occupied, presale, tenant or vacant -Owner's name, phone number, city and state -Occupant's name -Phone number to call for showing -Descriptions of lands and improvements -Driving directions to the property You may also collect information regarding a property's location, including the lot number, block number, and plat/subdivision/building name. Also information regarding: -Possession -Showing parameters, such as when the property can be shown and under what conditions -Whether or not a Seller's Property Disclosure has been provided -Tax year and tax amount -Homeowner dues or rental amounts, if applicable -Potential financing terms Site information, such as: -Lot dimensions -Waterfront footage -Zoning code and jurisdiction -Topography, such as level or pasture -View, such as golf course or mountain -Lot details, such as cul-de-sac, paved street, corner lot -Waterfront features - ocean, lake, high bank, etc. -Site features - indoor/outdoor arena, fenced, outbuildings, etc. -Pool - if so, what kind Building information, such as: -Sewer or septic -Type of basement -Type of parking available -Builder name -Style of construction -Specific information about the home if it is a manufactured home -Environmental certifications -Foundation type -Building condition -Roof type -Exterior finish -Architecture -Interior features, such as: -Finished versus unfinished square footage -Energy sources -Heating and cooling type -Floor coverings -Fireplace, ceiling fans, walk-in closets, sauna, etc. -Appliances that stay -Total number full, three-quarter, and half bathrooms -Where each of the rooms is located relative to the main floor Utility/Community information, such as: -Community features -Source of the drinking water supply -Spaces to write in the names of the utility companies and nearby bus line

Partition deed

used to convey co-owned property in compliance with a court order resulting from a partition suit; a partition suit terminates an estate when one or more co-owners want to dissolve their relationship and are unable to do so without the assistance of a court.

Voidable

A term applied to a contract that one or both parties have the ability to either withdraw from or enforce.

The following items must be printed in bold face if they are part of the agreement of sale:

1. A provision relieving the seller from responsibility for defects involving the sale property, or a provision requiring the buyer to execute a release to that effect at the time of settlement, or provision of similar import. 2. A provision reserving the builder-seller the right to change or depart from, the building specifications for the same property.

Mechanic's lien

A statutory lien on the real property of another, created to ensure payment for work performed and materials furnished in the repair or improvement of real property, such as a building. A mechanic's lien secures the costs of labor, materials, and supplies incurred in the repair or construction of real property improvements. If a property owner fails to pay for work performed, or materials supplied, a worker or supplier can file a lien to force the sale of the property and collect the debt.

Lead

A heavy metal once widely used in paints and plumbing materials. It has been banned in paint since 1978 and in new plumbing since 1988. It continues to be a health threat, particularly to children, as it occurs in airborne paint particles, paint chips, and soil and groundwater polluted by various external sources of emission. Inspection should be performed by licensed lead inspectors.

Steam systems

A steam system delivers steam to radiators or other heating elements where the steam gives up its heat and is condensed back to water. The radiators and steam supply pipes are pitched so that gravity eventually takes this condensed water back down through the steam supply piping to the boiler where it can once again be turned into steam and returned to the radiators.

How subagency works:

A subagent is an agent who assists in some or all of the duties assigned by the agent to do a job (such as selling a home) for a Principal. In some Multiple Listing Organizations where brokers of different companies offer to help a broker sell his listings in exchange for his help in selling their listings, a subagency relationship can be created under certain circumstances. Disclosure must be made so all involved understand the specific role that a subagent plays. In this situation NO ONE REPRESENTS THE BUYER!

Pur autre vie

A pur autre vie life estate endures over the lifetime of a third person, after which the property passes from the tenant holder to the original grantor (reversion) or a third party (remainderman). For example, Yvonne grants a life estate to Ryan, to endure over the lifetime of Yvonne's husband Steve. Upon Steve's death, Yvonne establishes that her mother, Rose, will receive the property.

Slab-on-grade construction

A structure which does not include a basement. The first floor is made up of a concrete slab, which lays on the ground and supported by foundation walls. Around the edge of the slab, the concrete forms a beam that is perhaps 2 feet deep. The rest of the slab is 4 or 6 inches thick. A 4-inch or 6-inch layer of gravel lies beneath the slab. A 4-millimeter sheet of plastic lies between the concrete and the gravel to keep moisture out. Embedded in the concrete is 6-inch by 6-inch wire mesh and steel reinforcing bars. This kind of foundation is often referred to as a floating slab. It "floats" on the soil, with the deeper concrete around the edge holding it in place. In northern climates, the concrete around the edge has to extend deep enough to remain below the frost line in winter.

Calculating section size

A section: Is 1 mile wide and 1 mile deep. Contains 640 Acres Example: How many acres are there in the S ½ of the SE ¼ of the SW ¼ of section 24, township 32 north, range 18 east? Steps: Ignore the text "section 24, township 32 north, range 18 east." It doesn't affect the answer. Multiply all denominators together (the bottom number of the fraction), 2 x 4 x 4 = 32. Divide 640 by that answer, 640 ÷ 32 = 20 acres.

Reassessment

Assessments naturally differ when the values of the properties are different. But they can also differ if they are not regularly updated. If a property in a certain neighborhood increases in value but is not reassessed, over time it will become under-assessed. Properties are reassessed for tax purposes on a regular schedule that is established by statute. But reassessments also occur under other circumstances.

Posting of suspension notice

Being found guilty of the Act (license law violations) is a very serious situation. A broker or cemetery broker whose license has been suspended cannot work as a broker. A broker or cemetery broker who has been suspended must return his license to the Commission. In addition, the broker must post a notice which will be provided by the Commission and must be displayed prominently on or near the front of every office or branch office of the broker. Failure to post the notice will be grounds for further disciplinary action.

Air conditioning systems

Central air conditioning and HVAC systems are now common in new construction. Most air conditioning units are situated outside the building, either near a wall or on the roof. However, in some instances, the unit is located in the basement of the structure. Air conditioning systems are combined with forced-air heating units to deliver heat through the ductwork system in cold seasons and cool, dehumidified air for air conditioning through the same ducts during warm seasons. The air-conditioning unit pumps liquid refrigerant (a liquid that cools something) into the air-handling unit (AHU), the unit inside the home that generates heated or cooled air. The most common refrigerant used in air conditioners is Freon. The AHU generates cool air and forces it through the home through the ductwork and into rooms. The ductwork system also returns air from the rooms back into the AHU for re-circulation. Meanwhile, the slightly warmed refrigerant travels back outside to the air conditioner, to be cooled and re-circulated. Air-cooled systems use air as the condensing medium and have a fan that moves the air over the coils. Water-cooled systems use water as the condensing medium and use a pump to circulate the water through the condenser and out to a cooling tower. Most central air conditioning units can be expected to last about 15-20 years. However this number may be affected by the climate in the geographical location of the unit. For example, a central air conditioning unit in Florida probably has a life expectancy of closer to 10 years.

When the employed licensees make decisions without the direction or knowledge by the broker,

Certain restrictions on the broker's liability occur. Imputed Knowledge, limitations, the brokers license is not in jeopardy from revocation or suspension of license unless it shall appear during hearings that the employing broker had actual knowledge of law violation on the part of the salesperson/ This course of action shown by the employee will constitute prima facie evidence of knowledge on the part of the employer.

Offer

Expresses the offeror's intention to enter into a contract with an offeree to perform the terms of the agreement in exchange for the offeree's performance. In a real estate sale or lease contract, the offer must clearly contain all intended terms of the contract in writing and be communicated to the offeree. If an offer contains an expiration date and the phrase "time is of the essence," the offer expires at exactly the time specified. In the absence of a stated time period, the offeree has a "reasonable" time to accept an offer.

Erosin

Decrease of land by the gradual wearing away that is caused by flowing water.

The torrens system

Differs from other title recording systems in that title passes only when the conveyance has been duly registered on the title certificate itself. Encumbrances likewise have no legal effect until they are recorded. In effect, the Torrens title record is the title itself. It is not necessary to search public records to ascertain the status of title; it is all reflected on the title certificate. To enter a property in the Torrens system, a court action must first clear title by giving notice to all potential interest holders that they must express their claims. At the end of the proceeding, the court decrees that the title is accepted into Torrens registration. The Torrens registry retains the original registration documents and provides copies to the recorder or other appropriate office. All subsequent transactions affecting title must follow the proper Torrens recording procedures and requirements.

Pricing a property

Even though it is ultimately up to the seller to decide on the final listing price, it is the listing agent's responsibility to provide the seller with advice and information to help the seller arrive at the best figure. A listing agent helps the sellers set a realistic selling price by considering the: -Sellers wishes -Market conditions -Timing of the sale

Seller's net formula

Formula: Sale price - (sale price x commission) - Other closing costs - Loan balance = Seller's net Example: A home sells for $260,000 and has a loan balance of $200,000 at closing. The commission is 7% and other closing costs are $2,000. What is the seller's net? Steps: 1. Multiply the sales price by the commission rate: $260,000 x .07 = $18,200 2. Subtract as needed: $260,000 sales price - $18,200 commission - $2,000 other closing costs - $200,000 loan balance = $39,800 seller's net

Converting mill rates formula

Formula: Tax = Taxable value/1,000 x Mill rate Example: A tax rate on a house with a $200,000 taxable value is 7 mills per thousand dollars of assessed valuation. What is the tax? Tax = ($200,000 ÷ 1,000) x 7 mills = $1,400

Tax base formula

Formula: Tax base = Assessed valuations - Exemptions Example: A town has a total assessed valuation of $20,000,000 and exemptions of $4,000,000. What is the tax base? $20,000,000 - 4,000,000 = $16,000,000

Tax liability formula

Formula: Tax liability = (NOI + Reserves - Interest expense - Depreciation) x Tax bracket Example: An office building has NOI of $200,000 an annual reserve expense of $20,000, interest expense of $130,000 and annual depreciation of $50,000. Assuming a 28% tax bracket, what is its income tax liability? Tax liability = ($200,000 + $20,000 - $130,000 - $50,000) x 28% = $11,200

Total depreciation formula

Formula: Total depreciation = Beginning depreciable basis/Depreciation term (years) x Years depreciated

Cost approach formula

Formula: Value = Land value + (Improvements + Capital additions - Depreciation) Example:Land value = $50,000; home replacement cost = $150,000; new garage added @ $30,000; total depreciation = $10,000 Value = $50,000 + (150,000 + 30,000 - 10,000) = $220,000

Square feet to acres conversions

Formula:Acres = Total SF/43,560 1 acre = 43,560 SF

Depreciation formulas

Formulas: 1. Annual depreciation = Beginning depreciable basis/Depreciation tern (Number of years) 2. Depreciable basis = (Initial property value + Any capital improvements - Land Value) Example: Property value = $500,000; land value = $110,000; depreciation term = 39 years Step 1: ($500,000 - 110,000) = $390,000 depreciable basis Step 2: ($390,000 ÷ 39 years) = $10,000 annual depreciation

Gross income multiplier (GIM) formulas

Formulas: 1. Gross income multiplier = Sales price/Annual income 2. Sales price = Annual income x GIM 3. Annual income = Sales price/Gross income multiplier Examples: 1. What is the value of a commercial property with an annual income of $33,600 and a GIM of 9.3? $33,600 income x 9.3 GIM = $312,480 2. What is the GIM of a commercial property with annual income of $33,600 and a value of $312,480?$312,480 price ÷ $33,600 = 9.3 GIM

Adaptation (real vs personal property: differentiation criteria)

If an item is uniquely adapted to the property, or the property is custom-designed to accommodate the item, it may be deemed real property whether the item is easily removable or not. House keys, a garbage compactor, and a removable door screen are examples.

Functionality (real vs personal property: differentiation criteria)

If an item is vital to the operation of the building, it may be deemed a fixture, even though perhaps easily removable. Window-unit air conditioners and detachable solar panels are possible examples.

Condition subsequent

If any condition is violated, the previous owner may repossess the property. However, reversion of the estate is not automatic; the grantor must re-take physical possession within a certain time frame.

Modifying a listing

If at any time during the course of the listing period, you decide that you made an error in your assessment of what the property is worth or if the market conditions change in such a way as to suggest the price should be modified, you'll need to let the sellers know immediately. The sellers may respond negatively to suggestions about a price modification, but it is possible to persuade them to your point of view, especially if you can support your recommendations with a solid argument. Sellers don't want to see their homes on the market for a long stretch with no activity and little chance of a sale. If you do make a change to the price or listing period, document the change using a contract amendment form that is provided by your broker or your local Real Estate Board. This will give you a paper trail showing what was done with the property and when. Also, alert the members of your MLS of the price change through an e-mail rather than hoping they will notice it on the MLS site.

Tax liens

Other than those for ad valorem, assessment, and estate tax are junior liens. They include: -Federal income tax lien -- placed on a taxpayer's real and personal property for failure to pay income taxes -State corporate income tax lien -- filed against corporate property for failure to pay taxes -State intangible tax lien -- filed for non-payment of taxes on intangible property -State Corporation Franchise Tax Lien -- filed to ensure collection of fees to do business within a state

Riparian

Ownership up to water's edge or to center of stream and government owns the water.

Rental listing agent

Owns or manages a business which collects rental info for the purpose of referring prospective tenants to rental units or locations. These salespersons do not need to be affiliated with a broker.

Conducting an open house

Preparing the Property Here are a few tips to show off the property in its best light: -Put open house signs in appropriate areas, with permission if needed. -Keep the garage door closed. -Make sure all outside walkways and driveways are clear of hoses, toys, etc. -Open the drapes on all the windows for natural light (unless a particular window has a poor view). -Make sure all toilets are flushed and seat lids are down. -Turn on lights in dark areas. -Start a small fire in the fireplace. It adds a nice touch. (Get sellers' permission first.) -Add a "baking" aroma by putting one teaspoon of vanilla in a bowl-shaped piece of foil wrap. Set it in the oven at 275 degrees (with seller permission). -With sellers' agreement, have coffee and cookies on hand. Play some nice background music. During the Open House It's a good idea to have each visitor sign in and let you know why they came. You can design your sign-in sheet to ask if the visitor is represented by another agent, so that you can determine if this person might be a potential client for you. Be sure to give each visitor a copy of the property flyer and your business card. You should also have flyers available for other comparable homes in this and lower price ranges. Take the opportunity to dialogue with the visitors to ascertain their needs and you just might be able to interest them in another of your properties that is better suited to them.

Appeals

Property owners may object to the assessed value of their property, but not to the tax rate. An owner usually has a certain period to protest after receiving notice of the assessed value. According to local law, a property owner must present evidence that the assessor made an error to a review board or appeal board. Typical evidence would include market data on comparable properties that sold recently, or evidence that neighboring properties had less appreciation or even declined in assessed value in comparison with the protestor's property.

Special purpose real estate

Property that does not fall into one of the above categories. It has a unique use to the persons who own and use it, such as churches, hospitals, schools and government buildings. Other types of property that fall into the special use category include: -Public open space - usually owned by private persons or the government and includes undeveloped shorelines, public parks and lakes. -Recreational areas, such as parks, water access areas, trails and shorelines. These are usually preserved for ecological or educational reasons.

Forms of specialization for brokers

Property type, geographical area, type of transaction, type of client, type of relationship.

Additional terms (listing agreement clause)

Provides space for any agreement or terms not covered by any other section, such as a seller paying for a termite report.

Restrictive covenants

Provision in a property deed preventing sale to a person of a particular race or religion; loan discrimination; ruled unconstitutional.

Revocation (form of contract termination)

Revocation is cancellation of the contract by one party without the consent of the other. For example, a seller may revoke a listing to take the property off the market. While all parties have the power to revoke, they may not have a defensible right. In the absence of justifiable grounds, a revocation may not relieve the revoking party of contract obligations.

Land plus appurtenances

Rights, privileges, and improvements that belong to and pass with the transfer of the property.

Tax rate limitations

Some states, counties or other taxing districts place limitations or caps on the absolute millage rate or the annual increase in millage for property taxes. In such situations, taxing bodies are forced to limit their budget requirements, unless there has been a sufficient increase in tax base to produce the required funds without raising the millage rate.

An exclusive listing agreement may NOT contain;

-A listing period exceeding one year; -An automatic renewal clause; -A cancellation notice to terminate the agreement at the end of the listing period; -Authority of the broker to execute a signed agreement for the owner or lessor; -An option by the broker to purchase the listed property; -Authority of the broker to confess judgment against the owner or lessor for the Commission in the event of a sale or lease.

New amendment permits a broker to also release escrow funds where there is:

-A prior agreement in writing or electronic form as to disposition of the funds or in the event of a dispute regarding entitlement, or -Receipt of instructions in writing or electronic form, signed by all of the parties at any time after the broker's receipt of the funds, directing the broker to release some or all of the funds.

The Commission is required to give the following additional information for license renewal:

-The maximum length of time to place a license on inactive status is 5 years; -The persons who place their licenses on inactive must show documentation of 14 hours of continuing education in order to reactivate; -The procedure and fee required for activating an inactive license; -That any licensee who does not activate his license after five years must retake the real estate exam.

Industrial zoning regulates:

-intensity of usage -type of industrial activity -environmental consequences A municipality may not allow some industrial zones, such as heavy industrial, at all. The industrial park is a relatively recent concept in industrial zoning.

A real estate education provider must require each of its students to enter into stupid enrollment agreement which contains:

-An itemized list of tuition and other fees, services and materials to be received by the student; -A statement of policy regarding the refund of tuition and fees if the student were to withdraw or be dismissed or if the school were to terminate before the end of the year; -Contain the Bureau's toll free telephone number, 1-(800)-822-2113 so that a student may call to obtain information about filing a complaint against the real estate education provider.

Deceptive conduct in advertising stated by the commission

-Any licensee who does not comply with A and B; -Any licensee that fails to disclose the possibility that a certain prize, etc. may not be distributed or awarded; -Any licensee who gives a misleading description of a prize.

Legal concept of real estate encompasses:

-Land -All man-made structures that are "permanently" attached to the land Real estate therefore includes, in addition to land, such things as fences, streets, buildings, wells, sewers, sidewalks and piers. Such man-made structures attached to the land are called improvements. The phrase "permanently attached" refers primarily to one's intention in attaching the item.

Duties of a licensee

-The licensee may not give assurances or advice concerning real estate that he knows, or reasonably should know, is incorrect or inaccurate. -A licensee may not be a party to materially false or inaccurate representation in writing regarding a real estate transaction in which he is acting in a representative capacity.

Deadline requirements for depositing money into an escrow account:

-A broker must deposit money belonging to another into an escrow account by the end of the next business day following its receipt in the real estate office where the escrow records are maintained. -If the money comes from another broker in the form of a check, the broker may, with written consent, refrain from depositing money into an escrow account pending the seller's or lessor's acceptance of that offer. In this case, the broker must deposit the check into a escrow account within one business day of the seller or lessor's acceptance of the offer.

Disclosure of interest

-A licensee cannot participate in a real estate transaction that he has an ownership unless he first discloses in interest in writing to all parties. -A licensee may not represent or purport to represent more than one party in a real estate transaction without the written consent of all parties. -A broker who manages rental property may not accept a commission rebate or profit on expenditures made for the lessor without the lessor's written consent. -A licensee who provides financial services, title services, and insurance, construction, repair or inspection services may not require the consumer to use any of these services. -If the consumer chooses to use any of the services listed above, the licensee must provide the consumer with a written disclosure of any financial interest including referral fee or commission that the licensee will receive for the service. -A licensee has a continuing obligation to disclose to a principal any conflict of interest in a reasonable time after learning about the conflict of interest.

Lien legal features

-A lien does not convey ownership, with one exception. A lienor generally has an equitable interest in the property, but not legal ownership. The exception is a mortgage lien on a property in a title-theory state. In these states, the mortgage transaction conveys legal title to the lender, who holds it until the mortgage obligations are satisfied. During the mortgage loan period, the borrower has equitable title to the property. -A lien attaches to the property. If the property is transferred, the new owner acquires the lien securing the payment of the debt. In addition, the creditor may take foreclosure action against the new owner for satisfaction of the debt. -A property may be subject to multiple liens. There may be numerous liens against a particular property. The more liens there are recorded against a property, the less secure the collateral is for a creditor, since the total value of all liens may approach or exceed the total value of the property. -A lien terminates on payment of the debt and recording of documents. Payment of the debt and recording of the appropriate satisfaction documents ordinarily terminate a lien. If a default occurs, a suit for judgment or foreclosure enforces the lien. These actions force the sale of the property.

Right to cancel purchase of time share and campground membership

-A purchaser of a time share or campground membership has the right to cancel the purchase until midnight of the 5th day following the date on which the purchaser executed the purchase contract. -Within ten days after the receipt of notice of cancellation, all payments made must be returned to the purchaser and an acknowledgement made that the sales contract is VOID sent to the purchaser. When promotional prizes, gifts etc. have been used, these must remain the property of the purchaser. -The right of cancellation is not waivable by any purchaser and purchaser who cancels shall not be held liable for any damaged as a result of the cancellation. -These rules are applicable to time shares and campground memberships located within the Commonwealth as well as to time shares and campground memberships which are located outside the Commonwealth but which the purchase contract was executed by the purchaser within this Commonwealth. -Besides a violation of the Act, a violation of this section by an individual, corporation, partnership, association or other entity is deemed a violation of the Unfair Trade and Consumer Protection Law. Any actions brought by the Attorney General to enforce this section shall be in addition to any actions which the Commission may bring under this Act. -A purchaser must have the right to bring court action to enforce this section, separate of any action by the Commission or the Attorney General.

A sales contract must include:

-A statement identifying the capacity of the broker in the transaction and whether the broker or any of his licensee have provided services (such as construction of financing) related to the subject to any other party in the transaction; -A statement describing the Real Estate Recovery Act and the telephone number of the Commission where the parties can receive further information; -A statement of the zoning capacity of the property unless the property is solely or primarily single-family dwellings. Failure to provide this information will make the sales contract (sales agreement) voidable at the option of the buyer, with earnest money returned to the buyer without a requirement for court action; -A statement that access to a public road may require an issuance of a highway occupancy permit from the Department of Transportation.

In an agreement between a broker and buyer,

-A statement identifying the possibility that the broker's commission may be based on a percentage of sale price; -A disclosure of the broker's policy regarding cooperation with listing brokers willing to pay buyer's brokers, -A disclosure that the broker, even if compensated by the listing broker or seller, will represent the interests of the buyer; -A disclosure of any potential for the buyer's broker to act as a disclosed dual agent.

In an agreement between the broker and seller,

-A statement of the broker's policies regarding cooperation with other brokers, subagents or buyers agents; -A disclosure that a buyer's agent even if compensated by the broker or seller may represent the interests of the buyer; and -A disclosure of any potential for the broker to act as a disclosed dual agent.

Written agreement requirements:

-A statement that the broker's fee and duration of the contract have been determined as a result of negotiations between the broker and the seller/landlord or buyer/tenant; -A statement describing the nature and extent of the broker's services to be provided and the fees that will be charged; -A statement recognizing the possibility that the broker or any licensee employed by the broker may provide services to more than one party in a single transaction, and if so, the nature of duties owed to the other party and whether the broker may accept a fee for those services. -A statement describing the Real Estate Recovery Fund and the telephone number of the Commission where the seller can receive further information about the fund; -A statement regarding any possible conflicts of interest and informing the consumer of the licensee's continuing duty to timely disclose any conflicts of interest; -Notification that payment of monies received by the broker must be held in an escrow account until the transaction is completed or terminated.

Two examples of compensation agreements that are not listing agreements are:

-An agreement that the designated broker has with his or her employees or independent contractors that addresses how they will be paid. (We'll talk more about this in an upcoming unit.) -An agreement that a broker signs with an unrepresented seller - usually in the case of a For Sale by Owner (FSBO) property. In such an agreement, the seller warrants that he or she is offering the property for sale without the assistance of any real estate broker. The broker names a specific buyer who may be interested in the property. The seller agrees that if he or she enters into a purchase contract with the named buyer within a specified time period, the seller will pay a specified commission - either flat fee or percentage - to the broker's firm at closing.

Three different accounts rental/property management brokers must have:

-An escrow account -A rental account -An operating account

Section 604 18 states:

-Any offering by mail or phone of any gift in relation to the offering of sale of real property, including time share, must be accompanied by a statement of fair market value, not suggested retail value, of all prizes offered plus the odds of winning such a prize. If the ad is sent by mail, the statement of value and odds must be printed in a CLEAR and CONSPICUOUS manner. -If the prize is a rebate, coupon or discount certificate, a statement must be included as well as a statement about any fees and the maximum amount that the prizewinner must pay in order to receive the prize. Fees include, but are not limited to, such items as dealer prep, shipping and handling etc. -If the offering is by mail, it must be written clearly using common words and terms. It must include a concise description of the property and if it is a time share. If the prospective prizewinner must personally visit and inspect the property and listen to a sales presentation to win, the offering must state that fact. The ad may contain instructions to contact a certain telephone number within a specified time or by a specified date, if the offeror identifies the business entity and its relationship to the offer complies with the rest of the paragraph. -Substitutions of prizes of equal or greater fair market value may be used if the offeror complies with the rest of this section.-The term prize in this section refers to (but is not limited to) money, personal property, vacations, travel certificates, motor vehicles or appliances.

Requirements to obtain a cemetery broker's license:

-At least 21 years of age; -Have completed 75 hours* in real estate instruction; -Have enough experience that the Commission considers adequate or possess at least 3 years of other equivalent experience and education; -Must have an business office; -Submit a completed license application with recommendations attesting to the applicant's good reputation for honesty, trustworthiness, integrity and competence.

Requirements to obtain a broker's license:

-Be a high school graduate or its equivalency; -Have completed 240 hours in real estate instruction; -Have been engaged as a licensed real estate salesperson for at least three years or its equivalency;have an office; -Submit a completed license application with recommendations attesting to the applicant's good reputation for honesty, trustworthiness, integrity and competence.

Advertising includes:

-Business cards -Newspapers -TV ads -Lawn signs Billboards -Car signs -Radio ads or any type of communication that advertises the broker or property for sale, lease etc. by the buyer.

Types of pipe

-Cast iron - Used for underground drainage systems because of its strength and sturdiness. It can be lightweight or heavyweight, depending on the application. Iron pipes are very heavy and are prone to rusting on the inside. -Galvanized - Used for hot and cold water supply lines. Galvanized steel pipe was commonly used years ago for the water supply lines, but more recently it has been replaced by other types of pipe. Steel is not used for underground plumbing. -Copper - Used for both water supply lines and drainage. Copper lasts longer than other metal pipes. It is easy to work with and resists corrosion. Copper is used for both hot and cold water supply lines. Copper pipe can be rigid or flexible, depending on the application. -PVC - Used mostly in areas where hard water is a problem. PVC is plastic pipe, so it is very lightweight and inexpensive. Unlike metal pipe, PVC crushes more easily, is less resistant to heat and requires more support because it is so much more flexible than metal. Some municipalities including New York City have restrictions on the use of PVC pipe. -Brass - Rarely used in plumbing installations today because of its expense. -PEX - Ideally suited for potable water plumbing applications. It is flexible, making it easy to install and service. PEX is able to withstand the high and low temperatures found in plumbing and heating applications, and it is highly resistant to chemicals found in the plumbing environment. PEX is also very resistant to freezing and breaking. PEX systems have fewer joints and are easier to install providing a lower-cost installation over traditional plumbing materials.

Licenses that don't require continuing education:

-Cemetery Association Broker -Cemetery Broker -Cemetery Broker (multi-license) -Cemetery Salesperson -Rental Listing Referral Agent -Campground Membership Salesperson -Builder-owner Salesperson -Timeshare Salesperson

Problems with soil and water quality subject to controls:

-Dioxins, a family of compounds produced as a byproduct of manufacturing and incinerating materials that contain chlorine -Lead and mercury, common metallic elements used or produced in manufacturing processes -MTBE, Methyl Tertiary Butyl Ether, a gasoline additive -PCB, Polychlorinated Biphenyl, a substance formerly widely used as an electrical insulation -Underground Storage Tanks (USTs), regulated since 1984 -Wetlands, considered part of the natural water filtering system, as well as special habitats, subject to restrictions on development and use.

Regulated and controlled environmental conditions include:

-Electromagnetic Fields (EMTs) created by power lines -Noise created by airports, air, rail and highway traffic -Earthquake and flood hazards that affect hazard insurance, lending practices, and construction requirements for buildings in designated flood and earthquake zones. Some water authorities control building construction in flood zones to keep from impeding flow of flood water.

Any licensee who provides you with real estate services owes the following duties:

-Exercise reasonable professional skill and care which meets the practice standards required by the Act. -Deal honestly and in good faith. -Present, in a reasonable practicable period of time, all offers, counteroffers, notices, and communications to and from the parties in writing. The duty to present written offers and counteroffers may be waived if the waiver is in writing. -Comply with the Real Estate Seller Disclosure Act. -Account for escrow and deposit funds.-Disclose all conflicts of interest in a reasonably practical period of time. -Provide assistance with document preparation and advice the consumer regarding compliance with laws pertaining to real estate transactions. -Advice the consumer to seek expert advice on matters about the transaction that are beyond the licensee's expertise. -Keep the consumer informed about the transaction and the tasks to be completed. -Disclose financial interest in a service, such as financial, title transfer and preparation services, insurance, construction, repair or inspection, at the time service is recommended or the first time the licensee learned that the service will be used.

Easements terminate by:

-Express release of the right by the easement holder -Merger, as when a dominant tenement acquires the servient property, or vice versa -Purposeful abandonment by the dominant tenement -Condemnation through eminent domain -Change or cessation of the purpose for the easement -Destruction of an easement structure, such as a party fence -Non-use of an easement by prescription

The broker must:

-Have the authority of the seller or lessor of the property to advertise the property. -Have the authority of the lessor or property manager to advertise the rental. -Not publish information as a rental listing referral agent about the rental on a list if the lessor or property manager expressly states that the property is not to be included in lists prepared by rental listing referral agents. -Use the brokerage company name, including sole proprietorships, cemetery companies, and rental listing referral companies or brokerages that hold themselves out to the public as real estate companies -Include nicknames that will be used in advertising (such as Jack instead of John) on licensure applications or biennial renewal applications.

In advertising its classes, the real estate education provider may not:

-Hold itself out under any other name except that which has been approved by the Commission; -Hold itself out as being recommended or endorsed by the Commission, other than to say it has been approved by the Commission; -Hold itself out to be an educational institution that conforms to the standards and requirements of a college or university; -Permit an instructor or guest lecturer, while on the real estate education provider's premises, to wear any identification relating to the name of a real estate licensee or organization, franchise or network; -May not recruit new licensees, or applicants for schooling for particular real estate companies.

Pennsylvania and Registration Act provides penalties if a person:

-Holds himself out as licensed salesperson, etc.; within the Commonwealth without a current real estate license; -Employs a person who is acting as a salesperson but does not have a license; -Advertises as a licensee.

Additional rules regarding escrow

-If a sponsoring broker transfers escrow moneys from an escrow account to another account for disbursement, he or she must keep a copy of all records reflecting the disbursement from the other account. -A sponsoring broker may choose to use a more sophisticated bookkeeping system based on sound accounting principles, including a system of electronic data processing equipment. However, if the broker chooses an alternate system, that system must contain or produce printed records that have all the information required by that state's laws. -Most states require that the broker make available to the real estate licensing agency all escrow records and related documents that he or she maintained in connection with the practice of real estate. These records must be available during normal business hours and usually must be submitted within 24 hours after a request. -Except as otherwise provided by law, the broker must keep copies of all escrow money instruments received from a principal as part of a transaction. This includes copies of all personal checks, cashier's checks, certified checks, money orders, promissory notes, or other financial instruments. The broker must also maintain copies and/or documentation of all disbursements or transfers into or out of an escrow account. -A sponsoring broker must keep all escrow records for 3-5 years. In many cases, the state will require that the broker keep the escrow records for the immediate prior 2 years in the office location. However, he or she can keep the balance of the records at another location. -If escrow records are lost, stolen, or destroyed due to fire, flood or any other circumstances, the sponsoring broker must report the loss to their state licensing agency within some specified period of time. The broker must also obtain copies of monthly bank statements, deposit and disbursement receipts, and any other available records, so he or she can reconstruct the lost escrow records.

Continuing education qualifying courses

-Laws affecting real estate; -Real estate financing and mathematics; -Real estate investment analysis; -Management of real estate brokerage operations; -Property development; -Real estate securities and syndication; -Real property exchange; -Broker course encompassing supervisory duties and standards of conduct and practice contained in Subchapter E; -Marketing promotion and advertising of real estate inventory; -Use of technology in delivering real estate services; -Real estate ethics; -Real estate valuation and evaluation; -Property management; -Land use and zoning; -Income taxation as applied to real estate; -Special assessment and ad valorem taxes; -Consumer protection and disclosures; -Agency relationships; -Landlord tenant relationships; -Environmental issues related to real estate; -Antitrust litigation; -Current litigation; -Legal instruments related to real estate transactions; -Legalities of real estate advertising.

3 Accepted methods of legally describing parcels of real estate:

-Metes and bounds -Rectangular survey system, or government survey method -Recorded plat method, or lot and block method Since the metes and bounds method preceded the inception of the rectangular survey system, the older East Coast states generally employ metes and bounds descriptions. States in the Midwest and West predominantly use the rectangular survey system. Some states combine methods.

Who can the Commission, with a min. of five member votes, can assess an additional civil penalty of up to $1000 per offense?

-On any current licensee who violates provisions of the Act -On any person practicing real estate without properly licensed to do so under the Act.

Typical restrictions you might see in a subdivision declaration of restrictions are:

-Only single-family homes are allowed. -Homes must have a specified minimum number of square feet of living area. -Only one home is allowed per lot. -Lots may not be subdivided. -Homes must be architecturally similar. All site plans and structure specifications must be approved by a committee before construction. -Buildings must be set back a certain number of feet from the front property line and from the interior property lines. (This is referred to as setback requirements.) -No temporary buildings are permitted. -Either one property owner or several owners can initiate a court action to enforce the covenants. -Covenants are in effect for a certain period of time. Some restrictions are automatically renewed, but can be changed by a vote of the property owners.

All of these contracts, commitments and agreements are required to be in writing. There are exceptions to this rule:

-Open listings or nonexclusive buyer agency agreements may be oral if the seller/buyer or landlord/tenant is provided with a written memo stating the terms of the agreement. -Transaction licensees or subagents cooperating with listing brokers are not required to obtain a written agreement from the seller/landlord. -Transaction licensees or subagents who provide services to the buyer/tenant but are paid by the seller/landlord or listing broker shall provide and have signed a written disclosure statement describing the nature of services to be performed as required by 63 P.S. 455.608; -A licensee may perform service before a written agreement is signed but the licensee is not entitled to recover a fee, commission or other valuable consideration in the absence of a signed agreement.

Legal and equitable title

-Owning title to real property commonly connotes owning the complete bundle of rights that attach to the property, including the right to possession. -Someone who possesses all ownership interests owns legal title to the property. -Legal title is distinct from equitable title, which is the interest or right to obtain legal title to a property in accordance with a sale or mortgage contract between the legal owner and a buyer or creditor.

Qualified associations may not:

-Possess any real estate licenses, OR -Hold itself out to public as providing real estate or real estate related services.

Advantages to having a buyer's agent

-Tailored buyer agreement When the buyer and the broker write their agreement, the buyer can have it tailored to meet his or her needs. The buyer can specify the exact type of property he or she is seeking and define the geographic location. The buyer can also define how much he or she is willing to pay in compensation. -Access to a larger market Most brokers limit their property searches to homes that are either listed in-house or listed in the local MLS. But when a buyer is willing to pay a commission to the broker, the broker is willing to look for and show a wider range of available properties. These properties could include: -Properties with open listings -Properties with low or unattractive selling commissions"For Sale by Owner" (FSBO) properties -Foreclosures -Probate sales -Sales by trusts and pension plans -Stronger negotiating strategySince the broker is now looking at the transaction strictly from the perspective of the buyer, the buyer is in a stronger negotiating position. This is especially important in a FSBO situation, since the seller is not represented by a broker and the buyer may feel that the seller chose this route because there is something wrong with the property.

In designated agency, the employing broker will be a dual agent and have the additional duties of:

-Taking reasonable care to protect any confidential information disclosed of the licensee. -Taking responsibility to direct and supervise the business activities of the licensees who represent the seller and buyer while taking no action that is adverse or detrimental to either party's interest in the transaction. -The designation may take place at the time that the parties enter into a written agreement, but may occur at a later time. Regardless of when the designation takes place, the employing broker is responsible for ensuring that confidential information is not disclosed.

Requirements of advertising in the business name

-The Commission demands that all licensees advertise in the business name selected by the licensee and that the broker's business name is the name that appears in the ad. -The brokerage must use the name that is listed on the license. -The ad must include business name and telephone number of employing broker. -Must be same size and must be phone number used by the broker, not a direct line phone to a specific salesperson or associate broker.

Federal standards, laws, and regulations

-The Minimum Property Standards (MPS), which is a set of HUD regulations, establish certain minimum standards for buildings constructed under HUD housing programs. This includes new single family homes, multi-family housing and health care type facilities. -Interstate Land Sale Full Disclosure Act - This program protects consumers from fraud and abuse in the sale or lease of land. In 1968 Congress enacted the Interstate Land Sales Full Disclosure Act, which is patterned after the Securities Law of 1933 and requires land developers to register subdivisions of 100 or more non-exempt lots with HUD and to provide each purchaser with a disclosure document called a Property Report. The Property Report contains relevant information about the subdivision and must be delivered to each purchaser before the signing of the contract or agreement. -National Electric Code - The National Electrical Code (NEC) is a United States standard for the safe installation of electrical wiring and equipment. It offers minimal guidelines and standards. It is part of the National Fire Codes series published by the National Fire Protection Association (NFPA). While the NEC is not itself a U.S. law, NEC use is commonly mandated by state or local law. Other federal regulations include: -Americans with Disabilities Act - ADA mandates that persons with disabilities have equal access to jobs, public accommodations, government services, public transportation and telecommunications. It prohibits discrimination in the "full and equal enjoyment of goods and services" provided by public places, including hotels, shopping centers and offices, and it applies to the lease and operation of commercial facilities.

Exceptions to the three year rule:

-The acknowledgement portion of the consumer notice must be kept for 6 months when there is no a real estate transaction;- The acknowledgement portion of the consumer notice applicable to timeshares must be kept for 6 months; -The acknowledgement portion of the consumer notice applicable to leases when the licensee is working on behalf of the owner must be kept for 6 months; -The written disclosure statement establishing a subagency or transaction licensee relationship must be kept for 6 months.

Brokers are required, before an agreement of sale is executed, to provide each party (buyer and seller) with a written estimate of reasonable expenses associated with the sale that the party may be expected to pay including, but not limited to,

-The broker's commission; -The mortgage payments and financing costs; -Taxes and assessments; -Settlement expenses. The estimate of costs must be as accurate as can be expected of a real estate professional.

An agreement for sale, other than a cemetery lot, mausoleum, cremation space or opening must:

-The date of agreement; -The names of the parties (buyers and sellers); -A description of the property and the interest to be conveyed; -The sale price;-The dates for payment and conveyance;-The zoning statement; -The capacity of the broker; -A provision in the contract for the broker holding any monies in an escrow account and the broker designated as payee until the transaction is closed or cancelled; -The following statement: "A Real Estate Recovery Fund exists to reimburse any person who has obtained a final civil judgment against a Pennsylvania real estate licensee owing to fraud, misrepresentation, or deceit in a real estate transaction and who has been unable to collect the judgment after exhausting all legal and equitable remedies. For complete details about the Fund, call (717) 783-3658."

Licensees who hold salesperson's licenses, not in reciprocal state requirements:

-The license currently possessed must have been issued by another jurisdiction and been active within the last 5 years; -Must have scored a passing grade on the Pennsylvania (State) portion of the salesperson's exam within 3 years; -Submit the proper fee.

The Statement of Record required for Promotional Land Sales must include:

-The name and address of each person having an interest in the property covered by the statement of record and the extent of such interest except for a corporation which must list all officers and all holders of 10% or more of the issued stock of the corporation; -A legal description of the property and a statement of the topography with a map showing the division proposed and the dimensions of the property and their relation to existing streets and roads; -A statement of the condition of the title to the property including all encumbrances, mortgages, judgments, liens or unpaid taxes, deed restrictions and covenants; -A statement of the general terms and conditions including the range of sale prices or rents proposed; -A statement of the present condition of access to the property, any unusual conditions relating to safety and completed improvements including such things as streets, sidewalks etc. and any improvements to be installed by the developer and an estimation of the schedule of completion; -A statement of any encumbrances such as liens against the property; -A copy of the articles of incorporation; -Copies of deeds or other legal instruments establishing title to the property; -Copies of all forms of conveyances (such as deeds) to be used; -Copies of legal papers creating easements and other restrictions; -A certified financial statement from the developers; -Information that the Commission may require to determine that prospective buyers will receive truthful information; -Consent to submit to the jurisdiction of the Commonwealth courts.

Other disbursement situations

-The sponsoring broker may release escrow moneys prior to the consummation or termination of the transaction in accordance with directions providing for the release, payment, or distribution of escrow moneys contained in any written contract signed by the principals to the transaction (or their duly authorized agents). In any such case the sponsoring broker must adhere to the terms of the contract regarding the release of the escrow moneys. -If the sponsoring broker receives an order from a court of competent jurisdiction providing for the disbursement of the escrow moneys, that broker must disburse the escrow moneys according to the terms of the order. -Sometimes the earnest money check is from someone other than the party to the contract. In that instance, when earnest money is returned, it must be returned to the party in the contract. For example: The buyer's parents write the earnest money check. The earnest money would be returned to the buyers, not to the parents.

Legal concept of land encompasses:

-The surface area of the earth -Everything beneath the surface of the earth extending downwards to its center -All natural things permanently attached to the earth -The air above the surface of the earth extending outward to infinity

An agreement of sale that is conditioned upon the ability of the buyer to obtain a mortgage must contain:

-The type of mortgage;-The mortgage principal; -The maximum interest rate of the mortgage; -The minimum term of the mortgage; -The deadline for the buyer to obtain the mortgage; -The nature and extent of assistance that the broker will render to buyer in obtaining the mortgage.

The disclosure must be on a form provided by the commission include:

-The types of relationships authorized under the Licensing and Registration Act which the broker and consumer may enter into; -A statement telling the sellers and buyers of their choices regarding an agency relationship with the broker, and that there is no presumption of agency. -A statement declaring that, in order to establish an agency relationship, there must be a written agreement between the broker and the consumer; -A statement that the consumer has the right to enter into a negotiated agreement with the broker limiting the activities that a broker will provide, and that any fee or services must be determined by negotiations; -A statement that a broker may assign one or more licensees to represent the separate interests of the parties in a transaction; -A statement regarding co-brokering policies, if any, an the sharing of fees. -A statement that a buyer's broker may be paid a fee that is a percentage of the purchase price but that the buyer's broker, even if compensated by the listing broker, will represent the interests of the buyer; -A statement statement which clearly states that the duration of the broker's employment and the broker's fees are negotiable; -A statement that the duration of a listing agreement or contract and the broker's commission are negotiable; -A statement that any sales agreement must contain the zoning classification unless the property is zoned primarily and completely for single-family dwellings.

Zoning laws regulate:

-The use of land -Lot sizes -Types of structures permitted -Building heights -Setbacks (how far back from the street an improvement can be built) -Density (the ratio of land area to improved area) -Types of animals that can or cannot be kept on a property (no pet cougars, etc...) Violating of zoning regulations renders a title unmarketable.

Pennsylvania Real Estate Commissioners breakdown

-Three members of the public at large shall be appointed by the governor. -Five members, who are at the time of the appointment licensed and qualifies real estate brokers of PA, have engaged in the real estate business for no less than 10 years.

Unacceptable continuing education courses:

-Typing;-Speed writing; -Preparation of advertising copy; -Development of sales promotional devices; -Word processing; -Calculator and computer operation; -Office management; -Courses that do not have a bearing on the public interest.

Easements may be created by:

-Voluntary action -Necessity -Prescriptive operation of law -Grant or reservation -Implication -Government power of eminent domain (condemnation)

Groth plan considers:

-nature, location and extent of permitted uses -availability of sanitation facilities -adequacy of drainage, waste collection, and potable water systems -adequacy of utilities companies -adequacy and patterns of thoroughfares -housing availability -conservation of natural resources -adequacy of recreational facilities -ability and willingness of the community to absorb new taxes, bond issues, and assessments

A community achieves its land usage goals through a three phase process:

-development of a master plan for the jurisdiction -administration of the plan by a municipal, county, or regional planning commission -implementation of the plan through public control of zoning, building codes, permits, and other measures

PSI provides exams for:

1. Real estate salesperson -Cemetery broker -Rental listing referral agent -Builder/owner salesperson 2. Broker

A licensed firm advertising on the Net must include on EACH PAGE of the following information:

1. The company's name as registered with the Real Estate Commission (abbreviations are not permitted);2. The city, state/province, and *country where the firm's main office is located;3. The regulatory jurisdiction in which the firm holds a real estate brokers license. Including license number *Although not required, strongly recommended.*

A licensee using any Internet electronic communication for advertising or marketing must include the following data:

1. The licensee's name; 2. The name of the firm with which the licensee is affiliated as the firm is registered with the Commission; 3. The city, state/province, and *country in which the licensee's office is located; 4. The regulatory jurisdiction in which the licensee holds a broker's license. Including the license number *Although not required, strongly recommended.*

A licensee advertising or marketing on a site on the new must include on EACH PAGE the following:

1. The licensee's name; 2. The name of the firm with which the licensee is affiliated; 3. The city, state, and *country in which the licensee's office located; 4. The regulatory jurisdiction in which the licensee holds a real estate broker or salesperson license. Including license number *Although not required, strongly recommended.*

A licensed firm using any Internet electronic communication for advertising or marketing must include the following data:

1. The name of the firm with which the licensee is affiliated as the firm is registered with the Commission; 2. The city, state/province, and *country in which the licensee's office is located; 3. The regulatory jurisdiction in which the licensee holds a broker's license. Including license number *Although not required, strongly recommended.*

Closing costs: Prorations: 30-day, 12-month, statutory month, or 360-day method

30-day, statutory year, or 360-day method. When using this method for prorations, each month has 30 days not actual days within that month. 365-Day Method or Calendar Year uses actual days in each month for prorations. For example, December has 31 days, and February has 28 days. Formulas: 1. Monthly amount = Annual amount/12 2. Daily amount = Monthly amount/30 3. Proration = (Monthly amount multiplied by the # months) + (Daily amount multiplied by the # days) Example: An annual tax bill is $1,800. Closing is on April 10. What is the seller's share of the taxes which are paid in arrears? 1. Monthly amount = ($1,800 ÷ 12) = $150; no. of months = 3 2. Daily amount = ($150 ÷ 30) = $5.00; no. of days = 10 3. Proration = ($150 x 3) + ($5 x 10) = ($450 + $50) = $500 seller's share 365-day method Formula: 1. Daily amount = Annual amount/365 or Monthly amount/Length of month 2. Proration = Daily amount multiplied by the # days Example: An annual tax bill is $1,800, Closing is on April 10. What is the seller's share of the taxes? 1. Daily amount = ($1,800 ÷ 365) = $4.93 2. Jan 1 thru April 10 = (31 + 28 + 31 + 10) days, or 100 days 3. Proration = $4.93 x 100 days = $493 seller's share

Suit for damages (form of contract termination)

A damaged party may sue for money damages in civil court. The suit must be initiated within the time period allowed by the statute of limitations. When a contract states the total amount due to a damaged party in the event of a breach, the compensation is known as liquidated damages. If the contract does not specify the amount, the damaged party may sue in court for unliquidated damages.

BTU ratings

A British Thermal Unit (BTU) is the amount of heat energy needed to raise the temperature of one pound of water by one degree F. BTUs measure the amount of heat an air conditioning unit can remove from the room. As the BTU rating increases, so does the size, weight and cost of the unit.

Aggrieved person

A person who has suffered loss or injury or whose rights were violated.

Amendment

A current or potential property owner may petition the zoning board for an outright change in the zoning of a particular property.

Littoral

Along large navigable lakes or oceans, the owner owns to the average high water mark.

Rescission (form on contract termination)

A damaged party may rescind the contract. This cancels the contract and returns the parties to their pre-contract condition, including the refunding of any monies already transferred.

Carbon monoxide

A colorless, odorless, poisonous gas that may result from faulty heating equipment. Home and commercial detection devices are available.Formaldehyde, a chemical used in building materials and in other items such as fabrics and carpeting. As it ages, formaldehyde gives off a colorless, pungent gas. Its use in urea-formaldehyde foam insulation (UFFI) was banned 1982 (ban later reduced to a warning), but the material is still present in many structures. Other substances known in general as volatile organic compounds (VOCs) and used in construction materials such as adhesives emit toxic fumes. Professional testing can identify levels and, in some cases, sources of formaldehyde gas and other VOCs.

Ordinary lease

A common example of the transfer of a portion of one's bundle of rights. The owner relinquishes the right to possess portions of the surface, perhaps a building, in return for rent. The tenant enjoys the rights to possess and use the building over the term of the lease, after which these rights revert to the landlord. During the lease term, the tenant has no rights to the property's subsurface, or airspace, other than what the building occupies. Further, the tenant does not enjoy any of the other rights in the bundle of rights: he cannot encumber the property, or transfer it. To a limited degree, the tenant may exclude persons from the property, but he may not exclude the legal owner.

A comparative market analysis (also called a competitive market analysis)

A compilation of known sales and listing activity done in a particular area. These figures of homes that have been sold, those that are currently on the market and those withdrawn from the market help the real estate professional work with the seller as to the range of price to list the home. It can slo be used by a buyer's agent to keep the buyer from paying too much for a property, or assist the buyer in determining what the buyer wishes to offer.

The master plan

A comprehensive plan to guide the long-term physical development of a particular area.

Listing agreement

A contract between an owner or owners of residential real property and an agent, by which the agent has been authorized to sell or lease the residential real property or to find or obtain a buyer or lessee for the property.

Oral vs. written

A contract may be in writing or it may be an oral, or parol, contract. Certain oral contracts are valid and enforceable; others are not enforceable, even if valid. For example, most states require listing agreements, sales contracts, and leases exceeding one year to be in writing to be enforceable.

Performance (form of contract termination)

A contract terminates when fully performed by the parties. It may also terminate for: partial performance, if the parties agree sufficient performance, if a court determines a party has sufficiently performed the contract, even though not to the full extent of every provision

Unconscionable contract

A contract that courts refuse to enforce in part or at all because it is so oppressive or manifestly unfair as to be unjust.

Executed contract

A contract that has been completely performed by both parties.

Aleatory contract

A contract where the values exchanged may not be equal but depend on an uncertain event.

Conventional life estate

A conventional life estate is created by grant from a fee simple property owner to the grantee, the life tenant. Following the termination of the estate, rights pass to a remainderman, or revert to the previous owner. During the life estate period, the owner enjoys all ownership rights, provided he or she does not infringe on the rights of the remainder or reversion interest holders, such as by damaging the property or jeopardizing its value. Should such actions occur, holders of the future interest may take legal action against the property owners. The two types of conventional life estates are the ordinary and the pur autre vie life estates.

What does the Commission require upon death of a broker of record?

A corporate officer or partner must file an application notifying the Commission of a change within 15 days following the death.

Writ of execution

A court's order, after a judgment has been entered against the debtor, directing the sheriff to seize (levy) and sell any of the debtor's nonexempt real or personal property. The proceeds of the sale are used to pay off the judgment, accrued interest, and costs of the sale; any surplus is paid to the debtor.

Order to show clause

A court-ordered appearance to present to the court the reasons why an order should not be confirmed. In this case, it applies to any penalties directed by the Pennsylvania Real Estate Commission. They set the fees and charges and directs the licensee (respondent) to file a written answer within 30 days.

Tax sale

A court-ordered sale of real property to raise money to cover delinquent taxes.

Rent escalations

A way to determine the dollar amount of a rent increase.

Transferring title

Also called alienation, occurs voluntarily and involuntarily. When the transfer uses a written instrument, the transfer is called a conveyance.

Mold

A fungus that grows in the presence of moisture and oxygen on virtually any kind of organic surface. It often destroys the material it grows on and emits toxic irritants into the air. Tightly sealed structures with inadequate ventilation are most susceptible. Roof leaks, improper venting of appliances, runoff from gutters and downspouts, and flood damage are common contributors. In recent years, mold- and mildew-related lawsuits and claims have become substantial.

General and specific liens

A general lien is one placed against any and all real and personal property owned by a particular debtor. An example is an inheritance tax lien placed against all property owned by the heir. A specific lien attaches to a single item of real or personal property and does not affect other property owned by the debtor. A conventional mortgage lien is an example, where the property is the only asset attached by the lien.

Public acquisition and ownership

A government body might acquire land because of the public need for: -thoroughfares and public rights-of-way -recreational facilities -schools -essential public facilities -urban renewal or redevelopment In many cases, public acquisition of property is a voluntary transaction between the government entity and the private owner. However, if the private party is unwilling to sell, the government may purchase the property anyway. The power to do this is called eminent domain.

Homestead

A homestead is one's principal residence. Homestead laws protect family members against losing their homes to general creditors attempting to collect on debts. Homestead laws generally provide that: -All or portions of one's homestead are exempt from a forced sale executed for the collection of general debts (judgment liens). The various states place different limits on this exemption. -Tax debts, seller financing debt, debts for home improvement, and mortgage debt are not exempt. -The family must occupy the homestead. -The homestead interest cannot be conveyed by one spouse; both spouses must sign the deed conveying homestead property. -The homestead exemption and restrictions endure over the life of the head of the household, and pass on to children under legal age. State laws define specifically how the interest transfers upon the death of the household head. -Homestead interests in a property are extinguished if the property is sold or abandoned. Abandonment is the discontinued use of the property. If the owner does not intend to use it again as a home, then the rights are extinguished. In some states the exemption is automatic; in others, homeowners must file for the exemption. The homestead exemption from certain debts should not be confused with the homestead tax exemption, which exempts a portion of the property's value from taxation.

Will

A last will and testament, is a legal instrument for the voluntary transfer of real and personal property after the owner's death. It describes how the maker of the will, called the testator or devisor, wants the property distributed. A beneficiary of a will is called an heir or devisee. The property transferred by the will is the devise. A will takes effect only after the testator's death. It is an amendatory instrument, meaning that it can be changed at any time during the maker's lifetime. Commonly, the testator names an executor, or personal representative, to oversee the settlement of the estate. If a minor is involved, the testator may identify a guardian to handle legal affairs on behalf of the minor.

The zoning ordinance

A law that limits the permitted uses of land and maximum density of development in a community. Typically addresses: -the nature of land use-- office, commercial, residential, etc. -size and configuration of a building site, including setbacks, sidewalk requirements, parking requirements, and access -site development procedures -construction and design methods and materials, including height restrictions, building-to-site area ratios, and architectural styles -use of space within the building -signage

Tenant's rights and obligations

A lease conveys a leasehold interest or estate that grants the tenant the following rights during the lease term: -Exclusive possession and occupancy -Exclusive use -Quiet enjoyment -Profits from use

Power of attorney

A legal document authorizing someone to act on your behalf.

Common law

A legal system based on custom and court rulings.

Designated sales agent

A licensed real estate salesperson or associate broker, working under the supervision of a real estate broker, who has been assigned to represent a client when a different client is also represented by such real estate broker in the same transaction.

Advertising harassment

A licensee may not, whether acting on the behalf of another or not, solicit- by personal contact, telephone, mail or advertising- the sale of or other disposition of real estate with such frequency as to amount to clear harassment of the owner or other person who controls the sale or disposition of the real estate.

Inferior lien

A lien whose priority is subordinate to that of a superior (tax) lien. Priority among inferior liens is established according to the time of recordation, with the exception of the mechanic's lien. Also called junior lien. Inferior liens in their rank order include: -Federal income tax liens -State corporate income tax liens -State intangible tax liens -Judgment liens -Mortgage liens -Vendor's liens -Mechanic's liens (priority by date work was performed)

Subordination

A lienor can change the priority of a junior lien by voluntarily agreeing to subordinate, or lower, the lien's position in the hierarchy. This change is often necessary when working with a mortgage lender who will not originate a mortgage loan unless it is senior to all other junior liens on the property. The lender may require the borrower to obtain agreements from other lien holders to subordinate their liens to the new mortgage.

Legal life estate

A life estate created by the action of law.

Life estates

A life estate is a freehold estate that is limited in duration to the life of the owner or other named person. Upon the death of the owner or other named individual, the estate passes to the original owner or another named party. The holder of a life estate is called the life tenant. The life tenant does not have the right to pass ownership to his or her heirs. The distinguishing characteristics of the life estate are: -The owner enjoys full ownership rights during the estate period. -Holders of the future interest own either a reversionary or a remainder interest. -The estate may be created by agreement between private parties, or it may be created by law under prescribed circumstances.

Landlord's agent

A listing agent who acts alone, acts in cooperation with a listing agent, or acts as a landlord's subagent to find or obtain a tenant for residential real property.

Open listing

A listing contract under which the broker's commission is contingent on the broker's producing a ready, willing, and able buyer before the property is sold by the seller or another broker.

The planning commission

A local government agency which determines plans for the physical growth of a community. The planning commission is responsible for: -approving site plans and subdivision plans -approving building permits -ruling on zoning issues

Personal easement in gross

A personal easement in gross is granted for the grantee's lifetime. The right is irrevocable during this period but terminates on the grantee's death. It may not be sold, assigned, transferred or willed. A personal gross easement differs from a license in that the grantor of a license may revoke the usage right. We'll talk about licenses on an upcoming screen.

Deficiency judgment

A personal judgment levied against the borrower when a foreclosure sale does not produce sufficient funds to pay the mortgage debt in full.

Fixtures

A personal property item that has been converted to real property by attachment to real estate is called a fixture. Typical examples are: chandeliers, toilets, water pumps, septic tanks, and window shutters. The owner of real property inherently owns all fixtures belonging to the real property. When the owner sells the real property, the buyer acquires rights to all fixtures. Fixtures not included in the sale must be itemized and excluded in the sale contract.

Title insurance

A policy that protects the insured against loss or damage due to defects in title.

Concurrency

A policy that requires the developer to make accommodations concurrently with the development of the project itself, not afterwards.

Asbestos

A powdery mineral once commonly used as a fireproof insulating material around pipes, in floor tiles and linoleum, in siding and roofing, in wallboard, joint compound, and many other applications. When airborne, it is a health hazard. Its use today is highly restricted, and removal can be expensive and dangerous. Inspection by a certified asbestos inspector is the best way to determine whether a building needs treatment.

Capital gain

A profit from the sale of property or of an investment.

Necessity

A property owner may create a voluntary easement by express grant in a sale contract, or as a reserved right expressed in a deed.

Voluntary action

A property owner may create a voluntary easement by express grant in a sale contract, or as a reserved right expressed in a deed.

Virtual tours

A rapidly growing marketing tool in recent years has been the virtual tour. Originally this technology required the use of a special camera that could take a 360° shot of each room and the exterior of the property. Although a level above "flat" digital photos, the tours had a "fish-eye" quality that tended to distort the views. However, this technology has advanced to the point that an agent can take digital photos and load them into a software program that will produce increasingly more professional-looking tours. Oftentimes managing brokers invest in the software and allow their agents to use it for a very modest monthly fee. If you plan to use this tool, be sure to get permission from your sellers in writing. Since these tours are available for viewing on the web, there is a concern that some viewers may be more interested in what is in the home rather than the home itself. You should make your sellers aware of the primary benefit of a tour - that the home can be "shown" when it's not physically available for a showing.

Assignment of a contract

A real estate contract that is not a personal contract for services can be assigned to another party unless the terms of the agreement specifically prohibit assignment. Listing agreements, for example, are not assignable, since they are personal service agreements between agent and principal. Sales contracts, however, are assignable, because they involve the purchase of real property rather than a personal service.

Undisclosed dual agency

A relationship in which the real estate agent is found to be the agent of both the buyer and seller in a transaction, but without the knowledge and informed consent of both parties. Undisclosed Dual Agency is illegal in all states.

Fiduciary relationship

A relationship of trust and confidence, as between trustee and beneficiary, attorney and client, or principal and agent.

Seller agency

A relationship where the licensee, upon entering into a written agreement, works only for a seller/landlord.

Fractions of a section

A section of a township can be divided into fractions as the next exhibit shows. The most significant fractional dimensions of a section are: Fraction Acres Feet X Feet 1 section 640 acres 5280 X 5280 1/2 section 320 acres 5280 X 2640 1/4 section 160 acres 2640 X 2640 1/8 section 80 acres 2640 X 1320 1/16 section 40 acres 1320 X 1320 1/32 section 20 acres 660 X 1320 1/64 section 10 acres 660 X 660

Transaction licensee duties:

A transaction licensee does not represent anyone in a transaction but is only present to implement the process of the transaction. He does not care about the interests of anyone in the transaction and will not represent the interests of either party. -This licensee is not acting as an agent or advocate for the consumer and should not ask for or receive confidential information; -This licensee owes a duty of limited confidentiality. The following information cannot be used: --The seller/landlord will accept a price less than the asking/listing price. --The buyer/tenant will pay a price greater than the price submitted in a written offer. --The seller/landlord will agree to financing terms other than those offered. -He must advise the consumer to be assisted that he, the licensee, is not acting as an agent or advocate of the consumer.

Transaction licensee

A transaction licensee is a broker or salesperson who provides communication or document preparation services or performs other acts for which a license is required without being the agent or advocate for either the seller/landlord or the buyer/tenant. Upon signing a written agreement or disclosure statement, a transaction licensee has the additional duty of limited confidentiality in that the following information may not be disclosed: -The seller/landlord will accept a price less than the asking/listing price. -The buyer/tenant will pay a price greater than the price submitted in a written offer. -The seller/landlord or buyer/tenant will agree to financing terms other than those offered.

Involuntary alienation

A transfer of title to real property without the owner's consent. Occurs primarily by the processes of descent and distribution, escheat, foreclosure, eminent domain, adverse possession, and estoppel.

Buyer

A transferee in a residential real property transaction. This includes a person who executes an offer to purchase residential real property from a seller through an agent, or who has engaged the services of an agent with the object of entering into a residential real property transaction as a transferee.

Breach of contract (Form of contract termination)

Also called default, it gives the damaged party the right to take legal action, subject to any time limits created by the state's statute of limitations or other legislation. The damaged party may elect the following legal remedies: -rescission -forfeiture -suit for damages -suit for specific performance

Converting fractions into decimals

Formula to convert a fraction to a decimal: a/b=decimal number. To convert the fraction into a decimal, divide the top number (numerator) by the bottom number (denominator).

General features of easement in gross

An easement in gross is a personal right that one party grants to another to use the grantor's real property. The right does not attach to the grantor's estate. It involves only one property, and, consequently, does not benefit any property owned by the easement owner. There are no dominant or servient estates in an easement in gross. An easement in gross may be personal or commercial.

Acceptance

An offer gives the offeree the power of accepting. For an acceptance to be valid, the offeree must manifestly and unequivocally accept all terms of the offer without change, and so indicate by signing the offer, preferably with a date of signing. The acceptance must then be communicated to the offeror which is demonstrated by the delivery of the signed contract to all parties in the transaction. If the communication, delivery of acceptance is by mail, the offer is considered to be communicated as soon as it is placed in the mail.

Counteroffer

An offeree's response to an offer in which the offeree rejects the original offer and at the same time makes a new offer.

Insulation

All the materials that are used in construction absorb and transfer heat. Eighty to ninety-five percent of this heat is transferred, from the warmer side to the cooler side by conduction, convection or radiation. The R-value or R-factor is the degree or resistance to the heat transfer. The R-value of a surface determines how quickly heat is conducted across it. The larger the R-value, the greater the insulation value. Exterior walls will usually use insulation with an R-value of 13, floors and crawl spaces R-19, attics R-30 or higher. There are several categories of insulation: -Loose fill - Includes loose fibers or fiber pellets that are poured or blown into building cavities or attics using special equipment. -Batts and blankets - Made of mineral fiber -- either processed fiberglass or rock wool -- and used to insulate below floors, above ceilings, and within walls. -Rigid board - Made from fiberglass, polystyrene, or polyurethane and used for work on flat roofs, on basement walls and as perimeter insulation at concrete slab edges, and in cathedral ceilings. -Spray foam - Two-part liquid containing a polymer and a foaming agent sprayed through a nozzle into wall, ceiling, and floor cavities. -Reflective - A metallic foil material (usually aluminum) designed to block radiant heat transfer across open spaces.

Building codes

Allow the county and municipality to protect the public against the hazards of unregulated construction. They establish standards for every aspect of a constriction project, including offside improvements such as streets, curbs, gutters, drainage systems, and onsite improvements such as the building itself. -architectural and engineering standards -construction materials standards -building support systems such as life safety, electrical, mechanical, and utility systems

Flyers

Also called property briefs, these print pieces describe the home's features. They contain at least one photo, sometimes several. They should also include an Internet address where potential buyers can get more information about the property. Leave a large supply of flyers at the home, so each visitor can pick one up. You can use the flyers in several other ways. -Place in information boxes or tubes attached to the For Sale sign. -Distribute at open houses. -Deliver to agents from other offices. -Distribute to your own firm's agents. -Mail out in response to telephone or e-mail inquiries.

Easement by grant

Also known as easement by reservation, easement by grant is created with the express written agreement of the property owners. For example, the grantor can convey fee interest in Lot 1 to the grantee, while reserving a non-exclusive easement for ingress and egress over the driveway located on Lot 1.

Mutual consent

Also known as offer and acceptance and meeting of the minds, requires that a contract involve a clear and definite offer and an intentional, unqualified acceptance of the offer. In effect, the parties must agree to the terms without equivocation. A court may nullify a contract where the acceptance of terms by either party was partial, accidental, or vague.

Judicial sale

Also known as sheriff's sale. A sale of property by court proceedings to satisfy a lien.

Earnest money

Also known as trust account money, is a deposit, usually made in the form of a check, to show evidence of the buyer's intention to carry out the terms of the contract in good faith. Even though a check is most common, an earnest deposit can be taken in any form. Cash, check, personal property, a boat, or a diamond ring would be examples of possible earnest deposits that a purchaser might use. The key issue here is notification to the seller of the form of the deposit. The seller must agree and understand that the deposit was in the form of "a diamond bracelet." Earnest money is provided when the offer to purchase real estate is made. The amount of the earnest money deposit is something the parties should agree upon, and the amount generally varies with the value of the property being purchased. Many contracts state that this deposit becomes the seller's property if the buyer defaults, but this depends on the specifics of each contract. Note: An earnest money deposit is not required for a contract to be valid. However, many real estate licensees are instructed by their sponsoring brokers to advise clients of the risks that may be involved if they accept a contract with no earnest money given.

Ancillary marketing tools (home tours)

Also referred to as caravans, home tours are very beneficial to familiarize brokers and agents with the new listings. They are usually set up as morning tours on a weekly basis. There are two types of home tours. -Office Tours - The agents from your firm tour the property. It would be beneficial to have the licensees fill out a property evaluation form after they do their walkthrough. These evaluations will give you valuable information to share with your sellers - both the positive aspects and those things the other professionals see as areas needing improvement. -MLS Tours - Many listing services set up tours for agents by area, since there are usually too many listings for any agent to see in a morning's time. If your listing is on an MLS tour, have property evaluations available for the agents to fill out. Be sure your sellers understand the importance of having their home look in top-notch condition for the home tours. Some tips about conducting a good home tour include: -Tell the sellers it is best if they are not at home during the tour. -Have some light refreshments for the agents - an appropriate beverage and some chocolate chip cookies are a nice touch. (If the owners bake the cookies shortly before the tour, the home will have a pleasing aroma when the agents arrive - also a positive touch.) -Have some soft mood music playing in the background if possible. -Give each agent a property flyer. -Ask each agent to fill out a short evaluation of the home.

Handling cooperative sales

Although several of a broker's properties may be sold in-house, in the majority of cases, a cooperating broker finds the buyer or tenant. For this reason, it is important to clarify early in the transaction whether the cooperating broker is -A broker's agent working in cooperation with the listing agent -A buyer's (or tenant's) agent -A broker's agent working in cooperation with the buyer's (or tenant's) agent Whenever an agent takes a listing, the agent should be sure to let the seller or landlord know that some of the agents who bring buyers or tenants to see the property will actually be working as representatives of that buyer or tenant. To protect the client's interests, the agent can tell the client that he or she would be happy to attend any showings done by a buyer's agent, if the seller would like that to happen. With regard to compensation in cooperative sales, the listing broker will be the person who handles the commission splits for the transaction.

Easement by necessity

An easement by necessity is an easement appurtenant granted by a court of law to a property owner because of a circumstance of necessity, most commonly the need for access to a property. Since property cannot be legally landlocked, or without legal access to a public thoroughfare, a court will grant an owner of a landlocked property an easement by necessity over an adjoining property that has access to a thoroughfare. The landlocked party becomes the dominant tenement, and the property containing the easement is the servient tenement. Two elements are essential to this type of easement: -There must have been a common grantor of the dominant and servient estates. -There must be a reasonable necessity for the easement, not just for convenience. This type of easement is also known as an easement by implied grant.

Termination of agency

An agency relationship is terminated when one of the following occurs (whichever occurs first or earliest): -Performance, which means the licensee has performed the tasks set forth in the agency agreement - that is, helped the buyer find a home for purchase or helped the seller find a ready, willing, and able buyer to purchase his or her home. -Expiration of the agreement term, which is stated in writing when the relationship is initiated. -Termination of the relationship by mutual agreement of the parties. -Termination of the relationship by one party, in which case the terminating party must provide notice to the other party that he or she is terminating the relationship. Note: This type of termination does not affect either party's rights under their contract. Sometimes an agency relationship is terminated even though the parties may not wish it to happen, in other words involuntarily. Some reasons why an agency relationship may terminate in this way include: -Death or incapacity of either party - if the contract does not pass to heirs or assigns -Agent abandonment -Condemnation of the property -Destruction of the property through fire, vandalism or natural disaster -Renunciation by the client -Breach of the contract -Bankruptcy -Revocation of the agent's license If the relationship is terminated in this way, there may be legal and financial ramifications for the party who defaulted or canceled. For example, if Seller John renounces his listing agreement, he could be held liable for Broker Sue's expenses. Unless other arrangements have been mutually agreed to in writing, once the relationship has been terminated, the licensee is no longer considered the principal's agent. As such, the licensee does not owe any further duties to the principal, except for the following: -Accounting: The licensee must account for all moneys and property received during the relationship. -Confidentiality: The licensee must not disclose confidential information he or she obtained during the relationship.

Tenant's agent

An agent who contracts to locate residential real property for a tenant or who finds a tenant for a property and presents an offer to lease to the landlord or landlord's agent and negotiates on behalf of the tenant.

Revocation of an offer

An offeror may revoke his/her offer at any time as long as it hasn't been accepted.

Gross rent multiplier (GRM)

An appraisal method for single family or duplexes based on the gross monthly rent.

Suit for specific performance (form of contract termination)

An attempt to force the defaulting party to comply with the terms of the contract. Specific performance suits occur when it is difficult to identify damages because of the unique circumstances of the real property in question. The most common instance is a defaulted sale or lease contract where the buyer or seller wants the court to compel the defaulting party to go through with the transaction, even when the defaulter would prefer to pay a damage award. Sometimes a contract does not accurately reflect the intentions of the parties because of some mechanical or clerical error in the document. When this happens, a legal action called a reformation is necessary to correct or modify the contract.

Easement components

An easement appurtenant gives a property owner a right of usage to portions of an adjoining property owned by another party. The property enjoying the usage right is called the dominant tenement, or dominant estate. The property containing the physical easement itself is the servient tenement, since it must serve the easement use. The term appurtenant means "attaching to." An easement appurtenant attaches to the estate and transfers with it unless specifically stated otherwise in the transaction documents. More specifically, the easement attaches as a beneficial interest to the dominant estate and as an encumbrance to the servient estate. The easement appurtenant then becomes part of the dominant estate's bundle of rights and the servient estate's obligation, or encumbrance.

Party wall easement

An easement appurtenant where owners of two adjacent properties share an improvement along the property boundary. The parties agree not to perform acts that would adversely affect the other party's interest in the shared improvement.

Leasehold estates

An estate for a limited time (e.g., renting, leasing).

Estate at will

An estate that gives the lessee the right to possession until the estate is terminated by either party; the term of this estate is indefinite.

Completed and expired lease contract

An executed contract, and the landlord may re-possess the premises, and the tenant has no further obligation to pay rent.

Easement by implication

An implied easement can be created when a grantor conveys a portion of the real estate he or she owns or when he or she divides a larger tract among separate grantees. In either case, a severance of parcels occurs, which is a necessary prerequisite to an implied easement.

Appreciation

An increase in value.

Builder/owner salesperson

An individual who is a full-time employee of the owner or builder of single-family or multifamily residences who is licensed to perform certain acts on behalf of the builder-owner.

Estate for years

An interest for a certain, exact period of time in property leased for a specified consideration.

Promotional real estate

An interest in property which is part of a common promotional plan undertaken by a single developer or group of developers acting together to offer interests in real estate for sale or lease through advertising. The term does not mean any real estate interest involving less than 50 lots or shares, cemetery lots, and land involving less than 25 acres.

Agent open house

An open house for agents can give you important feedback on your listing as well as get the property in front of more agents. Most agents don't have the time to visit every new listing on home tour days, so a special open house could give the property the exposure it needs. It's especially valuable for properties that are unusual. Agents typically like to attend these events. It gives them a chance to spend more concentrated time at a property that could very well meet the needs of one of their clients. And they welcome the opportunity to enjoy the free food and beverages that are offered at most open houses. An additional incentive that the hosting agent can use is to hold a drawing or raffle for a prize such as a set of free car washes, a gift certificate to a popular restaurant, or even a weekend getaway. The agents can deposit their business cards in a receptacle, from which the winning card will be drawn. Once you have the business cards from everyone who attended, you can contact the agents for feedback or to see if they have any interested buyers.

Ordinary life estate

An ordinary life estate ends with the death of the life estate owner and may pass back to the original owners or their heirs (reversion) or to a named third party (remainder). For example, John King grants a life estate in a property to Mary Brown, to endure over Mary's lifetime. John establishes that when Mary dies, the property will revert to him.

Infeasibility (form of contract termination)

An otherwise valid contract can be canceled if it is not possible to perform. Certain personal services contracts, for example, depend on the unique capabilities of one person, which cannot be substituted by someone else. If such a person dies or is sufficiently disabled, the contract is cancelable.

The bundle of real property rights also applies separately to the individual components of real estate:

An owner can, for example, transfer subsurface rights without transferring air rights. Similarly, an owner can rent air space without encumbering surface or subsurface rights. This might occur in a city where adjoining building owners want to construct a walkway over a third owner's lot. Such owners would have to acquire the air rights for the walkway. If the city wants to construct a subway through the owner's subsurface, the city has to obtain the subsurface rights to do so.

Undivided interest

An undivided interest is an owner's interest in a property in which two or more parties share ownership. The terms "undivided" and "indivisible" signify that the owner's interest is in a fractional part of the entire estate, not in a physical portion of the real property itself. If two co-owners have an undivided equal interest, one owner may not lay claim to the northern half of the property for his or her exclusive use.

Advertising plan

Another important piece of information to share with your sellers is your advertising plan. Sellers need to know the "schedule" of when their property will be advertised and the methods you'll use to do that advertising. Make sure your sellers know that every home your firm lists is not advertised every day or even every week. Explain that the idea of advertising is to create interest in homes with certain amenities. Even if someone calls the firm expressing interest in a home other than your sellers', once the agent talks with the buyers, it may become clear that your sellers' property is a better fit. So an ad for one property can and does create interest in others.

Multiple listing service (MLS)

Any member who belongs to this service sends the information on each of his or her listings to a central location for the MLS. An MLS employee then compiles the information and distributes it to everyone who is a member of the MLS. The information is usually made available on the Internet, but sometimes it's distributed on computer disc. Participation in the MLS increases the sales inventory available to licensees. Any member of the MLS can sell any property listed in the MLS. With MLS sales, the listing broker and the selling broker share the commission, based on a predetermined percentage split. Send the information on your new listings to the MLS as soon as possible, so that other agents will have the information quickly. Once the listing is uploaded to the MLS, print a copy and send it to your sellers as part of your weekly activity report.

Continuing education

As a condition of renewal, Section 404.1(a) of the Real Estate Licensing and Registration Act requires standard real estate brokers and salespersons to complete 14 hours of Commission-approved continuing education during each two year license period. The continuing education course must be taken prior to the May 31 renewal deadline and must be provided by a certified Continuing Education Provider. Beginning with the June 2004 renewal cycle, no mandatory course is required. Only courses taken after June of the renewal year will count toward the next continuing education requirement. Licensees completing their continuing education courses must complete 14 hours of course work in a minimum of 2-hour increments.

Preparing for offers

As a culmination to your meeting with the sellers, share a blank copy of the purchase agreement with them. Go over each of the paragraphs of the form, so that the sellers will be prepared and know what they are looking at when they receive an offer. It will help reduce the stress that comes when an offer is presented and the sellers are under a time constraint to make a decision. Also let the sellers know that sometimes new listings get quick offers. When this happens, sellers tend to think that they have set their listing price too low. While this could be the case, it most often is not. Sellers may want to reject offers that they perceive as coming in too quickly and they may later regret the decision, if other offers are not forthcoming.

Listing amendment form

As with most other forms you will use in your real estate career, this form also varies from state to state and even from Board to Board. In general, however, most listing amendment forms have spaces at the top to fill in: -Property address -Seller's name -MLS listing number -Listing office -Listed price Below that information, there is typically space to fill in the date of the original listing agreement, the name of the seller, and the name of the broker. The two most common changes are price changes and listing period extensions, so there are often check boxes to indicate if the change relates to either of these with a place to write in either the new listing price or the new expiration date for the listing. Below that the form usually has a section of blank space for the agent to write in a description of the change if it doesn't relate to price or listing expiration date. It is often noted on the form that all other terms and conditions of the original listing agreement remain unchanged. Then there are places for the document to be dated, signed by the agent on behalf of the indicated broker or broker's company, and signed by the seller or sellers.

Valuation and assessment

Assessors use a sales comparison approach to assess the value of land and a cost approach to value improvements. Commercial property may be valued on its potential to produce rental income for its owners. Agricultural property valuation is not based on market value, but rather on the productivity of the land, provided that the owner makes a certain percentage of income from farming or ranching. Open space valuation is determined much the same way as agricultural property, but the owner does not have to prove that a percentage of income is acquired through farming.

Water rights

Basically concern the rights to own and use water found in lakes, streams, rivers, and the ocean. In addition, they determine where parcel boundaries can be fixed with respect to adjoining bodies of water. What water rights does an owner of a property that contains, or adjoins, a body of water enjoy? The answer depends on three variables: -Whether the state controls the water -Whether the water is moving -Whether the water is navigable Since water is a resource necessary for survival, some states -- particularly those where water is scarce -- have taken the legal position that the state owns and controls all bodies of water. Called the Doctrine of Prior Appropriation, this position requires that property owners obtain permits for use of water. If a proposed usage is reasonable and beneficial, the state will grant a permit, which over time, can attach to the property of the permit holder. If a state does not operate under prior appropriation, it operates under the common law doctrines of littoral rights and riparian rights.

Lockbox

Before you leave the house at the end of the listing meeting, install a lockbox. The lockbox holds the key to the home. Agents can access the lockbox either by using a special lockbox key or with an electronic keycard. Install the lockbox on the doorknob, a metal railing or some other stationary object.

How can an inactive license be reactivated?

By taking the appropriate continuing education course, applying for any active license and paying the appropriate fee. A criminal background check will also be required when the application is submitted. Additionally, a licensed broker or salesperson who wishes to activate a license which has been placed on inactive status shall be required to document 14 hours of continuing education. If activating a license which has been in escrow, two additional seven hour elective courses must be taken or one 15 hour broker course to renew the license for the next two year license period

Return on investment (ROI) formula

Formula: ROI = NOI/Price Example: An investment property generates a cash flow of $100,000 and appraises for $1,500,000. What is the owner's return on investment? ROI = $100,000 ÷ $1,500,000 = 6.67%

Sale of tax certificates

Some states sell tax certificates. The buyer of a tax certificate agrees to pay the taxes due. After a period of time specified by law, the holder of the tax certificate on a property may then apply for a tax deed.

Strict foreclosure

Court orders legal transfer of title directly to lender without public sale. Involves a lawsuit filed by the lender against the borrower. This procedure is usually available only when the value of the property is less than the value of the debt.

Local regulation

County and local government regulation focuses on land use control, control of improvements, and taxation. Land use regulations and ordinances control how all property within the jurisdiction may be developed, improved, demolished, and managed. County and local governments have the power to zone land, take over land for the public good, issue building permits, and establish the rules for all development projects. County and local governments, along with school districts and other local jurisdictions, have the power to levy real estate taxes.

Subagency

Created by the agreement of the people who are involved in the transaction. It may be created by a written agreement (recall our discussion of express agency in the preceding unit). Or it may be created by words or actions as in our previous discussion of implied agency. Often subagency is created within the structure of the local multiple listing service (MLS), although that does not have to be the case. If it is created within the MLS, it is not automatic. A seller can choose whether or not subagency will be offered for his or her transaction. Also, a cooperating broker can choose to work with a buyer as a principal (be the buyer's broker) and thereby reject the offer of subagency. Although subagency can be created within the MLS structure, it can also be offered outside the MLS system. Some types of property are not required to be listed in the MLS, such as commercial property or vacant land. When this is the case, a broker can decide to invite just a few brokers to help find buyers for the property, inviting the brokers to "cooperate" in the transaction and share the commission. Even though the broker may invite some number of other brokers to act as subagents in a particular transaction, only the subagent who actually procures a buyer will share in the commission.

Residential property

Defined as land or improved property with buildings designed for humans to live in, such as single-family homes, multi-family homes, apartments, vacation homes or condominiums or any property that is held by its owners for investment purposes.

Agricultural property

Defined as land used primarily for growing crops or raising livestock, such as farms, pastureland, orchards and timberland. Zoning ordinances are usually favorable for agriculture use.

Commission after listing expiration

Even after a listing expires, a broker may still be entitled to receive a commission. If you recall, most listing agreements have a clause in place (often called a carryover or safety clause) which says that the broker is still entitled to a commission for a set period of time after the listing expires, if the property is sold to a prospect that the broker introduced to the property during the time of the listing.

Buyer customer

Even though a real estate firm specializes in buyer brokerage, the firm can still accept listings from sellers. In those cases, the sellers would be the firm's clients. If a buyer expresses interest in one of the firm's listings, the broker must disclose his or her agency status with the seller at which point the buyer can choose to receive customer-level service when dealing with properties that are listed by that firm. Most buyer brokerage firms will define as part of their company policy whether they are willing to deal with buyers as customers or whether they will only take on buyers as clients.

Subagent obligations to the buyer

Even though subagents are working for the seller, they must also deal honestly and ethically with all their buyer customers. In addition, subagents are bound to disclose any pertinent information that may affect the value of the specific property they are showing their buyers. For example, Sally, a subagent to the seller, is preparing an offer from buyer customer Amanda in which Amanda is agreeing to assume the seller's loan. Amanda asks Sally to review the seller's note and mortgage. Upon review, Sally discovers an excessively large prepayment penalty clause in the note. Even though Sally is the seller's agent, she should be honest with Amanda if she sees something that is unfair. In this case, Sally should either point out the information about the excessive charge or encourage Amanda to get legal help.

IRS code section 3508

Federal tax laws allow real estate agents to be classified as independent contractors. In order to qualify, the IRS requires what's called the safe harbor test to establish that a person is indeed an independent contractor. The three conditions of the safe harbor test are: -The person must be a properly licensed real estate agent. -Gross income, including that which results from sales and all other output (including the performance of services), must be based on production and not on hours worked. -A written agreement must exist between the independent contractor and the broker which outlines the services to be performed by the contractor and states that the contractor will not be treated as an employee for income tax purposes.

Points

Fees charged by lenders to either lower an interest or to originate the loan. Each point charged is 1 percent of the loan amount. For example, a discount point is charged up front to lower a borrower's interest rate which in some cases helps the borrower qualify for the loan. In addition, a lender could charge a loan origination fee (point) to originate the loan.

Floor framing

Floor framing consists of a system of sills, girders, joists or floor trusses and sub-flooring that provides support for floor loads and gives lateral support to exterior walls. A sill plate is a wooden support member that is laid on top of and bolted to the foundation wall. This sill plate serves as the base for the wall framing. The sill plates are the first part of the frame to be set in place. The floors of the building are supported by a series of joists. The distance between an opposing pair of outside walls is usually too great to be spanned by just one joist. So when two or more joists are required to cover the span, support is provided for the joist ends by girders or support beams. These beams or girders can be made of steel or can be several wooden members fastened together. Sometimes the main floor beam of the structure is supported by lally columns. These are steel cylinders filled with concrete. The lally columns are placed in the crawl space or basement and adjusted to the correct height. Their spacing is determined by the size and material of the main floor beam.

Heta pumps

For climates with moderate heating and cooling needs, heat pumps offer an energy-efficient alternative to furnaces and air conditioners. Like a refrigerator, heat pumps use electricity to move heat from a cool space into a warm space, making the cool space cooler and the warm space warmer. During the heating season, heat pumps move heat from the cool outdoors into the warm house. During the cooling season, heat pumps move heat from the cool house into the warm outdoors. Because they move heat rather than generate heat, heat pumps can provide up to 4 times the amount of energy they consume. The most common type of heat pump is the air-source (air-to-air) heat pump, which transfers heat between the building and the outside air. Higher efficiencies are achieved with geothermal (ground-source or water-source) heat pumps, which transfer heat between the building and the ground or a nearby water source.

Non-judicial foreclosure

Foreclosure that does not require court proceedings or a judgment of foreclosure - the result of the power of sale clause in a deed of trust.

Minimum contract price formula

Formula: (Desired Seller's net profit + Loan payoff + closing cost = Seller's gross profit) ÷ Seller's % = Minimum Contract Price Example: A home seller wants to net $50,000. The commission is 7%, the loan payoff is $150,000, and closing costs are $4,000. What must the minimum contract price be? Steps: 1. Add up the desired seller's net, the loan payoff and the closing cost: $50,000 + 150,000 + $4,000 = $204,000 seller's gross profit 2. Since the seller has agreed to a 7% sales commission, that means he will get to keep 93%, which is 0.93 as a decimal. 3. Divide seller's gross profit by seller's %: $204,000 ÷ .93 = $219,354.83 So, the very minimum amount that the seller can list his house at and still cover his expenses and make his desired profit is $219,354.83.

Dividing percentages

Formula: 1. Percent number/100 = Decimal number 2. Beginning number ÷ Decimal = Dividend Example: What is 240 ÷ 75% Steps:1. Convert 75% into a decimal: 75/100 = 0.7575% becomes 0.75 2. Divide 240 by 0.75:240 ÷ 0.75 = 320

Multiplying percentages

Formula: 1. Percent number/100=Decimal number 2. Beginning number x Decimal number=Product Example: What is 75% of 256? 1. Convert 75% into a decimal: 75/100=0.7575% becomes 0.75 2. Multiple 0.75 by 256:0.75x256=192

Tax rate formulas

Formula: 1. Tax rate = Tax requirement/Tax base 2. Tax base = Tax requirement/Tax rate 3. Tax requirement = Tax base x Rate Example: 1. A town has a tax rate of 5% and a tax requirement of $8,000,000. What is the tax base? Tax base = ($8,000,000 ÷ 5% ) = $160,000,000 2. A town has a tax rate of 5% and a tax base of $160,000,000. What is the tax requirement? Tax requirement = ($160,000,000 x 5% ) = $8,000,000

Adjusted basis formula

Formula: Adjusted basis = Beginning basis + Capital improvements - Total depreciation

Compounded appreciation formula

Formula: Appreciated value = Beginning value x (1+annual rate) x (1+annual rate) for the number of years in question. Example: A $100,000 property is expected to appreciate 5% each year for the next 3 years. What will be its appreciated value at the end of this period? Appreciated value = $100,000 x 1.05 x 1.05 x 1.05 = $115,762.50 If the question has asked the appreciated value over 5 years, this is how the equation would look: Appreciated value = $100,000 x 1.05 x 1.05 x 1.05 x 1.05 x 1.05 = $127,628.63

Area of triangle

Formula: Area=Base x Height/2

Cash flow formula

Formula: Cash flow = (Net operating income - debt service) where debt service is PI payment Example: 1. A building generates $100,000 NOI after expenses and has a debt payment of $40,000. What is its cash flow? Cash flow = $100,000 - $40,000 = $60,000

Equity formula

Formula: Current market value - Current loan balance(s) Example: A home that was purchased for $150,000 with a $100,000 loan is now worth $300,000. The current loan balance is $80,000. What is the homeowner's equity?Equity = $300,000 value - $80,000 debt = $200,000

Debt ratio qualification formulas

Formula: Debt ratio = Housing expense + Other debt payment/Monthly gross income Housing expense = (Monthly gross income x Debt ratio) - Other debt payments Example: A lender uses a 36% debt ratio. A borrower earns $30,000/year and has monthly non-housing debt payments of $500. What housing payment can she afford? Housing expense = ($30,000 ÷ 12 x .36) - 500 = ($900 - 500) = $400

Depreciable basis formula

Formula: Depreciable basis = Initial property value + Capital improvements - Land value

Return on equity (ROE) formula

Formula: Flow/ROE = Cash/Equity Example: An investment property generates a cash flow of $100,000. The owner has $500,000 equity in the property. What is the owner's return on equity? ROE = $100,000 ÷ 500,000 = 20%

Points formula

Formula: Loan origination fee: 1% Discount points: 2% Total: 3% Loan amount: $150,000 Total Charged - $150,000 x .03 total = $4,500.00 total Points: $150,000 x .02 points = $3,000.00 total points charged Examples/Formulas 1. A borrower pays $500 for a $10,000 loan. How many points are paid?$500 ÷ 10,000 = .05 = 5 points 2. A borrower pays 5 points on a $10,000 loan. What is the fee paid? $10,000 x .05 = $500 3. A borrower pays $500 as 5 points on a loan. What is the loan amount? $500 ÷ .05 = $10,000

Income ratio qualification formula

Formula: Monthly Principal & Interest (PI) payment = Income ratio x Monthly gross income Example: 1. A lender uses a 28% income ratio for the PI payment. A borrower grosses $30,000 per year. What monthly PI payment can the borrower afford? Monthly PI payment = ($30,000 ÷ 12) x .28 = $700 2. How much can the borrower borrow if the loan constant is 6.3207? (See also- loan constants) Loan amount = ($700 ÷ 6.3207) x 1,000 = $110,747.22

Percentage lease rent formula

Formula: Monthly percentage rent = Sales times % Sales charges Example: A store generates %50,000/month. The lease calls for 1.5% percentage rent. Monthly rent amount? ($50,000 x .015) = $750 / month

Net operating income (NOI) formula

Formula: NOI = Potential Gross Income - Vacancy loss + Other income - Operating expenses Note: Operating Expenses do not include mortgage payments! Example: An apartment building has 24 apartments that rent for $500 per month. Vacancy rate is 5% and laundry vending income is $300 per month. Operating expenses equal 40% of potential rent. What is the NOI? 1. Potential Gross Income --$500 X 24 units X 12 months = $144,000 2. Vacancy -- $144,000 x 5% = $7200 3. Laundry income -- $300 per month X 12 months = $3,600 4. Effective Gross Income --$144,000 - $7,200 vacancy + Laundry income $3,600 = $140,400 5. Operating Expenses -- $144,000 X 40% = $57,600 6. Net Operating Income -- Effective Gross Income of $140,400 - Operating Expenses of $57,600 = $82,800

Net income formula

Formula: NOI = Potential rent - Vacancy loss + Other income - Operating expenses Note: Operating expenses do not include mortgage payments! Examples: 1. A building has 10 office suites generating annual potential rent of $10,000 each. Vacancy = 10% and annual expenses are $35,000. Vending machines yield $5,000. What is the NOI? $100,000 rent - $10,000 vacancy + $5,000 other income - $35,000 expenses = $60,000 NOI

Rent escalation formula

Formula: New rent = current rent x (100% + escalation rate) Example: An apartment's rent is scheduled to increase by 6%. If the current rent is $450, the new rent is: $450 x (100% + 6%) =$450 x 1.06 = $477

Fully amortized loan formulas

Formulas: 1. Interest-only loan: Total interest = Loan amount x Rate x Term in yearsFully Amortized loan: Total interest = (Monthly PI payment x 12 x term) - Loan amount 2. Fully amortized loan (Monthly PI payment x 12 x term) - Loan amount Examples: 1. A borrower obtains a 10-year interest only loan of $50,000 @ 6%. How much interest will he or she pay? ($50,000 x .06 x 10) = $30,000 2. A borrower obtains a 10-year amortized loan of $50,000 @ 6% with monthly payments of $555.10. How much interest will he or she pay? ($555.10 x 12 x 10) - $50,000 = $16,612

Loan-to-ratio formulas:

Formulas: 1. LTV ratio = Loan/Price (Value) 2. Loan = LTV ratio x Price (Value) 3. Price (value) = Loan/LTV ratio Examples: 1. A borrower can get a $265,600 loan on a $332,000 home. What is her LTV ratio? LTV Ratio = $265,600 ÷ 332,000 = 80% 2. A borrower can get an 80% loan on a $332,000 home. What is the loan amount? Loan = $332,000 x .80 = $265,600 3. A borrow obtained an 80% loan for $265,600. What was the price of the home? Price (value) = $265,600 ÷ .80 = $332,000

Loan constants formulas

Formulas: 1. Monthly payment = Loan amount/1000 x Loan constant 2. Loan amount = Monthly payment/Loan constant x 1000 3. Loan constant = Monthly payment/Loan amount x 1000 Examples: 1. A borrower obtains a loan for $100,000 with a 6.3207 constant. What is the monthly payment? Monthly payment = ($100,000 ÷ 1,000) x 6.3207 = $632.07 2. A borrower has a monthly payment of $632.07 on a loan with a monthly constant of 6.3207. What is the loan amount? Loan amount = ($632.07 ÷ 6.3207) x 1000 = $100,000 3. A borrower obtains a loan for $100,000 with a monthly payment of $632.07. What is the loan constant? Loan constant = ($632.07 ÷ $100,000) x 1,000 = 6.3207

Simple appreciation formula

Formulas: 1. Total appreciation = Current value - Original price 2. Total appreciation rate = Total appreciation/Original price 3. Average annual appreciation rate = Total appreciation rate/Number of years 4. One year appreciation rate = Annual appreciation amount/Value at beginning of year Examples: 1. A home purchased for $200,000 five years ago is now worth $300,000. What are the total appreciation amount, total appreciation rate, and average appreciation rate? Total appreciation = ($300,000 - $200,000), or $100,000Total appreciation rate = ($100,000 ÷ $200,000), or 50%Average annual appreciation rate = 50% ÷ 5 years = 10% 2. A home costing $250,000 is worth $268,000 one year later. What is the one-year appreciation rate? One-year appreciation rate = ($18,000 ÷ $250,000) = 7.2%

Commission split formulas

Formulas: 1. Total commission = Sale price x Commission rate 2. Co-brokerage split = Total commission x Co-brokerage percent 3. Agent split = Co-brokerage split x Agent percent 4. Broker split = Co-brokerage split - Agent split Example: A $300,000 property sells at a 7% commission with a 50-50 co-brokerage split and a 60% agent split with her broker. What are total, co-brokerage, agent's, and broker's commissions? Total commission = $300,000 x .07 = $21,000 Co-brokerage splits = $300,000 x .07 x .50 = $10,500 Agent split = $10,500 x .60 = $6,300 Agent's broker's split = $10,500 - 6,300 = $4,200

Income capitalization approach formulas

Formulas: 1. Value = Annual net operating income/Capitalization rate 2. Capitalization rate = Annual net operating income/Value 3.Annual net operating income = Value x Capitalization rate Examples: 1. A property generated $490,000 net income and sells at a 7% cap rate. What is its value? $490,000 ÷ 7% = $7,000,000 value 2. A property has a net income of $490,000 and sells for $7,000,000. What is its cap rate? $490,000 ÷ 7,000,000 = .07, or 7% 3. A property's value is $7,000,000 and the cap rate is 7%. What is the property's Net Operating Income? $7,000,000 x .07 = $490,000

Rate of return, investment value, and income formulas

Formulas: 1. Where income = Net operating income (NOI); Rate = rate of return, cap rate, or percent yield; and Value = value, price or investment amount. 2. Rate = Income/Value 3. Value = Income/Rate 4. Income = Value x Rate Examples: 1. An office building has $200,000 net income and sold for $3,200,000. What was the rate of return? Rate = ($200,000 NOI ÷ 3,200,000 price) = 6.25% 2. An office building has $200,000 net income and a cap rate of 6.25%. What is its value? Value = ($200,000 ÷ 6.25%) = $3,200,0003. An office building sells for $3,200,000 at a cap rate of 6.25%. What is its NOI? Income = $3,200,000 x 6.25% = $200,000

Amortization loan formulas

Formulas: A 4 step method is used to calculate Principal and interest paid per month. The steps are Multiply x, Divide (÷), Subtract - , and Subtract -. Step 1: Principal x Interest = Annual Interest Step 2: Annual Interest (÷) 12 months = 1st month's Interest; Step 3: Monthly Payment - 1st (or any) month's calculated Interest = Principal paid; Step 4: Principal Balance - Principal Paid = New Principal Balance. Example: A borrower obtains a 30-year $100,000 amortized loan @ 7% with a $665.31 monthly payment. What is the principal paid in the second month? Month 1: $100,000 x .07 (÷) 12 = $583.33 1st month's Interest; Payment $665.31 - $583.33 = $81.98 First Month's Principal; $100,000 - $81.98 = $99,918.02 New Principal Balance Month 2: $99,918.02 x .07 (÷) 12 = $582.86 Second Month's Interest; Payment 665.31 - 582.86 = $82.45 Second Month's principal. (You can subtract the $82.45 from the principal balance of $99,918.02 to obtain the new principal balance and continue the steps to fully show principal and interest amounts for the length of the loan.)

Supervised property management assistance by salespersons

Generally, a salesperson may not do the work of a broker. In the case of property management, a salesperson may assist in property management so long as the salesperson's work is supervised and controlled by the employing broker. A salesperson may not independently negotiate the terms of a lease nor execute a lease on behalf of the lessor.

Subagent example

Greg and Ginny Coleman listed their property with ABC Realty. Agent Tim took the listing for ABC and licensee Sara, who also works for ABC, has shown the Coleman home. Both Tim and Sara are subagents of the Colemans because they both work for ABC Realty, whose broker actually "owns" the listing. The Coleman home is also listed with the local MLS. Mike, a licensee at Hometown Realty shows the Coleman home to several of his customers. Hometown Realty has agreed to the subagency offer through the MLS. So even though Mike is employed by Hometown Realty, he is also a subagent of the Colemans. That means Mike owes fiduciary responsibilities to the sellers and to the listing broker at ABC Realty. In turn, if the listing broker, Tim, Sara, Mike or any other subagent were to perform any act that resulted in damages to the other party in the transaction, the Colemans could be held liable for those actions. For this reason, it's critical that agents thoroughly explain subagency to their clients when taking a listing, so that the sellers can make an informed choice about whether or not to offer subagency.

Groundwater rights

Groundwater is water located below the earth's surface, below the saturation point, in underground geological formations called aquifers. Some states employ a rule of capture regarding groundwater use rights. The rule of capture allows a property owner to pump a regulated amount of water. Landowners who negligently remove excessive water may be liable for sinkage in neighboring properties.

Zoning board of adjustment

Group established to hear complaints about the effects of zoning ordinances on specific parcels of property.\ Generally deals with such issues and appeals as: -nonconforming use -variance -special exception conditional use permit -zoning amendment

Emblements

Growing plants, including agricultural crops, may be either real property or personal property. Plants and crops that grow naturally, without requiring anyone's labor or machinery, are considered real property. Plants and crops requiring human intervention and labor are called emblements. Emblements, despite their attachment to land, are considered personal property. If an emblement is owned by a tenant farmer, the tenant has the right to the harvested crop, whether the tenant's lease is active or expired. If the tenant grew the crop, it is his or her personal property, and the landlord cannot take it.

Method of annexation

How permanent is the method of attachment? Can the item be removed without causing damage to the surrounding property, or can any damage caused by the removal be easily repaired?

Buyer client

If a buyer decides that he or she wants client-level services, the buyer will sign a document known as an exclusive right to represent agreement. This agreement outlines the broker's obligations to the client and also the client's obligations to the broker. Using this document, the buyer and the broker specify the terms under which they will be working.

Invalidity of contract (form of contract termination)

If a contract is void, it terminates without the need for disaffirmation. A voidable contract can be cancelled by operation of law or by rescission.

Principal-subagent relationship

If a cooperating broker accepts the offer of subagency, that broker is then working through the listing broker and is the subagent of the seller. As a subagent of the seller, the cooperating broker has the same fiduciary responsibilities to the seller as does the listing broker and his or her affiliated licensees. In other words, the cooperating broker is working for the best interests of the seller, NOT for the best interests of any prospective buyers to whom he or she may show the property.

Dealing with race, color, or national origin in ads

If a licensee uses words that describe the housing, the current or potential residents or the neighbors or neighborhood in racial or ethnic terms, he or she will create liability for discriminatory advertising.

Remainder

If a life estate names a third party to receive title to the property upon termination of the life estate, the party enjoys a future interest, called a remainder interest or a remainder estate. For example, Mr. Jones leaves his home to his second wife with the provision that, after her death, it will pass to his daughter Sara from his first marriage. During Mrs. Jones lifetime, Sara holds a remainder interest and is called a remainderman.

Avoiding agency conflicts

If a prospective buyer approaches a listing agent about a property he or she has listed, it's important for the agent to remember that he or she is the seller's agent. However, even though a licensee is the seller's agent, he or she must always deal with buyers in an honest manner and use reasonable care and skill in the transaction. He or she must also disclose all material facts. In carrying out these duties owed to buyers, a seller's agent must be careful not to give the impression that he or she is representing the buyer, especially by giving advice that might cause the buyer to assume the licensee is looking out for the buyer's interests. Giving such an impression would create a potential conflict of interest and could lead to a dual agency situation. If a buyer makes this mistaken assumption, he or she might inadvertently disclose information to the seller's agent that he or she expects the agent to keep confidential. But the seller agent's duty of confidentiality is extended to the seller, not the buyer. And furthermore, the agent's duty of loyalty to the seller would compel him or her to pass on to the seller any information given by the buyer. In a situation such as this, the seller's agent could: -Disclose the potential for dual agency and get written permission for all parties to act as a dual agent. -Refer the buyer to another agent. Before making any decisions, the agent should always ask the prospective buyer if he or she is represented by another agent.

Relationship of parties (real vs personal property: differentiation criteria)

If a tenant installs a fixture in order to conduct business, the fixture may be considered a trade fixture, which is the tenant's personal property.

Wage lien

If an employer owes back wages to an employee, a wage lien can be set against all real and personal property of the employer. If the money cannot be collected, then a lien may be filed as a permanent record of the debt owed to the claimant by the employer.

Intestate proceeding with no heirs

If an intestate decedent has no heirs, the estate escheats, or reverts, to the state or county, after all claims and debts have been validated and settled.

Commission and incomplete transaction

If for some reason the transaction does not complete, the seller may still be responsible for paying a commission to the listing broker. This can happen if he or she: -Changes his or her mind and refuses to sell -Has a spouse who won't sign the deed -Has a title with uncorrected defects -Commits fraud with regard to the transaction -Cannot deliver possession -Insists on terms that were not in the listing agreement -Mutually agrees with the buyer to cancel the sale What this means is that the broker is still entitled to receive the commission if the transaction does not complete due to the seller's default. In the same vein, if a buyer hires a broker to find a property and agrees to pay a commission to the broker, the broker will be entitled to receive that commission if he or she performs according to the terms of the contract, even if the buyer: -Decides against making the purchase -Makes a direct purchase of a "for sale by owner" property -Chooses to purchase a property through another broker

Reversion

If no remainder estate is established, the estate reverts to the original owner, or the owner's heirs. In this situation, the original owner retains a reversionary interest or estate. If no remainder estate is established, the estate reverts to the original owner or the owner's heirs. For example, Mr. Smith gives his home to his ill cousin Jim with the stipulation that when Jim dies, the home will revert to Mr. Smith or his heirs. In this situation, Mr. Smith owns a reversionary interest. The two types of life estates are the conventional and the legal life estates.

Sale or lease contract provisions (real vs personal property: differentiation criteria)

In a sale or lease transaction, the listing of an item in the contract as a personal property item, or a fixture, overrides all other considerations. Unless otherwise stated as exceptions, all fixtures are included in the sale. For example, if a sale contract stipulates that the carpeting is not included in the sale, it becomes a personal property item. If the carpeting is not mentioned, it goes with the property, since it is attached to the floor of the building.

All business is done in the name of the broker, and never

In a salesperson or associate brokers name. Because the salesperson or the associate broker represents the broker and is accountable to the broker, the salesperson is called a fiduciary of the employing broker. Only the employing broker can issue commission checks to the salesperson, associate broker, or cemetery salesperson.

Importance of basic construction

In addition to knowing about a property and its neighborhood location, it is essential that a licensee take note of the specifics of any property that he or she lists, including such things as: -The roof -Cracks or chips in the exterior finish -The condition of any masonry - chimney, foundation, patio -Any broken windows or doors -Type of heating and cooling systems -Septic tank or sewer -Type of water supply - well, cistern, municipal or private

FHA requirements

In addition to local regulation, subdivisions must meet FHA (Federal Housing Authority) requirements to qualify for FHA financing insurance. The FHA sets standards similar to local ordinances to ensure an adequate level of construction quality, aesthetics, and infrastructure services.

Notice of pendency

In an equity action that will have a direct effect on real property (title, possession or use), the filing of a notice of pendency gives record notice to any potential buyers or mortgagees that any interest they acquire in the property will be subordinate to that of the P. In mortgage foreclosures, the filing of a notice of pendency is statutorily required.

Real estate from period-to-period

In an estate from period-to-period, also called a periodic tenancy, the tenancy period automatically renews for an indefinite period of time, subject to timely payment of rent. At the end of a tenancy period, if the landlord accepts another regular payment of rent, the leasehold is considered to be renewed for another period.

Designated agents

In case a brokerage firm is agent for both a seller and a buyer, the firm sometimes designates one salesperson to serve the buyer and one to serve the seller. The two salespersons are presumed to maintain the privacy, and serve the interest of the party they represent.

Designated agency

In designated agency, the employing broker may, with your consent, designate one or more licensees from the real estate company to represent you. Other licensees in the company may represent another party and shall not be provided with any confidential information. The designated agent(s) shall have the duties above seller agency and buyer agency.

Mortgage and trust deed lien

In lien-theory states, mortgages and trust deeds secure loans made on real property. In these states, the lender records a lien as soon as possible after disbursing the funds, in order to establish lien priority. If a mortgagor defaults, the lender forecloses and the property is put up for sale to satisfy the debt on the mortgage. Lenders usually require a first mortgage lien. This means that no other liens on the property will take priority over the mortgage, except for the property tax lien we just discussed. The lien is removed when the property is fully paid for. The lender will sign a satisfaction certificate to remove the lien.

Estimating a seller's net

In most cases (since the licensee is counseling the sellers toward an accurate and realistic listing price), the licensee should prepare the estimate using the listing price as the estimated selling price. Then the licensee would estimate all the costs the owners are apt to incur. (It's better to overestimate the costs just a bit, so that if there ARE any surprises, they will be pleasant ones.) Seller's Net Example Note: We'll discuss the closing costs typically paid by the sellers in more detail in a later unit of this course. So for purposes of this example, we'll just give you some figures to work with. Jim and Karen Grand have listed their home at $240,000. Figures: Title Insurance Policy$ 600 Transfer Taxes 250 Inspections 450 Brokerage Fee (6%) 14,400 Current Loan Balance $75,000 Calculation Title Insurance Policy 600 Transfer Taxes 250 Inspections 450 Brokerage Fee (6%)14,400 Total Estimated Costs $15,700 Current Loan Balance$75,000 Total Loan Repayment $75,000 Estimated Selling Price $240,000 Less Total Estimated Costs -15,700 Less Loan Repayment -75,000 Estimate Seller's Net $149,300

How much profit?

In order to lay the ground work for determining a realistic listing price, the licensee should share a Comparative Market Analysis (CMA) with the seller. (Note: You will learn more about CMA's in the Valuation Module of this course.) Often, a seller's reaction is surprise - thinking that the homes shown on the CMA sold at prices that were too low. The licensee needs to explain to the sellers that those homes listed with a price above the market value are the ones that have been on the market for a considerable length of time. Conversely, those homes that were listed close to their actual selling price or market value sold quickly. The seller certainly has the right to establish the listing price for the property. However, an unrealistic inflated price will make it difficult for the brokerage to market the property. In some cases, the sponsoring broker may even refuse to accept the listing at all.

Federal regulation

In regulating real property rights, the federal government is primarily concerned with broad standards of real property usage, natural disaster, land description, and discrimination. Federal agencies, such as the Federal Housing Administration, promote and regulate home ownership. The Environmental Protection Agency establishes protective usage restrictions and guidelines for dealing with hazardous materials and other environmental concerns. Federal flood insurance legislation requires certain homeowners to obtain flood insurance policies. Federal laws, such as the Federal Fair Housing Act of 1968, prohibit discrimination in housing based on race, religion, color, or national origin. Such laws as the Americans with Disabilities Act prescribe design and accessibility standards. The federal government does not levy real estate taxes.

Plan development

In response to land use objectives, community attitudes, and conclusions drawn from research, the planning personnel formulate their plan. In the course of planning, they analyze: -population and demographic trends -economic trends -existing land use -existing support facilities -traffic patterns

In rem proceeding

In some states, a local official can bring a legal action, called an in rem legal proceeding, to collect the taxes. An in rem proceeding is one that is directed against a thing, rather than against a person. Typically this involves a forced sale of the property.

Extraterritorial jurisdiction

In some states, subdivisions of land that are located within a certain distance of an incorporated city or town must be approved by the municipality. In counties that are densely populated, the county must approve subdivisions. This is called extraterritorial jurisdiction, or ETJ. A buyer of property outside city limits must be notified that the city may annex the property into the city at some time in the future. As long as the property remains in the ETJ the municipality has no right to control land use. If the municipality does annex the property, however, the city would have the right to control land use.

Surface rights

Include rights to anything on land or water. Apply to the real estate contained within the surface boundaries of the parcel. This includes the ground, all natural things affixed to the ground, and all improvements. Surface rights also include surface water rights.

Reliction

Increase in land due to receding of water.

Accretion

Increase of land created by deposits of soil by natural action of water.

Type of employment used for IRS purposes

Independent contractor or a regular employee. The difference is that an independent contractor keeps his own business, pays his own taxes, and is accountable to the broker. The broker does not withhold taxes from a commission check of an independent contractor.

Seller representations (listing agreement clause)

Indicates that the seller is unaware of any legal, financial or physical reasons that would affect the seller's ability to sell the property. If the seller becomes aware of any such reasons, the seller must notify the broker immediately.

Listing price and terms (listing agreement clause)

Indicates the asking price for the property. May also indicate any financing terms, such as loan assumption, down payment amount, all cash, etc. Note: Unless the terms are specified, a seller is not required to pay a commission when refusing a full price offer unless the offer is all cash.

Broker of record

Individual broker who is ultimately responsible for the real estate transactions of a partnership, association, or corporation that holds a broker's license. These people communicate with the Commission on behalf of partnerships. *A broker's license is needed for an overall partnership.*

Sanitary waste

Individual household sewage treatment systems are still the only method of sewage treatment available in many areas. Properly-designed, constructed, and maintained sewage treatment systems minimize the possibility of disease transmission and potential for contamination of ground and surface waters. Soil percolation must be adequate for absorption and land area must be sufficient for the necessary leach field. A septic system is an onsite system designed to treat and dispose of domestic sewage. It is used when a sewer line is not available to carry wastes to a sewage treatment plant. The individual parts of the system are the septic tank, a distribution box, and a leach field. Bacterial action takes place in the septic tank where the end products are mainly water, gases, and undigested material, called sludge that sinks to the bottom of the tank and scum that floats to the top of the tank. The septic tank contains baffles that prevent any scum that floats to the surface and sludge that settles to the bottom from passing out of the tank. The gases that are generated vent to the atmosphere via the plumbing vent system. From the septic tank, the segregated and relatively clear liquid flows into a small distribution box where it is then distributed to several perforated pipes. These perforated pipes then deliver the liquid to a large soil surface area, called a leach field, or absorption field, for absorption. The soil also acts as a filter to remove any small amounts of solids that may be carried along with the liquid. The sludge in the bottom of the tank must be periodically pumped out and properly disposed of.

Consumer notice for time-share estates:

Initial interview disclosure does not apply if;-The licensee is showing a time share as defined in 68 Pa.C.S. 3403 relating to public offering statements, time share estates; -The licensee shall provide the consumer with a written statement telling the consumer the capacity of the licensee. The statement must be provided at the time of the initial interview and shall be in the following form: The licensee must provide a copy of this statement to the prospective tenant and the licensee must maintain a copy signed by the prospective tenant for six months. If the prospective tenant refuses to sign on the form, the licensee shall duly note this fact.

Laws of descent

Involuntary alienation occurs when a title-holder dies without a valid will. The state's statutes of descent and distribution identify heirs and the respective shares of the estate they will receive. In the absence of heirs, title transfers to the state or county by escheat.

Judicial foreclosure

Involved sale of mortgage property under the supervision of a court, initiated by a lawsuit; available in every state.

Creation and improvement

Involves capital formation, financing, construction contracting, and regulatory approvals. Key parties include developer, landowner, and mortgage lender.

Simple definition of real estate

It is air, water, land, and everything affixed to the land. Real estate in the US may be owned privately by individuals and private entities, or publicly by government entities. Private ownership rights in this country are not absolute. The government can impose taxes and restrictions on private ownership rights, and it can take private property away altogether. In addition, other private parties can exert their rights and interests on one's real property. A bank, for example, can take a property if the owner fails to pay a mortgage. A neighbor can claim the right to walk across one's property whether the owner likes it or not, provided he or she has done so for a certain number of years.

Duties when selling or leasing own real estate

It is an acceptable practice so long as two requirements are followed; -A broker or salesperson who sells or leases his own real estate shall comply with the requirements of the Act and this chapter; and, -A broker or salesperson who is selling or leasing his own real estate shall disclose his licensed status to a prospective buyer or lessee before the buyer or lessee enters into an agreement of sale or lease.

Agent

One who is authorized to represent and act on the part of another person called the principal.

Accurate pricing

It is critical for a property to be priced accurately. The most common reason a property fails to sell is because it was overpriced. The practice of listing a property a little higher than the determined market value to allow room for negotiation is perfectly acceptable and a common real estate practice. When comparing the sellers' property to the CMA properties, factors such as proximity, physical similarity, and date of sale need to weigh into the discussion.

Distinction between real and personal property (two major classifications of property)

It is not always so clear. In some states, for example, manufactured homes are considered personal property because they are moveable, but they may be converted to real property by filing a "statement of ownership and location" with the county in which the motor home is located, or by permanently connecting the home to the land and declaring it to be real property. We will explore this topic further in a following section. Since all real estate in the United States is owned by some person, private organization, or government entity, all real estate in the country is real property. Given that fact, this course follows the customary practice of using the two terms interchangeably and synonymously.

Listing signatures

It's very important that all the owners sign the listing agreement to avoid any potential problems. But what happens if the seller is unclear about the names of all the owners? In what types of situations could this happen? This depends on how the title is held. In cases where the title is held in severalty (one owner), as joint tenants with right of survivorship or as community property, ownership would seem pretty evident. But ownership might not be quite so clear if title is held: -As Tenants in Common - New owners could inherit a portion of the property from any of the original owners. -By a Partnership - Persons inheriting from current owners might not know the names of the other partners. If the sellers are unclear about the ownership of the property or if you just want to check for yourself, you can do it in one of these ways. Ask the seller for a copy of the deed or other title document. -Call and check with a title company in the area where the property is located. -Call or visit the county tax office and check the records.

Environmental controls: responsibilities and liabilities

Licensees are expected to be aware of environmental issues and to know where to look for professional help. They are not expected to have expert knowledge of environmental law nor of physical conditions in a property. Rather, they must treat potential environmental hazards in the same way that they treat other material facts about a property: disclosure.

Employee of broker

May only receive compensation from that employing broker and no other, including the seller. Any bonus paid by the seller must be paid to the broker and then disbursed through the broker's books to the salesperson.

Wells

Most municipal areas are supplied by a public water system. This system brings water into homes via a pipe system from a municipal water main or a community well. The water is delivered under pressure and usually has, or should have, cutoff valves at each building and at individual fixtures, so that if a problem arises, it can be repaired without having to turn off the entire system. Residents in rural areas who do not have access to public water must depend on private wells for their water supply. A state's Department of Health usually provides guidelines for the construction of such wells. The guidelines include information about the proper location for the well. Here are a few of the typical guidelines. Wells should be located in an area that: -will allow adequate access to the well for inspection, maintenance, repair, renovation, treatment, and testing. -is not subject to seasonal flooding or surface water contamination, or it should be constructed in such a way that seasonal floodwater cannot enter the well. -is up-grade from any potential or known source of contamination unless property boundaries, site topography, location of structures and accessibility require a different location. The minimum horizontal separation distances from potential sources of contamination are published in a table available from the Department of Health. The ground surface immediately surrounding the well casing should be graded in such a way as to divert surface water away from the well. Concrete should not be used for grading purposes.

Blanket unilateral offer

Most residential properties are listed in the local MLS. This is important to sellers, since listing in the MLS will give the sellers the opportunity for their properties to be seen by large numbers of licensees who are MLS members. The more agents who see the listing, the more potential buyers will have the chance to view the property. The acceptance of this unilateral blanket offer came in the form of a cooperating broker showing the property and bringing a purchase offer from the buyer. So in effect, any agent that showed the listed property automatically became a subagent of the listing broker and the seller. A seller can agree to accept or reject the option of subagency when he or she signs the listing contract. Even if the seller chooses to allow the broker to offer subagency, a cooperating broker may reject the offer and work as the buyer's broker or agent. Since a buyer's agent CANNOT be the subagent of the listing broker and seller, any licensee acting as a buyer's agent must make their agency status known to the listing broker before showing the property. This is important in order to avoid any misperceptions or wrongful assumptions.

Property disclosure statement

Most states (although not all) require sellers to provide some sort of Property Disclosure Statement to a buyer within some specified number of days (varies by state) of the acceptance of a purchase and sale agreement, but the seller is usually not required to provide the statement before that time. However, many listing agreements encourage the seller to give the completed form to his or her agent as soon as possible. When this law is in effect, it typically applies to: -Multi-family dwelling of up to four units -New construction -Certain condominiums and timeshares -Manufactured and mobile homes -For-sale-by-owner (FSBO) properties (sometimes)

License

Much like a personal easement in gross, is a personal right that a property owner grants to another to use the property for a specific purpose. Licenses are not transferrable and do not attach to the land. They cease on the death of either party, or on the sale of the property. Unlike a personal easement in gross, a license is revocable at any time. Licenses are often granted informally, as a verbal statement of permission. A farmer granting a neighbor permission to cross his land to reach and fish in his pond is an example of a license.

Federal consumer protection - marketing legislation

National Do Not Call Registry: The Federal Communications Commission provides a list of phone numbers of consumers who do not want to the contacted by telemarketers, including real estate licensees. -Enforced by FTC, FCC and state officials -Brokerage companies must have a Do Not Call policy, even if they do not engage in cold calling, and must maintain an updated list (every 31 days), downloaded from the FTC's website, and must add any name of consumers contacted who are not on the list but who request no further phone calls. -Violations: $11,000 for each call placed Exemptions to the DNC law: -Political Organizations -Charities -Telephone Surveyors -Established business relationships --May call a consumer with whom a company has an established business relationship for up to 18 months after consumer's last purchase, delivery or payment, even if the consumer is on the DNC registry --May call up to 3 months after consumer makes an inquiry or submits an application to the company --May call if the consumer gives permission to call --If a consumer asks not to be called, no person in the company may call even if an established business relationship exists CAN-SPAM Act: addresses requirements for sending commercial e-mails -Bans false or misleading information -Prohibits deceptive subject lines -E-mail must include an opt-out method -Commercial e-mail must be identified as an ad and include sender's physical postal address -Fines: up to $11,000 Remember that e-mail recipients MUST HAVE AN OPT-OUT METHOD of unsubscribing.

Broker dual agency

Occurs when two agents in the broker's firm represent both the seller and the buyer in a single transaction. Even though the parties are represented by two different agents, the broker is a dual agent.

Property disclosure exemptions

On the other hand, property disclosure requirements do not usually include the following transfers of property: -A foreclosure or deed-in-lieu of foreclosure -A gift or other transfer to a parent, spouse, domestic partner, or child of a transferor or child of any parent, spouse, or domestic partner of a transferor -A transfer between spouses or between domestic partners in connection with a marital dissolution or dissolution of a state-registered domestic partnership -A transfer where a buyer had an ownership interest in the property within two years of the date of the transfer including, but not limited to, an ownership interest as a partner in a partnership, a limited partner in a limited partnership, a shareholder in a corporation, a leasehold interest, or transfers to and from a facilitator pursuant to a tax deferred exchange -A transfer of an interest that is less than fee simple, except for the transfer of a vendee's interest under a real estate contract -A transfer made by the personal representative of the estate of the decedent or by a trustee in bankruptcy -A transfer in which the buyer has expressly waived the receipt of the property disclosure statement

Direct e-mail ads

Once you have built up a list of prospects who have shared their e-mail addresses with you (from visitor responses to your internet site and other sources), you can prepare and implement a direct e-mail campaign. It costs nothing to send e-mail and you can customize your message to include photos and sound. You can be creative with the message so your ad stands out, but don't go overboard with the "bells and whistles" or you'll lose the audience. It's just as easy to hit the "delete" key as it is to toss a postcard or brochure in the waste can.

Advertising media

One important thing to remember when choosing an advertising medium is that the purpose is to reach the largest number of probable prospects, NOT necessarily the largest number of people. And you want to do this at the lowest possible cost. A number of media choices for advertising are available. -Newspapers -Magazines -Shopping guides -Telephone directories -Signs -Outdoor ads -Direct mail -Direct e-mail -Newsletters -Promotional items -Radio and TV -Internet

Bilateral contract

One in which both parties promise to perform their respective parts of an agreement in exchange for performance by the other party. An example of a bilateral contract is an earnest money contract: The buyer promises to pay for the property and the seller promises to deliver title to the property.

Executory contract

One in which performance is yet to be completed. A sales contract prior to closing is executory: while the parties have agreed to buy and sell, the buyer has yet to pay the seller and the seller has yet to deed the property to the buyer.

Arousing interest in ads

One of the best ways to stimulate interest is to pique the reader's curiosity about what you are offering. Excite the reader's imagination with such invitations as: -Entertain friends and family in the state-of-the art home theater. -Relax while enjoying your favorite beverage on the deck of the large swimming pool. -Tuck yourself into the quiet of the den/library with its unique free-standing fireplace. -Delight in the luxury of the two-person whirlpool tub. Statements like these allow readers to picture themselves in the setting, enjoying the features and benefits of the property.

To describe a township legally:

One would need only to cite the township's numerical position on the map grid as it relates to the intersection of a primary north-south line and a primary east-west line. For parcels within a township, the system created another grid within each township consisting of 36 sections. Thus to describe a section legally, one need only indicate the township and the number of the section within the township. Lastly, for parcels smaller than a section, the survey devised a method for describing fractions of sections and locating them within a section.

Intention (real vs personal property: differentiation criteria)

One's original intention can override the test of movability in determining whether an item is a fixture or not. If someone attached an item to real property, yet intended to remove it after a period of time, the article may be deemed personal property. If a person intended an article to be a fixture, even though the item is easily removable, the article may be deemed a fixture.

Unilateral contract

Only one party promises to do something, provided the other party does something. The latter party is not obligated to perform any act, but the promising party must fulfill the promise if the other party chooses to perform.

Public open house

Open houses for the public are the most familiar to agents, buyers, and sellers alike. In addition to any advertising your firm does for open houses, you can prepare for an open house by sending invitations to neighbors within a few blocks of the property. Also it's a good strategy to hand-carry invitations to the nearby neighbors. The advantages to this approach are: -Many homes are sold to neighbors' friends. -Neighbors are curious about the homes in their neighborhood because it may influence the value of their own home. You can make them feel welcome. -Neighbors can see first-hand how you work and may be inclined to call you for the future sale of their home.

Job of rental listing referral agent

Own or manage a business that collects rental info for the purpose of referring prospective tenants to rental units. -The rental list given by the rental listing referral agent to a prospective tenant must meet the desired specifications sought by the prospective tenant; and, -The rental list must be verified by the agent no more than 4 days prior to the date the agent collects a fee from the prospective tenant.

Fee simple defeasible

Ownership can continue indefinitely, provided the use of the property conforms to certain stated conditions. The defeasible fee estate is perpetual, provided the usage conforms to stated conditions. The types of fee simple defeasible are determinable and condition subsequent. The defeasible fee estate is perpetual, provided the usage conforms to stated conditions. Essential characteristics are: -the property must be used for a certain purpose, or under certain conditions -if the use changes or if prohibited conditions are present, the estate reverts to the previous grantor of the estate Example: "I will sell my property to you with the condition that alcohol is never served on the premises. If you have a wine and cheese party, then I have the right to take back the property." Example: The oil crisis of the 1970's led some service station chains to sell their prime corner locations. These were often sold to convenience stores with the condition that no gas could be sold at the location. The two types of fee simple defeasible are determinable and condition subsequent.

In case of death of an owner of a qualified association,

Ownership may continue through licensee's estate for a period not to exceed 18 months.

Interest in real estate

Ownership of any combination of the bundle of rights to real property, including the rights to: -Possess -Use -Transfer -Encumber -Exclude Interests are principally distinguished by whether they include possession. If the interest-holder enjoys the right of possession, the party is considered to have an estate in land, or familiarly, an estate. If a private interest-holder does not have the right to possess, the interest is an encumbrance. If the interest-holder is not private, such as a government entity, and does not have the right to possess, the interest is some form of public interest.

Mutual agreement (form of contract termination)

Parties to a contract can agree to terminate, or renounce, the contract. If the parties wish to create a new contract to replace the cancelled contract, they must comply with the validity requirements for the new contract. Such substitution is called novation.

Payment deadlines

Payment deadlines are usually set by law and differ from region to region. Taxes are paid in arrears at the end of the tax period. Different taxing bodies may have different fiscal years, and as a result may issue tax bills at different times of the year. It is more common for a county to issue a bill that consolidates the bills of all the lesser taxing bodies. The consolidated bill may be payable annually, semi-annually, quarterly, or on some other schedule as prescribed by law. In many cases where the owner has a mortgage and a required escrow account, the escrow officer will pay the tax bill. The owner will only receive notice of the assessed value and the tax statement.

Consumer notice requirements:

Pennsylvania law required real estate brokers and salespersons (licensees) to advise consumers who are seeking to sell or purchase residential or commercial real estate or tenants who are seeking to lease residential or commercial real estate where the licensee is working on behalf of the tenant of the business relationships permitted by the Real Estate Licensing and Registration Act. This notice must be provided to the consumer at the first contact where a substantive discussion about real estate occurs unless an oral disclosure has been previously provided. If oral disclosure was provided, this notice must be provided at the first meeting or the first time a property is shown to the consumer by the broker or salesperson. Before you disclose any information to a licensee, be advised that unless you select an agency relationship the licensee is not representing you. A business relationship of any kind will not be presumed but must be established between the consumer and the licensee.

Certificate of occupancy

Permission by the municipal inspector to occupy a completed building structure after being inspected and having complied with building codes.

Special exception to zoning

Permission to build or use in apparent conflict with existing zoning ordinance (ex: adult daycare in a residential area).

Fee simple absolute

Perpetual estate that is not conditioned by stipulated or restricted uses. It may be freely passed on to heirs. It is a perpetual estate that is not conditioned by stipulated or restricted uses. It may also be freely passed on to heirs. For these reasons, the fee simple absolute estate is the most desirable estate that can be obtained in residential real estate. It is also the most common. The bundle of rights attached to the fee simple absolute estate includes: -Right of quiet enjoyment -Right to give away -Right to sell by deed -Right to will -Right to exclude -Right to control within what is allowed by law A fee simple owner may also do any of the following: -Pass a life estate in reversion or remainder to another person. -Use the property as security for a debt. -Grant an easement. -Allow another person to lease the property. -Give permission for another to conduct an activity on the property.

Eminent domain

Power of a government to take private property for public use. Entities that have power of eminent domain include: -all levels of government -public districts (schools, etc.) -public utilities -public service corporations (power companies, etc.) -public housing and redevelopment agencies -other government agencies

Personal property

Portable, readily movable from one location to another. Example - A light fixture starts as person property, but once installed is considered real property Ownership of anything that is not real estate, and the rights associated with owning the personal property item. Items of personal property are also called chattels or personalty. Chattels are transferred by means of a bill of sale. The Uniform Commercial Code regulates the transfer of chattels and the use of chattels as security for debts.

Direct mail ads

Postcards, letters, brochures, booklets, fliers and other print pieces are all appropriate for a direct mail campaign. The cost for direct mail depends on how you target your audience, the number of pieces you send and the frequency of the mailings. Postcards are less expansive to send than brochures and are generally read by the recipients. Always keep track of the results of any direct mail campaign. Repeat only those types of mailings that generate a good response.

Freehold estates

Potentially unlimited duration is a fee simple estate: an estate limited to the life of the owner is a life estate.

Management and maintenance

Property managers (on behalf of owners) and asset managers (role is to achieve investment objectives of owners).

Foreclosure

Process by which the holder of a mortgage sells the property of a homeowner who has not made interest and/or principal payments on time as stipulated in the mortgage contract.

Exempt properties

Properties that have been decreed to be excluded from taxation or claim by others. This can include properties owned by governments and religious organizations are wholly exempt. Also, religious organizations and nonprofit.

Residential real property

Property improved by a one-to-four family dwelling used or occupied, or intended to be used or occupied, wholly or partly, as the home or residence of one or more persons.

Bundle of rights (five major rights)

Property is not only the item that is owned but also a set of rights to the item enjoyed by the owner. These include the rights to: -Possess -Use -Transfer -Encumber -Exclude In owning property, one has the right to possess and use it as the law allows. The owner has the right to transfer ownership of the item (sell, rent, donate, assign, or bequeath). The owner may also encumber the item by mortgaging it as collateral for debt. Finally, the owner has the right to exclude others from use of the item.

Elective share

Provision that gives a surviving spouse a share of most of the wealth of the decedent. Elective share laws generally provide that: -the surviving spouse is entitled to a percent of the deceased spouse's property, excepting homestead property and property the decedent owned exclusively -the surviving spouse must file for the elective share within a limited time period -if the spouse fails to file, the estate passes on according to the will, or the state's laws of descent -the elective share right pertains only to the surviving spouse and is not transferable

Planning management

Public land use management takes place within county and municipal planning departments. These departments are responsible for: -long-term implementation of the master plan -creating rules and restrictions that support plans and policies -enforcing and administering land use regulation on an everyday basis

Title records

Public records of real property documenting the history of ownership, claims, ownership, conveyances, legal descriptions, and surveys.

Commissioner of Professional and Occupational Affairs

Purpose is to provide administrative, logistical, and legal support services.

Real Estate Recovery Act

Purpose is to provide relief and compensation for any aggrieved person who has been the victim in a real estate transaction. The victim must have received a final judgment in any court of competent jurisdiction against any person licensed under the act.

Distance education

Real estate instruction delivered in an independent or instructor-led formal during which the student and the instruction are separated by distance and sometimes time.

Property disclosure statement contents

Real estate licensees are not responsible for filling out the disclosure form. That responsibility belongs to the seller. But it's important for the licensee to understand all the legal aspects of the disclosure form, so that he or she can help the seller by answering any questions the seller may have in filling out the form. Most forms allow the seller to give information about the condition of the property, the status of buildings and utilities, whether or not there are easements or encumbrances that affect the property and information about important environmental factors. The seller may be asked about these aspects of the property: -Seller's authority to sell the property -Issues with the title -Encroachments, boundary agreements or boundary disputes -Private access roads -Rights-of-way, easements or access limitations -Existing written agreements for maintenance of an easement or right-of-way -Studies, surveys or notices that would adversely affect the property -Pending or existing assessments -Zoning violations or unusual restrictions on the property that would affect future construction or remodeling -Boundary survey -Covenants, conditions or restrictions which affect the property

Knowing when and where to advertise

Real estate offices have far too many listings to advertise all at the same time, so it's important to decide which listing to advertise and when. It's important for each agent to understand the marketing/advertising goals of the firm at any given point and to follow the strategy that will help meet both the firm's and the agent's objectives. To help with this, many firms choose to have a single person in the office in charge of -Watching advertising costs -Controlling volume -Scheduling the advertising that meets the objectives -Compiling advertising data -Evaluating the effectiveness of the ads placed The individual agents are still responsible for writing the ads; the designated advertising person just manages the advertising effort to eliminate confusion.

Residential zoning

Restricts land use to private, non-commercial dwellings. Sub-zones in this category further stipulate the types of residences allowed, whether single-family, multi-unit complexes, condominiums, publicly subsidized housing, or other form of housing. Residential zoning regulates: -density, by limiting the number and size of dwelling units and lots in an area -values and aesthetics, by limiting the type of residences allowed

Wood framing

Refers to the framework of the structure. The exterior framing must be large enough and strong enough to support floor and roof loads. The walls must also resist lateral wind loads and, in some locations, earthquake forces. The pieces of wood that are used in this framing are called studs. Studs in exterior walls of one and two-story buildings are at least 2x4 inches with the 4-inch dimension forming the basic wall thickness. Stud spacing is normally 16 inches in exterior walls, although 24-inch spacing of 2x4 studs is acceptable in one-story buildings if wall sheathing or siding is of adequate thickness to bridge across studs. In three-story buildings, studs in the bottom story are at least a nominal 3x4 or 2x6 inches and may not exceed 16-inch spacing. Studs are arranged in multiples at corners and partition intersections to provide for rigid attachment of sheathing, siding and interior wall finish materials. These same size studs when used horizontally to frame floors and ceilings are called joists. Studs used to frame the roofing system are called rafters.

Real estate taxation

Refers to the taxation of real estate as property. Imposed by "taxing entities" or "taxing districts" at county and local levels of government. There are no federal taxes on real property. The Constitution of the United States specifically prohibits such taxes. The federal government does, however, tax income derived from real property and gains realized on the sale of real property. The federal government can impose a tax lien against property for failure to pay any tax due the Internal Revenue Service.

Public zoning

Restricts land use to public services and recreation. Parks, post offices, government buildings, schools, and libraries are examples of uses allowed in a public zone.

Planned unit development zoning (PUD)

Restricts use to development of whole tracts that are designed to use space efficiently and maximize open space. A PUD zone may be for residential, commercial, or industrial uses, or combinations thereof.

Dual agency definition

Representing both the seller/landlord and the buyer/tenant at the same time with the same level of commitment and dedication to both. This also involves the same level of confidentiality to both. Requires full disclosure to all parties.

A salesperson or an associate broker, acting as a salesperson,

Represents the broker and does not represent a client directly in a transaction. All business is done by an employed salesperson or associate broker is done in the name of the employing broker. Only licensed brokers may employ other licensees. All monies that the sales stuff collects must be given to the broker to be placed into the escrow account or sent on to the listing broker.

uses of legal description

Requires for: -Public recording -Creating valid deed of conveyance or lease -Completing mortgage documents -Executing and recording other legal documents In addition, a legal description provides a basis for court rulings on encroachments and easements.

Forfeiture (form of contract termination)

Requires the breaching party to give up something, according to the terms of the contract. For example, a buyer who defaults on a sales contract may have to forfeit the earnest money deposit.

Cooling-period rescission (form of contract termination)

Rescission is the act of nullifying a contract. In many states, parties to certain contracts are allowed a statutory amount of time after entering into a contract, or "cooling period", to rescind the contract without cause. No reason need be stated for the cancellation, and the canceling party incurs no liability for performance.

Heating systems

Residential heating systems typically fall into one of these categories: hot water, steam, forced air or electric. -Hot Water Systems Hydronics is the name for the use of water as the heat-transfer medium in heating and cooling systems. Some of the oldest and most common examples are steam and hot-water radiators. In any hot water system, the water is heated in a boiler and circulated by means of one or more circulator pumps. A system may be broken up into individual heating zones using either multiple circulator pumps or a single pump and electrically operated zone valves.

Deed condition

Restrictions that provide for a reversion of title if they are violated.

restricts land use to farming, ranching, and other agricultural enterprises

Restricts land use to farming, ranching, and other agricultural enterprises.

Showings

Sellers are most familiar with the "showing" aspect of the marketing plan. Many sellers know, or their agent should tell them, that it is best for them to be gone during a showing. Some aspects of showings may not be so apparent, however; so be sure to advise the sellers of how things could go. For example, even though in most cases the sellers will have ample warning when a showing is scheduled, they should be prepared for that unexpected, last minute call. Sometimes agents are actually out showing property to buyers when they realize that a certain home has the specifications the buyer clients are looking for. They might then call the listing agent to see if a last minute showing can be scheduled. Another example is the case of buyers out riding around and seeing a home that piques their interest. The buyers will call the agent while sitting out in front of the home and ask if they can see it. It's not ideal, but it does happen and sales have resulted from such situations. Note: Tell the sellers that if someone shows up on the doorstep wanting to see the home, they should get the person's name and then call your office immediately so an agent can come to do the showing. On the other hand, sellers need to understand that there will be situations when a scheduled showing will not take place. You must assure your sellers that you will make every effort to give them warning when a showing has been canceled. However, circumstances do exist when an agent will not show for a scheduled appointment and the listing agent will not know until the seller calls to report it. Reassure your clients that in the event this should occur, you will do whatever you can to find out what happened and let them know. Whether the situation involves a last minute showing or a canceled appointment, it's important for your sellers to realize that flexibility will help keep such situations from becoming unduly stressful.

Term of office for Real Estate Commissioners

Shall be 5 years from the appointment or until a successor has been appointed, but not to exceed 6 months beyond the 5 year appointment.

Compensation to broker (listing agreement clause)

Shows the mutually agreed upon commission the seller will pay the broker. It can be a percentage or a specific amount, although percentage is preferred because it will adjust according to the actual sales price. May provide for any additional compensation to the broker, such as advertising fees or MLS fees. May state that the broker has informed the seller of the firm's policy of dealing with cooperating brokers and how the commissions are divided. May indicate that the seller will have escrow pay the broker's commission directly from the sale proceeds.

Loan-to-value ratio (LTV)

Shows the relationship between the amount borrowed and the appraised value of the property.

Buyer's agency agreements

Similar to listing agreements, there are three common types of buyer agency agreements: -Exclusive buyer agency agreement - This agreement is also known as the exclusive right to represent. With the signing of this agreement, the buyer is legally bound to compensate the agent when the buyer purchases any property of the same type as described in the contract. The managing broker is entitled to payment regardless of who locates the property. This means that even if the buyer finds the property himself or herself, the buyer must still pay the agent the agreed upon commission. -Exclusive-agency buyer agency agreement - This exclusive contract is between the agent and the buyer. However, with this type of agreement the agent is entitled to payment only if he or she actually finds the property that the buyer purchases. If the buyer finds a property himself or herself, the buyer does not owe the agent a commission. -Open buyer agency agreement - This is a nonexclusive agency contract between a buyer and a broker. A buyer can enter into similar agreements with an unlimited number of other brokers. Only the broker who actually locates the property that the buyer eventually purchases is entitled to the commission.

How is dual agency created?

Since a dual agency situation can create a conflict of interest for the broker, we can be sure that brokers do not intentionally seek out these arrangements. In many cases, dual agency arises unintentionally when the actions of a broker or an agent create an implied agency with a buyer. Or the appearance of dual agency can arise in the case of a client becoming a customer.

Listing information

Since a listing agreement forms an agency relationship between the broker and the seller, it can terminate when one of the following occurs: -Performance - The licensee has helped the seller find a ready, willing, and able buyer to purchase his or her home. -Expiration of the agreement term - The date arrives that was stated in writing on the listing agreement. -Termination - The parties either mutually agree to end the relationship or one party decides to end it.

Immobility of land

Since a parcel of land cannot be moved from one site to another. In other words, the geographical location of a tract of land is fixed and cannot be changed. One can transport portions of the land such as mined coal, dirt, or cut plants. However, as soon as such elements are detached from the land they are no longer considered land.

Seller-paid fee

Since as we learned earlier the payment of compensation does not determine the agency relationship, there is no legal reason that the buyer must pay the compensation in the buyer agency relationship. As a matter of fact, the most common compensation arrangement is the traditional commission arrangement between the listing broker and the cooperating broker. In this arrangement the seller pays the commission, which is split between the listing agent and the buyer agent, and the buyer pays nothing. Alternatively, the buyer can agree that his or her buyer's agent will receive a certain percentage of the purchase price or a flat fee. If the commission split from the listing broker is equal to or greater than this agreed upon amount, the buyer pays nothing. If the split is less than the agreed upon amount, the buyer pays the difference at closing.

Foundation walls

Sits on top of the footing and is usually about 8 inches wide and made of poured concrete or concrete blocks. If the area between the foundation walls has been excavated deeply enough to provide head room, then a basement has been created. If the foundation area is only partially excavated, then what results is called a crawl space. The National Building Code requires that the foundation wall of a basement or crawl space and floors that come in contact with soil be treated for ground and surface water seepage by the placement of a vapor barrier. A vapor barrier is most often a plastic sheet that keeps moisture from passing through a wall. In addition, the local code may require that the vapor barrier and/or the area beneath be treated for termites. This requirement is dependent on local conditions.

Newsletter ads

Some firms and agents publish newsletters that have information about the firm and the agent as well as general information of interest to the readers. This form of advertising is beneficial to agents working in niche markets. For example, an agent who specializes in condominium sales can produce a newsletter about condominium living, featuring a different, specific development in each issue and showcasing that development's activities and special events.

Company policy

Some firms may choose to represent sellers exclusively. In this situation, the seller is always the client and the buyer is always the customer. On the other hand, if a firm chooses to represent only buyers exclusively, the buyer would always be the client and the seller would always be the customer. Even though seller agency was the traditional format years ago, in today's real estate arena, most firms believe that it is their duty to represent people, regardless of whether they are buying or selling property. The major advantage to practicing real estate exclusively with either sellers or buyers is the clarification of agency relationships for in-house sales. However, the potential for undisclosed dual agency increases in an exclusive arrangement. So these days, finding a firm that represents sellers or buyers exclusively is rare.`

Internet ads

Some pages that have become "standards" for real estate sites are: -About Us - This page gives information about the company and the agents. -Current Listings - These pages give detailed descriptions of your listings, including photos. It's a good idea to have a "search" feature that allows visitors to enter parameters for the kind of property they want - such as number of bedrooms, price, lot size, location, etc. Visitors should also be able to find a property using the MLS or property number. -Sold Listings - Many sites have pages that show the homes that have sold. This is a great showcase of your success. -Information for Sellers - These pages have specific information of interest to sellers, such as the definition of a -Competitive Market Analysis and how to get one. -Information for Buyers - These pages give current information on loans and financing and your buyer-specific services. -E-Mail Sign Up - This feature allows visitors to sign up to receive e-mails about new listings or other general real-estate related information your company can provide. -Contact Us - This page has all of your information - address, phone numbers, and fax number - and a link for the visitor to send you an e-mail.

Talking house

Some signs contain a radio transmitter that broadcasts a message about the home using an AM or FM radio frequency. Potential buyers can pull up in front of the home and listen to the message on their car radio. If you plan to use this tool, record a thoughtful and careful message and install the sign within a couple of days of taking the listing.

Equalization payments

Some taxing bodies recognize that local assessments can lead to unfairly high or low values for properties in certain areas. Therefore, the jurisdiction may establish equalization factors to level out the unevenness of valuations.

Old vs. new construction

Some types of construction projects are more likely than others to prompt a reassessment. These types of projects might include: -Finishing a basement into a family room or other living quarters. -Adding a garage. -Installing an in-the-ground swimming pool. If the assessor sees that these renovations are not in the current tax record, he or she will reassess the property to include those changes.

Closing costs - timeline

Sometimes the best way to calculate closing costs is visual. Using a timeline when calculating your closing costs is beneficial. Let's take a prior example to visually see the timeline:An annual tax bill is $1,800. Closing is on April 10. Using the 365 day method, what are the seller's share of the taxes? Jan 1 - April 10 - Seller days April 11 - December 31 - Buyer days If an item is paid in arrears, use Seller days to calculate costs and Debit the seller/Credit the Buyer If an item is paid in advance, use Buyer days to calculate costs and Debit the buyer(or whoever is returning the costs)/Credit the sellerIf the item is RENT, use Buyer days to calculate rents and Debit the seller (who should have the rent) and Credit the buyer. Note: Some states give the day of closing to the seller and others give the day of closing to the buyer. For calculation prorations, it is important to know which day belongs to whom. Your exam should explain in the question, if the buyer or the seller gets the day of closing.

Maintaining an escrow account

Sponsoring brokers responsible for earnest money must establish an escrow account, which is a special account, separate and apart from personal or other business accounts, that contains all escrow moneys entrusted to them while acting as the real estate brokers or escrow agents for others. In most states, the rules regarding escrow accounts include the following: -An escrow account must be non-interest bearing, unless the parties to the transaction specifically require, in writing, that the deposit be placed in an interest-bearing account, OR if the deposit is required by law to accrue interest. -If an interest-bearing account is required, the sponsoring broker must indicate in writing who will be receiving the interest from the account. -A sponsoring broker may maintain more than one escrow account, but it IS NOT NECESSARY to open a special escrow account for EACH earnest money deposit received. -A sponsoring broker who does NOT receive escrow moneys entrusted to him as a real estate broker (or other temporary custodian of funds of others entrusted to him) does NOT need to maintain an escrow account. -ALL escrow accounts, whether interest-bearing or non-interest bearing, must be maintained at a federally-insured depository. -The sponsoring broker must issue a receipt to the payor for any escrow monies and keep a copy with the transaction records.

State regulation

State governments are the primary regulatory entities of the real estate business. State governments establish real estate license laws and qualifications. In addition, state governments have established real estate commissions to administer license laws and oversee activities of licensees. State governments also exert regional influence in the usage and environmental control of real estate within the state. Relevant state laws might include laws relating to flood zones, waste disposal, drainage control, shore preservation, and pollution standards. States also play a role in defining how real property may be owned, transferred, encumbered, and inherited. For example, in some states a mortgaged property becomes the legal property of the lender until the mortgage loan is paid. States have the power to levy real estate taxes, but generally pass this power to local government.

Transfer tax

State law usually requires payment of a documentary stamp tax on a conveyance of real property. The tax is based on the actual price of the property conveyed, thus enabling taxing authorities to ascertain current market value for ad valorem tax purposes. Payment of the tax is evidenced on the deed.

Escrow records - monthly reconciliation statement

State law usually requires the sponsoring broker to reconcile each escrow account that he or she maintains within some specified number of days after he or she receives the monthly bank statement. This rule does not typically apply if there has been no transactional activity during the previous month. The reconciliation should include a written work sheet which compares the balances shown on the bank statement, the journal, and the ledger respectively. The comparison is necessary to insure agreement between the actual escrow account and the broker's journal and ledger entries. The sponsoring broker must keep the documentation of the reconciliation for a specified number of years (usually 3-5 years) from the last day of the month covered by that reconciliation.

Valid but unenforceable

State laws declare that some contracts are enforceable only if they are in writing. These laws apply in particular to the transfer of interests in real estate. Thus, while an oral contract may meet the tests for validity, if it falls under the laws requiring a written contract, the parties will not have legal recourse to enforce performance. An oral long-term lease and an oral real estate sales contract are examples of contracts that may be valid but not enforceable.

Contract preparation

State laws define the extent to which real estate brokers and agents may legally prepare real estate contracts. Such laws, referred to as "broker-lawyer accords," also define what types of contracts brokers and agents may prepare. In some states, brokers and agents may not draft contracts, but they may use standard promulgated forms and complete the blanks in the form. As a rule, a broker or agent who completes real estate contracts is engaging in the unauthorized practice of law unless the broker is a party to the agreement, such as in a listing agreement or sales contract. Brokers and agents may not complete leases, mortgages, contracts for deed, or promissory notes to which they are not a party.

Adverse possession

State laws may allow a real property owner to lose legal title to an adverse possessor. An adverse possessor is someone who enters, occupies, and uses another's property without the knowledge or consent of the owner, or with the knowledge of an owner who fails to take any action over a statutory period of time.

Agency disclosures

State laws require that licensees disclose information to consumers about the kinds of relationships they can form. These disclosures serve to remove any confusion about who the agent is working for and give the consumer a clear understanding of the services that licensees provide to clients and customers. In most states, a licensee must provide a written disclosure of any existing agency relationships to all parties for whom he or she provides real estate brokerage services. Typically, this disclosure must be made when they make their first substantive contact, but must certainly be made before either party signs an offer for a purchase. The disclosure must be given whether the licensee represents the buyer, the seller, both parties, or neither party.

Successors and assigns (listing agreement clause)

States that the agreement is binding on the seller and the seller's successors and assigns.

Attorney's opinion of abstract

States that the attorney has examined a title abstract, and gives the attorney's opinion of the condition and marketability of the title. Generally, an opinion is not a proof or guarantee of clear title, and offers no protection.

Security and insurance (listing agreement clause)

States that the broker is not responsible for loss or damage to the property, even with a lockbox present. The seller must take steps to safeguard any valuables and obtain insurance to cover the risks.

Multiple listing service (listing agreement clause)

States that the broker will provide the transaction terms to the Multiple Listing Service, unless the seller signs a form to withhold the listing.

Attorney fees (listing agreement clause)

States that the loser of a suit or arbitration of any disagreement must pay the associated costs.

Equal housing opportunity (listing agreement clause)

States that the property is offered in compliance with all anti-discrimination laws.

Factors in selecting a brokerage affiliation

Statistics show that several new licensees no longer practice real estate after the first year. And some of those who are still practicing are not making a good income after their first year. For this reason, it's important that a licensee spend time and effort in choosing a broker/employer. It's just as important for a licensee to find the right broker as it is for the broker to find the right licensee for his or her firm. Here is a list of important things to look for when choosing a broker/firm. -Quality training programs are available in-house and locally. -The broker encourages and supports training. -The broker provides a mentor program and/or office assistance for the licensees. -The firm has a large selection of books, audios, videos and CDs on hand for licensee use. -The office is dedicated to the licensee's desired specialty area. -The firm employs a number of successful agents. -The agents have a long history with the firm. -The firm feels like a "good fit."

Property boundaries

The "amount" of land to which one has property rights - can change as a result of water moving through, over, or beside a parcel.

Creating desire in ads

The ad must continue to paint a picture of the property that will appeal to the reader's emotions. The ad must build the reader's desire to see the property. Using clear, concise language tells readers what they need to know to be able to picture themselves as the owner of the property. Avoid exaggeration; just use the facts. Your ad should inspire the readers' confidence in your firm and your product.

Radio and TV ads

The benefit of radio and TV ads is that they reach a much larger audience than other forms of advertising. Radio is particularly effective since most listeners choose to tune in when they are doing something else, such as driving to and from work or relaxing on the patio or in the tub. This substantially increases the number of potential clients you can reach. Television is more expensive, but the increase in the number and popularity of cable stations has put this medium more within the reach of many real estate firms. Some cable stations have a community bulletin board that lists things for sale including real estate. Other cable stations carry 30-minute programs featuring real estate listings for sale. Several brokers may get together to showcase some number of their listings, through photos, virtual tours and narration by the agents or a paid professional narrator. These types of programs are becoming much more frequent and generate good response from consumers who get the opportunity to "visit" several listings in the comfort of their own home.

Net listing

The broker agrees to sell the property in order to achieve a net price to the owner, and anything which is received above the net price is the broker's commission. A net listing is prohibited by the licensing law in many states.

Safety clause (listing agreement clause)

The broker and sellers agree to a specific number of days after the listing expiration during which the broker may still receive a commission. Also called a carryover clause, this clause is enforceable if the owner, or his or her new agent, sells the property to a buyer whose name appears on a list of persons to whom the original broker showed the property during the listing period. The broker must give this list to the owner within a specified number of days after the listing expiration.

When handling money on an installment land contract,

The broker can consider the transaction completed when the buyer has been afforded the opportunity to record the agreement, unless the agreement specifies otherwise.

When a security deposit is held by a broker in an escrow account,

The completion of the transaction shall be the end of the tenancy.

Air quality

The condition of air in terms of the amount of pollutants it contains.

Legal purpose

The content, promise, or intent of a contract must be lawful. A contract that proposes an illegal act is void.

In a freehold estate,

The duration of the owner's rights cannot be determined: the rights may endure for a lifetime, for less than a lifetime, or for generations beyond the owner's lifetime.

Rectangular survey system - tier

The east-west area between two parallels is called a tier, or a township strip. The area marked "C" in the exhibit is a tier. A tier is identified by its relationship to the base parallel. All tiers are six miles wide.

Rectangular survey system - parallel

The east-west, latitudinal lines are called parallels, each of which are six miles apart. The base parallel or base line is the designated line for identifying townships. There is a base parallel for each principal meridian. Every 24 miles north and south of a base parallel is a correction line or standard parallel that is used, with the guide meridians, as a correction for the curvature of the earth. Common parallels are six miles apart, measuring from a standard parallel. These form the north and south boundaries of the townships. The 24-by-24-mile square created by the intersection of guide meridians and standard parallels is called a check or quadrangle.

An agreement of sale for a cemetery lot or plot or mausoleum space or opening shall include:

The elements about financing and about the Real Estate Recovery Statement.

Rectangular survey system

The federal government developed the rectangular survey system, or government survey method, to simplify and standardize property descriptions as a replacement for the cumbersome and often inaccurate metes and bounds method. The system was further modified to facilitate the transfer of large quantities of government-owned western lands to private parties. To institute the system, all affected land was surveyed using latitude (east-west) and longitude (north-south) lines. The object was to create uniform grids of squares, called townships, which would have equal size and be given a numerical reference for identification. The rectangular survey system works well for describing properties that are square or rectangular in shape, since these can be described as fractions of sections. However, for an irregular shape, such as a triangle, the rectangular system is inadequate as a method of legal description. The full description has to include a metes and bounds or lot and block description.

Gross living area (GLA)

The finished square footage of a structure that is measured using the outside dimensions. When calculating GLA: -Only include areas that are finished. -Items excluded from the GLS typically include garages, car ports, decks, and patios.

Rules regarding escrow accounts

The following rules also apply to escrow funds in many states: -Commingling is an ILLEGAL act in which a real estate licensee places client or customer funds with his or her own personal funds. Commingling of a licensee's business and personal funds is prohibited. However, a sponsoring broker may deposit from his or her own personal funds, and keep in any escrow account, enough money to avoid incurring service charges relating to the escrow account. The sponsoring broker must specifically document those funds as being for service charges and he or she must have proof available that the amount of his or her own funds in the escrow account does not exceed the minimum amount required by the depository to maintain the account without incurring service charges. -All licensees should give earnest money checks to their sponsoring broker immediately (unless your state license law says otherwise). -Generally, earnest money received by the broker must be deposited before a stipulated deadline established by state regulation or statute. -A sponsoring broker who is also serving as an escrow agent must notify all principals in writing if or when one of these situations occurs: --A principal fails to tender escrow moneys. --A principal's payment as escrow moneys is dishonored by the financial institution on which it was drawn --There appears on the face of the governing contract to be a deficiency in the amount on deposit -Sponsoring brokers must always be able to account for any client or escrow funds, as well as important documents.

Special warranty deed

The grantor warrants against defects that have occurred after the grantor acquired title. (No warrantee forever-only for the time the grantor owns the property)

Definition of escrow moneys

The handling of trust account funds is dictated by the license law and differs from state-to-state. You will learn the trust account laws for your state when you take the license law portion of this course. Please be advised that the information covered in this unit is generic and may differ a bit from your own state. Many states define escrow moneys as all moneys, promissory notes or any other type or manner of legal tender or financial consideration deposited with any person for the benefit of the parties to the transaction. A transaction exists once an accepted real estate contract is signed or a lease agreed to by the parties. Escrow moneys include, without limitation, earnest moneys and security deposits, except those security deposits in which the person holding the security deposit is also the sole owner of the property being leased or sold and for which the security deposit is being held. Earnest money constitutes escrow moneys and, as we said, it may be in the form of not only personal checks, but also cashier's checks, money orders, cash, or any other forms of legal tender. Under the terms of a written agreement between a licensee and a client, certain money does NOT fall under the heading of "escrow moneys." An example of this would be rent money paid to a licensee for transmittal to the licensee's client (the owner) in a property management agreement.

Ventilation

The intentional movement of air from outside a building to the inside. Ventilation air is that air used for providing acceptable indoor air quality. When people or animals are present in buildings, ventilation air is necessary to dilute odors and limit the concentration of carbon dioxide and airborne pollutants. Ventilation air is often delivered to spaces by mechanical systems which may also heat, cool, humidify and dehumidify the space. Many heating and cooling systems are referred to as HVAC (Heating, Ventilation, and Air Conditioning) systems. Ventilation systems have exhaust fans and ducts to remove stale air from the building, while introducing fresh air to replace what has been exhausted.

Judicial regulation

The judicial system exerts an influence on real estate ownership and use through decisions based on case law and common law, as distinguished from statutory law. Case law consists of decisions based on judicial precedent. Common law is the collective body of law deriving from custom and generally accepted practice in society.

Feudal system

The king owned all the land and the individuals who lived and worked there were considered tenants to occupy the land.

Conveyance of leased property

The landlord may sell, assign, or mortgage the leased fee interest. However, transferring and encumbering the leased property do not extinguish the obligations and covenants of a lease. Buyers and creditors, therefore, must take their respective interests subject to the terms of the lease.

Right of redemption

The legal ability to buy back one's property within the time specified in each state after a judicial sale by paying the debt, interest and certain costs.

Promise of compensation

The listing agreement must contain an assurance that the broker will receive compensation and state how that will happen. The seller could stipulate that the broker will receive compensation when the buyer is found, when a contract is signed or only if the sale actually closes.

Classified ads

The most common ad type, these ads are the most effective with buyers. There is usually a fairly large classified ad section in the newspaper which attracts potential buyers of single family homes for resale or lease. It's important to include your internet address in your classified ad with an invitation to get more information or see more properties. For example, "Find more information and properties at www.homes4you.com" will bring visitors to your site and help prospects "discover" a home that is right for them. When writing a classified ad, the best heading is the one that showcases a particularly desirable feature of the property, such as "Detached Workshop" or "Five Bedrooms" or even the price "$102,500."

Seller

The transferor in a residential real property transaction. This includes an owner who lists residential real property for sale with an agent, whether or not a transfer results, or who receives an offer to purchase residential real property.

Level of assessment

The percentage of market value at which property is assessed. All property within a jurisdiction should have an equal level of assessment. Also called LOA.

Respondant

The person answering the charges brought to the Complaints Office. With his attorney, he files an answer within 30 days or the Commission will proceed to discipline.

Rectangular survey system - identifying a tier

The principal base line in a survey area divides tiers into north tiers and south tiers. A tier is identified by a "T" for tier, a number representing its ordinal position from the base line, and an "N" or "S" for north or south, respectively, of the base line. Thus the eighth tier to the north of the base line would be identified as "T8N."

Return on equity (ROE)

The ratio between the cash flow and equity in a property.

Return on investment (ROI)

The ratio between the new profit and the cost of investment.

Right of reinstatement

The trustor's right to reinstate a loan by paying all delinquent payments, late charges, and foreclosure fees. Starts with recording of notice of default and lasts up to five business days before scheduled sale.

Recorded plat method - subdivision plat map

The recorded plat method, also called the lot and block system, is used to describe properties in residential, commercial, and industrial subdivisions. Under this system, tracts of land are subdivided into lots. The entire group of lots comprises the subdivision. In a large subdivision, lots may be grouped together into blocks for ease of reference. The entire subdivision is surveyed to specify the size and location of each lot and block. The surveyor then incorporates the survey data into a plat of survey, or subdivision plat map, which must comply with local surveying standards and ordinances. If local authorities accept it, the subdivision plat map is recorded in the county where the subdivision is located. The recorded lot and block numbers of a subdivision parcel, along with its section, township and meridian reference, become the property's legal description.

When the broker advertises number of branches that he operates,

These are the only offices that have been issues branch licenses by the Commission.

Eminent domain

The right of the government to take private property for a necessary public use, with just compensation paid to the owner. The government's right to take a property voluntarily from an owner, is limited by three requirements: -The property owner must be paid compensation for the property. -The property must be used for the public good. -The owner must have due process in the courts system.

Air rights

The right to use the open space above a property, usually allowing the surface to be used for another purpose. Apply to the space above the surface boundaries of the parcel, as delineated by imaginary vertical lines extended to infinity. Since the advent of aviation, air rights have been curtailed to allow aircraft to fly over one's property, provided the overflights do not interfere with the owner's use and enjoyment of the property. The issue of violation of air rights for the benefit of air transportation is an ongoing battle between airlines, airports, and nearby property owners.

Operation of law (form of contract termination)

The rights and liabilities of parties to a contract may be changed by the application of law. The Statute of Limitations restricts the time period for which an injured party in a contract has the right to bring a lawsuit against the other party. When a person files for bankruptcy, the person's obligations under existing contracts are terminated as of the filing date.

Consumer notice for leases:

The rule regarding initial interview will not apply for leases under some special circumstances. If the licensee is providing information on a property or dealing with a prospective tenant for the purpose of rental only and if the licensee is: -The actual owner/landlord of the property; -The direct employee of the owner/landlord of the real property; or, -Leading the property with a property management agreement or an exclusive leasing agreement with the owner/landlord of the property. In this case a different consumer notice is done with the prospective tenant which includes a statement telling the prospective tenant the capacity of the licensee. The written statement shall be provided at the time of the initial interview unless a rental application is required. In this case, the statement will be provided at the time the rental application is taken. A written statement shall be provided at the beginning of the rental application and shall be in the following form: The licensee must provide a copy of this statement to the prospective tenant and the licensee must maintain a copy signed by the prospective tenant for six months. If the prospective tenant refuses to sign on the form, the licensee shall duly note this fact.

Sign (listing agreement clause)

The seller may indicate that he or she does not want a sign on the property.

Disbursing escrow funds

The sponsoring broker must keep all escrow moneys on deposit in an escrow account until a transaction is consummated or terminated. Escrow moneys must be disbursed according to the requirements stated below. However, in all cases, the moneys may NOT be disbursed until the funds have been honored by the payor's financial depository. When a transaction has consummated or terminated, the sponsoring broker must disburse the funds according to the terms of the contract. He or she must make the disbursement -No earlier than the day the transaction is consummated or terminated and -Not later than the next business day after the transaction is consummated or terminated, unless the broker has received other written direction from all principals to the transaction or their duly authorized agents. If applicable, the sponsoring broker will disburse any commissions and/or fees he or she has earned in the transaction from the funds deposited in an escrow account: -No earlier than the day the transaction is consummated or terminated and -Not later than the next business day after the transaction is consummated or terminated, unless the broker has received other written direction from all principals to the transaction or their duly authorized agents. An authorized disbursement is one which is made on behalf of, and at the written direction of, all principals to the transaction or their duly authorized agents. A sponsoring broker must never withhold, for any period of time, an authorized disbursement of escrow moneys due to any claim for a commission or compensation to any licensee.

Metes and bounds

The term "metes" refers to distance and direction, and the term "bounds" refers to fixed reference points, or monuments and landmarks, which may be natural and artificial. Natural landmarks include trees, rocks, rivers, and lakes. Artificial landmarks are typically surveyor stakes. Many states use metes and bounds description to describe properties within the rectangular survey system. A metes and bounds description begins with an identification of the city, county, and state where the property is located. Next, it identifies the POB and describes the distance and direction from the POB to the first monument, and then to subsequent monuments that define the property's enclosed perimeter. The last part of the description describes the distance and direction of the last monument to the point of beginning.

Encroachment

The unauthorized, physical intrusion of one owner's real property into that of another. Examples are: -A tree limb extending into the neighbor's property, violating his or her airspace -A driveway extending beyond the lot line onto the neighbor's land -A fence built beyond the property line Encroachments cause infringements on the rights of the trespassed owner and may diminish the property's value, particularly when the property is to be sold. Encroachments often do not appear on a property's title records. A survey may be required to detect or demonstrate the existence of an encroachment. An owner may sue for removal of an encroachment or for compensation for damages. If an encroached owner takes no remedial action over a prescribed number of years, the encroachment may become an easement by prescription.

Broker supervision

The way the IRS treats a salesperson - as either an employee or an independent contractor - applies to the issues of income tax and withholding obligations. It has nothing to do with the broker's liability for any wrongful acts performed by the licensee. Most states require that brokers supervise all their salespeople, regardless of their income tax classification. Even though a salesperson may be classified as an independent contractor, the broker is still responsible for the licensee's professional actions. Because brokers could be held responsible for any wrongful acts performed by a salesperson they employ, many brokers require that licensees carry -Automobile liability insurance in high amounts, naming the broker as an insured on the policy -Errors and omissions insurance, covering the broker and salespersons for negligent acts (but not intentional acts) If a licensee working for a broker is a property manager having access to the money of others, the broker may get a fidelity bond to protect himself or herself from any embezzlement by such a licensee. It also seems that brokers are not protected from any injury claims that may be made by any of their independent contractors, so it would be wise for brokers to carry workers' compensation coverage for everyone who works for them.

Methods of legal description

There are many common ways of describing properties: address (100 Main Street), name (Buckingham Palace), and general description ("the south forty acres"). Such informal descriptions are not acceptable for use in public recordation or, generally speaking, in a court of law because they lack both permanence and sufficient information for a surveyor to locate the property. Even if a legal document or public record refers to an address, the reference is always supported by an accepted legal description. A legal description of real property is one which accurately locates and identifies the boundaries of the subject parcel to a degree acceptable by courts of law in the state where the property is located. The general criterion for a legal description is that it alone provides sufficient data for a surveyor to locate the parcel. A legal description identifies the property as unique and distinct from all other properties. Legal description provides accuracy and consistency over time. Systems of legal description, in theory, facilitate transfers of ownership and prevent boundary disputes and problems with chain of title. Distances in the descriptions are denominated in conventional lineal measures: feet, rods, miles, and so forth. Directions are described in terms of degrees east or west of an imaginary north-south axis. Imagine a circle divided into a northern half and a southern half and then into an eastern and western half. The center of the circle is the reference point. If another point is to the south of the reference point, its description begins with the "south" denotation. If it is to the north, the description begins with the "north" denotation. After identifying the north or south direction, the description states how many degrees the point is to the east or west of the imaginary north-south axis. If the point is in the southern half of the circle, and 10 degrees to the west of the north-south axis, the description reads "south 10 degrees west." If the point is in the northern half of the circle, and 50 degrees to the east of the north-south axis, the description says "north 50 degrees east." Since actual distances between monuments prevail over recorded distances, the description uses the language "more or less" to hedge against written distances. For example: "A parcel of land located in Bucks County, Pennsylvania, having the following description: commencing at the intersection of the south line of Route 199 and the middle of Flint Creek, thence southeasterly along the center thread of Flint Creek 410 feet, more or less, to the willow tree landmark, thence north 65 degrees west 500 feet, more or less to the east line of Dowell Road, thence north 2 degrees east 200 feet, more or less, along the east line of Dowell Road to the south line of Route 199, thence north 90 degrees east 325 feet, more or less, along the south line of Route 199 to the point of beginning."

Types of frame construction

There are three main types of frame construction used by builders. In platform-frame construction, first floor joists are completely covered with sub-flooring to form a platform upon which exterior walls and interior partitions are erected. This is the type of construction most generally used in home building. In balloon-frame construction, exterior wall studs continue through the first and second stories. First floor joists and exterior wall studs both bear on the anchored sill. This type of construction is not widely used today. In post and beam construction, wider beams are spaced up to eight feet apart. Floors and roofs are covered with 2-inch planks. These serve as subflooring and roof sheathing, and, where tongue-and-grooved planking is used, provide an attractive finished floor and ceiling. The ends of the floor and roof beams are supported on posts which provide the wall framing. Supplementary framing between posts permits attachment of wall sheathing and exterior sidings.

Display ads

These ads are run in other sections of the newspaper, not in the classified section. They usually combine institutional and product advertising to build the name recognition and image of the company, while showcasing specific properties. They include both words and graphics, such as pictures, drawings and maps. An important objective of display advertising is to attract sellers to list with a company. Display ads are more expensive than classifieds, so are often used when promoting developments rather than individual homes.

Classified-display ads

These ads combine some aspects of display advertising with the classified ad format. They are printed in the classified section of the paper, but use graphic elements, such as larger type, borders and illustrations, and white space to create a strong impact on the readers.

General duties of a licensee

These duties are expected and may not be waived: 1. Exercise reasonable, professional skill and care. 2. Deal honestly and in good faith. 3.Present in a timely manner all offers, counteroffers, notices and communications between the parties unless the property is subject to an existing contract and the seller/landlord has agreed in a written waiver; 4. Comply with the Real Estate Seller Disclosure Act. 5. Account for escrow and other monies given to the broker. 6. Provide consumer information at the initial interview. 7. Disclose, in a reasonable time, all conflicts of interest. 8. Advise the consumer to seek expert advice (such as termite inspection etc.) about the transaction that are beyond the licensee's expertise. 9. Ensure that all services are provided in a reasonable, professional manner. 10. Keep the consumer informed about the transaction and the tasks to be completed. 11. Provide assistance with document preparation. 12. Advise the consumer about compliance with laws pertaining to the real estate transaction without giving legal advice. 13. A licensee is not required to conduct an independent inspection of the property. 14. A licensee is not required to independently verify the accuracy or completeness of any representation made by the consumer if the licensee reasonably believes it to be accurate and reliable. 15. A licensee is not liable for the acts of the consumer unless the consumer is acting at the express direction of the licensee or as a result of a representation by a licensee relied on by the consumer.

Rider strips

These strips attach to the For Sale sign. Attach a strip with your cell phone number to the stake below the main portion of the sign. If you have rider strips that note the home's special features, attach it to the stake above the sign.

Homeowner tips

These suggestions should be written and include information about the cosmetic aspects of the exterior and interior of the home. Some tips for the exterior include: -Keep grass and shrubs trimmed. -Repair fencing and repaint if needed. -Place blooming flowers on the patio or near the front door. -Check condition of the finish on the front door and trim. Redo if peeling or worn. -Place lawn furniture attractively. -Make any roof repairs that may be necessary. -If there are outdoor pets, make sure pet area is clean and neat. Some tips for the home interior include: -Keep the home neat and "picked up." -Be sure floors, bathrooms, kitchen and appliances sparkle. -Be careful about cooking "aromas" - avoid vinegar and fried food smells; but blueberry muffins, home-baked bread or chocolate chip cookies can create the right atmosphere. -Repair leaky kitchen or bathroom faucets. -Clean carpets. -Make sure rooms are well lit - either through natural lighting or higher watt light bulbs. -De-clutter closets. -Remove excess furniture to make rooms look bigger. -Straighten and de-clutter the garage and basement. Move items to storage if necessary. In addition to tips for cosmetic changes, you might have become aware of an improvement that would increase the value of the home more than the cost to do it. If this is the case, share your suggestion with the sellers. Note: If sellers choose to make such an improvement, you may have to adjust the listing price to reflect that improvement. The sellers need to understand that anything they can do to make their home more attractive in a competitive market will be to their benefit in the long run. Also let your sellers know that it's best for them to be "away" when a buyer comes to view the home. Buyers tend to become very quiet if the sellers are present and it will be hard for the agent to get honest comments from the buyers when the sellers are there. Sellers need to understand that only when the agent has knowledge of the buyers' concerns will he or she be able to get those concerns addressed.

Describing elevation

To describe property located above or below the earth's surface, such as the air rights of a condominium, a surveyor must know the property's elevation. Standard elevation reference points, called datums, have been established throughout the country. The original datum was defined by the U.S. Geological Survey as mean sea level at New York harbor. A surveyor uses a datum as an official elevation point to describe the height or depth of a property. If, for example, the datum for an area is a point 100 feet above sea level, all surveys in the area will indicate elevation as a distance above or below 100 feet above sea level.

Computing seller's net

To determine a seller's net on a property sale: -Step 1: Subtract the commission percentage from 100% to obtain the aggregate (opposite) of the commission and put that result below the line on the right in the T-formula shown above. -Step 2: Put the sale price below the line on the left in the T-formula above. -Step 3: Multiply the sale price (number on the left) by the commission aggregate (number on the right). Example: Bob's home sold for $227,000 and he owes his broker 8% commission on the sale. 100% - 8% = 92% $227,000 X .92 = $208,840 Bob's net on the sale is $208, 840.

Computing sale price

To determine what a property must sell for in order for the owner to net a certain amount, do the following: -Step 1: Start with the amount that the seller wants to net, add any expenses (including a mortgage that needs to be paid off), and subtract any refunds that the seller may be receiving in the transaction. The result goes above the line in the T-formula above. -Step 2: Subtract the commission percentage from 100% to obtain the aggregate (opposite) of the commission and place that number on the right below the line of the T-formula. -Step 3: Divide the result of your calculation in Step 1 (number above the line) by the aggregate that you obtained in Step 2 (number on the right below the line). Example: Tim wants to net $65,000 from the sale of his home. He owes $75,000 on the mortgage, will pay about $9,000 in expenses on the sale. He will owe his broker 7.5% commission on the sale. $65,000 + $75,000 + $9,000= $149,000

Responsibility of the broker

To directly supervise all of his licensees who work for him, or in the case of a corporation, partnerships or association, it is the broker of record who is accountable for the actions of the employees. A salesperson may not be employed by more than one broker.

Seller's disclosures

Water -The source of the household water -Any easements regarding the water source -Problems or repairs -If the source provides adequate potable water -Existing water treatments systems -Existing water rights related to the household supply -Irrigation water rights for the property, if applicable -Entity supplying irrigation water to the property -Condition of any outdoor sprinkler system Sewer/On Site Sewage System -Kind of sewage system on the property -Connection to public sewer main, if applicable -Sewage fees or charges -Construction and upkeep of on-site sewage system, if applicable -Connection of plumbing fixtures to sewage system -Changes or repairs -Location of on-site system -Frequency of maintenance of on-site system Structural -Roof issues -Basement problems -Conversions, additions or remodeling -Age of the home -Settling, slippage or sliding, if applicable -Defects with foundations, sidewalks, slab floors, driveways, etc. -Pest inspections -Pest infestations -Attic and basement insulation Systems and Fixtures -Electrical system -Plumbing system -Hot water tank -Garbage disposal -Appliances -Sump pump -Heating and cooling systems -Security system Homeowner's Association/Common Interests -Homeowner's Association, if applicable -Periodic assessments -Pending special assessments -Shared common areas or existing maintenance agreements for pools, tennis courts, walkways, etc. Environmental -Drainage problems -Fill material -Damage to the property caused by disasters, such as fire, wind, floods, earthquakes, etc. -Existing shorelines, wetlands and floodplains -Existing environmental hazards, such as asbestos, radon gas, fuel or chemical storage tanks, etc. -Commercial or industrial use -Soil or groundwater contamination -Transmission poles, transformers, or other utility equipment on the property -Dumping site -Illegal drug manufacturing -Radio tower interference Lead-Based Paint This section would apply only to homes built prior to 1978. The seller of such a home must disclose information about the possible presence of lead-based paint in the home. The seller also acknowledges whether he or she has provided all documents and reports pertaining to lead-based paint to the buyer or indicates that he or she has no such reports to provide.

In-house sales with seller agency

When dealing with an in-house sale, even though the agent for the seller may be different from the agent for the buyer, the firm's broker would be a dual agent. Since these firms can and must offer consensual dual agency for sales that take place in-house, it would be a good practice for agents to advise any potential seller of the possibility of a dual agency situation arising and explain to the seller just how that could happen. The agent needs to tell the seller that if another agent in the firm has a buyer who is interested in purchasing the seller's property, since both agents work for the same broker, a dual agency situation would arise. The agent should inform the seller of this possibility at the time the listing is taken. Remember that dual agency must be disclosed at the time it arises, so the seller does not need to agree to dual agency at the time he or she signs the listing. The seller can make that choice if and when the dual agency situation actually arises.

In-house sales with buyer agency

When entering into a buyer's agency agreement with their buyers, the agents in such a firm should also inform their buyer clients that a dual agency situation could arise if the buyer becomes interested in one of the firm's in-house listings. If such a situation would arise, the firm must inform both parties immediately and then the broker can offer choices to the clients to handle the situation. -The buyer and seller could consent to the dual agency arrangement, so that the broker can represent both of them. -The buyer could cancel the buyer's agency agreement with the broker and represent him or herself or find another agent outside the firm to represent him or her, while the broker represents the seller. -The seller could cancel the agency agreement with the broker and represent him or herself or find another agent outside the firm to represent him or her, while the broker represents the buyer.

What happens in the case of illness or injury of a sole proprietor broker?

When he is unable to perform as a broker, the broker's attorney must notify the Commission within 15 days that another licensed broker is to act as the interim broker until the broker is able to resume his work.

Footings

When preparing the site for a structure, the ground itself forms the bed for the structure's foundation. That part of the foundation which transmits loads directly to the soil is called the footing. The purpose of the footing is to spread the load over a greater area to prevent or reduce settling. The footing holds the entire weight of the building.