Final NYS Exam Review

Homestead properties include:

- 1-3 family houses - Condominiums - Mixed-use properties when they are mostly residential - Mobile homes - Vacant land under 10 acres - Farm land / farm dwellings

The following are functions of the Architectural Review Board:

- approves new construction and remodeling following local zoning ordinance laws. - promotes the orderly and harmonious development of the municipality. - protects a municipality's cultural heritage.

The following are functions of the planning board:

- prepare and amend a master plan for the community. - implement the master plan through site plan and subdivision ordinances and recommendations to other agencies. - make investigations, maps and reports, and recommendations that relate to the planning and development of the municipality. - recommend amendments to the zoning ordinance or map.

The following are functions of the Historic Preservation / Landmark Commission:

- recommend to the municipality the adoption of ordinances preserving historic districts, landmarks, and historic sites. - review and approve application for construction, alteration, demolition, and relocation of a historical property. - recognize sub-districts within a preservation district. Allows the commission to adopt guidelines regulating properties in the sub-district.

Contracts

-In New York State, an individual must be at least 18 years of age to enter into a contract. - Minors (less than 18 years old) CANNOT enter into a contract. The contract is voidable if signed by a minor. - In New York State, an individual must be mentally and emotionally capable to enter into a contract. - The purchaser signs the contract first

Acres

1 Acre = 43,560 square feet 1 Hectare = 2.47 Acres

Areas

1 side x 1 side = area of a square width x depth = area of a rectangle ½ base x height = area of a triangle (remember a triangle is equal to ½ of a rectangle) In order to determine the area of an irregularly shaped lot, you must simply break down the lot into squares, rectangles, and triangles and add the areas of each together.

The Full Covenant and Warranty deed includes the following covenants:

1) Covenant of seisin - assures the grantee that the grantor holds the title specified in the deed. 2) Covenant of right to convey - assures the grantee that the grantor has the legal capacity to convey the title and has the title to convey. 3) Covenant against encumbrances - assures the grantee that no encumbrances against the title except those set forth in the deed itself exist. 4) Covenant of quiet enjoyment - assures the grantee that they will have quiet enjoyment and possession of the property. 5) Covenant for further assurances 6) Covenant of warranty

Escalation clause

A clause that allows landlords to raise rents during the term of the lease. Lease escalation clauses call for the increased costs to the tenant for different reasons at specified times during the lease term. These clauses protect the property owner against increases during the lease term.

Real Estate Settlement Procedures Act (RESPA)

A consumer protection statute, first passed in 1974. The purpose of RESPA are 1) To help consumers become better shoppers for settlement services and 2) To eliminate kickbacks and referral fees that unnecessarily increase the costs of certain settlement services. RESPA requires: 1) A Good Faith Estimate (GFE) 2) HUD Booklet 3) HUD Form No.1

Earnest money deposit

A deposit that a buyer makes at the time of submitting an offer to demonstrate the true intent of the purchase; also referred to as a binder, good faith deposit, and escrow deposit.

Fuse

A device used in electrical systems to protect against excessive current. The fuse melts and opens the circuit, causing electric power to stop when overheating occurs. Circuit breakers perform a similar function but are more convenient and safer than fuses.

Specifications

A document provided by Architects that describes the quality of construction.

Wraparound mortgage

A form of secondary financing for the purchase of real property. The seller extends to the buyer a junior mortgage which wraps around the existing in addition to any superior mortgages already secured by the property.

Loft lease

A lease for the rental of floor space that is not generally divided into rooms.

Percentage lease

A lease of property in which the rental is based upon the percentage of the volume of sales made upon the leased premises, usually provides for minimal rental.

Zoning Board of Appeals

A local appointed board that has the power to review administrative rulings made by the planning board or another legislative body. One of the main duties is to maintain the essential character of the neighborhoods. It is the interpreter of the zoning ordinance. Responsible for granting variances

Planning Board

A local elected or appointed government board charged with recommending to the local town or city council the boundaries of the various zoning districts and appropriate regulations to be enforced therein.

Sub-agent

A person appointed by an agent with permission of the principal (seller) to assist in performing some or all of the tasks of the agency. Subagency typically occurs with properties listed on the MLS. When the seller's broker posts a listing on the MLS, he/she are essentially inviting other brokers to join as a subagent. Agent showing the property become subagents for the listing broker (and the seller).

Comparative Market Analysis (CMA)

A property evaluation that determines property value by comparing similar properties sold within the last year. In other words, a CMA is an analysis of the competition in the marketplace that a property will face upon sale attempts. A CMA is NOT an appraisal. Instead, it is an opinion of value.

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. It is illegal in New York State. Instead, the agent should notify both parties and have them sign the Agency Disclosure form, which states that the agent is acting as a dual agent. This is known as Advance Consent to Dual Agency.

Eminent Domain

A right of the government to acquire property for necessary public use by condemnation; the owner must be fairly compensated.

Easement in Gross

A right of use in the land of another without the requirement that the holder of the right own adjoining land. Also known as a commercial easement in gross. A utility company uses/owns this type of easement.

Easement

A right to cross or otherwise use someone else's property for a specified purpose. It is nonpossessory interest in land owned by another.

Mechanic's Lien

A security interest in the title to property for the benefit of those who have supplied labor or materials that improve the property. A mortgage lien is an example of a specific lien. Example: You hired a contractor to renovate your home but refused the pay the contractor. The contractor can file a mechanic's lien against your property as a means to ultimately get paid.

Abstract of Title

A summary of all of the recorded instruments and proceedings which affect the title to property, arranged in the order in which they were recorded.

Bridge loan (Swing loan)

A type of short-term loan, typically taken out for a period of 2 weeks to 3 years. A bridge loan is a type of gap mortgage in which funds are provided over and above an already existing loan until more permanent financing is in place. A bridge loan allow a buyer to obtain a new property without having to sell his/her current property.

Assessed value

A valuation placed upon property by a public officer or a board, as a basis for taxation.

Agency Disclosure Form

A written explanation, to be signed by a prospective buyer or seller of real estate, explaining to the client the role that the broker plays in the transaction. - The Agency Disclosure Form is signed at the first substantive contact. - Outlines the agent's duties to the client - Explains that an agent owes a fiduciary duty to the client - Allows for advance consent to dual agency

Fee Simple Estates

Absolute ownership of real property; a person has this type of estate where the person is entitled to the entire property with unconditional power of disposition during the person's life and descending to the person's heirs or distributees. Most properties in New York have a Fee Simple Absolute deed, unless specified otherwise!

Advertising

According to section 175.25 of Article 12-A of the NY Real Property Law: " All advertisements placed by a broker must indicate that the advertiser is a broker or give the name of the broker and his telephone number."

Advertising

According to section 175.25 of Article 12-A of the NY Real Property Law: "All advertisements placed by a broker which state that property is in the vicinity of a geographical area or territorial subdivision must indicate as part of such advertisement the name of the geographical area or territorial subdivision in which such property is actually located."

Reasonable Care and Duty to Account

Agent may be liable for costly mistakes.

Obedience

Agent must act in accordance to clients demands/instructions

Disclosure of Information

Agent must communicate with client and must present all offers

Loyalty

Agent must work in the best interest of his client

Confidentiality

All confidential information as described by client must remain so unless given permission in writing.

Roof pitch

Also known as the slope. Typically used in describing the slope of a roof, driveway, sidewalk, etc.

Blind ads

An ad that remains anonymous as to who is advertising. They are illegal.

Special Agent

An agent with limited authority to act on behalf of the principal, such as created by a listing. I.E. Real Estate Agent / Real Estate Broker

Ground (Land) lease

An agreement in which a tenant is permitted to develop a piece of property during the lease period, after which the land and all improvements are turned over to the property owner. This long-term lease is commonly used for commercial property.

Exclusive Right to Sell

An agreement of employment by a broker under which the exclusive right to sell for a specified period is granted to the broker; if a sale during the term of the agreement is made by the owner or by any other broker, the broker holding such exclusive right to sell is nevertheless entitled to compensation.

Down payment

Anyone who holds a down payment must place it in a separate escrow account. The following people generally hold the down payment: - Listing agent - Seller's attorney - Selling broker

Blueprints

Architectural drawings that describe the layout and construction of a house. These drawings describe the quantities used in construction.

Accountability

As it relates to finances. One of the more serious fiduciary responsibilities.

Commissions

Commissions are paid by the client (buyer or seller depending on the transaction) to the brokers involved in the transaction. A typical commission in New York is 6%. Commissions are always negotiable, and are determined by both the client and broker.

Historic Preservation / Landmark Commissions

Established to review proposed projects within historic districts for compliance with standards established for new development or alteration or improvement of historic buildings and landmarks.

Homeowners Policies

HO-3: Special Form Policy - the most widely used and recommended homeowners policy. It covers the home for all risks or physical loss except damage caused by flood, earthquake, war, or nuclear accident. HO-4: Tenants or Cooperative Owners Policies - Commonly referred to as renters insurance, regardless if you are renting a home, condo, or apartment. This policy also covers cooperative owners since they hold a proprietary lease (not real property) HO-6: Condominium Unit Owners Policies - Insure against damage to the contents of an apartment, cooperative, or condominium.

Umbrella Policy

Insurance policy that covers amounts above those covered under one or more other primary policies, and which does not pay until the losses exceed a certain sum. Also called excess insurance.

The primary mortgage market

Is the lending institution where the mortgage originates. I.E. Bank of America gives a loan to the homeowner.

Secondary mortgage markets

Is where the loans originated in the primary mortgage market are bought and sold.

Water rights

Littoral Rights = Lake Riparian Rights = River (stream)

Littoral Rights

Littoral rights apply to property bordering a stationary body of water. I.E. Lake

Mortgagor / Mortgagee

Mortgagor is the borrower (typically the person buying the house) Mortgagee is the lender or bank who provides a loan to the borrower or homeowner. This may seem counter-intuitive. Many students think of the bank as the 'mortgagor' since people always say "I'm taking out a mortgage". But in fact, the homeowner gives the bank a mortgage.

Fiduciary Duties

OLD CAR Obedience Loyalty Disclosure of Information Confidentiality Accountability Reasonable Care and Duty to Account

Non-conforming Use

Occurs when a preexisting use of property in a zoned area is different from that specified by the zoning. The existing use is not as-of-right.

Buyer Agency / Buyer Brokerage

Occurs when a purchaser hires a broker to represent them. The purchaser employs a broker to locate a property. In this relationship, the buyer is the principal and the broker is the agent.

Negative amortization

Occurs when the monthly payment is less than full interest and does not pay any principal. The interest that is unpaid accrues and the principal balance owed increases.

Obsolescence

One of the causes of depreciation. It is the loss of desirability and usefulness caused by new inventions, changes in design, and improved processes for production, or from the influence of external factors. Obsolescence may be either economic or functional. Functional Obsolescence can be an outdated design or floor plan.

Architectural Review Boards

Oversees and upholds the quality and aesthetics of a neighborhood, town, or city.

Polychlorinated bihpenyls (PCBs)

PCBs were widely used as dielectric and coolant fluids, for example in transformers, capacitors, and electric motors. PCBs have been known to leak inot the ground from electrical transformers. PCBs appear in groundwater and soil.

Roof Components:

Pitch Eave Soffit Fascia Sheathing

Sheathing

Placed over the roof rafters, used to enclose the roof and stiffen the roofing system. Sheathing is typically made of plywood or exterior grade gypsum board.

Salesperson / Broker Relationships

Real Estate Salespersons/Agents DO NOT collect money or commissions. Any commissions earned are paid to the salesperson's broker, who in turn, pays the salesperson his portion of the commission. This also applies to any referral fees paid from another broker / salesperson / mortgage broker.

Independent Contractor Requirements

Real estate salespersons work as Independent Contractors for brokers. Elements of an Independent Contractor: - Pay their own taxes on commissions - Responsible for paying social security taxes and self-employment taxes. - Have no set work hours - Have no specific job location - Can be employed with another company or employer - Covers his/her own expenses (transportation, cell phone, clothing) - Either party can terminate the relationship at time

Replacement costs

Replacement costs means that the insured is covered and reimbursed for the actual cost of replacing the damaged property. For example, if a refrigerator is destroyed in a fire, the replacement cost will be the cost of buying another refrigerator.

Riparian Rights

Riparian rights belong to the owner of a property bordering a flowing body of water. I.E. River (stream)

Siding

Siding materials on buildings can be metal (such as aluminum), wood or vinyl. Behind the siding is a layer of sheathing.

General Agent

Someone authorized to transact every kind of business for the principal. I.E. Property Manager

Prepayment penalty clause

States that the borrower cannot pay off the loan at any time before expiration of the full mortgage term without a financial penalty for early payoff.

The revocation or suspension of a broker's license

Suspends the license of the salespersons and associate brokers affiliated with the broker

Truth in Lending Act (TILA) / Regulation Z requires:

TILA requires four main disclosures: 1) Annual percentage rate 2) Finance charge 3) Amount financed 4) Total amount of money to be paid toward the mortgage in principal and interest payments

Homestead properties

Tax Assessing Units may elect to establish separate tax rates for homestead and non-homestead properties. Homestead = Residential Non-homestead = Commercial

1988 Amendment to the Civil Rights Act

The 1988 Amendment to the Civil Rights Act added two new protected classes: - Persons with mental or physical disabilities - Familial status

Civil Rights Act of 1866

The Civil Rights Act of 1866 has no exemptions and contains the blanket statement that 'citizens have the same rights to inherit, buy, sell, or lease real and personal property. The Civil Rights Act of 1866 is primarily interpreted to prohibit racial discrimination.

NYS Department of State

The Department of State is primarily responsible for issuing real estate licenses, pocket cards, and handing down disciplinary action. Article 12-A of the NYS Real Property Law outlines the roles/duties of the Department of State.

Full Covenant and Warranty Deed

The Full Covenant and Warranty deed contains the broadest form of guarantee of title of any type of deed and provides the greatest protection to the grantee.

Municipal Engineer's Office

The Municipal engineer performs the following basic functions: - Estimate the costs of paving ,sewers and sidewalks, and other public works projects. - Supervise streets and other public works activities - Issue permits to private contractors for street openings and curb and gutter construction. - Assume responsibility for sewage, water supply, distribution systems.

NYS Department of Financial Services (FKA NYS Banking Department

The NYS Department of Financial Services registers and licenses all companies and individuals who conduct mortgage related services in New York.

NYS Department of Health

The NYS Department of Health performs the following basic functions: - Drinking water safety, including standards for private and community well construction and well water safety and regulation. - Septic tank approval. - Certain wastewater treatment approval.

Property Condition Disclosure Statement:

The Property Condition Disclosure Act requires the seller to submit to the buyer, a 'Property Condition Disclosure Statement, prior to signing the contract of sale. If the statement is not signed, the buyer shall receive a $500 credit against the purchase price of the property. Most seller attorneys advise their clients NOT to sign the statement, as it opens them up to a vast amount of liability.

Truth in Lending Act (TILA) / Regulation Z

The Truth in Lending Act of 1968 is United States federal law designated to promote the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner in which costs associated with borrowing are calculated and disclosed.

Fascia

The area of material facing the outer edge of the soffit.

Soffit

The area under the roof extension.

Agent / Client Relationships

The buyer and/or seller is known as the Principal or Client The salesperson or broker is known as the Agent.

Legal description

The deed must contain as adequate formal legal description. The legal description describes where the property is located and the size of the lot. There are 3 acceptable types of property descriptions: 1) Metes and bounds 2) Description by reference, lot and block 3) Monuments

Proration

The division of certain settlement costs between buyer and seller. These items can include real estate taxes, fuel, a survey, water and sewer charges, rent, and security deposits. Proration ensures fair apportionment of expenses between buyer and seller.

Market value

The most probable price that a property should bring if exposed for sale in the open market for a reasonable period of time, with both the buyer and seller aware of current market conditions, neither being under duress. Market value is driven by supply and demand in the competitive marketplace.

Guidelines the NYS Department of State provides advertising for brokers.

The name of the geographical area where the property is actually located

Sublease

The original tenant is still responsible to the landlord for the lease payments under the lease contract. The sub-lessee pays the rent to the tenant (lessee) and the tenant pays the landlord.

Debt-to-Income Ratio

The percentage of a consumer's monthly gross income that goes towards paying debts. Formula: Recurring monthly debt / Gross Monthly Income

Blockbusting

The practice of inducing homeowners in a particular neighborhood to sell their homes quickly, often at below market prices, by creating the fear that the entry of a minority group or groups into the neighborhood will cause a precipitous decline in property values.

Building Codes

The primary purpose of building codes is to ensure a safe, properly functioning environment for the occupants. The New York code provides minimum standards for all buildings in New York. If the Federal or City building code is more stringent on a particular issue, the more stringent Code will supersede the State code.

Redlining

The refusal to lend money within a specific area for various reasons. This practice is illegal. Before the Fair Housing Act, some lenders circled certain local areas with a red line on the map, refusing to make loans within the circled areas based on some characteristic of property owners in the area.

Conveyance

The transfer of the title of land from one to another. The means or medium by which title of real estate is transferred. A deed is a document used to convey title legally to real property. A deed is also called an instrument of conveyance.

Agency Types

There are two types of agents: General and Special

Ownership in severalty

When title to real estate is in the name of only one person or entity, it is an estate (ownership) in severalty. Think of it as a single individual owns real estate, therefore, the ownership is 'severed' from all others.

Zoning

Zoning determines the usage allowed for a building or subdivision. Zoning also determines the 'bulk' of a house or building, meaning the maximum size of the structure (height, square footage, size of floor plate).

Eave

the lowest part of the roof. It projects beyond the wall of the structure.

Pitch

the slope of the roof