CH 4 (Government Controls and Real Estate Markets)

Toxic waste that have posed problems to property owners in the last two decades include:

- radon - leaking underground storage tanks - mold - asbestos

An important process for any investor in property that could possibly contain toxic substances is a Phase 1 Environmental Value Assessment. This procedure examines

- air samples - property history - the property surface, itself - water samples

Building codes

- began to be adopted by US communities around 1900 - were the earliest form of police power regulation of land use - originally were prompted primarily by the threat of fire

Characteristics of building codes include

- continue to change with changing technology - generally are regional rather than strictly local - address safety, health and sanitation

Counter-arguments to zoning as a solution to real estate market failure include that zoning

- contributes to excessively low density of land use - creates inefficiency by separating residential from commercial activities

In zoning a nonconforming use

- must have existed before the zoning was enacted - cannot change in use or structure - cannot be discontinued more than a limited time

Zoning has been called a poor solution to land use market failure because it

- restricts the supply of lower priced housing - forces supporting business services away from the neighborhoods they serve

Three conditions for a zoning variance are

- the owner must show true hardship - the condition must be unique to the particular lot - the variance must not change the character of the neighborhood

Police power is the power of any government to regulate in the interest of the general health,_____, and _____ of the citizens

- welfare - safety

The source from which property tax revenue can be obtained is the value of the total tax _____ less the value of property that is _____ from property taxes.

1. base 2. exempt

In condemnation proceedings for eminent domain the amount of compensation to the owner must be based on _____ and _____ use of the property at the time it is condemned.

1. highest 2. best

The narrowest notion of eminent domain limits its scope to "public use," that is, for _____ facilities only, while the more common and broader view allows eminent domain to be use for "public purpose," meaning any use of clear public_____ .

1. public 2. benefit

Property tax rates typically are stated not in percent but in mills, which are dollars per _____dollars of value.

1000

Assessed value typically is ______ percent of market value, reflecting such factors as cost of selling a property.

85-90

A Phase I Environmental Value Assessment indicating a property is clean is legal protection to a buyer/investor:

If coupled with written assurance from the owner/developer

Failure to pay property taxes eventually leads to foreclosure sale for all types of property except:

No exceptions for taxable properties

The power of state and local governments in the United States to regulate in the interest of the health, safety and welfare of citizens in general is known as:

Police powers

An example of negative externalities is:

Reflective glass or roof material deflects light and heat onto adjacent properties

Which is the clearest example of a positive externality?

The effect on a neighborhood from good lawn maintenance

Generally, higher property taxes on a property tend to lower its value, while more resulting community services for the property tend to increase its value. In short, the effects of the property tax are captured or _____into the value of a property.

capitalized

To derive taxable value of a property from assessed value, subtract any applicable _____.

exemptions

Failure to pay property taxes ultimately can lead to _____ and sale of the property at public auction.

foreclosure

In condemnation, the amount of compensation that restores the property owner to a financial position equivalent to that existing before the property was taken is called _____compensation.

just

An ad valorem tax is levied at rates between 1.0 and 4.0 percent of a property's _____ _____.

market value

Among the most recent environmental hazards encountered in real estate is:

mold

To find the property tax amount for a property multiply the taxable value by the total _____ _____

tax rate

In recent decades the "public purpose" concept of eminent domain is claimed to have allowed misuse: encouraging local governments to use eminent domain to replace older private land uses with new ones simply to generate higher _____ _____.

tax revenue

The property tax is a form of ad _____ tax that is the primary source of revenue for almost all forms of local government in the United States.

valorem