Real Estate Principle I

handwritten contracts

(in written contracts) that contradicts any other term of that contract will overrule and take precedence

1 mile in feet

5,280 ft

Which of the following is not true regarding a sponsorship agreement

A broker may retain a licensee as a self-employed independent contractor. Texas law requires a written sponsorship agreement. A real estate broker may enter into a written sponsorship agreement. To meet IRS requirements, real estate brokers have independent contractor agreements with their sales agents and associate brokers to avoid the taxes associated with an employee.

listing agreement

A contract between the property owner and the brokerage to place properties for sale with the brokerage is a

Honest mistake

A mistake that does not question the honesty, competence, or diligence of a person and does not constitute a breach of duty

listing agreement

A private employment agreement between a seller and a real estate broker

ethics

A set of principles an individual uses to guide his or her own behavior and others

name of the license holder or team

All license holders' advertisements must include:

prescription easment

An easement given to an owner of land who adversely and openly crosses another owner's land uninterrupted over a certain amount of time

encroachment

An intrusion into, under, or over the property of another without that person's permission

emblements

Annual crops cultivated by tenant farmers and sharecroppers

Statute of Limitations

Anyone seeking relief for a breach of contract must do so within these guidelines

encumbrance

Anything that burdens or affects the use or the title of the property

exempt from TRELA licensing requirements

Attorneys

seller's role in listing agreement

Being honest in relating the condition of the property to the listing agent and prospective buyers Allowing flexibility in regard to property being available to show Maintaining the property in "showing" condition

"do-not-call" rules

Calls must be made between 8:00 AM and 9:00 PM

TRELA

Combats dishonesty among real estate brokers and their sales agents Requires real estate brokers and their sales agents to have licenses Stops fraudulent activities among real estate brokers and their sales agents

abandonment

Deserting property with the intent not to occupy the property as one's residence

Community Reinvestment Act

Encourages regulated financial institutions to serve their immediate community's needs Requires that lenders meet their local communities' needs first Requires that lenders lend to low to moderate income families for housing, small business, and farming

mortgage insurance

Insurance that provides coverage for the upper part of a residential loan in the event of default

establishing an agency relationship

It is standard practice to establish an agency with a buyer representation form. It is standard practice to establish an agency with a listing agreement. Ideally, the agency relationship should be stated in writing although verbal are allowed(harder to prove in court)

Ownership in Severalty

Owned by a single corporation whose rights are not shared with any other person Owner's description on the deed is often listed as an unmarried man or woman Owned by one person whose rights are not shared with any other person

Severalty

Ownership of real property by one person only, also called sole ownership.

specific leins

Property taxes and special assessments

Texas Real Estate Commission (TREC)

Regulates Texas real estate license holders

3 fundamental reasons for requiring a land description and survey in a real estate transaction

Relationship of the property to adjoining properties Relationship of occupied lines to recorded lines Existence of the property

in 1582, explorers and missionaries claimed the land that is now TX for the king of

Spain

Texas Occupations Code

TRELA is found in the

Subjacent Support

The absolute right of the property owner to have his or her land supported from beneath its surface

replacement value

The amount it will cost to rebuild the same structure if it is built today

price fixing

The collaboration of one or more persons setting a fixed price for goods or services to remove the free market's ability to influence prices

when an employing broker's license is suspended or revoked

The employed sales agent must transfer his or her license to another broker

Concealment

The failure to disclose a material fact, if intended to induce or allow a false belief

life tenant

The person to whom a life estate is conveyed

point of beginning (POB)

The point at which a metes and bounds description begins.

cyclical

The relationship between demand and supply makes the real estate markets

air rights

The rights inherent in the vertical place above ground level (estate, title, interest, and rights)

ground water

The water beneath the surface of the land that fills the spaces and cavities between the rocks and soil

groundwater

The water beneath the surface of the land that fills the spaces and cavities between the rocks and soil

writing the legal description in a contract

To sell real property in Texas, the contract must have a legal description of the property to be conveyed. An inaccuracy in the legal description can create possible financial liability on the part of the broker. An inaccuracy in the legal description can create serious problems for the owner

surface water

Water found in bodies of water such as ponds, lakes, and bays and in a flowing watercourse such as a stream or river; owned by the state of TX and held in trust for citizens of trust

monopoly

When a person or group has exclusive control over a product or service within a given region

Broker Associate

a broker who chooses to place their license under a sponsoring broker

producing cause

a cause that is legally sufficient to result in liability

a fee simple subject to condition subsequent

a fee estate that contains a condition that if violated, could lead to the termination of the estate

escrow account

a fund the lender may require the borrower to establish in order to pay mortgage default insurance, property taxes, and/or hazard insurance as they become due on the property during the year

landmark

a geographical feature, such as a large rock, an old tree, a fork in the road, or the intersection of two roads

nonexclusive listing

a listing agreement that gives the seller the right to retain more than one agent simultaneously; first broker to obtain a buyer who meets the terms of the listing, and whose offer is accepted by the seller, is the procuring cause of the sale and earns the commission

datum

a point, line, or surface from which elevations are measured or indicated

Transfer of loan servicing

a process in which a loan is sold to a third party who will service the loan in the future

urban homestead

a property that is located within a municipality and is served by police and fire protection as well as three of the following municipality services: electric, gas, sewer, storm sewer, and water

Regulation

a rule issued by an administrative agency to enforce or amplify a statute.

a trade organization

a voluntary nonprofit organization of independent and competing business units engaged in the same industry or trade

trade association

a voluntary nonprofit organization of independent and competing business units engaged in the same industry or trade, formed to help solve industry problems, promote progress, and enhance service

oil and gas rights holder has authority to

access the surface for both ingress and egress including building roads, holding tanks and derricks

general lein

affects all property both real and personal of the owner, such as a judgment lien or federal or state income taliens

Truth in Lending Act

aimed at promoting the informed use of consumer credit by requiring disclosures about its terms and costs and also requires the lender to state a maximum interest rate in variable rate contracts secured by a borrower's dwelling

typical apperutances (pass with the sale of real property)

air rights, water rights, right-of-way, easements, support rights

street address

an informal reference and is not sufficient for a legal description;it only tells you how to find a property but not the boundaries of the property

taxing authority

any organization that is legally able to levy and collect a tax

Punitive Damages

are awarded not to compensate the plaintiff, but to punish the defendant and are sometimes referred to as exemplary damages

community property interests

are severed through divorce proceedings

a real estate licensee can cause his or her license to be suspended or revoked

aying any portion of a commission or a fee to an unlicensed associate.

Golden Rule/ Ethic of Reciprocity

basis of the NAR Code of Ethics ; do unto others as you would have them do unto you

TX real estate license requirements

be a citizen of the United States or a lawfully admitted alien. be at least 18 years old. meet any applicable residency requirement

horizontal agreements against Antitrust Laws

boycotting, price fixing, dividing the market, and tying

2 types of real estate licenses

broker's license and sales agent's license

horizontal agreements

business agreements between competitors

lawsuit for money damages

can be filed by the innocent party if damages to an injured party are expressed in a dollar amount

property

can be real; It is anything capable of private ownership; It can have corporeal or incorporeal rights

Short-term fluctuations

changes in business and economic activity that occur within the year

exempt from property taxes

churches schools hospitals government buildings

The RESIDENTIAL BUYER/TENANT REPRESENTATION AGREEMENT

common contract for residential property only that defines the working relationship between a buyer and buyer's agent and creates an agency relationship. A variation exists for commercial property

money damages classifications

compensatory damages. nominal damages. punitive damages

types of undivided interest

concurrent ownership business ownership timeshares common interest developments

executory

contract is considered this until all terms are completed and escrow closes

voidable contract

contract with a minor

Actual Cash Value

covers a structure at the depreciated value of loss

cultivated plants vs wild plants

cultivated plants may be considered personal property before they are harvested

an unmarried man/woman

describes a person's status on the deed, if the person obtains title to property in severalty

a lease that lasts 6 months or any time less than 1 year

does not have to be in writing according to the statute of frauds

Accounting

duty owed to a client requires agents to remit a client's funds into a trust or escrow account according to the terms of an agreement

Texas Real Estate Commission (TREC)

enforces the provisions of TRELA and determines administrative policy

Education Standards Advisory Committee

est. in 2012; 12 members; reviews and revises course content requirements, curriculum standards, instructor certification requirements

Sole Proprietorship

exists when a single individual operates a business with no other owners. owns all assets and assumes all liabilities can be sold at the owner's will

General Partnership

exists when two or more businesses or individuals join to operate a business for profit

other names for a fee simple absolute estate

fee in simple, fee interest, estate in fee, or a fee

Information About On-Site Sewer Facility Form

form published by TAR is designed to be used by the seller to deliver additional information to the buyer about the septic system or other on-site sewer facility

Keybox Authorization by Tenant Form

form that enables the agent to obtain permission from the tenant to place a keybox on the property if the property is tenant occupied

Canons of Professional Ethics and Conduct

found in the Texas Administrative Code Rule §531.19 of the Canons addresses discriminatory practices

rule of capture

grants landowners the right to capture the water beneath their property such as groundwater

natural attachments

growing plants attached by their roots such as trees, shrubs, or flowers

ways to terminate a brokerage agreement

impossibility of performance. breach of contract. agreement of the parties

pitch of a roof

incline or rise- determines the life expectancy of the roof; the steeper the longer

undivided interests

interest held under the same title by two or more people, whether their rights are equal or unequal in value or quantity

3 types of agent representation

intermediary, buyer's agent, seller's agent

Statute

is a law passed by a legislature

General agent

is authorized by a principal to perform all tasks associated with the continued operation of a particular project

written disclosure to all parties

is necessary prior to a broker acting as an intermediary in a real estate transaction

Groundwater

is private property of the owner of the overlying land

Regulation B

issued by the Bureau of Consumer Financial Protection to implement the provisions of the Equal Credit Opportunity Act

TREC Responsibilities

issuing licenses and certificates of registration. implementing continuing education requirements. setting standards for real estate schools

primary difference between a joint tenancy and a tenancy in common

joint tenancy has the right of survivorship

homestead protectection

lasts indefinitely until there is solid proof of transfer, abandonment, or death

redlining

lenders tending to avoid lending in high-risk communities and neighborhoods

Horizontal Datum

longitude and latitude

mean sea level

most common datum used in the US

fee simple absolute estate

most complete form of ownership of land

parol evidence rule

no further outside promises, oral or written, are allowed after establishing a final contract.

secret profit

occurs when a licensee is compensated without the full knowledge and consent of the parties in a real estate transaction

blockbusting

occurs when a real estate licensee persuades an owner to sell or rent housing by saying that a particular race, religion, etc, are moving into the neighborhood

general leins

other government taxes such as unpaid income tax

addendum

overrules pre-printed contract

creating an intermediary brokerage

permission for intermediary status is needed from the buyer and seller. a written contract signed by the buyer and seller is mandatory. the buyer representation agreement addresses intermediary status.

tangible personal property

personal property that can be seen, weighed, measured, felt, or perceived by the senses.

Information About Brokerage Services (IABS) statement

presents a broker's duties and obligations to a prospective client or customer. However, it does not establish or disclose an agency relationship or the existence of an agency relationship between two parties

the 1866 Civil Rights Act

prohibits discrimination based on race in all property transactions

Addendum for Reservation of Oil, Gas, and Other Minerals

promulgated form used if the seller reserves all or a portion of the Mineral Estate

Title Insurance

protects a property owner against loss if the title to the property is shown to have a defect

Fair Housing Act

protects against discrimination based on religion. race. color. sex. national origin. familial status. handicap.

Fair Credit Reporting Act

protects consumer identity and credit information and is designed to promote the accuracy, fairness, and privacy of the information collected and maintained by credit reporting agencies

Deceptive Trade Practices and Consumer Protection Act (DTPA)

protects consumer's rights found starting in Section 17.41 of the Business and Commerce Code

Intermediary Brokerage

provides brokers with a way to represent both parties to a transaction while avoiding pitfalls of dual agency

real estate association

purpose is to upgrade the reputation and dignity of the real estate business.

TREC Regulates

real estate inspectors. residential service companies. timeshare developers easement or right-of-way agents

tenancy

refers to a mode or method of ownership or holding title to property

common law

refers to the body of law based on custom and judicial precedent rather than on codified statutes

18 hours

required CE for RE agents and brokers

Protection Period Clause

secures the listing broker's commission if the owner personally sells the property to any person whose attention was called to the property during the listing

land survey

should always show occupied lines deed record lines extent of any mismatch

legal description

should be written in such a way that any person in the future would be able to understand the description and determine the property location, with reasonable certainty.

earnest money

signifies a buyer's seriousness of his or her offer to purchase

Intangible personal property

stock, bonds, notes,accounts receivable, franchise, license or permit, contracts, cause of action, goodwill, certificate of deposit, shared deposit account, insurance policy, annuity, pension

4 basic tenancies recognized by law

tenancy at sufferance. tenancy for years. periodic tenancy tenancy at will.

licensees must use contract forms prepped by

the Texas Real Estate Broker-Lawyer Committee and approved by TREC

The principal

the client in a single agency relationship with regard to a real estate transaction

title vesting

the evidence that the owner of land is in lawful possession; it is the proof of ownership

Job Growth

the number of jobs added or deleted if the growth is negative, to the number of jobs in an area

metes and bounds system

the oldest method to describe land- the geometry of the perimeter of the parcel of the land

tenancy in common

the only form of tenancy that allows unequal interests in the property

Redlining

the practice of designating certain neighborhoods as areas where loans will not be made

Texas Constitution

the supreme law of Texas and establishes the fundamental legal rights of its citizens

Representation and Agency

the types of disclosures required by The Real Estate License Act

To reasonably locate the property during a transfer of title

there must be a sufficient legal description when testing the validity of a deed

4 characteristics of tenants in common

they may: take title at different times. have an undivided interest or equal right of possession(one unity). take title on separate deeds. have unequal interests

minerals in place

those minerals that have not been removed from the ground; (as soon as they are above surface they are personal property)

4 unities for joint tenancy

time, title, interest, and possession

under deed of trust-2 types of foreclosure for lender

trustee's sale and judicial foreclosure

general partnership

type of business structure in which each owner is jointly and severally liable

utility easemnt

type of easement that allows employees of a utility company to gain access to the property for installation and maintenance

land surveys

used in the construction process in order to assess: boundaries for properties. topography for engineering designs. elevations for flood insurance for home sites

vertical datums

used to measure height, as in a condominium level, or depth, such as subsurface mineral rights

sales comparison approach

uses the principle of substitution to compare similar properties by looking at the current selling price of a similar property and adjusting it for any differences to determine the market value for the subject property

Doing Business As (DBA)

when the owner of a sole proprietorship decides to operate under a different type of name, the must file this

typewrittencontracts

will overrule any addendum.