Realestate section 1
Opinion of Title:
An attorney can provide an opinion of title stating that the title meets all ownership needs and has no questions in its history. No Broker may give an opinion of Title - this would be considered as "unauthorized practice of law."
List four industries that are indirectly linked to real estate activities.
Builders, building suppliers, carpet manufacturers, appliance sales
the three Physical characteristics of Land
Immobility-Indestructibility-Heterogeneity
Fiduciary
a person having a duty to act primarily for another's benefit.
chain of title.
a series of owners in a row that have owned the property in the past
The legal concept of real estate encompasses:
land all man-made structures that are "permanently" attached to the land
Land Acquisition
when a developer buys undeveloped or previously developed land to build homes or commercial ventures.
The following cannot be registered as a real estate brokerage:
A Corporation Sole- church organization, but not a non-profit A joint venture-temporary relationship A Business Trust-investment group for its own purposes A Cooperative/Condominium/Homeowners' Association- These associations are formed to manage common ownership and do not deal in real estate An unincorporated Association- local property owners, not partners An Ostensible (Quasi) Partnership - hidden relationship
What is the main requirement within the Statute of Frauds?
All contracts must be in writing to be enforceable.
__________ is/are a key indicator of the health of the nation.
Housing starts
List five organizations for real estate professionals.
National Association of REALTORS® Indiana Association of REALTORS® Indiana Commercial Board of REALTORS® Women's Council of REALTORS® Real Estate Buyers Council
The property manager's specific duties will be contained in a
Property Management Agreement.
assemblage.
assemble several small pieces of land to create a large piece
Some of the sources of financing to the buyer are:
banks savings and loans credit unions mortgage bankers and mortgage brokers insurance companies sellers of the property
Statute of Frauds
based on an old English law which was written to protect consumers from fraud. It says that all contracts must be in writing to be enforceable and that all leases for more than one year must be in writing to be enforceable. Enforceable means that the courts will hear the case. Nearly all real estate contracts are in writing.
Property managers are
brokers who, under law, perform duties and services on behalf of the owner. Generally, a property manager is defined as one who preserves the value of an investment (by an owner) while generating income as an agent for the owner.
real estate brokerage
business is that business which brings interested parties together to sell, lease, and rent or exchange real property.
Public restrictions
come from the city or county where the property is located.
The legal concept of land encompasses:
the surface area of the earth everything beneath the surface of the earth extending downward to its center all natural things permanently attached to the earth the air above the surface of the earth extending outward to infinity
What rule should brokers follow to ensure they are acting ethically?
Do unto others as you would have them do unto you.
The bundle of rights includes
Encumber-possess-use-exclude-transfer
List five activities for which a real estate broker would receive or expect to receive compensation
Selling real estate Negotiating the sale of real estate Dealing in options on real estate Supervising the collection of rent for the use of real estate Procuring of leads intended to result in the sale of real estate
Quitclaim
Suit to Quiet the Title-filed by attorney when there is a break (cloud) in the chain of title. Two items that will cause a Suit to quiet the title suit are:
Puffing
going too far when describing a property. If the write up on the property provides information that is a subjective opinion
market conditions
how much property is on the market, how property can be financed, how well property is selling and how much the property is worth, and laws on advertising properties. Also the real estate professional must know how much rent a property can bring; or what the rate of return will be on an investment property.
Non-navigable-Riparian rights
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.
the five economic characteristics of land - SCARCITY
A property will sell quickly if only a few properties in a particular area are on the market.
Air rights
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.
contract
is an agreement between the parties to do or not to do something.
Agricultural property
is farm or ranch land of more than ten acres.
Industrial property
usually manufactures or distributes products such as a factory or warehouse. This involves sites in industrial parks or subdivisions; redeveloped industrial parcels in central areas and undeveloped industrial acreage.
"Spec" homes
mean speculation homes, built without having a specific buyer in mind. Sometimes these homes are used as displays; many times they are used for buyers who need a house in a hurry and can't wait to have a new home built. "Spec" homes help keep construction crews busy during off-peak times.
Color of title
means there is a claim against the title- such as Adverse Possession. This must be cleared by the courts before the property can be transferred.
In residential home construction, three types of homes are usually built which are-
"Spec" homes-Tract homes-custom homes
ownership of property entails a set of rights to the item enjoyed by the owner. These rights are commonly known as the
"bundle of rights" and are defined as beneficial interests associated with real property. They include the rights to: Sell Lease Encumber (mortgage or borrow upon) Use Enjoy Exclude ("no trespassing") Will Occupy Cultivate Exchange Explore License (means to give permission to others to use the property) Dedicate (means to give private property for public use, such as streets or parks) Share Mortgage
a portion of land delineated by boundaries.
A parcel, or tract
American economy is
Housing Led and Housing Fed.
Severable Rights
Land can be laterally severed into surface rights, air rights, and subsurface rights.
the five economic characteristics of land - SITUS - (meaning Site)
The unique attractiveness of a property's location is a major determinant of the other economic characteristics.
legal description
The way to determine the identity of a property-A street address is not a sufficient method to identify a parcel of land for a legal document or description as street names and numbers can change over time. A legal description identifies a property's location, measurements, and all necessary location information to identify a plot of land
escrow, or trust, account.
These accounts are operated and maintained under strict regulations regarding deposits and disbursements of funds from the accounts.-any type of money being held by the broker in escrow for the buyer or seller.
List four reasons an appraisal is done.
To obtain a property loan To obtain the insurance value To obtain a divorce settlement To determine capital gain
What is the purpose for licensing real estate professionals?
To protect the public
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. T/F
True
An instrument that records the history of the property is called the
abstract of title.
Subsurface rights
apply to land beneath the surface of the real estate parcel extending from its surface boundaries downward to the center of the earth. Notable subsurface rights are the rights to extract mineral and gas deposits and subsurface water from the water table.
dependent on real estate activity.
industries and businesses rely on real estate for their income. Savings and Loan Associations Mortgage bankers and mortgage brokers loan originators Appraisers Auctioneers Drywall companies Grading and earth moving companies Sign manufacturers Carpet suppliers, wholesaler carpet manufacturers, and carpet layers Window and door manufacturers, major appliance wholesalers and retailers Metal building manufacturers Fencing suppliers Sod and landscape suppliers Plumbers, sheet metal workers, and electricians
Dedication
An individual "Dedicates" real property for public use such as streets, parks, schools etc..
Local Government: laws
Zoning laws Occupancy permits Taxation of real property Business permits for real estate professionals
subdivision plat map
a visual drawing of where each lot and block will be as well as streets, parks and utilities
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 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.
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.
Licensure
is the process an agency of state government or other jurisdiction uses to grant permission to individuals to engage in the practice of a particular profession, vocation, or occupation, such as real estate.
Statute of Limitations
provides a time frame which court cases must be filed on certain offenses. If the Statute of Limitations runs out, the case cannot be heard
Abstractors
title searchers, who search the record to find the chain of title.
Subdividing and development
when a residential sub-divider takes over the property and divides it into the size lots he wishes for the price range of properties in this area
Certificate of Title
which indicates that all problems have been cleared and the title company can issue title insurance.
A broker may operate and be paid without belonging to any of the above organizations. However, no licensee may present themselves as a REALTOR® without belonging to a local, state, and national association of REALTORS®.
A broker may operate and be paid without belonging to any of the above organizations. However, no licensee may present themselves as a REALTOR® without belonging to a local, state, and national association of REALTORS®.
Define real estate brokerage and list three organizations that cannot be registered as a real estate brokerage.
A business which brings interested parties together to sell, lease, and rent or exchange real property. A joint venture temporary relationship A business trust investment group for its own purposes A homeowners association
the five economic characteristics of land -UTILITY OR USEFULNESS
A three bedroom house is more useful to more consumers than a one or two bedroom house.
appraisal
An appraisal is an estimation of value. It is done by appraisers using specific techniques and is done for a variety of reasons including obtaining a loan, obtain insurance value, obtaining a divorce settlement and determining capital gain. The appraiser does what is usually called a fee appraisal. An appraisal is performed in circumstances where a property's value must be determined for the purpose of a loan, an insurance value, or to determine a viable sale price based upon current sales in the area.
right to transfer interests means
An owner may transfer certain individual rights in the property without transferring total ownership.
List five sources of financing for real estate buyers
Banks, savings and loans, credit unions, insurance companies, sellers of property, mortgage bankers, and mortgage brokers
the five economic characteristics of land. These make the acronym D.U.S.T.S:
DEMAND-UTILITY OR USEFULNESS-SCARCITY-TRANSFERABILITY-SITUS - (meaning Site)
List two examples of ways a broker could commit fraud in a real estate transaction.
Exaggerating the benefits of a property's value Not providing information on material facts
Federal Government: Laws
Federal agencies such as HUD (Department of Housing and Urban Development), Federal Housing Administration (FHA), and Veterans Administration (VA) Laws such as Federal Fair Housing, Americans with Disabilities Act, the Real Estate Settlement Procedures Act (RESPA), Truth in Lending Act Taking of land for National parks, wildlife, and wetland areas Environmental rules and regulations
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
Immobility
Land is immobile, 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.
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.
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.
What is used to identify a property?
Legal description
State Government: laws
Licensing for real estate professionals Recording of deed, transfers of property Estate taxes and rules regarding inheritance
List three ways the state government plays a role in real estate.
Licensing for real estate professionals Recording of deeds, transfers of property Estate taxes
When the entire bundle of rights is sold, it is known as the
Livery of Seisen which means "I own it and I have the right to sell it."
List five industries that are dependent on real estate activity.
Loan originators Appraisers Plumbers Auctioneers Landscape suppliers
Farming
Real estate professionals often specialize in one particular geographic area or property type
farm area.
The area the real estate professional specializes in is called
the five economic characteristics of land - Demand
The more demand there is for a particular property, the more valuable it is to consumers looking for real estate.
True or False - Rights in real estate can be sold individually or collectively. Each right is separate and distinct.
True
the five economic characteristics of land -TRANSFERABILITY
When loans are available, and rates are low, real estate is readily transferable from seller to buyer.
Broker:
an individual, partnership, limited liability company, corporation, or registered limited liability partnership who, whether in person or through any media or technology, for another and for compensation, or with the intention or expectation of receiving compensation, either directly or indirectly: Sells, exchanges, purchases, rents, or leases real estate. Offers to sell, exchange, purchase, rent, or lease real estate. Negotiates, offers, attempts, or agrees to negotiate the sale, exchange, purchase, rental, or leasing of real estate. Lists, offers, attempts, or agrees to list real estate for sale, lease, or exchange.
Surface rights-
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.
Tract homes
are built to a certain set of guidelines used for a particular subdivision. These homes are very similar in design to other homes in the subdivision and usually vary only by color of paint, color of carpet etc. The square footage and layout is the same in each home of the same model.
How is a mortgage obtained?
by pledging property as collateral and promising to repay the loan with payments and times agreed upon with the mortgagee
Business Opportunity
consists of an investor purchasing an income producing business. The purchase may include real estate along with the business or just the business within a leased space. Knowledge of business practices, specific business loans, and the characteristics of valuation as they apply to the business.
private restrictions
establishes subdivision covenants and restriction for use in that subdivision alone
Special Purpose property
examples would be schools, churches, nursing homes, post offices and hospitals. Each zoning district will look at the combination of land and improvements with highest and best use in mind.
Navigable Riparian rights
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.
Residential property
is a family home that is a single family dwelling, a duplex, a triplex (3 units) or a quad (4 units) or vacant land that has been zoned for 4 units or less
Commercial property
is income producing property such as a retail center or an apartment complex of more than four units. The real estate professional must be able to convey to their clients and customers information about how to produce income and create after-tax cash flow.
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.
Real Estate includes: Land plus appurtenances (rights, privileges, and improvements that belong to and pass with the transfer of the property). There are two types of appurtenances: Man-made appurtenances like houses, fences, barns, swimming pools (in other words, items that are added to the property). Natural appurtenances like trees, creeks and streams. Air rights, gas rights, solar rights, light and sound rights, mineral rights, and surface rights. Each of these can be sold separately. Water rights (littoral, riparian and prior appropriation).
land rights
A break in the Chain of Title
means there is an unexplained gap, or break in the ownership of the property. Most of the time, it is a name change on the part of a married woman but whatever the change, it must be corrected by a Suit to Quiet the Title before the property can be transferred.
custom home
one that is built for a specific buyer, usually using an architect and drawings that the buyer has formulated. Custom homes are built one at a time and are generally much more expensive than other homes.
Knowledge of how to market real estate includes
proper pricing, disclosure to both buyer and seller, service to the buyers and sellers, and maintaining relationships with other real estate professionals.
What are land appurtenances?
rights, privileges, and improvements that belong to and pass with the transfer of the property
Doctrine of Prior Appropriation
some states -- particularly those where water is scarce -- have taken the legal position that the state owns and controls all bodies of water.-is 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.
title theory, also known as a deed of trust state
the borrower gives l title through a deed of trust to the lender, who is referred to as the beneficiary during the time of the loan. The borrower keeps a possessory right to the home and holds an "equitable title". With a deed of trust, a third party trustee is involved and holds "naked title" to the property. This means the trustee can sell the property without court action in a case of default. A deed of reconveyance is issued upon full payment of the loan to return title to the trustor.
In a lien theory state
the borrower keeps legal title to the property during the period of the loan and the lender places a lien against the property. ****Indiana is a lien theory state.****
property transfer
transferring permanent ownership by deed, will, or inheritance by using contracts, deeds, wills or trusts. To transfer possession of a property less than permanently, leases are used to rent property.
