Real Estate Flash Cards

Written history of property

(Due on default clause) A mortgage clause where a lender calls a loan balance due and payable upon the happening of certain event, e.g., non-payment of mortgage

A client level duty relating to account of earnest money, actions, etc.

Gradual build up of soil; person gains title to added land built up on property

A customer level duty relating to disclosure of all material defects (including latent or hidden defects) to any customer; e.g., leaky roofs, leaky basements, etc.

Occurs when a document, such as a deed, is signed by the seller in the presence of a notary public, acknowledging that this is a voluntary act

A situation where a person has actual or personal knowledge of a transaction, etc.

Based on value

A change made to an original contract; e.g., extending closing date on contract; also referred to as an amendment

(ARM) A note where the interest changes periodically, thereby possibly changing all terms of the loan

Court appointed person to oversee estate distribution of deceased; only applies when one dies intestate (without a valid will)

Squatter's Rights; can gain title by using someone else's property continuously, openly and notoriously (without permission) for a certain period of time

One who is hired to represent another

In a real estate context, this relates to the word transfer; e.g., in a mortgage, an alienation clause allows the lender to call the loan due and payable if a property is sold or transferred, in other words, making the loan non-assumable

(Due on Sale Clause) A mortgage clause where a lender calls a loan balance due and payable upon selling the property; makes loan non-assumable

A change made to an original contract; e.g., extending closing date on contract; also referred to as an addendum

(APR) Takes all costs of borrowing and expresses as a percentage

Looks to the future for value

A document that gives an estimate of fair market value; for lenders, owners, etc.

A right, privilege or improvement that is permanently attached to the land

A type of easement that runs with the land tied to a particular property given for the benefit of the particular land, e.g., shared driveway

Refers to an agreement arrived at under no undue pressure

At the end, e.g., May 1st house payment applies to April's interest

The total value of combined properties exceeds total value of individual properties; also referred to as a plottage increment

A total transfer of rights in a lease where the original tenant and new tenant are both liable to the landlord for the lease payments

A transfer of rights in contract to another party

An assignment of a loan from the seller to the buyer where the buyer becomes primarily liable for debt and the seller remains secondarily liable

The title given to someone who has the power of attorney; can sign on others' behalf

Sudden transfer; e.g., stream changing channel. With an avulsion, the boundary lines for a property remain the same as they were before the sudden change.

A type of deed transferring title from a seller to a buyer where the only promise made by the seller is the covenant of seizing (seller promises ownership of the property and the right to sell)

Legal holder of the note (lender)

Transfer of personal property through a will

A contract containing a promise for a promise; e.g., buyer and seller in selling and buying a house

Covers more than one property; used by developers, etc. Usually contains a partial release clause to release each property from the blanket mortgage as sold

The illegal act of making a profit by inducing owners to sell by telling them that persons of a protected class are moving into their neighborhood

Creates the debt; a promise to pay back money that was borrowed; also referred to as a promissory note

Markers in a Metes and Bounds description; e.g., stake, well, etc.

Where a party to a contract does not perform according to the terms of the agreement

An area separating two incompatible areas

Similar to discount points; a buydown is where one pays extra money to a lender up front in order to lower the interest rate for the first several years of the loan term; helps buyer qualify for loan

(HUD booklet) A booklet that explains all about closing costs; must be given to buyer within 3 days of loan application

Profit made on an investment item, such as real estate

An approach to value best used on income producing properties such as shopping centers, apartment complexes, etc. This approach uses the net operating income and a capitalization rate to estimate the value. Also referred to as the income approach.

A client level duty exercising knowledge and skill

List of recorded documents

Another word for personal property; comes from the word "cattle"

Actual Age

Banned all racial discrimination

Banned discrimination in residential real estate on the basis of race, color, religion, national origin, sex, handicap, or familial status

Any claim that impairs title; e.g. forged signatures or no signatures on deed, heirs of prior owner claiming title, etc.

Refers to a squatter's rights to ownership once time period has been met

A type of lender that historically specialized in making business loans

Mixing escrow money with personal or business funds; illegal

Property acquired during marriage; spouses have equal interest in property

An essential element of a contract; one must be of legal age and of sound mind

High profits attract competition

(CMA) What an agent uses in trying to find a value for a piece of property; a residential agent analyzes sold properties, currently for sale properties, and expired listing properties in an effort to determine a range of value for a particular piece of property

Where two or more own property together at the same time

The PROCESS used to take the property when the government exercises the right of Eminent Domain.

Property deeded with conditions; e.g., must be used as a school. Also referred to as a defeasible fee

A multi-unit building where the occupants each own their individual units and receive a deed granting ownership of the property

A client level duty relating to maintaining confidential information of the client

Properties should conform to the neighborhood to maintain the greatest value

An item of value; one must have consideration to have a valid deed or contract

A payment plan where the total principal and interest payment remains the same each month; amount toward principal and interest changes monthly

Typically, a short term loan; money is released as needed; usually riskiest type of loan

In leasing, a situation where the landlord constructively evicts the tenant by not maintaining the premises; e.g., no heat in the wintertime; lessee or tenant must actually leave the premises and is released from lease obligations

Occurs when a document is recorded on the public record at the county courthouse; a person is responsible for knowing facts because of recording on the public record

Owner financing where the seller keeps the warranty deed for the entire duration of the contract for deed; thus the seller retains legal title. The buyer gets possession and receives an equitable title upon the signing of the contract for deed, allowing for the buyer to obtain the deed after the entire contract is paid off. Also referred to as an installment contract or land contract.

Value of improvement is equal to what it adds to total value

A type of loan where the borrower typically pays a down payment of 20%, thus receiving an 80% loan from the lender; there is no government involvement in this type of loan

A multi-unit building where the people who occupy the units own stock in a corporation, thereby receiving a right to lease the unit from the cooperative itself

A type of syndication where owners can limit their liability; a corporation who purchases real estate takes title in severalty

An approach to value best used on special purpose properties, such as churches and hospitals; the approach values a property by determining the current replacement cost, less depreciation, plus the current land value

A rejected offer and a new offer made back to the other party

A way to determine current replacement cost by taking the cubic footage (length times width times height) of a property times a cost per cubic foot

A life estate interest a husband receives in property upon wife's death, regardless of debts owed on the property

Principal and interest payments required to retire debt

Buyer backs out of a contract, is release from the contract but the seller keeps the earnest money is liquidated or pre-arranged damages

Money spent on improvement does not add at least that much or more to the total value

Voluntarily giving land to government; typically done by a developer

An agreement whereby the lender receives the deed to a property from the defaulting borrower rather than foreclosing; this is still referred to as an involuntary alienation; this does help save the borrowers credit

A document verifying that a trust deed loan has been paid in full; should be recorded on the public record, thus releasing the property from the trust deed

(Null and Void Clause) A mortgage clause that voids the security upon the loan being paid off

Property deeded with conditions; e.g., must be used as a school. Also referred to as a conditional fee

A personal judgment against the defaulting borrower for any other debts owed and not satisfied by a foreclosure sale

Title is transferred from seller to buyer when the deed is delivered and accepted

An element of value; must be wanted

A transfer of rights in real property through a lease

DVA or VA or GI; established by the government in the 1940's, the VA guarantees loans made by lenders in case of default by the buyers

Occurs when one dies intestate; probate judge then determines who receives the property of the deceased, such as children, parents, other family members, etc. In essence, judge determines who property descends or goes to

An essential element of a contract; must have an adequate description of the real estate; generally a legal description

Improves the lots

Transfer of real property through a will

Receiver of real property through a will

A client level duty relating to disclosing to a client all material facts regarding the transaction

Extra money paid up front in cash to a lender in order for the buyer to receive a lower interest rate; in essence, pre-paid interest; 1 point = 1 percent; discount points are always based on the loan amount

Interest rate banks pay to borrow money

Selling a note for less than face value

Land benefited or in favor of the easement

A life estate interest a wife receives in property upon husband's death, regardless of debts owed on the property

Going from a more active use to a less active use; e.g., multi-family to single family

A situation where a broker represents both buyer and seller at the same time; must have written prior permission from both parties and informed consent

Good faith money

Gives someone else the right to use a part of your property while you still retain the ownership rights

Using someone else's property continuously, openly and notoriously for a certain period of time the adverse user then gains an easement to use that land

A type of easement not tied to any land but instead that is owned by a person or company, e.g., utilities, railroads

Number of years item is profitable; economic life is shorter than the physical life

A form of depreciation due to problems outside the property lines; e.g., owning a house next to a factory or sewage treatment plant; also referred to as external obsolescence

Apparent age based on condition; generally less than chronological age

The annual gross income for a property less a vacancy rate; used with the income approach

Growing crops in the field; allows the seller to come back and harvest after the sale

The RIGHT of the government to take private property for public good. The property owner is paid compensation for the property.

Trespassing; an improvement or appurtenance that extends across the property line; e.g., fences, tree limbs, etc.

Something that burdens or limits your title to a property, such as a lien or deed restriction (or) rights held by someone else in your property, such as through an easement

Bans credit discrimination based on: Race, Color, Religion, National origin, Sex, Age & Marital status

The right to redeem property before the foreclosure sale

What a buyer receives upon buyer and seller signing a contract to purchase a property; allows buyer to receive deed (or legal title) at a later date, usually at closing

Gradual wearing away of soil; owner loses title to land eroded away

A lease clause allowing a landlord to pass increased costs along to tenant; i.e., can raise rent to tenant if landlord's costs go up

A mortgage clause allowing a lender to increase the interest rate in the event of a late payment or default

The right of the government to take private property when an owner dies intestate (no will) and has no heirs; also applies if owner abandons the property

A separate account for holding other peoples' money; e.g., a broker holding earnest money in escrow or a lender holding pre-paid taxes and insurance in escrow

The degree, quantity, nature and extent of ownership interest in real property.

A lease with a definite beginning and ending date

A life estate whereby the property goes to a third party (named by the grantor) when the grantee (life tenant) dies

A life estate whereby the property reverts back to the grantor when the grantee (life tenant) dies

States the current loan balance on a note; used especially when notes are sold to others

A clause in a deed that lists any encumbrances the buyer is subject to; many times, referred to simply as the reservations clause

Only for owner-occupied properties; a person can write off up to $250,000 of capital gains if single, $500,000 if married; must have been your personal residence for 2 of the past 5 years; can use exclusion repeatedly, not just once in a lifetime

A type of listing where the owner and one broker are authorized to sell and receive a commission

A type of listing where only one broker is authorized to sell and receive a commission

The phase in a contract where the promises have been completed; e.g. contract closing

One named in will to carry out will

Type of deed used by the executor to transfer property to those named in will

The phase in a contract where the promises have been made but not completed; e.g. contract pending

Refers to a contractual obligation where all parties have clearly stated their intentions

A title insurance policy that may cover more things than a standard policy, such as unrecorded liens, etc.

A form of depreciation due to problems outside the property lines; e.g., owning a house next to a factory or sewage treatment plant; also referred to as economic obsolescence

A customer level duty relating to treating all customers fairly

A person with a child under 18; a protected class under the 1988 Amendments to the Fair Housing Act

Government agency that insures deposits in banks and savings & loans

FHLMC, Freddie Mac: An organization in the secondary mortgage market that primarily buys conventional loans from savings & loans

FHA; Established by the government in the early 1930's, FHA insures loans made by lenders in case of default by the buyers

FNMA, Fannie Mae: The largest organization in the secondary mortgage market that buys notes from lenders, thus providing liquidity for lenders; even though a private organization, FNMA raises money by selling government guaranteed bonds; buys all types of loans

The maximum rights one can have in owning real estate; also called fee simple absolute.

Loyalty and trust; what an agent owes to a principal (client)

First lender to record a mortgage is first in rights

Going from personal to real property; item that was once personal property but is now attached

What we usually think of as OWNERSHIP. There is no definite ending date and it is for at least a lifetime.

Linear (straight) feet along the street line; in essence, the width of your property along the street

A loan where the payments apply to principal and interest; the entire principal loan balance is totally paid off over the term

A form of depreciation due to problems inside the property lines; does not function the way modern properties do; e.g., outhouses, pumps for water, etc.

A promise made by the seller in a general warranty deed assuring the buyer that the seller will provide or sign documents in the future if necessary to help prove buyer's title

A person who represents someone else in several areas on an ongoing basis; e.g., property manager to owner; also salesperson to broker

Tax on land plus improvements; pays for school, police and fire protection, etc.

A lien that applies to all of one's property, real and personal

The instrument used to transfer title from a seller to a buyer whereby seller gives buyer greatest protection; seller promises the covenant of seizin, quiet enjoyment, against encumbrances, further assurance and warranty forever

A form of legal description that uses benchmarks to identify land

A preliminary estimate of expected closing costs given to buyer within 3 days of loan application

GNMA, Ginnie Mae: An organization in the secondary mortgage market that buys notes from local lenders; government corporation under HUD; buys notes in depressed areas of country; primarily buys FHA & VA loans

A form of legal description that describes land in America using meridians (north and south) and base (east and west) lines; every six miles range and tier lines are drawn to form townships; also referred to as the rectangular survey system

A lease where the payments can go up or down, but are pre-determined

A note where payments start out lower than normal, then go up yearly typically for 5 years, then leveling off for the remaining term; the FHA245 is a type of graduated payment note; sometimes can result in negative amortization

The person receiving title to real property; typically the buyer

Receiver of real property (buyer)

Words of conveyance in a deed; using property wording and verbiage in a deed

The person transferring title to real property; the seller

Giver of real property (seller)

The possible annual gross income for a property; used with the income approach

A lease where the landlord pays taxes, assessments, insurance, etc.

(GRM); This is a form of the income approach used to estimate the value of a rental property. The gross rent multiplier is computed by taking a rental property's sale price and dividing by the rent charged.

A lease for ground; usually long-term; e.g., farmers, gas stations, etc.

A type of mortgage where predetermined amounts, in addition to regular principal and interest payments, apply to principal each month, thus growing equity faster than normal

In a deed, contains just these words: "To have and to hold"

A physical or mental impairment; a protected class under the 1988 Amendments to the Fair Housing Act

The use of a property that provides greatest net return on land

A law that protects a family's home from creditors; does not apply to real estate taxes or home mortgage

A customer level duty relating to being honest with customers

The borrower retains item used as security for loan; e.g., house or car loan

Refers to a contractual obligation that is created by one's actions

An approach to value best used on income producing properties such as shopping centers, apartment complexes, etc. This approach uses the net operating income and a capitalization rate to estimate the value. Also referred to as the capitalization approach.

A lien for non-payment of income tax to the IRS (Internal Revenue Service)

Money spent on improvement adds at least that much or more to the total value

A lease where the payments can go up or down but are based on some type of index, such as the consumer price index

Owner financing where the seller keeps the warranty deed for the entire duration of the contract for deed; thus the seller retains legal title. The buyer gets possession and receives an equitable title upon the signing of the contract for deed, allowing for the buyer to obtain the deed after the entire contract is paid off. Also referred to as a contract for deed or land contract.

Primarily make large loans

Rental charge for using someone else's money

Dying without a valid will

A form of ownership where two or more parties own property together; carries the right of survivorship (when an owner dies, the ownership interest goes to the surviving owners, not the heirs of the deceased)

In 1968, the United States Supreme Court rules that one cannot discriminate racially under any circumstances

A lien for personal debts; covers all real and personal property

Where a mortgagee/lender has to go to court to foreclose upon breach of contract

Any mortgage other than a first; also called a second mortgage

A spot on the earth that goes down to the center of the earth and up to infinity

Owner financing where the seller keeps the warranty deed for the entire duration of the contract for deed; thus the seller retains legal title. The buyer gets possession and receives an equitable title upon the signing of the contract for deed, allowing for the buyer to obtain the deed after the entire contract is paid off. Also referred to as a contract for deed or installment contract.

What we usually think of as RENTING or LEASING. It is for a definite period of time, i.e., a limited duration.

An essential element of a contract; must be for a lawful purpose

Refers to party who actually is in possession of warranty deed

Receiver of lease (tenant)

Giver of lease (landlord)

Using borrowed money to make money

Personal permission to use someone else's property; does not encumber title as an easement does

States that honor this recognize that a homeowner has title; the lender has mortgage lien against property

A money encumbrance against a property

A property that is deeded to someone for their life or the life of another

An arrangement where one can invest money with a general partnership; the limited partner is normally only liable for their investment; basically a financial backer; not involved in day to day running of business

A clause in a contract allowing for the earnest money to be forfeited to the seller if a buyer backs out of a contract; also called pre-arranged damages

Latin for "pending litigation or action"

Property bordering a lake or ocean

A fee charged by a lender for originating and processing a loan

The percent the loan is to the total value; e.g., a loan of $80,000 on a property valued at $100,000 would result in an 80% loan to value ratio

A lender guarantees a borrower a fixed interest rate and a fixed amount of discount points for a certain time period

A form of legal description which lists a lot #, block#, subdivision, county and state; recorded on a plat map; used primarily for new subdivisions

(Fiduciary) A client level duty relating to doing what is in your client's best interest

Basically, a lenders' profit; the margin is added to an index in an adjustable rate mortgage to come up with the actual interest rate charged to the borrower; the margin remains the same for the life the loan

An approach to value best used on residential property and vacant land; uses comparable properties to estimate values

Plan for a cities future growth

A lien designed for people who make improvements on property and are wrongfully not paid; e.g., contractors, sub-contractors and material vendors who are not paid for work performed or materials supplied

Length measurements in a Metes and Bounds description; e.g., feet and inches

A form of legal description that gives a physical description of the property

False statement of a material fact

A document where property is used as security for the debt

Acts as a middleman between lender and borrower; mortgage bankers actually make the loans to the borrowers; earns money by servicing loans

Earns money by bringing lenders and borrowers together; normally does not actually make loans

A clause in a contract where the buyer is obligated to buy only if loan approval is obtained; usually buyer gets earnest money back if mortgage is denied

A voluntary lien where one uses property as security for a loan

A document verifying that a mortgage loan has been paid in full; should be recorded on the public record, thus releasing the property from the mortgage

The receiver of a mortgage (lender)

(lender) A title insurance policy covering a lender for the outstanding loan balance

The giver of a mortgage (borrower)

An instrument that can be bought and sold

A lease where the tenant pays all or part of taxes, assessments, insurance, etc. Taxes paid by tenant would be tax deductible for the tenant.

Normally illegal; this is where the real estate commission is the sale price less the seller's required proceeds

NOI; the annual gross income for a property less a vacancy rate and operating expenses; used with the income approach

Before zoning; similar to a grandfather clause; allows continued use of a property that is technically in violation of the current zoning law because the owner was using the property a certain way before the zoning change. Property can be sold as non-conforming use if buyer uses it the same as the seller had; however, if property burns down, generally property then must conform to the new, current zoning use.

A clause in a lease and lending document allowing for continuation of a lease even if the property is foreclosed on

In a trust deed state, the trustee sells the property and pays off the beneficiary (lender) without having to go to court

Without permission (hostile); this is a requirement for a person claiming rights to a property either through adverse possession or an easement by prescription

New contract takes place of old contract; e.g., an assumption of a loan with a release of liability given by the lender to the seller

(Performance) A client level duty following instructions of a client

In a real estate transaction, the buyer makes the first offer

An essential element of a contract; the parties must agree on the exact same terms

Line of Credit; can borrow again and again on the same loan; e.g., home equity loan; works like a credit card

A type of listing where everyone is authorized to sell and receive commission, including the owner; the only one who gets paid is the one who is the procuring cause (found the buyer)

Federal Reserve transactions in buying and selling securities

Costs incurred in a property management situation, such as utilities and repairs; does not include vacancies

Used with the income approach, the operating expenses include all operating costs, such as utilities, maintenance, salaries, etc. The one expense NOT considered is the debt service (mortgage payments).

A possibility contract where one party is bound to perform but the other party is not

Receiver of option (possible buyer)

Giver of option (seller)

Refers to a contractual obligation that is created by what appears to be; similar to implied

Uses both real and personal property as security

A clause in a blanket mortgage allowing each property to be released from the blanket mortgage as sold; however, loan balance must be reduced

A loan where the payments apply to principal and interest; however, the principal loan balance is only partially paid down, thus usually requiring a balloon payment at the end of the loan term

A type of syndication where the partners have unlimited liability and generally share in profits, losses, taxes, etc.

A situation where two structures share the same wall; e.g., a duplex

A lease where the rent is based on a percentage of sales; normally used in retail leases

A lease that runs from period to period; e.g., a month-to-month lease

Anything that is easily movable; e.g., camera, grill, etc.

A non-assignable contract; e.g., listing contracts

A form of depreciation due to peeling paint, sagging floors, etc.

Number of years item is physically sound

(PUD) Diverse uses of land in one area; requires special zoning (referred to as overlay, cluster or density zoning)

Used with the Lot and Block System, this map is a diagram of a subdivision

The lender retains item used as security for loan; e.g., stocks, bonds, etc.

The total value of combined properties exceeds total value of individual properties; also referred to as assemblage

Keeping things in order; e.g., zoning and building codes fall under police power

A written document authorizing one to sign legal documents on behalf of another

A clause in a contract allowing for the earnest money to be forfeited to the seller if a buyer backs out of a contract; also called liquidated damages

A mortgage clause where a lender charges a penalty if the loan is paid off early

One who hires an agent for representation

A special court for handling estates upon one's death. Court determines who gets what property and in what amounts if the deceased died intestate (without a valid will)

Creates the debt; a promise to pay back money that was borrowed; also referred to as a bond

An agreement between an owner and property manager that shows basic duties of the property manager; generally this agreement does not contain a vacancy rate

A lien for non-payment of real estate taxes; this always takes priority getting paid off at a foreclosure sale

Protects broker in case negotiations extend past the expiration date of listing; this clause is normally standard in an agency agreement

Subjective opinion; e.g., this home has a beautiful view; not a law violation

(for another's life) A life estate where the grantee owns a property based on someone else's life

Owner financing; typically where a seller carries a second mortgage on behalf of the buyer

A way to determine current replacement cost by pricing the rebuilding item by item; every brick, board, etc.

A promise assuring no third party claims; e.g., in a lease, a tenant receives the right of quiet enjoyment from a landlord, thus relieving tenant from having to worry about another party claiming rights to that same space

Court action to clear a cloudy title; e.g., ownership disputes, adverse possession claims, encroachments, etc.

A type of deed transferring title from a seller to a buyer where NO promises are made by the seller. The seller says IF I own it, but I'm not saying I do, I give you whatever rights I MAY have. This deed is typically used to quiet cloudy titles.

(REIT) A type of syndication that is basically a giant mutual fund for real estate investments

(RESPA) A federal law whose purpose is to inform borrowers ahead of time total closing costs so borrowers can shop around to get the best deal

Allows owners of investment property to deduct a percentage of the cost of the property each year from their taxable income; also referred to as tax depreciation

(Correlation) The final step in the appraisal process; this reconciles differences from among three different approaches to value to arrive at a final dollar amount for the appraisal

A form of legal description that describes land in America using meridians (north and south) and base (east and west) lines; every six miles range and tier lines are drawn to form townships; also referred to as the government survey system

Redeem = buy back; defaulting borrower has a certain time period to buy property back at foreclosure sale price plus any other costs owed

Lenders refusing to loan in certain areas based upon protected classes

A federal law pertaining to lenders having to disclose all loan costs to borrowers; also referred to as Truth-In-Lending Laws

Government regulations relating to subdivisions; e.g., most cities require streets, sewers, easements, etc.

Third party who receives fee simple title upon death of the grantee (life tenant)

Using the cost of similar materials

Using the exact replica cost

In a contract, this returns the parties to status quo; way they were before contract signed

A form of life estate where the seller sells the property but retains (reserves) a life estate interest in that same property for the seller's lifetime

Percent of funds banks must keep on hand

A private agreement contained in a deed that restricts the use of a property; e.g., certain types of fences or roofs required. Also referred to as restrictive covenants or deed restrictions.

A private agreement contained in a deed that restricts the use of a property; e.g., certain types of fences or roofs required. Also referred to as deed restrictions

RAM; A type of mortgage where the mortgagee (lender) pays the mortgagor (borrower) a fixed amount every month; usually for retired people with home completely paid off

Upon expiration of a lease, the property goes back to original lessor (landlord); also, a life estate in reversion is where once a grantee (life tenant) dies, the property goes back to original grantor

A contract where one is given the first opportunity to buy if a property is put up for sale

Allows for a party to rescind or back out of a contract. On many loans, a borrower has a 3-day right to rescind (back out). However, there is no right of rescission with a real estate sales contract.

Found in joint tenancy, when one owner dies, the ownership interest passes to the surviving owners

Property bordering a flowing waterway; e.g., river or stream

This is used when owner needs capital (money); owner sells property to a buyer and then leases the same property back from the purchaser

A type of lender with their largest investment in residential home loans

An element of value; must be a limited supply

A title insurance clause stating that certain items are excluded from coverage; e.g., government regulations such as zoning

Any mortgage other than a first; also called a junior mortgage

A place where loans already made by local lenders are bought and sold; the purpose is to provide liquidity for lenders

A portion of ground measuring one mile square; also one square mile; contains 640 acres; every acre contains 43,560 square feet

Required if one sells investments to the general public, such as REIT's (Real Estate Investment Trust)

Seized of title; A term where seller promises ownership of property and has the right to sell

Property acquired before marriage; individual spouses retain sole ownership interest

Land burdened by the easement

Amount of space between lot line and building line

A situation where one person only owns the property; also, how corporations take title

Going from real to personal property; e.g., cutting down a tree

SAM; A type of mortgage where the lender shares in appreciation plus interest; a form of a participation loan

Transfers property to buyer at foreclosure sale; e.g. for non-payment of mortgage

A federal law that prohibits groups of brokers setting a fixed price for services

An essential element of a contract; must have signatures of all parties to contract

A person who represents someone else one time in one area; e.g., broker to seller

Property tax for improvements that benefit certain properties; e.g., sewers and sidewalks

A type of deed transferring title from a seller to a buyer. However, the seller only makes promises regarding ownership, encumbrances, etc. during the time period in which the seller owned the property, no promises before that.

A lien that applies only to one specific property

Court action to force completion of a contract

Changing the zoning of one particular spot; normally for public good

A way to determine current replacement cost by taking the square footage (length times width) of a property times a cost per square foot; appraisers use outside dimensions in determining square footage

Length times width

A title insurance policy that covers forged documents, undisclosed heirs, etc.

The first step in the appraisal process; this defines the purpose of the appraisal

A law that requires certain documents to be in writing to be enforceable; e.g., real estate sales contracts, deeds, leases over 1 year

The right to redeem property after the foreclosure sale

Directing people toward areas based upon their protected class

A method of depreciation where one depreciates equal amounts each year; what appraisers use

(Term Loan) A loan where the payments apply to interest only; usually short-term; e.g., used on construction loans

An agency situation where one agent is authorized to use another agent to represent the client; historically, this is where two brokers, the listing and selling broker, both represent the seller; buyer is a customer and is unrepresented

Divides land into lots for sale

An assignment of a loan from the seller to the buyer where the seller remains solely liable for debt

A partial transfer of rights in a lease where just the original tenant remains liable for the lease payments; the new tenant is a lessee of the original tenant

A mortgage clause where lenders change the lien priority that is different than recording date; lender waives their right in favor of another

Signing over rights in a claim to a title insurance company in return for getting paid off

A property is only worth what one can get another one for just like it

A lawsuit where one of the owners institutes court action to force sale of property by all parties

Two or more people investing together

A public official who appraises property for tax purposes to determine only the assessed value.

Total of all assessed values

Transfers property to buyer at foreclosure sale for non-payment of taxes

Allows owners of investment property to deduct a percentage of the cost of the property each year from their taxable income; also referred to as recapture

Exchanging like-kind property for like-kind property, resulting in a deferral of capital gains tax; also called a 1031 exchange

A lease where the tenant stays over without permission; landlord suffers

A lease where the tenant does have permission to occupy but nothing is in writing; e.g., a landlord continuing to accept rent from a tenant even after expiration of the original lease

Very similar to joint tenancy, with the difference being that the owners must be husband and wife

An individual interest in group ownership; the ownership interest can be unequal, the parties all share possession, and the heirs of the deceased receive the property upon the death of one of the owners (ownership does NOT transfer to the other co-owners)

Dying with a valid will

Deceased person who had made a will

States that all terms of the contract must be completed in a timely manner

Fee simple ownership to a unit for a set period of time each year; interval ownership

Insures the title to a particular piece of property

States that honor this recognize that generally, the lender has title until debt is paid off

A portion of ground measuring 6 miles square; also 36 square miles

Item installed by a commercial tenant for business use; e.g. display cases

An element of value; seller must be able to give to buyer

Separate account for holding other people's money; usually held by broker; also referred to as escrow account

A document where property is used as security for the debt

The receiver of a trust deed; a neutral third party whose primary job is to foreclose if payments are not made to the lender or beneficiary

The giver of the trust deed (borrower)

A federal law pertaining to lenders having to disclose all loan costs to borrowers; also referred to as Regulation Z

A contract that may not be enforceable in court; e.g., an oral contract

A contract containing a promise for an action; e.g., a lease with an option to buy

(HUD 1 Form) Lists actual final closing costs for seller and buyer

A way to determine current replacement cost by pricing the rebuilding by units; concrete, roof, etc.

Set the maximum interest rate that can be charged by law; states have their own unique usury laws

An element of value; must be useful

A contract containing all the essential elements, including being in writing

An item goes down in value due to age, wear and tear, etc.

After zoning; this is a small deviation in the current zoning law that still conforms to the over all general plan for the area. Variances are generally granted for things like setback requirements, front footage requirements, etc.

Buyer of property; in a contract for deed, buyer is one who gets possession of property and pays "installments" to the seller until the contract is paid off

Seller of property; in a contract for deed, seller is one who retains legal title

A type of easement for viewing across another's property

A contract with no legal effect; e.g., one of the parties not of sound mind

A contract that can be voided by one of the parties; e.g., contract signed by a minor, under duress, or due to misrepresentation

A promise made by the seller in a general warranty deed that says if the seller provides faulty title, the seller will return the purchase price money back to the buyer; in essence, a money back guaranty

Difference between earth's surface and percolating water

A financing arrangement where typically a 2nd lender assumes the note of a 1st lender on behalf the buyer, advances the buyer additional funds to purchase the property with the buyer then making payments on the entire new mortgage made to 2nd lender

A procedure where a sheriff seizes property and sells to satisfy a judgment

An essential element of a contract; contract doesn't have to be in writing, but generally does to be enforceable (an oral contract generally cannot be enforced in court)

The regulation of structures and uses of property within designated areas

Land & Appurtenances

The right, privilege, or improvements permanently attached (run with the land)

Natural (creek, trees) Man made (garage or house) Mineral Rights (Oil) Air Rights & Water Rights.

Always unless specified otherwise.

Bill of Sale

Severance

Fixture

Not Real Property

Personal Property that a tenant can take with them at the end of the lease.

Crops cultivated by previous tenant or owner, it belongs to the past owner. (does not run with the land)

Government rights are for the good of the entire community.

Taxation, Police Power, Eminent Domain, Escheat

The right of the government to seize a persons property through the process of condemnation, for the greater good.

Right of the government to seize abandoned property.

Fee Estates & Life Estates

Fee Simple Estate

Life Estates

You own it with no definite ending date - all conditions transfer with it.

You rent or lease for a definite period

estate in reversion

• T - Time: Take ownership at the same time
• T - Title: Must all be on title
• I - Interest: Equal Interest
• P - Possession: Undivided, take possession at the same time.

As long as the life tenant is breathing, the grantor can lease, sell, mortgage, but when the life tenant dies it will go back to the original grantor (3rd party involved)

The interest rate on the mortgage loan has been lowered by 1% for each point charged

Real Property

Joint Tenancy

•  
• Due date

Lessor

•  
• NO

After the transaction is completed and funded.

Must sit and pass the required exam

 Being authorized to accept and excessive commission.

Escheat

Yes

No

No

Novation

False. Every 2 years.

Every 2 years

•  
• The status provided to a home owner's principal residence that protects the home against judgement up to a specified amount.

unlawful detainer action in court

$125

Kansas Real Estate Commission

Only when both buyer and seller give informed consent to this arrangement

•  
• Yes

They pass to the grantee unless specifically noted.

When it is permanently attached to the land.

Reversion

If it was included in the contract.

The tenant would be able to take the cases and would not have to pay the owner for the fair market value of the cases.

They stay with the property as they are permanently attached.

Above ground pool

eminent domain

the government exercising the right of eminent domain.

Escheat

Police Power

The maximum rights in a property.

estate in remainder

It ends when the child dies

severalty

a Leasehold Estate

estate at sufferance

Mortgage Lien

Seller

Encroachment

an appurtenant easement to the lake

Easement

appurtenances

an encroachment

survey

the board of directors

timeshare

Ownership of the condominium unit will be jeopardized.

Undivided interest in the common areas

cooperative

a deed

Would still have to pay the full monthly assessment.

Association of unit owners.

special warranty deed

The grantor conveyed the property with a quitclaim deed.

unrecorded liens that may affect the value of the property.

Upon the deed being delivered and accepted by the buyer.

When the deed is delivered and accepted.

Grantee

Constructive knowledge

Adverse possession

To quiet a cloud on the title.

Once when the policy is issued.

Title insurance

Special Tax Assessment

$300

stay the same

Pre-existing non-conforming use

non-conforming use

To see what the legal uses are for the property.

Variance

To pledge property as security for the loan

Real Estate Tax Lien

Secure the debt

Mortgagee

Equity

By signing an agency agreement with a broker

Both parties give written informed consent right up front.

Principals

POA - Power of Attorney

• Competent Parties
• Offer & Acceptance
• Consideration
• Legal Object
• Writing
• Signed
• Description

NO, but it does have to have something of consideration (something of value)

Contract cannot be for anything illegal, only for a purpose that is legal.

(Oral agreement) Not allowed if it differs from the written agreement

At the signing of the sale contract by both the buyer and the seller

It becomes void.

No, because it's not signed and accepted by all parties.

Present both offers at the same time.

• Expressed
• Implied

Executory Contract

• Valid and Enforcable
• Void
• Voidable
• Unenforcable

• Contract signed by a Minor
• Contract signed under Duress
• Contract signed due to Misrepresentation

No, it's in the eye of the beholder

Uni-lateral

Fraud

• Specific Performance Suit
• Rescind
• Sue for Damages

• Declare contract forfeited
• Specific Performance Suit
• Rescind
• Sue for Damages

Personal Services Contracts

New

An Option - Seller gives the buyer the option to buy or not to buy

Right of First Refusal - A person has the first opportunity to buy if offered for sale or lease

• Definite Time Period
• Definite Sales Price
• Unexercised Option Contracts (Uni-Lateral)
• Exercised Option Contracts (Bi-Lateral)

No

• Metes & Bounds
• Geodetic Survey System
• Rectangular Survey System
• Lot & Block System (Plat Map)

640 acres

43,560 sq ft

A setback

Lot & Block Numbers

• Corporation
• Partnership

Real Estate Investment Trust - A group of managers used to buy houses

SEC - Securities & Exchange Commission

Tenancy in Common

• 1: Civil Rights Act of 1866 (Racial Discrimination)
• 2: Civil Rights Act of 1968 aka Title 8 (7 Protective Classes: Race, Color, Religion, National Origin, Sex, Handicap, Familial Status)
• 3: Illegal Acts

• Refuse to sell, rent or negotiate
• Change terms or conditions
• State property is restricted
• Tell persons property is not for sale when it is
• Telling owners to sell because a particular type of people are moving in
• Different terms for loan
• Deny membership in the MLS

Handicap & Familial Status

• FSBO
• Owner Occupied 1-4 Plex
• Religious Organizations
• Private Clubs

Yes

Physical or mental impairment that limits activity

Mayer owned a 4-Plex and rented out the other 3 and refused to rent to an African-American family. They went all the way to the Supreme Court and they found it is ALWAYS illegal to discriminate Racially.

Either all elevators in all units or no elevators and use ground floor only.

62 and older

Return the space to the landlord in the original condition

Estimate value

Local economic conditions (supply & demand)

• DUST
• Demand - must be wanted
• Utility - must be useful
• Scarcity - must be a limited supply
• Transferability - Seller must be able to give to buyer

Land

When it is a rental (income property)

• Interest Rates
• Local Economic Conditions

Over which a property may be profitably utilized (# of years of profit)

the period of the actual age of the property (# of years structurally sound)

Mortgage rates going up

Opinion of Value

Deduct a percentage of the cost of the property each year from their taxable income

• Tax Depreciation
• Value Depreciation

Improvements only due to passage of time (houses or buildings we build on land)

• 1: Determine value of improvements (As if new)
• 2: Subtract depreciation
• 3: Add in current land value

Depreciation

• Appreciation is accrued to the value each year.
• Depreciation is calculated to one price all at once.

• 1: Highest & Best use
• 2: Substitution
• 3: Conformity
• 4: Anticipation
• 5: Competition
• 6: Plottage Increment

Competition

• 1: Sold
• 2: For Sale
• 3: Expired

Comps

• 1: New
• 2: Very few comps
• 3: Special purpose properties

Comparable is poorer you add

Comparable is better - subtract

Depreciation

• 1: Estimate replacement cost
• 2: Subtract for depreciation
• 3: Add the current land value

Vacant land

• Physically
• Functional obsolescence (inside)
• External (economic) obsolescence (outside)

Capitalization Approach

• 1: Market data approach
• 2: Cost approach
• 3: Income approach

2 of the 3 approaches

• 1) State the problem
• 2) Gather Data
• 3) Analyze and Interpret
• 4) Three Approaches to Value
• 5) (Final Step) Reconciliation

Kansas Legislature

• 1: Sell
• 2: Purchase
• 3: Lease Commercial Property
• 4: Auction or Assist
• 5: List
• 6: Procure Prospects

No

• 1: Freehold Estates
• 2: Non-Freehold Estates

• 1: FSBO
• 2: Someone acting under a POA (no compensation)
• 3: Licensed Attorney performing attorney duties
• 4: Government offices performing Government duties
• 5: Gross Easements (railroads, public health)

Supervising Broker

No

• 1: 5 members appointed by Governor
• 2: 3 must have been Brokers for 5 years
• 3: Employs a director to run the office (Public Member)

Vote

• 1: Make Investigations
• 2: Issue licenses
• 3: Publish disciplinary action in Newspapers
• 4: Revoke, suspend, restrict, or censure licenses
• 5: Fine up to $1000 per violation
• 6: Fine up to $5000 for an aggravated offense such as: risk of loss to client, fail to disclose clients ability to perform under the agreement (withholding a material fact)

• 1: Give criminal penalties
• 2: Arbitrate commission disputes

Yes

No

• 1. earlier revocation or suspension
• 2. you have already committed an act that could get your license revoked
• 3. you plead "guilty" or "no contest" or convicted of a ethical crime or felony
• 4. you have sold real estate without a license (illegally) earlier
• 5. you lied on your application
• 6. other matters deemed pertinent by the KREC

• 1: you must recommend to every buyer that an attorney check on the marketability of title and any other legal issues
• 2: you cannot try to get someone to break a contract of listing, sale or lease

seller, landlord, buyer or tenant who has an agency agreement

seller, landlord, buyer or tenant in which a broker is involved but has not entered into an agency agreement

Customer

acts a licensee may perform that do not rise to agency status - answering basic questions for peeps

• promote interests of client with loyalty including:
• a. disclosing to client all adverse material facts known by licensee
• b. advising client to obtain expert advice in areas outside expertise of licensee

• disclose all adverse material facts known by licensee including:
• a. environmental hazards
• b. physical condition of property
• c. material defects in property or title to property

• 1. account for moneys relating to transaction
• 2. account for property that changed hands during transaction
• 3. keep all confidential information confidential

• (a) expressed
• (b) implied
• (c) unilateral
• (d) bilateral
• (a) expressed

• (a) Notify the KREC in writing within 10 days
• (b) Return his license to the KREC
• (c) Notify the KREC about the new address at the next renewal
• (d) Nothing, the KREC only needs notification if he moves the office
• (a) Notify the KREC in writing within 10 days

• (a) Obedience
• (b) Fiduciary
• (c) Honesty and fairness
• (d) Confidentiality
• (d) Confidentiality