RE unit 1

  1. real estate brokerage business
    is that business which brings interested parties together to sell, lease, and rent or exchange real property.
  2. Local government involved in these aspects of real estate 4
    • Zoning laws
    • Occupancy permits
    • Taxation of real property
    • Business permits for real estate professionals
  3. State government involved in these aspects in real estate 3
    • Licensing for real estate professionals
    • Recording of deed, transfers of property
    • Estate taxes and rules regarding inheritance
  4. Federal government involved in these aspects of real estate 4
    • 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
  5. List four industries that are indirectly linked to real estate activities.
    Builders, building suppliers, carpet manufacturers, appliance sales
  6. List five industries that are dependent on real estate activity. (Additional answers are found on page
    • Loan originators
    • Appraisers
    • Plumbers
    • Auctioneers
    • Landscape suppliers
  7. The following cannot be registered as a real estate brokerage: 6
    • 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
  8. A real estate broker must be competent in the following areas: 3
    • knowledge of property transfer
    • knowledge of market conditions
    • knowledge of how to market real estate
  9. A broker licensee is not 3
    a lender, C.P.A., or an attorney.
  10. Real estate farming
    specialize in one particular geographic area or property type
  11. The area the real estate professional specializes in is called
    Farm area
  12. Five Major Real Estate Sales Specialties
    • Residential property
    • Commercial property
    • Industrial property
    • Agricultural property
    • Special purpose property
  13. brokers who, under law, perform duties and services on behalf of the owner. one who preserves the value of an investment (by an owner) while generating income as an agent for the owner.
    Property manager
  14. The property manager's specific duties will be contained in a
    Property Management Agreement.
  15. Fiduciary
    a person having a duty to act primarily for another's benefit. It involves duties such as good faith, trust, special confidence and candor.
  16. Property manager act as a ____ to owner looking after their best interests
    Fiduciary
  17. Do not confuse the duties of a property manager with those of a 3
    Community Association Manager (CAM). CAMs are licensed specialists tasked by the state to manage Community Associations, Homeowner Associations, and Cooperative Associations in their day-to-day business practices and the maintenance of their common areas.
  18. 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
  19. List five of several 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
  20. How is a property manager defined?
    one who preserves the value of an investment (by an owner) while generating income as an agent for the owner.
  21. organizations that exist to give the real estate professional ethical guidance, continued help, contact with other real estate professionals and education 3
    National Association of REALTORS® (NAR), Indiana Association of REALTORS® (IAR), and the Indiana Commercial Board of REALTORS®.
  22. other professional organizations which depict specific expertise and education which coincide with real estate specialties and niches 9
    • Council of Real Estate Brokerage Managers(CRB),
    • Women’s Council of REALTORS® (WCR),
    • Certified Commercial Investment Members (CCIM),
    • Residential Real Estate Council (RRC),
    • Counselors of Real Estate (CRM),
    • Institute of Real Estate Management (IREM),
    • Real Estate Buyers Council (ABR),
    • REALTORS® Land Institute (RLI),
    • Society of Industrial and Office REALTORS® (SIOR).
    • These organizations are recognized affiliates of the National Association of REALTORS®.
  23. 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.
    Licensure
  24. Statutes and regulations governing licensure for the real estate profession are found in various parts of the Indiana Code. The _______ has provided a July 2014 Compilation of those laws to be used as a guide to real estate professionals.
    Indiana Professional Licensing Agency
  25. The administrative rules of the Indiana Real Estate Commission are in ______ of the ________, which can also be found on the Indiana Government website
    • Title 876
    • Indiana Administrative Code
  26. During the normal course of business the broker or his firm handles money that belongs to others. Money belonging to others is deposited into an ____, or ____ account.
    Escrow or trust
  27. Because a broker is not an expert in the field, he should not _______ as to the validity of title
    An opinion
  28. Only a _____ can give an ________ after reviewing the chain of ownership over a period of time
    • Attorney
    • Option of title
  29. If the write up on the property provides information that is a subjective opinion that is called _______
    Puffing
  30. If the broker causes a material loss to a party as a result of misrepresentation, a resulting charge of ____ could follow.
    Fraud
  31. An example of misrepresentation of value by a broker could include lack of information on ________ such as a leaky roof or electrical problem that the broker knew or should have known by asking the seller. Such misinformation could be considered ____, breech of contract, or a _______, depending on the situation.
    • Material facts
    • Fraud
    • Breech of contract
    • Breach of trust
  32. A broker may never give advice about ___ ___ or explain the meaning of contract areas to anyone; nor should the broker discourage the use of an ______ in assisting the buyer or selling in the process of the sale.
    • Contract law
    • Attorney
  33. No Broker may give an opinion of Title – this would be considered as “___ ____ ____.”
    Unauthorized practice of law
  34. ensures that all details of a closing for a real estate professional are executed and that both seller and buyer are paid and receive title in a timely fashion.
    Title company
  35. is not required to close a sale on a property. Closings may be conducted by attorneys or through the simple transfer of money between the buyer and seller and a signed deed.
    A title company
  36. Title companies are used in all states but title insurance is legal in __ states- the others use _____.
    • 48
    • Abstracts
  37. the title company hires individuals called _____ or title searchers, who search the record to find the ___ ___ ___
    • Abstractors
    • Chain of title
  38. a series of owners in a row that have owned the property in the past.
    Chain of title
  39. When searching for chain of title When the file is complete and all the owners have been noted, an _____(history) is created.
    Abstract
  40. If the attorney for the title company feels that there is a break in the chain of title or there is a question about the title (a cloud), he files in a special court for a ___ _ __ the Title, or a ______
    • Suit to quiet
    • Quitclaim
  41. Two items that will cause a Suit to quiet the title suit are:
    • Color of Title
    • a break in the Chain of Title
  42. Color of title
    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.
  43. A break in the Chain of Title means.... _____. It must be correct by a ___ ____ ___ the Title before the property can be transferred.
    • 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,
    • -Suit to Quiet
  44. When color of title and break of chain in title is cleared, the attorney issues a ___ __ ___which indicates that all problems have been cleared and the title company can issue title insurance.
    Certificate of Title
  45. A ____ is an agreement between the parties to do or not to do something. If it is in writing, and contains all the valid essentials, it is also enforceable
    Contract
  46. In real estate there are a number of contracts including the 6
    • Listing contract
    • Buyer’s agency contract
    • Sale contract
    • Option contract
    • Leases
    • Property management contracts
  47. Because of the complexity of legal words, a real estate broker should only fill in the blanks on the contracts 4 Generally, these are prepared in advance by the broker's ____ or by the ______
    • listing agreements
    • buyer's agency agreements
    • sale and purchase contracts
    • option contracts.
    • Attorney
    • Board of Realtors attorney
  48. The ____ ___ -___ is 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 ______ to be enforceable. Enforceable means that the courts will_______. Nearly all real estate contracts are in writing.
    • Statute of Frauds
    • in writing
    • hear the case
  49. The ___ __ ____ provides a time frame which court cases must be filed on certain offenses. If it runs out, the case ___ __ ____.
    • Statute of Limitations
    • cannot be heard
  50. Brokers who belong to the National Association of REALTORS® are mandated by a specific ___ ___ ___that discusses the REALTOR’S® duties to Clients and Customers, the public, and fellow REALTORS®.
    Code of Ethics
  51. Following a ___ __ ___ for a broker would prevent many of the problems which have become prevalent in complaints, such as failure to disclose.
    Code of honor
  52. Failure to disclose
    Failure to Disclose – A broker who is protecting his customers and clients would always look to ensuring that the customer’s reputation be held in the best light. If a customer tells the broker not to disclose any certain items, the broker should immediately dismiss him or herself from being party to any sale that would be detrimental to the buyer or possibly cost the buyer in the future.
  53. The failure to disclose, if a material fact on a property is known to the broker, can be construed as __________.
    Misrepresentation
  54. Misrepresentation could lead to a charge of Fraud if the defect is costly to the buyer and can be proved in a court of law that the broker knew, or should have known is called _____
    Culpable negligence
  55. The proper courses of action for any broker when something doesn’t look right, or if the seller has stated it to the broker, is to ______.
    Disclose
  56. Disclosures are not only ethical, but they are ______ under the law.
    Required
  57. 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
  58. What is the purpose for licensing real estate professionals?
    To protect the public
  59. 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
  60. What is the main requirement within the Statute of Frauds?
    All contracts must be in writing to be enforceable
  61. What rule should brokers follow to ensure they are acting ethically?
    Do unto others as you would have them do unto you
  62. Appraisal
    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.
  63. The appraiser does what is usually called a ___ ___. 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.
    Fee appraisal
  64. Most appraisals for purposes of a loan in a federally related transaction are ordered by the mortgage loan originator through an ___ ___ ___
    Appraisal Management Company (AMC)
  65. These companies were created as a result of the huge demand for appraisal that occurred with foreclosures and short sales in the U.S.
    AMC Appraisal Management Company
  66. Some of the sources of financing to the buyer are: 6
    • banks
    • savings and loans
    • credit unions
    • mortgage bankers and mortgage brokers
    • insurance companies
    • sellers of the property
  67. All mortgage loan originators – those who finance (Lenders) and those who work to bring lenders and consumers together (Mortgage brokerages) – must be registered with the____ ____ ____ ___ , which was created under the___ ___ ___.
    Consumer Financial Protection Bureau (CFPB)

    Dodd-Frank Act
  68. Coverage of Mortgage Lending Provisions includes ___ ___ who take or assist applications and negotiate terms of mortgages and excludes creditors (except creditors in table funded transactions for anti-steering provisions), servicer employees, agents and contractors, persons or entities performing real estate brokerage activities, and certain employees of manufactured home retailers from “originator” definition.
    Mortgage oringinators
  69. the business of providing funds for real estate transactions.
    Financing
  70. A mortgage is an (legal term) upon a property.
    Encumbrance
  71. There are 2 theories used when pledging property for a mortgage. These theories determine how the mortgage company holds interest in the property. 2
    • lien theory
    • title theory
  72. 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.
  73. In a title theory, also known as a ___ __ ____ state,
    Deed of trust

    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.
  74. In a title theory, The borrower keeps a possessory right to the home and holds an “___ ___”. With a deed of trust, a third party trustee is involved and holds “___ ___” to the property. This means the trustee can sell the property without court action in a case of default.
    • Equitable title
    • Naked title
  75. In a title theory, A ___ __ ___) is issued upon full payment of the loan to return title to the trustor.
    Deed of reconveyance
  76. Real estate includes, 3
    • 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).
  77. A legal description
    • way to determine the identity of a property
    • a form of identification, is used on legal papers like contracts, deeds and title insurance policies for a particular property.
  78. When land is prepared to be developed into subdivisions or commercial ventures, there are several steps that a developer must take to prepare and create the end result in land development: 4
    • land acquisition
    • subdividing and development
    • subdivision plat map and recording
    • construction
  79. Land Acquisition occurs when a
    developer buys undeveloped or previously developed land to build homes or commercial ventures.
  80. assemblage
    assembling several small pieces of land to create a large piece;
  81. Subdividing and development occurs 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.
  82. subdivision plat map
    is a visual drawing of where each lot and block will be as well as streets, parks and utilities
  83. Many times as a condition of approval of the plat map, a sub-divider is required to _____ a certain portion of land for public use for such things as streets, parks, schools, or green areas.
    Dedicate
  84. where homes may be mixed with condominiums, and commercial properties creating a mini community within a community.
    PUD’s (Planned Unit Developments),
  85. In residential home construction, three types of homes are usually built.
    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.

    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.

    A custom home is 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.
  86. 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
  87. rights, privileges, and improvements that belong to and pass with the transfer of the property
    land appurtenances
  88. What is used to identify a property?
    Legal description
  89. A home that is built to a certain set of guidelines used for a particular subdivision
    tract home
  90. T/F All real estate business is done under the authority of a broker
    T
Author
btknipe
ID
354132
Card Set
RE unit 1
Description
RE
Updated