RE unit 3-6

  1. Ex of intangible real property
    Not such a thing
  2. Zoning ordinances are usually favorable for which property type
  3. All real property is______, but personal property may be either tangible (computers, furniture, cars) or intangible (trademarks, copyrights, listing agreements).
  4. List at least 6 types of real estate real property and the uses for each
    • Residential – human living
    • Commercial – generating income
    • Investment – held by owners for investment purposes, usually not owner occupied
    • Industrial – warehouses, factories, etc.
    • Agricultural – growing crops and raising livestock
    • Special purpose – doesn't fall into other categories: churches, hospitals, schools, etc.; could be parks, shorelines, etc.
    • Unimproved or undeveloped land – no buildings or residents
  5. If residential properties are defined as providing dwelling places for individuals or families, are hotels and motels considered residential properties? Why or why not?
    No, hotels and motels are not residential properties because they are considered to be only temporary housing.
  6. List and describe the five types of office buildings by size and architecture.
    • Research and Development – 1-2 stories with 50% office or lab space and the rest workshops, storage, or light manufacturing
    • Low-rise – 1-3 stories with no elevator
    • Garden office – 1-5 stories with extensive landscaping
    • Mid-rise – 4-15 stories with one elevator
    • High-rise – more than 15 stories with multiple elevators, not considered skyscrapers
  7. Characteristics of real property7
    Physical – immobility, indestructibility, uniqueness Economic – supply and demand, scarcity, permanence of investment
  8. Real vs personal
    personal is movable, real is not Tangible vs intangible – tangible is physical, visible, material, while intangible is abstract with no physical existence
  9. Flex space
    typically defined as anything between offices and warehouses, usually combining the uses of both.
  10. A loft building
    building of several floors with large areas of unobstructed space, originally rented out for light industrial purposes and now frequently converted to residential occupancy.
  11. List the 4 value determinants and how each influences or quantifies an item's value?
    • Desire – how much the purchaser wants or needs the item makes the item more or less valuable.
    • Utility – how well the item can do the job determines its value to the purchaser.
    • Scarcity – the item is quite valuable if it the supply is limited but its value is less if the supply is great.
    • Purchasing power – if the purchaser cannot afford to pay a high price for the item, then the item's value is diminished because it is financially out of reach.
  12. What are the principles of physical characteristics of real estate?5
    • Indestructible and immovable
    • Long term investment
    • Land does not depreciate, only improvements depreciate
    • Property insurance insures improvements, not the land
    • Property is nonhomogeneous, unique
  13. What are the unique traits or distinguishing features of real estate? 6
    inherent product value, unique appeal, demand must come to the supply, cannot always be sold for cash, slow to respond to market changes, local market
  14. Name seven factors that influence supply of real estate.
    Availability of skilled labor, availability of construction loans and financing, availability of land, availability of materials, investment returns, the community's master plan, government regulation and police power
  15. List five influences on demand for real estate
    Local real estate prices, household composition (number and age of family members), consumer income, availability of mortgage credit, consumer tastes
  16. What are the three major indicators in the real estate market and how are they read?
    • Vacancy rates – too high means too little movement; too low means demand is high and prices are low.
    • Price/sales information – how much property has sold and at what price indicates how the market is functioning
    • Building permits – indicates new construction; the more new construction, the better the market
  17. How does the government at every level influence the real estate market?
    Zoning, controlling and permitting new development, taxing, interest rates, environmental legislation and regulations
  18. goods or services available for sale, lease, or trade
  19. goods or services desired for purchase, lease, or trade
  20. supply and demand tend toward balance where they are equal
    Market equilibrium
  21. The most important factor affecting demand for homes in a market
    Employment availablitity
  22. If the market for an item has. Achieved market equilibrium,
    Supply and demand are equal and price and value are equal
  23. Do development costs influence demand
  24. Overall plan of community affect supply or demand
  25. Define "undivided interest" in real estate.
    When two or more owners share ownership, the interest of an individual owner is undivided and indivisible in the sense that it pertains to a fractional part of the entire estate, not to a physical portion of the real property.
  26. Discuss how the right of possession determines what kind of estate or interest a party has in real estate.
    If the interest-holder enjoys the right of possession, the estate is an estate in land. If the interest-holder does not have the right of possession, the interest is an encumbrance in the case of a private interest-holder, or some form of public interest in the case of a non-private (i.e., governmental) interest-holder.
  27. What primarily distinguishes freehold estates from leasehold estates?
    Whether an estate in land is a freehold or leasehold estate depends on the length of time the holder may enjoy the right to possess the estate, the relationship of parties owning the estate, and specific interests held in the estate. The duration of the owner's rights in a freehold cannot be determined: they may last for a lifetime, for less than a lifetime, or for generations beyond the owner's lifetime. In a leasehold, they have a specific duration, as represented by the lease term.
  28. Types of Freehold:4
    • Fee Simple
    • Fee Defeasible
    • Life Estate
    • Fee Tail
  29. What is the highest form of ownership interest one can acquire in real estate and why?
    Fee simple estate. It includes the complete bundle of rights and the tenancy is unlimited.
  30. What are the essential characteristics of fee simple defeasible estates?
    • The property must be used for a certain purpose or under certain conditions.
    • If the use changes or if prohibited conditions are present, the estate reverts to the previous grantor of the estate.
  31. How is a life estate different from a fee simple estate?
    A life estate is limited in duration to the life of the owner or other named person. When the life tenant dies, the estate passes to the original owner or another named party. The life tenant does not have the right to pass ownership to his or her heirs.
  32. The fee simple freehold estate is called the highest form of ownership interest, even though a fee simple defeasible carries some restriction on usage. Why are other estates less desirable?
    With all other estates in land-- life, leasehold-- the holder of the estate cannot control what happens to the estate in the future. The life estate reverts or is remaindered; the leasehold terminates when the lease expires.
  33. Name the two types of life estates and briefly explain the difference.
    • Conventional life estate – created by a grant wherein the property owner grants the property to a life tenant
    • Legal life estate – created by state law wherein the rights of surviving family members are protected when the husband or wife dies
  34. Interests2
    • any combination of bundle of rights
    • estates, encumbrances, police powers
  35. Estates in land include right of possession also called ____
    right of possession; also called tenancies
  36. leaseholds
    limited duration
  37. freeholds
    duration is not necessarily limited
  38. FREEHOLD ESTATES implies
    "ownership" in contrast to leasehold
  39. most common form of estate; not limited by one's lifetime
    Fee simple estate
  40. highest form of ownership interest
    fee simple absolute
  41. can revert to previous owner for violation of conditions
  42. in Life estate the fee estate -
    passes to another upon death of a named party
  43. remainder
    interest of a named party to receive estate after holder's death
  44. reversion:
    reversion: interest of previous owner to receive estate after holder's death
  45. automatic creation of estate through operation of law
    designed to protect family survivors
    homestead: rights to one's principal residence
    laws protect homestead from certain creditors
    dower and curtesy: a life estate interest of a widow(er) in the real property
    elective share: right to claim deceased spouse's property in lieu of will
    Legal life estate
  46. property owned by two parties
    requires consent of both parties to transfer or encumber
    Community property
  47. Once the life tenant dies, the life estate portion reverts back to
  48. To own an interest in real estate, a person must own-
    Any combination of the bundle of rights
  49. The grantor of a life estate may retain a what
    Reversionary estate
  50. A life estate can be classified as a
    Freehold estate
  51. How does a legal life estate differ from a conventional life estate
    • Legal life estate is created by statute
    • Conventional life estate created by a grant
  52. Man grants his sister an estate for as long as she lives, but her heirs cannot inherit the estate. What type of estate is this
    Ordinary life estate
  53. Freehold tenant is the ____ of a freehold estate
  54. Homestead, dower, elective share and curtesy are examples of
    Legal life estate
  55. Who decides how title to real estate will be held?
    The grantee or buyer decides. The seller decides the type of estate transferred.
  56. What are the primary differences between tenancy in severalty and co-ownership?
    The primary difference is the number of owners—one vs. two or more. Secondarily, the treatment of the estate on the death of an owner. In a severalty, the estate passes to heirs by probate. In a co-ownership, the estate may pass to heirs (tenancy in common) or to surviving co-owners (joint tenancy, tenancy by the entireties, tenancy in partnership) or to a combination (community property).
  57. What are the primary differences between tenancy by the entireties and joint tenancy?
    Tenancy by the entireties requires co-owners to be married; tenancy by the entireties can have only two owners; a tenant by the entireties cannot convey his or her interest separately to an outside party.
  58. Describe the main features of the concept of community property.
    Applies to legally married spouses; distinguishes between community property and separately-owned property; protects each spouse's ownership of the whole community property while spouses live; preserves half of community property for surviving spouse.
  59. What are some of the apparent advantages of a land trust as a way of owning property
    Anonymity; ease of transfer; ease of use as collateral; potential benefits in treatment of estate on death of beneficiary (grantor).
  60. What are the primary differences between a condominium and a cooperative as forms of ownership?
    Condo owner actually owns real property-- airspace and share in common elements-- while co-op owner owns shares in a corporation and proprietary lease; condo unit can be transferred, encumbered or foreclosed as an entity, while co-op interest cannot be so handled, but only as an interest in the corporation; entire property is endangered by default of co-op share holder, but only individual unit is endangered by default of a condo owner.
  61. Describe the main differences between deeded time-share ownership and vacation interval ownership as forms of ownership.
    The deeded time-share owner owns real property; the interval owner owns personal property; the deeded owner acquires the rights to use (a unit at a specific time), rent, sell, exchange or bequeath the interest; the interval acquires a right-to-use (no particular unit, at a specific time) and may have other rights to sell, exchange, etc., if allowed by the resort owner.
  62. Tenancy in severalty -
    sole ownership of a freehold estate
  63. Tenancy in common
    co-tenants enjoy an individually owned, undivided interest; any ownership share possible; no survivorship
  64. Joint tenancy
    equal, undivided interest jointly owned by two or more parties, with survivorship; requires four unities to create: time, title, interest, possession; joint tenants can sell their interest, but the interest becomes a tenancy in common with remaining joint tenants
  65. Tenancy by the entireties -
    equal, undivided interest jointly owned by husband and wife
  66. Community property -
    per state law, joint ownership of property by spouses as opposed to separate property
  67. Separate Property
    acquired before marriage or by gift or inheritance, personal injury claims, purchase from separate funds, by sale of separate property, or written contract with the spouse
  68. Tenancy in partnership -
    - ownership by business partners
  69. TRUSTS -
    property granted by trustor to fiduciary trustee for benefit of beneficiary
  70. Living trust and testamentary trust - personal and real property ownership created to take effect during one's lifetime (living trust) or after one's lifetime (testamentary)
    - personal and real property ownership created to take effect during one's lifetime (living trust) or after one's lifetime (testamentary)
  71. Land trust -
    - real property ownership where grantor and beneficiary are same party; beneficiary uses, controls property, does not appear on public records
    - freehold ownership of a unit of airspace plus an undivided interest in the common elements as tenant in common with other owners
  73. Interests and rights, obligations - may be 3__ _ ___ without affecting other unit owners
    may be sold, encumbered or foreclosed without affecting other unit owners
  74. Creation and declarations -
    created by developer's declaration and recorded master deed; declaration includes definitions of land, common elements, units, shares of ownership, plans for governance, bylaws, covenants and restrictions
    ownership of shares in owning corporation, plus proprietary lease in a unit; corporation has sole, undivided ownership
  76. In Co op - Interests, rights, obligations – no individual real property _____; personal property _____ subject to control by owning corporation; pay pro rata share of corporation's expenses, monthly assessments; unit can be______
    • Interest
    • Interest
    • sold
    - a lease or ownership interest in a property for the purpose of periodic use by the owners or tenants on a scheduled basis
  78. In time shares; Deeded ownership—
    real property, owned for the period specified in purchase contract; includes right to use a specific unit at a specific time each year; time-share unit can be transferred; time-share owners own the resort
  79. In time shares; Interval ownership—
    personal property, owned for a specified number of years; right-to-use a non-specific unit for specified intervals; often convertible to points which can be transferred; developer owns the resort
  80. In time shares; Leasehold—
    agreement to rent a property on a scheduled basis over the duration of the lease term; right to use returns to resort at end of lease period
  81. In time shares; Freehold—
    tenants in common own undivided interests in real property; usually may transfer, rent, exchange
  82. When a tenant in common dies, what happens to the tenants interest in the estate
    It passes by probate to the deceased tenants heirs
  83. A condo owner actually owns
    A fee simple interest in an airspace and tenancy in common interest in a share of common elements
  84. What kind of interest is owned by a beneficiary of a land trust
    Personal property
  85. In a co op, who pays the mortgage
    The cooperative corporation
  86. Most common form of co-ownership when owners are not married
    Tenancy in common
  87. If someone wants to sell their interest as a tenant in common, but can’t find a buyer including among the other co-owners, what can he do to convert his interest to cash?
    Initiate a partition suit
  88. A condo owners’ assessments for maintenance and operation are based on
    The units pro rata share of the property value as defined in the declaration
  89. The 2 documents that create a condo are
    Declaration and master deed
Card Set
RE unit 3-6