Term
|
Definition
Sole Ownership by an invdividual or single entity.
No restrictions on how the property is transfered to another party. |
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Term
|
Definition
Legal entity and composed of individuals conducting a business as if it were a single person.
Identity is seperate from its stock holders. Therefore the death of a stock holder does not affect corporate owned real estate.
Typically a board of directors empowers several of its key officers to acquire real estate for the corporation. The lands purchased become corporate property. |
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Term
|
Definition
Real Estate Investment Trust
A Corp or trust that combines the capital of at least 100 or more investors to acquire or provide financing for all forms of real estate.
REIT serves much like a mutual fund for real estate. Its shares are freely traded often on major stock exchange. |
|
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Term
| What must a RIET do to qualify for preferred tax statues? |
|
Definition
90% of the taxable income of a REIT must be distributed among its shareholders;
no fewer than five investors can own more than 50% of teh value of the REIT during the last half of the taxable year. |
|
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Term
| What are RIETS with over 300 investors required by the Federal Securities and Exchange Comission to do? |
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Definition
| Make thier financial statements public |
|
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Term
| What are the adavantages of a RIET? |
|
Definition
Only taxed on its retained earnings.
Provides small investors the opportunity to pool thier resources and channel them into larger investments. |
|
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Term
|
Definition
| A private or public partnership that pools funds for the acquisition and development of real estate projects or other business ventures. |
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Term
| Is a syndication recognized as a legal entity? |
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Definition
|
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Term
| Is syndication a form of ownership? |
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Definition
| Not in the normal sense, but it can be organized to fall under ownership in severalty. On the other hand, it can just as easily fall under co-ownership. |
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Term
|
Definition
| groups of two or more people(or even firms) joined together for the purpose of investing in real estate . A limited partnership is the common ownership for a syndicate. |
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Term
| What are the four types of Co-Ownership? |
|
Definition
Tenancy in Common
Joint tennancy
Tenancy by the entirety
Community Property |
|
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Term
|
Definition
Real Estate may be owned by 2 or more people as tennants in common.
Each owner possesses an undivided fractional interest in the property.
Unless deed specifies teh franctional interest each owner shares is assumed to be equal.
Each co-owner holds a seperate interest and can sell, mortgage, or transfer this interest without consento of the other two co-owners as long as it doesnot infringe on thier rights and interests of the other co-owners.
Upon the death of a co-Owner, the undivided interst passes in accordance to the will of that owner. |
|
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Term
True or False ...
When a deed is conveyed to two people and the deed does not specify the form of tenancy it is assumed as tenancy in common. |
|
Definition
True
However, in some states, Husband and Wife relationships may default to a different form of co-ownership. |
|
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Term
| What type of Co-Ownership do buisness partners usually operate under? |
|
Definition
|
|
Term
| What co-ownership do syndicates normally operate under? |
|
Definition
| Tenancy in Common using a limited partnership with the syndicator as the general partner and the investors as limited partners. |
|
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Term
True or False....
When someone dies they can deed thier interest in a propert when filed under tenancy in common. |
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Definition
|
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Term
| What happens in the event of the death of a co-owner under joint tenancy? |
|
Definition
| Ownership goes to remaining owner(s) and only the last surviving owner may deed the property in his will. |
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Term
True or False....
Joint Tenancy is assumed upon transfer of a title. |
|
Definition
False.
Joint Tenancy is never assumed. It must be specifically written. |
|
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Term
| How do you terminate a Joint Tenancy? |
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Definition
| Termination of an esate in joint tenancy can be accomplished by agreement, partition, or severance. |
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Term
|
Definition
A unique form of co-ownerhsip in which each spouse has an equal, unidivided interest in the property.
Upon death of a spouse ownership automatically transfers to the remaining spouse, creating an estate in severalty.
avoids probate for the surviving spouse.
To convey title, the signatures of both are required. |
|
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Term
|
Definition
9 states use this system for property owned by husband and wife. Each spouse has an undivided 1/2 interest in the property acquired during the marriage.
When spouse dies the remaining spouse is entitled to 1/2 the community property and the other 1/2 is distrubuted according to the will. If there is no will the entire community property will go to the remaining deceased. |
|
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Term
| What are the two classification community property recognizes? |
|
Definition
Serperate Property
Community Property |
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Term
|
Definition
| Property that was soley owned by either spouse before the marriage. the Spouse can morgage or convey his or her separate property without the signature of teh non-owning spouse. |
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Term
|
Definition
| All property acquired by either spouse during the marriage. |
|
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Term
| In terms of seperate and community property what is the difference in the way real and personal property is viewed? |
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Definition
| None- real and personal property are handled the same way under each of these classifications. |
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Term
| What are the the three roles in a trust? |
|
Definition
Trustor
Trustee
Beneficiary
**These players can be people or legal entities such as corporations. |
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|
Term
| In a trust real estate can be transfered to another person to hold or manage for the benefit of a third party. Who is the person who holds or manages the real estate? |
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Definition
|
|
Term
True or False...
In a trust the beneficiary recieves from the trustor any proceeds that come from the property less the operating expenses of maintaining the turst. |
|
Definition
|
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Term
| How long does the beneficiary recieve the income of proceeds that came from the property less operating expenses of maintaining the trust. |
|
Definition
| The income can be for the lifetime of the beneficiary or for a specified period- or event. |
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Term
|
Definition
| Created by an agreement while the property owner is still alive. |
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Term
|
Definition
| established by the will of teh property owner after his or her death. |
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Term
|
Definition
Real Estate is the only asset in a land trust.
Property title is conveyed to a trustee, but the trustor in this case is also the beneficiary. The trustor has a beneficial interest in the property, and that interest is acutally treated as personal property.
A land is desinged to provide tax and privacy advantages for teh beneficiary.
Duration of a land trust is typically for a speciified period of time. |
|
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Term
| Since the beneficial interest is personal property does the beneficiary retain the right to management, control, right of possession, and right to income or proceeds from a property sale? |
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Definition
|
|
Term
| Is a REIT a type of trust? |
|
Definition
|
|
Term
| What type of title do owners hold when they purchase a condominium? |
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Definition
| Owner holds a fee simple title to an individual condo unit. |
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Term
True or False...
A condominium is restricted in the actual number of ownership forms that it can be owned under. |
|
Definition
False.
An individual unit can be owned in a number of onwership forms such as tennancy in common or joint tennancy as permitted by state laws. |
|
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Term
| What is the remaining condinium real estate that the condominium owners hold an undivided interest in called? |
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Definition
|
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Term
| What is the only situation that would constitute an owner not being able to sell thier condominium to anyone they wish? |
|
Definition
| When the concominium association has riht of first refusal. In this case the unit must be offered first to the association (or owners in the association) at the same price before an outside offer can be accepted. |
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Term
True or False...
Association fees can be assessed equally or proportionately and are typically assessed on a monthly basis. |
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Definition
|
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Term
| What happens if an owner neglects to pay thier association fees? |
|
Definition
| Failure to pay the dues can result in the association obtaining a court ordered judgment to have the deliquent owners' unit sold to pay off the oustanding amount, or they can place a lien on the individual unit. |
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Term
|
Definition
Corporation owns real estate.
Corp. offers shares of stock to prospective tennants, who obtain a proprietary lease to the apartment for the life of the corporation. |
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Term
| In a cooperative ownership what to the purchasers own? |
|
Definition
| Stock is personal property, and the tennants do not own real estate. They own an interest in the in a corporation whose only asset is property. |
|
|
Term
True or False...
A Cooperative has a budget to cover operating expenditures, mortgage payments, insurance, and taxes. Funds are also set aside for replacement and repairs of major building componenets. |
|
Definition
|
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Term
| Will Lenders accept the stock of the cooperative ownership as collateral security? |
|
Definition
Yes
In this case the cooperative operates much the same as any type of real estate. |
|
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Term
|
Definition
| A fee simple interest in condominium ownership with accompanying rights. The ownership rights are limited to a specified time period but the owner can still mortgage, lease, sell, or bequeath the rights. |
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Term
|
Definition
Planned Unit Development
type of residential, commercial, and/or industrial land development plan in which buildings are clustered or set on lots that are smaller than usual, and large, open, park-like areas are included with the development. Individual properties are owned in fee with joint ownership of open areas or, if local law requires, open area are deeded to the city. |
|
|
Term
| What is the purpose of PUDS? |
|
Definition
| To create provide more efficient use of land through a comination of higher dwelling density with a greater amount of open spaces. |
|
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Term
| Are PUDS an ownership type? |
|
Definition
NO.
A PUD is created by covenants in the deed or long-term lease and the property owners do own the land under their buildings but PUDs do neatly fit into a zoning category (though most cities have zoning for them) and are not an ownership type. |
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Term
|
Definition
| A PUD in which teh common elements owned by the association have little or no effect on the individual property's value. This term in commonly used in the lending industry. |
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|
Term
True or False...
An owner's association is required in a PUD with nonseverable membership and mandatory assessments. |
|
Definition
|
|
Term
True or False...
An owner's association is required in a PUD with nonseverable membership and mandatory assessments. |
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Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
| A system for the legal description of land that refers to the parcel's boundaries, which are formed by the point of begining and all intermediate points and the courses or angular direction of each point. |
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|
Term
True or False...
Metes and Bounds is the oldest method of surveying land. It is still the primary method used in the states that comprised the original 13 colonies. |
|
Definition
|
|
Term
| How metes and boundes works |
|
Definition
begins and ends @ POB
boundary courses must produce closed area
monuments be they natural or manmade are used to establish boundaries. |
|
|
Term
|
Definition
| a stone or other fixed object used to establish real estate boundaries. |
|
|
Term
True or False...
Measurements are often qualified by the words more or less and the actual physical distance between monuments will take precidence over the measurements proided in the description. |
|
Definition
|
|
Term
| Rectangular (Government) Survey System |
|
Definition
A land survey system used in Florida, Alabama, Mississippi, and all states north of the Ohio River or West of the Mississippi River except Texas.
Divides land into rectangles called townships approximately six miles square, each normally containing 36 one square mile sections of 640 acres, except when adjusted for the curvature of the earth. |
|
|
Term
| History of the Rectangular Survey |
|
Definition
| created by the government in 1785 as teh united states expanded westward from hte original 13 colonies in the Northeast. It became principal method of land west of the Ohio and Mississippi Rivers. |
|
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Term
|
Definition
|
|
Term
|
Definition
|
|
Term
| How many principle meridians are in the united states? |
|
Definition
|
|
Term
True or False...
Principal Meridian lines baselines are referenced to degrees of lattitude and longitude. |
|
Definition
|
|
Term
|
Definition
| Survey lines that run east and west at six mile intervals north and south of a baseline and form the north and south boundaries of townships. |
|
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Term
|
Definition
| One of a series of goverment survey lines that extend due north and south at six mile intervals and are numbered east and west from the principal meridian. Range lines form the east and west boundaries of townships. |
|
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Term
|
Definition
| This is the area between two township lines and two range lines; normally contains 36 sections of approximately 640 acres each. |
|
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Term
|
Definition
| vertical column of townships |
|
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Term
|
Definition
| horizontal row of townships |
|
|
Term
|
Definition
| one of the 36 sections, each approx one mile sq, into which each township is divided. |
|
|
Term
In a township ...
1 section =
1/2 section=
1/4 section=
1/4 of 1/4 section=
1/4 of 1/4 of 1/4 section=
1/4 of 1/4 of 1/4 of 1/4 section= |
|
Definition
640 acres
320 acres
160 acres
40 acres
10 acres
2.5 acres |
|
|
Term
|
Definition
| Land areas that are not divided into quarters of a quarter due to actual size; usually lie along the northern and western borders of a township and along the edges of rivers or lakes, and extend from the border or waterline to the first quarter of a quarter. |
|
|
Term
|
Definition
| A system for the legal description of land that refers to parcels' lot and block numbers, which appear on recorded maps and plats of subdivided land; may also be used for assessment maps. |
|
|
Term
True or False...
Lot and Block system is also known as recorded plat and is based on the work of surveyors and engineers who subdivide the land and assign lot numbers to identify individual sites within the blocks. |
|
Definition
|
|
Term
True or False...
Lots are contiguous in Lot and Block and lot numbers always coincide with parcel numbers. |
|
Definition
False.
Where the lots are contiguous, the lot numbers do not always coincide with the parcel numbers. |
|
|
Term
| What is the most common system used in subdivisions and metropolitan areas for identifying property? |
|
Definition
|
|
Term
True or False...
When using Lot and Block other systems may be employed such as metes and bounds or rectangular survey. After such systems are used the plat is used with precise measurements to identify individual lots. Iron monuments (pins) are typically placed on the corners of the lots to identify the lot barriers. |
|
Definition
|
|
Term
| Which system is used to identify air space rights at precise elevations. It is typically used in condominium air lots. |
|
Definition
|
|
Term
True or False...
Vertical descriptions use an established plane as a reference point. |
|
Definition
|
|
Term
| What are the four government controls on ownership or four powers of government? |
|
Definition
| taxation, eminent domain, police power, escheat |
|
|
Term
|
Definition
| the right of the government to raise revenue through assessments on valuable goods, products, and rights. |
|
|
Term
true or false...
The U.S. Constitution prohibits personal property from being taxed. However, taxes are levied against real estate to support the operations and services of the government which include state government, county government, municipal government and private schools. |
|
Definition
False
Where taxes are levied against real estate they do not support private schools they support the public school systems and the US Constitution reserves the right to tax person property for the state and local governments while only prohibiting it from the federal government. |
|
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Term
|
Definition
According to value
used in property taxation because it is levied in proportion to the value of the property being taxed. |
|
|
Term
| Taxable property in each district is valued by who? |
|
Definition
| The assessor determines the assessed value of each real estate parcel. |
|
|
Term
True or False...
Owners who disagree with a value can file a tax assessment appeal and appraisers can be retained in these types of disputes over value. |
|
Definition
|
|
Term
|
Definition
| An assessment against real estate levied by a public authority to pay for public improvements also called betterment tax. |
|
|
Term
|
Definition
| The right of government to take private property for public use upon the payment of just(fair) compensation. The 5th amendment of the U.S. Constitution, also known as the takings clause, guarantees payment of just compensation upon appropriation of private property. |
|
|
Term
| What is the process by which the government takes private property? |
|
Definition
|
|
Term
True or False...
Typically the government entity will offer to purchase the property from the owner before condemnation occurs. |
|
Definition
|
|
Term
| Is zoning a police power? |
|
Definition
|
|
Term
| The right of government through which property is regulated to protect public safety, health, and general welfare. |
|
Definition
|
|
Term
True or False...
Police Power is really the government's power to control or regulate real property in the public's interest. |
|
Definition
|
|
Term
| Four guiding principles of police power |
|
Definition
Protect the health, safety, and general welfare of the public.
must be instituted and enforced in a nondiscrimatory manner.
should not negatively impact the value of a particular property to such a degree that it constitutes confinscation.
Police power should provide a benefit to the public through its policies and regulations. |
|
|
Term
|
Definition
form of police power used to control growth and development.
might include....
general guidance for land use
housing needs
transportation
community facilities
energy conservation |
|
|
Term
|
Definition
| The public regulation of the character and extent of real estate use through police power; establishing districts or areas with uniform restrictions relating to improvements; structural height, area, and bulk; density of population; and other aspects of the use and development of private property. |
|
|
Term
| What are the local laws that implement the comprehensive plan and provide regulation and control of land and structures within a specified district. |
|
Definition
|
|
Term
| What are some items that can be controlled through zoning ordinances? |
|
Definition
| building type, building height, building style/appearance, natural resources protection, permitted uses, setbacks, lot size, density |
|
|
Term
| General zoning has broad classifications with divisions such as low, medium, and high density; or in the case of industrial; light and heavy density. General zoning classifications may include... |
|
Definition
| Agricultural, Residential, Commercial, Industrial, Mixed Use, Public |
|
|
Term
True or False...
Specialized zoning can include airports, waterfront properties, planned developments, historic districts, and etc. |
|
Definition
|
|
Term
|
Definition
| Open spaces, landscaped areas, fences, walls, berms, or any combination thereof used to physically separate or screen one use or property from another so as to visually shield or block noise, lights, or other nuisances; often associated with a change of land use or density due to a zoning change. |
|
|
Term
|
Definition
| An exception to the general zoning regulations; permits specific, usually small, parcels of land to be zoned for a use that is not permitted in the surrounding area. |
|
|
Term
|
Definition
| A legally authorized modification in the use of property at a particular location that does not conform to the regulated use set forth in the zoning ordinance for the surrounding area; not an exception or change in the legally applicable zoning. Also called use variance or development standard variance. |
|
|
Term
|
Definition
| A use that was lawfully established and maintained but no longer conforms to the use regulations of the current zoning in the zone where it is located. Also called grandfathered use. |
|
|
Term
| What is a form of police power intended to protect public health and safety through which local and state governments adopt model codes by nationally recognized organizations to establish minimum requirements for building habitable structures. |
|
Definition
|
|
Term
| What are the four sources of police regulations |
|
Definition
heath department established @ state & local level
Fire Codes established by the state fire marshal
State Environmental protection agency
Department of natural resources @ the state level |
|
|
Term
| What is required under building codes before a property owner can build and occupy a building? |
|
Definition
Building Permit to begin construction which serves as evidence the application complies with codes.
Certificate of Occupancy (compliance) serves as evidence the completed structure complies with codes. |
|
|
Term
|
Definition
| The right of government that gives the state titular ownership of a property when its owner dies intestate with no ascertainable heirs. |
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
| What is the intent of escheat? |
|
Definition
| To prevent real property from being abandoned with no owner in title. |
|
|
Term
| All Liens are encumbrances but are all encumbrances liens? |
|
Definition
|
|
Term
| What are examples of liens |
|
Definition
| property tax, first mortgage, equity loans, mechanics' liens, judgements, attachments |
|
|
Term
| what role does the property owner play in a lien? |
|
Definition
| the role of debtor. the property serves as security which entitles the lender certain rights like the right to foreclose and use the proceeds to pay the debt. |
|
|
Term
|
Definition
| A charge against a property in which the property is the security for payment of the debt. |
|
|
Term
True or False..
A lien is different from other encumbrances because it is financial in nature and attaches to the property due to a specified debt which does not prevent transfer but does transfer with title and can adversely affect marketability. |
|
Definition
|
|
Term
| What are the two general categories liens fall under? |
|
Definition
General Lien-binds all assets of the individual debtor
Specific Lien-levied against or attaches to a specified piece of property. |
|
|
Term
|
Definition
created intentionally by the property owner's actions.
A mortgage is a voluntary lien |
|
|
Term
|
Definition
created by law, rather than by choice.
Property tax liens are involuntary liens. |
|
|
Term
|
Definition
| A specific lien which includes property tax liens and special assessment liens. They also include liens from other forms of taxation. |
|
|
Term
|
Definition
| Specific Liens which can arise when someone provides labor, skill, equipment, or materials while improving, repairing, or maintaining the property. |
|
|
Term
|
Definition
| Specific Liens which are voluntary and one of the most common types of liens. |
|
|
Term
|
Definition
| General Liens which typically result from a lawsuit in which a monetary judgment is awarded. The party that won the suit and and was awarded the judgment is a judgment creditor. The party who lost the lawsuit is a judgment debtor. |
|
|
Term
| what is the priority of liens? |
|
Definition
| first come first serve. They follow the priority based on when they were first created. |
|
|
Term
True or False.
Liens such as property tax liens are high priority where mortgage liens are not. |
|
Definition
|
|
Term
|
Definition
| A legal term signifying pending litigation that can affect the ownership title to real estate. Lis Pendens is not a lien just signifies a potential lien. |
|
|
Term
|
Definition
| A seizure of property by court order. A lien that allows a creditor with an interest in an otherwise unsecured property to prevent the debtor from conveying title while the dispute is being decided in court. |
|
|
Term
| What are the basic components of a contract? |
|
Definition
| Voluntary, An Agreement of promise, Legally competent Parties, Legal Consideration, Legal Act |
|
|
Term
|
Definition
|
|
Term
|
Definition
| An agreement presumed to exist. |
|
|
Term
|
Definition
| Only one of the parties to the contract is legally obligated to perform. An"option" agreement is a unilateral contract. |
|
|
Term
|
Definition
| Most real estate contracts are bilateral. Each party makes a binding agreement to perform according to the contract. |
|
|
Term
|
Definition
| Refraining from taking legal action on a mortgage that is in arrears; usually granted when a mortgagor makes a satisfactory arrangement to pay the arrears at a future date. |
|
|
Term
| Five Elements of a Valid Contract |
|
Definition
Consent-no party can be uninformed, under duress or menace.
Offer & Acceptance-offer can be refused, changed (counteroffer), and may expire in a certain time frame. The offeror can revoke the offer any time before acceptance.
Legally competent parties-18years old, and possess the proper mental capacity to discern consequences for their actions.
consideration-something of legal value used as an inducement to perform. Adequacy of the consideration is not the issue.
legal purpose-must be within the boundaries of the law if not the contract is void. |
|
|
Term
|
Definition
| An agreement between two or more persons that represents their promise to do or not to do a particular thing; where real property is concerned, a dated, written, signed statement between two or more competent parties who agree to perform or not to perform a legal act, for legal consideration, within a specified time. |
|
|
Term
| What are the 3 categories of a contract's legal status |
|
Definition
Valid- an agreement in which all the elements are present and therefore legally enforceable.
void- no legal force or binding effect and cannot be enforced in a court of law. This may be due to the absence of one or more of the elements.
voidable- technically valid but gives one or more parties the power to legally void the agreement and thus cancel performance. |
|
|
Term
|
Definition
| written document signed by a buyer and a seller who agree to the transfer of ownership interests in real estate. also called earnest money contract. |
|
|
Term
| What are the two functions of a sales contract |
|
Definition
It is a receipt for the buyer's earnest money deposit
It becomes the contract of sale once it is executed with the signatures of the seller and buyer. |
|
|
Term
| What are the essential elements of a sales contract appraisers are concerned with? |
|
Definition
Sales Price and Terms (financing & list of personal property included)
contract date and closing date
legal description
id of title and form of deed to be conveyed
contingencies
sellers disclosure
signature of all parties to ensure valid contract. |
|
|
Term
|
Definition
| A legal contract, typically purchased for a stated consideration, that permits but does not require one to buy, sell, or lease real property for a stipulated period of time in accordance with specified terms; a unilateral right to exercise privilege. |
|
|
Term
|
Definition
| A contract in which a purchaser of real estate agrees to pay a small portion of the purchase price when the contract is signed and additional sums, at intervals and in amounts specified in the contract, until the total purchase price is paid and the seller delivers the deed; used primarily to protect the seller's interest in the unpaid balance because foreclosure can be exercised more quickly than it could be under a mortgage; also called contract for deed or installment contract. |
|
|
Term
| In a land contract does the vendee or the vendor take possession of the property. |
|
Definition
| the vendee. even though the deed is not conveyed until the purchase price is paid in full the vendee takes possession of the property and has nearly all the rights and benefits that go with ownership. the vendee pays the insurance and taxes and maintenance. |
|
|
Term
|
Definition
| An ownership interest held by a landlord with the rights of use and occupancy conveyed by lease to others. |
|
|
Term
|
Definition
| The interest held by the lessee through a lease transferring the rights of use and occupancy for a stated term under certain conditions. |
|
|
Term
| What are the four leasehold estates |
|
Definition
Estate for years
Estate @ will
Estate from period to period
Estate @ sufferance |
|
|
Term
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Definition
| A written contract in which the rights to use and occupy land or structures are transferred by the owner to another for a specified period of time in return for a specified rent. |
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Term
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Definition
| lessor pays some or all operating expenses |
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Term
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Definition
| Tenant pays some or all operating expenses. |
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Term
| There are two bases used to set up leases what are they? |
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Definition
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Term
| If it is not Gross or Net what is the base of the lease considered to be? |
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Definition
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Term
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Definition
| A lease with a specified level of rent that continues throughout the lease term. |
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Term
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Definition
A lease that provides for specified changes in rent at one or more points during the lease term.
Step up lease- payments increase at specified intervals.
Step down lease- payments decrease at specific intervals. |
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Term
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Definition
| A lease that provides for periodic rent adjustments based on a revaluation of the real estate under prevailing market rental conditions. This is sometimes accomplished through appraisal or arbitration. |
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Term
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Definition
| A lease, usually for a long term, that provides for periodic rent adjustments based on the change in an economic index. (e.g. cost of living index) |
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Term
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Definition
| A lease in which the rent or some portion of the rent represents a specified percentage of the volume of business, productivity, or use achieved by the tenant. this type of lease is most frequently used for retail and typically specifies a guaranteed minimum rent with overage rent being possible. |
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Term
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Definition
| the percentage rent paid over and above the guaranteed minimum rent or base rent; calculated as a percentage of sales in excess of a specified breakeven sales volume. |
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Term
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Definition
| A lease in which an intermediate, or sandwich, leaseholder is the tenant of one party and the landlord of another. the owner of the sandwich lease is neither the fee owner nor the user of the property; he or she may be a leaseholder in a chain of leases, excluding the ultimate sublessee. |
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Term
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Definition
| The combination of all elements that constitute proof of ownership. |
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Term
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Definition
| A written legal instrument that conveys an estate or interest in real property to someone else, assuming it is executed and delivered. The parties are the grantor and the grantee |
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Term
| What are the elements of a deed |
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Definition
identification of the parties
grantor who is legally competent
words of conveyance
legal description of the real estate
consideration received by the grantor
executed by means of a written document singed by the grantor
Delivery by the grantor and acceptance by the grantee. |
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Term
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Definition
| The most secure deed. A covenant of warranty inserted in a deed that binds the grantor and heirs to defend the title conveyed to the grantee and his /heirs against the lawful claims of all persons. |
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Term
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Definition
The grantor provides two covenants
1. the grantor received the property
2. the grantor and his/her heirs will defend title to the lands against all legal claims created by the actions or omissions of the grantor or his sellers. |
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Term
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Definition
| the grantor conveys the property but does not guarantee clear title; used by court officials and fiduciaries to convey property they hold by force of law,but to which they do not hold title. |
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Term
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Definition
| The grantor conveys any interest held in the property to the grantee without warranty of title. Sometimes used for correction. Offers least protection to buyer |
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Term
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Definition
| involuntary transfer takes place when a party makes a property claim by taking possession over a period years and the owner fails to contest the possession. |
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Term
| What are the requirements of adverse possession |
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Definition
it must be
open- Obvious to everyone
notorious-others know about it
continuous- possession and occupation
hostile- without the consent of the true land owner
adverse- to the true owner's right of possession. |
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Term
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Definition
| The right to use another's land, which is established by using it over a period of time. Such an easement is understood. It is gained through adverse possession. |
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Term
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Definition
| the total dollar expenditure to develop an improvement. Cost is a fact that required to create produce or obtain a property. identification of cost is is independent any exchange process and to the appraiser may be an estimate of fact. |
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Term
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Definition
identified with structures and improvements
Direct (hard) labor and materials, but other costs such as equipment, site security, and fencing are included. |
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Term
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Definition
| expenses such as the professional services of architects and surveyors, costs for building permits, and costs for insurance. |
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Term
| Entrepreneurial Incentive |
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Definition
| market derived figure that represents the amount an entrepreneur expects to receive as his or her contribution. |
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Term
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Definition
| the overall project and includes the construction costs mentioned above, plus acquisition costs and all the other expenditures required to bring a property into an operating state. |
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Term
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Definition
| The $ amount asked, offered, or agreed upon between buyer and seller. Price becomes cost upon transaction. |
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Term
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Definition
| monetary worth of a property, good, or service to buyers and sellers at a given time. 2. the present worth of the future benefits that accrue to real property ownership. Value is based on exchange and is expressed as an economic concept--therefore it is not a fact but an opinion of the worth of a property as a specified time. |
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Term
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Definition
| The present or anticipated undersupply of an item relative to the demand for it. Conditions of scarcity contribute to value. |
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Term
True or False....
Scarcity and Utility are the essential ingredients in creating value, but they work together. For example, the air we breathe has utility; but without scarcity, it has no definable economic value. |
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Definition
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Term
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Definition
| A purchaser's wish for an item to satisfy human needs or individual wants beyond essential life support needs. |
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Term
| In terms of desire what is the key ingredient appraisers need to mindful of? |
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Definition
| Perception. That is to say how the market players perceive the value of the commodity. |
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Term
| Effective Purchasing Power |
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Definition
| Also called transferability. The ability of an individual person or group to participate in a market. |
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Term
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Definition
| The value specific to a property has to a specific person or firm as opposed to the value to persons or the market in general. Special use properties are valued on a basis of value in use. |
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Term
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Definition
| The specific value of an investment to a particular investor or class of investors based on individual investment requirements. Specific to the needs of the person or firm but their needs are different to that of the current use. |
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Term
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Definition
| market value of all the tangible and intangible assets of an established and operating business with an indefinite life, as sold is aggregate. |
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Term
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Definition
Total Cost-Land=INSURED VALUE
the value of an asset or asset group that is conveyed by an insurance policy. |
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Term
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Definition
| A value set on real estate and personal property by a government as a basis for levying taxes. |
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Term
| How does assessed value differ from the assessor's estimate of value? |
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Definition
| The assessed value may have an assessment ratio applied to the estimate of value. The assessed value would also include partial exemptions such as homestead or agricultural concessions. |
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Term
True or False...
Assessed values are applied in ad valorem taxation and refer to the value of the property according to the tax rolls. |
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Definition
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Term
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Definition
| an accounting term defined by the financial accounting standards (fasb) Fair value may differ from market value and it is required by regulatory agencies for some assignments-particularly for financial institutions working with troubled loans or real estate owned. |
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Term
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Definition
Based upon the economic concept of exchange value.
is a stated opinion,expressed as the most probable price, as of a specific date, in terms of cash or terms equivalent to cash or in other precisely revealed terms, for which the specified property rights should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale with the buyer and seller each acting prudently knowledgeably and for self interest and assuming that neither is affected by undue stimulus. |
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Term
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Definition
| a sale between unrelated parties under no duress. |
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Term
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Definition
| the time an available property was for sale in the market |
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Term
| What are some things that might make a properties exposure time not meat the definition of market value? |
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Definition
| Liquidation Sale, forced sale, excessive or little time on the market, sold in haste. |
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Term
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Definition
| the time it takes an interest in real property to sell on the market subsequent to the definition of market value. |
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Term
| What are the four agents of production? |
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Definition
Land-cost of land & improvements
Labor-cost to construct
Capital-Return on the investment/return on equity
entrepreneurial coordination-ability of a person, corp, or llc to execute a project. |
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Term
| Agents of production(definition) |
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Definition
| The elements of land labor capital and entrepreneurial coordination which together create wealth income or services. |
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Term
| Name the four forces that influence value and a simple explanation for each |
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Definition
Government and Legal-gov controls and regulates
Economic- circumstances & trends that effect supply and demand
social- changes in demographic, social trends, & attitudes.
Environmental and geographic- Environmental conditions; natural and manmade. |
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Term
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Definition
| stands for Comprehensive Environmental Response Compensation and LIability Act. Landowner of record is liable when hazardous materials have been released even when the owner was not responsible for the contamination. they may seek damages from the responsible party or from the CERCLA fund. However, the current owner is responsible for clean up. |
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Term
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Definition
| The distance in time and cost to schools, public transportation, employment, and business centers, shopping recreational, and religious & cultural facilities have a significant impact on real estate values. |
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Term
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Definition
| The result of the cause and effect relationship among the forces that influence real property values. |
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Term
True or False...
Change is premised on the cause and effect relationship that takes place in the market. |
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Definition
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Term
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Definition
| the perception that value is created by the expectation of benefits to be derived in the future. |
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Term
True or False...
Anticipation creates value based on the purchasers interpretation of future benefits. Anticipation only produces a positive impact on value. |
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Definition
False
Value is impacted by the anticipation of future benefits but these are not always positive. Sometimes a buyer sees future detriment in a property. |
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Term
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Definition
| Economic principle as applied within a real appraisal context... states that the price of real property varies directly, but not necessarily proportionately, with demand and inversely, but not necessarily proportionately with supply. |
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Term
True or False...
Real estate markets are created by the interaction of supply and demand. |
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Definition
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Term
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Definition
| the balance point where supply and demand meet. |
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Term
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Definition
| appraisal principle that states when several similar or commensurate commodities goods or services are available the one with the lowest price will attract the greatest demand and widest distribution |
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Term
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Definition
| sub principle of substitution. The cost of options foregone or opportunities not chosen. |
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Term
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Definition
| Principle that real property value is cerated and sustained when contrasting opposing or interacting elements are in a state of equilibrium. |
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Term
| Increasing and decreasing return |
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Definition
| The concept that successive increments of one or more agents of production added to fixed amount of the other agents will enhance income at an increasing rate until a maximum return is reached. Then, income will decrease until the increment to value becomes increasingly less than the value of the added agent or agents. |
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Term
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Definition
| the concept that the value of a particular component is measured in terms of its contribution to the value of the whole property, or as the amount that its absence would detract from the value of the whole. |
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Term
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Definition
| the net income that remains after the costs of various agents of production have been paid. |
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Term
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Definition
| the appraisal principle that real property value is created and sustained when the characteristics of a property conform to the demands of its market |
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Term
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Definition
| The compatibility of the property and its surroundings |
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Term
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Definition
| The condition that exists when labor, capital, coordination, and land are appropriately combined in a property. |
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Term
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Definition
| the concept that the value of an interior property is enhanced by its association with better properties of the same type. |
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Term
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Definition
| The concept that a superior property is adversely affected by its association with an interior property of the same type. |
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Term
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Definition
| The principle that economies outside a property have a positive impact on its value and diseconomies have an adverse effect on its value. |
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Term
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Definition
| the reasonably probable and legal use of vacant land or an improved property which is physically possible, appropriately supported, financially feasible, and that results in the highest value. |
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Term
| Four Tests of Highest and Best Use |
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Definition
legal permissibility
physical possibility
financial feasibility
maximum productivity |
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Term
| Highest and best use of the sight as through vacant |
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Definition
| The use of a property assuming it is vacant or can be made vacant. |
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Term
| Highest and best use of property as improved |
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Definition
| That use that should be made of a property as it exists. An existing improvement should be renovated or retained as is so lang as it continues to contribute to the total market value of the property. |
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Term
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Definition
| Temporary use to which a property is put until is ready to be put to its highest and best use. |
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Term
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Definition
| The concept that land can not be valued on the basis of one use while the improvements valued on the basis of another. |
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Term
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Definition
| Land that can be split out of an existing parcel because it is not needed to serve the existing use or support the existing improvement. |
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Term
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Definition
| Land that is not needed to support the highest and best use of a property but due to physical limitations can not be split out. |
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Term
True or False...
All surplus land is excess land but all excess land can not be surplus land. |
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Definition
False.
All excess land is surplus land but surplus land can not be excess land. |
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Term
True or False...
When appraisers value real property, they must take into consideration how real estate competes with other investment options. |
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Definition
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Term
| What does a market investor consider today? |
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Definition
Return on investment
Return of investment
Risk
Liquidity
Economic Outlook |
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Term
True or False...
The demand for money is a function of economic forces where the supply of money is largely a function of the Federal Reserve. |
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Definition
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Term
| Explain the economic principle of competition |
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Definition
works with the supply and demand of money.
The interaction takes place within a market.
Markets compete against one another for investment dollars |
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Term
| Explain the economic principle of substitution |
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Definition
Investors substitute one investment for another as the dynamics of the market change.\
If an investment offers similar benefits at a lower price, the investment dollars will flow toward the lower-priced investment. |
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Term
True or False...
Risk plays a significant role in how investments compete against each other. Various risks include; market, financial, capital market, inflation, liquidity, environmental, legislative, and management risk. |
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Definition
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Term
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Definition
| the interaction between buyers and sellers who trade short-term money instruments. |
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Term
| What do we express the price of money as? |
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Definition
|
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Term
| what are short term money instruments that comprise a money market? |
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Definition
Federal Funds
Treasury Bills and Notes
CD's
Commercial Paper
Municipal Notes
Eurodollars |
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Term
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Definition
| the interaction of buyers and sellers trading long or intermediate term money instruments. |
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Term
| what are the two types of capital |
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Definition
|
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Term
| What are some capital investments |
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Definition
Bonds
Stocks
REITS
Mortgages
Deeds of trust/land contracts |
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Term
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Definition
| A pledge of a described property interest as collateral or security for the repayment of a loan under certain terms and conditions. |
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Term
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Definition
| the repayment of loan by installments, It is the process of retiring debt through a systematic repayment of the principal together with interest on the outstanding principal balance. |
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Term
| What are the different types of mortgages |
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Definition
guaranteed mortgage
insured mortgage
conventional mortgage
balloon mortgage |
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Term
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Definition
| The interaction of individuals who exchange real property rights for other assets such as money; a group of individuals or firms that are in contact with one another for the purpose of conducting real estate transactions. |
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Term
| what are the federal reserves four duties |
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Definition
carry out the nation's monetary policy
supervise and regulate banking institutions and protect the credit rights of consumers.
Maintain the stability of the financial system.
Provide certain financial services to the US government, the public, financial institutions, and foreign official institutions. |
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Term
| How many regional banks is the Federal Reserve comprised of? |
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Definition
| twelve and a number of regional banks |
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Term
True or False...
The Federal Reserve is directed by the seven member board of Governors. These individuals are appointed by the president to 14 year terms and the members can not be dismissed during the appointed term. |
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Definition
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Term
| What does the Federal Reserve regulate? |
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Definition
Reserve Requirements
Federal Discount Rate
Federal Open Market Committee |
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Term
| The US Department of the Treasury is responsible for what? |
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Definition
implementing the fiscal policy.
It is guided by Congress regarding the budget, expenditures, and revenues.
It raises funds, pays bills, generates currency, collects taxes, and borrows money. |
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Term
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Definition
| An erosion of the purchasing power of currency characterized by price escalation and an increase in the volume of money. |
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Term
|
Definition
| An increase in property or investment value resulting from an excess of demand over supply. |
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Term
True or False...
Business cycles are discernible, recurring phases of business activity, and the real estate cycle generally follows the business cycle. |
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Definition
|
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Term
| What are the two sources of capital |
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Definition
| debt and equity investors |
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Term
| What is the difference in debt and equity investors? |
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Definition
| debt investors participate in bonds and mortgages where equity investors are more aggressive and willing to take risks, so the funds used for equity investments are called venture capital. |
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Term
Convert following to decimals - 80%
- 5%
- 62.5%
- .45%
|
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Definition
|
|
Term
Convert the following decimals to Percentages - .0725
- .555
- 2.0
- .0001
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Definition
|
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Term
| If the taxable value on a $150,000 parcel increased $20,000 what was the percent of increase? |
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Definition
| 20,000/150,000=.1333 or 13.33% |
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Term
| If you charge $3.90 sales tax on a $60 item, what percent is the sales tax? |
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Definition
|
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Term
| 5,000 is 5% of what number? |
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Definition
|
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Term
| How much money does Tony need to peosit to earn interest of $3,000 every year when the annual interest rate is 6%? |
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Definition
|
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Term
| If conventional financing requires a 20% down payment and the buyer has $70,000 cash available and assuming the buyer is qualified for the monthly motgage payments, what is the maximum price the buyer can afford? |
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Definition
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Term
| The fairchild's property was listed for $250,000 but it was reduced in price to $230,000 due to a lack of market interest. What is the price discount express as a percentage? |
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Definition
250,000 - 230,000= 20,000 20,000 / 250,000 = .08 or 8% |
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Term
| Sue purchases a property for 100,000. After making improvements, she sold the property for 10%more than she paid for it. What is the new purchase price? |
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Definition
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Term
Jethro purchased a property for 100,000 and sold it for 10% less what is the new purchase price? |
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Definition
10% less means he sold it for 90% of the original price. 100,000 x .9 = 90,000 |
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Term
| Pete's property has a market of 140,000 and is assessed at 60% of its value for tax purposes. If the mill rate is 18 mills what is the annual tax on the property? |
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Definition
140,000 x .6 = 84,000 84,000 x .018 = $1,512 |
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Term
| Jack Cash has a semi annual tax of $6,000. The mill rate in hte area is 20 mills, and properties are assessed at 40% market value. What is Jack's market value? |
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Definition
6,000 x 2 = 12,000 12,000 / .020 = 600,000 600,00 / .4 = 1,500,000 |
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Term
| A borrower obtained a loan from a lender who charged an origination fee of 1 point. How much did the borrower have to pay on a $150,000 mortgage? |
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Definition
150,000 x .01 = 1500 150,000 - 1,500 = 148,500 |
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Term
| In order to sell their property in a tight market Colleen and Tim paid 41/2 points on teh sale of her 180,000 residence. If the buyer is applying for an 80% loan, what was the dollar amount of points that colleen and tim paid? |
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Definition
Points are percentage of loans, not total sales so the 4.5 points come off of the loan amount. 180,000 x .8 = 144,000 144,000 x .045(or 4.5%) = 6,480 |
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Term
| The financing on Bob's property was changed so that they paid 5,670 to buy down the interest rate on the buyers mortgage. If it is a 90% mortgage and the mortgage amount is 180,000 how many points did Bob pay? |
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Definition
180,000 x .9 (or 90%) = 162,000 5,672 / 162,000 = .035 or 3.5% |
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Term
Jeff and Tina loaned 4,000 to their daughter so she could buy a used car to go to and from the college campus. The parents arranged for their daughter to repay the 4,00 after 4 years plus simple annual interest of 6% to be paid each year. How much will they recieved when the loan is repaid? |
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Definition
4,000 x .06 = 240 240 x 4= 960 960 + 4,000 = 4,960 |
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Term
What will and investment of 5,000 per year grow to in 6 years at 6% interest? How much was invested over the six years? |
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Definition
6 n 6 i 5,000 CHS PMT $34,876.60 5,000 x 6 = 30,000 |
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Term
| What migh an investor pay to recieve an income stream of 120,000 per year for 18 years @ 6% annual interest? |
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Definition
| 18 n 6 i 120,000 PMT PV = 1,299,312.42 |
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