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CA RE Broker's Test
CA Real Estate Broker License
| Term | Definition |
|---|---|
| Abstract of Title | Written summary of the chain of title. |
| Acceleration Clause | Any clause in a loan which requires the loan to paid-off upon the happening of a certain event. |
| Accession* | Acquisition of property by its being added to other property. |
| Accretion | Gradual additions to land bordering a river or stream. |
| Acknowledgment | Declaration before a notary by a person (grantor) who has executed a document that he did in fact sign the document. |
| Acre | 43,560 square feet = to 4,840 sq. yds. = to 209 feet by 209 feet, if square. |
| Actual Authority | Authority that a principal actually confers on the agent. |
| Actual Gain (Profit) | For income tax purposes is determined by subtracting the adjusted cost basis from the exchange value of the property. |
| Actual Notice | A person actually knows something (e.g., you know someone has taken possession of the property). |
| Ad Valorem | According to value; property tax is an ad valorem tax. |
| Adjusted Cost Basis | For income tax purposes this is the cost basis, plus improvements, plus existing assessment liens assumed by the buyer, minus depreciation, minus gain(s) deferred from prior transactions. |
| Adjusted Selling Price | For income tax purposes this is the selling price, minus the expenses of the sale. |
| Adverse Possession | Acquiring 5 years off exclusive, notorious & open possession of the property contrary to the best interests of the true owner, under a claim of right or color of title. A quiet title action would be used to perfect title for property taken this way. |
| Agency | An expressed contractual relationship which can be created in writing or orally in which a principal authorizes and empowers the agent to act on behalf of the principal in dealing with third parties. |
| Agency Disclosure Law | Jan 1, 1988 requires agent to disclose agency relationship when it becomes more than casual (applies to: sale of 4 or less residential units or lease longer than 1 year), 3 steps to agency disclosure: disclose, elect, confirm. |
| Alienate | To sell, transfer or convey. |
| Alienation (Due on Sale) Clause | A clause in a loan which requires the borrower to payoff the loan when title is transferred. |
| All Inclusive Trust Deed aka AITD, Wraparound trust deed, hold harmless trust deed, overriding trust deed | It's always a junior lien which is subordinate to, yet includes, the liens to which it is subordinated. Commonly used with land contracts. |
| Alluvion (Alluvium) | The soil deposited by accretion. |
| Alquist-Priolo Act | Discloses the location of earthquake fault lines on a Map. |
| Amenity Property | A home. Amenity properties are appraised by the Market Data Approach. |
| Americans With Disabilities Act | Federal law which requires equal access to public buildings for handicapped persons. |
| Amortization | Can be described as the "liquidation" of a financial obligation, such as a loan. |
| Amortization Tables | Used to determine the monthly payment. |
| Amortized Installment Note | A promissory note which calls for periodic payment of both principal and interest. |
| Angles | A change in direction is often referred to by using an angle expressed by degrees, minutes and seconds. |
| Annual Net Income | In the Capitalization Approach to appraisal is determined by the formula: Gross Income - vacancies - expenses = annual net income. |
| Annual percentage Rate (APR) | The relative cost of credit expressed in percentage terms, disclosed under the Truth in Lending Law (Reg. Z). |
| Appraisal | An opinion of value for a specific property on a given date and is valid for that date only. |
| Appropriation | Governmental permission to a non-riparian owner to take water from a public waterway for private use. |
| Appurtenance | Runs with the land for the benefit of the land; it is real property. |
| Appurtenant Easement | Benefits the land of the dominant tenement. The buyer of the dominant tenement automatically receives the easement. |
| Arbitration Clause | Clause in a contract whereby the parties agree to arbitrate a dispute rather than go to court. |
| Assessment Lien | A lien recorded by local government when a property owner fails to pay for stree improvement within 30 days of receipt of the bill. |
| Assessment Roll | The purpose of the assessment roll is to establish the tax base. Property is assessed every year for property tax purposes at 100% of taxable value (100% of fair market value, 100% of full cash value). Property is reassessed during the year if sold. |
| Assignment | Contracts are assignable unless they call for some personal quality of the promisor, or unless they expressly or implicitly negate the right to assign (e.g., a listing cannot be assigned). |
| Assumed Assessment Lien | Preexisting assessment lien which is assumed (taken over) by a buyer of real property. |
| Assumption | When a buyer "assumes" a loan, the buyer becomes primarily liable, but the seller is held secondarily liable. |
| Attachment Lien (Writ of Attachment)* | Property is held by court order as security for a possible judgement in a pending lawsuit. This lien is valid for 3 years. |
| Attorney-in-fact | Acting for another with a duly executed and recorded power of attorney. |
| Avulsion* | Sudden violent tearing away of land by water. |
| Backfill | Dirt used to fill in excavations. |
| Ballon Note | Partially amortized. |
| Ballon Payment | Any payment which is significantly larger than the other payments. |
| Banker's Year | 30 day month and 360 day year, used for proration and loan calculations. |
| Beneficiary | The lender in a trust deed; the beneficiary holds the pomissory note and trust deed during the life of the loan. |
| Beneficiary Statement* | Statement by lender disclosing the current loan balance. |
| Bilateral Contract | A promise for a promise |
| Blanket Encumbrance | Loan that covers more than 1 parcel of land; commonly used when building new homes. |
| Blind Advertising* | Does not disclose that an agent is representing the seller. When advertising, the licensee MUST disclose that he is an agent. A salesperson's ad MUST name the BROKER. |
| Board Foot* | A unit of measurement of lumber; one foot wide, one foot long, one inch thick; any combination of 144 cubic inches. |
| Bonds | Loan instruments |
| Boot | Cash, other "unlike" property, or "mortgage relief" used to balance the equities of the properties in a 1031 tax deferred exchange. |
| Borrower's Credit History | The risk inherent in the loan. |
| Broker | Person employed for a fee by another to perform a real estate act requiring a license. |
| BTU ()British Thermal Unit) | A measurement of heat used in rating the capacity of heating systems. |
| Building Resdual Technique | Determines the contribution of the building to the value of the enitre property. Use the building residual technique when the unkown factor is the value of the building. |
| Business and Professions Code | Set of California laws regulating business, such as the real estate industry. |
| Cal-Vet (CA Veterans Farm & Home Purchase Plan)) | The state purchases homes and sells them to CA veterans, using a land contract. |
| Capable Parties | Everyone is capable of contracting, except: minors and mentally incompetent persons. |
| Comprehensive Zoning Laws | Provides regulations that are consistent with a single, masterplan of development. |
| Spot Zoning Laws | Provides different zoning requirements for a small portion of a zoning district. |
| Partial Zoning Laws | Apply to a certain portion of the covered area or to certain uses. |
| Joint Tenancy | held by 2 or more people with the right of survivorship, interest is always equal. Unities: Title, time, interest 7 possession (TTIP). |
| Tenants In Common | Held by 2 or more people witn NO right of survivorship, interest can be unequal. Unity: Possession only |
| Community Property | Held in common by a married couple. |
| Termination of an Easement | Easements can be terminated by: express release, legal proceedings, 5 yrs of non-use, merger of the estates, adverse possession, abandonment, destruction of the servient tenement, and excessive use. |
| Civil Rights Act of 1866 | Prohibits all racial discrimination, private or public, in the slae or rental of property. |
| Federal Reserve Act of 1913 | Established the federal reserve system to assist in the operation of federally chartered commericial banks & authorized them to make real estate loans. |
| Federal Farm Loan Act of 1916 | Established the Federal Land Bank Associations, which is authorized to generate capital through the sale of bonds. |
| Reconstruction Finance Act of 1932 | Created the Reconstruction Finance Corporation, designed to provide liquidity for commercial banks. |
| Federal Home Loan Bank Act of 1932 | Created the Federal Home Loan Bank Board & the 12 district banks. This system is critical to current member savings and loan associations. |
| Home Owners' Loan Act of 1933 | Granted member savings and loan associations the authority to lend. |
| National Housing Act of 1934 | Created the Fdearal Housing Administration (FHA) & Federal Savings and Loan Insurance Corporation whichs provides account insurance for member savings and loan associations. |
| Servicemen's Readjustment Act of 1944 | Known as the GI Bill Of Rights was established the Veterans Administration Loan guarantee program. |
| Appraisal Process | Step 1: Define the problem. Step 2: Reconcile/correlate the data. Step 3: Estimate the Value. |
| Appraisal Reports | Letter Form: Less formal; maybe a simple letter summarizing info. Short Form: Checklist used primarily for lenders; most commonly used form. Narrative: most comprehensive & complete analysis. |
| D.U.S.T. | Demand-desire in the marketplace, Utility-ability of the property to satisfy a need or desire. Transferability-the property must be transferable as to use or title to be marketable. |
| Great Forces Influencing Value (P.E.E.S.) | Political/Government Rregulations, Economic Influences, Environmental & Physical Characteristics, Social Ideals & Standards |
| Principle of Substitution | aka Comparison/Substitution Approach & basis of the Market Data approach. Determined by the cost to acquire an equally desirable substitute property, because no prudent person will pay more for a property than others are willing to pay. |
| Principle of Highest and Best Use | The best use of a parcel of land which will most likely produce the greatest net rate of return over a given period of time. |
| Curable Depreciation | Economically and physically possible to correct. |
| Incurable Depreciation | Either too expensive or physically impossible to correct. |
| Economic/Social Obsolescence | Is usually incurable. |
| Physical Deterioration | Caused by events occuring within the property lines such as: wear and tear and deferred maintenance. |
| Internal(Functional) Obsolescence | Caused by events occuring within the property lines and observable during an inspection by an appraiser, such as: poor design of improvements, outdated facilities (old kitchen or heating system) or changes inconstruction styles. |
| External (Economic/Social) Obsolescence | Caused by external events (outside property lines). |
Created by:
missd2013
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