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Real Estate Law
| Question | Answer |
|---|---|
| Real Estate is also known as | Real Property |
| Real Property includes... | Land plus improvements, rights, appurtenances, and fixtures. |
| Land counts as | 1. Surface rights 2. Sub-surface rights 3. Air Rights |
| Improvements count as | Items affixed to the land with the intent of being permanent. IE, a house, fence, road, landscaping |
| What are Riparian rights? | Flowing waters ie, rivers, streams, water courses (alliteration: Riparian - Rivers) |
| What are Littoral rights? | Non flowing or tidal waters - lakes, oceans, sea arms (alliteration: Littoral - Lakes) |
| Sudden loss of land through natural causes? | Avulsion |
| Gradual loss of land through natural causes? | Erosion |
| Addition to land through natural forces? | Accretion |
| Taking title to additional property through accretion or attachment? | Accression |
| Personal Property is also known as... | Chattel |
| Mobile homes are personal property unless... | They are permanently attached to the foundation |
| What is a fixture? | An item of personal property that is attached to the land in such a manner as to be considered part of the real property. |
| Measures in feet, inches, etc... | Metes |
| Means shapes or boundaries | Bounds |
| Three legal methods of land description | Metes & Bounds, Rectangular (Government) primary uses for large parcels of rural property)) Survey, Lot & Block |
| Townships are ____ miles square | Six |
| Townships contain _____ square miles | 36 |
| One township contains _____ sections | 36 |
| How big are sections? | One mile square |
| How many lineal feet is a mile? | 5,280 ft |
| How many acres are in a section? | 640 |
| How many square feet are in an acre? | 43,560 |
| One yard = ____ feet | 3 |
| When is the Lot and Block system primarily used? | For urban residential property |
| What are the governmental rights in land? | 1. Police Power 2. Eminent Domain 3. Taxes and special assessments 4. Escheat Acronym: PETE |
| Lots that touch at ANY point including a corner are called? | Contiguous lots |
| What is Escheat? | Government's reversionary right, exercized when owner dies intesante (no will) and without heirs |
| What is the area of the land that seperates two drastically different land use zones called? | Buffer zone |
| T/F Building inspectors enforce building codes and can grant special exemptions? | True! |
| What is non-conforming use? | Allows owner to continue present use that no longer complies with current zoning, also known as "grandfathering" |
| A zoning change from dense to less dense usage is called? | Downzoning |
| This allows individual owners to deviate from strict compliance with zoning in order to relieve or prevent economic hardship? | Variance, does not change regulation |
| In Land Use Zone Classifications, ____ is for a multi family, while ____ is for a single family | r-3, r-1 |
| Ownership for an unpredicatable duration is known as? | Freehold estates |
| 3 parts to being Fee Simple Absolute | 1. Maximum private interest in property 2. Lasts forever 3. Transferable & Inheritable |
| Three types of freehold estates are: | 1. Fee Simple Absolute 2. Fee simple/defeasable 3. Community Property (California is this) - co-ownership only available to married couples |
| For married couples, community property is assumed unless... | Otherwise stated in deed -- take title as "husband and wife" |
| A corporation can hold title in severalty or as tenent in common, however, it cannot be ____ _____ | Joint tenant |
| The most common method used by real estate syndicates in which taxes are paid either as partnership or corporation... | Limited Liability Company or LLC |
| Disadvantage to have a corporation is... | Double taxation -- corporation and individual shareholders pay tax on money earned |
| Real estate, portions of which are designated for separate ownership ("units") and the remainder of which is designated for common ownership and use ("common elements") | Condominium |
| In order to convert apartments to condominiums one must provide... | 1. 180-day written notice of pending conversion to all current tenents 2. Must include 90-day notice of right to purchase |
| Any claim, right, or interest held by one who is not the legal owner of the property. ______ are imperfections that may negatively affective property value. They create a cloud on title that may impair or diminish owner's rights | Encumbrances |
| A non-possessory right to use the land of another for a specific purpose | Easement |
| This type of easement has a dominant tenement and a servient tenement, used for transfers w/land | Appurtenant easement |
| This type of easement has no dominant tenement, only servient tenement, ex: utility company easement | Easement in gross |
| An easement recognized by the courts after fulfilling specified requirements, ex: open and notorious occupation for five continuous years | Easement by perscription/Perscriptive easement, terminates after 5 years of non-use |
| Easement created to prevent landlocked property | Easement by necessity |
| Privately created limitations on land which, which protect property values and the interests of the property owners | Deed restrictions |
| Makes the property security for the payment of a debt. | Lien |
| This type of lien for property taxes or special assessments has priority over all other liens | Government lien |
| Lien created by statute which exists against real property in favor of persons who have performed work or furnished materials for the improvement of the real property | Mechanic's lien |
| Claimants perfect liens on unpaid work or materials by... | Verifying and recording |
| Voluntarily making property security for payment of debt | Mortgage/deed of trust lien (voluntary specific lien) |
| Court ordered claim against everything an individual owns | Judgment lien |
| A recorded document that gives constructive notice of a pending lawsuit | Lis Pendens |
| IRS Lien | Deals with income or estate taxes |
| Seizure of personal property to satisfy a potential later judgment | Attachment |
| A homestead is not a _____ or _______ | Lien, encumbrance |
| Unauthorized use of another person's land | Encroachments |
| Personal, revocable and unassignable permission to do one or more acts on the property of another without possessing any interest in the property is called a... | Liscense, not an estate in land |
| What is the act of conveying real estate ownership (title) called? (The opposite of acquisition) | Alienation |
| When discussing "conveying ownership", what best describes something FROM individuals TO the government? | Dedication |
| What are the two documents used to transfer interests in property? | 1. Deed - Real property 2. Bill of Sale - Personal property |
| What are the six essential elements of a valid deed? | 1. In writing 2. Competent grantor (18/sane) 3. Must designate a grantee 4. Granting clause (words of conveyance)to show intent to give up title 5. Adequate description of property, does NOT have to be legal description 6. Execution (signed by gran |
| For valid deed to be effective and transfer title it must be... | 1. Delivered by grantor 2. Accepted by grantee |
| What is the most commonly used deed in California? | Grant deed |
| What is a grant deed? | 1. Implied warranties 2. Conveys after-acquired title Limited warranty deed using word "grant" or like words that assure a grantee that the grantor has not already conveyed land to another and the estate is free from encumbrances placed by grantor |
| A deed to relinquish any interest in property which the grantor may have, without warranty of title or interest | Quitclaim deed |
| Deed used to convey real property which contains warranties or title and quiet possession, and the grantor agrees to defend the premises against the lawful claims of 3rd persons | Warranty deed (common in other states but has been supplanted by grant deed) |
| The transfer of the title of land from one person to the immediate preceeding owner. Commonly used to transfer the legal title from the trustee to the trustor (borrower) after a trust deed debt has been paid in full | Reconveyance |
| The judicial process that administers the business affairs of a person who has died | Probate |
| If real property is sold through probate course, who sets the liscensee's commission? | The court |
| The transfer of real property by will is called? | "a devise" (parties = devisor/devisee) |
| This type of will is more formal than a statutory will and is usually created by an attorney | Witnessed will |
| This type of will is in the testator's handwriting and does not need to be notarized | Holographic will |
| When a person dies without a will they are said to have died... | Intestate |
| When there is not will, what governs the distribution of the estate? | Law of Succession |
| Adverse possession is ownership recognized by the courts are fulfilling 5 essential elements. What are they? | 1. Open and notorious occupation 2. Continuous for 5 consecutive years 3. Hostile to intrest of the true owner 4. Held under a claim of right or color of title 5. Payment of taxes for 5 consec. years |
| Adverse possessor asserts claim that he/she is the owner is called | Claim of right |
| Holds document appearing to give good title (ex, a forged deed) | Color of title |
| Claiming right to use someones property | Easement by perscription |
| 4 essential elements for an easement by persciption: | 1. Open and notorious occupation 2. Continuous for 5 consecutive years 3. Hostile to true owner's interests 4. Under claim of right or color of title |
| Who establishes polices and proceedures that regulate recording? | state statue |
| The history of conveyances and encumbrances affecting title to property is called: | Chain of title |
| The California Land Title Association (CLTA) offers limited coverage FOR HOMEOWNERS that insures against loses from: | 1. Forgery and fraud 2. Matters of record 3. Improper delivery 4. Lack of capacity |
| The American Land Title Association (ALTA) FOR LENDERS insures against losses from: | 1. Unrecorded tax and assessment liens 2. " " mechanic's liens, easments, encumbrances 3. Water rights and mining claims 4. Correct survey showing encroachments 5. Rights of party in possession |
| T/F Government regulations such as zoning ordinances are insurable | FALSE, are NOT insurable! |
| The deposit of documents and/or funds with instructions, with a neutral third party, to carry out the provisions of a contract | Escrow |
| T/F After the close of escrow, the escrow agent becomes an agent for each party | True |
| Escrow agents can only release funds upon: | 1. Agreement between parties 2. Court order - interpleader action 3. Arbitration decision |
| In closing statements for escrow, prorations are based on a _________ period | 30 day month, 360 day year |
| Federal law that standardizes closing practices for certain transactions, restricts amount of advance escrow account payments for taxes and insurance | RESPA (Real Estate Settlement Protection Act), Note: Respa prohibits kickbacks for unearned fees |
| When dealing with real property taxes, an ad valorem tax means... | According to value |
| In the property tax process, the board of supervisors does what? | Sets the rate which establishes tax base |
| In the property tax process, the county assessor does what? | Determines assessed value |
| In the property tax process, the county tax collector does what? | Collects property tax |
| What did Proposition 13 do for real property taxes? | 1. limited the tax rate to 1% of assessed value, plus 2. Voter approved indebtness |
| In the property tax process, assessment increases are limited to...? | 1. Maximum of 2% per year, or 2. When ownership changes, or 3. When improvements are made to the property |
| This is used more than any other law for street improvements and appears on property tax bill... | Street Improvement Act of 1911 |
| What is Mello-Roos and how does it relate to the property tax process? | 1. No requirement that improvements will benefit individual properties 2. Unpaid assessments do not appear on property tax bill but are separately levied and collected 3. Seller must disclose if lien exists |
| Property taxes are payable in two installments. When are they due and when are they delinquent? | Memory aid: No Darn Fooling Around = Nov, Dec, Feb, April 1. 1st installment due - Nov 1 2. 1st installment delinquent - Dec 10 3. 2nd installment due - Feb 1 4. 2nd installment delinquent - April 10 |
| If installment is not paid on or before delinquent date, a ____% penalty is charged | 10% |
| The State Board of Equalization issues certificates of clearance to demonstrate that all previous sales taxes have been paid. This protects the buy from ___________ | Successor liability |
| The net amount a taxpayer has invested in his or property is called? | Basis |
| The equation to calculate adjusted basis: | Cost of Acquisition + Capital Improvements - Allowable Depreciation |
| The equation to calculate gain or loss is: | Adjusted selling price (after costs of sale) - Adjusted Basis |
| The equation to calculate Book Value of an Asset for Accounting is: | Original Cost + Capital Improvements - Accumulated Depreciation |
| Gain that is taxable in the year of sale | Recognized gain |
| Gain that does not have to be recognized in a given tax year. Tax is postponed to a subsequent year. | Deferred gain |
| Total of recognized and deferred gain | Realized gain |
| Method of reporting recognized gain and paying taxes, when installments are received, if the sales price is being paid in one or more annual installments after the sale | Installment sales |
| Tax deferred exchanges are often called "tax-free" but are more accurately termed "tax-deferred". The taxes are deferred so long as the tax payer does not receive either of these two things: | 1. Mortgage relief 2. Boot (example: cash) |
| What are the four elements essential for a valid contract? | Consent/Mutual Agreement, Capacity, Consideration, Lawful Objective Memory Aid: CoCa CoLa |
| This type of contract meets all legal requirements | Valid |
| This type of contract has no legal effect | Void |
| Contract is valid until injured party rejects it | Voidable |
| Contract that fulfills all essential elements, but due to the following laws will not be enforced by the courts | Unenforceable |
| This type of oral or written contract involves a promise exchanged for a promise | Bilateral |
| This type of oral or written contract involves a promise exchanged for performance | Unilateral |
| A contract in which something remains to be done by one or both parties | Executory contract |
| In order to make an amendment or changes to an existing contract, must be written and _____ by all parties | Signed |
| Transfers contract rights and duties but assignor retains secondary liability | Assignment |
| Substituion of one agreement for another agreement | Novation |
| To sue for completion of transaction | Specific performance |
| To retain breaching party's deposit in lieu of actual damages | Liquidated damages |
| During escrow, the buyer holder _____ title, while the seller hold ______ title | equitable for buyer, legal for seller |
| This act alows buyer to rescind contract if improvements are destroyed before title of possession has passed, so long as there is no agreement to the contrary. If title or possession has transferred, buyer must continue with transaction. | Uniform Vendor and Purchaser Risk Act |
| A lease is a also known as | "chattel real" |
| This is a type of lease where one has fixed rent and the landlord pays all expenses | Gross/Fixed lease |
| This is a type of lease where the tenant pays rent plus all expenses | Triple-Net |
| This is a type of lease where tenant pays base rent + a percentage of gross income/sales | Percentage lease |
| This is a type of lease that includes an escalator cluase - rent increases at intervals, and is adjusted based on economic indicators (consumer price index) | Graduated (step-up/index) lease |
| Original lease between landlord and tenant 1 after tenant 1 has sublet to tenant 2 | Sandwich lease |
| Financing technique where an owner sells property to an investor and then leases the property back. Converts equity to working capital without giving up possession. | Sale-leaseback |
| T/F Tenant needs landlord approval to sublease | FALSE, tenant may sublease or assign the contract without landlord approval unless lease contract states otherwise |
| In California, the maximum amount of a security deposit is equal to ____ months rent if furnished, or _____ months if unfurnished | 3 months rent if furnished, or 2 months if unfurnished |
| These 3 acts prohibit discrimination in leasing except for ability to pay: | 1. Unruh Civil Rights Act 2. Fair Employment and Housing Act (FEHA) 3. Federal Fair Housing Act |
| Disclosure from sellers and their agents that is required to be given to buyers as soon as practicable before transfer | Transfer Disclosure Act Note: Applies to 1-4 family dwellings, waivers NOT allowed, repairs not required (only disclosure), agents may not fill in seller's portion of form |
| Residential buildings built before 1978 are referred to as | Target housing |
| Transfer Disclosure Statements (TDS) come with a right to rescind. How long if the TDS is personally delivered? How long if mailed? | 3 days if personally delivered, 5 days if mailed |
| How big is a fault zone? | 1/4 mile wide |
| This law passed in 1972 requires sellers and/or agents to disclose if the property is located within a state delineated earthquake fault zone | Alquist-Priolo Earthquake Fault Zoning Act |
| This act imposes liability for environmental problems on anyone who "touches the property" for example: lenders who foreclose, tenents, heirs, and devisees. AKA: Superfund law | Comprehensive Environmental Response Compensation and Liability Act (CERCLA) |
| Frequent flooding is defined as occurring | More than once in 10 years |
| This act regulates sub-divisions of two or more contiguous parcels and gives local governments control over the physical aspects of subdivisions, sub-divider submits maps, requires Environmental Impact Report | Subdivision Map Act |
| A personal property instument that establishes a promise to repay a debt and identifies: the borrower and lender, amount of debt, terms of repayment, and the interest rate | Promissory Note |
| What are the four things a promissory note identifies? | 1. Borrower and lender 2. Amount of debt 3. Terms of repayment 4. Interest rate |
| Term for when promissory notes are sold for less than their face value | Discounting |
| Evidence of a debt, secured by a mortgage or trust deed, negotiable instrument that is easily salable | Promissory Note |
| Two instruments used to borrow money to buy property | Mortgage and Deed of Trust (they are NOT the same) |
| Security instruments that pledge (hypothecate) property as security for repayment without giving up possession | Mortgage and Deed of Trust |
| This clause allows lender to demand immediate payment of entire balance owned if loan is in default | Acceleration clause |
| This clause allows lender to foreclose through trustee's sale procedure instead of judicial foreclosure | Power of Sale clause |
| Two party instrument that creates a lien on real property pledged as security for a debt | Mortgage |
| Name the two parties involved in a mortgage | Borrower = MortgagOR Lender = MortgagEE |
| T/F California favors Deeds of Trust | True |
| Most common financing instrument in the United States | Mortgage |
| Three-party instrument used instead of a mortgage to create a lien | Deed of Trust/Trust Deed |
| Name the 3 parties involved in a Deed of Trust/Trust Deed | Borrower = TrustOR Lender = Beneficiary Third Party = TrustEE |
| Using this type of financing instrument, a borrower conveys bare legal ("naked") title to third party to hold on behalf of lender as security for loan. | Dead of Trust/Trust Deed |
| When trust deed is paid in full, these two things occur: | 1. Beneficiary notifies trustee to reconvey bare legal title 2. Trustee executes and delivers to trustor a RECONVEYANCE DEED |
| Who initiates the foreclosure suit? The Mortgagee or the Mortgagor? | Mortgagee |
| Process through which borrower can exit foreclosure process | Reinstatement |
| During the foreclosure process, who retains possession? | Defaulting owner |
| Whether renting in an apt building or owning a condo, an occupant has an estate in real property. Which one is a freehold estate, which is the leasehold/less-than-freehold estate? | Condo = Freehold Apartment = Leasehold/Less-than-freehold estate |
| The lease contract itself is an item of personal property called a... | Chattel real |
| This is used to release an easement, executed by the dominant tenement property owner... | A quitclaim deed |
| How long is an easement granted by deed good for before it expires for non-use? | It does NOT expire, it is for an unlimited amount of time. |
| How long before an easement by prescription expires for non-use? | 5 years |
| This allows a property owner to deviate from zoning reqirements... | Variance |
| A change in zoning from more dense to less dense use (for ex: commercial to residential) is called... | Downzoning |
| This allows a property owner to deviate from building codes... | Conditional use permit |
| ____ refers to construction on vacant land in urban areas, usually as part of a reclamation projet of run-down neighborhoods. | In-fill |
| What are the 3 stages of building a house? | 1. Land aquisition 2. Development 3. Construction |
| This allows a project to proceed without an environmental impact report (EIR) | Negative Declaration |
| A determination by a city or county, under the California Environmental Quality Act, that a development project will not have a significant adverse effect on the environment | "Negative Declaration" |
| This identifies a project's environmental impacts, cites mitigation measures, and discusses project alternatives, including, "no project." | Environmental Impact Report (EIR) |
| _______ and ______ are required for mechanics' liens to be valid. "Mechanics", laborers, or materialmen sign to ____ prior to _____. | Verification and recording |
| A mechanic's lien is an ______, specific lien | Involuntary |
| What determines the priority of a mechanic's lien? | The date work began or materials were delivered |
| True or False: A homestead is a type of encumberance | FALSE! A homestead is NOT an encumberance (anything affecting fee, ie mortgage, or easements). It protects specified property from certain encumberances. |
| True or False: A recorded homestead does not change real property taxes | True |
| The gradual receding of water resulting in an increase in the ownership of what becomes the permanent dry land. | Reliction |
| Aquiring title to more additional land by the gradual accumulation of earth deposited on the owner's property from natural causes (for example from erosion) | Accretion |
| The earth itself is referred to as ______ | Alluvion or alluvium |
| This act requires that geological reports be obtained for project approvals within specified zones and prospective purchasers of property in the zones be made aware of the fact that the property is located in such a zone. | The Alquist-Priolo Earthquake Fault Zoning Act |
| Since earthquake zones are approximates _____ miles wide, sellers and/or agents therefore must disclose to a buyer if a structure is within _____ miles of a fault | 1/4th miles |
| Counties must regulate construction in earthquake zones. What is the only exception? | Single family dwellings of 2 stories or less in a development of not more than four dwellings |
| A seller of a property built before _________ must giver the buyer a booklet entitled: | Before January 1, 1960, booklet = "Homeowner Guide to Earthquake Safety". If built after January 1, 1960, home is considered up to earthquake standards. |
| The 1960 earthquake deadline applies to residential property (light-frame construction). _______ buildings (commercial property) require a disclosure if they were built before ______ | Masonry, January 1, 1975 |
| This is recommended when damage to a home could be the result of unstable soil or land movement on a hillside or cliff | Soil Engineer's Report |
| Violating this can result in less or title | Condition |
| Violating this can result in an injunction (court order halting the action) or a suit for dollar damages | Covenant |
| Violating a _______ can have a much harsher result than violating a _______ | Condition, Covenant |
| True or False: Stock in a mutual water company is considered REAL PROPERTY | True |
| This act provides for anti-fraud provisions when subdivisions consist of ____ lots or more, and registration, disclosure and rescission provisions when subdivisions consist of ____ lots or more | Interstate Land-Sales Full Disclosure Act, 25, 100 |
| True or False: A subdivider can apply for an exemption from the Interstate Land-Sales Full Disclosure Act filing requirements if all parcels are 25 acres or more | False, 20 |
| If multiple offers on a property are received, who must present them to the seller SIMULTANEOUSLY | The listing broker |
| True/False: Liscensees must continue to present offers to the principal until close of escrow unless the seller instructs them not to or unless the offer is patently frivolous | True! |
| True/False: Listing agreements "belong to" the salesperson | FALSE, they belong to the broker |
| A listing broker owes _____ duties to the seller | Fiduciary (A fiduciary duty is a legal or ethical relationship of confidence or trust between two or more parties) |
| True/False: Death or incapacity of the listing broker will automatically transfer the listing to another broker | False, death or incapacity will TERMINATE listing |
| According to agency disclosure guidelines, the process to comply with the law goes in the following order: | Disclose, elect, confirm |
| True/False: This technique is a capitalization of net income technique used to estimate the value of land | Land residual technique |
| Appraisal method where the appraiser estimates the land value of improved property by deducting the value of any site improvements | Abstraction |
| True/False: An appraiser would consider it necessary to use a low capitalization rate for properties that pose a greater risk to the investor, ie, if the property is of lower quality | False, HIGH |
| The present highest and best use when a change in highest and best use is in the foreseeable future (Ex: A gold mine where gold is running out) | Interim use |
| This represents a loan applicants credit risk | FICO score |
| What two departments in California can license mortgage loan correspondents? | Department of Real Estate or Department of Corporations |
| Where are existing loans bought and sold? | Secondary Mortgage Market |
| This type of loan is where the borrower receives cash, as opposed to a "purchase money" loan, which is one that is used for the purchase of property | Hard money loan |
| What is it called when a holder sells a note for less than its face value? | Discounting |
| True/False: Lenders cannot charge a fee for filling out the Uniform Settlement Statement | True |
| Who is responsible for furnishing Truth in Lending disclosures to the consumer? | The creditor |
| Who holds tit under a Cal-Vet loan? The California Department of Veteran Affairs or the federal Veterans Administration? | California Department of Veterans Affairs holds title |
| With a Cal-Vet loan, who must resides in the property until the loan is paid in full or the property is sold? | The veteran or a member of the veteran's immediate family |
| Name three things the Federal Reserve might do to increase the money supply | Lower the reserve requirements of member banks, buy bonds, or decrease the discount rate |
| The purchasing power of the U.S. dollar is found by looking at what? | Price indexes |
| These "increase the lender's yield" | Discount points |
| Under FHA loans, borrowers pay Mutual Mortgage Insurance (MMI). Who protects the lender in case of default? | MMI! |
| FHA will insure a loan only if the property meets...? | MPRs, or Minimum Property Requirements |
| This type of loan provides for partially deferred payments of principal at the start of the loan, and involves "negative amortization" (ie, increase in principal amount) in the early years of the loan. | GPAM, or Graduated Payment Adjustable Mortgage. Usually after first 5 years, loan payments will increase substantially. |
| What is the name of a promissory note secured by a trust deed on unimproved property, or executed after construction of an improvement on property but before the first sale of the property, provided the note is not made for more than 36 months? | Promotional Note |
| Who retains possession of the property during a judicial foreclosure process? | The defaulting owner |
| A borrower can exit a foreclosure process _______ which means to make up all past due payments, plus pay any penalties, costs, and charges | Reinstatement |
| A trustor (borrower) can deed a property to the beneficiary (lender) to avoid foreclosure but the beneficiary takes title __________________ | Beneficiary (lender) takes title subject to all junior and senior liens |
| Real Property sales contracts are also known as these two things: | 1. Land contract of sales 2. Installment sales contract |
| In real property sales contracts, the seller is referred to as the _____? | Vendor (seller) |
| In real property sales contracts, the buyer is referred to as the _____? | Vendee |
| In real property sales contracts, who holds the legal title? | Vendor (seller) |
| In real property sales contracts, who holds equitable title? | Vendee (Vendee) |
| True/False: Real property sales contracts cannot prohibit early payoff? | True! |
| If an earthquake or other natural disaster damaged a property, who would remain liable for the payments? | Vendee |
| True/False: A vendor can enforce provision prohibiting recording | False, a vendor CANNOT enforce provision prohibiting recording |
| What is the opposite of acquisition? | Alienation |
| Real Property sales contracts are also known as these two things: | 1. Land contract of sales 2. Installment sales contract |
| In real property sales contracts, the seller is referred to as the _____? | Vendor (seller) |
| In real property sales contracts, the buyer is referred to as the _____? | Vendee |
| In real property sales contracts, who holds the legal title? | Vendor (seller) |
| In real property sales contracts, who holds equitable title? | Vendee (Vendee) |
| True/False: Real property sales contracts cannot prohibit early payoff? | True! |
| If an earthquake or other natural disaster damaged a property, who would remain liable for the payments? | Vendee |
| True/False: A vendor can enforce provision prohibiting recording | False, a vendor CANNOT enforce provision prohibiting recording |
| What is the opposite of acquisition? | Alienation |
| What two things are required for a valid deed to transfer title? | A property description a granting clause |
| What two things are requird for a valid deed to transfer title? | Delivery by the grantor and acceptance by the grantee |
| True/False: Signature of the grantee, and recording are not required for a deed to be valid or to transfer title | True |
| In order to have constructive notice of interest in real estate... | Documents must be recorded in the county where the property is located |
| Standard title insurance (CLTA) covers forgery and fraud, matters of record, improper delivery, and lack of capacity but not... | but not the rights of parties in possession |
| Extended title insurance covers forgery and fraud, matters of record, improper delivery, lack of capacity (like CLTA) plus unrecorded liens and encroachments, and parties in possession. What is necessary for an ALTA policy? | A physical inspection |
| Most buyers will get _______ insurance coverage (it's the most common), however lenders require _____ | standard title, extended coverage |
| True/False: Extended coverage insurance covers zoning violations | FALSE! A violation in zoning would NOT be covered by any title insurance policy, standard or extended |
| What policy of title insurance covers all risks? | NONE! |
| Name three way an escrow agent can release deposit money | 1. Upon instructions from both buyer and seller 2. Upon a court order 3. Upon an arbitration decision |
| A tax shelter is associated with... | Income tax |
| During closing, an escrow agent is a _____ agent; after closing, an escrow agent is the _____ agent of each individual party. | Dual, single |
| What is a "complete escrow"? | One where everything is ready for closing by the transaction as not closed yet |
| What happens if the buyer waives their right to delivery of a Uniform Settlement Statement prior to closing? | The statement must be mailed as soon as practical after the close of escrow |
| What is the document called that is used to convey real property from the government to a private owner? | Patent |
| What is used when a trust deed has been foreclosed on and the property is sold at a foreclosure sale? | A trustee's deed |
| What is issued by a trustee to the trustor when a trustor pays off a trust deed? | A deed of reconveyance |
| When does the fiscal year for property taxes begin? | July 1 |
| What is the easiest type of 1031 tax-free exchanges? | One where both properties have similar mortgage amounts and require only a little boot to balance the equities. All such exchanges must be of the like-kind properties (ie, ou can't exchange an apartment building for a personal residence) |
| Who can homeowners appeal the tax assessment on their property to? | A local Assessment Appeals Board |
| What is the most likely item to be "short-rated" on an escrow statement? | Fire insurance |
| What is it called when an owner might not have a financial gain but could have a financial loss? IE, fire insurance | Indemnity agreement |
| Taxes against a specific group of properties that benefit from a public improvement (ie, sidewalks, new sewers, etc...) | Special assessments |
| Who is authorized to make regulations, issue and revoke licenses, and promulgate (require) policies on the enforcement of real estate laws? | The Real Estate Commissioner |
| True or False: The Real Estate Commissioner is authorized to collect penalties for victims of licensees. | FALSE. The Real Estate Commissioner is NOT authorized to collect penalties for victims of licensees. |
| After passing the licensing exam, a person has how long to apply for a license? | 1 year |
| A new salesperson licensee receives a 4-year license, but it is conditional until the licensee completes what? | 2 additional, college-level courses within 18 months |
| A ________ is required between a broker and any salesperson that associates with the broker | Written contract |
| True or False: A broker is liable for the professional conduct of their salespersons, regardless of whether the salesperson is an employee or independent for tax purposes | True |
| If a licensee allows their license to expire at the end of the four-year license period, he or she has ______ years to complete the required C.E., pay the fee, and renew before being required to re-apply and re-take the state exam | 2 years |
| How much is the fine for acting as a licensee without a license? | $10,000 |
| For how long will the Department of Real Estate issue a temporary license to a person who has not paid child support? What happens if after this period, a person has still not paid child support? | 150 days, license will be suspended |
| What is the maximum payment per transaction from the Department of Real Estate's Recovery Fund? What is the maximum payment per liscensee? | The Recovery Fund maximum payment per transaction is $20,000. The maximum recovery payment per licensee is $100,000. |
| Who can respond to inquiries on the internet about property and loans? | Only real estate licensees |
| True/False: Unlicensed assistants may attend an open house, hand out fliers, arrange for an order structural pest control inspections, let the inspector into the property, and order repairs | True, however, information about the property to complete the report must be provided by the licensee |
| True of False: Unlicensed officials can make solicitation telephone calls to buyers and sellers | FALSE, Unlicensed officials CANNOT make solicitation telephone calls to buyers and sellers |
| Is a licensee allowed to give gifts to clients without violating the law? | Yes |
| Can unlicensed assistants make solicitation telephone calls to buyers and sellers? | No, they cannot. |
| Name one exception to the requirement of providing the Transfer Disclosure Statement even if the seller is putting the property on the market "as is" and doesn't expect to fix it. | Foreclosures do not need the statement |
| A broker is ______ to fill out the ENTIRE Transfer Disclosure Statement | NEVER |
| A Transfer Disclosure Statement is required to be provided once an offer is accepted on ______ united of residential property. | 1-4 units |
| In regards to a Transfer Disclosure Agreement, the buyer has how many days from time of delivery and home many days from time of mailing to rescind the contract? | 3 days from time of delivery or 5 days from time of mailing |
| How long does a buyer have to commence legal action against a licensee who does not conduct a reasonably competent and diligent inspection of property, or makes a misrepresentation? | TWO YEARS from the date of possession |
| What is another name for the purchase agreement between the buyer and the seller? | Deposit receipt |
| True of False: If disclosed to the seller, a licensee can accept a post-dated check as an earnest money deposit along with a written offer | TRUE! |
| Can a broker handle the escrow and loan proceedings for a transaction to which he is a party if that broker discloses all facts to the interested parties? | Yes |
| The higher the EEr (energy efficiency rating), the more ____ the appliance | efficient |
| Building inspectors are primarily liable for...? | The enforcement of building codes |
| What does HVAC stand for? | Heating, ventilation, and air conditioning |
| What is the zoning code for multifamily dwellings? | R3 |
| R-Value has to do with insulation efficiency. What does the "R" refer to? | Resistance |
| How is radon gas measured? | Pico-curies per liter of air (pCi/L) |
| What devices are used to measure radon gas? | An alpha-track detector or an electret ion chamber detector |
| If there is a Mello-Roos tax lien on a property, the seller portion of the Transfer Diclosure Statement makes the _____ primarily responsible for insuring the buyer is informed of the lien | the seller is primarily responsible (as opposed to the listing or selling broker) |
| In this type of lease, the tenant pays rent; the landlord pays all expenses | Gross lease |
| In this type of lease, the tenant pays rent plus other property expenses such as taxes or insurance | Net lease |
| A broker's advertisement that listed only a description of a house, a listing price and a contact phone number without an indication that a broker is involved would be considered ________? | Blind advertising |
| All broker advertising must state _______ or ______. A lender soliciting for borrowers must include the phrase "____________"? | "broker" or "agent", "Real Estate broker - CA Dept. of Real Estate" |
| A real estate licensee can pay an unlicensed person this type of fee if the finder MERELY ARRANGES AN INTRODUCTION and does not solicit or participate in negotiations | Finders fee |
| True or False: A California broker can pay an out of state broker a commission | True |
| Prior to entering into a purchase contract, what must be given to any serious prospective purchaser who must then SIGN to acknowledge that it was received and read? | A Subdivision Final Report |
| With whom are pest control reports filled with? | The Structural Pest Control Board |
| True or False: Anyone can obtain a copy of a pest control report from the Structural Pest Control Board | True, it is a public report |
| A purchaser of a business may end up with a tax liability known as _________. It is enforced by the state Board of Equalization | Successor liability |
| True or False: Under the federal superfund law for toxic materials, anyone who touches the land can be held liable -- even a tenent could be held liable if the land were previously contaminated | True! |
| How long must brokers' trust fund recording be reconciled? | Monthly |
| If a buyer makes out a deposit check to the escrow company and hands it directly to the escrow clerk, does the broker have to maintain any records of the check? | No |
| How is a desk fee determined? | Total expenses of a brokerage divided by the number of salespersons, NOT THE NUMBER OF DESKS IN A BROKERAGE |
| What is the name of the federal law that requires buildings to be accessible? | Americans with Disabilities Act (ADA) |
| These laws refer to 1-4 family dwelling units and prevent discrimination in the sale or lease of "housing accomidations" | Fair Housing Laws |
| These laws refer to places with a commercial use (stores, offices, ect...)and prevent discrimination in the sale or lease | Public Accommodation |
| Complaints re: fair housing violations can filed with the state Fair Employment and Housing Commission ____, or Fed. Dept. of Housing and Urban Development (HUD) w/in __of discriminatory action, OR party file suit in state or federal court w/in _ years | 60 days, 1 year, 2 years |
| How much can lenders charge on loans made to individuals who do not speak English so long as the money is used to pay for interpreting mortgage documents | 1/8% fee |
| True/False: While lenders are required to request information about sex, race, etc...on loan applications, prospective buys are not required to fill in the info and can ignore the request | True |
| Under federal law, bankruptcy discharges liability for most debts, but NOT for: | alimony and child support tax claims liability for malicious injury debts not scheduled (future debts) |
| Present apartment tenants of a proposed condominium, community apartment project, or stock cooperative must be given written notice of a conversion ______ days prior to conversion | 180 days |
| Present apartment tenants of a proposed condominium, community apartment project, or stock cooperative must also receive a NOTICE OF A RIGHT TO PURCHASE their units for _____ days after the issuance of the Public Report | 90 days |
| What is the illegal practice on the part of agents of inducing the listing and selling homes at prices below market value on the ground of the prospectice entry into a neighborhood of persons of another race, color, religion, etc... | Panic selling (also known as Blockbusting) |
| Where can the Statute of Frauds be found? | In the California Civil Code |
| In real estate contracts, do handwritten portions take priority over pre-printed portions? | YES |
| What kind of contract involves a promise for a promise? | A bilateral contract |
| The words "valuable", "good", "sufficient", or "adequate" are all associated with...? | Types of CONSIDERATION |
| What is it called when one part is substituted for another party, thus creating a new contract from an old one? | A Novation |
| Where is the clause "Time is of the essence" found and does it apply to everything in the contract? | It's found in a deposit receipt and yes, it applies to everything in the contract |
| What happens if an offeror dies before the offer has been accepted and the acceptance communicated? | The death terminates the offer |
| A counter offer is considered _______ and the result is the original offer is _______ | qualified acceptance, dead |
| A contract entered into based on misrepresentation is voidable. The injured party has ______ after the discovery of the misrepresentation to void the contract | 1 year |
| A voidable contract is valid until when? | Until it is rescinded by the injured party |
| This clause allows one part to void the contract if certain conditions aren't met (Ex: they can't get the property financing) | Contingency clause |
| This agreement contains a clause that grants the agent the "authority" to receive deposits on behalf of the seller | Listing agreement |
| What happens if a seller cancels an exclusive listing agreement with a broker and then enters into an open listing with other brokers? | He or she may end up owing both brokers a commission |
| An exclusive listing agreement must have a definite _____ date. It cannot be based on an indeterminable event (ie, the completion of construction) | Termination |
| This clause is found in a LISTING AGREEMENT and allows a broker to collect a commission if the property sells after the termination of the listing to a buyer the broker procured. Broker MUST have provided names of prospective buyers to seller in WRITING | Safety clause |
| Name a few things security deposits can be used by a landlord for... | For unpaid rent For cleaning the unit For repair of damages For the cost of restoring and replacing personal property (including keys) |
| When a landlord's actions disturb a tenant's right to possession of and quiet enjoyment of the premises. | Constructive eviction |
| Name some examples of constructive eviction | A landlord's attempt to lease property to a third party failing to make necessary repairs making extensive and unwarranted alterations to a property which adversely affect the tenant's use of the property |
| This is a statistical measure of changes in consumer goods prices and is used as a standard in making rent adjustments in COMMERCIAL RENTALS | Consumer Price Index (CPI) |
| True or False: A landlord may enter a tenant's property to show the property to prospective buyers... | True |
| This is a federal subsidy program for low-income tenants run by HUD, the U.S. Department of Housing and Urban Development | Section 8 |
| Condition in a real estate financing instrument giving the lender the power to declare all sums owing the lender immediately due and payable upon the happening of an event, such as the sale of the property, or a delinquency in the repayment of the note | Acceleration Clause |
| An addition to land through the efforts of man or by natural forces | Accession |
| Process by which real or personal property of a party to a lawsuit is seized and retained in custody of court for purpose of acquiring jurisdiction over the property, to compel an appearence before court, or for security for debt of costs from litigation | Attachment (AN ATTACHMENT IS A LIEN) |
| A sudden and perceptible loss of land by the action of water as by a sudden change in the course of a river | Avulsion |
| The statement of a lender giving the remaining principal balance and other information concerning a loan. It is usually obtained when a borrower wishes to sell, pay off a loan, or refinance. | Beneficiary Statement |
| Failure by a licensee to indicate license status in any advertising of services for which a real estate license is required | Blind advertising |
| A measure of lumber that equates to 144 cubic inches, or one foot square by one inch thick. It is therefore 1 X 1 X 1 or 144 cubic inches. | Board foot |
| The systematic regulation of construction of buildings within a municipality established by ordinance or law. (Enforced by building inspectors) | Building code |
| A term applied to the remained of an acre of newly subdivided land after the area devoted to streets, sidewalks, and curbs, etc...has been deducted from the acre | Commercial Acre |
| The document recorded to create a homestead. It is NOT a lien. | Declaration of Homestead |
| A loss in value due to factors not on the subject property but adversely affecting the value of the subject property | Economic Obsolescence |
| Gross income, less vacancy and bad debt/credit allowance | Effective Gross Income |
| A drawing showing the exterior sides of a building as it will appear when completed. The type and placement of windows are detailed, as are other openings such as doors, dormers, vents, and skylights | Elevation |
| legal doctrine prevents a person from asserting/denying a fact bc its contrary to the person's previous words of acts. ex: a person must stop others from being misled into a false belief such as that an agent has authority to speak for them when they dont | Estoppel |
| Statement by a tenant, typically made to a purchaser of income property, setting forth the amount of rent payable, the term of the rental agreement, and that the tenant has no offset against the landlord. AKA: Offset Statement | Estoppel Certificate |
| A concrete support under a foundation that rests on solid ground and is wider than the structure it supports. It is the bottom part of a foundation | Footing |
| A scale drawing showing the size of footings, ize and dimension of piers, and the construction measurements of the sub-floor area. | Foundation Plan |
| A loss of value due to adverse factors from within the structure which affect the utility of the structure, value, and marketability | Functional Obsolescence |
| A lien on all property of a debtor in the county in which it is recorded | General lien |
| Allows for a non-conforming use when zoning changes | Grandfather clause |
| A lease in which the lessee (tenant) pays an agreed rent and the lessor (owner) pays the expenses. (Compare this with a net lease) | Gross lease |
| A pitched roof with sloping sides and ends | Hip roof |
| A contract clause where the owner agrees to protect the agent against all damages arising out of the transaction except those caused by the agent's own negligence or fraud. Found in a listing agreement. | Hold-Harmless Clause |
| A court action initiated by an agent of escrow company who is holding deposit money, for the purpose of deciding who, amongst a buyer and a seller, is entitled to the money. | Interpleader |
| Legal claim on all of the property of a judgment debtor which enables the judgment creditor to have sufficient property sold for payment of the amount of the judgment | Judgment Lien |
| Contract used in a sale of real property wherby the seller retains title to the property until all or a prescribed part of the purchase price has been paid. | Land Contract AKA: Conditional sales contract, installment sales contract, or real property sales contract |
| A determination by a city or county, under the California Environmental Quality Act, that a development project will not have a significant adverse effect on the environment. It allows the project to proceed w/o an environmental impact report (EIR) | Negative Declaration |
| A lease requiring a lessee to pay charges against the property such as taxes, insurance, and maintenance costs in addition to rental payments | Net Lease |
| The percentage of interest that is stated in loan documents. May be different from the effective interest rate or the annual percentage rate (APR) | Nominal Interest Rate |
| An original conveyance of title to real property or personal property from the government to a private owner. | Patent |
| A type of lease on real property, the rental amount for which is determined by the amount of business done by the lessee; usually a percentage of gross receipts of the business with a provision for a flat fee for a minimum rental amount | Percentage Lease |
| A plan showing the lot dimensions, boundaries and improvements drawn to scale. It may also include walks, driveways and roof plans of the various structures of the property | Plot plan |
| Appraisal principle that states that a lower valued property in a neighborhood of higher priced properties tends to increase by the association with the higher priced properties. Also known as under-improvement or inadequacy. The opposite of regression. | Progression |
| Bringing together and weighing estimates from the sales comparison, cost, and income approaches to arrive at a final estimate of value. Also previously known as correlation | Reconciliation |
| An apprailsal principle that holds that higher valued property in a neighborhood of lower valued properties is reduced and seeks the level of the lower valued properties. Also known as over-improvement or super adequacy. | Regression |
| Cost to replace a structure with one having utility equivalent to that being appraised, but constructed with modern materials and according to current standards, design, and layout | Replacement cost |
| The cost of replacing the subject improvement with one that is the exact replica, having the same quality of workmanship, materials, and design to duplicate an asset | Reproduction cost |
| A clause in a blanket encumbrance enabling the borrower to obtain partial releases for specific parcels from a loan upon payment of a proportionate amount of the loan. | Release clause |
| A higher rate than was originally charged for a service that is used for less than the full term. In escrow, a ____ would most likely be charged to a seller who cancels a fire insurance policy. | Short rate |
| A lien that attaches to specified property | Specific lien |
| California law - authorizes local governing bodies to order street improvements and bill the owners for the work or to pay the costs through a bond issue and have the owners pay off the bond through a special assessment. Developer can't use $ to buy land | Street Improvement Act of 1911 |
| California law regulating the division of land in 5 or more parcels of less than 160 acres or 5 or more undivided interests of any size. It is administered by the Real Estate Commissioner | Subdivided Lands Act |
| A person whom the powers of an agent have been conferred, not by the principal directly, but by an agent for the principal and with principal's authorization | Subagent |
| A note in which a borrower repays the principal in a lump sum at maturity while interest is paid in installments or at maturity | Staight note (see interest only note) |
| The name given to the federal statutes and regulations which are designed primarily to insure that prospective borrowers and purchasers on credit receive credit cost information before entering into a transaction | Truth in Lending, AKA Regulation Z |
| When grantee takes title to real property subject to mortgage, grantee is not responsible to the holder of promissory note for the paytment of any portion of the amount due. Most a grantee can lose in event of a foreclosure is grantee's equity in property | "Subject to" A Mortgage |
Created by:
Bringonthetunes