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CA Real Estate Prac.
California Real Estate Practices
| Question | Answer |
|---|---|
| arrears | payment that occurs at the end of a period to compensate for charges accrued during that time |
| covenant of seisin | a protection in which the grantor states they hold the title conveyed in the deed |
| datum | a designated base reference point to elevation used by surveyors to determine the elevations of land or property in an area |
| debt service coverage ratio (DSCR) | used to evaluate income-producing properties; is calculated by dividing the net operating income (cash flow after all expenses and debts are paid) by total debt service (current debt obligations) |
| devise | the transfer of real or personal property through a will |
| ejectment | process by which a property owner removes an occupant from a property; the equivalent of eviction for non-tenants |
| fee simple defeasible | a property interest characterized by perpetual ownership on the condition that the property is used for a certain purpose or under specific conditions; ownership reverts back to the original owner if these stipulations are violated |
| fiduciary | an individual upon whom is placed the highest levels of trust and confidence when acting on behalf of another |
| general lien | a lien for which the real estate AND personal property may be sold to satisfy the debt |
| graduated lease | a lease in which the rental rate increases over time in specific increments |
| escalator clause | a clause in a lease allowing payments to increase in relation to a specified factor or index |
| habendum clause | a clause within a deed that clarifies the type and extent of interest conveyed by the granting clause |
| interpleader action | when an escrow holder takes a buyer and seller to court to force them to resolve conflicts in the escrow instructions |
| joint tenancy | co-ownership in which the parties have an equal and undivided interest in the property; includes the right of survivorship rather than inheritance |
| leverage | the use of a financial instrument or borrowed money to increase a return on investment |
| lis pendens | a document recording at the courthouse giving notice that a lawsuit is pending on a particular piece of property |
| ministerial acts | actions performed for another according to established procedures or guidelines and without the need for discretion or individual judgment |
| ostensible agency | occurs when a principal allows a license holder to act in such a way as to cause a third party to believe that license holder is the principal’s agent |
| planned unit development (PUD) | a subdivision that includes residential dwellings along with nonresidential real estate, departing from normal zoning and subdivision regulations; recreational facilities may be co-owned by PUD lot owners as tenants in common |
| plat | a map indicating the locations and dimensions of lots in a lot and block system |
| prepayment penalty | a fee charged to a borrower for prepaying a loan |
| proprietary lease | long-term and exclusive lease given to resident and stock owner of a cooperative |
| pur autre vie | a life estate characterized by ownership lasting only for the duration of a designated party's lifetime |
| quiet title suit | a lawsuit brought with the purpose of removing any outstanding ownership claim, title defect, or encumbrance on a property |
| quitclaim deed | a type of deed that conveys any interest, title, or right to a parcel of land the grantor has at the time the deed is executed |
| remainder interest | the interest in an estate that will pass to another party (other than the grantor) at the death of the person upon whom the life estate is based |
| reversionary interest | the interest in an estate wherein, upon the death of the life estate owner, full ownership reverts back to the original fee simple owner (grantor) |
| section | one of 36 equal square miles in a township |
| severalty | undivided ownership of an estate, with an interest that is exclusive from other owners; often used in the context of ownership in severalty or tenancy in severalty |
| special assessment | additional taxes levied on the homeowners in a neighborhood or area to pay for improvements that benefit the people living there |
| subordination agreement | a contract that gives a mortgage recorded at a later date priority over a previously recorded mortgage |
| syndicate | a group of investors that gets together and combines resources to make investments they wouldn't be able to make on their own |
| tenancy in common | co-ownership with individual, undivided interest in the property; includes rights of inheritance rather than survivorship |
| title | the actual ownership of a real property that includes the bundle of rights in which a party may own a legal or equitable interest; not an actual document |
| unlawful detainer | legal action a landlord can take against a tenant who has defaulted on their lease |
| Easement Appurtenant | Runs with the land; applies to neighboring properties (IE Joy can use a portion of Rob's driveway) |
| Easement by condemnation | private property is taken for public use through eminent domain |
| appurtenances | rights that run with real property ownership; most often transferred with the property, but possible to sell separately |
| work starts | if a lien is filed, this is the date it takes affect, for lien priority purposes (20 days of starting = preliminary notice) |
| OLDCAR | Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable Skill and Care |
| Escrow instructions | Unilateral instructions are given separately by each party. Bilateral instructions are given by both parties together. |
| PITI + DTI | FICO minimum FHA loans: 580 Max payment-to-income ratio for conventional loans: 28% MaxPITI for FHA loans: 31% Max debt-to-income ratio for manually written conventional loans: 36% MaxDITI ratio for FHA loans: 43% |
| Names for Land Contract (4) | Contract for Deed; Installment Sale; Conditional Sales Contract; Agreement for Deed |
| What does HUD stand for? | United States Department of Housing and Urban Development |
| Hypothecation | the pledging of an asset as collateral to secure a loan for the purchase of that same asset |
| promissory note | negotiable finance instrument (transferable and assignable) used in a typical mortgage agreement. It is evidence of a debt. It is a contract between the lender and the borrower |
| mortgage satisfaction | When a deed of trust is used and the note is paid in full, the lender authorizes the trustee to execute what is known as a deed of reconveyance or deed of release. |
| Defeasance | the term used when a deed of trust is used as the security instrument whereas satisfaction is used with a mortgage |
| Escalation clause | Gives the lender the right to raise interest rates under certain circumstances |
| Lock-in clause | the borrower pays exactly what is due each month without variance. A lock-in clause creates a closed mortgage (the end date is fixed) |
| Exculpatory clause | Protects the borrower in default/foreclosure. It says the property serving as collateral for the loan is the only security on the note. It stops the lender's ability to pursue a deficiency judgment against the borrower. |
| CFPB | Consumer Financial Protection Bureau - Agency created by Dodd-Framk Act to implement TRID (combines TILA + RESPA) |
| TILA | Truth in Lending Act - disclosing credit terms so people can compare easily; Federal Reserve Agency enforces Regulation Z |
| RESPA | Real Estate Settlement Procedures Act - prevent kickbacks in lending + discloses costs of loan + 14 mo. of payments in escrow; Federal Reserve Agency(previously HUD) enforces Regulation X |
| Regulation Z Rules (4) | - Kickbacks not allowed - Disclose costs/terms of loan - 3 day right to rescind period - ad's can't contain certain terms without disclosure statements (Monthly$; # of Payments; DownPayment; Loan Terms, etc.) TILA |
| TRID Disclosures | Loan Estimate (3rd day after applying); Closing Disclosure/ Statement (actual terms 3 days before beginning the loan) |
| ECOA | Equal Credit Opportunity Act - no discrimination |
| FEHA | California Fair Employment and Housing Act - no discrimination for housing and employment |
| Unruh Civil Rights Act | no discrimination in CA businesses |
| Rumford Act | no discrimination in supplying housing |
| Holden Act | No redlining (aka: Housing Financial Discrimination Act) |
| Default (4) | Pay mortgage; keep property in good condition; have insurance; pay taxes + assessments |
| Deficiency Judgment | When the amount made in a foreclosure doesn't pay all the bills, in JUDICIAL foreclosures, they can pursue a personal judgement against the borrower (give us our money!) |
| Right to Reinstate | opportunity to pay up delinquent loan (puts it back into a pre-accelerated loan) |
| Statutory Redemption | the right to redeem a foreclosed property up to 3 mo. AFTER the sale (only for judicial foreclosure - lien theory (not common in CA)) |
| 3 forms of bankruptcy | Chapter 13 - 3-5 year repayment plan (including mortgage) Ch.7 - liquidate + surrender assets Ch.11 - most often with businesses to negotiate repayment terms |
| police power | authority of the state government to enact and enforce laws to protect public health, safety, morals and general welfare |
Created by:
amyrypma
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