Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
113 Cards in this Set
- Front
- Back
|
A voluntary agreement between legally competent parties to perform some legal act
|
Contract
|
|
|
Contracts created by words
|
Express contract
|
|
|
Contracts created by actions or conduct
|
Implied contract
|
|
|
Contract with two promises being exchanged
|
Bilateral
|
|
|
Contract based on only one party promising to perform
|
Unilateral
|
|
|
Contract where all parties have completely fulfilled their obligations
|
Executed contract
|
|
|
One or both parties still have an act to perform
|
executory contract
|
|
|
Contract which meets all the essential requirements and is legally sufficient to be enforceable in court
|
Valid contract
|
|
|
Contract with no legal force or effect
|
Void has no legal existence
|
|
|
Contract which APPEARS valid but may be rescinded
|
Voidable contract
|
|
|
Valid contract which court cannot force parties to perform
|
Unenforceable contract
|
|
|
Essentials of a contract
|
Offer and acceptance
Consideration Competent parties Reality of consent (free and voluntary act of each party) Legal purpose |
|
|
Contract must be in writing to be enforceable
|
Statute of frauds
|
|
|
Agreement is terminated
|
Discharged
|
|
|
Contract must be performed within the time limit specified
|
Time is of the essence (when no time is specified, should be performed within a reasonable time)
|
|
|
Transfer of rights and\or duties under a contract
|
Assignment (original party is still obligated unless specifically released)
|
|
|
Substitution of a new contract in place of the original one
|
Novation
|
|
|
Violation of terms or conditions without legal excuse
|
Breach of contract
|
|
|
Buyer asks court to force seller to sell and convey property as agreed
|
Suit for specific performance
|
|
|
Permits seller to keep earnest money in event of buyer default
|
Liquidated damages clause
|
|
|
State law limits time within which parties may bring a legal suit to enforce rights
|
Statute of limitations Rights not enforced with FOUR YEARS from breach are lost
|
|
|
Contracts frequently used in Real Estate business:
|
Listings
Agreements of sale Options Installment contracts Leases Escrow agreements |
|
|
Agreements that must be written under the Plain Language Consumer Contract Act
|
For Borrowing money
To Buy, leasing or renting personal or real property To Engaging services for cash or on credit for personal, family purposes *NOT COVERED ARE: Deeds, Mortgages, certificates of title and title insurance documents, Documents used by state or federal financial institutions, contracts to buy securities, insurance policies and commercial leases |
|
|
Law which provides for procedures for electronic records and signatures
|
Uniform Electronic Transaction Act (federal) & Electronic Transaction Act of 2000 (PA law)
|
|
|
Three basic components of the financing market
|
Federal Reserve System
Primary Mortgage market Secondary Mortgage Market |
|
|
Two ways the fed controls the flow of money
|
Reserve requirements
Discount rates |
|
|
The Federal Reserve system is divided into how many federal reserve districts?
|
12 - each served by the a federal reserve bank.
|
|
|
FOMC
|
Federal Open Market Committe, which buys and sells US govt. securities on the open market
|
|
|
Each member bank of the federal reserve must keep a certain amount of funds on hand.
|
Reserve requirements. These are unavailable for loans or any other use
|
|
|
When amount of money available for lending decreases, interest rates...
|
rise.
|
|
|
Interest rate that the district reserve banks charge for the use of their money
|
Discount rate
|
|
|
Market where borrowers directly interact with lenders
|
Primary mortgage market
|
|
|
Income realized from what two sources in the primary mortgage market?
|
Finance charges collected at closing &
Recurring income or interest collected during the term |
|
|
Income realized from what two sources in the primary mortgage market?
|
Finance charges collected at closing &
Recurring income or interest collected during the term |
|
|
Two lenders in the primary mortgage market that must be licensed.
|
Mortgage Banking Companies &
Morgage Brokers |
|
|
Market where loans are bought and sold only after they have been funded.
|
Secondary mortgage market
|
|
|
Market where lenders and investors interact
|
Secondary mortgage market
|
|
|
Warehousing agencies purchase a number of loans assembled into packages called...
|
Pools
|
|
|
Fannie Mae
|
Federal national Mortgage Association - a quasi-governmental agency organized as a privately owned corporation that provides a secondary market for loans
|
|
|
Buys a block of loans from a lender in exchange for mortgage-backed securities
|
Fannie Mae - Guarantees payment
|
|
|
GNMA
|
Ginnie Mae - Government agency. a pass through certificate is a security interest in a mortgage pool. Certificates guaranteed by Ginnie Mae
|
|
|
Division of HUD
|
GNMA (Ginnie Mae)
|
|
|
FHLMC
|
Federal Home Loan Mortgage Corporation (Freddie mac) - provides a secondary market for loans. Does not guarantee payment of Freddie mac mortgages
|
|
|
Borrower is called a....
|
Mortgagor.
|
|
|
Lender is called a....
|
Mortgagee
|
|
|
States that view a mortgage as a conveyance are called...
|
Title theory states
|
|
|
States that view a mortgage as nothing more than collateral for the loan are called....
|
Lien theory states
|
|
|
States (including PA) that have adopted a hybrid philosophy based on both title theory and lien theory states
|
Intermediary theory states
|
|
|
Two parts of a mortage loan:
|
Note - the finance instrument &
The mortgage - the security instrument |
|
|
Pledging property as security for payment of a loan without surrending possession of the property
|
Hypothecation
|
|
|
With Trust Deed, who is lender and who is borrower?
|
Lender is Beneficiary (holder of the note) and the borrower is the Trustor.
This method has faster and simpler foreclosure procedures. |
|
|
Two parties to a Note
|
Payor = borrower
Payee = Lender |
|
|
Interest payments made at the end of a period
|
Arrears. Payments made at the beginning of each period are in advance.
|
|
|
Charging interest that exceeds the permissible maximum rate is called...
|
Usury
|
|
|
Fee charged to cover the lender's initial cost of generation the loan -
|
Loan origination fee
|
|
|
Principal is directly reduced over the life of the loan
|
Amortized
|
|
|
Periodic payments are allocated only to interest. Entire principal is paid at the end of the loan term
|
Straight loan (term loan)
|
|
|
Amortized loan where the borrower pays a different (rather than the same) amount for each installment
|
Straight-line amortized loans
|
|
|
Clause which allows the lender to accelearate the maturity of the debt upon borrower's default
|
Acceleration clause. Means the entire debt can be declared payable immediately
|
|
|
By the provisions of this clause, Lender is required to execute a satisfaction of mortgage (release of mortgage).
|
Defeasance Clause
|
|
|
Basic recurring components of a borrower's monthly loan payment
|
Principal
Interest Taxes Insurance PITI |
|
|
Buyer is not personally obligated to pay the debt in full. Buyer takes possession and makes payments on the existing loan
|
Subject to
|
|
|
If the mortgage is foreclosed and court sale doesn't bring enough money to pay entire debt, this may be obtained...
|
Deficiency judgement
|
|
|
To prevent a future purchaser from assuming a loan, the lender may declare the balance of the debt due immediately or permit the buyer to assume the loan upon the property's sale.
|
Alienation Clause (due-on-sale)
|
|
|
Agreement that changes the priority of mortgage liens.
|
Subordination agreement
|
|
|
Legal procedure in which property pledged as security is sold to satisfy the debt.
|
Foreclosure
|
|
|
Three types of foreclosure proceedings
|
Judicial, nonjudicial, strict foreclosure
|
|
|
Type of foreclosure that allows the property to be sold by court order
|
Judicial foreclosure
|
|
|
Foreclosure done in deed of trust states. Contains a power of sale clause. No court action required.
|
Nonjudicial foreclosure
|
|
|
Appropriate notice is given. Court establishes a deadline. If borrower is not payed off, court simply awards legal title to lender. No sale takes place
|
Strict foreclosure
|
|
|
Friendly foreclosure which is carried out by mutual agreement.
|
Deed in lieu of foreclosure. Mortgagee takes real estate subject to all junior liens (which is unusual for foreclosures)
|
|
|
After default but before the foreclosure sale, borrower may pay the lender what is owed and the debt will be reinstated.
|
Equitable right of redemption
|
|
|
Two types of redemption rights
|
Equitable - Before the foreclosure sale
Statutory - After the foreclosure sale |
|
|
Allows defaulted borrowers a period to redeem their real estate after the sale. (up to 2 years)
|
Statutory right of redemption (not in PA)
|
|
|
ARELLO
|
Association of Real Estate License Law Officials
Administration and enforcement of Uniform policies re: real estate laws |
|
|
Standards whose objective is to protect the rights of purchasers, sellers, tenants and landlords
|
RELRA
Real Estate Licensing and Registration Act |
|
|
Who supervises activities of licensees in PA?
|
State Real Estate Commission
|
|
|
Within the dept of state, under where does the State real Estate Commission operate?
|
Bureau of Professional and Occupational Affairs
|
|
|
State Real Estate commission is comprised of....
|
11 members
Commissioner (of Professional & Occupational affairs) Director (Bureau of Consumer Protection) 3 members representing the Public 5 licensed brokers (10 yrs experience) one cemetary broker (5 yrs. experience) |
|
|
Appraisal activities are governed by
|
State Board of Certified Appraisers
(not Real Estate Board) |
|
|
One who buys & sells for another for a commission.
|
Broker. Must be properly licensed to perform certain activities and collect compensation
|
|
|
Applicant for a broker license must...
|
Be 21. High school grad or equivalent.
*Complete 240 hours (16 credits) within 10 years of passing licensing exam *Salesperson for 3 years *Pass both portions of a written exam within 3 years of application *Submit written application |
|
|
Individual broker employed by another broker
|
Associate broker
|
|
|
Accountable and considered employees of a broker
|
Salesperson
|
|
|
NOT permitted to independently negotiate terms of a lease on behalf of a lessor.
|
Licensed Salesperson
|
|
|
Education requirements for cemetary brokers & salespersons
|
Broker - 60 hrs. & 3 years as salesperson & pass exam
Salesperson - no education. must be 18 yrs. old |
|
|
Builder-owner salespeople must be...
|
full time employees by builder-owner (who is not licensed)
No education requirement |
|
|
Rental listing referral agent requirements:
|
Does not need to be listed with broker.
Otherwise, same as salesperson requirements. |
|
|
Current license period for real estate licenses
|
Two years.
|
|
|
Continuing education requirement for licenses
|
14 hours
|
|
|
Status of license when individual fails to properly renew
|
Inactive. May be reactivated within 5 years of inactivity. Must obtain 14 hours of education before reactivating
|
|
|
State Real Estate Commission has authority to...
|
Suspend a license
Revoke a license Levy fines not exceeding $1k |
|
|
Maximum Penalty for Engaging in unlicensed activities
|
First offense- fine up to $500 and/or imprisonment, not to exceed three months
Second/Subsequent offenses - fine of $2,000 to $5000 and/or imprisonment for one to two years |
|
|
A revocation of a license lasts for at least....
|
5 years
|
|
|
Civil penalties for licensees violating the Act or person practicing without a license.
|
Up to $1,000
|
|
|
Fund established to provide a means for aggrieved persons to collect judgments awarded in civil court from real estate licensees for fraud.
|
Real Estate Recovery Fund
|
|
|
Maximum Amount Payable from Recovery Fund
|
$20,000 per claim
$100,000 per licensee Licensee is automatically suspended and cannot be reinstated until licensee repays amount of claim plus 10% interest. |
|
|
A person who is the recipient of any real estate service
|
Consumer
|
|
|
A consumer of real estate services who has entered into an agency relationship with broker
|
Principal
|
|
|
Licensee who has entered into an agency relationship with a seller of real estate
|
Seller agent
|
|
|
A broker, not employ of the listing broker, who is engaged to act for or coorporate with the listing broker in selling property as an agent of the seller. A subagent is deemed to have an agency relationship with the seller.
|
Subagent
|
|
|
A broker engaged as a seller's agent, dual agent, or the ansaction licensee to market the property of a seller/landlord
|
Listing broker
|
|
|
Licensee who acts as an agent for the buyer and seller or lessee and landlord in the same transaction
|
Dual agent
|
|
|
One or more licensees designated by the employing broker with the consent of the principal to act as agents on behalf of the principal to the exclusion of all other licensees within the broker's employ.
|
Designated agent
|
|
|
Licensed broker or salesperson who provides communication or document prep services
|
Transaction licensee
|
|
|
What must brokers do with funds pending consumation or termination of the transaction?
|
Deposit funds who belong together in an escrow account in a federally or state insured bank
|
|
|
If funds are held in escrow for more than 6 mos., they must be deposited where?
|
In an interest bearing account.
|
|
|
Who assumes the escrow duty for funds? Listing or selling broker?
|
Generally whoever recieves the funds. In a cobrokerage transaction, notice must be given to the buyer as to where the funds are going.
|
|
|
When is a broker responsible for depositing funds in escrow?
|
By the next business day following receipt. Broker may with written permission from both buyer and seller refrain from depositing monies until acceptance of offer.
|
|
|
When is a broker responsible for depositing funds in escrow?
|
By the next business day following receipt. Broker may with written permission from both buyer and seller refrain from depositing monies until acceptance of offer.
|
|
|
If resolution of a dispute appears remote without legal action,the broker may petition the court to interplead when?
|
30 days. Broker may not appropriate any part for commission
|
|
|
If licensee represents more than one party (dual agency), all parties must give what?
|
Written consent and notification of conflicts
|
|
|
Registration not required for promotional property that involves...
|
fewer than 50 lots or shares or land areas of less than 25 acres.
|
