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76 Cards in this Set
- Front
- Back
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Tangible property
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Physical assets that can be owned
-Can be real or personal property |
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Intangible property
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Non-physical assets such as stocks, bonds, mortgages, leases
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Term "real estate" used three ways
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As a tangible asset, as a bundle of rights, as an indistry and profession
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Percentage of world's wealth?
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Half of world's wealth
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Characteristics of real estate markets
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Heterogeneous products, high transaction costs
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Four quadrants of real estate
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Private equity/owners: individuals, partnerships, firms
Private debt/loaners: commerical banks, credit unions, mortgage banks, insurance companies Public equity/owners: investors in publicly traded real estate companies and equity REITs Public debt/lenders: investors in mortgage-backed securities and mortgage REITs |
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Real property interests
(A bundle of rights) |
Disposition, Use, Possession, Exclusion
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Real property
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Rights in land and its permanent structures
ex. commercial building |
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Personal property
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All other property
ex. personal and household goods, intellectual property |
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Fixture
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Real property that formally was personal property
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Important rules that determine when something becomes a fixture
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Manner of attachment
Permanently attached=real property Intention of the parties (dominant rule) |
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Interest
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Any set of rights in real property
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Estate
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A real property interest that includes the right of exclusive possession
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Nonpossessory interests
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Easements, restrictive covenants, liens
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Fee simple absolute
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Most valuable type of interest, represents absolute ownership of real property
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Tenancy for years
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For a specific period of time
Must be written if more than a year |
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Periodic tenancy
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No definite length of time
Oral agreement State law governs notice of termination |
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Easement
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The right to use land for a specific and limited purpose
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Prescriptive easement
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Implied easements granted after the dominant estate has used the property in a hostile, continuous and open manner for a statutorily prescribed number of years
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Easement appurtenant
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Right of use a (dominant) parcel of land "enjoys" over an adjacent (servient) parcel
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Affirmative easements
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Driveway, sewer line, common wall
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Negative easements
(a promise NOT to do something) |
Light and air easement
scenic easement |
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Easements in gross
(Commercial easements) |
Right to use land, unrelated to any other parcel
-lay a pipeline -extract minerals, oil, gas No dominant parcel, only servient |
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Restrictive covenants
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Covenants that impose restrictions on land use
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Who can enforce restrictive covenants?
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AHOA, owners, mortgage loan holders, renters
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Abandonment
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Delayed enforecement in restrictive covenants
(courts reluctant to enforce) |
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Lien
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An interest in property as security for an obligation
Usually a debt |
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General liens
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Arise from events unrelated to the property
ex. judgment liens from car accident |
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Specific liens
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Arise from ownership and use of the property
-mortgage -property tax or assessment lien |
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Which liens are paid first?
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Property tax liens
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Direct co-ownership
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A house with multiple owners
-All share right of exclusive possession - Cannot obstruct each others' use -May hold different sizes of shares |
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Tenancy in common
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Default form
Multiple owners of same fee simple interest Can sell or mortgage their interest independently |
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Joint tenancy
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"Right of survivorship"- restricts inheritance to heirs
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Tenancy by entirety
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Joint tenancy for husband and wife
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Condomonium
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Combines single ownership and tenancy in common
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Cooperative (Co-op)
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Corporation owns property
Each owner holds shares and a proprietary lease |
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Elective share
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TRUMPS A WILL
Surviving spouse receives up to one-third of all decedent's personal property and in-state real property |
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Community property
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One-half interest in all property acquired "out of the fruits of the marriage"
- not prop. owned before marriage -not gifts or inheritance to one spouse |
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Timeshare
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Choice of floating time intervals and choice of resorts
Never a financial investment |
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Deed
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A special, written contract for conveying a permanent interest in real property
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Grantor of deed
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Must be of legal age
Must be legally competent Must sign deed |
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Covenants
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Legally binding promises
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Covenant of seizin
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Grantor has good title and right to convey it
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Covenant against encumbrances
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No encumbrances except as noted in deed
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Covenant of quiet enjoyment
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No one with a better claim to title
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Three methods acceptable for deed public records
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1. Metes and bounds
2. Plat lot and block number 3. Govt. rectangular survey |
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Acknowledgment
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confirmation that grantor acted voluntarily
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Delivery
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Observable, verifiable intent that deed is to be given to grantor
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General warranty deed
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Most rights
All three covenants: seizin, no encumbrances and quiet enjoyment |
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Special warranty deed
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All three covenants but "no encumbrances" limited to grantors ownership
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Deed of bargain and sale
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No covenants, but still is regarded as implying ownership
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Quitclaim deed
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No covenants and makes no assertions about grantor's interest
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Voluntary conveyance by deed
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ordinary sale and transfer of title
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Involuntary conveyance by deed
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probate, bankruptcy, divorce settlement, condemnation, foreclosure
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Statute of frauds
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Contract must be written to be enforceable
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Recording statutes
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A contract recorded in public records is considered known
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Title
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Collection of evidence indicating a particular person(s) as holder of the "fee"
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Metes and bounds
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A sequence of directed distances
-compass directed walk around property |
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Variance
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Exception to requirements due to hardship
Slight change in which it can be developed |
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Eminent domain
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Right of government to acquire private land, without the owner's consent, for public use, with due process and just compensation
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Condemnation
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legal procedure for exercising the right of eminent domain
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Environmental assessments
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Three phases EVA
(noninvasive, invasive, complete assessment) |
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Property taxes
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Primary source of local government revenue
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Tax exemption for homestead
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$25,000
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Specific assessments
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Taxes for specific public improvements affecting a property
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Market value
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Most probable selling price, assuming “normal” sale conditions.
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Investment value
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Value to a particular individual (investor).
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Transaction price
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Price actually paid for a specific property.
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Three approaches to estimating market value
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Sales comparison approach
Cost approach Income approach |
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Sales comparison approach
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Value of RE can be determined by analyzing the sale prices of similar properties
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Arms-length transactions
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Fairly negotiated prices that occurred under “normal” conditions
A transaction in which the buyers and sellers of a product act independently and have no relationship to each other. The concept of an arm's length transaction is to ensure that both parties in the deal are acting in their own self interest and are not subject to any pressure or duress from the other party |
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Accrued depreciation
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NOT tax depreciation
Difference between replacement cost & market value of improvements |
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Types of accrued depreciation
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Physical deterioration
Functional obsolescence External (economic) obsolescence |
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Physical deterioration
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Loss in market value due to aging, decay & ordinary use
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Functional obolescence
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Loss in value due to changes in tastes, preferences, technological innovations, or market standards
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External obolescence
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Loss in value due to changes beyond property boundaries (neighborhood effects)
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