California Real Estate Exam Cram Session

Front 1

1031 exchange

Back 1

under Internal Revenue Code section 1031, a tax-deferred exchange of "like kind" properties.

Front 2

1031 exchange boot

Back 2

cash and/ or unlike property received in a 1031 exchange.

Front 3

1099-S Reporting

Back 3

a report to be submitted on IRS Form 1099-S by escrow agents to report the sale of real estate, giving the seller's name, Social Security number, and the gross sale proceeds.

Front 4

30/ 360 day count convention

Back 4

a convention for calculating interest or allocating expenses in which each month is considered to have 30 days, and each year is considered to have 360 days.

Front 5

acknowledgment

Back 5

a written declaration signed by a person before a duly authorized officer, usually a notary public, acknowledging that the signing is voluntary.

Front 6

acknowledgment of satisfaction

Back 6

a written declaration signed by a person before a duly authorized officer, usually a notary public, acknowledging that a lien has been paid off in full and that the signing is voluntary.

Front 7

abandonment

Back 7

failure to occupy or use property THAT MAY RESULT IN the extinguishment of a right or interest in the property.

Front 8

abatement

Back 8

a legal action to remove a nuisance.

Front 9

abstract of judgment

Back 9

a summary of the essential provisions of a court monetary judgment that can be recorded in the county recorder's office of the county or counties in which the judgment debtor owns property to create a judgment lien against such properties

Front 10

acceleration clause

Back 10

a clause in either a promissory note, a security instrument, or both that states that upon default the lender has the option of declaring the entire balance of outstanding principal and interest due and payable immediately

Front 11

acceptance

Back 11

consent (by an offeree) to an offer made (by an offeror) to enter into and be bound by a contract.

Front 12

accession

Back 12

the acquisition of additional property by the natural processes of accretion, reliction, or avulsion, or by the human processes of the addition of fixtures or improvements made in error.

Front 13

accretion

Back 13

a natural process by which the owner of riparian or littoral property acquires additional land by the gradual accumulation of soil through the action of water.

Front 14

accrued depreciation

Back 14

depreciation that has happened prior to the date of valuation.

Front 15

acknowledgment

Back 15

a written declaration signed by a person before a duly authorized officer, usually a notary public, acknowledging that the signing is voluntary.

Front 16

acknowledgment of satisfaction

Back 16

a written declaration signed by a person before a duly authorized officer, usually a notary public, acknowledging that a lien has been paid off in full and that the signing is voluntary.

Front 17

active investor

Back 17

an investor who actively contributes to the management of the business invested in

Front 18

actual agency

Back 18

an agency in which the agent is employed by the principal, either by express agreement, ratification, or implication.

Front 19

ad valorem

Back 19

a Latin phrase meaning "according to value." The term is usually used regarding property taxation.

Front 20

adjustable-rate mortgage (ARM)

Back 20

a mortgage under which interest rates applicable to the loan vary over the term of the loan.

Front 21

adjusted cost basis

Back 21

the dollar amount assigned to a property after additions of improvements and deductions for depreciation and losses are made to the property's acquisition cost.

Front 22

adjustment period

Back 22

the time intervals in an adjustable-rate mortgage during which interest rates are not adjusted.

Front 23

administrator

Back 23

a person appointed by a probate court to conduct the affairs and distribute the assets of a decedent's estate when there was no executor named in the will or there was no will.

Front 24

advance fee

Back 24

a fee charged in advance of services rendered.

Front 25

adverse possession

Back 25

the process by which unauthorized possession and use of another's property can ripen into ownership of that other's property without compensation.

Front 26

after-acquired interests

Back 26

all interests in a property acquired subsequent to a transfer of the property.

Front 27

age-life method

Back 27

see, straight-line method.

Front 28

agency

Back 28

the representation of a principal by an agent.

Front 29

agent

Back 29

a person who represents another.

Front 30

alienation clause

Back 30

a due-on-sale clause

Front 31

alluvium

Back 31

addition to land acquired by the gradual accumulation of soil through the action of water.

Front 32

ALTA policy

Back 32

an extended title insurance policy developed by the American Land Title Association.

Front 33

ambulatory instrument

Back 33

a document that can be changed or revoked, such as a will.

Front 34

amended public report

Back 34

a report that a subdivider must apply for if, after the issuance of a final public report, new conditions arise that affect the value of the subdivision parcels.

Front 35

Americans with Disabilities Act

Back 35

a federal act that prohibits discrimination against persons with disabilities, where "disability" is defined as "a physical or mental impairment that substantially limits a major life activity."

Front 36

amortization

Back 36

in general, the process of decreasing or recovering an amount over a period of time; as applied to real estate loans, the process of reducing the loan principal over the life of the loan.

Front 37

appurtenance

Back 37

an object, right or interest that is incidental to the land and goes with or pertains to the land.

Front 38

appropriation, right of

Back 38

the legal right to take possession of and use for beneficial purposes water from streams or other bodies of water.

Front 39

appreciation

Back 39

an increase in value due to any cause.

Front 40

appraisal

Back 40

an estimate of the value of property resulting from an analysis and evaluation made by an appraiser of facts and data regarding the property.

Front 41

annual percentage rate (APR)

Back 41

expresses the effective annual rate of the cost of borrowing, which includes all finance charges, such as interest, prepaid finance charges, prepaid interest, and service fees.

Front 42

anchor bolt

Back 42

a bolt inserted into concrete that secures structural members to the foundation.

Front 43

associate broker

Back 43

a person with a real estate brokers license who is employed as a salesperson by another broker

Front 44

assumption

Back 44

an adoption of an obligation that primarily rests upon another person, such as when a purchaser agrees to be primarily liable on a loan taken out by the seller.

Front 45

attachment lien

Back 45

a prejudgment lien on property, obtained to ensure the availability of funds to pay a judgment if the plaintiff prevails.

Front 46

balloon payment

Back 46

a payment, usually the final payment, of an installment loan that is significantly greater than prior payments — "significantly greater" generally being considered as being more than twice the lowest installment payment paid over the loan term.

Front 47

back-end ratio

Back 47

the ratio of total monthly expenses, including housing expenses and long-term monthly debt payments, to monthly gross income.

Front 48

automatic homestead

Back 48

a homestead exemption that applies automatically to a homeowner's principal residence and that provides limited protection for the homeowner's equity in that residence against a judgment lien foreclosure.

Front 49

attorney in fact

Back 49

a holder of a power of attorney

Front 50

bankruptcy

Back 50

a legal process conducted in a United States Bankruptcy court, in which a person declares his or her inability to pay debts.

Front 51

base lines

Back 51

in the Sections and Township method of land description, California has three sets of base lines, which are east-west lines, and meridians, which are north-south lines.

Front 52

beam

Back 52

a horizontal member of a building attached to framing, rafters, etc., that transversely supports a load

Front 53

bill of sale

Back 53

a written document given by a seller to a purchaser of personal property.

Front 54

bilateral contract

Back 54

a contract in which a promise given by one party is exchanged for a promise given by the other party.

Front 55

bequest

Back 55

a gift of personal property by will.

Front 56

bequeath

Back 56

to transfer personal property by a will.

Front 57

beneficiary

Back 57

a wall that supports structures (such as the roof or upper floors) above it. In condominiums, non-bearing walls are owned by the individual condominium owners, whereas bearing walls usually are property owned in common.

Front 58

bearing wall

Back 58

a wall that supports structures (such as the roof or upper floors) above it. In condominiums, non-bearing walls are owned by the individual condominium owners, whereas bearing walls usually are property owned in common.

Front 59

blanket mortgage

Back 59

a mortgage used to finance two or more parcels of real estate.

Front 60

blind ad

Back 60

an advertisement that does not disclose the identity of the agent submitting the advertisement for publication.

Front 61

blight

Back 61

as used in real estate, the decline of a property or neighborhood as a result of adverse land use, destructive economic forces, failure to maintain the quality of older structures, failure to maintain foreclosed homes, etc.

Front 62

blockbusting

Back 62

the illegal practice of representing that prices will decline, or crime increase, or other negative effects will occur because of the entrance of minorities into particular areas.

Front 63

bridge loan

Back 63

a short-term loan (often referred to as a swing loan) that is used by a borrower until permanent financing becomes available.

Front 64

book sale

Back 64

a "sale" for accounting purposes regarding tax-delinquent property; this "sale" does not entail an actual transfer property

Front 65

book depreciation

Back 65

a mathematical calculation used by tax authorities and accountants to determine a depreciation deduction from gross income.

Front 66

bona fide

Back 66

in good faith; authentic; sincere; without intent to deceive.

Front 67

board foot

Back 67

a unit of measure of the volume of lumber, equivalent to the volume of lumber of 1 square foot and 1 inch thick; 144 cubic inches.

Front 68

broker

Back 68

a person who , for a compensation or an expectation of compensation, represents another in the transfer of an interest in real property. A real estate broker must pass the CalBRE's brokers exam and be licensed as a real estate broker.

Front 69

bulk sale

Back 69

a sale, not in the ordinary course of the seller's business, of more than half of the value of the seller's inventory as of the date of the bulk sale agreement.

Front 70

BTU (British Thermal Unit)

Back 70

A measure of heating (or cooling) capacity equivalent to the amount of heat required to raise the temperature of 1 pound of water 1 ° Fahrenheit (from 39 ° F to 40 ° F).

Front 71

bundle of rights

Back 71

rights the law attributes to ownership of property.

Front 72

California Coastal Zone Conservation Act

Back 72

a California state law that is intended to promote the preservation and protection of California's diverse coastal zone.

Front 73

California Association of Realtors ®

Back 73

the state organization of the National Association of Realtors ®.

Front 74

buyer's agent

Back 74

a real estate broker appointed by a buyer to find property for the buyer.

Front 75

business opportunity

Back 75

involves the sale or lease of the assets of an existing business enterprise or opportunity, including the goodwill of the business or opportunity, enabling the purchaser or lessee to begin a business.

Front 76

California Environmental Quality Act (CEQA)

Back 76

a California state law that requires state and local agencies to consider and respond to the environmental effects of private and public development projects.

Front 77

CalVet loan

Back 77

a loan made by the Farm and Home Loan Division of the DVA to eligible military veterans for the purchase of a home or farm in California.

Front 78

California Withholding Law

Back 78

a California law that, with certain exceptions, requires the buyer of California real estate to withhold 3 ⅓% of the gross sales price from any individual seller.

Front 79

California Housing Finance Agency (CalHFA)

Back 79

a California state agency that makes low-interest loans to "first-time homebuyers" from funds derived from the sale of tax-exempt bonds.

Front 80

capital asset

Back 80

permanent , non-inventory assets held for personal or investment purposes, such as householders' homes, household furnishings, stocks, bonds, land, buildings, and machinery.

Front 81

capture, law of

Back 81

the legal right of a landowner to all of the gas, oil, and steam produced from wells drilled directly underneath on his or her property, even if the gas, oil, or steam migrates from below a neighbor's property.

Front 82

capitalization approach — see, income approach capitalization rate

Back 82

the annual net income of a property divided by the initial investment in, or value of, the property; the rate that an appraiser estimates is the yield rate expected by investors from comparable properties in current market conditions.

Front 83

capital gain

Back 83

the amount by which the net sale proceeds from the sale of a capital asset exceeds the adjusted cost value of the asset.

Front 84

carbon monoxide (CO) detector

Back 84

a CO detector/ alarm or a CO alarm combined with a smoke detector. As of January 1, 2013, CO detectors must be installed in all California dwelling units that contain a fossil fuel burning heater or appliance, a fireplace, or that have an attached garage.

Front 85

Carbon Monoxide Poisoning Prevention Act —

Back 85

a California law that requires the installation of carbon monoxide alarms in most residential units.

Front 86

carryover

Back 86

under an adjustable-rate loan, an increase in the interest rate not imposed because of an interest-rate cap that is carried over to later rate adjustments.

Front 87

certificate of discharge

Back 87

a written instrument used to release a lien created by a mortgage.

Front 88

certificate of clearance

Back 88

a certificate issued by the Board of Equalization to the buyer of a business that states that no taxes, interest, or penalties are due from the seller or from any previous owner of the business.

Front 89

CC& Rs

Back 89

an abbreviation of "covenants, conditions, and restrictions " — often used to refer to restrictions recorded by a developer on an entire subdivision.

Front 90

caulking

Back 90

a putty-like material used to seal cracks and joints to make tight against leakage of air or water, as in making windows watertight.

Front 91

Cartwright Act

Back 91

the California legislative act that is the basis for California's antitrust laws.

Front 92

Certificate of Eligibility

Back 92

a certificate issued by the VA, certifying that the applicant is eligible for a VA-guaranteed loan of a certain amount. .

Front 93

Certificate of Reasonable Value (CRV)

Back 93

a certificate issued by a VA-approved appraiser that certifies, pursuant to VA guidelines, the reasonable value of a property that is to be used as security for a VA-guaranteed loan

Front 94

chain of title

Back 94

a complete chronological history of all of the documents affecting title to the property.

Front 95

Civil Rights Act of 1866

Back 95

a federal law enacted during Reconstruction that stated that people of any race may enjoy the right to enforce contracts, to sue, be parties, and give evidence, to inherit, purchase, lease , sell, hold, and convey real and personal property, and to full and equal benefit of all laws.

Front 96

chattel real

Back 96

personal property that contains some interest in real property, the most common example being a lease

Front 97

Civil Rights Act of 1968

Back 97

a federal law (often referred to as the Fair Housing Act) that prohibited discrimination in housing based on race, creed, or national origin. An amendment to this Act in 1974 added prohibition against discrimination based on gender, and an amendment in 1988 added prohibition against discrimination based on a person's disabilities or familial status.

Front 98

collar beam

Back 98

a beam connecting pairs of opposite rafters well above the attic floor.

Front 99

CLTA policy

Back 99

a standard title insurance policy developed by the California Land Title Association.

Front 100

client

Back 100

an agent's principal closing — in reference to an escrow , a process leading up to, and concluding with, a buyer's receiving the deed to the property and the seller's receiving the purchase money.

Front 101

column

Back 101

a circular or rectangular vertical structural member that supports the weight of the structure above it.

Front 102

commission

Back 102

an agent's compensation for performance of his or her duties as an agent; in real estate, it is usually a percent of the selling price of the property or, in the case of leases, of rentals.

Front 103

commingling

Back 103

regarding trust fund accounts, the act of improperly segregating the funds belonging to the agent from the funds received and held on behalf of another; the mixing of separate and community property.

Front 104

commercial acre

Back 104

the buildable part of an acre that remains after subtracting land needed for streets, sidewalks, and curbs.

Front 105

common interest development (CID)

Back 105

a subdivision in which purchasers own or lease a separate lot, unit, or interest , and have an undivided interest or membership in a portion of the common area of the subdivision.

Front 106

community apartment project

Back 106

a development in which an undivided interest in the land is coupled with the right of exclusive occupancy of an apartment located thereon.

Front 107

community property

Back 107

property owned jointly by a married couple or by registered domestic partners, as distinguished from separate property. As a general rule, property acquired by a spouse or registered domestic partner through his/ her skills or personal efforts is community property.

Front 108

community property with right of survivorship

Back 108

property that is community property and that has a right of survivorship. Upon the death of a spouse or registered domestic partner, community property with right of survivorship passes to the surviving spouse or domestic partner without probate.

Front 109

Community Redevelopment Law

Back 109

a California state law that provides local governments with the authority to correct blighted conditions in areas within their jurisdictions.

Front 110

condition subsequent

Back 110

a condition written into the deed of a fee estate that, if violated, may "defeat" the estate and lead to its loss and reversion to the grantor.

Front 111

concealment

Back 111

the act of preventing disclosure of something.

Front 112

compound interest

Back 112

the type of interest that is generated when accumulated interest is reinvested to generate interest earnings from previous interest earnings.

Front 113

comparable property

Back 113

a property similar to the subject property being appraised that recently sold at arm's length, where neither the buyer nor the seller was acting under significant financial pressure.

Front 114

conditional use

Back 114

a zoning exception for special uses such as churches, schools, and hospitals that wish to locate to areas zoned exclusively for residential use.

Front 115

consideration

Back 115

anything of value given or promised, such as money , property, services, or a forbearance, to induce another to enter into a contract.

Front 116

conforming loan

Back 116

a loan in conformance with FHFA guidelines.

Front 117

conflict of interest

Back 117

a situation in which an individual or organization is involved in several potentially competing interests, creating a risk that one interest might unduly influence another interest.

Front 118

conduit

Back 118

a (usually) metal pipe in which electrical wiring is installed.

Front 119

condominium

Back 119

a residential unit owned in severalty, the boundaries of which are usually walls, floors, and ceilings, and an undivided interest in portions of the real property, such as halls, elevators, and recreational facilities.

Front 120

conspiracy

Back 120

in antitrust law , occurs when two or more persons agree to act and the agreed-upon action has the effect of restraining trade.

Front 121

constructive eviction

Back 121

a breach by the landlord of the covenant of habitability or quiet enjoyment.

Front 122

construction mortgage

Back 122

a security instrument used to secure a short-term loan to finance improvements to a property.

Front 123

constructive notice

Back 123

(1) notice provided by public records; (2)notice of information provided by law to a person who, by exercising reasonable diligence, could have discovered the information.

Front 124

Constructors' State License Law

Back 124

a California state law that, with certain exceptions, requires that every building contractor must be licensed by the Contractors' State License Board.

Front 125

cost approach

Back 125

an appraisal approach that obtains the market value of the subject property by adding the value of the land (unimproved) of the subject property to the depreciated value of the cost (if currently purchased new) of the improvements on subject property.

Front 126

co-ownership

Back 126

joint ownership

Front 127

cooperating broker

Back 127

a broker who attempts to find a buyer for a property listed by another broker.

Front 128

conversion

Back 128

the unauthorized misappropriation and use of another's funds or other property.

Front 129

conventional loan

Back 129

a mortgage loan that is not FHA insured or VA guaranteed.

Front 130

contingency

Back 130

an event that may, but is not certain to, happen, the occurrence upon which the happening of another event is dependent.

Front 131

cost recovery

Back 131

the recoupment of the purchase price of a property through book depreciation; the tax concept of depreciation.

Front 132

Costa-Hawkins Rental Housing Act

Back 132

a state law that places restrictions on local rent control laws.

Front 133

cost-to-cure method

Back 133

a method of calculating depreciation by estimating the cost of curing the curable depreciation and adding it to the value of the incurable depreciation.

Front 134

covenant

Back 134

a contractual promise to do or not do certain acts , the remedy for breach thereof being either monetary damages or injunctive relief, not forfeiture.

Front 135

coupled with an interest

Back 135

an aspect of an agency that refers to the agent's having a financial interest in the subject of the agency.

Front 136

counteroffer

Back 136

a new offer by an offeree that acts as a rejection of an offer by an offeror.

Front 137

crawlspace

Back 137

the space between the ground and the first floor that permits access beneath the building.

Front 138

debits

Back 138

in reference to an escrow account, items payable by a party. This definition of a debit does not conform to its use in double-entry bookkeeping or accounting.

Front 139

curable depreciation

Back 139

depreciation that results from physical deterioration or functional obsolescence that can be repaired or replaced at a cost that is less than or equal to the value added to the property.

Front 140

credits

Back 140

in reference to an escrow account, items payable to a party. This definition of a debit does not conform to its use in double-entry bookkeeping or accounting.

Front 141

credit bid

Back 141

a bid at a foreclosure sale made by the beneficiary up to the amount owed to the beneficiary.

Front 142

declared homestead

Back 142

the dwelling described in a homestead declaration.

Front 143

demand

Back 143

the level of desire for a product.

Front 144

deposit receipt

Back 144

a written document indicating that a good-faith deposit has been received as part of an offer to purchase real property; also called a purchase and sale agreement.

Front 145

depreciation

Back 145

the loss in value due to any cause.

Front 146

deficiency judgment

Back 146

a judgment given to a lender in an amount equal to the balance of the loan minus the net proceeds the lender receives after a judicial foreclosure.

Front 147

deferred maintenance

Back 147

any type of depreciation that has not been corrected by diligent maintenance.

Front 148

defendant

Back 148

the one against whom a lawsuit is brought.

Front 149

defeasance clause

Back 149

a provision in a loan that states that when the loan debt has been fully paid, the lender must release the property from the lien so that legal title free from the lien will be owned by the borrower.

Front 150

deed in lieu of foreclosure

Back 150

a method of avoiding foreclosure by conveying to a lender title to a property lieu of the lender’s foreclosing on the property.

Front 151

deed

Back 151

a document that when signed by the grantor and legally delivered to the grantee conveys title to real property

Front 152

depreciation deduction

Back 152

an annual tax allowance for the depreciation of property.

Front 153

disintegration

Back 153

the phase when a property's usefulness is in decline and constant upkeep is necessary.

Front 154

discount points

Back 154

a form of prepaid interest on a mortgage, or a fee paid to a lender to cover cost the making of a loan. The fee for one discount point is equal to 1% of the loan amount.

Front 155

discounted rate

Back 155

a rate (also called a teaser rate) on an adjustable-rate mortgage that is less than the fully indexed rate.

Front 156

disabled veteran's exemption

Back 156

an exemption that can reduce the tax liability of a qualified veteran's principal place of residence.

Front 157

devisee

Back 157

a recipient of real property through a will

Front 158

devise

Back 158

(1) (noun) a gift of real property by will; (2) (verb) to transfer real property by a will.

Front 159

disintegration

Back 159

the phase when a property's usefulness is in decline and constant upkeep is necessary.

Front 160

dormer

Back 160

a projecting structure built out from a sloping roof that isused to provide windows and additional headroom for the upper floor.

Front 161

dormer

Back 161

a projecting structure built out from a sloping roof that isused to provide windows and additional headroom for the upper floor.

Front 162

dominant tenement

Back 162

land that is benefited by an easement appurtenant.

Front 163

documentary transfer tax

Back 163

a tax imposed by counties and cities on the transfer of real property within their jurisdictions

Front 164

divided agency

Back 164

an agency in which the agent represents both the seller and the buyer without obtaining the consent of both.

Front 165

drywall

Back 165

prefabricated sheets or panels nailed to studs to form an interior wall or partition.

Front 166

due-on-sale clause

Back 166

a clause in the promissory note, the security instrument, or both that states that the lender has the right to accelerate the loan if the secured property is sold or some other interest in the property is transferred.

Front 167

due diligence

Back 167

the exercise of an honest and reasonable degree of care in performing one's duties or obligations. A real estate agent's due diligence involves investigating the property to ensure that the property is as represented by the seller and to disclose accurate and complete information regarding the property.

Front 168

dual agent

Back 168

a real estate broker who represents both the seller and the buyer in a real estate transaction.

Front 169

duress

Back 169

unlawful force or confinement used to compel a person to enter into a contract against his or her will.

Front 170

earnest money deposit

Back 170

a deposit that accompanies an offer by a buyer and is generally held in the broker's trust account.

Front 171

dwelling house homestead

Back 171

an automatic homestead.

Front 172

DVA

Back 172

the California Department of Veterans Affairs is a California state agency whose mission is to promote and deliver benefits to military veterans and their families who live in California.

Front 173

easement by necessity

Back 173

arises as a creation of a court of law in certain cases were justice so demands, as in the case where a buyer of a parcel of land discovers that the land he or she just purchased has no access except over the land of someone other than from the person from whom the parcel was purchased.

Front 174

Easton v. Strassburger

Back 174

the 1984 landmark California court case that held that real estate agents have an "affirmative duty to conduct a reasonably competent and diligent inspection of the residential property listed for sale and to disclose to prospective purchasers all facts materially affecting the value of the property that such an investigation would reveal.

Front 175

EER and SEER

Back 175

Air-conditioners have an efficiency rating that states the ratio of the cooling capacity (how many BTUs per hour) to the power drawn (in watts). For room air conditioners the ratio is the EER (energy efficiency ratio); for central air conditioners the rating is the SEER (seasonal energy efficiency ratio). The higher the EER or SEER , the greater the efficiency of the air-conditioning unit. Significant savings in electricity costs can be obtained by installing more efficient air-conditioning units.

Front 176

effective demand

Back 176

demand coupled with purchasing power sufficient to acquire the property from a willing seller in a free market.

Front 177

emblements

Back 177

growing crops, such as grapes, avocados, and apples, that are produced seasonally through a tenant farmer's labor and industry.

Front 178

encumber

Back 178

To place a lien or other encumbrance on property.

Front 179

environmental impact statement (EIS)

Back 179

a statement that certain agencies are required to make pursuant to the National Environmental Policy Act regarding development that might significantly impact the quality of the environment.

Front 180

escalator clause

Back 180

a provision in a lease that provides for periodic increases in rent, often based on the Consumer Price Index

Front 181

escrow activity report

Back 181

a report that certain real estate brokers must file with the CalBRE if their escrow activities exceed a certain threshold.

Front 182

estate

Back 182

the degree, quantity, nature, duration, or extent of interest one has in real property.

Front 183

escrow instructions

Back 183

the written instructions signed by all of the principals to the escrow (buyers, sellers, and lenders) that specify all of the conditions that must be met before the escrow agent may release whatever was deposited into escrow to the rightful parties.

Front 184

escrow holder

Back 184

an escrow agent

Front 185

escrow agent

Back 185

an impartial agent who holds possession of written instruments and deposits until all of the conditions of escrow have been fully performed.

Front 186

escrow

Back 186

a neutral depository in which something of value is held by an impartial third party ( called the escrow agent) until all conditions specified in the escrow instructions have been fully performed.

Front 187

escheat

Back 187

a process whereby property passes to the state if a person owning the property dies intestate without heirs.

Front 188

easement

Back 188

a non-possessory right to use a portion of another property owner's land for a specific purpose, as for a right-of-way, without paying rent or being considered a trespasser.

Front 189

easement appurtenant

Back 189

an easement that benefits, and is appurtenant to, another's land.

Front 190

equitable title

Back 190

the right to possess and enjoy a property while the property is being paid for.

Front 191

equilibrium

Back 191

the period of stability when the property changes very little.

Front 192

equal dignities rule

Back 192

a principle of agency law that requires the same formality to create the agency as is required for the act( s) the agent is hired to perform.

Front 193

Equal Credit Opportunity Act (ECOA)

Back 193

a federal law that prohibits a lender from discriminating against any applicant for credit on the basis of race, color, religion, national origin, sex, marital status, or age (unless a minor), or on the grounds that some of the applicant's income derives from a public assistance program.

Front 194

eaves

Back 194

the overhang of a roof that projects over an exterior wall of a house.

Front 195

economic life

Back 195

the period of time that the property is useful or profitable to the average owner or investor.

Front 196

Endangered Species Act

Back 196

a federal law that is intended to provide a means whereby the ecosystems upon which endangered species and threatened species depend may be conserved, and to provide a program for the conservation of such endangered species and threatened species. environmental impact report (EIR) — a report that the agency investigating the feasibility of a development project pursuant to the California Environmental Quality Act is required to make if it is determined that there is substantial evidence of the project would have a significant adverse environmental impact.

Front 197

encumbrance

Back 197

A right or interest held by someone other than the owner the property that affects or limits the ownership of the property, such as easements and liens.

Front 198

effective age

Back 198

the age of an improvement that is indicated by the condition of the improvement, as distinct from its chronological age.

Front 199

eminent domain

Back 199

right of the state to take, through due process proceedings (often referred to as condemnation proceedings), private property for public use upon payment of just compensation.

Front 200

eLicensing

Back 200

a system developed by the CalBRE that allows the examination application and the licensing process to be completed online.

Front 201

employer

Back 201

a person who directs and controls the services rendered by an employee

Front 202

effective gross income

Back 202

income from a property after an allowance for vacancies and uncollectible rents is deducted from gross income.

Front 203

ejectment

Back 203

a legal action to recover possession of real property from a person who is not legally entitled to possess it, such as to remove an encroachment or to evict a defaulting buyer or tenant.

Front 204

employee

Back 204

a person who works for another who directs and controls the services rendered by the person.

Front 205

encroachment

Back 205

a thing affixed under, on, or above the land of another without permission.

Front 206

emancipated minor

Back 206

a minor who, because of marriage, military service, or court order, is allowed to contract for the sale or purchase of real property.

Front 207

estate —

Back 207

the degree, quantity, nature, duration, or extent of interest one has in real property

Front 208

estate at sufferance

Back 208

a leasehold that arises when a lessee who legally obtained possession of a property remains on the property after the termination of the lease without the owner's consent. Such a holdover tenant can be evicted like a trespasser, but if the owner accepts rent, the estate automatically becomes a periodic tenancy

Front 209

estate at will

Back 209

a leasehold that has no specified duration, though it may only be terminated by the owner of the property upon giving proper notice. An estate at will arises when a tenant takes possession of a property while negotiating a lease or under a void contract or lease.

Front 210

estate for years

Back 210

a leasehold that continues for a definite fixed period of time, measured in days, months, or years.

Front 211

estate from period to period

Back 211

a leasehold that continues from period to period, whether by days, months, or years, until terminated by proper notice.

Front 212

estate of inheritance

Back 212

a freehold estate.

Front 213

estoppel

Back 213

a legal principle that bars one from alleging or denying a fact because of one's own previous actions or words to the contrary. Ostensible agency can be created by estoppel when a principal and an unauthorized agent act in a manner toward a third-party that leads the third party to rely on the actions of the unauthorized agent, believing that the actions are authorized by the principal.

Front 214

exclusive agency listing

Back 214

a listing agreement that gives a broker the right to sell property and receive compensation (usually a commission) if the property is sold by anyone other than the owner of the property during the term of the listing.

Front 215

executed contract

Back 215

a contract that has been fully performed; may also refer to a contract that has been signed by all of the parties to the contract.

Front 216

exclusive authorization and right to sell listing

Back 216

a listing agreement that gives a broker the exclusive right to sell property and receive compensation (usually a commission) if the property is sold by anyone, including the owner of the property, during the term of the listing.

Front 217

executor

Back 217

a person named in a will to carry out the directions contained in the will.

Front 218

executory contract

Back 218

a contract that has not yet been fully performed by one or both parties.

Front 219

external obsolescence

Back 219

depreciation that results from things such as (1) changes in zoning laws or other government restrictions, (2) proximity to undesirable influences such as traffic, airport flight patterns, or power lines, and (3) general neighborhood deterioration, as might result from increased crime.

Front 220

Factory Built Housing Law

Back 220

a California state law that regulates factory built housing.

Front 221

express contract

Back 221

a contract stated in words, written or oral.

Front 222

factory-built home

Back 222

a home specifically manufactured to conform to the local building codes of the site, transported on flatbed trucks rather than being built on a permanent chassis, and assembled on the site where it is affixed it to a permanent foundation.

Front 223

Fair Employment and Housing Act

Back 223

a California state law (also known as the Rumford Act) that prohibits discrimination in the sale, leasing, or financing of nearly all types of housing, except the rental to one boarder in a single-family, owner-occupied home or to accommodations operated by charitable, fraternal, or religious organizations. The Rumford Act specifically prohibits landlords from asking prospective buyers or tenants about race, color, religion, gender, sexual orientation, marital status, familial status , national origin, ancestry, or disability.

Front 224

false promise

Back 224

a promise made without any intention of performing it.

Front 225

Fannie Mae

Back 225

a U.S. government conservatorship originally created as the Federal National Mortgage Association in 1938 to purchase mortgages from primary lenders.

Front 226

federally designated targeted area

Back 226

federally designated locations where homeownership is encouraged and incentivized.

Front 227

fee simple absolute estate

Back 227

the greatest estate that the law permits in land . The owner of a fee simple absolute estate owns all present and future interests in the property.

Front 228

fee simple defeasible estate

Back 228

a fee estate that is qualified by some condition that, if violated, may "defeat" the estate and lead to its loss and reversion to the grantor.

Front 229

FHA

Back 229

the Federal Housing Administration is a federal agency that was created by the National Housing Act of 1934 in order to make housing more affordable by increasing home construction, reducing unemployment, and making home mortgages more available and affordable.

Front 230

FHFA

Back 230

the Federal Housing Finance Agency is a U.S. government agency created by the Housing and Economic Recovery Act of 2008 to oversee the activities of Fannie Mae and Freddie Mac in order to strengthen the secondary mortgage market.

Front 231

FICO score

Back 231

a credit score created by the Fair Isaac Corporation that ranges from 300 to 850 and is used by lenders to help evaluate the creditworthiness of a potential borrower.

Front 232

fiduciary relationship

Back 232

a relationship in which one owes a duty of utmost care, integrity, honesty, and loyalty to another.

Front 233

final map

Back 233

a final map that a planning commission must approve after consideration of a tentative map before regulated subdivided property may be sold.

Front 234

final public report

Back 234

a report that the Real Estate Commissioner issues after determining that a subdivision offering meets certain consumer protection standards.

Front 235

finder

Back 235

a person who merely introduces a buyer to a seller, but does nothing else to facilitate a transaction between the buyer and seller, such as rendering assistance in negotiating terms.

Front 236

fire stop

Back 236

a block or board placed horizontally between studs to form a tight closure of a concealed space, thereby decreasing drafts and retarding the spread of fire and smoke.

Front 237

first mortgage

Back 237

a security instrument that holds first-priority claim against certain property identified in the instrument.

Front 238

fiscal year

Back 238

in California, the fiscal year begins on July 1 and ends on June 30 of the following calendar year.

Front 239

footing

Back 239

concrete poured on solid ground that provides support for the foundation, chimney, or support columns. Footing should be placed below the frost line to prevent movement.

Front 240

flue

Back 240

a channel in a chimney through which flame and smoke passes upward to the outer air.

Front 241

flashing

Back 241

sheet metal or other material used in roof and wall construction to prevent water from entering.

Front 242

fixture

Back 242

an object, originally personal property, that is attached to the land in such a manner as to be considered real property.

Front 243

fixed lease

Back 243

a gross lease

Front 244

foreclosure —

Back 244

a legal process by which a lender, in an attempt to recover the balance of a loan from a borrower who has defaulted on the loan, forces the sale of the collateral that secured the loan.

Front 245

foreclosure consultant

Back 245

any person who makes any solicitation, representation, or offer to any owner to perform for compensation or who, for compensation, performs any service which the person in any manner represents will in any manner stop or postpone the foreclosure sale; obtain any forbearance from any beneficiary or mortgagee; assist the owner to the owner to exercise the right of reinstatement; obtain any extension of the period within which the owner may reinstate his or her obligation; obtain any waiver of an acceleration clause contained in any promissory note or contract secured by a deed of trust or mortgage on a residence in foreclosure or contained that deed of trust or mortgage; assist the owner to obtain a loan or advance of funds; avoid or ameliorate the impairment of the owner’s credit resulting from the recording of a notice of default or the conduct of a foreclosure sale; save the owner’s residence from foreclosure; or assist the owner in obtaining from the beneficiary, mortgagee...

Front 246

Form Report

Back 246

see, Summary Report.

Front 247

foreclosure prevention alternative

Back 247

a first lien loan modification or another available loss mitigation option.

Front 248

Foreign Investment in Real Property Tax Act (FIRPTA)

Back 248

a federal act that, with certain exceptions, requires the buyer in a real estate transaction to determine whether the seller is a non-resident alien; and if so, the buyer has the responsibility of withholding 10% of the amount realized from the sale and sending that 10% of the IRS.

Front 249

four unities

Back 249

refers to the common law rule that a joint tenancy requires unity of possession, time, interest, and title.

Front 250

front-end ratio

Back 250

the ratio of monthly housing expenses to monthly gross income.

Front 251

Freddie Mac

Back 251

a U.S . government conservatorship originally created as the Federal Home Loan Mortgage Corporation in 1968 to purchase mortgages from primary lenders

Front 252

freehold estate

Back 252

an estate in land whereby the holder of the estate owns rights in the property for an indefinite duration

Front 253

fully amortized loan

Back 253

a loan whereby the installment payments are sufficient to pay off the entire loan by the end of the loan term.

Front 254

fully indexed rate

Back 254

on an adjustable-rate mortgage, the index plus the margin.

Front 255

general agent

Back 255

an agent who is authorized by a principal to act for more than a particular act or transaction. General agents are usually an integral part of an ongoing business enterprise.

Front 256

functional obsolescence

Back 256

depreciation that results (1) from deficiencies arising from poor architectural design, out-dated style or equipment, and changes in utility demand, such as for larger houses with more garage space, or (2) from over-improvements, where the cost of the improvements was more than the addition to market value.

Front 257

gable roof

Back 257

a roof with two sloping sides but not sloping ends.

Front 258

gambrel roof

Back 258

a roof sloped on two sides, each side having a steep lower slope and a flatter upper slope.

Front 259

Garn-St. Germain Act

Back 259

a federal law that made enforceability of due-on-sale provisions a federal issue

Front 260

Ginnie Mae

Back 260

the Government National Mortgage Association is a wholly owned U.S. government corporation within HUD to guarantee pools of eligible loans that primary lenders issue as Ginnie Mae mortgage-backed securities.

Front 261

general lien

Back 261

a lien that attaches to all of a person's nonexempt property.

Front 262

general partnership

Back 262

a partnership in which each partner has the equal right to manage the partnership and has personal liability for all of the partnership debts.

Front 263

general plan

Back 263

a comprehensive, long-term plan for the physical development of a city or county that is implemented by zoning, building codes, and other laws or actions of the local governments.

Front 264

gift deed

Back 264

a deed used to convey title when no tangible consideration (other than "affection") is given. The gift deed is valid unless it was used to defraud creditors, in which case such creditors may bring an action to void the deed.

Front 265

good-faith improver

Back 265

a person who, because of a mistake of law or fact, makes an improvement to land in good faith and under erroneous belief that he or she is the owner of the land.

Front 266

goodwill

Back 266

an intangible asset derived from the expectation of continued public patronage.

Front 267

grantee

Back 267

one who acquires an interest in real property from another.

Front 268

graduated lease

Back 268

a lease that is similar to a gross lease except that it provides for periodic increases in rent, often based on the Consumer Price Index.

Front 269

grant deed

Back 269

the deed most commonly used in California. It has two implied warranties that are enforced whether or not they are expressly stated in the deed: the grantor has not transferred title to anyone else, and the property at the time of execution is free from any encumbrances made by the grantor, except for those disclosed

Front 270

ground lease

Back 270

a lease under which a tenant leases land and agrees to construct a building or to make other significant improvements on the land.

Front 271

grantor

Back 271

one who transfers an interest in real property to another.

Front 272

gross income

Back 272

total income from a property before any expenses are deducted.

Front 273

gross income multiplier (GIM)

Back 273

a number equal to the estimated value of a property divided by the gross income of the property.

Front 274

gross lease

Back 274

a lease under which the tenant pays a fixed rental amount, and the landlord pays all of the operating expenses for the premises.

Front 275

gross rent multiplier (GRM)

Back 275

a number equal to the estimated value of a property divided by the gross rental income of the property.

Front 276

group action

Back 276

in antitrust law, two or more persons agreeing to act in a certain way.

Front 277

group boycott

Back 277

in antitrust law, the action of two or more brokers agreeing not to deal with another broker or brokers.

Front 278

heir

Back 278

a person entitled to obtain property through intestate succession.

Front 279

hip roof

Back 279

a sloping roof that rises from all four sides of the house.

Front 280

Holden Act

Back 280

see, Housing Financial Discrimination Act.

Front 281

holographic will

Back 281

a will written, dated, and signed by a testator in his or her own handwriting.

Front 282

home equity line of credit (HELOC)

Back 282

a revolving line of credit provided by a home equity mortgage.

Front 283

home equity mortgage

Back 283

a security instrument used to provide the borrower with a revolving line of credit based on the amount of equity in the borrower's home.

Front 284

homeowner's exemption

Back 284

and exemption of $ 7,000 from the assessed value of a homeowner's residence.

Front 285

Homeowner's Protection Act (HPA)

Back 285

a federal law that requires lenders to disclose to borrowers when the borrowers' mortgages no longer require PMI.

Front 286

Housing Financial Discrimination Act

Back 286

a California state law (also referred to as the Holden Act) that prohibits redlining by making it illegal for financial institutions to consider the racial, ethnic, national origin, or religious composition of a neighborhood when determining whether to make loans or to provide financial assistance for housing in that neighborhood.

Front 287

HUD-1 Uniform Settlement Statement

Back 287

an escrow settlement form mandated by RESPA for use in all escrows pertaining to the purchase of owner-occupied residences of 1-4 dwelling units that use funds from institutional lenders regulated by the federal government.

Front 288

implication

Back 288

the act of creating an agency relationship by an unauthorized agent who acts as if he or she is the agent of a principal, and this principal reasonably believes that the unauthorized agent is acting as his or her actual agent.

Front 289

implied contract

Back 289

a contract not expressed in words, but, through action or inaction, understood by the parties.

Front 290

implied easement

Back 290

an easement arising by implication, as when a purchaser of mineral rights automatically acquires an implied right to enter the property to extract the minerals.

Front 291

impound account

Back 291

see, reserve account

Front 292

Improvement Bond Act of 1915

Back 292

this act permits local governments to issue bonds to finance subdivision street improvements. Owners of the subdivisions bear the cost of redeeming the bonds.

Front 293

inclusionary zoning

Back 293

a zoning law that requires builders to set aside a specific portion of new construction for people of low to moderate incomes.

Front 294

income approach

Back 294

an appraisal approach that estimates the value of an income -producing property as being worth the present value of the future income of the property through a three-step process: (1) determine the net annual income, (2) determine an appropriate capitalization rate, and (3) divide the net income by the capitalization rate to obtain the estimate of value.

Front 295

incurable depreciation

Back 295

depreciation that results from (1) physical deterioration or functional obsolescence that cannot be repaired at a cost that is less than or equal to the value added to the property and (2) economic obsolescence (which is beyond the control of the property owner).

Front 296

independent contractor

Back 296

a person who performs work for someone, but does so independently in a private trade, business, or profession, with little or no supervision from the person for whom the work is performed.

Front 297

index

Back 297

under an adjustable-rate mortgage, a benchmark rate of interest that is adjusted periodically according to the going rate of T-bills, LIBOR, or the like

Front 298

individual building manager

Back 298

a property manager who usually manages just a single large property.

Front 299

individual property manager

Back 299

a real estate broker who manages properties for one or more property owners.

Front 300

installment note

Back 300

a promissory note in which periodic payments are made, usually consisting of interest due and some repayment of principal.

Front 301

integration

Back 301

the growth and development stage of property.

Front 302

installment sale

Back 302

a sale in which the seller receives at least one payment in a later tax period and may report part of the gain from the sale for the year in which a payment is received.

Front 303

integration

Back 303

the growth and development stage of property.

Front 304

interest

Back 304

the compensation allowed by law or fixed by the parties for the use, or forbearance, or detention of money.

Front 305

interest-rate cap

Back 305

under an adjustable-rate mortgage , the maximum that the interest rate can increase from one adjustment period to the next or over the life of the entire loan.

Front 306

interpleader

Back 306

an action that allows for a neutral third party (such as a real estate agent) to avoid liability to two or more claimants (such as a seller and buyer) to the same money or property (such as an earnest money deposit) by forcing the claimants to litigate among themselves, letting the court determine who deserves what while not enmeshing the neutral third party in the litigation.

Front 307

Interstate Land Sales Full Disclosure Act

Back 307

a federal consumer protection act that requires that certain land developers register with the Bureau of Consumer Financial Protection if they offer across state lines parcels in subdivisions containing 100 or more lots. A regulated developer must provide each prospective buyer with a Property Report that contains pertinent information about the subdivision and that discloses to the prospective buyer that he or she has a minimum of 7 days in which to cancel a purchase agreement.

Front 308

intestate

Back 308

not having made, or not having disposed of by, a will.

Front 309

involuntary lien

Back 309

a lien created by operation of law, not by the voluntary acts of the debtor.

Front 310

intestate succession

Back 310

transfer of the property of one who dies intestate.

Front 311

jamb

Back 311

the vertical sides of a door or window that contact the door or sash.

Front 312

joint ownership

Back 312

ownership of property by two or more persons.

Front 313

joint tenancy

Back 313

a form of joint ownership which has unity of possession, time, interest, and title.

Front 314

joist

Back 314

one of a series of parallel heavy horizontal timbers used to support floor or ceiling loads.

Front 315

Jones v. Mayer

Back 315

a landmark 1968 United States Supreme Court case that held that the Civil Rights Act of 1866 was constitutional and that the Act prohibited all racial discrimination, whether private or public, in the sale or rental of property.

Front 316

judicial foreclosure

Back 316

a foreclosure carried out not by way of a power-of-sale clause in a security instrument, but under the supervision of a court.

Front 317

judgment

Back 317

a court's final determination of the rights and duties of the parties in an action before it.

Front 318

jumbo loan

Back 318

a mortgage loan the amount of which exceeds conforming loan limits set by the FHFA on an annual basis.

Front 319

junior mortgage

Back 319

a mortgage that, relative to another mortgage, has a lower lien-priority position.

Front 320

land contract

Back 320

a real property sales contract.

Front 321

land installment contract

Back 321

a real property sales contract.

Front 322

lateral support

Back 322

the support that soil receives from the land adjacent to it.

Front 323

lease extension

Back 323

a continuation of tenancy under the original lease.

Front 324

lease renewal

Back 324

a continuation of tenancy under a new lease

Front 325

leasehold estate

Back 325

a less-than-freehold estate.

Front 326

legatee

Back 326

one who acquires personal property under a will.

Front 327

lessee

Back 327

a person (the tenant) who leases property from another.

Front 328

lessor

Back 328

a person (the landlord) who leases property to another.

Front 329

less-than-freehold estate

Back 329

an estate in which the holder has the exclusive right to possession of land for a length of time. The holder of a less-than-freehold estate is usually referred to as a lessee or tenant.

Front 330

level payment note

Back 330

a promissory note under which all periodic installment payments are equal.

Front 331

leverage

Back 331

a method of multiplying gains or losses on investments, usually by using borrowed money to acquire the investments.

Front 332

license to use

Back 332

a personal right to use property on a nonexclusive basis. A license to use is not considered an estate.

Front 333

lien

Back 333

an encumbrance against real property that is used to secure a debt and that can, in most cases, be foreclosed.

Front 334

lien priority

Back 334

the order in which lien holders are paid.

Front 335

lien stripping

Back 335

a method sometimes used in Chapter 13 bankruptcies to eliminate junior liens on the debtor's home.

Front 336

life estate

Back 336

a freehold estate the duration of which is measured by the life of a natural person — either by the life of the person holding the estate, or by the life or lives of one or more other persons.

Front 337

limited liability partnership

Back 337

a partnership in which there is at least one general partner and one or more limited partners. The limited partners have no liability beyond their investment in and pledges to the partnership.

Front 338

lintel

Back 338

a horizontal support made of wood, stone, concrete, or steal that lies across the top of a window or door and supports the load above.

Front 339

liquidated damages

Back 339

a sum of money that the parties agree, usually at the formation of a contract, will serve as the exact amount of damages that will be paid upon a breach of the contract.

Front 340

lis pendens

Back 340

Latin for "action pending") a notice of pendency of action.

Front 341

listing agreement

Back 341

a written contract between a real estate broker and a property owner (the principal) stipulating that in exchange for the real estate broker's procuring a buyer for the principal's property, the principal will compensate the broker, usually with a percentage of the selling price.

Front 342

loan modification

Back 342

a restructuring or modification of a mortgage or deed of trust on terms more favorable to the buyer's ability (or desire) to continue making loan payments.

Front 343

loan modification

Back 343

a restructuring or modification of a mortgage or deed of trust on terms more favorable to the buyer's ability (or desire) to continue making loan payments.

Front 344

loan servicing

Back 344

the administration of a loan from the time the loan proceeds are dispersed to the time the loan is paid off in full.

Front 345

loan-to-value ratio (LTV)

Back 345

the amount of a first mortgage divided by the lesser of (1) the appraised value of the property or (2) the purchase price of the property.

Front 346

long-term capital gain

Back 346

the capital gain on the sale of a capital asset that was held for a relatively long period of time, usually more than one year.

Front 347

lot, block, and tract land description

Back 347

(see "recorded map land description")

Front 348

manufactured home

Back 348

a structure that was constructed on or after June 15, 1976 and built to HUD standards; transportable in one or more sections; eight body feet or more in width, or 40 body feet or more in length, in the traveling mode, or, when erected on site, is 320 or more square feet; built on a permanent chassis.

Front 349

maker

Back 349

the person who makes a promissory note.

Front 350

margin

Back 350

a number of percentage points, usually fixed over the life of the loan, that is added to the index of an adjustable-rate mortgage to arrive at the fully indexed rate.

Front 351

market allocation

Back 351

in antitrust law, the process of competitors agreeing to divide up geographic areas or types of products or services they offer to customers.

Front 352

market price

Back 352

the price actually paid for a particular property.

Front 353

market value

Back 353

as defined for appraisal purposes by HUD/ FHA is: "The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus.

Front 354

material fact

Back 354

a fact that is likely to affect the decision of a party as to whether to enter into a transaction on the specified terms.

Front 355

mechanics lien

Back 355

a specific lien claimed by someone who furnished labor or materials for a work of improvement on real property and who has not been fully paid.

Front 356

Megan's Law

Back 356

a law that provides for the registration of sex offenders and for the making available to the public information regarding the location of these offenders.

Front 357

Mello-Roos Community Facilities Act

Back 357

this act provides for the construction or improvement of a wide variety of facilities and services. Because the property tax burden on Mello-Roos districts can be quite high, a seller of a residential structure consisting of 4 or fewer dwellings that is subject to a lien of a Mello-Roos district must make a good-faith effort to obtain from the district a disclosure notice concerning the special assessment and give notice of the disclosure to prospective purchasers.

Front 358

menace

Back 358

a threat to commit duress or to commit injury to person or property.

Front 359

meridians

Back 359

(see and compare "base lines")

Front 360

minor

Back 360

in California, a person who is under 18 years of age.

Front 361

mobile home

Back 361

a structure that was constructed before June 15, 1976; transportable in one or more sections; eight body feet or more in width, or 40 body feet or more in length, in the traveling mode, or, when erected on site, is 320 or more square feet; built on a permanent chassis.

Front 362

metes and bounds land description

Back 362

a method of describing a parcel of land that uses physical features of the locale, along with directions and distances, to define the boundaries of the parcel.

Front 363

mobile home park

Back 363

an area of land where two or more mobile home sites are rented, or held out for rent, to accommodate mobile homes used for human habitation.

Front 364

moldings

Back 364

patterned strips, usually of wood, used to provide ornamental finish to cornices, bases, windows, and door jambs.

Front 365

mortgage banker

Back 365

a primary lender that uses its own money in creating a mortgage loan.

Front 366

mortgage broker

Back 366

an individual or company that finds borrowers and matches them with lenders for a fee.

Front 367

mortgagee

Back 367

a lender or creditor to whom a mortgagor gives a mortgage to secure a loan or performance of an obligation.

Front 368

Mortgage Forgiveness Debt Relief Act of 2007

Back 368

a federal law that allowed taxpayers to exclude from income debt that is canceled on their principal residence (not on a second home) through foreclosure, loan modification , or other form of debt cancellation. The amount of canceled debt that can be excluded from income is $ 2 million for a married couple filing jointly, or $ 1 million for individuals or married persons filing separately. After being extended several times, this Act expired at the end of 2013.

Front 369

mortgage loan originator (MLO)

Back 369

a person who takes, or offers to take, a residential mortgage loan application or offers or negotiates terms of a residential mortgage application for compensation or gain or in expectation of compensation or gain.

Front 370

mortgagor

Back 370

the borrower who gives a mortgage on his or her property to secure a loan or performance of an obligation.

Front 371

mudsill

Back 371

for houses built on a concrete slab, the wood sills that are bolted to all sides of the slab, providing a means of attaching portions of the framing for the house to the foundation.

Front 372

multiple listing service

Back 372

an organization (MLS) of real estate brokers who share their listings with other members of the organization.

Front 373

mutual consent

Back 373

refers to the situation in which all parties to a contract freely agree to the terms of the contract; sometimes referred to as a "meeting of the minds."

Front 374

National "Do Not Call" Registry

Back 374

a registry established by the Federal Trade Commission to protect consumers from unwanted commercial telephone solicitations.

Front 375

Narrative Report

Back 375

see, Self-Contained Report.

Front 376

National Association of Real Estate Brokers

Back 376

a real estate trade association whose members are called Realtists ®.

Front 377

National Association of Realtors ®

Back 377

the largest real estate trade association in the United States, founded in 1908, whose members are called Realtors ®.

Front 378

National Environmental Policy Act (NEPA)

Back 378

a federal law intended to protect, and to promote the enhancement of, the environment.

Front 379

negative amortization

Back 379

a loan repayment scheme in which the outstanding principal balance of the loan increases because the installment payments do not cover the full interest due.

Front 380

negative amortized loan (NegAm loan)

Back 380

a loan by which the installment payments do not cover all of the interest due — the unpaid part of the interest due being tacked onto the principal, thereby causing the principal to grow as each month goes by.

Front 381

negative amortized loan (NegAm loan)

Back 381

a loan by which the installment payments do not cover all of the interest due — the unpaid part of the interest due being tacked onto the principal, thereby causing the principal to grow as each month goes by.

Front 382

negative declaration

Back 382

a report issued by a state or local agency acting pursuant to the California Environmental Quality Act if the agency determines that a development project will not have a significant adverse environmental impact.

Front 383

negative fraud

Back 383

the act of not disclosing a material fact which induces someone to enter into a contractual relationship and that causes that person damage or loss.

Front 384

net income

Back 384

income from a property remaining after expenses are deducted from gross income.

Front 385

net listing

Back 385

a listing agreement providing the broker with all proceeds received from the sale over a specified amount.

Front 386

net lease

Back 386

a lease under which the tenant pays a fixed rental amount plus some of the landlord's operating expenses.

Front 387

NMLS

Back 387

the Nationwide Mortgage Licensing System and Registry is a mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the state licensing and registration of state-licensed loan originators.

Front 388

nonconforming loan

Back 388

a loan not in conformance with FHFA guidelines.

Front 389

nonconforming use

Back 389

a zoning exception for areas that are zoned for the first time or that are rezoned and where established property uses that previously were permitted to not conform to the new zoning requirements. As a general rule, such existing properties are "grandfathered in," allowing them to continue the old use but not to extend the old use to additional properties or to continue the old use after rebuilding or abandonment.

Front 390

non-judicial foreclosure

Back 390

a foreclosure process culminating in a privately conducted, publicly held trustee’s sale. The right to pursue a non-judicial foreclosure is contained in the power-of-sale clause of a mortgage or deed of trust, which, upon borrower default and the beneficiary's request, empowers the trustee to sell the secured property at a public auction.

Front 391

notice of cessation

Back 391

a written form that notifies that all work of improvement on a piece of real property has ceased, and that limits the time in which mechanics liens may be filed against the property

Front 392

notice of completion

Back 392

a written form that notifies that a work of improvement on real property has been completed, and that limits the time in which mechanics liens may be filed against the property.

Front 393

notice of default (NOD)

Back 393

a document prepared by a trustee at the direction of a lender to begin a non-judicial foreclosure proceeding.

Front 394

notice of nonresponsibility

Back 394

a written notice that a property owner may record and post on the property to shield the owner from any liability for a work of improvement on the property that a lessee or a purchaser under a land sales contract authorized.

Front 395

notice of pendency of action

Back 395

a notice that provides constructive notice to potential purchasers or encumbrancers of a piece of real property of the pendency of a lawsuit in which an interest in that piece of real property is claimed.

Front 396

notice of sale

Back 396

a document prepared by a trustee at the direction of a lender that gives notice of the time and place of sale of an identified foreclosed property.

Front 397

novation

Back 397

a substitution of a new obligation or contract for an old one, or the substitution of one party to a contract by another, relieving the original party of liability under the contract.

Front 398

nuisance

Back 398

anything that is indecent or offensive to the senses , or an obstruction to the free use of property, so as to interfere with the comfortable enjoyment of life or property.

Front 399

nuncupative will

Back 399

an oral will; nuncupative wills are no longer valid in California.

Front 400

offer

Back 400

a proposal by one person (the offeror) to enter into a contract with another (the offeree).

Front 401

offeree

Back 401

one to whom an offer to enter into a contract is made.

Front 402

offeror

Back 402

one who makes an offer to enter into a contract.

Front 403

open listing

Back 403

a listing agreement that gives a broker the nonexclusive right to sell property and receive compensation (usually a commission) if, but only if, the broker is the first to procure a buyer for the property

Front 404

option contract

Back 404

a contract that gives the purchaser of the option the right to buy or lease a certain property at a set price any time during the option term.

Front 405

option listing

Back 405

a listing agreement in which the broker is given the right to sell the subject property or to purchase it at a specified price for a specified time.

Front 406

ordinary interest

Back 406

interest calculated by the 30/ 360 day count convention.

Front 407

ostensible agency

Back 407

an agency in which the principal intentionally, or by want of ordinary care, causes a third person to believe another to be his agent who was not actually employed by him.

Front 408

parol evidence rule

Back 408

a rule that prohibits the introduction of extrinsic evidence of preliminary negotiations, oral or written, and of contemporaneous oral evidence, to alter the terms of a written agreement that appears to be whole.

Front 409

partial release clause

Back 409

a clause in a blanket mortgage that allows a developer to sell off individual parcels and pay back, according to a release schedule, only a proportionate amount of the blanket loan.

Front 410

partition

Back 410

a court-ordered or voluntary division of real property held in joint ownership into parcels owned in severalty.

Front 411

passive income

Back 411

in general , income from either rental activity or from a business in which the taxpayer does not materially participate.

Front 412

passive investor

Back 412

an investor who does not actively contribute to the management of the business invested in.

Front 413

patent, land

Back 413

an instrument used to convey government land

Front 414

payee

Back 414

the person to whom a promissory note is made out.

Front 415

payment cap

Back 415

under an adjustable-rate mortgage, the maximum amount that installment payments may increase from one adjustment period to the next or over the life of the loan.

Front 416

percentage lease

Back 416

a lease, often used in shopping centers, under which the tenant typically pays a base rent amount plus a percentage of the gross receipts of the tenant's business.

Front 417

period of redemption

Back 417

a period of time after a sheriff's sale in a judicial foreclosure proceeding during which the borrower may redeem his or her property by paying off the entire debt plus costs.

Front 418

periodic tenancy

Back 418

an estate from period to period.

Front 419

physical deterioration

Back 419

depreciation that results from wear and tear of use and from natural causes.

Front 420

pitch

Back 420

the degree of inclination or slope of a roof.

Front 421

planned development (PD)

Back 421

a development (other than a condominium , community apartment project, or stock cooperative) consisting of lots or parcels owned separately and areas owned in common and reserved for the use of some or all the owners of the separate interests.

Front 422

plaintiff

Back 422

the one who brings a lawsuit.

Front 423

physical life

Back 423

the period of time that the property lasts with normal maintenance.

Front 424

planning commission

Back 424

the city or county agency responsible for proposing a general plan for the city or county.

Front 425

plaster

Back 425

a mixture of lime or gypsum, sand, water, and fiber that is applied to walls and ceilings and that hardens into a smooth coating.

Front 426

point of beginning

Back 426

the fixed starting point in the metes and bounds method of land description. .

Front 427

police power

Back 427

the power of a government to impose restrictions on private rights, including property rights, for the sake of public welfare, health, order, and security, for which no compensation need be made.

Front 428

points

Back 428

see discount points

Front 429

post-dated check

Back 429

a check dated with a date after the date the check is written and signed.

Front 430

power of attorney

Back 430

a special written instrument that gives authority to an agent to conduct certain business on behalf of the principal. The agent acting under such a grant is sometimes called an attorney in fact.

Front 431

portfolio loans

Back 431

loans that primary lenders retain in their own investment portfolios rather than sell into the secondary market.

Front 432

preliminary notice

Back 432

a notice sent by someone who furnishes work or materials for a work of improvement on real property that creates a right to file a mechanics lien against the property.

Front 433

preliminary public report

Back 433

a report that a subdivider may request that requires fewer disclosures than does a final public report and that only allows the subdivider to accept reservations from potential purchasers. .

Front 434

preliminary title report

Back 434

a statement by a title insurance company of the condition of the title and of the terms and conditions upon which the company is willing to issue a policy.

Front 435

prepayment penalty

Back 435

a fee charged to a borrower for paying off the loan faster than scheduled payments call for.

Front 436

power-of-sale clause

Back 436

a clause contained in most trust deeds that permits the trustee to foreclose on, and sell, the secured property without going to court.

Front 437

preapproval

Back 437

an evaluation of a potential borrower's ability to qualify for a loan that involves a credit check and verification of income and debt of the potential borrower.

Front 438

prequalification

Back 438

an initial unverified evaluation of a potential borrower's ability to qualify for a mortgage loan.

Front 439

prescription

Back 439

a method of acquiring an interest in property by use and enjoyment for five years.

Front 440

prescriptive easement

Back 440

an easement acquired by prescription

Front 441

price fixing

Back 441

an agreement between competitors to set prices or price ranges.

Front 442

primary financing

Back 442

first mortgage property financing.

Front 443

primary mortgage market

Back 443

the market wheremortgage loans are originated.

Front 444

primary lender

Back 444

lenders who originate mortgage loans.

Front 445

principal

Back 445

the one whom an agent represents.

Front 446

principle of anticipation

Back 446

principle that value is derived from a calculation of anticipated future benefits to be derived from the property, not from past benefits, though past benefits may inform as to what might be expected in the future.

Front 447

principle of balance

Back 447

principle that the maximum value of property, its highest and best use, is created and maintained when land use by interacting elements of production are in equilibrium or balance.

Front 448

principle of change

Back 448

principle that property values are in a constant state of flux due to economic , environmental, political, social, and physical forces in the area.

Front 449

principle of competition

Back 449

principle that increased competition results in increased supply inrelation to demand, and thereby to lower profit margins.

Front 450

principle of conformity

Back 450

principle that the maximum value of land is achieved when there is a reasonable degree of social, economic, and architectural conformity in the area.

Front 451

principle of contribution

Back 451

principle that improvements made to a property will contribute to its value or that, conversely, the lack of a needed improvement will detract from the value of the property.

Front 452

principle of four-stage life cycle

Back 452

principle that property goes through a process of growth, stability, decline, and revitalization.

Front 453

principle of progression

Back 453

principle that the value of a residence of less value tends to be enhanced by proximity to residences of higher value.

Front 454

principle of regression

Back 454

principle that the value of a residence of higher value tends to be degraded by the proximity to residences of lower value.

Front 455

principle of substitution

Back 455

principle that the value of a property will tend toward the cost of an equally desirable substitute property.

Front 456

principle of supply and demand

Back 456

principle that the value of property in a competitive market is influenced by the relative levels of supply and demand: the greater level of demand in relation to the level of supply, the greater the value.

Front 457

principle of the highest and best use

Back 457

principle that the best use of a property in terms of value is the use most likely to produce the greatest net return (in terms of money or other valued items).

Front 458

private mortgage insurance (PMI)

Back 458

mortgage insurance that lenders often require for loans with an LTV more than 80%.

Front 459

privity of contract

Back 459

a legal doctrine that states that a legally enforceable relationship exists between the persons who are parties to a contract.

Front 460

privity of estate

Back 460

a legal doctrine that states that a legally enforceable relationship exists between the parties who hold interests in the same real property.

Front 461

promissory note

Back 461

a contract whereby one person unconditionally promises to pay another a certain sum of money , either at a fixed or determinable future date or on demand of the payee.

Front 462

probate

Back 462

a legal procedure whereby a superior court in the county where the real property is located or where the deceased resided oversees the distribution of the decedent's property.

Front 463

profit á prendre

Back 463

the right to enter another's land for such purposes as to drill for oil, mine for coal, or cut and remove timber.

Front 464

property tax postponement program

Back 464

a program in which the state pays all or part of the real property tax on a qualified senior's residence until he or she moves, sells the property, dies, or transfers title to the property. Repayment of all postponed taxes must be paid when the property is sold or title transferred.

Front 465

Proposition 13

Back 465

an amendment to the California state Constitution that places a maximum ad valorem tax on real property equal to 1% of the "full cash value" plus a maximum increase of the assessed value of up to 2% per year, as long as the annual increase does not exceed the Consumer Price Index for that year.

Front 466

Proposition 193

Back 466

this law extends Proposition 58 tax relief to certain transfers from grandparents to their grandchildren , but not transfers from grandchildren to their grandparents.

Front 467

Proposition 58

Back 467

this law provides for an exclusionfrom reassessment when property is transferred between spouses. It also provides for an exclusion from reassessment of a transfer of a principal residence and transfers of the first $ 1 million of other real property between parent and child.

Front 468

Proposition 60

Back 468

this law allows certain older persons to transfer the adjusted basis of their present principal residence to a replacement if the replacement is in the same county and is of equal or lesser value than the prior residence

Front 469

Proposition 8

Back 469

this law requires the county assessor to assess real property either at the property's Proposition 13 adjusted value or its current market value, whichever is less.

Front 470

Proposition 90

Back 470

this law extends Proposition 60 to allow the purchase of a new residence in a different California county, but only if the county in which the new residence lies adopts Proposition 90.

Front 471

proration

Back 471

an adjustment of expenses that either have been paid or are in arrears in proportion to actual time of ownership as of the closing of escrow or other agreed-upon date

Front 472

public grant

Back 472

public land conveyed, usually for a small fee , to individuals or to organizations, such as to railroads or universities.

Front 473

puffing

Back 473

the act of expressing a positive opinion about something to induce someone to become a party to a contract.

Front 474

public dedication

Back 474

a gift of an interest in land to a public body for public use, such as for a street, a park, or an easement to access a beach.

Front 475

rejuvenation

Back 475

the phase when a property is rebuilt, remodeled, or otherwise revitalized to a new highest and best use.

Front 476

reliction

Back 476

a natural process by which the owner of riparian or littoral property acquires additional land that has been covered by water but has become permanently uncovered by the gradual recession of water.

Front 477

remainder

Back 477

the residue of a freehold estate where, at the end of the estate, the future interest arises in a third person.

Front 478

remainderman

Back 478

a person who inherits or is entitled to inherit property held as a life estate when the person whose life determines the duration of the life estate passes away

Front 479

remainder depreciation

Back 479

depreciation that will occur after the date of valuation. .

Front 480

purchase money loan

Back 480

a deed of trust or mortgage on a dwelling for not more than four families given to a lender to secure repayment of a loan which was in fact used to pay all or part of the purchase price of that dwelling, occupied entirely or in part by the purchaser.

Front 481

pyramid roof

Back 481

a hip roof that has no ridge.

Front 482

quitclaim deed

Back 482

a deed that contains no warranties of any kind , no after-acquired title provisions, and provides the grantee with the least protection of any deed; it merely provides that any interest (if there is any) that the grantor has in the property is transferred to the grantee.

Front 483

rafter

Back 483

one of a series of parallel sloping timbers that extend from the ridgeboard to the exterior walls, providing support for the roof.

Front 484

ratification

Back 484

the act of creating an agency relationship by a principal who accepts or retains the benefit of an act made by an unauthorized agent.

Front 485

Real Estate Fund

Back 485

a special account controlled by the California State Treasury into which real estate license fees are deposited.

Front 486

Real Estate Commissioner

Back 486

the chief executive officer of the CalBRE who is appointed by the governor and whose responsibility is to oversee and enforce the Real Estate Law and the Subdivided Lands Law and to issue regulations, known as the Regulations of the Real Estate Commissioner, that have the full force and effect of law.

Front 487

real estate investment trust (REIT)

Back 487

a company that invests in and, in most cases operates, income-producing real estate and that meets numerous criteria , such as the necessity of being jointly owned by at least 100 persons.

Front 488

real estate owned (REO)

Back 488

property acquired by a lender through a foreclosure sale.

Front 489

real estate professional





real estate professional — a real estate investor who (1) materially participates for at least 750 hours during the tax year in the real estate business and (2 ) spends more than 50% of his or her personal services performed in all businesses during the tax year in the real estate business that he or she materially participates

Back 489

a real estate investor who (1) materially participates for at least 750 hours during the tax year in the real estate business and (2 ) spends more than 50% of his or her personal services performed in all businesses during the tax year in the real estate business that he or she materially participates in.

Front 490

Real Estate Settlement Procedures Act (RESPA)

Back 490

a federal law designed to prevent lenders, real estate agents, developers, title insurance companies, and other agents (such as appraisers and inspectors) who service the real estate settlement process from providing kickbacks or referral fees to each other, and from facilitating bait-and-switch tactics.

Front 491

Real Estate Transfer Disclosure Statement"(" TDS")

Back 491

a form that a seller of a residential real estate property of 1 to 4 units must complete, sign , and have delivered to a buyer. The TDS must also be completed in part by the agent representing the seller, stating whatever defects are discovered or known by the agent.

Front 492

Real Property Loans Act

Back 492

a California law that addresses abuses and loan charges on small loans secured by real property.

Front 493

real property sales contract

Back 493

an agreement in which one party agrees to convey title to real property to another party upon the satisfaction of specified conditions set forth in the contract and that does not require conveyance of title within one year from the date of formation of the contract.

Front 494

Realtist ®

Back 494

a member of the National Association of Real Estate Brokers.

Front 495

Realtor ®

Back 495

a member of the National Association of Realtors ®.

Front 496

reconciliation

Back 496

the process of ascertaining value by comparing and evaluating values obtained from comparables or from different valuation approaches; the process of comparing what is in a trust fund account with what should be in the account.

Front 497

reconveyance deed

Back 497

a deed executed by the trustee of a deed of trust after the promissory note is paid off in full by the borrower and the lender instructs the trustee to so execute the reconveyance deed, which reconveys legal title to the borrower

Front 498

recorded map land description

Back 498

a method of land description that states a property's lot, block , and tract number, referring to a map recorded in the county where the property is located.

Front 499

Recovery Account

Back 499

a special account into which is credited some of the funds from the Real Estate Fund, which funds are used to reimburse members of the public who have obtained a civil judgment or criminal restitution order against a real estate licensee but have not been able to collect fully from the licensee through normal collection efforts.

Front 500

redemption period

Back 500

a period of time extending for 3 months after a sheriff's sale if the proceeds of the sale is enough to pay off the debt and all costs of foreclosure; it is 1 year if the proceeds of the sale are not enough to pay off the debt and the lender pursues a deficiency judgment. If the lender elects not to pursue a deficiency judgment, there is no right of redemption.

Front 501

redlining

Back 501

the illegal practice of refusing to make loans for real property in particular areas.

Front 502

Regulation Z

Back 502

the set of regulations that implement the Truth-in-Lending Act (TILA).

Front 503

reinforced concrete

Back 503

concrete poured around steel bars or metal netting to increase its ability to withstand tensile, shear, and compression stresses.

Front 504

rejection

Back 504

the act of an offeree that terminates an offer. An offer may be rejected (1) by submitting a new offer, (2) by submitting what purports to be an acceptance but is not because it contains a variance of a material term of the original offer, or (3) by express terms of rejection.

Front 505

replacement cost

Back 505

the cost of replacing improvements with those having equivalent utility , but constructed with modern materials, designs, and workmanship.

Front 506

reproduction cost

Back 506

the cost of replacing improvements with exact replicas at current prices.

Front 507

request for a reconveyance

Back 507

an instrument that a lender sends to a trustee requesting that the trustee execute and record a deed of reconveyance that is then sent to the borrower.

Front 508

rescission

Back 508

the cancellation of a contract and the restoration of each party to the same position held before the contract was entered into.

Front 509

reserve account

Back 509

in reference to loan servicing , the escrow account from which the loan servicer typically pays, on behalf of the borrower, property taxes, hazard insurance, and any other charges (such as mortgage insurance) with respect to the loan

Front 510

retaliatory eviction

Back 510

an eviction action brought to retaliate against a tenant for making a habitability complaint or for asserting other of the tenant's legal rights.

Front 511

Restricted Use Report

Back 511

a type of appraisal report that is sometimes used when the client is familiar with the area and a report summarizing the data thatsupports the final estimate of value is not necessary. The Restricted Use Report must contain data that supports the final estimate of value is not necessary. The Restricted Use Report must contain a notice that it is to be used only by the client for one particular purpose, not by potential buyers or lenders or others.

Front 512

resident manager

Back 512

an individual who resides on the premises , is a "responsible" person, and has "charge" of the apartment building.

Front 513

return on investment (ROI)

Back 513

an investor's cash flow (net income minus financing charges) divided by the investor's actual cash investment (as distinct from the purchase price).

Front 514

residential loan

Back 514

a loan primarily for personal, family, or household use secured by a residential structure that contains 1 to 4 dwelling units. The term also includes a loan for an individual condominium unit, cooperative unit, mobile home, manufactured home, and trailer, if it is used as a residence.

Front 515

reverse mortgage

Back 515

a security instrument for a loan for homeowners over the age of 62 who have a large amount of equity in their homes, usually designed to provide such homeowners with monthly payments, often over the lifetime of the last surviving homeowner who either moves out of the house or dies.

Front 516

residual value

Back 516

an estimate of the reasonable fair market value of a property at the end of its useful life.

Front 517

respondeat superior

Back 517

in agency law, the doctrine that a principal is liable for the acts of an agent if those acts were performed within the scope of the agent's authority. (See, vicarious liability.)

Front 518

reversion

Back 518

the residue of a freehold estate where at the end of the estate , the future interest reverts to the grantor.

Front 519

revocation

Back 519

the withdrawal of an offer by the person who made the offer.

Front 520

rezoning amendment

Back 520

an amendment to a zoning ordinance that property owners may request if they feel that their area has been improperly zoned

Front 521

ridge board

Back 521

a horizontal board placed on edge at the apex of a roof to which the upper ends of the rafters are attached

Front 522

right of first refusal

Back 522

the right to be given the first chance to purchase a property at the same price, terms, and conditions as is offered to third parties if and when the property is put up for sale

Front 523

right of reinstatement

Back 523

a borrowers right to, at any time within the period from the date of recordation of the notice of default until 5 business days prior to the date of sale, have his or her loan reinstated by paying all delinquent loan installments, foreclosure costs, and trustee's fees. No right of reinstatement exists after a trustee's sale , when the purchaser immediately acquires all rights held by the former owner, subject to the rights of holders of rights superior to the mortgage that was foreclosed

Front 524

right of survivorship

Back 524

the right to succeed to the interest of a joint tenant or, if community property with right of survivorship, to succeed to the interest of a spouse or registered domestic partner. Right of survivorship is the most important characteristic joint of tenancy

Front 525

riparian rights

Back 525

the rights of a landowner to use water from a stream or lake adjacent to his or her property, provided such use is reasonable and does not injure riparian owners

Front 526

Rumford Act

Back 526

see, Fair Employment and Housing Act

Front 527

R-value

Back 527

a measure of the resistance of insulation to heat transfer. The FTC requires sellers of new homes to disclose the R-value of each home's insulation. The higher the R-value, the greater is the effectiveness of the insulation

Front 528

SAFE Act

Back 528

the Safe and Fair Enforcement for Mortgage Licensing Act of 2008 was designed to improve consumer protection and reduce mortgage fraud by setting minimum standards for the licensing and registration of mortgage loan originators

Front 529

safety clause

Back 529

a clause in a listing agreement that protects the broker's commission for a sale that is consummated after the termination of the broker's listing agreement to a buyer who is found by the broker during the term of the listing agreement

Front 530

sales comparison approach

Back 530

an appraisal approach that compares recent sales of similar properties in the area to evaluate the market value of the subject property

Front 531

salesperson

Back 531

a natural person who is employed by a licensed real estate broker to perform acts that require having a real estate license

Front 532

salvage value

Back 532

residual value

Front 533

sandwich lease

Back 533

a leasehold interest that lies between a primary lease and a sublease

Front 534

sash

Back 534

frames that contain one or more windowpanes

Front 535

scarcity

Back 535

a lack of abundance

Front 536

scrap value

Back 536

residual value

Front 537

second mortgage

Back 537

a security instrument that holds second-priority claim against certain property identified in the instrument

Front 538

secondary financing

Back 538

second mortgage and junior mortgage property financing

Front 539

zoning

Back 539

laws of a city or county that specify the type of land-use that is acceptable in certain areas

Front 540

writ of possession

Back 540

a court order that authorizes the sheriff or other eviction authority to remove a tenant and the tenant's possessions from leased premises

Front 541

secondary mortgage market

Back 541

the market where mortgages are sold by primary mortgage lenders to investors

Front 542

secret profit

Back 542

any compensation or beneficial gain realized by an agent not disclosed to the principal. Real estate agents must always disclose any interest that they or their relatives have in a transaction and obtain their principals' consent

Front 543

section

Back 543

one square mile, containing 640 acres

Front 544

sections and township land description

Back 544

a method of land description based on a grid system of north-south lines ( ranges) and east-west ( tier or township lines) that divides the land into townships and sections

Front 545

security instrument

Back 545

the written instrument by which a debtor pledges property as collateral to secure a loan

Front 546

Self-Contained Report

Back 546

a type of appraisal report that contains a complete description of the data relied on, including data about the neighborhood as well as the property; the reasons the appraiser used for his or her interpretation of the estimate of value; and pertinent maps, photographs, charts, and the plot plans

Front 547

self-help eviction

Back 547

a landlord's denial of possession of leased premises to a tenant without complying with the legal process of eviction

Front 548

seller carry back loan

Back 548

a loan or credit given by a seller of real property to the purchaser of that property

Front 549

Seller Financing Disclosure Law

Back 549

a California law that requires the seller of real property who carries back a loan to give the purchaser loan disclosures similar to the disclosures required in conventional loans

Front 550

seller's agent

Back 550

a real estate broker appointed by the seller to represent the seller

Front 551

selling agent

Back 551

the real estate agent who sells or finds and obtains a buyer for the property in a real estate transaction

Front 552

senior mortgage

Back 552

a mortgage that, relative to another mortgage, has a higher lien-priority position

Front 553

separate property

Back 553

property that is owned in severalty by a spouse or registered domestic partner. Separate property includes property acquired before marriage or the registering of domestic partnership , and property acquired as a gift or by inheritance during marriage or registered domestic partnership

Front 554

servient tenement

Back 554

land that is burdened by an easement

Front 555

severalty

Back 555

ownership of property by one person

Front 556

sheriff's deed

Back 556

a deed given at the foreclosure of a property, subsequent to a judgment for foreclosure of a money judgment against the owner or of a mortgage against the property. A sheriff's deed contains no warranties and transfers only the former owner's interest in the property

Front 557

sheriff's sale

Back 557

a sale of property following a judicial foreclosure

Front 558

Sherman Act

Back 558

the federal law passed in 1890 that prohibits agreements, verbal or written, that have the effect of restraining free trade

Front 559

short sale

Back 559

a pre -foreclosure sale made by the borrower (usually with the help of a real estate agent) with lender approval of real estate for less than the balance due on the mortgage loan

Front 560

short-term capital gain

Back 560

the capital gain on the sale of a capital asset that was held for a relatively short period of time, usually one year or less

Front 561

sill

Back 561

the board or metal forming the lower side of the frame for a window or door; the lowest part of the frame of a house, resting on the on the foundation and providing the base for the studs

Front 562

simple interest

Back 562

the type of interest that is generated only on the principal invested

Front 563

single agency

Back 563

an agency in which a broker represents either the seller or the buyer, but not both

Front 564

single point of contact

Back 564

an individual or team of personnel employed by a mortgage loan servicer, each of whom has the ability and authority borrower in assessing whether the borrower may be able to take advantage of a foreclosure prevention alternative offered by, or through, the mortgage servicer

Front 565

special agent

Back 565

an agent for a particular act or transaction.

Front 566

specific lien

Back 566

a lien that attaches only to specific property.

Front 567

specific performance

Back 567

a court order that requires a person to perform according to the terms of a contract

Front 568

spot zoning

Back 568

an improper use of zoning whereby a particular property is zoned differently from similar property similarly situated in the neighborhood

Front 569

standard subdivision

Back 569

is a subdivision with no common areas of ownership or use among the owners of the subdivision parcels.

Front 570

standby loan commitment

Back 570

a commitment by a lender to make a take-out loan after construction on a property is completed

Front 571

State Housing Law

Back 571

a California state law that provides for minimum construction and occupancy requirements for housing.

Front 572

statute of frauds

Back 572

a law that requires certain types of contracts, including most real estate contracts, to be in writing and signed by the party to be bound in order for the contract to be enforceable.

Front 573

statute of limitations

Back 573

a law that requires particular types of lawsuits to be brought within a specified time after the occurrence of specified time after the occurrence of the event giving rise to the lawsuit.

Front 574

statutory will

Back 574

a pre-printed "fill-in-the-blanks" will provided by statute that must be signed in the presence of two competent witnesses.

Front 575

statutory year

Back 575

contrasted with a calendar year, a "year" period consisting of 360 days, with 12 months of 30 days (also referred to as a banker's year).

Front 576

steering

Back 576

the illegal practice of directing people of protected classes away from, or toward, housing in particular areas.

Front 577

stigmatized property

Back 577

a property having a condition that certain persons may find materially negative in a way that does not relate to the property’s actual physical condition.

Front 578

step-up lease

Back 578

a graduated lease

Front 579

stigmatized property

Back 579

a property having a condition that certain persons may find materially negative in a way that does not relate to the property’s actual physical condition.

Front 580

stock cooperative

Back 580

a corporation formed or availed of primarily for the purpose of holding title to improved real property either in fee simple or for a term of years.

Front 581

straight note

Back 581

a promissory note under which periodic payments consist of interest only.

Front 582

straight-line depreciation

Back 582

the expensing of a property by equal amounts over the useful life of the property, determined by subtracting from the cost of the property the estimated residual value of the property and dividing that amount by the useful life of the property measured in years.

Front 583

straight-line method

Back 583

a method of calculating annual depreciation of an improvement by dividing the cost of the improvement by the estimated useful life of a typical such improvement.

Front 584

Street Improvement Act of 1911

Back 584

this act provides local governments with the authority to issue bonds to improve streets and make other improvements to specific areas. Assessments on properties are due in equal installments during the term of the bonds, which can run for decades

Front 585

studs

Back 585

vertical wood or metal members in wall or partition framing that serve as the main support for upper floors or roof. Studs are usually placed 16 to 24 inches apart

Front 586

subagent

Back 586

an agent of an agent.

Front 587

Subdivided Lands Law

Back 587

a California state law that requires subdividers to disclose certain pertinent information to the initial purchasers of parcels in subdivisions

Front 588

Subdivision Map Act

Back 588

a California state law that gives local officials the authority to regulate subdivisions to ensure that they conform to local general plans

Front 589

subjacent support

Back 589

the support that soil receives from land beneath it.

Front 590

subject to

Back 590

acquiring real property that is burdened by a mortgage without becoming personally liable for the mortgage debt.

Front 591

subjective value

Back 591

(also referred to as value in use) is value placed on the amenities of a property by a specific person.

Front 592

sublease

Back 592

a transfer of a tenant's right to a portion of the leased premises or to the entire premises for less than the entire remaining lease term

Front 593

subordination clause

Back 593

a provision in a mortgage or deed of trust that states that the mortgage or deed of trust will have lower priority than a mortgage or deed of trust recorded later.

Front 594

Summary Report

Back 594

a type of appraisal report that typically consists of several pages of forms to be filled out by an appraiser that contain pertinent data about the subject property, along with photos, maps, and plans. This type of appraisal report is most often used by lending institutions, insurance companies, and government agencies.

Front 595

supplemental tax assessment

Back 595

an event that occurs upon the sale of real property or completion of new construction on real property when the county assessor determines the current market value of the transferred property or the newly constructed real property and subtracts the prior assessed value from the current assessed value to obtain the net supplemental value that will be enrolled as a supplemental assessment. The increase (or decrease) in assessed value is then reflected in a prorated supplemental tax bill that covers the period from the first day of the month following the transfer or completion of construction to the end of the fiscal year, which runs from July 1 to June 30.

Front 596

take-out loan

Back 596

a loan that provides long-term financing for a property on which a construction loan had been made.

Front 597

tax assessor

Back 597

the county or city official who is responsible for appraising property.

Front 598

tax auditor

Back 598

the county or city official who maintains the county tax rolls.

Front 599

tax collector

Back 599

the county or city official who is responsible for collecting taxes.

Front 600

tax deed

Back 600

the deed given to the successful buyer at a tax sale. A tax deed conveys title free and clear from private liens, but not from certain tax liens or special assessment liens, or from easements and recorded restrictions.

Front 601

tenancy in common

Back 601

a form of joint ownership that is presumed to exist if the persons who own the property are neither married nor registered domestic partners and they own undivided interests in property. Tenants in common may hold unequal interests; however, if the deed does not specify fractional interests among the tenants, the interests will be presumed to be equal.

Front 602

tenancy in partnership

Back 602

a form of joint ownership in which the partners combine their assets and efforts in a business venture.

Front 603

tentative map

Back 603

a map required pursuant to the Subdivision Map Act for subdivisions that create five or more parcels, five or more condominiums, a community apartment project containing 5 or more interests, or the conversion of a dwelling into a stock cooperative of 5 or more dwelling units. The tentative tentative map, which is to be filed with the local planning commission, must include a legal description of the property; the location and description of all adjoining highways, streets, and waterways; the location and description of easements for roads, drainage, sewers, and other public utilities; proposed public areas; and proposed provisions for floods and other natural hazards.

Front 604

testament

Back 604

a will.

Front 605

testator

Back 605

one who dies leaving a will.

Front 606

time-share estate

Back 606

an estate in real property coupled with the right of occupancy for certain periods of time

Front 607

time-share use

Back 607

a right to occupancy during certain periods of time, not coupled to an estate in real property

Front 608

title plant

Back 608

a duplicate of county title records maintained at title insurance companies for use in title searches.

Front 609

township

Back 609

six square miles, containing 36 sections

Front 610

trade fixtures

Back 610

objects that a tenant attaches to real property for use in the tenant's trade or business. Trade fixtures differ from other fixtures in that, even though they are attached with some permanence to real property, they may be removed at the end of the tenancy of the business

Front 611

transferability

Back 611

the ability to transfer some interest in property to another.

Front 612

Treaty of Guadalupe Hidalgo

Back 612

the treaty that ended the Mexican-American war (1846-48), annexed California to the United States, and provided for the recognition of community property rights in California.

Front 613

triggering term

Back 613

any of a number of specific finance terms stated in an advertisement for a loan that triggers Regulation Z disclosure requirements in the advertisement

Front 614

triple net lease

Back 614

a lease under which the tenant pays a fixed rent plus the landlord's property taxes, hazard insurance, and all maintenance cost

Front 615

trust deed

Back 615

a three-party security device, the three parties being the borrower ( trustor), the lender (beneficiary), and a third-party (trustee) to whom "bare legal title" is conveyed.

Front 616

trust fund overage

Back 616

a situation in which a trust fund account balance is greater than it should be.

Front 617

trust fund shortage

Back 617

a situation in which a trust fund account balance is less than it should be.

Front 618

trustee

Back 618

a person who holds something of value in trust for the benefit of another; under a deed of trust, a neutral third-party who holds naked legal title for security

Front 619

trustor

Back 619

a borrower who executes a deed of trust.

Front 620

Truth-in-Lending Act (TILA)

Back 620

a federal consumer protection law that was enacted in 1968 with the intention of helping borrowers understand the costs of borrowing money by requiring disclosures about loan terms and costs (in particular, the APR) and to standardize the way in which certain costs related to the loan are calculated and disclosed.

Front 621

tying arrangement

Back 621

occurs in antitrust law when the seller conditions the sale of one product or service on the purchase of another product or service

Front 622

underwriter

Back 622

one who analyzes the risk of, and recommends whether to approve, a proposed mortgage loan

Front 623

undivided interest

Back 623

an ownership interest in property in which an owner has the right of possession of the entire property and may not exclude the other owners from any portion by claiming that a specific portion of the property is his or hers alone.

Front 624

undivided interest subdivision

Back 624

a subdivision in which owners own a partial or fractional interest in an entire parcel of land. The land in an undivided interest subdivision is not divided; its ownership is divided.

Front 625

unenforceable contract

Back 625

a contract that a court would not enforce.

Front 626

Uniform Commercial Code (UCC)

Back 626

a set of laws that established unified and comprehensive regulations for security transactions of personal property and that superseded existing laws in that field.

Front 627

unilateral contract

Back 627

a contract in which one party gives a promise that is to be accepted not by another promise but by performance.

Front 628

unity of interest

Back 628

in reference to joint ownership, refers to each of the owners having equal interests in the property.

Front 629

unity of possession

Back 629

in reference to joint ownership, refers to each of the owners having an equal, undivided right to possession of the entire property

Front 630

unity of time

Back 630

in reference to joint ownership , refers to each of the owners having acquired his/ her interest in the property at the same time

Front 631

unity of title

Back 631

in reference to joint ownership , refers to each of the owners having received ownership in the property from the same deed

Front 632

unlawful detainer

Back 632

a legal action to regain possession of real property

Front 633

Unruh Civil Rights Act

Back 633

a California state law that prohibits persons engaged in business from discriminating on the basis of race, color, religion, ancestry, national origin, gender, disability, medical condition, or age when providing products or services in California. In housing related activities, businesses are also prohibited from discriminating on the basis of marital status, familial status, sexual orientation, or source of income. This law applies to all real estate salespersons and brokers.

Front 634

useful life

Back 634

the estimated period during which a property generates revenue (if the property is an income property) or usefulness (if the property, such as a private residence, has value other than income value

Front 635

usury

Back 635

the charging of interest in excess of that allowed by law.

Front 636

utility

Back 636

the usefulness of property; its ability to satisfy a potential buyer's need or desire, such as to provide shelter or income.

Front 637

VA

Back 637

the Department of Veterans Affairs is a federal agency designed to benefit veterans and members of their families.

Front 638

Vacation Ownership and Time-Share Act of 2004

Back 638

a California state consumer protection law that regulates disclosures and representations made by time share sales persons

Front 639

valid contract

Back 639

a contract that is binding and enforceable in a court of law.

Front 640

value

Back 640

the present worth of all rights to future benefits, arising out of property ownership, to typical users or investors.

Front 641

variance

Back 641

an exception that may be granted in cases where damage to the value of a property from the strict enforcement of zoning ordinance would far outweigh any benefit to be derived from enforcement.

Front 642

vendee

Back 642

the purchaser in a real property sales agreement

Front 643

veteran's exemption

Back 643

nd exemption of up to $ 4,000 from the assessed value of a qualified veteran's property.

Front 644

vicarious liability

Back 644

liability imposed on a person not because of that person's own acts but because of the acts of another . (See, respondeant superior)

Front 645

void contract

Back 645

a purported contract that has no legal effect

Front 646

voidable contract

Back 646

a contract that, at the request of one party only, may be declared unenforceable, but is valid until it is so declared.

Front 647

voluntary lien

Back 647

a lien obtained through the voluntary action of the one against whose property the lien attaches.

Front 648

Vrooman Street Act of 1885

Back 648

this act provides local governments with authority to construct streets, sewers, and other improvements. Funds for these improvements are secured by the issuance of bonds, which are redeemed by assessing the properties benefited

Front 649

warranty deed

Back 649

a deed in which the grantor warrants that the title being conveyed is good and free from defects or encumbrances, and that the grantor will defend the title against all suits.

Front 650

warranty of habitability

Back 650

mandated by both statutes and by common law, an implied warranty in any residential lease that the premises are suitable for human habitation.

Front 651

will

Back 651

a document that stipulates how one's property should be distributed after death; also called a testament.

Front 652

writ

Back 652

a court order commanding the person to whom it is directed to perform an act specified therein.

Front 653

writ of attachment

Back 653

a writ ordering the seizure of property belonging to a defendant to ensure the availability of the property to satisfy a judgment if the plantiff wins

Front 654

writ of execution

Back 654

a writ directing a public official (usually the sheriff ) to seize and sell property of a debtor to satisfy a debt.

Front 655

writ of possession

Back 655

a court order that authorizes the sheriff or other eviction authority to remove a tenant and the tenant's possessions from leased premises.

Front 656

1 mile

Back 656

= 5,280 feet or 320 rods

Front 657

1 rod

Back 657

= 16 ½ ft.

Front 658

1 township

Back 658

= 6 mi. x 6 mi. = 36 sections

Front 659

1 section

Back 659

= 1 mi. x 1 mi. = 640 acres

Front 660

1 acre

Back 660

= 43,560 square feet

Front 661

1 square acre

Back 661

≈ 208.7 ft. x 208.7 ft. (i.e., a "square acre" has 208.7 ft. on each side.)

Front 662

commercial acre

Back 662

the buildable part of an acre that remains after subtracting land needed for streets, sidewalks, alleys, curbs, etc.

Front 663

To convert a percentage to a decimal

Back 663

simply remove the % sign and move the decimal point two places to the left: 15% = .15 74.6% = .746

Front 664

To convert a decimal to a percent

Back 664

move the decimal point two places to the right and add the % sign: .75 = 75% 1.12 = 112%

Front 665

To convert a fraction to a decimal

Back 665

divide the numerator (the number on top) by the denominator (the number on the bottom): 1/ 5 = 1 ÷ 5 = .20 3/ 4 = 3 ÷ 4 = .75

Front 666

Jessica is a real estate salesperson who found a buyer for a home that sold for $ 800,000. Jessica's employing broker received a 5% commission for the sale. The agreement between the broker and Jessica provides that she receive 40% of the broker's commission on every sale she procures. What is Jessicas commission?

Back 666

5% of $ 800,000 = .05 x $ 800,000 = $ 40,000. Jessica is to receive 40 % of $ 40,000 = .40 x $ 40,000 = $ 16,000. ///OR ANOTHER WAY//// 40% of 5% = .40 x .05 = .02 = 2 % of the sales price. Using this 2% figure, we find that 2% of $ 800,000 = .02 x 800,000 = $ 16,000.

Front 667

Bob is a salesperson who works for broker Janet. Bob's agreement with Janet is that he gets a commission of 40% of whatever commission Janet receives on sales made by Bob. Bob procures a sale of a house that was listed by broker Susan, who had a cooperating agent agreement with Janet to split the commission on the sale 50-50. Susan's listing agreement with the owner called for a 6% commission. Bob's commission on the sale was $ 6,000. How much did the house sell for?

Back 667

The problem tells us that: $ 6,000 = 40% of 50% of 6% of Sales Price = (. 4 x .5 x .06) x Sales Price = .012 x Sales Price (i.e., 1.2% of Sales Price) Therefore, dividing each side of the equation by .012, we get $ 500,000 = Sales Price

Front 668

Ernesto sold his house, receiving for $ 423,000 after paying a 6% commission. For how much did Ernesto sell his house?

Back 668

We are told that the price the house sold for — its "Sales Price" — minus the commission paid was $ 423,000. Therefore, Sales Price - Commission = $ 423,000 Sales Price - (6% of Sales Price) = $ 423,000 Sales price - (. 06 x Sales Price) = $ 423,000 .94 x Sales Price = $ 423,000 Finally, dividing both sides of the equation by .94, we get Sales Price = $ 450,000

Front 669

Investment problems involve four concepts:

Back 669

1. Investment — the amount of dollars invested 2. Income — the amount of dollars earned (or lost) from the investment 3. Rate — the rate of return on the investment (often referred to as the "ROI") 4. Time — the amount of time the Investment is earning the Rate

Front 670

Investment problems involve the following relationships (formula):

Back 670

Income = Investment x Rate x Time Income

Front 671

Joe wants to make $ 750 per month from an investment that will earn 5% per year. How much must Joe invest to obtain his desired monthly investment income?

Back 671

Here we are told that Joe wants to earn $ 750 per month, which is 12 x $ 750 = $ 9,000 per year. Therefore, the problem has given us Income = $ 9,000 (per year) Rate = 5% (per year) Putting these given bits of information into our formula, we have: $ 9,000 = 5% (per year) of Investment for 1 year = .05 (per year) x Investment x 1 year By dividing both sides of this equation by .05, we get $ 9,000 ÷ .05 = Investment $ 180,000 = Investment

Front 672

Sarah bought her house for $ 300,000 and sold it for $ 375,000 five years later. What was the rate of return on her investment?

Back 672

The problem tells us that Sarah's Income (Sales Price - Investment ) is $ 75,000. Therefore, $ 75,000 = Investment x Rate (per year) x Time (in years) $ 75,000 = $ 300,000 x Rate (per year) x 5 (years) [Remember to keep the time periods consistent throughout the formula!] Therefore, by dividing both sides of the equation by $ 300,000 x 5 (years) we get: $ 75,000 ÷ ($ 300,000 x 5 years) = Rate (per year) .05 (per year) = Rate (per year) 5% (per year) = Rate (per year) Note that if the question asked for the rate per month, the answer would be .05/ 12 = .00417 (rounded off) or .417% per month.

Front 673

Susan is interested in a building that she has learned produces $ 100,000 net income per year. The capitalization rate that she wants to earn is 8%. What is the maximum price she should pay for the building

Back 673

The maximum price she should pay would be the amount of Investment that would yield Income of $ 100,000 each year at the Rate of 8% per year year. Using our formula Income = Investment x Rate x Time, we get $ 100,000 = Investment x 8% x 1 year $ 100,000 = Investment x .08 $ 1,250,000 = Investment

Front 674

Susan owns a promissory note for $ 10,000 payable in 12 months at a rate of 6% interest, which is also payable at the end of the note term. Wanting to convert the note into cash, Susan sells the note to her friend Bob at a 5% discount . Assuming that the note and interest are paid in full at the end of the note term, what rate of return will bob receive

Back 674

Here the question asks for a Rate, so we must figure out the amount of Income Bob will earn and the amount of his Investment. His Investment is $ 10,000 - (5% of $ 10,000) = $ 10,000 - $ 500 = $ 9,500. His income is 6% of $ 10,000 + $ 500 which is $ 600 + $ 500 = $ 1,100. Therefor Therefore, Bob's Rate = Income ÷ Investment which is $ 1,100 ÷ $ 9,500 = 11.58% (rounded off).

Front 675

The straight-line depreciation is defined as:

Back 675

Annual Depreciation = (Cost of Property - Residual Value) ÷ (useful life of the property in years) Thus, if the property has a 5-year useful life and no residual value, the rate of (straight-line) depreciation is: 100% ÷ 5 years = 20% per year

Front 676

Evan purchases a building for $ 3,000,000 that has a useful life of 30 years and salvage value of $ 0. After 10 years, what is the value of the building, if by "value" we mean the original cost less accumulated straight-line depreciation?

Back 676

Here the depreciation rate is: 100% ÷ 30 years = 3 ⅓ % per year 3 ⅓ % per year x 10 years = 33 ⅓ % depreciation 33 ⅓ % of the initial value = 33 ⅓ % x $ 3 million = $ 1 million Therefore, value = cost - depreciation = $ 2,000,000

Front 677

simple interest formula

Back 677

Interest = Rate x Principal x Time

Front 678

What is the interest on a $ 400,000 loan for 1 year, 2 months, and 10 days at 6% interest (using a statutory year)?

Back 678

The time elapsed is 360 days + 60 days + 10 days = 430 days. 430 ÷ 360 = 1.19444 years. Therefore, applying our formula Interest =Rate x Principal x Time, we get Interest = .06 x $ 400,000 x 1.19444 =$ 28,666.56

Front 679

Jessica borrows $ 12,000 from her friend Susan. The terms of the loan are that principal will be paid back in equal monthly installments over a five-year period along with the interest that was generated at the annual rate of 6% during the month on the outstanding balance of period along with the interest that was generated at the annual rate of 6% during the month on the outstanding balance of principal owing. What is Jessica's payment to Susan at the end of the second month?

Back 679

Because there are 60 months in 5 years, the amount of Susan's monthly payment attributable to principal is $ 12,000 ÷ 60 = $ 200. Therefore the amount of principal owed after the first-month payment is made is $ 12,000 - $ 200 = $ 11,800 . Consequently, the second month payment will be $ 200 + the interest due on $ 11,800 for one month. Because the interest rate is 6% annually, the monthly rate is 1/ 2%. Thus, the second-month payment is $ 200 + 1/ 2% of $ 11,800 = $ 259.

Front 680

Susan purchased a condo that had been rented from Bob at $ 1,500 a month. Escrow closed on September 16. Who pays whom in regard to proration of the rent

Back 680

Rent is normally collected in advance on the first day of the month , so unless stated otherwise one should make this assumption in proration of rent problems. Under this assumption, Bob received $ 1,500 on or about September 1, but only deserved to keep half of the month's rent because Susan acquired ownership of the condo on September 16. Therefore, Susan should be credited $750 at the close of escrow

Front 681

Emily purchased a home from Bob on which Bob had an outstanding loan balance of $ 385,000 on April 20, the day that escrow closed. The interest rate on the loan was 5% and was payable with the loan payment on the first of each month. If Emily assumed Bob's loan, who should have paid whom in regard to proration of the interest?

Back 681

The annual interest on the loan was 5%, and $ 385,000 was the loan balance on which interest would be paid by Emily (who assumed the loan) on May 1. Figured on an annual basis, interest of 5% on $ 385,000 = $ 19,250, so to obtain the daily interest amount for each day of April we divide $ 19,250 by 360 (using a statutory year) to get $ 53.4722. [Note that in proration problems it is best to use at least four numbers after the decimal point until you get to the final answer, which can be rounded off.] Because Emily should have been credited for 19 days, her credit should have been 19 x $ 53.4722 = $ 1,015.97.

Front 682

the area of a rectangle

Back 682

is base x height and the area of a triangle is ½ x base x height.

Front 683

Kevin is going to purchase the lot shown in the diagram below and build on it a house and garage. He has been quoted the following: · $ 150 per square foot for the house · $ 40 per square foot for the garage · $ 10 per square foot for the land What is the total amount that Evan will pay for this lot, house, and garage?

Back 683

First we calculate the square footage of each item: house area = 60' x 30' = 1,800 ft. ² garage area = 25' x 18' = 450 ft. ² lot area = ½ x 100 x 150 = 7,500 ft. ² cost of house = 1800 ft. ² x $ 150 per ft. ² = $ 270,000 cost of garage = 450 ft. ² x $ 40 per ft. ² = $ 18,000 cost of the lot = 7500 ft. ² x $ 10 per ft. ² =$ 75,000 Total = $ 363,000