Modern Real Estate Practice

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Real Estate Brokerage

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The business of bringing poeple together in a real estate transaction conducted by a real estate broker who is a person or company licensed to buy, sell, exchange, or lease real property for other for compensation, or by a real estate salesperson (sales associate) who conducts brokerage activities on behalf of the broker.

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Appraisal

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The process of developing an opinion property's value (typically, market value) based on established methods and increases professional judgment. Licensing or certification is required for many federally related transactions, and many states require licensing or certification for other transactions as well.

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Property management

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Conducted by a property manager, a person or company hard to maintain and manage property on behalf of the property owner. The property manager's scope of work depends on the management agreement, and the basic responsibility of the property manager is protect the owner's investment while maximizing the owner's financial return.

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Financing

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The business of providing the funds that make real estate transactions possible through loan secured by mortgage or deed of trust on the property, with funding provided by commercial banks, thrift (which includes savings) associations, credit unions, more is better, and the mortgage brokerage companies.

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Subdivision and development

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The involvement of splitting a single property into smaller parcels (subdividing) and construction improvements on the land (development).

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Home inspection

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The interest to both purchasers and homeowners, and an inspection report will show results of a thorough survey of the property conditions. A state license may be required of a home inspector.

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Real estate counseling

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The involvement of independent advice based on sound professional judgment regarding how to buy, sell, or investment property.

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Types of real property

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The inclusion of residential, commercial, mixed-use, industrial, cultural, and special-purpose.

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Real estate market

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The reflection of the principle of supply and demand, influenced by the uniqueness and the immobility of parcels of real estate. This supply increases relative to demand, prices go down, and the demand increases relative supply, prices go up

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Factors affecting the supply

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Include laborforce availability, construction and material costs, the government controls (environmental restrictions, land-use policies, building codes, zoning), and monetary policy the impacts interest rates and the money supply.

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Factors affecting the demand

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Include population, demographics, and employment and wage levels.

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Land

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The inclusion of the Earth's surface, subsurface extending downward to the center of the earth, and the airspace above the surface. Subsurface rights include mineral rights and other natural resources that can be sold separately from the surface rights. Rights can be sold separately from the surface rights and limitations to enable air travel. Water rates can be held by owners of land adjacent to rivers, lakes, or oceans.

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Real estate

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The inclusion of the land as well as all things properly attached or annexed to the land, both by nature and by humans.

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Real property

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The inclusion of interests, benefits, and the rights that are automatically included in the ownership of unimproved land and real estate

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Bundle of legal rights

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The inclusion of the rights of possession, control, enjoyment, exclusion, and disposition.

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Title

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The right to ownership of real property and evidence of ownership provided by document, called the deed, by which title is transferred.

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Water rights

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Determined by common law and statute and include riparian rights, which belong to owners of land along the flowing body of water, and littoral rights, which belong to owners of land that borders a commercially navigable lake, sea, or ocean. The doctrine of prior appropriation is followed in some states and provides that water use, aside from limited domestic abuse, is controlled by the state rather than the land owner adjacent to the water; use water, the landowner must demonstrate a beneficial use of the water such as for additional crops.

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personal property

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Personal property ( chattel) includes

1) movable items, such as a chair or a sofa

2) emblements , annual plantings or crops of grains, vegetables, and fruit

3) items of real property that can become personal property by severance

4) items of personal property that can become real property by annexation (such as construction materials)

5) factory built homes, including manufactured homes, they can be personal property unless permanently affixed to land

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Fixture

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A fixture is personal property that has been affixed to the land or to a building so that by law it becomes part of the real property. The legal test for a fixture include MARIA: the method of annexation, adaptability of the thing for the lands ordinary use, relationship of the parties, intent and placing the item on the land, and agreement of the parties.

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Trade fixtures

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Trade fixtures include property attached to the structure but used in the course of business, and can be personal property, if removed by the tenant and the premises are returned to the original condition before the lease expires; or real property, if left behind by the tenant. The landlord can acquire this type of property by accession.

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Characteristics of land

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The characteristics of land are both economic and physical. Economic characteristics of land include scarcity, improvements, permanent of the investment, and area preference (situs). Physical characteristics of land include immobility, and distractibility, and nonhomogeneity (uniqueness).

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Equal opportunity in housing

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Equal opportunity in housing is intended to create a marketplace in which persons of similar financial means have a similar range of housing choices. Equal opportunity laws apply to owners, real estate professionals, apartment management companies, real estate organizations, lending agencies, builders, and developers.

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Civil Rights Act

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The Civil Rights Act of 1866 prohibits all racial discrimination in real estate transactions, with no exceptions, and was upheld in Jones v. Mayer in 1968.

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Race

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Race has been defined by the US Supreme Court to include ancestral and ethnic characteristics, including certain physical, cultural, or linguistic traits that are shared by a group within a common national origin.

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Federal fair housing act

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The federal fair housing act's title VI I I of the Civil Rights Act of 1968, as amended, and prohibits discrimination in housing based on race, color, national origin, religion, sex, familial status, or disability. The fair housing act does not prohibit discrimination based solely on a person's citizenship status. Illegal activities include steering, blockbusting, and redlining

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Housing and community development act

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The housing and community development act of 1974 added sex to the list of protected classes. The fair housing amendments act of 1988 added disability and familial status to the protected classes. The fair housing act is administered by HUD, which established rules and regulations to further clarify the law, and created equal housing opportunity poster.

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Exemptions

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Exemptions from the fair housing act (but not the Civil Rights Act of 1866) include:

1) rentals and owner occupied buildings with no more than four units;

2) housing operated by organizations and private clubs that limit occupancy to members;

3) the sale or rental of a single-family home when fewer than three homes are owned by an individual, discriminatory advertising is not used, and a real estate professional is not involved in the transaction.

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HOPA

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The housing for older persons act of 1995 (HOPA) repealed facilities and services requirements for housing intended for persons age 55 or older. The law prohibits an award of monetary damages against those who reasonably rely in good faith on property designated as housing for older persons as being exempt from familial status provisions of the fair housing act

housing is exempt from familial status protection if it is restricted to persons age 62 or older, or if 80% of the units are occupied by persons age 55 or older

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Familial status

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Familial status extends fair housing protections to families with children, meaning a family including a woman who is pregnant or in which one or more individuals under the age of 18 living with either a parent or a guardian.

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Disability

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A disability is a physical or mental impairment that substantially limits one or more of an individual's major life activities. A person with a IDS is considered disabled but the law does not protect individuals who are current users of illegal or controlled substance or who have been convicted of the illegal manufacture or distribution of a controlled substance. The law does protect an individual who is participating in an addiction recovery programs. Reasonable modifications to property to make it usable by an individual with a disability must be allowed, but the individual must return the property to its former condition on vacating it

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. Americans with disability act

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The Americans with disability act (ADA) prohibits discrimination in employment and public accommodations. Access to facilities and services in commercial properties must provided when reasonably achievable in existing buildings, with higher standards for new construction or remodeling. Exempt properties include those covered by federal fair housing laws.

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HUD

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HUD enforces the fair housing act. A complaint must be brought within one year of the alleged act of discrimination. Within 100 days of filing a complaint that is not referred by HUD to a local enforcement agency, HUD dismisses or goes forward with a charge of illegal discrimination. Conciliation is the resolution of a complaint within 100 days of filing when a respondent promises to remedy any violation. A complaint brought to HUD may be heard by administrative law judge (ALJ) with remedies that may include a fine or injunction. A civil action may be brought in federal court I've complaint within two years of the alleged discriminatory act. The Atty. Gen. may bring a civil action in federal court. Complaints under the Civil Rights Act of 1866 go directly to federal court. Real estate professionals must act you legally, doing their part to avoid discriminatory practices.

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Freehold estate

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A freehold estate last for any indeterminable length of time. Fee simple is the highest estate recognized by law. Fee simple defeasible is in a state that is qualified because it is subject to the occurrence or on occurrence of a specified event. A life estate is based on the lifetime of the life tenant or someone else (pur autre vie).

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Encumbrance

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An encumbrance is a claim, charge, or liability that attaches to real estate. A lien is a charge against property that provide security for a debt or obligation of the property owner. Covenants, conditions, and restrictions (CC&Rs) are private limitations on the use of land.

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Easement

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An easement is a right to use the land of another. and easement is usually created by written agreement between the parties. An easement appurtenant is said to run with the land when the title is transferred. The dominant tenement benefits from the easement, which runs over the servient tenement.

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Easement in gross

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An easement in gross in an individual or company interest in or right to use another's land. An easement by necessity arises when the land has no access to a street or public way. An easement by prescription is acquired when a claimant has use another's land for the period required by law. The use must be continuous, nonexclusive, visible, open, and notorious.

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Termination

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An easement is terminated when the need for it no longer exists, when the owner of either the dominant or servient tenement becomes the owner of both, when the owner of a servient tenement releases the right of easement, if the easement is abandoned, or by the nonuse of a prescriptive easement.

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License

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A license is a personal privilege to enter the land of another for specific.

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Encroachment

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An encroachment occurs when all or part of a structure illegally intrudes on the land of another or beyond legal building line.

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Liz pendens

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Liz pendens gives notice of litigation in progress that may affect title to property.

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PE TE

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Government powers can be recalled by using the acronym PET E. Police power is the state's authority, passed down to counties and municipalities through enabling acts, to legislate to preserve order, protect the public health and safety, and promote the general welfare of citizens. Eminent domain is the government's right to acquire privately owned real estate for a public or economically beneficial use through condemnation. Taxation can include a charge on real estate to raise funds to meet public needs. Escheat occurs when the state takes control of property after the owner dies leaving no will or lawful heirs.

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Inverse condemnation

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When a taking of property occurs, the Fifth Amendment to the U.S. Constitution requires that the owner be given just compensation. A property owner may claim compensation under inverse condemnation if an adjacent public land use diminishes the value of the owner's property but the property has not been condemned for public use.

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Severalty

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Ownership in several T's ownership by one individual, who may be an artificial person, such as a corporation.

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Tenancy in common

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Coownership by two or more individuals may take one of four forms, depending on the state in which the property is located. In a tenancy in common (TIC), each tenant hold an undivided fractional interest and co-owners have unity of possession. Each interest can be sold, conveyed, mortgaged, or transferred, and will be passed by will or state law when a co-owner dies. A legal action called partition can be brought by one or more of the tenants in common to force division or sale of the property.

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Joint tenancy (P ITT)

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In a joint tenancy, there are four unities (P ITT): unity of possession, unity of interest, unity of time, and unity of title. Joint tenants enjoy the right of survivorship, which means that, on the death of a joint tenant, that tenant's interest passes to the other joint tenant or tenants. A joint tenancy can be terminated by death of all but one joint tenant, who then owns the property in severalty; conveyance of a joint tenants interest, but only as to that interest if there were more or to joint tenants originally; or partition, the legal action to force division or sale of the property some states recognize a tenancy by the entirety which is available only to the spouses and which carries a right of survivorship. Property held by a tenancy by the entirety can be conveyed only by both spouses.

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Community property

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Community property, currently recognized by nine states, is property acquired during marriage that is not separate property and requires agreement of both spouses to be conveyed. Separate property is property owned by one spouse before marriage, or acquired by one spouse during marriage by gift, inheritance, with the proceeds of separate property. On the death of a spouse, that spouses half of the community property is distributed according to the deceased will or by state law.

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Trust

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A trust is a legal arrangement in which property is transferred by the trustor, the person creating the trust, to a trustee, to be held for the identified beneficiary. The trustee acts as a fiduciary in carrying out the wishes of the trustor

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Land trust

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In a land trust, the beneficiary is also the trustor, but the public record will not identify the beneficiary

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Partnership

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A partnership is an association of two or more persons who carry on a business for profit as co-owners in a general or a limited partnership, as provided by state law. In a general partnership, all partners participate in operation and management, and partner share full liability for business losses and obligations. A limited partnership has both general partners and limited partners. The general partners run the business. Limited partners do not participate in running the business and are liable for business losses only up to the amount of the individuals investment.

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Limited liability company (LLC)

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A limited liability company (LLC) may be permitted by state law and offers its members the benefits of the limited liability of a corporation, the tax advantages of a partnership, and a flexible management structure.

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Condominium

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A condominium owner hold fee simple title to the airspace of a unit, as well as an undivided share in the remainder of the building and land, known as the common elements, which may be referenced and what are called horizontal property acts. Common elements are owned by condominium unit owners as tenants in common. The condominium is administered by a homeowners association of unit owners that may decide to hire an outside property management firm. Maintenance of common elements is funded by fees charged to each unit owner. Condominium unit owners have no right to partition common elements. Individual condominium units may be mortgaged; default on a mortgage payment does not affect other unit owners. The condominium association may have a right of first refusal when a unit owner wants to sell.

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Cooperative

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In a cooperative, title to the land and the building is held by a corporation, which sells shares of stocks to prospective tenants. A purchaser of stock becomes a shareholder in the corporation and receives a proprietary lease to the apartment for life of the Corporation. The stock is owned as personal property and not real estate.

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Lender

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A lender may accept stock and a cooperative as collateral for financing, which expands the pool of potential owners. The IRS treats the cooperative the same as a house or condominium for tax purposes.

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Timeshares

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A timeshare permits the sale of an estate or use interest that allows occupancy of a property during a specific period of time, typically weekly. Timeshare ownership permits multiple purchases to buy interest in real estate, a form of ownership most commonly found with resort property. The model real estate timeshare act deals with timeshare management and protections for purchasers of units.

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Metes and bounds method

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The metes and bounds method measures distance (metes), starting from a point of beginning (POB), and following compass directions or angles (bounds) to arrive back at the point of beginning. Monuments (fixed objects or markers) identify the POB and corners or places where the boundary line changes direction.

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Rectangular survey system

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The rectangular survey system (government survey system) devises lands into rectangles called townships measured from the intersection of a principal meridian and baseline, and referenced by degrees of longitude and latitude. Township lines within a section run east to west parallel to the baseline, 6 miles apart, range lines run north to south parallel to and counted from the principal meridian, 6 miles apart rows of townships are called tears and columns of townships are called ranges. A Township is divided into 36 sections of one square mile (640 acres) each and run from right to left, then left to right, starting at section 1 at the northeast corner of the township and ending at section 36 at the southeast corner of the township.

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Lot and block

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The lot and block (recorded plat) method divides a subdivision into block and lot (individual parcel) numbers and references all data in a subdivision plat map, noting lot sizes, street names, and other required information that is approved by the governing body, and filed in public records of the county where the land is located.

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survey preparation

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Survey preparation includes both a legal description and a survey sketch. A less precise analysis, found in the improvements location certificate (ILC), may be used. The legal description must be included by reference or transcribe exactly as written to avoid future problems over incorrect boundaries

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Elevations a.k.a. air lots

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Elevations must be measured if air lots above the surface or subsurface rights below the datum are to be described and conveyed. Differences are noted as above or below datum, defined by US geological survey (USGS) as mean sea level at New York Harbor, making use of permanent benchmarks that are established throughout the United States and are often based on a local official datum, and noting monument marking surface measurements between points.

The most common units of land measurement include the:

1) mile of 5280 feet

2) acre of 43,560 square feet (approximately 207×207 feet)

3) square mile of 640 acre (a section).

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title

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Title is the right to or ownership of land, and can also be evidence of that ownership.

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Voluntary alienation

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Voluntary alienation is the transfer of title to real estate by gift or sale during ones life, using some form of deed. To create a valid deed, the grantor (person who transfers title) must be of legal age and legally competent to execute or sign the deed. A deed executed by a minor is voidable. The grantee must be identifiable with sufficient certainty. Bold grantee

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Consideration

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Consideration (payment) of some form must be stated to record a deed granting clause (words of conveyance) must be used. The habendum clause defiance the ownership interest taken by the grantee. An accurate legal description of the property contained is essential. Exceptions or reservations to the full transfer of all the rights of ownership must be noted. The signature of the grantor must be acknowledged by a notary public or other official authorized by the state in which the property is located. Finally there must be a delivery of the deed and its acceptance by the grantee.

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Types of deeds

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Types of deeds includes the general warranty deed, which provides the greatest protection to the grantee and includes the covenant of seisin, covenant against encumbrances, covenant of further assurances, covenant of quiet enjoyment, and covenant of warranty forever. The special warranty deed includes the warranties that the grantor received title and that the property was not encumbered during the time the grantor held title, except as otherwise noted. The bargain and sale deed implies that the grantor holds title and possession of the property, but there are no express warranties against encumbrances. The quit claim deed provides the least protection of any deed as it carries no covenants or warranties, and conveys only whatever interest grantor may have when the deed is delivered. With a deed of trust, a trustor conveys real estate to a trustee for the benefit of a beneficiary. A reconveyance deed is used by the trustee to return title to the trustor, but a trustee's deed conveys property to someone other than the trustor. There may also be a deed executed pursuant to a court order.

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Transfer tax stamps

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Transfer tax stamps may be required to record the deed. Will

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Involuntary alienation

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Involuntary alienation (transfer) of title to property is usually the operation of law. Using the government's power of the eminent domain, property can be taken for a public purpose, with just compensation paid to the owner. In a foreclosure, property is taken by a creditor for nonpayment of the debt secured by real property. In the process called escheat, property is taken by the state when no heirs of the deceased can be found.

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Adverse possession

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Property can be acquired by adverse possession someone who is not the lawful owner takes exclusive possession of the property for the link the time specified by the state law in a way that is ONCHA: open, notorious, continuous, hostile, and adverse to the interest of the true owner.

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Transfer of title by will

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Transfer of title by will occurs when someone dies testate (leaving a valid will, prepared as required by state law). It will takes effect only after death and could be changed by codicil revoked while the testator is still alive. A devise is a gift of real property by will to the devisee. A bequest or legacy is a gift of personal property. To pass title to property on that, it will must be filed with the court and probated. Wills cannot supersede state laws protecting inheritance right of a surviving spouse (dower or courtesy, or benefits granted by homestead laws). Transfer of title under a state statute of descent and distribution occurs when a person dies intestate (without a valid will). The laws of the state where real property is located govern the property distribution.

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Notices

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Constructive notice of a document is assumed when due diligence (such as a search of public records and inspection of the property) would reveal its existence. Actual notice means that an individual has direct knowledge of documents in the public records and facts revealed by an inspection of the property. To serve as constructive notice, and provide priority over subsequent documents, a written document that affects an estate, right, title, or interest in land must be drafted and executed according to state law (recording acts) and must be recorded in the public records that are maintained by designated official, such as recorder of deeds, County Clerk, or city clerk, in the county or city in which the property is located. Public records are typically searched by title companies that provide title insurance to prospective purchasers based on what the search reveals.

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Unrecorded documents

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Unrecorded documents that may affect title, such as a tax lien, may not be recorded immediately, yet are still given priority by law and require a search of tax records and other sources.

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Chain of title

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The chain of title is a record of property ownership, but it does not include liens and other encumbrances. A gap in the chain or other dispute of ownership creates a cloud on the title, which is resolved by a suit to quiet title.