Nc Real Estate Pre-Licensing Exam

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interest

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money paid for using someone else's money

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principal

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the amount of money on which interest is either paid or received

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arrear

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monthly payment due on the first of the month includes interest for using the money during the previous month

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PITI

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principal, interest, taxes and insurance

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amortization

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gradual reduction of a mortgage loan amount from the original amount of the loan to a zero balance through periodic payments

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equity

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difference between the market value of property and what is owned on it

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usury

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interest charged in excess of the legal limit that is set by law

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mortgage note

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IOU or promissory note that is backed by a mortgage or a deed of trust pledging the property as collateral for the loan

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acceleration clause

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provides the lender with the option of calling the entire loan due and payable at once if the buyer defaults or breaks the contract in any way

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prepayment penalty clause

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penalty in the event that a mortgage is paid off faster than at the amortization rate stipulated

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alienation clause/due-on-sale clause

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prevents a future purchaser from assuming the loan without the lender's persmission

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title theory

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disinterested third party actually holds legal title to the property insecurity for the loan -- through deed of trust

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foreclosure

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liquidation of title to the real property pledged to recover funds to pay off the debt

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deed in lieu of foreclosuer

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borrower conveys the title to the property to the lender to avoid foreclosure (must be accepted by lender)

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deficiency judgment

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a court order stating that borrower still owes money

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conventional loan

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no participation by an agency of the federal government

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PMI (private mortgage insurance)

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insures repayment of the top portion of the loan to the lender -- necessary in the event the borrower defaults -- typically a loan exceeding 80 percent

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FHA Loan (Federal Housing Administration)

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protects lenders against financial loss -- loan-to-value ratio is high

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FHA Loan Qualifications

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monthly housing expenses cannot exceed 29% of gross income

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VA Loan

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Given through Dept. of Veterans Affairs; can be a 100% loan (no down-payment)

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escrow account

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also called impound account; borrower must pay an impound into this acct each month to accumulate money to pay the annual real property tax bill and the annual homeowner's insurance policy premium

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adjustable rate mortgage (ARM)

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type of mortgage loan in which the lender has the right to alter/adjust the interest rate

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graduated payment mortgage (GPM)

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monthly payments are lower in the early years of the loan term

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buydown loan

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allows for either a temporary or permament buydown of the interest rate

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blanket mortgage

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two or more parcels of real estate are pledged as security for payment of a mortgage debt

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package mortage

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personal property in addition to real property -- frequently used in sale of furnished condos or resort properties; can include all furnishings in a unit

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reverse mortgage

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homeowner does not pay the lender but receives income payments from the lender

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real estate/real property

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land and everything that is permanently attached to land

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personal property

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chattel or personalty; not permanently attached to the land

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physical characteristics

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immobility, indestructibility, uniqueness (nonhomogeneity)

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economic characteristics of land

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scarcity, permanence of investment, location (situs)

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situs

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location

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free market

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one in which the buyer and seller negotiate a purchase and sale without undue pressure, urgency, or outside influence

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tenements

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all things that are included in the definition of land and include both corporeal and incorporeal rights in land

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bundle of rights

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right to possession of the property; the right of quiet enjoyment; the right to dispose of the property by gift, by sale or by will; right to control the use of property within the limits of the law

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fructus industriales/emblements

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crops that require planning and cultivation

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appurtenance

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any right or privilege that is said to run with the land -- examples: air rights, subsurface rights, riparian rights

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subsurface rights

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interest in real property that allows the owner to take minerals from the earth (mineral lease -- permits the use of land for mineral exploration and mining operations)

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air rights

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ownership of and the rights to the area above the surface of the earth

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riparian rights

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rights of an owner of property bordering a flowing body of water

- navigable: to the banks

- non-navigable -- to the center

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littoral rights

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rights of landowners whose property borders an ocean or a lake

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lateral support

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the right of land to be supported in its natural state by adjacent land

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subjacent support

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right to have one's land supported from below

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fixture

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an item of personal property that is attached to the land or a permanent improvement

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total circumstance test

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IRMA

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IRMA

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intention, relation to the attacher, method, adaptation

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trade fixtures

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personal property that are used in the course of a business operating in a leased property

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agricultural fixtures

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additions/fixtures become a part of the property

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eminent domain

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government's power to take private property for public use by paying the owner fair and just compensation

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time sharing

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any right to occupy a property for five or more separated time periods over a span of five or more years

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Planned Univ Devlopment (PUD)

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a small community that includes some form of cluster housing as well as recreational areas and supporting commercial activities, such as shops

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lien

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a claim or a charge against the property that can result from a contractual agreement or from the operation of law

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mechanic's lien

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filed by anyone who provides labor or material to a property or property improvement -- they would file because they weren't paid; must be within 120 days of the last day of labor

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easment

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a nonpossessory right or interest in land owned by another

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appurtenance

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something that has been added to something else and, as a result, becomes an inherent part of that to which it has been added

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appurtenant easement

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runs with the land

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easement in gross

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not dependent upon ownership of an adjoining property; no dominant tenement; could be a person or a corporation for life

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adverse possession

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a method of acquiring title to real property by conforming to statutory requirement; involuntary alienation of title

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O.C.E.A.N.

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Open, Continuous, Exclusive, Actual, Notorious

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encroachment

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trespass on the land of another as a result of an intrusion or invasion by some structure or other object

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ad valorem

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at assessed value

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Fair Housing Act of 1968

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prohibits discrimination based on race, color, religion, or national origin

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Federal Fair Housing Amendments Act of 1988

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added handicap and familial status as prohibited classes

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government rectangular survey system

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survey system as land description but not in NC or other 13 cologies

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township

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square -- 6x6 miles; 36 square miles in area

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section

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1 square mile

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plat

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property map

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testate

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someone dies with a valid will

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intestate

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someone dies without a valid will

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deed

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written instrument that transfers an interest in real property when delivered to and voluntarily accepted by the grantee

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lien foreclosure sale

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conducted without the consent of the property owner who incurred the debt that resulted in a lien

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judicial deed

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executed by the official autorized by the court to conduct the sale and transfer the title

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adverse posession

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method of acquiring title to real property by conforming to statutory requirement

(O.C.E.A.N)

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color of title

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a document that appears to give him or title to the property but actually does not

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escheat

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occurs when no one is eligible to receive the property of the intestate

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eminent domain

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the right to take property

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condemnation

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the act of actually taking the property

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essential elements of a deed:

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- writing

- competent grantor

- legal description

- words of conveyance

- execution (signed)

- delivery and acceptance

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words of conveyance

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words demonstrating that it is the grantor's intention to transfer the title to the named grantee

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types of deeds

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General Warranty

Special Warrant

Quitclaim Deed

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special warranty deed

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warranty is limited to claims that happened during period that grantor owned

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quitclaim deed

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contains no warranties whatsoever but is a deed of release

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cloud on a title

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possible claim against a title

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excise tax

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based on the consideration received by the seller in the sale of the real property by deed

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title examination

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determines the quality of the title; only attorney can give legal opinion

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title insurance

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an indemnity contract that protects the purchaser or mortgagee against loss resulting from a defect in title that is covered in the policy and is in existence when the policy becomes effective; $2 per every thousand

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Conner Act

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provides that certain real estate documents are not valid against third parties until recorded, therefore creating the need of protection

ex. race to the courthouse

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freehold estate

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an interest in land of at least a lifetime and is therefore generally identified with the concept of title or ownership

- estates of inheritance and estates not of inheritance

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fee simple absolute

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provides the greatest form of ownership available in real property

- rights of ownership and use during his lifetime, and then ownership will convey to heirs

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fee simple determinable

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defeasible or qualified fee estate has certain stipulations; i.e. a property must be used for a college

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fee simple subject to a condition subsequent

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title will continue so long as the property is not used for a restricted purpose

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pur autre vie

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for the life of another; measuring life is someone other than the grantee

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life estate

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noninheritable; available only for the grantee's lifetime

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alienation

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transfer his or her title to another person or pledge the title as security for a debt

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ownership in severalty

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title to real property is held in the name of only one person

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joint/concurrent ownership

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simultaneous ownership of real property by two or more people

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tenancy in common

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two or more persons holding title to a property at the same time, with no right of survivorship; i.e. upon death of a tenant, deceased's share goes to heirs

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joint tenancy

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same interest, title at the same time, same degree; rights of survivorship (but not in NC) -- meaning that the surviving partners would automatically take over the share of a deceased partner

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tenancy by the entirety

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limited to husband and wife; must be a legal marriage at the time that the husband and wife receive title to property

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condominiums

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ownership includes airspace of individual unit, as well as co-ownership in the common areas of the condos

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NC Condominium Act

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set specific requirements on offering for sale or resale a condominium created on or after October 1

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cooperative

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ownership of shares of stock in a corporation that owns a building containing cooperative apartments

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time sharing

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any right to occupy a property for five or more separated time periods over a span of five or more years

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PUD/planned unit development

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a small community that includes some form of cluster housing as well as recreational areas and supporting commercial activities like retail shops

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encumbrance

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anything that diminishes the bundle or rights of real property

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public land use controls

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government regulation of land use through zoning laws, building codes, subdivision ordinances, and environmental protection laws

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zoning ordinance

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zoning map

text of ordinance

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nonconforming use

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when the use of property in a zoned area is different from that specified by the zoning code for that area (when land was being used for something prior to zoning or rezoning)

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illegal use

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violation of a present zoning code/ordinance

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zoning amendment

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an actual change in the zoning code itself

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variance

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permitted deviation from specific requirements of the exisiting zoning ordinance

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overlay district

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zoning device that superimposes one zoning area over another