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450 Cards in this Set
- Front
- Back
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Residential rental agreements
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1 year
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The time required to keep all rejected offers |
1 year
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Redemption period following a real property tax sale |
3 years |
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A broker must keep a copy of all contracts for |
5 years from termination date
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The period of time a person has to file a lawsuit to obtain money from the recovery fund |
5 years |
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The time period of constant use to claim an easement by prescription |
10 years |
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Time period to file a law suit after mechanics lien was filed |
6 months
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Statutory period of redemption regarding a mortgage foreclosure |
6 months |
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A person may reject a contract on unimproved subdivided or unsubdivided land when purchased unseen |
6 months
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Period of time to reject a contract regarding unimproved subdivided or unsubdivided land if the buyer has inspected the land |
7 days |
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Time to rescind a timeshare contract |
7 days |
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Amount of days to notify the Real Estate Department regarding change of address |
10 days |
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Broker needs to initial or sign all contracts |
10 business days
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Reinstatement period prior to a trustee sale in a deed of trust |
90 days |
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Subcontractors time to file lien |
120 days |
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General contractors time to file lien |
120 days |
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1031/Starker to close escrow |
180 days |
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Number of continuing education hours required to renew an associate broker and salesperson license |
24 hours |
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Number of continuing education hours required to renew a designated broker, self employed broker, or delegated associate broker license |
30 hours |
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Arizona's constitution states real estate agent/brokers can write contracts as long as they do not charge
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Article XXVI (26) |
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Governs requirements of all agents |
Commissioner |
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Has the authority to investigate any licensee at any time |
Commissioner |
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Must exercise authority to investigate licensee upon written complaint |
Commissioner |
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Creates rules and regulations |
Commissioner |
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Manages all employees for ADRE |
Commissioner |
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Administers Recovery Fund |
Commissioner |
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Publish quarterly bulletin (www.azre.gov) |
Commissioner |
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Provides approval or disapproval for subdividing |
Commissioner |
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Can audit real estate agent or broker without notification but cannot suspend or revoke license without hearing |
Commissioner |
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Advisory Board |
10 members (2 brokers, 2 subdivides, 3 residential, 3 public members) |
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Governor appoints members each with 6 year term of office
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Advisory Board |
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Evaluate Commissioner on a yearly basis for Governor |
Advisory Board |
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Appointed by Governor |
Commissioner |
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Submits recommendations to Commissioner |
Advisory Board |
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State-regulated fund used to pay purchasers of real estate who have suffered a loss due to actions or inactions of licensee |
Recovery Fund |
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Act which requires full disclosure of all cost involved in obtaining financing and closing on a property
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Real Estate Settlement Procedure Act (RESPA) |
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RESPA |
Act which requires full disclosure of all cost involved in obtaining financing and closing on a property |
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CLUE |
Comprehensive Loss Underwriting Exchange |
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Allows insurance companies to access loss history of a property when trying to insure a property |
CLUE (Comprehensive Loss Underwriting Exchange |
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Allowed access by Fair Credit Reporting Act Only insurance company and owners of property can order |
CLUE report |
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Created for regulating the relationship between landlord and tenant in residential leases
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Uniform Residential Landlord tenant Act of 1973 |
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A contract between a lessor and a lessee that transfers the right to exclusive possession and use of the property for a specified period of time in exchange for rent
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Lease
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Landlord is the |
Lessor |
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Tenant is the |
Lessee |
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Transferring part of a lessee's interest to another for a portion of the term of the lease |
Subletting |
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Legal process that results in the tenant being physically removed from the leased premises |
Actual Eviction |
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Actions of landlord that disturb or impair a tenants enjoyment of the leased premises and causes them to leave |
Constructive Eviction |
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When the right and interest in a property is transferred to another for the entire term |
Assignment |
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Landlords legal right to seize a tenant's belongings for damages or rents in arrears under court order
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Distraint
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The right to take back possession of a property if lease ends is |
Reversionary Rights |
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Statue of Frauds
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Must be in writing |
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When does Statue of Frauds not apply?
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1 year or less lease or broker to broker (commission agreements) |
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Types of leases |
Gross lease, Net lease, Ground lease, Percentage lease |
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Gross lease |
Landlord pays all taxes, insurance, mortgage payments, repairs Residential properties |
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Net lease |
Commercial or industrial properties Long term |
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Ground lease |
Also known as land lease Leasing land alone Used to separate ownership of land from building ownership Usually 99 year lease |
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Percentage lease |
In addition to a gross or net lease Retail operation |
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Triple net |
Taxes, Insurance, Common Area Maintenance |
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Allows lender to collect rent if lessor defaults on loan
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Assignment of Rents |
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One who supervises all activities of sales agents and is liable for their actions |
Designated Broker |
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Firm name or entity not a person |
Employing Broker |
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A real estate broker working for a designated broker |
Associate Broker |
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A real estate broker receiving client/customer from another broker |
Referring Broker |
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A broker who steps in to manage a brokerage for the purpose of winding down business or finishing transactions |
Temporary Broker
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A broker who assists another broker in a real estate transaction |
Cooperating Broker |
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A document that is filed with the county when changing a mobile home from personal property to real property |
Affidavit Affixture |
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Temporary Broker |
Steps in when DB becomes disabled or dies Can be licensed or unlicensed Has same powers No more than one temporary license can be issued within one year for the same designated broker |
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Designated Broker |
Designation must be in writing and must be on file in office for one year from effective date Perform all functions except they cannot hire or sever licenses Shall not exceed 30 days |
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ADRE |
Arizona Department of Real Estate |
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READ |
Real Estate Advisory Board |
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Land and anything permanently attached |
Real Property |
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Personal property changed to real property by permanently attaching it to the real estate |
Fixture |
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Movable items not attached to real estate |
Personal Property |
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Personal property used in a business or trade that is attached to real estate |
Trade Fixture |
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Touching at any point |
Contiguous |
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Butting against each other |
Abutting |
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In a 24-mile-square parcel, there are 16 townships |
Government Check |
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Map that only shows lot locations and size is called |
Plat Map |
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Any claim attached to real property that may lessen its value or impair its use |
Encumberance |
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Claim against one property owner as security for debt |
Lien |
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Lien placed on property for the labor and/or material rendered in the improvement of a property |
Mechanic's Lien |
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Easement that is attached to the land and passes with the land is |
Easement Appourtenant |
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Benefits from easement |
Dominant Estate |
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Giver of easement |
Servient Estate |
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Common wall between properties |
Party Wall |
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Not an interest in land but merely permission to use the land of another for some limited purpose is having |
License |
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An unauthorized intrusion of real property reducing its value |
Encroachment |
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Ability to exit a property |
Egress |
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Ability to enter a property |
Ingress |
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Lien created when a court ordered lien is placed against a property and filed with the courts when the homeowner fails to pay a debt |
Judgment Lien |
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Land elements |
Mineral rights, Air rights, Horizontal Regimes |
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Mineral Rights |
Usually conveyed with real property |
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Air Rights |
May be transferred by easement Air is not real property Airspace is real property when described as 3 dimensions above property |
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Horizontal Regimes |
In condominiums it refers to airspace as horizontal planes being the floor and ceiling |
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Transfer of real property |
By deed |
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(i.e. annual crops (implements)) |
Chattel |
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Trade Fixtures
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Transfer of personal property is by bill of sale |
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Acre |
43,560 square feet |
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Mile
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5280 feet |
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Principal Meridian
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North to south line |
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Range lines |
Run north to south |
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Baseline |
West to east lines |
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Township lines
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Run east to west |
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Government Check |
16 townships in 24 sq mile parcel |
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Legal description methods |
Metes and Bounds Lot, Block and Trust |
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Metes and Bounds |
Uses points and angles Surveyor must be given directions and distances Must return to point of beginning (POB) |
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Lot, Block and Tract |
Plat map Most commonly used with subdivisions Subdivided is required to file a map or plat of a tract with the county clerk in the county where the property is located |
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Townships |
6 miles by 6 miles, 36 sq miles |
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Section
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Each township is divided into 36 sections 1 sq mile each Containing 640 acres Each section can be located by its #, township and range Contiguous Abutting |
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Encumbrances
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Examples: Liens or mortgage loans Easements or encroachments Leases Unpaid taxes |
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Clouds |
Any document, claim, unreleased lien, or encumbrance that may impair or invalidate the marketability of the title |
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Easements |
Statue of frauds applies Usually in the form of a separate deed or a reservation in a deed Easement appurtenant (annexed to ownership) Dominant estate (tenement) Serving estate (tenement) Party wall easement License =Permission (can be revoked at anytime) |
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Tenement |
Piece of land held by an owner |
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Easement Types |
Easement by prescription Easement in gross |
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Easement by necessity |
Landlocked situation Ingress/Egress |
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Easement by prescription
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Acquired by adverse possession A right acquired by an adverse user to use the land of another Timer period for use (10 years) User has to have adverse, hostile, open, actual, notorious and continuous use of land |
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Easement in gross
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Similar to license except it is irrevocable for owners lifetime It is personal in nature and does not attach to the land Personal easements - not assignable Commercial easements - assignable |
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Easement Terminations
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Abandonment Quit claim deed Purpose of easement ceases to exist Taken by eminent domain or lost by adverse possession Improper purpose |
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Encroachment
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Must be physical in nature (roof, fence, driveway, barn, shed) |
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Federal Fair Housing (FFA) Acts |
FH Act 1968 Housing and Community Development Act 1974 Fair Housing Amendment Act 1988 |
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OEO
|
Office of Equal Opportunity |
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FFH law administered by |
OEO (Office of Equal Opportunity) |
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EEOC |
Equal Employment Opportunity Commission |
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EEOC (Equal Employment Opportunity Commission) |
Applies to business with at least 15 employees |
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ECOA |
Equal Credit Opportunity Act |
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Equal Credit Opportunity Act (ECOA) |
Credit based on fairness and impartiality without discrimination Lenders must give applicants written reasoning for rejection within 30 days Lenders cannot discriminate on basis of sex, marital status, age, race, color, religion, origin or borrowers of public assistance programs |
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One brokerage used a separate phone number for advertising properties in a primarily minority neighborhood, that way when a call came in on that special line it could be directed to a minority real estate agent
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Steering |
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Steering |
Steering Statement - 'You wouldn't be interested in this neighborhood, it is predominantly Latino' |
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Denying or requiring different terms or conditions for home loans made by commercial lenders such as banks, savings and loans and insurance companies |
Redlining |
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Redlining |
Automatically associating a minority neighborhood with declining property values |
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Inducing panic |
Blockbusting |
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Blockbusting
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Passing out flyers that state a minority group has purchased a home nearby Telling owners the ethic population in a neighborhood will adversely affect schools or police will no longer be able to keep the area safe Obtaining several listings in area and placing 'For Sale' signs on these properties to frighten local residents into selling |
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Fair Housing Exemptions |
Religious organizations Private Clubs Commercial/Industrial Senior housing Owner occupied multi family dwelling |
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A group of real estate agents had an informal lunch during the week. During lunch, they discussed an idea that one of the brokers has been thinking about. There were overheard discussing a possibility of raising commission rates because the market was so poor. What is this a violation of? |
Sherman Anti Trust Act
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To pledge property as security for a loan without giving up possession
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Hypothecate |
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Property that is pledged as security for debt
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Collateral |
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Unconditional promise made in writing to repay debt |
Promissory note
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Written instrument to secure repayment of a debt for real property |
Mortgage
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In a mortgage, the buyer/borrower is |
Mortgagor |
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In a mortgage, lender is |
Morgagee |
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When mortgage is sold or assigned to another lender, this is called |
Assignment |
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Legal document in which the title to the property is transferred by a borrower to a third party as security for the beneficiary or lender is |
Trust deed |
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Deed of trust, borrower is
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Trustor |
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Deed of trust, impartial third party is |
Trustee |
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Deed of trust, lender is |
Beneficiary |
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Permits the trustee to sell the property if the borrower defaults without court of law is called |
Power of Sae |
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Lienholder causes there property to be sold so that unpaid lien can be satisfied from the proceeds |
Foreclosure
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Loss of a right or something else of value as a result of failure to perform on a contract |
Forfeiture
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Mortgage contract must |
Must be in writing Name of competent parties Legal description Consideration State of debt Signed by borrower Defeasance Cluse |
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FED |
Federal Reserve |
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Federal Reserve |
As money supply increases, economy booms Money supply decreased, less will be borrowed and economy turns downward FED sets 'discount rates' |
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If buyer does not have sufficient funds, a promissory note is acceptable if selling agent fills out completely with interest rate |
Promissory Note |
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Promissory Note |
Note for earnest money would be treated the same as regular earnest money - Check made out to broker |
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Security Instruments |
Deed of Trust |
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Mortgagor |
Buyer |
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Mortgagee |
Lender |
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Assignment |
Acceptable practice in lending In contract for deed there is a note (seller funded) |
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Mortgagee records a lien on property and mortgagor retains title
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Used in Arizona |
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Mortgagee holds title to property until the mortgagor repays debt in full |
Title Theory |
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Lender has to foreclose in order to get title |
Intermediary Title |
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Deed of Trust Parties |
Trustee - Impartial third party Trustee holds naked title/power of sale Beneficiary - lender Power of Sale- What trustee can do on default |
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Trustor /borrower deeds property back to beneficiary / lender to avoid foreclosure
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Does not wipe out junior liens Beneficiary does not have to accept Also called voluntary deed |
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Straight loan
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Only interest paid during the term of the loan with entire principal amount due with final interest payment |
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Partially Amortized
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Note that provides for a sum payment @ end of a specified term |
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Amortized |
In subsequent payments, amount toward interest decreases and amount |
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Fluctuating interest rate |
Usually tied to a bank or savings and loan association costs of funds index Also called a Variable Rate Mortgage (VRM) Payment amounts vary Rate caps control fluctuation per year over the life of loan |
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Principal interest taxes and insurance are all included in monthly payments
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Budget Loan |
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Includes more than one property
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Blanket Loan |
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Contains partial release clauses per property
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Blanket Loan |
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Includes personal and real property |
Package Loan |
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RAL - Reverse Annuity Loan |
Debt is repaid upon sale of property or death |
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Short term financing during the construction phase of building that is due when project is complete
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Construction Loan |
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Fixed term loan with periodic payments that remain constant over the term of the loan
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Portion of each payment goes to interest and the balance reduces principal |
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Begins with low payments but increases at regular intervals for set number of years and then levels out for the balance of the loan |
Graduated Loan |
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Enables a borrower to have a pre approved loan for future money |
As the outstanding loan is paid off, borrower can borrow more |
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Loan payments are paid bi-weekly enabling a borrower to pay more often than once a month |
Bi-weekly Loan |
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100% financing and very low interest rate
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A very high credit rating is required |
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Only interest is paid and capital loan must be paid at end of term
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No equity build up while borrower repays the loan |
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Owner sells property and signs lease to remain in possession
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Sale and Leaseback
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Entire loan combined two or more debts and is treated as single obligation |
Loan with 'due on sale clause' cannot be wrapped All terms of the loan must be specified on contract Neutral third party collects the payments and disburses funds |
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Buyer received title and gives note and mortgage to seller |
Also called Purchase Money Usually used to fill a gap between buyers down payment and new first mortgage |
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Agreement for Sale/Land Contract/Installment Contract/Contract for Deed |
Buyer holds equitable title, seller holds legal title Buyer has money invested in property but has not received deed Buyer received title after last payment |
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Redemption time periods based on percentage of equity
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Less than 20% - 30 days 20% but less than 30%- 60 days 30% but less that 50% - 120 days More than 50% - 270 days/9 months |
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'To be Void Upon Full Payment'
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Defeasance Clause |
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The lender calls for entire debt due immediately if borrower defaults on a payment |
Acceleration / Due on Default Clause |
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The entire debt is due immediately if the property is sold by borrower |
Prevents the borrower from assigning the debt without the lenders approval |
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Cannot use the deficiency judgment
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Non Recourse Clause |
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Holder of a mortgage permits a subsequent mortgage to take priority |
Subordination Clause |
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Early payment of a debt without penalty |
Prepayment Clause |
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Penalty is charged if the borrower pays debt off early |
Prepayment Penalty Clause |
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Prohibits Prepayment of Note |
Lock-in-Clause |
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Charge for using another money |
Interest |
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When lender charges a rate of interest above that allowed by law is called |
Usury |
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Fee charged by lender for making a loan |
Origination fee |
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Fee charged by lender to get a lower rate for borrower |
Discount point |
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When a buyer assumes the current loan under the same terms and conditions of the original buyer |
Assumption |
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Substituting a new obligation for an old one or for new parties to an existing obligation |
Novation |
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Legal instrument verifying the exact loan amount, the current rate of interest and the date to which interest is paid |
Estoppel certificate |
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Ratio of mortgage principal to the property appraised value or its sale price, whichever is lower |
Loan to Value (LTV)
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Standardized congenital loan that meets the requirements of Fannie Mae and Freddie Mac |
Conforming Loan |
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Loan that fails to need requirements |
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Borrower must be shown appraisal and if not may withdraw from sale penalty free |
FHA escape clause |
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Primary Lenders
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Savings and loan Mutual savings banks Life insurance Credit Unions Mortgage bankers Mortgage brokers Commercial banks |
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Secondary Lenders |
Freddie Mac - Buys congenital loans (no guarantee) Ginnie Mae - Guarantees payment of risky Fannie Mae loans |
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Conventional Loans |
Not assumable Have 'due on sale' clause Not insured or guaranteed by federal government |
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PMI |
PMI is risk insurance for the lender |
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ARM |
Lenders can adjust interest rates within a prescribed limit by tying it to an economic index Have rate cap Margin - lenders cost of doing business and does not fluctuate |
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Federal Housing Administration Loan (FHA) |
Requires 3.5% down Part of HUD for owner occupied to four family residence FHA does not build homes, lend directly to borrower, do not do secondary loans |
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FHA Escape Clause |
Must have appraisal If buyer is not shown appraisal, can withdraw without penalty |
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Mortgage Insurance Premium (MIP) |
Most borrowers need to pay MIP for the life of the loan MIP is paid up front at closing and monthly |
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VA
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No down payment Seller pays escrow fees Buyer pays VA funding fee - 2% of loan |
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Maximum loan amount is based on price or appraisal value/Certificate of Reasonable Value (CRV) |
VA loan |
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Document showing monetary amount veteran is entitled to
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Certificate of Eligibility |
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Measures risk for an Investment
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Commercial Finance |
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Determines how effectively the invested cash in a property has been used
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Only looks at one years earnings instead of future years |
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Gross income minus all expenses creates net income which is then divided by all debt/expenses
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Net Income to Debt Ratio |
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Amount of money left over on an investment after all operating expenses have been paid but before depreciation and income tax |
Cash Flow Projections Different from net income |
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Provides a uniform code to follow for commercial transactions including personal property |
Uniform Commercial Code (UCC) |
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UCC (Uniform Commercial Code) |
Provides a uniform code to follow for commercial transactions including personal property |
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UCC Search |
To find liens against personal property |
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Users personal property as collateral for a loan
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Chattel Mortgage |
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Chattel Mortgage |
UCC-1 - financing statement/filed with AZ Secretary of State/effective 5 years from date of filing UCC-2 - termination statement/filed with AZ Secretary of State |
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Governments right to enact legislation for the health, safety and general welfare
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Police Power |
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Right of government to take private property for 'necessary public use' in exchange for compensation |
Eminent Domain |
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Process by which the government takes property by eminent domain |
Condemnation |
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When an owner requests his property be condemned because of damages caused by government actions |
Inverse condemnation |
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Partial taking of property through eminent domain |
Severance damages |
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Damage that occurs due to something off the subject property but that causes a loss of value |
Consequential damages |
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Right of government to tax private property to pay for the costs of government and area improvements |
Taxation |
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According to value |
Ad valorem |
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Reversion of property to the state or county |
Escheat |
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Specific levy for a definite purpose such as adding curbs or sewers in a neighborhood |
Assessment taxes |
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Landowners right to use available water based on a government administered permit system |
Prior appropriation |
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Prior appropriation |
First in time/First in rights |
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Areas where the water supply is limited and where water management programs are most needed |
Active Management Areas (AMA) |
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Rights associated with navigable waterways |
Littoral rights |
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Rights associated with non-navigable waterways |
Riparian rights |
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Amount of space required between lot line and building line
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Set back |
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Permitted use of real property that no longer conforms to current zoning laws |
Non conforming use |
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Permit deviations from existing zoning laws
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Variance |
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Strip of land separating one land use from another |
Buffer zone |
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Land with 6 or more parcels under 36 acres |
Subdivided land |
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Land with 6 or more parcels of 36 acres, but less than 160 acres each |
Unsubdivided land |
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Area of 2 or more platter subdivisions with the same CC&Rs
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Master Planned Community |
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Regulation that governs structures on a property and use of land within a particular area |
Zoning |
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Underground layer of water-bearing permeable rock where groundwater can be extracted is called |
Aquifer |
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Surface of saturated material in an aquifer is called |
Water table |
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Passing liquid through small spaces
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Percolated |
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Old English Common Law where government held title to land |
Feudal System |
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Free and full ownership of rights in land by individuals, basis of real property law in US |
Allodial System |
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Government Powers |
Police Power Eminent Domain Taxation Escheat |
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Taxation
|
Limited property value Full cash value |
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Tax Schedule
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Due October and March Delinquent November and September Lien January Sell February |
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Successful bidder of tax sell
|
Certificate of purchase |
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Certification of Purchase Redemption time |
Treasures deed |
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Assessment Ratio
|
Agricultural / Vacant land - 16% Commercial / Industrial - 25% General tax rate- quoted as $1000 of assessed valuation AZ - expressed as dollars per $100 assessed value |
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Escheat |
Owner dies without will/owner dies intestate and heirs
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Owner dies without will/owner dies intestate and heirs |
Escheat |
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Property is abandoned |
Escheat |
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CERCLA |
Federally Created Created Superfund sites |
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Federal superfund sites are administered by |
Environmental Protection Agency (EPA) |
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WQARF
|
Water Quality Assurance Revolving Fund Sites State superfund sites |
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SARA |
Superfund Amendment and Reauthorization Act Focuses on liability of owners, landlords or lenders |
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Environmental Rights/Superfund
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WQARF - State SARA - liability |
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Leaking UST Trust Fund
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Set up to pay for clean up |
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UST |
Cause groundwater contamination |
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Governs environmental regulations in Arizona
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ADEQ - AZ Department of Environmental Quality |
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Groundwater rights
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When selling, first file a transfer of rights with ADWR |
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Well rights |
Transfer of rights to use well passes with land |
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Required to obtain ADWRs
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Developers are required to obtain ADWRs determination on quantity and quality of water before lot sales
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Fine material like sand or mud carried by water and deposited on land |
Alluvion |
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Gradual addition of land by alluvial deposits of soil |
Accretion |
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Gradual wearing away of land due to currents, tides or winds (opposite of accretion) |
Erosion |
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Sets limits on who can use groundwater and how much can be used
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Depends on where groundwater is located and controls overdraft Administered by ADWR Most needed in AMAs |
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AMAs
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Administered by AZ Department of Water Resources (ADWR) Users must have permit to use groundwater unless it is an exempt well Exempt well - max pump of 35 gallons per minute |
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CPR |
Public offering statement |
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CPR required before contract Max is $5000 and is refundable Voidable for 3 years |
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To later acknowledge or restate a previously implied relationship
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Agency by ratification |
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When the principal creates agency because they fail to 'esstop' someone from acting like agent
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Estoppel agency |
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When the actions of an agent constitute agency between owner and agent and the owner can be held liable for agents actions
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Ostensible agency |
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Fiduciary Responsibilities |
Care Obedience Accountability Loyalty Disclosure |
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Broadest authority that can be given |
Universal |
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Where one is authorized by a principal to perform all acts associated to a particular job |
General |
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Agent has limited authority to conduct a single transaction for a principal
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Special |
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Termination of agency |
Completion of task Agreement of parties Breach of contract Performance is impossible Death Insanity Bankruptcy Abandonment by the agent/revocation by principal |
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Written agreement authorizing a real estate broker to find a buyer for a property owner |
Listing contract or employee agreement |
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Statement to the best of the seller's knowledge identifying condition of property being sold |
SPDS (Sellers Property Disclosure Statement) |
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False, unintentional statement by which one party tries to gain advantage |
Misrepresentation |
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False statement that the broker should have known about the fact
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Negligent Representation |
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Exaggerated or superlative comment or opinion |
Puffing |
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Buyer beware |
Caveat emptor |
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Seller beware |
Caveat venditor
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Reduction or decrease |
Abatement |
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Process of curing an environmental hazard |
Remediation |
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All listings must have a beginning and end date
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Listings belong to broker |
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Valid Listing |
Consideration Legal Description Written accepted and signed by owner and broker Type of agency |
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Protects against liability of mistakes and negligence in listings |
Real Estate Agents, Escrow Company, Appraiser |
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Seller is to receive a net amount of money from the sale with excess proceeds going to broker |
Legal in AZ |
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Listing Termination
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Buyer is found/complete Expiration of listing Zoning changes Eminent domain Destruction of property Breach of contract Operation of law Death Insanity Bankruptcy |
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Notice given from referring party to client disclosing that it has a business relationship with company it is referring client |
HUD - Affiliated Business Disclosure Statement |
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Act protects consumers against fraudulent |
AZ Consumer Fraud Protection Statues |
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Used to educate or investigate consumers on fraud or reimburse state costs after a judgment |
Consumer Protection-Consumer Fraud Revolving fund
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Power to investigate and stop offender from practicing unlawful business
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Attorney General |
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Legally enforceable agreement for consideration between competent parties to perform or not perform |
Contract
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Requirement that everything must be in writing |
Statue of Frauds |
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Written agreement is the final expression of the agreement of the parties and prevails over prior oral negotiations |
Parol evidence rule |
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Doctrine to bar a legal claim due to delay or failure to assert the claim or right |
Laches (locked out) |
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Regulates the registration and sale of investment securities |
Blue Sky Laws |
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Mixing of brokers operating money with the trust funds |
Commingling |
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Broker spends trust money |
Conversion |
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Mutual agreement signed by the seller and buyer to cancel contract, stating disposition of earnest money |
Rescission agreement |
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Compensation amount predetermined and paid to an injured party by a contract breach |
Liquidated damage |
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Legal action to compel a party to carry out the terms of a contract |
Specific performance
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Agreement kept open to buy or lease the owners property at a fixed price within a stated period of time |
Option |
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Once a contract has been entered, a buyer can substitute a name which is called
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Nominee |
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Person who assumes legal rights on a contract |
Assignee |
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Minor entering into contract |
Voidable |
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Oral contract |
Unenforceable contract |
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Right to ownership |
Title |
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Extent of interest a person has in real estate |
Estate |
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Method taking title |
Ownership |
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Estate that lasts for a fixed period of time (rent or lease) |
leasehold |
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Estate in real property that could last on indefinite duration |
Freehold
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Interest that a wife has in the real estate of deceased husband |
Dower |
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Interest that a husband has in the real estate of deceased wife |
Curtesy |
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Life estate in real estate occupied as family home |
Homestead |
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Life estate contingent on the life of someone other than the grantee |
Pure Autre Vie |
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Dies with no will |
Intestate |
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When a court divides property due to a dispute regarding the use or sale of the property |
Judicial partition |
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Real and personal property owned solely by either spouse before marriage |
Separate property |
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Interest of a property is equally divided between its surviving owners or remaining owner |
Right of survivorship |
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Living trust |
Inter Vivos Trust |
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Trust that becomes effective after person dies |
Testamentary Trust |
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Personal property interest in real property |
Chattel Real |
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Exact Period of Time
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Beginning and ending date |
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Lessee continues to occupy the premises improperly after lease expires |
Tenant known as holdover tenant |
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Term is indefinite |
Lessee has the right to possession until the estate is terminated by either party |
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Continuity of estate from period to period until termination |
month to month lease |
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Max possible estate one can possess in real property |
Freely transferable and inheritable Full rights Indefinite duration |
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Contingent on length of someone's life |
Life estate conventional |
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Freehold estate that can pass to heirs based on someone else's life |
Pur Autre Vie |
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Dower/Curtesy
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Not legal in AZ |
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Protects home from general creditors |
$150,000 |
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Homestead Protection Act does not protect
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Mortgage Cost of improvements |
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Homestead Protection Acts requirements |
Legal age of 18 Residence of AZ Can acquire more property without adverse effect |
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Reasons Homestead Rights may be lost |
Sale of house Moving from state |
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Methods of taking title |
Joint Tenancy with Right of Survivorship Severally Community Property with Right of Survivorship Tenancy by Entirety |
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If not stated otherwise and not married, ownership will be |
Tenants in Common Two or more people can hold equal or unequal shares Each interest in inheritable Each hold their own title to their state of the property Each can transfer interest without permission of others No right of survivorship Judicial partition |
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All owners collectively constitute one person, a fictitious entity |
PITI The death of one joint tenant does not destroy the unit It reduces the number of persons who jointly own the unit Judicial Partition |
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Several Tenancy or Sole Tenancy |
Severed from others When sole owner dies, property is probated and passes to their heirs May hold title in severally Individual Corporation Government entities Partnerships Trust |
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If not stated otherwise, married couples will have |
Separate property Entirely free from all interest or claim on the part of the other spouse Must be kept separate Community property Upon death of one spouse, other spouse only owns half Intestate - state will determine who will inherit |
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Method of taking title for husband and wife only
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Not all states have this form of ownership AZ adopted in 1995 Tax advantage - Step up in basis - should one spouse die cost basis is changed to current year value Right of ownership Concurrent tenancy or co-ownership - from of ownership in which 2 or more people have an undivided interest in the same land |
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Husband and wife one legal entity
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Not legal in AZ Both husband/wife signature required on documents Right of survivorship |
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Legal title of property is transferred by trustor to a trustee to be managed for a beneficiary |
Inter Vivo Trust Testamentary Trust |
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Governed by Federal Securities laws |
Real Estate Investment Trust (REIT) Real Estate Mortgage Trust (REMT) Prevents double taxation |
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Owner has fee simple ownership to his unit and tenancy in common to shared areas
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Homeowners Association (HOA) - collects funds to cover common area maintenance |
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Shareholders are liable for default on payments |
Cooperation |
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Tenant signs occupancy agreement; Multiple purchasers own one unit with a specific amount of use time allocated to each purchaser |
Tenants in common |
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Association maintains severally ownership in common area |
Owner has title to the unit and the land it is on |
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Use of borrowed money to purchase income producing property with the hope of receiving a profit in return and paying back borrowed funds
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Investor has made very low down payment and can receive tax benefits and depreciation |
High leverage |
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Investor pays higher rate to borrow money than the rate of net income on the property |
Debt financing |
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Deduction taken for the recovery of the cost of the investment
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Land cannot be depreciated Can reduce taxable income |
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Property owners can deduct a % of the property value every year for the economic life of the property |
Residential economic life is 27.5 years |
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Deduction taken in equal amounts over every year
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Straight line depreciation |
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When seller delivers title to the buyer in exchange for the purchase price |
Closing |
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Arrangement in which money and or documents are then transferred by escrow agent, according to purchase and sale agreement
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Escrow |
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Recorded document indicating the sale price of the property and signed by the buyer and seller for tax purposes
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Affidavit of legal value |
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Dividing of all the costs proportionally between the buyer and seller
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Prorating |
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Ownership history of a property from creation |
Chain of title |
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Proof in the form of documents that seller conveys legal title |
Title evidence |
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A history of all recorded instruments that has affected title to a property |
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A formal declaration made before a notary public or duly authorized officer, by the person who has signed the document itself |
Acknowledged deed |
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Person dies with a will |
Testate |
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Person dies without leaving a will
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Intestate |
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When a court determines the validity of a will or the order of descent if there is no will is called |
Probate |
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Transfer of real property by will
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Devise |
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Person who receives property by will |
Devisee |
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Real estate distributed by descent statues after deceased owner died intestate is |
Descent or intestate succession |
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When the title company turns earnest money over to court due to a dispute between buyer and seller
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Interpleader action |
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Person who is named in a will to carry out the deceased person's wishes is an |
Executor |
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The actual, open, notorious, hostile and continuous possession of another's land |
Adverse possession |
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Mortgage (due on sale) -> Trust Deed-> Trustee must sign |
Mortgage (due on sale)-> Deed reconveyance -> Deed -> Trust deed-> Close escrow (COE) |
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Establish or prove sales price to determine taxes
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Sworn statement make under oath by buyer and seller Required for title transfer and must contain legal description |
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Impounds |
Insurance Homeowner's association dues Interest Rent |
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Shows amount buyer will need to bring to closing Shows amount seller will receive as proceeds after the closing |
Prepared by escrow agent Real estate broker responsible for delivering closing statement to buyer and seller |
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If there is a gap in the chain of title this is used as the legal course of action to correct it |
Suit for quiet title |
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Abstract of title, title insurance policy or abstract and attorneys opinion
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Title evidence |
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Does not guarantee title quality
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Often attorneys use abstract of title to base their opinion on property |
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Insures against any losses from defects in the title other than those exceptions listed in the policy |
Title insurance |
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Allows injured party to give right to insurance company to collect damages on their behalf |
Subrogation Clause |
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Paid once at closing by seller to protect buyer
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Premium is based on sales price Insures for the amount of sales price |
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Paid for by the buyer to protect lender |
Lenders Title Policy Insures for amount of loan and required on a new loan Premium is based on loan amount |
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Prevents forgery and assure that grantor has signed voluntarily
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Acknowledged deed |
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Delivery and acceptance needed for deed to be valid
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Acknowledged deed |
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Adverse possession |
P possession O open A actual C continuous (10 years) H hostile |
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Covers cost -> Any expense -> it is money |
Administered by HUD Applies to residential properties Applies to first mortgage only |
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Lender must provide within 3 business days |
Good faith estimate of settlement costs |
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Must be available to buyer and seller 1 day before closing |
Standardized form protects consumers Lenders may not charge fee for preparing statement Lenders must keep statements for 2 years of COE |
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Prohibits kickbacks in a real estate transaction
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Title company pays a kickback to a lender for referring one of the lenders recent customers |
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USS (Uniform Settlement Statement) exemptions |
Home improvement loans Certain construction loans Installment land contracts Properties larger than 25 acres (vacant land) Commercial properties |
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Written instrument transferring the ownership of real property from one person to another |
Deed |
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One giving up possession or the seller is called |
Grantor |
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One receiving the property or the buyer is called |
Grantee |
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Valuable or good is called |
Consideration
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Act of conveying ownership |
Grant |
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Formal declaration made before an authorized officer to confirm a person has signed a document not under duress |
Acknowledgement |
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Knowledge that is implied by the law or legal notice |
Construction notice |
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Express information or fact attained in a transaction |
Actual notice |
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Identify estate and contain words indicating intent to transfer |
Granting or conveyance clause |
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Reaffirms the extent of ownership that a grantor is transferring to the grantee |
To have and to hold clause |
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Deed will not be accepted for recording unless it is acknowledged/signed
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Acknowledgement |
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Valid deed requirements |
Grantee Legal description / county records Signature Consideration Words of Conveyance Delivery / Acceptance |
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Entering documents into the book of public records that affect the title to real property |
Not essential for validity Protects grantee against claims of any third party For valid recordation a deed must be properly recorded in the chain of title Must be recorded in the county where the land is located Priority - relates to position and time |
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Proper recording of a document provides construction notice
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Constructive notice |
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First hand knowledge gives actual notice |
Actual notice |
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Types of Deeds |
Special Warranty Sheriffs Deed Treasurers Deed Trustees Deed Deed of Reconveyance Correction Deed Bargain and Sale Deed Quit Claim Deed Gift Deed Disclaimer Deed Guardian Deed Grant Deed |
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A deed in which the grantor warrants clear title to the property
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Used in most real estate deeds transfers Offers greatest protection |
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Grantor owns property and has the right to convey it |
Covenant of seisin |
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Grantor will defend grantees title against claims by third parties |
Covenant of quiet enjoyment |
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Grantor promises the property is free from title defects except those already revealed |
Covenant against encumbrances
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Grantor agrees to perfect or correct the title if necessary during their lifetime |
Covenant of further assurance |
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Grantor agrees to defend the grantees title against all other claims forever |
Covenant of warranty title |
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Grantor (seller) accepts responsibility for title defects in the property arising only during ownership |
Grantor makes no warranties Not appurtenant Used mostly in land contracts |
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A deed given by the sheriff when a property is sold for execution of a judgment or sheriffs mortgage foreclosure sale |
Redemption period is 6 months Buyer must wait 6 months before he gets actual deed |
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Deed given at a foreclosure for failure to pay property taxes |
Successful bidder receives certificate of purchase Redemption period is 3 years |
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Deed given to convey property out of a trust, often as a result of bankruptcy or deed of trust foreclosure |
Redemption - 90 days before the sale |
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Document used to transfer title back to trustor when a debt secured by a deed of trust has been paid to the lender in fulle |
Deed of Reconveyance |
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Government commonly sells real property, usually under market value but with no warranties |
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Deed passes only the interest in real property the grantor had at the time of release, not any subsequent title or interest acquired |
Have no covenants or warranties provide little protection to the grantees |
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Often used in marital situations to deny a spouse interest in property |
Signed at time of purchase and contains no covenants or warranties |
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Bankruptcy - Chapter 7 |
Individual |
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Bankruptcy - Chapter 11 |
Business |
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Bankruptcy - Chapter 13 |
Reorganization of individual /with regular income |
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An assessment or opinion of the value of a piece of property as of a certain date |
Appraisal |
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One who estimates the value of real or personal property
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Appraiser |
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When an appraiser arrives at a final estimate of value after examining each appraisal approach |
Reconcilliation |
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Real estate market where the demand for homes is greater than the supply
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Sellers market |
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Real estate market where the supply of homes is in excess compared to the demand |
Buyers market |
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Property being appraised |
Subject property |
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Recently sold property being used as a means of comparison |
Comparable property |
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Construction cost at current prices of an exact duplicate of the subject property |
Reproduction costs |
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Construction cost at current prices of a property that serves the same purpose of function as the original
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Replacement costs |
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Decay, disintegration or wear and tear |
Physical deterioration |
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Loss of value inside property lines from functional problems like age or design |
Functional obsolescence |
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Loss of value off the subject property |
Economic obsolescence |
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To convert future income to present value |
Capitalize |
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Combining parcels for greater value |
Plottage |
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Combining two or more adjacent lots to increase value |
Assemblage |
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Property Characteristics Affecting Value |
D demand U utility S scarcity T transferability |
