Real Estate National Exam

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Deed of trust

Back 1

A trustee conveys bear legal title naked title this is without the right of possession from the bar Louie to a third-party call trustee to trustee host legal writing on behalf of the lender the holder and

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Abstract of title

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Summary report of what the title search found in the public records. The person who prepares this report is called an abstractor. - searches all events that could have affected the title throughout its history in chronological order.

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Cloud on the title

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Ownership can not be traced through an unbroken chain, a gap in the chain of title.

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Certificate of title

Back 4

Statement of opinion of the titles status on the date of certification is issued. Certifies the condition of the title based on examination of public records (title search)

A certification is not a guarantee of ownership

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Marketable title

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Title is acceptable to a reasonable prudent person and which will not subject the buyer to litigation

- Disclose no serious defects

- no expose a purchaser to the hazard of litigation or threaten quiet enjoyment

Although a title does not meet these requirements still can be transferred it contains certain defects that may limit our restricted ownership a buyer cannot be forced to except a convenience that is material different from the one bargain from the sales contract for questions of marketable title must be raised by a buyer before acceptance of the deed

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Constructive notice

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Is the legal presumption that information has been obtained by an individual through do diligence a document in placed in the public record serves as notice to the world of an individuals right or interest in the property

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Actual notice

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Means not only that information of an interest in property is available but also that someone is actually aware of it individual who has search the public records or inspect the property has actual notice of what is contained in the records or obvious from the property inspection

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Acknowledgement

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Formal declaration under oath that the person who signs a written document does so voluntarily and that the signature is genuine the declaration is made before a registered notary public or in authorized public officer such as a judge justice of the peace or some person as prescribed by state law

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Habendum clause

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To have and to hold

It’s provisions must agree with those stated in the granting clause

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Granting clause

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A Deed must contain a granting clause , or words of conveyance, that states the grantors intention to convey the property.

Convey and warrant ( General warranty)

Remise, release, alienate (special warranty)

Grant, bargain, and sell (bargain and sale)

Remise,release, and quitclaim (quitclaim)

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Delivery and acceptance

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A title is not considered transferred until the deed to the deed to the property is actually delivered to and accepted by the grantee.

The title is said to pass only when the deed is delivered and accepted. The effective date of the transfer of title from the grantor or the grantee is the date of delivery of the deed itself.

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Covenant of Seisin

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He grantor warrants that here she owns the property and has the right to convey title to it. The guarantee may recover damages up to the full purchase price if this covenant is broken.

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Covenant against encumbrances

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The grantor warrants that the property is free from liens are conferences except for any pacifically stated in the deed and commerce is generally include mortgages mechanic liens and easements. If this covenant is breached the guarantee may sue the cost of removing the encumbrances.

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Covenant of further assurances

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The grantor promises to obtain and deliver any instrument needed to make the title good.

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Covenant of quite enjoyment

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The grantor guarantees that the grantees title will be good against any third-party who may bring a court action to establish superior title to the property. If the grantees title is found to be inferior the grantor is liable for any damages that is the grantor will pay the grantee if the title is not good

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Covenant of warranty forever

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The grantor promises to compensate the grantee for the loss sustained if the title fails at any time in the future.

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Probate

Back 17

Probate proceedings take place in the county in which the descendent last residing in the descending on real estate in another county probate would occur in the county as well.

The person who has possession of the will presents it for the filling with the court. The court is responsible for determining that the will meet statutory requirements for How form and execution. If the will was modified or if more than one will exist, the court will decide how the document should be probated.

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Deed of trust

Back 18

Trustor conveys real estate to a trustee for the benefit of a beneficiary. The real estate is held by the trustee to fulfill the purpose of the trust.

Convenience from trustor to trustee

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Reconveyance deed

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A reconveyance deed is used by the trustee to return the title to the trustor in a lien theory state in which a deed of trust is treated as creating a lien on the property rather than transferring title document called a satisfaction of mortgage for

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Quitclaim Deed

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Provides the guarantee with the lease protection of any deed. It carries no covenants or warranties in generally conveys only whatever interest the grantor may have when the deed is delivered. If the grantor has no interest, the guarantee will acquire nothing and will have no right to warranty claim against the grantor. A quick claim deed can’t convey title as effectively as a warranty deed if the grantor has good title when the deed is delivered, but it provides none of the guarantees that the warranty deed does. The quick claim deed, the grantor only remise is, releases, and quick claims the grantors interest in the property if any.

A quick claim deed is frequently used to cure the title defect called cloud on the title

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Exclusive right-to-sell listing

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In an exclusive right to sell listing one broker is employed as the sellers sole representative. The listing broker is giving the exclusive right our authorization, to market the sellers property. If the property is sold wow the listing agreement is in effect, the seller must pay the broker commission regardless of who sells her property.

In other words if the seller finds a buyer with or without brokers assistance the seller must pay the broker a commission

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Exclusive agency listing.

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One broker is authorized to act as the exclusive agent of the principal, but the seller retains the right to sell the property without the obligation to pay the broker a commission, if the seller finds a buyer on their own.

-there’s one authorized agent

- broker receives a commission only if the procuring cause

- seller retains the right to sell without obligation

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Open listing

Back 23

The seller retains the right to employee any number of brokers or agents. If the seller personally sells her property without the aid of any of the listing brokers as cellular is not obligated to pay commission to any of them

- there are multiple agents

- only the selling agent is entitled to the commission

-seller retains the right to sell independently without obligation

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Net listing

Back 24

A net listing provision specifies that the seller all will receive a net amount of money from any sale with the excess going to the listing broker as a commission. The broker fee to offer the property at any price greater than the net amount.

- in a not listing the broker is entitled to any amount exceeding the sellers stayed in net proceeds.

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Termination of seller representation

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- The agreements purpose is for filled by the transfer of the title to the buyer

- The agreement term expires

- The property is destroyed, or it’s use is changed by some force outside of the owners control, such as zoning change or condemnation by eminent domain.

- title to the property is transferred by operation of law as in the case of the owners bankruptcy or foreclosure.

- The broker and the seller mutually agree to cancel the agreement.

- either the broker or the seller breaches the agreement, such as the sellers refusal to consider an offer or the brokers refusal to present an offer to the seller.

- either the broker or the seller dies or becomes incapacitated if the sales associate dies or becomes incapacitated the agreement is still valid.

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Option contract

Back 26

An option is a contract by which an optionor (generally an owner) gives an optionee (a prospective purchaser or tenant) the right to buy or lease the owners property at a fixed price within a certain period of time. The optionee pays a fee as consideration for the option right. The optionee must decide whether to exercise the option right or allow the option to expire. An option is enforceable by the optionee only a unilateral contract. Options must contain all elements of a valid contract

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Land sales contract

Back 27

Owner financing can assist a buyer by providing a credit for some or all the purchase price. They land contract, also known as a contract for deed, bond for title, installment contract, land sales contract or articles of agreement for warranty deed, must comply with state law. With a purchase money mortgage, the buyer receives title to the property immediately replaces security interest on the property in favor of the seller.

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Voidable vs. Void

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A contract is voidable if it may be rescinded or disaffirm to buy one or both parties. A contract with a minor is voidable. A contract is void if one of the essential elements is missing. If a mistake, misrepresentation, fraud, undue influence, or duress occurs, there is no mutual concern or meeting of the minds, which means that an essential element of the contract is missing in the contract is void

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Contingency

Back 29

Conditions that must be satisfied before a sales contract is fully enforceable our contingencies the contract clause that provides a contingency one through the following elements.

- The action necessary to satisfy the contingency

- The time frame within which the action must be performed

-The party who is responsible for paying any cost involved

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“Time of the essence”

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Which means that each of the elements of the contract must be performed within a Pacific time a party who fails to perform an obligation under contract on the time is liable for breach of contract.

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Valid contract

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Meets all essential elements that make it legally sufficient, or enforceable, and is binding in a court of law.

Has all legal elements

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Void contract

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A void contract has no legal force or effect because it lacks some or all essential elements of a contract. A contract that is void was never a legal contract. For example the use of a forged name in a listing contract would make the contract void.

- lacks one or more elements and has no legal force or effect

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Voidable contract

Back 33

A voidable contract appears on the surface to be valid but it may be rescinded or this affirmed by one or both parties based on some legal principle. A voidable contract is considered by the courts to be valid at the party who has the option to disaffirm the agreement does not do so within a period of time. A contract with a minor for instants is voidable. A contract entered into by a mentally ill person is usually voidable during the mental illness for a reasonable period after the person is cured. If a contract was made under duress, with misrepresentation, under the influence, and with intent to defraud it is also voidable.

-has all legal elements on its face but it may be rescinded or disaffirm

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Unenforceable

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Appears to have all legal elements but cannot be enforced in court

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Expressed Vs. Implied contract

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In a express contract, the party state the terms and show their intentions in words either oral or written. Most real estate contracts or expressed contract and are written.

In a implied contract, the agreement of the parties is demonstrated by their acts and conduct

Front 36

Deed of trust

Back 36

3rd party security instrument:

A trustee conveys bear legal title (naked title) - that is, title without the right of possession from the borrower to a third-party called the trustee. The trustee holds legal title on behalf of the lender, the holder of the promissory note, who is known as the beneficiary. On full payment of the underlying debt, the lender/beneficiary notifies the trustee, who returns legal title to the trustor.

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P.I.T.I.

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Principal

Interest

Time

Insurance

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Discount points

Back 38

Are used to increase the lenders yield(rate of return).

A point is 1% of the amount being borrowed, it is not 1% of the purchase price

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Lien theory State

Back 39

The mortgagor retains both legal and equitable title to the property that serves as security for a debit. the mortgagee has a lien on the property but the mortgage is nothing more than collateral for the loan if the mortgagor defaults the mortgagee must go through the formal foreclosure proceedings in the court to obtain legal title

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Satisfaction of mortgage

Back 40

Which can be fulfilled in the public record as evidence of the removal of the security interest which would otherwise continue to be the encumbrance on the ownership interest of the borrower.

Satisfies the mortgage lien on the property

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Straight Loan

Back 41

Term-only or interest only loan

The buyer makes periodic payments of interest only, followed by the payment of the principal in full at the end of the term.

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Amortized Loan

Back 42

Each payment in a amortized loan partially pays interest as well as portion of the principal owed.

Hint 42

Most mortgages and deed of trusts of loans are this.

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Adjustable-Rate mortgage (ARM)

Back 43

Begins at one rate of interest, then fluctuates up or down during the loan term, based upon on a specified economic indicator.

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Growing-Equity Mortgage

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Rapid-payoff mortgage

The growing-equity mortgage uses a fixed interest rate, but payments of principal are increased according to an index or schedule.

The total payment thus increases, and the loan is paid off more quickly.

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Balloon payment loan

Back 45

Typically a ballon payment is a final payment that is at least twice the amount of any other payment. The loan will be considered a partially amortized loan, because some of the principal has been paid, with some still owed at the end of the term.

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Reverse Mortgage

Back 46

Allows a homeowners 62 or older to borrow money against the equity built up in the home the borrowed money may be used for any purpose in the bar or the size of the funds will be paid out in a lump sum fixed monthly payments an open line of credit or another option the borrower is charged a fixed rate of interest on amount paid out by the lender but the lender does not need to be repaid until the property is sold or the borrower defaults moves or dies.

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Power of sale clause

Back 47

No court action is required, by sending a default Notice to the borrower indicating the amount that must be paid. If failure to comply within specified time - notice of foreclosure/

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Strict foreclosure

Back 48

Appropriate notice must be given to the delinquency borrower wants the proper documents have been prepared and recorded, the court establishes a deadline for the balance of the default in debt to be paid in full. If the bar does not pay off the loan by the day, the court simply awards for legal title to the lender. No sales takes place.

Hint 48

More common with personal property is used to secure a debt

Front 49

Deed in lien of foreclosure

Back 49

In alternative to foreclosure, a lender may be willing to except a deed in Lou of foreclosure from the bar. This is sometimes known as a friendly foreclosure because it is carried out by mutual agreement rather than my lawsuit. Illuminate any equity that the homeowner may have had in the property. The disadvantage to the lender is that it does not illuminate junior liens

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Equitable right of redemption

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After default but before the foreclosure sale, the bar or any other person who has an interest in the real estate, such as another creditor pays the lender the amount and default plus cost, the debt will be restated.

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Statutory right of redemption

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The mortgage or who can raise the necessary funds to redeem the property within the statutory period pay is there a redemption money to the court because the debt was paid from the proceeds of the sale the borrower can take possession free and clear of the former defaulted loan.

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Deficiency judgement

Back 52

The foreclosure sale may not produce enough cash to pay the loan balance in full after deducting expenses and occurred unpaid interest.

The mortgagee may be entitled to personal judgment against the bar for unpaid balance. Such a judgment is a deficiency judgment. It may also be obtained against any endorsers or grantors of the note in against any owners of the mortgage property who assume the debt by written agreement. If any money remains from the foreclosure sale after paying the debt and any other liens expenses in interest those proceeds are paid to

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Involuntary lien

Back 53

Is not a matter of choice; it is created by law and may be either statutory or equitable

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Voluntary lien

Back 54

Created intentionally by property owners actions, aka mortgage

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Equitable lien

Back 55

Arises out of common law. A court-order judgement that requires a debtor to pay the balance on a delinquent charge account, and which can be filed in the county where the debtor owns property. Would create an involuntary, equitable lien on the debtor’s real estate.

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General lien

Back 56

Affects all the property both real and personal if a debtor. This includes judgements, estates and inheritance taxes, decedents debts, corporate franchise taxes and IRS taxes.

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Specific liens

Back 57

Are secured by specific property and affect only that particular property.

Vendor liens, Mechanics liens, mortgage liens, real estate liens, special assessments and utilities.

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Vendor lien

Back 58

Is a lien belonging to the vendor (seller) Or unpaid purchase price of the property, when the vendor has not taken any other lien or security, such as a mortgage, be on the personal obligation of the purchaser

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Satisfaction of judgement

Back 59

When real property is sold to satisfy the debt, the debit tour should demand a legal document known as a satisfaction of judgment. Feeling the satisfaction of judgment clears a record of the lien in those states using deed of trust, a deed of reconveyance must be filled with either the clerk

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variance

Back 60

Will provide if a zoning regulations of prize an owner of the reasonable use of the property. To qualify for a variance, the owner must demonstrate the unique circumstances to make the various necessary. In addition, the owner must prove that the regulation has caused harm or create a burden. The variance might also be sought to prove relief if an existing zoning regulations and create physical hard **** for the

Front 61

CC&R Restrictive Covenants or covenants, conditions, restrictions.

Back 61

Or private rule set up by the developer that establish standards for all the parcels within the define subdivision. The developers restrictions may be impose through covenant in the deed or buy a separate record declaration that is referenced in the deed. Typically these restrictions or type height and size of buildings that an individual owner can or wrecked as well as land-use

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Tenancy in common

Back 62

Oh and by two or more people as tenants in common each tenant holds undivided interest in the property the co-owners have unity of possession. Each holds fractional ownership interest.

Each interest can be sold conveyed mortgage or transferred in world by passage

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Joint tenancy

Back 63

Unity of possession unity of interest unity of time you need to title joint tenants enjoy the right of survivorship which means that insurance cannot be conveyed or transferred to another by Will