Real Estate Exam Study

These flashcards cover key vocabulary and concepts essential for studying for the CA Real Estate Exam.

Property Ownership

The legal rights or interests to she or he has in the thing she or he possesses

Bundle of Rights

The rights of use, possess, use, encumber, and dispose and exclude.

Fee Simple Absolute

An estate in land that conveys the maximum interest in property without any conditions or limitations.

Lien

A legal right or interest that a lender has in the borrower's property, granted until the debt obligation is satisfied.

Encumbrance

A claim against a property, which may affect its transferability.

Actual Agency

A relationship where an agent has been entrusted with specific authority to act on behalf of a principal.

Ostensible Agency

A situation where an agent appears to be authorized to act on behalf of a principal, although they may not be.

Exclusive Right to Sell

A listing agreement granting one agent the exclusive right to sell the property and earn a commission.

Exclusive Agency

A listing agreement allowing the owner to sell the property without paying a commission if they find the buyer.

Void Contract

A contract that is not legally enforceable from the moment it is created.

Voidable Contract

A contract that is valid until one party chooses to void it.

Unenforceable Contract

A valid contract that cannot be enforced because of legal defenses.

Fair Housing Laws

Laws designed to prevent discrimination in housing-related activities.

Easement in Gross

An easement that benefits an individual or entity rather than a parcel of land.

Government Powers PETE

Police power, Eminent domain, Taxation, and Escheat - the powers of the government over property.

Mistake Log

A record of questions missed on practice exams, used to identify weak areas and improve knowledge.

Opposites

Using antonyms to create mental anchors that help in remembering definitions.

Real Property (Real Estate)

Fixed items that are immovable (real estate) {IMMOVABLE}

Personal Property (Personal Estate)

A chattel or movable items that you own (clothes, car, watch){MOVABLE}

Estate

Interest owned in the land which expresses the degree quantity, nature, duration, or extent of an interest in land.

Freehold estate

Ownership of land/Owning property (1 major category of estates)that grants indefinite duration and implies rights of possession and use.

Fee Simple Absolute

Highest form of ownership, can be inherited with no restrictions. (FSA or “Fee”) (1 of 3 under freehold estate)

Fee Simple Defeasible

(FSD or “Defeasible Estate”) (1 of 3 under freehold estate) Form of ownership dependent on specific conditions, if conditions are breached, title goes back to the original owner or heirs title is then considered “defeated”. Look out for “shall never be used for” or “shall only be used for”

Life Estate

(“LE”) *Key Area of Exam* AKA the Borrower/Loaner Estate. Property that is given by the grantor (original owner) to some to someone to be using for the duration of their life. Upon that persons death, the grantor can state if the property will “revert” back to him or herself if still alive to their heirs (known as “Estate in Reversion”). Option 2nd is that the grantor can decide to have a 3rd person inherit the property called a “remainder” such as property (known as “Estate in Remainder”).

What are the three subcategories under a freehold estate?

Qualities of Fee Simple Absolute (FSA)

“Fee”, “Fee Absolute

. Greatest interest a person can have in land

2. Owner holds it without any qualifications or limitations

3. Indefinite duration

4. Freely transferable

5. Can be disposed of during owner's life or upon death.

6. Paid off property that you own” AKA Estate of Inheritance or Perpetual Estate

Qualities of Life Estate (LE)

You can't sell your life estate to anyone else because you don't actually own the property.

An estate that is limited in duration to life of its owner, or to life or lives of one or more designated persons.

Holder of LE has:

1. Right of possession

2. Right to all rents and profits

3. Is duty-bound to keep improvements repaired

4. Must pay taxes and just proportion of assessments

5. Must pay interest on any encumberances

6. May sell, lease, or encumber it only for the duration of the life estate

7. Cannot damage property/commit waste

What are the 2 options for property once the person who was granted "life estate" passes?

Estate in Reversion (Life Estates)

Title to property states the LE is to return to the original grantor or grantor's heirs upon death of designated grantee

ex: Grantee holds the LE; grantor holds an estate in reversion

Estate in Remainder (Life Estates)

Title to property states the LE is to pass on to a third person upon death of designated grantee

ex: Grantee holds the LE; grantor holds an estate in remainder

Tenants of property aka leasehold estates.

What is renting referred to?

Leasehold Estate

Less-than freehold or non freehold estate

What does a freehold estate (owner of property) and a leasehold (renter of property) have in common?

They both have an "estate" in real property".

Lessor (landlord)

Holds title or reversion during lease

Lessee (tenant)

Holds right to exclusive possession

Leasehold is a "chattel real"

An interest in real property but still only a form of personal property

Tenancy

The estate of a tenant, holding property of another

Types of Leasehold Estate

-estate for years

-estate from period to period/periodic tenancy

-estate at will

-estate at sufferance

Estate for Years

*Deceiving verbiage* This has nothing to do with "years". This describes a period of tie that is fixed in advanced.

Estate from Period to Period (Periodic Tenancy)

Typical month-to month lease, but can also be week-to-week, year-to-year

Estate at Will (tenancy at will)

When there is no contract and the tenant can leave at any day w/o penalty. Vice versa the landlord can ask the tenant to leave at any time, hence "at will" similarly to employment. Converts to periodic tenancy as soon as landlord accepts periodic rents

Estate at Sufferance

When a tenant has not paid rent and has not left the property and needs to be evicted. Legal terminology used in court when evicting a tenant. The action that is filed to remove a tenant who s not paying rent is called an "unlawful detainer"

When it comes to leasehold estates does the word "years" imply calendar years?

NO! Even a one-month lease can be an estate for years if it has a definite move-in and move-out date. Booking a weekend at a hotel is also considered an estate for years!

A land lease for agricultural land is?

51 years MAX

99 years MAX

A land lease for urban land is?

Appurtenant

Items enhancing land utility a right that can be used w/ the land for its benefit such rights “run with the land”. Which includes 1. Easements: A shared driveway, dethatched garage, shed or greenhouse *THINK an accessory to the land 2. Water rights: Property that is located next to a lake 3. Share of Stock (in mutual water company): Property located in Arrowhead CA comes with a share of stock in Arrowhead Water Company.

Trade Fixture

Business-related items a tenant can remove.

Encroachment

Physical intrusion onto another's property.

Encumbrance

Anything affecting title (liens, charge, easements, etc.).

Police Power (PETE)

Government right to regulate for public welfare.

Government powers in real estate

P- Police E - Eminent Domain T - Taxation E - Escheat

Zoning

Local land-use regulation.

Eminent Domain

Government power to take property with compensation.

Escheat

Property reverts to the state when owner dies with no heirs.

Variance

Permission to deviate from zoning rules.

Nonconforming Use

Previously legal use allowed to continue.

Tenancy at Sufferance

Holdover tenant.

Joint Tenancy

Equal ownership with right of survivorship.

Tenancy in Common

Shared ownership without survivorship.

Community Property

Property acquired during marriage (CA rule).

Promissory Note

Borrower's written promise to repay.

Mortgage

Lien securing a loan (not common in CA).

Deed of Trust

CA's primary security instrument (trustor, trustee, beneficiary).

Amortization

Paying off debt in installments.

Adjustable-Rate Mortgage (ARM)

Interest rate changes over time.

FHA Loan

Government-insured loan.

VA Loan

Government-insured loan.

Conventional Loan

Not government-backed.

PMI

Private mortgage insurance for low down payments.

Points

Fees paid to lower interest rate.

Loan-to-Value Ratio (LTV)

Loan amount ÷ property value.

Subordination

Changing lien priority.