Basic Appraisal Principles #48182

chapter 2, basic concepts

When an appraiser values a Toyota automobile dealership, the value of the franchise is always included in the analysis, true or false?

False

Items that are not real property are chattel, true or false?

True

 The three most significant characteristics of land are that it is immobile, indestructible and ____

1. unique

2. liquid

3. fungible

4. transferrable

1. unique

Question:  The economic concepts of real estate are situs, ______, improvements, and long term investment.

1. scarcity

2. fungibility

3. comparative value

4. liquidity

scarcity

Real property includes tangible elements of real estate plus the __________ attributes that are the rights of ownership.

1. intangible

2. fungible

3. ethereal

4. constitutionally - guaranteed

intangible

fungibile

Describes an asset's ability to be easily exchanged or replaced with another identical item.

The geographic concept of land includes climate, topographic, geology, soils, ________

1. water and vegetation

2. latitude

3. longitude

4. transferability

1. water and vegetation

Fee simple ownership must be specifically created by ___________

a deed or will or the owners

 All individual owner property rights are subject to __________

government regulation and limitations

The concept of the “bundle of rights” was created by ___________

common law, such as fee simple ownership and leasehold.

The two forms of land estates in the United States are freehold and _________

nonfreehold

nonfreehold

a type of land estate that lasts for a fixed term, such as a lease, compared to freehold estates that are of indefinite duration.

joint tenancy

a form of property ownership where two or more individuals hold an equal share in the property, with the right of survivorship.

eminent domain

the power of the government to take private property for public use, with compensation to the owner.

tenancy in common

a type of property co-ownership where two or more individuals hold shares that may be unequal, and there is no right of survivorship.

deed

a legal document that conveys property ownership from one party to another.

lease

a contract that allows one party to use and occupy property owned by another for a specified period in exchange for payment.

the most complete interest in real property, allowing ownership without limitations or conditions.

fee simple

Question:  Timeshare ownership is one type of condominium ownership. true or false?

false

All shareholders in a cooperative ownership hold fee simple title to the property. true or false?

false

A limited liability company is similar to a corporation in that it provides liability protection to the owners and it is typically used with a small number of owners. true or false?

true

REIT is an acronym for real estate income trust. true or false?

false  Real Estate Investment Trusts

 Leased fee estates have the following component:

Ownership of a reversionary interest

 Leased fee and leasehold estates

are types of property interests. A leased fee estate is the ownership interest held by a landlord in a property while leasehold estate is the tenant's interest in the property.

property interests

are legal rights in real estate that define the extent of ownership and use.

 Riparian rights relate to

The rights of owners whose land abuts a body of water.

Real estate appraisals include the value of which assets?

fixtures

The distinction between real property and personal property

is not always evident

Trade fixtures

are owned by the tenant

When considering the concepts of real estate versus real property

real property incorporates the intangible attributes that are the rights of ownership and real estate does not.

Zoning laws and property taxes are examples of

Government regulations and actions.

Government regulations and actions

the government powers are ad valorem taxation, eminent domain, escheat and _____.

police power

the government powers are ad valorem taxation, eminent domain, police power and _____.

escheat

the government powers are police power, eminent domain, escheat and _____.

ad valorem taxation

the government powers are ad valorem taxation, ad valorem taxation, escheat and _____.

eminent domain

freehold estate

ownership for an undetermined period of time

non-freehold estate

possession of a property with a determinable end, also called leasehold

Fee Simple Absolute

Complete ownership, with no restrictions other than government powers (taxation, eminent domain, police power, escheat).

Fee Simple Defeasible

Ownership that can be lost if a condition is violated. Two types:

• Fee Simple Determinable – Ends automatically if the condition is broken. ("so long as…")

• Fee Simple Subject to Condition Subsequent – Does not automatically end; the grantor must take action to reclaim it. ("on condition that…")

Ordinary Life Estate

Based on the life of the person holding the estate (the life tenant). Ends when they die.

Pur Autre Vie Life Estate

Based on someone else’s life; ownership lasts until that other person dies.

Estate for Years

A leasehold with a specific start date and end date, no matter how long the period is (could be a week or 10 years).

Periodic Tenancy (Estate from Period to Period)

A lease that automatically renews for successive equal periods (week-to-week, month-to-month, etc.) unless proper notice is given by either party.

Estate at Will

A lease that has no fixed duration and continues as long as both landlord and tenant agree.

Estate at Sufferance

When a tenant holds over — stays after the lease term has expired without the landlord’s consent.

Fee Simple Determinable

A subcategory of fee simple defeasible, Ends automatically if the condition is broken

Fee Simple Subject to Condition Subsequent

A subcategory of fee simple defeasible, Does not automatically end; the grantor must take action to reclaim it.