Ch. 3- Objectives

Single-family residence

A residence built for one family with no common walls.

Townhome

A home connected to others, typically sharing one or more walls.

Apartment building or complex

Multiple separate units with shared common facilities.

Condominium

Individually owned units governed by an association managing buildings and grounds.

Cooperative (Co-op)

A corporation owns the building; residents own shares in the corporation.

Timeshare

Multiple owners share ownership and use of one property.

Mobile home

A unit attached to land and utilities; often moveable.

Modular home

Factory-built rooms transported and assembled on-site; also called prefabricated housing.

Planned unit development (PUD)

High-density housing with maximized open space.

Converted-use property

A building renovated for residential use from another purpose.

Retirement community

Designed with facilities like healthcare and recreation for older residents.

High-rise development

Typically over six stories, often mixed-use with shops and offices.

Most important location factor

Can I afford to own property?

First-time homebuyer needs

Down payment, closing costs, and mortgage eligibility.

Equity

The paid-off share of the property the owner actually owns.

Capital gain

Profit from selling a home for more than the purchase price.

Tax deduction: property taxes

Property taxes can be deducted from income taxes.

Tax deduction: mortgage interest

Mortgage interest is also deductible.

Taxpayer Relief Act

Reduced federal taxes and created homeowner tax exclusions.

Capital gains exclusion (single)

$250,000 of gain excluded when selling a primary residence.

Capital gains exclusion (married)

$500,000 of gain excluded for married couples.

Use of capital gains exclusion

Can be used once every two years.

HO-2 insurance policy

Standard homeowner’s policy covering 16 named perils.

Named peril: fire or lightning

Covered under HO-2.

Named peril: hail or windstorm

Covered under HO-2.

Named peril: explosion

Covered under HO-2.

Named peril: riot or civil commotion

Covered under HO-2.

Named peril: aircraft or vehicle damage

Covered under HO-2.

Named peril: smoke damage

Covered under HO-2.

Named peril: vandalism or theft

Covered under HO-2.

Named peril: glass breakage or falling objects

Covered under HO-2.

Named peril: weight of ice/snow/sleet

Covered under HO-2.

Named peril: accidental water/steam overflow

Covered under HO-2.

Named peril: heating/AC/hot water system failure

Covered under HO-2.

Named peril: freezing of systems/appliances

Covered under HO-2.

Named peril: power surge damage

Covered under HO-2.

Liability coverage

Covers personal injury and property damage caused by the policyholder.

Flood insurance

Not included in HO-2 policies; must be purchased separately.

Coinsurance clause

Requires coverage equal to 80% of the home’s replacement value (excluding land).

CLUE Report

Insurance database showing prior claims; may affect coverage after closing.

CLUE report recommendation

Buyers should make offers contingent on CLUE report approval.

Condominium

Hybrid ownership of multi-unit properties; owners own their units and share common areas.

Owner’s association

Enforces bylaws and manages the condominium property.

Condo expenses

Owners pay for maintenance, insurance, legal fees, and repairs.

Condo assessments

Monthly payments from owners based on an annual operating budget.

Texas condo law

Unpaid assessments can become enforceable liens against the homestead.