CREL Unit 5

What is the role of an appraiser?

An independent person trained to provide an unbiased estimate of value.

What licenses can an appraiser obtain?

Appraiser Assistant License, Licensed Residential Appraiser, Certified Residential Appraiser, Certified General Appraiser.

What is an appraisal?

A supported and defended estimate or opinion of value on a given date completed by an appraiser.

What is the primary purpose of an appraisal?

To establish a property's value.

How does an appraisal assist lenders?

It provides assurance that the lender can sell the property for the assessed value if there is a default on the loan.

List two reasons for conducting an appraisal.

Estate purposes for fair division among heirs and divorce proceedings.

Why is an appraisal important for financing?

It determines the lending amount based on the property's value.

What is the significance of an appraisal in taxation?

It establishes the assessed value to be taxed on.

What is the sales comparison approach?

It evaluates property by studying similar parcels recently sold, adjusting for differences.

What are comparable properties in appraisal?

Recently sold properties used for comparison in the sales comparison approach.

What does the income capitalization approach estimate?

It estimates value by analyzing the income generated by the property being considered.

What is the gross income multiplier (GIM)?

A method used to estimate the value of rental properties based on yearly income.

What is the cost approach in appraisal?

It estimates the amount needed to reproduce or replace the property being studied.

When is the cost approach primarily used?

For insurance purposes and non-income producing buildings.

What types of depreciation are considered in appraisal?

Physical deterioration, functional obsolescence, and external obsolescence.

What is physical deterioration?

Loss of value due to curable events that the owner can control.

What is functional obsolescence?

Loss of value due to curable or incurable events affecting the property's functionality.

What is external obsolescence?

Loss of value due to factors outside the owner's control.

What are direct costs in property appraisal?

Costs related to labor, materials, and contractors.

What are indirect costs in property appraisal?

Costs related to financing, taxes, administration, legal fees, and insurance.

What is the first step in the appraisal process?

Define the assignment.

What does preliminary analysis in appraisal include?

Location details, improvements, sales, cost, income & expense data.

What is meant by 'highest and best use' in appraisal?

The most profitable legal use of a property.

What are the three approaches to appraisal?

Cost approach, sales comparison approach, and income approach.

What is the purpose of reconciling values in appraisal?

To arrive at a final estimate or value.

What is a title search?

The retrieval of previous ownership records to determine their effect on the title.

What does a chain of title show?

The record of ownership of the property over time.

What is an abstract of title?

A summary of all instruments affecting the title.

What is marketable title?

Title that is free from significant defects and will not expose purchasers to lawsuits.

What are liens?

A financial claim or charge against real estate that provides security for a debt.

What is an unrecorded lien?

A lien that has not been officially recorded in public records.

What is constructive notice?

Assuming information is available that a buyer or lender could have learned.

What is actual notice?

When someone has searched the information that is available.

What is evidence of title?

Proof that the owner has the title to the property.

What is a title insurance policy?

Protects the policyholder from loss if there is a defect in the title.

What is an easement?

A right acquired by one party to use the land of another for a special purpose.

What is an easement appurtenant?

A permanent right to use someone else's land for the benefit of a neighboring parcel.

What is an easement by necessity?

Access to land through another's property created by the actions of the parties involved.

What is an easement in gross?

A right to use the land of another without benefiting a neighboring parcel.

What is encroachment?

When a building or structure extends illegally beyond the land of its owner.

What is adverse possession?

Acquiring title to property by continuous possession for a period of time.

What are possessory rights?

Rights an occupant or owner has regarding the property.

What are nonpossessory rights?

Rights held by a non-owner who has no rights to the property.

What are encumbrances?

A right or interest in a property held by a party who is not the owner.

What is a specific lien?

A lien that affects a specific parcel of real estate.

What is a general lien?

A lien that affects both real and personal property.

What is the priority of liens?

Taxes are the number one priority over all other liens.

What fiscal year does NYC operate on?

NYC operates on a fiscal year from July 1 to June 30.

What calendar year does NYS operate on?

NYS operates on a calendar year from January 1 to December 31.

What type of lien is a mortgage lien?

Specific and voluntary.

When does a mortgage lien start?

When funds are dispersed, the mortgage documents are signed, and the mortgage is recorded.

What is a mechanic's lien?

A lien placed when an owner has not paid for work done on their property.

When must a mechanic's lien be filed?

Within 4 months of completion of work.

How long does a mechanic's lien last?

Expires in 1 year but can be renewed.

What type of lien is a judgment lien?

General and involuntary.

When does a judgment lien start?

When it is filed with the county clerk.

How long does a judgment lien last?

10 years and can be renewed for another 10 years.

What is an estate and inheritance tax lien?

A general and involuntary tax placed that restricts a deceased person's real and personal property.

What is the purpose of a subordination agreement?

To change the priority of liens.

Where are liens recorded?

At the county clerk's office.

What is a lis pendens?

A notice of a possible future lien indicating pending legal action.

What happens when a lien is paid?

The party that benefited from the lien is required to remove it.

What is the process of conveying real estate ownership called?

Alienation.

What is a deed?

A written instrument used to convey real property from one person to another.

Who is the grantor in a deed?

The original owner who transfers the assets to another.

What is required for a valid deed conveyance?

The grantor must have legal capacity, the grantee must be identifiable, and there must be consideration.

What is a granting clause?

A clause in a deed that states the grantor's intention to transfer ownership of the property.

What does the habendum clause define?

The ownership to be enjoyed by the grantee.

What is the significance of the description of real estate in a deed?

It must provide an adequate legal description, not just the street address.

What happens to property when a person dies intestate?

The property goes to surviving heirs through intestate succession.

What is the effect of liens on title?

Liens attach to the property, not the property owner, and can affect the ability to sell.

What must all grantors do regarding the deed?

All grantors must sign the deed.

Do grantees need to sign the deed?

No, grantees do not need to sign the deed.

What is encouraged for the grantor's signature?

An acknowledgement of the grantor's signature is encouraged.

What role does a witness play in the signing of a deed?

A witness watches the grantors sign the deed, allowing it to be recorded in public records.

When is title passed in a real estate transaction?

Title is passed once it is delivered and accepted by the grantee.

What does a deed indicate about ownership?

It indicates who had ownership before, who is getting ownership now, and who is protected by the deed.

What are Deed Warranties and Guarantees?

They determine the obligations of a grantor based on the form of the deed.

What is the difference between 'convey' and 'covenant'?

'Convey' means to transfer, while 'covenant' refers to promises.

What is a Full Covenant and Warranty Deed?

A deed where the grantor makes promises and guarantees to the purchaser, offering a high level of protection.

What is a Bargain and Sale Deed without covenant?

A deed that contains no warranties or promises, offering a low level of protection.

What is a Bargain and Sale Deed with covenant against grantor's acts?

A common type of deed where grantors warrant about their ownership but not about previous owners, providing medium protection.

What is a Quitclaim Deed?

A deed that provides the least protection, carrying no promises or guarantees.

What is an Executor's Deed?

A deed used after a grantor has passed, conveying their deed and offering medium protection.

What is a Referee's Deed?

A deed that contains no covenants or warranties and is used when a house goes into foreclosure.

What is a key element of a valid deed?

A description of the real estate that represents the property exactly.

What are the three types of legal descriptions?

1. Metes and bounds 2. Government surveys 3. Reference to a plat map.

What is Metes and Bounds?

A legal description method using boundaries and measurements of the land, often seen in rural areas.

What is the Government Survey method?

A method that uses straight lines and divides land into sections, covering most of the U.S.

What is a Reference to a Plat Map?

A description method used in cities with new subdivisions, recorded on a plat map.

What is Alluvion in real estate terms?

Additional soil added to someone's property by lakes, rivers, or streams.

What does Accretion refer to?

The gradual addition of land due to natural causes.

What is Closing Day in real estate?

The final phase of the sale where the property title passes from the seller to the buyer.

Where can closing be held?

At the title company, lending institution, party's attorney, broker, county clerk, or escrow company.

Who typically attends a closing?

The buyer, seller, real estate agents, attorneys, and representatives from lending institutions and title insurance companies.

What occurs at the closing?

Both parties gather, the contract is executed, and the deed is delivered in exchange for money.

What does the seller deliver at closing?

A good and marketable title, ensuring the property is in promised conditions.

What is the broker's role at a closing?

The broker's job is essentially over once the meeting of the minds is completed, but they can assist with processes like mortgage applications and closing details.