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Fee simple with executory interest
Automatic reversion to some third name
Fee simple subject to a condition subsequent
No automatic reversion
Fee simple determinable
Automatic reversion of interest to grantor when violated
Non-freehold
Created by lease agreement
“Bundle of legal rights”
Remainder
Third party
No rights to occupy the property
Encroachments
intrusion on a person’s territory, rights, etc.
Variance
permits a change in the specifications required by the zoning ordinance
Restrictive covenants
apply and bind successive owners of the property
Eminent domain
the condemnation of private property for public use
Escheat
reversion of property to state when one dies intestate (no will) with no legal heirs
The cost approach to value
estimating buildings replacement costs
Requires the value of the land to be calculated separately form the value of the improvements
5 steps:
Estimate value of land
Estimate replacement cost
Estimate accrued depreciation (economic life)
Estimate depreciation from cost new
Add depreciation value to the land value
Gross rent multipliers
best for residential
Used as a guideline for estimating value based on the relationship of sales prices to the rental income
Reconciliation
Analyzing the results obtained from the three approaches to value
The sales comparison approach to value
The cost approach to value
The income approach to value
Installment contract
Owner financing
Seller keeps title to property
Promissory note
makes the borrower personally liable for the debt
Satisfaction of mortgage
once loan is paid in full, lender will record a satisfaction piece to have the lien removed from property
Subordination agreement
an existing mortgage loan that can have its lien priority lowered
Secondary
Includes:
Fannie mae, freddie mac, ginnie mae
Buys FHA loans make from primary market
A fully amortized loan
Fixed payments and interest
Last and first payments are the same
Payable in periodic installments that are sufficient to pay the principle in full during the term of the loan
A straight loan
Interest only (no principle)
A partially amortized loan
Fixed payment and interest
Last payments are balloon
Purchase money mortgage
Owner financing
Buyer gets title
Open-end mortgage
Borrower is pre-approved for up to a predetermined amount, borrower can make draws on the loan periodically
A lis pendens
a notice that a lawsuit is pending
Statute of frauds
contracts must be in writing
Statute of limitations
sets deadline with in lawsuits can be filed
Substitution
property’s value based on equally desirable substitute properties
Subordination
makes other debts secondary to the claim of the mortgage lender
Disposition
allows for the tenant to sublet or assign the lease
Repossess
to take back property
Net
requires tenant to pay part or all operational and maintenance costs
Gross
requires landlord to pay all operational cost
Devise
conveyance of title right by will
Deed in trust
a third party holds title to property on behalf of someone else
Demise
conveyance by lease agreement
Eminent domain
the power of the government to take private property for public use
Escheat
the reversion of real estate to the state because of the lack of heirs or other persons legally entitled to own the property
Estoppel
oral expressions of an intent to abandon, do not terminate an easement unless in writing or accompanied by action
Defeasance clause
ends the mortgage when all payments are made, transferring title to the property back to the mortgagor and terminating lender's interest in the property
Granting clause
in the premises paragraph of the deed that conveys the rights and privileges of ownership