TX Real Estate Exam Prep

Real Property

land, Improvements attached to the land, and the rights to use them

Personal Property

right or interest in things of a temporary or movable nature chattel personalty. Ownership transferred by a BILL OF SALE

Fixture

Personal Property attached in such a way to make it real property.

Annexation

Process of attaching personal property to real property making it a fixture

Severed or Severance

Real property being removed becoming personal property

Trade Fixtures

required to carry out a business example would be commercial cooking equipment in a restaurant

Accesion

Acquiring trade fixtures by non removal prior to termination of lease

Land 3 physical characteristics

nonhomogeneity, immobility, indestructibility

Nonhomogeneity

no to pieces are exactly alike

immobility

land cannot be moved - a person must go to the land

indestructibility

durability - it will always be there

Land 4 economic characteristics

scarcity, modification, fixity, situs

scarcity

short supply where demand is great example lot in Manhattan v. a lot in upstate NY

modification

land use and value are greatly influenced by improvements made by man to land and to surrounding parcels of land

fixity

land and buildings and other improvements to land are consideration fixed or permanent investments- they are not liquid assets

Situs

location preference location,location,location

Metes and Bounds

legal description of land that always has a point of beginning that is also the end. The oldest used in 13 original colonies

Lot,Block, and Subdivision

recorded map or plat, it is the most common description in residential listing agreements

Monuments

permanent surveyors markers often starting point for metes and bounds example Iron pipe, oak tree

Rectangular/ Government Survey

takes into consideration base lines, meridians, townships and sections.Townships and Sections are located in Ranges. Example S7T3R2 means Section 7 Townships 3 Range 2

Township

36 Sections

Section

640 Acres 1 square mile

Acre

43,560 square feet

Plat

map of a town, section, or subdivision

Plot

map or layout of improvements on a property site. The property site is also called a lot or parcel

Encumbrance

limitation on your rights. It may also called cloud on a title.

Voluntary lein

created by the borrowers actions such as taking out a mortgage

Involuntary lein

created by law ie. ad valorem tax lein

Specific lein

attaches to one or more specific properties ex mortgage

General lein

attaches to all property of the debtor example tax lien

Lein

created by recording a judgement

writ of execution

party wins and is unable to collect,he can secure a writ of execution from the courts to enforce payment.

reservation

withholds title of part of the land Ex. easement or mineral rights

encroachment

structure or improvements overlaps onto another's property

easement

limited use or enjoyment of another's land written or verbal or implied

easements can be terminated

merger of adjacent property, release, or abandonment

Easement appurtenant

Dominant estate uses driveway of servient estate to access their property

Easement in Gross

belongs to a person or corporation example would be utility easement

License

permission to do a particular act , go fishing or ticket to Football game

Adverse Possession (Squatters rights)

occurs when property is acquired from the rightful owner through the State of Limitations

Estate

interest in real property

Freehold estate

ownership, Bundle of Rights, for indeterminate length,Ownership with the greatest bundle of rights Fee Simple or Fee Simple Absolute

Non-Freehold estate or lease-hold

has a termination date

Defeasible Fee, Conditional Fee, Qualified Fee, Qualified Defeasible Fee

ownership with conditions or terms which if violated could cause the ownership interest to be defeated or terminated.

Life Estate

ownership for the duration of someone's life. Owner called Life tenant. Remainderman person getting the estate after owner dies

Reversion

life estate is setup so that at the end of the life estate the property goes back to the original owner

Estate in severalty or Sole ownership

Ownership by one person

Tenancy in common

Ownership by two or more without rights of survivorship goes to your heirs not the other owners

Joint Tenancy

Ownership by two or more with rights of survivorship goes to other owners overrides a will

Trust

if a property is held by one party for the benefit of another

Syndicate

when two or more parties join together to create and operate a real estate investment

4 leasehold estates

Estate for years, periodic Tenancy, Estate at will, tenancy at sufferance

Estate for years

lease with specific starting and ending date EX.12 Month lease on a Apt.

Periodic Tenancy

fixed period of time that automatically renewed EX. Month to Month

Estate at will

Lease can be terminated by either party at will without notice

Tenancy at Sufferance

Lease expires and tenant refuses to move out

Holdover Tenancy

holdover tenant pays rent and it is accepted

Statutory Estate

created by law,vary from state to state, in TX community property and homestead are statutory estate

Government rights in land (PETE)

Police Power, Eminent Domain,Taxation, Escheat

Police Power

Power given to a municipality to regulate and control the character and use of property for the health,safety,and general welfare of the public

Zoning

Common example of Police Power, non conforming use still grandfathered in, Example Old Apartment building in a now all residential neighborhood

Variance

if you violate zoning you can request this in order to fix or prevent a violation

Buffer zone

area of land separating one land use for another

Eminent Domain

The right of the government to take private property for public use through the action of condemnation

Inverse Condemnation

When an individual forces the govt to buy his property

Taxation

Property taxes are the highest priority lein on real property

Assessed Value

value of property for tax purposes

Special assessment tax

Ex. Govt provides new side walk in neighborhood can charge the owner's of neighborhood this tax

Escheat

Property reverts to the state dies with no will,no heirs, no kindred. Also property is abandoned

Riparian rights

rights for rivers,streams, small bodies of water

Littoral rights

Lakes, Oceans, large bodies of water

Prior Appropriation Theory

first landowner to claim riparian rights exclusive rights

Market Value

price a willing seller will sell for, and price willing buyer will pay

4 Characteristics of Value (DUST)

Demand, Utility,Scarcity,Transferability

CMA Comparative Market Analysis

a tool licensee use to determine price for their property using current listings,recent sales and expired listings

3 Basic approaches to Appraisals

market data or sales comparison,income or capitalization method, and replacement cost or summation approach

Market data approach

mostly residential properties compares sales to similar properties in the area 3-5 sales no more than 6 months old

Income approach

or capitalization method used for income producing properties GRM x rent \= Price or use GIM

Cost approach

also know as summation approach how much it would cost to reproduce or build examples are churches or govt buildings,new construction

3 types of depreciation in cost approach

Physical deterioration,Functional obsolescence, Economic obsolescence

Appraisers Principles to Value (9)

Highest and Best use, Principle of Substitution, Principle of Conformity, Principle of Increasing and Decreasing Returns, Principle of Contribution, The Principle of Regression, The principle of Competition, The Principle of Change, The Principle of Anticipation

Assemblage or plottage

combining several parcels of land into one

Steps in Appraisers process (5)

1.Purpose 2. Collect and Verify info 3. Est. value using as many approaches as needed 4. Reconciliation 5. Prepare report

Appraisers

must follow USPAP (Uniform standards of Professional Appraisal Practice) some lenders require Fannie Mae appraisal

Chronological age

age of property in years

Deferred Maintenance

type of physical depreciation (ordinary wear and tear)

Straight line method

a method of depreciation of equal annual installment amounts.

MAI designation

Member, Appraisal Institute

Licensed appraiser is required

for any property worth 250,000 or more

mortgage

a pledge of real property as security for a promissory note

Deed of trust

Texas uses instead of traditional mtg contains "Power of Sale" Clause that allows for "Non-judicial foreclosure" quick foreclosure

Acceleration Clause

in the state of default whole amt of principal is due

Alienation Clause

Due on sale clause states balance is due if sold w/o mortgagee's approval

Defeasance clause

release of lein when debt is repaided

Escalation Clause

allows lender to raise existing interest rate

Prepayment Clause

Prepayment of mtg there is fee

Subordination Clause

allows lender to move or take a lower lien position

Assumption clause

if loan is assumed new buyers obligated to pay off loan

straight assumption

new buyer responsible, can not impact seller's credit score

subject to assumption

buyer not liable for loan can impact seller's credit score