Real Estate Exam Prep (copy)

Alienation

The transfer of property from one party to another.

Acceleration Clause

Allows a lender to demand immediate repayment of the entire loan balance if the borrower defaults.

Advertising

Marketing properties, subject to fair housing laws.

Assignment

Transferring rights or obligations from one party to another.

Antitrust

Laws that promote fair competition in the marketplace; prohibits monopolies.

Broker Education

Continuing education requirements for maintaining a real estate license.

Broker in Charge (BIC)

Supervises provisional brokers and ensures compliance within a real estate firm.

Blockbusting

Illegal practice of inducing panic selling in a neighborhood for financial gain.

CMA (Comparative Market Analysis)

An estimate of a property's market value based on recent sales of comparable properties.

Conventional Loans

Mortgages not insured or guaranteed by a government agency.

Contracts

Legally binding agreements between two or more parties.

Coast Approaches

Real estate practices and regulations specific to coastal properties.

Counter Offers

A rejection of an original offer with a new offer in return.

Calculation of Commission

Determining the payment due to a real estate agent, often a percentage of the sale price.

Conforming Loans

Mortgages that meet the standards to be sold to Fannie Mae and Freddie Mac.

Covenants of a Deed

Promises or agreements included in a deed that bind the grantee.

Dual Agency

Representing both the buyer and seller in the same transaction; requires informed consent.

Designated Dual Agency

Allows different agents within the same brokerage to represent the buyer and seller.

Discount Points

Upfront fees paid to reduce the interest rate on a mortgage; one point equals 1% of the loan amount.

Due Diligence Money

Fee paid by the buyer to the seller for the option to terminate the contract within a specified period.

Due on Sale Clause

Allows the lender to demand full repayment of the loan if the borrower transfers the property.

Deed of Trust

A security instrument that transfers title to a trustee until the loan is repaid.

Enforceable Contract

A contract that can be upheld in court.

Earnest Money

A deposit made by the buyer to show their serious intent to purchase.

Environmental

Pertaining to environmental regulations and disclosures related to real estate.

Equity

The difference between the market value of a property and the outstanding mortgage balance.

Essential Elements of a Contract

Offer, acceptance, consideration, capacity, and legal purpose.

Executed Contract

A contract that has been fully performed.

Executory Contract

A contract that is not yet fully performed.

Estate for Years

A leasehold estate for a definite period.

Estate for Life

An interest in real property that lasts for the duration of someone's life.

Fee Simple

The highest form of ownership; complete and unrestricted ownership of real property.

Fair Housing Laws

Prohibit discrimination in housing based on protected classes.

Freehold Estates

Ownership interests in real property that are of uncertain duration.

Flood Insurance

Insurance coverage against flood damage, often required in flood zones.

FHA Loans

Mortgages insured by the Federal Housing Administration.

Flood Zones

Areas designated as having a high risk of flooding.

Heated Square Footage

The area of a home that is heated and considered livable space.

How to Prorate

Dividing expenses or income proportionately between buyer and seller.

Hypothecation

Pledging property as security for a loan without giving up possession.

Identify Types of Leases

Gross lease, net lease, percentage lease, etc.

Installment Land Contract

A contract where the seller retains title until the buyer pays the full purchase price.

Listing Agreement

A contract between a seller and a real estate broker to list and market a property.

Littoral Rights

Rights of landowners whose property borders a large body of water like an ocean or lake.

Leasehold Estates

An interest in real property that a tenant holds.

Loan Estimate

A document providing an estimate of loan terms and closing costs.

Licensure Requirements

The education, examination, and other criteria required to obtain a real estate license.

Material Facts

Information that would likely affect a buyer's decision to purchase a property.

Market Value

The most probable price a property should bring in a competitive and open market.

Market Price

The actual price a property sells for.

Measurements

Calculating area, perimeter, and volume for real estate purposes.

Mineral Oil and Gas Rights

The rights to extract minerals, oil, and gas from a property.

Misrepresentation

A false or misleading statement.

North Carolina Property Tax

Taxes assessed on real property in North Carolina.

Novation

Replacing an existing contract with a new one.

NC Conner Act

North Carolina law requiring certain documents to be recorded to be valid against third parties.

Net to Seller

The amount of money a seller receives after all costs and commissions are paid.

Omissions

Failing to disclose material facts.

Offer to Purchase Contract

A written agreement stating a buyer's intention to purchase a property.

Offers

Presenting a formal proposal to purchase a property.

Practice all math we have covered

Review all mathematical concepts relevant to real estate transactions.

Property Management

Overseeing the operation and maintenance of rental properties.

Protected Classes

Groups protected from discrimination under fair housing laws.

Promissory Note

A written promise to repay a debt.

Power of Sale Clause

Allows a lender to sell a property without court intervention in the event of default.

Provisional Broker

A newly licensed real estate agent who must work under the supervision of a broker in charge.

Residential Property Disclosure Statement

A form disclosing information about a property's condition to potential buyers.

Right to Survivorship

Upon the death of a co-owner, their interest automatically transfers to the surviving owner(s).

Redlining

Illegal practice of denying services or loans to residents of certain areas.

Regulation Z

Implements the Truth in Lending Act (TILA), requiring disclosure of credit terms.

RESPA (Real Estate Settlement Procedures Act)

Federal law regulating real estate settlement procedures.

Riparian Rights

Rights of landowners whose property borders a river or stream.

Special Assessments

Taxes levied on property owners to pay for public improvements.

Steering

Illegally directing buyers to or away from certain neighborhoods based on protected characteristics.

Sub Agents

An agent who represents the listing firm but works with the buyer.

Sub Agency

The agency relationship created when a subagent assists the listing agent.

Subordination

A clause in a mortgage or deed of trust that allows a later mortgage to take priority.

Statute of Frauds

Requires certain contracts to be in writing to be enforceable.

Types of Listing Agreements

Exclusive right to sell, exclusive agency, open listing.

Tenants in Common

A form of co-ownership where each owner has an undivided interest in the property without right of survivorship.

Tenants in the Entirety

A form of co-ownership available only to married couples, with right of survivorship.

Types of Loans

Conventional, FHA, VA, etc.

Tax Deduction Benefits

Tax advantages associated with homeownership, such as mortgage interest deduction.

Types of Evictions

Summary ejectment (legal process to remove a tenant).

Taxpayer Relief Act

Legislation that may affect capital gains taxes on the sale of real estate.

Types of Deeds

General warranty deed, special warranty deed, quitclaim deed.

Timeshares

Ownership or right to use a property for a specific period each year.

Types of Buyer Agency Agreements

Exclusive buyer agency, open buyer agency.

Understand about offers

Contingencies, earnest money deposits, and timeframes.

Unenforceable

A contract that cannot be enforced in court.

Unlicensed assistants

Individuals who perform administrative tasks but cannot engage in activities requiring a real estate license.

Void

A contract that is not legally binding from the beginning.

Voidable

A contract that can be cancelled by one or more parties.

Valid deeds

Deeds that meet all legal requirements.

VA Loans

Mortgages guaranteed by the Department of Veterans Affairs.

What requires a Real Estate License

Activities such as selling, buying, leasing, or negotiating real estate for others.

Working with Real Estate Agents

Agency disclosure form.

Zoning

Local laws regulating land use and development.

Identify Types of Leases

Different lease types cater to various needs:

• Gross Lease: Tenant pays a fixed rent, and the landlord covers property taxes, insurance, and maintenance.

• Net Lease: Tenant pays a base rent plus a portion of the property taxes, insurance, and maintenance costs.

• Percentage Lease: Tenant pays a base rent plus a percentage of their gross sales.

• Ground Lease: Tenant leases the land and constructs improvements on it.

• Oil and Gas Lease: Grants rights to extract oil and gas from a property.

• Residential Lease: Used for residential properties with terms typically lasting for a year or less.

• Commercial Lease: Used for business properties with longer terms and specific clauses related to business operations.

General Warranty Deed

Offers the most protection to the buyer. The grantor warrants that they have clear title to the property and can defend against any claims or encumbrances, even those prior to their ownership.