Real Estate Exam 1

tangible proptery

tangible proptery

physical assets that can be owned

intangible property

non-physical assets (stocks, bonds, mortgages, leases)

Tangible Asset, bundle of rights, industry

What are 3 ways real estate is used?

bundle of rights

exclusive possession, use or enjoyment, disposition

user market

market for physical real estate - buyers receive the right to use the space

capital market

competes for funds with other asset classes such as stocks and bonds

public capital market

small homogeneous shares of ownership in assets traded in public exhanges

private capital market

absence of centralized market, less liquid

property market

market for ownership claims to real estate assets

rights

claims the government is obligated to enforce, non-revocable, enduring

personal rights

freedoms guaranteed by constitution

property rights

exclusive possession, enjoyment of the use or benefit, freedom to dispose as one pleases

real property

rights in land and its permanent structures (surface of the earth, air, beneath the earth)

personal property

all other property (personal/household goods, intellectual property, music)

fixture

real property that formerly was personal property (manner of attachment, intention)

interest

any bundle of rights in real property

estate

a real property interest that includes the right of exclusive possession

ownership estate

estates of indefinite length

easement

the right to use land for a specific purpose

affirmative easement

driveway or access right-of-way, sewer line, drainage, common wall

negative easement

light and air easement, senic easement

easement appurtenant

right of use a dominant parcel of land enjoys over an adjacent servient parcel

easements in gross (commercial easements)

right to use land unrelated to any other parcel (extract minerals or oil and gas)

restrictive covenants

impose restrictions on land use created at conveyance of land to a new owner

lien

an interest in property as security for an obligation (usually debt)

general lien

arise from events unrelated to the property (court awarded damages, federal tax)

specific lien

arise from ownership and use of the property (mortgage, property tax, assessment)

indirect co-ownership

general partnership, limited partnership, limited liability co, corporation, trust

direct co-ownership

tenancy in common, joint tenancy, tenancy by the entirety, condominium

tenancy in common

default form, multiple owners of same fee simple interest

joint tenancy

“right of survivorship” restricts inheritance to heirs of the last surviving owner

tenancy by the entirety

joint tenancy for husband and wife

condominium

combines single ownership and tenancy in common

cooperative

corporation owns property, each owner holds shares and a proprietary lease (no term and no rent)

deed

a special, written contract to convey a permanent interest in real property

grantor

person or entity conveying real property (must be legal age, competent and sign the deed)

grantee

recipient of real property (no legal age, competent and identifiable)

covenant of seizen

grantor has good title and right to convey it

covenant against encumbrances

no encumbrances except as noted in deed (liens, easements)

covenant of quiet enjoyment

no one with a better claim to title

property descriptions

metes and bounds, plat lot and block number, government rectangular survey

general warranty deed

all 3 covenants, no encumbrances and quiet enjoyment

special warranty deed

all 3 covenants but no encumbrances limited to grantor’s ownership

deed of bargain and sale

no covenants but still is regarded as implying ownership

quitclaim deed

no covenants and makes no assertions about grantor’s interest

evidence of title

assurance of a good or marketable title

marketable title

claim to title is regarded as free from reasonable doubt

metes and bounds

directed distances (a trip along the boundaries of the property)

government rectangular survey

basic reference points, measures of distance, units

plat and block number

map in public records identifies lot by block and lot number

eminent domain

right of government to acquire private land

condemnation

legal procedure for eminent domane

market segmentation

differences in preferences or needs among market subgroup

story approach - market research

begin with property and its market segments, then build links to larger economy

conventional approach - market research

start with the state of the world, then nation, then state, then city, then property

Elysian Forest

upper income, retirement buyers, good recreation, and no other comparable projects

Palm Grove office complex

general purpose offices, office users, in University City, small and large firms

Plane Vista Apartments

high-quality apartments, working rental households, east south and central Orlando

primary mortgage market

where loans are created

secondary mortgage market

where existing home loans are resold

conventional mortgage loan

oldest form, any standard home or mortgage loan not insured by FHA or Department of Veterans Affairs

Freddie Mac/Fannie Mae

standard note, standard mortgage, standard appraisal, size limit $510,400

Private Mortgage Insurance (PMI)

protects lender against losses due to default (25-35% of loan), required for loans over 80% of value.

FHA Mortgage

loan insurance program. 1.75% up front premium, loan covers UFMIP but not closing costs, base loan limit $331,760, insures 100% of loan

1.75%

What is the UFMIP for FHA loans?

$510,400

What is the size limit for Fannie Mae/Freddie Mac?

Interest only mortgage with balloon

interest-only payments for 5-7 years, ending with full repayment of principal

interest only amortizing mortgage

interest-only payments for up to 15 years, then converts to a fully amortizing payment for the remainder of the term

annual percentage rate (APR)

converts regular interest expense and up-front loan fees into a single equivalent interest expense (a better measure of loans than interest rates)

mortgagor

borrower

mortgagee

lender

default

failure to meet requirements of the note or mortgage

foreclosure

legal process of terminating all claims of ownership and all inferior liens