Interests in Real Estate, Ownership, and Arkansas Law

These flashcards cover key vocabulary from real estate lecture notes, including governmental powers, ownership forms, land description methods, deeds, finance, agency duties, and specific Arkansas real estate regulations.

P-E-T-E

The four governmental powers: police power, eminent domain, taxation, and escheat.

Eminent Domain

The right of government to acquire privately owned real estate for public use.

Condemnation

The specific process or action by which the government exercises the right of eminent domain.

Inverse Condemnation

An action by a property owner seeking compensation for land adjacent to land being used for a public purpose when the property value has been diminished.

Escheat

A process by which the state acquires privately owned real or personal property when an owner dies without heirs or a will.

Ownership in Severalty

Occurs when property is owned by one individual, corporation, or other entity.

Tenancy in Common (TIC)

A form of co-ownership where each tenant holds an undivided interest, and upon death, their interest is transferred to their heirs.

Joint Tenancy

Ownership by two or more people characterized by the right of survivorship; the interest transfers directly to the other surviving tenants upon death.

P-I-T-T

The four elements needed to create a joint tenancy: Possession, Interest, Time, and Title.

Partition

A legal way to dissolve the relationship between co-owners when they do not agree to its termination; may result in the court ordering the property sold.

Tenancy by the Entirety

A form of ownership available only to married couples, treating them as one entity with the right of survivorship.

Separate Property

Property owned solely by either spouse before marriage or acquired by gift/inheritance during marriage; can be sold without the other spouse's signature.

Fiduciary

A relationship in which an agent or trustee is held in a position of special trust and confidence by a principal or beneficiary.

Common Elements

The parts of a condominium complex owned jointly by all unit owners, such as land, lobbies, and elevators.

Right of First Refusal

A clause requiring a property to be offered at the same price to other owners or an association before it can be sold to an outside party.

Metes and Bounds

A method of land description that starts at a point of beginning (POB) and uses linear measurements, monuments, and directions to enclose a parcel.

Principal Meridians

The primary survey lines running north and south in the rectangular (government) survey system.

Base Lines

The primary survey lines running east and west in the rectangular (government) survey system.

Township

A square area of land that is $6$ miles by $6$ miles, containing $36$ square miles or $23,040$ acres.

Acre

A measure of land area equal to $43,560\,sqft$.

Section

A subdivison of a township that is $1$ square mile, or $640\,acres$.

Lot and Block Method

A system of land description using numbers referred to in a plat map filed in public records, mostly used in subdivisions.

Datum

A point, line, or surface from which elevations are measured.

Voluntary Alienation

The transfer of title during the owner's lifetime.

Grantor

The owner who transfers property via a deed.

Habendum Clause

The part of a deed beginning with the words 'to have and to hold,' which defines or explains the extent of ownership being conveyed.

General Warranty Deed

A deed that offers the greatest protection to the grantee by provideing five covenants: seisin, against encumbrances, further assurances, quiet enjoyment, and warranty forever.

Quitclaim Deed

A deed providing the grantee with the least protection, conveying whatever interest the grantor may have without any warranties.

Intestate

The condition of a person who dies without a valid will.

Adverse Possession

The involuntary transfer of title to a claimant who has possessed the property for a specified time in an Open, Notorious, Continuous, Hostile, and Adverse (O-N-C-H-A) manner.

Constructive Notice

The legal presumption that information has been obtained through due diligence, typically achieved by recording documents in public records.

Lis Pendens

A notice in the public records of a pending lawsuit that may affect the title to or possession of a property.

Marketable Title

A good, clear title that is free from significant defects and will not subject the buyer to potential litigation.

Subrogation

The right acquired by an insurance company to pursue any remedy or damages available to the insured after settling a claim.

Procuring Cause

The effort that brings about the desired result in a real estate transaction, such as securing a buyer.

Antitrust Laws

Regulations like the Sherman Antitrust Act designed to prevent illegal business activities such as price-fixing, boycotts, and market allocation.

C-O-L-D-A-C

The six common-law fiduciary duties an agent owes a principal: Care, Obedience, Loyalty, Disclosure, Accounting, and Confidentiality.

Latent Defect

A hidden structural defect that would not be discovered by an ordinary inspection.

Novation

The substitution of a new contract for an existing one, or the substitution of a new party for an old one.

PITI

The basic costs of owning a home: Principal, Interest, Taxes, and Insurance.

Loan to Value Ratio (LTV)

The ratio of a loan to the value of the property; calculated as $\frac{loan\,amount}{property\,value}$.

Hypothecation

To pledge property as security for a loan without giving up possession of it.

Acceleration Clause

A mortgage provision allowing the lender to make the entire debt due immediately if the borrower defaults.

Defeasance Clause

A mortgage clause requiring the lender to execute a satisfaction or release when the debt has been fully paid.

Amortized Loan

A loan where each payment includes both interest and a portion of the principal so that the debt is paid off by the end of the term.

Negative Amortization

A process where the amount of a loan increases because the monthly payments are not enough to cover the interest due.

Equity

The difference between the market value of a property and the amount still owed on it.

Mill

A unit of taxation equal to $\frac{1}{1000}$ of a dollar, or $\$1$ for every $\$1,000$ of assessed value.

D-U-S-T

The four characteristics of value in the real estate market: Demand, Utility, Scarcity, and Transferability.

Regression

A principle of value stating that the worth of a better-quality property is adversely affected by the presence of a lesser-quality property.

Plottage

The principle that consolidating adjacent lots into a single larger one (assemblage) creates a greater total land value than the sum of the individual lots.

Estate for Years

A leasehold estate that continues for a definite period with a specific start and end date.

Constructive Eviction

Actions by a landlord that so severely impair a tenant's enjoyment of the property that the tenant is forced to move out and terminate the lease.

Blockbusting

The illegal act of encouraging people to sell their homes by claiming that the entry of a protected class into the neighborhood will decrease property values.

Steering

The illegal practice of channeling homeseekers to or away from particular neighborhoods based on protected class status.

Redlining

The illegal practice of refusing to make mortgage loans or issue insurance in specific areas for reasons other than economic qualifications.

Buffer Zone

A strip of land, such as a park, separating land dedicated to one use from land dedicated to another use.

Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)

A federal law established in $1980$ to clean up hazardous waste sites and respond to spills, also known as the Superfund.

Arkansas Real Estate Recovery Fund

A fund managed by the AREC to pay damages to the public for monetary losses caused by the actions of real estate licensees.

Principal Broker

The individual in an Arkansas real estate firm required to be the owner or manager and who is responsible for all licensees in the firm.

Blind Ad

An illegal advertisement placed by a licensee that fails to indicate that the advertiser is a real estate professional.

Stigmatized Property

A property with an undesirable reputation due to non-physical conditions, such as a death, suicide, or alleged haunting.