real estate national

real property

anything attached to the property

• land

• buildings

• trees

• minerals

• etc.

personal property

things that are not attached to the land

• furniture

• vehicles

• equipment

• etc.

legal test for fixtures

“MARIA”

• m- method of attachment

• a- adaptation of the item

• r- relationship / agreement

• i- intent of the paries

• a- as per agreement

SURVEYOR’S METHOD

Algo known as Metes & Bounds Method,

Metes= distance

Boinas=compase direction

Ex. Opposite of N 22 degree E is S 22 degree E

GOVT. SURVEY METHOD

Example:

Find the acreage of a parcel with the legal description of the NW ¼ of the SE ¼ and the NE1/4 of the NE ¼ of the SE ¼ of section 10

Rectangular Method

Divides surface of earth into a grid

Baseline vs. Principal Meridian

50 acres

LOT AND BLOCK METHOD

Plat Method/Recorded Plat Method

Identifies small parcels in subdivided areas

MASTER PLAN

Provides long-term visions for land use and development, guiding zoning decisions and infrastructure investments.

FLOODPLAIN REGULATION

Governments regulate flood-prone areas to reduce flood risks and protect property and lives

COASTAL REGULATION

Aimed at preserving coastal resources, preventing erosion, and promoting a sustainable coastal development.

OTHER SPECIAL LAND TYPES

Regulations cover wetlands, historic sites, wildlife habitats, and other environmentally sensitive areas.

ABATEMENT

Reducing or eliminating environmental hazards.

MITIGATION

Reducing the impact of a problem through proactive measures.

CLEANUP

REQUIREMENTS

The removal or remediation of pollutants from contaminated sites. (Ex: Removal of Lead Based Paint requires a professional)

RESTRICTIONS

Governments limit contaminated property sales to protect health, minimize risks, and promote responsible land use.

HAZARDS

Agents and sellers must disclose hazardous pollutants to avoid legal

penalties. Regulations require this disclosure to protect buyers.

Deed Conditions

outline specific requirements or obligations associated with the property, such as maintaining a certain architectural style.

Deed Restrictions

limit or prohibit certain uses or activities on the property, like prohibiting commercial activities in a residential area.

Homeowner Association (HOA) Regulation

manage community standards and amenities, with rules known as covenants, conditions, and restrictions (CC&Rs), covering various aspects like architecture, landscaping, and pet policies, enforced by a board of directors elected by property owners through fines or penalties.

market value

The estimated worth of a property based on factors like location, size, condition, and demand, determined by appraisal.

market price

The actual amount a property sells for in the market, influenced by factors like supply and demand, negotiation, and financing terms.

characteristics

of value

Value in real estate can be influenced by factors like location, size, condition, and amenities, affecting its desirability and worth.

Principles of

Value

Principles such as supply and demand, utility, scarcity, and transferability impact the value of real estate.

Market Cycles &

Other Factors

Affecting Property

Value

Property values fluctuate over time due to economic factors, market trends, interest rates, and government policies, affecting buying and selling decisions

Market Analysis

THIS METHOD ESTIMATES THE VALUE OF A PROPERTY BY COMPARING IT TO SIMILAR PROPERTIES THAT HAVE RECENTLY SOLD IN THE SAME AREA

Income

THIS METHOD ESTIMATES THE VALUE OF A PROPERTY BASED ON ITS POTENTIAL TO GENERATE INCOME, MOSTLY FOR INVESTMENT PROPERTIES LIKE RENTAL APARTMENTS, OFFICE BUILDINGS, OR RETAIL SPACES.

Coast approach

THIS METHOD ESTIMATES THE VALUE OF A PROPERTY BY CALCULATING THE COST OF REPLACING THE IMPROVEMENTS ON THE PROPERTY WITH SIMILAR NEW CONSTRUCTION.

replacement cost

The cost to replace an existing improvement with a similar one, taking into account modern materials and construction methods.

reproduction cost

The cost to replicate an improvement exactly as it exists, using the same materials, design, and craftsmanship. This accounts for duplicating every detail of the original structure, including any unique or historical features, without considering depreciation or obsolescence

reconciliation

The process of analyzing and weighing the results obtained from different appraisal methods to arrive at a final estimate of the propertys value.

depreciation

The decrease in value of a property over time due to factors such as wear and tear, aging, obsolescence, or changes in market conditions.

FUNCTIONAL OBSOLESCENCE

property's design or features become outdated or less desirable, reducing its utility or functionality compared to newer properties.

EXTERNAL/ECONOMIC OBSOLESCENCE

A decrease in property value caused by factors outside the property's boundaries, such as changes in the surrounding neighborhood, economic conditions, or environmental factors

Competitive or Comparative Marketing Analysis (CMA)

used to determine a subject property's value by comparing it to similar properties in the area, known as comparables or "comps.”

LOAN-TO-VALUE (LTV) RATIO

The ratio between the amount of a mortgage loan and the appraised value of the property securing the loan, expressed as a percentage.

LOAN APPLICATION PROCEDURES

Applying for a loan, submitting financial documents, completing applications, and undergoing lender evaluation.

MORTGAGE INSURANCE (PMI)

A fee paid by borrowers of FHA or USDA loans to protect lenders in case of default.

ORIGINATION FEES

A one-time charge by the lender to cover administrative costs associated with processing a mortgage loan application

POINTS

Upfront fees paid at closing to lower the interest rate on a mortgage loan. Each point typically represents 1% of the total loan amount.

DISCOUNTS

Reductions in the interest rate of a mortgage loan offered to borrowers at closing, resulting in lower monthly payments.

BROKER COMMISSION

Compensation paid to a real estate broker for their services in a property transaction, usually calculated as a percentage of the final sale price.

LENDER REQUIREMENTS

A criteria borrowers must meet to qualify for a mortgage loan, such as credit score, income, and employment history.

EQUITY

The difference between a property's market value and the amount owed on mortgages or liens secured by the property.

QUALIFYING BUYERS

Individuals or entities meeting a lender's criteria for obtaining a mortgage loan, including factors like creditworthiness, income, and stability.

TERM OR STRAIGHT LOANS

Mortgages where the borrower only pays interest during the loan term, with the principal amount due in a lump sum at the end of the loan period.

AMORTIZED LOANS

Mortgages where each payment covers both interest and a portion of the principal, gradually reducing the loan balance over time.

AMORTIZED (BALLOON) LOANS

Partially amortized or balloon loans involve regular payments for a set period followed by a large final payment (balloon payment) to pay off the remaining principal.

ADJUSTABLE RATE MORTGAGE (ARM)

Loans that have interest rates that can fluctuate periodically based on changes in a specified financial index, potentially affecting borrowers' monthly payments.

CONVENTIONAL VS. INSURED

Conventional loans are mortgages not insured or guaranteed by government agencies such as FHA or VA. Insured loans, on the other hand, are backed by government agencies, providing lenders with additional security against borrower default.

PRIMARY MARKET

The primary market is where lenders originate mortgage loans by providing funds directly to borrowers. (Example: Stock IPO)

SECONDARY MARKET

The secondary market is where mortgage loans are bought and sold by investors, providing liquidity to lenders and allowing them to continue originating new loans. (Example: buying Apple stock on NYSE)

SELLER/OWNER FINANCING

Seller or owner financing involves the property seller providing financing to the buyer, acting as the lender instead of a traditional financial institution.

DOWN PAYMENT ASSISTANCE PROGRAMS

Down payment assistance programs offer financial assistance to help homebuyers cover a portion of their down payment or closing costs, typically through grants, loans, or other forms of assistance.

REVERSE MORTGAGES

Reverse mortgages allow homeowners aged 62 and older to convert home equity into cash without selling the home.

EQUITY

LOANS

also known as home equity loans or second mortgages, allow homeowners to borrow against the equity in their property.

F H A

These loans are favored by first-time buyers and those with imperfect credit due to lower down payment requirements and flexible qualifications, contributing to wider homeownership and housing market stability. FHA loan minimum down payment amount is 3.5% of purchase price.

SUBPRIME AND OTHER

NONCONFORMING LOANS

Subprime and other nonconforming loans cater to borrowers with less-than-ideal credit profiles or unique financial situations.

V A

loan program offers affordable mortgage financing to eligible veterans, active-duty service members, and their surviving spouses. Guaranteed by the Department of Veterans Affairs

Assumption

Allows a new borrower to assume the existing mortgage. (take over payments on the existing mortgage loan)

Due-on-Sale (Alienation)

Requires the full loan balance to be paid if the property is sold. (Mortgage is due in full upon sale of the home)

Acceleration

Allows the lender to demand immediate repayment of the loan. (Usually due to a breach of contract)

Prepayment Penalty

Outlines conditions and penalties for paying off the loan early.

Defeasance

Releasing the property from the mortgage lien upon repayment. (Also called Release Clause). Will receive a satisfaction letter.

Lien Theory

mortgage serves as a lien against the property, allowing the lender to foreclose on the property in case of default while leaving legal title with the borrower.

Title Theory

lender holds ,legal title to the property until the mortgage is fully repaid. Once the loan is satisfied, the borrower receives legal title to the property.

Mortgage/Deed of Trust

document serves as security for the loan, creating a lien on the property in favor of the lender. It outlines the terms and conditions of the mortgage, including any applicable clauses and borrower obligations.

Promissory Note

note is evidence of the debt owed by the borrower to the lender and is enforceable in court.

Truth in Lending Act (TILA) - Reg Z

Requires lenders to disclose the terms and costs of credit, including the annual percentage rate (APR), to borrowers.

Real Estate Settlement

Procedures Act (RESPA)

Governs real estate transactions and requires lenders to provide borrowers with disclosures about loan terms, closing costs, and settlement procedures.

TILA-RESPA Integrated Disclosure Rule (TRID)

Combines several mortgage disclosure forms into two documents, the Loan Estimate and Closing Disclosure, to simplify and streamline the loan process for consumers.

Equal Credit Opportunity Act

Prohibits discrimination

based on race, color,

religion, national origin,

sex, marital status, age,

or receipt of income

from public assistance

in credit transactions.

Lending and disclosure laws

ensure

transparency and fairness in mortgage

transactions, protecting consumers and

promoting informed decision-making.

Mortgage Fraud

Involves misrepresentation or omission of

information in mortgage transactions for

financial gain, posing risks to lenders and

borrowers.

Predatory Lending

Regulate the maximum allowable interest rates

on loans to prevent lenders from charging

excessive interest rates.

Appropriate Cautions to

Clients Seeking Financing

Advise clients on potential risks and provide

guidance on the mortgage process, ensuring

informed decision-making and protecting

clients' financial interests.

Special Agent

Represents the principal in a specific transaction or for a

limited purpose. (Ex: Real Estate Broker)

General Agent

Authorized to act on behalf of the principal in a broad

range of matters. (Ex: Property Manager)

Designated Agent

Appointed by a brokerage to represent a specific client in a

real estate transaction, often within the same brokerage.

Subagent

A real estate agent who works with a buyer but represents

the seller's interests, created through the listing agreement

between the seller and their agent.

Dual Agent

Represents both the buyer and the seller in the same transaction,

with consent from both parties. May be illegal in some states

Nonagents (Transactional/Facilitational)

provide administrative assistance,

coordinate paperwork, and facilitate communication between

parties without providing advice or advocacy.

Fiduciary Responsibilities

Obedience: Following the client's lawful instructions.

Loyalty: Acting in the best interests of the client.

Disclosure: Providing all relevant information to the

client.

Confidentiality: Safeguarding confidential information.

Accountability: Being responsible for actions taken on

behalf of the client.

Reasonable Care and Diligence: Exercising competence

and diligence in carrying out duties.

Responsibilities of Agent to

Customers and Third Parties

Disclosure, Honesty, Integrity,Accounting

Agency can be terminated in the following ways:

Mutual Agreement: Both parties have mutually agreed to

terminate the agency relationship.

Expiration: The agency agreement has reached its

end/expiration date.

Destruction of Property: Agency terminates due to the

destruction of property.

Death of Principal: Agency terminates due to death of the

principal.

Termination by Force of Law: Agency relationship is

terminated due to legal reasons or court order.

Completion/Performance: Agency is terminated if the agent

has fulfilled all assigned tasks.

Home or construction warranty programs

designed to provide homeowners with peace

of mind by covering repair or replacement

costs for major systems and appliances that

fail due to normal wear and tear.

The scope of home or construction warranty

programs typically includes coverage for essential

home systems such as plumbing, electrical,

heating, and cooling, as well as major appliances

like refrigerators, ovens, and dishwashers.

LAND/SOIL CONDITIONS

Avoid landslide

dramas or sinking issues by checking

the soil. It's like ensuring your house

has solid ground to stand on—

literally!

ACCURACY OF LOT

Make sure the lot and building sizes

match what’s advertised. Also, be

aware of any easements (like shared

driveways) or encroachments

(neighbor’s fence creeping into your

yard)—

PEST PATROL

Check for unwelcome house guests like

termites or rodents. And don’t forget

about toxic mold and other

environmental hazards - they’re the

stuff of real estate nightmares!

STRUCTURAL ISSUES

Inspect the roof, gutters, downspouts,

doors, windows, and foundation. These

elements are like the bones of your

house—keep them strong and your

home will stand tall.

ELECTRICAL & PLUMBING

Ensure the electrical and plumbing systems

are in tip-top shape. It’s all about keeping the

lights on and the water flowing without a hitch.

HAZARD HUNT

Find out if the property is in a flood zone,

earthquake-prone area, or any other

natural hazard zone. Also, check if it’s

insurable—no one wants to live in a real-

life disaster movie without coverage!

ALTERATION ALERT

Any known changes or additions to the

property should be disclosed. It’s like

knowing the full history of your new

home—no surprises allowed!

BOUNDARIES

Know the boundaries for schools, utilities, and

tax districts. Check if you’re under a busy flight

path—peace and quiet might be just as

important as property size!

TAXES, ASSESSMENTS, LIENS

Get the scoop on local taxes, special

assessments, and any liens on the property.

Forewarned is forearmed!

EXTERNAL ENVIRONMENTAL HAZARDS

Identify any nearby environmental hazards, like

factories or pollution sources, that could affect

your living conditions.

STIGMATIZED PROPERTIES

Be aware of any property stigmas (like a haunted

house) or issues related to Megan’s Law, which

lists registered sex offenders. Safety and peace of

mind are key!

valid contract

Competent Parties, Offer & Acceptance,Legal Purpose, In writing, Consideration (value)

EXECUTORY CONTRACT

contract where some or all of

the obligations are yet to be

fulfilled.

EXECUTED CONTRACT

contract where all the terms

and obligations have been

fully performed by all parties.

Assignment

Transfer of rights/benefits

to another party.