Ch.1 Real Estate Principles - Nature of Real Property and Business

Flashcards covering the fundamentals of the real estate business, the nature of real property, appurtenances, attachments, and legal land descriptions based on the lecture transcript.

What is the difference between an employee and an independent contractor in terms of compensation?

Employees generally work on a schedule for an hourly wage or salary, whereas independent contractors set their own schedules and are paid by the job or commission.

What specific term does the IRS use for a real estate licensee who is treated as self-employed for tax purposes but is still supervised by a broker?

Statutory nonemployee

What are the three requirements for a salesperson and broker to avoid an employer-employee relationship for federal tax purposes?

1. The salesperson must be licensed; 2. Compensation must be based on sales/commissions rather than hours worked; 3. There must be a written contract stating the salesperson will not be treated as an employee for federal tax purposes.

In the real estate business, what is 'floor duty'?

Assigned time to help callers and walk-ins who do not have an agent, serving as a source for leads.

What is a 'Sphere of Influence'?

People you know and trust who will refer you to their friends and family, often considered the best source of business.

What is the difference between Real Property and Personal Property?

Real property includes land and anything attached, affixed, incidental, or appurtenant to it; Personal property (also known as chattel or personalty) is everything else and is usually movable.

What is the 'Bundle of Rights'?

The legal rights to possess, use, enjoy, encumber, will, alienate (sell), or do nothing at all with a property.

What does the 'Inverted Pyramid' theory of land ownership describe?

The theory that ownership includes the surface of the land, everything below to the center of the earth, and everything above to the upper reaches of the sky.

What is an appurtenance?

Something that goes with or pertains to owning a piece of real property but is not necessarily a physical part of it, such as air, water, mineral, and support rights.

Distinguish between Riparian and Littoral water.

Riparian water is flowing water (rivers, streams), while Littoral water is standing water (lakes, ponds, oceans).

What is the 'Rule of Capture' regarding oil and gas?

A rule stating that any oil or gas produced from wells on a landowner's property becomes their personal property, even if they migrated from a neighbor's property.

What is the difference between 'fructus naturales' and 'fructus industriales'?

Fructus naturales are naturally occurring plants; Fructus industriales are plants cultivated by humans, such as annual crops.

What is the 'Doctrine of Emblements'?

A legal rule allowing a tenant farmer to re-enter land once to harvest the first mature crop if their lease terminated through no fault of their own before the crop matured.

What mnemonic is used to remember the legal tests for a fixture?

MARIA: Method of attachment, Adaptation, Relationship, Intention, and Agreement.

What document is used to convey ownership of personal property?

A Bill of Sale

What are 'Trade Fixtures'?

Equipment installed by commercial tenants for their business; they remain personal property and can be removed by the tenant at the end of the lease.

Name the three standard methods of legal land description.

Metes and bounds method, Government survey method, and Recorded map method.

What are the three elements used in a Metes and Bounds description to define boundaries?

Monuments, courses, and distances.

In the Government Survey method, what are Range Lines and Township Lines?

Range lines are north-south lines every $6\,miles$ that create columns; Township lines are east-west lines every $6\,miles$ that create rows (tiers).

How many sections are in a township, and what is its total area?

A township contains $36$ sections and covers $36\,square\,miles$ ($6\,miles \times 6\,miles$).

How many acres are in one section?

$$640\,acres$$

How many square feet are in one acre?

$$43,560\,square\,feet$$

What is a 'Plat Map'?

A map showing the lots and blocks in a subdivision, recorded in the county where the subdivision is located.

If a ranch is described as '$36\,miles\,square$', how many townships does it contain?

$36$ townships (A area that is $36\,miles \times 36\,miles$ is equivalent to $6\,townships \times 6\,townships$).

How many feet are in 1 mile?

5,280 feet

How many feet are in 1 square acre?

208.7 feet x 208.7 feet, equating to an area of $43,560$ square feet.