National Real Estate Prep

Judgement Lien

A judgment lien is not a lien on specific assets but on the assets of the debtor in general. A judgment applies to both the personal and real property of the debtor. Property tax liens are specific liens that have priority over other liens. A mechanic's lien may be filed against real property by a contractor or supplier for nonpayment of work or supplies. A property tax lien may be filed by a government for the nonpayment of real estate property taxes.

A judgment is a general, involuntary, equitable lien on both real and personal property owned by the debtor. A mechanic's lien is a specific lien against real property filed by a contractor, a subcontractor, or a supplier when an owner or a contractor has not paid for work or supplies for improvements on a property. A real estate tax lien is a statutory lien against real property for nonpayment of taxes. An assessment lien is a special assessment levied on real property to fund public improvements to property.

Metes-and-bound system

A metes-and-bounds system starts at a point of beginning (POB) and proceeds around the property's boundaries by referring to linear measurements, monuments, and directions. An informal system would be a street address. The rectangular survey system divides land into rectangles and describes those rectangles with principal meridians and base lines. The lot and block system uses lot and block numbers referred to in a plat map and is often used in urban areas.

A metes-and-bounds description starts at a point of beginning (POB) and moves clockwise around the boundaries, always ending back at the POB so that the described tract is completely enclosed. The metes-and-bounds, government survey, and lot and block are all accepted in courts. The method may be used in areas included in the rectangular survey system. The metes-and-bounds method is often used to survey large parcels of land before the parcels are broken into subdivision plats.

A metes-and-bounds description traces a parcel's perimeter by starting at a point of beginning (POB) and always ending back at the POB, so the described tract is completely enclosed. The rectangular survey system divides land into rectangles and describes those rectangles with principal meridians and base lines. The lot and block system uses lot and block numbers in a plat map to describe property and is often used in urban areas. A street address is not a legal description.

Easement in gross

An easement in gross is a company's right to use another's land. A license is a personal privilege to enter the land of another for a specific purpose. A license can be terminated or canceled. An easement by prescription is acquired when a person makes continuous and visible use of another's land for a certain period of time without the owner's permission. A conditional use permit is granted by a municipality to a property owner to allow a special nonconforming use of property in a residential district.

Township contains…

Each section is 1 square mile. Each township is 6 miles square and contains 36 sq. mi, so a township contains 36 sections. Each section is 1 sq. mi., or 640 acres. The 36 sq. mi. of a township are 23,040 acres.

A landowner sells one acre of his two-acre property to a friend. He reserves for himself an appurtenant easement over the friend's land for ingress and egress. The landowner's property is

The landowner's parcel benefits from the easement and is the dominant tenement. The neighbor's tract, over which the easement runs, is the servient tenement. The landowner's easement remains with the property when it is sold. An easement in gross is a company's right to use another's property, such as an easement for a utility company to run power lines over another's property.

Lis pendens

A recorded lis pendens (a notice of action pending) warns any potential purchaser that a property is subject to a pending legal action. This notice would prompt a buyer to consider very carefully whether to proceed, but it would not absolutely prevent it. The contractor may also have the right to use a mechanic's lien to obtain payment. The lis pendens would give notice until the mechanic's lien was in place. An assessment is a special levy for a definite purpose, such as adding curbs or sewers in a neighborhood. A mortgage lien is a voluntary specific lien the borrower signs.

A lis pendens is a notice of a possible future lien and is filed because there is often considerable delay between the time a lawsuit is filed and the time final judgment is rendered. The chain of title is the record of a property's ownership and would not indicate a pending action on the property. A suit to quiet title is a court action to establish ownership of a property when a gap or cloud exists in the chain of title. A judgment lien is already recorded in the county in which the property is located and does not indicate any other pending liens.

A junior lien may become first in priority if the original lender agrees to execute

If the original (first mortgage) lender signs a subordination agreement, another loan made more recently (later) may be allowed to take first place and the original one drop to second place. A deed of trust is a third-party instrument in which the deed is given as security for the loan to a third party, the trustee. A second mortgage agreement binds a borrower to repay a loan taken on a property on which the borrower already has a first mortgage. An alienation clause provides that when a property is sold, a lender may declare the entire debt due immediately.

Ad valorem taxes

General real estate property taxes are based on the value of the property being taxed and are known as ad valorem taxes. They are specific, involuntary liens. Special assessments are taxes levied on real estate to fund public improvements beneficial to the property. Real estate property taxes are not appropriation funds taken from local or state revenues. Real estate property taxes are specific, involuntary liens. Voluntary liens, such as mortgages, are placed on real property with the consent of the owner.

Easement by prescription

An easement by prescription may be acquired through open, continuous, exclusive, actual/visible and notorious/ hostile (OCEAN) use of another's property for a number of years as prescribed by state law. A license is a personal revocable right to enter another's property for a specific use. Eminent domain is the government's right to acquire property for a public use. An easement by necessity is created by a court to grant access to property that has no access to a street or public way.

Datum

The datum is used to measure horizontal planes from which heights and depths are measured. The benchmark is the permanent reference mark.

Priority of Liens

The priority of liens refers to the order in which claims against the property will be paid off. In general, the rule for priority of liens is "first to record, first in right." The priority is created by the recording date, but property taxes and special assessments are exceptions to the rule because they take priority over all other liens, regardless of when the liens were recorded.

Equitable right of redemption

Generally, a delinquent taxpayer can redeem the property before the tax sale by paying the delinquent taxes plus interest and charges (court costs and attorney fees). This right is known as the equitable right of redemption. After the real estate has been sold, the defaulted owner may redeem the property by paying the amount collected at the tax sale plus interest, charges, and any taxes levied since the sale. This right is known as the statutory right of redemption.

fee simple defeasible estate

The deed conveys a fee simple defeasible estate, which includes a specific condition on the use of the parcel. If the town uses the parcel for any purpose other than for recreational use, the property owner can take possession of the property through legal action. Holder of a leasehold estate has no ownership, only possession. A fee simple absolute estate has no restrictions on the use of the property. A life estate is limited in duration to the life of the owner of the estate or to the life of some other designated person.

Severalty

Severalty ownership is ownership by one person severed and cut off from all others. Tenancy in common and tenancy by the entirety are forms of joint ownership. Community property is personal or real property belonging to spouses according to state laws.

A corporation is legally treated as a single person and may own property in severalty. A corporation, though not human, is an artificial person in the eyes of the law. A corporation is not a partnership or a trust. It does not own property with the right of survivorship established through a joint tenancy.

Condominium

When a person owns a unit in fee simple and a percentage of the rest of the development in common with the other unit owners, he holds ownership to a condominium. In a cooperative, a person does not own in fee simple but holds a proprietary lease on a unit and shares of stock in the cooperative corporation. A time-share is a real property interest with the right to use the facilities for a specified period (usually a week). In a land trust, title to real estate is conveyed to a trustee while a beneficiary retains management and control of the property.

Section in rectangular survey system

Each township contains 36 sections, and each section is 1 square mile, or 640 acres per section.

Joint tenanacy

The equal interests of possession, interest, and title must all occur at the same time (PITT) for joint tenancy to be created.

All concurrent ownership is created by one deed, which will establish either joint tenancy or tenants in common. Additionally, joint tenancy requires that four unities must be present: possession, interest, title, and time (PITT).

Each partner has an undivided share in the property, which gives all owners equal rights of possession. To create a joint tenancy, the unities of possession, interest, time, and title must be present. Upon the death of one joint tenant, that interest in the property is extinguished, and the other tenants hold title as the remaining joint tenants. Marriage is not a requirement of joint tenancy.

Joint tenancy, which offers the right of survivorship, requires possession, equal interests, title all occur at the same time (PITT). Tenants in common owners have equal rights of possession but may have unequal rights of ownership. All owners, regardless of how ownership is taken, share one deed, which conveys legal title

Tenancy in common

Under tenancy in common, when a cotenant dies, the tenant's undivided interest passes according to the will. In this case, either the deceased owner died intestate and the state law of decent gave her interest to her heirs, or she willed her undivided interest in the property to her heirs.

Tenants in common hold property with undivided fractional interests, and the shares do not have to be equal. In a joint tenancy, each owner holds equal shares and interests to the property. Community property consists of personal or real property acquired by either party in a marriage and belonging to both parties to the marriage. In a cooperative, owners own shares in a corporation, partnership, or trust, which owns a property, with each owner holding a proprietary lease and the right to occupy the unit.

Fee simple absolute estate

Fee simple ownership is absolute ownership; the buyer has all rights to the property. A fee simple qualified fee estate exists when an estate is qualified by a special limitation and may end if the current owner fails to comply with the limitations set on the estate by the former owner. A leasehold estate is an estate of possession only by a tenant. A life estate is a freehold estate limited in duration to the life of the owner or to the life of some other designated person or persons.

Leased fee estate

A fee estate is an estate of ownership. The owner of the leased property holds a leased fee estate. The right of possession will revert from the lessee (the tenant) to the lessor (landlord) when the lease is over.

Holdover Tenant

A holdover tenant—still on the property after the lease is over—has a less-than-freehold estate at sufferance. This is the lowest estate in real property known under the law. A freehold estate in land is an estate of ownership. A fee simple defeasible estate is an estate of ownership where a violated condition might result in the loss of title to the property.

Littoral and prior appropriation rights

Littoral and prior appropriation rights, both water rights, are the rights of a homeowner to land bordering on the shore of a sea or ocean.

Fee simple

Fee simple rights are tied to fee simple absolute ownership

Cooperative

In a cooperative, a corporation holds title to the land and building and offers shares of stock to inhabitants of the cooperative's units. Owners in a cooperative occupy their units through proprietary leases, and their interests are treated as personal property. If the couple were to move to a condominium complex, they would own and finance their individual unit. Condominium ownership provides fee simple title to each individual unit, while a cooperative is ownership in the corporation, which owns the property.

General/specific lien

A general lien affects all of a debtor's property, both real and personal. A specific lien affects only a particular piece of real or personal property. Both general and specific liens may be enforced in court.

Revisionary Interest

Upon death of the life tenant, the mother, the holder of the reversionary interest will return to having a fee simple absolute estate. A qualified fee estate is held as long as the owner maintains the deed condition. A homestead is protection for a primary property against certain creditors. A remainder interest belongs to a person named as a remainderman, the person—other than the creator of the estate—to whom the life estate will pass when the estate ends.

The holder of a reversionary interest retains the right to repossess a property if a deed condition is not met or broken. If the condition is broken, the holder of the reversionary interest can go to court to try and obtain ownership of the property. If a remainderman dies, the remainder interest in a life estate passes to the heirs. The holder of a reversionary interest does not have the right to change the conditions of a qualified fee estate. A holder of a qualified fee estate may sell the property so long as the conditions or limitations of the qualified fee estate continue.

Nonfreehold estate

A nonfreehold estate is a leasehold estate of possession held by the tenant (the lessee). The fact pattern described here describes a nonfreehold periodic estate (a.k.a. a periodic tenancy). A leased fee estate is an estate of ownership held by the lessor (the landlord). A fee simple defeasible estate is an estate of ownership with a condition that, if violated, can result in a loss of ownership. A nonfreehold estate at sufferance describes the estate of a holdover tenant who stays on the property after the lease has terminated.

Personal Property

The key word is built-in. Because the bookcase is attached, it is real property. Chairs, emblements, and trade fixtures are all examples of personal property.

Fee simple defeasible estate

A fee simple defeasible estate creates a limited use by a deed condition. The former owner retains reversionary interest in that the owner may reacquire full ownership if the hospital does not use the land for medical purposes. A life estate is a freehold estate that lasts as long as the life of the tenant. A tenancy for years is a leasehold estate that continues for a definite period of time, for years, months, even days. A periodic tenancy is a less-than-freehold estate that creates the right of possession of a property from year to year.

Freehold estates

Freehold estates are estates of ownership; There are three types of freehold estates of ownership: fee simple absolute, fee simple defeasible, and a life estate.

Estate at sufferance

A tenant who stays past the end of the lease without the permission of the landlord has an estate called an estate at sufferance (a.k.a. a tenancy at sufferance). This person is called a holdover tenant. Remember the holder of an estate at sufferance is the tenant, the party suffering is the property owner (because the tenant stayed beyond the termination of the lease).

Estate at will

Under traditional common law rules, either the landlord (lessor) or the tenant (lessee) could terminate an estate at will at any time. An estate at will is a leasehold estate of possession. Note: Some states now either prohibit this type of leasehold estate or impose notice requirements for its termination. The legal document called a will sets forth how someone wants their assets distributed following death. A devisor is a person who is leaving real estate via a will. The devisee is the person who will inherit the real estate via a will, after the devisor dies.

Mechanics Lien

A mechanic's lien gives security to persons or companies that perform labor or furnish material to improve real property and can be filed when the owner has not fully paid for the work. Lis pendens is a recorded notice of a suit that may affect title to real property. A default judgment is granted when a creditor files for unpaid bills and wins the right to place a general lien on all the debtors' property to collect payment. A deficiency judgment is a personal judgment a lender may file against a borrower for the unpaid balance on a mortgage loan when a foreclosure sale has not produced enough cash to pay the loan balance.

Life estate

Life tenant holds the right to use, occupy, and enjoy the property for the rest of their natural life. Life tenant cannot sell or mortgage the property without consent from remaindermen. Responsible for routine maintenance, property taxes, and insurance; remaindermen hold a future interest in the property. They have ownership mapped out for future, but they possess no right to live, control or sell the property while life tenant is still alive

life estate is a life estate pur autre vie, a life estate based on the lifetime of another person

A conventional life estate is a freehold estate that lasts as long as the life of the life tenant. A conventional life estate occurs by a voluntary agreement of two parties. A legal life estate arises out of law, such as a spouse's dowry rights when the other spouse dies. A periodic tenancy is a less-than-freehold estate that creates the right of possession of a property from year to year. A reversionary interest exists when the creator of a life estate reserves for himself a fee simple estate once a life estate ends.

Quit claim deed

A quitclaim deed provides the grantee with the least protection of any deed because it carries no covenants or warranties. The bargain and sale deed contains no express warranties against encumbrances but does imply that the grantor holds title and possession. A warranty deed fully warrants good clear title to a property. A deed of trust is used to create a lien for a loan.

Appurtenant easement

In an appurtenant easement, the parcel over which the easement runs is known as the servient tenement, and the neighboring parcel that benefits from the easement is known as the dominant tenement.

Which of these is NOT a form of co-ownership?

Ownership in severalty occurs when a property is owned by one individual or corporation. In a tenancy in common, each cotenant owns an undivided fractional interest in a property. Tenancy by the entirety is a form of joint ownership by a married couple that allows the surviving spouse to acquire full ownership of the property upon the death of one of the spouses. Community property consists of personal and real property acquired by either spouse in a marriage and belonging to both parties to the marriage.

For a deed to be valid,

The grantor must have the legal competency to sign a deed. An attorney or a notary is not required to witness a deed. Deeds do not have to be recorded to be valid. The grantor, not the grantee, is required to sign a deed in order for the deed to be valid. The grantee does not have to be legally competent.

Properly recording a deed in the public record serves as constructive notice to the world of the buyer's rights or interests in the property. If a buyer does not record the deed, a third party may make a claim on the property. Not recording the deed does not affect the validity of the transfer or of the deed to the property because recording is not an essential element to create a valid deed.

A title is not considered transferred until the deed is actually delivered to and accepted by the grantee. Title is said to pass only when a deed is delivered and accepted, and the effective date of the transfer is the date of delivery of the deed itself. The deed must be recorded in the county in which the land is located in order for the purchaser's interest in the property to be protected.

Contract for deed

In a contract for deed, the seller retains legal title to the property. When the buyer pays off the loan and all requirements under the land contract have been met, the buyer receives legal title to the property. A land contract may be used in the sale of improved and unimproved land. The buyer receives possession upon closing of the contract but will not get legal title until the final payment is made.

Trust deed

A trust deed (a.k.a. a deed of trust) is a loan document—and only a loan document—signed by a borrower putting up a parcel of real estate as collateral for a loan. The only conveyancing in a trust deed is a narrow sliver of title being conveyed by the borrower to the trustee. This small sliver of title is called bare legal naked title. If an owner wants to put a parcel of real estate into a revocable living trust, a trust deed would never be the appropriate document. These other answer choices are conveyancing documents that might transfer the title to a parcel of real estate into a revocable living trust.

Indemnify

means to promise to pay someone back for money they lose or spend because of damage, injury, or a legal problem.

Voluntary alienation

Voluntary alienation is the legal term for the voluntary transfer of title, such as when the owner sells the property. Condemnation, foreclosure, and adverse possession are examples of involuntary alienation. Involuntary alienation takes place when property is transferred against the owner's will.

Quiet title suit

A quiet title suit removes all clouds on title and then allows the seller to convey the property to the buyer. The disadvantage is it may take months to go through the court system. Title insurance does not cover defects found before closing. Paying cash for the property or using a quitclaim deed would not clear title.

Deed in lieu of forclosure

A deed in lieu of foreclosure is an alternative to foreclosure and is carried out by mutual agreement between the lender and the borrower rather than by a lawsuit. A reconveyance deed is used by a trustee under a deed of trust to return title to the trustor. In an assumption, a buyer purchases a property by assuming the seller's debt and becoming personally obligated for the payment of the entire debt. A subordination agreement moves a first mortgage lien to a secondary position by mutual agreement of the two lenders.

Granting clause

The granting clause states the grantor's intention to convey the property at the present time. An exception and reservations clause notes any encumbrances, reservations, or limitations affecting the title. The covenant of seisin is the grantor's promise of ownership and ability to convey title in a general warranty deed. The acknowledgment is a formal declaration under oath that the person signing the deed does so voluntarily and that the signature is genuine. The signature is not required to make a deed valid but is often required to record the deed.

Constructive notice of conveyance

legal presumption that a person knows about a property transfer or ownership claim because it is recorded in public records or openly visible.

Intestate

a person has died without leaving a valid last will and testament

Every deed must be signed by

Either the grantor, or someone acting under the grantor's authority, must execute (sign) every deed, and the grantor must have the legal capacity to do so. The grantee is not required to sign the deed. A devisee is the recipient of real property under a will and is not required to sign a deed.

When defining ownership estates, the term estate refers to

With respect to property ownership, the word estate refers to a person's legal use or the bundle of rights in land, which, depending upon the type of estate, include the right to possess, transfer, encumber, et cetera. Estates are not tied to the physical quantity or the value of the land itself. A fee simple estate is the highest estate one can hold in land because it has the most or maximum rights to the land.

Acceptable evidence of marketable title is

Nothing can guarantee ownership or marketable title. An abstract with a title opinion or a title insurance policy show the title was researched and offer protection against future defects in the title. A deed by itself is not considered evidence of marketability.

Quiet enjoyment

Quiet enjoyment means freedom from any claims to the title by third parties, persons other than the grantor and the grantee. The other guarantees and promises are warranted through the covenants of warranty forever, seisin, and further assurance. A general warranty deed provides all of these covenants.

For a nontidal wetland, development under federal law

For a nontidal wetland, development under the Federal Clean Water Act requires that a federal permit be issued before the nontidal wetland is either filled or dredged. Provided the appropriate permit is issued by the government, development is permitted. The permit is issued by the U.S. Army Corps of Engineers, not the U.S. Navy Corps of Engineers. Finally, while there are many state laws related to building in wetlands, the United States does regulate development, especially under the Federal Clean Water Act.

Private land use control falls into the two categories of

deed restrictions and restrictive covenants.These are both forms of private land-use control. Governmental controls include zoning and building codes.

EPA

Both the EPA and the United States Army Corps of Engineers administer the permitting program under the Federal Clean Water Act. However, it is the EPA, not the United States Army Corps of Engineers that has veto power over permits authorizing the discharge of dredged or fill material into an area designated as a wetland. The establishment of an area as either a nontidal wetland or a coastal wetland does not always constitute a taking. There is a wide range of government permits available to property owners from general permits (authorizing minor activities without the need for individual permits) to individual permits (allowing property development while still achieving the public health and safety goals of protecting the environment).

Involuntary alienation

Involuntary alienation occurs when property is transferred without the owner's consent. The right of eminent domain allows a government to acquire property for a public purpose through condemnation. When a person dies without a will (intestate) and without heirs, the property passes (escheats) to the state. This process was neither planned nor initiated by the owner before death. Voluntary alienation occurs when property is transferred with the owner's consent. Adverse possession is the acquiring of title through open, notorious, hostile, and continuous use of another's property. Descent occurs when an heir inherits a property through probate from a deceased owner who died intestate, without a will.

Uniform Environmental Covenants Act

The UECA requires an environmental covenant that indicates the cleanup of hazardous material and restrict land use.

A deed is valid if…

Signed by the attorney-in-fact must act under a power of attorney, the specific written authority to execute and sign for another person. A valid deed requires that the grantor be a legal entity and deliver the deed to the grantee. A minor is not considered legally competent to sign a deed as a grantor.

A valid deed does not require the signature of the grantee but does require that the deed be executed or signed by the grantor. A legal description and consideration are among the essential elements required for a valid deed.

Private land use control may be enforced by

Private land use control is enforced by court order, which is called an injunction. An injunction is a court order that forces an individual to abide by the private restrictions imposed.

The owner of a unit in a cooperative receives

In a cooperative, each tenant-owner receives shares in the cooperative and a proprietary lease to the owner's unit for the life of the cooperative. Cooperative owners do not own real estate and do not have fee simple interest in their units. Cooperative owners pay their portion of taxes assessed on the cooperative. A right of first refusal refers to the right of a person to have the first opportunity to lease or purchase real property. Cooperative owners own their shares as personal property.

Governmental Powers that limit private rights

The four governmental powers that limit private rights on land are police power, eminent domain, taxation, and escheat (PETE). Declaration is used to establish common interest property, such as condominiums.

The primary survey line running east and west in the rectangular survey system is

The base lines run east and west in a rectangular survey system, while the principal meridians run north and south. Township lines run east and west; range lines run north and south. Sections are created through the intersection of these lines.

Covenants, conditions, and restrictions

CC > Rs are private restrictions that can be found in the bylaws of an association. Governmental controls include police powers and zoning.

Freehold/less than freehold estate

Means to own estate not rent/to occupy for a limited time

For properties located in a 100-year floodplain, the requirement that owners purchase special flood insurance is based upon

The purchase of special (federally backed) flood insurance for properties located within a 100-year floodplain both minimizes lender risk and is required by federal law for federally backed loans. A federally backed loan is one that is sponsored through a government-sponsored entity like FHA, VA, USDA, and loans purchased or secured by Fannie Mae or Freddie Mac.

A deed of trust differs from a mortgage in

A deed of trust is a three-party instrument that conveys naked title to a third party, the trustee, who holds the title on behalf of the lender, also known as the beneficiary. The borrower is the trustor. A mortgage is a two-part instrument between the mortgagor and the mortgagee.

A property is located within a 100-year floodplain. Which of the following definitions BEST describes the meaning of this term?

If a property is located in a 100-year floodplain, it means there is a 1% chance of flooding occurring on the property within any given year.

Grant deed

A grant deed (a.k.a. a special warranty deed) contains two implied warranties. The two implied warranties are 1) that the seller hasn't conveyed the property to anyone else, and 2) that the seller has revealed all encumbrances on the property to the grantee. A quitclaim deed contains no implied warranties. A warranty deed contains more than two implied warranties. An easement deed conveys a nonpossessory right to use the land of the grantor for a specific purpose; it would not be used as a conveyancing instrument when a seller is conveying title to the property to a buyer. Note: On a deed, the seller is called the grantor and the buyer is called the grantee.

A condominium form of ownership is officially established when

When a developer declares in the public record the existence of a condominium, the condominium is officially established. The declaration includes survey, legal description, bylaws, restrictive covenants, and architectural drawings. Construction of improvements, the establishment of an owners association, and the sale of individual units follow the establishment of the condominium.

In a limited partnership,

In a limited partnership, each limited partner can be held liable for losses only to the extent of his investment. There is no limitation on the number of investors in the partnership. The limited partners are not legally permitted to participate in the running of the business.

Private property controls

rules set by individuals or non gov orgs that limits or guide how a piece of real estate can be used developed or maintained

Condemnation

Condemnation is the process through the courts or administrative action by which a government acquires ownership of private land for public use. Eminent domain is the right of the government to acquire ownership, and condemnation is the process used to implement that right. Escheat is the taking of land by the government when the land is abandoned or when the owner dies without heirs capable of inheriting the land. The doctrine of prior appropriation is tied to how priority is set in water rights.

Potentially responsible parties (PRPs)

Real estate licensees are not identified as PRPs. This term refers to potentially responsible parties, such as present and past owners of a property who are responsible for releasing hazardous material into the environment.

Fiduciary responsibilities of an agent

The fiduciary duty of loyalty means that the agent must place the client's interests above all others, including the agent's own self-interest. The duty of accounting requires agents to be accountable for money and the property of others that come into their possession in the performance of the agent's duties. The duty of care requires that agents use their skill and experience to the client's benefit. The duty of disclosure includes keeping the client informed of all relevant facts related to the transaction.

Types of listing contract

In an exclusive right-to-sell listing, if the property is sold while the listing is in effect, the seller must pay the broker a commission regardless of who sells the property. An open listing clause states that any number of brokers may work simultaneously to sell the property, with the commission going to the broker who secures a buyer able to purchase the property. An exclusive agency listing provides that the brokerage firm or a co-op broker will receive a commission if the property sells, but the owner reserves the right to sell the property without owing a commission if the owner sells the property on his own. An option listing permits the broker to retain an option to purchase the property for the broker's own account.

A listing contract

A listing contract will include the broker's commission. Commission rates are determined by the individual listing broker, not by an MLS. A listing contract will usually state the broker's responsibilities, reasons for termination or default of the contract, and any unusual deed conditions or restrictions. A listing is a personal employment contract between brokers and their clients setting forth the broker's responsibilities in finding for the seller a ready, willing, and able buyer.

Law of agency

The law of agency is law from judgments and decrees as opposed to law established by legislatures or other governing bodies. In many states, statutes have been enacted to further define agency representation with laws and regulations that set forth the responsibilities of real estate licensees to clients and customers.

exclusive agency

Conditional commission: The agent only earns a commission if they or another real estate agent find the buyer.

Termination of an agency relationship

The destruction or condemnation of a property during a listing period terminates the listing or death of owner or incompetency. The agency relationship remains in effect with any of the other events; owner abadons property

Net listing

The net listing is illegal in some states and discouraged in others because of the potential conflict of interest between the real estate licensee (agent) and the seller. With a net listing, the seller sets a net minimum price, with anything over that going to the real estate licensee as the commission. This may test the agent's fiduciary duty of loyalty because the agent typically has more knowledge of the property's market value, and may not be motivated to recommend the seller set a sufficiently high net minimum price. The lower the seller's net minimum price, the more profit the agent may earn from the transaction. The other answer choices are widely used listing agreements that do not set up a potential test of the agent's fiduciary duty of loyalty.

Note: Exclusive agency and seller reserved are synonyms. Under this type of listing agreement, a real estate agent will receive a commission, unless the seller finds the buyer.