ree practice exam 1

Rental Rates Determinant

Competition for the available supply of locations and space determines the current level of rental rates for each submarket and property.

Demand Effect on Rental Rates

An increase in demand for leasable space causes an increase in equilibrium rental rates and an increase in property value.

Equity Interests Return

Equity investors in real estate expect to earn a return through the collection of rent and selling or refinancing the asset.

Demand for Real Estate

The demand for real estate derives from the need for shelter and convenient access to other locations.

Real Estate Definition as Land and Improvements

Real estate is defined as the land and its improvements when viewed as a tangible asset.

Tangible Asset Example

An example of a tangible asset is land.

Classification of Land by Use

Land that consists of residential, industrial, commercial, and institutional uses is classified as urban land.

Investment Grade Property Market Investors

Pension funds typically target the investment-grade property market.

Improvements on Land

Improvements on the land include fences, walkways, sewer systems, and streets.

Intangible Asset Example

A mortgage would be considered an intangible asset.

Market for Real Estate Transactions

The market for buying, selling, and leasing real estate can be characterized by localized and highly segmented markets.

Fixture at Time of Sale

Custom (built-in) bookshelves would most likely be considered a fixture at the time of sale.

Estate with Least Enforceable Rights

A tenancy at will involves the least enforceable bundle of rights.

Mechanics’ Lien Definition

A mechanics’ lien is a right established by a contractor to protect against a property owner defaulting on a construction contract.

Easement Appurtenant

The servient parcel is the land that is constrained by the easement appurtenant.

Condonminium Rights

Condominiums represent types of direct co-ownership that combines single person ownership with tenancy in common.

Bundle of Rights in an Ordinary Life Estate

In an ordinary life estate, the right of disposition is detached from the traditional bundle of rights.

Condominium Buyer Document Requirement

Every condominium buyer needs to know the details of the Condominium declaration.

Superior Lien Type

A government property tax and assessment lien is automatically superior to any other lien.

Joint Tenancy Feature

The distinctive feature of a joint tenancy is the right of survivorship.

Marital Property Rights

Community property gives a spouse a one-half claim on all property acquired from the fruits of the marriage.

Nonposessory Interests

Nonpossessory interests include easements, restrictive covenants, and liens.

Government Rectangular Survey Method

The government rectangular survey relies on townships and section numbers for land description.

Highest Quality Deed Type

The general warranty deed is considered the 'highest quality' because it contains the full set of legal promises by the grantor.

Valid Legal Description of Land

A street address is not considered an acceptable legal description of land.

Conveying Real Property Involuntarily Without a Deed

Title by adverse possession and easement by prescription are modes of conveying real property involuntarily without a deed.

Special Warranty Deed Difference

The special warranty deed is identical to the general warranty deed except for its conveyance of the covenant of seizin.

Property Conveys According to Will

If a will dictates the distribution of the decedent’s property, it is said to be devised.

Recent Conveyance Laws

Laws that set limits on how far back a title search must go are referred to as marketable title laws.

Conveying Real Property Voluntarily Without a Deed

An implied easement is a method of conveying real property voluntarily without a deed.

Acknowledgment in a Deed Purpose

Acknowledgment in a deed is required for a deed to be placed in the public record.

Deed Requirements

A deed requires only the grantor to be legally competent and of legal majority age.

Seller's Title Requirement Evidence

Today, the predominant medium for providing evidence of title is a title insurance commitment.

Effective Tax Rate Calculation

Effective tax rate is calculated as (Annual Tax Liability / Taxable Value) x 100.

Mills Conversion from Percentage

To convert a tax rate of 5.9%, multiply by 10 to convert to mills, resulting in 59 mills.

Taxable Value Calculation

Taxable value is calculated as (Assessed Value - Exemptions).

Internalizing Negative Externalities

Economists advocate implementing impact fees to internalize negative externalities.

Federal Environmental Control Law

The Comprehensive Environmental Response Compensation and Liability Act established the 'Superfund'.

Property Tax Criticism

Property taxes are criticized for being regressive.

Housing Construction Component Requirement

The affordable housing allocation requirement is included in local government comprehensive plans.

Control Urban Development

Local governments planning and controlling urban development outside their boundaries is known as extraterritorial jurisdiction.

Real Estate Taxes

Real estate taxes are applied as ad valorem taxes Based on the value of the property.

Earliest Method of Police Power to Regulate Land Use

The earliest method is zoning.

Growth Management Requirement

Concurrency requirement prohibits local development unless adequate infrastructure is in place.