Real Estate Agency Relationships

• Agency is a relationship authorizing someone to act on another's behalf.
• Agency Law governs when a principal delegates authority to an agent.
• The principal-agent relationship is built on fiduciary duty implying trust and confidence, recognized nationally under common law.
• Georgia law requires agency to be in writing to be considered Fiduciary.

Types of Agents

• Special (Limited) Agent: Hired for a specific task, like a broker selling a home.
• General Agent: A broker hiring a salesperson, or an agent managing property.
• Ostensible Agent: Perceived representation by a consumer, even without a written contract.
• Implied Agency: Agency suggested by actions, even without a written agreement.
• Power of Attorney: Legal authorization to act on another's behalf, known as "attorney in fact."
• Multiple Listing Service (MLS) provides brokers a platform to list available properties, but is not an agency relationship.
• Universal Agents do not exist, it would allow the agent to act before any act from the principal is given.

Duties

• Agent's Duties (POLAND-Personal Performance, Obedience, Loyalty, Accountability, Notice of Disclosure): Based on National Fiduciary standards.
• Principal/Client's Duties (PRIC-Performance, Reimbursement, Indemnification, Compensation).
• Agents can give counsel, guidance, and advice to principals/clients forming an agency relationship.
• Agents perform ministerial acts for customers but never give advice.

Duties to Third Parties (HARD)

• Honesty & Integrity (Disclosures – Hidden: Latent Defects (Seller's Property Disclosure).
• Accountability.
• Reasonable skill and care.
• Disclosures.
• Patent Defects – Easily Discovered – Home inspection.

Stigmatized Properties

• Stigmatized properties include those associated with crimes, murder, or ghosts.
• Georgia law mandates agent disclosure of knowledge it asked, not required.
• Federal Law (Fair Housing) states AIDS is never disclosed.
• Procuring Cause is the primary action leading to a sale through an uninterrupted series of events.

Earning a Commission

• To earn a commission agents must be: Licensed, have a listing agreement, and demostrate procuring cause.

Agents and Agreements

• Agents working with a broker have an Affiliated Agreement, an employment contract with the General Agent broker.
• Independent Contractors are self-employed, paying their own taxes, insurance, and expenses.

Listing Agreements

• When working with a Seller, types of listing agreements must stipulate: listing price, listing timeframe, seller signature, details of the property, commission rate, and a Legal description.
• Open Listing: Seller pays any broker who brings a buyer and no broker is hired.
• Exclusive Agency: Seller hires one broker but avoids commission if they find the buyer.
• Exclusive Right to Sell: Seller pays commission regardless of who finds the buyer, and one broker is hired for.

Buyer Brokerage Agreements

• When working with a Buyer include an Exclusive Buyer Brokerage Agreement so the ready, willing, able buyer can provide Brokers compensation if it's not paid by the Seller.

Placing an Offer

• To Place an Offer, agreements include: Purchase and Sales Agreement (offer price, earnest money, closing date, due diligence days, timeframe, Seller must respond), Financing Exhibit, Seller's Property Disclosure, Community Association Disclosure, Pre Approval.

Termination of Contract

• A listing agreement is terminated in the same manner as any contract: Performance, Mutual Agreement, Breach, or Expiration.

Brokerage Engagements

• A client enters an agency agreement with a broker.
• A customer has not entered an agency agreement.
• A dual agent works with both Seller and Buyer with both informed consent for the purchase of the same home. The company sales this way can be very risky for brokers.
• A transaction agent works with both Seller and Buyer as customers only doing the paperwork.

Federal Fair Housing Laws

• 1866 - prohibits discrimination based on Race
• 1968 - prohibits discrimination based on Race, Color, Religion, National Origin
• 1974 - prohibits discrimination based on Race, Color, Religion, National Origin, Sex
• 1988 - prohibits discrimination based on Race, Color, Religion, National Origin, Sex, Handicap, Familial Status
• Memory Aid: FRESH CORN (Familial Status, Race, Sex, Handicap, Color, Religion, National Origin).
• Equal Opportunity (E and O)

ADA

• The ADA (Americans with Disabilities Act) requires equal access to jobs, public accommodations, and transportation.

Lead Based Paint

• For properties built before 1978, sellers must disclose known lead-based paint.
• Buyers must receive records/reports, a federal pamphlet ("Protect Your Family From Lead In Your House"), and a 10-day inspection period with a confirmation statement of compliance.

Do Not Call Registry

• Telemarketing calls are prohibited between 9 pm and 8 am.
• Calls to past clients are allowed up to 18 months after the last transaction, and up to 3 months after an inquiry.

Can-Spam Act of 2003

• This act regulates unsolicited commercial email/text messages.
• It requires valid sender information, a physical postal address, an accurate subject line, a clear indication of advertisement/solicitation, an "Opt-Out" provision (no fee), and prohibits needing a valid telephone number.

Sherman Anti-Trust Act of 1890

• This act prevents monopolistic practices and activities that endanger competition.
• Restraint of Trade includes: brokers conspiring to fix commission rates/splits, dividing markets, economic boycotts, and “tie-in” contracts.

Required Elements of a Contract

• Contracts should be clear and detailed became legally binding.
• Consideration (promise of value), Mutual Assent (meeting of minds), Legally Competent Parties, and Lawful Purpose.
• Bilateral - 2 parties are making promises in the contract.
• Unilateral - 1 party is making promises in the contract.

Enforceability

• Executory Contract: Work is not yet fully performed.
• Executed Contract: All obligations are fulfilled so the contract closes, and a contract is fully preformed.
• GA's Statute of Frauds requires real estate contracts to be written.
• Statute of Limitation defines a period of legal action.
• Statutory right of redemption allows redeeming property after a tax foreclosure.
• Equitable right of redemption allows a defaulting mortgagor to reclaim property by paying the mortgage before foreclosure.

Finances

• Earnest money is deposited, deducted from the buyer's account, held until closing, then is applied to the purchase price or given as damages for breach.
• Earnest money should be deposited promptly, unless otherwise agreed.
• Earnest money is not essential but customary.
• Agents earn commission when presenting a ready, willing, and able buyer and the seller accepts.
• If a contract is broken, advise consulting a lawyer.
• Never run ads in the agent’s name - only the broker.

Discharge of a Contract

• Discharge of a contract occurs though: Performance (Executory/Executed Contracts), Expiration, Supervening Illegality, Mutual Agreement, Novation, Property Destruction, Operation of Law (voidable contracts), Assignment, Death, or Incapacity.

Validity of Contracts

• Void contracts are missing legal elements to be valid.
• Voidable contracts can be rescinded if fraud is present.
• Void contracts include: Mutual Mistake, Mentally Incompetent (declared before contract), and Menace/Duress/ Undue Influence.
• Voidable contracts include: Mentally Incompetent (declared after the contract), Minor, Innocent Misrepresentation, Actual or Negative Fraud, and Constructive Fraud.

Remedies for Breach of Contract

• Contractual Remedies include: Arbitration and Liquidated Damages (earnest money).
• Legal Remedies include: Suite for Damages, Specific Performance, and Rescission (returning to the pre-contract state).

Real Estate Contracts

• Real Estate Contracts include: Listing Contracts, Exclusive Buyer's Brokerage Agreement, Sales Contracts, Option Contracts, Leases, Property Management Agreements, Affiliation Agreements, and Land Contracts.

Land Contracts

• The Seller finances the agreement and retains legal title. But the buyer receives equitable title during the repayment period.
• The Purchase Money Mortgage is used of seller financing. If the buyer defaults the seller gets the property back.

Review- Binding Contract

• The Buyer offers and the Seller accepts all terms. A due diligence period of 3 to 7 days allows inspection and potential termination with earnest money returned.
• Financing and Appraisal contingencies give 10 to 21 days for loan approval.
• The buyer can receive earnest money if the denial isn't their fault: Job transfer is not a reason.
• The buyer may withdraw the offer before acceptance and get earnest money back.
• The Buyer's agent should review all info from the listing agent.
• Sold As Is means the agent should ensure all defects are disclosed. Buyers however can still ask for major defects to be repaired.
• A Backup Offer is accepted after the first offer.
• Real estate salespersons cannot draw up contracts. They fill in blanks on legally created documents.

Encumbrances

• Limitations to real property, such as liens, easements, and deed restrictions.

Government Powers(PETE)

• Government has the power to protect and provide for the safety, health, morals and general well being of the public.
• They are: Police Powers dealing with zoning, Eminent Domain dealing with private property taken for public use (process of condemnation), Taxation dealing with property, and Escheat dealing without no will.

Planning

• Land Uses classifications are: residential, commercial industrial, multi-family, recreational and mixed use planned unit development (sub-classifications: historic districts, conservation districts. Terms to know are: buffer zones, non-conforming use and variance.

Eminent Domain

• Eminent Domain is when the government can sell to a private company for the Public Good if the owner gets Just Compensation and must have Due Process.
• Inverse Condemnation happens when a neighbor's property loses value due to eminent domain on another property.

Taxation

• Property Taxes are subject to government power and Privately owned land is subject to the government's power of taxation. Tax Abatement and Homestead Exemption exist.
• Market Value is $145_000 x assessment rate of 40% with an Assessed Value(tax base) of $58_000 x tax rate (30 mills/.030) with a Tax Due (yearly) of $1_740

Capital Gains

• A capital Gains is the amount a real estate owner makes when selling an asset. The adjusted Sales Price is subject to the property basis. Basis is calculated by: Sales Price of $275_000 - Closing Costs of $8_500 - Commissions Paid of $19_250 for a Total Adjusted Sales Price of $247_250 vs Home Cost of $126_500 with include profit in income. A Tax Relief Act of 1997 exists from Exemptions for homeowners. The owner must have lived and owned the home as their primary home, or the primary residence for at least 2 of the last 5 years from the date of sale.

Exemptions

• Exemptions for single person is up to $250,000 and married couples up to $500,000.
• 1031 Tax Deferred Exchanges can avoid capital gains if the money is reinvested into a like property.
• At close state taxes are paid by the buyer.
• Sales tax is the sales price / 100 = # x .10
• Intangible Tax are tax on a new loans.

Escheat

• Escheat is when property goes to the state with no heirs or will.

Private Property

• Private Property is a person's rights that can grant that person use of the property through liens of easements.
• Liens can be general or specific, Voluntary or Involuntary.

Types of Liens

• Specific/Involuntary is Real Estate – Property Taxes Lien
• Taxes and Special Assessments – Mechanic's Liens
• Specific / Voluntary is Vendor/Vendee (Purchase Money Mortgage)
• General / Involuntary is Judgment (court lawsuit) / Attachment Liens
• Specific / Voluntary is Mortgage Lien

Easements

• Easements run with the land owners - servient and dominant estate that allow ingress and egress
• In order to get Easements these must be present: Necessity, in gross, personal or commercial and with or without transference, or prescription.

Lis Pendens

• A Lis Pendens is a pending law suit that prevents one from conveying (selling) while the lawsuit is pending.
• Attachment Lien ensures the property will be available to settle a lawsuit.
• Writ of Execution allows officer or court personnel to seize and sell property to settle a debt.

Land & Properties

• Real Estate Characteristics include: Economic (SPIL) and Physical (UII)Scarcity Uniqueness (Non-homogeneity) Permanent(Fixed Investment) Immobile Improvement IndestructibleLocation (Situs)

Key Real Estate Terms

• Real Estate include: Land = Surface + below+above+natural things attachedReal Estate = Land + artificial attachments, Real Property = real estate + rights + interest, Rights are the Bundle of Rights (CPED), Frutus Industrials Personal Property crops that require annual cultivation and Trade Fixtures are personalty
• Test for Fixtures: MARIA (Modification, Attachment ,Relationship, Intention, Agreement)

Water Rights

• Water Rights have the right to use and enjoy water adjacent to, underneath, or on the land that is touching your property and not apportioned to another landowner.
• Riparian Rights are given to landowners where property is located along water.
• Littoral Rights pertain to landowners bordering a large lake.

Free Hold Estates

• Estates in Land are: Metes and Bounds (POB) Point of Beginning, Rectangular Survey (Government) and Plat of Survey (Lot and Block, recorded plat )
• Freehold Estates are are those that are Inheritable and those that are not (Non-Inheritable)
• Life Estates are some states recognize as Legal Life Estates (Statutory).

Leasehold Estate

• Leasehold Estates are of non-freehold Estates: Estate for Years – Definite starting and ending date Estate – Indefinite/Month to month Estate at Will – Consent of Landlord Estate at Sufferance – Holdover Tenant and Tenant- Leasehold estate

Forms Of Ownership

• Forms of Ownership includes: Severalty – Sole Owner, Concurrent Owners, Tenants in Common, Community Property Married couples own property 50/50.
• Business Ownership includes many types of companies: Corporation, Partnership General - Run the business Partnership Limited, Limited Liability Company (LLC) , Coop or Conodominium

Aliens and Transfer

• Transfer of Title changes ownership and is not to prove ownership it's that the title changes hands.
• There are often Aliens (transfer) fees that transfer (Alienation) the title and these can either be voluntary or involuntary.

Causes of Transfer

• Natural Causes happens though: Addition of property with alluvion or avulsion or Operation of Law.
• Court actions include: Lien Foreclosure, Petition, Quiet Title
• Voluntary Actions are a: Gift Safe, Patent

Requirements for a Deed

• These requirements must exist: Must be in Writing, name has to exist and the Grantee is identified.

Covenant of Seizin

• A Covenant of Seizin is one in which the Seller owns the property and a Covenant against Encumbrances is where is is released from any claim or liens

Types

• All 5 covenants exist with a General Warrants
• All 5 covenants with a Limited/Special Warrants
• Just 2 covenants exist with a Grant Deed which include a Covenant of Seizin.

Requirements of Wills

• To create a wills these exist: Legal Age and Sound Mind with witnesses.
• There are only 2 types of wills, none of which are recognized in CA: holographic handwritten, and nuncupative- verbally.

Evidence of Title

• These must be in place in order for There to be Evidence of Title: Visible to the rightful owner, notorios, exclusive and without permission.

Title insurance

• Title insurance protects the buyer (Owner's Policy) and lender (Lenders Policy)

Real Estate Agents Roles

• Real Estate Agents or brokers can never validate a title or give advice.

Market Value

• Market Values can be estimated. Elements of Value (DUST) must be present which include: Demand Utility Scarcity Transferability

Economic Principles of Value

• Highest and Best Use, Serve/Substitute, Conformity, Change - property values depend on life cycles of communities, Progression- gains value, Regression - loses value, Competition - choice, Increasing returns, Decreasing returns, Anticipation.- future based

Appraisal Process

• Assemblage is the combining of several parcels into one lot to sale as one .
• Pottage is a increase in value - An appraisal estimates opinions and it used when needing to find an appraiser
• The Appraiser can't own it
• The must identify he Problem and Gather Data so can Analyze and decide There many Approaches
• Market/ CMA
• Cost Approches
• Income/value with the addition of land, this is the most value
• Depreciation-Physical, functional or economics
• There are different levels of obsolescence.

What Is AVM?

• AVMs (Automated Valuation Model) -mathematical formula
• Not accurate all the time

Lender Points

• Increase rate points and points buy interest

Hypothecation

• Give property to lender as collateral and borrow retains control

Mortgage Industry

• Mortogor = Borrower
• Mortgagee = Lender
• Origination Fees

Security Industry

• Title theory, they all have debt, deed and title

If The Trustor Defaults

• The lender can't lose by not following

Loan Instruments

• 2 Loan instruments are: mortgage note and secondary

Remedy if They Dont Pay

• Judicial
• Non judicial

Borrowers and Lender Claims

• Borrowers must pay, the lender must secure

Defaults

• Default is a Clause

Loans

• 1 point = 1 percent of loan increases yield to lender

The Law

• Credit and lending must follow the laws of ECOA and must be compliant of reg z which prohibits steering and discrimination.
• 1031 - Used by investors with a period of time to locate like property
• Mortgage Fraud - Big penalty

What Can't they do

• CAN'T commit vandalism theft squatting or Arson.
• 5 and 5 is chapter of review.

Closings

• Finalize with lender's lawyer.
• Cash closing when there is real estate
• Settlements is given.
• The is funded paid the broker.