Real Estate Law: Licensing, Brokerage, and Contracts

Real Estate Law

• Licensing Requirements:
  • Age: 18 years old
  • High school diploma or equivalent
  • 63 hours of approved pre-licensing education
  • Pass the state exam
• Brokerage Relationships:
  • Types: transaction broker, single agent, no brokerage relationship
  • Disclosure requirements
• Real Estate Contracts:
  • Types: listing agreements, purchase agreements, lease agreements
  • Essential elements: offer, acceptance, consideration, capacity
• Property Rights:
  • Types: fee simple, life estate, easements
  • Encumbrances: mortgages, liens, encroachments
• Real Estate Taxes:
  • Types: ad valorem, non-ad valorem
  • Tax implications for buyers and sellers

Contracts

• Elements of a Valid Contract:
  • Offer
  • Acceptance
  • Consideration
  • Capacity
  • Legality
• Types of Contracts:
  • Bilateral: promises for promises
  • Unilateral: promise for an act
  • Executory: promises for future performance
  • Executed: fully performed
• Real Estate Contract Provisions:
  • Deposit requirements
  • Financing contingencies
  • Inspection contingencies
  • Closing procedures
• Contractual Rights and Obligations:
  • Seller's obligations: disclosure, warranties
  • Buyer's obligations: payment, inspection

Appraisal

• Appraisal Methods:
  • Sales Comparison Approach
  • Cost Approach
  • Income Approach
• Appraisal Process:
  • Inspection
  • Data collection
  • Analysis
  • Report preparation
• Appraisal Report:
  • Contents: property description, value opinion, limitations
  • Types: oral, written, self-contained
• Appraisal Standards:
  • USPAP (Uniform Standards of Professional Appraisal Practice)

Ethics

• REALTOR Code of Ethics:
  • Preamble: professionalism, fairness, integrity
  • Articles: duties to clients, duties to customers, duties to REALTORS
• Ethical Obligations:
  • Confidentiality
  • Disclosure
  • Loyalty
  • Accounting
• Ethical Dilemmas:
  • Conflict of interest
  • Dual agency
  • Misrepresentation
• Penalties for Unethical Behavior:
  • License suspension or revocation
  • Fines
  • Legal action

Financing

• Types of Mortgages:
  • Fixed-rate
  • Adjustable-rate
  • Government-backed (FHA, VA, USDA)
  • Jumbo loans
• Financing Options:
  • Conventional financing
  • Owner financing
  • Hard money lending
• Mortgage Process:
  • Application
  • Processing
  • Underwriting
  • Closing
• Financing Terminology:
  • Amortization
  • APR (Annual Percentage Rate)
  • PITI (Principal, Interest, Taxes, Insurance)

Real Estate Law

• To become a real estate agent, you must be at least 18 years old, have a high school diploma or equivalent, complete 63 hours of approved pre-licensing education, and pass the state exam.
• There are three types of brokerage relationships: transaction broker, single agent, and no brokerage relationship, which require specific disclosure requirements.

Contracts

• A valid contract must have five essential elements: offer, acceptance, consideration, capacity, and legality.
• There are four types of contracts: bilateral, unilateral, executory, and executed contracts.
• Real estate contracts include listing agreements, purchase agreements, and lease agreements, which require specific provisions like deposit requirements, financing contingencies, and inspection contingencies.

Appraisal

• The three main appraisal methods are the Sales Comparison Approach, Cost Approach, and Income Approach.
• The appraisal process involves inspection, data collection, analysis, and report preparation.
• An appraisal report includes a property description, value opinion, and limitations, and can be oral, written, or self-contained.

Ethics

• The REALTOR Code of Ethics is a set of principles for real estate professionals, including a preamble and articles outlining duties to clients, customers, and other REALTORS.
• Ethical obligations include maintaining confidentiality, disclosing relevant information, and being loyal to clients.
• Ethical dilemmas may arise from conflicts of interest, dual agency, and misrepresentation, and can result in penalties like license suspension or revocation, fines, and legal action.

Financing

• There are several types of mortgages, including fixed-rate, adjustable-rate, government-backed, and jumbo loans.
• Financing options include conventional financing, owner financing, and hard money lending.
• The mortgage process involves application, processing, underwriting, and closing, and requires an understanding of financing terminology like amortization, APR, and PITI.