Real Property Rights and Concepts
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Questions and Answers

What type of lien applies specifically to a certain property?

  • Voluntary Lien
  • General Lien
  • Specific Lien (correct)
  • Involuntary Lien

A Voluntary Lien is created without any action taken by the debtor.

False (B)

What is a Mechanics Lien?

A lien on behalf of those who have supplied labor or materials that improve the property.

An _______ Lien is imposed on an individual, such as taxes and judgment liens.

<p>Involuntary</p> Signup and view all the answers

Match the following terms with their definitions:

<p>Debit = Money owed Credit = Money received Escrow = Neutral third party Impounds = Money set aside for reoccurring costs</p> Signup and view all the answers

Which act eliminated kickbacks and referral fees in settlement services?

<p>RESPA (B)</p> Signup and view all the answers

Actual Notice refers to information given to someone personally.

<p>True (A)</p> Signup and view all the answers

What does TILA stand for and what is its purpose?

<p>Truth in Lending Act, which requires disclosures about consumer credit terms and costs.</p> Signup and view all the answers

Which of the following is NOT an essential element of a valid contract?

<p>Unilateral agreement (C)</p> Signup and view all the answers

A voidable contract cannot be rescinded.

<p>False (B)</p> Signup and view all the answers

What is the term for a contract that has been fully performed?

<p>Executed Contract</p> Signup and view all the answers

The principle that states certain contracts must be in writing is known as the __________.

<p>Statute of Frauds</p> Signup and view all the answers

What type of authority is expressly conferred by a principal to an agent?

<p>Actual Authority (C)</p> Signup and view all the answers

Match the following contract types with their definitions:

<p>Void Contract = Lacks one of the 4 essential elements Bilateral Contract = Promise for a promise Unilateral Contract = Promise for an act Executory Contract = Not yet fully performed</p> Signup and view all the answers

An exclusive listing allows only one broker to be compensated without showing procuring cause.

<p>True (A)</p> Signup and view all the answers

What is a codicil?

<p>An amendment</p> Signup and view all the answers

What does Title Insurance ensure?

<p>Ensures clear and marketable title (A)</p> Signup and view all the answers

A servient tenement suffers the burden of an easement.

<p>True (A)</p> Signup and view all the answers

What is the term for sole ownership of property?

<p>severality</p> Signup and view all the answers

An easement that is granted after using the property openly for a statutorily required number of years is called an __________.

<p>easement by prescription</p> Signup and view all the answers

Which type of easement represents a right to use adjoining property that transfers with the land?

<p>Appurtenant Easement (D)</p> Signup and view all the answers

Title insurance policies do not cover defects found in public records.

<p>False (B)</p> Signup and view all the answers

Name the four government powers represented by PETE.

<p>Police Power, Escheat, Taxation, Eminent Domain</p> Signup and view all the answers

What type of loan replaces short-term financing like a construction loan?

<p>Take-Out Loan (C)</p> Signup and view all the answers

The seller is liable if a loan is assumed by the buyer.

<p>False (B)</p> Signup and view all the answers

What does it mean to hypothecate an asset?

<p>Pledging an asset as collateral while retaining ownership.</p> Signup and view all the answers

A _____ clause ensures that current debts take priority over future debts.

<p>subordination</p> Signup and view all the answers

Which organization insures lenders but does not make loans?

<p>FHA (D)</p> Signup and view all the answers

Match the following loan types with their characteristics:

<p>FHA = Small downpayment and insured by government VA Loan = No down payment required by borrower Take-Out Loan = Long-term loan replacing interim financing Interim Loan = Short term financing</p> Signup and view all the answers

Insurance companies prefer non-income producing properties.

<p>False (B)</p> Signup and view all the answers

The _____ market is where lenders make mortgage loans directly to borrowers.

<p>Primary Mortgage</p> Signup and view all the answers

Which appraisal method is best for determining the value of new buildings?

<p>Cost (Replacement) Approach (C)</p> Signup and view all the answers

The term 'depreciation' refers to an increase in value over time.

<p>False (B)</p> Signup and view all the answers

What is the formula to calculate Gross Multipliers?

<p>Price divided by rent</p> Signup and view all the answers

The total area of one acre is ______ square feet.

<p>43,560</p> Signup and view all the answers

Match the following types of liens with their definitions:

<p>Mortgage = A voluntary, specific lien Participation Loan = Requires interest plus a portion of profits as payment Balloon Loan = Loan that does not fully amortize over its term Amortization = The paying off of debt over time</p> Signup and view all the answers

What does a higher Cap Rate indicate?

<p>Higher risk (D)</p> Signup and view all the answers

What is the purpose of a construction loan?

<p>To finance the building of a property</p> Signup and view all the answers

Economic obsolescence is caused by poor planning.

<p>False (B)</p> Signup and view all the answers

What is the main difference between an Exclusive Agency Listing and an Exclusive Authorization and Right to Sell Listing?

<p>Owner sells and the agent gets nothing in an Exclusive Agency Listing. (D)</p> Signup and view all the answers

A Hold Harmless Clause ensures that one party can hold the other responsible for any losses that may arise.

<p>False (B)</p> Signup and view all the answers

What does a Contingency Clause define?

<p>A condition or action that must be met for a real estate contract to become binding.</p> Signup and view all the answers

The principle that states no prudent person would pay more for a property than another that is available for less is called the _______.

<p>Principle of Substitution</p> Signup and view all the answers

What does the Protection Period Clause (Safety Clause) allow an agent to do?

<p>Be compensated after the listing expires if they can prove procuring cause. (A)</p> Signup and view all the answers

The Essential Elements of Value are represented by the acronym STUD.

<p>True (A)</p> Signup and view all the answers

What is a Net Listing?

<p>A listing where the agent receives money above a designated amount.</p> Signup and view all the answers

Flashcards

Voluntary Lien

A lien that exists because of an action taken by a debtor.

Specific Lien

A lien that is on a single property.

Impounds

Money owed to a lender to pay for reoccurring costs like taxes or insurance.

Lis Pendis

A lawsuit pending involving either ownership of a property or a claimed interest in it.

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Escrow

Neutral third party involved in a transaction, often holding funds or documents until certain conditions are met.

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Short Rate

A higher periodic rate for a shorter term than what was originally contracted.

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General Lien

A lien against all personal property.

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Injunctions

A court order that compels a party to do or refrain from specific acts.

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Quiet Title Action

A lawsuit filed to establish clear ownership of property.

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Alienation of Title

The ability of a property right to be legally transferred or sold.

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Title Insurance

Insurance that protects against financial losses from defects in a property's title.

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Standard Policy of Title Insurance

A type of title insurance that covers common title defects found in public records.

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ALTA Policy of Title Insurance

A type of title insurance that covers a wider range of title defects, including those discovered during property inspection.

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Severalty

Sole ownership of a property by one person.

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Concurrent Estate

Ownership of property by two or more individuals.

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Joint Tenancy

A type of concurrent ownership where surviving joint tenants automatically inherit the deceased tenant's share.

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Appraisal

An estimation of a property's worth.

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Narrative Appraisal

A detailed report that includes all the information about a property's value.

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Market Data (Comparison) Approach

Finding the value by comparing similar properties that were recently sold.

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Cost (Replacement) Approach

Determining the cost of building a brand-new replica of the property.

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Capitalization (Income) Approach

Converting the income generated by a property into its value.

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Mortgage

A loan secured by real estate.

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Appreciation

The increase in value of a property over time.

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Construction Loan

A loan used to finance the construction of a property.

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Void Contract

A contract that lacks one or more of the four essential elements (mutual consent, lawful object, consideration, capable parties). It is considered legally unenforceable.

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Voidable Contract

A contract that allows one party to choose whether or not to proceed with the agreement. This often arises due to fraud, duress, or misrepresentation.

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Bilateral Contract

A contract where both parties make a promise to each other. For example, in an exclusive listing agreement, the seller promises to list the property exclusively with the broker, and the broker promises to use their best efforts to find a buyer.

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Unilateral Contract

A contract where one party makes a promise, and the other party accepts by performing an action. Examples include open listings and option contracts.

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Executed Contract

A contract that has been completely fulfilled by both parties. All obligations have been performed.

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Executory Contract

A contract where some or all of the obligations have not yet been performed.

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Statute of Frauds

A legal principle that determines which contracts must be in writing to be enforceable. This varies by state, but usually includes contracts for the sale of land, leases longer than a year, and agreements to pay the debt of another.

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Statute of Limitations

A legal principle that sets time limits for filing lawsuits related to contracts. These limits vary by type of contract and state.

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Interim Loan

A type of financing used during a construction project, usually short-term, where the lender provides funds for the building process. Once the construction is completed, a long-term loan (take-out loan) replaces the interim loan.

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Take-Out Loan

A long-term loan that replaces an interim loan after a project is complete. Typically offers fixed payments and is amortizing.

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Prepayment Clause

A clause in a loan agreement that allows the borrower to repay the loan in full before the due date, often without penalty.

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Prepayment Penalty

A fee or charge imposed on a borrower for paying off a loan earlier than the scheduled date. Prevents lenders from losing income.

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Due-on-sale Clause

A clause that states that the entire remaining balance of a loan must be repaid immediately if the property is sold.

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Primary Mortgage Market

The market where mortgage loans are initially made by lenders directly to borrowers. This is where you apply for a mortgage.

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Secondary Mortgage Market

The market where existing mortgage loans are bought and sold between different institutions. This allows lenders to quickly move their loans and free up capital.

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Savings and Loan Association

A type of financial institution that primarily focuses on residential mortgage loans. They accept deposits from the public and offer mortgage loans to individuals.

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Exclusive Agency Listing

The owner pays the agent only if the agent finds a buyer for the property. If the property is sold by someone else, the agent gets no commission.

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Exclusive Authorization and Right to Sell Listing

The broker gets paid a commission if the property is sold, regardless of who finds the buyer.

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Open Listing

The seller can hire multiple brokers to sell their property. The broker who finds the buyer gets the commission.

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Net Listing

The seller sets a minimum price for the property and the broker gets to keep anything above that price.

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Protection Period Clause (Safety Clause)

A clause that allows the broker to get a commission even after the listing expires, if they can prove they were the procuring cause of the sale.

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Contingency Clause

A clause that specifies a condition that must be met in order for a real estate contract to be legally binding.

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Hold Harmless Clause (Liability Waiver)

An agreement where parties agree not to hold each other responsible for any losses or damages that may arise from the agreement.

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Interim Occupancy Agreement

An agreement that allows the buyer to occupy the property for a period of time after the sale has closed.

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Study Notes

Bundle of Rights

  • Bundle of rights include possession, control, exclusion, sell, and enjoyment of property.

Real Property

  • Real property involves immovable property.

Personal Property

  • Personal property is generally movable property.

Chattel Real

  • Chattel real is personal property, like a leasehold interest.

Fixture

  • A fixture was personal property, but is now real property.
  • The MARIA method (Method, Adaptability, Relationship, Intention, Agreement) can determine if something is a fixture.

Trade Fixture

  • Trade fixtures are personal property because they go with a business.

Riparian Rights

  • Riparian rights pertain to moving bodies of water (rivers).

Littoral Rights

  • Littoral rights pertain to standing bodies of water (lakes).

Accretion

  • Accretion describes additional land due to water.

Avulsion

  • Avulsion is the sudden tearing away of land.

Reliction

  • Reliction is the gradual recession of water, leaving land uncovered.

Appurtenances

  • Appurtenances run with the land.

Freehold Estate

  • A freehold estate has no fixed duration of ownership.
  • Fee simple absolute is the highest possible ownership.

Fee Simple Defeasible

  • Fee simple defeasible involves ownership with a condition.

Life Estate

  • A life estate involves ownership for the duration of a person's life.

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Related Documents

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Description

Test your knowledge on the various concepts surrounding real and personal property, including the bundle of rights, fixtures, and water rights. This quiz covers essential definitions and principles that are critical for understanding property laws.

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