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Prep Exam
Maryland & general prep exam questions and definitions
| Term | Definition |
|---|---|
| Title | the right to and evidence of the ownership |
| Voluntary Alienation | the owner intentionally conveys the ownership using some form of deed; may be a gift or a sale. The owner is the grantor. The person receiving title is the grantee. |
| Granting clause | words of conveyance |
| Associate Broker | individuals who have met the requirements for becoming a broker but affiliate under another broker |
| MD Real Estate Commission | 9 members; 5 w/ real estate licenses from different subdivisions but must be licensed for 10 yrs and have resided in their subdivision for 5 yrs. other 4 members shall not have ownership interest receive compensation or be licensed |
| Who Appoints MD Real Estate Commission | Governor with the secretary advice an d consent of senate |
| What are the MD Real Estate Commission | duties are administration and enforcement of complaints, hearings subpoenas and injuctions |
| Guaranty Fund | reimburse members of the public for actual financial losses at the result of a licensee or employees. Max reimbursement claim is $50,000 |
| Broker Requirements | good character, 18 years or older, 135 course hours (3 ethics) have been a licensed salesperson for 3 yrs and pass pre-licensing exam |
| Sales Person Requirements | good character, 18 years or older, 60 credit course hours (3 ethics) pass exam, obtain written commitment for real estate broker |
| What kind of Law is Broker's Act? | Legislative |
| Continuing Education Requirements | total of 15 hrs (3 legislative state, 1.5 fair housing, 3 ethics, 3 agency, 3 broker supervision, 1.5 elective) |
| How many days do you have to respond to a hearing notice? | 10 days |
| Errors and Omission | insurance for mistakes made during a real estate transaction |
| Up to how many units are considered Residential? | 4 Single units, 5 or more is commercial |
| Ministerial Acts | performing according to legal duty established by law. |
| Cooperating Agents | represents the seller but assist the buyer |
| Sub Agent | sales associate acting as an agent of a broker and owes fiduciary duties to broker's client |
| Another term for Intra-company agents (Inca's) | Dual agency |
| Dual Agency | representing both parties to a transaction. both parties have to agree |
| Independent Contractor | someone who perform a certain act but is subject to control and direction of another only |
| Trust Money | Earnest Money Deposit |
| What must advertisements have? | Broker name ( company), office phone number |
| Requirements for a valid deed | grantor, grantee, consideration, granting clause, habendum clause, acknowledgement, notary, delivery and acceptence |
| General Warranty Deed | |
| alienation clause | in a mortgage or deed of trust starting that the balance secured debt becomes immediately due and payable at lenders option if the property is by the borrower. voluntary alienation by sale or gift |
| Assumption | acquiring title to property on which there id an existing mortgage and agreeing to be personally liable for the terms and conditions of the mortgage including payments |
| Due on sale clause | a provision in the mortgage stating the entire balance of the note is immediately due and payable if the mortgagor transfers the property |
| Variance | permission obtained from zoning authorities to build a structure of conduct a use that is prohibited by current zoning laws |
| Straight Loan | Interest only loan. Divides the loan into 2 amounts to be paid off separately. the borrower makes periodic payments of interest only followed by payment of principal in full at the end of the term. |
| actual eviction | legal process that result in tenants being physically removed from the premises |
| Mastered Planned Community | |
| Planned Urban Developments | |
| Title insurance | a policy insuring a property owner or mortgagee against loss by defects in the title |
| Joint Tendency | possession- undivided right to; interest- equal ownership; time title (PITI) |
| Tenancy by the entirety | |
| Community Property | each spouse has an equal interest in the property acquired by the efforts of either spouse during marriage |
| Legal Title | sell the property |
| Equitable Title | use the property |
| Vendee/ Vendor | |
| Purchase Money Mortgage (PMM) | |
| Broker Protection Clause | clause in a contract that protects a broker from losing a commission in the event a transaction is not completed o intentionally delayed until after the listing expires |
| Reversion | when ownership returns to the original owner |
| Termination of Agency | Completion, Destruction/ Condemnation of property, Expiration of terms of agency, Mutual Agreement, Breach by one party (maybe liable for damages), Operations of the law (bankruptcy) |
| Remainderman | person whom the property will pass when the life estate ends |
| Primary Mortgage Insurance (PMI) | additional insurance |
| Bargain and Sale | a deed that carries with it no warranties against liens or other encumbrances but does imply that the grantor had the right to convey title |
| Special Warranty | Contains clause "remise, release, alienate, and convey" Warrants only that the title was not encumbered while the grantor held it except as noted in the deed. Any additional warranties must be specifically stated in the deed. May be used by a fiduciary |
| Quit Claim deed | transfers whatever interest the grantor has in the specified real estate without warranties or obligations |
| Further Assurances | the grantor will furnish whatever is needed to make the title good |
| Sesin | the owner has full ownership and the legal right to convey the title |
| Marketable Title | no serious defects, doesn't expose buyer to hazard of litigation, call sell or mortgage property at a later time |
| Quiet Enjoyment | the grantor assumes responsibility for protecting the title against the claims of third parties |
| Estoppel | method of creating agency relationship where someone states incorrectly that another person is a agent and a third relies on the representation |
| Adverse Possession | actual open notorious hostile and continuous possession of another's land under a claim of title |
| Conveyance | transfer of title |
| Title Insurance Policy | insuring a property owner or mortgagee against loss by reason defects in the title to a parcel of real estate other encumbrances, defects and matters specifically excluded by the policy |
| Warranty Forever | the grantor is liable for reimbursing the grantee for any title interest lost in the future |
| certificate of title | a statement of opinion of the title's status on the date issues but is not a guarantee of ownership |
| Torrens System | legal registration used to verify ownership of real estate |
| Subrogation | the right to any remedy or damages available to the insured |
| Subordination | a written agreement between holders of liens on a property that changes the priority of mortgage, judgment and other liens under certain circumstances |
| Entitled to Compensation | a licensed broker, employed by a buyer/ seller under a valid contract and procuring cause of the sale |
| tie in agreements | agree to sell one product only if the buyer purchases another product as well |
| group boycott | 2 or more businesses conspire against another business or agree to with hold patronage |
| Penalties for the Sherman Antitrust Act | Maximum of $1 million fine and 10 years in jail; Corporations $100 million |
| Common law | Court decisions |
| Statutory Law | State legislative and governing bodies |
| adjustable rate mortgage | a loan characterized by fluctuating interest rate usually one tied to a bank or savings and loan association cost of funds index |
| Novation | substitutes a new contact |
| statute of limitations | the period of time within which certain actions must be brought to court |
| 4 ways to create a lien | voluntary, involuntary, statutory, equitable |
| General liens | affect all the property real and personal |
| Specific liens | a lien affecting or attaching only to a certain identified parcel of land or piece of property |
| Superfund | hazardous waste clean up fund established by the compensation and Liability Act (CERCLA) |
| Ginnie Mae | |
| Gross rent multiplier | gross monthly income of property to produce an estimate of property value |
| reconciliation | final step in appraisal process in which appraiser considers the estimates of value received from the sales comparison cost and income approaches to arrive at a final opinion of market value the subject property |
| assessment equalization factor | assessed value of property is multiples to arrive at a value for the property that is in line with state wide tax assessments |
| Fannie Mae | Conventional, FHA insured, VA guaranteed |
| Freddie Mac | provide a secondary market for mortgage loans primarily conventional loans |
| Primary mortgage market | lenders that originate mortgage loans where they make money available directly to the borrower |
| Federal Reserve System | maintain sound credit conditions, help inflation and deflation trends and keep market stable |
| Lien theory | mortgagor retains both legal and equitable title to property that serves as security for debt in a mortgage |
| Title Theory | in a deed of trust state , the lender retains legal title to mortgage and borrower retains equitable title and right of possession, legal title is returned to borrower when debit is satisfied |
| Earned Commission | (Ready, willing and able buyer) buyer ready to write offer, willing to meet terms, able to qualify for loan |
| Price Fixing | agreement between competitors on price |
| Mile= Feet | 1 mile= 5280 feet |
| Market Allocation | Competitors illegally segment the market to discourage competitors and control market segments |
| Tie- In Agreements | Antitrust violation where businesses refuse to do business with consumer unless they purchase another product or service. |
| Antitrust Laws | State and Federal laws; Sherman Antitrust Act. Prohibits monopolies and control combinations and conspiracies that unreasonably restrain trade. ( price fixing, group boycotting, market allocation, tie-in agreements) |
| Violation Antitrust Laws | Under Federal Law- victims are entitled to triple damages plus attorney fees and cost if perps are found guilty |
| Administrative Law Judge | Complaint bought to HUD heard by judge to remedy , (fine or injunction |
| Truth In Lending Act | Requires credit institutions inform borrowers of true cost of obtaining credit. (True cost of financing before transaction is complete. Regulation Z enacted by Federal reserve board to enforce (TILA) |
| Capital Gains Tax | Married couple file taxes jointly are exempt from tax profits up to $500k and for single individuals $250k; sales price - purchase price; owns property 2/5 years |
| Prepayment Penalty | if borrower repays loan before end of term, lender collects less than anticipated interest. The Clause requires borrower to pay payment penalty against unearned portion of interest fort any payments made ahead of schedule. |
| Promissory Note | Note or Financing Instrument is a borrowers personal promise to repay debt according to agreed terms. The note generally states the amount of debt, time and method of payment and rate of interest. |
| Square Mile= Acre* | 1 square mile= 640 acres or 1 section |
| Acre= Feet* | 1 acre= 43560 square feet |
| easements termination | No longer exists/ Need; Dominant and servient tenement becomes sole owner; release right easement to servient tenement; abandonment of easement; Nonuse of prescriptive easement. |
| Inverse Condemnation | action brought by property owner seeking just compensation for land adjacent to land used for public purpose when property use and value have diminished. |
| Characteristics of Land | Economic include scarcity, improvements, permanence of investment, area preference Physical include immobility, indestructibility, nonhomogeneity (uniqueness) |
| Avulsion | sudden tearing away of land as by earthquake, flooding, volcanic action or sudden change in course of stream. |
| Types of Real Estate | Residential, Commercial, Mixed Use, Industrial, Agricultural, Special purpose |
| Community Reinvestment Act | Banks; responsibility of financial institutions to help meet their communities needs for low income & moderate income housing. Participate and invest in local community development and rehabilitation projects and participate in loan programs for housing |
| Anticipation | value is created by the expectation that certain events will occur. |
| Conformity | Maximum value is realized if the use of land conforms to existing neighborhood standards |
| Conrtibution | The value of any part of a property is measured by its effect on the value of the whole parcel. |
| Highest and Best | The Most profitable single use of property: physical possible, legally permitted, economically or financially feasible, the most profitable or maximally productive. |
| Market Price | opinion of value based on an analysis of data (what the property sold for) |
| Characteristics of Value | Demand- Desire, Utility- Usefulness, Scarcity-a finite supply, Transferability- ownership rights transfer (DUST) |
| Regression | Better quality property is affected by the presence of a lesser quality property. ex. a castle next to row homes |
| Substitution | the maximum value of a property tends to set by how much it would cost to purchase an equally desirable and valuable substitute property. |
| Sales Comparison Approach | AKA market data approach. used in residential resale. Value is obtained by comparing the property being appraised. Property rights, financial terms, market conditions, condition of sale, Market conditions, Location, Physical features/ amenities. |
| Cost Approach | Principle of substitution. |
| Sales contract elements | offer and acceptance, consideration, legally competent parties, consent, legal purpose, in addition to Sales price and terms, property description and improvements, condition of title, |
| NAR Affiliates (national association of realtors) | composed of state, regional, and local associations. members are entitled to be known as realtors. |
| Ethics | refers to a system of moral principles, rules, and standards of conduct. establish standard for integrity and competence, define code of conduct relations |
| Cooperative | has units that share common walls and facilities within a larger building. the owners do not own the units, each holder receives a proprietary lease to a specified unit in the building |
| Fee simple determinable | may be inherited. qualifies by a special limitation. using words like so long as or while or during. ex. owner gives land to a church so long as its used for religious purposes. DONT HAVE TO GO TO COURT TO GET BACK |
| Fee simple condition subsequent | subject to a condition. will terminate if there is a violation of condition. doesn't terminate immediately. have to go to court. |
| Police power | used to enact environmental protection laws, zoning ordinances and building codes |
| General partnership | all partners participate in the operation and management of the business and share full liability for business losses and obligations |
| Limited partnership | consist of 1 or more general partners as well as limited. limited partners are not legally permitted to participate but a method to organize investors. |
| Coropations | legal entity; artificial person under the authority of the laws of the state which it receives its charter. operated and managed by board of directors who are selected by shareholders |
Created by:
studyhard89
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