Real Estate Key Concepts
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| General Warranty Deed Covenants | Covenant of Seisin
Covenant of Right to Convey
Covenant of No Encumbrances
Covenant of Warranty
Covenant of Quiet Enjoyment
Covenant of Further Assurances
Deed is full coverage which covers all past owners up to the current owner.
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| Earnest Money Agreement | Must Have:
-Competent Parties
-Legal Object
-Offer & Acceptance
-Consideration
-Discription
Becomes legally enforceable upon:
-Sellers Acceptance/ Signature of seller
-Communication of sellers acceptance to the buyer
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| Fiduciary Duties | Owed to Principal/Client:
-Loyalty -Reasonable Skill & Care
-Obedience -Accounting
-Disclosure - Confidentiality
Owed to Third Party:
-Reasonable Skill & Care
-Honesty & Good Faith
-Disclosure
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| Title 1&2 of the National Housing Authority (NHA) | Title 1: is the home improvement loan program. This includes loans to finance repairs and make improvements.
Title 2: Is the home purchase and construction loan program.
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| Freddie Mac | Federal Home Loan Mortgage Corporation (FHLMC):
-AKA:Freddie Mac
-Can purchase FHA, VA and Conventional loans
-Created to provide secondary mortgage markets for members of Federal Home Loan Banks, Savings and Loans.
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| Fannie Mae | Federal National Mortgage Association (FNMA):
-AKA Fannie Mae
-Can purchase FHA, VA and Conventional loans
-Created by FHA title 2 loans used to get real estate to increase available credit for home loans and to stabilize the market.
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| Land Division Concepts | Land is divided into: Process: Units are called:
2-3 Units Partitioning Parcels
4 or More Units Subdividing Lots
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| Water Rights | Water permit is NOT required when:
-wells dug prior to 1955
-livestock watering
-watering lawn/noncommercial garden of 1/2 acre or less
-domestic use is less than 15,000 gallons a day
-industrial/commercial use is less than 5,000 gallons a day
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| The Federal Reserve Board (the FED) | -Changes reserve requirements
-buys/sells government securities through open market operations
-adjusts discount rates charged to borrowers (doesn't set prime rates)
-Stop inflation: increase discount rate, reserve requirement, sell gov't bonds
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| Loan Default Clauses | Acceleration Clause - Lender calls balance due
Alienation Clause - Lender calls note due if property sold
Defeasance Clause - Clears title when note paid off
Or More Clause - Allows to pay off early
Lock in Clause - Prohibits prepayment
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| Loan Defaults | Late Payment Penalty - Penalty if payment is late
Assignment of Rents - Transfers rents to lender
Prepayment Penalty - Allows prepayment but for an additional charge
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| Buyer Credit/Debits | Buyer & Seller: Money paid INTO escrow is a credit and Money paid OUT of escrow is a debit.
Buyer Debts:purchase price, prepaid tax, closing costs, etc.
Buyer Credits: Financing, checks into escrow, check to close, $ seller owes
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| Seller Credit/Debits |
*Total of debits=Total of credits on seller & buyer
Seller Debts-All checks escrow writes, loan costs, financing sellers involve
Seller Credits-Sales price, prorated prepaid property tax
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| Mortgage | Mortgage - borrower is mortgagor, lender is mortgagee.Satisfaction recorded shows note paid in full
Trust Deed - borrower is grantor (trustor), lender is the beneficiary and third party is trustee. Deed of reconveyance recorded shows note paid in full
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| Requirements for a valid Deed | -In Writing -Identify Parties
-Words of Conveyance -Signed by competent grantor
-Property Description -Delivery
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| Principles of Economics | Highest & Best Use - produces the greatest net return over given period
Principle of Substitution - person won't pay more for a product that he could purchase the same identical product for less
Principle of Contribution - added value to a property
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| Requirements for Recording a Deed | 1.) Acknowledged by grantor
2.) Show consideration in dollars, except if gifting
3.) Name & Address of party receiving property tax
4.) Legal Description of property
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| What is tax deductible when owning a house? | -Real estate taxes
-Mortgage interest
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| What are the four agents in production? | -Land
-Labor
-Capital
-Management
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| What is Chapter 696? | A section of the ORS establishing:
-When a real estate license is required
-The requirement for keeping a license
-Disciplinary actions against licensees
-Procedures for enforcing law
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| Who must be licensed in REMO? | REMO itself must be licensed supported by one or more principals.. Employees must be registered with the Agency
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| What are the fiduciary duties owed to a principal/client? | Loyalty
Obedience
Reasonable Skill & Care
Accounting
Disclosure
Confidentiality
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| Construction Mortgage | High interest, short term financing.
Proceeds advanced in installments.
Final payment released after lien period expires.
Contractor must obtain performance bond to indemnify injured parties if he fails to complete job
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| What do the appurtenance rights include? | -Lateral support:support from the side
-Subjacent support: support from below
-Water rights
-Air rights
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| What is prior appropriation? | In areas that water is scarce, the doctrine will issue state permits
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| Allodial system | Land is owned by individuals
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| Feudal system | Land is owned by kinds and lords
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| Property owned by the state is considered? | Public property
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| General partnership vs Limited partnership | A general partnership: everyone involved is liable for the acts of other partners. All partners share profits equally.
A limited partnership: includes general partnership but the limited partners are primarily there to invest in the general partnership.
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| What is annexation | Man made addition to property
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| A property management agreement must specify the duties and responsibilities of the property manager and property owner; which are what | authority of the property manager; the period of the agreement; the method for termination; the terms and conditions of the agreement; the management fees, rebates, discounts, overrides and any other form of compensation for the property manager.
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| What is the basic equation for a balance sheet? | Assets - Liabilities = Owner equity (Net worth)
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| What are the four steps to in a break-even analysis? | 1.Separate fixed & variable expenses based on experience & future expenses
2.Relate the variable expense total to revenue
3.Determine the contribution margin %
4.Calculate sales volume by dividing the contribution margin into the fixed expense total
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| A tight money market in real estate indicates... | A buyers market, and high interest rates.
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| A mortgage bank can do which of the following? Service loans. Use its own money to make loans. | Both
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| What is a "request for notice of default" | A request that the lienholder be notified if a lien is in default.
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| The TILA-RESPA Integrated Disclosure (TRID) Rule requires what and applies to..? | requires the lending institution to give the borrower a Loan Estimate of settlement costs. Applies to first and second mortgage loans made by federally-related lenders, not to loans made by sellers.
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| Which of the following statements regarding financing is TRUE? I. First mortgages may be foreclosed without the consent of the second mortgagee. II. Second mortgages may be foreclosed without the consent of the first mortgagee. | Both are True.
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| Brokers who violate the Sherman Antitrust Act may be punished by a max prison term of | Three years
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