Glossary of NC Real Estate Broker Pre-licensing Exam: pre-midterm key definitions
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- Who neeeds a license?
- These people DO NOT need a license:
Sale by Owner
Power of attorney
Salaried employee under broker
- When must RE documents be delivered?
- ASAP, or within 5 days.
- Who should commissions, bonuses, fees & other checks be written to?
- Your company (i.e., Fonville Morisey)
- When must trust funds (earnest money checks, security deposits) be deposited?
- -Earnest money/sec deposits: 3 bus days w/in contract acceptance
-Rent/dues: 3 days from receipt
- When is trust money distributed?
- -Revocation of offer
-Termination of transaction
-Interest & commissions: w/in 30 days
- If dispute, when is earnest money released?
- -Buyer & seller: until court order or arbitration
-Seller & Broker: released to Seller. Broker needs to sue or arbitrate.
- How to determine if something item is a fixture or real property?
CH - character of attachment
A - Adaptability
I - Intention of seller
R - Relationship of attacher
- Type of Freehold estates?
- -Fee Simple (Absolute)
-Fee Simple Defeasible (Determinable or Condition Subsequent)
- 3 types of co-ownership of real property?
- -Tenancy in commmon
-Joint tenancy (right of survivorship)
-Tenancy by the entirety (marriage)
- Key points to "Tenancy by the Entirety"?
P - Possession is ==
I - Interest is ==
T - Title
T - Time
S - Survivorship
- 2 types of easments?
- -Appurtenant easement: involves 2 tracts of adjacent land
-Gross easement: involves 1 tract and person, company, or government...
- 4 types of deed warranties?
- -General - best coverage
-Special - less coverage, only warrants time held by grantor
-Quitclaim - no coverage
-deed of gift
-deed of release (from mortgage)
-deed in lieu of foreclosure
- 6 essential elemenets for a deed?
- Women Should Dress Dashingly Well Everey Day
S-Signed by Grantor
D-Delivered to Grantee
D-Description of property (legal)
W-Words of convey
(Recording NOT essential)
- Why record a title?
- -Protects grantee & gives "contstructive notice"
-Connor Act: 1st to record wins
-Recorded documents: deeds, leases > 3 years, options, mortgages, contracts
-Procedure: go to courthouse, pay fee & record
- 4 powers of our Government?
- To allow variance, must prove...
- -Unfair hardship
-No other reasonable use of property
-Hardship not caused by owner
-Proposed use is legal
- Protected classes in Fair Housing act?
- FRESH CORN
- 4 principal truths of agency law?
C-Communication to agent=comm to principal
A-Any info known by agent, known by principle
P-Principal/agent are one
P-Principal is responsible for agent's action
- What does agent owe his client?
D-Disclosure of all information
S-Skill, Care & Diligence
- What does an agent owe his customer?
-Disclosure of material facts
-Does NOT disclose confidential information re: client
- 4 essential elements of a contract?
- "Bundle of Rights" of real property owners?
D-Disposition (sell, will, mortgage)
U-Use (enjoy in legal manner)
E-Exclusion (keep others from entering)
- Examples of appurtenances or appuertenant rights
- -Fruits of the Soil (Fructus Naturales)
-Riparian or Littoral (water rights)
- 2 types of Liens:
- -Specific - only specfic parcel
Mortgage (deed of trust), Real Estate tax, assesment, mechanics
-General-affects all real & personal property
Judgement, personal property tax, state tax, federal tax
- Encumbrances to Real Property
-Lis Pendens (notice of pending litigation)
-Deed restrictions (placed by Grantor)
-Easements (appurtenant or gross)
- Methods of transferring title
-Open, continuous (20 year), exclusive, actial, notorius
- Options for Real Estate Agency relationships
- -Exclusive Seller Agency
-Exclusive Buyer Agency
-Single Agency (either Buyer or Seller, but not both)
-Disclosed Dual Agency or Designated Dual Agency
-Facilitator (represents either)
- Definition of contract?
- A legally enforceable agreement between two or more competent parties.
- Types of contracts?
- -Express (written or oral) vs Implied (by actions)
-Bilateral (all parties bound) vs unilateral (1 party bound, i.e. option contract)
-Executed (finished) vs Executory (in process)
-Valid (enforceable) vs Void (unenforceable)
-Voidable (1 party may cancel)
- Essential elements of a contract?
-Money or Consideration (anything of value)
-Legal Capacity of parties (>18 years, sober, "sound mind")
NOT NECESSARILY WRITTEN
- How to make a valid contract voidable, i.e. Requirement for Reality Consent?
-Fraud or Misrepresentation
- Contract law re: Auction sales
- -Auctioneer must be or work under Broker
-With Reserve (minimum price)
-Without Reserve (no minimum price)
- Statute of Frauds, Real Property?
- -Contracts to sell or convey ANY interest must be written (ex. sales contrcts, options, mortgages, deeds)
-Leases exceeding 3 years must be written
- How to discharge a contract?
- -Agreement of Parties
-Impossibility of Performance
-Operation of Law. i.e. voiding a contract
-Breach by any party
- What are the remedies to a breach of a contract?
- -Liquidated Damages: earnest money
-Inliquidated Damages: money above liquidated damages to make injured party "whole"
-Specific Performance: sue to make breaching party complete contract
-Rescind: all parties return to position before the contract
- Assignment of Contract
- Delegating responsibilities and benefits to another (the asignee, Does not necessarily eliminate responsibilities of the origina party (assignor).
- Rules for interpreting contracts?
- -Written overrides oral
-Handwriting overrides preprinted form
-Favor goes to most reasonable conclusion
- Composition of the Real Estate Commission?
- -9 members
-7 appointed b the Govenor
-2 appointed by the Assembly
-3 must be licenses
-2 must be lay (non-licensed)
- Uniform Commercial Code (UCC)
- Concerns security interests in fixtures: purpose is to protect buyers from the unpaid debts of the sellers on personal property.
Creditor should file a security instrument in the public records.
- Combination (Hybrid) Forms of Ownership
- 1) Condominium: air space w/ undivided (tenant in common) interest in common property). 7 day right of recission
2) Townhouse: units horizontally attached units w/ land; HOA owns common land
3) Cooperative: owner receives a propietary lease granting shares of copration stock
4)Planned Unit Development: special use permitted under zoning permiting mixed residential/business & densities
- Ad Valorem or Property Tax
- North Carolina Machinery Act.
-Tax Rate can change each year
-Personal & Real property taxed, unless exempt
-Taxed based on assessed value
-Real property reassessed every 8 years
- What is title insurance?
- A policy insuring against loss by reason of defects in the title
-Owner's Policy (up to sales price) vs Mortage policy (up to loan amount)
-Owners: $2 per $1000 of sales price
- Tax deductions for homeowners?
- -Ad Valorem, i.e. Property Taxes
-Annual Mortgage Interest
-Discount Points (not if paid by seller)
- Calculating Capital gain or loss from sale of principal residence
- Original Purchase price
+Allowable closing costs
ADJUSTED COST BASIS
-closing costs (incl commission)
-ADJUSTED COST BASE
- Capital gain exclusion from sale of principal residence
- -Married couple: up to $500,000
-Single person: up to $250,000
-Can be ised once every 2 years
-Property must have been owner occupied aas principal residence for 2 of the past 5 years
- Tax deductions real estate investments?
- -Mortgage interest
-Depreceation (structure & improvements)
- Fair Housing Laws
- 1) Civil Rights Act of 1866 (federal)
-No racial discrimination when leasing or purchase real or personal property
2) Fair Housing Act of 1968
(Sex added in 1974; handicap (including AIDS) & family added in 1988)
-No blockbusting, steering, bad advertising, redlining...
-Exempt: FSBO, own less than 3 dwellings, owner-occupied & 4 or less units, nonprofit religous & private club
-enforced by HUD or Federal Court (file < 1 year)
3)NC Fair Housing Act of 1983
-Identical to Federal Act, except:
FSBO not exempt, single sex dorm, family member in apartment
-enforced by NC Human Relations Commission
4) Americans w/ Disabilities Act (ADA)
-Accessibility & use requirements for commercial or public facilities
-handicapped tenants can make changes at their expense.
- Types of agency relationships?
- 1) Universal: do anything principal can do (ex. attorney_
2) General: all matters relating to one are of business (ex. property manager)
3)Special: handle a specific transaction (ex. Real Estate agent)
- Parties in an Agency Relationship?
- 1) Principal/client
3) Sub-agent: agent of the agency
- Options for Real Estate Agency relationships?
- 1) Exclusinve Seller Agency
2) Exclusive Buyer Agency
3) Single Agency (represent either, but not buth in same transaction
4) Dual Agency
c-Designated Dual Agency
d-Facilitor, represents neither
- Disclosure a Buyer Agency relationship?
- 1) Mandatory brochure/form: Working w/ Real Estate Agents
2) 1st Substantial Contact
3) Must be in writing
-before offer to purchase
-when exclusive and/or limited by time
4) Must be disclosed to Seller/Seller's Agent
5) Must disclose Dual Agency
- Procedure for Buyer's Agent?
- 1) Explain agency duties & agency reltionships/options
2)Optain agency agreement
3) Qualify buyer
4) Obtain property info, show properties
5) Diclose Agency Status and Request for Compensation by Seller to Listing gent
6) Discover & Disclose Material Fact to Buyer (obtain sellers disclosure)
7) Prepre. present, negotiate offers
8) Assis the buyer w/ closings
- Procedure for Listing agent?
- 1) Explain agency duties & agency reltionships/options
2) Discover material facts
3) Square Footage & Area
4) Set listing price: CMA & Net Profit
5) Duties of Seller and Agents under NC Residential Property Disclosure Act
6) Duties of Seller and Agents under Federal Law and Rules Relating to Disclosure of Residential Lead-Based Paint Hazards
- 3 types of listing contract?
- 1) Open: selelr can employ many Brokers, and seller can sell themself. No MLS.
2) Exclusive Agency Listing: 1 Broker, and seller can sell themself.
3) Exclusive Right to Sell: he best. Seller pays commission regardless of who sells during the term of the contract.
- Taxation Timetable
- Jan 1-Tax Lien Filed
Jan 31-List Property
Jul 1-New Tax Rate Set
Aug -Bills Mailed
Sep 1-Bill Due & Payable
Jan 1-New Years Lien Filed
Jan 5-Last Years Tax Must Be Paid
- Critical Deadline
- -Deliver of R/E document: ASAP or 5 days
-File a Mechanical Lien: 120 days
-Enforce a Mechanical Lien: 160 days
-Condominum: 7 day recision period
-Timeshare: 5 day recision period
-Interstate land sale: 7 day recision period (2 years if disclosure report not received 3 days before contract)
-Statutory redemption period: 10 days after foreclosure
-Lender credit disclosure period: 3 business days after application
-Real property tax assessment: 8 years
-Deposit of trust funds: earnest $/tenant security $: 3 bank days; rent/dues: 3 days; cash: ASAP
-Return of tenant security deposit/payment commmissions:: 30 days
-Easements by prescription easement (use of or encroachment of): 20 years
-Marketable title act, chain of title: 30 years
-Recording of a gift by deed: 2 years (else voidable)
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