PA Real Estate Study Guide (Chapters 22-24)
Terms
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- Property manager's 3 principal responsibilities
-
1. Fiscal Management
2. Physical Management
3. Administrative Management - Why must documents be recorded in the correct order?
- To avoid defect in title
- CLO (computerized loan origination) services are subject to regulation by:
- RESPA
- 2 characteristics of a property manager
-
-Maintains owners investment
-Ensures the property produces income - Lender not permitted to collect tax/insurance escrow payments of more than...
- Two months
- Title Expenses
- Usually paid by buyer - rate set by Pennsylvania Title Insurance Rating Bureau
- Type of agent the property manager usually is....
- General Agent (as opposed to special agent)
- T or F? In PA, a property manager serving the public for a fee must be a licensed real estate broker.
- True
- 2 types of proration calculations
- 360 day year "banking year" or 365 day (or 366 for leap yr.) known as "actual year
- prorated
- divided
- Deed preperation fee paid by
- Seller
- In CLO (computerized loan origination) systems what can brokers charge for providing mortgage loan accessing service?
- A "fair fee" - Must be paid by borrower (not lender or broker)
- Consumation of real estate transaction
- Closing or Settlement
- How buyer determines he is taking good title to the property
- Obtains abstract of title or title commitment from title insurance (Buyer's responsible)
- Seller assures that there has been no judgments since the date of title examination with this....
- Affidavit of title
- Interrelated companies that offer real estate-related services are called:
- Controlled business arrangements (CBA's - One stop shopping)
- Accrued items
- Buyer credits (prorated expenses that are owed by seller, later will be paid by the buyer)
- Point at which ownership is transferred in exchange for selling price
- Closing
- For settlement, special assessments are usually paid when?
- Seller normally pays current installment, buyer assumes future installments
- Two things a buyer should check before closing
- Physical condition of property - Condition of title
- On PA Licensing exam, for prorations, what are the lengths of months a& years (in days?)
- 30 days to a month. - 360 days in a year. (In practice however, prorations are based on 365 day year)
- For a licensee to represent a party at closing, licensee must be....
- authorized to act as principal's agent under power of attorney
- RESPA permits CBAS as long as...
- consumer is informed of relationships - Fees may not be exchanged for simply referrals
- Amount to be paid by seller or buyer
- Debit (or charge)
- Last day seller owns property:
- Prorations are usually made to and including the day of closing
- This creates an agency relationship between property owner and property manager.
- Management Agreement
- Main concerns of closing
- Buyer receives marketable title, seller recieves purchase price
- Like any agent in real estate, the management agreement should be...
- in writing.
- Management Agreements should include:
- Description of property; time period; definition of responsibilities; statement of owners purpose; extent of authority; reporting; compensation; allocation of costs; equal opportunity statement
- Who is responsible for calculating the official settlement statement?
- Closing officer
- Budget based on anticipated revenues and expenses
- Operating budget
- A property manager might be an employee of:
- Owner of real estate (might not be licensed if residential multifamily dwellings)
- Expenditures charged against the property's income for modernization or renovation
- Capital expenditure
- Agency that administers RESPA
- HUD
- Measurment of initial and operating cost of equipment over its entire useful life.
- Life cycle costing
- Buildings that provide internal communications infrastructure are:
- dark wired
- Disclosure Obligations for settlement
- Special Settlement info booklet from HUD - Good faith estimate of settlement costs (No later than 3 days after acceptance of loan application)- Uniform Settlement Statement (HUD-1 form)
- What primarily influences rental rates?
- Supply and demand
- In establishing rental rates, property manager has 4 long-term considerations:
-
1. Rent income must be sufficient to cover operations
2. Income must provide fair return on investment
3. Rents should be in line with comparables.
4. Vacancy rates should be monitored for rent increases. - Prepaid items
- Seller credits (expenses to be prorated that have been prepaid by the seller, but not fully used up - i.e. taxes)
- Serious consideration to raising rents should be given when occupancy levels exceed:
- 95%
- Why do some commercial leases bar the introduction of similar businesses?
- Helps diversify owner's investment and makes profitability more likely.
- One page notice signed on or before closing explaining difference between appraisal and home inspections
- Consumer Notice form
- 3 provisions should be in lease agreements regarding rental payment
-
1. time & place of payment
2. penalties for late payments
3. provisiions for cancellations and damages in case of nonpayment - A property manager's primary maintenance objective:
- Protect the physical integrity of the property over the long term.
- Abstract may not be accurate as of the date of settlement so a second search is done known as:
- Bring Down
- 4 types of maintenance required to keep property in good condition:
-
1. Preventive maintenance
2. Repair or corrective maintenance
3. Routine maintenance
4. Construction - Regularly scheduled maintenance activities such as painting, seasonal service, appliances.
- Preventive maintenance
- Computations for prorations are carried how many decimal points?
- 3, then rounded off to cents after final proration.
- T or F? Buyer's assumption of sellers existing loan is covered by RESPA?
- False
- Alterations to the interior of building to meet a tenant's particular needs (especially commercial)
- Tenant improvements
- Obligates employers and property managers to adopt nondiscriminatory employment practices
- Title I of ADA and the Pennsylvania Human Relations Act (PHRA)
- Borrower has the right to inspect HUD-1 statement when?
- 1 business day before closing - Lender must retain statement for 2 years after closing date.
- Prohibits discrimination against people with disabilites by ensuring access and enjoyment of services.
- Title III of ADA
- Fee usually paid by seller as a filing fee
- Recording expenses - Buyer pays recording charges in connection w/ actual transfer of title.
- Four alternative risk management techniques (acronym)
-
Control it
Avoid it
Retain it
Transfer it
CART - An insurance package that might include standard types of commercial coverage PLUS special coverage for natural disasters
- Multiperil policies