Real Estate Transactions and Property Management: A Comprehensive Guide, Exams of Insurance Economics

Download Real Estate Transactions and Property Management: A Comprehensive Guide and more Exams Insurance Economics in PDF only on Docsity! Champions Real Estate - Principles 1 Exam 2024 (Principles of Real Estate I class study cards) Solved 100% Correct!! brokerage Answer- the aspect of the real estate business that pertains to overseeing the needs of the parties and completing a transaction; a brokerage transaction may or may not involve agency relationships The role of a property manager Answer- Generally responsible for the day to day operations of the property, maintenance, and tenant relations How are home inspectors licensed? Answer- Home inspectors are licensed in Texas by TREC. Real Estate Development Answer- most often involves the acquisition of land for development into residential subdivisions, retail centers and other commercial uses. National Association of Realtors (NAR) Answer- the nationwide association is divided into state associations, and further divided into local associations or boards. The local associations or boards operate the MLS in markets throughout the US. The benefits of home ownership include: Answer- Pride of Ownership, Occupancy, Tax Benefits, Investment, Security: POOTIS=m Physical Characteristics of Land: Indestructibility Answer- Indestructibility refers to the fact that land cannot be destroyed. The other two characteristics are immobility and non-homogeneity (uniqueness) Demand for real estate is affected by: Answer- 1. Growth in employment 2. Personal preference 3. Availability of credit as well as transportation systems and Federal government policy Common Law vs. Statutory Law Answer- Common Law was developed in England and based on common sense and local custom; under this system, a court looks to the findings of prior courts when rendering a decision Statutory law is enacted by federal and state legislative bodies What is the purpose of the Texas Real Estate Licensing Act (TRELA 1939)? Answer- The purpose of TRELA is to protect the public against unscrupulous brokers and sales agents. What is TREC (1949)? Answer- TREC was created by the state legislature in 1949. It has 9 members who carry out the provisions in TRELA. TREC has been granted powers by the Legislature to: Answer- -File actions against a license holder on its own notion -Assess admin. penalties of up to $5k per day against offending licensed and unlicensed officials -Promulgate forms which are mandatory for license holders - Suspend or revoke licenses of violators -Subpoena books, records, witnesses and file suit with the AG to enforce subpoena as well as issue licenses, enact rules and regulations, place a license holder on probation, require education Land Answer- the surface of the earth extending downward to the center of the earth and upwards above the surface extending to infinity; includes trees, crops and water Rights to land are considered "severable"... Answer- the ability for different individuals to own the different rights of the same piece of land Surface Rights Answer- The owner of surface rights has the ability to develop (improve) the surface, and to use resources extracted from or near the surface including stone, gravel, water, and limestone. Improvements are: Answer- any man-made addition to the land that is permanent and considered to become part of the land Personal Property Answer- things of a temporary or movable nature that are not part of the real property; known as personalty or chattel. If personal property is being transferred with real property, a bill of sale is used to accomplish the transfer Fixtures are: Answer- Personal property that has become attached to the land. The process of attaching personal property so that it becomes real property is called: Answer- Annexation Severance Answer- removing fixtures to create personal property The courts apply 3 tests to determine if something is a fixture. These include: Answer- 1. The intention of the parties when the item was installed 2. The method of attachment and adaptation of the property Emblements Answer- Annual crops; considered personal property and may be harvested by the owner of the crop; ensures that the tenant will be allowed to harvest even if they lose possession of the property prior to harvest time property laws, most property acquired during the marriage is owned equally by both spouses and cannot be conveyed or sold without the signature of both parties. Property owned by a married person that is not community property is called separate property. Property acquired before marriage is separate, as is inherited property and property purchased with inherited funds. Any profit or income from separate property is considered community property. However, an increase in the value of a separate property is not community property, and the proceeds from the sale of separate property are separate cash. Agency Relationship Answer- agency relationship exists when one person (the agent) acts for or on behalf of another person (the principal). The principal is also known as the client. This relationship is a fiduciary relationship, which means that it is a relationship based on trust. While treating all others honestly, the agent places the interests of the principal or client first; the agent must always remain loyal to the principal. Three types of Agency: Answer- Universal agency General agency Special agency UNIVERSAL AGENCY Answer- universal agent has full authority to conduct business on behalf of the client. e universal agent can sign documents and bind (obligate) the client in the same manner in which the client would do in person. It is the equivalent of having unlimited power of attorney and is very rare in real estate. General Agency Answer- As a general agent, an individual has the right to represent a principal in a particular type of trans- action or business. One common example of a general agent in real estate is the property manager. e property manager is primarily responsible for preserving the value of an investment property while generating income as an agent for the owners. Special Agency Answer- special agency relationship is the most limited of all the agency relationships and is also referred to as "limited agency." In a special agency relationship, the agent may perform only limited duties for the principal. e special agent is NOT able to bind the principal because he/she is not allowed to sign or accept any terms or conditions on behalf of the principal. An AGENT'S duties to his or her principal are: (OLD CAR) Answer- Obedience - adhere to given lawful instructions Loyalty - place the client's best interests rst Disclosure - reveal all known facts, give advice and opinions Confidentiality - protect the private information of the client Accounting - handle funds with care. Never engage in commingling or conversion Reasonable care - protect the property and legal interest of the client. express authority Answer- In real estate, license holders most often secure agency relationships with sellers via written listing agreements. e written document is evidence that the agency relationship exists and provides the agent with express authority. Express authority also comes from the specific oral instructions given to the agent by the principal. perform any activity regulated under this chapter; and 2) must pay renewal fees. Real Estate Recovery Trust Account Answer- - An account established to pay aggrieved persons who suffer a monetary loss due to unscrupulous acts of licensees. - $50,000 is the maximum per transaction, and $100,000 is the maximum on behalf of any one license holder. - Each applicant for licensure pays $10 towards the Trust Account. - If the amount in the account exceeds $3.5 million, the excess goes into the state's general revenue fund. Canons of Professional Ethics and Conduct Answer- Listed in Texas Real Estate Commission Rules of Commission...5 Articles (Fidelity,Integrity, Competency, Consumer Information, Discriminatory Practices) Article 1. FIDELITY Answer- attheprimarydutyoftherealestateagentistorepresenttheinterestsofhisorherc lient,andhis or her position, in this respect, should be clear to all parties concerned in a real estate transaction, that however, the agent, in performing his or her duties to the client, shall treat other parties to a transaction fairly; at the real estate agent be faithful and observant to trust placed in him or her and be scru- pulous and meticulous in performing his or her functions; at the real estate agent place no personal interest above that of his or her client. Scrupulously vs. Meticulously Answer- scrupulously is defined as acting in strict regard for what is considered right or proper; punctiliously exact; painstaking. Meticulously is defined as marked by extreme or excessive care in the consideration or treatment of details; careful. Article 2. integrity Answer- prudence and caution Article 3. Competency Answer- A license holder is obligated to be knowledgeable and competent as a real estate brokerage practi- tioner. e license holder must: be informed on local market issues and conditions a ecting real estate in the geographic area where a license holder provides services to a client; be informed on national, state, and local issues and developments in the real estate industry; exercise judgment and skill in the performance of brokerage activities; and be educated in the characteristics involved in the speci c type of real estate being brokered for others. Article 4. Consumer information Answer- Each real estate inspector or active real estate broker licensed by the Texas Real Estate Commission shall display Con- sumer Protection Notice TREC No. CN 1-2 in a prominent location in each place of business the broker maintains, Article 5. Discriminatory practices Answer- No real estate license holder shallinquire about, respond to or facilitate inquiries about, or make a disclosure which indicates or is intended to indicate any preference, limitation or discrimination based on the following: race, color, religion, sex, national origin, ancestry, familial status, or handicap of an owner, previous or current occupant, potential purchaser, lessor, or potential lessee of real property. 80 percent of the occupied units and adheres to a policy that demonstrates an intent to house persons who are 55 or older. The Community Reinvestment Act was passed to ensure that banks would: Answer- serve the needs of the community in which they were chartered to do business. It prohibits redlining. Redlining Answer- a practice of refusing to provide financing in a particular area because of location. Only banks can be guilty of redlining under this law. one acre equals Answer- 43,560 square feet Four realtors going down I-35 at 60 miles per hour Monument Answer- A permanent marker installed on the land by a surveyor metes and bounds system Answer- provides a legal description of the property. most commonly used descriptions in states that do not use the Government Survey System. lot and block method Answer- Lot and block is the most common type of property description used in subdivisions. Refers to recorded map or PLAT. When a developer acquires a tract of land for subdividing, the developer will design the new subdivision and lay out the streets, lots, utilities, common areas, and easements. a plat will be filed in the county in which the subdivision is located. Restrictive covenants are also referred to as: Answer- deed restrictions or Covenants, Conditions, and Restrictions (CC&Rs). 1 mile = feet Answer- 5,280 feet Land surveying is defined as Answer- the technique, profession, and science of accurately determining the terrestrial or three-dimensional position of points and the distances and angles between them, com- monly practiced by licensed surveyors and members of various building professions. Surveyors in Texas are licensed by the Texas Board of Professional Land Surveying. What situations necessitate a survey? Answer- "Beginning at a point.." Answer- metes and bounds Listing Agreement Answer- An employment contract between a seller or landlord and the broker. The listing agreement creates a special agency relationship between the broker and the client. four major types of listing agreements are: Answer- Open listing Exclusive agency Exclusive right to sell: benefit of the exclusive right to sell listing agreement is that it helps to avoid the problem of procuring cause lawsuits because the listing broker is the only one with the right to sell the property. Net listing: The real estate broker's commission is the difference between the minimum net established by the seller and the actual seller's net. Procuring Cause of Sale Answer- the individual who, through a series of uninterrupted activities or actions, brought about the completion of a contract. ELEMENTS OF A VALID AND ENFORCEABLE CONTRACT - "COLIC" Answer- Competent parties, Offer and acceptance (mutual parties), Legal purposes, In writing, Consideration Contracts may be valid, void, voidable, or unenforceable. Answer- A valid contract is one that meets all of the requirements of law. A void contract is invalid from the beginning and does not affect on the parties. A contract to perform an illegal act is a void contract. A voidable contract is one that cannot be enforced against one or more of the parties. Most contracts entered into with minors are voidable at the option of the minor. An unenforceable contract is one that cannot be enforced due to some flaw in the contract, passage of time, or other issues that make enforcement impossible. Under DTPA, a person has years to report Answer- 2 years Exceptions to the requirement for completion of a Seller's Disclosure Notice: Answer- - pursuant to a court order or foreclosure sale - by a bankruptcy trustee - to a lienholder by the owner of a property - by a mortgagee (lender) who has acquired the property through a foreclosure or a deed in lieu of foreclosure - by a fiduciary (e.g., an executor, trustee or guardian) in the course of administration of a decedent's estate, guardianship, conservatorship or trust - from one co-owner to one or more other co-owners - to a spouse or a person in the lineal line of consanguinity (e.g., parents, grandparents, chil- dren) of one or more of the transferors between spouses resulting from a divorce decree or a property settlement agreement inci- dent to a divorce decree - to or from any governmental entity of a new residence which has not previously been occupied for residential purposes where the value of the dwelling does not exceed five percent of the value of the property All sellers, including those listed above, have an obligation to disclose any known material defects to a buyer. Remedies for Breach of Contract Answer- Liquidated Damages