Real Estate Basics: Understanding Land, Improvements, Rights, and Property Types, Exams of Real Estate Management

Download Real Estate Basics: Understanding Land, Improvements, Rights, and Property Types and more Exams Real Estate Management in PDF only on Docsity! Real Estate Basics Questions and answers Land CORRECT ANSWERS✅ Everything from a point in the center of the earth outward to infinity - (In a pie shaped form) Improvements CORRECT ANSWERS✅ Man made (artificial) attachments to the land such as - Buildings (barn for example) Fences Driveways Utilities Streets Sidewalks etc Surface Rights CORRECT ANSWERS✅ Rights to the minerals, water, and the plants and trees growing on the surface of owned land Subsurface Rights CORRECT ANSWERS✅ Rights to the minerals, gases and water underneath the surface of owned land Real Estate CORRECT ANSWERS✅ Land plus improvements Real Property CORRECT ANSWERS✅ Land plus improvements plus the bundle of legal rights a person has when they're the owner of real estate or in title to the real estate. Real Estate Basics Questions and answers The interest, benefits and rights that are automatically included in the ownership of land and real estate Title CORRECT ANSWERS✅ Ownership and all the rights that go with it Feudal System CORRECT ANSWERS✅ When all of the land is owned and controlled by the government or by lords Allodial system CORRECT ANSWERS✅ A system that allows private land ownership The rights of ownership CORRECT ANSWERS✅ Disposition Enjoyment Exclusion Possession Control (These rights of ownerships are appurtenances) Disposition CORRECT ANSWERS✅ Owner of the real estate can DISPOSE of it by selling it, giving it away, willing it to heirs, etc Enjoyment CORRECT ANSWERS✅ Owner of the real estate has the right to quietly, peacefully ENJOY the possession and use of the property without disturbance Real Estate Basics Questions and answers Uniqueness Immobility CORRECT ANSWERS✅ Immobility--Land is fixed and immobile. For this reason, the real estate market is local in character. The fact that real estate is fixed and immobile also makes real estate easy to tax. Indestructibility CORRECT ANSWERS✅ Land is indestructible. This characteristic tends to have a stabilizing effect on real estate investments. Uniqueness CORRECT ANSWERS✅ No two pieces of property are exactly alike. This characteristic may also be referred to as nonhomogeneity, meaning that real estate is not homogenous. Scarcity CORRECT ANSWERS✅ Availability of dry land on the earth is limited to about one-quarter of the entire surface. Of the available dry land, only a small portion is usable by humans. This causes land to be a very valuable commodity. Improvements CORRECT ANSWERS✅ Addition of an improvement to a property can add to its value and that of surrounding properties. Improvements can also sometimes have a negative effect on the value of property. For example, the construction of a shopping center or the introduction of a toxic waste dump in an area can have a dramatic effect on the value of properties in a very large area; one will have a positive effect and the other will have a negative effect. Permanence of Investment CORRECT ANSWERS✅ Real estate is a long-term investment or fixed asset. That is, it cannot be readily converted to cash like certificates of deposit (CDs), stocks and bonds can. For this reason, real estate is a riskier investment. This characteristic is also known as FIXITY. Real Estate Basics Questions and answers Area Preference CORRECT ANSWERS✅ People tend to prefer certain areas over others. This economic characteristic, sometimes called SITUS, does not refer to geographic location, but rather to people's preference to certain areas over others. It is the unique quality of these preferences that results in different values for similar units. Economic Characteristics of Real Estate CORRECT ANSWERS✅ Scarcity Immprovments Permanence of Investment Area Preference Market CORRECT ANSWERS✅ - A place where goods are bought and sold. - It's function is to provide a place where the forces of supply and demand can establish market value, making it advantageous for buyers and sellers to do business with each other. Real Estate Market CORRECT ANSWERS✅ The place where real estate is bought and sold Supply and Demand CORRECT ANSWERS✅ - The effect of supply and demand in the marketplace determines the prices for good and services - When supply increases and demand remains stable, prices drop - When demand increases and supply remains stable, prices rise Real Estate Basics Questions and answers Greater Supply CORRECT ANSWERS✅ Producers need to attract more buyers, so they lower prices Greater Demand CORRECT ANSWERS✅ Producers can raise prices because buyers will compete for the product Equilibrium CORRECT ANSWERS✅ The point at which the forces of supply and demand meet to create stable prices in the marketplace Because of real estate's uniqueness and immobility: CORRECT ANSWERS✅ The real estate market tends to adjust slowly to the forces of supply and demand and tends to lag behind other markets in responding to economic indicators Forces that Affect Supply CORRECT ANSWERS✅ Labor force and Construction costs - lack of skilled labor or building materials can slow down production of new homes, as can an increase in building costs Government controls and Financial Policies - when municipalities impose stricter requirements for builders to meet in the planning, zoning and building code approval processes, a slowdown in construction is the result -when the Federal Reserve increases the discount rate, interest rates on construction loans increase. When interest rates are high, new construction slows down Real Estate Basics Questions and answers A bookcase with a single screw to hold it against the wall, for example, would likely be considered personal property. A bookcase that has molding and a base built around it to attach it to the wall would be considered a fixture, because it is more firmly and permanently attached. Trees and crops generally fall into one of two classes: CORRECT ANSWERS✅ Perennials and Emblements Perennials CORRECT ANSWERS✅ Orchards, vineyards and grasses that do not require annual planting - Part of Real Estate and presumed to transfer with title Emblements CORRECT ANSWERS✅ Require annual planting, such as wheat, corn and soy beans, etc - considered personal property and belong to the seller Fixture CORRECT ANSWERS✅ Personal property that has been so affixed to the land or building that, by law, it becomes part of the real estate. Examples of fixtures are lighting, doors, heating and air conditioning systems, built-in appliances, sinks, bath tubs, kitchen cabinets and plumbing. Fixtures include practically any item that has been added as a permanent part of a building. Legal Tests for a Fixture CORRECT ANSWERS✅ Intent - What was the intent of the party who attached the article? Did they intend for it to remain permanently on the property or for it to be removable in the future? An item such as a crystal chandelier that is a family heirloom might end up being declared personal property. Real Estate Basics Questions and answers Method of attachment - How is the article attached? Will removing it cause damage to the surrounding property? If removing it will cause damage, it is probably a fixture. Adaptation of the article - Is the item uniquely suited or designed for that particular property? Items such as garage door opener controls and house keys are designed to work with features of that particular property and, even though movable, are part of the real estate. Agreement between the parties. Have the parties agreed that a particular item is part of the real estate or personal property that can be removed? Trade Fixtures CORRECT ANSWERS✅ Considered Personal Property. Items used in a trade or business that have been permanently attached to a rented building by a tenant ex. bowling alleys, restaurant equipment, bars and store shelves. Trade fixtures must be removed by the tenant on or before expiration of the lease or they will become fixtures (the real property of the landlord). The tenant must pay for any damage done in removing them Tenant improvements CORRECT ANSWERS✅ Adaptations to the space made by the landlord or the tenant that will remain with the property upon expiration of the lease. Prior Appropriation CORRECT ANSWERS✅ A theory of water law regarding the right to divert water from a water source. The theory is that if available water Real Estate Basics Questions and answers were equally divided among all potential users, there would not be an adequate supply. Under the doctrine of prior appropriation, the right to use to water commercially is vested in the state.