Cram course

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Avery Yarbrough & Associates Real Estate License Cram Course Review Thursday & Friday 9 till 4 with an hour for lunch

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Transcript of Cram course

  • 1.
    • Avery Yarbrough & Associates
  • Real Estate License
  • Cram Course Review
  • Thursday & Friday
  • 9 till 4 with an hour for lunch

2.

  • House Keeping Rules
  • Cell Phones -Off
  • Computers - Off
  • Breaks each hour -Be back at 10 minutes
    • Restrooms are in break room
    • No smoking at front door go to end of building
  • Mindful of your classmates
    • We have a lot of material to cover
    • Hold questions till breaks

3.

  • Welcome
    • Everyone, classroom students, online, other schools
  • Materials
    • Green Book
    • Law Booklet & Law Test
    • Handout Packet
    • Handouts
  • We need your contact information
    • Fill out at break

4.

  • Lots of different material to cover in 2 days
      • A cres toZ oning
    • Need to know about acres and zoning to pass test
    • 140 questions can miss 42 and still pass
    • 100 general& 40 Alabama Law
    • More than one answer may look right
      • Test taking anxiety
        • Think long, think wrong
      • Analytical personalities think too hard
        • Dont read anything into question
      • Any test you dont study for will be hard

5.

    • 6 sections 100 Questions&40 on Alabama law
    • 1Listing Property31%of general knowledge test
    • 2Selling Property21%
    • 3Property Management 14%
    • 4Settlement/ Transfer of Ownership14%
    • 5Financing10%
    • 6Professional Responsibilities10%
    • Law is 28% of total test
    • We will have lecture then shorttest
      • Do better with this method

6.

  • 65% to &70% pass test on first try
  • Only about 60% online pass on first try
  • About 80% of our students pass on first try
  • Second test try pass rates drop
    • And drops even more on third try, only 20% pass
  • Test should be difficult
    • Dealing with important subjects
    • Do it right the first time
      • $71 per test
    • It is important that you take this seriously

7.

  • Look at the packet on the right
  • Outline of class
  • Words Know vocabulary
    • Nerd Words on test
    • Obscure wordsReliction, Riparian, Reentry, Remainderman, Recording, Range, Reconciliation, Rectangular System, Redlining, Regression
  • The way we studied as children is the way to learn
  • Read, Study, Test
  • Our other classes
    • Post License, Broker, CE

8.

  • Test taking tips
    • 80% of those that fail get between 65 to 69
    • Only 1 point between success and failure
    • Listento lecture
      • Make notes

9.

  • Schedule a morning test
  • Anxiety is less in AM no time to worry
  • Brain sharper in AM
  • Review night before
    • Eat fruit night before brain food- 12 hours
  • Dont study past 9PM
  • Go to sleep early and let your brain rest

10.

  • On the day of test
  • Get up early and be relaxed , not rushed
  • Dont read paper or listen to news
  • Eat a good breakfast
  • No more studying
  • Get to test site early
    • 15 minutes late and you cant take test

11.

  • At test site
  • Have photo ID and 1 more with signature
    • Do practice questions on computer
    • Maintain pace throughout exam
    • Dont wrestle with a question
    • Read question twice
    • Read answers twice
      • You will know answer in your brain
      • If you dont know, then bookmark and move on
      • Bookmark math and skip -- work them last
    • DO NOT GO BACK AND CHANGE AN ANSWER
      • Will usually get it wrong

12.

  • Finance has 10 questions
    • Most students have trouble with real estate math
  • We go over math, but dont teach math
    • We will help as much as you need
  • Having Trouble?
    • Call us for extra help this is what we do
    • No extra charge for this
    • We want you to do well on the test

13.

  • Power Point Handout is your Outline
  • Take notes on handout
  • Study them later
  • More important to listen to lecture
  • Story about Finance
    • Elementary concept

14.

  • 1934 Mortgage industry began under FDR
  • Horrible economy end of Depression
  • Housing - the way to make economy grow
    • 50% down payment at that time
  • FHA created 3% down payment
    • More likely to default
      • Walk away if times get tough
      • Insures lender

15.

  • FHAinsuresloans
    • Does not loan money or build homes
  • FHA mortgage defaults - FHA pays
  • FHA set maximum loan amounts
    • People started buying homes
      • Economy began to recover
    • Lenders ran out of money
    • What could they do?

16.

  • Secondary market created to buy mortgages
  • Primary lenders sold pools of mortgages
  • Fanny Mae bought these mortgages
  • Primary lenders collected payments
    • Escrow for taxes and insurance
    • Service loan for a fee
    • Lenders also charged closing cost to make money
      • Origination, Discount, Service fee
  • Fanny Maesold mortgage backed securities to investors

17.

  • I950s more buyers wanted a piece of the pie
    • Private Mortgage Insurance PMI
    • 5% down payment on larger loans
  • Saving & Loan Banks needed secondary source
  • Freddie Mac created
  • Today they both buy the same loans
  • 1960s government realized it was in trouble
  • Turned into private companies
  • Didnt want risky mortgages
  • G innie Mae came about to buy risky loans
    • G overnment owned
    • G uarantees loans

18.

  • 3 Financial Intermediaries
    • Primary Lenders
  • InstitutionalRetail Banker
    • Loan their own money- Fiduciary
  • Non- InstitutionalWholesaleBroker
    • Loan money that is not their own
  • Insurance companies and pension plans
    • Have lots of money to invest
    • Alabama retirement fund

19.

  • Mortgage Brokers
    • Not their money
    • Get it fromnon - institutional source
      • They know someone who has money
  • Insurers
    • FHA , VA, PMI
  • Secondary Market
  • FAMA, FRMAC, GNMA

20.

  • Loan products
    • Blanket Mortgage think of a quilt with patches
      • Developer buys land, puts lien on entire development
      • When house is built on one parcel and sold
        • Partial release clause releases lien on that parcel (patch)
    • Package Mortgage Real and Personal property
      • Includes Appliances, Furniture
      • Popular at beach (condo and furniture)
      • Farm Equipment

21.

  • Open end mortgage Like credit card
    • Leave mortgage open to add to in future
  • Graduated payment mortgage(FHA245)
    • Goes up about 5% each year for 5 years
      • Negative Amortization
      • Adds to principle will owe more than borrowed for years
  • Reverse Annuity Mortgage
    • Senior Citizengets check for part of equity each month
    • Upon death , home is sold by family and debt paid

22.

  • Adjustable Rate Mortgage
  • Protects lender from interest rate changes
    • Changes Each year (up or down)
      • Principle
      • Plus
      • Margin profit to lender - Fixed during life of loan
      • Plus
      • Index-measure of change such as Consumer Price Index
    • Cap per year/life2/6

23.

  • Amortized Loan Equal payments until note dies
    • Also called- direct reduction loan- Includes:
      • P rinciple the amount borrowed
      • I nterest-Rate remains constant through life of loan
  • Mortgage payment also will include:
    • Escrow forT axes &I nsurance
    • PITI Principle, Interest, Taxes, Insurance
    • Interest is paid in arrears ( at end of period when )
  • Straight loan pay (interest only) each year(rare)
    • Loan would renew each year
      • Pay off principle later
  • Balloon Amortized over 30 years, but
  • Balance is paid off with a big lump payment at 5 years
  • * Most owner financing is Balloon

24.

  • AccelerationClause(like accelerator petal on car)
    • Miss 3 payments and lender speeds up loan
      • Foreclosure starts and borrower (mortgag or ) has:
  • Equitable Right of Redemption
    • Pay off loan before foreclosure sale
  • Statutory Right of Redemption
    • Pay back loan plus cost of sale within one year
  • Dont ignore lender- work with them
    • They dont want the house
  • Short Sale Bank agrees to take less than owed

25.

  • Defeasance Clause
      • Clause says lender must record satisfaction of mortgage
    • Alienation Clause
      • Clause says mortgage must be paid off at time of sale
    • Acknowledgement= Notarize
      • Necessary for recording
      • Record in county where property located

26.

  • OR
    • Gives
  • EE
    • Gets
  • Confusing---Mortgagor & Mortgagee
  • Mortgage is a promise backed by security instrument
    • Mortgag or(Borrower) gives promise to pay
    • Mortgag ee(Lender) gets promise

27.

  • Title Theory - Alabama
    • Lender has legal title
    • Borrower has equitable title
  • Lien Theory
    • Lender has equitable title
    • Borrower has legal title
  • Title record shows evidence of ownership
    • Not a piece of paper

28.

  • Mortgages-- local Alabama custom
    • Negotiable Instrument will be sold
    • Two parties
      • Lenderand borrower
  • Trust Deed
    • Three parties
      • Trustor Lender
      • Trustee Holds title
      • Beneficiary -- Borrower
  • UsuryLaw Limits the amount of interest charged

29.

  • Priority of liens first to record, first to collect
    • Constructive notice (recorded)
    • Actual notice (actual knowledge)
  • Primary gets first money from foreclosure
  • Secondary may not get any money
    • Subordinate or junior
    • Prefixsub-means beneath
  • Alabama is a deficiency state
    • Lender will get judgment claim against borrower
  • Property taxes always have first priority

30.

  • Title
    • Chain of ownership on property
    • Marketable Title 40 years no challenges
  • Seller makes promise to deliver marketable title
  • Cloud on Title
    • Break in chain of title
      • Forgery
  • Title Insurance insures chain against defects
    • Will have exclusions not covered easements
    • ALTA unrecorded liens materialman

31.

  • Points- 1 point is 1 % of loan
    • Origination Bank commission for selling loan
    • Discount- % of upfront $ paid to reduce rate on loan
      • Builder buy down for a couple of years
      • Permanentbuy-down forlength of loan
      • 1 point increases yield to bank about 1/8%
  • Assumptions of Mortgage
    • Rules vary by loan type
  • Assume Seller still responsible for debt
  • Subject to Seller not responsible for debt
  • Novation new note

32.

  • Owner Finance
    • Purchase Money Mortgage2 ndMortgage
      • Purchaser has title
  • Owner Finance
    • Seller keeps legal title until paid off
      • Bond for title
      • Land sale contract
      • Contract of deed
      • Installment Contract

33.

  • FHAinsures (% upfront + % each month)
    • Ends when principle < 80% of original appraisal
  • VAguarantees (government)
    • CRV Certificate of reasonable value
      • Same as appraisal
  • Veteran must qualify& property must qualify
    • Can substitute anothers guarantee
  • Conventional PMI (private mortgageinsurance )
    • On amount more than 80% of appraisal value

34.

  • Sale- Lease Back
    • Owner needs money to expand operations
    • Will sell building to investor and lease back
  • Owner Finance
    • Vendor -Seller (retains title)
    • Vendee Purchaser (gets equitable title)

35.

  • Test on page 146
    • About an hour
    • You must be comfortable with the way test is worded
    • In front of green book are pages with confusing words
    • Except, Not, Least, Best, Difference, Most Likely, ect.
  • Put exam answers on separate page
    • Later highlight correct answers to use as review

36.

  • Alabama License Law
  • 40 of the 140--29% of test
    • Know the violations!Page 16 18
    • AREC can suspend or revoke license
    • Fines $100 to $2500
  • Straight forward information memorize
  • Concepts of common law
  • Know fees

37.

  • RECADReal Estate Consumer Agency Disclosure
  • 4 ways to have relationship with consumer
    • Written disclosure to consumer to alleviate distrust
  • Single Agent-- Agency with one partywork For - Advise
  • Limited Consensual Dual Agent--
    • Agency for both Seller & Buyer
  • Transaction Broker-- Non Agencywork With - Assist
  • Sub-Agent-- Pre-RECAD way things worked
    • All agents worked for the seller
  • All relationships start as Transaction Broker
    • Until:
  • A written agreement is signed with consumer

38.

  • RECAD
  • Must be presented at first contact with consumer, before any confidential information is disclosed to another
  • Must be signed by agent and kept in file for 3 years
    • Consumer not required to sign
  • Keep all real estate contracts, listings, ect. for 3 Years

39.

  • Consumers are either:
  • CustomerNON-client / NON-Agent
    • No advice
    • WorkingWith
    • Transaction Broker
  • Client- Agency Relationship
    • Give Advice
    • WorkingFor
    • Fiduciary

40.

  • Agency Duties- Fiduciary
  • Drive clients inOLD CAR
  • O bedience- Obey lawful commands
  • L oyalty- Put clients interest above your own
  • D isclosure Everything you know about transaction
  • C onfidentiality-Keep confidential information confidential
  • A ccounting Account for all funds
  • R easonable Care Use reasonable care

41.

  • Customers Non Agency No fiduciary
  • Must answer theirHARD?
  • H onesty
  • A ccountable
  • R easonable Care
  • D isclosure
  • ?Questions must be answered truthfully

42.

  • Law Test
  • Go over even # questions
  • Answer on separate paper then later:
    • Highlight correct answers to use as study guide

43.

  • Lunch1 Hour Please be back on time
  • Nearby Restaurants
    • Mexican at end of this building
    • Green Valley Drug Store On down hill from here
    • Subway- In parking lot across from Outback
    • Salvador's- Next to Subway
    • Golden Rule- Across Highway form Salvadors
    • McAlisters- On Hwy on right mile to the left
    • McDonalds- Just past McAlisters
    • Burger KingJust before McAlisters
    • Chinese- Shopping center across from McAlisters
    • Krystal Across from Burger King

44.

  • Review Alabama Law Test
  • Know the violations!

45.

  • Easements
    • Right of one person to use the property of another
    • Necessity was necessary to get to property
    • Appurtenant legally attached runs with the land -deeded
          • Commercial easements in gross
          • Utility easements look gross
    • Prescriptionused for a length of time 20 years
      • Adverse Possession
    • Servient tenement Serves another property
    • Dominant tenement Property thatbenefits from easement
      • Ingress & Egress from landlocked property
    • Personal easement terminates upon death of either party
    • Encroachment Illegal extension on anothers property

46.

  • Life Estate use for the life of a person
  • Reversion goes back to original grantor
  • Remainderman goes to another at termination
  • In either case
    • Can not waste property
    • Can do anything else in bundle of rights UPEED
    • All rights under life estate are limited by someones life
      • Pur Autre Vie Based on the life of another

47.

  • Deed To transfer title
  • Must have:
    • In writing
    • Identify parties and property
    • Conveyance language
    • Consideration something for something
      • Amount not necessary to state
    • Grantors signature
      • Grantee (buyer) signature not needed
    • Must be delivered during grantors lifetime

48.

  • Condominium
    • Fee simple (absolutely best ownership all rights)
      • Own interior of unit fee simple
      • Own common area as tenants in common
        • Swimming in the condo pool with the common people
    • Developer must record condominium declaration
    • Includes:
      • Legal Description
      • Bylaws
      • Covenants & Restrictions and bylaws
      • Survey

49.

  • Co-operative
    • Apartment converted to ownership
    • Building owned as a corporation
      • Own stock in corporation
      • May get loan to buy this stock, secured by lease
    • Proprietary lease on apartment

50.

  • Co- ownership
    • Joint Tenancy(Husband and wife joined together at the arm PITT)
      • Usually family
      • Right of survivorship
        • At death interest goes to other party
      • PITT P ossession,I nterest,T ime,T itle
      • If ownership changes,
        • PITT doesnt change new owner is a tenant in common
    • Tenants inCommon (In the condo pool with thecommon people )
      • Usually investment
      • Interest % may be different
      • If ownership changes nothing else changes
      • At death of owner, their ownership goes to heirs

51.

  • Community property- Not in Alabama
  • Tenancy by the entirety Not in Alabama
  • Separateproperty bought before marriage stays separate
    • Property may be bought separately during marriage
  • Property inherited stays separate

52.

  • Obsolescence
    • Economic town is dying
      • Not curable
    • Functional-6 bedroom, 1 bath (or an outhouse)
      • Curable can be fixed economically
      • In-Curable cost more to fix than is worth

53.

  • Methods for determining value
    • Appraiser is aCSIinvestigator
  • C ost What it cost to build
    • Special purpose - church
  • S ales Comparison what have othersimilarhomes sold for
  • I ncome Income producing properties
    • Capitalization rate=Net Income / Price
  • Real Estate Agents perform:
    • Comparative Market Analysis(using Sales Comparisons)
    • May notcall it an appraisal

54.

  • Appraisals
  • CIAdoesnt wantCBSwatching them
  • C omparableI nferiorA dd
  • C omparableB etterS ubtract
  • Neveradjust subject value, only comparable
    • The comparable next door has an extra bedroom worth $10,000
    • Adjust its sold price down to get the market value for your subject

55.

  • Cost approach
    • New construction, special purpose
    • White House - cost approach (2008) $130,000,000
  • Cost = Total of Materials + Land + Labor + Profit
    • Reproduction Cost = exact duplicateYour DNA
    • Replacement Cost = similarAdopt
  • Capitalization Rate
    • Rate investment will return
  • GIVEN
  • G rossI ncome V acancy E xpenses =N et Income
    • Remember to change all #s to annual

56.

  • Certificate of Occupancy
    • All inspections have passed ready to move in

57.

  • Legal Descriptions 3 methods
      • Definition - A surveyor can find boundary of property
  • Metes & Bounds - Plymouth Rock 1 stmonument
      • Meters & Directions
    • POB P ointO fB eginningand around to starting point
  • Rectangular Survey government (Squares)
    • Townships - 6 miles X 6 miles
    • Sections 1 mile square- 36 sections in a township
  • Plat Lot & Block - Recorded survey (subdivision)
    • Must include, lot #, subdivision name, county & state

58.

  • Township tier starts at Tennessee line(Base Line)
    • 6 miles south of Tennessee line is another line
  • Running north and south every 6 miles are range lines
    • Intersections of township & range lines are called
    • Townships these are 6 miles square
      • Townships are numbered by where they are:
      • First tier south of the Tennessee line is T1S
        • T1S =T ownship1 S outh
      • The north and south lines, Called Range Lines
        • start in Huntsville, so
        • The first one west of Huntsville is R1W
          • R1W = Range 1 West

59.

  • Section is 640 Acres
    • section has 160 acres
    • of of has 10 acres
  • Acre 43,560 square feet--208.71 X 208.71
  • 711Ask at the 7-11 store about an acre
  • Mile is5 , 280feet
  • Oak Mountain is5miles down Highway280

60.

  • Day 2
  • Page 73--Property Management
  • Property Manager(General Agent)
    • Works FOR owner fiduciary (agency) of owner
  • Objectives
    • Make money (return on investment)
    • Maintain property
  • Property Manager supervises
    • Resident Manager
    • Maintenance Manager

61.

  • Property Owner Must
    • Provide Habitable Premises
    • Provide Quite Enjoyment
  • Eviction
    • Actual Eviction
      • not paying rent
    • Constructive eviction -
      • Landlord doesn't provide habitable premise
        • Not providing heat when needed

62.

  • Personal Property - personalty
    • Not attached to real estate
    • Ceiling fan in box
      • Can move it around
      • May become Real Property appurtenant as a fixture
  • Real Property
    • Attached to property
    • Ceiling fan attached to ceiling
  • Buy seed at Lowes personal property
  • Plant seed & it becomes a tree real property appurtenant
      • Fructus naturales (no annual cultivation) tree
      • Fructus industriales (emblements) - crops
  • Cut tree (severance) now personal property
  • Processed into lumber personal property - sold at Lowes
  • Used to build house becomes real property upon attachment

63.

  • Trade Fixtures
    • Equipment to operate a business
      • Big refrigerator, Stainless Steel sinks
      • Attached, but not considered Real Property
    • Must be removed before lease expires
      • Damage must be repaired
      • If not removed, becomes property of owner

64.

  • Leases
  • Estate for years or Tenancy for years
    • Itbeginsand itends
      • Period of time doesnt matter
      • 30 minutes or 30 days or 30 years
  • Period ic Tenancy
    • Periodto Period no ending date
      • Month to Month, Year to Year
      • Requires 1 period notice to terminate
  • Estate at will
    • Understanding to stay for a while (At will)
      • Verbal agreement likely family or friend
  • Estate at Sufferance
    • Holdover Tenancy
    • Tenant remains after lease expires
    • If landlord accepts next months rent it becomes:
      • Periodic Tenancy

65.

  • Lease can be either Gross or Net
  • Net lease charges tenant for following in addition to rent:
    • T axes,I nsurance,M aintenance-TIM
  • Gross lease includes TIM in payment
  • Percentage lease also charges a percentage of sales
    • Includes a fixed rate, plus
    • A percentage of tenants sales over a set amount
  • CAM - Common Area Maintenance
    • Some net commercial leases may have CAM charge

66.

  • Percentage Lease on 10,000 square foot store
  • Base rent of $20 per Square Foot, plus
  • 5% on store sales over $1,000,000
    • What if Store sales are $1,500,000
  • Base Rent per year is 10,000 X $20 = $200,000
  • Plus 5% on sales over $1,000,000
  • $1,500,000 -$1,000,000= $500,000 X 5% = $25,000
  • Rent = Base $200,000 + $25,000 = $225,000
  • Monthly Rent $225,000 / 12 = $18,750

67.

  • Commercial rental space is graded:
  • A New building in great location
  • B-Older building in great location that has been rehabbed
  • C- Older building , may not be in great location or condition
  • D- Run down building
  • Rent is charged per square foot per year
  • Class A space may be $20 per square foot
  • 1500 sf. X $20 X 12 months = $30,000 per year
    • Monthly rent would be $2,500

68.

  • Statute of Frauds
    • Contracts involving real estate must be in writing
      • To be enforceable
    • Except a lease less than one year, may be oral (parol)
  • 20 years or moremust be recorded in first year to be enforceable
  • Maximum lease is 99 years
  • Escalation Lease will be go upover time to cover increased cost
    • Tied to an index (Consumer Price Index)
  • Statute of Limitation
    • Time limit to bring action

69.

  • Accounting reports
    • Balance Sheet
      • List Assets & Liabilities
    • Profit & Loss
      • List net profit after expenses

70.

  • Sub- lease
    • Assignment of
      • privilege of use
      • Responsibility to pay rent
    • Original tenant has a sandwich lease
  • Novation
      • Replaces agreement with another

71.

  • Environmental Hazards
  • Lead Paint(Written disclosure required- LPD)
    • Must also give pamphlet about danger to family
    • No lead paint used in residential built after 1978
  • PCB hazardous chemical in electrical transformers
  • Radon Decomposing soil builds up gas under home
        • Colorless, Odorless, Gas Collects in home and may cause cancer
  • Carbon Monoxide-
    • Gas from using natural gas heat that may build up and kill you
  • Asbestos Cancer causing insulation
    • Encapsulate Seal it and leave it alone

72.

  • Contract
  • Execute- to sign a contract
  • Executed Contract is fulfilled closed
  • Offer & Acceptance
    • Agreement to do or not do something
      • Seller promises to deliver good title
      • Buyer promises to pay money

73.

  • Option
  • Unilateral contract- One promise
    • Right to buy a property for a period
    • Optionor person giving promise to sell
    • Optioner person may buy or not
      • Gives money for right to buy
  • Lease Purchase is 2 agreements:
    • Lease
    • Option
      • May buy at end of lease or not

74.

  • Unilateral Contract
    • One person has made promise
    • Listing Agreement
  • Bi- lateral
    • Two parties have agreed to contract
    • Sales Contract

75. 76.

  • Legal remedies
  • Breach of Contract
    • One party to contract does not perform
      • Aggrieved party
        • Suit for damages
        • Specific performance
  • Contract date to close is a target date
    • May be circumstances that prevent closing
  • Time is of the essence means:
    • All times MUST be adhered to, or breach occurs
  • One may lose rights through latches(sleeping on rights)
      • Inspection date missed one week

77.

  • Earnest Money is not required for a valid contract
    • If earnest money is included
      • Sellermayaccept earnest money as liquidated damages
        • If contract breached by purchaser
    • Money must be held in Escrow Account in
      • An FDIC insured bank in Alabama
  • Must be turned in to broker immediately
  • Must be deposited in escrow account
      • When offer becomes contract
        • Offer (unilateral) becomes contract (bilateral)
        • Unless contract states differently
  • Money belongs to contract
      • Creates equitable interest in property for purchaser
  • Postdated check must be approved by seller

78.

  • Offer
    • May be accepted by seller
      • Becomes a bi-lateral ( 2 sided) contract
    • May be rejected
      • Offer dies
    • May be countered
      • If seller makes a mark other than signature
      • This creates a new unilateral contract (counter-offer)
      • Sometimes one party may put a time limit (by Friday @5)

79.

  • Bundle of Rights(Sticks in a bundle)
    • UPEED
    • U se
    • P ossession
    • E ncumber
    • E xclude others
    • D isposition
    • Subject to Government rights (PETE)

80.

  • Zoning (Primary Purpose is to protect thehealth, safety and welfare of the public)
  • RCA IS ZoningDistricts
  • R esidential
  • C ommercial
  • A gricultural
  • I ndustrial
  • S pecial Purpose ( Hospital, Library, Church)

81.

  • Non Conforming Use (Zoning)
    • Use that does not conform to surrounding properties
      • Day care center inresidential zoning
    • Grandfather Clause
      • Use that may continue when surrounding zoning changes
      • Home on highway where commercial has expanded
    • Variance
      • A property owner needs to build on a lot that is too small
  • Building Codes are not Zoning
    • Set minimum standards for material & workmanship
      • Health & Safety -GFI plugs, ect.

82.

  • Ordinary Income
    • Money for working
  • Capital Gains
    • Profit on gains from the sale of property or stocks
      • Short term owned less than a year
      • Long term owned more than a year
        • Lower tax rates

83.

  • Income Deductions
    • Depreciation
      • Accounting Deduction per year of % of improvement
        • Land does not depreciate
      • Actual Depreciation paint, roof
  • 1031 Tax Exchange will be handled by intermediary
    • Tax code that allows the exchange of like property
      • Income property for income property
    • May not be even exchange
      • One party may payboot
        • Moneyin addition to property this money is taxed

84.

  • Securities (regulated by SEC)
    • Stocks ownership position in company
  • REIT Real Estate Investment Trust
    • Colonial Properties is a REIT
    • Get benefit of investment without management
      • No say in management
    • Securities sales requires a securities license
      • Not a real estate sales license

85.

  • Int er state commerce (regulated by SEC)
    • Regulated by federal government
  • Int ra state commerce ( Alabama Blue Sky Law)
    • Not regulated by federal government, but Alabama

86.

  • Testament - Will
  • Die leaving a will is Testate
  • Die without a will is Intestate
    • State Statute of Descent and Distribution
    • State law determines how property is distributed
  • Die without heirs
    • Escheat = State get property ( One of PETE power)
  • Will must be written to transfer interest in RE

87.

  • Devise
    • Gift of real property by will
  • Bequeath Bouquet
    • Gift of personal property by will
  • Legacy
    • Gift of money by will

88.

  • Government Powers
  • PETEworks for the government
  • P olice- Zoning is one police power
  • E minentDomain (right), Condemnation (Process)
  • T axation
  • E scheat- Person dies without heirs or will

89.

  • Restrictions on use of property
  • Private restrictions CC&R
    • Covenants
      • To maintain uniformity homogeneity
      • ARC - Architectural Review Committee must approve
      • Mailbox, color of house, trees
      • May be forced to conform
    • Can not take owners property under covenants

90.

    • Fee Simple Defeasible(Defeatable)
    • Conditions
      • Restricts use of future owner
        • Previous owner may have future rights
    • Conditions Subsequent
      • New owner must not perform some action(sell alcohol)
        • Former owner retains right of reentry if condition is broken
        • Must go through courts
    • Fee Simple Determinable- Special Limitations
      • Estate ends automatically due to violation of limitation
        • Possibility of Reverter
        • No court action required

91.

  • Deeds
    • Warranty against title defects
  • Could have been issues in past that affect title
  • General Warranty Deed or Warranty Deed
    • Bumper to Bumper warranty on car
    • If there is a issue against title in future it will be fixed
  • Special or Statutory Warranty Deed
    • Limits to warranty
    • Covers issues that may have happened during grantors ownership of property
  • Quit Claim no warranty
    • As is
    • Used to quiet a cloud on title

92.

  • Title Insurance
    • Protects against something in the past
      • Different from other insurance that protects against event in future
    • One time premium
  • Opinion of Title Attorney does Abstract
    • Checks the chain of title no warranty
    • Will not know about unrecorded liens
    • Will not know about forgery

93.

  • Liens
  • Voluntary Lien
    • Owner ask for it - Mortgage
  • Involuntary Lien
    • Owner didnt ask for it Property tax lien
  • Specific
    • Lien on a specific piece of property
  • General
    • Lien on all property, personal and real of a person

94.

  • RESPAReal Estate Settlement & Procedures Act
    • 1 to 4 unit family residential property
    • Federally related loan
    • Must use HUD1 form (24 hours before closing)
    • Required Good Faith Estimate (GFE) within 3 days
    • No Steering
    • No Kickbacks
    • Maximum 2 months escrow for taxes and insurance
  • Fair Credit Act (truth in lending) Regulation Z
    • Disclose the APR ( true annual percentage rate )
    • Truth in Advertising- Trigger words are %, payment
    • 3 day right of recession on junior mortgages

95.

  • Debits are bad
    • Debt owed
    • Takes money away
  • Credits are good
    • Credit to an account

96.

  • Important Dates
  • Civil Rights Act 1866
    • Prohibits discrimination based on race
  • Civil Rights Act 1968 Expands protected classes
  • Fair Housing Act of 1988
    • Protects FR E SH C O RN
    • E&O insurance doesnt cover,Equal Opportunity
  • Familial, Race, Sex, Handicap, Color, Religion, National Origin
  • Doesnt protect age
  • Handicap includes physical and mental
    • Includes AIDS
    • Includes recovering addicts

97.

  • Redlining
    • Insurance or Lender draws a red line around an area and refuses to do business there
  • Steering
    • Pushing people to a certain area
      • Catholics to a Catholic neighborhood
  • Blockbusting
    • Telling people they need to move because a protected class is moving into the area and the property values are going to fall

98.

  • Can discriminate if:
    • Owns a 4 plex or less and lives in one unit
    • Owns less than 3 homes
    • Churches can discriminate based on religion
  • Can not advertise the discrimination
  • Race discrimination is never allowed
  • Handicap reasonable accommodations must be made
    • May require tenant return to original condition
  • Exempt
    • Churches Membership may not discriminate
    • Housing for older persons
      • 62 or older
      • 80% must be over 55

99.

  • ADAAmericans with Disability Act
    • Must make reasonable accommodations
      • Assigned Handicap spot near door
      • Service animals in a no pet building
    • May require premises to be returned to original

100.

  • Fair Credit Act
  • Most of FRESH CORN
  • Protects Marital Status instead of Familial
  • No Age discrimination
  • Includes dependence on public assistance

101.

  • Independent Contractor
    • Employer doesnt have to
      • Pay Social Security Tax
    • Employer May not:
    • Dictate hours worked
    • Dictate how work is to be done
  • 90% of compensation must come from commissions and not hours worked

102.

  • Anti-Trust Prohibits (Sherman Act)
    • Allocation of markets
    • Price Fixing(or even taking about it between competitors)
    • Group Boycotting
  • Broker may:
    • Set commission rate of office
    • Set commission splits

103.

  • Can a seller refuse to accept a full price offer?
    • Yes
    • But, broker has earned commission
      • Delivered a ready, willing, able buyer
        • Show License
        • Show permission to sell Listing agreement
        • Show to be procuring cause

104.

  • Progression
    • Home price is positively affected by nice newhomes around it
  • Regression
    • Home price is negatively affectedby run down homes around it

105.

  • Federal Reserve Policy controls interest rates
    • Selling BondsTakescash out of the system
      • Causing interest rates to increase due to less supply of money
        • Due to Supply and Demand of money
    • Buying BondsPutscash into the system
      • Causing interest rates to drop because there is more money
    • Reserve Requirements
      • Banks must hold a percentage of cash in reserve
      • More reserve requirement means less money in circulation
        • More demand for money increases interest rates
    • Discount Points Rates banks charge each other
      • Higher rates mean less money to lend
        • Means higher demand and higher interest rates

106.

  • Any Questions?