Monday, August 25, 2014
Capitalization Math
Value = Income / Rate
Examples:
Value = Income / Rate
Value = $105,000 / 12%
Value = $875,000
Rate = Income / Value
Rate = $114,500 / $900,000
Rate = 12.72%
Income = Value x Rate
Income = $825,000 x 13%
Income = $107,250
Income = Value x Rate
Rate = Income / Value
The relationship of these components can be expressed in the Triangle below. You can always get the third figure by either multiplying or dividing the two given numbers, just remember IRV.
Examples:
Value = Income / Rate
Value = $105,000 / 12%
Value = $875,000
Rate = Income / Value
Rate = $114,500 / $900,000
Rate = 12.72%
Income = Value x Rate
Income = $825,000 x 13%
Income = $107,250
Sunday, August 24, 2014
Legal Descriptions
Legal Descriptions identify a property in a way that the property could never be mistaken for any other parcel.
( Things to remember for the test )
Metes and Bounds
( Things to remember for the test )
Metes and Bounds
- Most Authoritative
- Most difficult to prepare
- Most difficult to interpret
A metes and Bounds description MUST have a definite point of beginning.
Rectangular Survey ( Government Survey )
- Faster and Simpler
- Uses Imaginary Lines
- Baselines and principal meridians
Recorded plat ( Short Form )
- Subdivision blocks and lots
Estates in Land
Leasehold Estates
Estate for Years - Has a Definite point of Beginning and End Date. No Notice is needed by either Landlord or Tenant.
Periodic Estate - Indefinite Period of Time. Notice is required. Typically a notice of 30 days for a Tenant and 60 days for a landlord.
Estate at Will - Uncertain period of time.
Estate at Sufferance - Holdover tenant
Freehold Estates
Fee Simple Absolute - The Highest Form of Legal Estate. Inheritable estate of indefinite duration, without restrictions or conditions in order to retain ownership. It is the most complete ownership of rights.
Fee Simple Determinable - Automatically ends and goes back to the person who granted the estate. Ownership could go back to heirs or a remainder man if named. Based on the occurrence or non occurrence of a stated condition. Must be used in a certain way or gets reverted back to the original owner.
Fee Simple on Condition Subsequent - May be ended by the grantor, a remainder man, or the grantor's heirs. No automatic reversion. Must go to court within a reasonable time after the condition is violated.
Non inheritable
Conventional Life Estates
Legal Life Estates
Estate for Years - Has a Definite point of Beginning and End Date. No Notice is needed by either Landlord or Tenant.
Periodic Estate - Indefinite Period of Time. Notice is required. Typically a notice of 30 days for a Tenant and 60 days for a landlord.
Estate at Will - Uncertain period of time.
Estate at Sufferance - Holdover tenant
Freehold Estates
Fee Simple Absolute - The Highest Form of Legal Estate. Inheritable estate of indefinite duration, without restrictions or conditions in order to retain ownership. It is the most complete ownership of rights.
Fee Simple Determinable - Automatically ends and goes back to the person who granted the estate. Ownership could go back to heirs or a remainder man if named. Based on the occurrence or non occurrence of a stated condition. Must be used in a certain way or gets reverted back to the original owner.
Fee Simple on Condition Subsequent - May be ended by the grantor, a remainder man, or the grantor's heirs. No automatic reversion. Must go to court within a reasonable time after the condition is violated.
Non inheritable
Conventional Life Estates
- " Pur Autre Vie " ( For the life of another )
Legal Life Estates
- Curtesy
- Dower
- Homestead Protection
Types of Mortgage Foreclosure
Judicial
Strict Foreclosure- A legal procedure which enables the lender to take title from a defaulting borrower without a foreclosure sale. The court grants the borrower a specified amount of time to pay off the loan. If the debt is not paid, title is awarded to the lender.
Judicial Sale- Legal proceeding where a lender files a lawsuit against a defaulting borrower in order to force the sale of property held as collateral.
Nonjudicial
Power of Sale - Mortgage provision which enables the lender to foreclose without filing a lawsuit.
Deed in Lieu of Foreclosure- Also know as a "Friendly Foreclosure". A deed given to a lender by a defaulting borrower who wishes to avoid foreclosure proceedings. The lender may or may not accept the deed.
Strict Foreclosure- A legal procedure which enables the lender to take title from a defaulting borrower without a foreclosure sale. The court grants the borrower a specified amount of time to pay off the loan. If the debt is not paid, title is awarded to the lender.
Judicial Sale- Legal proceeding where a lender files a lawsuit against a defaulting borrower in order to force the sale of property held as collateral.
Nonjudicial
Power of Sale - Mortgage provision which enables the lender to foreclose without filing a lawsuit.
Deed in Lieu of Foreclosure- Also know as a "Friendly Foreclosure". A deed given to a lender by a defaulting borrower who wishes to avoid foreclosure proceedings. The lender may or may not accept the deed.
Transfer of Title
Voluntary
Involuntary
Operation of Law
Court Action
- Will,
- Gift
- Sale
- Patent ( Public Grant )
Involuntary
- Natural Causes
- Accretion
- Alluvion
- Dereliction.
Operation of Law
- Condemnation
- Escheat
- Intestate Succession
- Adverse Possession
- Community Property
Court Action
- Lien Foreclosure
- Partition Sale
- Quite Title
Deeds
Types of Deeds
General Warranty - Offers the most comprehensive title protection of any deed. The grantor fully warrants good title to the property through the expressed or implied covenant of Seizin, covenant against encumbrances, covenant of quite enjoyment, covenant of warranty forever, and the covenant of further assurances.
Special Warranty- Grantor warrants good title to the property through the expressed or implied covenant of Seizin, covenant against encumbrances, covenant of quite enjoyment, covenant of warranty forever, and the covenant of further assurances. Covenant apply only to the defects occurring during Grantor's period of ownership.
Bargain and Sale - A deed which contains neither expressed nor implied warranties of title, but the grantor implies ownership of the property described in the deed.
Grant Deed - A deed in which the covenant of seizin and covenant against encumbrances are implied by statute when the word grant is used in the words of conveyance.
Quitclaim - A deed without either express or implied warranties. It simply conveys whatever interest, right, or title the grantor has in the property, if any.
Explanation of covenants
Seizin - Owns the property and has the right to convey it.
Encumbrances - Free from all encumbrances not specifically excepted in the deed.
Quite Enjoyment - Free from claim of superior title.
Warranty Forever - Compensate the Grantee.
Covenant of Further Assurances - Perform to perfect title.
Special Purpose
Gift, Deed of Trust, Trustee's Deed, Deed of Reformation
Court Ordered Deeds
Sheriff's Deed, Tax Deed, Deed in Partition
Requirements
In writing, Legal Capacity, Consideration, Legal Description, Signed by Grantor, Name of Grantor and Grantee, Granting Clause, Delivery and Acceptance.
General Warranty - Offers the most comprehensive title protection of any deed. The grantor fully warrants good title to the property through the expressed or implied covenant of Seizin, covenant against encumbrances, covenant of quite enjoyment, covenant of warranty forever, and the covenant of further assurances.
Special Warranty- Grantor warrants good title to the property through the expressed or implied covenant of Seizin, covenant against encumbrances, covenant of quite enjoyment, covenant of warranty forever, and the covenant of further assurances. Covenant apply only to the defects occurring during Grantor's period of ownership.
Bargain and Sale - A deed which contains neither expressed nor implied warranties of title, but the grantor implies ownership of the property described in the deed.
Grant Deed - A deed in which the covenant of seizin and covenant against encumbrances are implied by statute when the word grant is used in the words of conveyance.
Quitclaim - A deed without either express or implied warranties. It simply conveys whatever interest, right, or title the grantor has in the property, if any.
Explanation of covenants
Seizin - Owns the property and has the right to convey it.
Encumbrances - Free from all encumbrances not specifically excepted in the deed.
Quite Enjoyment - Free from claim of superior title.
Warranty Forever - Compensate the Grantee.
Covenant of Further Assurances - Perform to perfect title.
Special Purpose
Gift, Deed of Trust, Trustee's Deed, Deed of Reformation
Court Ordered Deeds
Sheriff's Deed, Tax Deed, Deed in Partition
Requirements
In writing, Legal Capacity, Consideration, Legal Description, Signed by Grantor, Name of Grantor and Grantee, Granting Clause, Delivery and Acceptance.
Types of Leases
Gross - Tenant Pays Fixed Rent
Net - Tenant Pays Rent + Expenses
Percentage - Bases on % of Gross Income
Variable or Graduated - Rent Changes
Ground Lease - Tenant erects Building
Lease Purchase - Tenant Purchases
Lease Option - Rent with Right to Purchase
Types of Listings
Open Listing- A property listing that uses multiple Real Estate agents in order to sell it.
Exclusive Agency - A listing agreement in which the seller appoints only one broker to represent him/her but reserves the right to sell the property them self without being liable to the broker for a commission.
Exclusive Right to Sell - A listing agreement which guarantees the broker a commission if the property is sold during the term of the listing, regardless of who sells it.
Net Listing - A listing agreement which authorizes the broker to sell the property for any price possible, while the seller agrees to accept a set amount. Note: Prohibited in most states
Exclusive Agency - A listing agreement in which the seller appoints only one broker to represent him/her but reserves the right to sell the property them self without being liable to the broker for a commission.
Exclusive Right to Sell - A listing agreement which guarantees the broker a commission if the property is sold during the term of the listing, regardless of who sells it.
Net Listing - A listing agreement which authorizes the broker to sell the property for any price possible, while the seller agrees to accept a set amount. Note: Prohibited in most states
Real Estate Formulas
Area Math
1 Square Yard = 9 Square Feet
1 Acre = 43,560
1 Mile = 5,280 Feet
1 Square Mile = 640 Acres
1 Section = 1 Square Mile or 640 Acres
Township = 36 Sections or 6 Square Miles
Rectangle
Area = Length x Width ( LxW ) or Frontage x Depth ( FxD )
For Example: Area = 650 ft x 490 ft = 318,500 sq. ft
Acres = Square Feet / 43,560
For Example: Acres = 318,500 sq. ft / 43,56 = 7.3118
Area = Length x Width x Height
For Example: Volume = 40ft x 60ft x20ft = 48,000 cubic feet
Triangle
Area = Lenth x Width / 2
For Example: Area = 30ft x 40ft / 2 = 600 sq ft
Calculating Commission
Sales Price x Commission Rate = Commission Dollar Amount
Transfer Tax
( $0.10 per 100 )
( Sales price / 100 ) x .10 ROUND UP
Intangibles Tax
( $1.50 per 500 )
Intangible Tax = New Loan Assumed / 500 ROUND UP x $1.50
1 Square Yard = 9 Square Feet
1 Acre = 43,560
1 Mile = 5,280 Feet
1 Square Mile = 640 Acres
1 Section = 1 Square Mile or 640 Acres
Township = 36 Sections or 6 Square Miles
Rectangle
Area = Length x Width ( LxW ) or Frontage x Depth ( FxD )
For Example: Area = 650 ft x 490 ft = 318,500 sq. ft
Acres = Square Feet / 43,560
For Example: Acres = 318,500 sq. ft / 43,56 = 7.3118
Area = Length x Width x Height
For Example: Volume = 40ft x 60ft x20ft = 48,000 cubic feet
Triangle
Area = Lenth x Width / 2
For Example: Area = 30ft x 40ft / 2 = 600 sq ft
Calculating Commission
Sales Price x Commission Rate = Commission Dollar Amount
Transfer Tax
( $0.10 per 100 )
( Sales price / 100 ) x .10 ROUND UP
Intangibles Tax
( $1.50 per 500 )
Intangible Tax = New Loan Assumed / 500 ROUND UP x $1.50
Real Estate Acronyms
Principals of Agency
C - Compensation
R - Reimbursement
I - Indemnification
P - Performance
Agency Law - Duties to Client
P - Personal Performance
O - Obedience to Legal Instruction
L - Loyalty ( Promote and Protect Client )
A - Accountability ( Funds )
N - Notice ( Written and Informed )
D - Due Care/Diligence
Agency Termination
R - Revocation
E - Expiration of Agreement
A - Agreement
D - Death of Either Party
I - Incapacity
E - Extinction of Purpose
S - Subject of Law ( Illegality )
What an Agent owes to a Customer
H - Honesty
A - Accountability
D - Disclosure
Agent must have a license to
B - Buy
A - Appraise
R - Sell
S - Sell
A - Auction
L - Lease
E - Exchange
Creating an Easement
P - Private Grant
O - On Agreement
P - Prescription
C - Condemnation
O - Operation of Law
R - Reservation
N - Necessity
Terminating an Easement
R - Release
E - Expiration
P - Prescription
M - Merger
A - Abandonment
N - Necessity
Essential Elements of a Contract
C - Competent Parties
O - Objective
M - Mutual Agreement
I - In Writing
C - Consideration
Fair Housing Act
F - Familial Status
R - Race
E - Equal Opportunity
S - Sex
H - Handicap
C - Color
O - Origin
R - Religion
N - Nationality
Test for Fixtures
M - Method of Attachment
A - Adaptation
R - Relation of Parties
I - Intention
A - Agreement
Government Rights, Fed, & Local
P - Police Power
E - Escheat
T - Taxation
E - Eminent Domain
Termination of a Lease
D - Death of Tenant
E - Eviction of Tenant
C - Condemnation
A - Agreement
F - Foreclosure or Bankruptcy
Termination of a Listing
D - Death
E - Expiration of Listing Contract
A - Agreement ( Mutual or Written )
R - Revocation
I - Incapacity ( Legally Incompetent )
E - Eminent Domain
Counting Days at Closing
B - Buyer
A - Add
D - Day
S - Seller
A - Accrual
C - Closing Date
Bundle of Rights
PO - Possession
CO - Control
EN - Enjoy
DI - Dispose
Adverse Possession
C - Continuous
O - Open
H - Hostile
E - Exclusive Adverse
N - Notorious
Economical Characteristics of Property
S - Scarcity
P - Performance of Investment
A - Area Performance
M - Modification
Physical Characteristics of Property
I - Immobility
N - Non-Homogeneity ( Uniqueness )
I - Indestructibility
Joint Tenancy
P - Possession
I - Interest
T - Time ( Same Time )
T - Title ( Same Time )
S - Survivorship
Value of Land
D - Demand
U - Utility
S - Scarcity
T - Transferablity
C - Compensation
R - Reimbursement
I - Indemnification
P - Performance
Agency Law - Duties to Client
P - Personal Performance
O - Obedience to Legal Instruction
L - Loyalty ( Promote and Protect Client )
A - Accountability ( Funds )
N - Notice ( Written and Informed )
D - Due Care/Diligence
Agency Termination
R - Revocation
E - Expiration of Agreement
A - Agreement
D - Death of Either Party
I - Incapacity
E - Extinction of Purpose
S - Subject of Law ( Illegality )
What an Agent owes to a Customer
H - Honesty
A - Accountability
D - Disclosure
Agent must have a license to
B - Buy
A - Appraise
R - Sell
S - Sell
A - Auction
L - Lease
E - Exchange
Creating an Easement
P - Private Grant
O - On Agreement
P - Prescription
C - Condemnation
O - Operation of Law
R - Reservation
N - Necessity
Terminating an Easement
R - Release
E - Expiration
P - Prescription
M - Merger
A - Abandonment
N - Necessity
Essential Elements of a Contract
C - Competent Parties
O - Objective
M - Mutual Agreement
I - In Writing
C - Consideration
Fair Housing Act
F - Familial Status
R - Race
E - Equal Opportunity
S - Sex
H - Handicap
C - Color
O - Origin
R - Religion
N - Nationality
Test for Fixtures
M - Method of Attachment
A - Adaptation
R - Relation of Parties
I - Intention
A - Agreement
Government Rights, Fed, & Local
P - Police Power
E - Escheat
T - Taxation
E - Eminent Domain
Termination of a Lease
D - Death of Tenant
E - Eviction of Tenant
C - Condemnation
A - Agreement
F - Foreclosure or Bankruptcy
Termination of a Listing
D - Death
E - Expiration of Listing Contract
A - Agreement ( Mutual or Written )
R - Revocation
I - Incapacity ( Legally Incompetent )
E - Eminent Domain
Counting Days at Closing
B - Buyer
A - Add
D - Day
S - Seller
A - Accrual
C - Closing Date
Bundle of Rights
PO - Possession
CO - Control
EN - Enjoy
DI - Dispose
Adverse Possession
C - Continuous
O - Open
H - Hostile
E - Exclusive Adverse
N - Notorious
Economical Characteristics of Property
S - Scarcity
P - Performance of Investment
A - Area Performance
M - Modification
Physical Characteristics of Property
I - Immobility
N - Non-Homogeneity ( Uniqueness )
I - Indestructibility
Joint Tenancy
P - Possession
I - Interest
T - Time ( Same Time )
T - Title ( Same Time )
S - Survivorship
Value of Land
D - Demand
U - Utility
S - Scarcity
T - Transferablity
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