In chapter 2, the topic of real property and personal property is covered and what makes the one different from the other.
Personal Property
Personal property plays an important role in the discussion of real estate because so often personal property is involved in the transfer of real property.
Chapter 3 – Informal and Legal Descriptions of Real Estate
In chapter 3, discusses the different ways that people describe property. Some ways are very simple such as that red house on the corner to complex legal descriptions. Methods exist to be able to find and identify any specific piece of property in this huge world of ours. Methods also exist to legally describe land in the United States in order to be able to locate it so it can be possessed and used.
Chapter 4 – Governmental Limitations on the Use of Land
In chapter 4 you will see how the government has overriding rights in all of the land. Our concept of land rights and use has developed over hundreds and hundreds of years and has come from many continents to create the way we look at these rights in the United States today.
SECTION 2 – REAL ESTATE OWNERSHIP AND ITS LIMITATIONS
Chapter 5 – What is Owned – Estates
Chapter 5 discusses Freehold and Less-then-Freehold estates. The Freehold estates detail the difference between Fee Simple Estates and Life Estates and explain what real estate owners actually own and what the rights and the obligations are that go with owning real estate. The second part of this chapter identifies and details the Less-then-Freehold estates or what are often termed Leasehold Estates which are Estate for Years, Estate from Period to Period, Estate at Will and Estate at Sufferance.
Chapter 6 – Limitations of Ownership Rights – Encumbrances
Chapter 6 covers limitations on ownership rights – other than governmental ways – that are called encumbrances which limit what an owner can do with his or her property. Encumbrances can be monetary or non-monetary. Monetary encumbrances are referred to as liens. Non-monetary encumbrances include easements appurtenant and easements in gross, profits, licenses, encroachments, trespass and nuisance, and private and public restrictive covenants. Monetary encumbrances look at how mortgages and trust deeds, real estate taxes place a burden upon the title to real estate. Judgment liens and mechanic’s liens complete this discussion
Chapter 7 – Traditional and Contemporary Ownership – Title to Real Estate
Traditional Ownership
In chapter 7, the traditional ways real estate has been owned is examined. Sole ownership as well as the forms of co-ownership – sharing ownership of real estate with others – like joint tenancy with the right of survivorship and tenants in common are examined.
Contemporary Ownership
Chapter 7 also looks at the new ways that have evolved for real estate to be owned today. Forms of ownership like condominiums, the cooperatives and PUDs are identified that permit property owners to share the cost of luxuries that they might not otherwise be able to afford.
Chapter 8 – Real Estate Investing
Investing
Chapter 8 starts out looking at the largest investment most people make – the ownership of their home. The asset and liability aspects of home ownership are considered. This chapter also looks at investing in other forms of real estate as sources of income to the owners. Because real estate is not liquid and not quickly marketable like stocks and bonds, investments in real estate are usually considered long-term investments which require great care in selecting them as well as the knowledge of the tax consequences for successful investing.
Chapter 9 – Real Estate Development
Development
Real estate development creates real estate investment opportunities. Economic and political considerations often change the treatment of various real estate investments.
Chapter 10 – The Rights of Landlords and Tenants and Property Management
Rights of Landlords and Tenants
Chapter 10 starts out looking at the rights that landlords and tenants have in leased real estate. In leasing, and owner permits the use of real estate by a person who does not own it in return for the payment of rent. The tenant enjoys the possession and use of the property and the owner, the landlord, enjoys the rental income. Very old rules of law must be dealt with in leasing and these legal concepts can become complex. A well-drafted lease ensures that both landlord and tenant get the benefits they seek.
Property Management
Chapter 10 continues by illustrating that out of the complexities of leasing has developed property management, which is now an important real estate activity that it has evolved into a separate career area. A career as a professional real estate property manager allows people an opportunity to manage an owner’s income producing real estate for a fee in a wide variety of ways form the leasing of residential, commercial industrial, shopping center property to design, new and remodeling construction etc.
SECTION 3 – THE REAL ESTATE BROKERAGE BUSINESS
Chapter 11 –The Evolution of the Real Estate Brokerage Business
Along with many other industries now operating in the harsh glare of our new “global” economic reality, the real estate industry is under assault as never before. Today’s home buyers and sellers are much better educated, often because of the way their own careers have been re-shaped by the rapidly-changing business models all around them. Predictably, most are clamoring for better value and more services from real estate agents and the industry is at the genesis of significant change over the next two decades.
Chapter 12 – The Role of Agency and Ethics in Real Estate
Role of Agency
Chapter 12 clarifies what it takes to have an agency contract and then demonstrates what the role of the principal, the licensee and the third parties or customers are in an agency relationship and looks in depth at the fiduciary relationship between the principal and licensee. It further explains how sellers, buyers and real estate licensees participate and interact in an agency contract.
Real Estate Ethics
Chapter 12 concludes with a discussion of morals, ethics and laws and how the real estate profession is involved with all three. The National Association of REALTORS® Code of Ethics sets the standard for real estate practice in the United States today.
Chapter 13 – Licensing Laws and Professional Affiliations
Chapter 13 reviews the role of the National Association of REALTORS® and the way various Councils lead the real estate practice in the United States today. Other important real estate groups are showcased.
SECTION 4 – CONTRACTS
Chapter 14 – General Contract Law – The Foundation
Chapter 14 discusses the overarching concept of contracts which are at the heart of every business transaction. It covers the four essential elements of a valid contract and looks at what is necessary for a contract to be good. A properly formed contract assures that the transaction will yield the desired results.
Chapter 15 – Brokerage Contracts With Sellers and Buyers
Brokerage Contracts with Sellers
Chapter 15 discusses real estate brokerage contracts. The most common contract in real estate is the listing contract whereby an owner of a property hires a licensed real estate broker to assist in the selling of a real property. Forms are used in real estate for listing property for sale. No universal forms exist in real estate brokerage, but all of the forms do have certain common important elements and the ability to use these forms is covered.
Brokerage Contracts with Buyers
Today, a new type of contract is being used. A contract commonly called a Buyer’s Representation or Agreement is used whereby a buyer hires a licensed real estate broker to assist in the buying of a real property. The important aspects of this contract are reviewed.
Chapter 16 – Sales Contracts between Sellers and Buyers
In chapter 16, attention is turned to learn about the importance of a detailed Sales Contract or Agreement between a buyer and a seller to make sure that all parties get what they bargained for and that there will be no need for costly disputes or court. A real estate sale is a complicated transaction requiring the inclusion of many details. Considerable knowledge of this contract is required of everyone active in real estate the brokerage business.
Chapter 17 – Unique Laws Affecting Real Estate Brokerage
Chapter 17 looks at the laws that directly affect the real estate brokerage business. Regulation of the sale and leasing of real estate comes from a variety of sources. Much of the regulation comes from state regulation of the brokerage industry. It also covers the Americans with Disabilities Act.
SECTION 5 – REAL ESTATE VALUATION AND APPRAISAL
Chapter 18 – How Value is Determined
Chapter 18 discusses how personal and real property is valued. The ability to establish with some degree of confidence the value of a piece of real estate is essential to the financing function. A good working knowledge of how value is determined is important to everyone active in real estate and not just to lenders.
Chapter 19 – How Real Estate is Appraised
Chapter 19 states that an appraisal is estimate or opinion of value as of a specific time and by a qualified expert called an appraiser. Because of its unique character, the worth of real estate must be established by applying different procedures and comparisons to similar properties through an art and a science called appraisal. Unlike shares of stock that are traded daily, real estate sales are infrequent and therefore harder to determine what they are worth at this time.
Often a comparative market analysis that is an abbreviated form of value determination is done by a real estate licensee, which is helpful to the seller or buyer in the decision-making process of a real estate sale.
SECTION 6 – REAL ESTATE FINANCING
Chapter 20 – The Sources of Financing
Primary Mortgage Market
Chapter 20 examines the Primary Mortgage Market which is the source of funds for all real estate transactions which includes commercial banks, savings and loan associations, mutual savings banks, insurance companies and the significance they play in the real estate financing arena.
Secondary Mortgage Market
Chapter 20 continues and reviews the Secondary Mortgage Market which is where the Primary Mortgage Market goes to buy and sell the notes and mortgages and trust deeds generated by their sources in order to obtain new capital.
Chapter 21 – Notes, Mortgages and Deeds of Trust
Notes
Chapter 21 discusses the important aspects of notes and the promise to pay concept in the role of financing real estate.
Mortgages and Deeds of Trust
Chapter 21 continues the discussion as to the role of mortgages and deeds of trust in securing the real estate as security for the debt in the financing of real estate.
Laws
Chapter 21 identifies laws that have an indirect effect on the real estate business due to the substantial governmental regulation of the mortgage-lending industry which include Truth-in-Lending and the Real Estate Settlement Procedure Act known as RESPA. The impact that the Department of Housing known as HUD has on real estate is also reviewed.
SECTION 7 – THE REAL ESTATE TRANSACTION
Chapter 22 – Voluntary and Involuntary Transfer of Real Estate Titles
Deeds
Chapter 22 begins with discussing how the transfer of title to real estate from one owner to another is accomplished using a written document called a deed. A variety of deeds can be used and the quality of ownership being transferred will differ depending on the type of deed signed.
Voluntary Transfer
Chapter 22 continues the discussion of transferring the tile by looking at the usual voluntary transfer that is often – but not always – done as the result of a sale.
Involuntary Transfer
Chapter 22 ends by demonstrating how sometimes real estate ownership is unfortunately transferred involuntarily.
Chapter 23 –Real Estate Property Taxation
Taxation of Real Property
Chapter 23 covers how real estate tax rates are established and how assessments are determined as well as how the taxation payment affects the market value of real estate.
Chapter 24 – Environmental Issues Involved with a Real Estate Transaction
Chapter 24 explains how environmental issues relate to real estate transactions. Since environmental issues are still relatively new, it is hard to predict with certainty the full impact of environmental issues on the real estate business. The explosive growth in regulations from a variety of sources makes it difficult to be aware of potential liability until the courts have decided more cases. An active real estate person will need to know about environment issues to function effectively and cannot afford to ignore this subject and how it will fully affect the real estate industry.
Chapter 25 – Title Abstracts, Title Insurance and Title Recording
Title Abstracts
Chapter 25 the subject is that the evidence of ownership required. Because of the high value placed on real estate, buyers of real estate have historically required evidence that the seller is in fact the owner of the property. Ownership has been proven by examining the history of the real estate over a very long period. This ensures that no one other than the present owner has a claim on the real estate. The history that is constructed is called the chain of title. By following the chain of title back over the years, today’s true owner can be accurately identified.
Title Insurance
Chapter 25 continues by explaining why title insurance plays such an important role in today’s real estate economy and practice and how title insurance can represent that the title is clear at the time of closing and why it is so important to do so.
Title Recording
Chapter 25 completes this discussion by explaining how title recording works, what the requirement for recording are and why it is important to record the title immediately after closing.
Chapter 26 – Insuring Real Estate against Casualty Losses
Chapter 26 covers how important it is for people to protect their home from loss. Various insurance aspects are also considered.
Chapter 27 – Closing the Real Estate Transaction
Chapter 27 brings the real estate story almost to a close and looks at the required accounting for a real estate sale that must take place at the closing when the parties settle their accounts. At the closing, the buyer pays the money to the purchase the property and the seller receives the net proceeds of the sale. The closing is the culmination of much effort by a number of participants and requires precise mathematical accuracy in its preparation.
Chapter 28 – Unique Laws Affecting Real Estate Transactions and Financing
Chapter 28 reviews federal laws that have an impact either directly or indirectly through regulation of environmental laws and regulations or finance. The role that the Department of Housing, HUD, plays in a real estate closing is examined. It also covers the impact of the Environmental Protection Agency on real estate.
APPENDIX A – REAL ESTATE CONSTRUCTION
Construction
Development leads to building construction – a field that real estate professionals find full of opportunity. Construction has its own language that must be understood and a working knowledge of construction terms and techniques is essential to anyone active in the real estate business. Avoiding the liability of misrepresentation requires a fundamental knowledge of building construction.
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