Arm-length transaction Flashcards

Arm-length transaction Flashcards Land contractThe seller accepts a down payment on a parcel of land but title to the property does not pass until the last principal payment has been received. This is referred to as an installment sales contract or a contract for a deed.Cost approachThe process of estimating the value of a property by adding to the estimated land value the appraiser's estimate of the reproduction or replacement cost of the building, less depreciation.1031 exchangeWay to defer capital gains tax; property owner must re-invest profits from the sale of an investment property into another investment property within 6 months EstoppelA legal impediment to denying a fact or restoring a right that has been previously waived.Undisclosed dual agency isA) permitted so long as no injury is sustained B) illegal C) permitted so long as the principal paying the commission consents. D) permitted on residential property

• illegal

Deedthe official document transferring ownership from seller to buyer Purchase agreementA written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.PITIPrincipal, Interest, Taxes, Insurance Deviseeone who inherits real estate under a will How can a buyer in Texas legally back out of a purchase contract after the option. Has expired.By finding a legal defect in the contract Interest in landany right, privilege, power, or immunity in real property Principle of ContributionThe value of any component of property is determined by how much value the improvement contributes to the value of the whole property.Market data approachA means of estimating value by comparing similar properties. Used when there is an active market and where comparables can be identified. Also called comparable sales approach.FHA loana government-sponsored loan that carries mortgage insurance How does the conversion of a residential property to a rental property affect a homestead exemption status in Texas?The exemption remains as long as the owner maintains the property as their domicile Adverse PossessionA person takes possession & use of a property belonging to another. Possession must be open, notorious, hostile & uninterrupted for a certain period of time.

Acceleration clausea statement in a credit contract that requires you to repay the entire loan immediately if you miss a payment Which option best describes the difference between an administrator and an executor?An administrator is appointed by the court, while an executor is named in the will ReversionReturn of land Testatora person who makes a will RESPA (Real Estate Settlement Procedures Act) a law requiring full disclosure of closing costs to buyer and seller.Warranty deeda deed that guarantees a clear title to the buyer of real property.Principle of progression (real estate)The value of a less expensive property is likely to increase when placed in the area with high and property Fee simple ownershipTo have and hold forever Principle of substitutionNo person is justified in paying more for a property when a similar property can be purchased for less - sets an upper limit on price Aviation ObsolescenceChange an aircraft flight patterns What are the potential legal repercussions for a Texas real estate broker who fails to supervise their agents adequately License, revocation or suspension Construction evictionLease may be terminated if the lessee (tenant) must vacate due to the lessor's (landlord's) act or failure to act; wrongful evidence In Texas, what distinguishes a general warranty deed from a special warranty deed?Special warranty deed, states that there are no claims against the property title during the time when the seller or grantor owned it. On the other hand, a general warranty deed states there was no title defects at any point in time.How can a Texas property owner legally contest a property tax appraisal, deemed excessively high By filing a formal protest with the local appraisal district Sheriff's Deeddocument given to purchaser of foreclosed property Describe the legal consequences in Texas if a real estate agent misrepresents the zoning classification of a property they are selling License, suspension or revocation Title insurancea type of insurance that protects the buyer if problems with the title are found later Non-Freehold EstateLess than freehold. A non-ownership or leasehold estate, which a tenant possesses in real property.Injunction in real estateA permanent order granted by a court that enforces an existing right Explain the legal implications for a Texas property owner who installs permanent fixtures on lease land The pictures become the property of the landowner Four essentials of a valid contractMeeting of the minds, Capable parties, Lawful object and Consideration.Self dealingoccurs when managers take advantage of their position to further their own private interests rather than those of the firm

Duress(n.) compulsion by threat; forcible confinement

Scenario: in Texas, a buyer backed out of a home

purchase during the option. Period what happens to the earnest money?The buyer receives a full refund Quit claim deedA deed that conveys all interest in a property which the grantor may or may not have, and gives no warranties as to the condition of title. Its primary use is to remove clouds from the title.Capitalization approachAn appraisal method used by an appraiser to arrive at a property's value based on the present worth of a property's future net operating income.Straight line depreciation method(cost - salvage value) / useful life In real property what does a "fee" signify? And a state of inheritance (land or other Realty) over which a person has absolute ownership What unique challenges arise, when selling a property in Texas that is part of a condominium. regime compared to single-family home Additional disclosures regarding the condominium association and fees are required Ways to voluntarily transfer title of property Well, Grant, deed In Texas under what conditions can a buyer legally withdrawal from a real estate purchase after the inspection.Has ended due to environmental concerns.If the concern significantly affect the properties value interest in landany right, privilege, power, or immunity in real property Deed of TrustA deed to real property, which serves the same purpose as a mortgage, involving three parties instead of two. The third party holds naked title for the benefit of the lender.Beneficiary (Lender), Trustor (Borrower), Trustee (Third Party) arm length transactionTransactions between two independent parties.Functional ObsolescenceA loss of value to an improvement to real estate arising from functional problems, often caused by age or poor design.How do deed restrictions affect property use in ownership in Texas Restrictions limit, or dictate certain uses for activities on the property

PITI is the acronym for:a loan payment including principal, interest, taxes and

insurance Escrowed mortgageWhen you close on a mortgage, your lender may set up a mortgage escrow account where part of your monthly loan payment is deposited to cover some of the cost associated with homeownership Subagent of the listing agent works forThe seller Bill of SaleA document used to transfer ownership of personal property.Discount pointsA fee charged by the lender at settlement that results in increasing the lender's effective yield on the money borrowed. One discount point equals one percent of the

loan amount.Cap Rate (Capitalization Rate)The rate of return an investor wants to receive or that the property is producing