MA Real Estate Exam Study Guide Flashcards

MA Real Estate Exam Study Guide Flashcards Salvage ValueThe worth of an asset after it has been depreciated.DepreciationAny condition that negatively affects the value of an

improvement or personal property. There are three classes:

physical deterioration, functional obsolescence, and external (economic) obsolescence.HO6This form of a hazard insurance policy is designed for condominiums and can be customized to comply with the condo association's bylaws.Air RightsThese rights are for the use of space above a piece of real property. They can be transferred and subdivided.DeviseA gift of real property delivered through a will.Board of DirectorsA group of people responsible for the management of a corporation.Subsurface RightsThese rights are for the use of anything found beneath a piece of real property, such as oil, coal, or gas. These rights can be transferred separately from the property itself, and include an implied easement that allows the owner access to the property so that they can exercise their rights.Seller's MarketThe situation where demand for real property is greater than the supply, which causes sale prices to rise and builders to become more motivated to build.General LiensEncumbrances that usually affect all of a debtor's non-exempt property, both real and personal. Examples include judgement liens, debts, federal taxes, etc.LandThe earth's surface down to the center of the earth and upwards to infinity ("heaven to hell"), including all things attached by nature. Also known by the term real estate.Special PurposeThe types of properties that include churches, schools, cemeteries, and government-held lands.SubdivisionThe process of splitting a single property into smaller parcels.National Association of RealtorsA professional real estate organization that requires members to uphold a specific set of ethics and pay dues. In turn, the members can call themselves Realtors.FixtureAn item that was once personal property but is now affixed to the real estate in such as a way as to become real property. Courts use the following tests if an item is being

disputed:M- Method of attachment (i.e. permanence)A-

Agreement between the partiesR- Relationship of the parties (landlord/tenet, buyer/seller, etc.)I- Intention of the

parties at the time the article was attachedA- Adaptation of the article (i.e. custom-made for the house) ContingenciesConditions that must be met before a contract is binding.The most common conditions are the buyer's ability to obtain suitable financing, a satisfactory property inspection, and the ability to obtain adequate insurance on the property.

Exculpatory ClausesItems that excuse a landlord for any negligence in maintaining a leased property. These items are illegal in Massachusetts.BenchmarkA permanent reference point, such as a street intersection, used in a metes and bounds legal description.BoundsA name for the landmarks and monuments used in some formal legal descriptions.DemographicsThis factor determines the quantity and type of housing in demand in a particular area. It evaluates family sizes, ratio of adults to children, number of senior citizens, family incomes, lifestyles, etc.Bargain and Sale DeedsThese deeds contain no real warranty against unnamed encumbrances, and only imply that the grantor has the right to convey the property.This type of deed is not used in Massachusetts.ImprovementsAdditions to property that increase its value or enhance its appearance. It can include buildings, fixtures, and landscaping.Elevation CertificateInsurance agents are required to obtain one of these on any property before issuing quotes for flood insurance.FinancingThe pledging of real property and collateral for the repayment of a loan through a mortgage or deed of trust.Personal PropertyPossessions such as money, furniture, stocks and bonds, trade fixtures, and growing crops that are easily moved from one property to another. Also known as chattel.ContractA voluntary agreement between legally competent parties to perform (or refrain from performing) a legal act.SeveranceThe process of turning real property into personal property, such as by cutting a tree down.Percolating WaterAnother name for subsurface water.BrokerageThe business of bringing people together in a real estate transaction.TownshipA 36 square mile area of a rectangular survey that is bounded by base and range lines. Each is 6 miles wide by

• miles long. Each one contains 36 1-acre sections.

AppraisalAn estimation of a property's value, usually prepared by a professional who is licensed in this field.Point of BeginningThe physical location at which a metes and bounds legal description starts. To obtain closure, the description must also end at this location.LocationThis characteristic of real property is important because a parcel's value is impacted by surrounding land uses.Holographic WillA will that is handwritten.Nonmoney EncumbrancesEncroachments, licenses, restrictions, and easements that affect only the physical condition and use of a property.

Property ManagementA broad term for a person or company hired to maintain and manage a property on behalf of its owners, and who are to maximize the owner's returns.ConsiderationSomething given by a grantee in exchange for property. It can be a specific dollar amount, personal property, or even "love and affection".Legal DescriptionA formal or informal definition of a specific property that unquestionably describes one property and cannot be applied to any other property.Functional ObsolescenceThis results when depreciation of property is the result of outdated function or poor design. If easily remedied, then it is considered curable. If design constraints prevent

remedy, then it is incurable. Ex: not enough bathrooms,

lack of a laundry area, inadequate electrical system, etc.SeveraltyType of ownership where property is owned by a single person or company.Flood InsuranceThis type of homeowner's insurance policy covers "rising water" problems such as a burst water main, overloaded drains, and melting snow. It is usually an optional add-on policy that becomes effective 30 days after purchase, unless the property is in a specific area and is collateral for a federal loan, in which case it is a mandatory policy and effective immediately.NonhomogeneityA characteristic that states no two parcels of real property are exactly alike, and therefore, one cannot be legally swapped for another.AccessionThe process of personal property or accretion of alluvial

deposits becoming additions to real property. Ex: installing

a new HVAC system, planting a tree, or sand washed up naturally on the edge of a steam. Also referred to as annexation.AlluvionThe accumulation of soil, rock, and other materials on the edge of a property that are deposited by the movement of water.EmblementsGrowing crops or flowers that are produced annually on a property and are referred to as fructus industriales, meaning "fruits of industry." AgriculturalThe types of properties that include farmlands, timberlands, orchards, and ranches.Riparian RightsThe rights granted to owners of land that are adjacent to flowing waters and/or land that has subsurface water.These rights state the owner can use the water in any legal way as long as it doesn't interfere with the same rights of owners downstream.