PrepAgent CA RE Exam Prep Flashcards

PrepAgent CA RE Exam Prep Flashcards Construction LoanShort-term loan used to finance the building of a home or another real estate project. Because they are considered fairly risky, construction loans usually have higher interest rates than traditional mortgage loans.AccessionTitle to improvements or additions to real property is acquired as a result of the accretion of alluvial deposits along the banks of streams or as a result of the annexation of fixtures.Standard Policy of Title InsuranceInsurance policy most buyers get to protect themselves from forgery in the chain of title or defective delivery of a deed. A standard policy DOES NOT cover a site inspection or a survey.Servient Tenementland burdened by the easement Grandfather ClauseAllows a property to continue it's existing use, even if it doesn't comply with zoning laws.Estoppel StatementA signed statement certifying that certain facts are correct, which cannot be later contradicted by the signer- for example, that a lease exists or that rent is paid to a certain date.Caveat EmptorLatin for "Buyer Beware" DeedEvidence of property transfer.Panic SellingDiscriminatory practice of trying to convince owners in a neighborhood to sell their homes because members of a minority group are moving into the neighborhood. This is a violation of state and federal laws, and is not the same as duress. May also be referred to as Panic Peddling or Blockbusting.General Warranty DeedA type of deed where the grantor or the seller guarantees that s/he holds clear title to a piece of real estate and has a right to sell it. The guarantee is not limited to the time the grantor owned the property- it extends back to the property's origins.Executory ContractA contract in which terms of the contract have yet to be completed.Lis PendensA pending legal action- for example, a notice that a property is due to be taken to court which, depending on the results of the court case, could affect the title. A lis pendens remains in effect until there is a judgment or the court case is dismissed.Principle of SubstitutionA valuation principle that says the value of a property should be equal to that of a similar, substitute property. For

example, an investor wouldn't pay one million dollars for a property when another one is available with a similar use, design, and income for five hundred thousand dollars. The lowest valuation should be the upper limit of value for both homes being compared.

ForeclosureA legal procedure by which property used as security for a debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms in the mortgage document.Writ of AttachmentThe method by which a debtor's property is placed in the custody of the law and held as security, pending the outcome of a creditor's suit.Interim Occupancy AgreementAgreement made when possession and title do not occur at the same time- for example, when a buyer wants to move in to a property before the close of escrow.Balloon PaymentA final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized.Bilateral ContractAn agreement in which one person makes a promise in exchange for a promise from a second person (the contract is binding on both parties to perform)- for example, a

broker's listing which says: "In consideration of the

execution of the foregoing, the undersigned broker agrees to use diligence in procuring a purchaser." Effective AgeAge of a property based on its condition, not its actual age- for example, if an appraiser examines a building that is 25 years-old but, because of excellent maintenance it has the condition of an 11 year-old building, the appraiser may use the 11-year-old age as the effective age of the property.ContingenciesA provision or condition in the purchase of real estate requiring a certain act to be done or an event to happen before the contract becomes binding.CounterofferA new offer made in response to an offer received. It has the effect of rejecting the original offer, which cannot be accepted thereafter unless revived by the offeror repeating it.Material FactFact that a reasonable person would think was relevant to a decision being made- for example, un-repaired water damage in the attic of a home for sale. If knowing something could cause a person to change their mind about a transaction, legally it's material fact.Reconveyance DeedA deed which indicates that the borrower is released from a mortgage debt and transfers the property title from the lender (or beneficiary) to the borrower. Most commonly issued when a mortgage has been paid in full.Mechanic's LienLien filed for to benefit someone who worked on the property. Only considered valid if they have been verified and recorded. Take priority depending on when work began- they may take priority earlier than their date of recording. Notices for mechanic's liens can be for

completion, cessation, and non-responsibility.Open-End MortgageA mortgage loan expandable by increments up to maximum dollar amount, all of which is secured by the same original mortgage.