Real Estate Principles

by Jacobus,Charles J.

Edition: 10th

ISBN13: 9780324305609

ISBN10: 0324305605

Format: Hardcover

Pub. Date: 2005-06-22

Publisher(s): Cengage Learning

Other versions by this Author

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Summary

This popular, best-selling principles book is the first choice for introducing the fundamentals of Real Estate -- clearly and simply -- while providing a solid and comprehensive understanding of the real estate industry today. Book jacket.

Preface

xxiii

Introduction to Real Estate

(10)

How to Read This Book

(1)

Transaction Overview

(1)

Chapter Organization

(2)

Career Opportunities

(5)

Residential Brokerage

(1)

Commercial Brokerage

(1)

Industrial Brokerage

(1)

Farm Brokerage

(1)

Property Management

(1)

Rental Listing Services

(1)

Real Estate Appraising

(1)

Government Service

(1)

Land Development

(1)

Urban Planning

(1)

Mortgage Financing

(1)

Securities and Syndications

(1)

Consulting

(1)

Research and Education

(1)

Full-Time Investor

(1)

License Requirements

(2)

Additional Readings

(2)

Nature and Description of Real Estate

(23)

Key Terms

(1)

Land

(1)

Improvements

(1)

Fixtures

(3)

Manner of Attachment

(1)

Adaptation of the Object

(1)

Existence of an Agreement

(1)

Relationship of the Parties

(1)

Appurtenances

(1)

Water Rights

(1)

Land Descriptions

(10)

Metes and Bounds

(3)

Rectangular Survey System

(4)

Recording Plat

(1)

Reference to Documents Other Than Maps

(1)

Informal References---Street Numbers and Common Names

(1)

Assessor's Parcel Numbers

(1)

Grid Systems

(1)

Vertical Land Description

(1)

Lot Types

(1)

Physical Characteristics of Land

(2)

Immobility

(1)

Indestructibility

(1)

Nonhomogeneity

(1)

Economic Characteristics of Land

(4)

Scarcity

(1)

Modification

(1)

Fixity

(1)

Situs

(1)

Vocabulary Review

(1)

Questions & Problems

(1)

Additional Readings

(1)

Rights and Interests in Land

(23)

Key Terms

(1)

Feudal and Allodial Systems

(1)

Feudal System

(1)

Allodial System

(1)

Government Rights in Land

(2)

Property Taxes

(1)

Eminent Domain

(1)

Police Power

(1)

Escheat

(1)

Protecting Ownership

(1)

Fee Simple

(1)

Encumbrances

(6)

Easements

(3)

Encroachments

(1)

Deed Restrictions

(1)

Liens

(2)

Qualified Fee Estates

(1)

Life Estates

(1)

Prohibition of Waste

(1)

Statutory Estates

(2)

Dower

(1)

Curtesy

(1)

Community Property

(1)

Homestead Protection

(1)

Freehold Estates

(1)

Leasehold Estates

(1)

Estate for Years

(1)

Periodic Estate

(1)

Estate at Will

(1)

Tenancy at Sufferance

(1)

Overview

(3)

License

(1)

Chattels

(1)

Law Sources

(1)

Common Law

(1)

Statutory Law

(1)

Pictorial Summary

(5)

Surface Right of Entry

(1)

Land Lease

(1)

Condominium Lots

(1)

Vocabulary Review

(1)

Questions & Problems

(1)

Additional Readings

(1)

Forms of Ownership

(17)

Key Terms

(1)

Sole Ownership

(1)

Tenants in Common

(2)

Wording of Conveyance

(1)

No Right of Survivorship

(1)

Co-Owner Responsibilities

(1)

``What Ifs''

(1)

Joint Tenancy

(3)

Four Unities

(1)

Right of Survivorship

(1)

``Poor Man's Will''

(2)

Tenancy by the Entirety

(1)

Advantages and Disadvantages

(1)

Effect of Divorce

(1)

Community Property

(1)

Separate Property

(1)

Philosophy

(1)

Caveat to Agents

(1)

Partnership

(2)

General Partnership

(1)

Limited Partnership

(1)

Limited Liability Partnerships

(1)

Joint Venture

(1)

Corporations

(1)

S Corporations

(1)

Caveat

(1)

Trusts

(1)

Inter Vivos and Testamentary Trusts

(1)

Land Trusts

(1)

Real Estate Investment Trusts

(1)

Limited Liability Companies

(2)

Syndication

(1)

Caution

(3)

Vocabulary Review

(1)

Questions & Problems

(1)

Additional Readings

(1)

Transferring Title

(19)

Key Terms

(1)

Deeds

(9)

Essential Elements of a Deed

(2)

Covenants and Warranties

(1)

Full Covenant and Warranty Deed

(3)

Grant Deed

(2)

Special Warranty Deed

(1)

Bargain and Sale Deed

(1)

Quitclaim Deed

(1)

Other Types of Deeds

(1)

Conveyance After Death

(2)

Testate, Intestate

(1)

Probate or Surrogate Court

(1)

Protecting the Deceased's Intentions

(1)

Holographic Will

(1)

Oral Will

(1)

Codicil

(1)

Adverse Possession

(1)

Color of Title

(1)

Easement by Prescription

(2)

Ownership by Accession

(1)

Public Grant

(1)

Dedication

(1)

Forfeiture

(1)

Alienation

(3)

Vocabulary Review

(1)

Questions & Problems

(1)

Additional Readings

(1)

Recordation, Abstracts, and Title Insurance

(19)

Key Terms

(1)

Need for Public Records

(2)

Constructive Notice

(1)

Inquiry Notice

(1)

Actual Notice

(1)

Recording Acts

(1)

Mortgage Electronic Registration System

(1)

Unrecorded Interests

(1)

Summary

(1)

Requirements for Recording

(2)

Witnesses

(1)

Acknowledgment

(1)

Public Records Organization

(2)

Tract Indexes

(1)

Grantor and Grantee Indexes

(1)

Example of Title Search

(1)

The Next Step

(1)

Chain of Title

100

(2)

Abstract of Title

102

(1)

``What Ifs''

102

(1)

Title Insurance

103

(4)

Title Commitment

103

(2)

Policy Premium

105

(1)

Lender's Policy

105

(1)

Claims for Losses

105

(1)

The Growth of Title Insurance

106

(1)

Quiet Title Suit

107

(1)

The Torrens System

107

(2)

Torrens Certificate of Title

107

(1)

Adoption

108

(1)

Marketable Title Acts

109

(3)

Vocabulary Review

110

(1)

Questions & Problems

111

(1)

Additional Readings

111

(1)

Contract Law

112

(15)

Key Terms

112

(1)

How a Contract Is Created

113

(1)

Bilateral Contract

113

(1)

Unilateral Contract

113

(1)

Forbearance

114

(1)

Legal Effect

114

(1)

Essentials of a Valid Contract

114

(6)

Competent Parties

115

(1)

Mutual Agreement

116

(2)

Lawful Objective

118

(1)

Consideration

118

(1)

Contract in Writing

119

(1)

Executory, Executed, Execute

120

(1)

Performance and Discharge of Contracts

120

(1)

Novation

121

(1)

Deceased Party

121

(1)

Breach of Contract

121

(2)

Partial Performance

121

(1)

Unilateral Rescission

122

(1)

Lawsuit for Money Damages

122

(1)

Lawsuit for Specific Performance

122

(1)

Comparison

122

(1)

Liquidated Damages

123

(1)

Mutual Rescission

123

(1)

Statute of Limitations

123

(1)

Implied Obligations

124

(3)

Vocabulary Review

125

(1)

Questions & Problems

126

(1)

Additional Readings

126

(1)

Real Estate Sales Contracts

127

(25)

Key Terms

127

(1)

Purpose of Sales Contracts

128

(1)

Purchase Contracts

128

(10)

Earnest Money Deposit

128

(3)

Deed and Condition of Title

131

(1)

Closing Agent

131

(1)

Prorating

132

(1)

Termite Inspection

132

(1)

Possession

132

(1)

Loan Conditions

133

(1)

Additional Conditions

133

(1)

Property Damage

134

(1)

Buyer Default

134

(1)

Time Limits

135

(1)

``Time Is of the Essence''

135

(1)

Signatures

135

(1)

Acceptance

136

(1)

Notification

136

(1)

Federal Clauses

136

(1)

Lead-Based Paint Disclosures

137

(1)

Preprinted Clauses

137

(1)

Riders

137

(1)

Negotiation

138

(1)

The Binder

138

(1)

What the Binder Does Not Say

138

(1)

Letter of Intent

139

(1)

Practicing Law

139

(1)

Installment Contracts

140

(1)

Vendor, Vendee

140

(1)

Public Criticism

141

(1)

Protections

141

(1)

Equitable Title

141

(1)

Option Contracts

142

(1)

Lease with Option to Buy

143

(2)

Popularity

143

(1)

Examples

144

(1)

Option Fee

144

(1)

Caveats

144

(1)

Right of First Refusal

145

(1)

Exchange Agreements

145

(3)

Trading Up

146

(1)

Delayed Exchanges

146

(1)

Reverse Exchanges

147

(1)

Typical Trade Contract

148

(1)

``esign''

148

(4)

Vocabulary Review

150

(1)

Questions & Problems

151

(1)

Additional Readings

151

(1)

Mortgage and Note

152

(20)

Key Terms

152

(1)

Promissory Note

153

(2)

Obligor, Obligee

153

(1)

The Principal

153

(2)

Acceleration Clause

155

(1)

Signature

155

(1)

The Mortgage Instrument

155

(3)

Covenants

157

(1)

Alienation Clause

158

(1)

Condemnation Clause

158

(1)

Mortgage Satisfaction

158

(1)

Partial Release

159

(1)

``Subject To''

159

(1)

Assumption

159

(1)

Novation

159

(1)

Estoppel

160

(1)

Debt Priorities

160

(1)

First Mortgage

160

(1)

Subordination

161

(1)

Chattel Liens

161

(1)

The Foreclosure Process

161

(1)

Delinquent Loan

161

(1)

Foreclosure Routes

162

(1)

Judicial Foreclosure

162

(3)

Surplus Money Action

162

(1)

Notice of Lis Pendens

163

(1)

Public Auction

163

(1)

Equity of Redemption

163

(1)

Deficiency Judgment

164

(1)

Statutory Redemption

164

(1)

Strict Foreclosure

165

(1)

Power of Sale

165

(1)

Entry and Possession

165

(1)

Deed in Lieu of Foreclosure

166

(1)

Installment Contract Foreclosure

166

(1)

Deed of Trust

166

(2)

Equitable Mortgage

168

(1)

Deed as Security

168

(1)

Choice of Security Instrument

168

(4)

Vocabulary Review

170

(1)

Questions & Problems

171

(1)

Additional Readings

171

(1)

Deed of Trust

172

(10)

Key Terms

172

(1)

Parties to a Deed of Trust

173

(1)

Reconveyance

174

(1)

Default

174

(1)

Trustee

174

(1)

Deed of Trust Document

175

(3)

Power of Sale

175

(1)

Assignment of Rents

175

(2)

Foreclosure

177

(1)

Trustee Appointment

178

(1)

Jurisdictions Using Deeds of Trust

178

(2)

Advantages of the Deed of Trust

180

(2)

Vocabulary Review

180

(1)

Questions & Problems

181

(1)

Additional Readings

181

(1)

Lending Practices

182

(20)

Key Terms

182

(1)

Term Loans

183

(1)

Loan Renewal

183

(1)

Amortized Loans

184

(3)

Repayment Methods

184

(2)

Monthly Payments

186

(1)

Loan Size

187

(1)

Change in Maturity Date

187

(1)

Budget Mortgage

187

(1)

Balloon Loan

188

(1)

Partially Amortized Loan

188

(1)

Earlier Payoff

188

(2)

15-Year Loan

189

(1)

Biweekly Payments

190

(1)

Existing Loans

190

(1)

Loan-to-Value Ratio

190

(1)

Equity

190

(1)

Loan Points

191

(1)

Origination Fee

191

(1)

Discount Points

191

(1)

FHA Insurance Programs

192

(3)

Current FHA Coverage

192

(1)

Assumability

193

(1)

Mortgage Insurance

193

(1)

Floating Interest Rates

194

(1)

Loan Qualification

194

(1)

Construction Regulations

195

(1)

Department of Veterans Affairs

195

(4)

No Down Payment

195

(1)

VA Certificates

196

(1)

Financial Liability

197

(1)

Funding Fee

198

(1)

Interest Rates

198

(1)

Assumption Requirements

199

(1)

Adjustable-Rate Mortgages

199

(1)

Private Mortgage Insurance

199

(1)

Approval Procedure

200

(1)

Rural Housing Services Administration

200

(2)

Vocabulary Review

201

(1)

Questions & Problems

201

(1)

Additional Readings

201

(1)

The Loan and the Consumer

202

(17)

Key Terms

202

(1)

Truth-in-Lending Act

203

(2)

Advertising

203

(1)

Trigger Terms

203

(1)

Annual Percentage Rate

203

(1)

Lending Disclosures

204

(1)

Who Must Comply?

204

(1)

Exempt Transactions

205

(1)

Failure to Disclose

205

(1)

Right to Cancel

205

(1)

Loan Application and Approval

205

(12)

Settlement Funds

206

(1)

Purpose of Loan

206

(7)

Borrower Analysis

213

(1)

Monthly Income

213

(1)

Assets and Liabilities

214

(1)

References

214

(1)

Redlining

215

(1)

Loan-to-Value Ratios

215

(1)

Credit Report

215

(2)

Predatory Lending

217

(2)

Vocabulary Review

218

(1)

Questions & Problems

218

(1)

Additional Readings

218

(1)

Sources of Financing

219

(17)

Key Terms

219

(1)

Primary Market

220

(1)

Savings and Loan Associations

220

(2)

Disintermediation

221

(1)

Restructuring the System

221

(1)

Commercial Banks

222

(1)

Life Insurance Companies

222

(1)

Mortgage Companies

223

(1)

Mortgage Brokers

223

(1)

Computerized Loan Origination

224

(1)

Municipal Bonds

224

(1)

Other Lenders

224

(1)

Secondary Market

225

(6)

Traditional Delivery System

225

(1)

Secondary Market Delivery Systems

226

(1)

Standardized Loan Procedures

227

(1)

FNMA

227

(2)

GNMA

229

(1)

FHLMC

229

(1)

Farmer Mac

230

(1)

Loan Qualification

230

(1)

Private Conduits

231

(1)

Computerization

231

(1)

OFHEO

231

(1)

Automated Underwriting Systems

231

(2)

Commercial Loans in the Secondary Market

232

(1)

Availability and Price of Mortgage Money

233

(1)

Usury

233

(1)

Price to the Borrower

234

(1)

Due-On-Sale

234

(1)

Prepayment

234

(2)

Vocabulary Review

235

(1)

Questions & Problems

235

(1)

Additional Readings

235

(1)

Types of Financing

236

(19)

Key Terms

236

(1)

Adjustable Rate Mortgages

237

(3)

Current Format

237

(1)

Interest Rate

238

(1)

Margin

238

(1)

Adjustment Period

239

(1)

Interest Rate Cap

239

(1)

Payment Cap

239

(1)

Negative Amortization

239

(1)

Disclosures

240

(1)

Choosing Wisely

240

(1)

Graduated Payment Mortgage

240

(1)

Equity Sharing

241

(1)

``Rich Uncle'' Financing

241

(1)

Package Mortgage

242

(1)

Blanket Mortgage

242

(1)

Reverse Mortgage

242

(1)

Construction Loan

243

(1)

Blended-Rate Loan

243

(1)

Equity Mortgage

244

(1)

Affordable Housing Loans

244

(2)

Credit Criteria

245

(1)

Consumer Education

245

(1)

97% Conventional Loan

246

(1)

The Nehemiah Program

246

(1)

Asset Integrated Mortgage (AIM)

246

(1)

Seller Financing

247

(1)

Wraparound Mortgage

248

(1)

Subordination

249

(1)

Contract for Deed

249

(1)

Option

249

(1)

Overly Creative Financing?

250

(1)

Investing in Mortgages

251

(1)

Rental

251

(1)

Land Leases

252

(1)

Financing Overview

252

(3)

Vocabulary Review

253

(1)

Questions & Problems

254

(1)

Additional Readings

254

(1)

Taxes and Assessments

255

(15)

Key Terms

255

(1)

Property Taxes

256

(2)

Budget and Appropriation

256

(1)

Appraisal and Assessment

256

(1)

Tax Rate Calculation

256

(1)

Applying the Rate

257

(1)

Unpaid Property Taxes

258

(1)

Assessment Appeal

258

(1)

Property Tax Exemptions

259

(1)

Property Tax Variations

259

(1)

Special Assessments

260

(2)

Forming an Improvement District

261

(1)

Confirmation

261

(1)

Bond Issues

261

(1)

Apportionment

262

(1)

Income Taxes on the Sale of One's Residence

262

(2)

Calculating a Home's Basis

262

(1)

Calculating the Amount Realized

263

(1)

Calculating Gain on the Sale

263

(1)

Income Tax Exclusion

264

(1)

Capital Gains

264

(1)

Installment Method

265

(1)

Property Tax and Interest Deductions

266

(1)

Interest Deduction Limitations

266

(1)

Impact on Real Estate

266

(1)

Agent's Liability for Tax Advice

267

(1)

Conveyance Taxes

267

(3)

Vocabulary Review

268

(1)

Questions & Problems

268

(1)

Additional Readings

269

(1)

Title Closing and Escrow

270

(24)

Key Terms

270

(1)

Buyers' Walk-Through

271

(1)

Title Closing

271

(1)

Closing or Settlement Meeting

272

(2)

Seller's Responsibilities at Closing

272

(1)

Buyer's Responsibilities at Closing

273

(1)

Real Estate Agent's Duties

273

(1)

The Transaction

273

(1)

Dry Closing

274

(1)

Escrow

274

(2)

Escrow Agent's Duties

274

(1)

Reporting Requirements

275

(1)

The Closing

275

(1)

Deed Delivery

276

(1)

Delays and Failure to Close

276

(1)

Loan Escrows

277

(1)

Reporting Requirements

277

(1)

Prorating at the Closing

278

(2)

Hazard Insurance

278

(1)

Loan Interest

278

(1)

30-Day Month

279

(1)

Rents

279

(1)

Property Taxes

279

(1)

Homeowners' Association

280

(1)

Proration Date

280

(1)

Proration Summary

280

(1)

Sample Closing

280

(3)

Settlement Statement

283

(3)

Seller's Side

283

(1)

Settlement Charges

283

(3)

Real Estate Settlement Procedures Act

286

(8)

Restrictions

287

(1)

Benefits

287

(2)

HUD Settlement Statement

289

(3)

Vocabulary Review

292

(1)

Questions & Problems

292

(1)

Additional Readings

293

(1)

Real Estate Leases

294

(19)

Key Terms

294

(1)

The Leasehold Estate

295

(1)

Creating a Valid Lease

295

(1)

The Lease Document

296

(3)

Conveyance

296

(1)

Contract

296

(3)

Landlord-Tenant Laws

299

(1)

Setting Rents

299

(1)

Option Clauses

300

(1)

Assignment and Subletting

300

(1)

Ground Lease

300

(1)

Vertical Lease

301

(1)

Contract Rent, Economic Rent

301

(1)

Lease Termination

301

(1)

Eviction

301

(1)

Eminent Domain

302

(1)

Rent Control

302

(2)

Rent Control Experience

303

(1)

Property Management

304

(1)

Before Buying

304

(1)

Advertising

304

(1)

Tenant Selection

304

(1)

Security Deposit

305

(1)

Rent Concessions

305

(1)

Tenant Retention

305

(1)

Communications

306

(1)

Leases

306

(1)

Collecting Rents

306

(2)

Late Rents

307

(1)

Eviction Problems

307

(1)

Manager Remedies

307

(1)

On-Site Management

308

(1)

Management-Unit Ratios

308

(1)

Off-Site Management

308

(1)

Job Opportunities

309

(4)

Training Programs

309

(2)

Vocabulary Review

311

(1)

Questions & Problems

312

(1)

Additional Readings

312

(1)

Real Estate Appraisal

313

(32)

Key Terms

313

(1)

Purpose and Use of Appraisals

314

(1)

The Real Property Valuation Process

314

(1)

Value Approaches

314

(1)

Market Value Defined

314

(1)

Market Comparison Approach

315

(9)

Comparables

315

(1)

Sales Records

315

(1)

Verification

316

(1)

Number of Comparables

316

(1)

Adjustment Process

316

(1)

Time Adjustments

317

(1)

House Size

318

(1)

Garage and Patio Adjustments

318

(1)

Building Age, Condition, and Quality

318

(1)

Landscaping

319

(1)

Lot Features and Location

319

(1)

Terms and Conditions of Sale

319

(1)

Adjusted Market Price

320

(1)

Correlation Process

320

(1)

Unique Issues

320

(1)

Competitive Market Analysis

321

(2)

Gross Rent Multipliers

323

(1)

Cost Approach

324

(4)

Estimating New Construction Costs

325

(1)

Square-Foot Method

326

(1)

Cost Handbooks

326

(1)

Estimating Depreciation

326

(2)

Final Steps in the Cost Approach

328

(1)

Income Approach

328

(4)

Income and Expense Forecasting

328

(1)

Operating Expenses

329

(1)

Reserves

329

(1)

Net Operating Income

330

(1)

Operating Expense Ratio

330

(1)

Capitalizing Income

330

(1)

Depreciation

331

(1)

Choice of Approaches

332

(1)

Reconciliation

332

(1)

Appraiser's Best Estimate

333

(1)

Appraisal Regulation

333

(3)

The Appraisal Foundation

333

(1)

Federal Regulation

334

(1)

Developing the Appraisal

334

(1)

Departure Provisions

334

(1)

Reporting Options

335

(1)

Reporting Standards

335

(1)

Formats of Appraisal Reports

336

(3)

The Letter Report

336

(1)

The Form Report

337

(1)

The Narrative Report

337

(1)

Review Appraisals

337

(1)

Real Estate Analysis

337

(1)

Appraiser Qualifications

338

(1)

Characteristics of Value

339

(1)

Principles of Value

339

(1)

Highest and Best Use

339

(1)

Supply and Demand

340

(1)

Diminishing Marginal Returns

340

(1)

Multiple Meanings of the Word Value

340

(1)

Plottage Value

341

(1)

Rental Value

341

(1)

Replacement Value

341

(1)

Buyer's and Seller's Markets

341

(1)

Professional Appraisal Societies

341

(4)

Vocabulary Review

343

(1)

Questions & Problems

344

(1)

Additional Readings

344

(1)

Licensing Laws and Professional Affiliation

345

(29)

Key Terms

345

(1)

Rationale for Licensing

346

(1)

Loyalty, Honesty, and Truthfulness

346

(1)

Persons Required to Be Licensed

347

(1)

Broker

347

(1)

Salesperson

348

(1)

Sales Associate

348

(1)

Qualifications for Licensing

348

(1)

Examination

349

(1)

Education Requirements

349

(1)

Continuing Education

349

(1)

Licensing Procedure

349

(3)

Renewal

351

(1)

Examination Services

352

(1)

Nonresident Licensing

352

(1)

License Reciprocity

353

(1)

Notice of Consent

353

(1)

Moving to Another State

353

(1)

Licensing the Business Firm

353

(1)

Fictitious Business Name

354

(1)

Branch Offices

354

(1)

Real Estate Regulation

354

(1)

Real Estate Department

355

(1)

License Suspension and Revocation

355

(1)

Bonds and Recovery Funds

356

(1)

Securities License

357

(1)

Affiliating with a Broker

357

(2)

Training

357

(1)

Compensation

358

(1)

Broker Support

358

(1)

Finding a Broker

359

(1)

Employment Contract

359

(1)

Independent Contractor Status

359

(1)

Franchised Offices

360

(1)

National Real Estate Firms

361

(1)

Professional Real Estate Associations

361

(1)

Realtor®

362

(1)

Code of Ethics

362

(12)

Realtist

371

(1)

GRI Designation

371

(1)

Vocabulary Review

372

(1)

Questions & Problems

373

(1)

Additional Readings

373

(1)

The Principal--Broker Relationship: Employment

374

(15)

Key Terms

374

(1)

Listing Agreement

375

(3)

Brokerage Commission

376

(1)

Protecting the Broker

377

(1)

Protecting the Owner

377

(1)

Exclusive Right to Sell Listing

378

(1)

Exclusive Agency Listing

378

(1)

Open Listing

378

(1)

Net Listing

378

(1)

Advance Fee Listing

379

(1)

Advance Cost Listing

379

(1)

Exclusive Authority to Purchase

379

(3)

Multiple Listing Service

382

(1)

Market Exposure

382

(1)

Computerized MLS

383

(1)

Listing Brokers

383

(1)

Broker Compensation

383

(1)

Buyer's Brokers

384

(1)

Procuring Cause

384

(1)

Terminating the Employment Contract

385

(1)

Mutual Agreement

385

(1)

Abandonment

385

(1)

Bargain Brokers

386

(1)

Flat-Fee Brokers

386

(1)

Discount Broker

386

(1)

Variable Rate Commissions

386

(1)

Perceived Value

387

(2)

Vocabulary Review

388

(1)

Questions & Problems

388

(1)

Additional Readings

388

(1)

The Principal-Broker Relationship: Agency

389

(19)

Key Terms

389

(1)

Agency

390

(1)

Establishing the Agent's Authority

390

(1)

Broker's Obligations to the Principal

391

(3)

Faithful Performance

391

(1)

Loyalty to Principal

392

(1)

Protecting the Principal's Interest

393

(1)

Reasonable Care

393

(1)

Accounting for Funds Received

394

(1)

Commingling

394

(1)

Broker's Obligations to Third Parties

394

(3)

Lead-Based Paint

395

(1)

Red Flags

396

(1)

``As Is''

396

(1)

Puffing

396

(1)

Buyer Agency

397

(1)

Principal's Obligations

398

(1)

Broker's Sales Staff

398

(1)

Cooperating Broker

398

(2)

The Complicating Issues

399

(1)

Agency Disclosure

400

(3)

Owner Disclosure Statement

403

(1)

Interstate Land Sales Disclosure Statements

404

(1)

Property Report

404

(1)

Not an Approval

404

(1)

Antitrust Laws

405

(1)

Price Fixing

405

(1)

Boycotting

405

(1)

Errors and Omission Insurance

406

(2)

Vocabulary Review

406

(1)

Questions & Problems

407

(1)

Additional Readings

407

(1)

Fair Housing, ADA, Equal Credit, and Community Reinvestment

408

(15)

Key Terms

408

(1)

Fair Housing

409

(6)

Constitutional Impact on Ownership of Real Property

409

(1)

Fair Housing Laws

410

(5)

The Americans with Disabilities Act

415

(1)

Scope

415

(1)

Equal Credit Opportunity Act

416

(3)

Prohibited Requests

417

(1)

Evaluating Credit Applications

418

(1)

Credit Denial

419

(1)

Penalties

419

(1)

Copies of Appraisal Reports

419

(1)

Community Reinvestment Act

419

(4)

CRA Notice

420

(1)

Vocabulary Review

421

(1)

Questions & Problems

421

(1)

Additional Readings

422

(1)

Condominiums, Cooperatives, PUDs, and Timeshares

423

(18)

Key Terms

423

(1)

The Desire for Land-Use Efficiency

424

(1)

The Amenities of Multi-Family Living

424

(1)

Dividing the Land of an Estate

425

(1)

Condominium

425

(4)

Separate and Common Elements

426

(1)

Owners' Association

427

(1)

Bylaws

427

(1)

CC&Rs

427

(1)

Deed

428

(1)

Voting Rules

428

(1)

Board of Directors

428

(1)

Annual Meetings

428

(1)

Condominium Management

429

(1)

Maintenance Fees

429

(1)

Reserves

429

(1)

Property Taxes and Insurance

429

(1)

Condominium Financing

430

(1)

Loan Terms

430

(1)

Deposit Practices

430

(1)

Condominium Conversions

431

(1)

Advantages of Condominium Living

431

(1)

Disadvantages of Condominium Living

432

(1)

Before Buying

432

(1)

Cooperative Apartments

433

(2)

Financing

434

(1)

Default

434

(1)

Resale

434

(1)

Government

434

(1)

Differences

434

(1)

Similarity

435

(1)

New Legislation

435

(1)

Planned Unit Development

435

(1)

Resort Timesharing

436

(5)

Right-to-Use

436

(1)

Fee Simple

436

(1)

Costs

437

(1)

Benefits

437

(1)

Commitment

438

(1)

State Regulations

438

(1)

Vocabulary Review

439

(1)

Questions & Problems

440

(1)

Additional Readings

440

(1)

Property Insurance

441

(12)

Key Terms

441

(1)

Property Damage

442

(1)

Modern Fire Coverage

442

(1)

Endorsements

442

(1)

Public Liability

442

(1)

Homeowner Policies

443

(4)

Policy Formats

443

(1)

Properties Covered

443

(1)

Perils Covered

444

(1)

Tenant's Policy

445

(1)

Condominium Policy

445

(1)

Real Property Loss

445

(1)

Liability Coverage

445

(1)

Medical Payments

446

(1)

Endorsements

446

(1)

New for Old

447

(1)

Lender Requirements

447

(1)

Guaranteed Replacement Cost

448

(1)

Flood Insurance

448

(1)

Landlord Policies

448

(1)

Policy Cancellation

449

(1)

Policy Suspension

449

(1)

Policy Takeovers

449

(1)

Home Buyer's Insurance

450

(3)

Vocabulary Review

451

(1)

Questions & Problems

451

(1)

Additional Readings

452

(1)

Land-Use Control

453

(12)

Key Terms

453

(1)

Zoning

454

(3)

Zoning Symbols

455

(1)

Land-Use Restrictions

455

(1)

Enforcement

455

(1)

Nonconforming Use

455

(1)

Amendment

456

(1)

Variance

456

(1)

Conditional-Use Permit

456

(1)

Spot Zoning

456

(1)

Downzoning

456

(1)

Taking

457

(1)

Buffer Zone

457

(1)

Legality, Value

457

(1)

Subdivision Regulations

457

(1)

Building Codes

458

(1)

Deed Restrictions

458

(1)

Planning Ahead for Development

459

(1)

Master Plan

459

(1)

Long-Run Continuity

459

(1)

Environmental Impact Statements

460

(1)

Content of an EIS

460

(1)

Environmental Laws

460

(1)

Precautions

461

(1)

Professionals

462

(1)

Windfalls and Wipe-Outs

462

(1)

Transferable Development Rights

463

(2)

Where Used

463

(1)

Vocabulary Review

464

(1)

Questions & Problems

464

(1)

Additional Readings

464

(1)

Real Estate and the Economy

465

(19)

Key Terms

465

(1)

Economic Base

466

(2)

Effect on Property Values

466

(1)

Vulnerability

467

(1)

Employment Multiplier

467

(1)

Short-Run Demand for Housing

468

(2)

Increase in Demand

468

(1)

Increase in Supply

468

(1)

Decrease in Demand

469

(1)

Effect of Inflation

470

(1)

Long-Run Demand for Housing

470

(2)

Buying Pattern

471

(1)

Age Distribution

472

(2)

Housing Demand

472

(1)

More Homeowners

473

(1)

Over 65

473

(1)

Another Wave

473

(1)

Governmental Impact

474

(2)

Tax Laws

474

(1)

1997 Taxpayer Relief Act and 1986 Tax Bill

474

(2)

Types of Inflation

476

(1)

Cost-Push Inflation

476

(1)

Demand-Pull Inflation

477

(1)

Monetary Inflation

477

(1)

Real-Cost Inflation

477

(1)

1975--2004 Period

477

(3)

Low Real Interest

478

(1)

Tax Benefits

478

(1)

Reversal/Recovery?

478

(1)

Looking Ahead

479

(1)

Owner-Occupants

479

(1)

Watching the Fed

480

(1)

Monetary Base

480

(1)

The Outlook

481

(3)

A Parallel

481

(1)

Vocabulary Review

482

(1)

Questions & Problems

482

(1)

Additional Readings

483

(1)

Investing in Real Estate

484

(22)

Key Terms

484

(1)

Benefits of Real Estate Investing

485

(3)

Cash Flow

485

(1)

Tax Shelter

486

(1)

Loss Limitations

487

(1)

Depreciation Calculation

488

(1)

Capital Gains

488

(1)

At-Risk Rules

489

(1)

Installment Sales

489

(1)

Construction-Period Expenses

489

(1)

Rehabilitation Tax Credits

489

(1)

Low-Income Housing Credit

489

(1)

Watch List

490

(1)

Equity Build-Up

490

(1)

Leverage

490

(1)

Property Selection

491

(4)

Vacant Land

491

(1)

Houses and Condominiums

492

(1)

Small Apartment Buildings

493

(1)

Medium-Size Buildings

493

(1)

Larger Apartment Buildings

493

(1)

Office Buildings

494

(1)

Investment Timing

495

(1)

Land Purchase

495

(1)

Project Completion

495

(1)

First Decade

495

(1)

Second Decade

496

(1)

Third and Fourth Decades

496

(1)

Building Recycling

496

(1)

``Glitamad''

496

(1)

Developing a Personal Investment Strategy

497

(1)

Risk Taking

497

(1)

Debt Repayment

498

(1)

Valuing an Investment

498

(1)

Limited Partnerships

499

(3)

Property Purchase Methods

499

(1)

Property Management

500

(1)

Financial Liability

500

(1)

Investment Diversification

500

(1)

Service Fees

501

(1)

Pitfalls

501

(1)

Master Limited Partnerships

502

(1)

Disclosure Laws

502

(1)

The Prospectus

502

(1)

Blue-Sky Laws

503

(1)

Governmental Regulation

503

(1)

Effort and Courage

503

(3)

Vocabulary Review

504

(1)

Questions & Problems

505

(1)

Additional Readings

505

(1)

Appendix A---Construction Illustrations and Terminology

506

(13)

Appendix B---Real Estate Math Review

519

(9)

Appendix C---Interest and Present Value Tables

528

(4)

Appendix D---Measurement Conversion Table

532

(1)

Appendix E---Answers to Chapter Questions and Problems

533

(20)

Index and Glossary

553

Real Estate Principles

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