Real Estate Exam 2

Front 1

Fixture

Back 1

An article that was once personal property but has become so affixed to the land that the law construes it to be part of the real estate is a

Front 2

Metes and bounds

Back 2

Uses physical descriptions for legal descriptions of real estate.

Front 3

Government survey

Back 3

Specifies locations by using a rectangular coordinate system.

Front 4

External obedience

Back 4

Neighbor, loud airport.

Front 5

Reproduction cost

Back 5

Cost of identically reproducing an asset or property with the same materials and specifications.

Front 6

Replacement cost

Back 6

Actual cost of replacing based on current value including depreciation.

Front 7

Objective real estate value

Back 7

Value that buyer is willing to pay for the property.

Front 8

Comparable real estate

Back 8

Similar properties in the same area that were recently sold.

Front 9

Highest and Best Use

Back 9

Used in appraisal. It states that the value of a property is directly correlated to the use of the property.

Front 10

Leverage

Back 10

Using borrowed money to increase profits on an investment

Front 11

Equity

Back 11

Difference between what the property is worth and what it owes.

Front 12

Basis

Back 12

Original cost of the property, plus capital improvements, minus depreciation

Front 13

Capital gain

Back 13

Increase in value of a capital asset that gives it a huger worth than the purchase price

Front 14

Rescission

Back 14

Cancels contract and restores buyer and seller to original agreement position.

Front 15

Breach

Back 15

If one party does not fulfill their part of the agreement.

Front 16

Escrow agent

Back 16

Neutral third party whom the purchaser and seller will sign closing documents with.

Front 17

Alienation Clause

Back 17

Clause in which full payment of the mortgage balance is due at the lenders discretion if sold or the title is transferred.

Front 18

Straight note

Back 18

Payments are made on the interest only and not in the principal balance borrowed. At the end of the term is when the entire principal is due.

Front 19

Bi-monthly oayments

Back 19

Paid twice per month. Substantially reduces the amount of interest compared to monthly payments

Front 20

Acceleration clause

Back 20

Clause in which the balance of the loan becomes due immediately.

Front 21

Due on sale clause

Back 21

Allows the lender to call the loan immediately due and payable in the event that the owner sells or transfers title of interest.

Front 22

Lock in Clause

Back 22

Clause in which paying it off early in prohibited. No early payments

Front 23

Late payment penalty

Back 23

Charged by the lender when payments from the borrower are not paid on time.

Front 24

Subordination Clause

Back 24

Ales another loan to have a higher priority.

Front 25

Defeasance Clause

Back 25

clause in which it provides the cancellation of the lenders interest when the debt has been paid in full.

Front 26

Financing instrument

Back 26

Documents that have monetary value or are evidence of a monetary transaction such as checks, drafts, bills, bonds and promissory notes.

Front 27

Usery

Back 27

When a lender charges more interest than what is legally allowed.

Front 28

Interest

Back 28

Cost of borrowing money.

Front 29

Simple intersst

Back 29

Interest that is calculated with the original loan amount, and does not change.

Front 30

Compounding interest

Back 30

interest that takes into consideration that the balance is getting lower over a period of time.