An introduction to real estate principles

Week 6 Discussion (Chapters 11 & 12 Reflection Summary) – Group 1. BIGHORN RAMS
Write a brief summary of the textbook Chapters 11 & 12, to include the following paragraphs with headings: an overview, 3 key concepts, and a summary. Each “key concept” must include the textbook page numbers. Each paragraph needs a minimum of 3 sentences.  Use the template format provided below.  Refer to the model assignment (sample) following the template. do not copy   just use as a guide 
TEMPLATE:
Overview

Key Concept from Chapter 11

Key Concept from Chapter 12

Key Concept from Chapter 11 or 12

Summary

SAMPLE:
Model assignment: 
BELOW IS A SAMPLE REFLECTION SUMMARY.  DO NOT COPY THE CONTENTS.  IT IS A SAMPLE ONLY.
Course: BRE 100, Real Estate Principles
Student Name: Ima Success
Today’s Date: 02/20/2020
Textbook Author: Perez, J.
Chapter # 1
Overview
The topic of Chapter 1 is an introduction to real estate principles.  This chapter covers four important concepts for the real estate student.  First, the real estate licensing in California is discussed, along with the real estate market.  Second, the historical influence of real property is examined.  Third, the difference between real property and personal property is spelled out clearly.  And last, the chapter concludes by analyzing various methods of land description.  These concepts are important because they may be on the real estate exam for licensees.
Key Concept from Chapter 11
I learned that real estate can be a profitable professional (p. 4).  One of the reasons it can be profitable is because the compensation to agents is based on the sales price of the house.  In California, real estate values are typically high, which translates into a high commission.  The commission is always paid to the broker, but the real estate salesperson receives a portion.  Many real estate agents are using social media to promote their services.
Key Concept from Chapter 12
The second thing I learned is that property owners have a “bundle of rights” (p. 5).  It means they have control of certain things because they own the real estate.  Generally, people view it as a bundle of sticks, with each one of them being a “right” the owner has.  Their types of rights vary based on their level of ownership.  For example, homeowners have the right to possess (live in) their houses – unless they rent out the house to tenants.  In that case, the tenant now has the right to possess the house.
Key Concept from Chapter 11

The third concept I learned is the definition of real property (p. 6).  There are four things that define real property:  land, affixed to the land, appurtenant to the land, or immovable.  These items “tests” are what separates real property from personal property.  For example, a refrigerator can be moved out of the house, so it is considered personal property.  However, a fence is permanently dug into the ground so it becomes part of the real property, along with the land and the house.
Summary
This was an interesting chapter and I learned a lot about real estate.  Real estate has a long and colorful history in California.  There are several types of land description methods, which will probably be on the state real estate exam.  I know I will have to study some of the concepts further, such as the MARIA acronym of determining personal versus real property.  In addition to the knowledge of concepts, real estate involves math calculations.
Victor Valley College
BRE – 110 Real Estate Law
8/18/2021
2
The more that you read, the
more things you will know,
the more that you learn,
the more places you’ll go.
BRE – 110 Real Estate Law
8/18/2021
3
Escrow and Closing
“Educating Generations, Building Communities”
I.
Preparing for Closing
II. Escrow
III. Termination of Escrow
IV. When Title Passes
V. Real Estate Settlement Procedures Act (RESPA)
VI. Settlement Statements
VII. Title Insurance
BRE – 110 Real Estate Law
8/19/2021
5
Part I.
BRE – 110 Real Estate Law
Preparing for Closing
8/19/2021
6
“Educating Generations, Building Communities”
? CLOSING is the consummation of a real estate transaction.
? CLOSING DATE is when the documents transferring title from the
seller to the buyer will be delivered and recorded.
BRE – 110 Real Estate Law
8/19/2021
7
Part II.
BRE – 110 Real Estate Law
Escrow
8/19/2021
8
? ESCROW is an arrangement in which a third party holds money
and documents on behalf of the principals in a transaction.
?
Grounds for Disciplinary Action in Escrow
?
Purpose of Escrow
?
Opening Escrow
BRE – 110 Real Estate Law
8/19/2021
9
BRE – 110 Real Estate Law
8/19/2021
10
? Escrow Agent
?
Escrow Instructions
1.Provisions
2.Escrow Agent’s Duty
BRE – 110 Real Estate Law
8/19/2021
11
BRE – 110 Real Estate Law
8/19/2021
12
Part III.
BRE – 110 Real Estate Law
Termination of Escrow
8/19/2021
13
A. Mutual Agreement
B. Expiration
C. Default
BRE – 110 Real Estate Law
8/19/2021
14
Part IV.
BRE – 110 Real Estate Law
When Title Passes
8/19/2021
15
“Educating Generations, Building Communities”
? Unauthorized Delivery – the unauthorized transfer or use of
another person’s money or property is a tort call CONVERSION
? Doctrine of Relation Back – the transfer relates back to the date
of deposit in escrow
BRE – 110 Real Estate Law
8/19/2021
16
Part V.
Real Estate Settlement
Procedures Act (RESPA)
BRE – 110 Real Estate Law
8/19/2021
17
“Educating Generations, Building Communities”
? RESPA is a federal law passed by Congress in 1974.
? It requires lenders to disclose information about closing costs to
loan applicants.
? RESPA applies to most federally related loans.
BRE – 110 Real Estate Law
8/19/2021
18
BRE – 110 Real Estate Law
8/19/2021
19
BRE – 110 Real Estate Law
8/19/2021
20
Part VI.
BRE – 110 Real Estate Law
Settlement
Statements
8/19/2021
21
A. Allocating Expenses
B. Transaction Settlement
Guide
BRE – 110 Real Estate Law
8/19/2021
22
“Educating Generations, Building Communities”
? Debits
?
Loan Origination Fee
?
Discount Points
?
Impound Account
?
Prepaid Interest
?
Fees (Escrow, Notary, Recording)
? Credits
?
Deposits
?
Taxes, Insurance or Rents
BRE – 110 Real Estate Law
8/19/2021
23
“Educating Generations, Building Communities”
? Debits
?
Payoff of any existing loans
?
Fees (Notary, Attorney, Recording)
?
Documentary Transfer Tax
? California rate is $ .55 for each $500 of sales price, or $1.10 for
each $1000
? Example: the house is being sold for $100,000
$100,000/500 = 200
BRE – 110 Real Estate Law
200 x $ .55 = $110
8/19/2021
24
“Educating Generations, Building Communities”
? Credits
?
Purchase Price
?
Prorated taxes and insurance premiums
BRE – 110 Real Estate Law
8/19/2021
25
“Educating Generations, Building Communities”
? PRORATE means to divide or distribute proportionately.
?
Property Taxes
?
Hazard Insurance Premiums
?
Rents
?
Interest on Loans
BRE – 110 Real Estate Law
8/19/2021
26
“Educating Generations, Building Communities”
? Once the buyer’s loan is approved, the lender forwards the loan
documents to the escrow agent.
? If all the conditions in the escrow instructions have been met, the
transaction is ready to close.
BRE – 110 Real Estate Law
8/19/2021
27
BRE – 110 Real Estate Law
8/19/2021
28
Part VII.
BRE – 110 Real Estate Law
Settlement
Statements
8/19/2021
29
? Obtaining Title Insurance
? Type of Coverage
?
Standard Coverage Policy
?
Extended Coverage Policy
BRE – 110 Real Estate Law
8/19/2021
30
? Abstract and Opinion
BRE – 110 Real Estate Law
8/19/2021
31
BRE – 110 Real Estate Law
8/19/2021
32
“Educating Generations, Building Communities”
I.
Preparing for Closing
II.
Escrow
III.
Termination of Escrow
IV. When Title Passes
V.
Real Estate Settlement Procedures Act (RESPA)
VI. Settlement Statements
VII. Title Insurance
BRE – 110 Real Estate Law
8/19/2021
33
“Educating Generations, Building Communities”
? Read Next Chapter
? Write Reflection Summary
? Study for Quiz
BRE – 110 Real Estate Law
8/19/2021
34
“Educating Generations, Building Communities”
? Schedule 1 hour of study every day
? Plan to be early!
? Always be ready
BRE – 110 Real Estate Law
8/19/2021
35
Only what you put into it!
? Take Notes
? Stay Engaged
? Think of How to Apply
? Ask Questions
? Participate / Share
? Do Activities
? Be Grateful
BRE – 110 Real Estate Law
8/19/2021
36
“Educating Generations, Building Communities”
? Educate yourself by attending class
? Assignments & Activities
? Read every day
? Never stop learning!
“The more you LEARN the more you EARN.”
BRE – 110 Real Estate Law
8/19/2021
37
Student Learning Objectives met
BRE – 110 Real Estate Law
8/19/2021
38
BRE – 110 Real Estate Law
8/19/2021
39
Victor Valley College
Victor Valley College
BRE – 110 Real Estate Law
8/18/2021
2
Life is a succession of
lessons which must be
lived to be understood.
BRE – 110 Real Estate Law
8/18/2021
3
Real Estate Financing
“Educating Generations, Building Communities”
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
Promissory Notes
Security Agreements
Common Optional Loan Terms
Foreclosure
Reverse Mortgages
Real Property Sales Contracts
Lending Disclosure Laws
SAFE Act
Agricultural Security Interests
BRE – 110 Real Estate Law
8/19/2021
5
Part I.
BRE – 110 Real Estate Law
Promissory Notes
8/19/2021
6
“Educating Generations, Building Communities”
? PROMISSORY NOTE is a promise to repay a debt.
?
MAKER
?
PAYEE
BRE – 110 Real Estate Law
8/19/2021
7
“Educating Generations, Building Communities”
? SECURITY AGREEMENT is a contract that makes the real property
collateral for the loan.
BRE – 110 Real Estate Law
8/19/2021
8
“Educating Generations, Building Communities”
? Principal
? Maturity Date
? Straight Note
? Balloon Payment Loan
BRE – 110 Real Estate Law
8/19/2021
9
Part II.
BRE – 110 Real Estate Law
Security Agreements
8/19/2021
10
“Educating Generations, Building Communities”
? A security agreement is made between a lender and a borrower
that creates a security interest in property pledged or
hypothecated.
?
Pawnbrokers – are the oldest and simplest security
agreement.
? PLEDGING
? HYPOTHECATION
In California – nearly all lenders use deeds of trust instead of
mortgages.
BRE – 110 Real Estate Law
8/19/2021
?
11
“Educating Generations, Building Communities”
1. Basic Provisions
? Trustor – borrower
?
Waste
?
Power of Sale Clause
2. Recording
? Beneficiary – lender
?
Fictitious Trust Deed
3. Reconveyance
? Trustee – neutral third party
BRE – 110 Real Estate Law
?
Beneficiary Statement
?
Full Reconveyance
?
Partial Reconveyance 8/19/2021
12
BRE – 110 Real Estate Law
8/19/2021
13
Part III.
Common Optional Loan
Terms
BRE – 110 Real Estate Law
8/19/2021
14
“Educating Generations, Building Communities”
BRE – 110 Real Estate Law
8/19/2021
15
“Educating Generations, Building Communities”
–give the borrower the right to make a larger payment than required,
to pay off the entire loan before the maturity date.
?
PREPAYMENT PENALTY
? When a loan agreement doesn’t give the borrower the option to
prepay, the loan is said to be LOCKED IN.
BRE – 110 Real Estate Law
8/19/2021
16
“Educating Generations, Building Communities”
BRE – 110 Real Estate Law
8/19/2021
17
“Educating Generations, Building Communities”
1. Late Charges and Default Rates
?
Residential Property
2. Acceleration on Default
?
Prepayment Charges and Acceleration
BRE – 110 Real Estate Law
8/19/2021
18
“Educating Generations, Building Communities”
? When real property is sold, the new owner takes title SUBJECT TO any
existing liens, meaning the lienholders still have the power to foreclose on
the property in spite of the transfer
?
DEFICIENCY JUDGMENT
?
ASSUMPTION
1. Due-on-Sale Clauses
?
Alienation clause
? Residential Property
? Prepayment Charges and Due-on-Sale Clauses
BRE – 110 Real Estate Law
2. Due-on-Encumbrance Provisions
8/19/2021
19
“Educating Generations, Building Communities”
? Lien priority is extremely important to every lender.
? A trust deed that takes on lower priority is called a SUBORDINATED
TRUST DEED. The later trust deed that is given higher priority is
called the SUBORDINATING TRUST DEED.
BRE – 110 Real Estate Law
8/19/2021
20
Part IV.
BRE – 110 Real Estate Law
Foreclosure
8/19/2021
21
“Educating Generations, Building Communities”
A. Nonjudicial Foreclosure of a Trust Deed
1. Notice of Default
2. Notice of Sale
3. Preventing a Trustee’s Sale
?
Cure and Reinstatement
?
Redemption
?
Deed in Lieu of Foreclosure
BRE – 110 Real Estate Law
8/19/2021
22
“Educating Generations, Building Communities”
4. Trustee’s Sale
?
Sale Proceeds
?
Trustee’s Deed
5. Protection for Junior Lienholders
BRE – 110 Real Estate Law
8/19/2021
23
“Educating Generations, Building Communities”
B. Judicial Foreclosure of a Mortgage
?
Mortgagor – borrower
?
Mortgagee – lender
?
Lis Pendens
?
Sheriff’s Sale
?
Certificate of Sale
BRE – 110 Real Estate Law
8/19/2021
24
“Educating Generations, Building Communities”
? When a foreclosing lender is entitled to a deficiency judgment, the
lender must apply to the court for the judgment within three months
after the property is sold at the foreclosure sale.
BRE – 110 Real Estate Law
8/19/2021
25
Part V.
BRE – 110 Real Estate Law
Reverse Mortgages
8/19/2021
26
“Educating Generations, Building Communities”
? Also known as a reverse annuity mortgage (RAM), a REVERSE
MORTGAGE enables older homeowners (62+) to convert their
home equity into tax-free income without having to sell their home,
give up title, or take on a mortgage
BRE – 110 Real Estate Law
8/19/2021
27
Part VI.
BRE – 110 Real Estate Law
Real Property Sales
Contracts
8/19/2021
28
“Educating Generations, Building Communities”
? Land Contract – the buyer pays the seller in installments over a
long period of time, although the buyer usually takes possession
immediately.
?
Vendee – borrower
?
Vendor – seller
BRE – 110 Real Estate Law
8/19/2021
29
Part VII.
Lending Disclosure Laws
BRE – 110 Real Estate Law
8/19/2021
30
“Educating Generations, Building Communities”
A. Truth in Lending Act
? Regulation Z
1. Coverage of the Act
? For $55,800 or less; or
? Secured by real property
2. Disclosure Requirements
? Total Finance Charge
? APR
? Home Equity Loan
3. Advertising of Credit Terms
BRE – 110 Real Estate Law
8/19/2021
31
“Educating Generations, Building Communities”
? When a seller carries back a purchase money loan on residential
property, California law requires that certain disclosures be made
to both buyer and seller.
BRE – 110 Real Estate Law
?
Coverage of the Law
?
Disclosure Requirements
8/19/2021
32
“Educating Generations, Building Communities”
? California’s Mortgage Loan Broker Law regulates real estate agents
who act as loan brokers.
?
Disclosure Statement
?
Commissions and Costs
?
Balloon Payments
?
Language Translation
?
Prepayment Charges
?
Late Charges
BRE – 110 Real Estate Law
8/19/2021
33
“Educating Generations, Building Communities”
? In order to stop any unfair dealings by home equity purchasers,
California’s legislature has adopted some rules for home equity
purchasers of owner-occupied property with 1 to 4 units after the
recording of a notice of default.
BRE – 110 Real Estate Law
8/19/2021
34
“Educating Generations, Building Communities”
? California has also placed numerous restrictions on foreclosure
consultants who were found to use fraud and harassment to obtain
a fee from the property owner.
BRE – 110 Real Estate Law
8/19/2021
35
Part VII.
BRE – 110 Real Estate Law
SAFE Act
8/19/2021
36
“Educating Generations, Building Communities”
? The SAFE ACT requires all states and 5 territories to put a licensing
system for residential MORTGAGE LOAN ORIGINATOR
? Within 30 days of commencing loan activity, all licensees must
report to the DRE if they make, arrange or service loans secured by
real property
BRE – 110 Real Estate Law
8/19/2021
37
Part IX.
BRE – 110 Real Estate Law
Agricultural Security
Interests
8/19/2021
38
“Educating Generations, Building Communities”
? Sometimes a borrower wants to give a lender a security interest in
standing timber to be cut, or extracted minerals, or crops growing
in a field. This is referred to as an AGRICULTURAL SECURITY
INTEREST.
BRE – 110 Real Estate Law
8/19/2021
39
BRE – 110 Real Estate Law
8/19/2021
40
“Educating Generations, Building Communities”
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
BRE – 110 Real Estate Law
Promissory Notes
Security Agreements
Common Optional Loan Terms
Foreclosure
Reverse Mortgages
Real Property Sales Contracts
Lending Disclosure Laws
SAFE Act
Agricultural Security Interests
8/19/2021
41
“Educating Generations, Building Communities”
? Read Next Chapter
? Write Reflection Summary
? Study for Quiz
BRE – 110 Real Estate Law
8/19/2021
42
“Educating Generations, Building Communities”
? Schedule 1 hour of study every day
? Plan to be early!
? Always be ready
BRE – 110 Real Estate Law
8/19/2021
43
Only what you put into it!
? Take Notes
? Stay Engaged
? Think of How to Apply
? Ask Questions
? Participate / Share
? Do Activities
? Be Grateful
BRE – 110 Real Estate Law
8/19/2021
44
“Educating Generations, Building Communities”
? Educate yourself by attending class
? Assignments & Activities
? Read every day
? Never stop learning!
“The more you LEARN the more you EARN.”
BRE – 110 Real Estate Law
8/19/2021
45
Student Learning Objectives met
BRE – 110 Real Estate Law
8/19/2021
46
BRE – 110 Real Estate Law
8/19/2021
47
Victor Valley College