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Alabama Real Estate Exam State Test Outline 2011

Alabama Real Estate Exam State Test Outline 2011 . Steve McTyeire SteveMcT@gmail.com 205-807-5200. Test Questions. Questions Agency Relationships & Contracts 28 Real Property Ownership 14 Finance 15 Real Property 14

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Alabama Real Estate Exam State Test Outline 2011

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  1. Alabama Real Estate ExamState Test Outline2011 Steve McTyeire SteveMcT@gmail.com 205-807-5200

  2. Test Questions Questions • Agency Relationships & Contracts 28 • Real Property Ownership 14 • Finance 15 • Real Property 14 • Market Regulations 8 • Property Management 8 • Real Estate Calculations 13 • Total General Knowledge 100 • Alabama Law 40 • Total Questions on Test 140

  3. 1. Agency Relationships & Contracts A. Agency Relationships 1. Creating Agency 2. Types of Agency (including implied agency) 3. Rights, Duties and Obligations of the Parties 4. Termination and Remedies for Non-Performance 5. Disclosure (related to representation)

  4. 1. Agency Relationships & Contracts B. General Legal Principles, Theory, and Concept about Contracts 1. Unilateral / Bilateral 2. Validity 3. Void and Voidable 4. Notice of Delivery / Acceptance 5. Executory / Executed 6. Enforceability 7. Addenda to Contracts

  5. 1. Agency Relationships & Contracts C. Purchase Contracts (contracts between seller and buyer) 1. General Principles and Legal Concepts 2. Purchase Contract (contract of sale, purchase and sale agreement) 3. Options (contractual right to buy) 4. Basic Provisions / Purpose / Elements

  6. 1. Agency Relationships & Contracts C. Purchase Contracts (contracts between seller and buyer) 5. Conditions for Termination / Breach of Contract 6. Offer and Acceptance (counter offers, multiple offers, negotiations, earnest money) 7. Contingencies 8. Duties and Obligations of the Parties

  7. 1. Agency Relationships & Contracts D. Services/Listing Buyer Contracts (contracts between licensee and seller or buyer) 1. General Principles and Legal Concepts 2. Basic Provisions / purpose / Elements 3. Duties and Obligations of the Parties 4. Conditions for Termination/Breach/of Contract 5. Remuneration / Consideration / Fees 6. Types of service / Listing Contracts

  8. 1. Agency Relationships & Contracts E. Employment agreements between Broker and other Licensees (including supervision) Employer Independent Contractor

  9. 2. Real Property Ownership/Interest A. Freehold Estates (rights of ownership) B. Types of ownership (estates in land) 1. Joint Tenancy 2. Tenancy in Common 3. Condominiums

  10. 2. Real Property Ownership/Interest C. Leasehold Interest 1. Basic Concepts and Terminology 2. Types of Leases 3. Basic Elements and Provisions of Leases 4. Rights and Duties of the Parties 5. Remedies for Default / Non-Performance

  11. 2. Real Property Ownership/Interest D. Forms of Business Ownership 1. Sole Proprietorship 2. General or Limited Partnership 3. LLC

  12. 2. Real Property Ownership/Interest E. Private Restrictions on Real Property, Land Use and Matters Affecting Ownership 1. Liens a. Voluntary b. Involuntary c. Priority

  13. 2. Real Property Ownership/Interest E. Private Restrictions on Real Property, Land Use and matters Affecting Ownership 2. Easements / Rights of Way / Licenses 3. Preexisting Leases or Other Agreements 4. Encroachments 5. Deed Conditions, Covenants and Restrictions 6. Property Owner Association Agreements

  14. 2. Real Property Ownership/Interest F. Governments Powers and Control of Land Use 1. Americans With Disabilities Act (ADA) 2. Land Use Restrictions and Regulations (zoning) 4. Police Powers 5. Property Taxation 6. Subdivision Regulations (e.g. Condominium, Cooperatives, Planned Unit Development)

  15. 3. Finance A Basic Concept and Terminology 1. Equity 2. Loan-to-Value Ratio 3. Term 4. Principal and Interest 5. Direct and Indirect Costs (points, discounts) 6. Return on Investment / Rate of Return

  16. 3. Finance B. Types of Financing 1. Amortized 2. Interest Only 3. ARM 4. Construction Loan 5. Home Equity

  17. 3. Finance C. Methods of Financing 1. Government Programs (e.g., FHA, VA) 2. Conventional 3. Owner-financed 4. Land Contract

  18. 3. Finance D. Financing Instruments Mortgages, Trust Deeds, Promissory Notes 1. Basic Elements and Provisions of Financing Instruments 2. Legal Principles 3. Non-Performance

  19. 3. Finance E Government Oversight 1. RESPA 2. Regulation Z 3. Truth in Lending Act 4. Antitrust 5. Mortgage Fraud 6. Equal Credit Opportunity Act

  20. 3. Finance F Lending Process 1. Pre-approval and Pre-qualification (debt ratios, credit scoring, and history) 2. Parties to the Lending Process (loan originator, underwriter, mortgage broker)

  21. 4. Real Property A. Methods of Legal Description of Land 1. Metes and Bounds 2. Rectangular Survey 3. Lot and Block

  22. 4. Real Property B. Methods of Measurements 1. Structures (space and volume) 2. Livable Area 3. Land Measurement

  23. 4. Real Property C. Property Valuation 1. Basic Concepts and Terminology 2. Influences and Characteristics Affecting Value 3. Comparative Market Analysis (CMA) performed by a real estate licensee 4. Broker Price Opinion (BPO) 5. Real Property Fixtures / Personal Property Chattel

  24. 4. Real Property D Methods of Valuation by Appraiser 1. Sales Comparison Approach (Market Data) 2. Cost Approach 3. Income Analysis Approach 4. Appraisal Process / Procedure

  25. 4. Real Property E. Conveyance of Real Property 1. Definition of Clear Title (Marketable) 2. Matters Affecting Title 3. Recordation 4. Title Insurance

  26. 4. Real Property E. Conveyance of Real Property 5. Deeds 6. Will 7. Court Ordered Sale (foreclosure) 8. Adverse Possession 9. Settlement Procedures (closing the transaction)

  27. 5. Marketing RegulationsPurchase and Rental A. Property Advertising Disclosures Including Fair Housing 1. Environmental Concern Lead Based Paint, Radon 2. Property Condition

  28. 5. Marketing RegulationsPurchase and Rental B. Licensee Advertising 1. Antitrust 2. Do-Not-Call List 3. CAN-SPAM Act 4. Fair Housing – Blockbusting, Steering

  29. 6. Property Management • General Principles of Property Mgt. Agreements • Basic Provisions / Purpose / Elements of Property Management Agreements • Types of Contracts • Duties and Obligations of the Parties • Market Analysis and Tenants Acquisition • Accounts and Disbursements • Property Maintenance and Improvements • Evictions

  30. 7. Real Estate Calculations • Compensation, Commission, and Fees • Valuation / Market Sale Price and Yields • Net to Seller, Cost to Buyer (credits & debits) • Tax and Other Prorations • Amortization

  31. 7. Real Estate Calculations F. Points G. Prepayment Penalties H. Loan-to-Value Ratios I. Measurements (square footage, acreage, volume) J. Property Management / Investment (rate of return)

  32. Let’s get started

  33. Agency Relationships &Contracts 28% of General Knowledge Test A. Agency Relationships • Creating Agency Must be in Writing Purpose Parties

  34. A. Agency Relationships 2. Types of Agency (including implied agency) Transaction Broker – Assist the Transaction Relationship starts here working with Customer Single Agent – Represents one party Advises Works For Client Dual Agent – Limited Consensual Agent for both sides Sub Agent – Pre RECAD – workunder listing broker

  35. Responsibilities of Licensee and Listing Firm • Listing May be Agency or Transaction Broker • Agency – Listing – Client –Principle – Fiduciary • Works For Client • COLD AC • Duties • Confidentiality – Any information gained in confidence • Obedience – Perform all lawful acts • Loyalty – Put Clients interest above agent’s • Disclosure of Material Facts • Accountability of all funds • Care – Reasonable

  36. Alabama – Representation Notice – RECAD • Real Estate Consumer Agency Disclosure • Single Agent – Agency – must have signed agreement • Works FOR one party • Dual Agent (limited consensual) - Agency • Works FOR both parties – must have signed agreement • Transaction Broker (or their agent) – no written agreement • Works WITH one or both parties – Non Agency • Sub-Agent – works on behalf of listing broker • Not used any longer – • Agency agreement must be in writing – Express • No Implied Agency in Alabama • Transaction Broker is default (always starts as) relationship

  37. Types of agents • Universal • Power of Attorney - May sign deed • Can do anything permitted in name of principle • General • Property Manager • Can do specific allowed things like have building painted • Specific • Real Estate Agent • Limited authority to do things like show home to buyer • Can not sign or initial contract for principle

  38. Types of licensee • Company • Must have qualifying broker • Broker QB • One per company • Associate Broker -- Any broker other than QB • Passed broker test, but remains under another broker • Salesperson

  39. Disclosure – • Alabama is “Caveat Emptor” - Buyer Beware • No required seller disclosure statement in Alabama • Must disclose Known latent defects • Latent – hidden, not easily discovered • Patent - easily discovered • Includes health or safety defects • If Agency- must disclose everything known by agent • No duty to discover

  40. Caveat Emptor does not apply to: • HAND • Health & Safety • Assumption of Duty • New Construction • Direct Question

  41. Misrepresentation • Material Fact not disclosed • Fraud if: • You made statement, or not • Buyer, Seller relied on information • Someone was harmed • Implied Agency is Fraud • Leading customer to believe they are represented • Buyer or Seller relied on this • They were harmed

  42. Real Property • Land from center of earth to reasonable height above • Includes mineral and water rights • These may be sold separately • Includes appurtenances – runs with the land • All rights, privileges and improvements that transfer with land • May be tangible (can touch) easement • Or non-tangible - right to use

  43. Personal Property • Things that are tangible and moveable, • Not real property • Chattels ( also called personalty) • Title to personal property is transferred by “bill of sale”

  44. Fructus Industriales • Annual crops are considered personal property – emblements • Must allow harvesting even after lease ends • Fructus Naturales • Uncultivated crops and trees are considered real property • Trade Fixtures • Necessary for business operation – personal property • Must be removed prior to lease termination • Any damage must be repaired

  45. Listing Agreement • May be Agency or Non Agency • Must have expiration Date • No Automatic renewals • Must leave copy with principle • Must retain copy for 3 years • Net Sheet – not required, but recommended • Must be in writing to enforce commission • Only broker may sue for commission • Deed has names of all owners • Deed does not prove ownership

  46. Listing Agreement • Owner will sell at price and terms • Broker gets paid for bringing buyer • Must be signed by all owners • Must be in writing to be enforceable • Must have expiration • No automatic renewal • Must leave copy with owner. • Is unilateral personal service (employment) agreement • Commission is negotiable

  47. Forms of Ownership in Real Estate • Easy as 1, 2, 3 • 1 - One Owner (severalty) severed from others • Married person may hold property in severalty • 2 - persons may hold title together as: • Joint Tenants with right of survivorship • Most likely husband and wife • PITT – Title passes to other holder upon death of other owner • Tenants in common – interest may not be equal • Upon death title passes to heirs • 3 – Trust 3 parties • Trustor (creates trust) • Trustee (holder of title) • Beneficiary (benefits from trust)

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