Real Estate Exam Prep: Key Concepts

1. Real vs. Personal Property

• Real Property: Immovable (e.g., house, attached fixtures)
• Personal Property: Movable (e.g., keys, lease)
• Mnemonic: Real property goes with real estate; personal property goes with the person

2. Estates and Property

• Freehold Estates: Indefinite duration (ownership)
  • Types: Fee simple absolute, fee simple defeasible, life estate
• Less than Freehold Estates: Limited time (leases)
  • Types: Estate for years, periodic tenancy, estate at will, estate at sufferance

3. Government Powers

• Acronym: PETE
  • Police Power: Regulations (e.g., zoning, building codes)
  • Eminent Domain: Taking property with compensation (condemnation)
  • Taxation: Government collects taxes
  • Escheat: Property reverts to state if no heirs

4. Types of Ownership

• Severalty: Owned by one person
• Concurrent: Owned with others
  • Types: Joint tenancy and tenancy in common
  • Joint Tenancy: Time, title, interest, possession, right of survivorship
  • Tenancy in Common: Unity of possession, no right of survivorship

5. Essential Elements of Value

• Acronym: STUD or DUST
  • Scarcity: Limited availability
  • Transferability: Ability to sell
  • Utility: Usefulness
  • Demand: Desire for property

6. Types of Depreciation

• Economic Obsolescence: External factors (e.g., crime, nearby airport)
• Functional Obsolescence: Poor design (e.g., 5-bedroom house with 1 bathroom)
• Physical Deterioration: Wear and tear

7. Appraisal Methods

• Market Data Approach: Uses comparable sales (comps)
• Cost Replacement Approach: Cost to replace building (used for schools, libraries)
• Capitalization Income Approach: Income generated by property

8. Deeds and Title

• Deed: Evidence of transfer
• Title: Ownership

9. Liens

• Specific Liens: Target specific property (e.g., mortgage, property tax)
• General Liens: Target all assets (e.g., income tax, judgment lien)

10. Fair Housing Laws

• Enacted in 1968
• Violations:
  • Steering: Directing buyers based on race/ethnicity
  • Blockbusting/Panic Selling: Urging sellers to sell based on incoming residents
  • Redlining: Denying loans based on location
• Key Terms: Steering, blockbusting, panic selling, redlining

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