Fiche de révision : Real Estate Licensing Fundamentals

📋 Course Outline

1. Exam prep course guidance
2. Agency relationships and fair housing
3. Purchase contracts and lender disclosures
4. Valuation and market analysis
5. Property ownership and legal description
6. Easements, liens, and ownership forms
7. Land-use controls and environmental hazards
8. Commercial property and leases
9. Disclosure, deeds, and title transfer
10. Real estate math review

📖 1. Exam prep course guidance

🔑 Key Concepts & Definitions

• True/false questions : A set of statements you answer before lectures to reveal which content areas you must study and retest.
• Self-score answer sheet : A workbook form you use to track pre-test and post-test results by category so you can target review.
• Exam Prep Strength and Weakness Indicator Chart : A chart that maps how many items you answered correctly to book page references for focused topic review.
• Pre-test and post-test : Two practice tests used to measure your readiness, with the post-test serving as the closest predictor of passing the licensing exam.

📝 Essential Points

• Read the Preparing for the Exam Prep Course section before starting the rest of the program.
• Complete all true/false questions before attending lectures or viewing online, and conceal right-side answers while you try to decide true or false.
• For a false statement, try rewriting it to make it true; if you cannot, mark it missed.
• Start the study process with your weakest topic, then redo missed questions repeatedly until you no longer miss them.
• Pre-test score of at least 80% means you should still target remaining weak areas using the chart and take the post-test.
• Pre-test below 80% or post-test below 80% means you need more review and retesting, with additional review recommended particularly when you score below 75% on the pre-test.

💡 Memory Hook

80% = ready-enough focus spots; <80% = review; <75% = usually struggle unless you extend study; post-test <80% = not ready.

📖 2. Agency relationships and fair housing

🔑 Key Concepts & Definitions

• Principal : A principal employs another to act on the principal’s behalf and receives the agent’s fiduciary duties.
• Agent fiduciary : An agent fiduciary represents a principal and owes fiduciary duties to the principal who employed the agent.
• Third-party customer : A third party in the transaction is not part of the agency agreement and the agent must deal honestly and fairly.
• Dual agency : Dual agency is representation of both buyer and seller in the same transaction that requires written consent from both parties.
• FReSH CoRN classifications : FReSH CoRN is a memory aid for the federal protected housing classifications under the Fair Housing Act and its amendments.

📝 Essential Points

• In common-law agency, the agent owes fiduciary duties of obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care and skill (OLD CAR).
• The agent must disclose representation before showing or receiving confidential information, and if representation changes a new disclosure is required at once.
• The agent must keep confidential the principal’s price, terms, and motivation (PTM) and must keep and account for all money/personal property given to the broker.
• Dual agency requires written consent of both parties, and the disclosure must state the source of any expected broker compensation.
• Under the Fair Housing Act, protected classifications include FReSH CoRN and race has no exceptions in federal law.
• Complaints may be filed with HUD within 1 year, and an aggrieved party may file a civil suit in federal court within 2 years.

💡 Memory Hook

PTM stays secret and dual needs 2 written consents: PTM confidentiality → dual = both parties’ written OK.

📖 3. Purchase contracts and lender disclosures

🔑 Key Concepts & Definitions

• Earnest money : Earnest money is a deposit tied to a purchase contract that is returned when certain contractual termination conditions are triggered.
• Contingency termination : Contingency termination is ending the purchase contract based on a stated financing or other contingency condition.
• Option contract : An option contract gives the buyer a set right and time period to buy for a set price.
• Truth in Lending Act : Truth in Lending Act requires lenders to disclose the true cost of consumer credit, including the APR, and certain rights.
• RESPA : RESPA requires lenders to provide timely disclosures of settlement costs and limits certain escrow prepayments.

📝 Essential Points

• If a buyer terminates the contract per a contingency for financing, the buyer’s earnest money is returned.
• Brokers are not paid if a contract terminates per a contingency.
• Earnest money is not consideration and is not required to create a valid purchase agreement.
• In an option contract, it starts as a unilateral contract and becomes bilateral when the buyer exercises the option.
• Truth in Lending Act defines APR as the effective rate that includes the note rate plus total cost of credit, and APR is higher than the note rate.
• RESPA requires a “Guide to Settlement Costs” and a good-faith estimate within 3 days, and it limits advance escrow payments to no more than 3 months plus what is owed.

💡 Memory Hook

TILA = APR + 3-day rescission (home improvements/refinances); RESPA = costs disclosure within 3 days + HUD-1 check 1 day pre-close.

📖 4. Valuation and market analysis

🔑 Key Concepts & Definitions

• Competitive market analysis : A competitive market analysis estimates a subject property’s market value by comparing similar sales and adjusting for differences.
• Capitalization : Capitalization converts a property’s estimated future income into an indicated value for investment decision-making.
• Net operating income : Net operating income is the property’s effective gross income minus operating expenses.
• Gross rent multiplier : Gross rent multiplier is a quick valuation method that estimates property value using rent and a multiplier derived from comparable rentals.

📝 Essential Points

• A CMA adjustment example treats each feature’s dollar impact as an added or subtracted amount to the comparable sale price before selecting the estimated market value.
• For capitalization, net operating income is computed as effective gross income minus operating expenses.
• Effective gross income equals potential annual gross income minus bad debt and minus vacancy.
• Capitalization math uses $I=R\times V$, so value is $V=I\div R$ when NOI and the capitalization rate are given.
• Gross rent multiplier value uses $V=\text{Rent}\times \text{GRM}$, and the rent period must match the multiplier period (annual with annual, monthly with monthly).
• A GRM of at least 100 indicates a monthly multiplier, while a smaller number (e.g., 12) indicates an annual multiplier.

💡 Memory Hook

CMA adjusts prices; Income approach capitals NOI ($V=I\div R$); GRM multiplies rent ($V=Rent\times GRM$).

📖 5. Property ownership and legal description

🔑 Key Concepts & Definitions

• Title insurance policy : A title insurance policy provides protection against title defects as defined in the policy terms.
• Owner’s title policy : An owner’s title insurance policy protects the buyer (owner) and heirs while they have an interest.
• Mortgagee’s title policy : A mortgagee’s title insurance policy protects the lender by providing title coverage to the lender.
• Quiet title action : A quiet title action is a legal proceeding used to resolve title problems identified in the title report or abstract.

📝 Essential Points

• A standard title insurance policy protects against certain title defects discovered after closing rather than before closing.
• Owner’s title insurance protects the owner (buyer) and heirs while they retain an ownership interest.
• Mortgagee’s title insurance covers the lender, and the buyer often pays the premium for the lender’s policy.
• Quiet title actions are used to clear title problems found in the abstract or the title report.
• Title insurance premiums are paid once at closing, and the policy is issued at or after closing.

💡 Memory Hook

Owner = your heirs; Mortgagee = your lender.

📖 6. Easements, liens, and ownership forms

📖 7. Land-use controls and environmental hazards

🔑 Key Concepts & Definitions

• Zoning : Zoning is a form of public land-use control exercised through police power to regulate how property may be used.
• Restrictive covenants : Restrictive covenants are private land-use limits placed by a property’s owner to restrict future use.
• Restrictive covenant deed rule : A restrictive covenant can be added to a deed to restrict property use.
• Environmental hazard disclosure : Environmental and special-use impacts on property must be disclosed, including flight paths and hazards like floodplains.

📝 Essential Points

• Zoning is public control under police power, not private control.
• Restrictive covenants are a private control on land use.
• Restrictive covenants are not limited to subdivisions and may be added to any deed.
• Flight paths, coastal preservation areas, and floodplains must be disclosed when they impact the property.

💡 Memory Hook

Zoning sounds like police: Public control/police power; covenants are private chains on the deed.

📖 8. Commercial property and leases

🔑 Key Concepts & Definitions

• Percentage lease : A percentage lease is a commercial lease where the tenant pays a base rent plus a set percentage of the business’s gross sales profit.
• Ground lease : A ground lease is a lease where the tenant pays rent and the rent is adjusted upward over time, commonly in steps each year.
• Gross lease : A gross lease is a lease type where the landlord pays most property charges and the tenant pays a fixed monthly rent.
• Constructive eviction : Constructive eviction is a tenant’s legal remedy when the landlord’s actions or conditions force the tenant to effectively leave, even without a formal eviction.
• Leasehold estate : A leasehold estate is the tenant’s interest in the right to possess and use real property for the lease term.

📝 Essential Points

• A lease is enforceable in writing unless it is for 1 year or less.
• Under a gross lease, the tenant pays fixed monthly rent while the landlord pays property charges.
• For commercial tenants, paying only rent generally describes a fixed or gross lease.
• In constructive eviction situations, the tenant must move out rather than withholding rent and staying.
• A buyer of leased commercial property typically takes title subject to and must honor the existing lease.
• A developer leasing land to construct a building on it holds a leasehold interest.

💡 Memory Hook

Gross = landlord covers charges; Tenant pays Fixed rent; Percentage = Tenant shares sales %.

📖 9. Disclosure, deeds, and title transfer

🔑 Key Concepts & Definitions

• Lead-based paint disclosure : Lead-based paint disclosure is a required notice for eligible pre-1978 properties that informs buyers about lead hazards and associated rights.
• Title report : A title report is a document showing the current recorded status of title encumbrances affecting a property.
• Constructive notice : Constructive notice is legal notice created by recording documents that lets the public rely on the recorded title information.
• General warranty deed : A general warranty deed is a deed that provides the strongest promise to the buyer by defending title against claims.
• Quitclaim deed : A quitclaim deed is a deed that transfers the grantor’s interest without warranties, limiting the buyer’s protection against title defects.

📝 Essential Points

• Lead-based paint disclosure is required for properties built before January 1, 1978, and it allows the buyer to waive the right to an inspection.
• An “as is” sale does not eliminate disclosure duties because material facts must still be disclosed even if the seller will make no repairs.
• Recording creates constructive notice, and it also helps establish priority so later claims cannot take priority over a properly recorded interest.
• A valid deed requires words of conveyance, the grantor’s signature, delivery and acceptance, and recording for constructive notice and priority effects.
• A general warranty deed gives the greatest buyer protection through its warranties of title, while a quitclaim deed specifically disclaims warranties against title and ownership claims.
• Title insurance is designed to protect against title defects discovered prior to closing, and the premium is paid only once when the policy is issued.

💡 Memory Hook

Think RECORDING → CONSTRUCTIVE NOTICE; Warranties = protection: GENERAL warranty > SPECIAL warranty > QUITCLAIM (least protection).

📖 10. Real estate math review

🔑 Key Concepts & Definitions

• Acre : A land area unit equal to 43,560 square feet.
• Section : A survey unit in the government survey system that has a fixed area.
• Baseline in survey : A principal east–west line used as the starting reference in a government land survey.

📝 Essential Points

• 1 acre equals 43,560 square feet.
• A section in the government survey contains 640 acres.
• In a government survey, baselines run east and west.

💡 Memory Hook

640 acres per section: think “Section Size = 640”.

📅 Key Dates

📊 Synthesis Tables

TILA vs RESPA timing & what they require

⚠️ Common Pitfalls & Confusions

1. Confusing earnest money with consideration (earnest money is not consideration and is returned/kept based on contingency/default rules).
2. Thinking a CMA is an appraisal (a CMA/BPO/BOV helps with value but “may not be used to finance property”).
3. Mixing up constructive eviction with “stay and withhold rent” (constructive eviction requires the tenant to move out rather than stay).
4. Forgetting dual agency needs written consent from both parties and the disclosure must state the source of expected broker compensation.
5. Using the wrong GRM time period (annual rent must match an annual GRM; monthly rent must match a monthly GRM).
6. Assuming title insurance guarantees problems won’t occur (title insurance protects against covered defects/exceptions per the policy; premiums are paid once at closing and standard policies cover defects discovered after closing).
7. Reversing option-contract structure (it starts as a unilateral contract and becomes bilateral when the buyer exercises the option).

✅ Exam Checklist

1. Complete all true/false questions before attending lectures and conceal right-side answers while you decide true or false.
2. For false true/false statements, rewrite them to make them true; if you cannot, mark the question as missed.
3. Start study with your weakest topic, redo missed true/false questions repeatedly, and use the Exam Prep Strength and Weakness Indicator Chart for focused review.
4. Take the pre-test, then use self-score categories to complete the chart and determine whether you should still target remaining weak areas and retake missed items.
5. Understand that the post-test is the closest predictor of passing the licensing exam and that scores below 80% mean you generally need more review and retesting.
6. Agency: know OLDCAR/OLD CAR duties and that representation must be disclosed before showing or receiving confidential information; dual agency requires written consent from both parties.
7. Contracts: distinguish unilateral vs bilateral, executory vs executed, and know that a purchase contract becomes binding when acceptance is communicated; financing contingency termination returns earnest money and brokers are not paid.
8. Fair housing: identify protected classifications using FReSH CoRN and know HUD complaint filing within one year and civil suit in federal court within two years.
9. Financing & credit laws: know TILA requires APR disclosure and provides a 3-day right of rescission for home improvements/refinances, and RESPA requires a Guide to Settlement Costs and a good-faith estimate within 3 days plus HUD-1 inspection 1 day before closing.
10. Valuation & math: CMA adjusts comparables (not the subject), income approach uses capitalization math (V=I÷R with NOI), and GRM uses V=Rent×GRM with matching annual/monthly periods; also master core math units like 1 acre=43,560 square feet and a section=640 acres.
11. Ownership & title: keep straight real vs personal property/fixtures vs emblements/trade fixtures, and know key deed/recording/timing rules including that recording creates constructive notice and standard title insurance is issued at or after closing with premium paid once.