Principals of Real Estate

M Index 643 INDEX

secondary financing (junior loans), 301 Minimum Property Requirements (MPRs), 420
short-term loans, 311, 329 minors, 89
“subject to” clauses, 287 misrepresentation, 91, 129, 549
sub-prime loans, 293 mistake, 91
take-out loans, 329 misuse of trade name, 552
trustors (borrowers), 274 MLS (multiple listing service), 108-110
types, 276 MMI (Mutual Mortgage Insurance), 294
underwriting, 337 mold, 190
unsecured loans, 308 monetary policy, 323-324
VA loans, 296-297 monuments, 256
loan-to-value ratio, 310, 331, 339 moral turpitude, 551
Local Coastal Programs (LCPs), 408-409 mortgage-backed securities (MBS), 336
Local Option Real Estate Transfer Disclosure mortgage bankers, 332-334
Statement (LORETDS), 189, 199 mortgage brokers, 332
logotype, Equal Opportunity Housing, 472 mortgage companies, 332
lot, block, and tract system, 251 Mortgage Loan Disclosure Statement (MLDS), 351
Mortgage Loan Originator License Endorsement, 532
M mortgage markets, 328-337
mortgagees, 282
maker of will, 70 mortgages, 58-59
maker of promissory note, 275 Adjustable Rate Mortgages (ARMs), 280
management contracts, 511 conventional mortgages, 332, 335
management fees, 511 defined and described, 282
mansionization, 508-509 Graduated Payment Mortgage (GPM), 295
manufactured housing, 486 mortgage pools, 333
margin, 280, 302-304, 443 pledged account mortgages (PAMs), 310
MARIA (fixture tests), 32 private mortgage insurance (PMI), 290
marketable title, 246 renegotiable rate mortgages, 311
Market Conditions Advisory, 216-218 Reverse Annuity Mortgages, 296
market data for appraisals, 372 rollover mortgages (ROM), 311
market rent, 384 second mortgage loans, 304
market value, 363-364 shared appreciation mortgages (SAMs), 310
master plan, 404-405 warehousing of mortgages, 332
material facts, 129, 183 wrap-around mortgages, 306
matters of record, 239 mortgage yield, 329
Maximum Allowable Rent (MAR), 518 mortgagors, 282
MBS (mortgage-backed securities), 336-337 multiple listing service (MLS), 109-110, 208
mechanic’s liens, 59, 62, 69 mutual consent, 89
median home price, 11-12 Mutual Mortgage Insurance (MMI), 294
meeting of the minds, 90 mutual ownership, 329-330
megalopolis, 6 mutual rescission, 95
Mello-Roos, 205-207, 261 mutual savings banks, 330-331
menace, 92 mycotoxins, 184
merger, of easements, 64
meridians, 251 N
metes and bounds, 256
method of attachment, 32 naked legal title, 281
military ordnance locations, 192 National Association of REALTORS® (NAR), 467
minerals, 31 Natural Hazard Disclosure Statement (NHD), 193-196

644 California Real Estate Principles

INDEX natural hazards, 198-204 options, 154, 156
NDFA, acronym explained, 259 optionees, 154
negative declarations, 412 optionors, 154
negligence, 552 oral agreement, 89, 117
negligent misrepresentations, 130 Order to Desist and Refrain, 544
negotiable instruments, 275 orientation of property, 366
net lease, 159 original cost, 363, 382-383
net listing, 122 ostensible agency, 106, 108, 117-119
net operating income (NOI), 385 oversupply, 365
net worth, 10 ownership, 41-47
NFIP (National Flood Insurance Program), 194 concurrent ownership, 42
NHD (Natural Hazard Disclosure Statement), 193-196 eminent domain, 64, 80
NIMBY syndrome, 509 estates as ownership interests, 35
No Darn Fooling Around mnemonic, 259 land and rights, 29-31
no fault evictions, 518 ownership of fugitive substances, 31
non-business property, 497-498 real estate brokerage ownership, 440
non-conforming loans, 290 recording evidence, 47
non-conforming use, 67 regulation of land ownership, 402
non-despository institutions, 328, 331 restrictions, 66-68
non-financial institutions, 333 separate ownership, 42
non-freehold estate, 40-41 title, 41
non-institutional lenders, 328, 331 water rights, 30-31
non-money encumbrances, 58, 62
non-use of easements, 65 P
notary public, 47
notes. See promissory notes, 274-275 package loans, 308
notice of completion, 59 panic selling, 474, 552
notice of non-responsibility, 60 parcel map, 413
notice of termination, 172, 185, 207 parcels of land, 251
Notice of Termination of Tenancy, 172 parol evidence rule, 94
Notice to Pay Rent or Quit, 170 partial release clause, 308
Not In My Back Yard syndrome, 509 partition action, 43, 79
novation, 95 partnership license, 531
partnership, 440-441
O party wall, 236, 425
pass-through securities, 336
Oak Woodlands Conservation Act, 410 patent, 41, 78, 183
objective value. See market value, 364 payment schedule, 345
obsolescence, 367 penalties for false advertising, 531
offers, 93 pendency of action (lis pendens), 61
offeror and offeree, 90 PEPS, acronym explained, 367
Office of Thrift Supervision (OTS), 336 percentage lease, 159
open and notorious use, 64 percolation, 415
open-end loans, 308 performance of contract, 95
open house registry list, 461 permitted use, 407
open listing, 122 perpetual estate, 36
open market operations, the Fed, 324-325 personal property, 29
operating expenses, 449 pest control and certification report, 216
operation of law, 78 PETE, See glossary

physical characteristics of properties, 365 Index 645 INDEX
pitch of roof, 426
planned developments, 419 professional organizations, 388, 468
planning and development, 404-405 profitability, measuring, 449
urban sprawl, 507 progression, principle of, 370
plants, as real property, 34 promissory notes, 274-275
pledged account mortgages (PAMs), 310 property, 27-48
pledge, 29, 274, 310 property management, 510-519
plottage increment, 366 property values
point of beginning (POB), 256 appreciation, 22, 380, 500
points, 294 Proposition 13, 205, 257
police power, 80, 403-404 Proposition 60, 258
ponding floodwater, 30 proprietary lease, 159
population prorate, 153, 239
demographic statistics, 15 prospecting for clients, 460
diversity, 469 public grants, 78
growth in California, 5–6 public report, disclosure, 219
possession. See also occupancy puffing, 130
escrow instructions, 143 pur autre vie, 37
hypothecation of loans, 274 purchase agreements, 142-151
right, 41 purchase money loans, 286, 304
potability of water, 415 purchase offers, 142
power of sale clause, 284 purchase price, 238
power of attorney, 89, 106-107, 121, 127, 534
preliminary notice of mechanic’s lien, 59 QQ
preliminary public reports, 219
preliminary title report, 236, 240, 243 qualifying interest rates, 280
premiums, 237 quantity-survey method, 380
Pre-Move-Out Inspection, 167 quiet enjoyment, 28, 158
prepayment clause, 283 quiet title action, 79
prerecorded messages, 461 quitclaim deeds, 76-77
prescription, 64
price, 363 RR
prima facie evidence, 47
prime loans, 290 racial discrimination, 469-475
principal, 89 radon gas, 184, 200
in an escrow, 228 Rangeland, Grazing Land, and Grassland Protection
legal obligations, 122 Act, 410
obligations, 122 ready, willing, and able buyers, 117, 122, 452
priority Real Estate Commissioner, 528-529
deeds, 74 regulations, 546-552
mechanic’s liens, 59 Real Estate Education and Research Fund, 529
recording, 49 Real Estate Investment Trusts (REITs), 333
private grants, 72 Real Estate Law. See also laws and regulations, 528-530
private mortgage insurance (PMI), 290 enforcement, 546
probate, 70 legal responsibilities, 528
procuring cause, 122, 131 violations, 548-556
professionalism, 12 real estate licenses. See licenses and licensing
Real Estate Recovery Fund, 529
Real Estate Settlement Procedures Act (RESPA), 346-347
Real Estate Transfer Disclosure Statement, 183-189
real property, 29-35

646 California Real Estate Principles

INDEX Real Property Loan Law, 350-351 defined, 66-67
reasonably discoverable problems, 183 ownership, 36
rebate law, 247 police power, 403-404
reconciliation of value, 375 private restrictions, 66
reconciliation statements, 243 public restrictions, 66-67
recorded map system, 251 retaliatory evictions, 167
recording, 48 retrofit ordinances, 215
red flags, 182 retrofit standards, 211-212
redlining, 349-350 return on investment (ROI), 283
red tags, manufactured housing, 486 reversionary rights, 158
referral fees, 245 right of replevin, 170
refinancing, 278, 287 right of rescission, 346
regression, principle of, 370 right of survivorship, 43
Regulation Z, 344 right-of-way, 35
rehabilitation of property, 421 riparian rights, 30
reinstatement of loans, 284 rollover mortgages (ROM), 311
REITs (Real Estate Investment Trusts), 333 roof types, 426-427
reliction, 71 R-value, 215
renegotiable rate mortgages, 311
rental agreements. See leases, 156-159 SS
rental units, 167
rents, 166-168 SAFE Act, 532
defined, 166 safety clauses, 132
income approach, 383 sales associates (associate licensees), 110-112, 530
market rent, 384 defined and described, 530
Maximum Allowable Rent (MAR), 518 salespersons, 442, 449-450
payment methods, 159 defined and described, 532
rent control or stabilization, 517-518 discharge for violation, 555
Request for Full Reconveyance of Deed, 281 licensing, 532
Request for Notice, 284 supervision violations, 552
rescinding transactions, 95-96 sales tax, 498
reserve requirements, the Fed, 324-325 San Bernardino Baseline and Meridian, 251
residency requirements for license, 540 sandwich leases, 169
residential ceiling height measurement, 425 Savings and Loan Associations (S&Ls), 325-326
Residentinal Environmental Hazards booklet, 200 savings banks, 330
residential property, 159 scarcity, 364-365
Residential Purchase Agreement and Joint Escrow schematics, 425
S corporation, 441
Instructions, 142-154 secondary financing, 301
resident managers, 511 secret profit, 550
resort-type subdivisions, 493-494 Section and Township Survey, 256
RESPA (Real Estate Settlement Procedures security agreements, 497
Act), 346-347 security bars on windows, 183
restricted licenses, 533 security deposits, 166
Restricted Use Appraisal Reports, 376 security instruments, 274, 280-281
restrictions. See also zoning, 65-67 security transactions, UCC, 497
building codes, 421 seismic hazard zones, 197-198
building restrictions, 367 selecting a brokerage, 457-459
CC&Rs, 66, 418 Self-Contained Appraisal Reports, 376

seller financing, 304-306, 350 Index 647 INDEX
2nd trust deeds, 304-306
all-inclusive trust deeds (AITD), 306-307 State Responsibility Area, 197
Seller Financing Disclosure Statements, 352 statute of frauds, 93
sellers, as parties in escrow, 244 statute of limitations, 97
Seller’s Affidavit of Nonforeign Status, 109-211 statutory dedication and public use, 78
seller’s permits, 498 steering, 474
selling agents, 108 stigmatized properties, 191
selling price, 122 stock cooperatives, 420
senior citizens, Fair Housing Act, 471 stockholders, 159
septic tanks, 415 stock in mutual water company, 35
servient tenement, 62 straight line depreciation, 501-502
setbacks, 425 Street Improvement Act of 1911, 261
settlement costs, 347 Structural Pest Control Board, 216
settlement statements, 242 structures. See improvements
severalty, 42 studs, 424
sewage, 415 subagents, 107
sex offender data base (Megan’s Law) disclosure, 205 Subdivided Lands Law, 219-220, 411
shared appreciation mortgages (SAMs), 310 subdivision
sheet overflow floodwater, 30 common interest developments (CID), 418
sheriff’s deeds, 286 condominiums, 419
Sherman Anti-Trust Law, 129 creation of subdivisions, 418
shopping centers’ population requirements, 425 defined and described, 417
sign regulations, 466-467 health and sanitation regulations, 415
single agency, 107, 142 planned developments, 419
situs, 365 standard subdivision, 418
S&Ls (Savings and Loan Associations), 326, 330 stock cooperatives, 420
smart growth, 507-508 Subdivided Lands Law, 219-220, 411
smoke detectors, 214 Subdivision Map Act, 411-415
social security numbers, 539 subjective value, 364
soil, 365-366 “subject to” clauses, 287, 289
compaction, 422 sublease, 169
expansive soil, 422-423 subordination clause, 301
sole proprietorship, 440-441 substitution, principle of, 369
spam, 462-463 succession, 70
special agent, 106 Summary Appraisal Reports, 376
special assessments, 61, 261 supply, 368
special information booklet, 347 surrender of lease, 170
special power of attorney, 107 swing loans, 310
specific performance, 95
specific plans, 404 TT
square-foot method, 380
standard subdivision, 418 take-out loans, 329
standby commitments, 311 taking, 402-403
Starker exchange, 504-505 target housing, 201
State Board of Equalization, 498 taxes
State Housing Law, 420 1031 Exchanges, 504-506
statement of issues, 548 ad valorem, term explained, 258
appraisal, 383
assessment and collection, 258
benefits of home ownership, 262

648 California Real Estate Principles

INDEX California Sales and Use Tax, 498 tenancy for years, 40
capital gains or losses, 264, 503-504 tenancy in common, 42
clearance of tax liability, 487 tenancy in partnership, 47
deductions related to home ownership, 262-264 tenants, rights, 168
delinquent tax accounts, 260 tender, 95
depreciation, 380 tentative tract map, 413
determination of tax rates, 258 termination
documentary transfer tax, 262 agency relationships, 120-121
escrow, 239 escrow, 244
estate tax, 506-507 exclusive agreements, 118
exclusions, 263 lease, 169-172
exemption, 260-261 offer, 90, 154
FIRPTA withholding requirements, 209 termites, 381, 424
fiscal vs. calendar year, 259 testate, defined, 69
gift tax, 507 third parties, 107, 110
income tax, 262 agent’s responsibilities, 197
inheritance tax, 507 escrow, 228
installment due dates, 259 escrow officers, 234
installment sales, 504 three-stage life cycle, principle of, 368
Mello-Roos assessments, 207 thrifts, 329
profit or taxable gain, 505 tiers, 252
progressive tax, 262 tight money market, 325
property as tax shelter, 262 TILA (Truth in Lending Act), 344
property taxes, 257-261 TILA-RESPA Rule (TRID), 344-345
Proposition 13, 257 time-share ownership, 420
Proposition 60, 258 TIMMUR, acronym explained, 385
REITs, 333 T-intersection lots, 373
sale of property, 264 title company, 234, 240
sales tax, 498 title insurance, types of policies, 247-250
sole proprietorship, 440 title plants, 246
special assessments, 61, 261 titles, 41
street improvement assessments, 261
supplementary tax bills, 207-208 abstract of title, 246
tax benefits of property ownership, 262-264 acquisition and conveyance, 69-80
tax deeds, 260 after-acquired title, 73
tax liens, 61 bare or naked legal title, 281
tax rolls, 258-259 certificate of title, 246, 487
tax sales, 260 chain of title, 74, 246
tax-free exchanges, 504-506 cloud on title, 62, 79, 82
transfer tax, 262 community property, 45-47
use tax, 498 conveyance, 69-80
TDS. See Real Estate Transfer Disclosure Statement defined and described, 41
tenancy, 40 equitable title, 281
at will, 41 escrow and recording of title, 243
at sufferance, 41 guarantee of title, 247
concurrent ownership, 42-47 marketability, 246
defined, 40, 42 mobile homes, 487
periodic tenancy, 40 quiet title actions, 79
Rebate Law, 250

Index 649

recording evidence, 47-49 unilateral rescission, 96
title search, 240 unit-in-place, 380
trust deeds, 281 unity, 42
vesting, 153, 239 unlawful detainer action, 170-171, 174
topography, 366 unlocated easements, 63
torts, 130 Unruh Civil Rights Act, 474
townships, 252 unsecured loans, 308
toxic mold, 184 UPTEE, 28
trade fixtures, 33 urban sprawl, 507
trade names, 552 U.S. Department of Housing and Urban Development
trading up, 505
training, 458 (HUD), 218, 293, 335-336, 472
transactional e-mail messages, 462 U.S. Public Land Survey System, 251
transferability, 365 useful life, 383
transfer of property use tax, 498
conveyance defined, 72 usury, 276
grant deeds, 72-76 utility, 364, 367
private grants, 72
right, 28 VV INDEX
TransUnion™ credit reporting agency, 338
Treaty of Guadalupe Hidalgo, 41 vacancy factor, 384
trust deeds, 59, 281, 298 valid contracts, 89
acceleration clauses, 283 VA loans, 296-298
All Inclusive Trust Deed (AITD), 306-307 value
defined and described, 306 defined, 362-363
foreclosure, 284 depreciation, 378-380
prepayment clause, 283 economic influence, 366-367
trustee, 106, 281 physical characteristics, 365
trust funds, 444 political forces, 367
trustors (borrowers), 274, 281 principles of valuation, 367-369
Truth in Lending Act (TILA), 344 scarcity, 365
T-tip mnemonic, 44 social forces, 367
turnkey projects, 500 transferability, 365
two-year grace period, license renewal, 542 utility, 364
variable expenses, 385
U variances and zoning, 408
vendees, 282
undersupply, 365 vendors, 282
underwriting loans, 337-339 vesting
undivided interests, 42, 210, 420 bankruptcy, 79
undue influence, 92 community property and right of survivorship, 45
unearned increment, 366, 500 title, 41, 153, 239
unemployment insurance, 496 veterans
unenforceable contracts, 89 Cal-Vet loans, 298
Uniform Building Code, 421 VA loans, 296-298
Uniform Commercial Code (UCC), 496 Veterans Administration (VA) loans, 296-298
Uniform Standards of Professional Appraisal Practice Veterans’ Exemption, 261
(USPAP), 387, 388 violations of real estate law, 548-556
unilateral contracts, 88 visual inspection, 182
void and voidable contracts, 88-89

650 California Real Estate Principles

voiding, of deeds, 73
voluntary liens, 58

W

waiver, 95
walk-up, 425
warranty deeds, 78
water
Clean Water Act of 1977, 409
conservation (plumbing fixtures), 215
contamination, 200
defined channel, 415
health regulations and water quality, 415
heaters, 212
ownership rights, 30-31
percolating water and percolation tests, 30, 415
stock in mutual water companies, 35
table, 415
water-pressure tests, 425
wetlands, 409
wild land fire areas, 197
willing buyers and sellers, 364
wills, 69
administration, 70
codicils, 69
holographic, 70
probate process, 70
witnessed, 70
windows, security bars on, 183
workers’ compensation insurance, 457
wraparound mortgages, 306-307
writ of attachment, 61
writ of execution, 79
writ of possession, 171

ZZ

zoning, 405-408
downzoning, 66
vs. eminent domain, 80
vs. General Plan, 404-405
symbols for different zoning areas, 406-407
use variances, 408

INDEX

Appendix B WEBSITES

Websites Used in this Book

Entity Website

California Apartment Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .http://www.caanet.org
California Association of REALTORS® ������������������������������������������������������� http://www.car.org
California Bureau of Real Estate Appraisers �������������������������������������������http://www.orea.ca.gov
California Bureau of Real Estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . http://www.calbre.ca.gov
California Coastal Commission. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . http://www.coastal.ca.gov
California Dept. of Alcoholic Beverage Control �������������������������������������http://www.abc.ca.gov
California Dept. of Forestry and Fire Protection ������������������������������������� http://www.fire.ca.gov
California Dept. of Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .http://www.insurance.ca.gov
California Dept. of Veterans Affairs . . . . . . . . . . . . . . . . . . . . . . . . . . . http://www.calvet.ca.gov
California Franchise Tax Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . http://www.ftb.ca.gov
California Housing & Community Development ����������������������������������� http://www.hcd.ca.gov
California Property Tax Resources. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . http://calproptax.com
Dept. of Housing and Urban Development ���������������������������������������������������http://www.hud.gov
Fannie Mae . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . http://www.fanniemae.com
Federal Emergency Management Agency . . . . . . . . . . . . . . . . . . . . . . . . . . http://www.fema.gov
Freddie Mac . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . http://www.freddiemac.com
Ginnie Mae . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . http://www.ginniemae.gov
Mello-Roos Property Tax Information . . . . . . . . . . . . . . . . . . http://www.californiataxdata.com
myFICO, a division of FairIsaac . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .http://www.myfico.com
National Association of Real Estate Brokers ��������������������������������������������http://www.nareb.com
National Association of REALTORS®. . . . . . . . . . . . . . . . . . . . . . . . . . . . http://www.realtor.org
The Appraisal Institute �������������������������������������������������������������� http://www.appraisalinstitute.org
The Federal Reserve System. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . http://www.federalreserve.gov
U.S. Internal Revenue Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . http://www.irs.ustreas.gov
U.S. Small Business Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . http://www.sba.gov
Veterans Home Loan Guaranty Services . . . . . . . . . . . . . . http://www.benefits.va.gov/homeloans
Western Manufactured Housing Communities Association ��������������������������http://www.wma.org

California Real Estate Principles, 17th Edition, 2nd Printing 595

WEBSITES 596  California Real Estate Principles
596