Property Ownership
8%of exam
Land Use + Encumbrances
6%of exam
LiensEasementsZoningPolice PowerEncumbrances
Valuation + Appraisal
7%of exam
Three ApproachesValue PrinciplesCMAMath
Financing
9%of exam
Loan TypesMortgage ClausesFed LawsFinance Math
Agency + Contracts
17%of exam
Transfer + Title
7%of exam
DeedsTitleClosingRecording
Practice + Math
16%of exam
Fair HousingMath PickerTrust FundsDisclosure
MI License Law (LARA)
16%of exam
LARALicensingCEAgency LawTrust Accounts
MI Tax + Fair Housing
14%of exam
Proposal ASEVTransfer TaxElliott-Larsen
Quick Facts
- Total Q
- 115 scored
- Split
- 80 national + 35 state
- Time
- 180 min
- Pass
- 70% each section
- Fee
- $79 (PSI)
- Pre-license
- 40 hrs + 4 civil rights
- Admin
- PSI for LARA
- Min age
- 18 years
Joint Tenancy Unities
TTIP = time title interest possession
T: same TimeT: same TitleI: equal InterestP: equal Possession
Freehold vs Leasehold
Freehold
- Ownership estate
- Indefinite duration
- Fee or life
Leasehold
- Possession only
- Fixed/periodic term
- Tenant interest
Own vs occupy
Estates
- Fee simple
- Full ownership
- Life estate
- For lifetime only
- Remainder
- Future third party
- Reversion
- Returns to grantor
- Freehold
- Ownership estate
- Leasehold
- Tenant possession only
- Fee defeasible
- Conditional ownership
Real vs Personal Property
Real
- Land plus fixtures
- Conveyed by deed
- Permanent attachment
Personal
- Movable chattel
- Conveyed by bill
- Trade fixtures removable
Attached vs movable
Co-Ownership
- Severalty
- One owner
- Tenancy in common
- No survivorship; default
- Joint tenancy
- Survivorship; four unities
- Tenancy by entirety
- Married couples; creditor shield
- Four unities
- Time, title, interest, possession
- Condominium
- Unit plus common area
- Cooperative
- Stock plus lease
Lien vs Encumbrance
Lien
- Money claim
- Forced sale risk
- Mortgage, tax
Encumbrance
- Any burden
- Use limit
- Easement, deed restriction
Lien is one encumbrance
Land Use
- Easement
- Right to use
- Easement appurtenant
- Runs with land
- Easement in gross
- Personal/utility right
- Encroachment
- Improvement over boundary
- Police power
- Zoning, codes, regs
- Eminent domain
- Government takes; pays
- Escheat
- To state; no heirs
- Variance
- Zoning exception granted
Liens + Encumbrances
- Lien
- Money claim attached
- Specific lien
- One property only
- General lien
- All debtor property
- Mechanic's lien
- Unpaid labor/materials
- Property tax lien
- First priority lien
- Deed restriction
- Private use limit
- Lis pendens
- Pending lawsuit notice
Value Approaches
Sales | Cost | Income
Sales: compsCost: new minus depreciationIncome: NOI ÷ cap
Which Calculation
- Income property value→NOI ÷ cap rate(IRV formula)
- Quick rental value→Price ÷ rent(GRM)
- Commission earned→Price × rate(Split by broker)
- MI state transfer→Price ÷ 1000 × 8.60(State only $7.50)
- MI assessed value→Market × 0.50(SEV)
- Annual property tax→Taxable × mills ÷ 1000(Michigan)
- Loan-to-value→Loan ÷ value(LTV ratio)
- Proration→Annual ÷ 360 × days(Statutory year)
Valuation
- Sales comparison
- Compare similar sold
- Cost approach
- Land plus depreciated
- Income approach
- Income capitalized
- GRM
- Price ÷ rent
- Cap rate
- NOI ÷ value
- Highest best use
- Most profitable legal
- CMA
- Agent price opinion
- Depreciation
- Loss in value
Financing
- Conventional
- No government backing
- FHA
- Insured low down
- VA
- Guaranteed veteran loan
- Amortized
- Principal plus interest
- PMI
- Conventional under 20%
- Acceleration clause
- All due now
- Alienation clause
- Due on sale
- Discount points
- 1% buys rate
Federal Finance Law
- RESPA
- No kickbacks; settlement
- TRID
- Loan estimate; closing
- Reg Z / TILA
- APR disclosure
- ECOA
- No credit discrimination
- Closing Disclosure
- 3 days before close
- Loan Estimate
- 3 days post-application
- Usury
- Illegal excess interest
Fiduciary Duties
OLD CAR = agent duties to client
O: ObedienceL: LoyaltyD: DisclosureC: ConfidentialityA: AccountingR: Reasonable care
General vs Special Agent
General
- Broad authority
- Ongoing relationship
- Property manager
Special
- Limited scope
- One transaction
- Listing broker
Ongoing vs single deal
Which Agency Relationship
- Listing the seller→Seller agent(Fiduciary to seller)
- Representing buyer→Buyer agent(Fiduciary to buyer)
- Both same broker→Dual agent(Written consent; neutral)
- Both, separate agents→Designated agency(Per-party agent)
- No representation→Customer(Honesty only)
- Limited tasks only→Transaction coordinator(No advocacy)
Agency
- Principal
- Client; owes fiduciary
- Customer
- Honesty only owed
- Fiduciary duties
- OLD CAR loyalty
- Special agent
- One transaction scope
- General agent
- Ongoing broad authority
- Dual agent
- Both parties; neutral
- Designated agent
- Different agent each
Earnest vs Down Payment
Earnest money
- Good faith deposit
- Held in trust
- Applied at closing
Down payment
- Buyer equity
- Price minus loan
- Paid at closing
Deposit vs equity
Which Listing Agreement
- Broker paid always→Exclusive right(Even if owner sells)
- Owner may sell free→Exclusive agency(One broker only)
- Many brokers compete→Open listing(Procuring cause)
- Owner sets net→Net listing(Discouraged/risky)
- Buyer representation→Buyer agency(Written agreement)
Contracts
- Statute of Frauds
- RE sale in writing
- Bilateral
- Promise for promise
- Unilateral
- Promise for act
- Earnest money
- Buyer good faith
- Contingency
- Condition must occur
- Liquidated damages
- Preset breach amount
- Exclusive right
- Broker paid regardless
- Open listing
- Procuring cause paid
Warranty vs Quitclaim Deed
Warranty
- Full covenants
- Most protection
- Typical sale
Quitclaim
- No warranty
- Whatever interest
- Clears clouds
Guarantee vs release
Transfer + Title
- Warranty deed
- Greatest buyer protection
- Quitclaim deed
- No warranty; clears
- Covenant deed
- Limited warranty period
- Grantor
- Seller conveying title
- Grantee
- Buyer receiving title
- Title insurance
- Covers title defects
- Marketable title
- Free of defects
- Recording
- Constructive public notice
MI Licensing
- LARA
- Licenses MI real estate
- Occupational Code
- Act 299 of 1980
- Pre-license
- 40 hrs total
- Civil rights course
- 4 hrs mandatory
- Employing broker
- Supervises salesperson
- License term
- 3 years
- CE required
- 18 hrs per cycle
- Address change
- Notify within 30 days
MI Agency + Trust
- Agency disclosure
- Before substantive discussion
- Dual agency
- Written consent both
- Commission
- Fully negotiable
- Salesperson pay
- Via employing broker
- Trust account
- Federally insured institution
- Commingling
- Prohibited fund mixing
- Conversion
- Personal use; revocation
MI Transfer Tax
State 7.50 + County 1.10 = 8.60 / $1,000
State: $3.75/$500County: $0.55/$500Combined: $8.60/$1,000
SEV vs Taxable Value
SEV
- 50% market value
- Reassessed yearly
- Uncapped figure
Taxable value
- Computes tax bill
- Capped annually
- Uncaps on sale
Market half vs capped
MI Property Tax
- Proposal A
- Caps assessment increase
- Cap
- Lesser 5% or inflation
- SEV
- 50% true cash value
- Taxable value
- Used to compute tax
- Uncapping
- Resets to SEV; sale
- State transfer tax
- $7.50 per $1,000
- County transfer tax
- $1.10 per $1,000
- Combined transfer tax
- $8.60 per $1,000
MI Fair Housing + Topics
- Elliott-Larsen
- MI civil rights act
- Extra classes
- Age, marital, height/weight
- Newer classes
- Orientation, gender identity
- MDCR
- Enforces MI fair housing
- Complaint window
- 180 days to file
- PRE
- Exempts 18 school mills
- Redemption period
- 6 months residential
- Dower
- Abolished in Michigan
Common Traps
SEV vs taxable value
SEV is 50% market ≠ Taxable is capped figure
Dual vs designated
Dual is neutral ≠ Designated has separate agents
Client vs customer
Client owed fiduciary ≠ Customer owed honesty
Lien vs encumbrance
Lien is money claim ≠ Encumbrance any burden
State vs combined tax
State is $7.50/$1,000 ≠ Combined is $8.60/$1,000
Federal vs Elliott-Larsen
Federal seven classes ≠ Michigan adds more classes
Earnest vs down payment
Earnest held in trust ≠ Down payment is equity
Last Minute
- 1.115 Q = 80 national + 35 state
- 2.Pass 70% on each section
- 3.Pre-license: 40 hrs, 4 civil rights
- 4.LARA licenses; Occupational Code 299/1980
- 5.Agency disclosure before substantive talk
- 6.Dual agency = written consent, stay neutral
- 7.Salesperson paid only via employing broker
- 8.Trust funds: no commingling, no conversion
- 9.Proposal A caps: lesser 5% / inflation
- 10.SEV = 50% market; uncaps on sale
- 11.Transfer tax = $8.60 per $1,000
- 12.Elliott-Larsen adds age, marital, height/weight
- 13.MI redemption period = 6 months residential
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