AL Real Estate flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Fixture

An item of personal property that has become attached to realty. Courts weigh annexation, adaptation to the property's use, and the parties' intention, with intention usually controlling.

Township

A government survey unit six miles square containing 36 sections; each section is one square mile, or 640 acres, and sections are numbered from the northeast corner.

Metes and bounds

A legal description that begins at a point of beginning and follows courses, distances, and monuments around the parcel's perimeter back to the starting point.

Tenancy in common

Co-ownership with undivided fractional interests that need not be equal and no right of survivorship; each owner's share passes to heirs at death.

Joint tenancy

Co-ownership with equal undivided interests and the right of survivorship, so a deceased owner's share passes automatically to the surviving co-owners.

Quitclaim deed

A conveyance that transfers whatever interest the grantor may have with no warranties of title; it is commonly used to cure title defects or clear clouds.

Notice statute

A recording law making an unrecorded conveyance void against a later purchaser who buys for value without notice of the earlier transfer; Alabama follows this rule.

Capitalization rate

The ratio of a property's net operating income to its value or price; value equals net operating income divided by the capitalization rate.

External obsolescence

A loss in value caused by conditions outside the property, such as neighborhood decline or highway noise; it is generally incurable and measured by market rent loss.

Gross rent multiplier

Sale price divided by gross monthly rent. Multiplying a comparable property's rent by the GRM gives an indicated value for the subject property.

Statute of frauds

The rule requiring contracts for the sale of land and leases longer than one year to be in writing and signed by the party to be charged.

Liquidated damages

A contract clause fixing the amount payable after a breach; the earnest money deposit is often the seller's liquidated damages if the buyer defaults.

Contingency

A contract condition that must be satisfied before a party is obligated to close, such as obtaining financing, an acceptable inspection, or an adequate appraisal.

Dual agency

Representing both buyer and seller in one transaction with the informed written consent of both parties; the agent must remain neutral and limit confidentiality.

Fiduciary duties

The duties an agent owes a principal: care, obedience, loyalty, disclosure, accounting, and confidentiality, commonly remembered by the acronym COALD.

Loan-to-value ratio

The loan amount divided by the property's sale price or appraised value, whichever is lower; higher ratios generally require mortgage insurance.

Discount points

Prepaid interest charged by a lender at closing. One point equals one percent of the loan amount and typically lowers the note interest rate.

Closing Disclosure

A federally required form summarizing the final loan terms and closing costs, which must reach the borrower at least three business days before consummation.

Estoppel certificate

A signed statement by a tenant confirming lease terms, rent, and deposit balance; a buyer or lender relies on it, and the tenant is bound by it.

Sublease

A transfer of part of a tenant's remaining lease term in which the original tenant keeps a reversionary interest and remains liable to the landlord.

Proration

Dividing a recurring expense such as property tax between buyer and seller according to days of ownership, typically using a 365-day year.

1031 exchange

A tax-deferred swap of like-kind investment property; the taxpayer must identify replacement property within 45 days and close within 180 days.

Title insurance

A policy indemnifying against losses from title defects that existed at closing; the owner's policy is optional while lenders require a loan policy.

Alabama deed tax

A state tax of $0.50 per $500 of consideration, computed by rounding the consideration up to the next $500 before multiplying.

Millage rate

A property tax rate equal to one dollar per $1,000 of assessed value; the tax equals assessed value times millage divided by 1,000.

Commission split

The division of a brokerage commission between broker and salesperson or between cooperating brokers, usually expressed as a percentage of the total commission.

Recovery Fund

An Alabama fund that reimburses consumers holding a court judgment for losses from a licensee's fraud or dishonest dealing; it does not pay commissions or punitive damages.

Qualifying broker

The licensed broker responsible for a brokerage's operations and for supervising affiliated salespersons; every salesperson must be sponsored by one.

Trust account

A brokerage account holding client money such as earnest money and security deposits; commingling those funds with operating money is prohibited.

Alabama URLTA

Alabama's Uniform Residential Landlord and Tenant Act, which governs deposits, notice, repairs, and eviction procedure only in counties of 200,000 or more residents.

Implied warranty of habitability

A landlord's promise that rented housing is fit to live in; Alabama courts have not adopted this warranty for residential leases, unlike most states.

Familial status

A Fair Housing protected class covering households with children under 18 and pregnant women; qualifying housing for older persons is exempt from this protection.