SD Real Estate flashcards

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

Fiduciary Duties Mnemonic

Care, obedience, loyalty, disclosure, accounting, and confidentiality: the six duties that a real estate agent owes to a principal within an agency relationship.

Express Agency Agreement

An agency relationship created by agreement, usually written, in which the principal authorizes the agent to act on the principal's behalf; listing agreements are the common example.

Procuring Cause

The agent whose efforts began an uninterrupted chain of events leading to a sale; used to decide which broker is entitled to a commission when brokers dispute.

Dual Agency

A broker representing both buyer and seller in the same transaction; it requires informed written consent of both parties because fiduciary duties to each are limited.

Statute of Frauds

State law requiring certain contracts, including real estate sale contracts and leases longer than one year, to be in writing and signed by the party to be charged.

Counteroffer

A response to an offer that changes its terms; it rejects the original offer and creates a new offer that the original offeror may accept or reject.

Earnest Money Deposit

Money a buyer deposits with an offer to show good faith; it is credited to the purchase price at closing or forfeited under contract terms if the buyer defaults.

Option Contract

A unilateral contract in which an owner grants a buyer the right to purchase on stated terms within a set period; consideration keeps the offer from being revoked.

Joint Tenancy

Co-ownership by two or more persons with right of survivorship; it requires unity of time, title, interest, and possession, so a deceased owner's share passes to survivors.

Tenancy in Common

Co-ownership in which each owner holds an undivided interest that may be unequal, with no right of survivorship; interests pass by will or inheritance.

Easement Appurtenant

A right to use neighboring land that benefits and runs with the dominant parcel; it passes automatically when either the dominant or the servient parcel is sold.

Fixture

An item of personal property attached to real property so that it becomes realty; courts weigh annexation, adaptation to the property, and the parties' intent.

Loan-to-Value Ratio

The loan amount divided by the lesser of the appraised value or purchase price; higher ratios generally require mortgage insurance and stricter underwriting.

PITI Payment

The typical monthly housing payment consisting of principal, interest, property taxes, and hazard insurance; lenders use it to calculate qualifying ratios.

RESPA

The federal Real Estate Settlement Procedures Act; it requires a Loan Estimate within three business days of application, a Closing Disclosure three days before closing, and bars referral kickbacks.

Right of Rescission

Under Truth in Lending, a borrower's right to cancel certain refinance or home equity loans secured by a principal residence within three business days of closing without penalty.

Highest and Best Use

The most profitable use of a property that is legally permissible, physically possible, financially feasible, and maximally productive; it sets the basis for market value.

Capitalization Rate

Net operating income divided by property value; rearranged, value equals net operating income divided by the cap rate, which is the income approach formula.

Principle of Substitution

A buyer will pay no more for a property than the cost of acquiring an equally desirable substitute; it underlies both the sales comparison and cost approaches.

Functional Obsolescence

A loss in value caused by outdated design or features within the property itself, such as only one bathroom in a large house or an awkward floor plan.

General Warranty Deed

A deed in which the grantor warrants title against defects arising before and during the grantor's ownership, including seisin, quiet enjoyment, and warranty forever covenants.

Quitclaim Deed

A deed that transfers whatever interest the grantor may hold with no warranties of title; commonly used to clear defects among family members or co-owners.

Race-Notice Recording Statute

A law protecting a later purchaser who records first and takes without notice of an earlier unrecorded interest; the purchaser must both lack notice and record.

Adverse Possession

Acquiring title through open, notorious, hostile, continuous, and exclusive possession for the statutory period; some states also require payment of property taxes.

Fair Housing Protected Classes

Federal law prohibits discrimination in the sale or rental of housing based on race, color, religion, sex, national origin, familial status, and disability.

Steering

Directing prospective buyers or renters toward or away from neighborhoods based on protected class characteristics; a fair housing violation even without discriminatory intent.

Blockbusting

Falsely telling owners that members of a protected class are moving into the area in order to induce panic selling for profit; prohibited under fair housing law.

Lead-Based Paint Disclosure

Sellers and landlords of pre-1978 housing must disclose known lead hazards, give buyers or tenants the EPA pamphlet, and allow a 10-day testing opportunity.

South Dakota Real Estate Commission

The state agency operating under SDCL chapter 36-21A that licenses brokers and salespersons and may fine, suspend, or revoke licenses for violations.

Commingling

Mixing client funds, such as earnest money or rents, with the broker's personal or business funds; prohibited, because client money must be held in a trust account.

In-Company Transaction

In South Dakota, when two licensees of the same brokerage represent different parties in one transaction, the broker must first obtain written consent from all parties.

Salesperson Compensation Rule

A licensed South Dakota salesperson may not accept a commission or fee directly from a client; all compensation must be paid through the employing broker.