TN Real Estate cheat sheet

Fiduciary duties in an agency relationship include loyalty, obedience, disclosure, confidentiality, reasonable care, and accounting.

Agency can arise by express agreement, implication, estoppel, or ratification; the scope of authority is set by the principal's words and conduct.

Actual authority is express or implied; apparent authority arises when the principal's conduct leads a third party to reasonably believe the agent has authority.

A dual agent represents both buyer and seller in the same transaction and requires informed written consent from both parties.

A transaction broker provides services without representing either party and must disclose non-agency status; no fiduciary duty of loyalty is owed.

Confidential information acquired during an agency relationship continues to be protected after the relationship ends, unless disclosure is required by law or the information becomes public.

An agent may not commingle client funds with personal or brokerage funds; trust funds belong in a separate escrow or trust account.

A subagent is an agent of the listing broker or seller; the subagent's fiduciary duties run to the principal who authorized the subagency, not to the customer.

A valid contract requires offer, acceptance, consideration, capacity, legality of purpose, and, when required, a writing.

Under the Statute of Frauds, contracts for the sale of real property and leases longer than one year must be in writing and signed by the party to be charged.

A counteroffer terminates the original offer and becomes a new offer that the original offeror may accept or reject.

An offer may terminate by revocation before acceptance, rejection, lapse of time, death or incapacity of the offeror, or a counteroffer.

Earnest money demonstrates buyer commitment and is typically held in escrow and applied to the purchase price at closing.

A liquidated damages clause sets a predetermined amount for breach and is enforceable if it is a reasonable estimate of actual damages, not a penalty.

Specific performance is an equitable remedy that compels a party to perform a contract, commonly used for real property because each parcel is unique.

The parol evidence rule generally bars prior or contemporaneous oral statements from varying a fully integrated written contract.

A fee simple absolute estate is the broadest ownership interest, with indefinite duration and unrestricted inheritance.

A life estate lasts for the life of a named person; the life tenant must avoid waste and cannot convey a fee simple interest.

Tenancy in common gives co-owners separate, divisible shares with no right of survivorship; joint tenancy includes the right of survivorship.

Tennessee recognizes tenancy by the entirety for married couples, which includes a right of survivorship and cannot be severed by one spouse alone.

An easement appurtenant benefits a dominant parcel; an easement in gross benefits a person or entity rather than a parcel.

An easement by necessity arises when a parcel is landlocked and access is necessary; it ends when the necessity ends.

A fixture is personal property that becomes part of the realty based on attachment, adaptation, and the parties' intention.

Zoning is an exercise of police power; a variance grants relief from hardship, and a nonconforming use is a preexisting use allowed to continue.

Loan-to-value ratio = loan amount divided by the lesser of purchase price or appraised value.

PITI = principal, interest, taxes, and insurance; it is the standard monthly housing payment used in underwriting.

A fixed-rate mortgage has a constant interest rate; an adjustable-rate mortgage changes with an index and has caps on periodic and lifetime increases.

Discount points are prepaid interest that lower the interest rate; one point equals one percent of the loan amount.

A fully amortizing loan retires principal over the term; a balloon loan has a large unpaid balance due at a specified date.

Tennessee commonly uses a deed of trust with a power of sale, allowing nonjudicial foreclosure by the trustee after required notice.

PMI is usually required when the down payment is less than 20 percent on a conventional loan and may be canceled under federal rules when certain conditions are met.

RESPA Section 8 prohibits kickbacks and unearned fees in settlement services; TILA/TRID require Loan Estimate and Closing Disclosure disclosures.

Market value is the most probable price in a competitive market under fair conditions; market price is the actual amount paid.

The sales comparison approach adjusts comparable sales for differences; an inferior comparable generally requires a positive adjustment to its price.

The cost approach estimates value as replacement or reproduction cost minus depreciation plus land value.

The income approach values property using value = net operating income divided by capitalization rate.

Gross rent multiplier = sale price divided by gross monthly rent; estimated value = GRM multiplied by subject gross rent.

Highest and best use is the reasonably probable, legal, physically possible, financially feasible use that produces the greatest value.

Depreciation includes physical deterioration, functional obsolescence, and external obsolescence.

Reconciliation weights the approaches by relevance and reliability; it is not an average of the values.

An exclusive right to sell listing pays the broker regardless of who procures the buyer; an exclusive agency listing pays the broker unless the owner procures the buyer.

An open listing allows the owner to use multiple brokers and pays only the broker who procures a ready, willing, and able buyer.

A net listing sets the seller's minimum price and lets the broker keep the excess; it is restricted or prohibited in many jurisdictions because it creates a conflict.

Tennessee's residential property condition disclosure law generally requires a seller disclosure or an as-is disclaimer, with exceptions for certain transfers.

Federal law requires lead-based paint disclosure for residential sales or leases of housing built before 1978.

Fair housing laws prohibit discrimination based on protected classes in sale, rental, advertising, and financing of housing.

At closing, prorations allocate taxes, rent, and other recurring items between buyer and seller based on the closing date.

Referral fees may not be paid to unlicensed persons for brokerage activity; RESPA also prohibits kickbacks for settlement-service referrals.

The Tennessee Real Estate Commission regulates licensees under the Tennessee Real Estate Broker License Act and is attached to the Department of Commerce and Insurance.

An affiliate broker must work under a licensed broker; a broker may operate a brokerage firm and supervise affiliate brokers.

Tennessee affiliate broker prelicensing requires 90 classroom hours, a passed exam, and affiliation with a licensed broker.

Tennessee continuing education is 16 hours per two-year license cycle, including 6 hours of TREC Core.

TREC may investigate complaints and impose sanctions including reprimand, probation, suspension, revocation, and civil penalties.

Brokers must maintain separate trust accounts for client funds and may not commingle trust funds with operating funds.

Advertising by a licensee must include the brokerage firm name; unlicensed assistants may not perform activities requiring a license.

A dual agency relationship requires written informed consent from both parties; a transaction broker relationship is non-agency and must be disclosed.