1 Hour Real Estate Exam Review with Irene

Okay, this Joe with PrepAgent. I'm here with my friend Irene. How's it going, Irene? Good, how are you? Good. So Irene called me today. She's got an interesting dilemma because her test is tomorrow. It is, what, 9:30 at night, and her test is tomorrow, and you called me saying can you help me out my test's tomorrow, I need to review some things, correct? Yep, at 8:30 in the morning. 8:30 in the morning, so.

Here I am but, people, don't get carried away this request. I don't want too many people calling me an hour before their exam. But every once in a while, we'll do it. So I'm doing things a little differently in this webinar slash tutoring session, whatever you want to call it, because her test is tomorrow and normally when I go through questions, we review a few, but we don't review a whole lot of concepts. So we're going to try and bang out a whole bunch of concepts here in a very short period of time. Okay, um so Irene what you see up there is a lot of words.

We see a lot of words, right? Yeah, okay. We're going to have a real estate conversation. Okay, and I want you use the words that you see on that board. When you use those words, we're going to take them off. Okay, all right sound good, and we're going to try to incorporate all those words as best we can. By us doing this, it's a lot more fun than me just reading off definitions. We'll review the terms and hopefully by you being able to put them in context, you'll have a better understanding of them. And just to clarify, Irene's in California, so if you're not in California, most of the information we're going over right now, you should still be okay. A lot of this information is national, but I will designate when we're doing something that's California specific. For example, when we go over trust deeds, that is California specific. But right now, let's get going with what we see here. So Irene, you live in Los Angeles, correct? Yeah.

Hollywood, right? Yeah. You live in a house or a condo? I live in a apartment building – a complex, in apartment. I lease. You lease, okay good. So what kind of estate would you call that? Less than freehold estate. A less than freehold estate, exactly. So name different types of less than freehold estates. Yeah Periodic tenancy. Um Estate for years. Good bang. We're right here at estate for years. What do you mean by estate for years? So is your property in estate for years right now? Are you in your situation? Estate for years doesn't need a notice before you move out, like a summer rental, right? Why is it like a summer rental? You don't have to give a notice and you could just i it's a set date, so it's from like June 1st to August 1st.

Would you say because it's for a designated period of time. Yes. Bang exactly. Okay, so far so good. So when you moved into that property, you liked it, right? You liked it a lot you think it's great, correct? Right. But one day you decide to leave that property. What can you do? Yeah? I could either sub lease it or assign it. Okay, excellent. So if you sublet it though and something happens to that property, who's responsible? You or the person living there? That's still my responsibility, but if I assign it, then it will change responsibilities, right? Yes, you're doing awesome, great. Okay, so it's an apartment building, right? Right, You consider that real property or personal property? Definitely personal.

An apartment building? Right, oh the apartment building is real property but my lease is personal property. Boom. Why'd you call your lease personal property? It's mine. It's…I don't…it's not real property. Movable. Why's it movable? Let's get real simple, so we could pass our test. Why is it movable? Because what is a lease at the end of the day? A lien. No. What is it? It's a piece of paper. That's it. Just paper. So we're going to keep things as simple as possible. Can you move a piece of paper? Yeah. Those personal property. Now the more technical definition there is that a lease doesn't always go with the property, it goes to the person to contract with the person, which is why it's personal property.

It doesn't always go with the property, okay? So you said that the lease is personal property. Can you name other types of personal property? Furniture, TVs. Anything that's not a fixture. What's a fixture? What do you mean by a fixture. You said a TV? Why is that not a fixture? You can move it. [inaudible] like my stove that I installed. Can you make that TV a fixture? I mean, technically if I could put in the wall, I mean… Yes, stop there, you're doing great. Don't talk. Once you got it right, you got it right, you know? Like once asked [inaudible] she says yes, I don't keep asking, right. Right so okay, so you said, um, so you took that TV you put it against the wall and what'd you call it? A fixture. A fixture. Why is it a fixture now? Because of the way I…

Through the Maria, right, method adaptability, You're doing so good. Method, adaptability, Method adaptability, relationship, intention, and agreement, is that what it is, or no? You're spot-on, you're spot-on. You get method, adaptability, relation, attention, and agreement. Ever since I taught I can't get that song out of my head by Blondie, "Maria". It's excellent. Method, adaptability, relation, attention agreement. Say it one more time for me. Method um… Okay, Maria: method, adaptability, relationship and tension agreement. Right okay. Method, adaptability, relationship and tension agreement. Wait a minute – is it possible for a fixture to be personal property? You just said a fixture is personal property that becomes real property, because of that Maria test, correct? Yeah, you could remove it, right? No. What [inaudible]. No, a trade fixture is not through a business? And that's movable as like when your lease expired, right? Right, well think of it this way. If you're a dentist, is that chair attached to the property? No.

A dentist's chair, have you been to the dentist recently?. Oh yeah, I'm sorry. Those things are like bolted down like in some scary like torture chamber. But is it personal or real property? Well, it's… it's a trade fixture, so it becomes real property. So trade fixture is personal property. Because, think about this way, when the dentist ends his lease, he's taking that chair with him, isn't he? Yes, so it's personal property. Where if it was real property, it would stay with the property. Okay. Does that make sense? That makes sense to to me. Good excellent. Okay, so moving right along. All right, you have your lease. You said there's different types of less than freehold estate, so periodic tenancy, estate for years.

What's another one? Estate of sufferance. Good, what is that all about? That's when the landlord is suffering because the person won't leave their place and releases its [inaudible]. Basically a deadbeat tenant. Deadbeat tenant. Right, you want them out of there, okay? Eventually, do you want to own property? You rent right now, but you want to own it eventually, correct? Absolutely. So what do you want? I want a fee simple estate. You want a fee simple absolute, absolute ownership, okay. [inaudible] that property, what would be evidence of the ownership? Title. Boom, title excellent. Good. Are you gonna have to take out a loan? I'm going to, yeah, unfortunately. I don't have cash. Right, well.

Oh, what do you call that? Mortgage. Yeah, so what what is that, when you owe money, what is that? A lien. A lien. Would you call that a specific or o general rule? So when you take out a mortgage, is that a specific, the first, or a general lien? Specific, right? So for everybody listening, let's back up because I know you know this. What does a lien mean? How can you jump to the word lien so quickly? What is a lien? A lean is… it's… [inaudible]. Hold on. Say this: lien, money, lien, money, lien, money, lien, money, lien, money.

Right, lien money so you'll know? You'll owe money. Yeah, lien, money, lien, money, lien, money, lien, money, lien, money, okay? Boom. all right so whenever you hear the word lien, I want you to think of money? I want you to think of dollar signs. Can you do that? Yeah, lien's money. Lien, money. So there's mechanic's lien, judgment lien, whatever, loans, whatever it is, it's a lien. Okay That loan on your house, is it a specific lien or general lien? I think it's a specific lien.

Why? Because it's specific to the property that I'm purchasing. Bang. Meaning if you don't pay it, could they take away everything in your life? No, they could take away the house and the property. If they could take away everything in their life, what would they call it? A general lien which… is that like taxes and stuff, general lien? When you go to court, what's that called? Or when they tell you you owe money? What's that? When the judge is ruling. Judgement lien. Perfect yeah. You're totally going to pass tomorrow. I can feel it. So a general lien, an example would be like a judgment rule, would be a good example of a general rule. Now, you have your new house, and what's your evidence that you have that house? Um Title? Good title excellent, okay. What did you use to transfer title? Deed. Boom, next word down. So you used the deed, okay? Now transfer title has to be was called clear and markable title, correct? Yeah.

Like they have to make sure there's nothing wrong with the title. What's it called when there's something wrong with the title? Cloud on title. Boom. We're just banging through this. So there's a cloud on title, so I need a summary of the history of ownership. What's that called? So I need a summary of this title? Encumbrances? No, um. [Abstract of title? Bang. Abstract: summary.

Abstract: summary. You've got to remember that. Okay, so that basically goes through and tells them how many people, like, what, what has been going on that property, right? Yeah, but there's a word for that when you see the history of ownership without property. Okay, abstract title. Well, abstract's the summary. Abstract looks at something that links everybody together. Okay. What's that called? Freehold estate. Boom. I don't know, you were pointing there, so I just thought I'd take a guess. Well that was by accident. I didn't mean to do that. That was by accident. [inaudible] What does chain of title mean? It's um the summary. It's actually…describes of everything that happens with the title wall before you bought it. You you're a title, you ready? We'll make it really simple. And if everybody listening, as you listen to a lot of my webinars and lessons you'll notice that I always try and bring everything down to the simplest common denominator.

Try and really narrow it] down. So chain of title is just a history of ownership. That's it: the history of ownership. Okay, chain of ownership. Right and the reason is because if I sell to you, but the guy who sold to me, didn't have the right to sell it for whatever reason, either because of some issue with marriage, divorce, or some other reason, means then it can affect your ability to own it, and that's why you have those title insurance companies, they look at that whole thing. They look at the chain of title, okay? So you have your house, right? You have your house, which you have title to, because you got a deed with transferred title and you're really excited about it. Which is what kind of estate did we say? Freehold. Boom. Which is a freehold estate. But you know what, I need to build my house behind yours, okay? I just found this great lot behind you. I purchased it, and you're just like oh, that totally sucks.

I'm like why does it suck and you're like well how are you going to get to your property. I said I know I know, I'll create a path across your property to get to mine. That's what I want to do. What am I doing? What am I looking to do here? Well, it's either an easement, or you're trying to enroachment. Okay, so I was looking for this one: easement, perfect. So easement, we've got right of passage. Right.Let me ask you something. I have this easement, I'm behind your property. Am I serviant or dominant in this situation? You're behind it, if you… You're behind the property and somebody is above like… You're on the street. I'm behind you. So to get to my property, I have to cross yours. You're the servant. No, are you serving my purpose or am I serving your purposes? Well, I'm…well actually, I'm the servant, because you're using my property to get to yours, I'm sorry about that. Exactly. I was confused.

So you're servant. Yeah, I mean, you're the dominant property 'cause you're taking advantage of me. So how do you feel about this? I feel like it's an encumbrance. Perfect! Good, so you see I love that you see where I'm going with all this. All right. You feel rather encumbered, wouldn't you say Yes, I do. Yes Bang. So you feel awfully encumbered by all this okay. And that agent who helped sell this property…they really didn't give me all the facts, they didn't really tell much behind your property, really didn't have my best interests at heart. Terrible real estate agent. I know you're going to be a great one, but they were terrible.

When they didn't give me all the information about the property, what did they violate? The…the br…hold on a second. Let me think about this. So they really weren't good to me, and they didn't put my interests above their own. That's an agent, right it's yeah, bad agent to violate something very important. Trying to find the word for it. Let's think. Fiduciary duty. Okay, got it. They violated that fiduciary duty. They're just a really bad agent couldn't stand them at all. So um you have that property and I have my property behind you. Do you live with anybody in your property.? I do. Okay, so you don't own it by yourself? No, I was either…the most common one is tenancy in common, right? Okay, but let's, let's step back here. If you owned it by yourself, what would that be called? Severalty? Bang, severalty by yourself. Now, you said if you [inaudible], there's different ways you can own it, but there's a more general term that's equivalent to severalty.

Do you know what that is? If I owned it by myself? If you owned it with others. With others? Yeah, it would be called a… current… Current estate. Thanks, yes, current estate and that's tenancy in common, a joint tenancy, right? Okay, so there's joint tenancy, tenancy in common, and there's community property. And disclosure: if I'm listening, community property is not in every state, but it is in California. A husband and wife one, right? Okay. Yeah, so now you get the property with somebody else you're going to buy it with somebody else, okay, right? You get there at the same time.

You share the title, have equal rights of interest and equal rights possession. What's that called? Tendency in common. Boom. Wait what. Time, interest, and possesion. Joint tenancy, yes. That's a joint tenancy. [inaudible] joint tenancy is when you have the, uh… You share all of the same things and you have one title, right? Excellent, good. So tenancy in common's the more common on. The joint tenancy, you gotta remember time, title, interest, and possession, TTIP. Time, title, interest, and possession. Okay, okay, okay. Time, title, interest, and possession. Good. Okay So now moving right along here. Alright, we have our property, okay.

We have our easement, which is an encumbrance. Okay, yeah, and there's some guy who built something our property. He put in some flowers, helped with like the lawn, helped with some windows, but you don't like 'em, so you decide not to pay any, like screw that guy I hate him. What can [inaudible]. Mechanics lien. Boom. He can file a mechanic's lien alright, okay, okay? Good, and that comes before it's, it's…the lien starts the day he started working, right? Yes, what takes priority: the mechanic's lien or your loan? I want to say my loan, but I don't know. Mechanic's lien always comes first right? Yes, Exactly, okay. That's why it's a big deal. That's why it's very annoying, because you'd have to pay that back before you pay back the lender, which is why a lender would not want to lend a property that has mechanic's lien on it. They'd say [inaudible]. Okay so they would not be too happy about that. Okay, mechanics lien for everything, okay got it. Yeah, well not everything, nobody goes ahead of Uncle Sam.

Right. All right, so. You know what um, I hate this property, you hate it. It's just terrible, you're just like this sucks. There's this annoying guy who lives behind me. The property was really annoying. I'm just not into this at all. You want to sell your property, ok? How do you know how much it's worth. Your value. How you know the value? Dust. Ok well, ok.

Let's stop there. That's not was not what I was getting at, but since you brought it up, um what'd you say, dust? Yeah, so dust is the four essential elements of value. What are they? Demand, which is does anybody want it? Utility. Scarcity and Transferability yeah, now you use the word dust and I've said this all time. I hate the word. Yeah, because like who likes dust? Like a stud has value, a studs like, you know, an attractive guy or a horse you want for breeding or at least it's something you use when you build a house, alright a stud has usefulness, so what a stud stand for? Well scarcity is there a lot of? Transferability is can we sell it? Utilities is can I use it? And demand is does anybody want it? Right and obviously I don't care if you stud, dust or tstd for all I care.

As long as you remember scarcity, transferability, utility, demand. Demand, utility, scarcity, transferability. Whatever it's going to take. The value. But now let's go back to that original question I have. How you going to find out the value of your home? So how you going to find out the value? How do you find out? I guess the easiest way to do it or the most common, market data approach. What's that? It's when you basically look at a property is very similar to yours, and you kind of make an appraisal through that.

Good, so you're comparing other properties in the market. Good, God, glad you did well. You realize you bought your house for 400 grand and by the market data approach, which is something anybody could do, hell, we do it when we go buy shoes at the mall. You know, you say this is worth 50 bucks. That's for 60 bucks. This is pretty good deal right. But you realize you're gonna be able to sell your property for a hundred grand over what you owe on it, so you take out loans, and you owe like, let's say 400 grand right now. And you're pretty psyched about it. What's that called? When, when you take, wait equity. Good so equity is the money above and beyond what you owe. Yeah, before we got on this call, I gave you a more technical definition. Do you remember what that was? Equity means money No, what was it, I'm sorry. No it's okay. Equity is your interest in the property above and beyond all rulings against it, right.

Simply said, it's like what you could sell, the money you could go buy a cookie with it's your money. You know. It's what you're going to have when it's all said and done. You have that equity, okay? We did say easement. We did say fee simple estate. Okay Okay, so we're looking at our new property. We're pretty psyched about it, okay. And we're going to hire a real estate agent. What are you going to do? I'm going to do… I'm going to do… Exclusive agency listing. Okay, back up. What's a listing? Let's think, it's when you put your property on sell. A listing yeah, no no no no no no. Alright, this is one of those really easy ones where it's all so easy, you kind of miss it. I don't want you to miss it tomorrow. I want you to nail it tomorrow. Okay? What is that? A listing is when you hire an agent, it's a contract, it's an employment contract. Okay, okay. What are you employing the agent to do? To sell my property, No, just show my property.

I'm sorry to, to, to list it, no, um what do I… tell me. All right. It's okay. It's okay. That's why we got this review. A listing is an employment contract to hire an agent to find a buyer. Okay, I know that. I'm sorry. My brain is not. It's okay. No need to say sorry. So it's important. In real life, yes, they're listing the house or trying to sell it, but you know tomorrow's legal terms you've got to know these legal terms. And you're hiring an agent to find a ready, willing, and able buyer. Ready, willing and, able buyer. Okay, okay listen, okay hiring an agent to find a buyer. Yes, well, okay, let me ask you this backup. You're married, correct? Right. Okay, so you're married and your husband came up to you one day. He said Irene. I'd like to marry you, right. Right. You're like great. How'd you know he was serious? Oh? I thought it was the deposit, but I don't… [inaudible] Yes, it oh, you're right.

You're right that deposit shows they're serious the deposit shows that they're ready, willing, and able. I used it when … what is earnest money deposit? Exactly. Or no. Yes it is. Earnest money deposit's the same as your engagement ring. If your husband [inaudible] Irene I want to marry you, and you're like great and he had no ring. What would you do? You look at him and be like um? This is kind of lame, right? You'd be a little disappointed. It may not need to be the nicest ring in the world, but you want something to show that he's serious, correct? Right, of course. Yes. That's a deposit. That's the engagement. And similarly when you got married he puts that ring down and he says here I promised to be faithful. I promise to be with you. I promise to get married. It's going to be great, right? And then after he gives you the ring he goes and does something terrible, whatever it is that you don't like, right? He meets another girl or something horrible What happens now? Um I keep the deposit unless he's gonna take me to court [inaudible] Exactly.

He could get the deposit back, but it would be one hell of a fight, correct? Yeah. The deposit functions the exact same way as that engagement ring. You've got to know that okay. It shows they're ready, willing, and able, they're serious okay, and if they follow through what they said, basically, when you said I do to your husband, and he said I do to you escrow closed. Right does that make sense? Yes.

Okay, so that shows you're ready, willing, and able. Back to this listing thing. So when you got that listing with the agent, did you make a promise? I did. Did your agent make a promise? Yes? What kind of contract is that? Exclusive. Well, back up. Two people made a promise. Oh, it's a bilateral contract. I'm sorry. Bang, good, so a listing is a bilateral employment contract whereby the seller is hiring the broker to find a ready, willing, and able buyer. Right. Got that? Yep. Okay, what's an example of a unilateral contract? I don't want to like botch this, so help me. Okay. You see the lost dog sign like, find Muffy, $500.

Yeah. Do you have to go look for Muffy? No, no, but if you find Muffy, do they have to pay you? Yeah, it's a contract. [inaudible] One promise. It's only one promise. One ended contract, okay. It would be bilateral if you said, I really promise to look for Muffy. Okay, but you didn't do that. You saw it you're like. Hey, if I find this dog, you better pay me, but I'm not promised to do that. Yeah. Okay, so now you have your agent okay. Can you sell the property yourself? Yes. So what kind of listing do you have then if you, the seller, can sell yourself, but if the agent finds the buyer, you have to pay them? I don't, I don't have to pay them, right if I sell myself? Right so what kind of listing is that? Open? No.

No. Is it exclusive agent closing? Yes, good. Okay, let me just verify this really fast, okay, before we move on okay. That means basically exclusive agency listing means that I made a contract with my agent to sell – to find me a buyer, but if I find a buyer before them and I sell the house then they don't get a commission for it, right? Yes. The words you want to use is you have to prove that you are the procuring cause of the buyer. Okay That's the key words in this – you are the procuring cause of the buyer.

Okay, procuring cause of the buyer okay. Not them. Excellent. Yeah, got it But now most agents do not want to sign that contract, because obviously they don't want to be in competition with you correct, right? So what type of listings do you want to sign when you're an agent? And when you are an agent you'll see on the listing it'll say this on the top of the contract. What's the more standard contract an agent would sign? A standard contract that I would sign with an agent? Is that on the exclusive authorization writes itself. Good. That's the one where the agent does not need to prove that they're the procuring cost. Okay, they get paid no matter what okay? Okay, that's the one you want to sign as an agent all right. So moving right along. Okay, the agent finds a buyer great. Okay totally great and they find this buyer, and they're all ready, willing, and able.

Everybody's happy and everybody's super psyched about it. You sign to sell your red house. They have a deposit – red house. We're all good to go. What kind of contract is that? A valid contract. Bang. Good. Uh-oh I saw a problem here. They actually signed to buy a green house and your house is red. What's it now? Voidable Why is it voidable and not void? They wanted a red house – or they want a green house and your house is red.

Why is it voidable and that void? They could still have the auction to buy they don't have to go through with it, but they still have that option to buy the red house or blue house or pink house, whatever they want. Exactly, because they could be like you know what, I wanted green, but that red, that's freaking awesome. I'm totally into that. I'm all about that. I want that. Okay. Wait a minute. There's another problem. The dude's only ten years old. Ah void. It's basically like what's his name the Olsen twins or something? They're only like ten? Void. Good. You're kind of crazy all right. You're living in LA. You really need to sell this property. You get the [inaudible] and they find the buyer and they go to that buyer, listen Irene has really given me a lot of trouble.

She's crazy, so you better buy that property. iIf you don't buy, I'm going to kill you. Your agents holding a gun to the head of the buyer. Crazy stuff. What kind of contract is that? Is that valid, void, or voidable now? So this buyer signs it with a gun to their head. What's the word I'm looking for here in this situation? You're threatening the person. You could put them under…

What? Are you scaring them? Right? Which would put up under a word that begins with a D? Duress. Oh duress, yes, I'm sorry. Yes, now why could they buy the property? There's a gun that's horrible. It's absolutely horrible. Why could they buy the property? Because I don't know 'cause they're just like whatever. Good. I don't know there's… same logic with the red and blue house. They may be like listen, Captain Crazy, right the gun is a little excessive. I was totally gonna to buy it anyway. This is nuts, right? Then the agent like oh, sorry my bad. I was just under a lot of stress my bad. So that gun shouldn't stop them from wanting to buy the property. It gives them the option to [inaudible] which makes it voidable. Okay So we're moving right along with this agent who's trying to sell the house.

He's really working hard with this whole thing, okay? He see these buyers, and when he's a buyer he tells the buyer. This is the greatest house on the face the earth. There's no better house. You could have like a multi-million dollar mansion it wouldn't be better than Irene's house, and you were like relax man. It's a condo. What's that agent doing? Is he lying? Yeah, I mean he's, he's not puffing… is it called puffing? Yeah? Yes, he's not lying, but it's close. Exaggerating, yes like grossly exaggerating. Just be like this is incredible, you could have like a hockey game in every room room, right? You'd be like oh I love hockey, so that's cool that you mentioned that.

Yeah, well. That's why he's your agent, see?. That's how it works. Okay, so now how long is your listing for? It does… 30…90 days? Does it have to be? No, it's whatever we make the agreement to be, isn't it? Yeah, whatever you agree upon. So you agreed upon 90 days of your agent, okay? Day 89 comes, the agents totally nervous and he decides, he says, you know what, I have some buyers here, and you're like, too bad, they haven't bought it yet, sucks for you, you get nothing. Okay, and then you the agent, says I have the buyer. He'll be in town next week. He's gonna buy it. What should happen between the two of you? What should that agent have done? I assumed that we'd have to do a new agreement. Nope. Open protection period clause. What's that about? That's extending our agreement because we already found a buyer that's potentially going to buy their house.

Good. So a protection period clause is a clause in the listing contract where that agent, before the listing expires, could write down saying like, Bob or Bill, whatever he has there, okay? And then, he says, hey listen Irene I have Bill here. If – I will not be able to look for new buyers after tomorrow. Our listing expires tomorrow, but if anybody I found before this listing terminated buys in the next two weeks, or whatever you agree upon I deserve my commission and you say great, but how do I know that you found them during the term the listing the agent will write it down all their buyers so when that comes you could say look, I wrote their names before the listing expired so clearly I found them bud. Does that make sense yeah? It's a good thing. It makes sense for everybody so that agent can be like listen, I'm not looking for anybody new but it gives me a chance to close deals with the people I've been working with.

Okay, right. Good all right. Now this agent of yours, he's not the most ethical guy in the world. He tries to get you to sell your house at a lower price, alright by saying this. Are you ready for this? Yeah. Irene, you better sell your house now. You know why? Those people are moving to town. You don't want to live by them, do you? Those people are just horrible. Blockbusting. Bang, good. Blockbusting, okay. What a terrible, terrible guy, okay? So you got a new agent, right? You're like that guy was just like the worst. The worst of the worst, the worst. Okay and you look for new properties, ok. Now this new agent comes around, takes you in the car, and he's no better than the other one. He goes, he goes, Irene, you know where you should live? Here. You know why? Because those people live here, and you're like one of them. So you should totally live there. Steering. Boom, what are they violating? The fiduciary, I can't say the word, but…

There's an act Here. Fair Housing, yeah, I'm sorry, Fair Housing Act, of course. They're violating fair housing. Yeah, totally they're violating Fair Housing, okay? Now, you see these different properties and you see a property that's close to the highway. The government is going to expand the highway. What's going to happen to that property? Eminent domain. Good, eminent domains a government power. Can you name the other government powers? Yeah, police power, eminent domain, taxation, escheat. Which's escheat? That's when a property owner dies and they don't have anybody like heirs, whatever that doesn't have a will, so the government just cheats their way into getting the property, good. Exactly. Now they just get property yes. Yeah, you're right, ready for this? Ebenezer Scrooge. Zoning. Well no, I was just… No, Ebenezer Scrooge was the guy who died without heirs or without a will, he had no family in The Christmas Story, so the property escheated to the state.

What's the name, yeah, remember the four government powers? Isn't it the PETE? Good, PETE. Tell me again what PETE stands for just so I know you got it. Police power, eminent domain, taxation, and escheat. Boom. Alright well we're going through a ton of material really quickly. You do realize you're going through like five months material in like one hour here. Yay Yeah, this is like total rapid motion here. But you think I'm gonna pass, right? I think you're gonna do awesome.

Okay, except we're getting to the parts where I don't know what it is, but let's go on. So we go to the property okay, and we see it's not zoned in a way you like because you need your property be pushed back from the lines too close to the line. What are you going to ask for? If you want an exceptional time If I know… novation? No, not wait, I would want to get… What do I want exactly? I'm sorry. You want an exception to the rule.

So the area's zoned so you have to be a certain distance from the sidewalk or whatever the rule is, and you want an exception to that rule. I would get a license No. No, what would I do? Variance. Yes, a variance is an exception to the rule that will not affect the rest of the community. Okay, variance. Alright, um we talked about zoning zonings one of those government powers. Which one? Police power Boom. Good. Okay, now you're trying to find this property. What kind of property are you looking to buy? I am looking to buy… What do [inaudible] income property? You want an income property? No, I want… Okay. What will you use to determine the value of that income property? Cost replacement approach, no okay, gross rent multiplier functional.

Okay, what does that mean because I'm a little confused about that part lowest right multiplier. I wrote it wrong there. I'm looking for you to say gross rent multiplier. Which is when you take price divided by rent to find value. Okay, price divided by rent to find value, okay. Yes, what was your question you wanted to ask me. That was the question I wanted to ask you. Okay? Yeah, no, it's just price divided by rent, okay? Okay, what if you want to buy a library? What would you do? I would use the… Cost replacement approach, good. Yeah, okay library and like public things, right? It's basically unique properties, what they call special purpose properties, libraries, [inaudible], things of that nature.

Yeah, okay okay um less and less of the things that I know so bear with me. No, you're gonna kill it tomorrow. So now you are going to get back that rental property. You're pretty excited about it. You're not the tenant anymore. You're going to get some tenants, and you think some are kind of sketchy. So what are you going to do right when they move in? Innovation. Nope, look at the list. I'm going… What am I going when the new tenants are gonna… They're gonna have to leave a security deposit. Yeah, security deposit. Good, so when these tenants move in, so when they mess it up, you got some money of theirs to keep. Yeah. So you got that that income property okay, and there is a little bit of a problem. The property's falling apart.

That's going to be a type of depreciation you want nothing to do with. What's that called, when the property is falling apart? Physical deterioration. Excellent, good. But now you got some old lady living there, but it's a three-story property. What would that be? Functional obsolescence. Good, it's not functional, and this one's not on the board here, but if you had your property and there's violence in the neighborhood, and there's sirens going everywhere, there's an airport nearby, what kind of depreciation would that be? Zoning. I don't um. I don't remember the word for it, Economic. Economic, yeah, I'm sorry. Economic obsolescence, excellent, good. Economic obsolescence. That's what things are hurting the property that are outside property lines extraneous and property lines, right. Now you find somebody you like and tell them you can own this property as long as your grandmother's alive.

Life estate. Boom. But I have another condition. Forget the grandma thing. You know, I'm just not into your grandmother anymore, you could live there. It's just you seem like a partier. If you start drinking alcohol, having all your friends over here, I'm done with you. Fee Simple Defeasible. Alcohol any limitations makes it fee simple. Right, and just to correct as we're getting more into this because you're getting the correct answers, but you're talking to your tenant, that really applies if you're selling the property.

Yeah, but you knew what I was getting at. Yeah. Okay. What's an interim occupancy agreement? So you get that property. Yes, you get this property and these people just don't have time to move out. So what do you do? So what does that mean? That's what this – that definition for that is? So you get a property and they don't have time to move out right? And you're not a horrible person You're not like you got to go now. I own this beat it, lady. You let them live there. What's that called? I don't know. I'm sorry. That's the interim occupancy agreement. You can make an agreement with them, they pay you or you just agree for them to stay there during that time. They say listen, we'll sell the property but we got to be here for another month. You say no worries.

That's fine. Let's make an interim occupancy agreement. Okay. That makes sense yeah. Wooof, we're cooking here. All right. Now, brain crash. That's a hard one for me. That property you just bought. It's a million dollar property, which is great, that's fantastic. But all the properties around it are worth like a hundred grand. What's the problem with that? There's um… my property is not worth that much so it's not valued well. You're property is a million dollar property. The other properties are a hundred grand. Is that a good thing? Some um well, I make the all the other properties go up in value, right, but my property, I don't know. No, you're saying exact right thing, keep going, exactly. My property is not worth as much… No, you were doing great until you took a turn here. The other properties around you are going to benefit from progression because your's… [inaudible] value because my house is [inaudible] suffer from… Regression. Okay regression, okay, because property values would go down. Okay um license is just permission to perform an act.

It could be even fishing at a lake. You're going to get your real estate license, but it's really just granting permission to do something. So, much more general term. You gotta know that for your exam. All right now. We're getting to the last bit yet um Abandonment. What's that? When I mean you could abandon a house, you could abandon a lease, right? You're going to hear it in relation to easements. Okay, when you [inaudible], it cease to exist unlike when you abandon a dog, a dog still exists, everybody adopt dog. Abandonment you don't use it anymore and in with easements, it's a way to terminate an easement, so you gotta know that. [inaudible] either putting two properties together or abandoning the other? No, no no. Putting two properties together is merging an easement.

That's a different way to terminate Without getting too much into it now, because I don't want to confuse you the night before your exam, but abandonment is essentially just, it's a way to terminate an easement by just not using anymore. And there's ways to prove that, that we don't want to get into now, because it's just information overload. Speaking of easements, do easements run with the land? Yes, so what's that called? They transfer the title. So what's that called? Appurtenances. Yes, appurtenances means it goes with the property, good. okay, appurtenances goes with the property. All right. So let's just bang these ones out. What's a percentage lease? Percentage lease is when you are making a percentage out of, you know, the leaste that you have like if – I have a – if I'm a landlord and I get a person to rent out a shop for me.

I make a percentage, right? Mmm, sort… well let me ask you this, what kind of… you're renting right now, correct? Yeah. What kind of lease is it? So, is it a gross lease, a triple net lease, excuse me, a gross lease, net lease, or percentage lease? Okay, a gross lease is when, let me just go over it real quick, the gross lease is when the landlord pays for everything, right? Insurance and maintenance, yeah, you pay one set fee. Okay, and then net lease is when I pay for it and then percentage lease is when the landlord makes money off of the percentage of the whatever I'm selling, right? Yeah, yeah yeah.

Percentage lease is when a landlord gets paid based on percentage of the gross receipts, percentage of sales. A net lease is when… you're on gross lease, because you just pay one flat fee. Exactly [inaudible] The net lease is when I would have to pay for my own maintenance, right? Taxes, insurance, and maintenance, yeah, more common with commercial properties. Okay. Exactly. Repairing right. They have to do with river, streams, creaks. Say no more, good. Has to do with water rights next to a river. Plottage, we mentioned before marriage and whenever you hear these wedding speeches always some lame person who goes individual, you're one, but one plus one equals three. You know, what do they mean by that, when they say that lame speech at the weddings? I have no idea really. They're saying that individually you guys are worth something, but together you guys could do incredible things. Plottage takes that concept, meaning you take one property that's worth a hundred grand another that's worth 100 grand, that if you put them together, they'd be worth say three hundred grand like they're just worth much more together than they are separately.

Okay, and Novation. Nova is latin for what? It's basically to give a new agreement, right? Exactly, Nova's latin for new, yeah. Woo. Wow, we knocked it out. We did. How are you feeling? I'm feeling good, what do you think? Do you think…what are my odds? I think you're going to do awesome tomorrow. I hope so. Yeah, I think you're great. It's pretty late. Did you want to go over trust deeds or no? Real quick, can we? I think it's lile ten forty so… Okay, here we go trust deeds, really quick. We're gonna go over it really quickly, okay? Ready yeah.

You know your OREE rule? You better know the OREE rule for tomorrow. I do. What's the OREE rule? The E is… Okay, OR is basically like the grantor the E is the grantee, so… Okay, remember this, remember this, and it's going to be in your head tomorrow, Lessor, vendor, trustor, grantor, optionor, the giveor, the propetor, for your pleasure? Lessee, vendee, trustee, optionee, gives me property, makes me happy, can you remember that? yep, OR: givor. EE: receive. Okay, yeah, so EE is the receiver and OR is the giver.

Exactly, I'm the giftor your the giftee. Who's receiving a present? Me. I'm the grantor. You're the grantee. Who's receiving deed? Grantee. Good, excellent. I'm the vendee. You're the vendor. Who's selling? The vendor. Excellent, good, okay, all right, trustor, trustee, beneficiary. Who's the borrower in this situation? Trustee, no trustor. Okay. Borrower. Bank. Neutral third party. Okay Trustor wants to borrow money. Okay. Trustor says, hey, beneficiary, lend me some money. I totally want it, okay. You with me so far? Yeah Beneficiary says absolutely not. I don't trust you. I don't like you.

You're not a good guy. I'm not into it. Okay, he says why should I trust you? Trust or says well, I have something called legal title, which is the right to sell, okay. Legal title. Okay, that's the right to sell. You with me so far? Yep. Okay Legal title: right to sell. Beneficiary says now we're talking, I'm into it. If you give legal title to my friend the trustee, who will receive (OR) (EE) I will lend you the money, okay. Okay. That make sense? It does. Okay, so now eventually the beneficiary says, hey, trustee, remember that guy the trustor? He says yeah. He says he totally sucks.

He didn't pay me. I hate him. What could the trustee do? Hello? Sue? You ever hear this word called trustees sale also known as a foreclosure? Yeah, foreclosure. Because the trustee has the right to sell the property. Right. Now on the flip side, The beneficiary goes to trustee and says, beneficiary, remember that guy trustor? He's like yeah. Great guy, paid me everything. I should have trusted him from the beginning.

I totally like it. would like you to issue a reconveyance deed to the trustor, which we conveys titled back to the trustor. And that's what happens when we finish paying a loan. Okay, so re-conveying is to give back the title? Give back – yes. Yes, yes in the user reconveyance deed. Okay, that makes sense. Yep, all right that's the short of it. I think you're pretty good to go, and I think you need to get some sleep I hope so. Thank you so much for your help. You're welcome, and I really hope I pass. You're gonna do great. I know you know a lot more than you think, be confident and kick butt and find me on Linkedin after you pass. Yes, I'll talk to you tomorrow Thank you so much. Alright, good luck. Thank you. Bye bye..

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