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Real Estate Glossary A [Part 3]
After-Acquired
At some point, this item is bought. An after-acquired title is a title that a grantor of property gets after the grantor has tried to give a good title to the property. When the grantor has a good title, it will automatically pass to the grantee because of the law. Smith gave Jones his farm on January 1, 2004, by way of a warranty deed. That’s not the only reason Smith didn’t have a valid title on January 1. He owned the land under a forged deed. Smith got good title on March 5, 2005, so Jones got good title on March 5.
Note that a quitclaim deed doesn’t give the grantee the right to a title that the grantor hasn’t yet owned. This is because the deed only transfers the grantor’s current interest in the land, if any. You can see a “quitclaim deed” for more on this.
People who own property and have a mortgage must pay for and install any fixtures that they buy and pay for themselves. This means that they are subject to the lien of the mortgage. When you buy a home, you usually get a mortgage. Many mortgages also say that any fixtures that were there when the mortgage was made are subject to the mortgage. The Uniform Commercial Code (UCC) has set rules for resolving disputes between mortgagees and chattel security claimants who have rights to property that was bought before the mortgage was taken out. For example, if an appliance was bought on time and installed on the mortgaged property, the chattel security claimant has a right to it. As long as the UCC is used, a debtor can give a chattel mortgage a superior security interest in such property that he or she has bought after the debt has been paid off.
After-Tax Income
In accounting, the amount that is left after income tax is taken out of taxable income. After taxes, the cash flow from an investment is called “after-tax cash flow,” or “after-tax cash flow” (ATCF).
Age To Life Method
Estimating improvement value by calculating the ratio of an improvement’s effective age to its economic life and multiplying the resulting age-to-life ratio by the structure’s reproduction cost.
Age-Life Depreciation
Depreciation is calculated based on the condition of a property and how long it has been in business. Effective age (based on condition) is added to the estimated remaining economic life of a home under this method. The effective age is then divided by that sum to figure out how much depreciation there is total. In this example, a house has been around for ten years and still has a lot of money left in it, so the depreciation is 20%. (ten divided by 50).
Agency
The legal connection that exists between a principle and an agent as a result of a contract in which the principal hires the agent to undertake specified tasks on his or her behalf.
A relationship is formed when one person, the principal, gives another person, the agent, the right to act on his behalf in business transactions and to have some control over how they do so. People who work with someone else have a fiduciary or legal relationship with them, which means they have certain responsibilities and obligations, as well as high standards of good faith and loyalty.
People who work for someone else have a lot of different rights and responsibilities that are regulated by a lot of common and statute law. It’s not just the general law of agency that applies to all business transactions. State real estate licensing laws have a direct effect on the agency relationship between real estate licensees and their clients and the public. Even though contract law and agency law are two different things, they often come together when real estate agents and their principals are interpreted. This is because real estate agents and their principals often work together.
The payment of money does not have to be part of an agency relationship. One can agree to act as an agent for free and be held to the same standards as an agent when they start doing so.
General: When a principal gives a property manager the power to run a real estate project on his or her behalf, this is an agency. It can also be a special agency, like when the broker is hired to find a ready, willing, and able buyer. The broker is not allowed to sell the property or to bind the principal to a contract to sell the property.
An agency relationship can be implied by what the parties do, and it doesn’t need to be written down to make it happen. The buyer and the agent with whom they are working can have an agency relationship even if they don’t agree to it in writing. Once an agency relationship is set up, it has certain rights and responsibilities. This makes the broker responsible for any violations of duty.
There are two types of real estate brokers in a typical deal: one who works for both the seller and buyer is called a “listing agent,” which includes the associate licensees who work for that broker. The other broker who works for the buyer is called a “selling agent,” which means that he or she either works for the buyer or for the seller. In some cases, the listing agent is the only broker who works on the deal. There may be two types of agents: dual agents and limited agents. In some states, this relationship is set to transaction brokerage by default, but it can be changed.
In most cases, a real estate licensee can be held liable for breaking his or her fiduciary duties to the person who hires him or her. (1) The principal can sue the licensee-agent for money damages in court. (2) The state licencing authority can take action against people who break its rules. For example, if an agent does something or says something that isn’t in line with his or her job description, the person who hired him or her is legally responsible for those actions and statements.
The agent must do what the principal wants, be loyal, obey, and tell the principal about important things that could make the property worth more than the agreed-upon price. The agent must also take care not to overstep the authority given to him or her or misrepresent important facts to the principal or to third parties, keep a proper accounting of all money, and put the property where the principal wants it. Keep in mind that in an emergency, a person’s agent has more power, and he or she can disobey orders if it’s in the best interest of their boss.
When an agent doesn’t have permission from the person they work for, they can’t tell a third party confidential information or information that hurts the person they work for. People can’t say for example that the seller is forced to sell because of a job loss or because they are going through a divorce. They also can’t say that the seller will accept less than the listing price without permission.
The private information learned during the agency can’t be used later against the principal, even if the deal is done. This is true even if the deal is done. This includes financial information that was used in negotiations with properties that were later put on the market.
Agents are legally required to tell their principals everything that is important and relevant, but race, national origin, colour, disability, religion, family status, and sex are not important facts and should not be told even if the principal wants them to.
Sometimes, a real estate agent can get an offer from someone who will list their own home with that same agent. A smart broker will tell the seller this when he or she makes an offer. Otherwise, the broker could be accused of not telling the seller that he or she made money.
In some states, the agent in a principal/agent relationship must do more. For example, if one of the salespeople or a relative or a related company makes an offer to buy the property, the agent must say so in writing. For example, if the agent’s wife used her birth name when making an offer, the agent must say so in writing. There must be written permission from both the seller and the buyer if an agent works for both of them at the same time. The agent cannot mix the principal’s money or other things with his own. If the owner doesn’t want the broker to advertise their property, they can’t. If you work for a broker, you have to tell your boss or client about every deal.
Most states have laws that require the licensee to say who the licensee represents early on in the transaction and to make sure this information is correct in writing. A limited agent, “designated agent,” “transaction coordinator,” “facilitator,” and other new terms and definitions have been used by states to describe how they work with customers.
Agents must be honest and careful when they deal with third parties for whom they are not the broker. They are liable for any material misrepresentations or negligent acts made by the broker, so they must be careful. A third person may also be held liable for any actions that an employee does while on the job. Statutorily, some states have given the responsibility back to the customer (abrogated vicarious liability).
At any time, a principal can end an agency with an agent. If the agency is linked to an interest, the principal can’t do that at all. A money claim might be made if the agency is shut down before the stated end date. If one of the parties dies or becomes incapacitated, the agency ends. Notification of death isn’t required. The property is destroyed or taken away, or the terms of the agency run out. The agent or principal can renounce or rescind the agreement. The principal can also go bankrupt and lose the property because the title is given to a receiver.
Agency By Ratification
“After the fact”: When a principal says or implies that a person who claims to be her agent is acting in her best interest, that person is her agent. There must be proof that the principal knew about the act or acts and either agreed to the benefits or agreed to be bound by the actions of the agent.
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Agency Coupled With An Interest
When the agent owns a piece of the subject of the agency (the property). The principal can’t get rid of it, and it doesn’t end when the principal dies. For example, a broker may be able to help with the financing of a condominium development if the developer agrees to give the broker an exclusive listing to sell the units that are already equipped. After the broker had given the developer the money, the developer couldn’t take back the listing.
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Agency Problem
Occurs when an investor (principal) uninformed relies on an advisor (agent) for counsel when there is a possibility that the adviser may not behave in the best interests of the investment/principal.
Agency Relationship
A relationship in which the properly managed/agent serves as the owner’s fiduciary; consequently, the manager’s words and actions bind the owner.
Agent
Individual who has been permitted to act on behalf of another person (principal) in a transaction with a third party.
The person or firm you authorize in writing to act on your behalf with third parties in exchange for a commission
A person who is allowed to act on behalf of another person (called the principal). An agent is different from an employee, who only works for a principal. An agent works in the place of a principal. The main difference between an agent and a worker is that an agent can make a contract on behalf of the person they work for. An employee, on the other hand, can only make a contract if they have been specifically told to do so.
A real estate broker is the person who works for the person who wants to sell or buy a house. She has a legal or fiduciary duty to that person. A salesperson, on the other hand, works for his broker and doesn’t have a direct contract with either the seller or the buyer. Salespeople who want to leave their current company and become angry when their broker won’t let them take their listings should keep this in mind, too.
Note that minors can’t choose an agent to help them with their contracts, but an adult can choose a minor to be an agent.
A person who is licensed and well-trained helps with the process of selling a home.
A person authorized to represent another (typically the property owner) in the selling, purchasing, renting, or management of real estate.
Agents In Conjunction
You (as a vendor or landlord) may appoint more than one agency, or an appointed agent may collaborate with another agent who brings a buyer or renter to your property.
An agency conjunctional relationship can be formed in real estate transactions by either:
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specific instructions received from the vendor or purchaser to act in conjunction, or
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where an agent acting on behalf of a vendor or purchaser allows another agent to introduce a purchaser or vendor - or vice versa - the agents are said to be acting in conjunction. Agents in Association is a term used in some states.
In these cases, the agents will typically split a predetermined percentage of the total commission.
Agglomeration Economies
A nebulous word relating to cost savings attributed to proximity.
The formation of specialized resources in a community in response to demand from a variety of businesses. Large cities are commonly connected with this term.
Aggregate
A material or structure composed of a loosely compacted mass of fragments or particles.
Aggrieved
Having been harmed or hurt because of someone else’s infringement or denial of rights. The term also refers to someone who has been hurt or who has lost some of her personal or property rights or has been forced to do something that is unfair.
Agreed Boundaries
A law that affects the rights of people who own land to the borders. When there is a question about where the true boundary line is between adjoining parcels of land, the landowners can work together to set a boundary line. agreed boundaries are used when two people agree on a legal boundary. If they act in accordance with that boundary, the law says that line is the legal boundary between their properties.
Agreement Of Sale
A written contract between a buyer and a seller of real estate.
Ownership terms are words that move ownership from one owner to another. In real estate, the agreement of sale (purchase agreement) includes agreements about the price, when the sale will happen, and who will get what. There are some states where a “contract for sale” is also called a “land contract” or “contract for deed.”
Agricultural Foreign Investment Disclosure Act (AFIDA)
1978: A federal law says that foreigners who own more than one acre of agricultural land in the U.S. must give the secretary of agriculture information about it.
Agricultural Lien
A legal lien is given to a farmer to get money or supplies for growing a crop. The lien is only on the crop, not the land.
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