Workshop 1 Fina 680 Real Estate

Topics: Real estate, Property, Mortgage Pages: 7 (980 words) Published: April 20, 2015







a. What is the difference between real estate and real property? Real property is also termed realty and immovable property.
Real estate is a legal term that encompasses land along with improvements to the land, such as buildings, fences, wells and other site improvements that are fixed in location -- immovable. Real estate refers to the physical land and improvements constructed on the land, while real property refers to the ownership rights associated with the real estate. b. What is meant by an estate? Why are estates important in real estate finance? Estate is used to denote a possessory or potentially possessory interest in real estate. However, not all interests in real property are estates. Ownership can be quite different from possession and a variety of legal factors affect the ownership rights associated with real estate. The economic benefits expected by lenders, investors, and other parties in real estate transaction are affected by these legal factors. c. How can a leased fee estate have a value that could be transferred to another party?

The original fee owner can give up some property rights to a lessee. The value of the leased fee estate will depend on the amount of lease payments expected during the term of the lease plus the value of the property when the lease terminates and the original owner receives the reversionary interest.

c. What is an abstract of title?
An abstract of title is a historical summary of the publicly recorded documents that affect title. e. Name the three general methods of title assurance and briefly describe each. Which would you recommend to a friend purchasing a home? Why? General Warranty Deed - the grantor warrants that the title he/she conveys to the property is free and clear of all encumbrances, other than those that are specifically listed in the deed.

Special Warranty Deed - makes the same warranties as a general warranty deed except that it limits their application to defects and encumbrances which occurred only while the grantor held title to the property.

Quitclaim Deed - offers the grantee the least protection in that it simply conveys to the grantee whatever rights, interests, and title that the grantor may have in the property. No warranties are made about the nature of these rights and interests or of the quality of the grantor’s title to the property. Would recommend the General Warranty Deed, because it offers the most comprehensive warranties about the quality of the title. f. Distinguish between a mortgage and a note.

A note is a document you sign promising to pay the lender the sum borrowed, with specified interest, in installments set forth in the note. A mortgage is a document you sign pledging real property against which you have borrowed money to secure payment of the note you signed to borrow the money. If the note is not timely paid the mortgage holder may foreclose on the pledged real property to secure payment of the unpaid balance of the note. A note admits the debt and generally makes the borrower personally liable for the obligation. A mortgage is usually a separate document which pledges the designated property as security for the debt. g. Can borrowers pay off, part or all, of loans anytime that they desire? No. In general, prepayment is a privilege not a right. In cases of residential/consumer loans made by federally related lenders, this option is usually provided to borrowers. In commercial real estate loans it is not. h. What does non-recourse financing mean?

The borrower is not personally liable on the note. The lender may look only to the property (security) to satisfy the loan in the event of default. I. What does default mean? Does it occur only when borrowers fail to make scheduled loan payments?

Default means that the borrower has failed to (1)...

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