The 3 types of fee simple estates — and how to recognize each one
Fee simple is the highest form of property ownership. SAD helps you remember the three types. Recognize Subject to Condition by BOP language (But, On condition that, Provided). Recognize Determinable by SUD language (So long as, Until, During). Absolute has no conditions at all.
S — Subject
Fee Simple Subject to Condition — BOP language (But, On condition that, Provided)
A — Absolute
Fee Simple Absolute — no conditions, complete ownership forever
D — Determinable
Fee Simple Determinable — SUD language (So long as, Until, During)
Joint Tenancy
PITT
Possession · Interest · Time · Title
4 unities required to create a joint tenancy
Joint tenancy includes the right of survivorship — when one owner dies their share passes automatically to the surviving owners. All 4 PITT unities must exist at the same time when the joint tenancy is created. Missing any one unity means you have a tenancy in common instead.
P
Possession — all owners have equal right to possess the whole property
I
Interest — all owners hold equal shares
T
Time — all owners acquired their interest at the same time
T
Title — all owners hold title from the same deed
Types of Tenancy
You Will Suffer Periodically
Tenancy for Years · Tenancy at Will · Tenancy at Sufferance · Periodic Tenancy
4 landlord-tenant tenancy types — in one sentence
As a landlord or tenant You Will Suffer Periodically — this sentence gives you all 4 tenancy types. Tenancy for Years has a fixed end date. Periodic renews automatically. At Will either party can end it anytime. At Sufferance is a holdover tenant — lease expired but tenant stayed.
Years
Tenancy for Years — fixed start and end date, no notice needed to terminate
Will
Tenancy at Will — either party can terminate at any time
Periodic Tenancy — auto-renews (month-to-month), notice required to terminate
Valid Lease Elements
LAND
Length of time · Amount of rent · Name of parties · Description of property
4 elements every valid lease must contain
A lease missing any of these four elements may be unenforceable. LAND is easy to remember because a lease is always about land — or the property on it. These are the minimum requirements — most leases contain much more but must have at least these four.
L
Length of time — start and end date of the tenancy
A
Amount of rent — how much and when it is due
N
Name of parties — landlord and tenant identified
D
Description of property — legal description of what is being leased
Easement by Prescription
OAC
Open and notorious · Adverse (Hostile) · Continuous and uninterrupted
3 requirements to establish an easement by prescription
Easement by prescription is similar to adverse possession but for use rights rather than ownership. The use must be OAC — Open (visible, not hidden), Adverse (without the owner's permission), and Continuous for the statutory period (varies by state, typically 5-20 years).
O
Open and notorious — visible use, not hidden or secretive
A
Adverse (Hostile) — without the owner's permission
C
Continuous and uninterrupted — for the full statutory period
Easements don't last forever — ADAM E LEE gives you all 8 ways they can end. Merger is particularly important — when the dominant and servient estates come under the same ownership, the easement terminates automatically since you can't have an easement on your own property.
A
Abandonment — owner stops using and intends to give it up
D
Destruction — property subject to easement is destroyed
A
Adverse Possession — servient owner adversely possesses the easement area
M
Merger — dominant and servient estates come under same ownership
E
Express agreement — both parties agree in writing to terminate
L
Lawsuit — court order terminates the easement
E
Estoppel — easement holder's actions prevent them from claiming it
E
Excessive Use — use beyond the scope of the easement
6 requirements to claim ownership by adverse possession
Adverse possession allows someone to claim legal ownership of land they have occupied for a statutory period without the owner's permission. Think of PANCHO Villa — he took what he wanted openly and continuously. All 6 elements must be met for the full statutory period.
P
Possession — actual physical possession of the land
A
Adverse — against the interests of the true owner
N
Notorious — visible and obvious to the community
C
Continuous — uninterrupted for the statutory period
H
Hostile — without the owner's permission
O
Open — not hidden or concealed
Acquiring or Conveying Property
WASTO
Will · Accession · Succession · Transfer · Occupancy
5 ways property can be acquired or conveyed
WASTO covers every legal method of acquiring real property. Transfer is the most common — voluntary sale or gift. Will and Succession handle death scenarios. Accession covers improvements and additions. Occupancy includes adverse possession and abandoned property claims.
W
Will — property transferred through a will/testament upon death
A
Accession — acquiring property through additions or improvements
S
Succession — inheriting property when someone dies intestate (no will)
T
Transfer — voluntary conveyance by deed, sale, or gift
O
Occupancy — acquiring abandoned or unowned property by possession
Broker Commission
RAW
Ready · Able · Willing
When a buyer earns a broker their commission
A broker earns their commission when they produce a buyer who is RAW — Ready to buy now, Able to buy financially (qualified), and Willing to buy at the seller's terms. If a seller refuses a RAW buyer, the broker may still be owed their commission even if the sale doesn't close.
R
Ready — prepared to complete the purchase now
A
Able — financially qualified to buy (financing secured)
W
Willing — agreeable to the seller's price and terms
OLD CAR covers all the fiduciary duties a real estate agent owes their client (principal). These are the highest duties in law — breaching any one of them can result in license revocation and legal liability. Loyalty is the most important — the agent must always put the client's interests first.
O
Obedience — follow all lawful instructions of the principal
L
Loyalty — put client's interests above all others including your own
D
Disclosure — reveal all material facts known to the agent
C
Confidentiality — protect client's private information
A
Accounting — account for all money and property entrusted
R
Reasonable Care — use skill and expertise expected of a professional
Agency Disclosure
DEC
Disclose · Elect · Confirm
3 agency disclosure requirements — in order
DEC is the sequence agents must follow for agency disclosure. First Disclose the agency relationship options, then allow the client to Elect their choice, then Confirm the election in writing. This process protects both agent and client and is required by law in most states.
D
Disclose — present all agency relationship options to the client
E
Elect — client chooses their preferred agency relationship
C
Confirm — put the elected agency relationship in writing
Government Controls
PETE
Police power · Eminent Domain · Taxation · Escheat
4 types of government power over real property
PETE represents the four powers government holds over private real property. Police power is the broadest — zoning, building codes, environmental laws. Eminent Domain takes property for public use with just compensation. Taxation creates a lien. Escheat takes property when owner dies with no heirs and no will.
P
Police Power — zoning, building codes, health and safety regulations
E
Eminent Domain — government takes property for public use, must pay just compensation
T
Taxation — property taxes create an involuntary lien on real estate
E
Escheat — property reverts to state when owner dies intestate with no heirs
COAL
COAL: Care, Obedience, Accounting, Loyalty — fiduciary duties to a client
COAL
The four fiduciary duties an agent owes to their client
Care: exercise reasonable skill and care. Obedience: follow all lawful instructions. Accounting: account for all funds. Loyalty: put client's interests above all others including your own. Some states add Disclosure and Confidentiality — making it COALD or OLD CAR.
Three agency relationships — and which party each agent represents
Seller's agent (listing agent): represents the seller, owes fiduciary duties to seller. Buyer's agent: represents the buyer. Dual agency: represents both buyer and seller in the same transaction — legal in most states but requires informed written consent from both parties. Transaction broker: facilitates without full fiduciary duties.
The seven federally protected classes under the Fair Housing Act of 1968
Federal law prohibits discrimination in housing based on: Race, Color, National origin, Handicap (disability), Sex, Familial status (children under 18), Religion. Many states add additional protected classes (sexual orientation, age, source of income, marital status). Exemptions are very narrow.
R
Race
C
Color
N
National origin
H
Handicap — disability
S
Sex
F
Familial status — families with children
D
Religion — creed
Steering and Blockbusting
Steering: directing buyers toward or away from neighborhoods based on protected class — illegal
Steering and Blockbusting
Two specific Fair Housing violations every agent must know
Steering: guiding buyers to or away from certain neighborhoods based on race, religion, or other protected class. Blockbusting (panic peddling): inducing homeowners to sell by suggesting a protected class is moving into the neighborhood. Both are federal violations even if done subtly.
Valid Contract Requirements
Contract elements: COLE — Competent parties, Offer and acceptance, Lawful object, Exchange of consideration
Valid Contract Requirements
Four elements every valid real estate contract must have
Competent parties: legal age and mental capacity. Offer and acceptance (mutual agreement/meeting of minds): one party offers, other accepts without changes. Lawful object: contract purpose must be legal. Consideration: something of value exchanged by both parties (money, promise, services).
C
Competent parties — legal capacity
O
Offer and acceptance — mutual agreement
L
Lawful object — legal purpose
E
Exchange of consideration — something of value
Void vs Voidable Contracts
Void vs Voidable: Void = never valid (illegal). Voidable = valid until one party cancels (minor signed).
Void vs Voidable Contracts
Two types of defective contracts — very different legal consequences
Void contract: has no legal effect from the beginning — as if it never existed. Example: contract for an illegal purpose. Voidable contract: valid and enforceable UNLESS the disadvantaged party chooses to cancel. Examples: contract signed by a minor (minor can cancel), contract signed under duress, fraud.
Statute of Frauds
Statute of Frauds: real estate contracts must be IN WRITING to be enforceable
Statute of Frauds
Why all real estate contracts must be in writing
The Statute of Frauds requires certain contracts to be in writing and signed to be enforceable. Real estate contracts always fall under this. Includes: purchase agreements, listing agreements, leases over one year, buyer representation agreements. Verbal agreements for real estate are generally unenforceable.
Contract Contingencies
Contingencies: conditions that must be met or buyer can walk. Financing, inspection, appraisal most common.
Contract Contingencies
Conditions that must be satisfied for the contract to proceed
Financing contingency: buyer can cancel if they can't get the loan. Inspection contingency: buyer can negotiate or cancel based on inspection findings. Appraisal contingency: protects buyer if property appraises below purchase price. Sale of buyer's home contingency. Removing contingencies makes offers stronger.
Earnest Money
Earnest money: good faith deposit showing buyer is serious. Held in escrow. Forfeited if buyer defaults.
Earnest Money
The good faith deposit and what happens to it
Buyer deposits earnest money (typically 1-3% of purchase price) into escrow when offer is accepted. If buyer defaults without valid reason: seller may keep earnest money as liquidated damages. If seller defaults: buyer gets earnest money back plus may sue for specific performance.
Specific Performance
Specific performance: court orders the party to complete the real estate transaction
Specific Performance
The unique legal remedy available in real estate
Because every piece of real estate is unique, money damages are often inadequate remedy for breach. Courts can order specific performance — compelling the party to go through with the sale. More commonly sought against sellers (who have unique property) than buyers.
Antitrust in Real Estate
Antitrust: agents cannot agree on commission rates with competitors — price fixing is illegal
Antitrust in Real Estate
Federal antitrust law applies to real estate commissions
Sherman Antitrust Act prohibits competitors from conspiring to fix prices. Real estate agents cannot: agree with other brokers on commission rates, agree to divide markets (allocation), agree to boycott certain brokers. Commissions are ALWAYS negotiable between broker and client.
Listing Agreement Types
Listing agreement types: Exclusive right to sell (agent gets paid regardless), Exclusive agency (agent gets paid unless owner sells), Open listing (multiple agents, only selling agent paid)
Listing Agreement Types
Three types of listing agreements — key exam topic
Exclusive right to sell: listing broker gets commission even if owner finds the buyer. Most protective for broker. Exclusive agency: broker gets commission UNLESS seller finds buyer directly. Open listing: non-exclusive, any broker who brings buyer earns commission, broker who sells gets paid.