MCCCD Program Description

Real Estate Principles I and II

Course: REA201

First Term: 2004 Summer I

Lecture 6 Credit(s) 6 Period(s) 6 Load
Subject Type: Occupational
Load Formula: S

Description: Comprehensive survey of real estate principles to include careers in real estate, nature and description of real estate, rights and interests in land, forms of real property ownership, forms of business organization, methods of title transfer, title search and insurance, contract law, real estate sales contracts, mortgage and notes payable, deeds of trust, lending practices, loans and consumer rights, sources of financing real estate loans, types of financing instruments, real property taxes and assessments, title closing, escrow and settlement procedures, property management and real estate leases, real estate appraisal, state licensing laws and professional affiliations, real estate brokerage, real estate agency, fair housing and equal credit laws, types of residential real estate, real property insurance, land use control, economics of real estate, and investment considerations

MCCCD Official Course Competencies
1. Define the different career pathways in the real estate industry. (I) 2. Describe the nature and characteristics of real estate. (II) 3. Describe individual rights and legal interest in real property (land). (III) 4. Define and describe legal forms of ownership. (IV) 5. List the methods used to convey title in real estate. (V) 6. Describe methods to search, verify and record titles in real estate. (VI) 7. Define the essential elements of legal contracts. (VII) 8. Define the fundamental components of various real estate contracts. (VIII) 9. Define the mortgage instrument and notes payable obligation. (IX) 10. Identify the essential elements of a deed of trust. (X) 11. Identify the different types of mortgages and government- sponsored financing programs. (XI) 12. Identify and describe lending and consumer rights regarding fairness and disclosure. (XII) 13. Describe the many different sources of mortgage financing. (XIII) 14. Define different ways to structure financing. (XIV) 15. Describe how property taxes and assessments on real property can be derived. (XV) 16. Explain the closing process and the importance of escrow. (XVI) 17. Describe real estate leases and property management issues and concerns. (XVII) 18. Identify and describe the three different value approaches used to appraise real property. (XVIII) 19. Define state licensing laws and the role of professional affiliations. (XIX) 20. Describe the role of a real estate brokerage. (XX) 21. Describe the fiduciary obligations of a real estate agency. (XXI) 22. List fair housing, American Disabilities Act (ADA), and equal credit statutes and compliance criteria. (XXII) 23. Describe other types of residential dwellings, including condos, co-ops, planned unit developments (PUDs), and time-shares. (XXIII) 24. Define and list the various types of real property insurance. (XXIV) 25. Define land-use control, regional planning, and environmental impact statements. (XXV) 26. Identify and describe economic forces and phenomena that affect the value of real property. (XXVI) 27. Identify and describe the many different factors that affect investment decisions. (XXVII)
MCCCD Official Course Competencies must be coordinated with the content outline so that each major point in the outline serves one or more competencies. MCCCD faculty retains authority in determining the pedagogical approach, methodology, content sequencing, and assessment metrics for student work. Please see individual course syllabi for additional information, including specific course requirements.

MCCCD Official Course Outline
I. Introduction to Real Estate A. Real estate as an industry sector B. Career pathways in real estate C. General licensing requirements II. Nature and Characteristics of Real Estate A. Real property versus personal property B. Land, improvement thereupon, and attached fixtures C. Water rights D. Legal descriptions 1. Government rectangular survey 2. Metes and bounds 3. Lot, block, and tract E. Surface, subsurface, and above surface rights III. Rights and Interests in Real Property (Land) A. Feudal versus allodial systems of ownership B. Government rights in land 1. Taxation 2. Eminent domain 3. Police power 4. Escheat C. Fee simple bundle D. Encumbrances E. Estates in real property 1. Freehold estates 2. Life estates 3. Statutory estates F. Leasehold estates in personal property 1. Estate for years 2. Periodic estate 3. Estate at will 4. Estate at sufferance IV. Ownership and Organization A. Forms of real property ownership 1. Estate in severalty 2. Tenants in common 3. Joint tenancy 4. Tenancy by the entirety 5. Community property B. Forms of business organization 1. Sole proprietor 2. Partnerships a. General b. Limited c. Limited liability 3. Limited liability company 4. Corporations a. Subchapter C b. Subchapter S 5. Trusts V. Title Transfer A. Deeds 1. Elements 2. Covenants and warranties a. Seizen b. Further assurances c. Against encumbrances d. Quiet enjoyment e. Warranty forever 3. Types a. General warranty deed b. Grant deed c. Special warranty deed d. Quitclaim deed e. Other types of deeds B. Conveyance after death 1. Testate \226 Wills a. Written (formal) will b. Holographic will c. Nuncupative will d. Codicil 2. In testate a. Succession of heirs b. Escheat C. Other types of conveyance 1. Adverse possession 2. Easement by prescription 3. Ownership by ascension 4. Public grant 5. Dedication 6. Forfeiture 7. Alienation VI. Publics Records, Title Search and Tile Insurance A. Organization of public records 1. Grantor/Grantee indexes 2. Lis pendens index 3. Judgment rolls B. Public notice 1. Constructive 2. Actual 3. Inquiry C. Title search 1. Chain of title 2. Abstract of title 3. Opinion of title D. Title insurance 1. Preliminary report 2. Policy premium 3. Quiet title suit E. Other title methods 1. Torrens system 2. Marketable Titles Act VII. Contract Law A. Expressed versus implied contracts B. Bilateral versus unilateral contracts C. Contract essentials \226 validity 1. Legally competent parties 2. Mutual agreement 3. Lawful objective 4. Consideration 5. In writing \226 Statute of Frauds D. Performance and discharge of contracts E. Breach of contract F. Statute of limitations VIII. Real Estate Contracts A. Purchase contract elements 1. Earnest money deposit 2. Buyer`s offer 3. Seller`s acceptance 4. Brokerage commission B. Binders C. Installment contracts D. Lease with option to buy/right of first refusal E. Exchange agreements 1. Real property trade 2. Delayed exchanged IX. Mortgage and Promissory Note A. Promissory note elements 1. Written 2. Parties with contractual capacity 3. Borrower`s promise to repay sum 4. Terms of repayment 5. Executed by the borrower 6. Delivered to and accepted by the lender B. Mortgage covenants 1. Covenant to pay taxes 2. Covenant against removal 3. Covenant of insurance 4. Covenant of good repair C. Mortgage satisfaction 1. Subject to 2. Assumption 3. Novation 4. Estoppel D. Debt priorities E. Foreclosure process 1. Judicial foreclosure 2. Strict foreclosure 3. Power of sale 4. Entry and possession 5. Deed in lieu of X. Deed of Trust A. Parties to a deed of trust 1. Trustor 2. Trustee 3. Beneficiary B. Statutory requirement C. Reconveyance D. Foreclosure/power of sale XI. Lending Practices A. Types of loans 1. Term 2. Amortized 3. Balloon 4. Budget 5. Partially amortized B. Loan to value ratio (conventional) C. Loan costs 1. Discount points 2. Origination fee D. Government-sponsored 1. Federal Housing Administration (FHA) Insurance Program 2. Department of Veterans Affairs (DVA) a. DVA eligibility b. Financial liability c. Funding fee d. Assumption requirements E. Private mortgage insurance XII. The Loan and the Consumer A. Truth-in-Lending Act 1. Regulation Z - Federal Reserve Board 2. Advertising trigger terms a. Amount of down payment b. Amount of any payment c. Number of payments d. Period of repayment e. Dollar amount of any finance charge 3. Full financial disclosure 4. Compliance a. Exempt transactions b. Failure to disclose c. Right to cancel B. Loan application and approval 1. Uniform residential loan application 2. Credit report a. Fair Credit Reporting Act b. Credit scoring XIII. Sources of Financing A. Primary mortgage (lending) market 1. Savings and loans 2. Commercial banks 3. Life insurance companies 4. Mortgage companies 5. Mortgage brokers 6. Municipal bonds 7. Other lenders B. Secondary mortgage market 1. Federal National Mortgage Association (FNMA) 2. Government National Mortgage Association (GNMA) 3. Federal Home Loan Mortgage Corporation (FHLMC) 4. Federal Agricultural Mortgage Corporation (FAMC) C. Automated underwriting systems XIV. Types of Financing A. Mortgages 1. Adjustable rate a. Interest rate b. Margin c. Adjustment period d. Interest rate cap e. Payment cap f. Negative amortization 2. Graduated payment 3. Rich Uncle financing 4. Equity sharing 5. Package 6. Blanket 7. Reverse 8. Equity 9. Asset integrated 10. Wraparound 11. Seller financing B. Loans 1. Construction 2. Blended-rate 3. Affordable housing C. Contract for deed/land sales contract D. Investing in mortgages XV. Taxes and Assessments A. Property taxes 1. Budget 2. Appropriation 3. Assessed value a. Mill rate b. Dollars per 100s c. Dollars per 1,000s 4. Unpaid property taxes 5. Property tax exemptions B. Special assessments 1. Improvement districts 2. Bond issues 3. Apportionment C. Income taxes \226 sale of residence 1. Capital gain calculation a. Home basis b. Amount realized c. Gain on sale 2. Income tax exclusion a. $250,000 \226 single b. $500,000 \226 married D. Capital gains tax rates E. Installment method F. Property tax and interest deductions and limits XVI. Title Closing and Escrow Procedures A. Title closing 1. Closing meeting a. Buyer responsibilities b. Seller responsibilities c. Agent responsibilities 2. Settlement conference/escrow agent duties B. Federal reporting requirements C. Prorating prepaid expenses 1. Insurance 2. Note interest 3. Rents 4. Taxes 5. Homeowners` dues D. Settlement statement \226 HUD1 (Housing and Urban Development) 1. Seller`s side 2. Buyer`s side E. Real Estate Settlement Procedures Act (RESPA) 1. Restrictions 2. Benefits 3. Good faith estimate of closing costs XVII. Real Estate Leases A. Leasehold estate 1. Estate for years 2. Periodic estate 3. Estate at will 4. Tenants at sufferance B. Valid lease elements 1. Lessee and lessor 2. Description of premises 3. Agreement to let 4. Rent payment provisions 5. Starting date and duration 6. Signatures of the parties C. Lease as a binding contract D. Landlord-tenant laws 1. Arizona Residential Landlord & Tenant Act a. General provisions/security deposit b. Landlord obligations c. Tenant obligations d. Remedies e. Retaliatory action E. Types of leases 1. Gross lease 2. Graduated (step-up) 3. Percentage 4. Ground lease 5. Vertical lease F. Lease termination G. Tenant eviction 1. Actual 2. Constructive 3. Retaliatory H. Property management 1. Tenant retention 2. Collecting rents 3. Setting rents 4. On-site versus off-site I. Institute of Real Estate Management 1. Certified Property Manager 2. Accredited Resident Manager J. Building Owners and Managers Institute 1. Real Property Administrator 2. Systems Maintenance Administrator XVIII. Real Estate Appraisal A. Purpose B. Valuation process C. Value approaches 1. Market comparison a. Competitive market analysis b. Gross rent multiplier 2. Cost approach a. Land estimation b. Construction cost estimation c. Depreciation estimation 3. Income approach a. Pro forma statement b. Capitalizing income c. Depreciation D. Reconciliation of results/appraiser`s best estimate E. Appraisal regulation 1. Financial Institutions Reform Recovery and Enforcement Act (FIRREA) 2. Uniform Standards of Professional Appraisal Practice (USPAP) standards 3. Appraiser qualifications a. Arizona`s licensing requirements b. Arizona`s certification requirements F. Reporting standards 1. Options 2. Report formats 3. Real estate analysis a. Characteristics of value b. Highest and best use G. Professional appraisal societies XIX. Real Estate Licensing Laws and Professional Affiliation A. Licensing requirements for Arizona 1. Broker 2. Agent B. Licensing qualifications for Arizona C. Licensing procedure for Arizona D. Licensing of business entity E. Real estate regulation 1. ARS \226 Title 32 \226 Real Estate Code 2. Department of Real Estate a. Commissioner of Real Estate b. Advisory Board F. Broker affiliation 1. Training 2. Compensation 3. Support 4. IRS status a. Independent contractor b. Employee G. Real estate franchises H. National Association of Realtors (NAR) 1. Code of Ethics 2. Standards of Practice XX. Principal \226 Broker Employment Relationship A. Sales listing agreements 1. Broker representing a seller a. Exclusive right to sell listing b. Exclusive agency listing c. Open listing d. Net listing e. Advance fee listing f. Advance cost listing B. Exclusive authority to purchase/broker representing a buyer C. Broker compensation D. Procuring cause E. Termination of employment F. Bargain brokers XXI. Principal \226 Broker Agency Relationship A. Agency 1. Universal 2. General 3. Specific B. Agent authority 1. Implied 2. Ostensible 3. By ratification 4. By estoppel 5. Coupled with an interest C. Broker`s obligation to the principal/fiduciary relationship 1. Faithful performance 2. Loyalty to the principal 3. Protecting the principal`s interests 4. Reasonable care D. Broker`s obligation to third parties E. Buyer agency F. Principal`s obligation to the broker G. Cooperating broker H. Agency disclosure I. Seller disclosure [Seller`s Property Disclosure Statement (SPDS) \226 Arizona] J. Interstate land sales disclosure K. Antitrust laws L. Errors and omission Insurance XXII. Legislation \226 Real Property A. Fair housing 1. Constitutional Law a. Fifth amendment b. Thirteenth amendment c. Fourteenth amendment 2. Title VIII \226 Fair Housing Law a. Protected classes (1). Race (2). Color (3). Religion (4). Sex (5). National origin (6). Physical handicap (7). Familial status b. Housing covered by Fair Housing c. Housing not covered by Fair Housing B. American with Disabilities Act (ADA) 1. Scope 2. Access rights C. Equal Credit Opportunity Act 1. Prohibits discrimination in granting credit a. Race b. Color c. Religion d. National origin e. Age f. Receipt of public assistance income 2. Prohibited requests a. Spouse b. Marital status c. Sources of income d. Birth control practices e. Race, color, religion, or national origin 3. Evaluating credit applications 4. Credit denial criteria a. Unverified credit reference b. Temporary or irregular employment c. Insufficient length of employment d. Insufficient income e. Excessive debt obligations f. Inadequate collateral g. Too short a period of residency h. Delinquent credit obligations D. Community Reinvestment Act (CRA) 1. Purpose 2. CRA Statement a. Map b. List 3. Notify 4. Federal guidelines XXIII. Other Forms of Residential Real Estate A. Condominiums 1. Enabling legislation 2. Separate and common elements 3. Owner`s association 4. Bylaws 5. Covenants, conditions, and restrictions 6. Fee simple ownership 7. Management a. Maintenance fees b. Reserves 8. Taxes and insurance 9. Financing 10. Advantages and disadvantages B. Cooperative apartments 1. Not-for-profit corporation a. Cooperative b. Cooperators c. Proprietary lease 2. Governance 3. Financing 4. Advantages and disadvantages C. Planned Unit Developments (PUDs) 1. Mixed use 2. Covenants, conditions, and restrictions 3. Fee simple ownership 4. Common and separate elements 5. Financing 6. Advantages and disadvantages D. Resort timesharing 1. Investment costs 2. Benefits 3. Types of ownership a. Right-to-use b. Fee simple 4. State regulations XXIV. Real Property Insurance A. Need for insurance 1. Property damage 2. Public liability B. Types of policies 1. Basic (HO-1) 2. Broad (HO-2) 3. Special form (HO-3) 4. Tenant (renter) policy (HO-4) 5. Comprehensive (HO-5) 6. Condominium (HO-6) 7. Older home (HO-8) C. New for old 1. Actual cost 2. Replacement cost D. Lender requirements E. Flood insurance F. Landlord insurance G. Policy cancellation H. Home buyer`s insurance/one-year warranty XXV. Land-Use Control A. Zoning 1. Zoning laws 2. Zoning categories 3. Zoning qualifiers a. Amendment b. Variance c. Conditional-use permit d. Spot zoning e. Downzoning f. Taking g. Buffer zone B. Subdivision regulations 1. Mapping requirements 2. Arizona requirements C. Building codes 1. Local enforcement of zoning regulations 2. Certificate of occupancy D. Deed restrictions E. Future development master plan F. Environmental impact statements 1. Purpose 2. Scope 3. Environmental laws G. Transferable development rights 1. Windfalls 2. Wipeouts XXVI. Real Estate and the Economy A. Economic base 1. Base industries

MCCCD Governing Board Approval Date: 12/9/2003

All information published is subject to change without notice. Every effort has been made to ensure the accuracy of information presented, but based on the dynamic nature of the curricular process, course and program information is subject to change in order to reflect the most current information available.