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.
Seven protected classes under federal Fair Housing Act (1968 + amendments)
Fair Housing prohibits discrimination in sale, rental, and financing — agents must never steer
Original 1968 act: Race, Color, National Origin, Religion, Sex. 1988 amendments added: Familial Status (families with children under 18), Handicap/Disability. Prohibited acts: refusing to sell/rent, steering (directing buyers/renters toward or away from areas based on protected class), blockbusting (inducing owners to sell by warning of minority move-ins), redlining (refusing loans in certain areas), discriminatory advertising. Exemptions: owner-occupied buildings with 4 or fewer units (Mrs. Murphy exemption), single-family homes sold/rented without a broker (with restrictions).
Steering
Directing buyers based on protected class — illegal
Blockbusting
Inducing sales by warning of neighborhood changes — illegal
Redlining
Refusing loans based on neighborhood demographics — illegal
Agency Relationships
COLDAC — Confidentiality, Obedience, Loyalty, Disclosure, Accounting, Care
COLDAC — Confidentiality, Obedience, Loyalty, Disclosure, Accounting, Care
Six fiduciary duties an agent owes to their principal (client)
Agents owe fiduciary duties to clients — customers get honesty and fair dealing only
Client (principal) vs. Customer: agent owes fiduciary duties only to client — customer gets honest and fair dealing. Types: Seller's agent (lists property, owes fiduciary to seller), Buyer's agent (represents buyer), Dual agent (represents both — requires written consent, reduced duties), Designated agent (different agents in same firm represent each party). Subagency: cooperating agent represents seller, not buyer — largely obsolete. All agency must be disclosed in writing. Non-representation: transaction broker/facilitator assists without representing either party.
Loyalty
Put client's interests above all others including your own
Disclosure
Reveal all material facts affecting client's decision
Dual agency
Represents both — legal only with written informed consent
License Law
Salesperson → Broker → Broker-Owner — hierarchy of real estate licensure
Real estate license law requirements and the broker-salesperson relationship
Salespersons must work under a licensed broker — they cannot operate independently
Salesperson (agent): must work under a licensed broker. Cannot receive commission directly from public — must receive from their broker. Broker: additional education and experience, can operate independently or employ salespersons. Associate broker: holds broker license but works under another broker. Managing broker: responsible for the office and all licensees. License violations: commingling (mixing client funds with personal), conversion (using client funds for personal use), secret profits, misrepresentation. Disciplinary actions: suspension, revocation, fine, probation.
Commingling
Mixing client trust funds with personal funds — license violation
Conversion
Using client funds for personal use — serious violation
Commission
Salesperson paid only through broker — never directly from public
Listing Agreements
OENA — Open, Exclusive Agency, Net, All — four types of listing agreements
The four types of listing agreements and what each means for the broker's commission
Exclusive right to sell is most common — broker earns commission no matter who sells the property
Exclusive Right to Sell: broker earns commission regardless of who finds the buyer — most common, best protection for broker. Exclusive Agency: broker earns commission UNLESS owner sells it themselves. Open Listing: seller can list with multiple brokers — only the broker who finds the buyer earns a commission. Net Listing: broker earns everything above a net price set by seller — legal in some states but discouraged (conflict of interest). All listing agreements must be in writing, include expiration date, and commission rate.
Exclusive right to sell
Commission owed no matter who sells — most broker protection
Exclusive agency
Owner can sell themselves without owing commission
Net listing
Broker keeps overage — conflict of interest, discouraged
Five environmental hazards requiring disclosure in real estate transactions
Lead paint disclosure is required by federal law on homes built before 1978 — all agents must know this
Lead-based paint: federal law requires disclosure for homes built before 1978 — seller must provide EPA pamphlet and buyer has 10-day inspection right. Asbestos: common in homes built before 1980 — must disclose known presence. Radon: colorless, odorless gas — second leading cause of lung cancer. Buyer has right to test. Mold: must disclose known moisture intrusion and mold — health and structural concerns. Underground storage tanks (USTs): oil tanks on property — potential contamination liability. CERCLA (Superfund): federal law that can make property owners liable for cleanup even if they didn't cause contamination.
Lead paint
Federal law — pre-1978 homes, 10-day inspection right
Radon
Radioactive gas — test before buying, mitigation available
CERCLA
Superfund — owner may be liable for cleanup regardless of fault
Constructive Eviction
Landlord makes it unlivable → tenant leaves → landlord "evicted" them constructively
When a landlord's actions or neglect force a tenant to vacate without a formal eviction
A tenant who leaves due to constructive eviction owes no further rent and can sue for damages
Constructive eviction: landlord fails to maintain the property in habitable condition (breach of the implied warranty of habitability), making the premises unfit for the purpose leased — tenant has no choice but to vacate. Elements: (1) landlord's substantial breach of duty, (2) tenant notifies landlord and landlord fails to correct, (3) tenant vacates within a reasonable time. Result: tenant's rent obligation ends. Actual eviction: landlord physically removes tenant or locks them out — illegal without court order. Self-help eviction (changing locks, removing belongings) is illegal in most states.
Constructive
Uninhabitable conditions force tenant out — no rent owed
Actual
Physical removal — requires court order, not self-help
Self-help
Changing locks, removing belongings — illegal in most states
Lis Pendens and Quiet Title
Lis pendens = lawsuit pending (warning). Quiet title = court clears the title.
Two legal actions that affect title and must be resolved before a clean sale
A lis pendens recorded against a property will stop most buyers and lenders dead in their tracks
Lis pendens (Latin: "suit pending"): notice filed in public records that litigation affecting the title or right to possession of a specific property is pending. Clouds title — buyers and lenders will refuse to proceed until resolved. Anyone who buys property subject to lis pendens takes it subject to the outcome of the lawsuit. Quiet title action: a court proceeding to clear title disputes — establishes who has legal title when there is a competing claim (adverse possession, boundary dispute, missing heir, forged deed). Court issues a judgment that "quiets" all competing claims.
Lis pendens
Recorded notice of lawsuit — clouds title, stops sales
Buyer takes subject to outcome if they buy during lawsuit
Partition Action
Co-owners can't agree → court forces a split or sale
A court action to divide co-owned property when owners cannot agree
Any co-owner (joint tenant or tenant in common) can force a partition — no one is trapped in co-ownership
Partition: any co-owner can bring a court action to force division of co-owned property. Partition in kind: physically divide the property (works for land, rarely practical for a house). Partition by sale: court orders property sold and proceeds divided among co-owners proportionally — most common when physical division is impractical. Used when: divorcing spouses, business partners, heirs who inherit together and disagree. Important: a joint tenant can sever joint tenancy and convert to tenancy in common by transferring their interest — then brings partition action. Cannot partition what you don't co-own.
In kind
Physically divide — rare, works for raw land parcels
Core duties of a property manager acting as agent for the property owner
A property manager is a general agent for the owner — fiduciary duties apply to all funds handled
Property manager is a general agent (ongoing authority for broad range of acts). Key duties: screen and select tenants (using Fair Housing compliant criteria), collect rents and security deposits (held in separate trust accounts — never commingled), pay operating expenses, maintain property (habitability), provide accounting to owner, enforce lease terms, handle maintenance and repairs, market vacancies. Security deposits: held in trust, itemized accounting within statutory period of move-out (typically 14-21 days). Fiduciary duties to owner apply to ALL funds. Property management agreement needed — sets fees, authority, term.
General agent
Ongoing broad authority — vs special agent (one transaction)
Trust account
All tenant funds kept separate from owner and PM funds
Security deposit
Itemized accounting required within state deadline at move-out
Antitrust in Real Estate
Price fixing, Market allocation, Boycotts, Tie-in agreements — all illegal per se
Four antitrust violations real estate agents must never commit
Discussing commission rates with competing agents is enough to trigger an antitrust violation
Sherman Antitrust Act applies to real estate. Four per se violations (illegal regardless of intent or effect): Price fixing — competing brokers agreeing to charge the same commission rate. Market/territory allocation — competing brokers agreeing to divide up geographic areas. Group boycotts — agents agreeing not to work with a particular broker. Tie-in agreements — requiring purchase of one service to get another. Commissions are always negotiable — agents must never suggest otherwise or imply there is a "standard" rate. Penalties: criminal fines up to $100 million for companies, imprisonment for individuals, treble damages in civil suits.
Price fixing
Competing agents agreeing on commission rates — per se illegal
Market allocation
Dividing territories with competitors — per se illegal
Always negotiable
Never suggest commission has a "standard" rate
🎓 Common Exam Questions
Q: What are the seven protected classes under the Fair Housing Act and what activities are prohibited?
A: Original 1968 protected classes: Race, Color, National Origin, Religion, Sex. Added by 1988 amendments: Familial Status (families with children under 18, pregnant women) and Handicap/Disability. Prohibited activities: refusing to sell or rent, steering (directing buyers/renters based on protected class), blockbusting (inducing sales by warning of minority move-ins), redlining (denying loans based on neighborhood), discriminatory advertising, setting different terms or conditions, denying membership in MLS. Exemptions: owner-occupied 1-4 unit buildings (Mrs. Murphy exemption — cannot use agents), single-family homes sold without a broker (with restrictions). Some states and localities add additional protected classes: sexual orientation, marital status, source of income, military status.
Q: Explain the different types of agency relationships in real estate.
A: Seller's agent (listing agent): represents seller, owes fiduciary duties to seller — must disclose buyer's motivation and financial capacity if known. Buyer's agent: represents buyer, owes fiduciary duties to buyer — must disclose property defects and seller's motivation. Dual agency: one agent or brokerage represents both parties in the same transaction — requires written informed consent of both parties, reduced fiduciary duties to both sides. Designated agency: in a dual agency situation, different agents within the same brokerage represent each side — each owes full fiduciary duties to their own client. Transaction broker/facilitator: assists both parties without representing either — owes honesty and fair dealing only. All agency relationships must be disclosed in writing.
Q: What are the requirements for a valid deed and what are the different types?
A: Required elements of any valid deed: competent grantor, identifiable grantee, legal description of property, words of conveyance (granting clause), grantor's signature, and delivery and acceptance. NOT required: price/consideration (can be nominal), recording, or notarization (required for recording but not validity). Types: General Warranty Deed: grantor warrants title against ALL claims, past and present — most protection for grantee. Special Warranty Deed: grantor warrants only against claims arising during their ownership. Grant Deed (CA): grantor warrants not previously conveyed and no undisclosed encumbrances. Quitclaim Deed: no warranties at all — transfers only what grantor has. Bargain and Sale Deed: no warranty of title but implies grantor has possession. Sheriff's/Trustee's Deed: used in foreclosure or court-ordered sales.
Q: What are the requirements for a valid listing agreement and what are the four types?
A: All listing agreements must: be in writing (most states require this), include an expiration date (no 'open-ended' listings), specify the commission rate or amount, identify the property and parties, be signed by both parties. Four types: Exclusive Right to Sell — broker earns commission no matter who finds the buyer (most common, best broker protection, used for MLS). Exclusive Agency — owner can sell themselves without owing commission; broker earns only if they or cooperating broker finds buyer. Open Listing — nonexclusive, multiple brokers can list, only the broker who brings the buyer earns commission, owner can sell themselves. Net Listing — broker keeps everything above a set net price; legal in some states but considered unethical due to conflict of interest.
Q: How does zoning and land use regulation work?
A: Zoning: local government power (police power) to regulate land use — residential, commercial, industrial, agricultural, mixed-use. Master/General Plan: long-range city plan — zoning must conform. Variances: permission to deviate from zoning requirements for specific hardship (property-specific, not changing the law). Conditional Use Permits (Special Use Permits): allow uses not normally permitted in a zone if conditions are met. Nonconforming use: use that was legal when established but violates current zoning — grandfathered in but typically cannot be expanded. Spot zoning: rezoning a single parcel differently from surrounding area — may be challenged if arbitrary. Exactions and impact fees: developers must provide infrastructure (parks, roads) or pay fees as condition of approval. Eminent domain: if zoning goes too far and deprives owner of all economic value = regulatory taking requiring compensation.