Rental units come in all shapes and sizes, from single- family homes to multistory high-rises that contain hundreds of units. This block of historic apartment buildings is another type of rental property. Chapter 16 Leases

16 Leases Modern Real Estate Practice 17th Edition Learning Objectives ê Identify the four types of leasehold estates ê Describe the requirements and general conditions of a valid lease, and how a lease may be discharged ê Explain the rights of landlords and tenants in an eviction proceeding, and the effect of pro-tenant legislation and civil rights laws on the landlord-tenant relationship ê Distinguish the various types of leases

16 Leases Modern Real Estate Practice 17th Edition Leasehold Estates ê Estate for Years ê Estate from Period to Period (Periodic Tenancy) ê Estate at Will ê Estate at Sufferance

Modern Real Estate Practice 17th Edition 16 Leases

Modern Real Estate Practice 17th Edition Requirements of a Valid Lease ê Offer and acceptance ê Consideration ê Capacity to contract ê Legal Objectives

16 Leases Modern Real Estate Practice 17th Edition Lease Agreements ê Possession of premises ê Use of premises ê Term ê Security Deposit ê Improvements ê Maintenance

16 Leases Modern Real Estate Practice 17th Edition Lease Agreements ê Destruction of premises ê Assignment and subleasing ê Recording a lease ê Nondisturbance clause ê Options

16 Leases Modern Real Estate Practice 17th Edition Types of Leases ê Gross Lease ê Net Lease ê Percentage Lease ê Variable Lease ê Ground Lease ê Oil and Gas Lease ê Sale and Leaseback ê Agricultural

16 Leases Modern Real Estate Practice 17th Edition Discharge of Leases ê Breach ê Suit for possession: actual eviction ê Tenants’ remedies: constructive eviction ê Pro-tenant legislation

16 Leases Modern Real Estate Practice 17th Edition Fair Housing and Civil Rights Laws ê Affect landlords and tenants ê Cannot discriminate against protected classes

A property manager is also a “people manager” and relationships are important. This manager may be checking a property’s plans for adequate fire planning, for upgrading the HVAC system, or for a remodeling project. Chapter 17 Property Management

17 Property Management Modern Real Estate Practice 17th Edition Learning Objectives ê Identify the basic elements of a management agreement ê Describe a property manager’s functions ê Explain the role of environmental regulations and the Americans with Disabilities Act in the property manager’s job ê Distinguish the various types of insurance alternatives

17 Property Management Modern Real Estate Practice 17th Edition Elements of a Management Agreement ê Description of the property ê Time period ê Definition of the manager’s responsibilities ê Statement of the owner’s purpose ê Extent of the manager’s authority

17 Property Management Modern Real Estate Practice 17th Edition Elements of a Management Agreement ê Reporting requirements ê Compensation ê Allocation of costs ê Antitrust provisions ê Equal opportunity housing statement

17 Property Management Modern Real Estate Practice 17th Edition Manager’s Responsibilities ê Financial Reports ê Renting the Property ê Marketing ê Selecting Tenants ê Collecting Rents ê Maintaining Good Tenant Relations

17 Property Management Modern Real Estate Practice 17th Edition Manager’s Responsibilities ê Maintaining the Property êPreventive êRepair or Corrective êRoutine êConstruction êTenant Improvements

17 Property Management Modern Real Estate Practice 17th Edition Federal Laws Affecting Property Management ê ECOA ê Fair Housing Act ê The Americans with Disabilities Act

Modern Real Estate Practice 17th Edition 17 Property Management

Modern Real Estate Practice 17th Edition Risk Management ê Risk Management Techniques ê Tenant Security

17 Property Management Modern Real Estate Practice 17th Edition Risk Management ê Insurance êFlood êConsequential loss, use and occupancy êContents and personal property êLiability êFire and hazard êCasualty êSurety bonds ê Handling Environmental Concerns

Measurement is vital to the appraiser. Not just physical measurement in feet and inches, but measurement of value and cost. Chapter 18 Real Estate Appraisal

18 Appraisal Modern Real Estate Practice 17th Edition Learning Objectives ê Identify the different types and basic principles of value ê Describe the three basic valuation approaches used by appraisers ê Explain the steps in the appraisal process ê Distinguish the four methods of determining reproduction or replacement cost

18 Appraisal Modern Real Estate Practice 17th Edition Appraisal Process 1. State the problem 2. List the data needed 3. Gather, record, verify, and analyze data êGeneral data êSpecific data êData for each approach 4. Determine the highest and best use 5. Estimate the land value 6. Estimate value by each of the three approaches 7. Reconcile the estimated values 8. Report the final value estimate

18 Appraisal Modern Real Estate Practice 17th Edition Value ê Market value ê Market value vs. Market price ê Market value vs. Cost

18 Appraisal Modern Real Estate Practice 17th Edition Basic Principles of Value êAnticipation êChange êCompetition êConformity êContribution êHighest and best use

18 Appraisal Modern Real Estate Practice 17th Edition Basic Principles of Value êIncreasing and diminishing returns êPlottage êRegression and progression êSubstitution êSupply and demand

18 Appraisal Modern Real Estate Practice 17th Edition Sales Comparison Approach to Value ê Subject property vs. comparable properties ê Property rights ê Financing concessions ê Market conditions ê Conditions of sale ê Market conditions since date of sale ê Location ê Physical features and amenities

18 Appraisal Modern Real Estate Practice 17th Edition Cost Approach to Value ê Reproduction cost vs. Replacement cost new êSquare-foot method êUnit-in-place method êQuantity-survey method êIndex method ê Depreciation êPhysical deterioration êFunctional obsolescence êExternal obsolescence

18 Appraisal Modern Real Estate Practice 17th Edition Income Approach to Value ê Annual potential income ê Effective gross income ê Annual operating expenses ê Capitalization rate ê Gross rent multiplier (GRM) ê Gross income multiplier (GIM)

Issues controlled by local land-use controls include how close developers can place units to each other, and how to protect historic characteristics of an area. Chapter 19 Land-Use Controls and Property Development

19 Land-Use Controls and Property Development Modern Real Estate Practice 17th Edition Learning Objectives ê Identify the various types of public and private land- use controls ê Describe how a comprehensive plan influences local real estate development ê Explain the various issues involved in subdivision ê Distinguish the function and characteristics of building codes and zoning ordinances

19 Land-Use Controls and Property Development Modern Real Estate Practice 17th Edition The Comprehensive Plan ê Land Use ê Housing needs ê Movement of people and goods ê Community facilities and utilities ê Energy conservation

19 Land-Use Controls and Property Development Modern Real Estate Practice 17th Edition Zoning Permits ê Zoning hearing board ê Nonconforming use ê Conditional use ê Variance

19 Land-Use Controls and Property Development Modern Real Estate Practice 17th Edition Zoning Ordinances ê Buffer zones ê Bulk zoning ê Aesthetic zoning ê Incentive zoning ê 14th Amendment and Takings Clause (5th Amendment) ê Inverse condemnation

19 Land-Use Controls and Property Development Modern Real Estate Practice 17th Edition Subdivision ê Subdivider vs. Developer ê Land planning êplat ê Subdivision plan ê Density êCurvilinear street pattern êGridiron street pattern êClustering for open space

19 Land-Use Controls and Property Development Modern Real Estate Practice 17th Edition Subdivision ê Private Land-Use Controls êRestrictive covenants êMay be more restrictive than zoning ordinances ê Regulation of Land Sales êInterstate Land Sales Full Disclosure Act

Fair housing is not just “nice to have”—it’s the law. Fair housing practices are established by local, state, and national laws and regulations, and the judicial system actively enforces them. Chapter 20 Fair Housing and Ethical Practices

20 Fair Housing and Ethical Practices Modern Real Estate Practice 16th Edition Learning Objectives ê Identify the classes of people who are protected against discrimination in housing by various federal laws ê Describe how the Fair Housing Act is enforced ê List the exemptions allowed in the Fair Housing Act

20 Fair Housing and Ethical Practices Modern Real Estate Practice 16th Edition Learning Objectives ê Explain how fair housing laws address a variety of discriminatory practices and regulate real estate advertising ê Distinguish the protections offered by the Fair Housing Act, the Housing and Community Development Act, the Fair Housing Amendments Act, the Equal Credit Opportunity Act and the Americans with Disabilities Act

20 Fair Housing and Ethical Practices Modern Real Estate Practice 16th Edition Equal Opportunity ê Civil Rights Act of 1866 ê Fair Housing Act ê HUD ê“housing” ê“familial status” ê“disability ” ê Prohibited Actions ê Exemptions

Modern Real Estate Practice 16th Edition

20 Fair Housing and Ethical Practices Modern Real Estate Practice 16th Edition Equal Opportunity ê Jones v. Mayer ê Equal Credit Opportunity Act ê Americans with Disabilities Act

20 Fair Housing and Ethical Practices Modern Real Estate Practice 16th Edition Fair Housing Issues ê Blockbusting ê Steering ê Advertising ê Appraising ê Redlining ê Intent and Effect ê Response to Concerns of Terrorism

Pollution, such as hazardous runoff into local waterways, is a serious issue for homeowners, developers, and real estate professionals. Chapter 21 Environmental Issues and the Real Estate Transaction

21 Environmental Issues and the Real Estate Transaction Modern Real Estate Practice 17th Edition Learning Objectives ê Identify the basic environmental hazards an agent should be aware of in order to protect his or her client’s interests ê Describe the warning signs, characteristics, causes and solutions for the various environmental hazards most commonly found in real estate transactions ê Explain the fundamental liability issues arising under environmental protection laws ê Distinguish lead-based paint issues from other environmental issues

21 Environmental Issues and the Real Estate Transaction Modern Real Estate Practice 17th Edition Hazardous Substances ê Asbestos ê Lead-based Paint and Other Lead Hazards ê Radon ê Formaldehyde ê Carbon Monoxide ê Polychlorinated Biphenyls (PCBs) ê Chlorofluorocarbons (CFCs) ê Mold ê Electromagnetic Fields

Modern Real Estate Practice 17th Edition 21 Environmental Issues and the Real Estate Transaction

21 Environmental Issues and the Real Estate Transaction Modern Real Estate Practice 17th Edition Groundwater Protection ê Groundwater ê Water table ê Safe Drinking Water Act (SDWA) Underground Storage Tanks (USTs) ê Registration and administrative requirements ê Exempted types of tanks

21 Environmental Issues and the Real Estate Transaction Modern Real Estate Practice 17th Edition Waste Disposal and Clean-up ê Landfills êcapping ê Hazardous and radioactive waste ê Brownfields ê Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) ê Superfund Amendments and Reauthorization Act

21 Environmental Issues and the Real Estate Transaction Modern Real Estate Practice 17th Edition Agent Liability ê Discovery of environmental hazards ê Environmental site assessments ê Environmental Impact Statements (EIS) ê Disclosure of environmental hazards

Some closings are face-to-face, and some are conducted through escrow. But in all cases, once again, it’s a people-related business. Chapter 22 Closing the Real Estate Transaction

22 Closing the Real Estate Transaction Modern Real Estate Practice 17th Edition Learning Objectives ê Identify the issues of particular interest to the buyer and the seller as a real estate transaction closes ê Describe the steps involved in preparing a closing statement ê Explain the general rules for prorating ê Distinguish the procedures involved in face-to-face closings from those in escrow closings

22 Closing the Real Estate Transaction Modern Real Estate Practice 17th Edition Preclosing Procedures Buyer’s Issues ê Title evidence ê Seller’s deed ê Removal of liens and encumbrances ê Survey ê Inspection results ê Leases Seller’s Issues ê Payment ê Buyer financing ê Compliance with buyer requirements

22 Closing the Real Estate Transaction Modern Real Estate Practice 17th Edition The Closing ê Face-to-Face Closing ê Closing in Escrow

22 Closing the Real Estate Transaction Modern Real Estate Practice 17th Edition RESPA Requirements ê Controlled Business Arrangements ê Disclosure Requirements êInformation Booklet êGood-faith estimate of settlement costs êUniform Settlement Statement (HUD-1) ê Prohibition on Kickbacks and Referral Fees

22 Closing the Real Estate Transaction ê Debits and Credits ê Broker’s Commission ê Attorney’s Fees ê Recording Expenses ê Transfer Tax ê Title Expenses ê Loan Fees ê Tax and Insurance Reserves ê Appraisal Fees ê Survey Fees ê Other Fees Closing Statement

22 Closing the Real Estate Transaction Modern Real Estate Practice 17th Edition Prorations ê Accrued Items ê Prepaid Items ê Rules for Prorating êownership on closing day êcalendar for calculating prorations êtaxes êassessments êInterest êrents êsecurity deposits