1. Chapter 12 Home Ownership

2. Amenities: feature that increase the value of a home. –Eg. Indoor plumbing or hot tub Costs of Home Ownership –Taxes –Mortgage Interest –Repairs Benefits of Home Ownership –Appreciation –Tax Benefits

3. Home Ownership Issues Zoning –Usually set by city government officials –Determines which areas of a township will have industrial, single family or multifamily structures. Mechanics Lien –A lien placed on property by a subcontractor after payment has been withheld.

4. Equitable Servitudes An equitable servitude is a covenant that will be enforced in equity against an assignee of land that has burden of covenant –Must have notice –Prevalent in condominiums and subdevelopments Usually entail restrictions such as no yard signs, no additional permanent structures, and only three unrelated individuals per house. Terminate, upon merger, acquiescence, or release.

5. Easements The right to use another’s property –Appurtenant – easement benefits land and stays with the land Eg. A and B have farms on adjacent property. A uses B’s driveway. –Easement in Gross Benefits a person or group of people –Eg: the First Church of Zion may park on my empty lot. –Prescriptive Easement? How do they come about? –License: a right granted by licensor to licensee Can be revoked at any time Different from easements because not created by deed

6. Types of Ownership Tenancy in common –Each tenant is entitled to an undivided interest in the whole. –Most states, including Iowa, presume tenancy in common Joint Tenancy – each tenant owns an undivided interest but the remainder passes at death to the other owner. –Interest must arise at the same time, under the same title, and for the same interest (duration and possession). Tenancy in the entirety – Joint tenancy for married folk only.

7. Real Estate Agents Brokers and agents must be licensed by the state In Iowa licensing involves a week long class and then a certification test The mother of all conflicts of interest What to watch out for: –Exclusive listing contracts –Exclusive purchasing contracts

8. The Contract Needs to be in writing Purchase agreement and deposit receipt –A written contract form that is filled in by the buyer and seller Often buyer has to put down earnest money, which is kept by the seller if the buyer breaches –Can always proceed in equity

9. Caveat Emptor Fraudulent misrepresentation. Generally, no duty to inform buyer of defects –Changing in many states Seller needs to disclose material facts the average buyer would like to know. –Previous deaths –Possibly the make up of the neighborhood

10. Promissory Notes Promissory note is a written promise to pay a specified amount of money –Note has two parties –Draft has three parties. (checks) –Collateral is property made available as security by a debtor to a creditor Mortgagor – one who takes out a mortgage –Borrower ie house owner Mortgagee – one who give a mortgage (bank)

11. Mortgages Deed of trust – often the deed to real property is held in trust as collateral Nonjudicial foreclosure – some mortgage agreements will provide that the mortgagee can take collateral and sell upon default without judicial proceedings Acceleration clause: makes the full principal due immediately upon default.

12. Foreclosure Creditor generally gets a judicial judgment against property after default In Iowa, judgment becomes a lien on all real property and after acquired property for 10 years. If creditor executes and sells the property, then the right of redemption arises. –What is a homestead exemption?

13. Mortgage Terms Mortgage Insurance – provides insurance proceeds in the event of default Variable rate v. fixed rate Points Assumption of a mortgage Refinancing Quiet Title Actions Escrow

14. Types of Deeds A deed is a document that transfers or conveys title of real property from one person to another Quitclaim deed – owner transfer whatever interest they have. Dangerous Warranty deed – seller makes the following warranties –Grantor has full ownership –The title will not be challenged by third parties