Real Estate Law & Transactions Flashcards

What is a 'due-on-sale' clause in a mortgage, and what is its primary effect?

Answer: It allows the lender to demand full repayment of the loan when the property is sold or transferred

A due-on-sale (alienation) clause gives the lender the right to accelerate the entire loan balance upon any transfer of the property, effectively preventing loan assumption without lender approval.

What does 'proration' at a real estate closing typically accomplish?

Answer: It allocates ongoing expenses such as property taxes and HOA fees between buyer and seller based on the closing date

Prorations divide ongoing charges (property taxes, prepaid rent, HOA dues) between buyer and seller so each pays only for the portion of the period they own the property.

Under the doctrine of equitable conversion, when does the risk of loss typically shift from seller to buyer in a real estate contract?

Answer: At the moment the purchase contract is signed

Under equitable conversion, once an enforceable contract is signed, equity treats the buyer as the equitable owner, and in most jurisdictions the risk of loss shifts to the buyer at contract execution.

Which of the following correctly describes a 'covenant running with the land'?

Answer: A restriction or promise in a deed that binds and benefits future owners of the affected parcels

A real covenant runs with the land when it is in writing, relates to the use of the land, and the original parties intended it to bind successors, making it enforceable by and against future owners.

A landlord's failure to maintain habitable conditions such that the tenant is constructively forced to vacate is known as:

Answer: Constructive eviction

Constructive eviction occurs when the landlord's failure to maintain the premises in a habitable condition makes the property unsuitable for the tenant's use, effectively forcing the tenant to leave.

Which document transfers a seller's rights under a real estate contract to a third party buyer BEFORE closing, allowing the third party to close the deal?

Answer: Assignment of contract

An assignment of contract transfers the original buyer's contractual rights (and often obligations) to a new purchaser who then closes the transaction, commonly used in wholesaling.

Under the Americans with Disabilities Act (ADA), which type of property is MOST subject to accessibility requirements for public accommodations?

Answer: Commercial facilities and places of public accommodation

The ADA's Title III requires places of public accommodation and commercial facilities to be accessible to persons with disabilities; single-family homes and most residential rentals are not covered by the ADA.