Alienation Clause Image

Alienation Clause

Lets talk about the alienation clause, also known as the due-on-sale clause. Don’t worry it has nothing to do with extraterrestrial life.

The act of transferring title, ownership, an estate, or an interest in real estate from one party to another is alienation. The alienation clause works similarly to the typical alienation definition but has to do with mortgages, trust deeds, and real estate contracts.

A clause identifies a particular section of a real estate contract (for those of you who don’t know). There are many types of clauses in real estate, and you are likely to see many of them on your real estate exam.

What is the Alienation Clause?

Definition: The alienation clause is a provision in a mortgage or deed of trust signed with the lender that states that the borrower must pay the mortgage in full before the borrower can transfer the property.

So what does that mean? Well, think of the alienation clause as insurance for the banks or lenders. The clause prevents new buyers from taking over an existing or the previous mortgage. If the borrower decides to transfer the property, the mortgage must be paid in full immediately.

It’s also worth noting alienation clauses are almost always standard, especially in mortgages.

What to Know for the Real Estate Exam

What’s important to understand for the real estate exam is like other clauses, you need to remember what the alienation clause is.

Remember, the alienation clause or due-on-sale clause is the clause that makes the mortgage immediately due and in full.

A question on the exam you might see is a list of different contract clauses, and you may need to distinguish which-is-which.

Habendum Clause Image

Habendum Clause

The habendum clause typically is a section of a contract that deals with rights and to whom or what is granted.

A clause identifies a particular section of a real estate contract (for those of you who don’t know). There are many types of clauses in real estate, and you are likely to see many of them on your real estate exam.

What is the Habendum Clause?

Definition: The habendum clause is the statement in a contract that describes the rights and interests being given. It almost always begins with the words “to have and to hold.”

Therefore, it is often called the “to have and hold clause.” Put simply, the habendum clause tells the buyer, or lessee, EXACTLY what they are getting.

For example, on one form of a real estate contract, let’s say, a timeshare lease, the clause will outline the percentage of ownership being transferred and any other timeshare related restrictions.

It is worth noting the content of a habendum clause varies somewhat. Depending on the exact contract, obviously, a timeshare lease will be much different than a standard home deed. Still, either way, the habendum clause is always the section where ownership is defined.

Fun fact: Many states, such as Pennsylvania, require specific contracts to have a habendum clause for the contract to be officially recorded and legally recognized.

What to Know for the Real Estate Exam

What’s important to understand for the real estate exam is like other clauses, you need to remember what the habendum clause is.

Remember the habendum clause is the statement in a real estate contract that describes the rights and interests granted.

A question on the exam you might see is a list of different contract clauses, and you may need to distinguish which-is-which.

Title Theory vs Lien Theory

Title Theory vs Lien Theory

As we all know, real estate laws vary state by state. In title theory states, banks or mortgage lenders hold the title of a property until it is paid in full. In lien theory states, however, banks or mortgage lenders …

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Dominant vs Servient Estate Image

Dominant vs Servient Estate

Let’s talk about the Dominant and Servient Estate which have to do with easements. Understanding the difference between both estates is vital for the real estate exam.

For those of you who don’t know what an easement is – an easement is a right held by one person to use the land of another for a specific purpose.

What is the Dominant Estate?

Definition: The Dominant Estate is a parcel of real property that has an easement over another piece of property.

What is the Servient Estate?

Definition: The Servient Estate is a parcel of land that is subject to an easement.

What Does it Mean?

The best way to explain how both terms work is by an example. Take a look at the picture below.

Dominant vs Servient Estate Example

You should notice that Property B is landlocked, which means the only way to access the property is by entering another (which in our case is property A). So property B has an easement on property A. In this example, Property B is referred to as the dominant estate since it holds the easement in property A. Of course, that means property A is referred to as the servient estate.

An excellent way to remember which-is-which is whenever you hear servient estate think of that estate serving the other. It is a servient estate because it serves the other through the easement located on their property. You can also think about dominant estate dominating the other since it holds an easement over the other parties’ property.

What to Know for the Real Estate Exam

The biggest thing to remember for the real estate exam is which-is-which.

Remember, a servient estate serves the other. And a dominant estate dominates the other through holding an easement of the other property.