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Rockwell publishing real estate law chapter 1
 

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    Rockwell publishing real estate law chapter 1 Rockwell publishing real estate law chapter 1 Document Transcript

    • Printable Lesson Materials Print these materials as a study guide These printable materials allow you to study away from your computer, which many students find beneficial. These materials consist of two parts: graphic summaries of the content and a multiple choice quiz. Graphic Summaries This portion of your printable materials consists of dozens of frames that summarize the content in this lesson. The frames are arranged on the page to make it easy for you to study the material and add your own notes from your textbook or the online course. Quizzes Many students learn best from sets of questions, and this multiple choice quiz allows you to focus your review of the material to important topics. 13218 NE 20th Street Bellevue, WA 98005 425-747-7272 800-221-9347 www.rockwellinstitute.com© 2009 Rockwell Institute
    • California Real Estate Law Lesson 1: Introduction to Law and the Legal System © Copyright 2007 Rockwell Publishing, Inc.Introduction This lesson will discuss: l role of law l roots of U.S. law l criminal and civil law l sources of law © Copyright 2007 Rockwell Publishing, Inc.The Role of LawProvides society with benefits, such as: l standards of acceptable behavior l punishment for unacceptable behavior l method for settling disputes l way to preserve natural resources l protection for minorities l predictability in business © Copyright 2007 Rockwell Publishing, Inc. 1
    • The Role of LawIn countries where law is unsettled, commercesuffers.In countries where law is developed, businessbenefits. l common language l some certainty of outcome © Copyright 2007 Rockwell Publishing, Inc.The Roots of U.S. LawIn general, two systems of law: l common law l civil law © Copyright 2007 Rockwell Publishing, Inc.The Roots of U.S. LawCommon law: l judges follow rules or decisions made in earlier cases l brought from England © Copyright 2007 Rockwell Publishing, Inc. 2
    • The Roots of U.S. LawCivil law: l legislatures create laws l judges follow statutesExamples: France, Germany, Mexico, Japan © Copyright 2007 Rockwell Publishing, Inc.The Roots of U.S. LawUnited States follows common law system. l Results in strange vocabulary, especially real estateExamples: metes, appurtenances, seisin, etc. © Copyright 2007 Rockwell Publishing, Inc.The Roots of U.S. LawSpanish influence in CaliforniaCalifornia also influenced by Spanish law.Land that is now California: l first occupied by Spanish in 1769 l taken over by Mexico in 1822 l taken over by U.S. in 1848, after Mexican- American War 1848U.S. law replaced Spanish-based law, but tracesremain (example: community property). © Copyright 2007 Rockwell Publishing, Inc. 3
    • SummaryThe Role and Roots of U.S. Law l Common law l Civil law l Spanish influence © Copyright 2007 Rockwell Publishing, Inc.Criminal and Civil LawCriminal law : decided by legislature, contained inCalifornia’s Penal CodeCivil law : any legal matter not involving criminal lawCriminal law and civil law have different penaltiesand procedures. © Copyright 2007 Rockwell Publishing, Inc.Criminal and Civil LawPenalties: l Criminal law: fines, restitution, incarceration l Civil law: limited to fines, revocation of licenses © Copyright 2007 Rockwell Publishing, Inc. 4
    • Criminal and Civil LawProcedures: l Criminal law: only government can prosecute l Civil law: government or private person can bring case © Copyright 2007 Rockwell Publishing, Inc.Criminal and Civil LawMost disputes involve civil law. l government or private person brings claim for damagesDamages: compensation for financial losses causedby defendant’s wrongful conduct. © Copyright 2007 Rockwell Publishing, Inc.Criminal and Civil LawTypes of civil lawMost civil matters involve: l contract law l tort law l property lawCivil matter may involve one area or all three. © Copyright 2007 Rockwell Publishing, Inc. 5
    • Types of Civil LawContract lawContract: each party makes promise to other party l exchange of promises = binding contractLawsuits result when: l one party fails to do as promised l other party sues over financial lossLegislatures generally leave contract law to courts. © Copyright 2007 Rockwell Publishing, Inc.Types of Civil LawTort lawTort law : imposes a duty to take reasonable care toavoid injuring people or damaging propertyContract is voluntary duty; tort is involuntary duty. © Copyright 2007 Rockwell Publishing, Inc.Types of Civil LawTort lawNegligence: failure to use reasonable care l Unintentional tort: causing injury through negligence l Intentional tort: intending to cause injury to person or property © Copyright 2007 Rockwell Publishing, Inc. 6
    • Types of Civil LawTort lawIntentional torts in real estate: l trespass, fraud, etc. l many have counterparts in criminal codeExample: broker takes client’s money l civil law: tort of “conversion” l criminal law: theft © Copyright 2007 Rockwell Publishing, Inc.Types of Civil LawProperty lawProperty law : governs ownership of both realproperty and personal propertyPersonal property: any property that isn’t real estateor permanently attached to real estate © Copyright 2007 Rockwell Publishing, Inc.Criminal and Civil LawStandards of proofStandard of proof: proof necessary for jury to findperson guilty (criminal case) or liable (civil case)Criminal: “beyond a reasonable doubt”Civil: “more likely than not”Person can be found “not guilty” in criminal case,but still liable in civil case. © Copyright 2007 Rockwell Publishing, Inc. 7
    • SummaryCriminal Law and Civil Law l Criminal law l Civil law l Contract law l Tort law l Property law l Negligence l Standard of proof © Copyright 2007 Rockwell Publishing, Inc.Sources of LawFederal, state, local governments each have laws.Different sources of law include: l constitutions l legislatures l courts l administrative agencies © Copyright 2007 Rockwell Publishing, Inc.Sources of LawSeparation of powers: l each branch of government has unique power l “checks and balances” © Copyright 2007 Rockwell Publishing, Inc. 8
    • ConstitutionsConstitution is a plan for government: l creates branches of government l lists powers l limits powers l provides operating instructions (Example: who is eligible to vote) © Copyright 2007 Rockwell Publishing, Inc.ConstitutionsThe U.S. ConstitutionU.S. Constitution is highest legal authority l adopted 1789 l applies to federal government l applies to all 50 statesSupremacy Clause: “This Constitution…shall be thesupreme Law of the Land.” l any conflicting law unconstitutional and void © Copyright 2007 Rockwell Publishing, Inc.The U.S. ConstitutionFederal and state lawmakingFederal government has sole power over: l wars and military l interstate commerce l copyrights and patents l currencyPromotes unified states for military; removes tradebarriers between states for commerce. © Copyright 2007 Rockwell Publishing, Inc. 9
    • The U.S. ConstitutionFederal and state lawmakingIf state law encroaches on subject reserved forfederal law, state law will have no effect.Federal: bankruptcy, patentsState: contracts, real propertyBoth: environmental laws, consumer protectionIf one law is more strict, that law controls. © Copyright 2007 Rockwell Publishing, Inc.The U.S. ConstitutionState actionState action: an act by a government or governmentofficialOnly state action can violate someone’sconstitutional rights. l Examples: acts by police officers or public officials, discriminatory statutes © Copyright 2007 Rockwell Publishing, Inc.The U.S. ConstitutionState actionState action does not include private citizens.However, other federal and state laws limit privateaction. l Example: Civil Rights Act of 1964 © Copyright 2007 Rockwell Publishing, Inc. 10
    • The U.S. ConstitutionConstitutional rightsBill of Rights: l added in 1791 l first 10 amendments to the Constitution l contain bulk of constitutional protections © Copyright 2007 Rockwell Publishing, Inc.The U.S. ConstitutionConstitutional rightsFourteenth Amendment: l added after Civil War l expands Bill of Rights to include African- Americans l requires state governments to honor protections contained in Bill of Rights © Copyright 2007 Rockwell Publishing, Inc.The U.S. ConstitutionConstitutional rightsTogether, Bill of Rights and Fourteenth Amendmentrequire governments to provide: l just compensation for property taken by government l due process l equal protection © Copyright 2007 Rockwell Publishing, Inc. 11
    • Constitutional RightsTakings ClauseFifth Amendment: “No person shall…be deprived oflife, liberty, or property; nor shall private property betaken for public use, without just compensation.” l known as “Takings Clause” l doesn’t prevent government from taking property; just requires government to compensate landowner © Copyright 2007 Rockwell Publishing, Inc.Takings ClauseCase example: Nollan v. CA Coastal Comm.California Coastal Commission requiredhomeowners to give easement across beach topublic in exchange for permit to build.Supreme Court ruled that government could nottake easement without compensation. © Copyright 2007 Rockwell Publishing, Inc.Constitutional RightsDue Process ClauseFifth and Fourteenth Amendments: No person shallbe “deprived of life, liberty, or property without dueprocess of law.”Due process: judicial process in which individualhas right to fair hearing before some kind ofimpartial judge © Copyright 2007 Rockwell Publishing, Inc. 12
    • Constitutional RightsEqual Protection ClauseEqual Protection Clause: found in FourteenthAmendmentProhibits governments from: l adopting laws that unfairly discriminate between different groups l applying acceptable laws in a discriminatory fashion © Copyright 2007 Rockwell Publishing, Inc.Constitutional RightsEqual Protection ClauseThe clause doesn’t prohibit all discrimination, justunreasonable discrimination.Government can treat groups differently when: l it achieves reasonable state goal l it does not single out individuals unfairly © Copyright 2007 Rockwell Publishing, Inc.ConstitutionsCalifornia State constitutionCalifornia constitution: l adopted in 1879 l begins with “Declaration of Rights” l in general, provides protection similar to federal constitution © Copyright 2007 Rockwell Publishing, Inc. 13
    • ConstitutionsCalifornia State constitutionDeclaration of Rights: l more detailed than Bill of Rights l more topics covered © Copyright 2007 Rockwell Publishing, Inc.SummarySources of Law: Constitutions l Separation of powers l Supremacy Clause l State action l Bill of Rights l Takings Clause l Due Process Clause l Equal Protection Clause © Copyright 2007 Rockwell Publishing, Inc.LegislaturesBoth federal and state constitutions place primarylawmaking responsibility on legislative branch ofgovernment. l legislatures do this by passing statutes © Copyright 2007 Rockwell Publishing, Inc. 14
    • LegislaturesFederal level has two “houses”: l Senate l House of RepresentativesTwo houses together known as Congress. © Copyright 2007 Rockwell Publishing, Inc.LegislaturesCalifornia legislature: l Senate l AssemblyTwo houses together known as the legislature. © Copyright 2007 Rockwell Publishing, Inc.LegislaturesThe legislative processBill: a proposal to amend or create a new statute. l usually proposed by legislators l sometimes by president (or governor) l voter request l lobbyists © Copyright 2007 Rockwell Publishing, Inc. 15
    • LegislaturesThe legislative processBill then analyzed or redrafted by committee inhouse where created.Example from U.S. Congress for energy bills: l House Committee on Energy and Commerce l Senate Energy and Natural Resources Committee © Copyright 2007 Rockwell Publishing, Inc.LegislaturesThe legislative processIf house where created passes bill, sent to otherhouse for consideration.Other house may: l pass bill as written l rewrite or amend bill l vote bill down l let bill die in committee © Copyright 2007 Rockwell Publishing, Inc.LegislaturesThe legislative processIf second house passes different version of bill, twoversions must be reconciled.Conference committee: members from both housesappointed by legislature to work out compromiseversionCompromise version must be passed by majorityvote of both houses, or it dies. © Copyright 2007 Rockwell Publishing, Inc. 16
    • LegislaturesThe legislative processEven if bill passes both houses, it’s still not law untilexecutive branch approves it.President (or governor) has three choices: l approve bill (by signing it) l ignore bill (will still become law) l veto bill (reject it)Legislature can override veto with two-thirdsmajority vote from both houses (rare). © Copyright 2007 Rockwell Publishing, Inc.The Legislative ProcessLocal lawsLocal governing bodies pass ordinances. l Examples: city or county councilsLocal laws usually cover areas not addressed byfederal or state law. © Copyright 2007 Rockwell Publishing, Inc.The Legislative ProcessLocal lawsIf local laws conflict with federal or state, stricter ruleapplies. l Examples: zoning, animal control, construction standards © Copyright 2007 Rockwell Publishing, Inc. 17
    • The Legislative ProcessReferenda and initiativesReferendum: ballot measure that rejects orapproves statute passed by legislatureInitiative: proposal to amend constitution or tomodify or create new statute or ordinanceThese give voters veto and lawmaking powers. l Only available at state and local level (U.S. Constitution does not provide for either) © Copyright 2007 Rockwell Publishing, Inc.LegislaturesCalifornia’s codesCalifornia’s statutory law grouped into 29 codes.Codes affecting real estate: l Civil Code l Business and Professions Code l Financial Code l Corporations CodeCodes are available online. © Copyright 2007 Rockwell Publishing, Inc.SummarySources of Law: Legislatures l Statutes l Bill l Conference committee l Veto l Ordinances l Referendum l Initiatives l California Codes © Copyright 2007 Rockwell Publishing, Inc. 18
    • The CourtsLegislatures make new statutory law; courts makenew case law.Court’s ability to create new law limited: l only regarding issues raised in particular lawsuit l only interpreting statutes (statutory construction), not making new ones l must follow decisions in earlier cases © Copyright 2007 Rockwell Publishing, Inc.The CourtsStatutory construction: process used by court todetermine intent of legislature © Copyright 2007 Rockwell Publishing, Inc.The CourtsCourt opinionsCourts resolve disputes by applying relevant law tofacts and reaching decision.Trial courts usually just issue brief statement knownas an order. © Copyright 2007 Rockwell Publishing, Inc. 19
    • The CourtsCourt opinionsAppeals courts may explain interpretation in writtenopinion. l often quite detailed l may also contain dissentDissent: a contrary opinion that appears aftermajority opinion © Copyright 2007 Rockwell Publishing, Inc.The CourtsStare decisis and precedentCase law : rules found in judicial opinionsDoctrine of stare decisis: Once case has beendecided it sets precedent; rules developed must befollowed by judges in later cases. © Copyright 2007 Rockwell Publishing, Inc.The CourtsStare decisis and precedentStare decisis is not a rigid doctrine.Courts may abandon precedent based on changedsocial conditions.Example: Brown vs. Board of Education © Copyright 2007 Rockwell Publishing, Inc. 20
    • The CourtsStare decisis and precedentCourts can also avoid stare decisis bydistinguishing a case.A court distinguishes a case by explaining in itswritten opinion that facts of earlier case are sodifferent from present case that precedent doesn’tapply. © Copyright 2007 Rockwell Publishing, Inc.The CourtsStare decisis and precedentNote: only the court that established precedent candeviate from stare decisis—lower courts cannot. l Example: California Supreme Court decisions are binding on all state’s lower courts.Binding precedent: a written, published opinion froma higher court in the same jurisdiction © Copyright 2007 Rockwell Publishing, Inc.Stare Decisis and PrecedentHigher courtU.S. Supreme Court l highest court in land l binding on all federal appellate and trial courts l binding on all state courts on matters of federal lawExample: California case dealing with governmenttaking of property l U.S. Supreme Court decisions on Takings Clause apply © Copyright 2007 Rockwell Publishing, Inc. 21
    • Stare Decisis and PrecedentJurisdictionJurisdiction: the authority higher courts have overcourts below. (Supreme Court) Highest Court (Appellate Court) (Appellate Court) Intermediate Court Intermediate Court A B (Superior Courts) (Superior Courts) Lower Courts Lower Courts A1 A2 A3 B1 B2 B3 © Copyright 2007 Rockwell Publishing, Inc.JurisdictionPersuasive authorityCase of first impression: involves issue with noexisting binding precedentPersuasive authority: opinions from otherjurisdictions that are not binding but may be used toguide judges in cases of first impression © Copyright 2007 Rockwell Publishing, Inc.Binding PrecedentPublicationCourt opinion must be published to be bindingprecedent.Most appellate court opinions are published inhardbound volumes called case reporters. © Copyright 2007 Rockwell Publishing, Inc. 22
    • SummarySources of Law: Courts l Statutory construction l Stare decisis l Binding precedent l Jurisdiction l Case of first impression l Persuasive authority © Copyright 2007 Rockwell Publishing, Inc.Administrative AgenciesSometimes considered a fourth branch ofgovernment.Have hybrid powers: l can make law like legislative body l can decide cases like a courtAgencies exist because more regulation requiredthan legislative and executive branches can handle. © Copyright 2007 Rockwell Publishing, Inc.Administrative AgenciesFederal, state, and local agenciesHundreds of agencies exist at federal level. l Examples: IRS, Treasury Department, Environmental Protection Agency © Copyright 2007 Rockwell Publishing, Inc. 23
    • Administrative AgenciesFederal, state, and local agenciesMany federal agencies have equivalent at statelevel. l Example: California’s Environmental Protection Agency (Cal/EPA)Department of Real Estate is California agency. © Copyright 2007 Rockwell Publishing, Inc.Administrative AgenciesFederal, state, and local agenciesLocal agencies administer: l zoning l parks and recreation l waste disposal l etc. © Copyright 2007 Rockwell Publishing, Inc.Administrative AgenciesRulemakingRegulations: rules issued by agencies that haveforce of lawCode of Federal Regulations: federal agency rulesCalifornia Administrative Code: state agency rules © Copyright 2007 Rockwell Publishing, Inc. 24
    • Administrative AgenciesRulemakingExample: California Department of Real Estate l almost 200 pages of regulations published l covers licensing, discipline, etc. © Copyright 2007 Rockwell Publishing, Inc.Administrative AgenciesRulemakingAgency regulations: l must be constitutional l must fall within scope of agency’s authority © Copyright 2007 Rockwell Publishing, Inc.Administrative AgenciesAdjudication and enforcementProcess for dispute involving agency regulation: l usually must appeal to agency itself l agency holds administrative hearing © Copyright 2007 Rockwell Publishing, Inc. 25
    • Administrative AgenciesAdjudication and enforcementHearings are held before Administrative Law Judge(ALJ).Hearings satisfy due process requirements. © Copyright 2007 Rockwell Publishing, Inc.Administrative AgenciesAdjudication and enforcementIf claimant disagrees with ALJ decision: l can appeal to superior court l usually not successful © Copyright 2007 Rockwell Publishing, Inc.SummaryAdministrative Agencies l Code of Federal Regulations l California Administrative Code l ALJ © Copyright 2007 Rockwell Publishing, Inc. 26
    • Legal Aspects of Real Estate Lesson 1 Cumulative Quiz1. The person or entity who initiates a civil lawsuit by suing another party is a: A. defendant B. plaintiff C. prosecutor D. respondent2. In the _____ system, judges make decisions based on precedents established by previous generations ofcase law, thus creating a body of law separate from statutory law. A. civil law B. common law C. criminal law D. substantive law3. A defendant is found guilty and is sentenced to one year in prison. This outcome is possible in: A. administrative law B. civil law C. criminal law D. property law4. Max drives negligently and runs over Violet, injuring her. Violet sues Max for the cost of her medicalexpenses, plus an award for pain and suffering. This would be considered: A. contract law B. criminal law C. property law D. tort law5. Johnny shot a man in Reno just to watch him die. To convict him of first-degree murder, theprosecution must demonstrate his guilt: A. beyond a reasonable doubt B. by a preponderance of the evidence C. by clear and convincing evidence D. by prima facie evidence6. Both criminal law and tort law usually fall within the scope of: A. county and/or city law B. federal law C. maritime law D. state law© 2009 Rockwell Publishing 1
    • 7. What part of the U.S. Constitution states that the constitution is the supreme law of the land and that nofederal or state law may contradict it? A. Full Faith and Credit Clause B. Preamble C. Privileges and Immunities Clause D. Supremacy Clause8. The federal government has sole lawmaking power over all of these matters, except: A. interstate commerce B. the currency C. the environment D. the military9. A plaintiff who experienced discrimination based on disability has a choice of suing under either thefederal Americans with Disabilities Act or the state Fair Employment and Housing Act. The state lawoffers greater protection. The plaintiff: A. may sue under either law B. must sue simultaneously under both acts C. must sue under the Americans with Disabilities Act D. must sue under the Fair Employment and Housing Act10. Which amendment to the U.S. Constitution states that private property cannot be taken for public usewithout just compensation? A. First B. Fifth C. Eighth D. Fourteenth11. The Fifth and Fourteenth Amendments both state that: A. freedom of religion and the press shall be guaranteed B. no one shall be deprived of life, liberty, or property without due process of law C. property shall not be taken for a public use without just compensation D. unreasonable search and seizure is prohibited12. The Declaration of Rights: A. is found within the state constitution and offers greater protection than the Bill of Rights B. is found within the state constitution and offers lesser protection than the Bill of Rights C. is found within the U.S. Constitution and offers greater protection than the Bill of Rights D. is found within the U.S. Constitution and offers lesser protection than the Bill of Rights© 2009 Rockwell Publishing 2
    • 13. The two houses of the California legislature are known as the: A. Assembly and House of Representatives B. Senate and Assembly C. Senate and House of Delegates D. Senate and House of Representatives14. If one house in a legislative body passes a bill, the other house may do all of the following EXCEPT: A. amend the bill B. pass the bill as written C. veto the bill D. vote against the bill15. The City Council decides that dogs must be on a leash in all city parks. This would take the form ofa/an: A. administrative rule B. bylaw C. ordinance D. statute16. Which doctrine states that legal cases establish precedent, and that subsequent cases should followthat precedent? A. Caveat emptor B. Res ipsa loquitur C. Stare decisis D. Sui generis17. A California Supreme Court decision would be considered _____ in a superior court in San Francisco. A. binding B. convincing C. irrelevant D. persuasive18. An administrative agency: A. is like a court, because it has adjudicative powers B. is like a legislative body, because it has rulemaking powers C. is not subject to judicial oversight D. Both A and B© 2009 Rockwell Publishing 3
    • 19. A person who disputes a decision by an administrative agency will: A. ask the legislature to pass a bill overturning the agencys decision B. file a lawsuit in the appropriate superior court C. have no legal recourse D. file a complaint with the agency and that complaint will be heard by an administrative law judge20. A professional license cannot be revoked or suspended without: A. a superior court trial B. an act of the legislature C. an administrative hearing D. an executive order of the governor© 2009 Rockwell Publishing 4