Cyclopedia of real estate and insurance

Front matter

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CYCLOPEDIA

Table Of Contents

Page

Abstract of Title 5

Ack^o^^■ledgment, General ii

Chapter I. System

One of the first things necessary in starting into business is the adoption of some system which will enable you to keep track of all your business transactions. The card system is undoubtedly the one best suited to the Real Estate Broker. Have a box, with cards, for properties you have for sale ; one for mortgages ; one for property you have to let; one for investors and one for insurance. They are inexpensive, and can be bought at any stationer's. (See chapter on Office Systems.)

HOW TO OPEN AN OFFICE.

While many have their offices in their own homes in the beginning, it is well to have an office or desk-room in the business district, if possible. From that you can branch out as your business increases, taking suburban offices in growing localities where it is advisable to have a man on the ground to show property.

Then it is advisable to take out Justice of the Peace and Notary Public papers. They give you the power to acknowledge drawing of deeds, protesting notes, etc., which will go a great way towards paying your running expenses. (See under Separate States.)

HOW TO GET AN INSURANCE AGENCY.

Any local insurance agency will give you a sub-agency, or you can take a full agency by applying to the Board o^

Fire Underwriters. This insurance agency means a good deal to a Real Estate Broker, as he comes in direct contact with owners and lessees of property and thereby has a good chance of getting their insurance business. It pays well and is practically no trouble.

HOW TO GET CUSTOMERS.

Have cards printed and distribute them on every possible occasion to your friends and others, as they are a good advertising medium and cost little. You can have a thousand printed, something like the following, at slight cost.

MORTGACES

INST R.VNCE

HENRV

A.

PIERCK

REA^I.

ESTATE

MTI.Iv STREET

BOSTOX, MASS.

Watch the daily papers and advertisements closely. From them you will find out who is buying and selling Real Estate. The buyer may have more money to invest and the seller has the money from his sale, which he would likely want to reinvest, and you could probably interest them in some of the properties on your list. Another way to get property to sell and also to get buyers is by circulars. You can get names most readily from the assessors' books at your City Hall.

One way to secure property to sell is to canvass a neighborhood thoroughly and wherever you see a "For Sale" sign take the owner's name and call on him. Generally he will be glad to place it in your hands, but should he not you can mention the fact that you have several investors whom you think you could interest in the property, and this will undoubtedly bring him around. If possible get him to place it in your hands exclusively. When a property is given you to sell get a full description of it. Your card should read something like the following:

3 family brick house No. 20 Common Street, Boston, 2,000 feet of land. Assessed $8,000. Mortgaged $5,000 at 5 per cent. Price $8,500.

INCOME.

First floor 5 rooms and bath. Rent monthly $20.00

Second floor 6 rooms and bath. Rent monthly 25.00

Third floor 6 rooms and bath. Rent monthly 23.00

68.00 12

Rent yearly $816.00

EXPENSES.

Interest on Mortgage 250.00

Gas I5-00

Net income $408.00

Terms $1,000 down. Balance on second mortgage at 6 per

cent.

Notes. Is in good repair and all rented.

Mortgage is due November 1909.

It is advisable to always tell the truth in your dealings, as misrepresenting the value of a property is sure to be discovered and casts suspicion on all your dealings. Real Estate is a commodity which is always well examined by purchasers and title conveyancers, therefore for this reason, if for no other, the above advice is valuable.

Another thing to bear in mind is not to send prospective purchasers to look at property alone. Go with them and with the knowledge you have previously gained you will be able to show the good points and advantages which the property has, in such a manner as to convince them that it would be to their advantage to acquire the property.

Study your customers well and approach them in the manner which your judgment tells you would be best to further your own interests. All people cannot be approached in the same manner. Everyone has his own fads and fancies and by working on these your work will be made much easier. Treat all people with politeness and respect, and remember that the seller is just as necessary to the Broker as is the buyer.

You can make up your list and mail it to any one you think it would interest, such as people who own adjoining property, or those whom you see by the papers are buying in that vicinity. Should any one want property not on your list tell them you will find what they want. This you can do either by going to the owners or through other Brokers who advertise what you think would be suitable for your customer. Where you make a sale through another broker, it is customary to divide the commission and it is better to do this and make a quick sale, rather than wait and possibly lose one. While some brokers with no principle will evade dividing the commission by going direct to the owners, this does not pay, as a reputation for square dealing is one of your principal assets.

MAPS.

A map or atlas of the city and surrounding country where you are located will be found to be of great value, enabling you to find at once the location and kind of surroundings of property you have to sell. Some, in fact a great many brokers, make the mistake of not personally paying a visit and looking over Real Estate given them to sell. Of course you could not be expected to examine property situated many miles from your headquarters, but where it is possible it is absolutely necessary to look the property oyer thoroughly, so that you will be able to answer intelUg'eatly any questions

whkh ni^y b^ ?.skd regarding ii

AGREEMENT PAPERS AND TITLE CON- VEYANCING.

The next step after you have secured a purchaser, is to bring both buyer and seller together and have them sign the agreement papers. The necessity for agreement papers is as follows : — The purchaser of a property goes to a Title Conveyancer whose business it is to examine the title- of the property, to see whether the seller holds a clear title or not. When a person owns property, in real estate parlance it means that he holds a clear title to it. A title conveyancer or abstractor is one who is generally employed by the buyer, to examine the records to find out if the seller has a clear title to the property. As all transfers, mortgages or other encumbrances on real estate, to be valid against third parties, have to be recorded at the Registry Office, this can readily be done. This is done by lawyers, and of late years Title Insurance Companies have sprung up who make a specialty of this work, and who, for a stated sum, generally from tAventj dollars upwards, according to the value of the property, insure the buyer against loss by imperfect title. That is to say, that if they report that the seller has a clear title and any time afterward it should turn out that he had not, they insure the buyer against loss.

It depends on the length of the title, that is, a property which has changed hands fifty times will take longer to examine than one which has only changed hands ten times. From one to six weeks is generally allowed for in the agreement papers for the examination of the title.

The reason agreement papers are necessary : — Without them the seller might be offered a higher price for the property in the meantime, or the buyer see something else he liked better. Either of which things happening, would be great loss to the other. Hence, it is for their mutual advantage to have these papers drawn.

If, on examination, the title is found to be bad, the buyer can recover the cost of examination and expenses from the seller, if he can show that the seller knew he held an imperfect title. Otherwise, he must suffer the loss. The following is the general form used :

AGREEMENT FOR SALE OF REAL ESTATE.

Agreement made this first day of January A. D. 1907 between John M. Smith of Boston in the County of Suffolk and Commonwealth of Massachusetts, of the first part, and William L. Russell of said Boston in the County and Commonzvealth aforesaid, of the second part.

The party of the first part hereby agrees to sell, and the party of the second part to purchase, a certain estate situated and bounded and described as follows: Beginning at the easterly corner of Jones' land on Elm Street, thence running easterly on said Elm Street seventy-five (75) feet to land of James Whitehouse; thence turning and running northerly by said Whitehouse' s land eighty (80) feet to land of Willard Greene; thence turning and running westerly by said Greene's land one hundred (100) feet to land of said Jones; thence turning and running southerly by said Jones' land eighty-five (85) feet to point of beginning on Elm Street. Being all the premises conveyed to me by Winthrop P. Sears by deed dated July 2jth, 1904 and recorded zmth the Suffolk Registry of Deeds, Book 1926, Folio 1798.

Said premises are to be conveyed on or before February first by a good and sufficient zvarranty deed of the party of the first part, conveying a good and clear title to the same, free from all incumbrances and for such deed and conveyance the party of the second part is to pay the sum of Five Thousand dollars, of which Five JJundred dollars has been paid this day, Tzi^o Thousand dollars is to be paid in cash upon the delivery of said deed, and the remainder is to be paid by the note of the party of the second part, dated January first, nineteen hundrcd-and-six bearing interest at five per cent, per annum, payable semi-annually, and secured by a power of sale mortgage, in the usual form, upon the said premises, such note to be payable January first, nineteen hnndred-and-nine.

Full possession of the said premises, free of all tenants is to be delivered to the party of the second part at the time of the delivery of the deed, the said premises to be then in the same condition in which they now are, reasonable use and wear of the buildings thereon, and damage by fire or other unavoidable casualty excepted.

The buildings on said premises shall, until the full performance of this agreement, be kept insured in the sum of Five Thousand dollars by the party of the first part, in offices satisfactory to the party of the second part, and, in case of any loss, all sums recovered or recoverable on account of said insurance shall be paid over or assigned, on delivery of the deed, to the party of the second part, unless the premises shall previously have been restored to their former condition by the party of the first part.

Rents shall be apportioned as of the day of the delivery of the deed, and the taxes assessed for the year 1905, shall be paid by John M. Smith.

The deed is to be delivered and the consideration paid, if the purchaser so requires, at the Registry of Deeds in which the deed should by law be recorded.

If the party of the first part shall be unable to give title or to make conveyance as above stipulated, any payments made under this agreement shall be refunded, and all other obligations of either party hereunto shall cease, but the acceptance of a deed and possession by the party of the second part shall be deemed to be a full performance and discharge hereof.

In consideration of the above, I Clara M. Smith, wife of the said John M. Smith, hereby agree to join in the deed to be made as aforesaid, and to release to the party of the second part all right of dower and homestead in the said premises.

It is understood that a broker's commission of one per cent, on the said sale is to be paid to Jlenvy A. Pierce, by the said party of the first part.

In witness whereof, the said parties hereto, and to another instrument of Hke tenor, set their hands and seals on the day and year first above written.

Signed and sealed in presence of R. D. BROWN.

J. M. JONES.

JOHN M. SMITH. (Seal)

WILLIAM L. RUSSELL. (Seal)

EXTENSION.

The time for the performance of the foregoing agreement is extended until

Witness our hands and seals this . . . .day of 190 .

When the agreement papers are drawn, a sum of money agreed on is paid by the buyer. This money is returned to him if the title turns out to be imperfect.

There is nothing to be done further until the title conveyancer makes his report. If the title has been found to be perfect, the next step is to draw up the deed. This is usually done by the buyer's lawyer.

HOW TO DRAW UP A DEED.

If the Grantor has a wife, she must sign and acknowledge the deed, otherwise she could, after her husband's death, claim the use of one-third of the property during her life.

In making a deed the names of the Grantor and the Grantee must appear. Small mistakes, such as writing Willard instead of William in a deed do not invalidate it. Property must have an owner, and it is impossible for one person to part with his ownership unless there is another person to take it from him. Consequently, a deed to a person having no existence is void.

In nearly every state the names of two witnesses are subscribed to a deed, although by common law, an attestation ivS not required to give validity to a deed, nor is this required even by statute in all states. It is though a general practice and in some states obligatory to the validity of the deed. It is not necessary for a witness to see a party write his name. It is enough if he asks the witness to subscribe to the attestation clause, and the latter does so in the signer's presence.

A deed may be executed by the Grantor or his agent or his attorne}'. The Grantor is the seller, the Grantee, the buyer.

Delivery is essential to render a deed valid.

To effect a delivery two things are necessary. The Grantor must give up control of the deed and the Grantee must actually accept it. The delivery of a deed after the grantor's death is not effective. The law requires a deed to be acknowledged in order to be recorded. This is done by a Justice of the Peace or Notary.

Great care should be taken in drawing up a deed, that full details and dimensions of the land are inserted, as one of the rules is that an imperfect description cannot be mended by oral evidence. It must state in writing just what property is being conveyed.

Another part of the deed consists of the covenants of title as they are called. These stipulations or agreements are of great practical importance, yet are very imperfectly understood. There are five, although not all are found in modern conveyances: — Covenants of possession, the right to convey, against encumbrances, for quiet and enjoyment and warranty. In most states only the last is employed.

The covenant of possession is defined to be an assurance that the Grantor has both in quantity and quality the Estates which he wishes to convey. Therefore any outstanding right of title will be a breach of the covenants. (Covenant means contract.)

The covenant against encumbrances is intended to provide security against the claims of third parties. The most common form of encumbrance is a mortgage. Others are a right of dower, a judgment lien, taxes, and an outstanding lease.

Besides these covenants, deeds sometimes contain special covenants or restrictions, such as the height of buildings or kind to be erected on the land.

A deed must be written on parchment or paper. The law does not require accuracy or precision in the use of words or the observance of grammatical rule. Any writing from which the intention of the parties can be clearly gathered is sufficient.

When a deed, mortgage, or lease is executed to two or more persons, the name of each should be given, and also when they are the Grantors, each should sign his individual name. Never sign as a firm. If the buyer should be satisfied to let the Broker draw up the deed he, (the Broker) can get the details from the deed held by the seller.

RECORDING OF DEEDS.

After the deed has been prepared, signed and acknowledged, it should be taken to the Registry of Deeds and there recorded. The deal is now consummated.

A broker has generally been considered to have earned his commission when the agreement papers have been signed, but this is optional with him, as many wait until the deed has been recorded before collecting it.

BROKER'S COMMISSIONS. - Commissions are determined by the location of the property and the character of the services rendered. In cities the following are the standard charges: — For selling Real Estate in the city proper i per cent, of selling price.

For selling Real Estate in the suburbs 21-2 per cent, of selling price.

For exchanges, full commission as above from both parties. For leases under three years 21-2 per cent, of first year's rent.

For leases three years (5r over i per cent, of gross amount of rent.

For procuring loans on mortgages in city proper i per cent.

For procuring loans on mortgages in suburbs 2 per cent.

For selling farms 5 per cent.

Minimum charge for sale, mortgage or lease $25.00.

For renting and collecting rents, where there is no special agreement, the usual charge is 5 per cent, of rent.

His duties generally are to protest bills of exchange, authenticate and certify copies of documents and take acknowledgments of deeds and other instruments, administer oaths, etc. The acts of a notary are respected by the custom of merchants and the laws of nations. Their protest of a bill of exchange is received as evidence in the courts of all civilized countries. Except in cases of protest of bills the signature of a notary to an instrument going to a foreign country should be authenticated by the consul or representative of that country. In this country they do not administer oaths unless authorized by statute, except in cases where the oath is to be used out of the state or in the courts of the United States. Notaries are liable for damages arising from the negligent or imperfect discharge of their duties.

Notaries are required to have a seal, usually circular in form, with his name, County and State in the outer circle and the words "Notary Public" in the inner circle.

Notaries must keep records of all their acts, and in case of death or removal from office, the records must be filed, usually with the County Clerk.

(See Notaries under separate state headings.)

ACKNOWLEDGMENT.

The object of this is to authorize the acknowledged deed or other instrument, as the case may be, to be given in evidence without further proof of its execution and also to entitle it to be recorded. In some cases and in some states the acknowledgment is necessary to its validity. A certificate of acknowledgment where once made cannot be legally changed by the officer taking the acknowledgment or by any one without a re-acknowledgment.

LAW CONCERNING ACKNOWLEDGMENTS.

In Porto Rico, the Philippine Islands, Cuba, or in any other place over which the United States at the time has or is exercising sovereignty, control, or a protectorate, a conveyance may be acknowledged or proved before : 1. A judge of a court of record thereof, acting within his jurisdiction. 2. A mayor or chief officer of a city, acting in such city. 3. A commissioner appointed for the purpose by the governor of the state, and acting within his jurisdiction. 4. An officer of the United States regular army or volunteer service of the rank of captain or higher, or Avhile on duty at the place where such party or parties are or reside.

The certificate of an acknowledgment taken before any of the officers mentioned in clauses i, 2, and 3, shall have attached thereto the seal of the court or officer if he have a seal, and if such officer have no seal then a statement to that effect. The certificate of an acknowledgment taken before an officer of the army or navy mentioned in clause 4, shall state his rank, the name of the city, or other political division where taken, and the fact that he is on duty there, and shall be authenticated by the secretary of war.

NOTARY'S PROTEST.

A protest is a notarial act done for want of payment of a promissory note or for want of acceptance or payment of a bill of exchange when due, declaring that all parties to the instrument will be held responsible to the holder. The protest when accompanied by proper notice to all the parties to the bill or note has the effect of making them responsible to the holder for the amount thereof with damages. The protest is a formal paper wherein the notary certifies that on the day of its date he presented the original bill or note thereto attached^ or a copy of which is therein written, to the acceptor or the maker as the case may be, and demanded acceptance or payment which was refused, and that therefore he protests against the drawer and endorsers for damages, etc. It is usual for the notary to serve notices of the protest or copies of the protest on all the parties to the bill or note. The Protest in itself is proof of demand and refusal to pay or accept.

If a negotiable paper held by a bank as security for payment of a loan or debt becomes due and the bank fails to demand payment and have it protested when dishonored, the bank shall be liable to the owner for the full amount of the paper.

FORM OF PROTEST.

(Write here a copy of the note or bill of exchange with endorsements.)

United States of America, State of , ss :

Be it known, that on the day of the date hereof, at the

request of the holder of the original of

which a true copy is above written, I, , notary public

for the state of , by lawful authority, duly commissioned and sworn, residing in the city of , and state

of , during the usual hours of business for such purposes, presented the same at and demanded the

payment thereof, which was refused and answer made^

or words to that effect.

Whereupon, I, the said notary, at the request aforesaid, have protested, and do hereby solemnly protest, against all persons and every party concerned therein, whether as maker, drawer, drawee, acceptor, payer, endorser, guarantee, surety, or otherwise howsoever against whom it is proper to protest, for all exchange, re-exchange, costs, damages and interest, suffered a.nd to be suffered for want of payment therof, Of which demand and refusal I duly notified the endorsers (and draA\'er in case of a bill of exchange) thereon, this day in manner following: (State how specifically.)

This done and protested, at the city of , County

and State aforesaid, the day of A. D. 19. . .

Notary Public.

NOTICE OF PROTEST.

State of , County of , 19. .

A for $ dated I9- • • , drawn by

........ on in favor of endorsed by

payable after date, having been protested

by me this day for non- after having made legal

demand for the same, I hereby, at the request of . the

holder thereof, notify you that he looks to you for payment, interest, damages and costs.

Notary Public.

HAWAIIAN ISLANDS.

Notary Public.

Applicant must be a citizen of the Republic and cannot be a member of the legislature. Appointment is made by the Minister of the Interior to whom application should be made. Term of office lasts until removal. Fees — Noting protest $2. each ; notice of protest $2., depositions $2., administering oath 25 cents.

PHILLIPINE ISLANDS.

Notary Public.

Spanish notaries already acting, continue in office. Fees — Protest 75 cents ; takiilg acknowledgments or administering oath 25 cents.

rORTO RICO.

Notary Public.

Applicant must be a lawyer of good character and must be

a citizen of Porto Rico or the United States. Appointment

is made by the Supreme Court on examination. A fee of

$i.oo and a bond of good character are required.

MILITARY DISTRICTS.

Notary Public.

Appointed by judges of the Superior Court to whom application should be made. Applicants must be recommended by the grand jury of the county. The commission comes from the Governor and term of office is four years.

CANADA.

Notary Public.

Applicant must be a British subject not a barrister or solicitor and is subject to examination by a judge of the supreme or county court. Appointment is made by the Lieutenant Governor in council and term of office is at his pleasure. A fee of $5.00 is payable to the Examiner. To act in the Entire Province a fee of $20. is charged. To act in part of Province $10. Notaries' duties consist of protesting commercial paper, taking acknowledgments, affidavits, etc. Notaries must provide themselves with a seal.

JUSTICE OF THE PEACE.

A Justice of the peace may personally arrest any offender in a case of felony or breach of the peace committed in his presence or may command others to do so, and in order to prevent the riotous consequences of a tumultuous assembly may command others to arrest affrayers when the affray has been committed in his presence.

The Constitution of the United States directs that no warrant shall issue but upon probable cause supported by oath or affirmation. So, if the magistrate be not present when a crime is committed, before he can take a step to secure arrest of the offender an oath or affirmation must be made by some person to the effect that the offence has been committed by the person charged or that there is probable cause to beheve he committed it. The justice then issues a warrant for the arrest of the alleged offender who is brought before him and, after hearing, is discharged, held to bail to answer the complain or for want of bail committed to prison. Justices under local statute laws have jurisdiction in many minor civil cases and in suits for fines and penalties, with a right of appeal annexed thereto unless the amount claimed be very small. With the exceptions of the District of Columbia where they are appointed by the President, and Delaware, Florida, Maine, Massachusetts, Maryland, New Hampshire and South Carolina where they are appointed by the Governor, Justices of the Peace are elected by popular vote.