REAL ESTATE AND INSURANCE
Lands, buildings, and houses are called real property or real estate,
and the business pertaining to them, the real estate business. Every one
of us has more or less to do with this business. If we do not own
property, we pay _rent_. Rent is the money paid for the use of a piece
of land, or a building, or part of a building, and is usually paid at
certain stated intervals of time--monthly, for example. The owner of the
building is called the _landlord_; the one who rents, the _tenant_.
Sometimes there is no condition as to how long a tenant shall remain in
one place and pay rent, but, as a rule, the landlord requires the tenant
to sign a _lease_. This is a contract between the landlord and the
tenant, stating that in consideration of the landlord's furnishing the
tenant a place in which to live with certain conveniences--such as heat,
hot water, and other services--the tenant agrees to pay rent for a
certain length of time, usually a year or more. If the tenant moves out
before his lease expires and refuses to pay the rent, he breaks the
contract and, as is usually the case when a contract is broken, a
lawsuit may follow. In large cities where land is in some places very
valuable, owners may not care to sell the property on which others wish
to build, but lease it to the builders for a certain term of years,
usually ninety-nine years.
Suppose you no longer wish to pay rent, but to own the house in which
you live. If you buy a piece of property from John Smith and pay him
your money for it, you wish to be assured that after a few months John
Smith will not come to you and claim the property as his. To protect
you John Smith gives you a _deed_ to the property. A deed is a contract
between the buyer and the seller of the property. It states that, in
consideration of the buyer's paying a certain stipulated sum of money,
the seller releases and conveys the property to the buyer. This deed
shows that you now own the property. At the same time you should receive
a _clear title_ to the property; that is, you wish to be sure that no
one else has a claim on the property. If John Smith guarantees that the
title is clear, he gives you a _warranty deed_ for the property, in
which he will "warrant and defend the same against all lawful claims
whatsoever." If, however, he simply turns over the property to you as it
stands, he gives you a _quitclaim deed_, in which he relinquishes or
quits all his interest in it. If you have no debts on the property, you
own it in _fee simple_.
Very often in buying property, the purchaser pays only a part of the
purchase price himself, paying for the balance by borrowing the
necessary amount from a third party. For example, if the house you
bought from John Smith cost $6,000 and you had only $4,000, you would be
forced to borrow the other $2,000 to pay John Smith. You would then go
to your bank or to some person who had money to invest and would borrow
the required amount, and to guarantee that you would pay the money back,
you would give a _mortgage_ on the property. A mortgage is a contract
which states that, in consideration of one party's giving the second
party a certain sum of money, the second party agrees to pay interest on
that money at a stipulated rate, and at the end of a certain length of
time agrees to pay the money back; and that, in case the second party
does not pay back the amount at the end of the time, the first party is
empowered to take possession of the property, to sell it, and to get the
amount due him. This last procedure is called _foreclosing the
mortgage_. It is a common practice to mortgage property; almost all the
property in a city is mortgaged.
Some men and firms make a special business of transferring property,
buying and selling it for others, making leases, and collecting rents.
They are called real estate agents, and for their services get a
_commission_, which is a certain percentage of the purchase or the
selling price and a certain percentage of the amount of rent collected.
This percentage varies according to whether the amount of money involved
is large or small, the percentage being larger when small sums of money
are involved than when large sums are involved.
=Exercise 295=
_Oral_