Business English Part 99

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 a.s.sured 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 t.i.tle_ 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 t.i.tle 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_

1. What is a lease?

2. Explain why owners of valuable property lease it.

3. What is a deed? Explain the two kinds.

4. What is meant by a clear t.i.tle?

5. What is meant by fee simple?

6. Why is it important to be careful about the t.i.tle?

7. What is a mortgage?

8. Explain why property is often mortgaged. Does the mortgage benefit the owner? Explain.

9. What is meant by foreclosing?

10. What is an agent? How is he usually paid?

11. Why do people employ real estate agents to take care of renting? To sell their property?

12. Why is property near a railroad valuable? For what?

13. Why is a corner lot worth more than an inside lot?

14. Why is property on a car line more valuable than on a side street?

15. What effect would the building of a new street car line have on the value of adjacent property? Why?

=Exercise 296=

_Oral_

1. Suppose that you are a landlord and that in your lease no mention is made of giving your tenants janitor service, but you yourself take care of the furnace. Other landlords in the block supply janitor service. After one of your tenants has moved in, he demands that the back porch be scrubbed once a week and the garbage emptied daily. What would you do?

Consider the points for and against.

2. Suppose some boys playing ball on the street break a plate gla.s.s window in the store you own. Would you expect your tenant to pay for repairs?

_Written_

3. Write to Francis L. Russell, a real estate agent, asking his terms for collecting the rent of ---- (tell the location of the house, the number of the tenants, and the rent you receive).

4. As if you were Francis L. Russell write a reply, saying that you will undertake the collection for a commission of 5%.

5. Imagine you are a tenant in the same building. The kitchen sink cannot be used in your flat because of a stoppage in the plumbing. You have told the agent once. Write him (see 3) again, stating that unless he sends a plumber you will not pay your next month's rent. (Is there any reason for writing this, rather than telephoning it?)

6. The plumber has submitted a bill of $5.98 for the repairs suggested in (5). The agent writes to the landlord, enclosing a check for the rent that he has collected, less the amount of the plumber's bill and his commission.

7. You are a lawyer. Write to the landlord, informing him that the mortgage which your client holds against the landlord's property expires in thirty days. Ask the landlord whether he expects to pay the money or whether he wishes a renewal of the loan for three years. Your client is willing to give such a renewal.

8. The landlord replies that he is enclosing $100 to pay the interest due on the mortgage and that he desires a renewal of the loan. If the lawyer will prepare the papers, he will come to sign them at the specified time. Write the letter.

9. You are an insurance agent. Write to the landlord that the fire insurance on his property expires in sixty days. Ask him to allow you to write a new policy. Inform him that the rate now will be 3-3/4% instead of if 1-3/4% as it was formerly, because a garage has been erected one door north of his property. (Why should the rate be higher?)

10. One of the tenants has paid no rent for two months. You decide that he never will be able to pay.

As landlord you make out and deliver to him a _Five days' notice of removal_. At the same time, you write a letter to your lawyer, explaining the state of affairs and asking him to take charge of enforcing the notice. (This means that if the tenant does not move, the case must come up in court. If it is decided in the landlord's favor, the tenant must move. If he refuses, the lawyer engages a constable to eject him.) Write the letter.

11. Francis L. Russell writes three short advertis.e.m.e.nts, offering for sale (1) a large 12 room residence, mortgage $6,000, price $15,000; (2) a 3 apartment building, clear, price $16,000; (3) a large 12 apartment building, mortgage $25,000, price $41,000, terms to suit. Where would you advertise?

Write the advertis.e.m.e.nts.

12. You get inquiries about all of the above. Write answers describing the buildings more fully, and make appointments with the writers to inspect the property.

13. A man is interested in the 12 flat building, but he has only $10,000. Offer him the property for $40,000 on these terms: $10,000 down, a first mortgage for $20,000 to run 10 years at 5%, and a second mortgage for $10,000 to run 5 years at 5%, $2,000 to be paid each year with interest. Make it as attractive as possible. Tell him you will arrange for the mortgages.

14. (_a_) Write to your bank, the First National, and explain that, although the first mortgage on the 12 flat building for $25,000 still has 3 years to run, you would like to arrange for a 10 year mortgage for $20,000, if your prospective buyer takes the property.

(_b_) Write to George R. Scott, who owns the building, offering him the second mortgage. Explain that although it is a second mortgage the fact that $2,000 of the princ.i.p.al is paid each year makes it attractive. (How would the owner benefit if the buyer failed to make his payments after 2 years?) Sign yourself Francis L. Russell.

15. You have put through the deal. Write to the new owner, offering to take care of the renting for a commission equal to 2% of the amount collected.

=Exercise 297--Farm Lands=

1. You own a large tract of land in the South, West, or Southwest.

Choose your own locality. Prepare a pamphlet setting forth the advantages of this particular spot in a series of paragraphs: (1) scenery, (2) climate and healthfulness, (3) crops, (4) profits from the crops, (5) price of labor, (6) chances for pleasure, e.g., hunting, fishing, etc., (7) transportation facilities, (8) price of the land. Use a firm name and address.

2. Arrange and punctuate:

Nov. 1, 19-- [For the introduction supply the same firm name used in (1)]. Gentlemen I have just returned from an extended trip through (the district spoken of above) with reference to the forty acres I purchased from you I desire to say that I am convinced that it will prove a paying investment I am so pleased that I shall certainly try to induce several of my friends to purchase near my site while on the property I carefully inspected the farm worked by Mr S R Jackson I must say what he is accomplishing the immense crop of vegetables and fruit he is marketing amazed me no doubt what he is doing I may do for I made sure by careful examination that the soil on my land is exactly like his you may depend upon it that within the next two months I shall move my family upon the land for I am eager to develop it sincerely yours F W Farrell

What advantage would there be in including such a letter as (2) in the booklet spoken of in (1)?

3. To prove the possibilities of the land spoken of in (1), you intend to start a model farm. Advertise for a farmer. Your plan is to give him 60 acres to develop for himself, in return for which he shall demonstrate the possibilities of the land.

4. Write a letter applying for the position. You must have farming experience, some money, a knowledge of crops, and a good deal of enthusiasm.