Government Powers

What are government powers and how do they relate to real estate?

There are four main government powers you need to know for your real estate licensing exam.  These powers allow the government to control many aspects related to real estate, such as what structures are built where (zoning), and how (building codes).  Additionally, the government has the power to levy taxes on property (property taxes).Government Powers

Luckily, there is an acronym you can use to remember the four government powers you need to know for your licensing exam.  The acronym is PETE.

What does the acronym PETE represent?

PETE stands for the following:

  1. Police power
  2. Eminent domain
  3. Taxation
  4. Escheat

Can you explain the government power of police power?

Sure, police power is what allows the government to regulate the development of land and the building of structures for public safety.  This power includes the ability to create and enforce things such as the zoning of land, building codes, and subdivision regulations.

Okay, that makes sense, how about the government power of eminent domain.  What is that?

Eminent domain is the government power which allows the government to take private property for public use, so long as the property owner is fairly compensated.  The process which is undertaken to achieve eminent domain is called condemnation.  Thus, the power is eminent domain, and the process used to achieve it is condemnation.

You can read a more detailed explanation of eminent domain we put together over here.

Is taxation a government power?

Yup, it sure is – property taxes.  You may or not pay them though.  If you are renting a property, you don’t pay any property taxes.  Yeah.  The owner of the property does.  Boo!

Additionally, if you have a mortgage, it may not seem like you are paying them, but you are.  Generally, you pay them to the lender, and they hold the funds in escrow and make the payment.  The government uses these funds for public needs.

Escheat!  Bless you!  Huh?  It’s a government power.

However, what is it?  Okay, say someone owns a home, and they die.  What happens to the house?  Well, in this case, they have no will, and never had any kids.  So, the home sits there and becomes a massive dump.  How would that sound to you if you lived next door?  Awful, right?  Well, escheat is what allows the government to take possession of property which has no owner.  So, in the case mentioned above, if a property owner dies intestate (no will), with no heirs, the property reverts to the government.  Now you know!

What else can help me prepare to pass my real estate licensing exam on my first attempt?

Other tips to help you pass your real estate licensing exam on your first attempt:

Real Estate Test Taking Tips

How to Pass the Real Estate Exam

Real Estate Exam Math Made Easy

Also, check out our question of the day videos on our YouTube channel:

PassMasters Real Estate Exam Prep YouTube Channel