e. GA Finance (15 ?s)
Tests courts use to determine if an item is real or personal property
(MARIA) Method of annexation - can it be removed without causing damage Adaptation to real estate - custom made for specific home Relationship to the parties - ownership depends on what is negotiated Intention - intention of owner when item was installed Agreement - what's in sales contract
quitclaim deed
- contains no express or implied covenants; it conveys whatever interest the grantor has ir any on that day - used to correct errors on a deed or release interest in a property
Real Estate Settlement Procedures Act (RESPA)
- lenders disclose to buyers and sellers all settlement costs on federally related mortgage loans - 1st and 2nd liens for purchase or refinance of 1-4 family dwellings - Good Faith Estimate and Uniform Settlement Statement (HUD) -limits lenders amount of money required in escrow
Liquidated damages
Upfront damages, or compensation, are agreed to be paid by the breaching party in the contract. The earnest money may serve as a liquidated damage in a sales contract.
Answer: B. Said another way, interest is the profit on money in the same way mark-up is the profit stores make on the goods they sell.
What is the BEST definition of interest? A) an upfront fee charged by a lender to process a loan B) the fee a borrower pays to a lender for the use of the money C) a fee charged by the lender to increase their equity position D) the degree and extent of the lender's holdings
Answer: B.
What is the maximum fine for a single violation that the commission may impose? A. $500.00 B. $1,000.00 C. $2,000.00 D. $5,000.00
Answer: (A) - property tax
What type of lien always takes first priority if a forced sale occurs? A. first mortgage B. income tax C. mechanic's D. property tax
Implied agency
When the actions or conduct of the parties communicate that there is an agreement. Example: Agent says, "Take this deal. It's the best one for you."
Answer: (C) - Trustor "Trustor" is another name for the borrower and "trustee" is a "supposedly" neutral third party who holds naked legal title, the right to foreclose at the instructions of the beneficiary for non-payment of a promissory note. The beneficiary is the lender in a Deed of Trust. Even though it's the lender who requires the insurance to protect his/her position, it's the borrower who pays for it.
When the lender under a Deed of Trust requires title insurance, who would be the most likely person to pay for it? A. the mortgagee B. the trustee C. the trustor D. the beneficiary
Answer: A.
Which approach would probably be most accurate in the valuation of a church? A. COST APPROACH B. Gross income multiplier C. Income approach D. Sales comparison approach
Joint tenancy
Which form of ownership requires the unities of possession, interest, time ,and title ?
Answer: D.
Which of the following is an agency of the federal government? A. Fannie Mae B. Freddie Mac C. Sallie Mae D. GINNIE MAE E. Bank of America
Answer: (C) - Conventional Only Conventional loans have pre-payment penaltys
Which of the following loan types might have a pre-payment penalty? A. FHA B. VA C. Conventional D. None of the above
C nonconforming use
Which of the following permits land use because zoning is not retroactive? A Variance. B Spot zoning. C Nonconforming use. D Bulk zoning.
B Mortgaging clause
Which of the following would be included in a mortgage, if used in a lien theory state? A Defeasance clause. B Mortgaging clause. C Granting clause. D Discounting clause.
Blanket Clause
A builder purchased several parcels of property with a mortgage containing a release clause
Answer: C. A call option is most similar to an acceleration clause.
A call option is most similar to A. a lifetime cap B. a buy-down C. an acceleration clause D. all of the above
C
A commercial back will generally: A. Insure FHA loans. B. Guarantee VA loans. C. Make short term business loans. D. Make purchase-money mortgages.
Conforming Conventional Loan
A conventional loan that meets the standards required for purchase in the secondary market by Fannie Mae or Freddie Mac. More easily bought and sold due to lower risk and high liquidity.
Cooperative
A corporation holds title to the property. The tenants receive shares of stock in the corporation and a proprietary lease that grants occupancy of a specific unit in the building.
Answer: B
A home is listed at an inflated price and requires all minority prospects to pay that price. However, if a lower price is accepted from a non-minority prospect, this practice: A. does not violate Fair Housing Laws because the home is still being made available to minority prospects B. subjects the seller and the seller's agent to liability for money damages under a Fair Housing suit C. is a violation by the seller only D. is illegal only if the purchase of the house is being financed through FHA or VA
C Surrender and acceptance
A landlord and tenant's mutual agreement to cancel a lease is best described as: A release and surrender. B rescission and acceptance. C surrender and acceptance. D None of the above.
Answer: A. A lender would require a blanket mortgage if the borrower was going to use several unencumbered properties as security.
A lender would require a blanket mortgage in which of the following circumstances? A. if the borrower was going to use several unencumbered properties as security B. if there was a mortgagee clause stating that upon default, it would become a general lien C. if the lender made the loan to encompass all of the borrower's debts D. none of the above
RESPA would apply to ?
A loan on a single family residence
Answer: (A) - Buyers market
A market where there is excess supply over demand is knows as a: A. buyer's market B. broad market C. seller's market D. thin marker
Oligopoly
A market with a few suppliers that have some control over market prices since there is limited competition.
Answer: (D) - Metes and Bounds
A method of describing land using points, angles, and distances is which of the following? A. Rectangular Survey B. Measurement by leaps and bounds C. Plat of survey or Lot and Block survey D. Measurement by Metes and Bounds
Answer: B. Subordinate financing is any mortgage or other lien that has a priority lower than the first mortgage
A mortgage or other type of lien that has a priority lower than that of the first mortgage is called A. a second mortgage B. subordinate financing C. first subordinate financing D. all of the above
Universal agent
A party is given full power of attorney to represent another person. Example: a guardian of a minor or incompetent person.
D Patent
A person homesteading in the Indian territories received ownership of the land by means of what document? A Treaty. B Land Grant. C Quit claim deed. D Patent.
Gantt chart
A project management technique, common in real estate construction, used to schedule work and measure progress against expectations.
assessed value
A property owners general real estate tax bill is computed by applying the tax rate to the propertys
D a lein
A right or claim of a creditor to have a debt satisfied from the proceeds of the sale of the debtor's property in the event of default is: A an attachment. B a judgment. C a writ of execution. D a lien.
Answer: (B) - Exclusive right to sell listing
A seller wants to list the property with a broker, but wants to avoid paying any commission should the seller be fortunate enough to sell the property himself. Which of the following should the seller avoid signing? A. an exclusive agency listing B. an exclusive right to sell listing C. an open listing D. all listings
The Americans with disabilities act would apply to what type of property ?
A shopping center without handicapped accessible restrooms
Estate at sufferance or tenancy at sufferance
A tenancy created when a tenant remains in possession of the property without the consent of the landlord after the lease expires. If the landlord gives permission to a tenant to remain on the property after the expiration of a lease, the tenant may be treated as a holdover, and a tenancy at will or periodic tenancy may be created.
Answer: B.
A tenant had a one year lease which expired. The tenant stayed in the home past the expiration and continued to pay the rent in which the landlord accepted. This type of lease would be called: A. an estate for years B. a periodic tenancy C. a tenancy at sufferance D. an easement by prescription
Answer: A.
A warehouse property is expected to generate net operating income of $250,000 per year. If similar buildings are currently selling at an 11 percent cap rate, what would you estimate to be the market value of this building? A. $2.27 million B. $22,700 C. $2.75 million D. $27,500
external obsolescencee
A well maintained house in a deteriorating neighborhood of run down homes would most likely suffer from
D the local public school system could probably give you that information
A white family is looking at homes and happens to notice some black children playing in a nearby park. They ask you what percentage of the people in the neighborhood are black. Your best response might be: A that is something we never discuss. B there are not enough to matter. C I think it is around ten percent. D the local public school system could probably give you that information.
D Qualified
Acceptance of an offer will not create a binding contract if the acceptance is: A absolute. B complete. C unconditional. D qualified.
Home Mortgage Disclosure Act
Act of Congress that discourages lenders from avoiding, or redlining, certain neighborhoods in a manner related to minority composition.
Lis Pendens
Action pending- describes the concept of providing notice of a possible future lien
Universal Agent
Acts on behalf of principal, power virtually unlimited
D an easement may be revoked at will by the servient landowner
All of the following can be characteristics of an easement, except: A an easement creates an interest which may be protected from third party interference. B an easement can be created by conveyance. C an easement is an incorporeal right in the land of another. D an easement may be revoked at will by the servient landowner.
Bundle of rights
Allows the owner to possess, enjoy, control, exclude, and dispose of the property.
Normative appraisal process
An analogous term for the prescriptive appraisal process, that systematic process that appraisers are taught to follow when valuing real estate.
prevent the owner from conveying title to the property until a lawsuit is decided
An attachment lien would mostly be placed on a property to
Answer: A. An appraisal is the process that APPRAISES the value of a property. Don't confuse this with a survey, which measures boundaries and land areas; or an assessment, which imposes TAX on something. A lien is a financial encumbrance.
An estimate of the value of something, usually a property, is known as: A) an appraisal. B) an assessment. C) a survey. D) a lien.
Estate for years
An interest for a certain definite period of time.
provide constructive notice
An interest in real property must be recorded to
Form 8300
An irs form used to report receiving more than $10,000 cash in a trade or business transaction.
Trade Fixtures are ?
An item of personal property attached to the land or building leased by a tenant who uses the item in a trade or business.
Answer: C.
An unlicensed assistant cannot: A. assemble contracts and other documents B. place signs on the property C. show property D. check on loan commitments
Answer: (C) - a felony
Any person violating the anti-trust laws is guilty of: A. a misdemeanor B. a violation of the Federal Fair Housing Law C. a felony D. fraud
Reverse Annuity mortgage
Arrangement where the lender agrees to pay money to an elderly homeowner, either regularly or occasionally, and to be repaid from the homeowner's equity when he or she sells the home or obtains other financing.
Prescriptive appraisal process
As distinct from the process an appraiser might actually follow, the systematic process of valuing real estate that an appraiser is taught but which may or may not be followed.
Descriptive appraisal process
As distinct from the process that an appraiser is taught, the process that an appraiser actually follows when valuing real property.
trustee
Which party would hold "naked title" in a deed of trust?
A fifteen days
At a closing to take place on June 16th, the purchaser's charge for prepaid interest on a new loan will be for: A fifteen days. B forty-six days. C thirty-one days. D fourteen days.
The sudden loss of land as a result of being washed away by a sudden action of nature, but the boundary lines remain the same would be an example of
Avulsion
A mortgage which covers two or more properties is called_______.
BLANKET MORTGAGE
The primary survey line running east and west in the rectangular survey system is the ?
Baseline
Estate for Years
Begins Ends Over must have a specific End Date (no notice needed)
Agency-related bias
Bias in problem solving, decision making or judgment outcomes that derives from inherent conflicts of interest between agents and their principals.
Answer: B. A voidable contract is one that is able to be voided because Mrs D was under duress or undue influence.
Broker K arrives to present a purchase offer to Mrs. D, an 80 year old invalid who is not always of sound mind, and finds her son and her daughter-in-law present. In the presence of Broker K, both individuals persistently urge D to accept the offer, even though it is much lower than the price she has been asking for her home. If D accepts the offer, she may later claim that: A) Broker K should not have brought her such a low offer for her property. B) She was under undue duress from her son and daughter-in-law, and, therefore, the contract is voidable. C) Broker K defrauded her by allowing her son and daughter-in-law to see the purchase offer he brought to her. D) Her consumer protection rights have been usurped by her son and daughter-in-law.
68. The terms that best describes a tenantís interest in a property is called: A) A gross lease B) A percentage lease C) A net lease D) A variable lease
C) A net lease
66. Qualifying ratio are used by lenders to determine a borrower's: A) Required down payment B) Pre-approval for a mortgage loan C) Maximum monthly payments for housing expense D) Meeting of the lender's Community Reinvestment Act quotas
C) Maximum monthly payments for housing expense
5. Following successful completion of the 75 hour pre-licensing course, how long does an applicant have to complete all of the remaining requirements and have their application received and processed by the Real Estate Commission? (2B) A) Four months from the date that the applicant passes the state examination B) Six months from the date that the applicant passes the state examination C) One year from the graduation date of the pre-licensing class D) One year from the starting date of the pre-licensing class
C) One year from the graduation date of the pre-licensing class
Private restrictions on property
CC&Rs - covenants, conditions and restrictions generally enforced by developers
Bundle of Legal Rights
CDEEEP- Control, Dispose, Enjoy, Encumber, Exclude, Possess
Answer: A. The Equal Credit Opportunity Act prohibits a broad spectrum of discriminatory lending practices, including the granting or denial of credit or the costs associated with borrowing based on race, gender, marital status, source of income (public assistance) and other factors.
Discrimination is prohibited in lending practices under: A. ECOA B. RESPA C. Truth in Lending Act D. FNMA
Answer: B.
Does the commission have to be notified of Jim's move? A. no, it is a matter between Jim and his new former brokers B. yes, they must be notified in writing by Jim's former broker within thirty days C. yes, the commission must be notified in writing within sixty days D. yes, the commission must be notified in writing within ten working days
What clause in a mortgage makes the loan non assumable without the lenders permission ?
Due on sale/ Alienation
Joint Tenancy
Each person has equal rights in the property- when one dies the joint tenants interest automatically goes to the remaining joint tenants
Which of the following would have an interest in real estate but not an estate?
Easement
An owner of lakefront property has 50 acres and divides it into lots. Owner keeps the lots closest to the lake. How is an easement to the lake preferred by lot buyers>
Easement appurtenant
If at the end of a lease, the tenant is allowed to remain for an indefinite length of time, this is best described as:
Estate at will
A husband and wife own the property as tenants in common. If one dies the property would pass to
Estate of the deceased
absorption rate
Estimate of how quickly homes sold in the past year
Economic Life
Estimated period during during which an improvement yields a return over and above that which is attributable to the land
_________ is a procedure whereby property pledged as a security for a debt is sold to pay debt in case of default.
FORECLOSURE
C A law which protects a portion of a family's home from debts, except taxes, mechanic's liens, and mortgages, that might result in a forced sale
Homestead protection is: A A legal life estate B Not the same as homestead exemption. C A law which protects a portion of a family's home from debts, except taxes, mechanic's liens, and mortgages, that might result in a forced sale. D All of the above.
Tenancy by Entirety
Husband and wife owners, one title and each own 100% of property Termination by consent death or divorce
Answer: C. Statute of limitations exist to keep the legal system from getting bogged down in old disputes and allow for evidence and recollections to remain reasonably fresh. Civil limitations typically range from 1 to 6 years, though in some cases up to 25 years.
If a buyer defaulted some time ago on a written contract to purchase a seller's real estate, the seller can still sue for damages, if he is not prohibited from doing so by the: A. statute of frauds B. law of agency C. statute of limitations D. broker-attorney accord
B The transfer tax
If a purchaser is buying a home for cash, which of the following closing costs would not be reduced? A The intangibles tax. B The transfer tax. C The closing attorney's fee. D The discount points
A joint tenancy with the right of survivorship may be created when ?
If it is specified in the deed
B. When the Seller provides all or part of the financing it is called owner financing.
If you are buying a house and asking the Seller to provide all or part of the financing, you are asking for _______ financing. A. special B. owner C. personal D. non-bank
Answer: B - A repayment plan is an arrangement made to repay delinquent installments or advances.
If you made an arrangement to repay delinquent installments or advances, you would be setting up a A. good faith payment plan B. repayment plan C. another loan pay off D. oral contract
Redlining
Illegal practice of a lending institution denying loans in a certain community.
What are the physical characteristics of land ?
Immobility, Non Homogeneity( no two lands are exactly the same), and indestructibility.
Nondisturbance clause
In a mortgage states that the mortgagee agrees not to terminate the lease in the event of foreclosure. However, the tenant must be in compliance with the lease terms.
...
In an adjustable rate mortgage, an increase in interest rates will a. cause an increase in the payments b. cause a decrease in the payments c. cause no change to the payments d. either A or B, depending on the prime rate Definition: a. cause an increase in the payments - See more at: http://www.coursehero.com/flashcards/92225/REal-Financing/#sthash.1LCMtpV6.dpuf
Answer: D. A licensed salesperson or associate broker must work through a listing agreement established by his or her broker with the unlicensed party OR give up his or her license entirely before beginning work.
In order to provide brokerage services for an unlicensed individual such as a developer, builder, or management company, a licensed salesperson or associate broker must: A. work through a listing agreement established by his or her broker with the unlicensed party B. give up his or her license entirely before beginning work C. neither of the above D. either A or B
Answer: B. Bit of a trick question. The manager's fee must, in fact, be part of the agreement. Very often it is based as a percentage of rents, but may be a fixed fee or some other calculation.
In terms of property management agreements, which of the following is NOT required? A. An outline of the managers specific duties and responsibilities. B. The managers fee, stated as a percentage of rents. C. The names of all parties to the agreement. D. The terms of the agreement.
A
In the purchase of a single family residential house, the buyers thought they has been discriminated against. Under the Federal Fair Housing law the buyers could file a complaint with HUD within: A. 1 year B. 2 years. C. 3 years. D. 4 years.
Freehold estates
Include fee estates and life estates. A freehold exists for an uncertain duration. Nonfreehold estates include leasehold estates which are based on calendar time.
Both joint tenancy and tenancy by the entirety ?
Includes the right of survivorship
What type of lease wold help maintain the financial position of the lessor and lessee
Index
Answer: A. Insurance Companies usually make loans through mortgage companies. These "loan correspondents" negotiate and service their loans.
Insurance companies not willing to deal directly with borrowers, usually pay a loan servicing and preparation fee and make real estate mortgage loans to purchase indirectly through: A. mortgage companies B. savings & loans C. FHA D. banks
Private Mortgage Insurance
Insurance offered by private companies that reimburses the lender for capital losses in the event of default by the borrower.
Diversification
Investing in a variety of assets to spread risk and, hopefully, avoid large losses.
When evaluating the economic characteristics of real estate one would consider ?
Investments to the land tend to be long term
Answer: C. A salesperson is free to leave his or her broker at any time.
Jim Woolcott is a licensee who wishes to leave his current broker and work for another. What difficulties is he likely to encounter? A. since his broker holds his wall license, he must agree to Jim's wish to leave B. jim must get the permission of both his current broker and the real estate commissioner C. jim will have no difficulties D. jim will have no difficulties, but must provide the real estate commission with thirty days advance notice of his intent to move
Servient Estate
Land that is subject to use by adjourning land
Is MIP(MORTGAGE INSURANCE PREMIUM) required for fha loans ?
MIP Is required for all FHA loans
________ is an instrument wherein property is pledged as a debt, creating a lien on the property.
MORTGAGE
_________ is a contract wherein the mortgagor retains the right to possession and fruits of the property.
MORTGAGE
General Warranty Deed
MOST PROTECTION-
Forfeiture clause
Many contracts contain a forfeiture clause, which means that under certain circumstances, one party must forfeit or give up something to the other party. If found in the sales contract, the earnest money may be given to the seller if the buyer breaches the contract.
Planned unit development
Many townhouses are planned unit developments. This is designed for a high density of dwellings and a maximum use of open space.
Voidable
May be rescinded by 1 or both parties eg. contingency not met, no reality of consent, w/minor or incompetent
Answer: C. the borrower held the loan for forty-two months. 8% × $6,071 = $486 per year $486 ÷ 12 (months) = $40.50 per month $1,700 ÷ $40.50 = 42 months
On an 8% straight term loan of $6,071, the borrower paid total interest of $1,700. How long did he have the loan? A. 30 months B. 36 months C. 42 months D. 48 months
Monopoly
One supplier in a particular market that has control over market prices since there is no competition.
Facilitator or transaction broker
One who does not represent either party in a transaction. Both parties are treated as customers in the transaction.
Unilateral contract
Only one party is obligated to perform in a unilateral contract.
In order to acquire an easement by prescription you need
Open, hostile, coninuous use
Option contract
Optionor (seller) keeps open an offer to sell or lease real property in return for option money. While the optionee (buyer) does not have to buy, the optionor must sell, should the buyer exercise the option.
____________ a stipulation which prohibits the mortgagor from alienating the property within the period of mortgage.
PACTUM DE NON ALIENDO
____________- a lease of a property in which the rent is computed as a certain percent of the amount of sales made within the leased property
PERCENTAGE RENT OR LEASE
Answer: A. PITI reserves must equal the cash amount that the borrower would have to pay for principal, interest, taxes, and insurance for a predefined number of months.
PITI reserves applies to A. a cash amount the borrower must have on hand after down payment and closing costs B. an amount which is financed with the mortgage C. both A and B D. none of the above
Private Mortgage insurance(PMI) is calculated on what ?
PMI is calculated on the loan amount.
D a 90% loan-to-value conventional loan
PMI is most likely to be charged when the buyer is getting: A an FHA graduated payment plan loan. B a VA loan. C an 80% loan-to-value conventional loan. D a 90% loan-to-value conventional loan.
Universal Agent
POA Given for power of attorney to represent another. eg. for guardian or incompetent person
________ A stipulation which prohibits the mortgagor from alienating the property within the period of the mortgage.
Pactum de non aliendo
Fixtures are ?
Property that was once personal property but has become real (built in appliances, wall to wall carpet, major plumbing fixtures) MARIA
FHA Mortgage Insurance
Protects the lenders from any loss after foreclosure and conveyance of title to the property to the HUD.
The Original Purpose if the secondary market is to
Provide a source of liquidity for the primary mortgage market lenders
ROI calculation
ROI = after-tax cash flow (ATCF) / equity or money invested (E)
Capital assets
Real estate and stocks are examples of capital assets. When a capital asset is sold or exchanged for a profit, the profit is called a capital gain.
When budgeting expenses which of the following items would the property manager consider a fixed expense ?
Real estate tax
A sells a commercial apartment building to B. The present leases are:
Remain valid
Baird conveys a life estate to her grandson and stipulates that upon her grandson death the estate will pass to her son in law. The son in law has a ?
Remainder Interest
Special Agent
Represent principal in a specific action of business
one person one property
Severalty
Fee Simple Defeaseable
Specified how the property can be used
Effective Gross Income
actual income received after deducting any rental losses and vacancies
The death or incapacity of the principal will a. terminate the agency. b. accelerate the payment of the fee. c. cancel any purchase agreements in effect. d. extend the expiration date of the listing to an indefinite date.
a. Death or incapacity or either party terminates the agency by operation of law.
Cash flow
The income from a real estate investment realized by the investor after vacancy and credit loss, all operating expenses, and debt service have been paid.
Appreciation
The increase in asset value over a certain period.
Who pays some or most of the operating expenses in a gross lease ?
The landlord
Answer: B. Mortgages are used in a Lien Theory State. The lender is the mortgagee and holds the Title.
The lender in a state which uses mortgages is known as the: A. mortgagor B. mortgagee C. debtor D. grantor
Answer: (B) Conventional. Government-sponsored loan programs such as FHA are not actually loans, but guarantees to lenders to encourage them to make favorable mortgages available to qualifying individuals.
The lender is not insured or guaranteed against a loss, if the borrower defaults in repayment, under which type of loan? A. FHA B. Conventional C. VA D. GI
Primary Mortgage Market
The loan origination market where borrowers and lenders negotiate mortgage terms.
Secondary Mortgage Market
The market where mortgage originators can divest their holdings, and existing mortgages are resold.
If a jurisdiction requires private property for public use, the first step begins with a. an amicable negotiation. b. seeking an injunction against transfer of the property to a third party. c. obtaining a writ of attachment. d. beginning condemnation proceedings.
a. The jurisdiction attempts to purchase the property.
Provide a source of liquidity for primary mortgage market lenders
The orimary purpose of the secondary market is to
The Civil Rights Act of 1866 prohibits discrimination in real estate based on a. race. b. race and gender. c. handicap and country of origin. d. gender and religion.
a. The law that followed the close of the Civil War extended equal rights in real property to members of all races.
For tax purposes, a substantial real property improvement made after the initial purchase is:
a. Treated like a separate building.
C FHA
The purchaser will pay a Mortgage Insurance Premium on what type of loan? A 80% Conventional. B 90% Conventional. C FHA. D VA.
What are bundle of rights ?
The rights and interest the owner has in the object.
Business or market risk
The risk that business or market conditions may change unexpectedly and unfavorably, reducing the investor's return.
Liquidity risk
The risk that the investor cannot sell and convert the real estate investment to cash, called liquefying, when desired.
Answer: C. Land contracts are also known as installment contracts or contract of deed. In this type of arrangement, the buyer occupies the property, but the title is held in the name of the seller until some future point in time -- often when the last payment is made.
The seller under a Land Contract (AKA: Installment contract; Contract of deed) is called: A. the grantor B. the grantee C. the vendor D. the vendee
C 03.4700 per $100 of assessed value
The tax rate of 34.7 mills is equivalent to: A $34.7000 per $100 of assessed value B $00.3470 per $100 of assessed value C $03.4700 per $100 of assessed value D $00.0347 per $100 of assessed value
Community Property
Theory of property ownership applicable to husbands and wives in certain jurisdictions
Answer: C. Licensing and other requirements provide a "base level" of protection against losses due to mishandling. Nonetheless, to protect associations, the law requires fidelity insurance once the $60,000 threshold is crossed.
Thomas Balkan is a community association manager who does NOT carry fidelity insurance. Under what circumstances is this allowable? A) If he never handles more than $25,000 at any one time. B) If he never handles more than $45,000 at any one time. C) If he never handles more than $60,000 at any one time. D) If he never handles more than $75,000 at any one time.
Interval ownership (time-share)
Time-share. The buyer receives a deed for the property that allows possession for an allotted time each year. The buyer has the right to occupy the property, and use of the facilities is limited to a certain number of years.
In a sale-leaseback, what is correct?
Title does move
If the property's NOI is expected to be $22,560 operating expenses $12,250, and the debt service $19,987, the debt coverage ratio (DCR) is approximately equal to:
b. 1.13.
Assume a retail center can be purchased for $5.5 million. The center's NOI is expected to be $489,500. A $4,000,000 loan has been requested. The loan carries a 9.25 percent fixed contract rate, amortized monthly over 25 years with a 7-year term. What will be the property's (annual) debt coverage ratio?
b. 1.19
A real estate investment is available at an initial cash outlay of $10,000, and is expected to yield cash flows of $3,343.81 per year for five years. The internal rate of return (IRR) is approximately:
b. 20 percent.
A jumbo loan is:
b. A conventional loan that is too large to be purchased by Fannie Mae or Freddie Mac.
The Institute of Real Estate Management (IRM) awards which of the following designations?
b. CPM.
An income-producing property is priced at $600,000 and is expected to generate the following after-tax cash flows: Year 1: $42,000; Year 2: $44,000; Year 3: $45,000; Year 4: $50,000; and Year 5: $650,000. Would an investor with a required after-tax rate of return of 15 percent be wise to invest at the current price?
b. No, the NPV is -$148,867.
With an expense stop clause:
b. The landlord is responsible for operating expenses up to a specified level, above which increases in operating expenses become the obligations of the tenant.
The equity dividend rate:
b. expresses before-tax cash flow as a percent of the required equity cash outlay.
Present value:
b. is the value now of all net benefits that are expected to be received in the future.
Which of these ratios is an indicator of the financial risk for an income property?
d. Both a and b, but not c
Which of the following financing structures provides for 100 percent financing?
d. Complete (land and building) sale-leaseback
Liquidated damages
damages specifically agreed to by contracting parties in the event of breach
What type of right would a buyer receive in a land contract (contract for deed ?
possession
What is not required to transfer title?
signature from the buyer- DO need the signature of the GRANTOR
Must disclose firm name and address even when
texting
writ of attachment
giving the sheriff or other person custody of property until a lawsuit is concluded
When can a mistake void a contract?
if based on mutual unintentional material mistakes
What is the effective gross income multiplier?
b. 6.11
The maximum loan-to-value ratio for an FHA loan over $50,000 is approximately:
b. 98 percent.
A characteristic of a partially amortized loan is:
b. A balloon payment is required at the end of the loan term.
If an investor is a "dealer" with respect to certain real estate, then that real estate is classified (by the IRS) as being held:
b. For sale to others
Which of the following statements is most accurate?
b. Joint ventures decrease the amount of equity capital the developer/borrower must invest in the project.
When the tenant pays a base rent plus some or all of the operating expenses of a property, the result is a:
b. Net Lease.
Bi-lateral contract- two promises
both parties promise to do something, exclusive right to sell listing contract is a bilateral contract
Virtual Office Website Brokers
brokerage services offered online to registered clients
Ads must contain what?
brokers name/ listing agent/ brokerage arm
Full Service Discount Brokers
business model that offers full service at a discounted commision
Exemptions from RESPA
business purpose loans, loans involving more than 25 acres or more, vacant land, loan conversions, secondary markets transfers, deals financed by the seller, anything over 4 units
What is an example of a condition in a contract
buyer agrees to buy the property contingent upon obtaining the necessary financing
Lien Theory
buyer holds the deed- property owner holds the title while paying mortgage- The buyer promises to make all payments to the lender and the mortgage becomes a lien on the property, but title remains with the buyer- foreclosure harder
Parties to the Purchase Agreement
buyer/seller vendee/vendor- vendee buyer- vendor seller
For non-real estate corporations, which of the following is not a potential advantage of a real estate sale-leaseback?
c. The firm benefits from property appreciation that occurs after the sale- leaseback.
The correct formula for estimating value using the cost approach is a. cost to reproduce + depreciation - value of land = value. b. depreciation + value of land - cost to reproduce = value. c. cost to reproduce - depreciation + value of land = value. d. value of land + cost to reproduce + depreciation = value.
c. The formula is: cost to reproduce - depreciation + value of land = value.
acceleration clause
call the note due in advance due to defaults on payments
Bounds
can be established by using artificial monuments- iron pipes, brass disks set into concrete, road intersections and highways and lakes or large boulders
Compared with Easements
can run with the land- restricts the use of the land- contract
Radon
cancer causing radioactive gas can be found in the water and air; the EPA action level is 4 picocuries caused by decay of uranium
Special agent
carries out one specific act only- unable to sell
Mortgage brokers do what?
close but do not service the loans in the name of the lender
contingent fee
commission paid to the buyers agent only if the buyer finds and buys a home (generally for sale by owner)
Hypothecation
common lending arrangement where a borrower retains the right to possess property while it serves as security for a loan (mortgage)
Sales comparison approach
comparing property to 2 or more that have recently sold for residential or vacant land
cost approach
computed using the reproduction and replacement costs used for churches, libraries and new properties at their highest and best use
Abstract of Title
condensed history of the documents affecting real property
deed condition
condition breached title reverts back
Person dies and leaves business to spouse- what is spouse able to do
conduct any existing business- wind down the business within 180 days
Taking clause
constitutional limitation that state the gov't unable to take property without paying compensation
Who can collect under the Transaction recovery fund
consumers injured by real estate licensees may collect
special warranty deed
contains 3 warranties: grantor received title property unencumbered by grantor grantor will defend title during his/her period of ownership
recission
contract cancelled or terminated
bulk zoning
controls density to avoid overcrowding
Patent deed and Habendum Clause
conveys property from the government to an individual- defines the type of interest one owns
depreciation
cost recovery annual allowance of wear and tear written off on taxes (res. 29.5 yrs investment 39 yrs) cost basis / 29.5 = depreciation
Revocation
counter offer being revoked
Specific Performance
court ordered contract remedy that forces the breaching party to perform as promised in contract
Easemtent by necessity
created by court order based on the priciple that owners must have the right to entere and exit their land-the right of ingress(enter) and egree(leave) they cannot be landlocked
alienation
the act of transferring property to another
Open Listing
the agent that sells collects comission & if the owner sells the agent doesn't receive comission
implied contract
the agreement of the parties is demonstrated by their acts and conduct, verbal
Vendee
the buyer person who is taking possession and gets equitable title to the property-land contract
Legal title passes from seller to buyer when ?
the deed is delivered and accepted
if the grantor has been declared imcompetent by a judge
the deed is void
Divisor
the donor of real property in a will
Convenant of further assurance
the grantor promised to obtain and deliver any instrument needed to make the title good, GA DOESN'T RECOGNIZE THIS COVENANT
Convenant of warranty forever
the grantor promises to compensate the grantee for the loss sustained if the titel fails at any time in the future
the cost to borrow the money
the interest is
beneficiary
the lender under a deed of trust is the
Exclusive right to sell
the listing firm is offered compensation in the event of a sale regardless of who procured the eventual purchaser.
What is the present value of the following series of cash flows discounted at 12 percent: $40,000 now; $50,000 at the end of the first year; $0 at the end of year the second year; $60,000 at the end of the third year; and $70,000 at the end of the fourth year?
d. $171,835.94
Potential sub-prime borrowers include persons who:
d. All of these.
A mortgage that is intended to enable older households to "liquify" the equity in their home is the:
d. Reverse annuity mortgage.
The reduced importance of certain institutions in the primary mortgage market has been largely offset by an expanded role for others. Which has diminished and which has expanded?
d. Savings and loan associations; mortgage bankers.
The holder of a life estate may do all of the following EXCEPT a. pay the property taxes and special assessments. b. maintain the property. c. mortgage the life interest. d. direct the disposition of the property at the end of the measuring life.
d. Within the terms of the life estate, the holder's interest ends at the death of the person (typically, the holder) against whose life the life estate is measured.
comprehensive loss underwritng exchange (CLUE)
database agents can access to research insurance claims
Agency agreement in form of a listing can be terminated by all EXCEPT- mutual concent- revocation by the principal- death of salesperson- performance of the requested act
death of salesmen
Deed
deed describes land and LAND ONLY
Warranty deed
deed in which the grantor makes one or more promises about the status of the title- greatest protection
Bargain and Sale Deed
deed which contains no explicit promises- merely implies that the grantor has an interest to transfer
Latent defect
defects in construction that are not readily apparent
tax advantages of real estate
deferment of capital gains, deductions for depreciation and losses, loan origination fees and points (capital improvements and special assessments are not deductible)
equitable lien
delinquent debt
A lease is unaffected by:
destruction
Procuring Cause
did you set in motion a chain of events which, without break in continuity, resulted in a sale?- if deal happens within 3 days of contract being terminated then commission would be owed
boot
difference between the values of the exchanged properties in 1031 which is taxable
Equal Credit Opportunity Act (ECOA) prohibits
discrimination based on race, color, religon, national origin, sex, marital status, age and source of income in granting credit
...
divorce is was not in arms length
Die intestate
dying without a will
Adjustable rate mortgages (ARMs) commonly have all of the following except:
e. Inflation index.
Under current federal income tax law, what is the shortest cost recovery period available to investors purchasing residential rental property?
e. None of the above.
express contract
the parties state the terms and show their intentions in words, either oral or written. statute of frauds, require contracts to be written to be enforceable in a court of law
general partnership
each share all decisions of running business, all liable for debts and actions of others If one file bankruptcy or dies they will need to reorganize
patent defects
easily visible when inspecting property
when all the money is paid in one big payment
ecceleration clause is used for >
no contract
ehnb the offer is withdrawn prior to acceptance regardless of the time element in the offer to bind offeror, the offeree must accept unconditionally and communicate acceptance
Title Search
ensure marketable title Conducted to ensure that the buyer and lender receive marketable title or one that would not place either party in legal liability.
Salesperson charged with a violation? What happens next
entitled to a hearing before disciplinary action
discount point
equals one percent of the loan amount
The primary purpose of recording a valid deed is to ?
establish marketable title
Hold over
estate at sufferance is a ?
everbody willing
estate at will
A lender is selling a loan and the new mortgagee wants to know the existing loan balance. This would be accomplished with an ?
estoppel certificate
Puffing
exaggeration of facts
exclusive-agency buyer agency
exclusive contract where broker entitled to payment only if they locate property
exclusive buyer agency
exclusive contract where buyer pays agent even if the property is found on their own
An agency relationship may be created by what type of agreement?
express agreement
Misrepresentation
false statement or a concealment of a material fact that is unintentionally asserted- unlike fraud it may be innocent and unintentional- however still voidable depending
suit of partition
filed to break up a joint tenancy or tenancy in common
Property sold for 168- had mortgage of 75k- 6% commission and 2100 closing costs- what were net proceeds
first calc commission- 10,080 + closing 2,100= 12,180 sales price - mortgage= 93,000- 12,180= 80,820
Civil Rights Act of 1866
first written law prohibiting discrimination based on race Jones v. Mayer 1968 Supreme court upheld civil rights act
Personal property that automatically conveys is a
fixture
The statue of frauds requires that lease agreements
for more than one year to be in writing to be enforceable
judgement lien
found guilty in a lawsuit and doesn't pay
Americans with Disabilities Act (ADA)
gives that with disabilities equal access to the social and economic mainstream
Personal Property
goods and intangible interests
public grant
gov't gives land to private owner
Escheat
gov't power that causes unclaimed property to go to the state
variance
granted when zoning creates hardship on owner
buyer
grantee is the
Special Warranty Deed
grantor guarantees (warrants) title only against defects arising during the tenure of his ownership and not against previous defects- no promise about prior
seller)sellOR)
grantor is the
Quitclaim deed and Premises Clause is best used for what?
grantor makes no promises about the status of the title- used to clear clouds- contains words of conveyance which names the parties in the transaction
Sale-leaseback
grantor sells property to grantee then leases it back
Subrogation
grants the insurer the same rights and remedies that the owner has- could sue a third party for damages arising from hidden cloud on the title
void contract
has no legal force or effect because it lacks some or all the essential elements of a contract. A contract that is void was never a glegal contract. ex, use of forged name in a listing contract would make the contract void
Testator
the person who makes a will, is alive, any property included in the will can still be conveyed by the owner
latent defects
hidden structural defects not easily discovered
What item will always be in appraisal
highest and best use
saving and loans associations
historically, the foremost single source of funds for residential mortgage loans in this country has been:
Example of Junior Mortgage
home equity loan
Package Mortgage
home loan that includes washer dryer refrigerator as collateral
Who is able to discriminate on gender in Virginia?
home owner looking for roomate
30 days
how many days do you have to notify the commission of change of address ?
aniticipation
how the value of a property will adjust due to anticipated changes in the community
How may an appurtenant easement be terminated?
if easement is no longer necessity or if released by dominant estate
bargain and sale deed
implies that the grantor holds title and possession but includes no express warranties
reproduction cost
in appraising a historically significant residence built in the Victorian era using the cost approach, an appraiser will probably appraise it on the basis of its
grantor- grantee index
in locating the sellers deed in the record room of the courthouse your first point of reference would be the
budget mortgage
includes PITI and taxes and insurance in escrow
Under what conditions is a contract void or voidable?
incompetency, misrepresentation, mistake, illegality and duress
Annexation ?
incorporation by joining or uniting
Accretion
increase in land to due soil deposits
Graduated Lease
increasing the rent as the property becomes valuable
External Obsolescence
incurable due to factors that exist outside of the property eg nuclear plant, farm, etc
Principal Broker
individual broker who must be designated by each firm to assure compliance with the VA license law
The purpose of the truth in lending act(regulation z) is to ?
inform borrowers the true cost in obtaining credit
The primary purpose of the REAL ESTATE SETTLEMENT PROCEDURE ACT( RESPA) is to ?
inform buyers and sellers of all settlement costs in a residential real estate transaction
material fact
information that if known would change a decision -an agent is liable for not disclosing defects
Ministerial Acts
informative for consumer Those acts that a licensee may perform for a consumer that are informative in nature and do not rise to the level of a active representation.
Actual Notice
inidividual actually received information or documents
Express Agency
intentions stated An express agency is created when the parties state the contract's terms written or orally.
discount rate
interest rate the Federal Reserve (the Fed) charges for loans
APR (Annual Percentage Rate) includes?
interest rate, points, mortgage broker fees and certain other credit charges
Market Conditions agents should be aware of
interest rates, employment levels, demographics, vacancy rates, absorption rates
Investment Permanence (Fixity)
investment in infrastructure such as- Investing in sewer, electricity, drainage
Lien
is a charge against property that provides security for a debt or an obligation of the property owner.( real estate taxes, mortgages, judgments and mechanics liens
time share estate
is a real property estate having the character and incidents of a fee simple estate, or of a leasehold, an estate for years, unless changed by statute
Easement in gross
is an individual or company interest in or right to use someone else's land. Power company, rail road on your land
Physical License of Salesperson or Broker
is sent to principal broker- does not need to be displayed/property of the board
beneficiary
is the holder of a note for a trust- LENDER
Dominant Estate
is the parcel of real property that has an easement over another piece of property (the servient estate) parcel that benefits
Location or situs
is the preference people have for a certain area where a property is located
Easements
is the right held by another- not likely to be figured out during a metes and bounds survey
Blind person with a dog
it is reasonable for a landlord with a no pet policy to allow
Laws of Descent and Distribution
laws that determine how assets will be distributed for someone that dies intestate
Buydown Mortgage
lender is prepaid a portion of the interest rate in order to reduce payments
Exculpatory clause
lender waives its right to a deficiency judgement in the event of foreclosure
When a lessee signes a net lease, the taxes, insurance and maintenance are paid by the:
lessee
Gross Lease
lessor pays rent and insurance maintenance all other expenses
Judgement Lien
lien on a debtor's property that is granted to a creditor by court judgment; lien may be enforced by having the sheriff seize the property and hold a sheriff's sale
usury laws
limit maximum interest rates banks can charge
Open-End Mortgage
line of credit
Exclusive-right-to-sell
listing broker paid not matter if another broker sells or not in exclusive buyer agency broker entiltled to commission even if he didn't show property. (nonpayment is breach)
Whats the formula for calculating the Qualifying loan amount?
loan amount / 1,000 x loan payment factor= monthly PI / loan payment factor
Points are based on?
loan amount not the sales price
unconventional mortgage
loan backed by the government such as FHA or VA loan
Functional Obsolescence
may be curable or incurable occurs because of poor floor plan, outdated items or changes in technology
Negative Amortized loan
med school repayment where payment does not cover the interest accruing
Valid contract
meets all the essential element that make it legally sufficeint or enforceable, and is binding in a court of law
Land contract
method of owner financing- contract for Deed- buyer receives equitable title upon closing and the seller retains legal title until buyer completes installment agreement
Anytime salesperson/ broker suggests or guarantees the return it is no longer puffery-it becomes
misrepresentation and possible fraud
Tax deductions
mortgage interest, real estate taxes, some closing costs (points)
RECORDING A DEED
must be recording in the clerk of superior court office in the county of the property
Actively engaged
must be working at least 40 hours per week
in buyer agency agreement if buyer doesn't purchase
no commission is generally owed
Proprietary Lease
no fixed rental amount- between corporation (owner) and stockholder (tenant)
Nonhomogeneity
no two parcels are identical
What happens when sales person terminates affiliation with broker?
nothing
Not telling prospect about landfill is NOT
obedience, loyalty, accountability
What is needed for a meeting of the minds
offer and acceptance
Mail Box Rule
offer is accepted when it is put in the mailbox not when received by offeror
Exclusive Agency Listing
one broker lists the property and only broker or co-broker that sells gets commission
limited liability partner
one or more run business while limted partners only liable to extent of their investment
Regulant
one salesperson or broker who is regulated by the board
each section is
one square mile or 640 acres, with 43,560 sq feet
Marketable Title
one that is reasonably free from significant title defects.
private mortgage insurance (PMI)
one-time premium on monthly payment of private mortgage insurance--generally for borrowers with less than 20% down
Recording title
only gives constructive notice
Easement by Perscription
open, notorious, continuous, exclusive use without the owners approval
Puffery
opinion
unilateral contract- one promise
option contract, is one sided agreement. one party makes a promise to entice a second party to do something. the second party is not legally obligated to act. however if the second party does comply, the first party is boligated to keep the promise
wrap around mortgage
option for one monthly payment that is applied to new and previous mortgage
nuncupative will
oral will in which someone descributes personal property in contemplation of death
Nuncupative will
oral will- not effective to transfer real estate
A conventional life estate conveys to the life tenant ?
ownership for the tenants life
Subsevient Estate
parcel of real property that has an easement and suffers, only, ( can't disregard easement)
specific lien
particular property only eg property taxes: specific, involuntary
security
parties join with others in an effort of making profit from efforts of others
limited liability company
pass through income to members to avoid double taxation
amortize
pay in monthly payments that include P&I
buy down mortgage
paying interest in advance to reduce monthly payments
Let Lease
pays rent and pro-rated share of expenses
Divisee
person receiving gift for will
Sue for Specific Performance is never a remedy for?
person service contracts
Chattel
personal property
protect the chain of title
the purpose of recording a deed is to
inform borrowers the true cost of obtaining credit
the purpose of the truth in lending act (regulation z) is to
Equitable Title
the right to receive legal title after completing specified performance like payment in full of a mortgage- after signing Purchasing Agreement
Inquiry Notice
presumes notice when factors exist that would make a reasonable person inquire further
Restrictive Covenants
private contractual agreements often imposed by developer that binds subsequent owners includes- aesthetic and use restrictions
annexation
process of converting personal property into real property
Reserve account holds?
property taxes, hazard insurance, deferred maintenance
Open buyer agreement
prospective buyer and broker and the agent that brings buyer the deal they want gets the commission
Whats the formula for calculating the amount to bring to closing?
purchase price - amount financed + closing costs - deposit = amount for closing
A quitclaim deed is commonly used to ?
quiet a cloud on the title
A deed is like a
receipt for the property
Final step in appraisal
reconciliation
trustor
( MORTGAGOR) a borrower in a deed of trust loan transaction; one who places property in a trust; also called a grantor or settler
Littoral rights are ?
(1) A land owner's claim to use water in large navigable lakes and ocean's adjacent to his or her property. (2) The ownership rights to land bordering these bodies of water up to the high water mark.
Four Elements or Property value
(DUST) Demand - number of goods people are willing to buy at a given price Utility - how has the land and improvement been utilized Scarcity - supply limited, prices increase Transferability - good marketable title on the property
Whats the formula for calculating the Proration?
(annual county tax/360 days) x number of days after closing = reimbursed amount
Home sells for 377k transfer tax of 1.75 per 600 of sales price-How much tax is due?
(sales price / unit of measure) * tax rate per unit = tax
Example of partially amortized loan
reg payments then balloon payment at end
performance standards
regulate air, noise, water pollution or building codes
rent control
regulation by state and local government restricting the amount of rent landlords can charge
Breach of valid contract- which is available to the non-defaulting party? rescission/ specific performance/ monetary damages/punitive damages
rescission/ specific performance/ monetary damages- NOT punitive damages and NOT both monetary and specific performance (unable to get money and the deal)
Option
reserving the right to purchase or sell property
easement
right to use land of another
special purpose deeds include...
- cession deed: used to give property to the government (giving land for park) -sheriffs deed transfers interest in property that was forclosed - executor's or administrator's deed:given by a court-appointed party to settle the estate of the deceased -tax deed: given at property tax sale - gift deed: used to give property as a gift
Easements
right to use the land of another for a particular purpose,
In case of the sale of house and lot with the right to repurchase the period of redemption shall be (07) _____________ from date of contract in the absence of any agreement. Should there be an agreement, the period cannot exceed (08)___________ years. However, the vendor may still exercise the right to repurchase within (09)___________days from the time final judgment was rendered in a civil action on the basis that the contract was a true sale with right to repurchase.
07. 4 YEARS 08. 10 YEARS 09. 30 DAYS
In Georgia, a broker engaged by a seller shall disclose to all parties with whom the broker is working all material facts about the physical conditions known within how many miles of the property ?
1 Mile
640 Acres=
1 Square Mile
A section that contains 640 acres is how many miles ?
1 Square Mile
In general, a mortgagor who mortgaged his real property and later was foreclosed extrajudicial and sold at public auction may redeem the property within the period of _________.
1 YEAR
Maximum period for Right of redemption in extra judicial foreclosure of mortgage ___________.
1 YEAR FROM FORECLOSURE SALE
43560 square feet =
1 acre
one DP
1/8 of 1% of yield
An action to foreclose a real estate mortgage prescribes in ___________.
10 YEARS
Maximum period for Right of redemption in Pacto de retro sale.__________
10 YEARS
A va loan is a
100% loan and does not require a down payment
Tenancy in Severalty
100% ownership by one person or legal entity Passes to heirs, terminate by sale or death
customers and clients on do not call list can be contacted...
18 months after the end of transaction
Not renting to blacks violates what law?
1968 fair housing law
Lead Paint Disclosure should be provided to sellers and renters of homes built before...
1978 Federal law requires that disclosures are kept for 3 years
Under the Rent Control Law, the lessor may ask for a deposit rental not exceeding _________ months.
2 MONTHS
Joint Tenancy
2 or more have right to survivorship (to surviving owners), one title with equal shares Unities: possession, interest, time, title
synidicate
2 or more pool resources to operate investments
appurtenant easement
2 tracts of land owned by different people eg shared driveway
Time period allowed to file complaint after alleged violation
2 years
What is the maximum amount an individual can recover from the Virginia RE Transaction recovery fund?
20k
each township contains
36 sq miles
In most conventional loans the debt-to-income ratio can be no more than...
36% of the borrowers stable monthly income
The total obligations(living expenses) ratio on a conventional loan should not exceed ?
36% of the purchaser gross stable income
scaricity, improvement, performance of investment, location
4 economic chara. of land
In extra-judicial foreclosure of mortgage of real estate acquired through homestead, the redemption period is ______ year from registration of auction sale.
5 years
mile
5280 feet
The annual real estate taxes on a property are $2,400. The seller pays taxes in arrears in two installments, on June 1 and October 1. If the closing is scheduled for August 28, what taxes will be due and how will the information appear on the HUD 1? a. Credit seller $1,596 and debit buyer $1,596. b.Credit buyer $2,400 and debit seller $2,400. c. Debit seller $804 and credit buyer $804. d.Credit buyer $2,796 and debit seller $2,796.
59. d. $2,400 ÷ 2 = $1,200; $2,400 ÷ 12 = $200; $2,400 ÷ 36 = $7; Half year at $1,200 plus 7 months at $200 equals $1,400; 28 days at $7 equals $196 for a total $2,796 to be credited to buyer and debited to seller on the HUD 1.
Township
6 miles by 6 miles
Math Question
62,500
Acres per sq mile
640
In a rectangular survey system a section contains ?
640 acres
BUilder can use who to sell his property?
salaried employees
At what point is the salesperson/broker entitled to the commision
salesperson was properly licensed when sale happened and would be entitled to commision (not the closing date)
A, and C own property as joint tenants. C dies then B sells his interest to D. The property is now owned by:
A and D as tenants in common, each with 2 interest
What is a datum ?
A base point from which heights or depth can be measured ( condominium)
When personal property is sold ownership is transferred by ?
A bill of sale
Answer: C. An amendment is when
A buyer and seller sign an agreement to change the contract to close on May 1 instead of May 2. This is a(n): A. addendum B. special stipulation C. amendment D. clause
shopping center
A cap rate would most likely be used when apprasing a
notice of lien
A contractor hired by the property owner made improvements to the property. After the work was completed the owner refused to pay the contractor for the work performed the contractor should file a
Property is transferred by ?
A deed
Truth in Lending Act (TILA)
A federal law requiring lenders to provide residential loan applicants with the estimates of the total finance charges and the APR.
A person wants to ensure that the ownership of real property can be willed to her children. Which of the following forms of ownership would the person want o take ?
A fee simple estate
A chandelier attached to the ceiling in a sellers house would be ?
A fixture
an article that was personal property
A fixture is
B transact the principal's affairs in a certain business
A general agency empowers the agent to: A transact matters of all types for the principal. B transact the principal's affairs in a certain business. C perform only specific acts for the principal. D perform any legal act for the principal.
Devise
A gift of real property by will
Exculpatory clause
A hold harmless clause that may be found in contracts relieving a party from liability for injuries to another.
Answer: C. Because agreement was reached and SIGNED documents were provided on TUESDAY, Friday midnight ends the THREE-business-day period.
A home improvement company was negotiating with a homeowner to add on two rooms to a home. The company agreed to take a second mortgage as long as the homeowner also included the rest of the property in the loan. The company and the homeowner agreed to a price and the company provided the necessary disclosure form on Monday and the homeowner signed the agreement at noon the following day. Assuming that the week had five business days, until what time could the homeowner rescind the loan? A. tuesday, midnight B. thursday, midnight C. friday, midnight D. there is no rescission on a house
Answer: C. $252 × 12 (months) = $3,024 $3,024 ÷ 33,600 = 9% Annual Rate
A house sold for $42,000. The buyer made a 20% down payment. Monthly interest on the loan was $252. What was the interest rate on the loan? A. 5% B. 7% C. 9% D. 11%
A protective covenant
A lease provision which prohibits using certain premises for a drugstore is called a: A protective covenant. B use covenant. C restrictive covenant. D condemnation covenant.
Estate at will or tenancy at will
A lease that gives the tenant the right to possess the property with the consent of the landlord for an uncertain period of time. The lease can be terminated at any time by the landlord or the tenant giving proper notice to the other party. Death of either party terminates the lease.
Estate for years or tenancy for years
A lease with a definite time period or specified beginning and ending dates. This terminology is deceptive in that a lease may substantially less than a year. No notice is needed to terminate the estate. A tenant who remains in possession after expiration is considered a holdover.
Estate from period to period. Estate from year to year/ Periodic tenancy
A lease with an indefinite time period. The lease automatically renews until proper notice to terminate is given.
Answer: (A) - tenancy for years
A leasehold estate that has a definite beginning and ending, cannot be renewed, and requires no notice to terminate is a: A. tenancy for years B. tenancy at will C. periodic tenancy D. tenancy at sufferance
Agency
A legally created relationship that empowers one person, the agent, to act on behalf of another person called the principal.
Answer: B. The licensee presented information as being factual but did not verify it. If it is incorrect and the buyers are damaged due to their reliance on that information, whether it is oral or in writing, the licensee can be held responsible for misrepresentation.
A licensee is representing prospective buyers. The licensee orally informed the buyers that the developer would be paving the streets in front of a house in a rural subdivision. The licensee had not verified this but assumed that it was true because the developer had done the paving in similar subdivisions. The buyers relied on the licensee's statement in deciding to buy the house. If no contract exists spelling out paving responsibilities, who can be held accountable for damages? A. the developer because it is a developer's responsibility to pave streets up to existing arteries B. the licensee because his unverified statement was misrepresentation C. the county because it has jurisdiction over roads in rural areas D. no one because no written promise of street-paving was made by either the licensee or the developer
Answer: A. 475 x 525 = 249,375 square feet. 249,375 ÷ 43,560 = 5.7248 acres. $275,000 ÷ 5.7248 = $48,036
A lot that measures 475' x 525' sold for $275,000. What was the cost per acre? A. $48,036 B. $48,238 C. $48,568 D. $48,976
What type of lease is used for retail business ?
A percentage Lease
Psychic benefit
A perk to owning real property that is difficult to quantify.
Answer: B. The initial investment was $66,000 (3 lots at $22,000 each). The developer divided them into four lots and sold them for $18,000 each. $18,000 × 4 = $72,000 in sales; $72,000 - $66,000 = $6,000 (dollar amount of profit). The percentage of profit is always based on the original investment. The dollar amount of profit divided by the original investment will equal the percentage of profit (Part ÷ whole = rate): $6,000 ÷ $66,000 = 0.09 (9% profit).
A person bought three lots for $22,000 net each and divided them into four lots of equal frontage. The lots were then sold for $18,000 each. What was the approximate percentage of gross profit? A. 3% B. 9% C. 12% D. 33%
Deficiency Judgement
A personal judgement levied against the borrower when a foreclosure sale does not produce sufficient funds to pay the mortgage debt in full
Answer: C - A planned unit development (PUD) is a type of ownership where individuals actually own the BUILDING or UNIT they live in. In a condominium, an individual owns the AIRSPACE of his unit.
A planned unit development (PUD) is different from a condominium because A. a condominium usually has more amenities B. there are fewer units in a condominium development C. in a condominium the individual owns the airspace of the unit D. all of the above
B
A property manager's fee is generally determined by: A. An agreement with the tenants. B. A flat fee or percentage of gross rental income. C. A standard fee schedule agreed on among property management companies. D. A percentage of the gross selling price.
Laches
A property owner owner is violating the recorded deed restrictions. if the adjoining lot owners stand idly by while the violation is committed, they could lose their legal rights to an injunction by their inaction. The court might claim their right was lost through the doctrie of
Buyer's broker
A real estate broker representing the buyer in an agent—principal fiduciary capacity.
Answer: A. A lease is a legal and binding contract. Although preprinted lease agreements are often used in residential leases, commercial leases are more complex. Drafting a commercial lease may constitute the practice of law, and a real estate licensee cannot practice law unless also a licensed attorney.
A real estate licensee was hired by a property management company to lease and manage commercial properties. Each commercial lease was different based on the negotiations of the parties. Which of the following is true in these circumstances? A. Legal counsel should be sought to write or review the leases. B. The licensee can prepare the leases as he is trained in real estate. C. The licensee could fill in the blanks on preprinted commercial lease forms. D. A lease agreement is not the same as a contract and can be prepared by either party. commercial lease forms.
Lots and Blocks System
A recorded subdivision plat maps, which shows the location of undivided lots in a subdivision.
Tax shelter
A reduction, usually mortgage interest and tax depreciation for real estate investments, in taxable investment income.
NO PROTECTION
A seller of real property conveys title using a quick claim deed what protection against defects in the titke does the purchaser recieve >
...
A special warranty deed protectes the buyer against title defects that occured only during the sellers ownership
Answer: D. At 8%, the annual interest on $13,400 is $1,072 or $89.33 per month. Total payments of $3,752 divided by the monthly payment equals forty-two months.
A straight note for $13,400 was executed at 8% annual interest. If the borrower actually paid $3,752 in interest, how many months did he take to pay it off? A) 32 B) 36 C) 39 D) 42
What is a spot survey ?
A survey a buyer receives at closing
Community property
A system of property ownership based on the theory that each spouse has an equal interest in the property acquired by the efforts of either spouse during marriage.
Answer: C. Base rent amounts to $18,000 per year. Subtracted from the $30,000 total rent, it yields a further $12,000 that came from the 3% of sales portion of the agreement. $12,000 divided by 3% is $400,000, plus the first $200,000 that was exempt from the surcharge, means the company had total sales of $600,000.
A tenant rented a store to use as a real estate school at a base rent of $1,500 a month. Additionally, the tenant agreed to pay 3% of gross annual sales over $200,000. What were the gross sales if the total rent paid for the year was $30,000? A) $400,000 B) $150,000 C) $600,000 D) $750,000
Answer: A. Since the trustee in this case is acting on behalf of the true owner of a property, he holds a "naked title," meaning a title without the usual rights of ownership.
A trust deed gives the lender a right to request that the trustee perform certain tasks in order to fulfill the terms of the trust. The trustee may take action in those circumstances because he holds: A) naked title. B) equitable title. C) reversionary title. D) public title.
Gross Lease is?
A typical residental lease
Most probable sales price
A value-in-exchange concept generally analogous to market value, it is the most likely transaction price for a parcel of real estate when market conditions are unremarkable.
62. Funds for FHA insured loans come from: A) Qualified and approved local lenders B) The Department of Housing and Urban Development C) The Federal Reserve Bank D) The Federal Deposit Insurance Corporation
A) Qualified and approved local lenders
8. When 'peaking with broker Smith about listing his home for sale, Mr. Jackson made it clear that he did not want his home shown to ì...people who would change the neighborhood". What must broker Smith do? (4B) A) Refuse the listing B) Refuse the listing unless Jackson agree to let it be shown without his restrictions C) Accept the listing but not show it when Jackson is present D) Accept the listing after explaining that his restriction are discriminatory and would be illegal
A) Refuse the listing
Economic Land Characteristics
AAIIPS- Area Preference (situs), Assemblage, Improvements, Investment Permanence, Scarcity
Answer: D. ABC Incorporated would take title in Severalty.
ABC Incorporated was organized with five stockholders. How would ABC Incorporated take title to property? A. tenants in common B. tenants by the entirety C. joint tenants D. severalty
A provision in a financing agreement which renders the remaining principal balance of the loan immediately due and payable upon default in any stipulated installment is called_________.
ACCELERATION CLAUSE
___________- a clause in a contract stating that upon the happening of a certain event, like failure to pay any installment due, shall make all the balance become immediately due and payable.
ACCELERATION CLAUSE
___________- the liquidation of a financial obligation on installment basis. (A periodic payment which includes interest and principal necessary to liquidate a financial obligation).
AMORTIZATION
...
AN ESTATE FOR YEARS DOES NOT REQUIRE NOTICE
...
AN ESTATE FOR YEARS HAS AN ENDING DATE. AN ESTATE FOR YEARS CAN BE FOR 2 DAYS, 3 MONTHS, 3 YEARS ETC, BUT IS ALWAYS HAVE A DEFINATE ENDING DATE. IT BEGINS ENDS AND THEN ITS OVER
A contract where real estate is hypothecated to secure an obligation where the creditor is given the right to possess the property and collect the fruits thereof is known as_________.
ANTICHRESIS
The conveyance of real estate in payment of an obligation is___________.
ANTICHRESIS
To hypothecate a property with transfer of possession is a contract of _____________.
ANTICHRESIS
______ is a contract wherein the mortgagee receives the fruit of the property with the obligation to apply them in payment of the interest and principal.
ANTICHRESIS
_________ to convey a thing as security for an obligation having to surrender ownership or possession.
ANTICHRESIS
Hybrid ARM
ARM loan that provides for an initial period of fixed interest charges, hence fixed payments, before the interest rate becomes adjustable. Fixed interest rate period typically ranges from 3-10 years.
TAXES
ASSESSED VALUE x MILLAGE RATE= TAXES
___________ is where the lessee transfers a part of his interest to another person.
ASSIGNMENT OF LEASE
_______- a stipulation in a mortgage of several properties providing that when a buyer of one or more lots pays in full the purchase price, a portion of the payments shall be applied to the mortgage obligation and the mortgagee shall correspondingly release said lot or lots from the mortgage. Similar to "partial release clause".
AUTOMATIC REDEMPTION CLAUSE
D Any or All of the above
Actual fraud may consist of: A an untruth spoken by a person who knows or believes otherwise. B silence such as to conceal the truth. C the mere suggestion that something is true which the person making the suggestion does not believe to be true. D Any or all of the above.
Which of the following statements regarding tenant improvements (TIs) is the least true in the context of commercial real estate leases?
Actually, both b. and d. are equally untrue.
Points
Additional money paid to lender to reduce interest rate of his mortgage
what is needed to subdivide a plot of land
Adjustments need to be made to original plat to reflect
Mrs Jones has been using a vacant lot next to her property as a garden every year for the past ten years without the owners permission. Mrs. JOnes could claim title to the vacant lot by ?
Adverse possession
Specific performance
After a sales contract is created and contingencies are met, the sales contract is enforceable, meaning that if the buyer or seller defaults, the other party can file a suit for specific performance to enforce the terms of the contract.
Enforceable Contract
After contract created & contingencies met contract is enforcable
Suit of Performance
After contract is enforceable buyer or seller defaults this can be filed to enforce terms (generally if seller breaches contract)
Open Listing
Agency agreement between a seller and any number of brokers, wherein the sell agrees to compensate the broker if the broker sells the property.- if owner sell property then nothing to broker
Express or implied
Agency relationships can be either of these.
Implied Agreement
Agency relationships may also be created by activities or statements of the parties, short of an express agreement.
Dual Agency
Agent represents buyer and seller in same transaction
Dual Agency
Agent represents two principals in the same transaction. Must be in writing.
Executed Contract
All duties fulfilled, purchase paid, deed conveyed at closing
are appointed for a term of 5 years
All members of the Georgia Real Estate Commission
Sales comparison approach
Also known as the market approach, one of three techniques appraisers are taught to estimate market value. It is based on the use of recently transacted competitive properties to derive approximate indications of the potential transaction price for the subject property being valued.
A clause in a lease that would allow adjustments of payments either up or down would be called
An Escalator
Answer: C. FHA loans, which are actually government guarantees of payment to lenders rather than actual loans, are intended to help low and middle income families enter the housing market by providing low down-payment options.
An FHA 203 loan was applied for by a buyer. What was the purpose in seeking this type of loan? A) low interest rates with accelerated payments B) faster equity build-up C) small down payment D) shorter period of amortization
Home Ownership and Equity Protection Act
An act of Congress that addresses abusive, predatory practices in subprime lending and sets a trigger APR and fee levels at which loans become subject to the law's restrictions.
Dual agency
An agency that exists when a broker represents both the buyer and the seller of a transaction.
the comparable most like the subject property
An appraiser is estimating the value of a residential property. When using comparable properties to determine the value of the subject property the apprasier would give the greatest consideration to ?
Answer: C - An assessment places a value on property for the purpose of taxation.
An assessment does which of the following? A. places a value on property for the purpose of real estate sales B. is the same as a competitive marker analysis C. places a value on property for the purpose of taxation D. is usually carried out by the mayor of a town
Easement of Condemnation
An easement created by the government or government agency that has exercised its right under eminent domain.
A expression reservation
An easement may be created by: A express reservation. B merger. C abandonment. D all of the above.
Freehold Estates
An estate in land in which ownership is for an indeterminate length of time, in contrast to a leasehold estate.
Tenancy at will
An estate that gives the lessee the right to possession until the estate is terminated by either party; the term of the state is indefinite.
Absorption rate
An estimate of how quickly homes have sold in the neighborhood within the last year.
Inflation
An increase in nominal prices.
The owner of a house wants to fence the yard for her dog. When the fence is erected, the fencing materials are converted to real estate by ?
Annexation
Ambiguities
Any ambiguities in a contract are construed against the writer of the contract. Contract terms must be clear and definite.
Encumbrance
Any claim, lien, or liability that affects the value or the use of the property.
What is an Allodial System ?
Any individual who has the means can acquire rights of ownership and our government protects these rights
a judicial review in accordance with the georgia administrative procedure act
Any licensee who has exhausted all administrative remedies available within the license law, and who is aggrieved by a final decision in a contested case is entitled to ?
Law of agency
Apply to the responsibilities and obligations of a person who acts for another.
Designated Agent
Appointed by broker to act for a specific client/principal. eg. used when one agent of company listed property and another agent in same company secured the buyer.
The right of ingress and egress is best associated with:
Appurtenant
Vendee/Vendor
Are found in land contracts
Mineral Right of Land
Are not automatically transfered when the land is sold
Carr is interested in a house that fits most of her needs, but is located in a busy area where she is not sure she wants to live. Her concern about the property's location is called ?
Area preference
If home is about to be in foreclosure
sell the home quickly- do not need to tell prospects
Risk of Loss during executory period?
seller bears the risk during the executory period
seller refuses to sell
seller may refuse to sell but in a circumstance where full list price is offered the broker is entitled to commission
Survival/Merger
seller promises to deliver the house with newly painted shutters- seller does not paint the shutters. Buyer accepts house without painted shutters unable to sue unless promise to "survive" closing
What are improvements ?
Artificial Attachments includes such things as buildings, fences, driveways, pipelines, swimming pools, and even mobile homes if they are attached to the land.
appraisal of value for tax purposes by an assessor representing the municipality in which the property is located
Assessment
The officer who has the responsibility of determining the assessed valuation of land, improvements, and personal property used in business.
Assessor
buffer zone
separates two zoning districts eg park between residential and commercial district
4 eco and 3 physcial
seven charateristics of land
Contingency
several provisions that must be met during the executory period of the contract- buyer does not have to buy if the bank won't lend
A gives a life estate to B for the life of C. B dies. Who has the estate?
B's Heirs
79. The interest rate on a $90,000 straight loan is $5,250 for five (5) months. What is the annual interest rate? (6) A) 0.13 B) 0.14 C) 0.15 D) 0.16
B) 0.14
11. The transfer of real property by a will is known as: A) A demise B) A devise C) A dedication D) A bequest
B) A devise
22. New Jersey real estate brokers may pay a portion of their commissions to: (3C) A) Only other New Jersey licensed real estate brokers B) Any licensed real estate broker, anywhere C) Any real estate broker or attorney admitted to the New Jersey Bar D) Anyone they wish
B) Any licensed real estate broker, anywhere
29. All New Jersey Broker and Salesperson license must be renewed: (2A) A) Annually every January 1st B) Biennially on July 1st C) Biennially on June 30th D) Biennially from the month of the first issuance
B) Biennially on July 1st
33. Deeds are recorded for the benefit of the: A) Grantor B) Grantee C) Courts D) Mortgagee
B) Grantee
B There is no contract
Ben and Will are both mistaken as to the parcel of land which Ben is buying from Will. Under these circumstances: A they each have a voidable contract. B there is no contract. C they each have an unenforceable contract. D each is technically guilty of constructive fraud against the other.
Regression/Progression
Best house in a bad neighborhood- value down. Worst house in the best neighborhood value up
Answer: C. Unless also an attorney, licensees should never provide legal advice. Also, while landlords will often ask agents to find back-up offers while a lease or letter of intent is pending, it is not done as a matter of course.
Beth is a broker engaged by a landlord. Which of the following is included in her responsibilities? A. advising the landlord of legal matters pertaining to his property B. keeping all information provided by the landlord confidential C. the timely accounting for all money and property she receives in which the landlord may have an interest D. always seeking additional offers even after a lease or letter of intent has been received
Deed of Trust
Borrower gives it to a trustee who holds on behalf of borrower and lender. If loan obligation is paid off in accordance with the Note, the trustee returns the deed to the borrower. But if the borrower defaults, trustee can exercise the power of sale to dispose of property on behalf of the lender.
Bilateral contract
Both parties are obligated to perform in a bilateral contract.
Executory Contract
Both parties have duty to perform eg. listing agreement; finding buyer & seller cooperating/pay commission. (most are executory)
Bilateral Contract
Both parties obligated to perform eg.
Designated Agency
Broker has 2 salesperson represent buyer and seller
Concurrent license
Brokers only- allows brokers to work for multiple firms
Optionee
Buyer
Answer: (B) - special agent
Buyer Burke had authorized Broker Rand to purchase a property on his behalf. What kind of agent is Broker Rand? A. general agent B. special agent C. universal agent D. secret agent
When a sale and leaseback occurs
Buyer is landlord
Silent Second
Buyer negotiates a second mortgage with the seller but its not disclosed to the lender
Implied Contract
By the parties actions or conduct they enter into a contract. eg. purchase at restaurant, service of taxi
65. The type of mortgage that permits the interest rate to range up or down is called: A) A package mortgage B) A straight mortgage C) A variable rate mortgage D) A blanket mortgage
C) A variable rate mortgage
20. The Consumer Information Statement must be provided to a member of the public before: (3D) A) Written documents are executed B) Properties are shown C) Discussion of the personís motivation or financial situation D) Offers are created or presented
C) Discussion of the personís motivation or financial situation
37. An agency agreement may not be terminated A) By mutual consent B) Due to insanity of one of the parties C) Due to an increase in interest rates D) Upon completion of objective
C) Due to an increase in interest rates
21. The Meganís Law statement on New Jersey sales contracts and leases advisees the parties that: (3M) A) Licensees have a list of all known sex offenders who live in the area B) Licensees have the obligation to investigate and disclose the presence of sex offenders in the area C) The county prosecutorís office has information on all known sex offenders who live in the area D) The county prosecutor may either permit or forbid sex offenders to live in the area
C) The county prosecutorís office has information on all known sex offenders who live in the area
24. An oral sales agreement to purchase real property is: A) Unlawful B) Null and void C) Unenforceable D) Enforceable
C) Unenforceable
In case of refusal by the lessor to accept payment of the rental agreed upon, the lessee may either deposit, by way of consignation, the amount in ___________.
COURT, CITY/MUNICIPAL TREASURER or Bank account of lessor with notice...
No that is a violation of license law
Can a real estate licensee pay an unliscenses person a referral fee ?
When a lease is assigned, this is true:
Can be done without the lessor's approval
Inverse Condemnation
situation where the gov't regulation is so pervasive that it eliminates any economically viable use of ones property
A possession and interest
Certain unities are necessary for the creation of a joint tenancy. They are: A possession and interest. B place and time. C time and survivorship. D survivorship and possession
Methods a principal can pursue damages for non-performance?
Civil action or file complaint with real estate commission
abstractor
someone trained by a title company to conduct a title search
escalation clause
sometimes called an escalator, that lets a home buyer say "I will pay x price for this home, but if the seller receives another offer that's higher than mine, I'm willing to increase my offer to y price.
Gross living area or finished area
space connected to house suitable for year round use
Responsibilities of an agent
Coald- Care, skill, and diligence Obedience of lawful instructions from the client Account for all funds entrusted to the agent Loyalty to the client above the interest of the agent or anyone else. Disclosure of all info about the property, transaction, and other party IMMEDIATLY to the client.
Whats the formula for calculating the Commission Rate?
Commission amount/ sales price = commission rate
when people living together unmarried for a period of time and obtain property together it is considered community property NOT RECGONIZED IN GEORGIA
Community property is ?
Actual damages
Compensate for the cost of that which has been lost.
Contingency
Completion of act before contract is binding
Condemnation
Condemnation occurs when a local, state, or federal government seizes private property and compensates the owner
Estate at Will or Tenancy at Will
Consent of possession for uncertain period of time Death of either party terminates
Document that contains buyer/seller agreement
Contract to sale, sale agreement, offer to purchase
Non-conforming loan
Conventional loan that does not satisfy one or more underwriting standards required for purchase in the secondary market by Freddie Mac or Fannie Mae.
Special Agent
specific transactions When the principal delegates a specific act or business transaction. eg. listing broker, durable POA, buyer agency
Ownership in Severalty
Corporation
Cooperative Ownership
Corporation holds title and tenants receive shares of stock and proprietary lease
Stocks =
Corporation, Shareholders
What zoning decision is most likely to be stricken on appeal?
spot zoning
Easements- Express Reservation
Created by the landowner selling his property but retaining an easement (by "reservation") in the property
Superfund
Created from CERCLA law --when congress collected $12 billion to clean up hazardous waste sites when potential responsible parties (PRPs) could not be identified
Amendment
Created to make changes or to add provisions after the original contract is created.
Designated agency
Created when an agent is appointed by a broker to act for a specific principal or client. This is used when one agent listed the property and another agent within the company secured the buyer for the property. The listing agent would be the designated agent of the seller, and the buyer's agent would be the designated agent of the buyer.
Homestead rights
Creditors are trying to force a homeowner to sell her home to pay debts such as charge accounts and personal loans she may be allowed protecrtion from judgements of creditors as a result of her ?
78. A property is listed for $150,000. Mr. Green buys it for $130,000. He makes a down payment of 20% and borrows the rest. The lender charges four (4) points. If there are no other dosing costs, what is the total cash layout by Green? (6) A) 4160 B) 6000 C) 26000 D) 30160
D) 30160
7. Which of the following cannot maintain an escrow account'? (3F) A) A real estate broker B) An attorney C) An escrow agent D) A salesperson
D) A salesperson
30. In New Jersey, real estate commissions (3C) A) Are negotiable between the broker and client B) May be expressed as a percentage C) May be expressed as a flat fee D) All of the above
D) All of the above
45. Under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), the cost for the cleanup of hazardous substances on a property can be collected from: A) The current property owner B) The party that caused the contamination C) All owners past and present form the point of contamination D) All of the above
D) All of the above
43. Property affected by dust and noise from a nearby road suffers from: A) Functional obsolescence B) Physical obsolescence C) Societal obsolescence D) External obsolescence
D) External obsolescence
36. Which of the following is not a reason for terminating a listing agreement? A) A fire completely destroys the listed property B) The broker declares bankruptcy C) The broker and the owner agree to cancel the listing agreement D) The owner discloses the presence of asbestos
D) The owner discloses the presence of asbestos
__________- the failure to fulfill a duty or promise or to discharge an obligation; an omission or failure to perform any act.
DEFAULT
__________ the clause in a mortgage that gives the mortgagor the right to redeem his property upon the payment of his obligations to the mortgagee.
DEFEASANCE CLAUSE
_________ is a judgment for the mortgagor to pay the balance of an obligation if the proceeds of the foreclosure sale is not sufficient to cover the principal obligation.
DEFICIENCY JUDGMENT
Answer: C. In Georgia, salespeople, associate brokers, or other affiliated licensees may hold trust accounts if their BROKER APPROVES.
Dale Douglaston is a licensee who maintains a trust account. How often must he provide his broker with a written reconciliation comparing the account's balance with its liabilities? A. on a monthly basis B. semi-annually C. quarterly D. whenever the broker requests it
B Testator's deed
Deeds executed by court appointed representatives include all of the following EXCEPT: A Guardian's deed. B Testator's deed. C Executor's deed. D Administrator's deed.
If a party is granted a property upon the condition that a certain use will continue in the future, this would be called
Defeasible fee
Estate for Years or Tenancy for Years
Definite beginning and end dates (can be less than 1 year) No notice to terminate, in possession after termination is holdover
...
Discount points Definition: The percentage of a loan which determines the amount paid to the lender to increase the yield. One discount point is equal to one percent of the loan amount.
In the bundle of rights which right allows the owner to sell or will their property ?
Disposition
Avulsion
sudden loss of land as an act of nature
A right of way over parcel A to parcel B identifies parcel B as the
Dominant estate
Remainder Estate
Dorris and Roaky- Mr. Jones sold house to church but retained the right to occupy the property as long as he lives. Estate that automatically arises after an existing estate terminates
__________- the potential rent that a property can command, considering rental of similar or comparable properties in the neighborhood.
ECONOMIC RENT
In case of doubt, a contract purporting to be a sale with right to repurchase shall be construed as ___________.
EQUITABLE MORTGAGE - SALE WITH REPURCHASE
Reliance as it pertains to voiding a contract
ER tells you that he will pay you a pension when you retire- In reliance on this your expecting the pension income
Metes-and-bounds
survey method using a point of beginning Monuments - used to identity the POB and intersection of boundary lines Benchmarks - permanent reference point used to establish elevations and altitudes above sea level Datum- a point line or surface from which elevations are measured eg N45(degrees symbol)E means surveyor is moving 45 degrees eastward from due north
Metes an bounds survey most likely used for?
Encroachments
interest rate
Esculation clause is used with >
The degree, quantity, quality, or interest one has in real estate is called:
Estate
Answer: D. A condominium owner holds title to his individual unit. A co-op owner, on the other hand, is technically a renter. It's his stock in the corporation holding title to the property that gives him the right to lease the unit as well as sell that right to another.
Evan lives in an apartment building. The land and structures are owned by a corporation, with one mortgage loan covering the entire property. Like the other residents, Evan owns stock in the corporation and has a lease on his apartment. This type of owner has A. condominium B. planned unit development C. time-share D. cooperative
What type of loan is FHA ?
FHA is considered an unconventional insured loan
A process wherein a property used as collateral for a loan is sold to pay the loan in case of default on the part of the borrower is ___________.
FORECLOSURE
_______- a procedure whereby property pledged as security for a debt is sold to pay the debt in the event of default in payment or terms. It is a process instituted by a mortgagee by which the mortgaged property is sold at public auction to satisfy obligation that the debtor failed to fulfill.
FORECLOSURE
personal service contract
terminated on the death of either party (property management agreement)
answer: B. single family residences made up of 1-4 units
Fannie Mae buys a. only single-family detached residences b. single family residences made up of 1-4 units c. any type of residential property regardless on the number of units d. any type of property
...
Fannie mae is a loan purchaser in the secondary market
Fructus Industrials
Farmer has a right to harvest his crops
FHA
Federal Housing Reserve established in 1934 to encourage lenders to make loans and influence mortgage market after the great depression
Real Estate Settlement Procedures Act (RESPA)
Federal Law requiring lenders to provide information on all the costs associated with closing a residential loan within three business days of the loan application, to use the HUD-1 closing statement, to limit required escrow deposits, and to avoid kickbacks on loan-related services.
NOT a freehold estate:
Fee determinable
If you own land and have the right to impose restrictions on that land, your ownership is;
Fee simple
The highest form of an estate wold be:
Fee simple
C holds a life estate for his life and also purchases the interest of the vested remainder man. What interest would C now hold?
Fee simple estate
Which of the following is an example of a freehold estate:
Fee simple estate
What is the difference between fee simple and non freehold?
Fee simple is freely inheritable, while non freehold is a lease
Value of office building with 156k of gross income. Expenses of 43k and 7% cap rate
First NOI- 156-43 113k 113 / 0.07 (cap rate)= 1,614,285
Right of Refusal
First option or continue to market Giving someone the first option to buy or continuing to market home while potential buyer fulfills contingencies
Gross (straight) Lease
Fixed rent/owner pays other property expenses while tenant pays utilities
Answer: A. Licenses expire on the last day of the licensee's BIRTH MONTH...and are renewed by paying renewal fees and showing proof that all continuing education requirements have been met.
For how many years are real estate licenses valid in Georgia? A. four years B. three years C. two years D. one year
When a property is rented for only one month, this is called tenancy:
For years
FIRPTA
Foreign Investment and Real Property Tax Act- fed law that allows taxing property transfers by foreign persons- any purchaser of RE from foreign seller must withhold 10% of gross price and remit to IRS within 20 days
What type of loan purchaser is a loan purchaser in the secondary market ?
Freddie Mac
Type of Freehold- Life Estate
Freehold estate conveyed to a person for the duration of someones's life.
In a sale lease back transaction
Frees up the lessee's cash
Pur Autre Vie
French meaning "for another's life" rather then life of tenant (life estate pur autre vie"- typically referring to a life estate
Outdated bathroom is example of
Functional obsolescence-curable
Emblements/Frucutus Industriales
Generally considered Personal Property (Annual Cultivated Crops)
Public offering statement
Georgia Time Share Act requires developers of timeshare projects make disclousres to prospective buys of all materal facts about the property including the buyer's right to rescind the contract within 7 days
Answer: C. Georgia law requires that licensees disclose who they represent in writing no later than the time of the written offer. If it said "should" - answer: A.
Georgia law REQUIRES that licensees disclose who they represent in writing? A. at the first meeting B. at closing C. no later than the time of the written offer D. it is not required, it is suggested
D has a broader application than the FBPA
Georgia's Uniform Deceptive Trade Practices Act: A requires a transaction take place, before a violation is charged. B has a narrower application than the FBPA. C is a vehicle for regulating interstate antitrust violations. D has a broader application than the FBPA.
Statutory Right of Redemption
Gives homeowners the right to redeem their mortgages for a period of time after the foreclosure sale, typically by paying the foreclosure sale price, plus interest and other allowable fees, to the foreclosure sale purchaser.
VA-guaranteed loan
Government- guaranteed loan designed to help veterans obtain home mortgage loans for which they might not otherwise qualify.
BRRETA
Governs The Law of Agency in Georgia
A minor would be considered to have legal capacity when acting as a ?
Grantee
Escrow Closing
Grantor/Seller delivers the deed to an escrow agent who delivers it to the grantee/buyer upon fulfillment of specified conditions
the typical residential lease
Gross lease is ?
Joint in Tenancy
Guaranteed Survivor-ship
following clause LEAST likely to be included in a mortgage? Acceleration- habendum, alienation- defeasance
Habendum-- in the deed not the mortgage- it describes how the mortgage will be held
When a sale leaseback takes place, the advantage for the lessee is
He can deduct rent as an expense
Anchoring
Heuristic problem solving characterized by the reliance on early reference points to make numerical judgments, for example appraisers, under certain conditions, may be influenced by previous value opinions, both theirs and others.
Type of Freehold- Fee Estate
Highest and most unrestrictive ownership
Fee Simple Estate
Highest form of ownership Freely Transferable/inheritable
Fee simple absolute (fee simple estate)
Highest form of ownership. Ownership is for an indefinite duration. Ownership is freely transferable. It is an inheritable estate.
Life Tenant
Holder of the life estate that exists for the duration of his own life
Under condominium laws (horizontal property acts), the owner of each unit ?
Holds a fee simple title to the unit
Alt-A Loan
Home loan for borrowers who fall short of qualifying for a prime loan. Refers to loans better than subprime, but below prime in borrower qualifications and loan terms. Most differ from prime loans by the absence of complete documentation of borrower's income assets.
120 days after completion of work
How long does a subcontractor have to file a mechanic's lien?
Answer: C.
How many acres are there in the parcel containing the N 1/2 of the SE 1/4 of the SW 1/4 of the SE 1/4 of the NE 1/4 of Section 15? A. 5 B. 2 ½ C. 1 ¼ D. 10
10 days
How many days do you have to notify the commisson after a final disposition has been filed ?
7 days
How many days do you have to recind a contract on a condo/time share ?
Answer: D. To apply for the Broker's license requires 3 years experience.
How many years of sales experience must a salesperson have before they may apply for a broker's license? A. there is no salesperson experience requirement for the Broker's license B. three months experience C. one years experience D. three years experience
The contract of lease shall be binding even on third parties if the contract of lease is________.
IN WRITING AND DULY NOTARIZED
A $22.96
If a loan is in the amount of $87,000 and the interest rate is 9.5 percent, the daily rate for computing interest proration is: A $22.96 B $22.64 C $21.45 D $21.75
A The seller becomes secondarily liable to the lender
If a purchaser assumes and agrees to pay an existing mortgage loan originally signed by the seller, then: A the seller becomes secondarily liable to the lender. B the purchaser takes no personal liability for paying the debt. C the seller is released of all liability. D the purchaser is released of all liability.
the govoner
If a vacavcy occurs in the comission who appoints a new mwmber>
Tenancy in common
If one joint tenant sells his or her property, the new owner would be a tenant in common with the other joint tenants.
D Buyer's Loan
If the seller is paying part of the buyers finance cost, the cost will be calculated as a percentage of? A sales price. B gross equity. C seller's loan. D buyer's loan.
A $659.72
If the seller's existing loan is for $95,000, at 10%, and the payment due date is on the first of the month, at a closing to take place on the 25th, the seller will owe interest of approximately: A $659.72 B $79.00 C $26.25 D $9,500.00
Metes and Bounds
In Georgia, in the conveyance of real property,this legal description will take priority over all other forms.
M&T form a corporation to purchase a parcel of real estate. How would title be held?
In Severalty
Answer: A.
In a refinance transaction, what happens? A. one loan is paid off with the proceeds from a new loan using the same property as security B. an additional loan is added to the present loan C. the loan's interest rate changes D. the term of the loan is increased
leasehold estate (less than freehold)
In a sale and leaseback arrangement the sellers fee simple estate is converted to a
Answer: B. Since the vacancy rate is usually not a condition of employment, it is usually not in the employment agreement. It is also something that would change often.
In a typical property management agreement, which would NOT be included? A. the property manager's salary B. the allowable vacancy rate C. the property manager's functions D. a description of the property
Answer: B. In this type of contract, the BUYER doesn't receive legal title to the property until the final payment is made. The BUYER receives equitable title at closing, and upon final payment to the seller receives legal title.
In an installment land contract, what type of title did the seller retain? A. joint B. legal C. equitable D. record
held in severalty by a corporation
In cooperative ownership the title to real property is
Personal Property
In cooperative ownership, the stock of a cooperative owner is treated as
C Value of an item
In determining whether an item is a fixture, which of the following would not be considered? A Method of attachment. B Adaptation to the real estate. C Value of the item. D Legal interest of the annexing party.
C conservation
In developing a master plan for a community, all of the following might be "land use districts" EXCEPT: A industrial. B multi-family. C conservation. D recreation.
An easement given to a person would most likely be:
In gross
B an estate of inheritance.
In real estate law, the word fee is closest in meaning to: A possession. B an estate of inheritance. C a tax or assessment on land. D a real estate commission.
Appurtenances
In real estate this means rights, benefits, or attachments that transfer with real property.
cost approach
In the apprasial of churched, school, and other special purpose properties the apprasier would most likely assign the greatest weight to the
D how soon the property can be resold for profit
In the capitalization approach to establishing value, the selection of the cap rate to use reflects all of the following EXCEPT: A an investment return currently sought by investors. B how much net income the property will produce. C how long the property will continue to produce the projected net income. D how soon the property can be resold for profit.
replacement cost
In the caplization process what will not be used
Acceleration Clause
In the event a borrower defaults on a loan, it enables the lender to declare the entire loan balance due and payable.
The sale of securities in a real estate cooperative Limited partnership
In the following transactions a licensed real estate saleperson be required to obtain a securities license
complaint, investigation, hearing, final decision
In the investigation and hearing process which is the sequence of events ?
Answer: B. Many homeowners are surprised the first time they receive a letter from a lender they've never heard of informing them that they now hold the mortgage on their home and that future payments should be sent to them. This secondary market is where lenders buy and sell mortgages to balance their portfolios according to market conditions and their internal needs and objectives. It should be noted that the terms of the mortgages bought and sold cannot be changed by the new note holders.
In which of the following markets may a lender sell a loan that a mortgage banker has previously originated? A. primary market B. secondary marker C. mortgage market D. consumer marker
Package Mortgage
Includes the cost of other personal items into the loan of the property.
An Estate at will would be for
Indefinite duration
Estate from Period to Period or Periodic Tenancy
Indefinite period/auto renew until notice given
Estate from Period to Period
Indefinite until proper notice of termination
Which of the following leases escalate?
Index
Government Insured Loans
Insured/guaranteed the lender against default or foreclosure, higher LTV ratio
Fraud in the Inducement
Intentional deceit about the nature of material facts or circumstances that causes one to enter a contract
Fraud in the Factum
Intentional deceit that causes one to execute a document other than the document he intended to execute- contract then void no meeting of the minds- buyer tricked into signing document
Payment terms on a straight term loan is ?
Interest only
Time-share
Interval ownership for allocated period of time
Encroachment
Intruding on real property
Fixture
Is Personal Property that has been affixed to land or a building that by law makes it Real Property
Fannie Mae
Is a loan purchaser in the secondary market
Brokerage Agreement
Is also known as a Listing or Agency Agreement
A Lease for more then 1 year
Is only enforcable in Georgia if it is in writing
Chattels
Is personal property and runs with the land
Void
It is missing an essential element and has no legal force and effect (i.e., the contract was not signed by the person with the authority to perform)
Voidable
It may be rescinded by one or both parties. Contracts are voidable by the innocent party if entered into under duress, under undue influence, through misrepresentation, through fraud, with a minor, or with an incompetent person. A contract with a contingency that cannot be met may be voidable.
What is the primary purpose of a quitclaim deed ?
It terminates any claims of ownership the grantor has in the property
Appurtenance is ?
Items that go with the land to successive owners. (trees, buildings, or ownership rights)
What are chattels ?
Items the seller can loan into the van when moving after the sale. Cara, boats, furniture, clothes, stocks, money .
TAXES ASSESSMENT DATE
JAN 1 FOR CALENDAR YEAR AND ARE PRO RATED AT CLOSING
RIGHT OF SUVIVORSHIP
JOINT TENANCY
J&R own property and R dies. R's children try but can't obtain title from J. What type of title did J&R hold?
Joint tenancy
What tenancy would allow survivorship?
Joint tenancy
automatic right of survivorship meaning it goes to the partner in the deal that is still living
Joint tenancy is
B terminate
Jones, a life tenant, grants Smith an easement across Jones's land. Later Jones dies. The easement will: A go to Jones heirs. B terminate. C remain Smith's. D not be enforceable because a life tenant cannot grant an easement without committing waste.
D a debit on both forms
Joshua is buying a house. Among other concessions, the seller has agreed to pay half of the cost of the PMI that will be charged at closing on the buyer's 95% new mortgage loan. On the Net to Seller and Cost to Buyer forms, this will show as: A a credit to the buyer and a debit to the seller. B a credit to the seller and a debit to the buyer. C a credit on both forms. D a debit on both forms.
A contract between an owner and a tenant on thing worth conditions of use is __________.
LEASE
ITANGIBLE TAX EQUATION
LM-AM X 1.5/500
Real Property
Land and improvements
Dominant Estate
Land owned by a person who has the right to use the land of another, the person who benefits from an easement
Real Estate is ?
Land plus things that are attached to the land by nature or man made buildings. (trees, buildings)
What would give the buyer a high initial equity investment in a property ?
Large down payment
Commercial Mortgage
Larger money, depends on income produced by the property, less government involvement.
What type of an estate would a tenant have?
Leasehold
When a lease is inherited, the estate would be known as:
Leasehold
Dower
Legal Life estate that a wife has in the real estate of her deceased husband is
Promissory Estoppel
Legal doctrine that stops a person from canceling a contract despite certain deficiencies
Title Theory (foreclosure)
Lender holds the title to property- Lender provides conclusive evidence to the trustee that the borrower has defaulted on terms of the note and instructs the trustee to sell the property. A notice of default is recorded on public record and after waiting period 90-120 days property is sold at auction
A buyer obtained a residential loan from a lender and paid for a lenders title policy. The policy would protect the ?
Lender only
Prohibited fees
Lender unable to pay realtor for referral- lender may not add third party fee- unable to take a fee without doing any work
When a lease is entered into, it is between the?
Lesse and lessor
In a net lease, property taxes are paid by the ?
Lessee
When a party has an interest in a property, what is not considered Fee Simple Absolute Interest?
Lessee with a long term lease
Leasehold interest
Lessee's interest
In a sale lease back transaction:
Lessor retains legal title
Leased fee interest
Lessor's interest
Caveat emptor
Let buyer beware
Caveat venditor
Let seller beware
A summer camp uses a property as a weekend retreat, the owner does not create an encumbrance but instead gives the camp:
License
An irrevocable right to use a property would be called an easement:
License
If a utility company wanted an easement on a parcel of land, but the landowner did not want his property encumbered, what would the owner give the utility?
License
J was given the right to use W's land, but W could revoke this right at any time. This is an example of:
License
Requirements a broker needs to earn a commission.
Licensed, compensation agreement, and procuring cause of the sale
Standard Agent
Licensee who acts for or represents a client in an agency relationship
A remeinderman receives the property after
Life estate
Easements Appurtenant
Limited right of one landowner to use the adjoining land of another for specific purpose- Most powerful of easements
Easements in Gross
Limited right of one person to use the land of another- more rights then license less than appurtenant- cannot transfer when sold- ex. cable, phone, or gas company easements
Types of agreements that create an agency relationship?
Listing, Buyer Agency and Property Management Agreements
Whats the formula for calculating the Point Dollar Amount?
Loan Amount x Number of Points
Whats the formula for calculating the LTV?
Loan Amount/ Property Value
Prime loans
Loan taken by a borrower deemed to be the most creditworthy (high credit score, less risky, with full required supported documents)
Subprime loans
Loans made to homeowners who do not qualify for standard (prime) home loans. Can have high fees, and costly prepayment penalties that "lock in" the borrower to a high interest rate.
What are the economic characteristics of land ?
Location( situs), Improvements, fixed investments, and scarcity
Permanent Loan
Longer duration (5-10 years), funds are distributed to the borrower upfront and paid back over time, low default risk
method of determining if item is fixture
MARIA
ASSESSED VALUE
MARKET VALUE x TAX RATE= ASSESSED VALUE
Cooperative Ownership
Mary purchases ten shares of stock in the Oceanview Retirement Corporation, entitling her to a proprietary lease on apartment 428 and use of the common element. This is an example of:
Fee Simple Estate
Maximum or a Lifetime
General Agent
May represent principal in a broad range related to business (licensee)
Caveat emptor
Means let the buyer beware
Caveat venditor
Means let the seller beware
Metes
Measured in inches, feet, yards, sometimes miles
Valid Contract
Meets all essential elements and enforceable. Competent and authorized In writing unless a lease/listing under 1 year. Proper form/legal purpose; Illegal is void Legal consideration (promise/value) Offer/Acceptance or Mutual assent Signatures by both parties
Jumbo loan
Meets all standards with the exception that the loan size exceeds the maximum loan amount for purchase by Fannie Mae or Freddie Mac. Usually carry higher interest rate.
What type of land descriptions are used in Georgia ?
Metes and Bounds and lot and lot and block
The method of describing land the uses degrees, feet, and mouments is known as the ?
Metes and bounds system
The system of legal description that defines a parcel of land tracing its perimeter is the ?
Metes and bounds system
Void
Missing element/no legal force eg. no signatures
Gross lease
the tenant pays a fixed rent, and the landlord pays all taxes, insurance, repairs, utilities and maintenace connected with the property
Net lease
the tentat pays all or most hte property charge in addition to the rent
Estate at Will
Month to month lease
Interest only balloon mortgage
Mortgage loan that is interest only for its full term and then must be refinanced or paid off in full.
Purchase-money mortgage
Mortgage loan where a seller lends all or part of the purchase price of a property.
Equity of Redemption
Mortgagor has a right to stop foreclosure process by producing amount due & paying costs of foreclosure process.
Tenancy in Common
Most common form- title can pass to someone else- can owner different amounts
D. Smith is Jones heir
Ms. Smith, who is in good health, makes a will leaving her real property to Mr. Jones. Under such circumstances, all of the following are true statements EXCEPT: A Jones has no interest in Smith's property despite being a devisee. B Smith's will must be probated after her death in order to pass title to Jones. C Smith can convey to a third party all the interest she has in the property despite the will. D Smith is Jones heir.
Easements- Express Grant
Must be conveyed in writting
Joint tenancy
Must be unities in time, interest, and possession for the joint tenancy to be created. Each joint tenant has the right to sell, mortgage, or lease an interest without the consent of the other owners.
Final Disposition
Must notify commission within 10 Days
Cap Rate
NOI / Sales Price= Cap Rate
What is not a requirement of a valid deed ?
Name and signature of the grantor and grantee
Tenancy in Common
No Survivor-ship unless started in the contract
Can salesperson be licensed to sell with 2 brokerage houses
No only brokers can be affiliated with 2 or more
Is mortgage insurance required on a VA loan ?
No, mortgage insurance is not required on a VA loan
In a limited partnership, can a limited partner be held liable for more than the extent of their investment ?
No, the liability cannot exceed their initial investment
In the event of a foreclosure, the lender agrees not to terminate any leases signed after the mortgage was recorded. What mortgage clause should be included ?
Non disturbance clause
The uniqueness of land and its inability to be substituted is know as ?
Non homogenity
What is the commission paid on option contracts
None until the property sells
What happens if an agent breaches fiduciary responsibilites?
Not entitled commission and may be liable for actual damages.
Conventional Loans
Not insured/guaranteed, Typically limited to 80% LTV ratio, default insurance is provided through private mortgage insurance.
notary signature
ONLY REQUIRED FOR RECORDING DEEDS, DOESN'T MAKE SOMETHING VALID OR LEGAL
___________ is a kind of mortgage, which can be paid even before maturity.
OPEN MORTGAGE
_________- a mortgage containing a clause which permits the mortgagor to borrow additional money after the loan has been reduced, without re-writing the mortgage.
OPEN-END MORTGAGE
Breach of contract
Occurs when one party fails to perform as promised, deviates, from the specified terms of the contract, or when a person interferes with another party's performance making it impossible for the duties to be fulfilled.
Elements of a contract
Offer and acceptance Consideration Legally competent parties Consent Legal purpose
A
On January 10, a contractor started work on a new house. The work was completed on October 10. The general contractor was paid but a subcontractor for the general contractor was not paid. On December 1 the subcontractor filed a mechanics lien. What is the effective date of the mechanics lien? A. January 10. B. October 10. C. December 1. D. A subcontractor cannot file a mechanics lien.
Entitlement /guarantee
On a VA loan the amount of money that protects a lender if an eligible veteran defaults is called
Fee Simple Condition Subsequent
On the condition activities not performed Right of reentry possible
D %1
One discount point is what percentage of the loan amount? A 1/8% B 1/4% C 1/2% D 1%
Methods of contract formations
Oral- Express or implied- Unilateral/Bilateral
Conventional life estate (Life estate)
Ordinary with remainder or reversion- Set up by a grantor. Life tenant has full use and enjoyment of property for tenants life. Property reverts to grantor on the death of the life tenant. (reversion) Property is transferred to the remainderman or a party other than the grantor.
Separate Property
Owned by either spouse before marriage or received as gift
Reversion interest ?
Owner of a fee simple interest transfers an interest which, when terminated, reverts back to the owner. For example, Green conveys a fee simple defeasible title to Smith whereby, should Smith ever divorce Green's daughter, title would revert back to Green.
Tenancy by the entirety is ?
Ownership by married couples, equal partners, conveyance requires 2 signatures. Does not have right of survivorship. Not recognized in Georgia.
Rights property ownership are subject to
P - Police Power (zoning, codes) E - Eminent Domain (take by condemnation) T - Taxation (government fee for public needs) E - Escheat (dies instate)
___________- a stipulation which prohibits the mortgagor from alienating the property within the period of the mortgage.
PACTO DE NON ALIENDO
Express Contract
Parties specifically agree orally or in writing
Legal action taken to divide property owned as tenants in common
Partition action
Amortizing balloon mortgage
Payments are fixed (3-5-7 years), amortized over longer period (30 years), balloon payment required at end of term (3-5-7 years).
Situs
Peoples's preference for one area over another, based on a number of factors such as convenience and scenic beauty.
A lease where the lessee will pay a fixed rent plus a portion of the gross sales is called:
Percentage
Fructus Naturales
Permanent plantings
Remainderman
Person who becomes the owner of property at the end of a life estate. the remainderman has fee simple
Chattels is considered what ?
Personal Property
Trade fixtures are considered ?
Personal Property
Distinguished from a License (type of easement)
Personal privilege granted by one person to use the property of another (can be revoked and does not transfer) least power of easements
What are Fructus industrials or emblements ?
Personal property, in which the sales agreement should clearly state whether or not the crops are to be transferred with the land. ( Crops that are harvested each year, corn, wheat, soybeans, tobacco etc.)
An easement in gross is considered:
Personal right
Who is exempt from the licensing law requirement ?
Persons operating under a duly executed power of attorney to convey property is exempt from licensing requirement.
Easements- Necessity
Piece of property is landlocked and requires access across another's property
Answer: D.
Price fixing between brokers is a violation of federal antitrust laws. If your broker fixes prices with another broker, he or she may: A. be found guilty of a criminal offense B. be found civilly liable to injured persons C. face disciplinary proceedings by the Real Estate Commission D. all of the above
Ratification
Principal may create an agency relationship where an agent performs for the principal without the principals consent but the principal subsequently approves and ratifies the agents conduct
Whats the formula for calculating the tax rate?
Property taxes / Assessed Value= tax rate
A remeinderman would most likely be concerned with
Property waste
...
Quantity survey method: Definition: involved detailed estimate of the quantities and prices of construction materials and labor, added to the indirect costs such as building permits, surveys, for what is generally the MOST ACCURATE replacement cost estimate but also more complex and time consuming
Property Flipping
Quickly selling a property at a much higher value than originally purchased
Bilateral
RE sales contracts where one promises to pay and another promises to sell
_________ is the amount paid by the lessee of a house, a flat or business building.
RENT
Fixtures is considered ?
Real Property
Constructive (Legal) Notice
Recording the deed at a county courthouse
Riparian Rights
Refer to River, or supply water to land or crops
Estate in land
Refers to a party's legal interests or rights to a property. To be an estate, an interest must be possessory or may become possessory in the future. AN EASEMENT IS NOT AN ESTATE IN LAND BECAUSE IT DOES NOT ALLOW FOR THE POSSESSION OF THE PROPERTY.
Answer: C. Fair Housing Laws do apply to transaction involved in the selling or renting of property. (A) Fair Housing Laws prohibit discrimination on the basis of race, color, religion, national origin, sex, handicap, or familial status. (B) All properties are not exempt as one can NEVER discriminate racially under any circumstances. (D) Fair Housing Laws (1968) only apply to residential property, not commercial property.
Regarding Fair Housing Laws, which is true? A. it prohibits discrimination based on race, national origin, and religion only B. all property that do not discriminate in advertising and do not use an agent are exempt C. it applies only to discrimination involved in the acts of selling or renting property D. it applies only to commercial property transactions
Answer: A. If a broker participating in a real estate transaction doesn't receive any deposits, earnest money or any other third party funds intended as part of the transaction, the broker is not required to maintain a trust account. However, should that broker accept those funds, the broker must open a designated trust account within one business day
Regarding trust accounts, which of these statements is TRUE? A. only brokers who accept trust funds must maintain a designated trust account B. all brokers, active and inactive, are required to maintain trust accounts C. only active brokers are required to maintain trust accounts D. a firm or broker may maintain only one trust account at a time
Covenant of quiet enjoyment
Requires that the lessor will not enter the property without notice, unless it is an emergency.
Warranty of habitability
Requires the landlord to keep the property in good condition by maintaining the common areas, equipment, etc.
A loan in which monthly payments are made by a lender to retired borrower based on the borrowers accumulated equity in their property is called a ?
Reverse annuity mortgage
A lease and a life estate have which of the following words in common?
Reversion
Son gives mother the right to use his property. Son wants it back when she dies. What kind of estate must he create?
Reversion
When a grantor retains a future interest, this is called
Reversion
Bundle of Rights Include
Right to possess, control, enjoy and dispose of property
Tenancy by Entirety
Rights are Automatically Transfered to spouse (not recognized in Georgia)
Appurtenances
Rights, benefits, or attachments transferred with real property
Appurtenance
Run with land example Parking Spaces
Appurtenance
Run with the land
CORPORATION
SEVERALTY
TRANSFER TAX EQUATION
SP-AM X.10/100
There is ________ when the lessee leases a portion of the property leased.
SUBLEASE
Whats the formula for calculating the Sale Profit after commission?
Sale price- purchase price- (sale price x commission rate) = profit
GRM
Sales price / gross income
Four Economic Characteristics of Real Estate
Scarcity, Location, Investment, Improvement
Chair/Vice
Secert Ballot is used to elect
Home equity loan
Second mortgages, used to finance home improvements and other purchases, where homeowners can borrow against the accumulated equity in the home.
Vice chair and chair
Secret ballots are used to elect ?
The financing instrument used in Georgia in lieu of a mortgage is a ?
Security deed/ deed to secure debt
deed
the written instrument transferring ownership from Seller (GRANTOR) to Buyer (GRANTEE) Essential elements: name/signature of grantor, grantee identified, restrictions, legal description, delivery and acceptance by grantee
Straw Buyer
Sell your identity to someone that applies for a loan in your name
Optionor
Seller
What is the advantage of a sale with a leaseback?
Seller frees up cash for other uses
Conventional Life Estate
Set by grantor Full use until the end of tenant's life Transferred to remainder man or party other than grantor
Life Estate Pur Autre Vie
Set by grantor, and based on life of third party Reverts back to grantor or to remainderman
Execute a contract
Sign the document
Residential Mortgage
Smaller money, depends on borrower's income, more government involvement.
In a rectangular survey, normally the longer the legal description the ?
Smaller the parcel of land
B Void
Smith enters into a contract with Jones. Unknown to Smith, Jones has previously been judicially determined of unsound mind. Under these conditions, the contract is: A valid. B void. C voidable. D unenforceable.
Homestead
State laws that are intended to protect surviving spouses of homeowners from real estate taxes, general creditors and other circumstances arising from the death of a spouse.
House Stealing
Stealing someones identity and selling their house to collect the profit
Cooperative Ownership
Stocks and Shares
Novation
Substituting a new obligation for an old one or substituting new parties to an existing obligation( release seller form any future liability on loans secured by the real estate, buyer is solely responsible for any default on loan)
Novation
Substitution of original contract and release of obligation from original contract
Answer: D. Pete is allowed to sell the property to anyone else while the option is in effect, however, whoever buys the property from Pete has to accept the terms of the option while its in effect. Note: When you see the term "acquire" or "obtain", it means that someone "comes into" a contract/agreement or "buys" a property.
Sue acquires an option to buy a tract of land from Pete. Which of the following is NOT true? A. Sue is the optionee and Pete is the optionor. B. The property may be purchased at the discretion of the optionee. C. Pete may not diminish the value of the property (waste) during the period the option is in effect. D. Pete may not sell the property to anyone else during the period the option is in effect.
___________ - It means that if at the end of the period of lease, the lessee continues to enjoy the thing leased with the acquiescence of the lessor, it is understood that there is an implied new lease.
TACITA RECONDUCTA OR IMPLIED NEW LEASE
...
TENANCY FROM PERIOD TO PERIOS )MONTH TO MONTH ) REQUIRES A NOTICE
When the property is subject to rent control law, the lessor can eject the lessee when there is need of the owner or his immediate family member to use the premises for residence, on the following conditions except: A) Lease has expired B) 3 months advance notice is given to the lessee C) The owner or immediate family member has not other dwelling D) The owner or immediate family member will use the premises for business E) The lessor or immediate family member will live in the premises for at least one year.
THE OWNER OR THE IMMEDIATE FAMILY WILL USE THE PREMISES FOR BUSINESS
Under RA 8791, the maximum redemption period after extra judicial foreclosure of a mortgage executed by a corporation in favor of a bank is________. (General Banking Act, Juridical Persons)
THREE (3) MONTHS
Under the Rent Control Law, the lessor may ask for a deposit rental not exceeding_______.
TWO (2) MONTHS
Whats the formula for calculating the annual taxes?
Tax Rate x Assessed Value = Annual taxes
A an easement in gross
Telephone lines are examples of: A an easement in gross. B a legally valid encroachment. C an easement appurtenant. D a non-revocable license.
A survivorship interest is created in what?
Tenancy by entirety
Condominium Ownership
Tenancy in Common
A,B and C hold unequal interest in a piece of land; they own it as:
Tenancy in common
A all exclusive listings must be in writing
The Commission requires: A all exclusive listings must be in writing. B all gross listings must be in writing. C all open listings must be in writing. D all listings must be in writing.
B the owners
The Directors of a condominium owners' association are elected by: A the officers. B the owners. C the occupants. D the management company
Answer: D. 640 ÷ 4 ÷ 2 = 80 acres. 640 ÷ 4 ÷ 4 = 40 acres. 80 acres + 40 acres = 120 acres. 120 acres x 43,560 = 5,227,200 square feet
The S1/2 of the NE1/4 and the NW1/4 of the SE1/4 would contain A. 2,344,560 square feet. B. 3,484,800 square feet. C. 4,395,340 square feet. D. 5,277,200 square feet.
a. within 3 days of the application
The Truth-In-Lending Act disclosure must be given to the borrower a. within 3 days of the application b. 3 days before closing c. 1 day before closing d. at closing
Answer: A. The mortgage insurance premium is paid by a mortgagor for mortgage insurance, either to a government agency, such as the Federal Housing Administration (FHA) or to a private mortgage insurance (MI) company.
The amount paid by a mortgagor for mortgage insurance, either government or private is called A. mortgage insurance premium B. private mortgage insurance premium C. FHA insurance premium D. VA insurance premium
A real estate broker was hired to lease commercial properties. Each commercial lease was different based on the requirements of the parties. What should the broker do in this situation ?
The broker should seek legal counsel to draft the leases
Selling broker
The broker who brings the buyer to the transaction. The selling broker may or may not actually represent the buyer.
Listing broker
The broker who has entered into an agency agreement to market and sell property on behalf of its owner.
D sales price
The brokerage fee is usually a percentage of the? A buyers loan amount. B gross equity. C seller loan amount. D sales price.
Answer: D.
The buyer and seller agreed to a purchase price of $103,500. The buyer received an 80% loan. How much was the buyer's loan and how did it appear on the settlement statement? A. $103,500. Credit the buyer and debit the seller B. $100,000. Debit both the seller and the buyer C. $95,000. Credit both the seller and the buyer D. $82,800. Credit the buyer only
A Special Warranty Deed
The buyer is only protected from defects that occured during the seller's ownership
If life estate is sold
The buyer would receive the same interest the life tenant had.
Answer: (D) - subordination clause
The clause that allows a lender to waive his lien priority in favor of another's is known as the: A. defeasance clause B. alienation clause C. subrogation clause D. subordination clause
the rights of the other co owner were not transfered by the general warranty deed becasue they did not sign it
The co owner of a property held in joint tenancy conveyed his interest to a buyer warranty deed signed only by the co owner
For a property to be held in tenancy by the entirety is must be ?
The co tenants must be lawfully married husband and wife
Answer: (B) - buyer's brokerage engagement
The contract signed between a buyer and a broker is called? A. listing contract B. buyer's brokerage engagement C. listing engagement D. buyer's relationship
Spatial monopoly or oligopoly
The control of a real estate product within defined geographic region by one (a monopoly) or a few (an oligopoly) suppliers.
B The problem associated with estimating deprecitaion
The cost approach would be the least reliable method to use in estimating the value of a seventy year old building because of: A changes in building codes. B the problem associated with estimating depreciation. C changes in the cost of labor and materials. D the impact of new safety standards.
Answer: B - Maturity
The date on which the principal balance of a loan, bond, or other financial instrument becomes due and payable is called A. its due date B. maturity C. end of the paper trail D. delivery
Spread
The difference between the return on the underlying assets and the cost of borrowed funds.
Answer: C. Like points, discount points are one-time charges equal to one percent of the loan amount for each point charged.
The discount points charged by a lender on a federal VA or FHA loan are a percentage of the: A. sales price B. appraised price C. loan amount D. down payment
C dedication
The donation of real estate for public use is known as: A reverse condemnation. B eminent domain. C dedication. D escheat.
The surface of the earth extending down to the center and upward to the sky
The extent of an owner's rights in land would include
A Scarcity
The fact that an acre of land in a rural area cannot fulfill as many needs as an acre of urban land describes the economic characteristic of: A Scarcity B Situs C Improvements D Location
Answer: A. Civil rights laws apply to owners of residential property, rental units, hotels and virtually any other building offering housing or accommodations to the general public.
The federal anti-discriminatory laws apply to which of the following? A. a broker selling a single-family home B. a private club not open to the general public C. office building sales D. the rental of industrial property
Answer: D. These are considered legal, not financing fees and therefore are not part of the Truth in Lending statement.
The finance charges recorded on the Truth in Lending statements would include all of the following EXCEPT: A. loan fees charged by the lender B. insurance premiums for mortgage insurance payment C. discount points and service fees D. recording fees and title insurance premiums
Limited Liability Company
The following business organizations offers the members the limited liability offered by corporate ownership and the tax advantages of a partnership.
Selling Stock in a Real Estate Corporation
The following transactions would most likely require a real estate licensee to have a security license.
Special agency
The form of agency empowering the agent to act on behalf of its principal in a particular act or transaction such as a real estate listing. The special agency is in contrast to the general agency where the agent acts on behalf of its principal in a particular business and also in contrast to the rarer universal agency that empowers the agent to transact all manner of business for its principal. Real estate brokerage is a special agency.
In a limited partnership who runs the business ?
The general partner
Answer: (C) - accretion
The gradual build up of soil on a property through the action of wind or water is known as: A. erosion B. avulsion C. accretion D. reliction
Answer: C. Net income is $73,500 minus $52,300 or $21,200. The value of the building is calculated by dividing net income ($21,200) by the rate of return (11%) which, in this case, is $192,727.27.
The gross income from an office building is $73,500 and the annual expense total is $52,300. If the owner expects to receive an 11% return on his investment, what is the value of the building? A) $475,454.54 B) $668,181.81 C) $192,727.27 D) $125,800.00
Homestead Rights
The homeowner may be allowed certain protection from judgments of creditors as a result of the state's
Risk
The likelihood of an occurrence of an unwanted event.
Adjusted basis
The original basis in the property improvements, plus any capital improvements, less depreciation taken.
Prohibit utility meter reader on the property
The owner's bundle of legal rights would not include the right to.
The phrase bundle of rights refers to ?
The ownership of real property
Implied contract
The parties by their actions or conduct enter into a contract. Examples: buying gas at self service, ordering food in a restaurant, securing services for a taxi.
Express contract
The parties have specifically agreed, either orally or in writing, to enter into a contract.
C.
The person conveying an interest in real property is called A. the buyer B. the grantee C. the grantor D. the mortgagor
Management risk
The possibility that subpar managerial performance lowers the investor's return.
money borrowed
The pricnipal is the
Pride of ownership
The pride associated with real property ownership.
Answer: B.
The primary PURPOSE of a deed is to: A. prove ownership B. transfer title rights C. give constructive notice D. prevent adverse possession
Answer: D. Truth in Lending; (Reg Z) is intended to do away with deceptive financing tactics, especially those involving hidden costs--for example, advertising a $250 car lease as zero-down and then tacking a $1,200 upfront payment at the time of the contract disguised as an "incidental" acquisition fee.
The primary purpose of Truth in Lending is to: A. control interest rates on behalf of the consumer B. control the true costs to close a transaction. C. disclose the true costs of only an FHA loan D. disclose the true costs of obtaining credit
A
The primary purpose of a competitive market analysis (CMA) is to: A. Provide an estimate of the selling price for the property. B. Locate the boundary lines. C. Determine the loan amount. D. Estimate the property taxes.
What is severance ?
The process by which an item of real property becomes personal property.
Capitalization
The process of converting an income stream into a lump sum estimate of present value.
Subdivision
The process of dividing large land parcels into smaller sites.
C 1 Dec
The purchaser who closes her new loan on Oct. 2nd will have her first payment due on ______? A 1 Nov. B 10 Nov. C 1 Dec. D 10 Dec.
A
The purpose of a market analysis is to determine: A. What purchasers have been willing to pay for homes similar to the home you are listing. B. maximum loan value of the property for lending purposes. C. If the property has hidden defects which must be disclosed to potential buyer. D. If the property is in compliance with zoning regulations.
Investing
The pursuit of a future return by delaying consumption and taking an anticipated, desired level of risk.
Separate property
The real property owned by a husband or wife prior to their marriage.
b. protects the interest of the grantee.
The recordation of a warranty deed: a. gaurantees ownership. b. protects the interests of the grantee. c. prevents claims of parties in possession. d. provides defense against adverse possession. STATE EXAM!
Answer: B. Recording a deed does not convey, insure, or warrant ownership. However, it DOES protect the owner's interest in a property by serving notice that the recorded owner is the only recognized holder of title. This places a larger burden of proof and process on someone trying to assert a prior ownership interest and/or claiming a deedholder's title is clouded.
The recording of a deed: A. is all that is required to transfer the title to real estate B. gives constructive notice of the ownership of real property C. insures the interest in a parcel of real estate D. warrants the title to real property
Mortgage reduction
The reduction or amortization of the mortgage balance over time.
B tenancy by the entireties and joint tenancy
The right of survivorship is associated with: A tenancy in common and condominium ownership. B tenancy by the entireties and joint tenancy. C tenancy in common and joint tenancy. D tenancy by the entireties and community property.
Police power
The right of the government to regulate for the purpose of promoting the health, safety, and welfare of the public
Eminent domain
The right of the government to take property for plug public use and pay just compensation. The government exercises this right by the process of condemnation.
Profit a prendre
The right to take crops, soil, or profit from the land of another.
The best explanation of an easement would be:
The right to use another property
STATUE OF FRAUDS
The state law that requires real estate contracts to be in writing and signed by all parties to be legally enforceable is called
Blue Sky Laws
The state laws designed to protect the public from fraudulent practices in the promotion and sale of these securities are called.
Heuristics
The subconscious mental shortcuts employed by human problem solvers needing to minimize cognitive effort.
Sandwich lease
The sublessor's interest in a rental.
Who pays some or most of the operating expenses in a net lease ?
The tanant
Answer: B. The assessment roll would produce a total assessed value, which could then be divided by the anticipated cost of government to determine the tax rate. The total value becomes the tax base for the community.
The tax assessment roll, showing the assessed value of property in an area, would be used to: A. Establish the tax rate B. Establish the tax base for the community C. Equalize the taxes paid by the owners in that area D. Determine the proportionate share paid by each property owner
Assignment
The transfer in writing of interest in a bond, mortgage, lease or other instrument( any mortgage, contract or note can be assigned
Answer: B. An estate at will is an interest in a leased property that continues indefinitely, and may be terminated by either party.
The type of lease that is for an indefinite amount of time and may be cancelled by the landlord or tenant at any time is known as: A) a life estate. B) an estate at will. C) an estate from period to period. D) a fee simple estate.
Leverage
The use of borrowed funds by the investor with the anticipation of increasing investment returns.
Opportunity cost
The value of the next-best investment alternative when faced with mutually exclusive investment choices.
Escalator Clause
There is a cap rate
What are tenements?
Things permanently attached to the land, physically, or legally immovable by law.
Time of performance of the following activities is typically found in the offer:
Time for acceptance of the offer. Date for property, termite, lead-based paint, and other inspections. Date for loan application to be completed. Date for loan approval. Closing date. Date of possession.
An ownership interest that is based on annual occupancy intervals is a ?
Timeshare
Depreciation
To a real estate appraiser, a decrease in value suffered by a property because of a diminished ability to serve the needs of its users and potential users typically due to age or functional disutility.
All of the following are properly described by the word improvements except ?
Trade fixtures
Assignment
Transfer of rights and/or duties from one contract to another contract or from one person to another person.
Leases
Transfers the right of exclusive use and possession but not ownership of real estate
Severance and the removed tress are personal property
Tress growing on the property are cut down by the owner this process is called
B in lien theory states, the lender has only a monetary claim to the property
Two different legal positions have developed regarding the lender's rights in property, where a mortgage has been given as security for a debt. Some states practice the lien theory of mortgage law while others follow the title theory. The difference is that: A in lien theory states, the borrower conveys title to the lender. B in lien theory states, the lender has only a monetary claim to the property. C in title theory states, the borrower retains legal title. D in title theory states, the lender has only a monetary claim to the property.
The recording dates
Two mortgages and a judgement were filed against a property . The priority of the liens would be determined by ?
Tenancy in Common
Two or more people have separate legal title with undivided ownership in their fractional piece of property. Passes to heirs unity is possession e.g. air space and common areas in condo
Real property ownership/ interest
Types of ownership (estates in land) Joint tenancy, Tenancy in common, condominiums
Uniform settlement statement
Under RESPA one requirement pertaining to the closing is that the lender must use a particular closing statement form developed by HUD. This form is known as
Answer: B The intent of RESPA--the federal Real Estate Procedures Act-is to make borrowers more aware of costs and charges. Accordingly, it should be given at the time of application and no later than three days after that
Under RESPA, a copy of REAL ESTATE SETTLEMENT COSTS AND YOU must be given: A. within one day before closing B. at the time of loan application, or within 3 days of application C. within 5 days of application D. at closing
Answer: (C) - low down payment
Under Truth-In-Lending, which of the following would NOT be a "trigger term" and WOULD be allowed in advertising credit? A. $5,000 down B. 2% lower than prime C. low down payment D. 15 year loans available
Deed of Trust
Under a Deed of Trust, the seller gives title to the buyer, and the buyer then signs a Deed of Trust which makes the lender the beneficiary in the Deed of Trust
Two Characteristics of Land
Uniqueness and Immobility
...
Unit-in-place method: Definition: involves estimating the cost of replacing specific components of a building such as the roof, floors, foundation, etc. and add all the estimates together - See more at: http://www.coursehero.com/flashcards/379378/WA-RE-FUndamentals/#sthash.XOaUDOn8.dpuf
Statutory Estate
these are interest created by state law. (4) Rights 1. Dower Rights 2. Curtsey Rights 3. Community Property Rights 4. Homestead Property Rights
Punitive damages
Unrelated to the cost of the loss and are merely awarded to punish the wrongdoer.
Land Contract
Vendor (seller) retains title until the final payment is met by the vendee (buyer). Buyer gets equitable title. (aka. installment contract, contract of deed, agreement of sale, bond of title)
When a grantor gives a future interest to a named grantee, it is called:
Vested remainder
VREB
Virginia Real Estate Board
License by Reciprocity
Waive national exam and pre-license course- state is only required/ must have been sales person for 12 of the last 36 months preceding application/ for a broker must have been work 36 of the last 48 months
A mortgage company makes a number of new loans to be packaged and sold in the secondary market to investors, this short term financing is called ?
Warehousing
Answer: D.
Water rights relating to flowing water such as a river or stream are called _______ and rights relating to a lake or sea are called ________. A. riparian, percolating B. littoral, riparian C. aquarian, oceanic D. riparian, littoral
Answer: (A) - RESPA
What Act has as its primary purpose to educate BORROWERS regarding the costs involved in CLOSING so that the BORROWERS can shop for the best situation for them? A. Real Estate Settlement Procedures Act (RESPA) B. Equal Credit Opportunity Act (ECOA) C. Truth-In-Lending (Regulation Z) D. 1968 Fair Housing Act
Answer: B. Outstanding debts could be pursued as a result of a deficiency judgement.
What could happen if a property is sold at foreclosure and does not bring enough money to satisfy all of the debts secured by the property? A. any obligation of the debtor terminates with the sale of the property. B. outstanding debts could be pursued as a result of a deficiency judgement. C. all monies owed must be satisfied as a result of the foreclosure sale. D. all other property owned by the debtor is automatically seized and sold at a future sale to satisfy the unpaid debt.
A. Legal life estate
What do dower and curtesy rights have in common? A Legal life estate. B Possessory estate. C Leasehold estate D Remainder estate.
Answer: A. "Conveyance" means the process of transferring property from one owner to the other. A General Warrant Deed provides the most protection for the buyer.
What instrument of conveyance affords the most protection to the purchaser? A. general warranty deed B. special warranty deed C. quit claim deed D. security deed
street address of the property
What is NOT required in a land description ?
When the lessee pays some or all of the operating expenses
What is a net lease
an opinion or estimate of a propertys market value
What is an appraisal
Answer: D. A prepayment reduces the principal on a loan before the due date and can result from a sale, the owner's decision to pay off the loan early, or foreclosure.
What is private mortgage insurance (PMI) ? A. mortgage insurance that is arranged for by the buyer privately B. mortgage insurance provided by a private mortgage insurance company C. insurance required for loans with a loan-to-value percentage in excess of 80% D. both B and C
C
What is the maximum repayment term on a VA loan? A. 20 years C. 30 years D. 40 years
$1,000
What is the maximun fine for comingling funds ?
B Possesion
What is the one unity in a tenancy in common ownership? A Interest. B Possession. C Time. D Title.
Answer: (D) - the listing COMPANY
When a salesperson prepares an offer to purchase on a property listed with another real estate firm, he/she should recommend to the customer that the earnest money check be made payable to: A. the selling salesperson B. the selling company C. the listing salesperson D. the listing company
B a periodic estate
When a tenant is in possession of property, and the tenancy may be terminated by notice from either party, there exists: A an estate for years. B a periodic estate. C a determinable estate. D an estate at sufferance.
B Separated
When air rights are sold from the rest of the land, they are: A divided. B separated. C partitioned. D severed.
Dual agency
When an agent represents two principals in the same transaction.
Adaptability to the real property
When determining if an item is a fixture the court would take this into most consideration
at the time of application or within 3 business days of the completed application
When does the real estate settlement procedures act requires the lender to provide the borrower a good faith estimate of settlement cost ?
Rescue Scam
When homeowners behind on mortgages are told that they can transfer deed and pay rent --then buy back home later after paying upfront fees
prices on the residential properties would decrease
When interest rates increase on residential home loans, which of the following is most likely to occur
Answer: B. Commission is normally "payable" upon closing.
When is the commission normally payable? A. upon the broker bringing in a ready, willing, and able buyer B. upon closing C. upon presentation of the offer D. three days after closing
fee simple defeasible
When land is conveyed to a unversity " so long as" it is being used for educational purposes it would be considered
Due on sale Clause
When property is sold, it gives the lender the right to accelerate the loan, requiring borrower to pay it off.
Answer: C. Most commonly known as "restrictive covenants," such as deed restrictions are often used to maintain the consistency of a neighborhood by, for example, stipulation that only traditional home styles of a particular size and painted in traditional colors may be constructed and occupied within the subdivision. These are encumbrances on the property.
When the grantor does not wish to convey certain property rights, he or she: A. must note the exceptions in a separate document B. may not do so, since the deed conveys the entire premises C. may note the exceptions in the deed of conveyance D. must convey the entire premises and have the grantee reconvey the rights to be retained by the grantor
Express agency
When the parties state the contract's terms and express their intention, either orally or in writing. Example: a listing agreement.
Syndicate is ?
When two or more people join to make and operate a real investments
Joint in Community
When unmarried couple obtain property together(not recogized in Georgia)
Answer: B. Lowest monthly payment = lowest interest, highest year Highest monthly payment = highest interest, lowest year
Which loan will give a borrower the LOWEST monthly payment? A. 10% interest, 20 year term B. 10% interest, 25 year term C. 11% interest, 20 year term D. 11% interest, 25 year term
Answer: B. ONLY the COMMISSIONER can hold an inactive license, 5 out of the 6 Commissioner members MUST hold an active real estate license. The 6th Commission member must have nothing to do with real estate, he is just an employee.
Which of the following is NOT true of the Real Estate Commission Members? A. five must hold an active real estate license B. one must not hold an active license but can hold an inactive license C. five must have been residence of Georgia for at least five years D. the Commissioner is not the sixth member of the Commission
Answer: C.
Which of the following is not true of the Commissioner? A. he or she is hired by the Commission B. he or she may hold an inactive license C. he or she is appointed by the Governor and approved by the Senate D. he or she is a full time employee
Answer: D. Second mortgages carry higher risk for lenders because because they're "second" in line after the first mortgage holder. In case of foreclosure, that means the first mortgage holder is paid in full before any remaining monies are distributed. This added exposure typically results in higher interest rates.
Which of the following is true of a second mortgage? A. it has priority over a first mortgage B. it cannot be used as a security instrument C. it is not negotiable D. it is usually issued at a higher rate of interest
A
Which of the following organizations is a loan purchaser in the secondary market? A. Freddie Mac. B. Mortgage companies. C. Commercial banks. D. Federal Housing Administration (FHA).
A
Which of the following statements BEST describes a net lease? A. The lessee pays some or all of the operating expenses. B. The lessor pays all operating expenses connected with a leases space. Ce. The landlord receives a percentage of the gross income received by the tenant doing business on the leases property. D. The lessee pays only the rent.
C The transfer tax is based on the sales price minus any assumed loan amount
Which of the following statements regarding the Transfer Tax is true? A The transfer tax is a credit on Buyer's Cost estimate. B The tax is calculated at a rate of 10 cents per hundred dollars of the new loan amount. C The transfer tax is based on the sales price minus any assumed loan amount. D The transfer tax is usually prorated between buyer and seller.
Answer: (B) - Grantor AKA Seller
Who acknowledges a deed so that is can be recorded? A. notary public B. grantor C. grantee D. clerk
Answer: D.
Who enforces the Georgia Fair Housing Law? A. The Commissioner B. The EEOC C. The Georgia Real Estate Commission D. The Georgia Commission on Equal Opportunity
Answer: (B) - The month prior to the month the payment is made.
With a traditional, fully amortized loan, the interest portion of a payment due and made on the first day of a month covers the interest for: A. the month in which the payment is made B. the month prior to the month the payment is made C. the month following the month the payment is made D. the last fifteen days and the next fifteen days
Notify Commission of change of Address When?
Within 30 days
On the sale of their property the seller continues to make payments on their first loan and creates a new second mortgage with the buyer. The second mortgage would be a ?
Wraparound loan
What would be the best way to prevent leasing problems between the lessor and lessee ?
Write any restrictions or requirements in the lease agreement
A seller is selling a house financed with an existing VA loan. Can the borrower assume the loan ?
Yes if the VA approves the buyer and loan assumption agreement
Can a VA loan be used twice ?
Yes if the veteran has paid of all prior VA mortgages or obtained a release from the lender
Police Power
Zoning of private property by the government is an example of ?
mortgagor
a borrower in a mortgage loan transaction
Monetary Damages vs. Liquidated Damages
a builder agrees to build a home for 100k- it would have cost 90k for the builder- builder then can sue for 10k in monetary damages if there were no liquidated damages
blanket mortgage
a builder purchased several parcels of property with a mortgage containing a release clause is a
A lien on the property that has not been released by a lien holder would create ?
a cloud on the title
trustee's deed
a deed executed by a turstee conveying land held in a trust, DEED IS GIVEN TO A THIRD PARTY TO HOLD
A quitclaim deed is
a deed the contains no warranties, and provides the least protection for the grantee and the least liability for the grantor
may reject the application on the basis of her employment as a lawyer
a disabled muslim lawyer responsible to a classified advertisment, applied to rent an apartment in a large complex for which she and her two young children were financially qualified to rent. the property manager: ON STATE EXAM!
In Georgia what document operates only as security for a debt and passes no title to the property ?
a mortgage
Liquidated damages
to avoid a lawsuit if one party breaches the contract, the partiese may agree on a certai namount of money that will compensate the nonbreaching party
testate
a person who dies has prepared a will indicating how the deceased property will be disposed of
grantee
a person who recieves a transfer of real property from a grantor
optionee
a prospective buyer or leasee, given an option
Special Assessements
a tax or levy customarily imposed against only those specific parcels of real esatte that will benefit from a propesed public improvement like a street or sewer
A tenant is renting space in a retail mall. The lease expires and the tenant wrongfully holds over after expiration of the lease without the landlord's consent. This would be an example of ?
a tenancy at sufferance and no notice is required by the landlord
nonconfroming use
a use of property that is permitted to continue after a zoning ordinance prohibiting it has been established for the area
Overall capitalization rate
a value ratio commonly indicated either by R„ or OAR, it is calculated from historic sales by dividing a property's net operating income by the purchase price. Overall capitalization rates are commonly used to estimate investment value and market value of income producing real estate.
Holographic will
a will that is not witnessed and in the testor's hand writing- not valid in all states
Pour over will
a will that leaves some or all of testor's assets to a living trust that testor setup before death
Baird leases store space to carr for a restaurant. Carr installs his ovens, booths, counters, and other equipment. These items are considered to be ?
trade fixtures
A trust is a legal arrangement in which title to property is held for the benefit of a third part by a ?
trustee
If the investor is in the 33% income tax bracket, how much will a tax credit of $2,000 save the investor in taxes?
a. $2,000.00
How much would you pay to receive $50 in one year and $60 in the second year if you can earn 15 percent interest?
a. $88.85
A tenant in a strip mall pays a monthly rental that includes all property maintenance charges, utilities, and cleaning services. This is known as a a. net lease. b. percentage lease. c. ground lease. d. gross lease.
a. A net lease is one that includes rent plus operating expenses within the rental price
Mortgage banking companies:
a. Collect monthly payments and forward them to the mortgage investor.
Probably the greatest contribution of FHA to home mortgage lending was to:
a. Establish the use of the level-payment home mortgage.
The dominant loan type originated by most financial institutions is the:
a. Fixed-payment, fully amortized mortgage
The dominant loan type originated and kept by most depository institutions is the:
a. Fixed-payment, fully amortizing mortgage. (Note, while this answer has traditionally been correct, the sharp increase in adjustable rate loans since about 2004, could alter the correct answer to b. Adjustable rate mortgage.)
In shopping center leases, rents are typically quoted on the basis of what type of area occupied by the tenant?
a. Gross leasable area.
The best method of determining whether to refinance is to use:
a. Net benefit analysis.
A lease in which the tenant pays a rent based in part on the sales of the tenant's business is known as a:
a. Percentage lease.
The party most likely to sue for specific performance in the purchase of real estate is the a. buyer. b. seller. c. broker. d.mortgage insurance company.
a. While a seller's problems might be solved with money damages, a buyer might prefer forcing the seller to sell, because each parcel of real estate is unique.
Implied Agency
actions or conduct An implied agency is created when the parties actions or conduct communicate their agreement. eg. "take this deal. its the best for you."
How do you create an agency relationship?
actions or contract An agency relationship is created through a written contract or the actions of the parties.
canceling a contract
after due diligence a party could cancel the contract without penalty, therefore it could become a voidable contract, ex: unable to clear title
deed convenant
agreement to perform or not perform specific acts on property
Minimum qualifications for Firm licenses
all firms except those owned by single licensed broker with a single location must be separately licensed and must also be registered to do business in VA
reverse exchange
allow replacement property to be acquired prior to the disposition of the exchanged property
Special use permit- zoning related
allowing a hospital to be built in residential area
Variance
allows for deviation from the existing zoning in unique circumstances accord to state laws
open-end mortgage
allows mortgagors to borrow additional funds up to a maximum dollar amount and apply to same loan
Non-Freehold Estate
also known as leasehold estate, which conveys only the right of possession without the right of ownership (someone leasing an apartment)
economic base
an appraisal factor that reviews the activities that will attract business and income to a community
Answer: B. Escrow accounts accumulate funds from closing costs and monthly payments to ensure that property taxes and homeowner's insurance are kept current.
an impound or reserve account, also know as escrow account, MOST benefits whom? A. the borrower B. the lender C. the trustee D. the trustor
A lease that provides for adjustments of renting according to changes in cost of living index would most likely be referred to as ?
an index/ graduated lease
Net
any amount over the sellers desired sale price foes to the agent as commission
Encumbrance
anything-such as a MORTGAGE, TAX LIEN, or JUDGEMENT LIEN; an EASEMENT; a restriction on the use of the land; or an outstanding dower right-that may diminish the value and the enjoyment of a property.
What can person with POA do? can they be paid?
anything/ no license required- does not matter if paid or not
voidable contract
appears on the surface to be valid but may be rescinded or disaffirmed by one or both parties based on some legal principle.
LTV is based on?
appraised value or selling price which ever is LOWER
fully amortized loan
at the end the balance is zero
The real estate settlement procedure act requires the lender to provide the buyer" a good faith estimate and a copy of the Real Estate Settlements Costs and you" booklet ?
at the time of application or within 3 business days of the completed application
trade fixture
attached to a rented space to conduct business and can be removed when lease expires. If not removed it becomes property of landlord
Like Kind Exchange
avoiding capital gains through exchanging of qualified property
Limited or Special Deed
typical after foreclosure sales, limited warranties
enchroachment
unauthorized intrusion or improvement on another's property
Vendor
under a typical land contract the seller is known as vendor- land contract
destroy the interest of all shareholders, including those who have paid their payments
under cooperative ownership the corporation is uinable to make mortgage and tax payments because a few shareholders default on maintenance payments and the property might be sold by court in a forclosure suit. the result of the foreclosure action would?
liquidated damages
unfront compensation agreed to be paid by breaching party
What are the fiduciary duties of a RE salesperson?
use care in completing forms/ be loyal to client/ accountable for docs and funds
blanket mortgage
used by developers mortgage covers more than one tract of land and gives partial release clause
Urea formaldehyde
used in building material including insulation and can cause respiratory problems
Unenforceable contract
usually oral, may also appear on the surface to be valid; however neither party can sue the order to force performance
If two brokers agree to set the same fee
violating anti-trust laws
Deed of Trust
voluntary lien on real property- similar to mortgage- third party holds deed until loan is paid in full
Dedication
voluntary transfer of private property to government- developer would give land for roads
Covent of seisin
warrants the grantor has the right to convey title
A quitclaim deed does not
warrants the grantors title and possession
covenant of encumbrances
warrants the property is free from liens or encumbrances, unless expressly stated
Community Reinvestment Act
was passed to prevent redlining and disinvestment in central city areas
...
waste Definition: permanent damage to real property caused by the party in possession, harming the interest of other estate holders (future owners) STATE
it automatically transfer to the buyer un;ess excluded in the deed
what happens to mineral rights when a propert is sold
buyer agency relationship
when a broker enters into a contract with a buyer
Encoachments
when a building, fence, or driveway illegally extends beyond the land of its owner or legal building lines, an encroachment occurs.
actual notice
when a party has actual knowledge of a fact
intestate
when a person dies without a will real esate and personal property pass the decedent's heirs accordin the state's statute of secent and distribution
title by prescription
when a squatter receives title through adverse posession
Estate at Sufferance
when a tenant occupies real estate after his lawful rights have expired
Title passes
when it is delivered and accepted, does not have to be recorde
release
when mortgage is paid off the lender releases interest in the property
assumption of mortgage
when third party assumes the mortgage they become primarily liable for debt
quantity survey method
which method is generally regarded as the most thorough and accurate method of estimating building costs
FHA
which of the following organizatins requires appraisers to disclose any defects uncovered in their inpsection:
to ensure that the property value is high enough to cover the loan amount
why do lenders usually use the services of an appraiser: ON STATE EXAM!!
Reality of Decent
without duress/fraud A requirement of a valid contract which requires a contract is entered into without duress, misrepresentation of fraud. Voidable by innocent party, valid by wrongdoer.
Brokerage Agreement
written agreement establishing the brokerage relationship between client and a licensee
Does an unlicensed investor who owns a real estate brokerage firm need to do anything?
yes, hire a broker to manage
Physical Characteristics of Real Estate
(HID) Heterogeneity - every parcel of land is different Immobility - geographic location of land can never be changed Durable - improvements can be destroyed but land still remains
Whats the formula for calculating the accumulated depreciation?
(purchase price- land value) x yearly depreciation x years
ABC Realty has just listed the property at 3545 Jayhawk Drive. ABC Realty just received a lis pendens concerning the property. What does ABC Realty have? a. a preliminary title policy b. a bill for services from the seller's attorney c. a notice that a legal action has been filed that could affect the subject property d. a revised tax assessment
c. A lis pendens is a legal notice that a legal suit has been filed or is being filed that could have an affect on the property, but the case hasn't been heard therefore the effect on the property cannot be determined.
A heating and cooling engineer is drawing up the specifications for the HVAC system in a new building. The floor space measures 200′ × 150′ and the ceiling is 12′ high. How much air space does the engineer have to heat and cool? a. 33,333 square yards b. 300,000 square feet c. 13,333 cubic yards d. 36,000 cubic feet
c. Air space is three-dimensional and is measured length × width × height = cubic feet. The number of cubic feet is divided by 27 to arrive at cubic yards.
The legal right to pass over your neighbor's land is an a. encroachment. b. estate in land. c. easement. d. example of eminent domain.
c. An easement is the right to use the land of another for a specific purpose such as a right-of-way.
Conforming conventional loans are loans that are:
c. Are eligible for purchase by Fannie Mae and Freddie Mac.
Remodeling and rehabilitation:
c. Are expected to add value to the property.
As a tenant, you wish to turn over all rights and responsibilities of your unexpired lease term to a new tenant. By doing so, you are:
c. Assigning your leasehold interest.
Double taxation is most likely to occur if the commercial properties are held in the form of a(n):
c. C Corporation
Charlie has the right to cross Tommy's property to get to his property.What is the right called? a. a license b. an easement by prescription c. an appurtenant easement d. an easement in gross
c. Charlie has an appurtenant easement from Tommy. This allows Charlie to get to his property. Charlie is said to be the dominant parcel and Tommy is the servient parcel.
Which of these lenders is most likely to provide a construction loan?
c. Commercial Bank
The lender charges 2 discount points to the buyer. How much does this increase the buyer's closing costs on his $135,000 home if his LTV is 80%? a. $2,000 b. $2,070 c. $2,160 d. $1,600
c. Convert 80% to a decimal and multiply; $135,000 × 0.80 = $108,000 loan amount; $108,000 × 2% = $2,160 cost of points.
Lender's yield differs from effective borrowing costs (EBC) because:
c. EBC accounts for additional up-front expenses that lender's yield does not.
The penalty for a first violation of Federal Fair Housing Laws can be as much as a. $1,000. b. $5,000. c. $10,000. d. $100,000.
c. HUD's penalty for a first offense can be $10,000. The Justice Department may fine for a pattern of repeat violations up to $100,000.
Consideration to bind a contract may be in the form of a. cash or cash equivalent only. b. anything that the parties agree upon as long as it has monetary value. c. money, promises, or services. d. thoughtful treatment of the other party's feelings.
c. If the parties agree, consideration need not be valuable in order to be considered "good" enough.
While the objective in the cost approach generally is to estimate the value of both land and improvements, the land typically is appraised using the a. income approach. b. gross rent multiplier approach. c. market data approach. d.option approach.
c. Land is appraised by comparing the subject property to recent sales of comparable parcels of land.
Which of these loans is a life insurance most likely to invest in?
c. Large office building loan (nonconstruction)
Which of the financial firms is most likely to invest in a large, long-term mortgage loan on a shopping center?
c. Life insurance company
Real Estate Syndicates traditionally have been legally organized most frequently as:
c. Limited Partnerships
Special Allocations of income or loss are available if the form of ownership is a(n):
c. Limited Partnerships
With regard to double taxation, distributions, and the treatment of the losses, general partnerships are most like:
c. Limited Partnerships
The asset manager is NOT responsible for:
c. Making maintenance decisions.
The numerator of the standard housing expense (front-end) ratio in home loan underwriting includes:
c. Monthly principal, interest, property taxes, and hazard insurance.
Both the owner and the manager may be better off if management's compensation were based on a percentage of the property's:
c. Net operating income.
The tenant is responsible for paying property taxes and insurance in a:
c. Net-net lease.
Which of the following is a requirement for a valid agency relationship? a. written agreement b. compensation c. mutual consent d. brokerage license
c. Of the listed suggestions only mutual consent is required. Agency is sometimes formed by the behavior of the parties; compensation is generally a result of the completion of the task assigned in the agreement; licensure is immaterial in agency.
Of the following, which lien has the lowest priority? a. property taxes b. a mortgage or trust deed c. unsecured judgment d. a special assessment
c. Property taxes, special assessments, and secured liens have priority over all others.
Lockout provisions are primarily intended to reduce the lender's:
c. Reinvestment risk
In the market or sales data approach to appraisal, the sales prices of similar, recently sold properties are a. assessed. b. analyzed. c. adjusted. d. added.
c. Sale prices of comparable properties are adjusted to match the specifications of the subject property.
When an owner sells a principal residence, the capital gain is calculated by a. subtracting selling expenses from the sales price. b. subtracting the sales price from the original purchase price. c. reducing the net sales price by the property's adjusted cost basis. d. subtracting the selling expenses from the original purchase price.
c. Taxable capital gain from the sale of a principal residence is calculated by subtracting the adjusted cost basis from the net proceeds of sale.
Tenancy by the entirety is a special form of ownership available only to a. sole owners. b. corporations. c. married couples. d. limited partners.
c. Tenancy by the entirety, available in most non-community property states, is automatically assumed when a married couple purchases real estate together unless they specify some other form of ownership.
A landlord is NOT allowed to charge a tenant extra rent because the tenant has a a. dog. b. second car. c. child. d.RV.
c. The Fair Housing Amendments Act of 1988 added the presence of children in a family as a protected class.
IRS Form 8300 must be filed at what point in a real estate transaction? a. at time of closing b. when monies are deposited in broker's escrow account c. when a buyer brings more than $10,000 in cash to the closing or as earnest money d.never
c. The IRS requires IRS Form 8300 be filed on all cash payments over $10,000.
RESPA requires all of the following EXCEPT that the a. buyer receives the HUD information booklet from the lender. b. lender makes a good-faith estimate of closing costs for the buyer. c. buyer is offered a loan that is 1/4% below market rate. d. closing will be conducted using the HUD 1 Uniform Settlement Statement.
c. The RESPA regulations have nothing to do with rates.
The obligation of protecting any deposits entrusted to an agent is an example of the fiduciary duty of a. competence. b. disclosure. c. accounting. d. obedience.
c. The agent must be able to account for and produce anything of value entrusted to their care. This includes advances of marketing fees, earnest money deposits, and escrows.
FHA mortgage insurance premium is calculated at a rate of .5% annually. How much is the premium for the month in which the remaining principal owed is $92,347? a. $0.05 b. $12.00 c. $38.48 d. $46.17
c. The annual premium on $92,347 would be $461.74 ($92,347 × 0.005). One month's premium is $38.48 ($461.74 ÷ 12).
Agent Converse has just returned from a closing for a property that sold for $125,000. The property was listed by Sporty's Real Estate Company. Converse received 2.5% of the sale price total commission for the transaction from the closing agent. Converse is on a 55/45 split with his company. About how much commission will Converse receive? a. $6,250 b. $3,750 c. $1,719 d. $1,406
c. The company received 2.5% of the sale price, and Converse receives 55% of the company's dollars; $125,000 × .025 = $3,125 × .55 = $1,718.75
The cost approach is best suited for estimating the value of a. a large tract of land. b. the income generated by a commercial property. c. a historic building. d. a condominium apartment
c. The cost approach is preferable when appraising unique properties.
Which statement is false concerning the limited partnership of ownership?
c. The limited partners cannot enjoy tax benefits but the general partners can.
Which of the following would most likely be considered incurable depreciation? a. a broken window b. a roof with curled and cracked shingles c. improvements beyond those of other homes in the area d. rotted fencing
c. This is an example of regression, an external factor, caused by the lower priced homes in the area. External factors are always incurable.
A developer received a loan that covers several parcels of real estate and provides for the release of the mortgage lien on each parcel when it is sold and an agreed-upon amount of the original loan is paid. This type of loan arrangement is called a a. package loan. b.wraparound loan. c. blanket loan. d.purchase-money loan.
c. This type of loan is normally used to finance developments, in that it has a partial release clause, thus allowing the take out of individual properties as they are sold off.
You're the buyer's agent for Robert and Debbie, who will be selling their present home with you, in the purchase of 1234 Main Street, listed by ABC Realty.What is your agency relationship with all parties? a. Robert and Debbie is your customer; no relationship exists with seller of 1234 Main St. b. The seller of 1234 main St. is your client; you are in a dual-agent relationship with Robert and Debbie. c. Robert and Debbie are your clients; the seller of 1234 Main St. is your customer. d.You're a dual agent to all parties.
c. Under the Law of Agency, Robert and Debbie are your clients; the seller of 1234 Main St. is your customer. You owe a duty of fairness to all parties.
Demolition of an existing property on an urban site will likely occur:
c. When the site value, assuming a new use, exceeds the value of the site under its existing use, plus the cost of demolition.
An owner is planning to build on newly purchased property. Zoning laws state that no improvement may exceed 50 feet in height, architectural guidelines limit improvements to 45 feet in height, and the deed restriction states the maximum height to be 30 feet.What is the tallest building the owner can legally construct? a. 50 feet b. 45 feet c. 30 feet d. The new building can be any size the owner wants.
c. When there is a conflict in limitations on the development of property, the most restrictive applies.
In inflationary times, a property manager would NOT want a long-term lease based on a. graduated payments. b. the consumer price index. c. a fixed rate. d. a cost-of-living index.
c. With a fixed-rate lease, the property manager would not have the ability to raise the rent as the market dictates.
With a mezzanine loan
c. the borrower's promise to pay is secured by the equity interest in the borrower's limited partnership or limited liability company.
All of the following are required to create a valid mortgage lien EXCEPT a a. legal description of the property being secured. b. signature by the mortgagor. c. statement of the debt. d. credit life policy
d. A valid mortgage must be in writing, signed by the mortgagor, and contain a legal description of the secured property and a statement of the debt owed.
Ken Laughton's house is "for sale by owner." Robert Hall falls in love with it during an open house, tells Ken he'll pay the full asking price, and promises to send Ken an earnest money check for $5,000. Ken accepts the offer. The contract between them is a. enforceable by court action if either tries to back out. b. invalid because it lacks consideration. c. valid only if there were witnesses. d. unenforceable.
d. According to the statute of frauds, all contracts for the sale of real estate must be in writing to be enforceable.
Escrow monies can be defined as and include a. promissory notes. b. earnest money. c. security deposits. d. all of the above.
d. All of the items are examples of escrow monies.
One effect of a clause in a sales agreement that states that "time is of the essence" might be that a. the seller can take care of matters at their convenience. b. the buyer must deal with the details of the contract as they occur. c. the agent must see that the contract has been fulfilled prior to closing. d. all parties must attend to those details called for in the agreement in a timely manner.
d. Any party who fails to take care of his responsibilities in a timely manner is subject to being held in default of the contract.
Which of the following statements is true about 15-year and 30-year fixed- payment mortgages?
d. Assuming that they can afford the payments on both mortgages, borrowers should choose a 30-year mortgage over an otherwise identical 15-year loan if their discount rate (opportunity cost) exceeds the mortgage rate.
Currently, which type of financial institution in the primary mortgage market provides the most funds for the residential (owner-occupied) housing market?
d. Commercial banks
Private mortgage insurance (PMI) is usually required on _____ loans with loan- to-value ratios greater than _____ percent.
d. Home, 80 percent.
When the appraiser estimates the value of an investment property, the potential gross income includes all of the following EXCEPT a. payment of full rental prices by all tenants with full occupancy. b. licensing fees by vendors and concessionaires. c. parking and storage fees. d. settlement by the state for the loss of land by eminent domain.
d. Income from all accounts is considered. Settlements or sale of land are not figured into the calculation.
Which of these is not typically a responsibility of a property manager?
d. Income tax analysis.
If a mortgage is to mature (i.e. become due) at a certain future time without any reduction in principal, this is called:
d. Interest-only mortgage.
The federal government requires a leaflet about possible lead paint contamination to be given to any potential purchaser or tenant of a residence built before a. 1995. b. 1987. c. 1981. d. 1978.
d. Lead-based paint has not been used since 1977.
Which of the following best describes the taxation of gain and losses from the sale of Section 1231 assets?
d. Net gains are taxed as capital gains; net losses are taxed as ordinary income.
10. Which of the following statements is false?
d. Net passive losses can be used to offset dividend income from a REIT stock.
A real estate investment trust generally:
d. None of the above
In recent years, the mortgage banking industry has experienced:
d. Rapid consolidation.
Using financial leverage on a real estate investment can be for the purpose of all of the following except:
d. Reduction of financial risk for the leveraged investment.
When determining reproduction cost, the appraiser may use any of the following EXCEPT a. price-per-square-foot method. b. cubic-foot method. c. unit-in-place method. d. consumer-price-index method.
d. Reliable methods of determining reproduction costs are the square-foot method (most common), cubic-foot method, unit-in-place method, and quantitysurvey method.
A developer includes restrictive covenants in the deeds for all properties within a subdivision. These covenants may dictate all of the following EXCEPT the a. owner's use of the property. b. style of architecture. c. appearance of outbuildings and fences. d. ethnic character of future owners
d. Restrictive covenants that would be in violation of the law are illegal.
Ownership of a property that could be terminated upon the happening of a specific event is known as a. a reverter. b. a fee estate. c. an easement. d. a life estate.
d. The death of the life tenant terminates the ownership.
Title to real property is conveyed by involuntary alienation in all of the following EXCEPT a. a tax deed. b. a certificate of title. c. eminent domain. d. a will.
d. The devise, a will or clause in a will, conveys property voluntarily.
If a commercial building producing an annual gross income of $136,000 is sold for $888,000, what is its GIM? a. 0.153 b. 15.3 c. 12.07 d. 6.53
d. The gross income multiplier (GIM) is found by dividing the sales price by the gross annual income; $888,000 ÷ $136,000 = 6.529, rounded to 6.53.
A single-family property located in an industrial area has minimum value because of the principle of a. diminishing returns. b. contribution. c. competition. d. conformity.
d. The principle of conformity states that to retain value the property should be located within an area of similar properties.
A homeowners association decides that the subdivision's community center should be sold for economic reasons. Before attempting to find an investor, the association decides it needs guidance on an appropriate asking price and hires an appraiser.Which approach is the appraiser likely to find most appropriate to appraise this property? a. the sales comparison approach b. the income approach c. the gross rent multiplier approach d. the cost approach
d. Unique properties are most accurately appraised by employing the cost approach to value.
The internal rate of return equation incorporates:
d. initial cash outflow and inflow, and future cash outflow and inflow.
Ratio analysis:
d. serves as an initial evaluation of the adequacy of an investment's cash flow.
affidavit of the seller
document that affirms from the date of the sales contract to the closing that seller has done nothing to burden the title that couldn't be revealed in a title search
Acceleration
if borrower violates the covenants of the mortgage or DOT then the entire loan balance becomes due and payable
the deed is valid but the condition is unenforceable
if o'malley deeds property to 0'halloran on the condition that no englishmen live there, what is the status of the deed? ON STATE EXAM!
alienation clause
if property conveyed to another party without the lenders consent they can collect full payment
Assignment
is the transfer of the contractual right, title, or interest of one person to another
If tenant installs new oven while living in property whom does it belong
tenant as long as she takes it out before lease expires
Lease Option
tenant purchase Tenant has the option to purchase the property within or at the end of there lease.
defeasance clause
the clause in a mortgage which states the mortgage is canceled after the note has been paid in full is called the
What is not a purpose of the truth in lending act (regulation z) ?
to set maximum interest rates.
Living trusts
will substitutes- become effective during a person's lifetime
A person moved into an abandoned farm house, modernized it began to raise crops, notified the true owner of her recent possession and refused to leave the property .She paid the property taxes and stayed there seven years. Is there any chance that this person could claim legal title to the farm by adverse possession ?
yes because her use was continuous, open ,hostile, and exclusive
Easements compared to Zoning
zoning is based on law- Easements are based on contracts
Truth in Lending Act (Regulation Z)
-Requires lenders disclose the true cost of credit expressed in APR or annual percentage rate -residential loans for 1-4 units but no loans for business, commercial, argricultural, or personal property credit of $25,000 -credit must be subject to finance charge or payable in more than 4 installment in written agreement -3 day right of rescission under Regulation Z for home improvement loan, home equity loan or FHA reverse mortage
Lot-and-block
-legal description used on maps and plats of recorded subdivided land -must include county and state to distinguish areas -each parcel assigned a lot number and group of lots is given a block number
Answer: B. It has not been presented or accepted by the owner. Contracts aren't valid until both parties agree. However, even though the listing agreement has expired, the offer should be presented. If it's accepted and the transaction closes, the broker WILL generally be entitled to his or her FULL COMMISSION.
A broker and a seller terminate the listing contract. An offer is received in the mail by the broker after the termination of the listing contract. The offer is for full price and includes all of the terms and conditions of the seller. Why is this NOT a valid contract? A. there is no consideration involved B. no acceptance has been given C. no earnest money has been enclosed D. there is no current listing agreement
Answer: B. In order for a broker to collect the commission in an Exclusive Right to Sell agency listing, he must prove he was licensed at the time of sale. Note: In an Open Listing, the broker who "procures cause" gets the commission.
A broker had an Exclusive Right to Sell agency listing. In order to collect the commission, he must: A. prove he was the procuring agent B. prove he was licensed at the time of sale C. prove he has a ready, willing and able buyer that met the seller's terms D. all of the above
A
A broker is listing the property of a deceased owner who had five adult children. Two of the children are listing the property for sale. Before completing the listing agreement, the broker should do which of the following? A. Check the ownership of the record to see if the persons who are listing the property are the current owners. B. Check th deceased owner's will to verify who the heirs are. C. Require all the adult children to sign the listing. D. Require all the adult children sign a quit claim deed.
Answer: C. In order to be due a commission, the broker must produce an offer that matches the listing EXACTLY.
A broker listed a $75,000 property and the agreement read that the owner would NOT take more than a 25% cash offer. The broker produced a buyer who offered a full price 100% cash offer. Would the broker be due a commission? A. yes, bc the broker produced a ready, willing and able buyer B. yes, bc the offer was reasonable C. no, bc the broker did NOT produce a buyer that fulfilled all the terms of the listing agreement D. no, bc the broker violated the listing agreement by writing a 100% cash offer
A a separate trust account journal is maintained for each trust account.
A broker may maintain a separate trust account for each office location, provided: A a separate trust account journal is maintained for each trust account. B the Commission is advised of the name of the bank and the name of the account within fourteen days of opening the account. C the broker agrees to have the account examined by the Georgia association. D the office manager agrees to be responsible for the account.
Answer: C. Since the buyer was unable to obtain the financing, the buyer was not "able". Therefore, the fact that the seller could not give clear title was irrelevant.
A broker produces a supposedly ready, willing and able buyer. At closing, the seller is unable to provide marketable title to the property and the buyer cannot come up with the financing to purchase the home. Is the broker due a commission? A. yes, because the seller is the one who cannot produce marketable title B. yes, because he produced a ready, willing and able buyer C. no, because he did not produce a ready, willing and able buyer D. no, because he did not finish closing the transaction
Cooperating broker
A broker who assists the listing broker by procuring the buyer but does not necessarily represent the buyer. Because the cooperating broker has no relationship with the seller, its compensation must come from the listing broker who shares the commission, typically split fifty-fifty. A cooperating broker may choose to represent the buyer, but this must be disclosed in writing to avoid confusion.
C take-out commitment
A builder is most likely required by a lender to secure a: A conditional commitment. B firm commitment. C take-out commitment. D bonded commitment.
Answer: A. A licensee can only fill in forms for those for whom the licensee is an agent.
A buyer and seller, neither of which is under contract with the broker, ask a broker to write a contract for them. What should the broker do? A. refuse to do anything because he is not their broker B. refuse to do anything unless he gets a commission C. perform his normal services and charge is usual fees D. perform his normal services and not charge a fee
Answer: A. RESPA applies to new, FIRST MORTGAGES to buy a home if the lender is associated with the federal government. An FHA loan is insured by the federal government. Loans NOT of the type bought by FNMA are usually not associated with the federal government (B). Farm loans (C) are usually not covered under RESPA as farms are more of a type of business loan. Only first mortgages (D) fall under RESPA.
A buyer applying for a loan on a two family residence would be covered under RESPA in which of the following circumstances? A. if the loan was an FHA insured loan B. if it was a loan NOT typically bought by FNMA C. if it was part of a 45 acre farm D. if it was a second mortgage
Answer: D. Writing a false contract in order to borrow money is bank fraud. Anything other than the actual sale price is fraudulent. Even if the buyer and seller agreed (A) & (C), it is still fraud.
A buyer bought a house for $40,000. In order to get the buyer a larger loan, the broker wrote up a false contract for $48,000. Would this be legal? A. yes, as long as the buyer and seller both agreed B. yes, since the lender would base the loan on the appraisal, not the contract C. no, because the seller would NOT be a party to the false contract D. no, because the loan must be based upon the actual contract sale price
Answer: D. Since there were no contingency clauses, and no restrictive covenants of record. If the buyer cannot secure a change of zoning, the contract is still valid and is enforceable between the parties.
A buyer bought a property without telling the seller of his intended purpose for the property. The contract contains no contingency clauses and it is a properly executed contract. After the closing, the buyer is unable to obtain the zoning he needs for his commercial project. What is the contract at this stage? A. void B. voidable C. breach D. enforceable
Answer: C. Even though the licensee is legally representing the seller, the licensee still has an obligation to the buyer to be fair and honest and must exercise care and diligence in performing acts for that buyer. In this case, the licensee knew of the buyer's intended use of the property, and had an obligation to either ascertain that information, or inform the buyer that she should do so herself, or through another licensee.
A buyer wants to buy a larger house and open a beauty salon in her home. She tells the listing licensee her plans and looks at property with that licensee. They find a property she likes and she makes an offer that is accepted. After closing and moving into the property, she finds out there are deed restrictions in the subdivision that prohibit a business operating out of one's home. Which of the following is true? A. The buyer was solely responsible for researching the deed restrictions before buying the property. B. The licensee was representing the seller and had no duty to the buyer to investigate the restrictions. C. Since the licensee knew of the buyer's intended use, the licensee should have ascertained whether or not the property could be used for that purpose. D. The seller was solely liable for not telling the buyer she would be unable to open a beauty shop in the property.
Answer: A. Lenders must be approved by the Federal Housing Authority before they can offer FHA loans.
A buyer wants to take out an FHA loan. The broker should refer the buyer directly to: A. any approved lending institution such as a bank or savings and loan association. B. an FHA appraiser in the area C. the Federal Housing Administration Office D. the Federal National Mortgage Association
Mechanic's Lien
A charge or claim upon the property of another individual as security for a debt that is created in order to obtain priority of payment of the price or value of work that is performed and materials that are provided in the erection or repair of a building or other structure.
Answer: D.
A church owns a retirement home and restricts the rental of the units to church members regardless of age, sex, race, color, or national origin. Is this policy a violation of federal fair housing laws? A. Yes, because all discrimination on the basis of religion is illegal. B. Yes, because only owners of single-family homes may discriminate on the basis of religion. C. No, because nonprofit organizations are not subject to federal housing provisions. D. No, because religious organizations may limit occupancy of dwelling units they own to persons of the same religion.
An escalator clause. (found in index lease)
A clause in a lease that would allow adjustments of payments either up or dawn would be called:
Indemnification clause
A clause in which one party agrees to compensate another for a loss or damage that is sustained.
Defeasance Clause ( release or discharge)
A clause used in leases and mortgages that cancels a specified right upon the occurrence of a certain condition, usch as cancellation of a mortgage upon repayment of the mortgage loan.( satisfaction of note fully paid)
Worker Compensation Coverage
A condominium property manager hires a full-time maintenance person. While repairing a water leak on the roof the maintenance person is injured. The claim for medical or hospital payments would be covered under the association's.
Community Reinvestment Act
A congressional act that encourages mortgage originators to actively lend in their communities and that requires financial institutions to evaluate the "fairness" of their lending practices.
Contingency
A contingency in a contract requires the completion of a certain act or promise before the contract is binding, or it may cancel contract obligations. Depending on how it is written, a contingency can make a contract voidable or unenforceable.
Answer: B. "loss of latches" means that one does not perform an action within a law period of time. The contractor has 90 days to record the lien from the day he started the work/day he ended work ???
A contractor had a lien on a property for the non-payment of services that he provided to build a deck. He started the job on Dec. 15th, 2001, recorded the lien on Jan. 1st of the next year, and sued the owner on Feb. 2nd, 2003. What best describes the situation? A. as long as he recorded the lien within 90 days of the completion of the job, he should prevail in the law suit. B. he loses due to loss of laches. C. he loses because he did not bring the suit before Dec. 15th of 2002. D. if foreclosure takes place, the lien is prioritized on Jan. 1st, 2003.
Answer: B. Deed restrictions are enforced through a court. If a neighbor sees a violation of a deed restriction occurring, or about to occur, the neighbor could apply for a court injunction against the owner's plans. This is usually done by the homeowners' association (HOA), but an individual property owner has the right to do so as well. The playground is not community property. The property belongs to the individual owners, but the deed restrictions have created the playground and are enforceable.
A deed restriction in a subdivision created a community playground that used a few square feet from the rear of every owner's lot. An owner has begun making plans to convert the rear half of his lot to a garden. The plans would require the removal of park equipment. A neighbor objects to these plans. The neighbor should A. do nothing since an individual landowner has no authority to enforce deed restrictions. B. apply for a court injunction against the owner's plans. C. inform the owner that the playground is community property. D. file a lis pendens as soon as possible.
Answer: D. The licensee needs to be sure the persons who are listing the property are the owners of record. If they are not the owners of record, they do not have the right to sell the property.
A licensee is listing a rural property. The property was owned by a woman who is now deceased. The woman had six grown children. Two of the sons are listing the property for sale. Before completing the listing agreement, the licensee should do which of the following? A. Check the woman's will to ascertain who the heirs are. B. Require all six children to sign quitclaim deeds. C. Have the woman's attorney sign a release of title. D. Check the ownership of record.
Exclusive-agency
A listing agency relationship that grants the broker the right to collect a commission if the property is sold during the listing period unless the property owner brings the buyer to the transaction.
Answer: C. Under RESPA guidelines, "referral fees" are considered illegal kickbacks.
A loan company was referring loan applicants to a particular insurance company, which in turn paid the loan company a referral fee. This is: A) legal, as long as it is a set fee and not based on the amount of business referred. B) legal, as long as the loan company does not require a loan applicant to purchase insurance from a particular company. C) illegal, since the Real Estate Settlement Procedures Act prohibits kickbacks. D) illegal due to the Truth in Lending Law (Regulation Z)
Answer: (B) - straight term loan
A loan in which the buyer pays off the total principal at the end of the loan is a: A. partially amortized B. straight-term C. principal + interest D. amortized loan
Answer: B. Start with the loan balance of $21,000, and multiply it by 11% to get the annual interest paid of $2310. Divide that number by 12 to get the monthly interest amount of $192.50. Subtract that amount from the total principal and interest payment of $571.80 =$379.80 principal paid on June 1st in arrears for the month of May. Subtract $379.30 from the prior loan balance of $21,000, for a total of $20,620.70, and 1% of that is 206.
A loan with a balance of $21,000 prior to the June 1 payment was figured with interest at 11% annually and monthly principal and interest payments of $571.80. There was a 1% pre-payment penalty. The owner paid the June 1 payment and then paid off the balance of the loan. What was the pre-payment penalty? A) $204 B) $206 C) $210 D) $215
C tenants by the entireties
A married woman and an unmarried man may not own real estate as: A tenants in common. B joint tenants. C tenants by the entireties. D general partners.
Answer: D. A metes and bounds description must contain a beginning point and end at the same point, thus enclosing the parcel of land being described. A metes and bounds description must be based on landmarks or monuments.
A metes and bounds description must contain which of the following? A. at least one artificial monument B. a baseline from which measurements are taken C. a lot and block number assigned to it in the county recorder's office D. a point from which the description begins and at which it ends
What is a rectangular survey(Government survey system) ?
A method of legally describing the surface of the land based upon a grid system formed by principal meridians baselines ranges lines and township lines
Answer: A. Mortgage brokers function much like independent insurance agents agents and represent a variety of lenders. Their role is to match the circumstances of the individual buyers with the mortgage program best suited to their needs.
A mortgage broker: A. arranges loans between borrowers and investors B. is a lender C. buys mortgages in the secondary mortgage market D. buys mortgages and resells them at a profit
Answer: C. A mortgage secured by both real and personal property is called a Package Mortgage.
A mortgage secured by both real and personal property is a(n): A. blanket mortgage B. wraparound mortgage C. package mortgage D. open-end mortgage
A
A person moved into an abandoned farm house, modernized it, began to raise crops, notifies the true owner of her recent possession and refused to leave the property. She paid the property tax and stayed there seven years. Is there any chance that this person could claim legal title to the farm by adverse possession? A. Yes, because her use was continuous, open, hostile and exclusive. B. Yes, because she modernized the house. C. No, because farm land cannot be acquired through adverse possession. D. No, because a notified owner may never lose title to property though adverse possession
Answer: C. This would be a life estate known as a reservation.
A person sold their property and then reserved the right to stay on that same property as long as the person remained alive. This would be referred to as: A. pur autre vie B. remainder C. a life estate D. reversion
Answer: A. A deed in lieu of foreclosure does protect a person's credit rating better than an actual foreclosure. (B) A deed of reconveyance is a document a lender gives to a buyer when a loan is completely paid off. (C) An alienation clause in a mortgage calls the loan balance due and payable upon selling the property. (D) The defeasance clause in a mortgage voids the security once the loan is paid off.
A person who owned a house ran into financial difficulty. Foreclosure on the house appeared to be a possibility. Which of the following actions should this person take in trying to protect the person's credit rating in the future? A. ask the lender for a deed in lieu of foreclosure B. ask the lender for a deed of reconveyance C. exercise the alienation clause in the mortgage D. exercise the defeasance clause in the mortgage
C the lender's evidence of a loan
A promissory note is: A the lender's security for a loan made to finance the purchase of the property. B one guaranteed or insured by a government agency. C the lender's evidence of a loan. D automatically secured by a mortgage when signed by the property owner.
Lawsuit
A property had a judgement filed against it this was the result of a ?
Answer: C. We know the total square yardage as well as the frontage expressed in feet. Since area is a function of length times width, and since there are 9 square feet in each square yard, we know that 40 times X divided by 9 will give us our answer. To make the calculation, multiplying 920 yards by 9 will allow us to divide the result by 40 to find the depth, which is 207 feet. OR: 40 × ___ = 920 920 ÷ 40 = 23. 23 × (9) = 207 feet
A property had an area of 920 square yards with a 40-foot frontage. What was the depth of the lot? A) 23 feet B) 69 feet C) 207 feet D) 408 feet STATE!
C
A property manager's compensation would most likely be based on all of the following EXCEPT: A. A percentage of the gross income. B. A percentage of the net income. C. The standardized fee in the market place. D. A fixed fee negotiated between the agent and the principal.
B the board of arbitartion
A property owner who feels the amount of an ad valorem tax is unfair should appeal to: A the tax assessor. B the board of arbitration. C the courts. D the state board of equalization.
Answer: (B) - Subrogation
A property owner's signing over rights in a claim to the insurance company in return for receiving an insurance is an example of: A. subordination B. subrogation C. defeasance D. alienation
Answer: C. A purchase money mortgage is a loan made by the SELLER in a transaction.
A purchase money mortgage is a loan made by: A. a lender on the Secondary Mortgage marker B. a Fannie Mae approved lender only C. the seller in a transaction D. the purchaser in a transaction
Answer: D. The salesperson does not have to offer the property through his broker's company
A real estate salesperson intends to offer for sale a tract of land he inherited without listing it with a real estate brokerage company. Which of the following in NOT TRUE concerning the marketing of this property? A. the salesperson must notify the broker in writing of his intention to sell the property B. in order to advertise the property, the salesperson must have his broker's written consent to do so C. in advertising the property, the advertisement must state, "Owner is a licensed real estate agent acting as a principal." D. the salesperson must offer the property through his broker's company. He may not advertise the property except as a listing of his company.
Answer: D.
A salesperson must do which of the following regarding rental property he just bought and plans to manage personally? A. advertise the rental property under the name of his broker's company. B. require the first and last month's rent as a security deposit from each tenant C. make certain that all advertisements on the property include price, location, size, and the type of lease to be used D. obtain his broker's approval of the trust account used for any security deposits received
Answer: B. When the closing takes place, the terms of the contract have been fulfilled and it expires automatically.
A seller listed his home for six months on February 26. On April 29, a buyer made an offer on the property. The listing broker presented the offer to the seller on April 30. The seller accepted the offer on May 1, with the closing to occur on June 15. Assuming the closing took place on June 15, when did the listing expire? A. 26-May-04 B. 15-Jun-04 C. 26-Aug-04 D. 15-Dec-04
Answer: D. Anytime you see the words, "Seller wants to net" or "After paying a commission" the problem must be done in the following order: 1. Add expenses (closing costs, mortgage) to what the seller wants to net. 2. Subtract any refunds (prepaid rents, insurance assumption) due to the seller. 3. Divide the amount above by the aggregate of the commission. (100% minus 7% =93%) So in this problem $55,350 + 450.00 =$55,800 divided by 93% = $60,000.00 Using your % key will be a big help if you do not like to convert % to decimals, the process is done for you internally in the calculator.
A seller netted $55,350 after closing expenses of $450 and a 7% commission. What was the sale price? A) $56,048 B) $58,232 C) $59,516 D) $60,000 STATE!
Answer: C. A complaint to the community association is often enough to convince the owner to remove the tree house. Failing that, however, the court will enforce the requires on a single complaint.
A subdivision has a deed restriction that does not allow tree houses. An architect moves into the subdivision and builds a tree house in the back yard. How many neighbors will it take to enforce the deed restriction and what action should be taken? A. 75% of the neighbors must sign a petition that will be given to the local zoning board. B. Only 1 neighbor needs to take action through the local zoning board. C. Only 1 neighbor needs to take action through a court action. D. 75% of the neighbors must take action through a private court action.
C
A tenant has a five year lease. The tenant dies after three years. Is the lease binding on the tenant's heirs? A. No, death of either party terminates a lease. B. No, leases are not inheritable. C. Yes, contracts pertaining to real estate are binding on the heirs of the deceased. D. Yes, only if the lease is a tenancy at will.
Answer: C.
A tenant has an estate for years and vacates the property at the specific ending date. The landlord refuses to return the security deposit because the lessee did not give him notice. Is the landloard's action correct? A. Yes, an estate for years requires a 30 day notice B. Yes, an estate for years requires a 60 day notice C. No, no notice is required D. No, security deposits cannot be held for breach of lease.
Market value
A value-in-exchange concept generally analogous to the most probable sales price. More particularly it is the most likely transaction price for a property adequately exposed in the market that is agreed to by a willing buyer and a willing seller operating at ams length both fully informed and under no undue pressure to act.
Investment value
A value-in-use concept, it is the specific value an income -producing asset has to a particular investor or potential investor.
Answer: C. It's common for zoning ordinances to regulate the kinds of animals that may be kept. For example, in urban and heavily populated suburban areas, housepets only may be allowed. In more country-like settings, only housepets may be allowed in one zoning category, while housepets and horses in another. Other than zoos and wilderness areas, cougars are out of luck when it comes to being welcomed into the community.
A woman bought a house and wanted to bring along her pet cougar to keep in the backyard. Which would most likely keep her from doing this? A) Police power, because the police have authority over types of animals for pets. B) Urban development regulations, since they list allowable animals for the properties. C) Zoning ordinances, because sometimes these contain which animals may be kept. D) Building codes, since they would contain the most restrictions for city dwellings.
Answer: A. For example, let's say Barney is expecting a big promotion in six months and wants to buy Fred's house for $300,000 if it comes through. In exchange for keeping his home off the market for six months and agreeing to sell it to Barney for $300,000 at Barney's option, Barney gives Fred $3,000. The $3,000 is Fred's to keep no matter what. However, Barney is not obligated to buy Fred's house; it's his choice. Further, if he does get the promotion and wants to exercise his option, Fred must sell Barney his home for $300,000, even if market conditions have now made it worth more.
A(n) _______ is when an owner takes his property off the market for a definite period of time in exchange for some consideration, but he grants the right to purchase the property within that period for a stated price. A) option B) contract of sale C) right of first refusal D) installment agreement
11. Following the termination of an agent, how long does the broker of record have to provide the agent with an accounting of monies that may be due to them? (3B) A) 30 days B) 45 days C) 60 days D) 90 days
A) 30 days
76. A house is assessed for $45,000 with a tax rate of $2.10 per $100 of valuation. What is the monthly tax for the property? (2) A) 79 B) 945 C) 214 D) 179
A) 79
9. Which of the following must have a real estate? (2A) A) A developer's salaried sales agent selling condominiums B) An attorney representing a deceased clientís estate C) A bank disposing of a property taken in foreclosure D) A trustee appointed by a court
A) A developer's salaried sales agent selling condominiums
4. Which of the following estates is granted to the survivor under the Dowry and Curtsey rights A) A life estate B) A fee simple estate C) A leasehold estate D) A conditional estate
A) A life estate
70. A lease that is based on the tenantís gross sales is called a: A) A percentage lease B) Gross lease C) Net lease D) Variable lease
A) A percentage lease
1. A court action to clear a defect, cloud or questionable claim against a title is called: A) An action to quiet title B) A lis pardens C) A partition suit D) A novation action
A) An action to quiet title
59. A document is signed by the sellers at closing in which they affirm that they have not had a judgment, bankruptcy, divorce filing, or other action that would cloud the title. This is called: A) An affidavit of title B) Acknowledgement C) Actual notice D) Abstract of title
A) An affidavit of title
28. An individual who has secured the right to purchase a property at a fixed price for a designated period of time would have: A) An option B) An assessment C) A lease D) An agreement of sale
A) An option
19. Market value assumes an arms-length transaction, which means it is done: A) Between strangers B) Without undue influence C) With attorneys representing both side D) Without direct interaction between buyer and seller
A) Between strangers
52. Attempting to induce homeowners to sell by telling them that minority persons are moving to their neighborhood is referred to as A) Blockbusting B) Redlining C) Steering D) Alienation
A) Blockbusting
35. One of ABC brokerageís agents sells, to his client, a listing held by XYZ Brokerage. The ABC Brokerageís agent is a: A) Buyerís agent B) Disclosed dual agent C) Sellerís agent D) Transaction agent
A) Buyerís agent
15. Co-mingling refers to: (3F) A) Combining a broker's money with clientís escrow funds B) Indiscriminately promising financing C) Representing both parties in the same transaction D) Brokers lending their licenses
A) Combining a broker's money with clientís escrow funds
13. In order for a party to receive a settlement from the Real Estate Guaranty Fund, the party must: (4C) A) File a criminal claim B) Relinquish all future claims C) Prove that damages exceed 20,000 D) Request that the offending broker and/or salesperson's license be revoked
A) File a criminal claim
19. A salesperson may accept commissions from: (3C) A) Only their employing broker B) Their employing broker or co-worker of their employing broker C) Any legally licensed real estate broker D) Their employing broker or the seller
A) Only their employing broker
40. When acting as a fiduciary for a principal, the broker must: A) Place their principalís interests above their own B) Accept responsibility for the principalís actions C) Act for the principal in a legally binding capacity D) Represent the principal in one specific capacity
A) Place their principalís interests above their own
18. Using the income approach to value, as the capitalization rate increases: A) The capitalized value decreases B) The net income decreases C) The capitalized value increases D) The capitalized value remains the same
A) The capitalized value decreases
38. Which of the following would benefit the most form the inclusion of an alienation clause in a mortgage A) The mortagee B) The mortgagor C) The attorney D) The seller
A) The mortagee
14. The owner of a duplex may be exempt from the New Jersey Laws against Discrimination if: (4B) A) The owner occupies one of the units a their personal residence B) The original VA guaranteed or FHA insured mortgage is paid off C) The owner is a member of a protected class D) An employee of the owner occupies one of the units
A) The owner occupies one of the units a their personal residence
In case of refusal by the lessor to accept payment of the rental agreed upon, the lessee may either deposit, by way of consignation, the amount in_________. A. Court B. City / Municipal Treasurer C. Bank in the name of and with notice to the lessor D. Any of the Above
ANY OF THE ABOVE
Option ARM
ARM loan that offered the borrower a variety of payment choices (fully amortizing, interest only, minimum payment, etc.)
Ministerial acts
Acts that a licensee may perform for a consumer that are informative in nature and do not rise to the level of active representation.
Answer: D.
All of the following are duties of the property manager EXCEPT: A. reporting to the owner all notices of building violations. B. providing upkeep and maintenance on the property. C. maintaing financial records and accounts. D. securing tenants of a particular ethnic origin in accordance with the owner's wishes.
A conditional fee estate
All of the following are less than freehold estates EXCEPT: A conditional fee estate. B estate at sufferance. C estate at will. D periodic estate.
Answer: C. Not only are guidelines not uniform, qualification standards can vary enormously from lender to lender. There are no state-mandated qualifying requirements for conventional loans.
All of the following are true of conventional loans except what? A. they are made to the buyer without governmental insurance or guarantee B. the policy requirements of the lenders are not uniform C. the requirements to qualify are uniformly fixed by state law D. they require a higher downpayment than non-conventional loans.
A interest on a mortgage loan
All of the following items are usually prepaid EXCEPT: A interest on a mortgage loan. B hazard insurance premiums. C a tenant's rent. D security deposits.
A Estate for years
All of the following require written notice to terminate EXCEPT: A estate for years. B estate from period-to-period. C estate at will. D All of the above.
Executed contract
All parties have fulfilled their duties and responsibilities. Becomes fully executed at closing when the deed has been conveyed and the buyer has paid full price.
D statue of limitations
All the following will discharge the contractual obligations EXCEPT: A performance. B destruction. C agreement. D statute of limitations.
Answer: B.
An adjustable-rate mortgage, also known as an ARM is A. one in which the interest rate is fixed over time B. one in which the interest rate changes periodically, depending on index changes C. one in which the interest rate changes periodically, depending on the stock market D. a type of mortgage that the mortgagor can adjust himself
Answer: C. If the complaint is not filed within one year, a person may still file a civil suit in a Federal Court.
An aggrieved party with a Fair Housing violation claim has how long to file a complaint with the Department of Housing and Urban Development? A. 1 month B. 1 week C. 1 year D. 7 years
Lease
An agreement that transfers exclusive possession and use of real estate from the landlord/owner/lessor to the tenant/lessee.
Tax (or accounting or bookkeeping) depreciation
An annual allowance, set by Congress and collected and enforce by the IRS, used to recover or recapture capital investment in long-term assets.
C the applicant took the exam
An applicant passing the salesperson's licensing examination has three months to apply for their license (without paying double fees) from the date: A the applicant filed an application to sit for the examination. B the Commission advised the applicant that he/she passed the examination. C the applicant took the examination. D the applicant completed the educational requirement.
Answer: B. When there is more mortgage money in the market place "looking for a home," borrowers have more choices, which leads to increased competition among lenders, which leads to lower interest rates.
An increase in the availability of money would lead to which effect? A. interest rates would go up B. interest rates would go down C. interest rates would NOT be affected due to RESPA guidelines D. interest rates would NOT be affected due to Truth In Lending
Answer: C. 9% of $7,000 is $630 interest per year $945 divided by $630 equals 1.5 years (1.5 years = 18 months). loan amount x interest rate = ann. interest 7,000 x 9% = 630 annual interest 945 ÷ 630 = 1.5 years (18 months)
An individual borrowed $7,000 on a straight note at 9% interest. If the total interest paid on the note was $945, what was the term of the loan? A. 12 months B. 16 months C. 18 months D. 20 months
Answer: D. The broker's fee is earned when the option is exercised.
An option was given on a home for consideration of $1,000. When would the broker's fee be earned? A. it was earned when he brought the optionor and the optionee together B. the broker's commission would come off the $1,000 fee C. half of the commission is earned now and half when the option is exercised D. none of the above
Answer: A. It is up to the optionor (seller) to finish the transaction. The optionee (buyer) does not have to complete (close) on the property, but would lose whatever option monies (earnest money) that have been deposited.
An option: A. requires the optionor to complete the transaction B. gives the optionee an easement on the property C. does not keep the offer open for a specified time D. makes the seller liable for the commission
Answer: C. Regulation Z (Truth in Lending) requires disclosure of all financing terms and conditions if a low interest rate, downpayment, or other enticement is featured in an ad. This does not apply in this case, however, because Regulation Z applies ONLY to institutions, NOT individuals selling their own home.
An owner advertised "beautiful acreage; only $5,000 down; owner will personally finance down payment." Would this be violation of the Truth in Lending Act? A. Yes. Acreage is not exempt from Reg. Z B. Yes--since a down payment was stated C. No. Owners are not covered by Reg. Z D. No. Brokers can advertise the down payment
Answer: C. A new owner must honor the current tenant's lease rights in a property.
An owner and tenant signed a one year lease agreement. The owner sold the property to a buyer 4 months later. The buyer wanted to move into the property immediately. The original lease contract signed by the seller and tenant was silent on this point. Can the buyer of the property move in immediately? A. yes, because the lease contract was silent on the issue of the owner B. yes, because the tenant's rights are terminated upon the selling of the property C. no, because the tenant can stay in the property for the duration of the original lease contract D. no, because the tenant has an automatic right of first refusal on the property
A $157,900
An owner desires to net $147,600 from the sale of her home. Broker Baily accepts the listing with a 6.5% commission. The list price will be? A $157,900 B $157,200 C $138,000 D $227,100
Answer: D. Since the seller was declared legally insane, he was no longer qualified to be party to any kind of contract and it was automatically rendered void.
An owner listed a property with Broker Dole on May 1. On July 1, the owner was declared legally insane. The broker brought a full price offer on July 3 to the seller, which he accepted. How much commission is Broker Dole due? A) the full commission, as he brought in a ready, willing and able buyer B) the full commission, as the seller accepted the offer C) no commission, since the property was sold within the protected period D) no commission, since the listing was terminated when the owner was declared legally insane
Inform the owner to contact an agent that has a securities license
An owner of a commercial retail business is considering selling stock in the business. The owner contacted a real estate saleperson concerning the sale. The salesperson should:
Answer: C. $37,231.60 + 526.40 = $37,758. (100 - 75%) = 93% 37,758 ÷ 93% = $40,600
An unencumbered residence was sold. The closing expenses amounted to $526.40 plus a commission of 7%. The seller received a closing check in the amount of $37,231.60. What was the selling price? A. $39,800 B. $40,426 C. $40,600 D. $41,110
Seisin
Assurance (promise) make by grantor of a deed to the grantee of a deed that the grantor has the degree of ownership. This covenant is broken, or breached, if good title is actually held by a third party, or if the grantor does not hold the extent of title that he claimed
23. If a licensee is found guilty of three (3) violations, the Real Estate Commission could impose a maximum fine of: (2B) A) 30000 B) 25000 C) 20000 D) 15000
B) 25000
75. Ms. Jones bought a lot in 2003 for $30,000. In 2006, she listed the lot at a price that was 25% higher than she paid. If she accepts an offer that is $4,000 less than her list price, and pays her broker a 6% commission, what will she receive? (6) A) 30550 B) 31490 C) $32,90 D) 33000
B) 31490
74. Janet, a salesperson working for ABC Brokerage is on a 50% commission split with her broker. Janet sells a Brand X listing offering 2.5% to cooperating brokers. If the property sold for $475,000, how much did Janet receive as a commission from her broker? (8) A) 77875 B) 5938 C) 23750 D) 17812
B) 5938
6. Every branch office of a real estate brokerage must have: (3H) A) A sales manager with at least two years sales experience B) A branch license and a designated supervising broker C) A separate brokerage license D) A spate trust account
B) A branch license and a designated supervising broker
12. According to zoning rules, Paul's lot is too small to build the garage he wants. In order for Paul to be able to build a garage he will have to apply for: A) An exemption B) A variance C) A repeal D) A non-conforming use
B) A variance
57. A statement from a borrower, setting forth the unpaid balance of their loss and the interest rate is called: A) A reduction certificate B) An estoppel certificate C) A Torrens certificate D) A redemption certificate
B) An estoppel certificate
17. The appraised value of a high school building would be estimated by which of the following approaches to value? A) Income approach B) Cost approach C) Before and after approach D) Sales comparison approach
B) Cost approach
14. Amy deeds a property to Ned who fails to record his deed. She subsequently deeds the same property to David who does record his deed. Which of the following is true? A) Ned owns the property since his was the first deed B) David will be declared the owner C) Ned and David will be tenants in common D) Amy remains the owner since both deeds are now void
B) David will be declared the owner
3. The New Jersey Real Estate Commission is part of the: (3L) A) Attorney Generalís Office B) Department of Banking and Insurance C) Department of Consumer Affairs D) Department of State
B) Department of Banking and Insurance
56. Through which of the following deeds does a grantor make covenants extending back to all previous owners? A) Special Warranty deed B) General Warranty deed C) Bargain and Sale, CVG deed D) Quitclaim deed
B) General Warranty deed
5. The right of the government to place reasonable restrictions on private property is known as A) Eminent domain B) Police power C) Condemnation D) Adverse possession
B) Police power
44. When answering questions about a property, the best way to avoid misrepresentation is to: A) Pass along only information provided by the seller B) Refer all questions to an expert source C) Rely on your own expertise and experience D) Consult with other licensees within your brokerage
B) Refer all questions to an expert source
48. The Real Estate Settlement Procedures Act (RESPA) was enacted to ensure disclosure of the following to the buyer and seller in a residential real estate transaction: A) Existing liens B) Settlement Costs C) Prorations D) Tax liabilities
B) Settlement Costs
67. Which of the following leases automatically terminates on the death of either the lessee or lessor? A) Periodic estate B) Tenancy at will C) Tenancy at sufferance D) Estate for years
B) Tenancy at will
3. Survivorship does not exist among A) Joint tenants B) Tenants in common C) Tenants by the entirety D) None of the above
B) Tenants in common
58. The maximum amount that a lender will loan is generally based on: A) The list price of the property plus reasonable closing costs B) The lower of the appraised value or the sales price C) The higher of the appraised value or the sale price D) The sales price less reasonable sellerís contributions to closing costs
B) The lower of the appraised value or the sales price
41. Acceptance is accomplished when: A) The witness signs the contract B) The offeree signs the contract C) The offeror signs the contract D) The attorney complete their review
B) The offeree signs the contract
24. The purpose of the Guaranty Fund is to compensate: (4A) A) Licensees who have been financially harmed by other licensees B) The public who have been financially harmed by licensees C) Sellers who do not get fair market value for their properties D) Buyers who overpay for their properties
B) The public who have been financially harmed by licensees
25. In the event of the death of an employing broker, a temporary brokerís license may be issues to a salesperson if: (2B) A) The request is made within six months of the brokerís death B) The request is made within 30 days of the brokerís death by a salesperson with at least three years experience C) The application is made within two weeks of the brokerís death D) The request is made by a broker/salesperson within 30 days of the brokerís death
B) The request is made within 30 days of the brokerís death by a salesperson with at least three years experience
10. Which of the following would direct that a listing brokerage firm not cooperate with other firms in selling a listing by signing a Waver of Broker Cooperation? (3G) A) The listing broker of record B) The seller C) The listing agentís supervising broker D) The multiple listing service manger
B) The seller
72. In a sale-leaseback arrangement, the tenant occupant of the property would be which of the following parties? A) The buyer B) The seller C) The lender D) The lessor
B) The seller
4. How long is the statutory opportunity review for sales contracts prepared by real estate licensees? (3E) A) There is no statutory requirement if the contract was prepared by a licensee B) Three business days starting from the date when the last party receives their executed copy C) Seven calendar days starting from the date the contract is signed by the last party D) No less than three business days starting from the date that the contract is signed by the last party
B) Three business days starting from the date when the last party receives their executed copy
25. The relationship between a real estate agent and a principal is most similar to which of the following? A) Optionee and optionor B) Trustee and beneficiary C) Vendee and vendor D) Mortagee and mortgagor
B) Trustee and beneficiary
6. The minimum lot sizes in a subdivision and house density are usually established by A) The subdivider B) Zoning ordinances C) The developer D) The homeowner's association
B) Zoning ordinances
______- where the final installment payment on a note is greater than the preceding installment payments and the payer pays the note n full, such a final installment is termed a balloon payment. (payment in lump sum although not yet due).
BALOON PAYMENT
______- a mortgage that has two or more properties pledged as security for a debt.
BLANKET MORTGAGE
Answer: A. Since each broker represents separate sides in the transaction, no relationship exists.
Broker Carr, with ABC Real Estate Company, listed the property with a seller. Broker Smith, with XYZ Real Estate Company, called Broker Carr, and disclosed that he was a Buyer Agent. Broker Smith wrote a contract with a buyer for the sale of the property. What, if any, is the relationship between the buyer's broker, the seller, and the listing broker? A. there is not a relationship between the parties. Broker Carr represents the Seller and Broker Smith represents the Buyer B. customer C. agency D. dual agency
Answer: A. This would be Dual agency because Jones is assisting both parties through a WRITTEN agreement. Note: If broker Jones was providing assistance to both parties and only performing ministerial acts WITHOUT having a written agreement - Answer: C.
Broker Jones is providing assistance to both seller Smith and buyer Cline by performing only ministerial acts through a written agreement. This is best referred to as: A. dual agency because Jones is assisting both parties through a written agreement B. designated agency because Jones is representing both parties through a written agreement C. transaction brokerage with both parties D. single agency with Smith only
16. How long must a broker maintain records on escrow funds? (3I) A) 90 days after the completion of the transaction B) 6 months C) 6 years D) 10 years
C) 6 years
69. A lease that provides for the lessee to be responsible for operating costs is called: A) A gross lease B) A percentage lease C) A net lease D) A variable lease
C) A net lease
22. A court action seeking that a defaulting party to a contract complete the contract as promised is called: A) A judgment B) A partition suit C) A suit for specific: performance D) A writ of execution
C) A suit for specific: performance
23. A formal declaration by a person that he or she is in fact the person named in a document and that the document has been voluntarily executed is called A) An execution B) An authorization C) An acknowledgement D) An authentication
C) An acknowledgement
49. To qualify for a depreciation deduction for federal income tax purpose, the property must be: A) Unencumbered B) A personal residence C) An investment property D) Mortgaged
C) An investment property
10. John and Jill are not married but own real property together. John dies and Jill now own the property in severalty. How did John and Jill originally hold title? A) As tenant by the entirety B) As tenants in common C) As joint tenants D) As life tenants
C) As joint tenants
32. One requirement for a valid deed that the grantee must A) Be of legal age B) Sign the deed C) Be readily identit1ahlc D) Record the deed
C) Be readily identit1ahlc
26. In contract negotiations, an offer is not considered accepted until the person making the offer has: A) Signed the offer B) Made an earnest money deposit C) Been notified of the other party's acceptance D) Received written confirmation of the acceptance
C) Been notified of the other party's acceptance
31. Brokers and their agents are expected to serve their principals with informed knowledge and skill. This is referred to as their duty of: A) Obedience B) Accounting C) Care D) Loyalty
C) Care
53. Which of the following protected classes were created by the federal Fair Housing Amendment Act of 1988: A) Age and handicap B) Marital status and age C) Familial status and handicap D) Familial status and marital status
C) Familial status and handicap
20. Utilizing a property to its greatest economic advantage is commonly referred to as A) Economic utility B) Functional optimization C) Highest and best use D) Maximization of profit
C) Highest and best use
46. To prevent growth of mold, a building should be free from: A) Direct sunlight B) Urea-formaldehyde C) Intrusion of water D) Extremes of temperature
C) Intrusion of water
47. Federal law requires that a specific form of notice of the possible presence of which of these environmental hazards in residential property built before l978? A) Mold B) Radon C) Lead paint D) Asbestos
C) Lead paint
15. Which of the following liens serves as a notice of possible future legal action against a parcel of real estate? A) Curtesy B) Tackling C) Lis pendens D) Defeasance
C) Lis pendens
8. Which of the following statement is false? A) A first mortgage lien can encumber both land improvements B) Tax liens are satisfied before all other liens C) Mechanics liens take priority over tax liens D) The general property tax is in ad velorem tax
C) Mechanics liens take priority over tax liens
63. The note or bond signed by a mortgagor create a: A) Specific lien on the property B) Assignment of the debt C) Personal obligation D) General lien on the property
C) Personal obligation
50. The Truth in Lending Law is also known as: A) Regulation L B) Regulation T C) Regulation Z D) RESPA
C) Regulation Z
1. After receiving a commission payment, a broker must pay the salespersonís share within: (3C) A) Three days B) Seven days C) Ten days D) Thirty days
C) Ten days
27. Rules and regulations government New Jersey real estate licensees are established and enforced by: (1B) A) The state legislature B) The Department of Consumer Affairs C) The Real Estate Commission D) The New Jersey Board of Realtors
C) The Real Estate Commission
54. Lenders who make loans but do not keep them in their own portfolios, sell them to: A) The Automated Clearinghouse B) The National Mortgage Exchange C) The Secondary Market D) The Private Mortgage Insurance Corporation
C) The Secondary Market
39. Which of the following would benefit the most form the inclusion of an alienation clause in a mortgage? A) The mortgagee B) The mortgagor C) The attorney D) The seller
C) The attorney
__________- a mortgage in which the collateral is not allowed to be used as security for another loan.
CLOSED MORTGAGE
77. The annual gross income for a property is $28,000. Net income is 45% of the gross income. If the capitalization rate is 14%, what is the indicated value of the property? (2) A) 30160 B) 51750 C) 54000 D) 90000
D) 90000
73. Which of the following statements regarding client trust accounts is correct? A) The brokerage can withdraw its transaction related expense from the account any time prior to the transaction closing B) Interest earned on the account may be kept by the broker to offset bank service charges C) The salespersonís commissions can be paid from the account after the transaction has closed D) Accurate records must be maintained for the account
D) Accurate records must be maintained for the account
51. Under federal law, the protected class ìfamilial statusî includes: A) Families with minor children B) Pregnant women C) A family with an adopted 12 year old child D) All of the above
D) All of the above
30. The type of listing agreement that gives the broker the right to collect a commission no matter who sells the property is called: A) A multiple listing B) An open listing C) An exclusive agency listing D) An exclusive right to sell listing
D) An exclusive right to sell listing
64. The acceleration clause in a mortgage: A) Sets the limit of future interest rate B) Specifies the penalties for prepayment C) Prevents future purchaser from assuming the loan D) Assists the mortgagee if the mortgagor r defaults
D) Assists the mortgagee if the mortgagor r defaults
61. Title insurance premiums are paid: A) By the buyer semi-annually B) By the seller at closing C) By the lender at issuance D) By the buyer at issuance
D) By the buyer at issuance
13. Which of the following is an encumbrance but not a lien? A) Unpaid property taxes B) Attachments C) Judgments D) Deed restrictions
D) Deed restrictions
16. Which of the following is not real property? A) A fixture B) Trees C) Radiators D) Emblements
D) Emblements
12. When a salesperson is terminate, the broker must (3B) A) Continue to display the salespersons license until they find another broker B) Return the termination form to the Real Estate Commission within five days C) Destroy the license and advise the Real Estate Commission D) Forward the license, termination form and temporary pocket card to the salespersonís new broker
D) Forward the license, termination form and temporary pocket card to the salespersonís new broker
26. Several local brokers recently met and agreed that none of them would charge commissions of less than 6%. At the same time they agreed that there would be no upper limit on the amount of commission that nay one of them could negotiate. This form of informal agreement is: (3L) A) Permitted under New Jersey law but banned by most multiple listing services B) An allowed exception to the Sherman Anti-trust Act if not otherwise forbidden by state law C) A common practice in most multiple listing services D) Illegal under both New Jersey and federal laws
D) Illegal under both New Jersey and federal laws
42. Asbestos was once used in residential buildings for: A) Coloring in paint B) Electrical wiring C) Pest control D) Insulation
D) Insulation
7. By definition, an estate for years A) Has no termination date B) Must be for at least two years C) Requires a written lease D) Is for a fixed period
D) Is for a fixed period
60. Points charged by a lender for a loan are based upon the: A) Sales price B) List price C) Cost of funds D) Loan amount
D) Loan amount
2. Which of the following can be natural or manmade? A) Datum B) Metes and Bounds C) Old liens D) Monuments
D) Monuments
18. All newspaper ads placed by a licensee for a residential property must specify: (3A) A) Number of bedrooms and baths B) Asking/list price C) Street address D) Municipality
D) Municipality
55. One of the main advantages of FHA insured loans is that they: A) Favor investors B) Reduce property taxes C) Eliminate the possibility of foreclosure. D) Require low down payments
D) Require low down payments
28. In New Jersey, all residential dwellings with three or more units must be inspected by the: (3M) A) Municipality every three years B) State every three years C) Municipality every five years D) State every five years
D) State every five years
29. A clause in a mortgage which permits the lender to can the entire balance due if the property is sold or otherwise conveyed by the mortgagor is called: A) The Defeasance clause B) The Habendum clause C) The Amendatory clause D) The Alienation clause
D) The Alienation clause
21. Under an exclusive right to sell listing, which of the following statement is false? A) The listing is an agency contract B) The broker is a fiduciary of the owner C) The listing is a special agency D) The broker is a general agent of the owner
D) The broker is a general agent of the owner
2. Which of the following statements is correct with respect to a brokerís advertising? (3A) A) Ads do not have to include the name of the municipality in which the property is located B) Salespersons may advertise listings they take in their own names C) A Broker of Record may give his/her residence phone number in an ad instead of the office number D) The broker must include his/her regular brokerage name
D) The broker must include his/her regular brokerage name
9. A transfer by delivery of a deed can be described as: A) Right of possession B) Title acquired C) Satisfactory transfer D) Voluntary alienation
D) Voluntary alienation
_____________ - Payment in kind. Payment of the debt or obligation with a property.
DACION EN PAGO
A house an lot with swimming was rented by an expatriate in Dasmarinas Village, Makati City for the monthly rental of 150,000 per month. Up to how many months advance rental may the owner imposed on the tenant?
DEPENDING ON AGREEMENT OF PARTIES
Elements of Value DUST
Demand/ Utility/ Scarcity/ Transferability
In a lease, the lessor:
Demise his interest
income approach
Determining the value of property by dividing net annual income by the capitalization rate. Used on income-producing properties. "capitalization approach."
Answer: D. This term is usually used in reference to only government loans (FHA and VA). Discount points are any points paid in addition to the 1% loan origination fee.
Discount points refer to A. a system of figuring out how much the property will be discounted B. points paid in addition to the 1% loan origination fee C. usually only FHA and VA loans D. both B and C
Easements- Implication
Does not need to be in writing- larger piece of land is divided up into smaller parts- it is presumed the seller intended to grant the buyer easement rights necessary for the buyer to use the property.
Facilitator or Transaction Broker
Does not represent either party in a transaction. Both customers.
Legal life estate
Dower- A widow's interests in her husband's real property. Curtesy- A husband's interests in his deceased wife's real property. Homestead- A portion of the value of the real estate that is protected from unsecured creditors.
ALWAYS INCURABLE
EXTERNAL OBSOLESCENCE IS
the states power to take property is
Eminent Domain- NOT police power- zoning power- or condemnation proceedings
Listing Agreement
Employing brokerage to find ready, will and able buyers Exclusive-right-to-sell Exclusive Agency Open Net Option
A holdover tenant would have
Estate at sufferance
A tenant is living without permission on the property after the lease expires. What type of estate would the tenant most likely hold?
Estate at sufferance
A lease is for an indefinite period of time. This is called:
Estate at will
Estate at Will
Everyone is Willing
_________- the loss of money or anything of value, due to failure to perform, such as under an agreement to purchase.
FORFEITURE
Answer: B.
If a salesperson acts as an independent contractor, then: A. He is responsible to his broker as to how his work is performed. B. He controls his own working hours. C. All of his listings belong to him. D. His broker must withhold income tax from his commission checks.
Answer: (A) fixed-rate mortgage
If you have a loan in which the interest rate does not change during the term of the loan you have a ________ mortgage. A. fixed-rate B. conventional fixed-rate C. owner financing D. all of the above
Answer: A. exclusive listing
If you list your property with a real estate agent and sign a written agreement that they are the only ones entitled to a listing for a specific time you have given them an A. exclusive listing B. exclusive right to advertise C. exclusive right to show D. inclusive listing
Answer: C. In a Graduated Payment Mortgage, the payment changes. In a Adjustable Rate Mortgage (ARM), the interest rate changes.
In a Graduated Payment Mortgage, the _______ changes and in an Adjustable Rate Mortgage the ________ is subject to change. A. principal, interest rate B. interest rate, payment C. payment, interest rate D. interest rate, principal
Answer: (C) - the seller
In a Land Sales Contract, who retains legal title to the property? A. buyer B. mortgagee C. seller D. mortgagor
Answer: A. Selling broker is an agent to the listing broker and sub-agent to the seller
In a cooperative sale, where the listing broker and the selling broker represent the seller, the selling broker has which of the following relationships? A. agent of the listing broker B. sub-agent of the listing broker C. agent of the seller D. sub-agent of the buyer
Equitable title
In an executory contract- such as a sales contract, land contract or deed of trust- the buyer's interest in the property is called an equitable title interest. Although the legal title is held by another party, the buyer does have the right of possession and an insurable interest in the property.
public offering statement
In georgia developers of timeshare projects must provide a writtenstatement containing information essential to prospective buyers and the buyers right to recind the contract this information would be contained in the
Answer: A. For example, let's assume a prospective buyer asks about the condition of the plumbing and Paula replies, "I asked the owner and he said he's never experienced a problem." If a major plumbing repair becomes necessary eight months AFTER the sale, Paula would NOT be liable because she met the two conditions.
In listing a property, Paula makes a false statement to potential buyers. In which of these circumstances is she NOT liable for the misstatement? A. if she, a) didn't know the information was false and, b) disclosed the source of the information B. If she knew the info was false, but dropped hints that the buyers should investigate more thoroughly on their own C. if she gave the false information to protect the confidentiality of her client D. if she gave the false info in order to get the best price for her client
D pass the state exam
In order to receive a Georgia Salesperson's License you must: A be at least 21 years of age. B be a graduate of a High School. C take a 75 hour in-class prelicense course. D pass the state exam.
Answer: (D) - Meets all of the above requirements. In order to recover monetary damages from the Real Estate Recovery Fund, the claimant shall be required to show that they are not licensed, that they are not the spouse of a licensee, and that they have obtained a judgement. Note: "monetary damages" is compensation given to the injured party by a liable party.
In order to recover monetary damages from the Real Estate Recovery Fund, the claimant shall be required to show the claimant: A. is not licensed B. is not the spouse of a licensee C. has obtained a judgement D. meets all of the above requirements
When a business is owned by one person, it would be called:
In severalty
C
May a licensee still collect earned commissions directly from a previous broker if the licensee transfers to a new firm? A. N, the licensee forfeits all commissions when they transfer. B. No, the licensee can only be paid commissions by the new firm. C. Yes, provided both brokers agree in writhing to the expressed terms under the licensee shall be compensated by the former broker. D. Yes, the licensee earned the commission under the previous broker and can be paid directly by that broker.
A the purchaser has no liability to the lender
Nelson sells his home to Randal subject to an existing first mortgage loan he obtained five years ago. After nine months, Randall can no longer continue to make the monthly payments. Under these circumstances: A the purchaser has no liability to the lender. B the purchaser is solely liable to the lender. C the purchase is primarily liable to the lender, and the seller is secondarily liable. D the seller is primarily liable to the lender, and the purchaser is secondarily liable.
Income Capitalization Approach
Net Operating Income / cap rate = Property Value
Answer: A. Once you close your transaction, you probably have an escrow account with your lender which is composed of extra money takes from your monthly payments to be put in escrow and pay your taxes and insurance when they come due. The lender pays them with your money instead of you paying them yourself.
Once you buy a house, the amount you pay each month includes an extra amount above principal and interest. This extra money is held in a special account to pay your taxed and homeowners insurance when it comes due. This account is called A. an escrow account B. a savings account C. a regular checking account D. both B and C
Single Agency
One broker representing the buyer or seller in transaction.
Answer: B. The difference between an employer and a independent contractor is that an employer must pay an unemployment tax for each employee
One of the significant differences between an employee and an independent contractor is that: A. an independent contractor does not need an affiliation agreement with the broker B. an employer must pay an unemployment tax for each employee C. only the independent contractor can have draws against future commissions D. only the independent contractor has social security withheld from his or her commission checks ON STATE EXAM!
Income approach
One of three valuation techniques taught to real estate appraisers essentially consisting of the projection of future income benefits derived from the property which are then converted into a lump sum estimate of their present value.
Cost approach
One of three valuation techniques taught to real estate appraisers requiring an estimate of the market value of the land combined with an estimate of the reproduction cost new of all improvements adjusted by estimated depreciation.
Value in exchange
One of two broad concepts of real estate value considered by appraisers. Value in exchange derives from the attractiveness of a property to others who would be willing to trade assets, such as money, to obtain the rights to it.
Value in use
One of two broad concepts of real estate value considered by appraisers. Value in use originates from the worth or utility that a property has for a particular individual who uses it.
Executory contract
One or both parties have duties to perform. Example: The buyer must financially qualify and the seller must produce a marketable title.
Ownership in severalty is ?
One owner can sell, will, leave, or transfer property. Sole owner can be a single individual or a corporation.
Unilateral Contract
One party obligated to perform eg. option contract; seller only performs
_________- a contract of sale with the stipulation that the vendor shall have the right to buy back the property within the agreed period.
PACTO DE RETRO SALE
__________ is a stipulation in a contract which authorizes the mortgagee to appropriate the property as his own upon failure of the debtor to fulfill his obligation.
PACTUM COMMISORIUM
Tenancy in common is ?
Property owned by two or more people, undivided fractional interest. It requires the unities of possession, title, time and interest. It does not have the right of survivorship.
RESPA
Real Estate Settlement Procedure Act- administered by HUD that regulates procedures that ensures that lenders fully inform buyers and sellers of the settlement costs and that lenders do not engage in unfair practices
What are fructus naturales ?
Real property that automatically go with the land ( Shade trees, shrubbery, or perennial plants)
Answer: B. Regulation Z (Truth-In-Lending Law) does not apply to business or commercial loans. It does apply to residential homes and contains requirements that ALL credit terms be disclosed when the ad contains trigger terms such as the down payment (C) or payment terms (D).
Regulation Z would apply to all of the following EXCEPT: A. residential home loans B. business loans C. an advertisement where the down payment was noted D. an advertisement where the payment terms were noted
What is the name of the third party that will receive a life interest in a property, upon the death of a life tenant?
Remainderman
Reversion Estate
Remaining estate that returns or reverts to the grantor after the grantor has conveyed a lessor estate (less than a fee interest) to someone else. Failing to name a remainderman can create this.
In a sale lease back transaction:
Rental payments may be tax deductible
A graduated lease means:
Rents increase as tenants are procured
Insurance Clause
Requires borrower to maintain property casualty insurance acceptable to lender.
Escrow Clause
Requires borrower to make monthly deposits into an escrow account of money to pay obligations like property taxes, etc.
Preservation and Maintenance Clause
Requires property to be maintained in essentially its original condition.
Statute of Frauds
Requires real estate contracts, deeds, certain leases be in writing in order to be legally enforcable
Statute of frauds
Requires that certain instruments, such as deeds, real estate sales contracts, and certain leases, be in writing in order to be legally enforceable.
...
Residential Sales are ? Definition: (1) The sale of any improved residential property of four units or less (2) unimproved property intended for four units or less. (3) agricultural property of 10 acres or less (4) leases with options to purchase all or a portion of improved property of four or less residential units. (5)dispositions of business interests involving property of four or less residential units.
Answer: D.
Restrictive covenants and restrictive conditions have different penalties if breached. Which of the following penalties is/are possible under a restrictive covenant? A. loss of property only B. loss of property or an injunction C. suit for damages only D. injunction or a suit for damages
Life estate pur autre vie with remainder or reversion
Set up by grantor but based on the life of a third party. A conveys title to B, based on the life of C. Property reverts to A (grantor) on the death of the person by whose life it's measured.
file a partition action
Several persons own property as tenants in common. One of the owners desires to sell the property whereas the other owners prefer to retain the property. If the parties cannot reach an agreement which action can be taken b the owner that wants to sell
Construction Loan
Short term (1-3 years), funds distributed gradually from lender, no payment to lender until project is complete, extensive default risk for incomplete project
Fee Simple Defeasible
Special Limitation with reverter (by grantor or heirs) Land used for specific purpose
Tenancy by the Entirety
Special joint tenancy that places the title to the property in the martial unit- husband and wife- husband dies wife gets everything
Fee simple defeasible (fee simple estate)
Special limitation with Possibility of Reverter- Title transfers so long as the property is used for a particular purpose. There is an automatic reversion to the grantor or the grantor's heirs if the land ceases to be used for that purpose. The possibility or reverter is the possible future interest the grantor's heir(s) could have if the property ceases to be used for that purpose.
Answer: A. -A purpose of the Sherman Antitrust Act is to prohibit conspiracy in the restraint of trade. A form of this is called Price Fixing. Example: An agreement between two companies that compete with each other and make an agreement to charge the same rate. (ILLEGAL) -Sherman Antitrust Act also protects consumers from unfair business practices. -Sherman Antitrust Act also deals with monopolies. A monopoly occurs when one company has solid control over the market with a particular product or service, meaning a company is doing something that is "unreasonably anticompetitive" and that there is no competition. Example: when a company lowers their prices to a level that competition is forced out of business and then they raise their prices above the market level.
The Sherman Antitrust Act has as one of its purposes to: A. prohibit conspiracy in the restraint of trade B. guarantee businesses some protection from federal income taxation C. prohibit kickbacks in regard to providing settlement services D. guarantee non-business consumers some protection against hidden credit costs
On a valid deed whos name must be on it ?
The grantee name must be on the deed
Answer: C. Covenant of quiet enjoyment basically means that the grantee has the right to enjoy his property without being challenged. Don't confuse that with other "covenants" covered in these courses - the covenant of seisin, in which the grantor warrants that he is the owner of a property and has the right to convey it ; the covenant of further assurance, which tells the grantee he has what he needs to make the title good, or the covenant against encumbrances, which offers protection against encumbrances.
The grantor guarantees that the grantee's title is good against anyone who challenges the grantee's ownership is called: A) covenant of seisin B) covenant of further assurance C) covenant of quiet enjoyment D) covenant against encumbrances
dividing the sale price by the monthly rental rate
The gross rent multiplier on a residential property would be determined by
C an apartment building
The gross rent multiplier produces the best results when used to estimate the value of: A an office building. B a warehouse. C an apartment building. D a shopping center.
What is law of capture ?
The law which allows a well drilled on one property to extract oil or gas reserves from under adjoining properties.
Answer: A. The "good faith" part of this requirement is the key element to consumers (buyers). By standardizing the forms and disclosures used by lenders, borrowers are no longer surprised by substantial and hidden costs at the time of closing.
The lender is required, under RESPA, to provide a detailed "GOOD FAITH ESTIMATE" statement at the time of loan application or within three business days to: A. the buyer B. the seller C. the buyer and the seller D. neither the buyer nor the seller
Lease option
The lessee (tenant) has the right to purchase the property under specified conditions or to renew or extend the lease at its end.
$75,000
The liability of the real estate education research and recovery fund for the acts of a licensee is terminated upon the payments from the fund in an aggregate amount of ?
Answer: A. Easements grant ONLY access, NOT ownership, use or occupancy rights. Furthermore, that access is generally for the benefit of the property owner, such as maintaining utilities or sidewalks. As such, they "attach" to a deed or lease and remain in effect, until specifically lifted.
The local utility company dug up Frank's garden to install a natural gas line. The company claimed it had a valid easement and proved it through the county records. Frank claimed the easement was not valid because he did not know about it. The easement: A. was valid even though the owner did not know about it. B. was an appurtenant easement owned by the utility company C. was not valid because it had not been used during the entire time that Frank owned the property D. was not valid because Frank was not informed of its existence when he purchased the property
Answer: A. Although various banks, mortgage companies and programs have different LTVs, the lower, more conservative number is used.
The maximum permissible "loan to value ratios" are: A. based on sale price or appraised value, whichever is lower B. not determined by federal statute in the case of FHA loans C. based on the banker's competitive market analysis D. fixed by law for conventional loans
D metes and bounds
The method of land description which identifies a parcel by specifying its boundary lines along with the terminal points and the bearing of each side is known as: A lot, block, and tract. B recorded plat. C government survey. D metes and bounds.
Answer: A. The recorded subdivision map may show the date that the land was divided into parcels, and not when the improvements were built. The tax assessor's records will show when the assessor first started assessing that improvement.
The most accurate determination of the age of a house can be made by inspecting the: A. Tax assessor's records B. Recorded subdivision map C. Physical condition of the house D. Architectural style of the house
Exclusive right to sell
The most common listing or brokerage agency relationship. It grants the broker the right to collect a commission if the property is sold during the listing period no matter who actually brings the buyer to the transaction.
Answer: D.
The primary purpose of recording a Deed is to: A. protect the interest of the seller B. provide validity to the deed and finalize the transaction C. give actual notice D. give constructive notice
Recency
The problem solving heuristic characterized by giving greatest weight to the most recently encountered evidence for example when considering a series of comparable sales.
Confirmation
The problem solving heuristic that occurs when problem solvers make early, preliminary judgments and then seek or overweight evidence supporting these early opinions.
Financial risk
The risk that the investor will not be able to pay a promised debt service and that the property, used as collateral for the loan, will be taken from the investor.
Inflation risk
The risk that the purchasing power of investment incomes and values does not keep up with the cost of other goods and services.
An owner of a life estate with a remainder interest desired to sell their interest they buyer would receive ?
The same interest the life tenant had
Answer: A. The seller would owe money, and the buyer would receive money, because the seller has not paid the taxes. $2,500 ÷ 365 = $6.849315 × (the actual days)165 = $1,130.14
The seller and the buyer finally agreed to a purchase price of $203,500 with the closing to occur on June 15, 2011. The taxes for the year 2011 in the amount of $2,500 have not been paid by the seller. How much would the tax proration amount to, and how would it appear on a full settlement statement? Base your answer on a 365 day year, and the buyer is responsible for the day of settlement. A. $1,130.14 debit the seller and credit the buyer B. $1,130.14 debit the buyer and credit the seller C. $2,500 credit the seller and debit the buyer D. nothing. the seller does not owe since the buyer is buying
Land contract
The vendor (seller) finances the property and retains the title to it until the final payment is made or some other condition is met by the vendee (buyer). The buyer possesses the property and retains equitable title. A land contract is also known as a contract for deed or an installment contract.
TRUE
True or False: Reproduction cost is the most appropriate cost estimation method to use for historic and other unique properties.
allodial system
US system in with land is owned by individuals not government
Encroachment
Unauthorized physical intrusion that encumbers the land of another
Ambiguities
Unclear or indefinite terms of contracts
Answer: (D) within one month
Under certain circumstances, a broker may also allow commissions due to be paid from funds belonging to others to remain in a trust account. What, if any, is the time limit for removing or transferring these funds to another account? A. there is no limit. B. with six months C. within three months D. within one month
Destroy the interest of all shareholders including those who have paid their payments
Under cooperative ownership the corporation is unable to make mortgage and tax payments because a few shareholders default on maintenance payments and the property might be sold by court order foreclosure suit.
C $350,000
Under federal antitrust law, an individual found guilty of a violation can be fined up to: A $1,000 B $35,000 C $350,000 D $1,000,000
Answer: C. The first thing to understand about fair housing is that discrimination involves some sort of personal characteristic...such as race, religion, age, family structure and handicap. The second is that it involves some sort of "action." This is, actively steering a buyer away from a specific property or neighborhood towards another on the basis of that characteristic.
Under the Fair Housing Law, which of these is a prohibited activity? A. telling a prospective buyer that the price of a home has just been reduced when, in fact, it has not B. advertising a property as being in a "sought-after" neighborhood C. telling a prospective buyer with a handicap that a particular property is not available for inspection when, in fact, it is D. advertising a property as being "perfect for empty-nesters."
The dominant tenant is identified as the parcel that
Uses the easement
A $576,000
Using a twelve percent capitalization rate, an apartment complex is valued at $480,000. What will be the value of the same property if a ten percent capitalization rate is used? A $576,000 B $400,000 C $520,000 D $440,000
Answer: (D) - Illegal Interest Each state sets its own ceiling for the maximum interest rates lenders may charge. Rates above that ceiling are considered usurious and illegal.
Usury MOST nearly means: A. making loans without the benefit of co-signors B. lending money at fluctuating interest rates C. being capable of multiple usage D. illegal interest
Answer: C. DOWN PAYMENT and MONTHLY PAYMENT are what determines the purchaser's ability to repay a loan.
What determines the purchaser's ability to repay a loan? A. employment history and credit history B. down payment and credit history C. down payment and monthly payment D. monthly payment and credit history
Answer: B. The $20 fee is a one-time event for new licensees..except in certain instances
What is the activation fee for the original licensing as a broker, associate broker, salesperson, or community association manager? A. $45 plus an addition $20 which goes to the Real Estate Education, Research and Recovery Fund B. $45, which includes $20 for the Education, Research and Recovery Fund C. $75, plus an additional $20 for the Fund D. $75, which includes $20 for the Fund
Answer: D.
What is the maximum fine the Commission may impose on an individual for multiple violations? A. $1,000 B. $2,000 C. $3,000 D. $5,000
Answer: (C) - RESPA
What requires a lender to give a Good-Faith Estimate? a. the "Little FTC" consumer protection act. b. Regulation Z. c. RESPA. d. FHLBB consumer protection statutes.
Answer: (B) - Reverse Annuity Mortgage
What type of mortgage exists when the LENDER pays the BORROWER a fixed amount of money every month? A. shared appreciation B. reverse annuity C. growing equity D. there is no such mortgage
Answer: (B) - Transaction Broker
What type of transaction exists when there is a written contract for a broker to receive pay from both or either party and performs only ministerial acts for one or both parties? A. double agency B. transaction brokerage C. sub-agency D. single agency
Escheats
When I property owner dies intestate and the government can find no heirs the property escheats to the state or county.
Governor Appoints
When Vacency occur in the commission
Single agency
When a broker is representing the seller or the buyer in the transaction, but not both.
Answer: D.
When a claim is settled by a title insurance company, the company acquires all rights and claims of the insured against any other person who is responsible for the loss. This is known as what? A. caveat emptor B. surety bonding C. subordination D. subrogation
B leased fee estate
When a landlord leases property, the landlord retains a: A leasehold estate. B leased fee estate. C quiet title estate. D Remainder estate.
D The lender is required to advertise before holding a foreclosure sale
When a lender's security instrument includes the power of sale and a borrower has failed to make payments on a loan with that lender, which of the following is true? A The lender cannot foreclose until the borrower has missed three consecutive payments. B Junior lien holders must be notified before a foreclosure sale can be held. C In order to foreclose on the loan, the lender must sue the borrower in court. D The lender is required to advertise before holding a foreclosure sale.
Answer: D - All of the above.
When a property is being sold on an assumption of the existing loan, complications with the transfer of some mortgage loans can be: A. the purchaser may have to qualify with the lender as if it were a new loan B. the purchaser may have to pay a higher rate of interest C. the loan may be non-assumable and due in full if the seller transfers ownership D. all of the above
Answer: (C) - the date of recordation However, property taxes (special assessments) ALWAYS take first priority!
When foreclosure occurs, the payment priority of most of the outstanding debts is established by: A. the type of lien B. amount of the lien C. date of recordation D. the court
Answer: C. an aggrieved party must first file suit and win a judgment against a licensee in court and receive actual compensation less than awarded judgments. He or she then has ten days in which to notify the Fund in writing of their claim for compensation. For example, if a couple were award damages of $65,000 in a case and the most they could collect was $40,000 after exhausting all conventional channels, they could then apply to the Fund. Remember, though, even though there is an outstanding judgment of $25,000, the most they can recover from the Fund is $15,000.
When may a party appeal to the court for an order directing payment from the fund? A) Within thirty days of a obtaining a court judgment. B) Within forty-five days of obtaining a court judgment. C) Within ten days of obtaining a judgment. D) Within five days of obtaining a judgment.
Answer: B. One trust account can hold funds for multiple transactions and it's up to the broker to decide how many accounts best serve his or her needs.
When must a broker notify the real estate Commission that a trust account has been opened and what information must be provided? A. Brokers must notify the Commission within sixty days and provide the name of the bank where the trust accounts are held B. Brokers must notify the Commission within one month and provide the bank name and the account name or number for each trust account they control C. Brokers must notify the Commission within ten banking days and provide the names of all parties involved in each transaction D. Brokers must notify the Commission within seven banking days and provide the bank name only
Answer: B.
When must a broker notify the real estate Commission that a trust account has been opened and what information must be provided? A. brokers must notify the Commission within sixty days and provide the name of the bank where the trust accounts are held B. brokers must notify the Commission within one month and provide the bank name and the account name or number for each trust account they control. C. brokers must notify the commission within ten banking days and provide the names of all parties involved in each transaction D. brokers must notify the Commission within seven banking days and provide the bank name only
Unenforceable
When neither party can sue the other to force performance, the contract is said to be unenforceable. Because a real estate sales contract must be in writing, an oral agreement to purchase property is unenforceable.
Novation
When novation is granted, one contract is substituted for another contract with the intent to discharge the obligation of the original contract.
Answer: A. When obtaining an FHA loan, an FHA approved appraiser appraises the home.
When obtaining an FHA loan, which generally happens? A. An FHA approved appraiser appraises the home B. FHA makes the loan directly to the borrower C. The borrower makes the down payment directly to the FHA D. None of the above
Answer: (C) - suit to partition
When one of the owners in a concurrent ownership institutes court action to force the sale of the concurrently owned property, the court action is called: A. suit to quiet title B. specific performance suit C. suit to partition D. suit of division
It can be dont by the process of condemnation
When private property is taken by the government through the right of eninment domain which of the following statements would be correct ?
Answer: B. Tenancy for years is the common form of rental agreements and binds all future owners for the term of the lease.
When real estate under an estate for years is sold, what happens to the lease? A. it expires with the conveyance B. it binds the new owner C. it is subject to termination with proper notice D. it is valid but unenforceable
B may deposit the earnest money into their own trust account, as long as it is approved by their broker and properly registered with the Commision
When salespersons sell their own property, they: A must always deposit the earnest money into their broker's trust account. B may deposit the earnest money into their own trust account, as long as it is approved by their broker and properly registered with the Commission. C need not deposit earnest money into a trust account, if their license is on inactive status. D Both (B) and (C).
Answer: A. A Licensee SHOULD qualify prospective buyers at the first significant meeting with the buyer.
When should a licensee QUALIFY a prospective buyer (customer)? A. at the first significant meeting with the buyer B. no later than signing the purchase and sale agreement C. after the buyer has chosen the property they wish to purchase, but before the contract is signed D. not until after the buyer's offer has been accepted
What is a Net Lease
When the Lessee pays some or all of the operating expenses
General agent
When the principal delegates a broad range of powers, and the relationship is expected to be ongoing. Example: Property manager or real estate agent with the agent's broker.
Special agent
When the principal delegates a specific act or business transaction. Example: a listing agent or a party with a durable power of attorney; an agent who entered into a buyer's agency agreement.
C
When using a security deed in Georgia the borrower is the: A. Mortgagor. B. Mortgagee. C. Grantor. D. Grantee.
annual net operating income
When using the income approach to arrive at the estimate of the property's value the cap rate would be divided into
A
Where does Fannie Mae (FNMA) obtain money to buy loans? A. From the sale of bonds and mortgaged back securities. B. From the Federal Reserve System/ C. From the primary market lenders. D. From the Government National Mortgage Association? Ginnie Mae
Answer: B.
Which BEST describes the sale price for a property in an option agreement? A. the sale price would be determined when the option is exercised B. the buyer is guaranteed a fixed price when the option is signed C. the buyer can purchase the property by matching any other offer D. the optionor is obligated to pay the sale price when the option is exercised
Answer: C. Savings and loans primarily make investments in home loans. Insurance companies (A) usually make large commercial and investment loans. Commercial banks (B) make home loans but banks usually have large investments also in business loans. The FHA (D) is a "governmental" organization and only INSURES (not invests) in home loans.
Which non-governmental organization has its greatest investment in first mortgages on single family residences? A. insurance companies B. commercial banks C. savings and loans D. federal housing administration
Answer: C. Saving and Loans and Commercial Banks both have large investments in this area of financing. Who has more has fluctuated over the past 10 years, but currently Savings and Loans have the greatest investments in first mortgages on single family residences.
Which non-governmental organizations have their greatest investment in first mortgages on single family residences? A) insurance companies B) commercial banks C) savings and loans D) Federal Housing Administration
Answer: D.
Which of the following activities is illegal? A. price fixing if real property B. unreasonable refusals by real estate boards to accept new members C. rate fixing of real estate commissions D. all of the above
Answer: D.
Which of the following activities is permissible (allowed) for a broker? A. recording a listing contract that creates a lien for the purpose of causing a cloud on the title when no valid claim exists B. accepting an oral listing from an owner and placing a "For Sale" sign on the property C. obtaining an exclusive listing from an owner while knowing that another broker has the property exclusively listed D. none of the above
Answer: D. Repairs and recurring expenditures such as repairing a leaking roof or painting a structure are tax deductible expenses. installing something "new" is NOT tax deductible, ONLY repairs are.
Which of the following could be deducted as expenses from annual income taxes on an investment property? A. making additional principal payments B. replacing a roof C. installing a new furnace D. painting a structure
Answer: D.
Which of the following describes "prepayment"? A. an amount paid to reduce the interest on a loan before the due date B. an amount paid to reduce the principal on a loan before the due date C. can result from a sale, owner's decision to pay off the loan, or foreclosure D. both B and C
Answer: (A) amortized loan
Which of the following describes a mortgage where monthly payments include both principal and interest, Typically, the monthly payments remain constant, while the INTEREST portion is HIGHER in the EARLIER years, giving homeowners a larger tax deduction with HIGHER percentages of PRINCIPAL in the LATER years. A. amortized loan B. annuity loan C. acceleration loan D. assemblage loan
Answer: D.
Which of the following does a survey NOT show? A. precise legal boundaries of a property B. location of improvements, easements, rights of way C. encroachments D. location of furnishings within the dwelling
Answer: C. The main activity of the FHA is the insuring of residential mortgage loans made by PRIVATE lenders. It sets standards for construction and underwriting but does not lend money or plan or construct housing.
Which of the following does the Federal Housing Administration (FHA) do? A. lends money and plans and constructs housing B. insures residential mortgage loans made by government lenders C. sets standards for construction and underwriting D. none of the above
the opening of a large manufactoring plant (walmart)
Which of the following factors would tend to increase demand and pricce of residential property in a given area
C Life estates always pass to the remainderman
Which of the following is INCORRECT concerning a conventional life estate? A The owner is called the life tenant. B The owner does not have to die for the estate to end. C Life estates always pass to the remainderman. D A life estate may be sold, leased, or mortgaged.
Answer: D. Statutory redemption is what allows you to recover your property after a foreclosure
Which of the following is NOT a characteristic of Truth-In-Lending (Regulation Z)? A. disclosure of costs B. advertising C. APR D. statutory redemption
Answer: D. The company you make your loan payments to is "servicing" your loan by processing payments, sending statements, managing the escrow account, providing collection efforts on delinquent loans, making sure insurance and property taxes are made, handling pay-offs and assumptions and other services.
Which of the following is NOT part of loan servicing? A. processing payments, sending statements B. managing the escrow account C. handling pay-offs and assumptions D. sending a monthly statement to the owner
Answer: (B) - Grantee's signature You do not need the buyers signature for a deed to be valid, you only need to have the grantee clearly identified in the deed.
Which of the following is NOT required for a valid deed? A. grantor's signature B. grantee's signature C. consideration D. granting clause
...
Which of the following is NOT true of "amortization"? A. over time the interest portion increases as the loan balance decreases B. over time the interest portion decreases as the loan balance decreases C. over time the amount applied to principal increases so the loan is paid off in the specified time D. none of the above
Answer: A. Annual percentage rate is NOT the note rate on your loan. It is a
Which of the following is NOT true of annual percentage rate (APR)? A. it is the note rate on your loan B. it is not the note rate on your loan C. it is a value created according to a government formula intended to reflect the true cost of borrowing and expressed as a percentage D. it is always higher than the actual note rate on your loan
B A subagent has an implied authority to act as a dual agent
Which of the following is NOT true regarding a subagency relationship? A The listing broker is the principal of the selling broker. B A subagent has an implied authority to act as a dual agent. C A subagent can only perform the activities delegated and cannot be involved in making decisions which would directly affect the welfare of the seller. D The selling company should contact the listing company before showing property to a prospect.
Answer: C. The Commission is a SEPARATE budgetary unity from the state government and may set or adjust its own fees
Which of the following is TRUE of the Georgia Real Estate Commission (GREC)? A. it is funded through the state budget B. it does not have the authority to set or adjust licensing or other fees C. Its budget is separate from that of the general state budget D. It's part of the state budgetary unit, but may set or adjust its own fees
A
Which of the following is a lender in the primary mortgage market that would make a loan directly to a prospective borrower? A. Mutual savings banks. B. Federal Housing Administration (FHA). C. Federal Home Loan Mortgage Corporation (FANNIE MAE). D. Government National Mortgage Association (GINNIE MAE).
A It may allow more than one broker to share a commission paid by the seller
Which of the following is characteristic of an exclusive right to sell listing? A It may allow more than one broker to share a commission paid by the seller. B The seller may sell the property without being obligated to pay a broker's commission. C The seller must sell to a ready, willing and able buyer found by the broker. D The broker may sign a contract of sale on behalf of the seller.
Answer: C. ARMs are conventional loans. Options A and B are part of various government programs to help low and moderate income families as well as veterans find affordable home financing.
Which of the following is considered a conventional loan? A. FHA insured B. VA guaranteed C. commercial bank's ARM loan D. contract for deed
D failing to give copies of the closing statement to clients at the closing
Which of the following is considered to be an "unfair practice" of the License Law? A Maintaining more than one trust account. B Acting as a real estate broker or salesperson without a license. C Offering free gifts to influence prospective buyers. D Failing to give copies of the closing statement to clients at the closing.
reconcilation
Which of the following is the apprasial term that decriibes the final step in the valuation process in which the various appraisal approaches are weighed to arrive at a final vvalue estimate
Answer: B.
Which of the following is the best way to ensure that there are no encroachments and verify the boundaries of a parcel of land? A) Write a legal description. B) Get a survey. C) Find the monuments. D) Verify the benchmark. ON STATE EXAM!
Answer: B. When a mortgage payment is made, it includes a payment of interest for the previous 30 days.
Which of the following is true regarding a borrower's mortgage payment assuming the payment is made on time? A. the payment includes a payment of interest for the next 30 days B. the payment includes a payment of interest for the previous 30 days C. the payment always includes equal amounts to principle and interest D. interest is always paid in advance with the mortgage payment
Answer: A. All FHA, and VA loans require escrow accounts Conventional loans over 80% -->when you put a down payment that is less than 20% on a Conventioal Loan requires an escrow account
Which of the following loans would require the purchaser to maintain an escrow account? A. all FHA, all VA, all conventional loans over 80% B. only loans in excess of 80% regardless of type C. only loans in excess of 90% regardless of type D. FHA and VA only, conventional loans never require escrow accounts
Answer: A. Regulation Z (Truth In Lending) creates a disclosure device only, and does not establish any set interest rates or required charges for credit such as closing costs or broker's commissions.
Which of the following must be disclosed to be in compliance with Regulation Z (Truth in Lending)? A) the cost of credit B) closing costs C) the tax bill D) broker's commission
Answer: B. Brokers owe accuracy in facts given out to 3rd parties (i.e. not principals). Accounting, obedience and loyalty are owed to the principal.
Which of the following obligations does a broker owe to a third party in a real estate transaction? A. accounting B. accuracy C. obedience D. loyalty
D
Which of the following parties would be exempt from the real license requirements? A. An auctioneer selling property at an auction for another party for compensation. B. A forester selling a parcel of timberland for another party for compensation. C. A person promoting the sale of real estate through listing in a publication and receiving a listing fee. D. An attorney in fact under a duly executed power of attorney to convey real estate from an owner or lessor.
Answer: D. Whenever you're selling property for someone for COMPENSATION, you MUST have a real estate license, HOWEVER, if you sell someones property without asking for compensation, you do not have to be licensed.
Which of the following persons would require a real estate license in Georgia? A. a licensed auctioneer selling real property at a single auction for another party for compensation B. a licensed forester selling a single parcel of timberland for another for compensation C. a licensed attorney acting outside the normal scope of the practice of law by selling for another for compensation D. any of the above
Answer: B. While commission members must be APPROVED by the legislature, they are NOT part of it. While five of the six members DO need to hold ACTIVE licenses, the consumer member must be free of any ties to the real estate industry in order to remain an impartial voice.
Which of the following statements about the Georgia Real Estate Commission (GREC) is TRUE? A. the commission is part of the state legislature B. the commission's role is regulatory C. all commission members must hold active real estate licenses D. no member may hold an active real estate license
D Love and affection
Which of the following would NOT be legally sufficient to support the consideration in a sales contract? A Money. B Property. C Service. D Love and affection.
Answer: C.
Which of the following would be exempt from Federal Fair Housing Laws? A. a FSBO who discriminated in advertising but not on race. B. a non-profit religious organization based on national origin. C. a senior citizens community where everyone was 62 years of age or older. D. an owner of a duplex investment property in renting, but never based on race. Note: "exempt" means- they don't have to abide by the rules of Federal Fair Housing
Answer: C.
Which of these statements about trust accounts and the Commission is TRUE? A. the Commission may examine a broker's trust account records only if an allegation of improper handling has been made B. The Commission may request, but not demand, to examine trust account records at any time C. the Commission requires every broker maintaing a trust account to agree in advance that records may be examined by one of their representatives D. trust accounts are deemed to be confidential between brokers and clients and the Commission may not examine them
a. Interest-only payments
Which one of the following characteristics is not found in a partially amortized note? a. Interest-only payments b. Partial payment of principal, full payment of interest c. Balloon payment d. Periodic fixed payments
What is an example of an encumbrance
a lease
metes and bounds( oldest legal description system used in the US and Georgia
a legal description of a parcel of land that begins at a well-marked point and follws the boundaries, using directions and distances around the tract, back to the place of beginning.
Mechanic's lien
a statutory lien created in favor of contractors, laborers, and materialmen who have performed work or furnished materialmen who have performed work or furnished materials in the erection or repair of a building
At a general meeting of a brokers' trade association, several members begin talking about fees and business practices. This sort of activity could be considered a. a violation of the Sherman Anti-Trust Act. b. activity prohibited by the Better Business Bureau. c. an appropriate activity within the association. d. a good way for brokers to learn about the different practices nationwide.
a. Any discussion of fees between competitors could be viewed as an attempt to conspire to set the cost of real estate brokerage services, a violation of antitrust law.
Consider a 30-year, 7 percent, fixed rate, fully amortizing mortgage with a yield maintenance provision. Relative to this mortgage, a 10-year balloon mortgage with the same interest rate and yield maintenance provisions will primarily reduce the lender's:
a. Interest rate risk.
In a loan closing, proper signatures on the promissory note create a. the indebtedness of the borrower. b. the lien on the property. c. the transfer of ownership to a trustee. d. recordation of the lien on the land records.
a. It is the note that creates the debt in an agreement between the borrower and lender.
The formula for determining the value of investment property is a. net operating income ÷ capitalization rate = value. b. potential gross income ÷ capitalization rate = value. c. effective gross income × capitalization rate = value. d. cost of replacing the property × capitalization rate = value.
a. Net operating income is divided by the appropriate capitalization rate to arrive at the value of the property.
Martha James lives in one side of a twofamily house. She wants to advertise the other side as non-smoking. Can she legally do so? a. Yes, because the right to smoke is not protected by law. b.Yes, because she occupies part of the house herself. c. No, because a property owner cannot advertise discriminatory practices. d.No, because she can only legally discriminate on the basis of credit and income.
a. No law offers equal protection for smoking.
A purchase in which the seller holds title until a specified number of payments have been made is known as a a. contract for deed. b. deferred transfer mortgage. c. future delivery purchase. d. land sales mortgage.
a. Property purchased on the installment plan with the seller holding title for at least one year after the date of sale is a contract for deed.
The provisions of the Real Estate Settlement Procedures Act (RESPA) apply to a. one- to four-family residential mortgage loans. b. all residential mortgage loans. c. all mortgages except home equity loans. d. installment contracts.
a. RESPA covers federally related one- to four-family mortgage loans, including equity loans.
Which of the following is the simplest form of ownership? a. severalty b. joint tenancy c. community property d. tenants in common
a. Severalty is the simplest because there is only one person involved. All other forms involve multiple owners.
When property is appraised as part of the loan application process, a copy of the appraisal a. belongs to the buyer who paid for it. b. is confidential and for the lender's use only. c. is furnished to the seller only upon written request. d.must be shared with all the parties.
a. The Equal Credit Opportunity Act provides that the borrower is entitled to a copy of the appraisal if the buyer paid for it; in Michigan, the buyer must get the lender's permission to get a copy of the appraisal.
The annual percentage rate (APR) was created in:
a. The Truth-in-Lending Act of 1968
The difference between the market value of a property and the sum of the liens against it is called a. equity. b. leverage. c. cash asset. d. pledge.
a. The difference between market value and debt is equity.
A lender is providing 90% of the financing for a new house. If the house appraises for $75,000, what is the buyer's down payment? a. $7,500 b. $67,500 c. $9,000 d.$750
a. The down payment is the difference between the sales price and the loan amount. 100% - 90% = 10% down payment. Convert 10% to a decimal and multiply. $75,000 × .10 = $7,500
When representing a buyer in a real estate transaction, the agent must disclose to the seller all of the following EXCEPT a. the buyer's motivating circumstances. b. the agent's relationship with the buyer. c. any agreement to compensate the agent out of the listing broker's commission. d.any potential for the agent to benefit from referring the parties to a subsidiary of the agent's firm for transaction-related services.
a. The duty of confidentiality extends to buyer clients
Amy Reed, a salesperson for ABC Realty, is required by contract to attend meetings, dress in a uniform, and prospect for four hours per day. She receives a biweekly paycheck, less withholdings for taxes and Social Security. Amy's relationship with the firm is that of a. an employee. b. an independent contractor. c. a manager. d. a consultant.
a. This is a description of the typical characteristics of employee status.
Zoning regulations establish the permitted uses of land as well as a. building heights, setbacks, and density. b. the price of improvements, appurtenances, and amenities. c. restrictions on ownership. d. property rights.
a. Under the police powers given by the state, local jurisdictions regulate and control the use of the land through enacting and enforcing zoning laws. These laws also address issues such as building heights and setbacks.
The Smiths offer to buy the Brown's house for $125,000, with the closing scheduled for June 15. The Browns sign a written acceptance, with the provision that the closing is to be on June 16. At this point, which of the following can occur? a. The Smiths can back out of buying the house with no penalty. b. The Browns can hold the Smiths to a June 15 closing. c. The Browns can hold the Smiths to a June 16 closing. d. The Smiths can sue for specific performance on June 15.
a. When the Browns made a counteroffer, it constituted a rejection of the original offer. The Smiths are now free and may accept or reject the counteroffer.
Income multipliers:
a. are useful as a preliminary analysis tool to weed out obviously unacceptable investment opportunities.
Which of the following is not an operating expense associated with income producing (commercial) property?
a. debt service
What term best describes the maximum price a buyer is willing to pay for a property?
a. investment value
The purchase price that will yield an investor the lowest acceptable rate of return:
a. is the property's investment value to that investor.
The overall capitalization rate:
a. is the reciprocal of the net income multiplier.
Which of the following forms of ownership involve both limited and unlimited liability?
a. limited partnerships
Universal agent
authorized to perform variety of acts necessary to effectuate a variety of transactions on behalf of another. broader grant of authority than special or general agent
punitive damages
awarded to punish wrongdoers not for actual loss
A prospect for the lease of a commercial property feels the need for adversarial representation and hires a broker to negotiate the lease on his behalf. The contract entered into between the prospect and the broker is called a. an authorization to negotiate. b. a buyer-broker agreement. c. a property management agreement. d. a cooperative brokerage agreement
b. A contract wherein the broker represents a buyer or tenant is called a buyer broker agreement or an exclusive right to represent agreement.
A seller may control the use of a property after sale and limit the buyer's future enjoyment by means of a. a seizen covenant. b. deed restrictions. c. court action. d. a habendum clause.
b. A deed restriction is a restrictive covenant running with the land.
Lease provisions that grant the tenant the right, but not the obligation, to do something generally result in:
b. A higher base rent.
A variety of land uses will add to property value as long as the uses are in a. conformity. b. balance. c. progression. d. regression.
b. A range of land uses will contribute to value when they are in advantageous proportions.
Which of the following statements best describes a real estate agent's liabilities concerning environmental hazards? a. Residential real estate agents do not need to know about environmental conditions. b. A real estate licensee could be liable if he or she should have known about a condition, even if the seller neglected to disclose it. c. Disclosure of environmental hazards is the responsibility of the seller. d.Unless the buyer asks, the real estate agent doesn't have to worry about it.
b. A real estate agent should always disclose any possible environmental conditions that would have any affect on the property or on the buyer's intended use.
To secure a loan, the borrower conveys legal title to the property to a disinterested third party for safekeeping. In this situation, the document required is a a. general warranty deed. b. trust deed. c. involuntary conveyance. d.mortgage.
b. A trust deed involves three persons: the borrower (trustor), the lender (beneficiary), and a trustee who holds title for the benefit of the lender. The trustee will reconvey ownership after the borrower has satisfied the debt.
Rita Morgan has $86,576 left on her 8.5% mortgage. Her monthly payment is set at $852.56 for principal and interest (she pays her own taxes and insurance). How much of her next payment will go to reduce the principal? a. $116.76 b. $239.31 c. $613.25 d. $735.80
b. A year's interest on the present debt would be $7,358.96 ($86,576 × 0.085). A month's interest is $613.25 ($7,358.96 ÷ 12). The principal portion of her payment is $239.31 ($852.56 - $613.25).
Broker Murphy has finalized the negotiation on his listing at 1000 Cash Avenue. He received earnest money of $5,000 for the deal.What must he do with the earnest money? a. put the check in the deal file and turn it over to the closing agency when it closes b. put the check in his company's escrow account c. put the check in his company's operating account d. put the check in his personal account
b. All earnest monies held for others must be held in an escrow account, not in anyone's personal account, deal file, or company operating account.
What will the amount of taxes payable be if the property's assessed value is $85,000 and the tax rate is 50 mils in a community where the equalization factor is 120%? a. $10,200 b. $5,100 c. $3,460 d. $4,250
b. Calculate the tax by multiplying the assessed value times the equalization factor divided by 1,000 multiplied by the mill rate; $85,000 × 1.20 = $102,000 ÷ 1,000 = 102 × 50 = $5,100.
The tax-benefits associated with installment sales are:
b. Captured exclusively by the seller.
Which of the following effects, if any, does zoning have on property values? a. Values are unchanged because owners have the freedom to develop land as they wish. b.Value is enhanced because of the principle of conformity. c. Value is diminished because of the lack of creative use of land. d.Value is not related to zoning; it is a product of supply and demand.
b. Careful zoning will increase property appreciation.
The seller offers to pay 3 points on the buyer's 80% loan. If the house sells for $250,000, what is the expense to the seller? a. $2,400 b. $6,000 c. $3,000 d. $2,000
b. Convert 80% to a decimal and multiply. $250,000 × .80 = $200,000 loan amount. Convert 3% to a decimal and multiply. $200,000 × .03 = $6,000 cost of points.
How many cubic yards of space are there in a room 27 feet long, 18 feet wide, and 9 feet high? a. 4,374 cubic meters b. 162 cubic yards c. 4,374 cubic feet d. 162 cubic feet
b. Convert feet to yards, (3 feet = 1 yard), then multiply: 27 ft × 18 ft × 9 ft = 4,374 cu ft; 4374 cu ft ÷ 27 = 162 cu yd. The question asks for an answer in terms of cubic yards rather than cubic feet, so the conversion completes the answer.
Due-on-sales clauses are included in commercial mortgages primarily to protect lenders from:
b. Default risk.
Charlie's Cheeseburgers is located in a small building in an area that is now zoned for office development. Charlie was allowed to remain because he has a a. delicious product that will appeal to nearby office workers. b. non-conforming use. c. variance. d. special use permit.
b. Despite the change in zoning, Charlie will be allowed to maintain his business as a non-conforming use. He will not be allowed to expand it, however.
A buyer paid $5,000 for an option to purchase a property within 180 days for $200,000.Within a month, the buyer made an offer to buy the property immediately for $180,000.Which of the following is true in this situation? a. The option money is forfeited. b. The owner may accept the offer for $180,000. c. The buyer is in default of the option agreement. d. Both parties are in violation of contract law.
b. Either party is permitted to attempt to renegotiate the terms of the transaction.
The federal ban on discrimination based on familial status is intended to provide equal access to rentals for a. unmarried couples. b. people with children. c. single tenants. d. the elderly.
b. Familial status refers to a parent or guardian who lives with one or more children under the age of 18.
Jessie Petersen makes a written offer to buy Sam Lewis's house for $120,000. She confides in Sam's agent, George Everly, that if necessary she'd pay $10,000 more, but she doesn't want Sam to know that. George should a. present the offer to Sam but respect Jessie's confidentiality. b. warn Jessie that he must pass on to Sam anything useful he knows. c. refuse to convey the lower offer to Sam. d. explain to Jessie why the house isn't worth more than $120,000.
b. Jessie is entitled to honest treatment, so Sam should explain that he owes her no confidentiality and that he does owe a duty of notice to Sam.
The most profitable activity of residential mortgage bankers is typically
b. Loan servicing.
Mils are often used in calculating a. mortgage interest. b. property tax rates. c. real estate commissions. d. fire insurance premiums.
b. Mils, each one-tenth of a cent, are sometimes used to express the tax rate per dollar of assessed value.
Existing leases:
b. Must be considered more carefully when valuing a multi-tenant office building than valuing an apartment complex.
Assume an income-producing property is priced at $5,000 and has the following income stream (year 1, $1,000; year 2, -$2,000; year 3, $3,000; and year 4, $3,000). Would an investor with a required rate of return of 15 percent be wise to invest at the current price?
b. No, because the project has a net present value of -$1,954.91.
The most typical adjustment interval on an adjustable rate mortgage (ARM) once the interest begins to change is:
b. One year.
A salesperson negotiates a sale and obtains a written contract signed by all parties. The sale closes but the seller refuses to pay the broker a commission. The broker is not willing to sue the seller for the commission because the seller is his favorite brother-inlaw. The salesperson may a. sue the seller. b. sue the broker only. c. force the broker to sue the seller. d. place a lien against the seller's property for the amount of the commission.
b. Only the broker may sue the principal.
Taxable income from the rental of actively managed depreciable real estate is classified as:
b. Passive income.
Savings banks are now virtually indistinguishable from:
b. Savings and loan associations.
Warehousing refers to
b. Short-term loans made by commercial banks to mortgage bankers.
When may a broker functioning as an intermediary appoint one licensee to communicate with the seller and another licensee to communicate with the buyer? a. when in the judgment of the broker it is best to make such appointments b. when written permission to do so has been obtained from the parties c. when the parties have given verbal approval to make such appointments d. when the seller has given written consent for the broker to do so
b. The broker (intermediary) who wishes to make appointments must obtain written permission from the parties to do so and must give them written notice of who is being appointed to the seller and who is being appointed to the buyer.
Agent Grajewski will use which of the following procedures to assist the sellers of 1234 Gold Avenue in setting their listing price? a. a professional appraisal b. a Comparative Market Analysis (CMA) c. a Broker Price Opinion d. a Wide-Area Guess (WAG)
b. The comparative market analysis is the process by which professional agents assist a seller in establishing a listing price.
Attorney Sam gave agent Molly $100 to shows his appreciation for the referral of Molly's client. This type of transaction is a. legal and a good business practice for future business. b. illegal, since it's considered a kickback under RESPA. c. illegal; the monies should have been given to Molly's broker. d. legal; this program had been worked out by Molly's broker and the attorney.
b. This type of transaction is in violation of the Real Estate Settlement Procedures Act (RESPA).
When a property is sold for less than its remaining book value, its depreciation (wear and tear) was:
b. Underestimated.
Closing occurs on October 10. Annual property taxes of $4,500 are paid at the end of the year.What is the correct entry for the closing statement for the proration of taxes? a. $375 b. $3,500 c. $3,750 d. $350
b. Use a banker's statutory year (12 months times 30 days per month = 360 days per year) since a calendar year is not specified in the problem. $4,500 ÷ 12 = $375 monthly tax amount; $375 ÷ 30 = $12.50 daily tax amount; January through September = 9 months, so 9 × $375 = $3,375; October 1 through October 10 = 10 days, so 10 × $12.50 = $125; $3,375 + $125 = $3,500 total proration.
A borrower obtains a $100,000 mortgage at 7.5%. If the monthly payment of $902.77 is credited first to interest and then to principal, what will the balance of the principal (rounded to the nearest dollar) be after the borrower makes the first payment? a. $99,772 b. $99,722 c. $99,097 d. $99,375
b. You must determine the monthly interest; that is done by multiplying the loan amount by the annual interest rate, then divide the annual interest amount by 12 to get the monthly amount. Then subtract the monthly interest amount from the monthly payment amount to determine the amount to be applied to the principal. Subtract the amount to be applied to principal from the beginning balance to determine the remaining loan amount. $100,000 × .075 = $7,500 ÷ 12 = $625; 902.77 - $625.00 = 277.77; $100,000 - $277.77 = $99,722.23
Which of the following terms best describes the parties to a purchase-and-sales contract? a. mortgagee-mortgagor b. vendor-vendee c. grantor-grantee d. optioner-optionee
b. a refers to lender/borrower parties, c defines parties in a transfer of property, and d refers to parties in a unilateral contract.
As a general rule, using financial leverage:
b. increases risk to the equity investor.
The net present value of an acquisition is equal to:
b. the present value of expected future cash flows, less the initial cash outlay.
purpose of zoning
balance public and private land use for the health and safety of the community
partially amortize loan or balloon mortgage
balance remains after final payment made; P&I don't pay off entire loan
Federal Fair Housing Act 1968
bans all preference, limitations, or discrimination based on race, color, religion, sex, or national origin
Grantor's Tax/ Transfer/ Recording tax is based on?
based on selling price
Estate for Years
"Tenancy for years" is just a beginning and end dates that does not automatically renew
Whats the formula for calculating the transfer tax
(sale price x state tax) + (sale price x county tax)
Section
1 mile by 1 mile and contains 640 acres
LTV is 80% buyer puts down 20% pays $1,000 for 2 points what is the sales price
1 point is 1 percent 2 points equaling 1000 must be 50k is 80% therefore 50 / 0.80= 62,500
Easement in gross
1 tract of land eg water line easement
Property foreclosed judicially can no longer be redeemed by the owner after the auction sale has been confirmed by the court, except when the mortgagee is (12)____________ where redemption may still be made within (13)_____ from the (14)_____ of the auction sale.
12. BANK UNDER supervision OF BSP 13. 1 YEAR 14. DATE OF REGISTRATION
Maximum period for Equity of redemption in judicial foreclosure of mortgage___________.
120 days
In many loans mortgage expenses can be no more than...
28% of gross monthly income
GA TAX ASSESSMENT
40% OF MARKET VALUE
immobility, indestructibility, and uniquness
3 physcial chara. of land
Length of time for inactive license
3 years
What is the maximum repayment term on a VA loan ?
30 years
The maximum period of lease of real estate that may be agreed upon between the lessor and a foreign lessee who is not a foreign investor is (30)______years, renewable for another (31)__________ years. If foreign investor, under RA (32_ ________, "Investor Lease Act" - (33)__________years renewable once for a period of not more than (34) ______ years.
30. 25 YEARS 31. 25 YEARS 32. RA 7652 33. 50 YEARS 34. 25 YEARS
Home was bought for 335k interest rate 5.5% on 90% for 30 years- payment 1711.88- How much interest did Sam pay the lender for first payment?
335 x .09 = amount of loan 301,500 301500 x .055= 16582.50 (loan amount x annual interest rate) 16582.50 / 12= 1381.88 (to get monthly amount of interest)
Yards per acre
4,840
Feet per acre
43,560
acre
43560 sq feet
Length of time to return SD
45 days
How many are on the board of commission?
6 = 5 Licensee and 1 Non-Licensee
square feet in an acre
640 sq ft in an acre
What is prop value with rent of 700 per month and GRM 121.11
700*121.11= 84,777
Lower 1% on interest rate by purchasing how many points
8
Homeowner mortgage payment 865- 800 is interest. If the interest rate on the loan is 9% what is the loan balance
800x12 = 9600 Something x 9% is 9600. Therefore 9600 / .09= 106,667
VREB consists of?
9 members, 7 licensed brokers or salesperson with 5 consecutive years of experience and 2 citizens
71. What effect does the death of the lessor normally have on an estate for years? A) No effect B) The lease is void C) The lease is avoidable D) The lease converts to a periodic estate
A) No effect
17. In New Jersey, a person may acquire title to a property by a continuously occupying or using it for: (3K) A) 6 years B) 10 years C) 20 years D) 25 years
C) 20 years
The law of agency requires what fiduciary responsibilities?
COLD AC Care: expert through transaction except legal or tax advise. Negotiate, refer to lenders & inspectors, deliver docs, etc. Obedience: act on good faith and obey unless illegal request Loyalty: principal interest above all others Disclosure: keep informed of property defects, buyer/seller will go higher or lower Accounting: accounting for earnest/funds Confidentiality: not disclosing information
TENANTS IN COMMON
CONDO
Answer: A. If a person owns and lives in a unit, he or she is entitled to practice a certain measure of discrimination.
Carl Chauvinist, the owner of an apartment complex, lives in one unit of a triplex and routinely refuses to rent either of the other two units to a female. Can he do this? A. yes. he may do this if he does not use a broker or discriminate in advertising B. yes. he may do this if he doesn't ask the tenant's age C. no. carl can never discriminate on sex. D. no. carl must live in a single family home to discriminate
Baird and Carr purchased property as joint tenancy. Baird dies and wills his property to his wife. Who would receive Baird's interest under joint tenancy ?
Carr
Gross rent multiplier
Commonly referred to simply as the GRM, it is a value ratio calculated from historic sales as the sales price divided by monthly generated rent and is similar to the gross income multiplier or GIM which uses gross annual income rather than monthly rent in the denominator.
Answer: C. Georgia real estate firms are free to use Trade names -- whether those of their own devising or of a national franchise. However, the name of a firm as it is registered with the Commission must appear in all advertising
Corey Palmer is the registered owner of "Cory Palmer Real Estate." However, he operates under the trade name of "Clubhouse Realty." Which of these statements is TRUE regarding advertising? A. he must use only his trade name in advertising B. he may use either his trade name or his registered name C. he may use his trade name but must also conspicuously display the firm's registered name D. he may use his trade name so long as his registered name appears somewhere in the advertising
Conditional Acceptance
Counter-offer or rejection coupled with new offer
80. Jack needs to net $8,500 from the sale of his time-share. How much will he have to get for his property if he pays a brokerage commission of 4% and fees of $140? (6) A) 8884 B) 8896 C) 8984 D) 9000
D) 9000
27. The Bulk Transfer Act concerns' which of the following: A) Real property B) Mortgages C) Leases D) Chattels
D) Chattels
34. Which of the following option are available to a mortgagee if the proceeds from a foreclosure are less than the amount they are owed? A) There are no remedies once the property has been sold B) The mortgagee must absorb the loss because the mortgagor is only responsible for foreclosure expenses C) The owner has two years to repay the deficiency D) The mortgagee may obtain a deficiency judgment against the mortgagor
D) The mortgagee may obtain a deficiency judgment against the mortgagor
Whats the formula for calculating the Equity?
Down Payment + (Original loan amount - current loan amount)
Percentage Lease
Flat rent fee plus a percentage of business income
A to determine building density
Floor area ratios are used: A to determine building density. B by tax assessors to estimate value. C to estimate the amount of fire insurance needed. D None of the above.
Answer: B. Appurtenant easements afford the most protection since they are generally a permanent feature of the property. Thus, in the case of a sale, the lake access passes to any new owners. By contrast, an "easement in gross" is between TWO INDIVIDUALS, which would severely limit the attractiveness and value of the property if the original owner wished to sell.
Ginny owns 50 acres of land with 500 feet of frontage on a desirable recreational lake. She wishes to subdivide the parcel into salable lots, but she wants to retain control over the lake frontage while allowing lot owners to have access to the lake. Which easement would give Ginny the most protection? A. an easement in gross B. an appurtenant easement C. an easement by necessity D. a license
A property is held in joint tenancy and one of the parties dies testate, what is true?
Goes to the joint tenant survivor
marketable title
Good or clear title, reasonably free from the risk of litigation over possible defects. unmarketable: easements, restrictions, violations of zoning, lis pendens notices, liens, etc.
A leases to B. A will pay all costs of operation plus repairs. This lease is called:
Gross
Answer: D. Accretion means the addition to a parcel of land by sand or soil deposits due to the action of a river or other body of water over time. Avulsion refers to the loss of land as a result of its being washed away by sudden or unexpected action of nature, such as a flash flood that re-routes a river.
Homeowner Ginny acquired the ownership of land that was deposited by a river running through her property by: A. reliction B. succession C. avulsion D. accretion
When filing their federal income tax return, homeowners may deduct from their gross income ?
Homeowners association fees
substitution
Homes selling for 200,000 in a residential neighborhood. A potential buyer offered 200,00 for a similar home in the same neighborhood the buyers offer was based on the principal of
Three Physical Characteristics of Real Estate
Immobility, Indestructibility,Uniqueness
A lease for more than 1 year
In georgia to be legally enforceable which of the following rental agreements have to be in writting ?
A. Ownership of an estate is transferred by operation of law, by natural causes, or by court action
Involuntary alienation means: A ownership of an estate is transferred by operation of law, by natural causes, or by court action. B ownership of an estate cannot be transferred without consent of the owner. C ownership of an estate is transferred by a deed. D ownership of an estate belongs to someone from another country.
Fixtures
Items that were once movable but have now been affixed to real estate
D Progression and regression
Karlie Sinclair has paid $300,000 for a new house in a neighborhood of properties that are worth a similar price. Now she is considering some major improvements to both the house and lot, which would cost $200,000. Which principle of valuation might suggest that this is not a wise move? A Highest and best use. B Decreasing returns. C Substitution. D Progression and regression.
Interest-only amortizing mortgage
Mortgage loan that is interest only for some years, maybe 10-15, after which the payment increases to an amount sufficient to fully amortize the loan in the remaining term. Broken into two terms: 1) up to 15 years of interest only payments. 2) pay payment necessary to fully amortize loan over remaining term.
Unenforceable
Neither can sue to force performance eg. sale contract that is oral; not written
Answer: A. A grantee taking title to a real property "subject to" a mortgage is not personally liable to the mortgagee for payment of the mortgage note. In the event that the grantor/mortgagor defaults in paying the note, however, the grantee could lose the property, and thus his or her equity, in a foreclosure sale.
Nelson (grantor/mortgagor) sells his home to Randall (grantee)"subject to" an existing first mortgage loan he obtained five years ago. After nine months, Randall can no longer continue to make the monthly payments. Under these circumstances: A. The purchaser (grantee) has no liability to the lender. B. The purchaser is solely liable to the lender. C. The purchaser is primarily liable to the lender and the seller is secondarily liable. D. The seller is primarily liable and the purchaser is secondarily liable.
What typ of lease would the renter pay all expenses?
Net
Terminating an offer
Notice of revocation by the offeree, death of either party, insanity or either party, and a counteroffer all terminate an offer.
B Reserve for replacements
On an operating statement, the allowance for items that have a useful life of more than one year is called: A accrued depreciation. B reserve for replacements. C a variable operating expense. D debt service.
A mortgage
Pledging property as security for a loan is done through ?
Whats the formula for calculating the Number of Points?
Point Dollar Amount / Loan Amount
Of the unites required for joint tenancy, which one is necessary for tenancy in common?
Possession
What are the bundle of rights ?
Possession, control, enjoyment, and disposition
Bundles of Rights
Possession,Enjoyment,Disposition,Control, Exclusion
The Sherman Antitrust laws prohibits
Price Fixing - never reference "going rate, standard rate or traditional rate" Group Boycotting -conspire to work with others or withhold other to reduce competition Allocation of Customers or Markets - agree not to compete in specific areas Tie-in Agreements- agree to sell one product based on another
D restrict the grantee's conveyance of the property
Private restrictions cannot: A be based on aesthetic considerations. B restrict the owner's lawful use of the land. C take precedence over zoning ordinances. D restrict the grantee's conveyance of the property.
A legal action by a court to review and distribute an estate is called:
Probate
Civil Rights Act 1866
Prohibits discrimination based on race
Equal Credit Opportunity Act
Prohibits discrimination in lending by: race, color, religion, national origin, sex, age, etc.
Hazardous Substances Clause
Prohibits the use and storage of hazardous substances on the property beyond normal use.
Network based scheduling tools
Project management techniques focused on estimating the minimum total project duration and identifying those critical activities, called the critical path, that must remain on schedule to avoid extending this minimum duration.
Whats the formula for calculating the assessed value?
Property Tax / Tax Rate = Assessed Value
Whats the formula for calculating the loan amount
Property Value x LTV ratio
Community Property
Property obtained by marriage are considered mutual effort Surviving spouse gets one half other is inhertited
A gives to B for the life of C. This type of estate is called:
Pur autre vie
...
Purchase and Sales Agreement is AKA (4): Definition: - Earnest Money Agreement - Deposit Receipt - Sales Contract - Contract of Sale
Type of financing not covered under TILA?
Purchase money mortgage (seller financing) or Multi-family
Answer: B. RESPA concerns itself ONLY with educating consumers about the true costs of borrowing and standardizing lending practices. As such, referral "fees" are prohibited.
RESPA would prohibit which of the following acts? A. steering B. paying of kickbacks C. blockbusting D. redlining
How would two buyers take title if they were not related?
Tenancy in common
Under a condominium ownership, individual unit owners have what form of ownership in the common elements ?
Tenancy in common
Which of the following would be the holding of title received for the common area of a condo?
Tenancy in common
Without survivorship
Tenancy in common is ?
When a property is sublet, the new lessee is referred to as:
Tenant
A party who holds possession of realty after expiration of a lease holds it as a
Tenant at sufferance
How can a corporation hold title?
Tenant in common
Two sisters want to buy a property and leave it to their heirs. They should take title:
Tenant in common
Net Lease
Tenant pays portions of ownership expenses such as taxes, utilities and maintenance
Percentage Lease
Tenant pays rent plus portion of their gross income
Estate at Sufferance of Tenancy at Sufference
Tenant remains without consent
Baird, carr and falk are co owners of a residential house on a lake. Baird sells her 50% interest to able. Baird, Carr , and Falk owned the property as ?
Tenants in common
Answer: B.
The gross income multiplier for warehouse properties in a particular part of town is 9. If a warehouse in this area generates $250,000 in gross rents per year, what would be its indicated value using the income approach? A. $27.78 million B. $2.25 million C. $25.00 million D. $9.00 million E. $27.00 million
Condition subsequent with right of reentry (fee simple estate)
Title is transferred on the condition that there is an activity that the grantee must not perform. The grantors must take legal steps to get the property back. The right of reentry is the possible future interest of the grantor.
A fee simple determinable estate is created on a property for a specific school. When the school closes, what is true?
Title reverts back to the original grantor
Assignment
Transfer of rights or duties from one contract to another or person to another
Answer: C. "In a timely manner" means as quickly as possible...usually within hours.
Under BRETTA rules, when must a broker present offers to his or her seller client? A. immediately B. within twenty-four hours C. in a timely manner D. within three business days
Answer: (B) - Monthly Payments Graduated payment mortgages are aimed particularly at young families who expect to see their earnings rise over the next 5 to 10 years. As such, payments for interest and principal are less than the actual costs in the early years and gradually rise to make up the difference.
Under an FHA graduated payment mortgage, which of the following fluctuates over the term of the loan? A. interest rate B. monthly payments C. finance charge D. annual rate
Forfeiture Clause
Under certain circumstances one party must forfeit or give something eg. earnest money given if contract breached
P.I.T.I
Used by lenders to decide monthly mortgage payments (Principle,Interest,Tax,Insurance)
Answer: C. Brokers may only deposit their own funds if necessary to maintain a minimum deposit required by the bank, to pay bank fees for maintaining the account, to cover costs for checks and deposits or other such clearly defined reasons.
When may a broker deposit or maintain his or her own funds in a trust or escrow account? A. never, under any circumstances B. anytime, so long as the funds are identified as belonging to the broker C. when the funds are clearly identified as belonging to the broker and only under specific circumstances D. under certain circumstances and with the Commission's approval
Offer acceptance
When offeror or agent receives/deliveries notice of acceptance by offeree--then contract is created
Answer: (B) - condemnation Condemnation is the process the government uses to take someones property for public good when the government exercises the right of Eminent Domain. The property owner is paid compensation for the property Escheat is the right of the government to take private property when an owner dies INTESTATE and has NO HEIRS or when someone ABANDONS their property and stops paying real estate taxes
Which would require compensation to be paid? A. police power B. condemnation C. escheat D. encumbrance
Answer: C. With the increase volume in home mortgages, the fact is a significant amount of closing statements do contain errors and it's easier and better to correct them before closing than after.
Why is the RESPA closing statement allowed to be examined on or before closing? A. to allow the buyer to see costs at or before closing to see if he/she can get the loan at a cheaper price B. to make sure the title insurance came from the right company C. to check for mathematical errors D. to provide for special fees to specific parties for business related to the real estate transaction
A
You are estimating the market value of an income producing residential property. Which of the following would be the most useful when comparing the gross rental income of the subject property with the sales price of a comparable property? A. Gross rent multiplier. B. The income approach. C. Net opening income. D. The replacement cost.
Answer: C. A sale-leaseback is a technique in which a seller deeds property to a buyer for a consideration, and the buyer simultaneously leases the property back to the seller.
You are selling the house you live in, but the house you're moving to is not completed. You need to stay on in the house a while after closing. You work out a deal with the new purchaser called a A. no-rent lease agreement B. delayed possession for the new purchaser C. sale-leaseback D. lease for one year past closing
Federal Fair Housing
You have 1 year to file a complaint with HUD
mortgagee
a lender in a mortgage loan transaction
Associate Broker
a licensed broker, other than the principal broker
What is not covered under respa ?
a loan assumption on a single family residence
graduated payment mortgage
a loan that has a fixed interest rate and negative amortization is a
rectangular survey system( government survey system)
a system established in 1785 by the federal government, providing for surveying and describing land by reference to principal meridians and base lines
...
a white woman owned a duplex and lived in a half and rented out the other half. she put a for rent sign in the front yard. the first applicant was a black man whom she turned down stating that she didn't rent to men. he later learned that she had rented t Definition: a discrimination case based on the civil rights act of 1866 ON STATE EXAM!
Testamentary trust will
a will that sets up one or more trusts for some or all of the testor's property
Estoppel certificate is what ?
a yearly statement received with current payment balance
Which of the following mortgage types has the most default risk, assuming the initial loan-to-value ratio, contract interest rate, and all other loan terms are identical?
a. Interest only loans.
Pledging property for a loan without giving up possession of the property itself is referred to as a. hypothecation. b. alienation. c. defeasance. d.novation.
a. Hypothecation is the pledging of something as collateral or security for payment of a loan.
How much would you pay for the right to receive nothing a year for the next 10 years and $300 a year for the following 10 years if you can earn 15 percent interest?
a. $372.17
A buyer is obtaining a conventional loan that requires 29/33 ratios. He earns $75,000 a year, and has a $450 car payment.What is his maximum PITI payment? a. $1,612.50 b. $1,812.50 c. $21,750.00 d. $2,475.00
a. $75,000 ÷ 12 = $6,250 monthly income. $6,250 × .29 = $1812.50 front end qualifier. $6,250 × .33 = 2062.50 - $450 debt = $1612.50 back end qualifier. The maximum PITI (Principal, Interest, Taxes, and Insurance) is the lower of these two qualifiers.
For all except very high loan-to-value conventional home loans the standard payment ratios for underwriting are:
a. 28 percent and 36 percent
What is the implied first year overall capitalization rate?
a. 9.5 percent
The buyer of a cooperative apartment receives shares in the cooperative and a a. proprietary lease. b. bargain and sale deed. c. joint tenancy. d. limited partnership
a. A co-op apartment is personal property, not real estate, and no deed is involved. The owners become shareholders in the overall organization and have a proprietary lease to their apartments.
After John Rawlings bought his apartment, he started receiving his own property tax bills. This indicates that he has bought into a a. condominium. b. cooperative. c. leasehold. d. syndicate.
a. A condominium is owned in fee simple just as a single house would be. By contrast, the owner of a cooperative apartment receives shares in a corporation that owns the whole building and pays property taxes on it.
A broker obtains an exclusive listing. Until the broker fulfills that contract, it is best described as a. executory. b. partial performance. c. having been executed. d. a unilateral agreement.
a. A contract that is not yet completely performed is described as executory.When all of its terms and conditions have been met, it is then referred to as executed.
Which of the following would be included in a spot survey of a single lot? a. the location of any improvements b. identification of any public transit services c. directions to shopping areas d. the zoning classifications of adjacent properties
a. A spot survey discloses any improvements on a property, as well as any encroachments or easements.
A contractual relationship where an individual must act in the best interests of a principal when dealing with a third party is termed:
a. An agency relationship.
What is 75% of $250,000? a. $187,500 b. $182,500 c. $62,500 d. none of the above
a. Convert 75% to a decimal and multiply; $250,000 × .75 = $187,500.
Fair Housing Amendments Act of 1988
added handicapped and family status- increase penalties, administrative enforcement mechanism
fixture
affixed to land and has become real property
reverse annuity mortgage (RAM)
allows those 62 or older to borrow against equity without income or credit ratio
What amount invested at the end of each year at 10 percent annually will grow to $10,000 at the end of five years?
b. $1,637.97
How much would you pay for the right to receive $80 at the end of 10 years if you can earn 15 percent interest?
b. $19.77
The lender's underwriting criteria would accept a housing expense to income ratio of 33% and a ratio of total debt service of up to a maximum of 38% of monthly gross income. The applicant has an outstanding college loan payable at the rate of $150.00 per month and a car payment of $450.00 monthly. Gross annual income is established at $100,000 per annum.What is the maximum PITI the lender will approve? a. $2,750.00 b. $2,566.67 c. $2,666.67 d. $2,716.54
b. ($100,000 ÷ 12) × 0.38 is $3,166.67 - ($150 + $450) = $2,566.67
The remaining balance on Shari Larson's mortgage is $185,500. The interest rate is 8.5% and the monthly payment is $1,426.50. How much of her next monthly payment will be applied to principal? a. $1,426.50 b. $112.54 c. $1,313.96 d. $43.79
b. ($185,500 × 0.085) ÷ 12 = $1,313.96 interest for month $1,426.50 - $1,313.96 = $112.54
A seller principal asks a salesperson to do something in a particular way. The broker disagrees with the seller and instructs the salesperson to handle the matter differently. Whose instruction should the salesperson follow? a. the seller b. the broker c. the buyer d. none of the above
b. The broker is a single agent of the seller and the salesperson is a subagent of the seller.
general warranty deed
best deed because buyer receives 5 covenants: Covenant of seisin - promise of ownership and conveyance Against encumbrances Quiet enjoyment Further assurances - correct title defects if found Warranty forever - defend third party disputes
nonrecourse loan
borrower not held personally liable for the note
lien-theory state
borrower receives deed at closing and lender established lien position
Exclusive buyer agency
buyer is obligated to pay broker if find the property on your own or with help of another broker
equitable title
buyers interest in a land contract when the seller holds legal title
Equity Skimming
buying a property to collect rent while mortgage payments are never paid
statutory lien
by law such as judgement
What is the present value of $500 received at the end of each of the next three years and $1,000 received at the end of the fourth year, assuming a required rate of return of 15 percent?
c. $1,713.37
Given the following information, what is the required equity down payment? • Acquisition price: $800,000 • Loan-to-value ratio: 75% • Up-front financing cost: 3%
c. $218,000
Given the following information, what is the required equity investment due at closing? • Acquisition price: $800,000 • Loan-to-value ratio: 75% • Financing cost: 3%
c. $218,000
In 2007, you purchase a small office building for $450,000, which you financed with a $337,500, 25-year, fixed-rate mortgage. Up-front financing costs total $6,750. How much of this expense could be written off against ordinary income in 2007?
c. $270
Property taxes are assessed annually at $4.05/100 of value. If the assessed value of a property is $100,000, how much are the taxes for the year? a. $4,000 b. $5,040 c. $4,050 d.$405
c. $4.05 ÷ 100 = $.0405; .0405 × $100,000 = $4,050
If a landowner purchased a vacant lot six years ago for $25,000, assuming no income or holding costs during the interim period, what price would the landowner need to receive today to yield a 10 percent annual return?
c. $44,289.03
To increase the effective yield on a $250,000 loan by 1/4% when one discount point is equivalent to an increase in the APR of 1/8 %, how much would the lender collect at settlement in loan discount? a. $2,500 b. $3,125 c. $5,000 d. $6,250
c. 0.25 ÷ 0.125 = 2 points; $250,000 × 2% = $5,000.
What percent of the rental income from residential property must be derived from the leasing of units occupied by tenants as housing?
c. 80 percent
On a level-payment loan with 12 years (144 payments) remaining, at an interest rate of 9% percent, and with a payment of $1,000, the balance is:
c. 87,871.
What is the IRR, assuming an industrial building can be purchased for $250,000 and is expected to yield cash flows of $18,000 for each of the next five years and be sold at the end of the fifth year for $280,000?
c. 9.20 percent
A property or neighborhood's life cycle will include the stages of a. development, use, stability, and termination. b. growth, deterioration, and rebuilding. c. growth, equilibrium, and decline. d.purchase, resale, and condemnation.
c. A building or neighborhood will undergo a period of growth in which it is first developed, followed by a period of relatively little change before the effects of deterioration result in its decline.
The requirement of a real estate manager to act in the best interests of the landlord when dealing with a tenant is termed:
c. A fiduciary responsibility
The following are necessary for a lease to be valid, except:
c. Tenant's contact phone number, or address, in the event of an emergency.
The operating expense ratio:
c. expresses operating expenses as a percent of effective gross income.
severance
changing an item of real estate to personal property by detaching it fro mthe land, cutting down a tree
general lien
claim of real and personal property
cloud on title
claim that creates a defect on the title
Easement by prescription
claimant has made use of another's land ofr a certain period of time as defined by state law. Ga time period is 20 years
Covenant of seisin
claiming to have a fee simple ownership when you only have life estate
option contract
contract by which an optionor generally the owner gives and optionee(buyer or leasee) the right to buy or lease the owner's property at a fixed price within a certain period of time- only one required to act
Unilateral
contracts my also obligate one or more persons to perform a task- person offering $100 for missing dog
involuntary lien
created by law without action of owner eg property taxes: specific, involuntary
purchase-money mortgage
created when interest rates were high. where sellers agree to finance a portion or the entire purchase price
Easement by necessity
created when someone is landlocked and needs to ingress or egress property
Emblements
crops that require annual cultivation and are considered personal property
Who are not a protected class under federal law
gays
How much will a $50 deposit made today be worth in 20 years if the compound rate of interest is 10 percent?
d. $336.37
If a homeowner has a first mortgage loan balance of $63,250, a second mortgage balance of $12,000, and unpaid taxes of $3,015, how much equity does he have in his $100,000 home? a. $25,000 b. $21,735 c. $100,000 d. $24,750
d. $63,250 loan balance + $12,000 loan balance = $75,250 total debt; $100,000 value of home - $75,250 debt = $24,750 equity. Taxes are an expense prorated at closing, and are not considered a debt.
The maximum loan-to-value ratio on a VA guaranteed loan is:
d. 100 percent.
On the following loan, what is the best estimate of the effective borrowing cost if the loan is prepaid in six years? Loan: $100,000 Interest rate: 7 percent Term: 180 months Up-front costs: 7 percent of loan amount
d. 8.7 percent.
A planned development consists of a. structures such as factories or hotels that have been converted to residential use. b. residential apartment units that share common elements, such as hallways and recreational areas, within a larger building. c. a high-rise building that includes apartments as well as commercial units, such as movie theaters and stores. d. parcels owned separately and areas owned in common for use by parcel owners.
d. A planned development includes individually owned lots and other lots or areas owned in common.
Net operating income is found by a.multiplying effective gross income by the cap rate. b. dividing effective gross income by the cap rate. c. subtracting market income from the appraiser's estimate of potential gross income. d. subtracting yearly operating expenses from effective gross income.
d. A property's net operating income is derived by first estimating its potential gross income, then deducting estimated vacancy and collection losses to derive effective gross income, and finally subtracting yearly operating expenses from effective gross income.
A house sold for $82,000 and was assessed at 90%. If property taxes are $4.30 per $100 of value, what are the annual taxes? a. $3,773.40 b. $4,300.00 c. $3,526.00 d. $3,173.40
d. Convert 90% to a decimal and multiply. $82,000 × .90 = $73,800 loan amount; $4.30 ÷ 100 = $.0430; $73,800 × $.0430 = $3,173.40 annual taxes.
The typical anchor tenant in a neighborhood shopping center is a:
d. Grocery store.
Home equity loans typically:
d. Have tax-deductible interest charges.
Fee-for-Service Brokers
flat-fee or limited service allows buyers and sellers to select from a menu of real estate services
Reserve account (or replacements for reserve or replacement reserves)
funds set aside for debt service or maintenance
Rectangular Survey
government survey based on imaginary principal meridians Read legal description in government survey backwards eg SW1/4 of the NE1/4 of the NE1/4 (start @NE) to compute acres 640 /4 /4 /4 = 10 acres
When computing the amount of capital gain what should not be an appropriate adjustment ?
homeowners association fees
cubic footage of the improvements
in determining the replacement cost of a commercial warehouse an apprasier would most likely be interested in
lower interest rates
in order to make adjustable rate mortgage loans more attractive to borrowers, lenders offer
25 hours
in order to qualify for a community association manager license, an applicant must complete an approved course of study of how many hours ?
Covenant of quiet enjoyment
is a right to the undisturbed use and enjoyment of real property by a tenant or landowner- does not promise that title is perfect (like seisin), but merely that the buyer's possession of the land will be defended against hostile claims. Would not be broken until Larry died and the remaindermen move to evict T. Fool
Appurtenant Easements
is attached to the ownership of one parcel and allows this owner the use ofa neighbor's land. Said the run with the land
constructive eviction
landlord breached lease and property is uninhabitable
actual eviction
landlord file for possession due to breach of lease
Reversionary Right
landlord/owner/lessor right to retake property on the expiration of lease terms
In a sale and leaseback arrangement the sellers fee simple estate is converted to a
leasehold estate ( less than freehold )
Title by Estoppel
legal principal also known as deed by estoppel whereby a person obtains title to real estate over the apparent owner because the apparent owner failed to provide proper public notice of his ownership interest.
probate
legal process of settling a deceased person's estate
Torrens system
legal registration of land where title doesn't transfer until documents registered in Torrens office
Dower and Curtesy
legal right or interest recognized by some states- Dower refers to the portion to which a surviving wife is entitled, while curtesy refers to what a man may claim
title theory state
lender gets legal title and the borrower equitable title
intermediate-theory state
lender has lien on property unless borrower defaults
Blanket Mortgage
loan wherein the borrower pledges more than one parcel as collateral
A recorded subdivision plat is used in the ?
lot and block system
8% interst rate and a 25 year term the lower the rate the longer the term
lowest monthly payment on which loan
Which of the following deed clauses will most likely contain the names of the parties? premises- habendum- testimonium- none of the above
premises
voluntary lien
mortgage, securing loan
nondisturbance clause
mortgagee agrees not to terminate lease in the event of foreclosure
Quit Title Deed
no warranties
open buyer agency agreement
nonexclusive contract that buyer can enter into with any amount of agents and agent who finds property is compensated
Living will
not a will- only valid during someones lifetime and does not dispose of assets- instructs a doctor whether a person wishes life support or not.
Assemblage
occurs when the whole is more vauleable then pieces- nothing to do with demand
What makes a contract
offer, acceptance, consideration, lack of defenses
Performance obligation
once a contract arises (offer, acceptance, consideration, lack of defenses)
nonamortized loan or straight loan
periodic interest payments but nothing applied to principal eg construction loan
time share ownerhsip
permits multiple purchasers to buy interests in real estate, time shares are most common with resort property ownership. the owners occupancy and use of the property are limited to the contractual period purchased.
Business Entity Salesperson License
permits the individually licensed salesperson or broker to work under a principal broker as a business entity
Client
person who has entered into brokerage relationship
Deficiency judgement
personal judgement against the borrower for outstanding balance on the loan following foreclosure
deficiency judgement
personal judgement levied against the defaulted when a foreclosure sale does not pay off loan
what type of property is transferred in the bill of sale?
personal property
chattels
personal property that include movable items
property management contract
personal service contract- which terminates upon sale of peroperty or death of the owner or broker. general agency between principals- property owner and broker
In the sale of a 60 year old house, the seller is unable to provide written proof of title because courthouse records were destroyed by fire. The seller could establish ownership and perfect his title through ?
prescriptive ( color of title )
What is the price to be quoted to prospects?
price on listing agreement
What is the best for CMA?
principal of highest and best use
Intermediation
process by which financial institutions (intermediaries) invest deposited funds
Whats the formula for calculating the Percent profit
profit divided by purchase price
Net Listing
promise to sell someones house for 200k and sell for 220k and keep the difference- illegal
variances
provide relief if zoing regulations deprive an owner of the reasonable use of the property, provides an exception for a minor deviation
What do you need to calculate depreciation?
purchase price - land value
General Agent
range of tasks/on-going When the principal delegates a broad range of powers and the relationship is expected to be on-going. eg. property manager
Exclusive Listing
real estate agent stands to gain a commission if a property sells within a specified number of months, no matter how a buyer is found
Liens paid first
real estate taxes and special assessments
what type of property is transferred in the deed?
real property
Brownfields site
real property for which expansion or development is complicated due to potentially hazardous material on the land
a residential loan to a first time home buyer to purchase a single family residence
the truth in lending act applies to
A seller agrees in a sales contract to take back a purchase money mortgage for part of the purchase price. To give public notice of the sellers financial interest in the property the seller should ?
record the mortgage
A general warranty deed is presumed to have been delivered if the deed is
recorded by the grantee
constructive notice
recording documents
A borrower obtain a new loan at 7% interest rate and uses the proceeds to pay off an existing loan at a 9% interest rate. This would be an example of ?
refinancing
FNMA does what to raise money
to purchase loans by selling gov't guaranteed bonds
Percentage lease
rent is based on a minimum fixed rental fee plus a percentage of the gross income received by the tentant doing business on the leased property
Index lease
rent tied to index outside of owner and tenant's control eg. consumer price index
warranty of habitability
requires that the landlord keep the property in good condition
recorded plots( lot and block system GA)
second legal description in Georgia, this system uses lot and block number referred to in a plat map filed in the pbulic records of the county where the land is located
seller terminates agency agreement without cause
seller may be liable for expenses incurred by the broker
Who are custom agency agreements with
sellers
What is something HUD does not do
set interest rates
Disintermediation
situation where private individuals invest their own money rather than deposit it in a bank
autmatically goes to the spouse. NOT RECOGNOZED IN GEORGIA
tenancy by the entirely
Tenancy for years does not require notice from the tenant
tenancy for years does not require notice from the tenant
Express or implied
terms and conditions may be either expressly stated or written
What is needed in a fair housing discrimination case?
that the discrimination occurred
a privately owned corporation and is active in buying FHA and VA mortgage loans
the Federal National Mortgage Association is:
trustor
the borrower under a deed of trust is the:
Exclusive Agency Buyer Agency
the buyer is obligated to pay commision only if broker locates suitable property- if buyer finds on there own then does not need to compensate
Acceleration clause
the clause in a morgage or deed of trust that can be enforced to make the entire debt due immediately if the borrower defaults on an installment payment or other covenant
Alienation Clause ( Due on sale clause, or call clause)
the clause in a mortgage or deed of trust that states that the balance of the secured debt becomes immediately due and payable at the lenders option if the porperty is sold by the borrower. In effect, this clause prevents the borrower from assigning the debt without the lender's approval. (prevents assumable loans.)
deed executed by a minor
the deed is voidable
mental impairment at the time of signing deed
the deed is voidable
Convenant of quiet enjoyment
the grantor guarantees that the grantee's title will be good against thrid parties who might birng court actions to establish superior title to the property
Grantor
the owner transferring title to or an interest in real property to a grantee
inform buyers and sellers of all settlement costs in a residential real estate transaction
the primary purpose for RESPA is to
Exclusive Agency
the seller only offers the listing firm compensation if the purchaser is procured through the firm's efforts or the efforts of other real estate firms
Devise
to leave property to someone in a will (to devisee)
