National Exam Practice Test
Roland's farm land is assessed at 1.5 million dollars and the improvements for $500,000. At a tax rate of 4 mills, how much are Rolan's monthly taxes? $6,667.00 $667.00 $8,000.00 $80,000.00
$667.00 Assessed value + improvements = total value of $2,000,000. Multiply 2 million by 4 (mills/millage rate) then divide by 1000 = $8,000 in annual taxes . Divide $8,000 by 12 to give you the monthly tax amount ($8,000 ÷ 12 = $667.00).
You're working with buyers who are pre-approved for a loan of up to $200,000. Assuming they lock in a 5.25% interest rate at closing, how much of their first payment will go toward interest? $824 $825 $874 $875
$875 The formula is loan balance x interest rate divided by months per year. Loan balance is: $200,000 x .0525 = $10,500 ÷ 12 = $875.
Appraiser Niles uses ______ to determine a range of values based on comparing a subject property to comparable sales. He makes sure to use some comparables that lack features of his subject property, and others that have even more desirable features, to balance out the comparison. Bracketing Competition Correlation Substituting
Bracketing Bracketing determines a probable range of property values by comparing a group of comparable sales to the subject. The appraiser attempts to include both superior and inferior units of comparison such as age and transaction price.
A buyer, hoping to beat out all other offers, included a clause in the offer that reads, "Buyer to beat all competing offers by $1,000 up to a price of $700,000. Seller to provide copies of competing offer to buyer on acceptance." What type of offer is this an example of? Bad Dynamic Elevator Escalator
Escalator
The cost approach method Burt used before investing in his new community was highly dependent on his depreciation estimates. As they begin building the homes they realize the guest bedroom in each has a point of entry that prospective buyers do not like in the layout of the house. The depreciation of this design defect is ______. External depreciation Functional obsolescence Physical depreciation Reoccurring depreciation
Functional obsolescence Burt's investment is experiencing functional obsolescence, a form of depreciation or loss in value caused by defects in design, such as an atypical floor plan.
According to the process appraisers follow, what action is taken first upon being assigned a property for appraisal? Determine highest and best use Gather and analyze data Identify data needed State the problem
State the problem The first step of the appraisal process defined by the Uniform Standards of Professional Appraisal Practice (USPAP) is to state the problem.
Shannon is reading through paperwork related to her upcoming home purchase, and she comes across the following: Southwest quarter of Southwest quarter (SW ¼ of SW ¼) and West Half of Southeast quarter of Southwest quarter (W½ SE¼ SW¼) of Section Eleven (11), Township Four (4) North of Range Eight (8) West. What did Shannon just find? Legal description Mortgage clause Quitclaim deed Tax description
Legal description
Steven owns 114 acres of wooded, rural land. The abundance of wildlife on his property means that his friends are always asking for permission to hunt on it during various game seasons. If Steven gives a friend permission to hunt on his land, it can be said that he has given his friend a ______. Covenant Easement Grant License
License A license is permission to do something on another's land without actually possessing any interest or ownership in the land.
Which type of agent is an escrow officer? General agent Limited agent Single agent Universal agent
Limited agent An escrow officer works in a limited capacity to serve the parties, so is a limited agent.
Kyle owns six acres of land with 400 feet of river frontage. He wants to build a beach along the river bank to make it easier to swim in the river. He can do this because as the owner of river frontage, he has ________ rights. Alluvial Erosion Littoral Riparian
Riparian Riparian rights are granted to property owners whose property is adjacent to flowing water, like a river.
Belinda is a licensee whose client asked her to draft an addendum containing complicated terms that even Belinda doesn't fully understand. Belinda should ______. Avoid unauthorized practice of law Hire an attorney Refuse to work with this client Use legalese
void unauthorized practice of law Licensees must avoid unauthorized practice of law. Drafting contractual paperwork with uncertain terms would be a violation.
In a residential real estate sale involving a federally related loan, who's required to provide Real Estate Settlement Procedures Act disclosures to the consumer? The consumer's lender The consumer's mortgage broker The consumer's real estate broker The settlement officer for the transaction
The consumer's lender The lender must provide the borrower with a written disclosure of the estimated and final settlement costs.
Bernie is representing Oscar in the sale of Oscar's home. They have signed an exclusive right-to-sell listing agreement. If Oscar finds his own buyer, does he owe Bernie a commission? No, because he found his own buyer No, because Oscar retained his exclusive right to sell Yes, because exclusive right to sell means Bernie gets paid no matter who finds the buyer Yes, because Oscar is not a real estate licensee
Yes, because exclusive right to sell means Bernie gets paid no matter who finds the buyer It's easy to confuse exclusive agency and exclusive right-to-sell agreements. With exclusive agency, the seller retains the right to sell and avoid paying the commission.
The Davises pay the annual property tax of $1,825 on their lake house every January. On a whim, they sell the lake house to the Bennets to buy a Winnebago and travel the country. Closing is set for July 31, and the buyers own the day of closing (pay prorated expenses through the day of closing). Using the calendar year proration method (assume that it's not a Leap year), how much of the pre-paid property tax was the Davises' responsibility? $1,050 $1,055 $1,064.70 $1,069.77
$1,055 The daily tax rate is $5 ($1,825 ÷ 365). The Davises' property taxes for January 1 through July 31 (211 days) is $1,055 ($5 x 211).
Dale is purchasing a property that has an assessed value of $35,190. If the tax rate is 5%, what will he likely pay annually in property taxes? $17,595 $1,759.50 $17.60 $35.19
$1,759.50 To find the tax amount, multiply the assessed value by the tax rate ($35,190 x 0.05).
Using the income approach, determine the value of a property that has a net operating income of $15,000 and a cap rate of 15%. $100,000 $15,000 40% 5%
$100,000 Value = income divided by cap rate. The value of a property is $100,000 ($15,000 ÷ .15 = $100,000).
Nico is buying a home for $625,000. His earnest money deposit is 8%. He wants to avoid private mortgage insurance (PMI) on his conventional loan, and he owes 5% in closing costs. How much money should he bring to closing? $106,250 $156,250 $31,250 $81,250
$106,250 Conventional loans often require 20% down to avoid PMI ($125,000), and Nico has paid a $50,000 deposit ($625,000 x .08). Closing costs are $31,250 ($625,000 x .05). He needs $106,250 to close ([$125,000 - $50,000] + $31,250).
Giant Industries has a $674,232 gross operating income, operating expenses of $329,129, and other expenses totaling $38,719. What is the net operating income? $306,384 $345,103 $383,822 $635,513
$345,103 The formula for finding net operating income is: gross income - operating expenses = net operating income. So, $674,232 - $329,129 = $345,103. Other expenses like loan interest and debt repayment aren't included in this calculation.
When real estate licensee Brian discovered that Arnold was using a 'Choose Your Neighbor' letter to market a property without also listing the property in the MLS, in the local paper, or even putting a for sale sign in the yard, what charge could he bring against Arnold to the National Association of REALTORS®? 1. A charge of agreeing to discriminate by limiting access to the property 2. A charge of misrepresenting the property for sale 3. A charge of not fulfilling his fiduciary duties to his client by not conducting a complete marketing plan 4. A charge of unfair practice because his mother did not get one of the 'Choose Your Neighbor' letters
1. A charge of agreeing to discriminate by limiting access to the property REALTOR® Brian could charge Arnold with violating Article 10 of the Code of Ethics, which prohibits REALTORS® from agreeing to discriminate against people belonging to a protected class.
urchasing a home warranty. "Why would I need a warranty?" he wondered. "Didn't the home inspection identify all of the issues?" What's the agent's best response to Lamar's question? 1. A home warranty covers things the inspection didn't address, like appliances, as well as structural issues that occur within the first year. 2. Buying a home warranty almost guarantees you won't have any issues! 3. If you purchase a home warranty and something breaks, you can sue the seller. 4. The inspection is only as good as the inspector, and there is no guarantee that the inspector found all potential issues.
1. A home warranty covers things the inspection didn't address, like appliances, as well as structural issues that occur within the first year. A home warranty often covers items that weren't inspected. Also, even the systems that WERE inspected are subject to problems or failure.
The Smithwicks, your buyer clients, obtained a 90% loan on their new $400,000 home. At closing, they paid $6,150 for points at closing. How many points did they pay? .017 .02 1.7 1.71
1.71 A point is 1% of the loan amount. The Smithwicks' loan is $360,000 ($400,000 x .90), and they paid $6,150 for points at closing. Divide the cost in points by the loan amount to get the number of points they paid: ($6,150 ÷ 360,000 = 0.0170833, or 1.71).
hich of these is an encroachment? 1. A path providing neighborhood access to a pond cuts through part of Bill's property. 2. Jeff installed a sidewalk next to his driveway, six inches outside his property. 3. The city seized a formerly private parcel of land for public use. 4. The state took ownership of Dawn's property when no heirs could be located following her death.
2. Jeff installed a sidewalk next to his driveway, six inches outside his property. An encroachment occurs when someone illegally places a structure or object on another person's property. Jeff's installation of a sidewalk off of his property is an example.
What is an open listing agreement? 1. One in which anyone can find the buyer, but the listing agent still gets paid 2. One in which only the person who finds the buyer gets paid 3. One in which the price is negotiable within a specified range 4. One in which there's no end date
2. One in which only the person who finds the buyer gets paid
Marketo Building Designs is selling the air rights above its office building. The lot is 450 feet by 350 feet. How would you determine the air lot height in order to calculate the area? 1. The area of an air lot can't be calculated because the height is unlimited. 2. The city or other governing authority establishes the air lot's height. 3. The height of all air lots is 500 feet above the existing structure. 4. The height of the air lot is equal to the height of the structure under it.
2. The city or other governing authority establishes the air lot's height. Because of safety and other concerns, municipalities typically establish the height of air lots in their jurisdictions.
Which of the following statements about the number of contingencies in a sales contract is true? 1. Every sales contract should contain a minimum of three contingencies. 2. The inclusion of numerous contingencies makes it less likely that the buyer's offer will be accepted. 3. The more contingencies, the better, from the seller's perspective. 4. The number of contingencies is directly related to the cost of the home. The higher the asking price, the greater number of contingencies.
2. The inclusion of numerous contingencies makes it less likely that the buyer's offer will be accepted. While contingencies provide important safeguards, buyers should bear in mind that the inclusion of numerous contingencies makes it less likely that their offer will be accepted, especially in a competitive bidding situation.
A buyer anticipates a house payment of $1,000 per month, with monthly homeowner association fees of $150. The buyer also has a car payment of $400 per month. If the buyer earns a monthly gross income of $5,000, what's the housing ratio? 20% 23% 28% 31%
23% The housing ratio is 23%: ($1,000 + $150) / $5,000 = .23 x 100 = 23%.
Jerrica is set to close on the property she's buying on Friday. Because of other delays in the closing date, Jerrica's interest rate as of the day of closing will increase by 1/4 of a percent. What impact does this have on the closing? 1. A new Closing Disclosure must be issued, so the closing date must be moved back. 2. A new Loan Estimate must be issued, so the closing date must be moved back. 3. Jerrica will not be able to close until she re-applies for her loan. 4. The closing date will remain the same, but Jerrica will need to bring additional funds to the closing.
A new Closing Disclosure must be issued, so the closing date must be moved back. Any interest rate change of more than 1/8 of a percent requires a new Closing Disclosure, triggering a new three-day waiting period.
Rhonda purchased an existing pet store in her neighborhood and she's so excited! Her animal-loving aunt is thrilled for Rhonda but disappointed that she won't be able to visit the store in her wheelchair, as the aisles are narrow and there isn't enough room to move around. What is true about Rhonda's responsibilities to her aunt and other people with disabilities? 1. At a minimum, Rhonda is required to add an accessible bathroom. 2. At a minimum, Rhonda is required to add an accessible entrance to the building. 3. Because Rhonda purchased a retail business, she must meet the same ADA requirements as new construction buildings. 4. Since Rhonda purchased an existing building and business, the ADA requirements aren't as strict as with new construction and vary by building.
4. Since Rhonda purchased an existing building and business, the ADA requirements aren't as strict as with new construction and vary by building. There is no required minimum for existing buildings; instead, each business must make a reasonable effort to resolve usage barriers for people with disabilities.
An attorney receives a request to have an appraisal performed on a property inheritance that she is transferring from her deceased client's estate to his heir. Which of these statements is true? 1. A licensee or certified appraiser must always appraise estates that are inherited, but other types of estates are exempt. 2. Appraisals performed for attorneys for any reason must be performed by a certified appraiser. 3. Estate-related property transfers always require a certified appraisal. 4. This isn't a federally related transaction and under federal law an appraisal isn't required.
4. This isn't a federally related transaction and under federal law an appraisal isn't required. Since this isn't a federally related transaction, federal law doesn't require a licensed or certified appraiser. However, state law may be more stringent.
Which of these statements best represents what happens after a federal fair housing complaint is made? 1. A fair housing specialist will review the complaint. 2. An official housing discrimination complaint will be filed, and a fair housing specialist will be assigned to the case. 3. FHEO will contact the alleged perpetrator to gather information. 4. HUD will review the complaint to determine if it's valid.
A fair housing specialist will review the complaint After an initial complaint is made, a fair housing specialist will review it to determine if a violation has occurred. If there's a potential violation, the specialist will help the consumer file an official complaint.
Which of the following is an example of an easement? 1. A path providing neighborhood access to a pond cuts through part of Hillary's property. 2. Michael installed a basketball hoop next to his driveway, six inches outside his property. 3. The city seized a formerly private parcel of land for public use. 4. The state took ownership of Don's property when no heirs could be located following his death.
A path providing neighborhood access to a pond cuts through part of Hillary's property. An easement allows a person the right to use or cross over another's property for a specific reason. Residents of a neighborhood using the path that crosses through Hillary's property is an example.
Which of the following is a way in which property taxes could impact your clients? 1. A sale in the area may prompt a reassessment, impacting new buyers. 2. Neighbors may be jealous about favorable tax rates. 3. Tax abatements could harm buyers financially. 4. Tax refunds are not possible if property tax deductions are taken.
A sale in the area may prompt a reassessment, impacting new buyers. A sale can prompt a reassessment, resulting in higher property taxes.
Elaina and Allen just purchased a home using a deed of trust. Which of the following is most likely true about their home loan? A trustee will hold title until the loan is paid. Their transaction is secured with a mortgage as well. The lender will hold the mortgage, while a trustee will hold the deed of trust until their loan is paid off. The lender will hold the title until the loan is paid off.
A trustee will hold title until the loan is paid. When a deed of trust secures a loan, a trustee holds the title until the loan is paid. Because the right to sell in the event of a default is part of the deed of trust's language, a non-judicial foreclosure may be used.
Millie is a buyer who has given her agent an earnest money check for $10,000 with an offer to purchase. When will the check be deposited? After Millie receives loan approval for the purchase After the purchase offer is accepted by the seller At least 10 days prior to closing on the sale Immediately upon receipt by her agent
After the purchase offer is accepted by the seller Earnest money funds are typically deposited after the seller accepts the buyer's offer.
Esmerelda makes regular monthly payments on her loan. In addition to paying interest, she's slowly paying down the principal of the loan. With each payment she makes, more will go towards the principal and less to interest. What type of loan does she have? Amortized Balloon Reverse Straight
Amortized
Which of these is NOT a likely features of a bridge loan? Amortized loan paid back over a period of no more than five years Interest-only loan Secured by the borrower's existing home Temporary, short-term loan
Amortized loan paid back over a period of no more than five years A bridge loan is usually a temporary, short-term interest-only loan secured by the borrower's existing home.
Casey signed a contract form offering a purchase price of $309,000 on Karen's home, and gave his agent a $5,000 earnest money deposit. Karen's out of town, though, and her agent can't reach her. At this point what does Casey have? An executory contract An implied contract An offer A voidable contract
An offer Until the terms are negotiated and the contract signed by both parties, acceptance hasn't occurred and the sales contract is considered an offer.
Margot is looking for a 10-year loan with regular affordable monthly payments. In eight years, she'll inherit a good chunk of money from her grandmother and be able to pay off the remaining loan amount. What kind of loan might be best for Margot? Balloon loan Bridge loan Budget loan Graduated payment loan
Balloon loan A balloon loan allows borrowers to make lower payments, then make a "balloon," or lump sum, payment at the maturity date (the end of the loan term). A lender can amortize the loan over a 30-year period with a balloon payment at the end of 10 years.
Ken, Barbie, and Trixie owned a property as a joint tenancy. When Trixie moved out of state, she sold her interest to Skip. Two years later, Ken died. How is the interest in the property divided? Barbie and Skip each own 50% Barbie and Trixie each own 50% Barbie owns two-thirds and Skip owns one-third Barbie, Skip, and Ken's heirs each own one-third
Barbie owns two-thirds and Skip owns one-third Joint tenancy includes the right of survivorship, so Ken's interest will pass to the other tenants. But because Skip bought in later than the others, he isn't considered a joint tenant. Ken's share will therefore pass entirely to Barbie.
Which of the following is the most serious consequence of treating a customer as a client? Breaching your duty to your actual client Drumming up potential business Wasting your time Working for someone for free
Breaching your duty to your actual client If you treat a customer as a client, you could breach your duty to your client. For instance, if you provided client-level service to a buyer interested in your seller's listing, you'd be breaching the duty of undivided loyalty to the seller.
Sue and Jim are hoping to expand their family, which means moving to a larger home. They're closing on their new home soon, but haven't yet sold their current one. Which type of loan will help them afford both homes for a short period of time? Bridge Lease with option to buy Purchase-money mortgage Wraparound loan
Bridge A bridge loan is best used when the buyer's current home is already under contract.
Which department typically decides which development projects require a permit or approval? Building department Environmental compliance department Health department Housing department
Building department This is the building department's domain.
One area of town has maximum building height requirements and setbacks for the front, side, and rear yards. These requirements are all indicative of ______. Bulk zoning Commercial zoning Density zoning Residential zoning
Bulk zoning These requirements are all indicative of bulk zoning, which may be seen in both commercial and residential areas, and which decreases density.
You represent a buyer in a transaction that includes a 2% cooperating agent commission that will be paid by the seller. Who's your client? Buyer Seller Seller's agent Seller's sub-agent
Buyer You represent the buyer, which makes the buyer your client. Compensation doesn't determine agency.
Cambridge Apartments provides an open parking lot for their residents. There is adequate parking and all spaces are available on a "first-come, first-served" basis. Alton has MS and uses a motorized wheelchair. Must Cambridge reserve a parking place specifically for Alton if he requests? As long as the current parking policy was already in place before Alton made application, Cambridge need not make an exception. Cambridge must allow an exception to the first-come, first-served policy for Alton. Cambridge must provide a space for Alton that is no farther than 50' from an accessible building entrance. Provided they have at least two parking spaces per living unit, they needn't reserve one for Alton.
Cambridge must allow an exception to the first-come, first-served policy for Alton. Reasonable accommodation requirements preserve Alton's right to a reserved parking space that fits his needs.
If you see sawdust that can't be explained, it's probably a sawdust-like material called frass created by ______. Carpenter ants Fire ants Powderpost beetles Termites
Carpenter ants Frass is created by carpenter ants when they burrow through wood.
Quentin Jones brought an application before city council to build a shopping mall on 17 acres south of town that is currently not zoned. The council referred him to the planning commission, which will review the application in light of the city's ________. Comprehensive plan Economic development plan Health and sanitation ordinances Zoning ordinances
Comprehensive plan The parcel isn't currently zoned. Zoning should be established in alignment with an area's comprehensive plan.
Specifically, what does the fiduciary duty of disclosure relate to? Adverse material facts and publicly recorded facts Conflicts of interest and confidential information Conflicts of interest, material facts, and adverse material facts Material facts and adverse material facts
Conflicts of interest, material facts, and adverse material facts The fiduciary duty to disclose relates to all pertinent facts in the transaction, including conflicts of interest.
A deed states, "For love and affection, the receipt and sufficiency of which is hereby acknowledged." What does this statement represent in the deed? Consideration Granting clause Habendum clause Subject to clause
Consideration Consideration (something of value) is required for transfer of this deed. In a traditional sale, the consideration is the purchase price stated in the deed. In deed transfers, "for love and affection" may be the consideration offered.
Which mortgage clause requires the lender to discharge the mortgage lien once the borrower has paid in full? Acceleration Alienation Defeasance Due on sale
Defeasance The defeasance clause means that the lender is prevented from trying to pursue additional payment because the loan has been paid in full.
The Richards' farm is located on a 10-acre parcel of land, which is very rare to come by in their area. However, the house is rundown and in need of many repairs. Buyers in the area looking for a move-in ready home would need to either look elsewhere or wait several months for the home to be renovated. Which factors are negatively impacting the value of the Richards' property? 1. Demand and utility 2. Demand, scarcity, and transferability 3. Utility and transferability 4. Utility, scarcity, and transferability
Demand and utility Although large parcels in the area are scarce, the low demand of buyers willing to buy and wait to live in a property that needs significant repairs is affecting the value.
affected by the medium-rise condos that developers are building on the edge of town. In response, local government officials rezoned the areas on the edges of town as parklands. What type of zoning is this? Aesthetic zoning Downzoning Incentive zoning Spot zoning
Downzoning Downzoning assigns a lower density use to an area that previously allowed a higher density.
A part of your property is used by the local utility company to maintain its power lines. What's this an example of? Easement Eminent domain Encroachment Illegal use
Easement An easement allows a person the right to use or cross over another's property for a specific reason.
What are the two categories of comparison when evaluating comparables to a subject property in the market comparison approach? Broad and specific Components and measures Elements and units General and detailed
Elements and units There are two categories of comparison: elements, which look at physical and locational characteristics, and units, which look at the numbers.
The doctrine of laches refers to the ______ of restrictive covenants/deed restrictions. Creation Enforcement History Types The doctrine of laches refers to the enforcement of restrictive covenants. If property owners don't protect their rights to enforce these covenants, they can lose them.
Enforcement
Which of these is NOT an example of agency coupled with interest? 1. Carma agrees to list Tera's property for free if Tera signs an agreement to purchase her new home through Carma. 2. Gene, a real estate professional, is purchasing a home for his personal use. He negotiates a reduction in the sales price in return for taking no commission from the seller. 3. Jeanine agrees to charge no commission from her buyer's purchase of a four-plex if the buyer agrees to pay Jeanine a 3% fee for each unit for which she finds a tenant after the sale. 4. Rhoda loans Carl the money to catch up his mortgage payments in return for a listing agreement to sell Carl's home for a 4% commission.
Gene, a real estate professional, is purchasing a home for his personal use. He negotiates a reduction in the sales price in return for taking no commission from the seller. Agency coupled with interest is an agency relationship in which a licensee is given some sort of interest in or right to a principal's property. A standard commission-based transaction isn't agency coupled with interest.
Jerome is developing an ad for three properties he has listed in an upscale community. He wants to keep it short and simple. Which of these would NOT trigger full disclosure under TILA? 10% down payment 30-year fixed rate with no points A monthly payment of $900 Get a low 4.925% APR
Get a low 4.925% APR An ad can show the APR without disclosing all the other credit terms. But if certain other "trigger" terms are included, such as down payment, payment amount, number of payments, or interest rate (other than APR), this would require full disclosure.
Anita is a new buyer. Luckily, ______ will help her before the sale and can reimburse her after the sale if a title issue arises. Her buyer's agent Her title insurance Seller credits Seller disclosures
Her title insurance Title insurance protects the buyer from title defects covered by the policy. If a defect is found, and it's covered, the insurance policy will reimburse the buyer for losses, up to the amount specified in the policy.
Rhonda and Oliver bought an old schoolhouse with hopes of transforming it into a residence. They owned the property as joint tenants. After Oliver died, how did Rhonda own the building? As a joint tenant with rights of survivorship As a tenant in common with Oliver's heir(s) In severalty In trust
In severalty When there are only two joint tenants, the death of one dissolves the joint tenancy. Rhonda is now the sole owner of an estate in severalty.
Which clause in a contract states that one or more parties won't be held liable if there are losses or expenses related to the contract? Choice of law clause Indemnification clause Severability clause Time of performance clause
Indemnification clause An indemnification clause is a contractual shift of liability and obligations off of a given party.
It's the licensee's responsibility to know how and when taxes and real estate ______. Are paid for Determine asset allocation changes Impact a client's net worth Interact
Interact
Jane is selling her home to Micah. What must occur for Jane to effect a transfer of title to Micah? Jane must accept the deed. Jane must deliver the deed to Micah. Micah must acknowledge the deed. Micah must sign the deed. The seller (grantor) must deliver a marketable title. The grantee isn't required to sign.
Jane must deliver the deed to Micah. The seller (grantor) must deliver a marketable title. The grantee isn't required to sign.
Sam and Bridget are cousins who jointly own property. They are both named on the deed, they received title at the same time, they have the right of survivorship, and they each have equal interest and undivided rights of possession. What type of ownership do they have? Estate in severalty Joint tenancy Tenancy by the entirety Tenancy in common
Joint tenancy Joint tenancy is equal ownership with unity of time, title, interest, and possession. Tenancy by the entirety (in states where it's used) also requires the same four unities, but requires that the owners be married.
Which ownership type is defined by four unities: time, title, interest, and possession? Freehold estate Joint tenancy Tenancy by the entirety Tenancy in common
Joint tenancy This is joint tenancy. Tenancy by the entirety requires a fifth unity (person). If one joint tenant dies, that tenant's interests go to the remaining joint tenants. If only one tenant is left, that tenant owns the property in severalty.
Charles is selling his property to Seth. Charles is financing part of the transaction for Seth, who will make payments to Charles while Charles retains the property title. What's this an example of? Assumable mortgage A straight-term loan Land contract Wrap-around mortgage
Land contract With a land contract, the seller agrees to provide credit to the buyer for a portion (or sometimes all) of the funds required to close the transaction. The buyer makes payments directly to the seller.
Which entity typically enforces the code restrictions and licensing and insurance requirements for contractors, thereby enforcing the building code? Builder/developer Department of Environmental Conservation Department of Health Local building department
Local building department While builders and developers self-regulate to some degree, they're not responsible for enforcing the building code. This is the local building department's responsibility.
Which legal description method is regulated by the U.S. Department of the Interior's Bureau of Land Management? Governmental Lot and block Metes and bounds Rectangular government survey
Lot and block The U.S. Department of the Interior's Bureau of Land Management regulates the rectangular survey system.
A new real estate professional is getting to know licensees at his new firm, Tremont Homes. One licensee tells him there's an unwritten agreement with a neighboring firm that Tremont serves the mid-town area, and everyone who has prospective clients in that area refer their leads to Tremont. What's this an example of? Group boycotting Market allocation Price fixing Tie-in arrangements This agreement is a market allocation antitrust violation, and it unfairly limits consumers' options.
Market allocation This agreement is a market allocation antitrust violation, and it unfairly limits consumers' options.
Meg is considering a move to a foreign country and wants to deed her property to her son, Christian, who's 16. Which of these must occur to make this transfer legal? 1. Christian must agree to the transfer and sign the deed. 2. Christian must provide monetary compensation to Meg. 3. Meg must sign the deed and have her signature acknowledged. 4. Meg must wait until Christian has reached the age of majority.
Meg must sign the deed and have her signature acknowledged. As the grantee, Christian doesn't have to sign the deed, and he doesn't have to be legally competent or of legal age. The property can be conveyed only if some consideration is in place, but it doesn't have to have a monetary value.
Which legal description method uses compass headings and directions? Block and grid Lot and block Metes and bounds Rectangular government survey
Metes and bounds Metes and bounds uses compass headings and directions. The rectangular system divides land into townships and further divides those into sections.
Tim and Tina Wells bought a home with absolutely beautiful perennial gardens in the back. The plantings were designed to bring birds, bees, and butterflies and to provide color for most of the year. When they did the final walkthrough, they were dismayed to see that many of the shrubs and flowering plants had been removed. They expected these plantings to be considered part of the real property because of the ________. Adaptation to the land Agreement of the parties Intention in placing the item Method of annexation
Method of annexation The method of annexation—planting in the ground—implies that the plantings were expected to stay with the land.
New Day Corporation's application to build a new mixed-income housing development was denied, because the town of Springfield has halted all new development until after city elections. What did Springfield enact? Area variance Moratorium Special use permit Use variance
Moratorium A moratorium is a temporary halt to any new development for a certain amount of time with the community's best interest in mind.
What is the federal program that was created to help mitigate future flood losses across the country? Federal Flood Loss Prevention Program (FFLPP) Federal Flood Loss Program (FFLP) National Flood Insurance Program (NFIP) National Flood Mitigation Fund (NFMF)
National Flood Insurance Program (NFIP) The National Flood Insurance Program was created for this reason.
Mardee is representing Carol in the sale of her condo, and they've signed an exclusive agency listing agreement. If Carol finds her own buyer, does she owe Mardee a commission? No, because Carol is not a real estate licensee. No, because Carol procured the buyer. Yes, because they have an exclusive agency listing agreement. Yes, but she only owes the listing commission.
No, because Carol procured the buyer. It's easy to confuse the types of listing agreements. With exclusive agency, the seller retains the right to sell herself and not pay a commission. Exclusive right-to-sell agreements guarantee payment to the listing agent no matter who brings the buyer.
James, a seller, signed a listing agreement that allows him to contract with multiple agents but only pay a commission to the agent who locates a buyer. This type of listing agreement is called ______. Exclusive agency Exclusive right to sell Open Seller's choice
Open Think of an open listing agreement as a free-for-all. Only the licensee who locates the buyer will be paid. If the seller locates the buyer, no commission is owed.
Tiers in the rectangular government survey system are formed by ______. Parallel baselines Parallel principal meridians Parallel range lines Parallel township lines
Parallel township lines East-west lines of a survey, which are parallel to the baseline, are called township lines. Township lines form strips of land known as tiers, and townships fall within these tiers.
Brandon has a right-to-use timeshare. What can he NOT do with this type of timeshare? Allow a friend to use his week. Pass the timeshare on to an heir. Purchase an additional week if it becomes available. Try to exchange weeks with another timeshare holder.
Pass the timeshare on to an heir. A right-to-use timeshare conveys the right of possession, but it isn't ownership and therefore can't be sold or passed on to another individual.
When a contract doesn't provide specific dates for when the terms of the contract need to be met, what should the parties assume regarding performance of the contract? 1. Performance must take place within a "reasonable time." 2. The contract will be done when all of the parties have met their obligations and not before. 3. The courts will decide if the parties have met their respective contractual obligations. 4. This contract provides an opportunity to sue for breach of contract.
Performance must take place within a "reasonable time." When no specific dates are provided, the parties should assume that performance of the contract must take place within a "reasonable time."
What does the lot and block system use to develop a property's legal description? Compass headings and directions Plat references Principal meridians and base lines Townships and sections Lot and block uses plat references to develop a property's legal description.
Plat references Lot and block uses plat references to develop a property's legal description.
Leigh Ann's cousin, Carly, is interested in buying a house. Leigh Ann shows Carly how to look for properties online and runs some CMAs for her. When Carly finds a property she likes and asks Leigh Ann to help her make the offer, Leigh Ann decides she should ratify the implied agreement with Carly. What are Leigh Ann's options for accepting an agency relationship after the fact? Continue to assist Carly and have her sign an estoppel certificate. Leigh Ann's only option is to get a signed listing agreement. Prepare an agency agreement or continue to assist Carly with the purchase. Prepare an estoppel certificate and a listing agreement.
Prepare an agency agreement or continue to assist Carly with the purchase. Leigh Ann can achieve ratification either by getting a signed agency agreement or by continuing to act as Carly's agent.
Which of the following situations may result in inverse condemnation? Property taxes rise because of an increase in property value. Property values decrease because adjacent property was rezoned. Property values decrease because the property was rezoned. The government takes private property for public use.
Property values decrease because adjacent property was rezoned. With regard to zoning, inverse condemnation is related to a loss of value due to downzoning of adjacent property.
Cheng is selling his property to Jericho. What's the best method Jericho can use to ensure his interest in the property? Ensure that Cheng signs the deed. Ensure that he signs the deed. Purchase title insurance. Record the deed in his name.
Record the deed in his name. Recording provides constructive notice of Jericho's purchase. Failure to record makes it possible for others to record interests in the future. Title insurance protects Jericho from claims from the past, but the title search limits that concern.
Conrad just closed on the house he's buying to fix up. Why should he follow up to be sure the deed has been recorded? He can't legally make any improvements to the property until the deed is recorded. He doesn't legally own the house until that occurs. Recording provides actual notice that he owns the property. Recording provides constructive notice that he owns the property.
Recording provides constructive notice that he owns the property. Ownership officially transfers when the grantor delivers the deed to the grantee, but recording provides constructive notice that Conrad owns the property, thereby permitting anyone who does a public records search to see the ownership information.
Which statement most accurately describes the type of notice provided by recording a change of ownership document? Recording the deed provides actual notice of the property sale. Recording the deed provides constructive notice of the property sale. Recording the new owner's title policy serves as constructive notice of the sale. Recording the promissory note provides constructive notice of the property sale.
Recording the deed provides constructive notice of the property sale. Recording a document provides constructive notice; recording the deed provides constructive notice of property ownership.
Victor's family has always owned this particular lake house. When he was little, he remembers the "beach" being no more than four feet wide before the waterline. Now Victor brings his own children to the lake house, but the beach is almost seven feet wide. What natural process could explain the beach being bigger? Avulsion Erosion Reliction Riparian
Reliction Reliction is the process by which water gradually recedes, which reveals new land.
Trina is a licensee at Midtown Homes. Which of these factors indicates that she's classified as an employee? She's eligible to participate in the firms 401k retirement plan. She's required to belong to the National Association of REALTORS®. She works from both her home office and an office the firm provides. The brokerage firm supervises her.
She's eligible to participate in the firms 401k retirement plan. The one factor that applies only to employees is Marge's eligibility to participate in the firm's 401k retirement plan.
Eva, Stella, and Lynn own a vacation home two blocks from the beach. Sadly, Stella passed away this winter, and so when summer arrives Eva and Lynn will be sharing the home with Stella's nephew Drew, to whom Stella willed her share of the property. What type of ownership is this? Estate in severalty Joint tenancy Tenancy by the entirety Tenancy in common
Tenancy in common This is a form of shared ownership, but only tenancy in common provides for inheritability—the other forms share the rights of survivorship (the existing tenants assume the deceased's share of the property).
Katherine is purchasing a second home as an investment/vacation property. She has a large down payment, and the seller is financing the rest of the purchase. Which of these statements is true? 1. The CD and LE aren't required in a seller-financed transaction. 2. The CFPB provides forms similar to the LE and CD for seller/financers to use. 3. The seller is required to provide the same disclosure forms to Katherine as a standard lender would provide. 4. The seller will provide the LE and CD to Katherine but has a longer timeframe to do so than a traditional lender would have.
The CD and LE aren't required in a seller-financed transaction. In a seller-financed transaction, the LE and CD aren't required. Some other form of statement may be prepared to show the buyer and the seller their respective closing figures.
Mark works at Farm and Country Bank, and has arranged an agricultural loan for Josh, a local organic farmer. Josh didn't meet the bank's normal underwriting standards, but Mark made the loan because he was able to arrange for a guarantee from ______. Farmer Mac The Farm Credit System The Farm Service Agency The Federal Agricultural Housing Authority
The Farm Service Agency The Farm Service Agency, which operates through the USDA, provides loan guarantees to lenders for up to 95% of the loss of principal and interest.
Rhonda hasn't paid her HOA dues in two years. Her attorney recently informed her that her state grants HOA-related liens a super lien status. What does this mean? 1. The HOA can collect twice the amount of the money that she owes. 2. order to collect. 3. The HOA will be paid before any other liens, even a property tax lien. 4. The lien can be attached to both her real and personal property.
The HOA will be paid before any other liens, even a property tax lien. Super lien status means that the lien is granted higher priority than all other liens, including mortgages, deeds of trust, or property taxes.
Select the statement that correctly exemplifies the covenant term. The covenant against encumbrances is the grantor's guarantee that he or she owns the property being conveyed. The covenant for further assurances assures the grantee that there are no undisclosed encumbrances on the property. The covenant of quiet enjoyment promises that the grantee won't be disturbed by a title defect the grantor passes on. The covenant of warranty promises that the grantor has the capacity to convey title. The covenant of quiet enjoyment promises that the grantee won't have his enjoyment of the property hampered by claims against the title.
The covenant of quiet enjoyment promises that the grantee won't be disturbed by a title defect the grantor passes on.
Katelyn really wants to include an inspection contingency in her purchase offer. Her agent explains that the inspection contingency will document which of the following? 1. How much money the sellers will spend on fixing inspection issues 2. The date by which all inspection issues must be addressed 3. The name of the inspector Katelyn will use 4. Whether Katelyn will ignore some of the inspection issues
The date by which all inspection issues must be addressed An inspection contingency typically documents the date by which inspection issues must be cleared. The amount of money the sellers will spend or the issues that Katelyn will overlook won't be known until the inspection itself is complete.
Which statement regarding fee simple defeasible estates is true? A fee simple absolute estate becomes fee simple defeasible when the owner dies intestate. A fee simple defeasible estate is granted upon the completion of a court-ordered condition. The estate includes only some of the bundle of legal rights; inheritability isn't included. The estate includes the full bundle of legal rights, but ownership is based on a condition.
The estate includes the full bundle of legal rights, but ownership is based on a condition. A fee simple defeasible estate includes the full bundle of legal rights, but ownership may be terminated if the required condition is violated.
When a mortgage is used as a security instrument, who holds the mortgage and the promissory note? 1. The borrower holds the mortgage, and the lender holds the note. 2. The borrower holds the mortgage and the note. 3. The lender holds the mortgage, and the borrower holds the note. 4. The lender holds the mortgage and the note.
The lender holds the mortgage and the note. The note and mortgage are the lender's leverage to foreclose in the event of default.
Tabitha listed her small-town property for sale. The community is in a decline; the largest local employer just shut its doors. The house has been on the market for several months with no offers. Tabitha decides to rent the property out instead of selling it. Under what condition may she do this without penalty? She's received no offers on the listing, so she can terminate her listing agreement. Since she's converting it to a rental, she can terminate the listing. The listing agreement with her current broker has expired. The local economy doesn't support the property sale, so she's permitted to move the listing agreement to the larger city.
The listing agreement with her current broker has expired. Tabitha can let the listing agreement expire or try to reach mutual agreement with the listing agent to terminate the agreement without penalty.
Tom and Jim are neighbors. Jim wants to buy Tom's rental property. In the contract that Tom and Jim sign, Jim is identified only as "the neighbor." Which statute or contract element does this violate? Consideration Legal purpose Offer and acceptance The statute of frauds
The statute of frauds The statute of frauds requires not only that a contract to convey property be in writing, but also that the contract identify the parties to the contract.
What's the relationship between the title search, title insurance policy, and document recording? The title insurance policy schedule of exceptions will include anything that's publicly recorded. Title insurance policies don't cover publicly recorded events. Title insurance policies must be publicly recorded to be legal. Title representatives and attorneys who perform title searches look for documents that are publicly recorded.
Title representatives and attorneys who perform title searches look for documents that are publicly recorded. During a title search, title company representatives look specifically for items that are publicly recorded, and the schedule of exceptions will exclude items that aren't recorded.
Which of the following is a typical accrued adjustment? Heating oil in the tank Prepaid taxes Unpaid real estate taxes Utilities billed and paid in advance
Unpaid real estate taxes Accrued expenses are those the seller owes at the day of closing, but the buyer will eventually pay, such as unpaid real estate taxes.
If a contract is for an illegal purpose, it's ______. Enforceable Legal Valid Void
Void If a contract is for an illegal purpose, it's void, because it's missing an essential element.
If someone wants to use their property in a way not permitted by a zoning ordinance, they must submit a request for a variance or special use permit to which of the following groups? Building department The architectural review board The planning board Zoning board of appeals
Zoning board of appeals Requests for variances and special use permits must be submitted to the zoning board of appeals.