New York Real Estate License

Describe the ownership of a property if four cousins, Keenan, Kelly, Shon, and Marcia are tenants in common, and Marcia sells her interest to cousin Michael. The new deed will read: Select one: a. Tenants in common with Keenan, Kelly and Shon. b. Joint tenants keenan, Kelly and Shon. c. Tenants in will. d. Marcia is not allowed to sell her interest.

Answer: a. Tenants in common with Keenan, Kelly and Shon. Tenancy in Common The tenancy in common, also known as the estate in common, is the most common form of co-ownership when the owners are not married. In a tenancy in common, two or more individuals have an undivided interest in a property. Each tenant in common has a right to share possession of the whole property, not just a part it. (Referred to as the unity of possession). Tenants in common may have equal or unequal interests in the property. The fact that two or more people are buying property together as tenants in common is stated in the deed. If the form of ownership isn't otherwise specifically stated in the deed, in some states tenancy in common automatically is assumed when two or more people buy property together. The defining characteristics are: Two or more owners. Identical rights. Interests individually owned. Electable ownership shares. No survivorship. No unity of time.

The state tax law requires the calculation of residential assessment Ratios (RARs): Select one: a. Annually. b. Twice yearly. c. Every six months. d. Semiannually.

Answer: a. Annually. Assessed Ratio The state tax law requires the calculation of Residential Assessment Ratios (RARs) annually. The RAR is an indication of the level of assessment for residential real property in a municipality. It is a measurement of the overall ratio of total assessed value of residential property. The RAR (residential Assessment Ratio) can be used by homeowners in a Board of Assessment Review (BAR) grievance and in a Small Claims Assessment Review (SCAR) hearing. Assessors use RARs as a general measure of assessment equity.

Making money by selling a property for more than you paid for it is called: Select one: a. Capital gain. b. Tax credit. c. Cash flow. d. Return of investment.

Answer: a. Capital gain. Chapter 16 - Unit 1, Capital Gains Capital gain is the profit realized from the sale of any capital investment, including real estate. A capital gain occurs when an investor sells the asset for more than the basics. Different types of income are taxed differently. Most income is taxed at the taxpayer's marginal bracket. Some income and gains are tax-deferred. Some income is taxed at a lower rate than other income. This last category includes capital gains. Assets such as stocks, real property, and collectibles fall into the category of capital assets. When these items are held over one year, the profits receive a reduced tax rate.

An exclusive listing is one which gives a licensed real estate agent the exclusive right to sell a property. Select one: a. For a specified period of time b. Until it sells c. Until the owner takes it off the market d. None of these

Answer: a. For a specified period of time The Exclusive Right to Sell The most widely used agreement is the exclusive right to sell listing agreement. It is the also the most popular form of listing contract with agents, because it guarantees that the agent will be paid (and what you will be paid) whenever the property sells within the term of the agreement Under this arrangement, the broker has the exclusive right to market the property for a specified period of time. If the property sells while the broker has the listing, the seller must pay the agreed upon commission, regardless of who procured the buyer (who was the procuring cause). This means that even if the seller himself finds the buyer with no help from the broker, the seller still owes the broker the commission. When a broker enters into this type of listing, he or she becomes more willing to expend the time, energy, and funds to market the property actively. It limits any conflict with the seller over who was the procuring cause. An exclusive right to sell listing gives the broker the highest assurance that he or she will receive compensation for his or her marketing efforts. And as a result, sellers usually see a quicker and more profitable sale of the property. New York Real Property Law requires that any exclusive agency agreement for a one- to three-family dwelling disclose the difference between exclusive agency and exclusive right to sell. The following language will suffice: An exclusive right-to-sell listing means that if you, as the property owner, find the buyer for your property or another broker does, you must pay the agreed-upon commission to the listing agent. An exclusive agency listing means that if you, as the property owner, find a buyer for your property, you will not have to pay a commission to the listing agent. If another broker locates the buyer, you will owe a commission to your broker and the buyer's agent.

Which type of pipping was used years ago for the water supply lines and it has been replaced by other types recently: Select one: a. Galvanized b. Domestic water c. Cast iron d. Copper

Answer: a. Galvanized Types of Piping - Galvanized Used for hot and cold-water supply lines. Galvanized steel pipe was commonly used years ago for the water supply lines, but more recently it has been replaced by other types of pipe. Steel is not used for underground plumbing.

In a 99-year lease, the buyer typically receives all the bundle of rights EXCEPT: Select one: a. Possession. b. None of of these. c. Enjoyment. d. Control of use.

Answer: a. Possession. Leaseholds Estate In a 99-year lease, the buyer does not have full title rights because the leaseholder retains the right of exclusive possession. A leasehold estate is a lease or contract generally granting only possession and use for a period of time. Generally, the holder of a leasehold estate is referred to as the "lessee/tenant" and the owner, "lessor/landlord."

A couple residing in a community property state have been married for five years. During the marriage, the wife's grandfather decides to give each of his grandchildren their inheritance, which is one of his income-producing properties. The property is: Select one: a. Separate property. b. Sole proprietorship. c. Part of a land trust. d. Community property.

Answer: a. Separate property. Community Property Rights Some state recognizes a form of ownership commonly defined as property owned by spouses or registered domestic partners. All real and personal property acquired during the marriage is considered community property, as is any separate property that is commingled with community property. Community property law distinguishes real and personal property into categories of separate and community property. Separate property belongs to one spouse; community property belongs to both spouses equally. Separate property consists of: Property owned by either spouse at the time of the marriage. Property acquired by either spouse through inheritance or gift during the marriage. Property acquired with separate-property funds. Income from separate property. Community property consists of all other property earned or acquired by either party during the marriage. A spouse owns separate property free and clear of claims by the other spouse. He or she can transfer it without the other spouse's signature. Upon the death of the separate property owner, the property passes to heirs by will or laws of descent. Community property cannot be transferred or encumbered without the signatures of both spouses. Upon the death of either spouse, half of the deceased's community property passes to the surviving spouse, and the other half passes to the decedent's heirs. Community property rights do not exist in New York.

What type of heating system uses a boiler to produce steam, which is transferred to rooms through a pipe? Select one: a. Steam system b. Radiant system c. Forced warm air system d. Hot water system

Answer: a. Steam system Steam System Similar to a hot water system; the steam system provides steam to radiators or other heating elements where the steam gives up its heat and is condensed back to the water. The boiler heats water at a high temperature creating steam that runs through pipes and radiators to radiate into the room. The steam and evaporation are carried in just one pipe. A two-pipe system carries steam and condensation in two different pipes. There's also a vapor system, which is a low-pressure two-pipe system.

How does the term "break-even point" relate to percentage leases? Select one: a. The landlord doesn't charge a percentage of sales until the tenant's sales exceed a break-even point. b. The tenant has to break even on expenses before the percentage charges are applied. The percentage charge applies when the tenant's sales exceed a break-even point. This point is specified in the lease. c. The landlord must receive enough in rent plus the share of sales to break even on the debt service. d. Sales proceeds must exceed last year's total before the percentage applies.

Answer: a. The landlord doesn't charge a percentage of sales until the tenant's sales exceed a break-even point. Percentage Lease A percentage lease is more commonly seen in retail properties such as shopping centers and malls. With a percentage lease, the tenant pays a base rent plus an additional charge that's a percentage of the tenant's gross sales. Retail tenants don't want leasing to be a losing proposition, so often the interest charged will be set to enable the retailer to reach a natural break-even point, and gradually stepped up as the retailer's business grows.

Once the buyer and the seller sign a contract: Select one: a. The purchaser assembles the board package. b. The seller gets a Certificate of occupancy. c. The buyer gets a board package checklist. d. The seller assembles the board package.

Answer: a. The purchaser assembles the board package. Board Package Checklist Once the buyer makes a purchase offer, and the seller agrees to the contract, and both parties sign it, it's time for the purchaser to assemble the board package

If you allow Ms. Smith to act as your agent, and you allow people to think she is your agent; you cannot now deny the agency. This is the agency by: Select one: a. estoppel b. ratification c. affirmation d. contract

Answer: a. estoppel Ratification and Estoppel Ratification is acceptance after the fact, sometimes in contrast to a prior agreement. Ratification may occur through contractual paperwork or the parties' actions. The doctrine of estoppel is a legal doctrine that says that a person is stopped from asserting rights or facts that aren't consistent with a previous statement, position, or behavior. This agency relationship arises from the actions of the parties involved, rather than by a written agreement.

To use the capitalization approach to appraising, you need the: Select one: a. net income b. gross income c. cash flow d. occupations of the tenants

Answer: a. net income Determining the Cap Rate When the capitalization rate of comparable property is used for a subject property, the assumption is that the subject property should generate a rate of return similar to the comparable property. Using this method, the comparable property's cap rate is applied to the subject property's net income to determine the subject's property value. First, determine the capitalization rate of the comparable property using this formula: Net operating income (NOI) ÷ value (V) = rate (R)

By accepting or retaining the benefit of an act made by an unauthorized agent or by an agent who has exceeded his or her authority, a principal can create an agency by Select one: a. ratification b. the equal dignities rule c. implication d. express agreement

Answer: a. ratification Ratification and Estoppel Ratification is acceptance after the fact, sometimes in contrast to a prior agreement. Ratification may occur through contractual paperwork or the parties' actions. The doctrine of estoppel is a legal doctrine that says that a person is stopped from asserting rights or facts that aren't consistent with a previous statement, position, or behavior.

A mortgage: Select one: a. the security instrument for a note b. is dissolved when the mortgage is paid c. must be fully amortized d. provides the borrower with title, subject to the note

Answer: a. the security instrument for a note Mortgage- Definition A mortgage is a financing instrument that creates a lien against a property. The lender who gets the mortgage is the mortgagee, and the borrower who gives the mortgage is the mortgagor. The borrower retains the rights of ownership (title) to the property while the property becomes encumbered by the lien. A mortgage always needs a note to be legally valid. In the event of default by the purchaser, the lender has the right to bring legal action through the courts to satisfy the debt. This is called a judicial foreclosure since the court must order it. Proceeds from the foreclosure sale are used to repay the remaining debt on the mortgage loan.

An office building produces an annual gross income of $3,950,000. Vacancies and uncollectible rents are running 8%. Monthly operating expenses are $245,400. What is the annual NOI? Select one: a. $3,388,600 b. $689,200 c. $1,982,400 d. none of these

Answer: b. $689,200 $3,950,000 × .08 = $316,000. Annual operating expenses = $245,400 × 12 = $2,944,800. NOI = $3,950,000 - ($316,000 + $2,944,800) = $689,200. Deriving the Net Operating Income (NOI) (NOI) is the income remaining after subtracting all relevant operating expenses from EGI. (NOI) is then calculated by subtracting the annual operating expenses from the effective gross income. Annual operating expenses include real estate taxes, insurance, utilities, maintenance, repairs, advertising, and management expenses. Management expenses are included even if the owner is going to manage it since the owner incurs an opportunity cost by managing it herself. The cost of capital items is not included since it is not an operating expense. Hence, it does not include mortgage and interest, since this is a debt payment on a capital item. Gross income is income received without deducting expenses. Before deducting operating expenses, losses from vacancies and credit losses are deducted from potential gross income (gross scheduled rental income) to arrive at effective income. The result of deducting operating expenses are deducted from effective gross income. Mortgage principal and interest payments are called debt service. Formula: Net Operating Income = Effective Gross Income - Operating Expenses

If the landlord quotes the size of a building at 128,000 square feet "rentable," with a 11% loss factor, how much usable space is there? Select one: a. 112,350 square feet. b. 113,920 square feet. c. 128,000 square feet. d. Cannot be determined.

Answer: b. 113,920 square feet. Square Footage In commercial real estate, the rent is usually stated as dollars per square foot. If space is 1000 square feet and the rent is $24.00 per square foot, then the annual rent would be $24,000 and the monthly rent $2,000. Sounds simple, but there are many different ways to calculate the square footage. a. Rentable Rentable square footage refers to the total square footage a tenant will actually use plus a percentage of the building's "common space". Common space would include areas such as hallways, elevators, lobbies, parking areas and staircases and any other portion of the building that is used or could be used by all tenants.

Jack mistakenly violates a setback requirement by two feet. His house is already constructed and complying with the full setback now would be extremely expensive, if not impossible. This is an example of: Select one: a. Use Permit. b. Area Variance. c. Use Variance. d. Special Use Permit.

Answer: b. Area Variance. Use & Area Variance: "Unnecessary Hardship" A zoning variance allows a use that differs from the applicable ordinance for a variety of justifiable reasons, including that: compliance will cause unreasonable hardship the use will not change the essential character of the area the use does not conflict with the general intent of the ordinance For example, an owner mistakenly violates a setback requirement by two feet. His house is already constructed and complying with the full setback now would be extremely expensive, if not impossible. The zoning board grants a variance on the grounds that compliance would cause an unreasonable hardship. A grant of a zoning variance may be unconditional, or it may require conditions to be fulfilled, such as removing the violation after a certain time. Most zoning ordinances recognize unusual circumstances that require a certain degree of flexibility in applying zoning regulations. A one-property variation from the requirements of the zoning ordinance is called a variance. Variances can be granted whenever an owner can prove that a practical difficulty or hardship will result in an attempt to build on the land or show that existing zoning will deprive him or her of all economic use of the land. For example, a zoning ordinance requires that a building must be set back 50 feet from the front property boundary line, but because of a rock outcropping, that extends deep into the land from the back of the lot, the 50-foot setback would be impractical. A variance may be granted, permitting the building to be built ten feet from the front boundary line, rather than the required 50 feet. This type of variance is called an area variance. A use variance, on the other hand, permits a different use of the land. One example of a use variance is a house with two apartments in an area that's zoned for single-family houses.

Broderick, a real estate agent who is being paid only by the lessees, Does Not disclose to his lessees that the two- family property they are renting was built before 1978 and may contain lead-paint based paint. Which of the following is TRUE? Broderick: Select one: a. Has violated the Residential Lead-Based Paint Hazard Reduction Act b. As the lessee's agent does not have to disclose because the lessees are paying him c. Only needs to disclose the possible presence of lead-based paint in properties built before 1968 d. Does not have a duty to disclose because the law applies only to a house purchase, not a rental

Answer: b. As the lessee's agent does not have to disclose because the lessees are paying him Lead- Disclosure Requirements Federal law requires disclosure about lead-based paint if the subject property was built before 1978. The disclosure must be provided to prospective buyers before the signing of a real estate sales and purchase agreement while buyers and renters must be provided with an EPA pamphlet about lead-based paint before contract. Every purchaser or lessee of any interest in residential real property that was built before 1/1/78 must be notified that such property may present exposure to lead from lead-based paint. The regulation mandates disclosure. No testing or evaluation is mandated. It does not mandate a clean-up. The seller or lessor of any residential property or agent of the seller or lessor must disclose to the purchaser or tenant any information on lead-based paint hazards from risk assessments or inspections in the sellers or Lessors possession. The seller or lessor must provide a purchaser or tenant with a HUD-Approved pamphlet entitled Protect Your Family from Lead in Your Home. Real Estate Brokers who represent the seller in a transaction or receive any compensation from the seller are required to inform the seller of the disclosure obligation and to ensure compliance. Real Estate Brokers who represent the lessor in a transaction are also required to notify the lessor of the disclosure obligation and to ensure compliance.

Most structures built before 1950 use: Select one: a. Romex Cable b. BX Cable c. Conduit Cable d. Greenfield Cable

Answer: b. BX Cable Electrical - Wiring Materials - BX This wiring type is the generic name (name after the Bronx, New York) for a type of armored electric cable. Armored cable is an assembly of insulated conductors (wires) in a flexible metallic enclosure. This type of cable is used when the wire must be protected from physical damage; it is found in branch circuit wire that feeds the outlets. Most structures built before 1950 use BX cable.

Agents must honestly represent information from the client: Select one: a. Up to a certain point where it could harm the client's interest. b. Because this a duty the agent owes to the principal. c. Unless the client specifically instructs the agent to withhold the information. d. Except for information, the agent knows the client should not have revealed.

Answer: b. Because this a duty the agent owes to the principal. Loyalty, Confidentiality, Full Disclosure, Obedience, Reasonable Skill and Care and Duty to Account loyalty The duty of loyalty requires the agent to put the client's interests above those of all others, including his or her own. An agent must negotiate agreements without considering the amount of compensation he or she will receive. Besides, a licensee is required to disclose any personal interest he or she has in a property. Example: A friend of Keira's represents sellers of a two-bedroom bungalow that would be perfect for Keira's buyer client. She shows the buyer the property but doesn't tell them she knows the seller's agent.

What is the primary mission of the New York State Department of Environmental Conservation? Select one: a. Identify and protect historic landmarks b. Conservation of natural resources c. Wetlands protection d. Preserve existing areas of natural beauty

Answer: b. Conservation of natural resources Deals with Environmental Issues per Municipal Ordinances In NY State, the Department of Environmental Conservation (DEC) oversees wetlands according to NY Environmental Conservation Law (ECL). Under ECL, wetlands are managed as follows: Wetland areas under 12.4 acres are not deemed of "unusual importance" and under the control of the local municipalities. Local municipalities may adopt additional freshwater wetland regulations of areas under DEC control, provided the rules are more restrictive.

Who does the co-op or (UCC) lien search on the shares? Select one: a. None of these. b. Either the buyer's attorney or the lender. c. The buyers' attorney. d. The lender. Incorrect

Answer: b. Either the buyer's attorney or the lender Credit Search (authorization with signature). Either the buyers' attorney or lender will do a co-op (or UCC) lien search on the shares. Just like the title search on a fee simple transaction, this search ensures the shares have no claims against them—or, if they do, that those liens can be discharged prior to purchase.

Which type of water heater is the most popular? Select one: a. Solar b. Gas c. Tankless d. Electric

Answer: b. Gas Plumbing- Gas Hot Water Heater A gas water heater consists of a vertical storage tank enclosed in an insulated metal tank. The Gas is automatically controlled by a thermostat inside the container so that incoming cold water turns on the Gas. When the water is heated, the thermostat lowers the flame.

In general, a deductible will ______________. Select one: a. Help the insurer pay the premium. b. Help lower your premium. c. Help keep your premium higher. d. Help the insured cover the cost for a casualty.

Answer: b. Help lower your premium. Insurance Policy Deductibles In an insurance policy, the deductible is the portion of any claim that is not covered by the insurance provider. It is normally quoted as a fixed amount and is a part of most policies covering losses to the policyholder. The deductible must be paid by the insured before the benefits of the policy can apply. If a policy contains a standard all peril deductible, such as $250, the policyholder would collect the amount of any covered property loss, less $250. With a deductible, the premium cost of the policy is lower than if there were no deductible. Deductibles save money because the first dollars of the insurance are the most expensive to buy. Increasing a deductible to a higher amount such as $500 or $1,000 can lower the premium even further. Hurricane deductibles, which we discussed on an earlier screen, are a relatively new feature in homeowners' policies. Insurers began offering or requiring hurricane deductibles following a series of catastrophes in the late 1980s and early 1990s that caused major losses. The hurricane deductible is in addition to the standard all perils deductible contained in the homeowner's policy. Many insurance companies also offer premium discounts for the use of deadbolt locks, smoke alarms, fire extinguishers, sprinkler systems, and security systems. As we said earlier, insurers are required to offer premium discounts if a policyholder has installed hurricane/storm shutters and/or hurricane-resistant laminated glass windows and doors. All of these devices minimize losses and, in some instances, may prevent them. insurance policy deductibles and how they affect premiums and payouts. To recap, a deductible is an amount the insured has to pay toward the claim before the insurance policy pays out. The higher the deductible, the lower the premium. Payouts are calculated by subtracting the deductible from the amount of the policy.

When all expenses, including taxes and insurance, are paid by the tenant and a net amount is provided to the landlord, this is called a: Select one: a. Gross lease. b. Net lease. c. Percentage lease. d. Sandwich lease.

Answer: b. Net lease. Net Lease The Net Lease is generally a long-term lease and designed for non-residential properties. The net lease requires the tenant to pay a prescribed amount of rent and a specific amount of the operating expenses associated with the property. So, a net lease is one where the tenant pays the building expenses on top of the base rent. Whether the tenant pays all or some of the expenses is negotiable. A triple net lease (sometimes referred to as a net lease) generally requires the tenant to pay all expenses such as taxes, utilities, maintenance, and insurance. The net or triple net lease is commonly used in renting commercial space. With a triple net lease, the tenant pays operating expenses.

Which of the following applies to prepayment penalties? Select one: a. Lenders are now required to charge prepayment penalties for debts exceeding $1.1 million. b. New York only allows prepayment penalties during the first year if the interest rate is fixed for at least the first three years. c. Qualified Mortgage rules prohibit lenders from charging prepayment penalties in most situations d. New York prohibits prepayment penalties

Answer: b. New York only allows prepayment penalties during the first year if the interest rate is fixed for at least the first three years. Prepayment Penalties If a homeowner pays off the home mortgage before the time set out in the mortgage contract, the homeowner may have to pay the penalty to the lender. According to IRS regulations, the homeowner can deduct that penalty as home mortgage interest if the penalty is not for a specific service performed or cost incurred in connection with the mortgage loan.

A living trust allows: Select one: a. The trustee to name him/herself the beneficiary. b. To convey title to a trustee for the benefit of a third party. c. To convey the fee estate to the trustee d. The trustee to charge the trustor with all responsibilities for managing the property.

Answer: b. To convey title to a trustee for the benefit of a third party. Trusts-Definition In an estate in trust, a fee owner -- the grantor or trustor -- transfers legal title to a fiduciary -- the trustee - who holds and manages the estate for the benefit of another party, the beneficiary. The trust may be created by a deed, will, or trust agreement. The trustee has fiduciary duties to the trustor and the beneficiary to maintain the condition and value of the property. The specific responsibilities and authorities are set forth in the trust agreement. • Living Trust A living trust allows the trustor, during his or her lifetime, to convey title to a trustee for the benefit of a third party. The trustor charges the trustee with all necessary responsibilities for managing the property, protecting its value, and securing whatever income it may produce. The trustee may also be ordered to sell the property at a given point. The beneficiary receives all income and sales proceeds, minus the trustee's fees. • Land Trust A land trust allows the trustor to convey the fee estate to the trustee and to name himself or herself the beneficiary. The land trust applies only to real property, not to personal property. The agreement, or deed in trust, grants the beneficiary the rights to possess and use the property and to exercise control over the actions of the trustee.

If a density zoning ordinance is applied to a subdivision all the lots must Select one: a. Be below the average size called for by the zoning. b. Total the lot count in a regular subdivision. c. Be grouped in a small area. d. Allow for at least 30 percent of the land to be left open.

Answer: b. Total the lot count in a regular subdivision. Adoption of Laws and Ordinances Including Zoning Ordinances and Cluster Zoning Approval The functions of councils may vary depending on the other agencies that are set up within the municipality, and the adoption of laws and ordinances, including zoning ordinances and cluster zoning approval, is one of them. To allow for a more flexible design of subdivisions, some municipalities have adopted density-zoning and cluster-zoning ordinances. A density-zoning ordinance permits the same overall density within the subdivision, which means the same total number of lots on the same size property as allowed by the zoning ordinance. The sizes of the individual lots, however, may be smaller or larger than the minimum required size. In the example I gave you, you still can get only 45 lots out of the whole 50-acre subdivision, but each lot can be bigger or smaller than one acre. As long as the average lot size is one acre, the density zoning ordinance permits flexibility of design, lot layout, and road layout. It may also save money by reducing road length and utility (water and sewer line) costs. Cluster zoning goes one step further than density zoning. It clusters or groups lots together in a relatively small area to preserve a particular portion of the property as open space. You may, for example, be able to cluster or group the lots in your subdivision into a total of only ten acres. That leaves 35 acres without any buildings. Once again, you won't be allowed to create more than 45 lots, but in addition to preserving open space, cluster zoning also makes for shorter roads and water and sewer lines, which, in turn, results in savings to the developer. In some places, cluster zoning also is known as conservation zoning.

Which of the following is NOT an example of fixed expenses? Select one: a. Repairs and maintenance b. Utility expenses c. Real estate taxes d. Insurance premiums

Answer: b. Utility expenses Fixed expenses Fixed Expenses are those that are incurred whether the property is occupied or vacant. Here are some examples of fixed expenses: Real estate taxes - The assessed value of the property determines the real estate taxes. Insurance premiums - The replacement cost of the project determines the insurance premiums that the investor will pay. Repairs and maintenance - These expenditures are usually incurred after a tenant leaves and space must be made ready for the next tenant, so they are relatively fixed. Advertising and promotion - an investor can set a weekly or monthly budget for these types of expenses. Categorizing expenses in this way makes it easier to estimate future expenses, by showing how different categories of expenses may change over time and how changes in occupancy can affect expenses.

Contractors who violate the deprovisions of Article 36- A may be fine up to: Select one: a. $500 b. $650 c. $250 d. $300

Answer: c. $250 Mandates Guarantees and Warranties - Home Improvement Article 36-A of the New York General Business Law provides that home improvement contractors who enter into contracts exceeding $5,000 must deposit payments received before completion into an escrow account. The contractor has the option of providing a bond or letter of credit guaranteeing the debt. If a payment schedule is arranged according to a specified amount of work completed, the contract must provide a payment schedule indicating the payment due and the work completed, including materials. An owner may cancel a home improvement contract, giving written notice to the contractor, up to three business days after signing the contract. The cancellation policy can be forfeited if an owner initiated the contract for an emergency repair and furnished the contractor with a written statement waiving the right to the three-day cancellation. If an owner agrees because of fraudulent representation, the owner may sue the contractor. If the court decides in the owner's favor, the owner may recover a penalty of $500 (plus attorney's fees) and other damages. (if the owners do not prevail, the contractor may be awarded attorney's fees.) Contractors who violate the deposit provisions of this law may be fined up to $250 or 5 percent of the contract price not exceeding $2,500.

A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. What's the total amount the borrower will pay back over the life of the loan? Select one: a. $30,640.65 b. $735,375.60 c. $367,687.80 d. $250,000.00

Answer: c. $367,687.80 Interest To find the total amount paid back, multiply the monthly payment ($2,042.71) by the total number of payments (180 = 12 payments/year x 15 years). The total paid back is $367,687.80. Interest = principal x rate x time Using the formula above, the interest rate on a $16,000 loan for one year at 8 percent interest is $2.5600 $16,000 x 8 x 2 = $2.5600 Most real estate loans use simple interest. Simple interest is money that is paid only for the amount of principal the borrower still owes. When the money is repaid to the lender, the payments stop. The formula for computing simple interest is: Interest = principal x rate x time Using the formula above, the interest rate on a $2,250 loan for one year at 7 percent interest is $157.50. $2,250 x .07 x 1 = $157.50

A property has an assessed value of $60,000 and an equalization rate of 1.25. What is the equalized value of the property? Select one: a. $40,000 b. $48,000 c. $75,000 d. $60,000

Answer: c. $75,000 Assessed Value Establishing real property tax begins establishing the assessed value (also known as "assessment") for each parcel of land and the improvements thereon. As previously discussed, the authorized assessor in each municipality determines the market value of each property in their assessing unit. Once a property's market value has been determined, the next step is to determine the assessed value. This is the value of a property determined by the authorized public authority such as the Tax Assessor. It is often based on a uniform percentage of market value, known as a "level of assessment" ("LOA"). Assessed value is calculated by multiplying market value by a uniform percentage of market value (the LOA). This is simply a percentage or rate determined by the local assessing unit and can be as low as 1% or as high as 100%. With the exception of NYC and Nassau county, NY State law requires that all property in an assessing unit be assessed at the same uniform percentage of value. For instance, if the assessing unit calls for a 50% level of assessment, the tax rate for all properties within that municipality must be uniformly applied to 50% of the market value. $60,000 × 1.25 = $75,000.

To begging a career on property management one can: Select one: a. Be a resident manager for apartment buildings. b. Not be a property manager without completing specific property management training courses. c. A and b but not c. d. Manage the property they want to purchase themselves for not being able to afford to hire a professional manager.

Answer: c. A and b but not c. Chapter 18- Unit 1, The Management Field - How does one Become a Property Manager? Many individuals become property managers when they purchase property as an investment. Most investors first starting do not have the finances to hire a professional manager, so they manage the property themselves. Other persons start in the business by becoming resident manages for apartment buildings or on-site managers for office complexes or community associations. Still, others choose property management as a career, completing specific property management training courses, or getting an MBA in asset management. Others come from other associated professions, such as real estate brokerage, appraisal, investment, or development. Most property managers are self-employed, although some work for large property management companies.

A mortgage in which two or more parcels of land are pledged is called: Select one: a. Package b. Wraparound c. Blanket d. All-inclusive

Answer: c. Blanket Specific Loans and Payments- Blanket Blanket Mortgage is a loan on several pieces of property. Blanket mortgages contain a partial release clause. This clause is one where the mortgagee agrees to release certain parcels from the loan of the blanket mortgage upon payment by the mortgagor of a certain sum of money. A developer could use this type of mortgage so that, as lots are sold, he could repay part of the mortgage without having to repay all of it. Sometimes lenders will accept more than one item of real property as collateral. With a Blanket Mortgage, the lender receives several parcels as collateral and typically will release each parcel upon its sale with most of the sale proceeds being paid to the lender. A broker should never accept a listing encumbered by a blanket mortgage unless the mortgage contains a release clause for the one specific parcel being listed.

Portfolio activities: Select one: a. Are traditional activities considered to be investments b. Include investments in stocks c. Both a and b d. Neither a nor b

Answer: c. Both a and b Portfolio Income Interest, annuities, dividends, and royalties. Likewise, passive losses cannot be used to offset portfolio income, (for example; example; interest, dividends, royalties, and gain on investment properties that is not covered by the passive loss rules). Portfolio activities are those traditional activities considered to be investments. These include investments in stocks, bonds, and other assets that produce interest, dividend or royalty income, as well as other assets "held for investment." The reason that these categories exist is that a loss in one category, cannot be offset by a gain in another category. The loss can be carried forward but MUST stay in its category. If the property sells with again, any losses from previous years may be used to offset losses carried forward.

Which document details the duties of the condominium board and the scope of its power? Select one: a. Governorship plan b. Offering plan c. Bylaws d. Declaration

Answer: c. Bylaws By-Laws The shareholder's rights and obligations are in the condominium's bylaw. A board of managers (or directors) oversees the finances and decision-making policies regarding the property. The bylaws, declaration, and rules set forth the following: Power duties of the board of managers. Annual dates when unit owners meet and when they hold elections to the board of managers. The number of seats the sponsor can have on the board of managers, and when the sponsor must give up control. The provisions (although, generally, there are no restrictions). The way the declaration can be amended (including the percentage of votes required). The method of adopting or amending rules and bylaws. Restrictions on the use of units and common elements. The obligation to repair. Pet restrictions.

A manager marketing plan for a rental property does NOT include: Select one: a. Financial statements b. Tenant analysis c. Feasibility studies d. Forecasting

Answer: c. Feasibility studies

Which of the following does NOT apply to loan underwriting? Select one: a. Buyer's willingness to pay b. Property evaluation c. Fully researching other data not presented in the loan application d. Buyer's ability to pay

Answer: c. Fully researching other data not presented in the loan application Borrower's Ability to Repay Loan The evaluation process used to determine the borrower's ability to repay a loan and estimating the value of the property being used as collateral is called underwriting.

A property owner can avert the danger of losing title by adverse possession by Select one: a. Claiming hostile and notorious possession. b. Recording proof of ownership in county title records. c. Inspecting the property and evicting any trespassers found. d. Filing a claim of right with the county recorde

Answer: c. Inspecting the property and evicting any trespassers found. Adverse possession An owner can avert the danger of involuntary alienation by adverse possession by periodically inspecting the property within statutory deadlines and evicting any trespassers found. The owner may also sue to quiet title, which would eliminate the threat of the adverse possessor's claim to legal title. A property registered in the Torrens system cannot be lost to adverse possession.

To become a mortgage broker, an individual must do all of the following EXCEPT? Select one: a. Provide recent credit reports. b. Pay an application fee. c. Pass a certification examination. d. Submit a surety bond.

Answer: c. Pass a certification examination. Requirements and Responsibilities of a Mortgage Broker Education varies. Not every mortgage broker will have a degree, though some do—often in business or finance. And a mortgage broker, by the way, could be either an individual or a mortgage brokerage company. Either way, we have to pass licensing requirements and register with the state. also we can't be registered with the state if we're employed by another brokerage business at a different firm. In New York, we register with the Department of Financial Services. "If you're already a real estate broker or an attorney, experience in those fields is enough to meet the education and experience requirement. Real estate salespeople, on the other hand, have to have at least two years of experience in residential mortgages." The State of New York Banking Department supervises and regulates all mortgage brokers working within the State. Applicants who want to become a mortgage broker in New York must: Have a minimum of two years of credit analysis or underwriting experience with an exempt organization, mortgage banker, mortgage broker or licensed lender. Pay a $500 application fee. Submit a surety bond ranging in amount between $10,000 and $100,000 depending on the number of loans being handled. The amount is re-determined twice a year. Submit a fingerprint fee of $94.25 with the application. Pay a non-refundable $1,500 investigation fee. Pay a $500 branch office fee for each additional branch requested. Provide recent original credit reports. Submit both professional and personal references, references from all employers, and references from 3 lenders. If the person who is applying for mortgage broker registration also holds a real estate broker or sales person license or functions as an attorney on residential mortgage transactions, he or she must also submit a Dual Agency Affidavit.

The 1968 Fair Housing Act, as amended, prohibits housing discrimination based on: Select one: a. Race, color, and religion b. Race, color, religion, and national origin c. Race, color, religion, national origin, sex, familial status, or handicap d. Race and color

Answer: c. Race, color, religion, national origin, sex, familial status, or handicap Fair Housing Act of 1968 The federal Fair Housing Act of 1968 began a monumental change in the U.S. On April 11, 1968, fair housing reached a pivotal moment when Pres. Lyndon Johnson signed the Civil Rights Act. Title VIII of that law, called the Fair Housing Act, prohibited discrimination in the sale, rental, and financing of housing and housing-related transactions based on race, color, national origin, and religion. It also created the Office of Fair Housing and Equal Opportunity (FHEO) under the Department of Housing and Urban Development (HUD). This agency is charged with enforcing fair housing laws and holding all parties accountable for compliance with these laws and regulations. Individuals who have experienced housing discrimination can file a complaint with this agency at no cost to themselves.

A community that undertakes a comprehensive master plan is ______. Select one: a. Overlooking the community's economic and physical assets. b. Making a much bigger deal out of planning than necessary. c. Taking the first step in urban planning. d. Using the zoning map as the basis.

Answer: c. Taking the first step in urban planning. Master of Comprehensive Plan, Official Map, etc. Public land use city planning incorporates long-term usage strategies and growth policies in a land use plan or master plan. In many states, the process of land use planning begins when the state legislature enacts laws requiring all counties and municipalities to adopt a land use plan. The land use plan must not only reflect the needs of the local area but also conform to state and federal environmental laws and the plans of regional and state planning agencies. The state enforces its planning mandates by giving state agencies the power to approve county and local plans. The master plan, therefore, fuses state and regional land use laws with local land use objectives that correspond to the municipality's social and economic conditions. The completed plan becomes the overall guideline for creating and enforcing zones, building codes, and development requirements. The primary objectives of a master plan are generally to control and accommodate social and economic growth. The master plan does the following: Sets specific guidelines on how much growth the jurisdiction will allow. While all communities desire a certain degree of growth, too much growth can overwhelm services and infrastructure. Defines what type of growth will occur, and where. This includes such things as the type of enterprises and developments to allow, the effects of industrial and commercial land use on residential and public sectors, and code specifications for specific construction projects.

An excessive assessment may mean that: Select one: a. Too many properties in the assessing unit were assessed. b. The uniform percentage applied to the assessment of the property was too low in comparison with other similar properties. c. The assessed value of a property is greater than its full value d. The assessed value of a property is less than its full value.

Answer: c. The assessed value of a property is greater than its full value Grievance Board- Full Value Disagreement If property owners believe that their property's assessed value is higher than the full property value, they may claim excessive assessment. This category also includes complaints that a portion of a partial exemption was denied.

A manufactured home is considered to be: Select one: a. real property b. personal property c. personal or real property d. temporary real property

Answer: c. personal or real property Manufacturing Another common type of property investor looks for is manufacturing, or industrial property Manufacturing buildings are large facilities designed to accommodate the equipment for various manufacturing processes. Light manufacturing buildings can be up to 300,000 square feet, while heavy manufacturing can utilize up to one million square feet or more. These buildings usually need large bay doors with at-grade or dock-high parking for the truck to maneuver. If a manufactured home is attached to a foundation, it is considered real property. Otherwise, it is personal property.

A property owner's tax rate is .03598, and the tax bill is $9,500. What is the assessed value of the property (rounded)? Select one: a. $267,258 b. $239,058 c. $309,234 d. $264,036

Answer: d. $264,036 Assessed Value Assessed value is calculated by multiplying market value by a uniform percentage of market value (the LOA). This is simply a percentage or rate determined by the local assessing unit and can be as low as 1% or as high as 100%. With the exception of NYC and Nassau county, NY State law requires that all property in an assessing unit be assessed at the same uniform percentage of value. For instance, if the assessing unit calls for a 50% level of assessment, the tax rate for all properties within that municipality must be uniformly applied to 50% of the market value. Which means: $9.500 ÷ .03598 = $264,036

According to the statute of frauds, which of the following contracts is not required to be in writing to be valid? Select one: a. An option to purchase real property. b. A lease for a term shorter than one year. c. A real property sales contract. d. A lease for a term of longer than one year.

Answer: d. A lease for a term of longer than one year. Statute of Frauds GOL 5-703 sub. 2 In contrast to its name, the Statute of Frauds does not deal with fraud at all, at least not directly, and is not even one discrete statute, but rather a number of different statutes, variously codified. New York's Statute of frauds (General Obligations Law Section 5-703), reads like this: An estate or interest in real property, other than a lease for a term not exceeding one year, or any trust or power, over or concerning real property, or in any manner relating thereto, cannot be created, granted, assigned, surrendered or declared, unless by act or operation of law, or by a deed or conveyance in writing, subscribed by the person creating, granting, assigning, surrendering or declaring the same, or by his lawful agent, thereunto authorized by writing. But this subdivision does not affect the power of a testator in the disposition of his real property by will; nor prevent any trust from arising or being extinguished by implication or operation of law, nor any declaration of trust from being proved by a writing subscribed by the person declaring the same. A contract for the leasing for a longer period than one year, or for the sale, of any real property, or an interest therein, is void unless the contract or some note or memorandum thereof, expressing the consideration, is in writing, subscribed by the party to be charged, or by his lawful agent thereunto authorized by writing. A contract to devise real property or establish a trust of real property, or any interest therein or right with reference thereto, is void unless the contract or some note or memorandum thereof is in writing and subscribed by the party to be charged therewith, or by his lawfully authorized agent. Nothing contained in this section abridges the powers of courts of equity to compel the specific performance of agreements in cases of part performance.

In which agreement, the agent still guaranteed a commission even if he is not the one who finds the tenant: Select one: a. The exclusive right to sell b. The exclusive right to represent c. The exclusive right to rent d. Both "a" and "c"

Answer: d. Both "a" and "c" The Exclusive Right to Rent Agreement An exclusive right to rent agency agreement is a contract between an owner or landlord and a real estate professional regarding the rental of residential property. Just as with an exclusive right to sell listing agreement, if the agent finds the tenant, the agent is owed a commission. If another agent finds the tenant, you are still owed a commission. And if the landlord/owner finds the tenant, the agent is owed a commission. Exclusive right to rent and exclusive right to sell ensure the highest level of effort on the part of the listing agent because the agent is guaranteed a commission when a buyer or tenant is found.

Market allocation is: Select one: a. An antitrust law violating practice. b. Possible to occur when real estate professionals agree to refuse a deal. c. a but not b. d. Both a and b.

Answer: d. Both a and b. Market Allocation Agreements Market allocation is an antitrust violation. Market allocation occurs when real estate professionals from competing firms agree to divide their market—by geography, price range, property type, etc.—and then refrain from competing for business. This used to be common practice between brokerage firms "you take the north side of town; we'll take the south"—so the firms weren't tripping over one another in their pursuit of business. But these agreements between competing firms restrict trade, discourage competition, and restrict consumer choice, and they violate antitrust law. It's important to distinguish between making a legal independent decision about the areas and clients the agent and his firm wish to serve (as long as this decision isn't based on discrimination against any protected class) and an actual agreement (written or oral) with competing brokers to allocate territories or customers, which is illegal This refers to the division of markets by location or price. "Why don't you take the south side of town and our company will take the north side" is another statement that would also violate Sherman Antitrust law. These types of allocation agreements could also be about types of properties, sociological divisions of business or the refusal to deal with a competitor.

Price increases in new buildings occurs: Select one: a. When a developer puts the first apartment on the market. b. When a celebrity buys into a luxury condominium development. c. When units are initially marketed. d. Both b and c.

Answer: d. Both b and c. Current Market Practices Many developers believe that purchasers will pay more for a unit once the new development begins to sell out. However, price increases in new buildings also can occur when the units are initially marketed. Sometimes a condominium greatly appreciates during its contract period. When a developer puts the first apartments on the market, he may not be sure how to price the unit. He sets a price according to what he thinks the buyer will pay. Other factors can drive up prices. In NYC, for example, when a celebrity buys into a luxury condominium development, prices can immediately go up 10 percent or more. Unlike resale, a buyer may have a difficult time picturing what he is buying. To overcome this, many developers try to simulate what an apartment will look like through scales models, model apartments, videos, and computer imaging. Many people, in NYC especially, buy an apartment based only on floor plans or models or even sight unseen.

What is the formula to calculate straight-line depreciation on an income property? Select one: a. Divide the building's market value by the number of years of the building's class life b. Divide the building's cost by the current age of the building c. Divide number of years of the building's class life by the building's market value d. Divide the building's cost by the number of years of the building's class life

Answer: d. Divide the building's cost by the number of years of the building's class life Straight-line Method Under MACRS all real property is depreciated on a straight-line basis over its class life. Straight-line depreciation means that the depreciation is computed by dividing the building's cost by the number of years of its class life. Income Production Residential—27.5years The building and improvements are depreciable over 27 ½ years for income producing residential property on a straight-line depreciation basis. The basis normally is the cost of acquiring the property reduced by the estimated salvage value of the property at the end of its useful life. Straight-line depreciation means that the portion allocated to the building is divided by 27.5 to determine an equal amount of depreciation allowance each year. This is 3.636 percent (100% ÷27.5 =.03636) for each full year. If the building is determined to be $125,000, the depreciation per year is $4,545 ($125,000 × 3.636 percent). For the year the property is placed in or returned from service, depreciation is prorated for the shorter year. Example: It has been determined that the replacement cost of a 15 years old building is $90,000. Since it has 35 years of useful life left, how much can be charged to annual depreciation? What do you know? Replacement cost = $90,000 Useful life = 35 years Using the formula replacement cost = annual depreciation, Years of useful life calculate annual depreciation. 500.000 = $2571 (Rounded to the nearest dollar) 35 Example: The annual depreciation of a building is $3245. What is the total depreciation of a 19 years old building? Annual depreciation x age of building = total depreciation $3245 x 19 = $61,655 Total depreciation = $61,655

Individuals, who experience housing discrimination are provided the opportunity to file a complaint based on the provisions of which act? Select one: a. Civil Rights of 1866 b. Americans with Disabilities Act of 1990 c. Fair Housing Amendments Act of 1988 d. Federal Fair Housing Act of 1968

Answer: d. Federal Fair Housing Act of 1968 Fair Housing Act of 1968 The federal Fair Housing Act of 1968 began a monumental change in the U.S. On April 11, 1968, fair housing reached a pivotal moment when Pres. Lyndon Johnson signed the Civil Rights Act. Title VIII of that law, called the Fair Housing Act, prohibited discrimination in the sale, rental, and financing of housing and housing-related transactions based on race, color, national origin, and religion. It also created the Office of Fair Housing and Equal Opportunity (FHEO) under the Department of Housing and Urban Development (HUD). This agency is charged with enforcing fair housing laws and holding all parties accountable for compliance with these laws and regulations. Individuals who have experienced housing discrimination can file a complaint with this agency at no cost to themselves.

__________is a loss of value due to characteristics inherent in the structures themselves Select one: a. Noncurable event. b. Physical Deterioration. c. Curable event. d. Functional Obsolescence.

Answer: d. Functional Obsolescence. Cost Approach Functional obsolescence is a loss of value due to characteristics inherent in the structures themselves. It results in a decreased capacity of the improvements to perform the functions for which they were intended, in accordance with current market tastes and standards of acceptability. Something becomes outmoded. As mentioned above, functional obsolescence consists of curable (that can be corrected by modernizing the building) and incurable items.

Property owners pay more than 95percent of the tax levied, this is an example of: Select one: a. Predictable. b. Veterans. c. Special assessment. d. Hard to conceal.

Answer: d. Hard to conceal. Why Tax Land and Improvements (As Opposed to Sales and Income taxes)? - Hard to Conceal Because property tax is secured by the property, the tax has a high compliance rate, Property owners pay more than 95 percent of the tax levied. Very few owners do not pay their property tax. Many lenders require that property tax be escrowed as part of the monthly mortgage.

The duty of _____requires the agent to place the client's interests above those of all others, including his or her own. Select one: a. Confidentiality b. Disclosure c. Obedience d. Loyalty

Answer: d. Loyalty Loyalty, Confidentiality, Full Disclosure, Obedience, Reasonable Skill and Care and Duty to Account The duty of loyalty requires the agent to put the client's interests above those of all others, including his or her own. An agent must negotiate agreements without considering the amount of compensation he or she will receive. Also, a licensee is required to disclose any personal interest he or she has in a property.

A sheriff's deed contains: Select one: a. A covenant of quiet enjoyment. b. A covenant against encumbrances. c. A covenant of seisin. d. No covenant.

Answer: d. No covenant. Sheriff's deed (A sheriff's deed contains no warranties and transfers only the former owner's interest, if any, in the property) . Sheriff's deed is used to convey foreclosed property sold at public auction.

A policy that includes several types of coverage in one policy is a(n): Select one: a. Monoline policy. b. Limited liability policy. c. Umbrella policy. d. Package policy.

Answer: d. Package policy. Package Policy A package policy, lumps different types of insurance into one policy. Package policies are generally less expensive than insurance coverage this is why it is the best bet cost-wise for clients because property owners and renters need more than one type of insurance, and buying them separately is more expensive. Note: Homeowners and tenants' policies are package policies that include property, liability, theft, and medical payment coverage

If a taxpayer is delinquent in paying property taxes, his taxing jurisdictions may initiate a(n)__________ against the property. Select one: a. Tax rate. b. Tax foreclosure. c. Tax bill. d. Tax lien.

Answer: d. Tax lien. Tax Lien When a taxpayer is delinquent in paying property taxes, a tax lien attaches against the property. Like other types of liens. A property tax lien creates an encumbrance against the property. However, a property tax lien takes first priority over all other liens. When a transfer of title takes place, any tax lien against the property should be paid first. However, in certain instances, the property can be sold subject to the tax lien. If the assessed real estate property taxes are not paid when they are due, the local official can bring legal action to collect the taxes. This procedure is called an in rem legal proceeding. It happens when an action is brought directly against the real property and not against an individual and his personal property. The typical action for collection is the forced sale of the property at a tax sale.

A devisee is the Select one: a. Male maker of a will. b. Property being transferred by a will. c. Female maker of a will. d. The person receiving a gift.

Answer: d. The person receiving a gift. Devisee Devisee is the person who receives a gift of property from a will.

Amperage required for different electrical usage is calculated in: Select one: a. Voltage b. Cubic feet per minute c. Lateral drops d. Watts or kilowatts

Answer: d. Watts or kilowatts Electrical - Amperage -What is Amperage - Capacity Requirement Amperage is the amount of current or electricity flowing through the wire. For example, when a light is on, there is a voltage across the filament of the bulb that is pushing amperage through the circuit. When the switch is off, there is the voltage across the switch, but there is no current flowing because it is "blocked" by the switch. Electrical capacity requirements, measured in watts or kilowatts, are determined when a structure is built. Amperage required for different electrical usage is calculated in watts or kilowatts. Structure electrical circuits are installed according to these kilowatt requirements.

Property managers are usually considered: Select one: a. contractual agents b. special agents c. universal agents d. general agents

Answer: d. general agents Skills Required of a Property Manager The many and varied duties of a property manager require the skills of a business executive, decorator, salesperson, parking lot attendant, gardener, housekeeper, information center, accountant, social director, rent collector, maintenance expert, security officer, telephone operator, messenger service, and complaint department. Honesty and social skills will serve him or her well. Property managers are usually considered general agents.

The pro forma uses Select one: a. debt service b. scheduled rent c. depreciation d. market rents

Answer: d. market rents Cash World A property seller or broker may offer a pro forma statement of operations, such as the one above, as part of a sales presentation. The rental income may be attractive estimates rather than actual amounts earned by the property. Or, operating expenses may be based on last year's rates while property taxes, insurance, or utilities have jumped in the current year. You may have to recast the amounts to determine what you are likely to incur in costs or receive in cash flow. Get the owner's rent roll, which is a list of the tenants, space occupied (i.e., apartment number), and rent, and compare the figures to the pro forma statement. Or look at actual operating statements, not forecasts. Expected cash flow can be an indication of how speculative investment is. When appreciation rates are high, it is not uncommon for properties with negative cash flow to be purchased. The investor expects to "feed" the property (pay the cash flow deficit out of other income or capital reserves) until the property is sold. An expected significant profit at resale offsets the period of negative cash flow. In other cases, investors may purchase properties with turnaround potential—those that are currently losing money but which may become productive given renovation or marketing effort. These properties are expected to have a negative cash flow for a time, but eventually produce real income and resale profits. In any case, where the cash-on-cash return is low or negative, the investment is speculative. Eventual returns are based on anticipated improvements in market conditions or the appeal of the property, and this introduces a risk that the improvement will not materialize.

To begging a career on property management one can: Select one: a. Not be a property manager without completing specific property management training courses. b. Be a resident manager for apartment buildings. c. A and b but not c. d. Manage the property they want to purchase themselves for not being able to afford to hire a professional manager.

Answer:c. A and b but not c. Chapter 18- Unit 1, The Management Field - How does one Become a Property Manager? Many individuals become property managers when they purchase property as an investment. Most investors first starting do not have the finances to hire a professional manager, so they manage the property themselves. Other persons start in the business by becoming resident manages for apartment buildings or on-site managers for office complexes or community associations. Still, others choose property management as a career, completing specific property management training courses, or getting an MBA in asset management. Others come from other associated professions, such as real estate brokerage, appraisal, investment, or development. Most property managers are self-employed, although some work for large property management companies.

The net income generated by a property before depreciation and other noncash expenses is termed: Select one: a. Cash flow. b. Stream of income. c. Revenue generation. d. Income flow

answer: a. Cash flow. Chapter 15 - Unit 2, Cash Word - Deriving the Before-Tax Cash Flaw (BTCF) Net income before taxes is called cash flow. The net amount is subject to federal taxation. Taxation is an important consideration for an investor in all transactions. The before-tax cash flow is calculated before income taxes are figured into the equation. So For example, if an investment property is generating an income, and expenses are that's a net return (cash flow) of $8,000.

The condominium concept is unique in that one buys a common interest in the common area and an exclusive interest in the unit. Which of the following statements is not correct about a condominium? Select one: a. A condominium can be a part of an office building. b. A Condominium is a structure of two or more units. c. A condominium can be lined generally or specifically. d. An owner of a condominium has an interest in real property.

answer: b. A Condominium is a structure of two or more units. Chapter 14 - Unit 1, Define a Condominium (Real Property) Condominium statutes are called horizontal property acts because they describe a three-dimensional property description, with a property line above and below the condominium. These horizontal property lines create a cube of airspace that is the privately owned condominium. A condominium is created and managed in New York according to Article 9B of the Real Property Law. To create a condominium, the owner/developer of the property (the declarant) signs a condominium declaration. The declaration includes creation provisions required by statute. This includes a description of the property and each unit, the way the condominium is governed and dues are assessed, repair and maintenance responsibilities, and ownership interest be between the condominium association and the owner. The declaration becomes effective when it is recorded in the public records of the county where the property is located. A Condominium is a structure of two or more units. The interior space is individually owned. The remaining property, the common elements, are owned in common by the owners of the individual units. Unlike a cooperative that is considered personal property, condominiums are real property. A condominium transaction is fee simple transaction. The closing includes a title search, a transfer of the property by deed, and appropriate transfer fees and recordation. The individual condominium unit is owned like other types of real property: in severalty, as a joint tenancy, as tenants in common, or as tenants by the entirety