RE TEST 2
The smallest property on the block is also priced lower than any others, but the higher-priced properties that surround it help to drive the property's market value up. What economic principle is at work here? a. Anticipation b. Contribution c. Progression d. Regression
c. Progression
What document should detail the typical reports you'll need to provide for a property owner? a. Employee policies and procedures manual b. Lease agreements c. Property management agreement d. Property management proposal
c. Property management agreement
In the real estate business, which professional's primary role is to provide clients with the information they need to make informed decisions about their own specific real estate interests? a. Home inspector b. Real estate attorney c. Real estate counselor d. Real estate educator
c. Real estate counselor
What does a mortgage Real Estate Investment Trust invest in? a. Lease contracts b. Personal property c. Real estate debt d. Real estate property
c. Real estate debt
Samuel has installed all new energy-efficient appliances within his home, including a new furnace and water heater. He discovers that he is eligible for which federal tax incentive? a. Ad valorem tax exemption b. Going green tax credit c. Residential energy efficient tax credit d. Residential renewable energy tax credit
c. Residential energy efficient tax credit
The legal description of the project, easements that run with the land, and street and traffic patterns are all under consideration when a local planning board ______. a. Calculates the developer's project application fee b. Considers granting a special use permit to a developer c. Reviews a developer's project plat d. Reviews the zoning for a developer's project
c. Reviews a developer's project plat
Which amendment to CERCLA says that "innocent landowners" aren't responsible for clean-up of hazardous contamination? a. Environmental Responsibility Amendment b. Hazardous Contamination Amendment c. Superfunds Amendments and Reauthorization Act d. The Fair Housing Act
c. Superfunds Amendments and Reauthorization Act
When a deed of trust is used as a security instrument, who holds the deed and the note? a. The lender holds the deed and the note b. The lender holds the deed, and the trustee holds the note. c. The trustee holds the deed, and the lender holds the note. d. The trustee holds the mortgage and the note.
c. The trustee holds the deed, and the lender holds the note.
What's the minimum number of business days prior to closing that lenders have to provide borrowers with the Closing Disclosure form? a. Five b. Four c. Three d. Two
c. Three
While walking through your seller's commercial property prior to listing it, you noticed that the soil is a strange color, and that there are some solid deposits in the soil toward the back of the property. You recommended that the seller have the soil tested for the presence of any sort of hazardous material. Which of the following is true? a. The seller has to disclose hazards because it's a commercial property. b. You are liable for disclosing suspected hazards to all parties. c. You are only liable for disclosing known hazards, not suspected ones. d. Your seller is required to pay for any tests that you recommend.
c. You are only liable for disclosing known hazards, not suspected ones.
Who must appear before a public officer in order for a deed to be acknowledged? A. The grantee B. The grantor C. The Notary D. The party of the second part on the deed
B. The grantor
Under Texas law, which of the following occurs if a tenant dies during the term of lease? A. The lease becomes part of the deceased tenant's estate. B. The lease does not terminate and becomes the responsibility of the tenant's heirs. C. The lease is subject to a constructive eviction. D. The property is considered abandoned, and the landlord may sue the tenant's family for damages.
B. The lease does not terminate and becomes the responsibility of the tenant's heirs.
The owner's covenants section of the property management agreement between manager Fred Baines and owner Lilian James contains three key pieces of information. First, Fred is named as the person responsible for managing the building. Secondly, Lillian is identified as the property's legal owner. What's the third key piece of information? A. That Fred is indemnified from any illegal acts of the tenants B. The duration of the contract and its start and end dates C. The fact that the owner is not facing foreclosure D. The fee that Lillian will pay Fred for his property management services
C. The fact that the owner is not facing foreclosure
Which of the following loan transactions would be exempt from TILA disclosure requirements? a. Duplex, with office building used as collateral b. Grocery store, with personal funds used as collateral c. Hobby farm d. Vacation home
b. Grocery store, with personal funds used as collateral
The ______ is used by the borrower when shopping for a loan. a. Closing Disclosure b. Good Faith Estimate c. HUD-1 d. Loan Estimate
d. Loan Estimate
John wants to do a 1031 tax exchange. He just sold his property. How many days does he have to close on a new property? A. 180 B. 30 C. 45 D. 60
A. 180
If a property's income value is $200,000 and it's earning a net operating income of $40,000, what is the cap rate? A. 20% B. 25% C. 40% D. 5%
A. 20%
What standards do appraisers follow? A. Appraisal bylaws B. License law C. NAR Rules of Ethics D. Uniform Standards of Professional Appraisal Practice
D. Uniform Standards of Professional Appraisal Practice
Soren is an appraiser. As such, what guidelines must he follow? A. NAR Code of Ethics B. National Association of Appraisers (NAA) bylaws C. Real estate license law D. Uniform Standards of Professional Appraisal Practice (USPAP)
D. Uniform Standards of Professional Appraisal Practice (USPAP)
Which veteran loan program offers qualified veterans help with the purchase of land in Texas? A. Texas Veterans Land Board B. Veterans Home Improvement Program C. Veterans Housing Assistance Program D. Veterans Land Program
D. Veterans Land Program
Shelly's flower business is blooming and it's time for her business to grow. She plans to take out a business loan to open two more shops on the north side of town. Which lending institution would she most likely go to for the loan? a. A commercial bank b. A credit union c. An investment group d. A savings and loan
a. A commercial bank
Which deed type may come with or without covenants of warranty? a. Bargain and sale b. Full covenant and warranty c. Quitclaim d. Referee's
a. Bargain and sale
Which of the following scenarios accurately represents your environmental disclosure responsibility as a real estate licensee? a. You must disclose all known environmental hazards for both residential and commercial properties. b. You must disclose all known environmental hazards for commercial properties only; residential disclosure is the seller's sole responsibility. c. You must disclose all known environmental hazards for residential properties only; commercial disclosure is the seller's sole responsibility. d. You must disclose all suspected environmental hazards for both residential and commercial properties.
a. You must disclose all known environmental hazards for both residential and commercial properties.
We know that the original loan was for $17,000 with an interest rate of 9.5%. How much interest would be charged if the loan is paid off in 11 months? a. $1,416 b. $1,480 c. $1,545 d. $1,615
b. $1,480
Which of these is excluded on a title insurance policy on Martha's property because of the schedule of exceptions? a. A mechanic's lien recorded by A1 Siding and Windows b. A verbal lease agreement Martha has with her neighbor who leases Martha's garage c. Last year's unpaid property taxes d. The current year's unpaid property taxes
b. A verbal lease agreement Martha has with her neighbor who leases Martha's garage
What is the term used for the land mass that is built up by accretion? a. Accession b. Alluvion c. Avulsion d. Reliction
b. Alluvion
Clark works for Acme Bank and asks for your assistance. He wants you to look at a property that's about to go into foreclosure and provide him with a report on its current marketability and a price for his bank. What's Clark most likely asking you to provide? a. Appraisal b. BPO c. CMA d. Professional opinion
b. BPO
Which type of analysis is a broad estimate of price in case the lender must take over the property and sell it to an investor or on the market? a. Appraisal b. Broker's price opinion c. Comparative market analysis d. Credit analysis
b. Broker's price opinion
Breeja sold her investment property for $330,000. Her adjusted basis in the property was $253,000. The difference between this sale price and the adjusted basis is a(n) ______. a. After-tax cash flow b. Capital gain c. Finance rate d. Rate of return
b. Capital gain
A licensee creating a CMA uses ______ to determine value. a. A very detailed analysis b. Comparable sales c. Construction costs d. Multiple methods
b. Comparable sales
With the cost approach to value, what is the replacement cost? a. Cost of the materials used in construction b. Cost to build a functionally equivalent improvement c. Cost to build an exact replica of the subject, with the same materials and deficiencies d. Cost to buy the property
b. Cost to build a functionally equivalent improvement
Earnest money on deposit is a ______. a. Credit to the brokerage b. Credit to the buyer c. Credit to the seller d. Debit to the seller
b. Credit to the buyer
Which document is used to establish proof of ownership and to transfer the title? a. Abstract of title b. Deed c. Survey d. Title insurance policy
b. Deed
How many days does the Texas seller have to deliver a "commitment for title insurance" to the buyer under the terms of the TREC One To Four Family Residential Contract (Resale)? a. 10 b. 15 c. 20 d. 35
c. 20
Which of the following would likely require a variance? a. A change in architectural style b. A garage repair c. An addition which alters the setback d. A remodel involving a different internal layout
c. An addition which alters the setback
A ______ is a ratio that compares two quantities. a. Part b. Percentage c. Rate d. Total
c. Rate
Tyrell and Barb bought a commercial investment property in 2009 during the real estate market downturn. Through what year will they be able to depreciate the investment? a. 2019 b. 2029 c. 2039 d. 2048
d. 2048
Damien is representing a commercial property owner. Which of the following duties can the owner expect Damien to perform on his behalf? a. Assist the owner in locating a property to lease. b. Collect the first month's rent from the tenant and hold it in a separate bank account for the owner. c. Explain potentially confusing lease clauses and determine the best monthly lease amount for the tenant. d. Locate and qualify potential tenants.
d. Locate and qualify potential tenants.
What attracts borrowers to adjustable rate mortgages? a. Balloon payment b. Convertible feature c. Initial cap d. Lower initial interest rate
d. Lower initial interest rate
A new development is going up just outside city limits where the population is expected to grow significantly in the next decade. The development will consist of commercial properties in one quadrant near a main road. The other areas are designated residential and will include single-family residences and multi-family townhomes. A small number of the single-family homes will border a golf course that is at the center of the development. What type of zoning is this an example of? a. Conforming b. Exclusive-use c. Non-conforming d. Planned unit development
d. Planned unit development
Joanie sees herself as a mover and shaker, a leader, someone who jumps in and gets things done. She likes to be involved and in charge. When she decides to start investing in real estate, which of these choices is she most likely to select as her investment vehicle? a. A multi-family residential income property b. A real estate investment trust c. A real estate mortgage investment conduit d. A real estate syndicate membership
a. A multi-family residential income property
What's the term for a notice given directly to and received by a person? a. Actual notice b. Constructive notice c. Proper notice d. UPS notice
a. Actual notice
The value principle of ______ is the basis of the income approach to appraisal. a. Anticipation b. Capitalization c. Competition d. Substitution
a. Anticipation
In investments, each type of depreciation is defined by a particular event. Which of the following best describes a depreciation type and an event it's tied to? a. Economic depreciation and cost recovery b. Economic depreciation and physical deterioration c. Operating depreciation and taxing authority d. Tax depreciation and physical deterioration
b. Economic depreciation and physical deterioration
To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which element is applied first? a. Conditions of sale b. Financing terms and cash equivalency c. Market conditions d. Physical characteristics
b. Financing terms and cash equivalency
With this type of commercial lease, when the lease expires, any improvement made to the property by the tenant belongs to the landowner. a. Full service lease b. Ground lease c. Oil or gas lease d. Proprietary lease
b. Ground lease
Cray leases a commercial building and pays all expenses related to the building, including taxes and insurance. Cray has a ______. a. Gross lease b. Net lease c. Percentage lease d. Sublease
b. Net lease
How does the Fed maintain a balanced economy? a. By limiting the number of loans a bank may originate b. By purchasing loans on the secondary market c. By regulating the flow of available funds and interest rates d. By shutting down the stock market
c. By regulating the flow of available funds and interest rates
Which of the following is the best example of investment leverage? a. Buying multiple properties at once b. Buying properties on a systematic basis c. Financing most of an investment and putting very little cash in d. Paying all cash for an investment to avoid interest payments
c. Financing most of an investment and putting very little cash in
An investor is analyzing a three-unit property by looking at its ability to produce future income. Which of the following would most likely be used to determine this value? a. Effective gross income b. Gross income multiplier c. Gross rent multiplier d. Potential gross income
c. Gross rent multiplier
The doctrine of "use it or lose it" is known as the doctrine of ______. a. Eminent domain b. Escheat c. Laches d. Taking
c. Laches
Who usually represents the lender at a closing? a. Broker for the buyer b. Broker for the seller c. Lender's attorney d. Title insurance representative
c. Lender's attorney
hat's it called when a number of percentage points is added to the index to determine the rate for an adjustable rate mortgage? a. Initial cap b. Lifetime cap c. Margin d. Usury
c. Margin
Which of the following is considered an acceptable form of identification for a prospective tenant who doesn't have a Social Security number? a. Individual Taxpayer Identification Number b. Matricula Consular Card c. Temporary resident card d. U.S. state driver's license card
c. Temporary resident card
Before development of its new zipper factory begins, XYZ Corp. finds out that a section of the property it wants to build on is prone to flooding. It decides to dedicate this portion of the property to the government for public use to get out of handling the maintenance and drainage issues. The local government refuses. Why? a. Flood insurance wasn't offered. b. The government can't accept land dedications from corporations. c. The maintenance or cost to fix the problem might outweigh the benefits of its use. d. There's no consideration given from the grantor for warranties against flooding.
c. The maintenance or cost to fix the problem might outweigh the benefits of its use.
What institution was formed in 1968 and took over the sale of the government loan market? a. Fannie Mae (FNMA) b. Farmer Mac c. Freddie Mac (FHLMC) d. Ginnie Mae (GNMA)
d. Ginnie Mae (GNMA)
Which form is used by the borrower when shopping for a loan? a. Closing Disclosure b. Good Faith Estimate c. HUD-1 d. Loan Estimate
d. Loan Estimate
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? a. He can't legally make any improvements to the property until the deed is recorded. b. He doesn't legally own the house until that occurs. c. Recording provides actual notice that he owns the property. d. Recording provides constructive notice that he owns the property.
d. Recording provides constructive notice that he owns the property.
Sarah is a property manager who needs to determine the amount of coverage for property insurance for her owner/client. If she uses the cost to purchase the property today as the basis, she would be using the __________method. a. Blanket coverage b. Cash value c. Depreciation d. Replacement cost
d. Replacement cost
Which of the following duties is part of the licensee's role in a residential lease transaction for a tenant client? a. Collect the tenant's first month's rent and security deposit and present it to the owner after the lease agreement has been signed. b. Determine what clauses should be included in the lease agreement and the monthly lease amount. c. Market the property that is being leased. d. Represent the client's interest in all negotiations and transactions regarding the property lease.
d. Represent the client's interest in all negotiations and transactions regarding the property lease.
What is the lender's attorney's responsibility at the closing? a. Obtain homeowners insurance for the buyer b. Provide an affidavit of title c. Provide the abstract of title d. Review the appraisal, survey, and inspection reports
d. Review the appraisal, survey, and inspection reports
Rachel loves convenience. As you can imagine, she was thrilled when she was able to finance her mortgage through the same institution where she deposits her payroll checks. Which of these most likely financed Rachel's mortgage? a. Insurance company b. Investment group c. Mortgage broker d. Savings and loan
d. Savings and loan
Roberta worked with an attorney to prepare her will. What kind of will is this? a. Descent b. Functional c. Holographic d. Statutory
d. Statutory
Blane owns a barbershop. He polls his customers and learns that they tend to come from less than a mile away. That's probably because Blane's store is in this type of location. a. Factory outlet mall b. Neighborhood center c. Regional shopping center d. Strip mall
d. Strip mall
Besides the federal rules, which Texas entity or entities sets forth the state rules surrounding kickbacks? a. Both TREC and the TDI b. Texas Association of REALTORS® c. Texas Real Estate Commission d. The Texas Department of Insurance
a. Both TREC and the TDI
Who at the closing table examines all documents for buyers or sellers and represents their best interests? a. Buyer's or seller's attorney b. Escrow agent c. Lender's attorney d. Title insurance representative
a. Buyer's or seller's attorney
SARA is an amendment to which environmental act? a. CERCLA b. Clean Air Act c. Clean Water Act d. Environmental Responsibility Act
a. CERCLA
When sites with hazardous substances are identified, which of the following mandates that the responsible party cleans them up? a. CERCLA b. EPA c. HUD d. SARA
a. CERCLA
Which type of lender is a member-based cooperative that provides credit for auto loans and home loans, takes deposits, and offers savings vehicles and money markets? a. Credit union b. Mortgage banker c. Mortgage broker d. Savings and loan association
a. Credit union
Being a retail property manager includes responsibility for ______. a. Establishing some leases as percentage leases where a base rent per square foot is augmented by a percentage share in the tenant's gross b. Leading the construction of large office buildings and warehouses c. Negotiating with the homeowners association d. Understanding residential fair housing rules
a. Establishing some leases as percentage leases where a base rent
What institution was established in 1938 to purchase FHA-insured loans from individual lenders, group the loans together, and sell them as mortgage-backed securities to investors? a. Fannie Mae (FNMA) b. Farmer Mac c. Freddie Mac (FHLMC) d. Ginnie Mae (GNMA)
a. Fannie Mae (FNMA)
What does the income approach to value rely on when valuing properties that are five or more units? a. Gross income multiplier b. Gross rent multiplier c. Monthly gross rent d. Sales comparison
a. Gross income multiplier
What does a balloon payment represent at the end of a loan term? a. It means that some principal remains at the end of the loan term. b. It means that the loan has been fully amortized. c. It refers to the entire principal due over the course of the loan. d. It refers to the lump sum of the total amount of interest due on the loan.
a. It means that some principal remains at the end of the loan term.
Mick focuses on originating mortgage loans at a company that has in-house loan processors and underwriters. The options he offers consumers are limited to the products his company offers. What's Mick's position? a. Mortgage banker b. Mortgage broker c. Mortgage servicer d. Real estate investor
a. Mortgage banker
Although a valid deed in Texas doesn't require a grantee's signature, a signature is required if the deed is used to settle property claims in the event of a death or divorce. This type of deed is known as a(n) ______ deed. a. Owelty b. Separation c. Widower d. With this I do depart
a. Owelty
Which of the following types of tenancy comes with an automatic renewal clause? a. Periodic estate b. Tenancy by a service member c. Tenancy from month to month d. Written estate for years
a. Periodic estate
Which of the following is a characteristic of an abstract of title? a. Provides an attorney's opinion of the title b. Provides information about the payoff amount c. Provides information about the property location d. Releases an existing lien
a. Provides an attorney's opinion of the title
Who is responsible for obtaining evidence of title and title insurance? a. The buyer b. The lender c. The seller d. Title insurance representative
a. The buyer
Your buyer client, Percy, needs to obtain financing to buy his dream house. What's his first step? a. Complete a loan application. b. Obtain a pre-qualification letter. c. Sign a purchase agreement. d. Write an offer.
b. Obtain a pre-qualification letter.
In Texas, what type of leasehold involves a possessory interest that is automatically renewed at the end of each period specified in the lease? a. Estate for years b. Periodic estate c. Tenancy at sufferance d. Tenancy at will
b. Periodic estate
Tom, the seller, is financing his buyer Jerry's mortgage. Jerry will give this mortgage to Tom, which will go toward the purchase price. Jerry will use this mortgage for his down payment. What kind of mortgage is this? a. Package mortgage b. Purchase money mortgage c. Reverse mortgage d. Wrap-around mortgage
b. Purchase money mortgage
Which of the following would be a description of economic depreciation? a. Investors can take a business deduction for annual depreciation. b. The asset is worth less because it's deteriorating physically. c. The asset is worth more because of capital improvements. d. The owner/investor is making less income from the property than previously.
b. The asset is worth less because it's deteriorating physically.
Which party at closing requires the property to be free and clear of encumbrances and requires title insurance and hazard insurance? a. The broker b. The lender c. The seller d. The title insurance rep
b. The lender
Who is ultimately responsible for ensuring that any hazardous waste produced at an apartment complex is properly disposed of? a. A HAZMAT team b. The property owner or manager c. The tenant d. The waste management division
b. The property owner or manager
Danette hasn't paid the first quarter water bill on her property that was due on April 1. She's closing with her buyer, Jason, on April 1. What type of expense is this and how will it appear on the settlement statement? a. This is an accrued expense and will appear as a buyer debit and a seller credit. b. This is an accrued expense and will appear as a seller debit and a buyer credit. c. This is a prepaid expense and will appear as a buyer debit and a seller credit. d. This is a prepaid expense and will appear as a seller debit and a buyer credit.
b. This is an accrued expense and will appear as a seller debit and a buyer credit.
Texas has its share of environmental woes. Three regions within the state have been designated as failing to meet what federal standards? a. Three regions of Texas have been designated by the EPA as failing to meet Energy Star qualifications since 2011. b. Three regions of Texas have been designated by the EPA as failing to meet the Clean Air Act standards since 2011. c. Three regions of Texas have been designated by the EPA as failing to meet the Green Living standards since 2011. d. Three regions of Texas have been designated by the EPA as failing to meet the Preservation of Wetlands standards since 2011.
b. Three regions of Texas have been designated by the EPA as failing to meet the Clean Air Act standards since 2011.
Keira's father leaves her some property in a tiny town. When she goes to see it a year or so later, she's surprised to see that a family lives in one of the property's outbuildings. All of the neighbors know that this family had been there for the past two years. This is an example of _______. a. Closed possession b. Long-term possession c. Open and notorious possession d. Regulated possession
c. Open and notorious possession
Charlie, who owns and leases out a commercial building, pays taxes, maintenance, and insurance on the building. What type of lease agreement does Charlie have with his tenants? a. Gross b. Net c. Percentage d. Triple net
c. Percentage
Parcels of land are valued at $50,000 each. However, when two of the parcels are joined, they are valued at $120,000. What economic principle is at work here? a. Anticipation b. Contribution c. Plottage d. Progression
c. Plottage
Jillian grew up visiting her grandmother, who owned five acres of forested land and a pond that the two of them swam in frequently. When Jillian's grandmother left her the property, Jillian moved in and put a fence around the forest and pond. When her neighbor went to sell his property, he discovered via survey that the pond was actually on his property. Jillian wants to claim adverse possession and keep the pond, but she's only lived there for three years. What, if anything, can she to do valid a. She can create a "color of title." b. She can file a claim of estoppel by deed. c. She can't do anything; the pond will be sold with the neighbor's property. d. She can use the principle of tacking.
d. She can use the principle of tacking.
Which organization issues the LEED certification? a. ENERGY STAR® b. The Environmental Protection Agency c. The U.S. Department of Energy d. The U.S. Green Building Council
d. The U.S. Green Building Council
Colleen and Judy purchased a dilapidated townhome in an estate sale. Due to their fix-up work and the current economy, the property value has skyrocketed. They decide to sell it to get their equity out of it. After they list it, a woman comes forward, saying she is an heir to the previous owner and lays claim to the property. Which general warranty deed covenant protects Colleen and Judy? a. The covenant against encumbrances b. The covenant of siesin c. The covenant of the right to convey d. The covenant of warranty
d. The covenant of warranty
In addition to the property address, the lease agreement start and end dates, and the monthly rent and deposit amounts, which of the following should all commercial leases contain? a. A complete list of the other tenants and their rental rates b. A copy of the tenant's credit report c. A detailed description of the property d. The purpose for which the space is being rented
d. The purpose for which the space is being rented
In a typical transaction, which of these title defects is unlikely to cause a problem for the buyer? a. A faulty survey b. An unrecorded lien c. A past error in recording title transfer d. The seller's existing mortgage
d. The seller's existing mortgage
The seller and ______ must approve a short sale. a. A broker b. A short sale specialist c. The new buyer d. The seller's lender
d. The seller's lender
What's the relationship between the title search, title insurance policy, and document recording? a. The title insurance policy schedule of exceptions will include anything that's publicly recorded. b. Title insurance policies don't cover publicly recorded events. c. Title insurance policies must be publicly recorded to be legal. d. Title representatives and attorneys who perform title searches look for documents that are publicly recorded.
d. Title representatives and attorneys who perform title searches look for documents that are publicly recorded.
You have a client who's leasing commercial space. The lease terms call for him to pay a portion of the landlord's taxes, insurance, and maintenance. What type of lease does your client have? a. Itemized lease b. Percentage lease c. Sublease d. Triple net lease
d. Triple net lease
When using the sales comparison approach to value a property, all of these are categories of adjustments except ______. a. Financing terms and cash equivalency b. Location c. Market conditions d. Types of obsolescence
d. Types of obsolescence
Which of the following is the process the lender uses to evaluate whether to make the loan? a. Application b. Appraisal c. Commitment d. Underwriting
d. Underwriting
In Texas, in a suit for possession breach of lease remedy, what is the document called that the court issues to the landlord, giving the landlord the right to repossess the property? a. Actual conviction notice b. Forcible detainer notification c. Right of repossession d. Writ of possession
d. Writ of possession
