Real Estate Final Exam (National Portion) pt.2

A sale is to close on June 23. Real estate taxes of $2,640 for the current year have NOT been paid. What is the amount of the real estate tax proration to be credited to the buyer? (Use a 30-day month for calculation.)

$168.67 (not correct)

You are estimating the value of an apartment building. The monthly scheduled gross income is $4000. The annual operating expenses are $23,000. The rate of return a typical buyer expects is 8%. If the average vacancy rate is 5%, what would be your estimate of value?

$187,500 (not correct)

The taxes for the fiscal year beginning July 1, 2002, were $932 and have been paid by the owner of the property.The property was sold and the transaction was closed on April 15, 2003. Compute the tax proration using a calendar year and prorate "to" the day of closing. Who will be credited and what amount?

$196.62 credit to the seller

According to the 1988 amendment to the Fair Housing Act of 1968, a person found guilty of violating the law can receive a civil penalty not exceeding:

$25,000 for the first offense. (not correct)

A driveway is 10 feet wide and 150 feet 6 inches long. The cost to build it is $25 per square yard. What is the total cost of the driveway?

$37,625.00 (not correct)

A home is listed for $200,000.00; it sells for 90% of the listed price, the assessment rate is 60%. If the property tax rate is 50 mills and was paid in advance, what is the proration if the sale occurs on March 1? Calculate to the Act of Sale using a Banker's year.

$4500.00 debit to seller; $4500.00 credit to buyer (not correct)

Of the following liens, which generally would be given the highest priority in a debt collection procedure?

A mortgage recorded four years ago. (not correct)

Agent Stanley has a client that plans on staying in the same home for at least 20 years and the current interest rates are at relatively low levels. What type of loan would probably be recommended?

A partially amortized loan with a 10 year term. (not correct)

All of the following are considered agents EXCEPT

A personal assistant

Which of the following is a responsibility of the Agent to the Principal according to the Laws of Agency?

A. Care B. Obedience C. Loyalty D. All of the above

Under Fair Housing, a "handicap" does not include:

A. drug use B. alcoholism C. AIDS. D. all of the above. (not correct)

Which of the following is NOT a leasehold estate?

An estate for years. (not correct)

Broker A is involved in an exclusive right to sell listing with his seller client, Seller S. After receiving the property condition disclosure form from Seller S, Mark hosts an open house to promote his new listing. At the open house a customer expresses concerns about radon levels in the area. Seller S did not indicate a radon problem on the property disclosure. What is Broker A's best course of action in this situation?

Broker A should acknowledge that he is aware of a radon problem in the area, and recommend the the customer perform an environmental inspection of the property before purchase as it is in their best interest. (not correct)

Which of the following is an example of a Principal-Agency Contract?

Buyer Representative Contract

Joint Tenancy is a form of:

Co-Ownership

You are appraising a property in which seller motivation is a significant factor. The motivation would be most important in utilizing which of the following?

Cost approach. (not correct)

A quitclaim deed provides which of the following warranties:

Covenant of further assurance. (not correct)

The relationship of trust and confidence that a broker has with a principal is called a(an):

Customer relationship. (not correct)

A sale closed on July 21. Real estate taxes of $3,420 for the current year have not been paid. What is the settlement sheet entry for the proration of the real estate taxes?

Debit seller $1,995; credit buyer $1,995 (not correct)

For consideration during the appraisal process, which of the following is the MOST likely to be used as a part of the valuation or estimation process?

Economic age. (not correct)

Which of the following grants zoning authority to municipal governments?

Eminent domain. (not correct)

An agent is trying to establish value for a residential rental home using sold rental comparables in the neighborhood. Which of the following is the most likely method used for the Income Approach to value?

Gross Rent Multiplier Method

Agent Smith showed a buyer a listing. The laws in the state require the agent to do an agency disclosure before showing a listing and showing a house to a prospective purchaser creates an agency relationship. If Agent Smith did not use an agency disclosure, and there is no written buyer agency agreement, but Agent Smith showed the listing anyway, what term would best describe the agency relationship?

Implied agency

What is the purpose of the deposit in a real estate transaction?

It is required by law. (not correct)

Joe was showing a home built before 1978. He must provide the purchaser a disclosure regarding what environmental hazard before the purchaser enters into a purchase agreement?

Lead-based paint

When acting as a dual agent, which of the following is easiest to do for both parties at the same time?

Loyalty to both parties equally. (not correct)

When discussing the concept of total square footage with your client, what is the BEST way to describe how the total square footage is measured?

Measure all square footage of included real property, including both attached and detached structures. (not correct)

Man made markers such as a steel rod or concrete post may be part of what type of legal description?

Metes and Bounds

Which of the following is most likely to be considered an intermediary in a loan transaction?

Mortgage Banker. (not correct)

The borrower under a note secured by a mortgage is known as the:

Mortgagor

If a contract is replaced by a new agreement between the parties, essentially terminating the previous agreement, it is called:

Novation

Agent Sam has a purchase agreement to buy a house from Mr. Smith for $100,000. Agent Sam and Mr. Smith agree to new terms including a price of $102,000. and sign a new agreement to replace the old one. Then Agent Sam sells the right to buy the house for $102,000. to Mr. Jones who will go to the Act of Sale and actually buy it. What are two legal concepts that have occurred?

Novation and Assignment

A joint tenant may transfer his or her interest under which of the following circumstances?

Only with the permission and approval of the other owners. (not correct)

The giver of an option is called the:

Optionor

A buyer and a seller enter into a binding agreement to sell a house. The sellers then refuse to sell the house to the buyer because they decide they want to continue living there. Which of the following principles of law will be used to sue the seller?

Partition. (not correct)

A house located next to a relatively new airport would be an example of:

Physical depreciation. (not correct)

A buyer researches the neighborhood and purchases the property with the lowest asking price among several similar properties. This is an example of valuing using the Principle of:

Plottage. (not correct)

Sam, a licensed broker who prefers to represent sellers, recently had a listing go under contract. He provided the buyer's deposit to his accountant who then proceeded to deposit the money into Sam's designated escrow account. Just before closing it was discovered that Sam's accountant had withdrawn escrow money to pay operational expenses. Which statement BEST describes this situation?

Since operational expenses are incurred before closing, escrow account money can be used to cover certain closing expenses which is an example of the term "conversion." (not correct)

Sam is a licensed agent who represents the seller of a home. Brian is a licensed agent who represents a buyer who wishes to purchase Sam's listing. After tough negotiations, the property is placed under contract and the typical purchase agreement inspection clauses are included. However, after the buyer has received the home inspection report, they inform Brian of their wish to back out of the purchase agreement. Which statement BEST describes this situation and the likely outcome?

Since the purchase agreement likely included an inspection clause for the buyer, after receiving the home inspection report the buyer has the right to rescind the contract and recover their initial deposit making the purchase agreement void.

Bank A holds a lien on a home on which Bank B already had a lien. The lenders subsequently entered into an agreement in which Bank A moved into a first lien position. This is an example of a:

Subordination agreement

You signed a lease for one year and took possession of an apartment. When the lease expired, you continued to live in the apartment without the owner's consent. Your tenancy would be considered to be a(n)

Tenancy at sufferance

In the practice of property management, which federal law specifically defines the amenities and other necessities which must be made available to handicapped persons for covered properties?

The Americans with Disabilities Act (ADA)

Under financed transactions covered by RESPA, what is the settlement statement or form called which is distributed to the consumer?

The HUD-1 Settlement Form. (not correct)

A Seller confides with their agent in a conversation that he is willing to take less for the property under certain conditions. Considering this information, what is the agent's best option moving forward?

The agent should inform any potential buyers that the seller is desperate and will likely accept a low offer. (not correct)

You have a Listing on a piece of property and you get a ready, willing and able purchaser to agree to a contract with the seller. Before the act of sale, the buyer and seller mutually agree to rescind the contract. Under these conditions, which of the following is true?

The agent will still receive the commission, but it will be paid by the buyer. (not correct)

If a building that is leased with 7 months remaining to the lease term is transferred to an heir because of the landlord's death, what is the effect on the lease?

The lease terms are binding, but the tenant would have to give the new landlord a new deposit and get the original deposit back from the former landlord's estate. (not correct)

A property is sold under a deed restriction (CC&R) that states the property may not be used as a bakery. The property is later converted to a bakery. Under these conditions which of the following is true?

The property will be the subject of an Eminent Domain Lawsuit. (not correct)

All of the following are considered agents EXCEPT:

a personal assistant working for a salesperson.

To be considered an independent contractor by the IRS:

a written salesperson agreement is required.

An option, prior to being exercised, is an example of:

an executory contract. (not correct)

Real Estate as an investment has many advantages. One of the disadvantages most commonly found is

appreciation (not correct)

A real estate development corporation purchased land for a condominium project. The corporation most likely took title to the land

as a joint tenant. (not correct)

Intentional acts of discrimination are called

disparate treatment

When new land is acquired as water recedes it is called:

erosion. (not correct)

An oral offer is made to a tenant and the tenant orally accepts the offer to rent property. Which of the following best describes this transaction?

express contract

Mold disclosures are required:

for all clients.

A licensee sees a water stain on the second floor ceiling of a house he is about to list. What is the licensee required by law to do?

hire an expert at his cost to see if the stain is a latent defect. (not correct)

A salesperson received a sales deposit valued at $2,000. According to typical state rules regarding customer funds, the salesperson should:

hold the payment until the buyer has received a financing commitment. (not correct)

The exemption regarding housing for older persons applies to:

housing occupied solely by those 62 or older.

If the signature on a deed is acknowledged:

it is legal evidence that the signature is voluntary and genuine.

One of the best methods for an agent to use to avoid a discrimination lawsuit is to

keep detailed records of people you worked with and what properties they were shown

Defects that a seller is required by law to correct include:

lead-based paint. (not correct)

Brokers get together and divide their market areas by region. This is:

legal if you are in the same Board of Real Estate Agents. (not correct)

Any knowledge the agent has pertaining to coming changes in school district boundaries would:

not be considered a material fact if it has not yet gone into effect. (not correct)

Agent Robinson has a seller that admits he is HIV positive. When listing the property, Agent Robinson should:

not disclose this information. Disclosure is illegal and not considered a material fact regarding the house.

Agent Branson wrote a new agreement between the buyer and seller because they both decided to agree to seller financing instead of the buyer getting a conventional mortgage. The new agreement cancels the original agreement by a legal process called:

nullity. (not correct)

In a Fair Housing Complaint, an agent may be guilty of a violation if:

only if the intent was to discriminate. (not correct)

An agent lists a property for sale under an Exclusive Right to Sell listing. The agent finds a buyer who makes an offer that is accepted by seller. The agent gets the commission:

only if there is an act of sale. (not correct)

Which of the following is most likely used in the cost approach?

original cost of building or improvement. (not correct)

Recording a document in the public record legally makes everyone responsible to know what is in the public record and therefore the document is valid and enforceable against other parties. This concept is called:

public notice. (not correct)

Which of the following is most likely to be a factor used in a Competitive Market Analysis?

purchase price of subject property. (not correct)

An special assessment is confirmed after the agent got the listing. The assessment is to be paid in 5 equal installments including interest as researched by the agent. The agent is:

required to inform the buyer that there will be a special assessment lien at the transfer.

The Housing and Community Development Act, passed in 1974, provides that it is unlawful to discriminate on the basis of:

sexual orientation. (not correct)

An agent is told by the seller that the taxes are $1500 per year. The agent is asked by the buyer how much the taxes are on the property. The agent should

tell the buyer they are $1500. (not correct)

Familial status and handicap were added as protected classes in Fair Housing by:

the Fair Housing Amendments Act.

The Principal of Substitution is most directly illustrated in the ______________________ to value by valuing a subject by comparing it to recently sold equivalent properties and the price they sold for.

the Sales Comparison Approach

Regulation Z of the Truth in Lending Act requires that if any of the terms of a loan (trigger terms) are advertised, then the ad must include details of all of the terms. These required terms include:

the cash price, required down payment, payment amount(s), APR, total of all payments

A broker has listed a home for sale. The broker will earn a commission:

when a "ready, willing and able buyer" signs an offer to purchase that meets the terms of the listing contract or terms acceptable to the seller

John owns of a piece of property and wants to build a new structure within 15 feet of his property line, however local law requires a 20 foot setback for any improvements. He should apply to the local government for a:

zoning change. (not correct)