REAL ESTATE TEST

Licensee Helen is showing property listed by another firm. Helen's buyer asks her to prepare an offer $7,500 below the listed price but tells Helen that he is willing to pay the full price, if necessary. The seller accepts the lower offer as presented. Which of the following statements is true in this situation?

Helen acted properly

What are discount points?

Loan points paid in return for a lower interest rate

The avoidance of conflicts of interest would be a key part of which of the following duties of an agent to a client?

Loyalty

An appraiser who is appraising a single family residence would most likely place the greatest emphasis on which approach to appraisal?

Market approach (CMA)

The requirement that funds be held in an escrow does not apply to which of the following?

A commission received from an out-of-state broker

An appraiser would be likely to place the greatest emphasis on the cost approach to appraisal when appraising:

A library

What is a blanket mortgage?

A loan secured by more than one parcel of land

What is the difference between a novation of a contract and an assignment of a contract:

A novation replaces an old contract with a new one while an assignment replaces one party to the contract with another

Necessity

Aasement you set if land locked (landlocked parcels) ??

Transfer or conveyance of title

Alienation

Time

All owners got title at same time

Possession

All owners may possess entire property

Title

All owners named in same deed

General partnership

All partners have unlimited liability

Voidable contracts

Appear valid of their face, but could be voided by one of the parties ex: contract signed under duress(gun to head) or signed by minor

A type of easement that runs with the land

Appurtenant easement

A person who has his or her broker's license but is acting in the capacity of a salesperson for another broker

Associate broker

Mechanic's liens

Available to general & subcontractors ???

Broker Bob represents both the seller and the buyer as agent in the same transaction. Which of the following statements is correct?

This arrangement is only legal with the informed consent and written permission of both the buyer and the seller (Dual agency)

Licensee Larry has a listing on a seller's home. He shows the home to Patti Prospect who is looking to purchase a home. Licensee Larry has not inquired about the condition of the roof with the seller. Patti Prospect asks about the condition of the roof and Licensee Larry says that he is sure the roof is fine. After the purchase closes the first rain storm hits and it is apparent that the roof leaks. Which of the following statements best describes this scenario?

This is misrepresentation and the contract is voidable

Alienation

To transfer, sell, or convey

A licensed salesperson can be licensed with more than one Virginia broker under which of the following circumstances?

Under no circumstances

A contract to hire someone to commit an illegal act would be:

Void

Salesperson H violated the license law. When H's broker found out about it he decided it was too late to do anything. Could the broker's license be suspended?

Yes, because he did not take action to correct the violation

Licensee Laura has a listing on Seller Sally's house. Seller Sally's has accepted an offer for $200,000 but the sale has not yet closed. Licensee Larry then presents an offer on the house to Licensee Laura for $175,000. Must Licensee Laura present this offer to Seller Sally?

Yes, but Larry must be informed that an offer has already been accepted and Larry's offer will be considered a "back-up" offer

Licensee Laura has a listing on Seller Sara's house. The listing expires in 5 days Before the listing expires Laura shows the house to Buyer Billy. Seller Sara pulls Billy aside and says that If he waits until the listing expires he can make an offer for 3% less than the listing price and Sara will accept it. If Buyer Billy makes the offer 10 days later, is Licensee Laura entitles to a commission if Sara accepts the offer?

Yes, but only if the listing includes protective period clause

Cloud on Title

a problem with the title ex: lien or forged deed

Appurtenances

a right, privilege, or improvement that "runs with the land"

Freehold Estates

always deals with ownership, not limited to specific timeframe (ex: condos) -fee simple -life estate

Mistake

an error or misunderstanding; honest mistake

Alienation

any type of transfer of ownership of real property; to sell, transfer, or convey

Joint tenancy

automatic right of ??? cannot be willed

Antitrust Laws Sherman Antitrust Act

designed to prohibit monopoly

Prior appropriation

first in time - first in right

Power-of-Sale clause

gives trustee in states that use deeds of trust the right to sell the property in the event of default

Puffing

harmless statement of exaggeration that a reasonable person would be expected to recognize subjective opinion or exaggeration not a violation; can't void contract ex: "this house has the most beautiful view"

A landlord tells the broker he only wants to rent to female college students. If the broker does as the client asks

he is guilty of discrimination

Fee Simple (Absolute)

highest and most common form of ownership

Acceleration clause

if borrower fails to keep the covenants of the mortgage or trust deed, the entire loan balance is due and payable upon demand; in case of default

Indemnification

if given false information, they are liable

Escrow agent

impartial agent of both parties

Littoral rights

lake or ocean

Defeasance clause

lenders must release lien when the debt has been paid off

Subordination clause

lenders waive priority to each other in refinancing; junior mortgage will remain subordinate to the first mortgage

Prepayment clause

may require that the mortgager pay a penalty if the loan is paid off prior to the original maturity date; charged for early payoff

Commingling

mixing escrow money with private or business money it is illegal!!

Interest

must have equal ownership shares

Dual Agency

one agent represents both parties in one transaction must have written, informed consent -or illegal!!

Novation

paperwork new contract replaces an old one ex: mortgage refinance

Escheat

power of gov't to take property when owner dies w/out a will -- intestate

Riparian rights

property bordering rivers or streams

The purpose of the Virginia Fair Housing laws is to

protect the welfare of the public

Escalator clause

provides loan payments to be adjusted either up or down; increased interest rate in event of default & late payments

Equitable title

right to legal title upon completion of a contract

Constructive Notice

should have known matter of public record (anybody can find out) ex: recorded deed

Severalty

sole ownership (own all by yourself)

Bait and Switch

telling them something good to bring them in, then tell them something different once they get there ex: "houses from $200k", but actually $300k"

Attorney-in-fact

the person with the power of attorney

Partial Release clause

used by developers to provide for the release of each parcel as the principal amount of the loan is paid back; releases the lien on each property as it is sold (blanket mortgage)

Assignment

when one party replaces another party

Estate at sufferance

when the tenant stays over without permission "a holdover tenant" ex: lease expired, but can't get tenant out

Estate at will

with permission, no written lease, no specified time period

The duty of an agent to follow the instructions of the client applies to each of the following instructions, EXCEPT

"Do not reveal to any buyers that my roof leaks"

G.I. Joe retires from the Army and gets his certificate of eligibility for a VA loan. Joe makes an offer to purchase a home for $200,000. The CRV gives an indicated value of $190,000. If the seller will not reduce the price and Joe wants to buy the house anyway, what down payment will ve required from Joe?

$10,000

Broker Smith died and the board appointed Smith's unlicensed brother tot conclude the business of the firm. Smith's brother has

180 days

Larissa purchased a home for $200,000 and took out a mortgage loan with a 90% loan to value ratio. If she was charged 2 loan points when the loan was originated, how much money did she pay in points?

200,000 x .90 = $180,000 $180,000 x .02 = $3,600 $3,600

A lender receives a mortgage loan application form a consumer for the purchase of a single family residence. How soon must the lender provide the applicant with Loan Estimate of settlement costs?

3 business days

When a real estate license has expired how long does the licensee have to reinstate the license without monetary penalty?

30 days

A licensee who is actively engaged in real estate brokerage works at least

40 hours per week

A conventional loan might require private mortgage insurance if the LTV on the loan is above:

80%

Ed, a licensed salesperson, moved to a new home. What is Ed required to do?

Advise the board in writing within 30 calendar days of the change

A clause that means that the loan is not assumable is the:

Alienation clause

A licensee was out of town on personal business. When she returned on July 5th, she realized that her license had expired on May 31. What is required if the licensee wants to remain licensed?

Apply for reinstatement and pay a reinstatement fee

The process of combing smaller lots into one larger lot is known as ________ while the increase in value that results is known as ________.

Assemblage / plottage

Merging two or more properties into common ownership is known as _________, while any increase in value that results is known as _________.

Assemblage; plottage

Sam has obtained his broker's license but is not functioning in a supervisory capacity. Instead, he is acting in the capacity of a salesperson. Sam is a(n):

Associate Broker

The purpose of a city's master plan is to:

Be a guide for the future development of the city

Why do brokers feel that an exclusive right to sell listing gives the broker the best protection?

Because the brokers would be paid regardless of who finds the buyer

A lender has been accused of violating a state's usury laws. This accusation would necessarily involve:

Charging excessive interest rates

The process used to take property by the gov't when needed for a public use is known as:

Condemnation

Which of the following types of depreciation would be least likely to be curable?

Economic obsolescence

Fred owns a house and has not paid his property taxes when due. The taxing authority initiates the process of conducting the tax sale. Prior to the sale date, Fred stops the process by paying the back taxes and penalties. Fred has exercised a(n):

Equitable right of redemption

In appraisal theory the use that would generate the highest net return on investment is called the:

Highest and best use

A broker places one of her signs on property without the permission of the owner. In so doing, the broker

Is in violation of board regulations

Jane, a full-time schoolteacher, refers friends to Broker Smith when they wants to sell their house. Jane receives a referral fee from Smith.

Jane must have an active real estate license

General requirements for licensure as either salesperson or broker include which of the following?

Must be at least 18 years of age

Broker Bob takes an open listing on Seller Sara's house. Broker Bob would be entitles to a commission of the sale of the house:

Only if Broker Bob is the "procuring cause" of the sale

An attorney-in-fact is someone who has received a ________ from someone else.

Power of attorney

A savvy real estate buyer purchases the least expensive home in the most expensive neighborhood he can afford. This is done to take advantage of the appraisal principle of:

Progression

The terms of a mortgage loan would most comprehensively be listed in the:

Promissory note

Licensee Lenny shows a home to Prospect Paul. Licensee Lenny tells Prospect Paul that this house has the best view of the lake. Prospect Paul buys the house and later discovers that a neighbor down the street has a view that in Paul's opinion is a better view than his own. This is an example of:

Puffing

Which type of deed contains the least assurances from the grantor to the grantee?

Quitclaim deed

Sam sells his home and gives his accountant a power-of-attorney to close the deal for him.

Sam can do this

An apartment complex has a "no pets" policy. Mary is a blind person who applies to rent a unit, but she wants to have her certified guide dog live in the apartment with her. This request:

Should be considered a "reasonable accommodation"

Larry Licensee shows a minority prospect homes only in neighborhood which are predominately populated by minorities. Larry has engaged in:

Steering

A clause in a lease which gives future mortgages priority over the lessees' interests is called a(n):

Subordination clause

After a broker has taken a listing the seller explains that the house is not to be sold to a minority. What should the broker do?

Tell the seller that this is against the law

Which clause in a mortgage loan would allow the lender to foreclose to recover the entire remaining loan balance if the borrower defaults on the loan?

The acceleration clause

Appraisal fees are set by:

The appraiser's estimate of the time and effort involved in the assignment

What is the defining feature of a net listing?

The broker's commission is any sale price in excess of a stated number

Title to the property passes when:

The deed is delivered and accepted

A licensed real estate salesperson can receive compensation for real estate activities from:

The employing broker only

When a broker places a "For-Sale" sign on property, what must appear on the sign?

The firm's license name

Which of the following statements about mortgage loan is correct?

The mortgagor makes monthly loan payments to the mortgagee

Which of the following is true regarding a branch office of a Virginia real estate firm?

The office must have a separate license

A buyer makes an offer to purchase a home for $95,000. The seller makes a counteroffer of $100,000. Which of the following statements is true?

The seller is not the offeror

A broker deposits a down payment into his personal account. He is told that it will be his commission after closing.

This is commingling

Which of the following statements is true regarding defaulting borrower's right to redeem the property after the foreclosure sale for a period of time by repaying the lender the full amount due on the loan?

This is known as a statutory redemption right and applies to judicial foreclosures only

The purpose of the Real Estate Settlement Procedures Act is to:

To allow consumers to shop for settlement services

Which of the following would be included in the duties of an agent to a customer?

To disclose material adverse facts about the property

A lender adds some additional charges to the monthly payment for the impound or escrow account. The purpose of this charge is to:

To ensure payment of property taxes and insurance

The primary function of the FHA is to:

To insure lenders against default by a borrower

A listing broker earns his or her commission:

When producing ready, willing and able buyer on terms acceptable to the seller

What is the primary difference between a mortgage banker and a mortgage broker?

Whether they make loans or act as intermediaries between borrowers and lenders

What is the primary difference between a gross lease and a net lease?

Who pays the property taxes, insurance and maintenance costs

Sally inherits a lot which has no direct access to a nearby street. Is she entitled to obtain an access easement?

Yes, as a matter of law (Easement by necessity)

A housing complex may advertise itself as being for Senior Citizens if:

a. 100% of residents are at least 62 years old b. 80% of residents are at least 55 years old c. Either of the above <------ d. None of the above

A broker receives an earnest money deposit to support a valid contract. The seller defaults and the transaction does not close. The broker must hold the escrow funds until

all principles to the contract agree in writing about the intended distribution

One of the responsibilities of the board is to

approve schools for teaching

When broker is representing bother buyer and seller in a transaction without the full knowledge and consent of all parties to the transaction, it is

grounds for suspension or revocation of the broker's license -this is called undisclosed dual agency

If a broker decides to work under the supervision of another broker

he is an associate broker

A licensed real estate salesperson may receive money or there valuable consideration for services rendered in connection with property management from

his employing broker

Salesperson Smith signs a listing agreement that does not have a definite termination date. This action is

improper dealing

When the board receives a complaint against a licensee they

investigate the complaint

A real estate agent asks his unlicensed neighbor to show a property for him and says he will give him part of the commission of the property sells. This

may result in the agent's license being revoked

Broker Bob is the principal broker for Bob's properties, Inc. Bob also wants to work as an associate broker for ABC Realty. To do this he

must apply for a concurrent license

When the board issues an active license, the license

must be made available to the public at the broker's main place of business

The purpose of the Virginia real estate license law and board related rules and regulations is to

protect the public interest

A broker may remove money form his escrow account in all of the following circumstances, EXCEPT

rescission of the contract by the seller

Jane decides to leave ABC Realty for Professional Properties, Inc. Her broker needs to:

return Jane's signed and dated license to the board by certified mail

A broker's "For sale" sign must include

the firm's licensed name

A broker decides to sell his own home himself.

He can do this because he is the owner

Misrepresentation

(unintentional) a false statement or concealment of material fact; voidable person giving misrepresentation may be liable for any ill effects if they should have known better

Termination of Agency

---mutual agreement

Police Power

---the power to keep things in order -power of gov't to regulate use of property ex: zoning and billing codes

Sherman Antitrust Act Prohibits:

--Price fixing Boycotts Market allocation (agreement to divide up market areas) Tie-in arrangements

Priority of liens

-Based on the date of recording -Shows the sequence in which liens are paid

General Warranty Deed

-Most promises Most common Greatest protection to grantee "I guarantee marketable title"

Compensation Issues

-Negotiable, no minimums or maximums -Buyers agent-usually but not always paid by seller

Servient Tenement (estate)

-giving it to them, serving Encumbered(burdened) by the easement

Cooperative Ownership

-in a rental situation Entire complex is owned by corporation Owners get a proprietary lease and pay rent

Eminent Domain

-power of gov't to take property when needed for public use -used by federal, state, local gov't, plus railroads and utilities -must pay "just compensation" ---condemnation is process used to take property

Taxation

-power of state and local gov't to levy property taxes -if not paid, property may be sold -becomes a lien when assessed, not when due

Dominant Tenement (estate)

-using it Benefits from the easement

4 Rights of Government

1. Eminent Domain 2. Police Power 3. Taxation 4. Escheat "PETE"

Escrow accounts

1. escrow accounts are for holding other people's money 2. escrow funds must be deposited within 5 banking days 3. escrow accounts for lenders is for holding pre-paid taxes and insurance

1 acre

43,560 square feet "7 11"

REIT

"Real Estate Investment Trust" A big mutual fund for real estate investment

Alienation clause

"due-on-sale clause" provides that upon alienation of the property, by the mortgager, the mortgagee may demand the balance of the debt be paid first

Annual Crops

"emblements"

Joint tenancy Four Unities:

(TTIP) Time Title Interest Possession

1 mile

5,280 feet

The state of Virginia mandates the number of people on the Real Estate Board. Currently the board consists of

9 members; 7 licenses and 2 citizens

Which of the following statements is true regarding time limits for complaints regarding alleged violations of the Fair Housing Act?

The time limit is 1 year for complaints to HUD and 2 years for federal lawsuits

The lot that is burdened by an easement

Servient tenement

The comparison approach to appraisal is based on the principle of:

Substitution

Variance

(after zoning) Permission for building that would otherwise violate zoning ordinance

Nonconforming(Pre-existing) use

(before zoning) Use is "grandfathered"

Estate for years

(could be 5 months) any definite period; no notice required

Periodic tenancy

(estate from year to year) month-to-month lease, usually one rental period notice

Fraud

(intentional misrepresentation) any form of deceit by which one party intentionally attempts to gain unfair advantage over another. May result in damages recovered by the court & may cause contract to be voidable Can sue for damages; criminal charges possible

Covenants

(promises) General warranty deeds

Tenants-in-common

(timeshares) -Can be willed; most common form of common ownership -Can have unequal ownership interests think of "T" & "C" two children.. so can be willed

Laura licensee tells people that the ethnic characteristics of the neighborhood are changing and they should consider selling their homes because of this. Laura has engaged in:

Blockbustering

A property was sold by Bob, a licensed associate broker. Several weeks after closing, the seller send Bob $500 and a thank you note for a job well done. Bob accepted the check because he had worked hard on the sale and felt the bonus was deserved. In the situation described, which of the following is true?

Bob has violated board regulations

You ask a friend how much he thinks his house is worth. He says "about $175,000." When you ask why he believes that, the friend says, "Because my neighbor's house just sold for that much." Your friend has perhaps unwittingly relied on the appraisal principle of:

Substitution

A burden or problem with title to a property

Cloud on title

Quitclaim Deed

Common Grantor "quits" any claim of ownership Often used between joint owners or to clear cloud on title "If I own it - it's yours" Know what it's used for!! ??

Adverse possession

Commonly called Squatter's rights

Counteroffer

Terminates original offer; offeree becomes offeror

A 12 year old child prodigy has started an Internet business that has become very profitable. He decides to surprise his parents and buy them a house. The seller is an adult. This contract would be enforceable against:

The seller only

Voluntary alienation

Deed of conveyance, will or dedication

The lot that benefits from an easement

Dominant tenement

Condemnation

Easement by eminent domain

The power of gov't to take property when needed for public use

Eminent domain

A contractual right to obtain legal title

Equitable title

Leasehold (Less-than-freehold) Estates

Estate for years Periodic tenancy Estate at will Estate at sufferance

Bob owns a home. He has a son who is financially irresponsible and Bob is concerned that the son would sell the house and end up leaving nothing to Bob's granddaughter. Bob gives a life estate in the home to his son. Upon the death of the son, the property will go to the granddaughter. The granddaughter holds what type of estate while her father (Bob's son) is still alive?

Estate in remainder

When is a real estate license renewed?

Every two years in the month issued

In what type of listing would the listing broker be paid the commission if there listing broker or any other broker was the procuring cause, but not if the seller found the buyer personally?

Exclusive agency listing

A home sells for less than other nearby similar homes because it has a bad floor plan. This would be an example of

Functional obsolescence

Limited partnership

Have limited liability

Trusts

Held by trustee for the beneficiary

Environmental Concerns Lead-based paint

Houses built before 1978 -Called target housing b/c could have lead in paint -If built before then, must have extra disclosures to give buyers -Highly dangerous if peeling/chipping

Involuntary alienation

Interstate succession, adverse possession, unintentional dedication, title by accession, estoppel, foreclosure, eminent domain or escheat

Void contracts

Lack one or more of the essential elements

Tenancy by the entireties

Like joint tenancy, but for married couples

Rights to water from a lake, sea or ocean

Littoral rights

A city's document that determines future growth

Master plan

A lien related to construction costs

Mechanic's lien

Land Descriptions (Legal Descriptions!!) Metes and Bounds

Metes - length measurements Bounds - monuments/markers -most often used in rural areas -It is a good way to describe an irregularly shaped parcel

Termination of Easements

Necessity no longer exists ---Dominant and servient tenements are merged Holder of dominant estate releases the servient estate Dominate estate is abandoned Servient estate is destroyed Terminated by court order

Which of these advertisements is acceptable under Virginia fair housing laws?

Open Hills Development - Seniors Only

Prescription

Open, notorious, and hostile use for some years ex: hunters

Condominiums

Owned by someone that pays their own air lots

Life Estate

Ownership limited to the lifetime of a person KNOW CHARTS pg. 33-34

Master Plan

Plan or guide for future growth/development of city/area guide for future development

The increase in value that results from assembling small parcels into one larger one

Plottage

Power of gov't to regulate use of property

Police power

Water rights based on "first in time, first in right"

Prior appropriation

Sam is a licensed real estate salesperson and is working with a buyer in the purchase of a single-family residence. Sam recommends ACME Title to the buyer for the purchase of title insurance. ACME pays a referral fee to Sam. This violates which of the following laws?

Real Estate Settlement Procedures Act (RESPA) -kickback act

Licensee Larry held a real estate license for many years and has completed many residential transactions but never any commercial transactions. His neighbor owns a small strip mall and asks Licensee Larry to sell the property. Licensee Larry should be especially careful to consider which of the following duties to the client?

Reasonable care and due diligence

A type of modern legal description which describes the property in relation to the intersection of a baseline and meridian

Rectangular governance survey

BigTown Bank does not make loans in neighborhoods which are predominantly populated by minorities. BigTown Bank has engaged in:

Redlining

Rights to water from a flowing source

Riparian rights

Water rights:

Riparian rights Littoral rights Prior appropriation

Economic Characteristics:

Scarcity Situs/location Permanency (permanency of investment) Assemblage (may result in plottage)