Initial Assessment + Prep

Gunther's gross monthly income is $3,800, and he has no monthly debt payments. The lender's qualifying ratios are 28% for the housing ratio and 36% for the total DTI ratio. What's the maximum housing payment Gunther can afford?

$1,064 - Calculate the debt and housing ratios that buyers need to meet both lending ratios. While Gunther qualifies for a payment of $1,368 under the total DTI, he only qualifies for $1,064 under the housing ratio ($3,800 x 28%).

Phoebe's gross monthly income is $4,200, and she has $360 in monthly non-housing debt payments. The lender's qualifying ratios are 28% for the housing ratio and 36% for the total DTI ratio. What's the maximum housing payment she can afford?

$1,152 - The maximum house payment is the lesser of the amounts calculated using both ratios. DTI: $4,200 x .36 = $1,512. $1,512 - $360 = $1,152. Housing ratio: $4,200 x .28 = $1,176. Phoebe's maximum payment is $1,152.

A seller received $800,000 for a 5.5 acre rectangular parcel alongside a road frontage. The property is 400' deep. What was the price per front foot of the property?

$1,335.67 - First, find the square footage (5.5 x 43,560' = 239,580). You're given one dimension of the rectangle, so find the other: 239,580 ÷ 400' = 598.95 front feet. To find the price per front foot, $800,000 ÷ 598.95' = $1,335.67 per front foot.

Breanna signed a purchase offer stating she'd buy Kathy's home for $150,000. Kathy replied, "No way," but offered to sell it to her for $200,000. Breanna agreed to these terms, and they added their signatures. Which of the following statements is correct?

Breanna accepted the offer Kathy made. - Kathy's offer to sell the home was a counter-offer, and when Breanna agreed to the terms of the counter, it constituted acceptance.

Jeanette is purchasing a newly built Maui beachfront home. Which of these statements is most likely true?

Jeanette's property is at least 40 feet from the shoreline. - The 20-foot setback is in place in only limited instances. Since Jeanette's home is a new build, it's most likely subject to the current 40-foot shoreline setback regulation.

Sunshine Surveyors Inc. created a lot and block survey for a new residential development, Happy Acres. The first thing they did when they surveyed the new neighborhood was to reference what type of description first?

Metes and bounds description - The lot and block system always begins with one of two types of land descriptions as a reference point: either a metes and bounds description or an RGSS (rectangular government survey system) description.

Kendra made an offer on Sam's property. Sam rejected Kendra's offer, but made a counter-offer. Kendra is now considering the counter. What is Kendra in this scenario?

Offeree - The seller considering a buyer's offer is an offeree, but if that seller makes a counter-offer, then the seller becomes the offeror and the buyer becomes an offeree.

The Davises pay the annual property tax of $1,825 on their lake house every January. On a whim, they sell the lake house to the Bennets to buy a Winnebago and travel the country. Closing is set for July 31, and the buyers own the day of closing (pay prorated expenses through the day of closing). Using the calendar year proration method (assume that it's not a Leap year), how much of the pre-paid property tax was the Davises' responsibility?

$1,055 - The daily tax rate is $5 ($1,825 ÷ 365). The Davises owe taxes for January 1 through July 31 (212 days), minus the closing day (paid by buyers). Therefore, the Davises owe for 211 days, which is $1,055 ($5 x 211).

An appraiser used the cost approach to estimate a property's value at $220,000. The site value was $50,000 and the total depreciation estimate was $4,000. What was the estimated cost of improvements?

$174,000 - To estimate value, an appraiser adds the site value to the estimated cost to replace improvements then subtracts the estimated depreciation. So $50,000 + cost of improvements ‒ $4,000 = $220,000. Cost of improvements = $220,000 ‒ $50,000 + $4,000.

Giant Industries has a $674,232 gross operating income, operating expenses of $329,129, and other expenses totaling $38,719. What is the net operating income?

$345,103 - The formula for finding net operating income is: gross income - operating expenses = net operating income. So, $674,232 - $329,129 = $345,103. Other expenses like loan interest and debt repayment aren't included in this calculation.

Hamish makes an offer on a loft in the city for $424,900 with a 10% earnest money deposit. The seller agrees, so Hamish secures an 80% loan. He needs to set aside funds for the mortgage tax as part of his closing costs. The rate in his area is $0.115 per $100. Calculate the mortgage tax Hamish will pay.

$390.91 - Calculate the loan amount first: $424,900 x .80 = $339,920. Then calculate the tax: $339,920 x 0.00115 = $390.91.

The Walton family got a great deal on their new home. They bought it for $101,295, and it appraised at $187,000. Using an assessment ratio of 25%, what is the assessed value of their new home?

$46,750 - Assessed value is based on the appraised value of the home. So, in this case, $187,000 X 0.25 = $46,750.

Any interest rate change of more than 1/8 of a percent requires a new Closing Disclosure, triggering a new three-day waiting period.

$667.00 - Assessed value + improvements = total value of $2,000,000. Multiply 2 million by 4 (mills/millage rate) then divide by 1000 = $8,000 in annual taxes . Divide $8,000 by 12 to give you the monthly tax amount ($8,000 ÷ 12 = $667.00).

Alison and Brent are financing their house purchase of $232,500 with an FHA loan. Their credit score qualifies them for the minimum down payment. What do they need to put down?

$8,137.50 - The minimum down payment for an FHA loan is 3.5%, so Alison and Brent's down payment needs to be $8,137.50 ($232,500 x 0.035).

Buyer Maria and seller Doug are closing on June 1. Maria's mortgage loan is $927.86, and $871.86 will go to interest in the first month. Maria will have to pre-pay interest for June using the 360-day proration method. What will her prepaid interest cost be at closing?

$842.74 - Calculate the daily interest rate for 30 days ($871.86 ÷ 30 = $29.06). Because Doug owns the closing day, Maria will pre-pay interest for 29 days, June 2 - 30, so $842.74 ($29.06 x 29).

Which of these statements accurately represents one of the required elements in a deed?

. The deed language includes an act of conveyance and may include a habendum clause. - The grantor is the seller; the grantee is the buyer. The grantor must sign the deed, be of legal capacity, and be positively identified. The deed must include an act of conveyance and may include a habendum clause.

Which of these guarantees is offered by a general warranty deed but NOT a special warranty deed?

. The seller will defend against all claims against the property's title. - Special warranty deeds are guaranteed to be free from any encumbrances brought about during the grantor's ownership of the property, but not before that. So if someone else comes forward with a claim outside of the time the grantor owned the property, the grantee is on his or her own to fight it.

John and Amy purchased a builder's home warranty when they bought their home. They have found structural damage that could be a detriment to their home. On average, how many years does a home warranty cover structural damage?

10 years - Structural damage can take a while to appear, so homeowners will want to file a claim if it's a decade or less.

The Gatlins' lender tells them they can afford a monthly payment of $1,830 on their new home loan. What interest rate are the Gatlins getting if this is an interest-only loan with a principal balance of $349,000?

6.29% - Annual payment ÷ loan balance = interest rate. $1,830 x 12 to get the annual payment of $21,960. Then divide the annual payment by the loan amount: $21, 960 ÷ $349,000 = .0629, or 6.29%.

Jared has a 70/30 split with his brokerage firm, and his firm has a 50/50 split with cooperating brokerages. Last month, he was paid $12,239.50 in commissions from his home sales, which totaled $538,000. What is the brokerage's commission rate?

6.5% - Jared was paid $12,239.50, which is 70% of the amount paid to his broker as commission. That makes his firm's commission $12,239.50 ÷ .70 = $17,485. Multiply that by two for the total commission the firm grossed, since it's shared 50/50 with a cooperating brokerage (the brokerage that brings the buyer to the sale), giving you $34,970. Then divide by the total sales amount for the brokerage's commission rate: $34,970 ÷ $538,000 = 0.065, or 6.5%.

How many acres are in a parcel described as, "The S 1/2 NW 1/4 Section 3, Township 4N, Range 2W of the 6th PM"?

80 - This legal description defines half of a quarter section. A quarter section is 160 acres. Half of that is 80 acres. Alternatively, multiply the two fractions' denominators (2 × 4) and divide into 640 (640 ÷ 8 = 80).

Jane is purchasing a property for $310,000 and plans to finance $250,000. What is the loan-to-value ratio? (Round to the nearest percentage.)

81% - To get the answer, divide $250,000 by $310,000. Multiply the result (0.81) by 100 and add a % sign.

Lynette purchased a property under a bargain and sale deed. Which statement best describes the covenants Lynette's deed provides?

A bargain and sale deed may come with or without covenants of warranty. - A bargain and sale deed may come with or without covenants of warranty. Generally, however, it's known for not containing warranties.

When real estate licensee Brian discovered that Arnold was using a 'Choose Your Neighbor' letter to market a property without also listing the property in the MLS, in the local paper, or even putting a for sale sign in the yard, what charge could he bring against Arnold to the National Association of REALTORS®?

A charge of agreeing to discriminate by limiting access to the property - REALTOR® Brian could charge Arnold with violating Article 10 of the Code of Ethics, which prohibits REALTORS® from agreeing to discriminate against people belonging to a protected class.

Which of these statements best represents what happens after a federal fair housing complaint is made?

A fair housing specialist will review the complaint. - After an initial complaint is made, a fair housing specialist will review it to determine if a violation has occurred. If there's a potential violation, the specialist will help the consumer file an official complaint.

Which of the following statements is true about zoning classifications?

A home business would be considered an accessory use. - An accessory use is one that's subordinate but related to the main use of the property.

Lamar closes on his new home next week. It's a 37-year-old split level, so his agent asked if he's interested in purchasing a home warranty. "Why would I need a warranty?" he wondered. "Didn't the home inspection identify all of the issues?" What's the agent's best response to Lamar's question?

A home warranty covers things the inspection didn't address, like appliances, as well as structural issues that occur within the first year. - A home warranty often covers items that weren't inspected. Also, even the systems that WERE inspected are subject to problems or failure.

Jerrica is set to close on the property she's buying on Friday. Because of other delays in the closing date, Jerrica's interest rate as of the day of closing will increase by 1/4 of a percent. What impact does this have on the closing?

A new Closing Disclosure must be issued at least three days before the closing date. - Any interest rate change of more than 1/8 of a percent requires a new Closing Disclosure, triggering a new three-day waiting period.

Your seller clients have received an offer, and the buyer has included a pre-approval letter. Your clients are a little confused and think a pre-qualification letter is necessary. What's true regarding pre-approval and pre-qualification?

A pre-approval letter comes with lender verification of buyer-provided data and provides more assurance to the seller. - A pre-approval letter provides more assurance of the buyer's ability to financing than a pre-qualification letter does

Which of the following is a way in which property taxes could impact your clients?

A sale in the area may prompt a reassessment, impacting new buyers. - A sale can prompt a reassessment, resulting in higher property taxes.

Kona and Kai signed a contract to purchase a use time share on Hawaii'i Island. Which of these items must the sales contract include?

A seven-day rescission period - Buyers have seven days to cancel. The seven days begin on the date the purchase contract is signed or the disclosure information is received, whichever is later.

Which of the following is an example of constructive eviction?

A tenant moves out of the apartment after repeated unsuccessful requests to the landlord to repair the broken water heater. - Constructive eviction occurs if a tenant vacates the property because the landlord has failed to uphold the warranty of habitability.

Kenneth enters a contract to sell his home to Valerie, who puts down a $5,000 earnest money deposit. At the last minute, Valerie backs out of the deal. Kenneth keeps the earnest deposit. This is an example of ______.

Accepting liquidated damages - All of the answer options are actual remedies to breach of contract, but in this scenario, Kenneth's keeping the earnest money, which is known as accepting liquidated damages.

Alluvion describes new deposits of land that are the result of what natural process?

Accretion - Alluvion, or new deposits of land, is the result of the process of accretion.

The MARIA acronym helps to identify the five tests of a fixture. In MARIA, what do the two As stand for?

Adaptability of item to land's use and agreement of the parties - The two As in MARIA stand for adaptability of the item to the land's use and agreement of the parties.

Li Meng purchased a property that had been owned by the same man for more than 40 years. The title search was clean. In the spring, she started seeing traffic on the path to her dock and discovered that the previous owner had always allowed the locals to use his path to get to the lake. What covenant may have been breached?

Against encumbrances - The previous property owner failed to disclose to Li Meng that there was an easement (which is an encumbrance) across the property.

A former client has filed a formal complaint against Ajit, claiming he failed to properly disclose a material fact that the seller didn't disclose. Which of these statements about Ajit's liability is true?

Ajit may be liable if he operates in a state that requires licensees to make a reasonable effort to discover adverse material facts. - Licensees must follow state laws regarding disclosure of all material facts, but typically there's no distinction between disclosure of material facts or adverse material facts. Ajit may be liable even if the seller didn't disclose the fact, depending on state law.

Camille, a buyer, wants to change the price already agreed to in a sales contract. She should use a(n) ______.

Amendment - An amendment changes existing contract terms. Once signed by both parties, it becomes part of the contract, with the same legal weight as the original contract.

Hawaii state law stipulates how cooperative bylaws can be amended. Which of these statements is true?

Amendment requires a two-thirds affirmative shareholder vote. - HRS 421-I requires a two-thirds affirmative shareholder vote in order to amend the cooperative bylaws.

How might the lengthy purchase process for a short sale or foreclosure impact a buyer's financing?

An existing interest rate lock may expire before the transaction is ready to close. - Interest rate locks are only viable for a short period of time. The transaction time to close a distressed property sale may be longer than the interest rate lock period, forcing the buyer to lock the rate again and potentially increase loan fees.

The economic principle known as ______ means that the value of property today is impacted by the current value of the total expected future benefits.

Anticipation - Anticipation says that the value of property today is impacted by the current value of the total anticipated future benefits.

What does the FTC consider to be a deceptive ad?

Any ad likely to mislead consumers acting reasonably under the circumstances - Any ad likely to mislead consumers acting reasonably under the circumstances is considered a deceptive ad, according to the FTC's Deception Policy Statement.

The Federal Trade Commission is concerned with all ad claims but is most likely to be most concerned with

Any ad that makes a health or safety claim or any claim that's difficult for the consumer to evaluate - The FTC is concerned with all ad claims, but it's most concerned by any ad that makes a health or safety claim or any claim that is difficult for the consumer to evaluate.

When an agreement of sale is used to finance the sale, the seller holds legal title to the property until the loan has been repaid, at which point the title is given to the buyer.

Area preference - Just remember the mantra "location, location, location!" A property's value is largely dependent on where it is and the desirability of that location.

Jeanetta leases an apartment from Quad City Leasing. Jeanetta has filed a complaint with the state real estate licensing division stating that Marissa, Quad City's property manager, breached her fiduciary duty of loyalty to Jeanetta. Which of these statements about this situation is true?

As a property manager, Marissa owes fiduciary duties to her client and the apartment community. - Property managers owe fiduciary duties to their clients (the landlord) and the community as a whole, not to individual residents.

Margot and Steve owned several rental properties at the time of their divorce. The divorce decree gave owneship to Margot in return for a cash payment by Steve. Fast forward six years, and Margot is ready to sell the properties. She soon discovers, though, that Steve's name is still on the title. What's her best course of action?

Ask Steve to generate quit-claim deeds on the properties. - Even though the divorce decree grants ownership to Margot, she can't convey the properties until Steve either produces quit claim deeds OR agrees to convey the properties with her.

Assuming that dual agency is legal where these scenarios occur, and the licensees' brokerages permit it, which of these situations demonstrates illegal dual agency?

At an open house Tom is holding for his client, Rod, a buyer says she wants to make an offer. She details her situation; Tom waits until she finishes and then suggests that she offer a non-refundable earnest money deposit to strengthen her offer. - Not only did Tom allow the potential buyer to give him all of her details, he then offered her advice about her offer. This example of illegal dual agency is likely to get Tom in big trouble.

Will was sued for damages related to a car accident in which he was involved last year. As part of the proceedings, the court placed a lien against his primary residence. What type of lien is this?

Attachment - An attachment lien is when the courts place on encumbrance on the property of a defendant in a lawsuit for monetary damages.

Lowell used to own 17 acres of property on the bay. After last year's hurricanes, Lowell now owns 15.5 acres of bayfront property. Which natural process was responsible for Lowell's loss of acreage?

Avulsion - Avulsion is the loss of land by a sudden, large-scale change in water flow. A hurricane would create a sudden large change in water flow.

Tracy is looking in the MLS and sees a listing marked "REO." Which of these statements regarding REOs is correct?

Banks acquire REOs through failed foreclosure sales or deed in lieu of foreclosure actions. - Failed foreclosure sales and deed in lieu of foreclosure actions result in lenders taking title to properties they previously had mortgage loans on. These properties are called real estate owned, or REOs.

Tristan's offer has been signed by all parties and delivered back to the seller. This means that ______ has occurred.

Binding acceptance - Binding acceptance happens when a signed contract is delivered according to the delivery procedures and deadline outlined in the contract.

Which of these statements about a conventional mortgage loan is true?

Borrowers with larger down payments and higher credit scores are most likely to select a conventional mortgage. - The FHFA imposes loan limits on conventional mortgages; borrowers with larger down payments and better credit scores may select a conventional mortgage to avoid paying for mortgage insurance.

When Gillian looked at the legal description of the property she was interested in purchasing, she read the following: "Beginning at the corner of State Route 61 and Hallowell Road, north for 314 feet, then southwest for 193 feet." In this description, what does "Beginning at the corner of State Route 61 and Hallowell Road" represent?

Bounds - Bounds are physical features that define the boundaries of the property. Combined with directions and distances (metes), these form the basis of a metes and bounds legal description.

Which of the following is an action borrowers take to temporarily lower the interest rate on their mortgage loan?

Buydown - A buydown is when buyers voluntarily pay points to temporarily bring interest rates down. For example, a 3-2-1 buydown would reduce the interest rate by 3% the first year, 2% the second year, and 1% the third year.

In states where full disclosure isn't required, it's the ______ responsibility to perform due diligence on the property.

Buyer's - In states without full disclosure requirements, "let the buyer beware" indicates it's the buyer's responsibility to proactively check out the property's condition and the licensee's responsibility to encourage buyers to get all necessary inspections.

Marsha's title insurance policy was issued on closing day, which was June 18. The policy lists standard exclusions as well as requirements for the company to issue the policy, such as paying off existing recorded liens. Which of these will NOT be addressed in the schedule of exceptions?

C. Marsha's second mortgage on the property, which was properly recorded in January. - Title insurance typically covers events or claims filed on the public record before the title insurance policy's effective date but excludes disclosed and undisclosed easements.

If you see sawdust that can't be explained, it's probably a sawdust-like material called frass created by ______.

Carpenter ants - Frass is created by carpenter ants when they burrow through wood.

The Hendersons were hoping to list their home for $400,000; however, four other comparable homes in the neighborhood just went up for sale, and they now must list their property at $380,000 to sell quickly. Which economic principle is at work here?

Competition - If there are many similar properties on the market, the competition is high and prices are likely to be driven down.

To make valid computations of adjustments for the market comparison approach to value, elements of comparison must be applied in a specific order. Which of these elements has the highest priority?

Conditions of sale - The elements appraisers consider in the market comparison approach are applied in a specific order: financing terms and cash equivalency, conditions of sale, market conditions at the time of contract and closing, location, and physical characteristics.

Robin, the appraiser of the Birkenstock's property, wants to make sure her computations of adjustments on their home are valid. She's using the sales comparison approach, so she'll prioritize the ______ as the highest priority.

Conditions of sale - The elements considered in the sales comparison approach are applied in a specific order: financing terms and cash equivalency, conditions of sale, market conditions at the time of contract and closing, location, and physical characteristics.

Which of the following is an example of a universal agent?

Conservator - A universal agent has broad authority to act on behalf of the principal, such as a person with a power of attorney or a conservator.

Which of the following is true about ownership or title to a property?

Constructive notice to the public of real property ownership occurs when the deed is recorded. - Recording and possession give the public constructive notice that ownership has changed hands. It also protects the buyer from others' claims on the property.

William is a real estate licensee who's preparing a sale agreement that will include an unusual circumstance. What's the best course of action?

Consult an attorney - It's possible that William could still use an existing form, but it won't cover the unusual circumstance. William should not write an addendum that covers it. His best bet is to consult an attorney.

Which of the following loans may require compliance with Appraiser Independence Requirements?

Conventional - AIR apply to conventional loans used to purchase a single-family dwelling of one to four units. Federally insured or guaranteed loans (such as FHA or VA or commercial loans) are exempt.

Which of these situations represents the illegal practice of blockbusting?

Corbin tells homeowners in Five Points that an impending influx of Asian immigrants will reduce property values. - Blockbusting is the practice of convincing homeowners that a demographic shift could result in reduced property values or the inability to sell their properties.

Ashton, an appraiser, is estimating value using the sales comparison approach. He applies more weight to two comparables over several others he used. What process is he utilizing?

Correlation - Through a correlation process, the most weight may be given to one or two comparables, or equal weight may be given to all. The term reconciliation is often synonymous with correlation.

Which one of these is an example of the doctrine of estoppel?

Corrie shows Marvin several properties and prepares CMAs for each. She assists him in making an offer on one. He becomes difficult to work with, and she then says she's not his agent because they don't have a signed agency agreement. - The doctrine of estoppel prevents individuals from making an assertion or claim, even by actions or behavior, and later denying it.

With the cost approach to value, what is the replacement cost?

Cost to build a functionally equivalent improvement - The replacement cost reflects the cost to build a functionally equivalent improvement, as opposed to the reproduction cost, which is the cost to build an exact replica of the subject, with the same materials and deficiencies.

State usury laws are typically not applicable to what type of lending?

Credit cards - Credit cards, retail installment contracts, and consumer leases are typically exempt from usury laws.

Sue is selling her house for $265,000. Closing is set for June 19, and Sue owns the day of closing. She has a loan balance of $78,000 at a 4.2% rate, and she's current on her payments. She prepaid the property taxes ($1,350) and insurance ($925). Using a calendar-year proration method for calculations, how will these amounts appear on Sue's closing statement?

Credit of $721.50 - Tax daily rate: ($1,350 ÷ 365 = $3.70) 195 days (days from closing until year end) = a $721.50 seller credit. Any prepaid seller's homeowners insurance will be refunded to the seller outside closing, so this doesn't appear on the closing statements.

A real estate transaction has a closing date of May 20. The seller, who's responsible for closing costs up to but not including the day of settlement, has already paid annual property taxes of $1,949. Using calendar year proration, the seller will be ______ on the closing statement.

Credited $1,207 - The seller will be credited $1,207, because $1,949 ÷ 365 = $5.34, and $5.34 × 226 days = $1,206.84. That's $1,207 if rounded to the nearest whole dollar.

In a real estate transaction, which two parties are owed the same duties?

Customers and other parties - Other parties in the transaction are owed the same duties as customers. Only clients receive the full offering of your duties.

Which of these is an example of listing agreement termination by completion/performance?

Dean lists his property on August 1. After just a few showings, he accepts an offer on August 12. The closing takes place on September 22. - The agency agreement automatically terminates when a transaction closes.

A trustee is holding the title to Cassandra's house until the loan is paid in full. Which type of security instrument was used?

Deed of trust - Three parties are involved when a deed of trust is used: the lender (beneficiary), the borrower (trustor), and a neutral third party (trustee). The trustee holds the title on loans when a deed of trust is used.

Which mortgage clause requires the lender to discharge the mortgage lien once the borrower has paid in full?

Defeasance - The defeasance clause means that the lender is prevented from trying to pursue additional payment because the loan has been paid in full.

Mario lives in a state that requires an abstract of title for property conveyance. The chain of title is broken approximately 50 years prior to the current date. Which of these properly identifies the status of Mario's title?

Depending on his state's laws, Mario may have marketable title. - If a link in the chain of title is broken, the attorney performing the search will branch out from public records to try to mend the link. State laws dictate how far back the chain must be unbroken for a title to be marketable.

Laura has agreed to purchase Derrick's Oahu property using an agreement of sale. Who holds legal title to the property during the term of the loan?

Derrick - When an agreement of sale is used to finance the sale, the seller holds legal title to the property until the loan has been repaid, at which point the title is given to the buyer.

You represent the buyer and seller in the same transaction. What type of agency relationship do you have with your clients?

Disclosed limited agency - You are in a disclosed agency relationship with your clients because you represent both the buyer and the seller.

Derrick just bought his first condo, and he's ready to crack the champagne. Which of the following will Derrick be able to deduct from his income for tax purposes?

Discount points - Fees and other closing costs don't qualify as tax deductions, but discount points—which are paid to a lender to get a lower rate or to buy down the interest rate—can be deducted.

Residents of Tinytown have been complaining to town officials that the village-like character of their town is being affected by the medium-rise condos that developers are building on the edge of town. In response, local government officials rezoned the areas on the edges of town as parklands. What type of zoning is this?

Downzoning - Downzoning assigns a lower density use to an area that previously allowed a higher density.

You represent the buyer, and another licensee from your brokerage represents the seller in the same transaction. What type of agency relationship do you and the other licensee have with your clients?

Dual-license dual agency - You and the other licensee from your firm are in a dual-licensee dual agency relationship. The broker is the dual agent and has designated you to represent the buyer and the other licensee to represent the seller.

Kurt bought a vacant lot in a development that was 85% completed. When he started working with the builder to lay out where the house and driveway would lie, it was determined that he would need an easement because his driveway would spill over onto the adjacent lot by a few feet. What type of easement is this?

Easement appurtenant - An easement appurtenant is attached to a parcel of land and transfers with the land. It grants the right to use adjoining land.

The Hawaii Uniform Probate Code of 1977 replaced dower and curtesy with which of these protections?

Elective share - A surviving spouse may take an elective share of the decedent's augmented estate, the amount of which ranges from 3% to 50% of the estate, depending on the length of the marriage.

What are the two categories of comparison when evaluating comparables to a subject property in the market comparison approach?

Elements and units - There are two categories of comparison: elements, which look at physical and locational characteristics, and units, which look at the numbers.

Elvin owns 150 acres of prime hunting land. Every year he has requests from private groups who would like to use his land for a day or two during hunting season. Some years he grants these requests, but this year he's decided to only use it personally and when with friends. Which right in the bundle of rights says that he can say no to these requests?

Exclusion - The right of exclusion gives Elvin the right to refuse other interests in his own property.

The Nettles have accepted the Briars' purchase offer, and both parties have signed the sales contract. What type of contract do the Nettles and the Briars have?

Executory - The Nettles and Briars have a valid contract that's in the process of being completed. Because one or more terms of the contract must still be completed, they have an executory contract.

Goldie and Kurt are looking at purchasing their first home. Their credit history is a little shaky and they don't have enough money saved to put down 20%. What type of loan seems most appropriate?

FHA - While they may be able to get into a conventional loan, an FHA loan may be the best option for Goldie and Kurt with their shaky credit history.

Commander Halfback retires after 25 years of service in the Coast Guard. He is looking to buy a home. What type of loan should he use?

FHA, VA, or conventional - The fact he was in the military doesn't mean he has to take a VA loan. There isn't enough information to determine the best loan, so at this point all loans mentioned are viable options to consider.

Mike's been friends with Tim since college. They often work together: Mike flips houses and Tim's an appraiser that he uses frequently. It works out great for both friends and Mike definitely gets a better appraised value on the flips Tim handles. For every appraisal Tim handles for him, Mike gives him a $100 gift card. In what illegal practice does it sound like they're engaging?

Falsely inflating appraisals - An inflated appraisal occurs when an appraiser intentionally submits a misleading report to a lender that indicates an inflated property value. Inflated appraisals are illegal and can get both of these guys in trouble.

Leon and Beth own 1/13 of a timeshare estate. They own weeks 20 and 21, and also weeks 40 and 41. These weeks are inheritable. What type of ownership is this?

Fee simple - Timeshare estates are owned as fee simple estates. They convey all rights of ownership and can be sold or passed down to heirs.

The Crows gave their son, Gibson, the family property, so long as he doesn't join his friend's rock band. If he joins the band, the property goes back to them. What type of estate is this?

Fee simple determinable - With fee simple determinable, the property holder owns the property subject to a condition. If the condition is breached, then the property will go back to the original owner.

Select the statement that accurately describes an abstract of title.

Few states require an abstract of title when conveying property. - The abstract of title process is costly and lengthy; only a few states require this process when conveying property.

While working with a buyer client, Jeffrey filled in the blanks on the purchase agreement, drafted an early-occupancy addendum, and assured his buyer that she was "fully protected" and would get her earnest money back if the sale didn't close. He encouraged her to hire an attorney to review the contract and addendum and invoiced her for a nominal $15 fee to prepare transaction documents. Which of these tasks would NOT be considered unauthorized practice of law?

Filled in the contract blanks - Jeffrey did just about everything wrong! The only two tasks he performed that aren't considered unauthorized practice of law are filling in the blanks on the purchase agreement and encouraging the buyer to seek legal advice.

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?

Financing terms and cash equivalency - When using the sales comparison approach, appraisers consider elements in a specific order: financing terms and cash equivalency, conditions of sale, market conditions at the time of contract and closing, location, and physical characteristics.

Leon and Beth own 1/13 of a timeshare estate. How many weeks each year do they get to use the timeshare unit?

Four - Timeshare ownership is typically split into 52 weeks. One-thirteenth of 52 weeks is four weeks.

Which of the following is an example of an agent exercising the duties owed to customers and other parties?

Francine disclosed information about the flooding basement to the buyer and buyer's agent. - The duties licensees owe to customers and other parties include disclosure of material facts, honesty, and fairness.

Francis collected an earnest money check from her client but didn't have an opportunity to deliver it to the escrow agent before close of business on Friday. For safekeeping, she deposited it into her personal checking account over the weekend and wrote the escrow agent a new check on Monday morning. Which of these statements is true?

Francis is guilty of commingling. - Francis mixed escrow funds with her personal funds, so she's guilty of commingling. Since she didn't spend the funds, she hasn't committed conversion.

A poor floor plan is an example of which type of depreciation?

Functional obsolescence - Functional obsolescence is a form of depreciation or loss in value caused by defects in design.

Brittany has a small office in a professional building. She has a set monthly lease payment that has been calculated to include maintenance of the common areas in the building, such as the restroom and small kitchen, and all nets, utilities, and janitorial charges for her space. The payment also includes taxes and insurance. The landlord takes these payments and pays the individual expenses himself. What type of lease does Brittany have?

Gross lease - In a gross lease, all expenses related to the property, such as taxes, insurance, and maintenance, are part of the lease payment.

Juan has finalized his comparables and is ready to determine a property's appraised value. How does he do this?

He reviews his process and places more weight on the most similar comparables that he believes to be the most valid. - The reconciliation (correlation) step requires Juan to use his best professional data analysis and judgment to determine the property's value. He'll give the most weight to one or two of the comparables that best match the subject property.

Related to reasonable accommodation of being allowed to have an assistance animal, which statement is true?

If the disability for which the tenant is making the request is obvious, the landlord may not ask why it is needed. - Housing providers may inquire as to the nature of the disability if it's not apparent, and they must permit assistance animals for tenants with documented disabilities without charging an additional pet deposit.

Amira's seller Tom just received the news that his buyers are walking away from the sale. They weren't willing to proceed after they saw the inspection report. Neither Amira nor Tom has requested a copy of the report. What's the most likely reason for that?

If they see the report, they'll be required to disclose any adverse findings. - Some licensees (and sellers) may opt NOT to see the inspection report so that they don't learn about any adverse material facts which then must be disclosed. They may also be concerned about the accuracy of the report.

Which physical characteristic of land addresses the concept that the geographic location of a piece of land is fixed and can never be changed?

Immobility - Unlike an improvement, such as a house, which could conceivably be moved, land stays put.

Which one of these would NOT be an element of comparison an appraiser would use when applying the sales comparison approach to a property valuation?

Income generated - The sales comparison approach doesn't factor in any income a property may have generated; that's an aspect of the income approach.

Ashish is purchasing a bank-owned property. His real estate agent tells him the bank is offering insurable, not marketable, title. What does this mean to Ashish?

Insurable title is one that may have known defects but is still insurable. Ashish should carefully review the title policy. - An insurable title may be acceptable to a buyer, depending on any known defects that are outlined in the policy.

Kevin is having an appraisal performed on a piece of property he's interested in buying. He's especially interested in hearing about the estimated rate of return the property could pull. What type of value is he interested in?

Investment value - An investment value can tell a consumer about the expected rate of return for a property.

Kevin's lender just ordered an appraisal on the five-unit apartment building he's contracted to purchase. He's especially interested in hearing about the estimated rate of return the property could pull. What type of value is he interested in?

Investment value - An investment value can tell a consumer about the expected rate of return for a property.

Jordan works as a property manager for several residential property owners. When she receives security deposits from tenants, how long does she have to deposit them into an escrow account?

It depends on her state's requirements. - Trust funds, which include security deposits, must be deposited within the length of time outlined in each state's laws and regulations. This is typically one, two, or three business days from receipt, but may be longer in some cases.

Why might a licensee want a buyer to sign a buyer representation agreement?

It helps ensure buyer loyalty. - Buyer agency agreements help define and solidify the working relationship between the parties. Without an agreement in place, the buyer could purchase through another licensee.

Zhe is appraising a property for Teamworks Lending. Which of these factors makes this a federally related transaction?

It's a conventional loan that Teamworks will sell to Fannie Mae. - A federally related transaction is a transaction for sale, lease, purchase, investment, or exchange of real property in which a federal financial agency or regulatory authority is involved (e.g., FNMA).

Which of these statements about a deed's habendum clause is true?

It's a description of the act of conveyance. - The habendum clause, if used, describes the type of conveyance. It's typically used if title being conveyed is less than fee simple.

Widget Corporation just bought land on which it plans to build a new manufacturing facility. How is the land owned?

It's owned as an estate in severalty. - Corporations are legal entities and hold property similar to the way a sole proprietor or an individual does: in severalty.

Max has a written agency agreement with Rufus in which Max will receive all of the listings in the subdivision that Rufus purchased (with Max's representation) and is developing. One day when Rufus is visiting the site of the subdivision, a work truck accidentally runs him over and he's seriously injured. Rufus can no longer run the development of the subdivision. What happens to Max's agency coupled with interest?

It's still in place because it doesn't terminate on the death or incompetence of the principal. - Agency coupled with interest is irrevocable.

Which of these is NOT an example of price fixing?

Jake's firm agrees to charge all clients a listing commission of between 2% and 2.5%. - Any agreement (formal or informal) between competing firms to fix prices or standardize listing terms or commission splits, etc., is considered price fixing.

Which form of real property ownership (for owners other than married couples) means there's equal ownership shares with undivided possession rights?

Joint tenancy - Joint tenancy provides equal ownership shares with undivided possession rights and requires four ownership unities: time, title, interest, and possession. Joint tenancy includes the right of survivorship.

Which of these statements best describes the history of Hawaii's land use and control system?

King Kamehameha was the last in a long line of Hawaiian rulers to rule under the feudal system of land use and control. - King Kamehameha began his rule under the feudal system, but soon charged the Land Commission with distributing land to commoners. The process began in 1850.

Krening Realty has been found guilty of running deceptive ads. Which of these statements about the potential penalty is NOT true?

Krening's broker may face jail time. - Violations of a cease and desist order may result in penalties of more than $41,484 for each day a deceptive ad runs; civil penalties may be in the millions, depending on the violation. Violators may be required to run corrective or informational ads.

Which of these is the best definition of real estate?

Land, plus all things permanently attached to it naturally or artificially - Real estate includes land, plus all things permanently attached to it naturally or artificially.

Lawrence is a buyer closing on a home for which he's obtaining financing. Which document will give Lawrence an estimate of the costs he'll likely pay at closing?

Loan Estimate - The Loan Estimate, required by the Dodd-Frank Act, provides buyers with the costs they're likely to pay at settlement and discloses the mortgage loan specifics, such as its key features, costs, and risks.

Which of the following is a true statement about police power and public land use controls?

Local governments and their planning boards control budgeting, site-plan review, and building codes. - Local governments and planning boards handle community planning.

Dean's new business venture is a software services firm where IT professionals handle programming and customer service tasks for a number of business clients. His employees all work at tables in an open office space. Dean most likely has a ________ lease for the office space.

Loft - A loft lease is usually for a large open space that may have few amenities.

Lucas, Ivan, Chad, and Trace own a property as joint tenants. After a few years, Ivan sells his interest to Tom. Chad dies intestate but is survived by a wife, Amy. Trace also then passes away but wills his property to Monique. Who owns the property after Trace's death?

Lucas and Tom - Joint tenants are allowed to sell their interests, so Tom became a property owner when Ivan sold his interest. However, joint tenancy is not inheritable but instead includes the right of survivorship. Trace's and Chad's interests passed to Lucas and Tom.

All of the following are common property manager duties EXCEPT ______.

Making mortgage payments - While property managers handle a plethora of duties, certain tasks, including making mortgage payments, should be conducted by the property owner.

Marsha's title insurance policy was issued on closing day, June 18. The policy lists the standard exclusions as well as requirements for the company to issue the policy, such as paying off existing recorded liens. Which of these will NOT be addressed in the schedule of exceptions?

Marsha's second mortgage on the property, which was properly recorded in January. - Title insurance typically covers events or claims filed on the public record before the title insurance policy's effective date but excludes disclosed and undisclosed easements.

Most often, what's the first course of action for disputed home warranty claims?

Mediation - Warranties will detail the course of action if a claim is disputed. Most often, mediation occurs first, then arbitration.

When Shauna looked at the legal description of the property she was interested in purchasing, she read the following: "Beginning at the corner of State Route 61 and Hallowell Road, north for 314 feet, then southwest for 193 feet." In this description, what does "north for 314 feet" represent?

Metes - Metes (measures) are the direction and distance of a line forming the boundary of the property.

Which legal description method uses compass headings and directions?

Metes and bounds - Metes and bounds uses compass headings and directions. The rectangular system divides land into townships and further divides those into sections.

"Beginning at a stake and stones about 30 feet from the center of the brook that runs across the road Southwesterly from the dwelling house of the late Bethany Smith ..." is an example of what type of legal description?

Metes and bounds - This is an example of a metes and bounds legal description.

Which of these is an example of conversion of funds?

Monica used funds from the firm's trust account to pay her firm's rent. - Conversion means that a licensee or brokerage firm uses trust funds for personal or operating purposes.

Which of these is an example of a sub-agency relationship?

Morris, who's licensed independently, finds a buyer customer for Greg's listing with Marvel Homes and is obligated to act in the best interest of Marvel Homes' client. - Sub-agency refers to a licensee from one firm who brings an unrepresented buyer for a property listed by another firm. The sub-agent represents the seller in this situation.

Which of these landlord actions would NOT be considered a reasonable accommodation?

Moving disabled tenants to units near an elevator - Allowing a tenant to transfer to a more accessible unit (which is reasonable) is different than forcing a tenant to move to a different unit.

In which of the following situations would the state be able to use its power of escheat?

Nadine died with no heirs and no debt. - Escheat occurs when a property owner dies without a will in place, and no heirs or creditors can be found.

Corinne is 68 years old and employed full time. She's of Spanish descent, is raising her 12-year-old grandson, and lives with her partner, Katherine. She requires an accessible apartment because she uses a wheelchair. Under which of the following federally protected classes might Corinne be protected if she faces housing discrimination?

National origin, sex, disability, and familial status - Federal fair housing laws don't name age, employment status, and sexual identity as protected classes. Corinne would be protected if she experienced housing discrimination based on her national origin, sex, disability, or familial status.

During a site evaluation to determine property value, all of the following factors are important to consider EXCEPT ______.

Neighborhood demographics - Topography, utilities, and a property's size and shape all are considered during a site visit to determine property value. Neighborhood demographics might be of interest to the buyer, but generally won't be considered by an appraiser.

Select the situation that correctly represents a true conflict of fiduciary duties.

Nikki's seller client has instructed her not to present offers that are less than the listing price. This is a conflict of Nikki's duty of disclosure, which requires her to present all offers, and her duty of obedience. - The duty of disclosure requires that licensees present all offers to their clients, but Nikki's client has asked that she not present all offers, creating a conflict between her duties of disclosure and obedience.

Your client is purchasing a single-family home with a conventional loan. The listing price is $150,000. Does this situation require a licensed or certified appraiser?

No, since the sales price is less than $400,000. - Federal law exempts this property from the certified appraisal requirement because the sales price is less than $400,000. However, it's always a good policy to pay for the best available service or product, regardless of the lender's legal obligation.

Maxine is purchasing a small craft shop, including the underlying real estate. She applies for a commercial loan from her federally insured bank to complete the purchase. Is Maxine's transaction covered by the Real Estate Settlement Procedures Act?

No; commercial and business loans are exempt from RESPA requirements. - Commercial and business loans are exempt from RESPA.

Jacob's family has operated a neighborhood grocery store in the community since before the land was zoned residential. Jacob continues to operate the store legally. What would you call this?

Non-conforming use - Legal, non-conforming use of land occurs when a structure or business was legally established according to zoning ordinances at the time, but does not meet current zoning and building regulations. This is called being "grandfathered."

Bo's real estate ad states: "Custom homes for sale with scenic mountain views. Easy financing and low down payments." What else must be included in the ad in order for it to comply with TILA?

Nothing - Under TILA, ads that mention general financing terms, such as "low down payment" or "easy financing," do not require additional disclosure. If Bo had gotten more specific (e.g., "10-year loan with 0% down") he would need to include more information.

Patsy's home has been on the market for five weeks. Currently, two brokers have buyers getting ready to make offers. If Patsy accepts one of those offers, the corresponding broker will be the only one to earn a commission. What type of listing does Patsy have?

Open listing - With an open listing, only the broker who brings the buyer earns a commission.

Angelo's aging mother needs a place to live out her remaining years. Angelo conveys a home to her, but only for her lifetime. This is an example of what type of life estate?

Ordinary - Ordinary life estates are granted for the lifetime of the grantee. When the life estate holder dies, remaining interest is either returned to the original owner (reversion) or is granted to a third party (the remainderman).

Tiers in the rectangular government survey system are formed by ______.

Parallel township lines - East-west lines of a survey, which are parallel to the baseline, are called township lines. Township lines form strips of land known as tiers, and townships fall within these tiers.

Joshua just got a copy of the preliminary report from his title company and is surprised to see that there's a mechanic's lien against his property. What is the first step he should take to clear this lien?

Pay the bill that resulted in the mechanic's lien. - In order to file a mechanic's lien, the lienholder must provide notice to the property holder of the lien. Joshua needs to pay the bill that resulted in the lien OR prove that the bill was indeed paid.

A closing agent has several duties to perform both before and after the closing. Which of the following is a task the closing agent must complete after the closing?

Pay the existing loan off - The title search, closing statement preparation, and title insurance purchase must all be completed prior to closing. After closing, the closing agent makes arrangements to pay off the seller's existing loan with the proceeds from the buyer. "We're recorded and funded" is music to a licensee's ears.

Which type of listing can help a real estate professional determine how quickly a home in a given price range received an accepted offer?

Pending - When a property goes under contract, it's said to be pending. The time frame from the date the property was listed until it goes under contract (becomes pending) tells the licensee how many days the property was on the market (days on market or DOM).

Mary has a contract to buy her mother's house when her mother is finally ready to move to a senior living community. This way, the house stays in the family. After her mother finds a suitable senior apartment and moves, Mary writes a check for the agreed-upon amount, and her mother transfers the deed to Mary. What is happening in this scenario?

Performance - This is an example of contract performance. Performance means that the two parties have met the terms of the contract.

The loss in value caused by deterioration in physical condition is called ______.

Physical depreciation - Physical depreciation is a loss in value caused by deterioration in physical condition.

Which of the following terms can be defined as what a buyer has paid for a property and what the seller has accepted?

Price - Price is the actual amount that a buyer pays for a property. It may be the same as the market value, or it may not.

Which of the following is a promise on the part of the borrower to repay a certain sum of money to another party (the lender or holder of the note) under specified terms?

Promissory note - A promissory note (often called a "note") is the borrower's documented promise to repay the loan.

New ownership registration in Hawaii's Land Court is rare. Why does the state continue to use this system?

Properties originally recorded in the Land Court system remain in that system, so both it and the regular system are maintained. - Because properties that were originally registered in the Land Court system remain in that system, the state must maintain both the regular and the Land Court systems.

Which of the following situations may result in inverse condemnation?

Property values decrease because adjacent property was rezoned. - With regard to zoning, inverse condemnation is related to a loss of value due to downzoning of adjacent property.

When a buyer finances a newly built home with a Federal Housing Administration loan, FHA requires the builder to ______.

Purchase a third-party home warranty to protect the buyer - The FHA requires builders of new homes to provide a third-party warranty to buyers.

In many cases, property managers must get explicit permission in order to disburse funds from a trust account. What is one common way to do so without this explicit permission?

Put it in the property management agreement. - The property manager may disburse funds from a trust account if the property management agreement states that the manager may do so without getting explicit permission each time a disbursement is made.

What's the best definition of real property?

Real estate, plus all of the interests, benefits, and rights included in ownership - Real property includes real estate, plus all of the interest, benefits, and rights included in ownership.

Richard is interested in purchasing some rural land and included outbuildings. When reviewing the legal description, he sees the name of a principal meridian. What type of legal description is this?

Rectangular government survey - Legal descriptions that use the RGSS usually include the state, name of the principal meridian, township, and range designations with compass directions and section numbers.

Victor's family has always owned this particular lake house. When he was little, he remembers the "beach" being no more than four feet wide before the waterline. Now Victor brings his own children to the lake house, but the beach is almost seven feet wide. What natural process could explain the beach being bigger?

Reliction - Reliction is the process by which water gradually recedes, which reveals new land.

Which of these statements about the homeowner's rights of redemption is true?

Rights of redemption with REOs may be less of a problem than with other distressed properties - Because of the length of time it takes to process a property after the foreclosure sale, the homeowner's redemption period may have expired before the lender puts the REO on the market.

What classification of water rights includes the two smaller sub-classifications of navigable and non-navigable waterways?

Riparian - Riparian water rights may apply to one of two sub-classifications: navigable or non-navigable waterways.

Travis has made the final payment on his loan according to the loan terms. What must the note holder do to acknowledge that the debt has been repaid?

Sign the note, mark it "Paid in Full," and return it to Travis. - When the note has been paid off, the holder must sign the note, mark it as paid in full, and return it to the maker. The satisfaction of mortgage is recorded with the county land office, removing the associated lien from the property.

Two essential elements of a deed are ______.

Signature of the grantor and habendum clause - Only the grantor's signature is required, not the grantee's. The habendum clause is required only if the deed is conveying less than a fee simple estate.

If the private individual owner doesn't own more than three single-family homes at one time, which exemption from the Fair Housing Act could apply?

Single-family housing sold or rented without the use of a broker - Single-family housing sold or rented without the use of a broker is exempt, provided the owner doesn't own more than three single-family homes at one time.

Adamsburg, a bedroom community outside the city, is growing by leaps and bounds. There's been a boom in the number of children under age 12. Mia wants to open an in-home daycare, but she lives in a neighborhood that isn't zoned for home occupations. She applied for a/n _________ and, after a public hearing, was granted one to operate the daycare.

Special use permit - A special use permit, also called a conditional use permit, requires a public hearing and may be granted as long as the use is in harmony with zoning ordinances and doesn't adversely affect the community.

The appraisal report submitted to Jenkins, the lender, notes that the property is being conveyed with all property rights intact. Which step in the appraisal process does this represent?

State the problem. - The first step in the appraisal process is to state the problem. This includes a description of the rights associated with the property.

Along with property ownership, rights are granted to use the land's physical components. Which right allows a property owner to use or sell the underground resources, such as natural gas and minerals?

Subsurface - Subsurface rights are those that are underground and include natural gas and minerals. Property owners sometimes sell the subsurface rights, which can also be referred to as mineral rights.

What is the term for sites identified by the EPA under the Comprehensive Environmental Response, Compensation, and Liability Act?

Superfund site - A Superfund site is a site identified by the EPA as requiring clean-up of hazardous waste under CERCLA.

When prices go down because there are too many homes on the market and too few buyers, this is an example of ______.

Supply and demand - Supply and demand refers to the fact that when supply goes up, prices go down, because there's less demand.

Eva, Stella, and Lynn own a vacation home two blocks from the beach. Sadly, Stella passed away this winter, and so when summer arrives Eva and Lynn will be sharing the home with Stella's nephew Drew, to whom Stella willed her share of the property. What type of ownership is this?

Tenancy in common - This is a form of shared ownership, but only tenancy in common provides for inheritability—the other forms share the rights of survivorship (the existing tenants assume the deceased's share of the property).

Trinity has applied for a home equity line of credit (HELOC) to perform some upgrades on her home. Within what timeframe must her lender provide the Closing Disclosure?

The CD isn't required for a HELOC. - Home equity lines of credit aren't subject to TRID disclosures, so Trinity's lender isn't obligated to provide a Closing Disclosure, though other disclosure forms may be required.

Which of these is a TRUE statement regarding truth in advertising violation penalties?

The Federal Trade Commission determines the severity of the penalty based on the severity of the violation. - The Federal Trade Commission determines penalty severity based on violation severity. Penalties range from a cease-and-desist order to corrective advertising, civil penalties, consumer and other monetary remedies, and informational remedies.

Marcus listed his property with Home Sweet Home Realty and one of its listing agents, Ron Savage. About a month later, Ron filed for bankruptcy. Which of these statements about this situation is true?

The agency agreement only terminates if the broker or the principal declares bankruptcy. - Bankruptcy of the broker (not the agent) or the principal terminates an agency agreement by force of law.

A seller tells his agent that he has to sell his house quickly because of a divorce proceeding and that he's willing to accept less than his list price. His agent tells a buyer that the seller will accept as much as $10,000 less than the list price. Which of these is true?

The agent has breached his duty of confidentiality to his client. - The agent breached his duty of confidentiality to his client. Even if the client has given the agent permission to note the price is flexible, providing the reduction the seller is willing to make impacts his ability to negotiate for the best price.

A fire destroyed Meredith's house. Meredith contacted her insurance company, and she was shocked to learn her insurance policy didn't fully cover what she paid for the property. How does the insurance company determine the replacement value of her home?

The amount it would cost to completely replace her home - Insurance companies reimburse based on a property's replacement cost, or what it would cost to recreate that property if it had to be completely rebuilt.

When an area uses its zoning powers, what must be followed?

The area's comprehensive plan - An area's comprehensive plan outlines future development plans and goals of the area. Zoning decisions should follow this plan.

Marketo Building Designs is selling the air rights above its office building. The lot is 450 feet by 350 feet. How would you determine the air lot height in order to calculate the area?

The city or other governing authority establishes the air lot's height. - Because of safety and other concerns, municipalities typically establish the height of air lots in their jurisdictions.

Which covenant requires the grantor to execute any necessary legal documents (within his power) necessary to fix title defects discovered after closing?

The covenant of further assurances - The covenant of further assurances requires grantors to take necessary steps (within their scope of power) to perfect the title conveyed.

Select the statement that correctly exemplifies the covenant term.

The covenant of quiet enjoyment promises that the grantee won't be disturbed by a title defect the grantor passes on. - The covenant of quiet enjoyment promises that the grantee won't have his enjoyment of the property hampered by claims against the title.

What title guarantees will Jody have if her property is deeded to her after a foreclosure?

The covenant of seisin - Foreclosed property may be conveyed with a referee's deed, which offers only the covenant of seisin.

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?

The covenant of warranty - The covenant of warranty assures that the grantor will warrant and defend the title against the lawful claims of others.

Licensee Kennie Mae's neighbor, Buzz, wants to sell his house but doesn't want to sign an agency agreement. Kennie Mae works with Buzz to list and show the property and negotiate offers. After the property sells, Buzz discovers that Kennie Mae didn't present all offers to him, and he sues Kennie Mae. Kennie Mae claims that because she didn't have an agency agreement with Buzz, she wasn't required to perform all fiduciary duties. What legal principle applies here?

The doctrine of estoppel keeps Kennie Mae from disavowing the agency relationship because she provided agency tasks for Buzz. - The doctrine of estoppel prohibits an individual from making an assertion that's in opposition to actions or to a previous statement. Kennie Mae acted as if she was Buzz's agent, so she can't later disavow that behavior.

Which statement regarding fee simple defeasible estates is true?

The estate includes the full bundle of legal rights, but ownership is based on a condition. - A fee simple defeasible estate includes the full bundle of legal rights, but ownership may be terminated if the required condition is violated.

Which of these statements about frontage is true?

The frontage for a lot that's 120 feet by 85 feet is 120 feet. - When reading lot dimensions, if the frontage isn't identified, it's the first number stated.

When calculating loan-to-value ratios, which of the following will be used by the lender?

The lesser of the sales price or appraisal value - Lenders use the lesser of the sales price and appraised value.

How are Hawaii mechanic's liens enforced?

The lienholder can force foreclosure, and the courts settle liens in priority order. - Contractors may force foreclosure based on a valid mechanic's lien. If a property is sold under foreclosure, sale proceeds will be used to pay off liens in the priority ordered by the court.

What is an example of a gross lease?

The owner pays all property taxes, maintenance, and insurance costs. - In a gross lease, the owner pays all property taxes, maintenance, and insurance costs.

Jorge accepted a seller's offer of insurable title. The transaction hasn't reached closing, and a previously unknown title defect has been revealed. What happens now?

The seller may not be required to attempt to clear the defect before closing. - The seller may not be required to clear the defect before closing; depending on the type of defect (e.g., an easement) it may not impact closing. Other types of defects may require action before closing.

Which of these situations is addressed by the fiduciary duty of disclosure?

The seller's agent fails to disclose a conflict of interest. - The fiduciary duty of disclosure relates to the licensee's responsibility to disclose material facts and conflicts of interest.

Tom and Jim are neighbors. Jim wants to buy Tom's rental property. In the contract that Tom and Jim sign, Jim is identified only as "the neighbor." Which statute or contract element does this violate?

The statute of frauds - The statute of frauds requires not only that a contract to convey property be in writing, but also that the contract identify the parties to the contract.

Jamison, the seller, is closing on his property with Conrad, the buyer. Jamison paid the current year's property taxes already. Is this a prepaid or accrued expense, and how will it be represented on the settlement statement?

The taxes are a prepaid expense and will appear as a buyer debit and a seller credit. - These taxes have already been paid, so they are a prepaid item. They'll appear as a buyer debit and seller credit at closing.

If there is some kind of defect on a property's title, what effect does this level of transferability have on the property's value?

The value will fall. - If a property can't be easily transferred, this will have a negative effect on value, causing it to fall.

A landlord with a strict "no pets" policy won't rent to a woman who uses a service animal to assist with her epilepsy. Which of the following is a true statement about this situation?

This is discrimination based on disability. - Service animals assisting any disabled individual must be allowed in any housing or residential situation. They're not classified as pets, so even if there's a "no pets" policy, it wouldn't apply.

In order for her house to accommodate her inability to hear, Angela has made a request for the house to be equipped with a doorbell that also alerts occupants with a flashing light. Which statement is correct?

This is likely to be considered a reasonable accommodation, and Angela should be permitted to install it at her own expense - Fair housing reasonable accommodations require housing providers to permit tenants with disabilities to modify their premises to fit their needs. The tenant does so at his or her own cost, and may be required to return the unit in its original condition.

In which of these situations would the property most likely be conveyed with a trustee's deed?

Tim's property will be sold at auction in a foreclosure action. - In states that use a deed of trust as security for a mortgage, the trustee conveys foreclosed property with a trustee's deed.

Vicky and Lee vacation in Cancun, Mexico, every year. They purchased the right to stay in a beach condo for the first two weeks in May, and their agreement continues for the next 10 years. They don't actually own the unit. What did they purchase?

Timeshare use - A timeshare use, also called a right-to-use timeshare, doesn't convey ownership. It's a form of lease that conveys the right to occupy the property for some given amount of time. Timeshares sold as timeshare estates, on the other hand, convey fee simple ownership. The unit is co-owned by multiple unrelated individuals who each hold a right to occupy the unit for a certain time each year.

Your buyer is worried that after she closes on her property, she'll find out someone else has a claim to its ownership. What can reassure her?

Title insurance - Title insurance protects property buyers from financial loss due to title defects. However, it covers only those items included in the policy.

What type of insurance will protect a lender's collateral interest in a property that's being financed?

Title insurance -Lender's title insurance policies protect the lender's collateral investment in a given property.

What forms the boundaries of a township?

Township lines and range lines - The boundaries of townships are township lines, which run parallel to baselines meridian, and range lines, which run parallel to principal meridians.

A quitclaim deed does which of these?

Transfers without warranty any interest or title the grantor has when conveying it - A quitclaim deed provides no warranties or covenants; it only guarantees that the grantor is transferring any interest or title he or she may have in the property.

Sylvan, the seller, and Eric, the buyer, have signed an option agreement, which is an offer to purchase a specific piece of real estate without the obligation to buy it. Until Eric exercises his option to buy, only Sylvan is bound by the option agreement; he may not sell the property to anyone else during the option period. What type of contract is this?

Unilateral - A contract in which consideration is only offered by one of the parties is a unilateral contract. In other words, the consideration only goes one way.

Physical characteristics of land include its immobility, indestructibility, and ______.

Uniqueness (nonhomogeneity) - Nonhomogeneity is a unique characteristic of land. Even within a single subdivision, two identically sized parcels will have their own unique characteristics: views, access, proximity to other amenities, etc.

Which physical characteristic of land addresses the concept that land isn't interchangeable and one piece of land isn't exactly like another?

Uniqueness - One piece of land isn't exactly like another. This is the concept of nonhomogeneity.

Which of the following is a typical accrued adjustment?

Unpaid real estate taxes - Accrued expenses are those the seller owes at the day of closing, but the buyer will eventually pay, such as unpaid real estate taxes.

Which of the following is a typical accrued adjustment?

Unpaid real estate taxes -Accrued expenses are those the seller owes at the day of closing, but the buyer will eventually pay, such as unpaid real estate taxes.

Blake is allowed to use his property in a way that's prohibited under current zoning ordinances, because those ordinances would cause undue hardship for him. What gives him this permission?

Use variance - This is a use variance. In contrast, an applicant for a special use permit doesn't have to show hardship, simply that the proposed use meets the conditions already contained in the ordinance (e.g., change in setback).

Damien and Sandy bought a lot with a condemned house. They want to tear it down and build a duplex, so that they can live on one side and rent out the other. Unfortunately, the property is zoned single-family residential. If they can make a case for economic hardship, they may apply for and be granted a ________.

Use variance - This would be a use variance. The existing zoning only allows single-family homes, so a duplex represents a use other than the originally intended use.

Starla, 35, and Gwen, 32, are going into business! Gwen is buying a share of Starla's franchise. Their attorneys drew up a contract that had Gwen providing $45,000 to Starla in return for 50% ownership. Gwen and Starla happily signed the contract, Gwen paid Starla the $45,000, and Starla presented Gwen with a notarized certificate showing Gwen's 50% ownership in the company. What type of contract is this?

Valid - This contract contains all of the essential elements, and so it is valid. The terms of the purchase contract have been completed, so it's an executed contract, not an executory one.

Warren signed a contract with the Samsons for the sale of property he didn't own. What type of contract is this?

Void - A party can't promise to do something impossible in a contract. Doing so makes the contract void.

You sign a contract to purchase a machine that will allow you to travel back in time and meet Abraham Lincoln. Assuming that time machines don't actually exist (for now), what type of contract is this?

Void - A party can't promise to do something impossible in a contract. This contract is void because the seller of the machine literally can't perform his side of it.

Sylvia, 15, and her neighbor, Marge, 24, agree that Sylvia will babysit Marge's toddler for the summer for $10 an hour. What type of contract is this?

Voidable - A voidable contract appears to be valid but because of legal principal, one or both parties have the right to rescind the contract. In this case Sylvia can enforce the contract against Marge but Marge cannot enforce against Sylvia.

Hope's mortgage created a lien against the property she purchased with the mortgage. What kind of lien is this?

Voluntary - A mortgage is a voluntary lien. With voluntary liens, people agree to have the lien placed against their real or personal property.

Xavier deposited a $3,000 earnest money check into his personal account for safekeeping while he was on vacation. The balance in his account when he left on vacation was $4,200, and when he returned, it was $2,800. He withdrew enough funds from his savings account to cover the earnest money check and delivered the funds to the escrow agent. Which statement best represents Xavier's issue?

Xavier is guilty of commingling and conversion. - Because Xavier's balance fell below the amount required to cover the earnest money check, he's guilty of both commingling and conversion, even though he replaced the funds.

Your client is purchasing a single-family home with a VA-guaranteed loan. The listing price is $150,000. Is an appraisal by a certified appraiser required?

Yes, and since the purchase is financed with a VA-guaranteed loan, the appraiser must be VA certified. - A VA-guaranteed loan requires an appraisal by a VA-certified appraiser, who must also be licensed or certified by the state.

Marvin knows that three-bedroom properties with two bathrooms sell quickest in his market. In an ad for a new listing, he says, "Bonus room could easily be a third bedroom." Marla and Tom visit the property with their agent, and Tom, a construction supervisor, notes that the bonus room couldn't be easily converted to a bedroom because it's too small, it has no egress and no heat source, and you must walk through a bathroom to get to it. Is Marvin guilty of misrepresentation?

Yes, because he should have known there would be major issues converting that room to a bedroom. - Though Marvin didn't market the property as a three-bedroom home, his experience should tell him that converting the bonus room to a third bedroom would not be easy, as he noted in his ad.

Can police power ever be used in a way that restricts citizens' freedom?

Yes, if it's for the public good. - While it's not the intent of police power, personal rights are sometimes sacrificed in the name of the public good.

Your 15-year-old son just signed a contract joining a health club which costs $50 a month. Is this contract valid?

Yes, the contract is valid. - While legal capacity includes whether or not all parties are of legal age, contracts signed by minors are valid but voidable by the minor.

You represent a seller as a listing agent. Do you owe any duties to buyer agents?

Yes, the duty to cooperate on showings - You owe buyer agents (or seller agents, if you're working with the buyer) the duty to cooperate on showings as well as honesty and fairness.

Jared wants to purchase property. One of the properties his agent shows him was formerly zoned for commercial use. It has a steep drop off at the back of the property, as well as some soft spots and mounds. Should his agent recommend that he have a home inspector investigate it?

Yes, these are clues that the property may have been used as a waste disposal site. - These are clues that the property may have been used as a waste disposal site. His agent should recommend that Jared talk to a home inspector about the implications for remediation.

Steve is preparing a market analysis for the Joneses and has selected three comparable (competitive) properties. What's the maximum number of adjustments Steve should make to the Joneses' property?

Zero - Steve won't adjust the subject property. Only the comparable sales price is adjusted. If it is inferior, adjust upward. If it's superior, adjust downward.

Steve is preparing a market analysis for the Jones's and has selected three comparables. What's the maximum number of adjustments Steve should make to the Jones's property?

Zero - This is an example of a question that requires you to read very carefully. The Jone's property is the subject property, and when preparing an appraisal or CMA, we adjust the comparable properties, not the subject property—so the correct answer is D: Steve will make zero adjustments to the Jones's property.- Only the comparable sales price is adjusted. If it is inferior, adjust upward. If it's superior, adjust downward.

If individuals want to use their property in a way not permitted by a zoning ordinance, they must submit a request for a variance or special use permit to which of the following groups?

Zoning board of appeals - Requests for variances and special use permits must be submitted to the zoning board of appeals.