Module 5 - Operating a RE business in Oregon & Module 6 - Finance
A broker's 60% of a 5% commission of a $50,000 sale is $1000 $1,500 $2,500 $3,000
$1,500
Each client with funds deposited in a trust account in a federally insured bank is insured up to: $100,000. $150,000. $250,000. $500,000.
$250,000.
In order to advertise the listings of another brokerage, a licensee must (check all that apply) 1)give the name and telephone number of the listing brokerage and broker in the advertisement 2)obtain the written consent of the listing principal broker if the brokerages have not entered into an agreement to advertise each others properties 3)alter the informational part of the listing so as not to be guilty of plagiarism
1 & 2
principal broker may, at the request of the owner of trust funds or the principals involved in a series of related transactions, place the trust funds in an interest bearing account only if 1)the account is in the name of the principal broker as trustee 2)the funds are deposited in a federally insured institution located within the State of Oregon 3)the interest will go to the principal broker 4)the funds are kept separate, distinct and apart from funds belonging to the principal broker or to any other person for whom the principal broker holds funds in trust 1, 2, 3, 4 1 and 2 only 1 only 1, 2 and 4
1, 2 and 4
The trustor: (check all that apply) 1) is also known as the grantor. 2) owns the property 3) is the borrower
1, 2, 3 The trustor is the borrower, owns the property, and is also known as the grantor.
A principal broker must retain which of the following documents that pertain to professional real estate activity? 1)Copy of a receipt issued by the broker in acceptance of a promissory note from a cooperating broker 2)Copy of a CMA prepared by the broker for a prospective buyer 3)Copy of a check received from a buyer for earnest money 4)Copy of escrow receipt acknowledging receipt and deposit of earnest money 1, 2 and 4 2, 3 and 4 1, 2, 3 and 4 3 and 4
1, 2, 3 and 4
When advertising on the Internet, a licensee must 1) identify the licensee, principal broker and/or brokerage in all advertising and communications 2) get principal broker approval with respect to general page design and contents prior to use on all personal real estate web pages 3) comply with all applicable federal, state and local laws 4) back up and maintain all e-mail or other electronic communications with clients to comply with record retention requirements 1 and 2 only 1, 3 and 4 only 1, 2 and 3 only 1, 2, 3 and 4
1, 2, 3 and 4
Rejected offers and expired listings must be retained for a period of they do not have to be retained as they did not result in a transaction 6 years 2 years 4 years
6 years
A trust account may be established in the name of which of the following as trustee? (check all that apply) A)the property manager of a property management organization B)the principal broker C)the individual authorized in writing by the principal broker to manage the trust account
A & B
Fees collected in advance for professional real estate activities to be performed in the future (check all that apply) A) require a monthly report to the client on the use of the fees until the fees are expended as agreed B)are considered to be trust funds and must be deposited into a client trust account C)become the funds of the principal broker or property manager when tendered
A & B
The ALTA extended policy: A)removes the five standard policy exceptions as exceptions and insures the policyholder against them. B)is generally granted to the buyer without additional charge in Oregon. Both A and B A only B only Neither A nor B
A only
Which will clear a mortgage from the public record? A properly recorded Satisfaction of Mortgage. The note marked "Paid in Full" and returned to the borrower.
A properly recorded Satisfaction of Mortgage.
An extended coverage title insurance policy provides coverage against which of the following? A)Unrecorded easements B)Unrecorded liens C)Rights of parties in possession B and C only A, B, and C A and B only C only
A, B, and C
If the form of business organization that is engaged in the brokerage business is a corporation, which of the following statements are true? A)The corporation must have at least one principal broker. B)The corporation must be a valid corporation under Oregon law and registered with the Business Registry. C)Once registered with the Real Estate Agency, the registered name will not expire. A only A and B only B only A, B, and C
A, B, and C
Principal brokers must supervise which of the following activities of brokers? A)Completion of a listing agreement. B)Completion of a competitive market analysis (CMA). C)Completion of a purchase and sale agreement. A only A and C only B and C only A, B, and C
A, B, and C
A licensee affiliated with a principal broker under an independent contractor agreement: must conduct personal real estate transactions, other than the rental or lease of personal property, under the supervision and control of the principal broker. is responsible for all income tax and other required gross income withholding liability. may enter into a written agreement with the principal broker to receive compensation through an LLC. All of the above
All of the above
The following documents or records must be made available to the Oregon REA if requested: A)Listing Agreements B)Trust fund account records C)All unaccepted offers D)Property Management agreements B, C, and D only B only B and C only All of the above
All of the above
Title insurance in Oregon is: protection against false impersonations. not required by law. issued to insure the named party only. All of the above
All of the above
Which of the following documents created by a broker must be reviewed and initialed by the principal broker? Transaction addenda Advertisements to promote listings Trust account reconciliations All of the above
All of the above
Which of the following must be deposited in a clients' trust account or neutral escrow? Money from a client to be used for future property advertisements Earnest money deposits Collected rents to be prorated at closing All of the above
All of the above
With respect to listings, company policy should include the following information: the time within which the listing must be given to the principal broker for review and initialing to allow review prior to MLS submission deadlines. security procedures to be discussed with each seller. obtaining separate informed consent from each seller whose home will be featured by way of a virtual tour. All of the above
All of the above
Commingling can best be described as: Depositing trust funds into the brokerage operating account Depositing trust funds into the broker's personal account Depositing personal funds into the trust account All of the above
All of the above Commingling is the act of mingling the funds of the client with the funds of the broker or licensee.
Principal brokers must supervise which of the following activities of a broker? Completion of a competitive market analysis Completion of a listing agreement Completion of an earnest money agreement All of the above
All of the above unless the broker is renting his/her own real estate as a property manager.
A borrower gave a lender a mortgage, pledging the property as security for a loan. The borrower: A) conveyed equitable title to the lender. B) voluntarily gave the lender a lien on the property. Both A and B B only A only Neither A nor B
B only
The trustee in an Oregon trust deed receives: A) full legal title to the real property described in the deed. B) the power to sell in the event the grantor (borrower) defaults. Both A and B A only B only Neither A nor B
B only
Which party to a trust deed holds the promissory note until the loan is paid in full? Trustor Trustee Beneficiary
Beneficiary The beneficiary holds the promissory note until the loan is paid in full.
Any promotional material distributed by an Oregon real estate broker associated with a principal real estate broker: 1)must be reviewed by the principal broker or branch manager prior to its use. 2)may contain the direct telephone number of the real estate broker if the principal broker's licensed name or registered business name is given (the registered business name must be used if there is one). 2 only Both 1 and 2 1 only Neither 1 nor 2
Both 1 and 2
Oregon Real Estate License Law permits administrative action to be taken against a principal broker for failing to: 1)notify the Real Estate Agency of the principal broker's change of address. 2)supervise the brokers associated with the principal broker. Both 1 and 2 1 only 2 only Neither 1 nor 2
Both 1 and 2
Under Oregon real estate law: 1) an Oregon principal broker is permitted to close his own transactions. 2) only an escrow company is permitted under the law to close a real estate transaction. 3) a listing broker is permitted to close his own transactions under the supervision of his principal broker. Both 1 and 3 1 only 2 only None of the above
Both 1 and 3
A broker was asked by a property owner to prepare a competitive market analysis for the owner's residence. Under Oregon law, which of the following statements is true about a competitive market analysis? A) A fee can be charged for providing a competitive market analysis B) The analysis must be for the purpose of gaining a listing Both A and B B only A only Neither A nor B
Both A and B
Under REA rules and regulations, which of the following are true? A) A brokerage is not required to maintain a trust account. B) Every brokerage business must maintain a client trust account. C) If a brokerage has a property management division, they must maintain a clients' trust account and security deposit trust account. B only A only C only Both A and C
Both A and C
An unlicensed personal assistant to a real estate broker could legally do which of the following? Discuss information about property listed by a broker Obtain verification of sewer connection for a listed house from the city public works office at the client's request Discuss the terms of a sale with a seller Deliver documents to a buyer
Deliver documents to a buyer
An unlicensed personal assistant of a broker can do which of the following? Discuss information with a caller about a property listed by their broker. Deliver documents to a buyer. Prepare and submit advertising to a newspaper Discuss the terms of an offer with a seller.
Deliver documents to a buyer.
Which of the below is the offense most closely related to conversion? Armed robbery Extorsion Usury Embezzlement
Embezzlement
f the license of a licensee under the supervision of a principal broker is suspended, the principal broker should Limit the licensee to follow up responsibilities on existing transactions Ensure that all real estate activity by the suspended licensee be stopped immediately and prohibit any real estate activity until the license has been reinstated Immediately fire the licensee Impose the maximum fine allowed by law for the infraction for which the licensee was suspended
Ensure that all real estate activity by the suspended licensee be stopped immediately and prohibit any real estate activity until the license has been reinstated
Which one of the following would NOT be included as a good office policy and procedures manual objective? Setting forth a definite method of conflict resolution Defining the legal relationships and authority of licensees and employees Establishing a procedure for affiliated licensees to supervise their own paperwork in the absence of the principal broker Outlining procedures for the handling and storage of all real estate records
Establishing a procedure for affiliated licensees to supervise their own paperwork in the absence of the principal broker
A subjective standard would require that the fact in question affect the value or desirability of the property for most buyers. True False
False
Material facts are only those that affect the value of a property. True False
False
The trustee and beneficiary can be the same party. True False
False The trustee is a disinterested third party given the authority to hold trust deed, and the beneficiary is the lender. The trustee and the beneficiary cannot be the same entity.
A third party who accepts a promissory note without having knowledge of any defects is a/an: Holder in due course Payee Endorser Maker
Holder in due course
A statement which sets forth the net income of a business resulting in a profit or loss is known as a Retained Earnings Statement Income Statement Balance Sheet Financial Position Statement
Income Statement
Which one of the following is NOT correct about an accounting balance sheet? It shows the financial condition of a business as of a particular date It is also known as a profit and loss statement The balance sheet lists the owner's equity The balance sheet will list the assets and liabilities of a company
It is also known as a profit and loss statement
Which is a type of security instrument? Promissory note Mortgage
Mortgage
In the event of default, the ability of the mortgagor to pay the judgment between the time of notification and the time of sale is known as: Mortgagor's equity of redemption Stay of foreclosure judgment Mortgagee's default cure
Mortgagor's equity of redemption
Registration as a branch office with the Oregon Real Estate Agency is necessary when using the location as a: 1)model unit available for sale in a subdivision for promotion of interest in the development. 2)Temporary structure for circulating information about the subdivision. Both 1 and 2 2 only 1 only Neither 1 nor 2
Neither 1 nor 2
Under Oregon real estate license law, funds in a clients' trust account can be subject to: 1)attachment on a claim against the principal broker. 2)execution on a claim against the principal broker. 2 only 1 only Both 1 and 2 Neither 1 nor 2
Neither 1 nor 2
With respect to CMA's and letters of opinion, which of the following statements are true? A fee may be charged if the items above are prepared for any reason other than in pursuit of a listing of to assist a potential buyer in formulating an offer No CMA or letter of opinion can be prepared, whether for a fee or free of charge, unless prepared in pursuit of a listing or to assist a potential buyer in formulating an offer No fee may ever be charged for preparing either of the above A fee must always be charged for the preparation of a CMA or letter of opinion
No CMA or letter of opinion can be prepared, whether for a fee or free of charge, unless prepared in pursuit of a listing or to assist a potential buyer in formulating an offer
Which serves as evidence of a debt owed to a lender? Trust Deed Promissory note
Promissory note The promissory note is evidence of a debt owed. The debt is secured by a security instrument, such as a mortgage or trust deed.
In a typical real estate transaction, which one of the following would violate license law? Give the funds to the owner of the funds based on written instructions from all principals. Deposit the funds into the brokerage trust fund account Put the earnest money check uncashed in the deal file until all contingencies are removed Deposit the funds into a neutral escrow depository
Put the earnest money check uncashed in the deal file until all contingencies are removed
Which of the following is NOT considered to be trust funds? Cash tendered as earnest money Check made payable to the brokerage trust account Rent money received from a tenant of a client Rent money received from a tenant of the broker
Rent money received from a tenant of the broker Rents and deposits derived from rental property owned by the brokerage itself or owned by the licensee as an individual are not considered trust funds.
Which of the following is NOT a duty of an escrow agent Obtain loan documents and instructions from the buyer's lender Disburse all funds to the appropriate parties Order a preliminary title report Settle disputes between parties to a transaction
Settle disputes between parties to a transaction
At settlement, all of the following items, if applicable, will be prorated between the buyer and seller, EXCEPT: rents collected in advance. interest on an assumed loan. real property taxes. lender's ALTA extended title insurance premium.
The escrow instructions take precedence.
A broker representing a seller has an obligation to disclose material facts to the buyer. True False
True
An objective standard would require that the fact in question affect the value or desirability of the property for most buyers. True False
True
Which of the following is not a negotiable instrument? Promissory note Draft Trust deed Check
Trust deed
Which party CANNOT bid at a trustee's sale? The lender The defaulting borrower Trustee Third parties
Trustee
The type of mortgage that covers more than one parcel of real property is called: a blanket mortgage. a package mortgage. a wraparound mortgage. an all-inclusive mortgage.
a blanket mortgage.
In Oregon, if a property closes on August 15th, the closing statement with respect to real property tax prorations will most likely show a debit to the buyer and credit to the seller a debit to the seller and a debit to the buyer a credit to the seller and a credit to the buyer a debit to the seller and a credit to the buyer
a debit to the seller and a credit to the buyer
A lis pendens is: a voluntary lien. a notice that there is a pending lawsuit which may affect the title or possession of a specific property. a financial encumbrance. an involuntary lien.
a notice that there is a pending lawsuit which may affect the title or possession of a specific property.
A mortgage is best defined as: a document conveying a possessory interest. a general lien. an involuntary lien. a special lien.
a special lien.
The most common type of voluntary lien is created by: a judgment. a mechanics lien. a trust deed. real property taxes.
a trust deed.
A trust fund overage (i.e., there is more money in the trust account than there should be) is: a violation of real estate law. a good thing, because there is more money in the account than is necessary. not a violation of real estate law. impossible to have happen.
a violation of real estate law. Whether the trust account has a shortage or an overage, a discrepancy of any kind is a serious violation.
Every deposit made into a brokerage's trust account shall be made on duplicate deposit slips identifying each offer or transaction by a written notation of the file number assigned to the offer or transaction be noted in a ledger account and record of all funds received showing from whom the funds were received, the date of the receipt and place of deposit identify the source of the funds All of the above
all of the above
To be negotiable, a note does not need to contain: the signature of the maker. a demand clause or provision making it due on a certain date. a promise to pay a sum certain. an acceleration clause.
an acceleration clause.
A subordination clause in a trust deed benefits the: beneficiary. beneficiary of a subsequently recorded trust deed. trustee. trustor.
beneficiary of a subsequently recorded trust deed.
A note is being signed by co-borrowers. To afford maximum protection to the lender, the note should state that the borrowers are obligated: both jointly and severally. jointly. severally. neither jointly nor severally.
both jointly and severally.
A licensed real estate property manager may negotiate a lease-option for an owner of real estate collect a commission for the lease of an owner's real estate list the owner's rental property for sale
collect a commission for the lease of an owner's real estate
A licensee renewing his/her Oregon real estate license for the first time must: send in the renewal fee and an affidavit that the licensee will complete 60 hours of continuing education prior to the next renewal period. complete 35 hours of continuing education. complete the 27-hour Broker Advanced Practices course and 3-hour Law and Rule Required Course. complete 45 hours of continuing education at the election of the licensee.
complete the 27-hour Broker Advanced Practices course and 3-hour Law and Rule Required Course.
The brokers' commissions will usually be shown on the closing statement as a: debit to the buyer. debit to the seller. credit to the seller. credit to the buyer
debit to the seller.
A principal broker wants to hire a number of part-time employees to show property, pass out brochures, quote prices, and state terms of the sale of real property in a new development. He will staff the site with a broker to fill out all of the purchase and sale agreement forms. The part-time employees will not assist with the filling out or signing of documents. Under these circumstances, the: employees must be real estate licensees principal broker can hire part-time unlicensed persons since a licensee will fill out the documents. broker must supervise the part-time employees. employees can legally answer questions and quote prices only.
employees must be real estate licensees
When determining the layout of a real estate office, the most important consideration is providing access to technology adequate reception area ensuring client confidentiality ensuring that top producers have private offices
ensuring client confidentiality
When a buyer purchases a home on a land sale contract, he or she receives: a remainder interest. a reversionary interest. equitable title. legal title.
equitable title.
There are _______ standard exceptions from title insurance coverage. five two ten seven
five
A sole proprietor must obtain a Federal Tax ID number (EIN) if a sole proprietor need not ever obtain an EIN he/she hires a licensed personal assistant all businesses, including a sole proprietor, must obtain an EIN number he/she intends to pay wages to one or more employees
he/she intends to pay wages to one or more employees
A debit to the buyer on the closing statement always: increases the amount the seller will receive. decreases the amount the seller will receive. increases the amount the buyer must bring to closing. decreases the amount the buyer will pay.
increases the amount the buyer must bring to closing. $ owed
Under the real estate law, a brokerage: is required to have a trust fund account. is not required to have a trust fund account. is required to place all trust funds into an escrow company's trust account. is required to have a trust fund account if the average brokerage transaction dollar amount exceeds $250,000 (the amount of FDIC insurance).
is not required to have a trust fund account.
Commissions owed to licensees must be paid to the selling broker by the listing principal broker after closing disbursed directly to the appropriate brokers by the escrow company at closing made payable to their principal brokers or brokerages for disbursement to the respective agents withdrawn from the trust account prior to closing to ensure payment
made payable to their principal brokers or brokerages for disbursement to the respective agents
A principal broker's responsibility to independent contractor licensees includes a benefit package withholding all taxes from commission checks maintaining records of commissions paid and preparing a 1099 for each licensee reflecting total commissions paid the payment of all professional association dues
maintaining records of commissions paid and preparing a 1099 for each licensee reflecting total commissions paid
A property manager licensee affiliated with a principal broker may list a property he/she manages with the written consent and supervision of the principal broker may rent or lease personally owned properties without the supervision and control of the principal broker is not subject to principal broker supervision may receive referral fees from the principal broker for referring properties he/she manages to be listed for sale
may rent or lease personally owned properties without the supervision and control of the principal broker
The borrower is also known as the: mortgagee mortgagor
mortgagor The borrower is also known as the mortgagor. The party who receives the mortgage document in exchange for making the loan (the lender) is the mortgagee.
Clients' trust fund accounts should be reconciled at least: twice quarterly. once a week. once a month. Four times a year.
once a month
To hypothecate is to: convert a fee simple into equitable title. deliver a judicial opinion. devise property. pledge something as security for a debt
pledge something as security for a debt
A mortgage or trust deed is always accompanied by a: title policy. conditional sales contract. promissory note. deed.
promissory note.
Seller financing under a mortgage is referred to as a : purchase money mortgage. chattel mortgage. conventional mortgage. home mortgage.
purchase money mortgage.
Curt and Beth are two months behind in payments on their note secured by a trust deed on their personal residence. A trustee's sale has been scheduled for the future. At this point Curt and Beth's interests in the property are protected by their right of: reversion. reinstatement. redemption. estoppel.
reinstatement.
All of the following are trust funds, EXCEPT: earnest money deposit relating to a purchase of property. rents and deposits derived from rental property owned by the broker. fees for brokerage services to be conducted in the future. security deposits received for a property the broker is managing for the property owner.
rents and deposits derived from rental property owned by the broker.
David Jones, an Oregon Broker, receives a $2500 earnest money check from his client, Mary Smith, made payable to his Principal Broker, John Gray. David knows that his brokerage does not have a trust account but accepts the check and gives it to his Principal Broker John. John should return the check to David with the instructions to get a replacement made out to the title company immediately deposit the check into his personal account and withdraw cash and deposit the funds immediately with the named title company in the purchase and sale agreement deposit the check into the company checking account and hold them there until closing deposit the check into the company general checking account and immediately issue a check to a neutral depository to comply with the 3 business day deposit requirement
return the check to David with the instructions to get a replacement made out to the title company immediately
Martin bought a property and the contract provided that the transaction would close in escrow on August 31. The closing statement will provide that the: buyer will pay the seller for July and August taxes. seller will pay the buyer for nine months of taxes. seller will be debited for July and August property taxes and the buyer will be credited. buyer will be debited and the seller credited for nine months of taxes.
seller will be debited for July and August property taxes and the buyer will be credited. because Seller owns property in July and Buyer owns the property in August
A brokerage commercial checking account may be used to temporarily hold client funds must be located in the State of Oregon should be used for personal real estate transactions for all licensees should be used to receive income and disburse all business expenses
should be used to receive income and disburse all business expenses
The period of time that signed copies of listings, deposit receipts, earnest money receipts and other contracts must be maintained is one year three years six years four years
six years
A defeasance clause in a mortgage: requires that the borrower maintain the collateral and not commit waste. indicates that the borrower has the authority to pledge the collateral. stipulates that the borrower will be able to regain clear title after the mortgage is paid in full. requires that the balance be paid in full upon default of the loan.
stipulates that the borrower will be able to regain clear title after the mortgage is paid in full.
Ownership by one person is known as: tenancy by the entirety. tenancy in severalty. tenancy in solo. tenancy not in common.
tenancy in severalty.
Before acceptance of the offer, earnest money received from the buyer belongs to the buyer. the broker. escrow company. the seller.
the buyer.
In researching records at the county clerk's office, a first mortgage and a second mortgage on the same piece of property can usually be distinguished by: the date of recording. the date of the instrument. the words "first" or "second" preceding the phrase "this indenture." the notations made in the recording records by the county recorder.
the date of recording.
A principal broker hired a number of part-time employees to show property, pass out brochures, quote prices and state terms of the sale of real property in a development. A real estate broker was on site to fill out all of the earnest money agreements. The employees did not sign documents. Under these circumstances, the principal broker is not in violation as long as the employees were paid on an hourly basis the employees could legally quote prices and terms as long as they did not fill out the forms the principal broker is not in violation since a licensee filled out and signed the documents the employees must be real estate licensees
the employees must be real estate licensees
When an earnest money deposit is placed in a neutral escrow: the funds are to be deposited into an account located out of the state. the licensee is required to keep the check uncashed until after the transaction closes. the funds must first be deposited into the principal broker's clients' trust account. the escrow agent must have instructions relative to the deposit.
the escrow agent must have instructions relative to the deposit.
If a licensee directs clients to his home office for the purpose of conducting real estate business: the home is merely the office of the licensee and is no different than meeting clients in a coffee shop. the home is not considered a branch office and no registration is required. the home is considered a branch office of the brokerage's principal broker and registration with the REA is required. a licensee is not permitted to work out of a home office, even if no clients visit the property.
the home is considered a branch office of the brokerage's principal broker and registration with the REA is required.
Title insurance protects the buyer by providing that: the mortgage balance will be paid off in case of default. the property will be restored in the event of any damage covered by the policy. the mortgage balance will be paid off in case of death or disability. there will be protection against adverse claims to the ownership of the property except those exclusions listed in the policy.
there will be protection against adverse claims to the ownership of the property except those exclusions listed in the policy.
Trust funds must be deposited by the principal broker within 3 banking days of receipt within 3 days of receipt within 5 banking days of receipt within 5 days of receipt
within 3 banking days of receipt
An endorser of a note who does not guarantee payment of the note to the person to whom he immediately assigns the note and to all future holders of the note endorses it: with recourse. without recourse. with protest. in blank.
without recourse.