National Exam #2

What is the best-case scenario with a debt-to-income ratio?

20% debt to income

Craig is a tenant with a year-to-year tenancy. How much notice must he give his landlord if he wants to terminate his lease?

30 days

The Maryland Commission on Civil Rights consists of how many members?

9 and an executive director appointed by the govenor.

What is a ground lease?

A residential lease or sublease for a specific term that is renewable forever, subject to the payment of ground rent.

Gloria has an option to purchase the cottage she leases from her landlord. She can exercise the option within the next two years. To gain that right, Gloria paid the landlord $5,000. This is called ______.

An option fee

All commercial leases should contain the conditions under which the lease can be terminated; the names and signatures of all parties; and _________.

Any additional information based on negotiations and specific situations

When your clients improve their credit score, they _________.

Are likely to get better rates

The fibers of what material are dangerous when inhaled because they can lodge in the lungs and intestines, causing cancer?

Asbestos

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

Buyer's

_______________ is a Latin term that means "let the buyer beware."

Caveat emptor

Which of these provides a number that signifies your credit risk to lenders?

Credit score

Darren and Natalie are first time buyers who have decided to purchase a newly built townhouse. Their agent, Jenner, tells them that the builder must provide a one-year home warranty. What condition is most likely true?

Darren and Natalie are using an FHA-Insured loan.

What is a common problem with roof shingles?

Discoloration or curling

The Nicholsons just bought a mid-century modern home that will require lead paint abatement. Tom and Genna, their three-year-old daughter Grace, and Genna's mom Pat are waiting to move into the split level until the abatement is complete. Who would be at the most risk of adverse lead effects if they moved in before the abatement was finished?

Grace

Which of the following situations is a violation of Maryland fair housing laws?

Jack refuses to rent a unit in the six-unit apartment building he owns and in which he lives to a transgender woman name Jane.

James is a real estate licensee in Maryland. A complaint has been brought against James by the Commission on Civil Rights for a fair housing violation. What is true?

James could be sanctioned by both the Commission on Civil Rights and the real estate commission.

Selma and Richard have the temporary right to live at 123 Elm Street. They can come and go and use the property as they see fit, but they can't do so indefinitely. They must vacate the property at the end of next year. What sort of interest do they have in 123 Elm Street?

Leasehold Estate

The tenant is the _______________ in a lease agreement.

Lessee

What does "caveat emptor" mean?

Let the buyer beware

Home inspector Maura was walking Thad through a property inspection. The frame house, on a slab foundation, had mulch piled up about 18 inches next to the house. What was Maura noting this as a concern?

Mulch next to wood siding may lead to wood rot.

Leases may be terminated by expiration, eviction, or ___________.

Mutual agreement

Which type of lease is one in which the tenant pays the rent and some expenses related to the property (e.g. maintenance) separately?

Net

Gary leases a commercial building and pays all expenses related to the building, including taxes and insurance. Gary has a __________.

Net Lease

With this type of commercial lease if the option to drill isn't exercised within the stated time frame, the lease expires.

Oil or gas lease

Who can enforce an option contract?

Only the Optionee

Under which types of agency agreement may a buyer and agent operate?

Open, exclusive right to represent and exclusive agency

Margo is the potential buyer of the property in an option contract. Margo is the ______.

Optionee

Tyra owns a nail salon that's located in a strip mall. Her rent every month includes $1,800 base rent and 10% of her gross sales. What kind of lease does Tyra have?

Percentage Lease - tenant pays a base rent plus a percentage of the gross sales. This is most common with retail tenants.

With this type of commercial lease, the lease holder does not own the apartment buy instead holds the lease to the residential unit.

Proprietary lease

In full seller disclosure states, whose responsibility is it to fully disclose all items on a seller disclosure form and any known material defects not listed on the form?

Seller

Paying down your credit cards is a great idea to reduce debt, but it can backfire. In the eyes of the lender, which action is the least damaging to loan qualification?

Several open cards with available credit on them

Which two Maryland protected classes, while not specified in federal fair housing law, may still qualify for protection under the federal Fair Housing Act under certain circumstances?

Sexual orientation and gender identity

Eleanor is working as a buyer's agent for Luis in a state without full disclosure requirements. What is her responsibility relative to property disclosures?

She must obtain the disclosures, provide them to Luis, and review them with him.

The seller disclosure indicates that the central air conditioning unit is 26 years old. Why might this worry margot's buyers?

The unit may need to be replaced.

How does Maryland's Homeownership for individuals with Disabilities Program (HID) benefit disabled individuals?

Through lower interest rates

What's the purpose of a buyer presentation?

To build rapport with the buyer.

What is the goal of the Maryland Real Estate Commission in declaring an area a real estate conservation area?

To curb threats to the racial stability of an area.

A qualified mortgage may not include interest - only payments and balloon payments, or lender fees and points that total more than 3% of the loan because these are considered _______ in relation to the qualified mortgage.

Toxic loan features

How does discrimination tessting work?

Two different applicants whose only difference is protected class apply for the same property.

Most lender like to see at least _______ months of cash reserves in addition to the buyers down payment.

two

Mike relocated for work and learned that the region in which he planned to buy a home had many old underground mines. In fact, Mike might even need to purchase mine subsidence insurance. What might a home inspector flag for Mike if there are any concerns about undermining?

A sinkhole on the property

When a policy negatively impacts a protected class more than it negatively impacts others, this is called what?

Disparate impact

Three days ago, there was a severe thunderstom in Shirley's town. Today, there's still a large puddle of water on her property, but it doesn't appear the neighboring properties have any puddles. This could indicate a ______________ problem.

Drainage

Justin decided to build a privacy fence around his yard. He thought the fence was along the property line, but it turns out he built it one foot inside his neighbor's property. What will an inspector document as existing on the neighboring property?

Encroachment

Who may borrow money from a Roth IRA to obtain down payment funds?

Five-year or more qualified Roth IRA holders

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

With this type of commercial lease, any improvement made to the property by the tenant belongs to the landowner when the lease expires.

Ground Lease

Inconsistent temperatures from room to room is a common indication of a problem with what system or home feature?

Heating and cooling

From a lender's perspective, what does a credit score on the low end indicate?

Higher Risk

A tenant who continues to occupy property after lawful authority has expired is known as a _________.

Holdover tenant

A borrower is using a gift to fund part of his home purchase. What criteria for the gift holds the most weight in the lender's eyes?

How long ago the gift was given - Those with a longer history of ownership by the borrower will be viewed the most favorably.

Our Sanctuary is a senior living community. It can reject occupancy by families with young children under which of the following circumstances?

If all residents are required to be age 62 or above.

To comply with the statute of frauds, an option contract must be _______.

In writing and signed by the optionor

Why is it important for buyers to ask when a chimney or fireplace was last inspected?

It could reveal important information about the unit's maintenance and function.

Why is a home inspection recommended?

It gives the buyer a snapshot in time of the home's condition.

If a tenant moves out before a lease term expires and the landlord is able to rent the unit, the tenant is ________.

Liable for rent for the month during which the move out occurred and any month until the end of the lease that the landlord is unable to rent the unit.

What could be a sign of a plumbing problem?

Low water pressure

Who or what entity has the power to seek civil action and / or injunctions against parties who violate Maryland fair housing law?

Maryland Commission on Civil Rights

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

Mediation

Real estate licensees are seldom guilty of blatant discrimination, but unintentional discrimination does exist. What's one example of unintentional discrimination?

Not showing homes in neighborhoods where the client may become a victim of racial bias.

Mark is trying to set up a face-to-face meeting with potential buyers the Tomlins, but the Tomlins have refused. What should Mark do next?

Politely insist on a meeting.

The right to use the property and to live or work there is known as _____.

Possession

Marilyn is reviewing the inspection report with her buyer clients. What issue in the report should Marilyn flag as most significant?

Presence of mold

A real estate professional in Maryland is legally permitted to take which of these actions?

Prohibit a family of 10 from renting a unit with a capacity of two people.

Which loan program benefits low-income borrowers in rural areas?

Section 502 Direct Loan

Prior to the end of the option period, Dwayne withdraws his offer to sell his property to Melissa. Dwayne is in breach of contract. Melissa still wants the property and will sue for ______.

Specific Performance

Loans made to high-risk borrowers, at higher interest rates and with higher fees, are ______.

Subprime loans

With a triple net lease, the tenant pays ________ separately from the base rent.

Taxes, insurance and maintenance

Who is the lessee in a lease agreement?

Tenant

Marshall is a home inspector who is walking the lot of the property he's inspecting with a survey in hand. Which of the following will he note as an encroachment on the inspection report?

The neighbor installed a basketball hoop next to his driveway, six inches over the property line.

In addition to the property address, the lease agreement start and end dates, and the monthy rent and deposit amounts which of the following pieces of information should all commercial leases contain? A complete list of the other tenants and their rental rates A copy of the tenant's credit report A detailed description of the property The purpose for which the space is being rented

The purpose for which the space is being rented.

In commercial lease agreements, tenants pay the owner in exchange for ___________.

The right to operate their business on the property.

You have a client who's leasing commercial space. The lease terms call for him to pay a portion of the landlord's taxes, insurance and maintenance. What type of lease does your client have?

Triple net lease

While showing your buyers through a home, you flipped on the light in the powder room and were concerned because the light switch felt warm. Why is this a concern?

Warm light switches might mean there is an electrical problem.

First Baptist Church in Annapolis owns two aparments next door to the church, which used to be housing for their ministerial staff. It does not rent to non-Baptists. Is this legal?

Yes, as long as it does not discriminate based on race, color, nation origin, or familial status.

Licensee Janice has found a way to work with prospective buyers without ever leaving her desk: She sets them up with automated email messages for listings that meet their criteria, and answers any questions they have when they call. Is Janice doing anything wrong?

Yes, because she should meet them in person before working for them.

Mrs. Jones is renting out the upstairs of her house to earn some extra money. She prefers female tenants and will only allow a single heterosexual female. Can she legally do this?

Yes, since she is the owner-occupant of a single-family principal residence, she is allowed to reject enants based on sexual orientation and sex.

Shawn and his life partner, Dennis, recently put an in an offer on a home. The seller tells his agent to reject the offer, because he won't sell to "gays." Are Shawn and Dennis protected under fair housing laws?

Yes, under state fair housing laws

Ricardo filed a complaint with the Maryland Commission on Civil Rights when he saw Mrs. Jones's rental advertisement for a one-bedroom apartment above her garage. The ad said, "heterosexual tenants only." Mrs. Jones claimed that she is allowed to discriminate because she lives in the home. Does Ricardo have a case?

Yes. Advertising may not discriminate.

Buyer Peter is eager to make an offer on the two-story home you just showed him, but you're concerned about the back bedroom, since it looks like a relatively recent addition. When Peter asks you why it's an issue, how do you respond?

You recommend that Peter check on the permits for it, so that he doesn't buy the house and then have to correct or even remove the addition because it wasn't built to code.

You've listed a 1918 Craftsman with some significant foundation issues—so significant that the buyers walked away after the inspection. They provided you and your sellers with a copy of the inspection report, which also points out some wiring concerns. At today's open house, a prospective buyer asks to see a copy of any inspections done on the property. What should your response be?

You should disclose any adverse material facts, buy you don't have to provide the report.