Oregon Real Estate, Brokerages
When the seller is paying the entire brokerage fee, the fee will be shown on the closing statement as a credit to the buyer. credit to the seller. debit to the buyer. debit to the seller.
debit to the seller Seller debits are items paid by the seller; seller credits are funds payable to the seller.
If a broker is dishonest, the trust fund bank account will protect the client's funds regardless of the broker's conduct. is insured by the FDIC, so the client will still receive their funds. will prevent a dishonest licensee from converting the funds to personal use. does not guarantee protection against the dishonest conduct of the licensee.
does not guarantee protection against the dishonest conduct of the licensee.
There are _______ standard exceptions from title insurance coverage. five two ten seven
five
The basic information necessary to open an escrow is found in the listing agreement. in the preliminary title report. in the real estate sale agreement and its addenda. in the escrow instructions submitted by the brokers.
in the real estate sale agreement and its addenda.
Every deposit made into a 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. identify the source of the funds. be noted in a ledger account and record of all funds received showing from whom the funds came, the date of the receipt, and place of deposit. include all of the above.
include all of the above
A debit to the buyer on the closing statement always 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 needs to pay their lender.
increases the amount the buyer must bring to closing.
Liens that attach to a property without the consent of the property owner are known as nonfinancial encumbrances. secured liens. involuntary liens. voluntary liens.
involuntary liens.
When a licensee regularly meets with clients at a home office, the home office is the office of the licensee and is no different than meeting clients in a coffee shop in as much as the REA is concerned. is a branch office and must be registered with the REA. is not considered a branch office and no registration is required. illegal because the REA does NOT allow a licensee to work from a home office.
is a branch office and must be registered with the REA.
Under the real estate law, a brokerage: is not required to have a trust fund 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 required to place all trust funds into an escrow company's trust account. is required to have a trust fund account.
is not required to have a trust fund account.
At settlement, all of the following items, if applicable, will be prorated between the buyer and seller, EXCEPT: interest on an assumed loan. real property taxes. rents collected in advance. lender's ALTA extended title insurance premium.
lender's ALTA extended title insurance premium.
Property taxes are levied and become a lien on real property on June 30th of each year. on July 1st of each year. on November 15th of each year. on January 1st of each year.
on July 1st of each year.
Clients' trust fund accounts should be reconciled at least: once a month. four times a year. once a week. twice quarterly.
once a month
The function of a closing statement is to ensure the escrow agent is not paying out more cash than was collected from the buyer. advise the parties of the steps that must be taken to protect the title. assess all charges equally between the parties. present and record the monetary presentation of a real estate transaction.
present and record the monetary presentation of a real estate transaction.
Restrictions relating to issues such as fence types, building design reviews, and prohibitions against such things as permanent basketball hoops are examples of public covenants. public restrictions. private restrictions. conditions.
private restrictions.
Which one of these items would not be prorated at closing? Inspection fees. Taxes. Condominium assessments. Utilities.
Inspection fees.
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.
Ownership of common stock in a corporation gives co-ownership in property held by the corporation. a personal property interest in the corporation. partnership control of selling corporate real estate. assurance that the original investment to purchase the stock will not be diminished.
a personal property interest in the corporation.
Keisha is buying John's house. The closing date (day belongs to seller) of the sale transaction is September 1 (day 244 of the year). Existing hazard insurance of $350 has been paid by John through December 31. Use the 365-day method for prorating. What is Keisha's share of the existing hazard insurance already paid in full? $116.03. $117.99. $232.01. $233.97.
$116.03.
A sale transaction closes on July 4. The day of closing belongs to the seller. On January 1, the seller paid a hazard insurance premium of $375 for the calendar year. According to the 12-month/30-day method, what is the seller's share of the insurance premium? $183.33 $187.50 $189.05 $191.67
$191.67 This method assumes all months are 30 days long, making the year a total of 360 days. The daily proration would be $1.04166 ($375 ÷ 360 days = $1.04166). The closing occurs on the 184th day of the 360-day year (6 months x 30 days per month =180 days + 4 days (July 4) = 184 days). $1.04166 × 184 days = $191.67 Note that if the day of closing is the buyer's, there would be 183 day's worth of prorated expense.
Julie is buying Makya's house. The closing date (day belongs to seller) of the sale transaction is September 1 (day 244 of the year). The buyer's loan amount is $78,750 (90%; 30 years @ 8%). The monthly payment on this loan is $577.84, with $525 going to interest in the first month. At closing, Julie must pre-pay interest for the period of Sept. 2-Sept. 30. Use the 365-day method for prorating. What is Julie's prepaid interest amount? $507.50. $525.00. $543.10. $558.58.
$507.50. If the buyer pays $525 interest for 30 days, the daily expense is ($525 ÷ 30), or $17.50. If there are 29 days of pre-paid expense, the buyer's charge is ($17.50 x 29), or $507.50.
A sale transaction closes on April 1, the ninety-first day of the tax year. The day of closing belongs to the seller. Real estate taxes for the year, not yet billed, are expected to be $2,190. According to the 365-day method, what is the seller's share of the tax bill? $1,364.66. $1,644.00. $546.00. $9530.
$546.00. The daily tax expense, first, is ($2,190 ÷ 365) or $6.00. Since the buyer will pay the taxes after closing, the seller will owe the buyer his or her portion of the tax bill, which is the 91 days from the beginning of the year through closing. Therefore, credit the buyer and debit the seller ($6.00 x 91), or $546.00.
Waldo is buying Marianne's house. The closing date (day belongs to seller) of the sale transaction is September 1 (day 244 of the year). Current Year real estate taxes are $1,100 (will be billed to buyer next year). Use the 365-day method for prorating. What is Marianne's share of the real estate taxes? $364.66. $367.67. $732.33. $735.34.
$735.34 Assuming a 365 day year, the daily tax expense is ($1,100 ÷ 365), or $3.013. As taxes are paid in arrears, the buyer will be paying the annual bill. Thus, he will be owed a credit for the seller's share of the bill, which is $3.013 x 244 days, or $735.34.
Any document prepared by a broker relating to real estate activity performed must be reviewed and initialed by the principal broker within: 7 banking days 10 days. 3 hours of document creation. 1 week
7 banking days
If a managing principal broker is to be absent from the brokerage, another principal broker can be authorized to control and supervise the professional real estate activity of the office for an initial period not to exceed 30 days. 60 days. 90 days. 120 days.
90 days
The two reconciliations to be made at the end of each bank statement period are: A. reconciliation of the bank account record with the separate beneficiary records. B. reconciliation of the trust fund journal with the trust fund ledger. C. reconcile the bank account record with the bank statement. D. reconcile the bank statement with the trust fund journal.
A and C only
A seller received a rental payment of $900 in advance of closing. At closing, the seller is due only $320 of this rent and the balance will be paid to the buyer. What should appear on the closing statement? A debit to the seller for $580 and a credit to the buyer for $320. A debit to the seller for $320 and a credit to the buyer for $900. A debit to the seller and credit to the buyer for $320. A debit to the seller and credit to the buyer for $580.
A debit to the seller and credit to the buyer for $580. For income the seller received in advance, the buyer receives a credit and the seller receives a debit. In effect, the seller has received some of the buyer's income, and the seller must pay this share to the buyer. Therefore, the seller is debited and the buyer is credited the $580 the buyer is entitled to earn as the new owner.
In Oregon, in order to get paid, real estate brokers are required A. to send a written demand for compensation to the escrow officer before closing. B. to confer with the cooperating broker to make sure they receive equal shares of the total commission.
A only
The ALTA extended policy A. removes the five standard policy exceptions as exceptions to coverage and insures the policyholder against them. B. is generally granted to the buyer without additional charge in Oregon.
A only
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
A, B, and C
If the brokerage is incorporated, which of the following statements is 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 need to be renewed every year.
A, B, and C
Which statements are true regarding a title search? A. A title search traces the chain of title by researching every record available for a property. B. A title search determines whether the person or entity who is selling the property actually has legal ownership and the right to sell it. C. A title search reveals "defects" against the title.
A, B, and C
Broker Jones has received rent money for two properties owned by Jack Hall. Each rental check should be recorded by Jones's principal broker on which of the following columnar records: A. Columnar Record of All Trust Funds Received and Paid Out - Trust Fund Bank Account B. Separate Record for Each Beneficiary for Client's Funds Placed in Trust Bank Account C. Record of All Trust Funds Received - Not Placed in Broker's Trust Account D. Separate Record for Each Property Managed
A, B, and D only
Regardless of the type of trust accounting system used, the accounting system must meet which of the following criteria? A. Trust receipts and disbursements must be detailed in chronological order B. The system must show the balance owing to each beneficiary or on each transaction. C. The system must be a manual system. Computer generated systems are not permitted. D. The balance in each trust fund account must be calculated on recorded transactions.
A, B, and D only
Principal brokers must supervise which of the following activities of brokers? Completion of a listing agreement. Completion of a CMA. Completion of a purchase and sale agreement.
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
All of the above
Once trust funds have been deposited into a trust account, the funds can only be withdrawn upon the signature of one or more of the following: A. The principal broker who is the agent of the client depositing the money. B. The principal broker in whose name the account is maintained as trustee. C. A broker licensed to a principal broker if properly authorized in writing to do so. D. An unlicensed employee of a principal broker if properly authorized in writing to do so and who is covered by a proper fidelity bond.
B only
Oregon Administrative Rules dealing with neutral escrow and clients' trust accounts requires: A. all funds to be deposited first in the clients' trust account and then transferred into a neutral escrow. B. the principal broker to account for all funds received by maintaining appropriate documentary evidence.
B only
When a broker transfers to another brokerage A. the broker can take all of their existing listings with them to the new office. B. the receiving principal broker must request a transfer of the broker's license.
B only
Which of the following can an unlicensed employee do? A. Transmit information from a multiple listing to a phone prospect if no one else is in the office. B. Verify the accuracy of listing information supplied by a broker by checking with the records at the county tax office.
B only
Two major reports used in accounting are the Balance Sheet and Income Statement. Assets Sheet and Cash Flow Statement. Chart of Accounts and Chart of Liabilities Balance Chart and Property Listings.
Balance Sheet and Income Statement.
Encumbrances A. are a right another person has in a property that diminishes the rights of the property owner. B. are frequently accepted by a buyer with the passing of title.
Both A and B
The ALTA Owner's Standard Title Policy expressly excludes from coverage any loss or damages arising from which of the following? A. Any law, ordinance or governmental regulation that affects the use and enjoyment of the property. B. Taxes and assessments that are not shown as existing liens by the records of the appropriate taxing authority.
Both A and B
When interviewing for a listing, who can give a seller an estimate of a reasonable sales price? A. Broker B. Principal broker
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. A property manager who receives security deposits on behalf of an owner must open and maintain a security deposits account that is separate from the property manager's clients' trust account.
Both A and C
Broker Jones has received a $2,000 earnest money check made payable to the escrow company. Jones's principal broker must enter the check in which of the following records: A. Columnar Record of All Trust Funds Received and Paid Out - Trust Fund Bank Account B. Separate Record for Each Beneficiary for Client's Funds Placed in Trust Bank Account C. Record of All Trust Funds Received - Not Placed in Broker's Trust Account D. Separate Record for Each Property Managed
C only
The unlicensed personal assistant of a broker can do which of the following? Discuss the terms of an offer with a seller. Deliver documents to a buyer. Discuss information with a caller about a property listed by their broker. Prepare and submit advertising to a newspaper
Deliver documents to a buyer.
Which of the below is the offense most closely related to conversion? Armed robbery Usury Embezzlement Extortion
Embezzlement
A listing broker would be wise to leave For Sale signs up after closing a transaction because it is a very effective and inexpensive method of advertising. True False
False
A principal broker can delegate the responsibilities of trust accounts to a CPA who will then become liable if there are any trust fund errors. True False
False
The operations checking account of a real estate business must be located within the State of Oregon. True False
False A real estate company should maintain at least one operations checking account. This account can be located within or outside of Oregon
Inactive records must always be kept at the registered business address. True False
False Inactive records are records of transactions completed or terminated at least two years prior. After two years, a principal broker may store inactive records in a single location other than the registered business address.
In a single entry accounting system, equal debit and credit entries are made for each transaction. True False
False It is the double entry system that gets its name from the fact that equal debit and credit entries are made for every transaction.
As an associated licensee you will be required to obey all of the instructions of your principal broker. True False
False Licensees should not obey any unlawful instructions of their principal broker.
When prorating Oregon real property taxes in a closing statement, what date is used as the beginning of the tax year? November 15 January 1 July 1 June 30
July 1
Assets = Liabilities + Cash Balance Liabilities + Owner's Equity Liabilities - Owner's Equity Owner's Equity - Cash Balance
Liabilities + Owner's Equity
A branch office registration is necessary to use A. model unit in a subdivision which is available for sale but used for promotion of interest in the entire development. B. temporary structure for dissemination of information.
Neither A nor B
Which of the following business entities is generally prohibited from brokering real estate? Sole proprietorship. Non-profit corporation. Corporation for profit. Partnership.
Non-profit corporation.
Which of the following are exceptions to commingling that are permitted under Oregon Real Estate law? A. The principal broker may maintain up to $300 of personal funds in a trust account to cover service fees and other bank charges. B. The principal broker may deposit rents and deposits from broker owned real estate into the trust fund account. C. The principal broker may retain commissions earned in the trust fund account up to 30 days from the date they were earned. D. The principal broker may deposit into the trust fund account any sum required to cover trust fund shortages.
None of the above
When trigger terms are used in an ad, which disclosure does NOT have to appear? Prepayment penalty Downpayment amount or percentage Repayment obligations over the full term of the loan, including any balloon payment Annual Percentage Rate
Prepayment penalty The prepayment penalty does NOT have to be disclosed when trigger terms are used.
Which of the following liens will usually take priority over all other liens? Mortgage liens Real property tax liens Judgment liens Mechanics liens
Real property tax liens
Which of the following is NOT a trust fund? Fees for brokerage services to be conducted in the future. Rents and deposits derived from rental property owned by the broker. Security deposits received for a property the broker is managing for the property owner. Earnest money deposit relating to a purchase of property.
Rents and deposits derived from rental property owned by the broker.
There are many requirements pertaining to record-keeping. How long must records be kept from the termination of activity for a transaction? Six years Two years Three years but no more than four years Until a reasonable time following transaction closing
Six years Records must be kept for six years from the termination of activity pertaining to a transaction.
How long does the principal broker have to keep all bank statements, canceled and voided checks, and bank reconciliations? Four years from reconciliation. Four years from the bank statement date. Six years from the bank statement date. Six years from the date of reconciliation.
Six years from the date of reconciliation.
Which one of the following is NOT considered to be "advertising" by the Real Estate Agency? Lawn signs Facebook Craigslist Sponsored links on a search engine such as Bing or Google.
Sponsored links on a search engine such as Bing or Google.
An Oregon principal broker wants to place a booth in the Washington Square Mall to display information about listings. The booth will be staffed by licensees. Which statement is true? The booth needs to be registered as a branch office. The law prohibits the use of this type of informational display in public areas. The booth does not need to be registered as a branch office As long as the booth is open for less than six months, it will not need to be registered as a branch office
The booth needs to be registered as a branch office.
Which statement is NOT true about the Chart of Accounts? For a large brokerage, the chart of accounts requires a much larger and comprehensive account listing than a small brokerage. The chart of accounts is designed to show the financial condition of the business as of a particular date. The chart of accounts identifies all sources of income and expenditures. The chart of accounts should identify a sufficient number of accounts for adequate control over expenses.
The chart of accounts is designed to show the financial condition of the business as of a particular date. The balance sheet, not the chart of accounts, is designed to show the financial condition of the business.
If escrow instructions differ from the real estate sale agreement, and the escrow instructions have been signed by both the buyer and seller, which of the following is correct? The escrow instructions will take precedence. Everything is void and the transaction is subject to renegotiation. The real estate sale agreement takes precedence. A new real estate sale agreement must be created and signed.
The escrow instructions will take precedence.
A certain item is to be prorated between a buyer and seller. If no outside party is concerned, which of the following statements is true? The party who owes money receives a debit for the portion owed and a credit for the portion that is not owed. The item must be prorated and recorded as a debit to one party and a credit to the other party for the same amount. The party who is owed money receives a credit for the entire item and a debit for the prorated amount. The item must be prorated and recorded as a debit to one party; the remainder is recorded as a credit to the other party.
The item must be prorated and recorded as a debit to one party and a credit to the other party for the same amount.
A principal broker accepted an earnest money deposit check from a buyer for an accepted offer on one of the principal broker's listings and then endorsed it over to the associated broker who listed the property as a partial commission advance. Which statement is correct? Nothing is wrong with this, provided this is done within three days from receiving the check. The broker has to keep the check uncashed until closing so it can be returned if the transaction falls through. The principal broker and the agent are guilty of price fixing. The principal broker has illegally converted trust funds for business use.
The principal broker has illegally converted trust funds for business use.
If a brokerage is going to be organized to allow multiple principal brokers to manage its brokers, which statement is true? There should be a written agreement between principal brokers, but none is required. There can only be one managing principal broker and the responsibility cannot be shared. The brokers must select which one of the principal brokers he/she prefers to work under. There must be a written agreement between the principal brokers defining how the supervision and control of the brokers shall occur.
There must be a written agreement between the principal brokers defining how the supervision and control of the brokers shall occur.
In a typical real estate transaction, which one of the following IS a violation of license law? To give the funds to the owner of the funds based on written instructions from all principals in the transaction. To never deposit an earnest money check from a client. To deposit the funds into the brokerage trust fund account. To deposit the funds into a neutral escrow depository.
To never deposit an earnest money check from a client.
All records relating to real estate activity and financial records related to trust funds, including accounting records, bank statements, check registers, journals, signed and dated reconciliations, canceled and voided checks, etc. must be maintained and retained by the principal broker for six years following the termination of a transaction. True False
True
An income statement is designed to report the revenue received for a specific period, minus the expenses for the same period. True False
True
Good accounting procedures include recording all transactions in the appropriate journals and checkbooks at the time the transaction occurs or at least daily. True False
True
If the brokerage maintains a merchant credit card account that allows earnest money deposits to be made by credit card, the face amount of the payment before deductions for merchant discount or processing fees is the amount the principal broker shall maintain, use, or refund. True False
True
Reconciliation of a bank trust account involves reconciliation with the separate beneficiary records and reconciliation of the bank account record with the bank statement. True False
True
The balance sheet indicates how much cash is available to the company. True False
True
A lis pendens is: a notice that there is a pending lawsuit that might affect title or possession of a specific property. a financial encumbrance. a voluntary lien. an involuntary lien.
a notice that there is a pending lawsuit that might affect title or possession of a specific property.
The right for someone to use the land of another for a specified purpose is known as a lien. an easement. a variance. an encroachment.
an easement.
An item paid in arrears is normally paid whenever it is incurred. at some time after the expense is incurred. only after it is billed. on a monthly or yearly basis.
at some time after the expense is incurred.
Real estate records must be kept in alphabetical order. by last name of the broker representing the client. consecutive order. burn proof storage areas.
consecutive order.
The illegal practice of __________ occurs when funds are misappropriated from the trust fund account. advancement commingling an illegal loan conversion
conversion
Martin bought a property and agreed that the transaction would close in escrow on August 31. The closing statement will provide that the seller will be debited for July and August property taxes and the buyer will be credited. seller will pay the buyer for nine months of taxes. buyer will pay the seller for July and August taxes. 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.
Unless otherwise agreed, the escrow fees are typically shared between the buyer and seller. paid by the listing agent. paid by the seller. paid by the buyer.
shared between the buyer and seller.
Ownership by one person is known as tenancy in solo. tenancy not in common. tenancy by the entirety. tenancy in severalty.
tenancy in severalty.
Before acceptance of the offer, earnest money received from the buyer belongs to the seller. the buyer. the broker. escrow company.
the buyer
Prorations are the apportionment of certain expenses at closing between the buyer and the lender. the broker and buyer. the seller and broker. the buyer and seller.
the buyer and seller.
To take title as tenants by the entirety the owners must be married. the owners must not be related. the owners must be related. the entire property must be owned by one party.
the owners must be married.
At the closing of a mortgage loan the borrower's loan application is complete and the file closed. the lender issues a firm loan commitment. the parties complete all loan origination documents and the loan is funded. the borrower pays off the note and receives clear title.
the parties complete all loan origination documents and the loan is funded.
Standard exceptions to title insurance are found in the initial letter from the escrow agent to the parties. the purchase and sale agreement. the listing agreement. the preliminary title report.
the preliminary title report.
The CLUE report has to be ordered by: the buyer. the property owner. a broker involved in the transaction. the seller's principal broker.
the property owner.
Title insurance protects the buyer by providing that the mortgage balance will be paid off in case of death or disability. the property will be restored in the event of any damage covered by the policy. there will be protection against adverse claims to the ownership of the property except those exclusions listed in the policy. the mortgage balance will be paid off in case of default.
there will be protection against adverse claims to the ownership of the property except those exclusions listed in the policy.
All of the following are duties of an escrow officer, EXCEPT to prorate real property taxes, interest on outstanding loans, rent, etc. to obtain the buyer loan documents and follow instructions from the buyer's lender. to issue receipts for the deposit of documents and funds. to correct any incorrect information found in the real estate sales agreement.
to correct any incorrect information found in the real estate sales agreement.
The purpose of the Record of Trust Funds Received But Not Deposited record keeping form is: to track funds received by the principal broker but not deposited into the trust account, but which were forwarded to escrow. to track funds held by the principal broker that are "pending" as a deposit into the trust account. to record all trust funds received by a principal broker that will be deposited into the broker's trust account. non existent, as there is no practical use for this form.
to track funds received by the principal broker but not deposited into the trust account, but which were forwarded to escrow.
A ___________ is the most common type of voluntary lien. mechanics lien trust deed judgment real property tax lien
trust deed
Principal Broker Deanna accepted Broker Jean-Luc as an affiliated licensee and they entered into an independent contractor agreement. All of the following statements are true about an independent contractor EXCEPT: under IRS rules, real estate licensees who are independent contractors cannot be supervised. Jean-Luc can be compensated on a commission basis. Deanna is not required to withhold payroll taxes on money paid to Jean-Luc. Deanna must control the real estate activities of Jean-Luc.
under IRS rules, real estate licensees who are independent contractors cannot be supervised.
In Oregon, closing occurs when the deed and other required documents are recorded and funds are made available to the seller. when the escrow is opened. when the buyer moves into the property. when the closing documents are signed by the buyer and seller.
when the deed and other required documents are recorded and funds are made available to the seller.
