RE Exam 4
In a real estate settlement, the costs of title insurance is usually paid by the buyer, as determined by: A. Local custom or negotiations between buyer and seller. B. State law. C. Federal law. D. Local MLS regulations.
CORRECT ANSWER IS: A Buyers usually pay for the title insurance, since it is the buyer who benefits from it. However, this is a matter of local custom and perhaps negotiations. There is no law or regulation which prohibits the seller from paying the title insurance.
When a salesperson or broker does a Comparative Market Analysis (CMA), he or she could be doing any of the following, EXCEPT: A. Helping a seller set a reasonable price B. Providing an appraisal of value C. Obtaining information about the price of similar properties D. Assisting a potential buyer to locate a suitable property
CORRECT ANSWER IS: B A CMA is NOT an appraisal. An appraisal is a statement of value, made by a licensed appraiser usually for the purpose of supporting a loan for real property. Salespersons and brokers are not qualified to give an appraisal.
An owner of a building in a historic preservation district has applied with the Historic Preservation Commission to remodel the exterior of the building. The Commission denies the request. The owner can appeal the decision to: A. The Zoning Appeals Board. B. The court system. C. Either the Zoning Appeals Board or the court system. D. Neither the Zoning Appeals Board nor the court system.
CORRECT ANSWER IS: B Appeals to a decision by a Historic Preservation Commission are made to the court system.
Which type of listing is illegal in the State of New York: A. An open listing. B. A net listing. C. An exclusive agency listing. D. An exclusive right to sell listing.
CORRECT ANSWER IS: B Net listings are illegal in New York.
Under New York Law, a landlord who is holding security deposits from tenants and who sells the property must transfer the security deposits to the new owner: A. At the settlement conference. B. Within five business days of settlement. C. Within ten business days of settlement. D. Within 30 days of settlement.
CORRECT ANSWER IS: B New York law requires security deposits to be transferred to the new owner within five business days after settlement.
The cash flow of a commercial project is determined by considering: A. Only the cash inflow generated by the project. B. Only the cash inflow and cash outgo from the project. C. The cash inflow, the cash outgo and the depreciation deductions. D. Only the cash outgo from the project.
CORRECT ANSWER IS: B The cash flow looks only at the cash coming in and the cash going out of the project.
The client in a listing agreement would be the: A. Salesperson taking the listing. B. Seller of the listed property. C. Listing broker. D. Buyer.
CORRECT ANSWER IS: B The two parties to a listing (agency agreement) are the seller (client) and broker (agent). The salesperson taking the listing is the subagent of the listing broker.
A person (or firm) which makes ____ or more mortgage loans in any calendar year in New York State must be licensed as a mortgage banker. A. 15. B. 10. C. 5. D. 1.
CORRECT ANSWER IS: C A person (or firm) which makes 5 or more mortgage loans in any calendar year in New York State must be licensed as a mortgage banker.
Under New York law, the purchaser of a newly-constructed home would have a warranty of how long for protection against major structural defects? A. One year. B. Two years. C. Six years. D. Ten years.
CORRECT ANSWER IS: C Major structural defects are covered for six years.
A type of property that is used primarily for storage and is optimized to facilitate shipping of raw materials and/or finished goods is called a: A. Loft. B. Light industrial park. C. Warehouse. D. Heavy industrial project.
CORRECT ANSWER IS: C The question describes a warehouse.
If a husband and wife own property as tenants in common, which of the following statements is true? A. Either husband or wife may dispose of their own interest without approval of the other B. The wife alone may sell the property C. Both must act together to dispose of any interest in the property D. None of the above statements is true
CORRECT ANSWER IS: A
A purchaser agrees to buy a house for $47,000, obtaining a 90% loan. The buyer makes an earnest money deposit of $2,500. If attorney fees are $225, how much will the buyer need to bring to closing? A. $2,425. B. $4,700. C. $44,500. D. $47,000.
CORRECT ANSWER IS: A $47,000 x .90 = $42,300 loan amount; $47,000 - 42,300 = $ 4,700 down payment - $2,500 deposit = $2,200; Subtract the deposit because that has already been paid; $2,200 + $225 attorney fee = $2,425.
Which of the following classes of broker´s licenses would be issued to an associate broker: A. Class 30. B. Class 33. C. Class 35. D. Class 37.
CORRECT ANSWER IS: A An associate broker´s license is a class 30 license.
Which of the following advertisements would be permissible under the Fair Housing Act: A. "Spacious home, large lot, master bedroom." B. "Lovely home, nearby school and synagogue." C. "Cozy 2 bedroom home, no kids or pets." D. "New home in partially-integrated neighborhood.
CORRECT ANSWER IS: A It is permissible to refer to master bedrooms. It is not permissible to refer to a synagogue (or specific denomination of church), and the phrase "partially-integrated" is suggestive of discrimination as well.
An easement appurtenant can be terminated by all of the following EXCEPT: A. The owner of the servient tenement, by executing a deed releasing his easement interest B. The owner of the dominant tenement, by executing a deed releasing his easement interest C. The dominant and servient tenements are merged D. The owner of the dominant tenement abandons his easement interest
CORRECT ANSWER IS: A It is the owner of the dominant tenement or estate ONLY who can terminate the easement appurtenant. The servient tenant is subject to the rights of the dominant tenant.
A borrower would apply for a loan in the: A. Primary mortgage market; B. Secondary mortgage market; C. Conventional mortgage market; D. Private mortgage market.
CORRECT ANSWER IS: A Loans are applied for and made in the primary mortgage market.
Which of the following types of appraisal licenses would enable its holder to appraise commercial properties: A. Certified general appraiser only. B. Certified residential appraiser and certified general appraiser only. C. Licensed real estate appraiser, certified residential appraiser and certified general appraiser only. D. All levels of appraisal licensing would permit the appraisal of commercial properties.
CORRECT ANSWER IS: A Only certified general appraisers can appraise commercial properties.
Which type of property insurance policy is the most basic type of policy: A. (HO)-1. B. (HO)-2. C. (HO)-3. D. (HO)-4.
CORRECT ANSWER IS: A The (HO)-1 policy is the most basic policy, but few insurance companies offer it any more.
The decision of the Board of Assessment Review could include each of the following, EXCEPT: A. A reduced property tax rate. B. A full denial of the grievance. C. A full reassessment of the property. D. A partial reassessment of the property.
CORRECT ANSWER IS: A The BAR can choose to fully reassess the property, partially reassess it or to deny the grievance entirely. It cannot change the tax rate.
Each of the following statements is correct regarding the assignment or sublease of a tenant´s interest in a property, EXCEPT: A. Landlords have no right to restrict a tenant´s ability to sublease the space. B. In an assignment, the new tenant pays the rent directly to the landlord. C. A tenant who assigns his or her interest to another tenant has secondary liability for the lease payments. D. In a sublease, the new tenant pays the rent to the sublessor, who then pays the landlord.
CORRECT ANSWER IS: A The FALSE statement is that landlords have no right to restrict a sublease. Landlords can prohibit both assignments and subleases unless approved by the landlord.
Which of the following statements is the best description of the difference between a project's contract rent and its economic rent? A. Contract rent is the actual rent; economic rent is the market rent. B. Contract rent is the market rent; economic rent is the actual rent. C. Contract rent considers only the rent payment; economic rent considers the rent payment plus the additional fees and income generated by the tenant. D. Contract rent considers the rent payment plus the additional fees and income generated by the tenant; economic rent considers only the rent payment.
CORRECT ANSWER IS: A The contract rent is the rent actually being paid by the current tenants. Economic rent is the market rate of rent that could be charged.
Which of the following statements about radon is FALSE: A. Radon is particularly dangerous to children. B. Radon is colorless, odorless and tasteless. C. Radon is radioactive. D. Radon is the second leading cause of lung cancer in the U.S.
CORRECT ANSWER IS: A There is no evidence that radon is particularly dangerous to children.
A seller sells her home to a buyer who purchases the property "subject to" the existing loan. If the buyer defaults, who is liable for the balance of the debt? A. Seller; B. Buyer only; C. Seller and buyer jointly; D. Seller and buyer jointly and severally.
CORRECT ANSWER IS: A When a buyer purchases property "subject to" the existing loan, the seller alone remains responsible to the lender for the repayment of the debt. The agreement is between the seller and the buyer and the lender may not even be involved.
Joe gives Bill a quitclaim deed to 5 acres of land. A year later a court determines that Joe did not have any interest in the property. Which of the following is true with respect to Bill's interest in the land? A. Bill owns the land since the court action took place after he received the deed from Joe B. Bill has no interest in the land C. Bill can win a suit against Joe for misrepresentation D. The court will order Joe to return Bill's purchase price
CORRECT ANSWER IS: B A quitclaim deed only conveys to the grantee (Bill) such interest as the grantor (Joe) may have, if any; there is no implication of any interest being held by the grantor in a quitclaim deed. Regardless of how right or wrong this situation may seem, NEVER assume the outcome of a court case.
An option on real property is: A. A consideration B. A contract C. A license D. An attachment
CORRECT ANSWER IS: B An option is a contract whereby the optionor (seller) gives the optionee (buyer) the right to buy the property for a specified price at anytime until some specific date in the future.
A buyer makes an offer to purchase a piece of property. The seller changes the date of occupancy by one day, and signs the contract. If the purchaser does not agree with this change, which of the following is true? A. The buyer only has 72 hours to accept a change of this type B. The purchaser has no further liability C. The seller and purchaser could both sue for specific performance D. The seller may keep the deposit as liquidated damages
CORRECT ANSWER IS: B Any change, regardless of how minor, must be approved by both parties. In this instance, the buyer would be relieved of any obligation.
Lead based paint might be found in any home built prior to: A. 1968. B. 1978. C. 1986. D. 1992.
CORRECT ANSWER IS: B Homes built prior to 1978 might contain lead-based paint.
When the utility company brings electricity to a home, what is the difference between a service drop and a service lateral? A. The utility company is responsible for the interior wiring if there is a service lateral, but not with a service drop. B. If the power lines come from above, it is a service drop; if the lines are underground it is a service lateral. C. A service drop is leased while a service lateral is owned by the homeowner. D. A service drop connects to a fuse box while a service lateral connects to circuit breakers.
CORRECT ANSWER IS: B If the power lines come from above, it is a service drop; if the lines are underground it is a service lateral.
When should a real estate licensee discuss with a client the possibility of changing the agency relationship from single agent to dual agent or dual agent with designated sales agents? A. No later than the time when the customer is asked to consent to a dual agency or dual agency with designated sales agents. B. At the time the agency relationship is established. C. Within five business days after the change in relationship. D. At least five business days prior to the commencement of the agency relationship.
CORRECT ANSWER IS: B It is best to discuss that possibility with the client when the agency relationship is established.
A "build-out" allowance is most likely to be found in the lease of which type of property? A. Residential property. B. Office space. C. Condominium and cooperatives. D. 1-4 unit residential properties.
CORRECT ANSWER IS: B Office leases often include a build-out allowance to assist with remodeling expenses.
The concept of opportunity costs is most closely related to: A. Legal fees. B. The time value of money. C. Interest rate risks. D. Poor investment strategies.
CORRECT ANSWER IS: B Opportunity cost is the income which could have been earned in a different investment when one chooses a particular investment choice. It is closely related to the concept of the time value of money. For instance, if a particular investment simply breaks even, the money could have been deposited in a bank and earned some interest, which means there was a lost opportunity.
The appraiser's final estimate of value is accomplished by: A. Averaging the values obtained by the approaches used B. Reconciling the values obtained by the approaches used C. Giving the most weight to the Market Data approach D. Using the weighted factor for labor and materials costs in the area of the country
CORRECT ANSWER IS: B The appraiser must reconcile the estimated values obtained by the various approaches used. This is done to obtain the final estimate of value of the property.
Fred bought a new boat. He hired a contractor to build a dock on his lake-front property. Fred did not pay the contractor. In an attempt to get paid, the contractor may file a: A. Mechanic's lien against the boat B. Mechanic's lien against the property C. General warranty lien against the boat D. Littoral rights lien against the property
CORRECT ANSWER IS: B The contractor improved real property by building a dock and is therefore entitled to file a mechanic's lien against the property which was improved. He cannot file a mechanic's lien on the boat because it is personal property.
If the rentable area of a building is 10,000 square feet and the useable area is 8,000 square feet, what is the loss factor? A. 20%. B. 25%. C. 30%. D. 40%.
CORRECT ANSWER IS: B The formula for the add-on factor is: (Rentable Square Feet - Usable Square Feet) divided by Usable Square Feet. In this case 10,000 - 8,000 = 2,000; 2,000 divided by 8,000 = .25 = 25%.
If Salesperson Steve works for Broker Betty and takes a listing on a property as seller's agent, which of the following statements is most accurate about the agency relationship created: A. Salesperson Steve is the agent of the seller while Broker Betty is the subagent of the seller. B. Salesperson Steve is the subagent of the seller while Broker Betty is the agent of the seller. C. Both Salesperson Steve and Broker Betty are agents of the seller. D. Neither Salesperson Steve nor Broker Betty are agents of the seller.
CORRECT ANSWER IS: B The listing contract is always between the broker and the seller, not the salesperson and the seller. Therefore, the broker is the agent of the seller and the salesperson is the subagent of the seller.
The mortgagee in a purchase money mortgage is usually the: A. Local bank; B. Seller; C. VA; D. FHA.
CORRECT ANSWER IS: B The mortgagee is the one that loans the money. In a purchase money mortgage it is the seller that is "loaning" the money, and would therefore be referred to as the mortgagee.
When reviewing an application for a new subdivision, a planning board would likely consider each of the following factors, EXCEPT: A. Whether the project fits into the master plan. B. Whether the project is likely to be profitable. C. Whether there is adequate financing for public improvements. D. Whether the project conforms to zoning and fire and safety codes.
CORRECT ANSWER IS: B The planning board will not concern itself with whether the project will be profitable.
A definition of real property would NOT include: A. Fixtures B. Trade fixtures C. Air space D. Mineral rights
CORRECT ANSWER IS: B Trade fixtures are personal property of the tenant who installed them for the operation of his business. Trade fixtures are NOT real property.
Which of the following tenants of a regional shopping mall would NOT be considered a suscipient tenant? A. A toy store. B. A specialized clothing store. C. A major department store. D. A mattress store
CORRECT ANSWER IS: C A major department store would be considered an anchor tenant, or a generative tenant. The others are all suscipient tenants, in that they rely on the foot traffic generated by the anchor tenant(s).
Adeline is selling her own home as a For Sale By Owner (FSBO). On Sunday, a full price offer is made by an Asian couple. Adeline refuses the offer made by the couple. On Monday, Adeline accepts an offer, $4000 below the asking price from a Caucasian family. Has Adeline violated any laws and if so which one? A. There is no violation because homeowners selling their own property are exempt from Federal Fair Housing laws B. Adeline has violated the Federal Fair Housing Act of 1968 C. Adeline has violated the Civil Rights Act of 1866 D. Adeline has violated the state license laws
CORRECT ANSWER IS: C Adeline is in violation of the Civil Rights Act of 1866, not the current Fair Housing Laws. The Fair Housing Law allows individual homeowners an exemption, as long as they do not use a licensee or discriminatory advertising. However, NO ONE is exempt from the Civil Rights Act of 1866 which prohibits refusal of selling, buying or exchanging personal AND real property on the basis of race.
All of the following would be considered an involuntary alienation of property EXCEPT: A. Foreclosure B. Eminent domain C. Devise D. Adverse possession
CORRECT ANSWER IS: C Alienation means to give up property. A devise is a gift of real property through a will, which is a voluntary act. Foreclosure, when the bank takes over the property and eminent domain, when the government takes over the property, are involuntary. Adverse possession can only come about WITHOUT the true owner's permission.
David, an independent broker, dies. His daughter, a licensed broker and only heir, inherits the brokerage business. If she intends to operate the brokerage and keep the listings, it is necessary that she: A. File legal notice of her intent to assume responsibility for the brokerage business. B. Advise the probate court of her intent to assume responsibility for the listing agreements. C. Negotiate and receive new listing agreements from each client. D. Nothing is required because she is the only heir.
CORRECT ANSWER IS: C By law, when David dies, all listings in his name terminate because a listing is a personal services contract. The fact that his daughter is his only heir is not relevant. She must negotiate new listing agreements to continue to handle the listings.
The New York State Human Rights Law adds four protected classes which are not part of the Fair Housing Act of 1968. Each of the following is one of the additional protected classes, EXCEPT: A. Military status. B. Marital status. C. Familial status. D. Sexual orientation.
CORRECT ANSWER IS: C Familial status is a protected class under the Fair Housing Act of 1968 (as amended), while the other choices are protected classes only under New York State law.
What would be the consequences to the exchanger in a reverse exchange if the sale of the relinquished property did not close within 180 days of the close of the purchase of the replacement property? A. The exchanger would lose all the benefits of the 1031 treatment. B. The exchanger would be required to pay significant financial penalties. C. The exchanger would face a higher risk of audit for not using the "safe harbor" rules. D. None whatsoever.
CORRECT ANSWER IS: C In a reverse exchange, the 180 day rule is not mandatory, but failure to comply will result in a significantly higher risk of audit for failure to comply with the safe harbor rules.
A taxpayer has invested in a limited partnership which shows a loss for this tax year. The taxpayer´s share of the tax losses from the limited partnership: A. Is not deductible against any type of income. B. Is deductible against ordinary income. C. Is deductible only against passive income. D. Is deductible only against portfolio income.
CORRECT ANSWER IS: C Income or loss from a limited partnership is considered passive income or passive losses. Passive losses can only be deducted against passive income.
Which of the following statements is most accurate regarding the ownership interest that the cooperative corporation holds in the property owned by the co-op? A. The corporation must hold a fee simple interest. B. The corporation usually holds a leasehold interest. C. The corporation usually holds a fee simple interest, but in some cases it holds a leasehold interest. D. The corporation usually holds a leasehold interest, but in some cases it holds a fee simple interest.
CORRECT ANSWER IS: C Most often a cooperative corporation holds a fee simple interest in the property, although there are some cases where the corporation holds a leasehold interest, such as a 99 year lease.
Which of the following statements is correct regarding a local Board of Assessment Review in the State of New York? A. Its members are usually elected to the position. B. It must include either the assessor or a member of the assessor´s staff. C. The property owner is not required to attend a hearing at the BAR. D. The burden of proof is on the assessor to support the assessed value at a hearing held by the BAR.
CORRECT ANSWER IS: C Property owners are allowed to attend, but are not required to attend. They may choose to be represented by counsel, for instance.
What type of tenant would be most likely to have a straight percentage lease, where there is no minimum rent required? A. Large appliance stores. B. Convenience stores. C. Anchor tenants in malls. D. Specialty stores.
CORRECT ANSWER IS: C Straight percentage leases are rare, but anchor tenants in malls can sometimes negotiate that provision with the owner.
Each of the following is a designation that can be earned by taking specified courses from the Institute of Real Estate Management (IREM), EXCEPT: A. CPM. B. ARM. C. CFP. D. ACom.
CORRECT ANSWER IS: C The CPM is the Certified Property Manager designation; the ARM is the Apartment Residential Manager designation. The ACoM Accredited Commercial Manager designation. All three of these are issued by IREM. (The CFP is the Certified Financial Planner designation and is not issued by IREM.)
A developer of commercial property is required to provide for off-street parking for tenants. This is an example of: A. Eminent domain B. Taxation C. Police power D. Escheat
CORRECT ANSWER IS: C The county government would impose such a restriction on property owners. This is an example of police power.
The house rules of a cooperative project would be LEAST likely to address which of the following issues: A. Rules regarding pets. B. Rules about smoking in public areas. C. The due date of required lease payments. D. Rules regarding posting of advertisements.
CORRECT ANSWER IS: C The due date of required lease payments will be included in the proprietary lease, not in the house rules.
Which of the following values would be based largely on the cost of replacement: A. Value in use. B. Investment value. C. Insurance value. D. Liquidation value.
CORRECT ANSWER IS: C The insurance value is based on the cost to replace the existing structures.
The proper role of the real estate licensee regarding property insurance would include each of the following activities, EXCEPT: A. Explain the lender´s interest in property insurance. B. Explain the reason for the escrow account for taxes and insurance. C. Obtain quotes from several insurers for property insurance coverage. D. Explain the reasons for obtaining property insurance in a cash purchase of the real estate.
CORRECT ANSWER IS: C The real estate licensee can explain the need for and purpose of property insurance, but rate quotes and selling the policy would require an insurance license.
The document that commits the board of directors to notify the lender of a default on the lease payments by the unit owner / shareholder is the: A. Alteration agreement. B. Cooperation agreement. C. Recognition agreement. D. Collateral agreement.
CORRECT ANSWER IS: C The recognition agreement is signed by the borrower, the lender and the board of directors. Among other things, it commits the board to disclose any defaults on the lease payments by the borrower to the lender.
Each of the following properties may be entitled to a full exemption from property taxes, EXCEPT: A. Property used by educational or charitable institutions. B. Property owned by state or local government. C. Property owned by senior citizens whose incomes do not exceed specified maximums. D. Environmentally favored properties, such as wind farms.
CORRECT ANSWER IS: C The senior citizen exemption is a partial exemption, not a full exemption.
Which of the following statements is correct? A. The rentable area of a building is calculated according to a formula specified by law. B. The difference between rentable area and useable area for office buildings rarely exceeds 10%. C. Rentable area generally includes all of the interior space in the building except for elevator shafts and fire escape stairwells. D. New York real estate law sets clear guidelines for the maximum loss factor for office buildings.
CORRECT ANSWER IS: C The true statement is that rentable area generally includes all of the interior space in the building except for elevator shafts and fire escape stairwells.
Prospective buyers discuss their housing needs with a sales agent. The agent discusses certain property, but avoids talking about houses located in a specific area. Such action is known as: A. Redlining B. Compromise C. Steering D. Blockbusting
CORRECT ANSWER IS: C This is steering. Directing people towards or away from specific areas of a community is steering.
Section 3508 of the Internal Revenue Code provides a "safe harbor" for real estate licensees to be treated as independent contractors rather than employees. In order to qualify for this treatment, the individual must be licensed and: A. There must be a written employment contract with the broker specifying that the licensee will be treated as an independent contractor. B. Substantially all of the individual´s compensation must be based on output rather than time spent. C. There must be both the written contract specifying independent contractor treatment and substantially all of the compensation must come from output rather than time spent. D. None of these listed choices are included in Section 3508.
CORRECT ANSWER IS: C To qualify, the individual must be licensed, must have a written employment contract specifying treatment as an independent contract, and substantially all of the individual´s compensation must be based on output rather than the time spent.
The trespass of an improvement is best described as: A. An easement B. A license C. An encroachment D. An appurtenance
CORRECT ANSWER IS: C To trespass is to be someplace that you are not legally allowed to be. If an improvement encroaches over the property line it would be regarded as a trespass.
Which of the following in NOT automatically included in the sale of real property? A. An easement B. Plumbing fixtures C. Trade fixtures D. Built-in kitchen appliances
CORRECT ANSWER IS: C Trade fixtures are personal property of the tenant who installed them for the operation of his business.
A licensee who breaches his or her fiduciary obligation to a client can suffer which of the following consequences: A. Revocation of his or her license. B. A civil judgment in court. C. Rescission of the transaction. D. All of these choices.
CORRECT ANSWER IS: D A breach of fiduciary duties can result in each of these consequences.
Under what circumstances might a person purchase real property without having an agency relationship with a real estate licensee? A. Under no legal circumstances. B. Only if purchasing "for sale by owner" (FSBO) properties. C. If treated as a customer by an agent of the seller. D. Either if purchasing "for sale by owner" (FSBO) properties or if treated as a customer by an agent of the seller.
CORRECT ANSWER IS: D A buyer would not have an agency relationship with a licensee in either the case of the purchase of a "for sale by owner" property or if treated as a customer by a licensee who is the agent of the seller.
A written listing agreement between a buyer and a licensee would be an example of: A. Estoppel. B. Ratification. C. Implied agreement. D. Express agreement.
CORRECT ANSWER IS: D A written listing contract is a type of express agreement.
A licensee and a homeowner make an oral agreement for the licensee to represent the homeowner in the sale of the home. This would be an example of: A. Estoppel. B. Ratification. C. Implied agreement. D. Express agreement.
CORRECT ANSWER IS: D An oral agreement is a type of express agreement.
An Apartment Sharing Agent is required to establish a trust account: A. Only if their fees are charged to the potential tenant, rather than the property owner. B. With a minimum balance of $10,000 plus an additional $5,000 for each branch office other than the main office. C. With a minimum balance of $5,000 plus an additional $2,500 for each branch office other than the main office. D. With a minimum balance of $2,500 plus an additional $1,250 for each branch office other than the main office.
CORRECT ANSWER IS: D Each Apartment Sharing Agent is required to maintain a trust account with a minimum balance of $2,500 plus an additional $1,250 for each branch office other than the main office.
A buyer is eligible for and applies for a VA loan to purchase a home. The buyer has offered $210,000 for the home, but the VA appraised value has come in at $200,000. Assuming the seller is not willing to reduce the price, how may the buyer proceed to purchase the home: A. Under no circumstances; B. Without restriction, since the appraised value is within the 5% tolerance factor; C. Without restriction, since the appraised value is within the 10% tolerance factor; D. Only if the buyer pays the $10,000 difference in cash.
CORRECT ANSWER IS: D If the purchase price exceeds the appraised value (the CRV), the buyer would have to pay the difference in cash. (There is no such thing as a tolerance factor for VA appraisals.)
What is the defining feature of a net listing: A. The compensation is a percentage of the profit on the sale of the property. B. There is no compensation offered to cooperating brokers. C. There is a partial rebate of the commission to the seller of the property. D. The compensation to the agent is the sale price which is in excess of some specified amount.
CORRECT ANSWER IS: D In a net listing, the compensation is the sale price which is in excess of a specified amount. For instance, it might be any price received in excess of $200,000.
Under what circumstances would raw land be eligible for depreciation deductions? A. If the land was used for trade or business purposes. B. If the land was held for the production of income. C. Either if the land was used for trade or business purposes or if the land was held for the production of income. D. Under no circumstances.
CORRECT ANSWER IS: D Land is not depreciable.
Under New York law, proposed changes to the by-laws for a residential condominium must be approved by what portion of the unit owners: A. 51%. B. 100%. C. Three quarters of the unit owners. D. Two thirds of the unit owners.
CORRECT ANSWER IS: D New York law requires changes to the by-laws for residential complexes to be approved by at least a two thirds majority.
The primary purpose of the Truth in Lending Act is to: A. Limit the cost of credit to consumers; B. Provide equal access to credit for all persons; C. Permit consumers to dispute information in their credit reports; D. Provide meaningful disclosure of the cost of credit, in percentage terms.
CORRECT ANSWER IS: D The Truth in Lending Act was designed to provide meaningful disclosure of the costs of credit in percentage terms, primarily through the disclosure of the Annual Percentage Rate (APR).
Under New York law, the buyer of a home would have how long after closing to inform the seller that either the smoke detector or the carbon monoxide detector is not operating: A. 30 days. B. 25 days. C. 15 days. D. 10 days.
CORRECT ANSWER IS: D The buyer would have ten days after the date of the deed to inform the seller if either or both of the detectors are not operating.
What is the first step a developer must take to comply with the State Environmental Quality Review Act (SEQRA)? A. Preparation of an Environmental Impact Statement. B. Determination of which agency will serve as lead agency for the application. C. Obtaining clearance of the project through the federal Environmental Protection Agency (EPA). D. Preparation of an Environmental Assessment Form.
CORRECT ANSWER IS: D The first step is to prepare and submit the EAF, the Environmental Assessment Form.
When conducting a closing, the settlement agent is responsible for all of the following, EXCEPT: A. Collecting all legal documents and funds pertaining to the closing of the transaction B. Obtaining all information relevant to the marketability of the title C. Paying the net proceeds of the sale to the seller D. Payment of the commission to the listing salesperson
CORRECT ANSWER IS: D The settlement agent is responsible to see that the necessary documents such as the deed and mortgages are in order; that the required funds from buyer and lender are available; and that the necessary title search has been completed and are at closing in order to close the transaction in accordance with the contract provisions. The settlement agent pays the BROKER any commission due and the BROKER pays the salesperson.
The City of Anytown, New York, generally has a maximum floor area ratio for multi-family housing projects of 1:1. However, if the developer agrees to build a project for low-income housing, it will permit a floor area ratio of 1.5:1. This is an example of: A. Spot zoning. B. Conditional use permits. C. Special zoning districts. D. Incentive zoning.
CORRECT ANSWER IS: D This is an example of incentive zoning.
Which of the following factors will NOT affect capitalization rates? A. Interest rates. B. Risk factors. C. Liquidity factors. D. Vacancy rates.
CORRECT ANSWER IS: D Vacancy rates will affect the Net Operating Income (and therefore value), but will not affect the capitalization rate.