REAL ESATE PRACTICE EXAM

Which of the following advertising descriptions may be a violation of fair housing law?

"Brand new condos for young, single living. No children allowed!"

What is the rate for the state documentary stamp tax on deeds in Florida?

$0.70 per $100 of the full purchase price ($0.60 for Miami- Dade County)

Ella's house assessed for $91,000. The tax rate for city, county, and school taxes was 9.1 mills each. How much did she save in property taxes this year?

$1,137.50 Total exemptions x Tax rate = Property tax savings. If a home has an assessed value above $75,000, the owner gets the base $25,000 exemption plus an additional $25,000 exemption on city and county taxes only. So, let's do school taxes first: $25,000 x 0.0091 = $227.50. For city and county, add the mills first to get 18.2 mills. $50,000 x 0.0182 = $910. $227.50 + $910 = $1,137.50

Marcel is a homeowner. His monthly principal and interest payment is $1,250. His annual insurance payment is $2,220. His annual property taxes are $4,200. Calculate his monthly PITI/mortgage payment.

$1,785 To calculate the PITI/mortgage payment, first find the monthly insurance ($2,220 ÷ 12 = $185) and property tax amounts ($4,200 ÷ 12 = $350). Then add each of the monthly payments together: $185 + $350 + $1,250 = $1,785

Manuela violates Florida's Telemarketing Act by calling several hundred people who are on the National Do Not Call Registry. What penalty will she likely incur?

$10,000 penalty per call

A building receives $100,000 in rental income in a year. The unoccupied units would bring in an additional $40,000 if they were occupied. What is the potential gross income of the building?

$140,000

Jeff is selling his 1,100-square-foot house for $214,000. What's the price per square foot?

$194.55 Use the formula Asking price ÷ Total sq. ft. = Price per sq. ft. So, $214,000 ÷ 1,100 sq. ft. = $194.55/sq. ft. Jeff is selling his house for $194.55 per square foot.

Bill buys an apartment building for $950,000. His closing costs are $24,000. He figures out that his land is worth $400,000. What is his annual depreciation allowance?

$20,872.73 Depreciable basis ÷ Useful life = Annual IRS depreciation deduction. Let's find depreciable basis first, which is Purchase price + Acquisition costs + Renovations - Land value = Depreciable basis.That's $950,000 + $24,000 - $400,000 = $574,000. The recovery period for residential income-producing property is 27.5 years. Residential investment property includes apartment buildings. So, $574,000 ÷ 27.5 years = $20,872.73.

Comp 1 is 3,000 sq. ft. and was sold for $300,000. The subject property is 2,800 sq. ft. If that was the only difference in the properties, using the sales comparison approach, what would the value of the subject property be?

$280,000 The price per square foot is $100. So, 200 fewer square feet in a property would mean $20,000 less in value. So, the subject property is valued at $280,000.

Samantha bought 4 discount points for $14,000. What is her loan principal?

$350,000 Total cost of points ÷ Number of points = Cost per point. $14,000 ÷ 4 = $3,500/point. Cost per point x 100 = Loan principal. $3,500/point x 100 = $350,000.

Savannah took out a $500,000, 30-year amortized loan. Her monthly payment is $2,500. How much will she end up paying in interest after the 30 years of paying the loan?

$400,000 Savannah will end up paying $400,000 in interest over the life of the loan. This is found by multiplying the monthly payment amount ($2,500) by the total number of payments made (360), and then subtracting the original loan principal ($500,000) from the total loan cost ($900,000).

Nadeem took out a $300,000, 30-year amortized mortgage with an interest rate of 7.3%. His monthly payment is $2,056. If he pays the exact monthly payment every month, how much money in interest will he end up paying after 30 years?

$440.160 For this loan, Nadeem will end up paying $440,160 in interest. This is found by multiplying the monthly payment amount ($2,056) by the total number of payments made (360), and then subtracting the original loan principal ($300,000) from the total loan cost ($740,160). $740,160 - $300,000 = $440,160

You're doing a CMA on a five-bedroom, three-bath, 2,700-square-foot property. Your comp is a five-bedroom, four-bath, 2,900-square-foot home that recently sold for $540,000. In your area, bedrooms are worth $20,000, baths $10,000, and square footage $200 per square foot. What is the adjusted value of your comp?

$490,000 To find the adjusted value of the comp, make the following adjustments: Comp sales price - (Price per sq. ft x Difference in sq. ft.) - Cost of bathroom = Adjusted value of comp. So, $540,000 - ($200 x 200 sq. ft. = $40,000) - $10,000 = $490,000

Monty took out a mortgage loan for $266,800. He paid two points. What was the total cost of his points?

$5336 Each point is 1% of the cost of the loan, so each point costs $2,668. $2,668 x 2 = $5,336.

Jeremy has a monthly income of $4,000. His payment-to-income ratio is 20%. How much is his monthly payment?

$800 First, convert 20% to 0.2. To find the monthly payment, multiply $4,000 by 0.2 to get $800.

What is the vacancy rate of an apartment complex that has 150 units, 3 of which are unoccupied?

2%

Williams Family Farms purchased 4 sections of land in a township. How many acres did they buy?

2,560 One section equals 640 acres, so to find the total number of acres in 4 sections of land in a township, use the formula 640 acres x 4 = 2,560 acres.

How many monthly payments will be made in a 30-year mortgage?

360

Reyna owns an investment property valued at $640,000. She owes the bank $230,000 on her primary mortgage and another $40,000 on a second loan. How much equity does she have in the property?

58% To find how much she owns, subtract the debts from the value ($640,000 - $230,000 - $40,000 = $370,000). To find that as a percentage of the total, divide by the value 370,000 ÷ 640,000 = 0.578, or 58%.

Which of these scenarios best illustrates business risk?

A small bakery just can't quite get enough traction through its word-of-mouth referrals to make a profit, despite a promising business plan.

Which of these situations BEST describes a buyer assuming a mortgage?

Alice took over the seller's mortgage payments when she bought her home. The lender approved the transfer and Alice makes payments directly to the lender.

Sales Associate Ira has entered into a no brokerage relationship with Buyer Gwen. The home that Gwen is looking at is in an area where many houses are known to have issues with radon gas seeping in through the basement. Ira knows that the seller had it tested and small amounts of radon were detected. Select the statement that BEST describes Ira's duties to Gwen.

All approved brokerage relationships in Florida have a duty to disclose facts that are not readily observable that could materially affect the value of the property. Ira needs to disclose the existence of radon gas.

Laura has submitted her application to be a sales associate. She wants to know how long the FREC has to contact her about errors in her application. Where in the Florida statutes should she look for that information?

Chapter 120

An airtight, weatherproofed house is energy efficient, but there are potential drawbacks. Predict the increased environmental hazards that such a home could experience.

Elevated levels of radon could get trapped inside, and reduced air circulation could also encourage mold growth.

Does a client always have the right to terminate (revoke) an agency relationship agreement at any time with a broker? If so, does this also mean a client could do so without liability?

Even though a client always has the right to terminate an agency agreement with a broker at any time, there may be language in the contract that creates liability for damages if they do.

Target marketing involves agents utilizing a farm area. Which of the following describes an agent utilizing a farm area?

Gretta focuses on the south side of town where there are a lot of apartment buildings and condos.

A former client successfully sues Licensee Laurel. Since Laurel cannot satisfy the judgment, the claimant appeals to the Recovery Fund for reimbursement. The Recovery Fund reimburses the claimant. What automatically happens to Laurel?

Her license is suspended.

What is the difference between a sublease and an assignment?

In a sublease, the original tenant is still responsible for rent, the new tenant takes over responsibility.

What is common law?

It can be traced back to the customs and precedent established by court decisions over the centuries in England.

In Florida, listing agreements are not promulgated. Does that impact whether or not the agreement would be considered a valid form of express agency?

It has no impact because as long as a nonpromulgated listing agreement contains all the required information, it will serve as a valid form of expressed agency.

Jack's broker received three offers on Jack's cottage. The first was a full-price offer without any conditions or contingencies. The second offer was insulting, really... just a handful of beans. The third and last offer was a full-price offer, contingent on Jack not removing the beanstalk from the property when he moved out. What are the obligations of Jack's broker?

Jack's broker is obligated to present all offers, regardless of how the broker feels about them.

Kat's sales associate license ceases to be in force. What is the most likely cause for this license status?

Kat change her employing broker without notifying the FREC within 10 days.

Maritza, who is not a real estate license holder, owns two single-family residences, which she rents out. (She does not occupy either of the residences). Does she have to abide by the Fair Housing Act when selecting tenants?

Maritza is exempt from the Fair Housing Act, although she may not use discriminatory advertising

Which of these people is least likely to end up in an implied agency relationship with Sales Associate Leslie?

Matt, a prospect whom Leslie met for the first time this morning

Cathy, a non-license holder, works for a cemetery as a salesperson. In addition to her salary, she gets an annual bonus for every cemetery lot she sells. Is Cathy in violation of Chapter 475 F.S.? Why or why not?

No, because cemetery lots in Florida are not considered real property.

Clarissa and Miguel, who are not spouses, create a temporary business arrangement to complete a single business transaction. They want to register as a brokerage. Is this allowed?

No, they cannot register as a brokerage because they created a joint venture.

A buyer offers in writing to purchase a house for $150,000, including the washer and dryer. The offer is set to expire on Monday at 9 a.m. The seller counters in writing on Thursday, accepting the $150,000 offer but excluding the washer and dryer. On Friday, while the buyer is thinking over the seller's counteroffer, the seller changes their mind and decides to accept the buyer's original offer for $150,000, including the washer and dryer. What is the buyer obligated to do?

Once the seller made a counteroffer, all previous offers are dead. The buyer is not obligated to do anything.

How is real estate different from real property?

Real estate is land and improvements. Real property is land, improvements and bundle of rights.

Brokers must deposit escrow funds immediately. When defining the term "immediately," what is an important point to consider?

Saturdays, Sundays and legal holidays are not counted as business days.

Graciela is leaving Atlas Realty and moving to another brokerage. She can't wait to tell her new brokerage all the details about her most recent transaction at her old brokerage. Graciela should remember:

She must keep confidential information confidential even after her employment terminates

Which statement most accurately differentiates between the Department of Business and Professional Regulation and the Florida Real Estate Commission?

The FREC consist of seven members, whereas the DBPR is a much larger, multi-division agency.

Kate doesn't fill out all of her license renewal application. What is the likely consequence?

The FREC will deny the license application but allow to apply again.

Which of the following describes how special agency works in a typical real estate broker-client relationship?

The authority given by the client is narrowly defined towards a single goal-- the sale or purchase of property.

Magnolia Point is a newly constructed apartment complex that just received a certificate of occupancy. What does this mean?

The building has passed its final inspection and can be occupied.

A seller paid for their HOA fee at the beginning of the year and then sold their house 2 months later. How will the buyer pay the seller for their share of the HOA fee?

The closing agent will prorate the cost and add it as a debit to the buyer at closing.

On New Year's Day, Emily signed a six-month listing agreement with Broker Blake to sell her home. As of July 1st, a buyer had not been found. Do Emily and Blake still have a contract, or has it been discharged? If so, for what reason and how would it be classified?

The contract was discharged due to expiration, which would be classified as operation of law.

The sales associate with whom Robin was working to sell her condo died of a heart attack just two days after Robin signed a listing agreement. Is Robin now free to list her property with whomever she pleases?

The death of Robin's sales associate does NOT release her from the listing agreement. That's because agency relationships are created at the broker level.

Carmela is part of an investment group that wants to purchase a property. She's debating between a large residential development and an office space. When you're laying out the pros and cons of each kind of property, what is one advantage of residential property you would share with her?

The residential property market is less volatile and more recession- proof since people always have to have a place to live.

Fiona has been delinquent on her property taxes. What is the BEST description of what results?

There is tax certification auction, where the maximum interest rate is 18%

In what kind of in-house transaction can there be two parties, each with a licensee providing fiduciary levels of representation? What would that tell you about the assets held by the two parties?

This is a nonresidential transaction in which designated agents are used, and the parties each have assets of one million dollars or more.

Toni and Karl own a home. It's their primary residence, and they have homesteaded it. They have two kids. If Karl dies, who owns the home?

Toni would have a life estate, and the kids would be the remaindermen.

Kae is a broker. She asks her sales associate to collect evidence of title for the property they are working with. They bring Kae evidence of title in the form of: A Torrens certificate An opinion of title A certificate of title Title insurance Rank the types of evidence of title the sales associate brought Kae from the best to the worst.

Torrens certificate, title insurance, opinion of title, certificate of title

Fred wants to live in the guest room of Barney's flagstone townhouse. Barney verbally agrees to let Fred move in — even though there has been no discussion of what Barney gets out of this arrangement. Has a valid, legally binding contract been entered into?

Without evidence of the exchange of consideration, this arrangement does not constitute a valid, legally binding contract.

Rhoda has a sales associate license in Mississippi. She has been living in a hotel in Florida for two months. Evaluate whether or not she would be eligible for mutual recognition.

Yes, because she is a licensed in a mutual recognition state and has not lived in Florida for four months.

Ingeborg is selling her Florida home. She is not licensed to sell real estate in Florida. Is this allowed under Chapter 475, F.S.? Why or why not?

Yes, property owners are allowed to sell their own property without a license.

A shopping mall was built in 1997. Does the mall need to be accessible to people with disabilities?

Yes. The ADA requires that public accommodations and commercial facilities that are newly constructed (built after 1993) be accessible.

Zora is purchasing a property in Florida. When she closes, the seller will transfer her shares of a corporation. She will also be given a proprietary lease to the unit she will live in. What kind of property is Zora most likely purchasing?

a co-op

Ella is buying a condo from the current owner. Which of these documents must the owner give her?

a condominium declaration

A Florida landlord places all of the security deposits he collects into his business account. He posts a surety bond which covers the total amount of deposits. This is:

a legal practice under the Florida Residential Landlord and Tenant Act

Jamar specializes exclusively in commercial real estate sales. Which of the following properties fall under this category?

a movie theater

Ivan is buying a furnished condo. What type of loan will he need?

a package mortgage

Two members of FREC are deliberating about whether or not there is enough evidence for a formal complaint to be filed against a license holder. These two members of FREC are:

a probable- cause panel

Broker Mary wants to enter into a listing agreement with Seller Tina that will be valid, enforceable, and that will allow Mary to publish the listing in the local MLS. What is the best option for her situation?

an express written contract

A household is defined as:

any person or group of people occupying a separate housing space

Which of the following would NOT typically be prorated at closing?

appraisal fees

Monique is a developer working on a new event center for the city. Who does she need to approve the site plans?

city planning board

What is one way lenders prevent other liens from hopping ahead of them in the debt priority line?

collecting property taxes in an escrow account and paying them for the borrower

A sales associate needs to direct their client to a few sources of third-party financing. You tell the sales associate to look into:

commercial banks, savings associations, and credit unions

Tony is a sales associate who focuses on the sales of movie theaters, bars, restaurants, and entertainment venues. This real estate specialization could best be described as:

commercial real estate

A license holder does not disclose a house's history of flooding to a buyer. This is an example of:

concealment

Kenya purchased a vacation property. She owns the unit itself individually, and she is a co-owner of the common elements like the pool, playground, and gym. What kind of property is Kenya's vacation home most likely to be?

condo

Conventional loans are divided into two categories. They are:

conforming and non-conforming

Baruch states in the contract that he will pay $350,000 for a property. The $350,000 is the:

consideration

The bundle of rights includes the right of possession, exclusion, control, quiet enjoyment, the right to encumber, and:

disposition

Buyer Pete insists that, in multiple conversations, the seller agreed to leave all kitchen appliances in the house. The seller doesn't recall it that way, and the contract makes no mention of this. Which of the following legal concepts will likely come into play here if this dispute becomes a lawsuit?

four corners

When an agent enters into an agency relationship, despite the fact that no compensation is offered or paid, they are providing:

gratuitous agency

A tenant has recently signed a lease for a new commercial property. According to the lease terms, the tenant pays only a monthly rent, and the landlord covers all of the maintenance and other property expenses. Name what kind of lease this tenant has.

gross lease

Stevie receives an offer for his house. He takes part of that offer and adds new language. He sends it to the buyer. This revised offer:

is a counteroffer and is considered a new offer

You're the listing agent meeting with the seller of a renovated 1969 home. The seller asks if they will need to give a lead-based paint disclosure to buyers, considering its recent renovation and great condition. You should tell the seller that a lead-based paint disclosure:

is required for all residences built prior to 1978, regardless of renovations

Henrietta sells a property, reinvests the proceeds in a brand new property, and defers all capital gain taxes. This is called a(n):

like-kind change

Choose the survey method that would result in this legal description: "Beginning at the intersection of the north boundary of Jolie Dr. and the east boundary of Midnight Rd.; then proceed due north along the east line of Midnight Rd. 120 ft. to its intersection with the center line of Deep River; then proceeding northeasterly 70 degrees along the center line of Deep River 400 ft. to the oak tree; then due south 300 ft. to the benchmark; then proceeding due west along the northern boundary of Jolie Dr. 300 feet, returning to the point of beginning."

metes and bounds

Train tracks for a new route were built right behind Joe's home. The train is noisy, and Joe has seen a decrease in the value of his property. What economic characteristic of land does this exemplify?

modification

A homebuyer is looking to find a mortgage. He goes to the office of Bert Applebee, who presents him with some options for mortgages. The homebuyer chooses one he likes, and Bert contacts the lender and negotiates the terms for the homebuyer. The lender then originates the loan for the homebuyer. What job does Bert Applebee most likely have?

mortgage broker

Fran wants to file a fair housing violation with HUD. How long does she have, from the alleged violation?

one year

Olga has missed some mortgage payments and her home has gone into default. If she were to exercise her equity of redemption, what would she have to do?

pay the loan in full before the property is sold in auction

A ceiling fan, still in its original packaging and NOT attached to the ceiling, is an example of:

personal property

What is an established starting point from which a metes and bounds description begins?

point of beginning

Which of these liens would take priority over the others?

property tax lien

A buyer purchased a home after a listing agreement between the seller and their former listing agent had expired. However, the buyer first toured the seller's home during an open house held by the seller's former listing agent. What clause in the contract can help determine if the former listing agent is owed compensation in this scenario?

protection period clause

A client is purchasing a house that was sold in a tax sale three years ago. The seller is very enthusiastic. They agree to convey: Interests Title Rights But it sounds too good to be true. You ask the seller if they can guarantee what they agree to convey. When they say no and tell you they can make almost no guarantees, you know they will be using a:

quitclaim deed

When a lender forecloses on a property and the sale of the property is not enough to satisfy the loan balance, what can the lender do to recoup the rest of their money?

seek a deficiency judgement

Odonis' client is concerned about the marketability of their title. Odonis advises that if they want their title to be marketable, they need to focus on clearing up all:

significant encumbrances and liens

How do you find the value of a business's goodwill?

subtract the value of the tangible assets from the going concern value

Which of these is a document that provides a detailed list of each party's expenses at closing?

the Closing Disclosure

Which Act requires developers engaged in the interstate sale or leasing of 100 or more lots to file a statement of record and register the subdivision with the CFPB?

the Interstate Land Sales Full Disclosure Act

Single agent Carl brought a buyer client to the transaction for the purchase of a Daytona, Florida townhouse. He was compensated indirectly by Seller Susan according to the commission split described in the listing agent's MLS listing. Who did single agent Carl represent in the transaction?

the buyer

Maribel owns a condo that has exclusive use of a storage area in the basement. If a pipe breaks in the basement and the storage area floods, who is responsible for paying for repairs to the floor?

the condo association of HOA

Buyer Martha enlisted Sales Associate Rachel to help her buy a home on the Gulf Coast of Florida. They spent some time on Friday discussing Martha's wish list as well as her ability to get financing. Rachel has NOT made any type of brokerage relationship disclosure to Martha, nor have they signed any formal relationship agreement. But they did set a time to look at some properties over the weekend. What is the agency relationship that presently exists between Martha and Rachel?

transaction broker

A broker tells her sponsored sales associates that if any of them sells 12 properties in the next six months, they will be entitled to a bonus. What type of contract is this?

unilateral contract

Which of these risks should buyers consider before agreeing to an adjustable-rate mortgage?

whether they can afford the maximum possible monthly payment over the life of the loan