Sales General Exam (Stringham)

The borrower used a document which gave the trustee power of sale as the security for the loan to buy the home. What document would contain that power: (a) Trustee's Deed (b) Uniform Real Estate Contract (c) Mortgage (d) Deed of Trust

Deed of Trust

T would like to purchase property from F. T sits with his agent and fills out a proper REPC. Which of the following COULD NOT be used as an earnest money deposit? (a) A written IOU made out by T to F for $100. (b) A handshake and a verbal agreement to cut a check later. (c) T's pet pig, Wilbur. (d) T's personal property.

A handshake and a verbal agreement to cut a check later. Explanation: T may give anything of perceived value/consideration to the seller to complete a valid contract. This includes personal property such as gold bricks, a check and yes even his pet Wilbur. It does have to be escrowed though... where would you escrow Wilbur?

When dealing with a land contract, or Uniform Real Estate Contract, which of the following choices is NOT one of the available remedies for default? (a) Hire an attorney to collect the back amounts owed. (b) Treat them as renters and evict them. (c) Use the steps of foreclosure to get them out. (d) Change the locks and hold their belongings as security for back payments owed.

Change the locks and hold their belongings as security for back payments owed (Explanation: [Mortgage Law] Changing the locks, etc. is not a legal option. All of the other three are options for the owner.)

A deed filed in the public records provides which of the following: (a) Escheat (b) Constructive notice (c) Statute of limitations (d) Actual delivery

Constructive notice (Explanation: [Deeds & Transfer] Actual delivery is giving the deed to the grantee. Escheat pertains to dying without a will, and statute of limitations relates to contract law.)

Which of these situations does NOT cause a contract to become voidable? (a) Contract is not in writing (b) One of the parties is a minor (c) Menace (d) Duress

Contract is not in writing

The two largest participants in the secondary market, referred to as government sponsored enterprises, that purchase mortgages are known as: (a) Goldman Sachs and China (b) Freddie Mac and Fannie Mae (c) Ginnie Mae and Fannie Mae (d) FHA and VA

Freddie Mac and Fannie Mae

About 35% of the credit score consists of: (a) The applicant's attitude toward taking on new debt. (b) The applicant's most recent 6 months of payment behavior. (c) The applicant's mix of trade accounts open. (d) How promptly and consistently the applicant pays his/her obligations.

How promptly and consistently the applicant pays his/her obligations.

If the net operating income of a subject property is $1 million per year and the capitalization rate for similar income properties in that particular market is 10%, what is its estimated value using the income capitalization approach. (a) Not enough information (b) $100,000 (c) $1,000,000 (d) $10,000,000

$10,000,000 Explanation: The income capitalization approach uses the formula; Income/Capitalization=Value. So, $1 million/10%=$10 million

The commission split is 70/30, and the brokerage charges sellers 6%. The agent took home $8,500 last month for one sale. What was the selling price? (a) $202,381 (b) $201,999 (c) $195,682 (d) $198,434

$202,381

Tim gets a 80% loan on a $100,000 property and is charged a 1 point origination fee. He is also charged a $35 credit report fee and a $450 appraisal. How much must Tim come to settlement with to then close the deal? (a) $21, 285 (b) $1,285 (c) $100,485 (d) $1,485

$21, 285

Broker L listed a home that sold for the full price of $325,000. The contract called for a 6.5% commission. How much did Broker L make? (a) $20,250 (b) $23,500 (c) $21,125 (d) $18,500

$21,125

When considering income tax issues, Which of the following relates to the phrase: "Two of the last five years"? (a) Home office deduction (b) $250,000 exemption (c) Interest deduction (d) $550,000 exemption

$250,000 exemption

If a property was worth $233,087 two years ago and it appreciated at the rate of 6% each year, how much is it worth now? (a) $259,633 (b) $261,057 (c) $261,897 (d) $263,942

$261,897 Explanation: Don't say: two years at 6% = 12%, so $233,087 x 12%. It appreciated 6% each year (in other words, it compounded). So original value x 6% and add the two (or multiply by 106% for one step). That gives you the value after one year. Take that new value and do it again.

82. A loan is obtained for $30,000. The loan calls for the principal to be paid in equal installments each month for 25 years. The interest on the loan is 0.75% per month. How much is the first payment? (a) $325 (b) $2,350 (c) $355 (d) $1,425

$325 Explanation: Divide loan by 300 monthly payments ($100) and add first month's interest ($30,000*0.0075 = $225)

68. An investment property had a rate of return of 9.5%, and the NOI was $38,560. What was the value of the property? (a) $386,500 (b) $405,895 (c) $367,225 (d) $428,506

$405,895 Divide the NOI (LAST) by the 9.5% (RATE) to get the Value (FIRST). Think of it as "Falue."

The owner wants to net $40,000 upon selling the property. The commission is 7%, there will be $2,500 in closing costs, plus a $450 fee to the attorney. What does the property need to sell for to get the owner $40,000 net? (a) $50,125.00 (b) $200,555 (c) $215,716 (d) $46,182.80

$46,182.80 Explanation: Always have to go "bottom up" on this. Work from the top down and you'll be close, but no cigar! FIRST is the selling price, our "I don't know" so the question mark goes there. LAST is the net. But the seller doesn't only need the $40,000, but also enough to cover closing costs and the attorney. So $42,950 is what he really needs to net. For LAST, what % equals the "net?" It sells for the magic 100%, 7% comes out for commission, so 93% equals the net. Divide the one below the line by the one above, or $42,950 by 93% to get the answer.

What is the amount of pre-paid interest to the borrower if her $205,000 loan at 5.5% annual interest rate closes on November 15? (a) $370.00 (b) $939.58 (c) $469.79 (d) $258.33

$469.79 Explanation: 205,000 X .055 = 11275 then divide that # by 12 to get the monthly interest paid, which is 939.58. Since every month has 30 days with Loan problems we divide that # by 30 and get $31.32 dollars per day interest. Closing is supposed to be Funding so we must assume that in our calculations. 15 days with counting the day of Closing would give us $469.79

The home to be insured had a value of $313,500. It was only insured for 85% of its value, and the cost for insurance was .65 per $100 of value for a three-year policy. How much was the premium for one year? (a) $533.42 (b) $577.36 (c) $638.50 (d) $625.00

$577.36

Mrs. Hawkins has a contractual obligation to pay Mr. Cooper, her agent, a 5% brokerage fee for his services. The borrower has a loan of 80% LTV, and discount points of 2%. The seller's title costs are $1,500 and the seller is required to pay at closing an extra $750 to re-shingle the roof for the buyer. Assuming these are the only closing costs for the buyer and seller, what is the minimum selling price of the home if Mrs. Hawkins wants to net $65,000? (a) $70,671.05 (b) $71,971.05 (c) $70,789.47 (d) $72,157.89

$70,789.47 (Explanation: This is another question where you must work backwards. The information regarding the buyer's closing costs is irrelevant. The seller needs to net $65,000. To this we need to add our closing costs first [again the buyer's discount fees are not subtracted from what the seller is to receive and are not included in the seller's closing costs]. Sales agents are commissioned on the selling price of the home and not the price of the home plus the closing costs. That is why we add the closing costs first in this equation. At this point, if there was no agent commission owed, the minimum selling price would merely be the net required by the seller [$65,000] plus the closing costs [$2,250]. Giving us a total of $67,250. The next step is more tricky... A common mistake is dividing by 5% using this calculation will get you a ridonculous number. The trick to this question is to remember that we are wanting what is net to the seller. In this case, we are going to take 100%, minus the 5% commission, for 95% which is left over for the seller. Now we can use the $67,250 divide this figure by 95% and you have the minimum selling price of the home.)

The commission structure for the brokerage was 5% on the first $1,000,000 and 8% on the rest. The property sold for $1,345,000. How much was the commission? (a) $97,250 (b) $67,250 (c) $77,600 (d) $174,850

$77,600 (Explanation: One million x 5% = part of the commission - $50,000. "The rest," or $345,000 x 8% = $27,600. Add the two parts together for the correct answer.)

J made a $100 earnest money deposit on a 4-plex and wisely used a real estate agent to assist him with the paperwork. The agent charged him a 2% commission. The real estate agent wisely put the deposit in the brokerage's trust account. The home later sold for $50,500. How much will the escrow company pay the agent's brokerage? (a) $910 (b) $900 (c) $1,110 (d) $1,010

$910 Explanation: The brokerage will be sent a check for the commission amount ($1,010) less the earnest money deposit ($100) held in the brokerage's trust account. When the check is received, it is time for the brokerage to withdraw the earnest money from the trust account and claim it as commission.

Tom wants to clear $90,000 when he sells his property. He must pay a 7% commission, $250 in closing cost, and $300 to the attorney who assisted in the transaction. What should he sell the property for? (a) $96,850 (b) $96,774 (c) $97,365 (d) $97,324

$97,365

If the interest rate on a straight loan is 8% and the monthly interest payment is $650, what is the amount of the loan? (a) $75,682 (b) $97,500 (c) $88,750 (d) $103,250

$97,500

All of the following statements are true about the Cost Approach to valuation EXCEPT: (a) Depreciation is calculated for the buildings and land to reflect the three different types of depreciation (loss in value) to the subject property. (b) The land is valued separately from the structure and site improvements. (c) The final result when adding the total cost to replace the subject property (land plus improvements) minus the approximate depreciation is a fair estimate of market value for the subject property. (d) The cost to rebuild or replace the structure and other land improvements is calculated using today's construction costs.

(Depreciation is calculated for the buildings and land to reflect the three different types of depreciation [loss in value)[ to the subject property.)

The renters hadn't paid rent for the past two months. The landlord was sick of it and ready to act. Which of the choices below is appropriate and legal? (a) Initiate an Unlawful Detainer action in court. (b) Immediately call the sheriff to put them out. (c) Have the locks changed so they can't get back in. (d) Put their belongings out on the street until rent is collected.

(a) Initiate an Unlawful Detainer action in court. Explanation: (Leases) Having the sheriff put them out is the last step of the eviction process. The unlawful detainer is the first step. The other two answers are illegal.

Tom is asking $100,000 for his home. Kyle calls and offers $100,000 over the phone. Tom accepts the offer. This contract would be considered: (a) Unenforceable (b) Unilateral (c) Voidable (d) Void

(a) Unenforceable Explanation: It is a valid contract if it has the four essential elements: Mutual Agreement, Consideration, Capacity/Competency, Legal Purpose. However, under the Statute of Frauds if either party wanted to take legal action against the other in court, it would be unenforceable.

In Utah, property taxes become delinquent: (a) 30-Nov (b) 1-Dec (c) 1-Jan (d) Nov-31

1-Dec

A property had a net operating income of $3,430. If the property had a value of $22,000, what was the rate of return of this property? (a) 6.41% (b) 1.56% (c) 0.16% (d) 15.59%

15.59% Explanation: This is a cap rate, capitalization, or rate of return question. FIRST = Value (Falue); RATE = rate of return; LAST = NOI (remember it must be an annual number). We have the value at the top, the NOI at the bottom, so we divide the one below the line by the one above the line

K wanted a property that was at least 3/4 of an acre in size. K liked the home on a property 434' by 289'. How many acres is this particular parcel? (a) 3 acres (b) 1.76 acres (c) 2.88 acres (d) 2.33 acres

2.88 acres

In Utah, what is the statutory period for obtaining a prescriptive easement? (a) 7 years (b) 5 years (c) 20 years (d) 40 years

20 years

A home listed with ABC Realty sold for $168,500. If the closing costs were $3,825 and the commission was $11,795, what was the rate of commission? (a) 7.16% (b) 7% (c) 6.80% (d) 7.25%

7%

The loan to value (LTV) on a $525,000 purchase in which the borrower placed $100,000 cash down is: (a) 19% (b) Not enough information to determine (c) 91.7% (d) 80.9%

80.9%

If the loan to value ratio is too high, the lender will want mortgage insurance to protect its interest in case of default and foreclosure sale. In almost all cases, what is the number that triggers mortgage insurance being paid? (a) 90% (b) 75% (c) 81% (d) 95%

81%

Which of the following would require a variance? (a) A business in an area that had recently been rezoned to residential. (b) A 9,000 square foot lot where zoning regulations require 10,000 square foot lots. (c) A church in an area zoned for residential properties. (d) An area between two varying types of zoning classifications to give protection to one of the areas.

A 9,000 square foot lot where zoning regulations require 10,000 square foot lots Explanation: A variance (to vary from) comes after certain zoning requirements are in place. It is the right to do something different and be legal about it. The business answer will be a legal non-conforming use as the use was their first. The area between two types of zoning would be a buffer.

Under a mortgage foreclosure, K made the highest bid and got the property. Within 24 hours K had paid the full amount to the sheriff. What would K receive? (a) A special warranty deed (b) A certificate of sale (c) A quit claim deed (d) A bargain and sale deed

A certificate of sale Explanation: (Mortgage Law) K will not receive the actual deed until the six month statutory period of redemption has passed and the defaulting borrower was unable to redeem the property. The other answers are all different types of deeds.

In real estate, the term "title" refers to: (a) A legal concept that signifies ownership of real property. (b) A valuable piece of paper that can be bought and sold. (c) A contract that gives a lender the right to foreclose if all the obligations are not met. (d) Any publicly recorded document that signifies one or more of the four property rights.

A legal concept that signifies ownership of real property

Which of the following is NOT a method for creating an easement? (a) Mutual Agreement (b) Implication (c) Prescription (d) A neighbor's use for 7 years

A neighbor's use for 7 years

Four brothers own a property as joint tenants. It has appreciated quite a bit in value since they made the investment to buy it. One brother wants to sell and get his money out, and he has a ready, willing and able buyer. The others refuse to sign the offer. What is a possible legal solution? (a) A partition action (b) An estate pur autre'vie (c) A writ of execution (d) Exercise the defeasance clause

A partition action Explanation: An estate pur autre' vie belongs with a life estate. A writ of execution is given to the sheriff by the court to evict a tenant, and there is no defeasance clause involved in the situation described here.

Which of the following would NOT be considered to have special agency? (a) A real estate agent given the responsibility to take care of all of the seller's real estate matters. (b) A real estate agent who takes a listing on a single family dwelling. (c) A real estate agent who has an exclusive right-to-sell listing on a home. (d) An agent who is given the responsibility to seek a ready, willing, and able buyer.

A real estate agent given the responsibility to take care of all of the seller's real estate matters. Explanation: Special=specific agency: the agent is hired to perform specific duties. A universal agent takes care of all the affairs of the client.

Which of the following is NOT true regarding the income tax concept of depreciation. (a) A vacant lot can be depreciated when rented to people for gardens. (b) Cost recovery is another term for depreciation (c) It does not result in "getting out of" paying taxes. (d) Straight line method is the only one allowed for real property.

A vacant lot can be depreciated when rented to people for gardens. Explanation: (Taxation) No matter what you do with it, land cannot be depreciated. Period. End of discussion!

Discount points could best be described as: (a) A reward the bank gives for referring a new borrower. (b) Money charged to originate the loan. (c) A way to raise the effective yield of the loan. (d) An additional security deposit given to the bank to secure the loan.

A way to raise the effective yield of the loan

When selling real estate, contracts must be in writing: (a) If advised by the real estate agent. (b) According to the Statute of Frauds (c) Unless the deed is to be recorded (d) If agreed to by the buyer and seller

According to the Statute of Frauds Explanation: Simple fact: to be enforceable a contract for the sale of real property must be in writing.

When someone makes a statement to a qualified official that they freely and voluntarily executed a deed or document: (a) Acknowledge (b) Recording (c) Certification (d) Habendum

Acknowledge

What do you call the person who signs a document on behalf of another? (a) Attorney in Fact (b) Client (c) Power of attorney (d) Customer

Attorney in Fact

Which of the examples below is NOT an exception to the requirements of the Fair Housing Laws? (a) The owner of a single family home renting a bedroom, and who advertises: "Females only." (b) Condo complex that requires that everyone who buys or lives there must be at least 45 years old. (c) A church-owned apartment building that has always rented only to members, and lets anyone join their church (d) An owner of a triplex who lives in one unit and rents out the other two.

Condo complex that requires that everyone who buys or lives there must be at least 45 years old.

Progression and regression are considered "sub-principles" relating to overbuilding for an area, or purchasing the least expensive model home in a development of new homes. The main principle involved is: (a) Contribution (b) Conformity (c) Cycle of Change (d) Competition

Conformity

An essential element of a deed is __________, which can be stated in terms known as valuable (monetary) or good (love and affection). (a) Consideration (b) Witnesses and a notary (c) The granting clause (d) Habendum

Consideration

A builder buys a lot and obtains a loan to build a "spec house." What type of loan would he have? (a) Blanket (b) Graduated (c) Construction (d) Wraparound

Construction Explanation: A blanket loan uses two or more parcels for security. A wraparound has an underlying loan. A graduated loan has terms in it indicating when and by how much the payments will increase over time.

The appraisal approach that determines value by adding the value of land to the depreciated replacement value of the improvement is the: (a) Market data approach (b) Cost approach (c) Income approach (d) Gross Rent Multiplier

Cost approach

For the purpose of property taxes, an appraisal is done and the value is determined by the: (a) County Tax Appraiser's Office (b) Board of Equalization (c) County Tax Assessor (d) State Appraisal Board

County Tax Assessor

A guarantee in a deed which says the grantor really does own the property and has the right to convey it to another is called the: (a) Covenant of Seizin (b) Covenant of Further Assurance (c) Covenant Against Encumbrances (d) Covenant of Warranty Forever

Covenant of Seizin

An industrial complex was built near a residential area. In order to preserve the value of the residential area, which of the following would be the most likely to be employed? (a) The local government would buy up the area in between by exercising eminent domain. (b) Zone the area between the two C1. (c) A zoning commission has no authority in such matters. (d) Create a buffer zone by zoning restriction.

Create a buffer zone by zoning restriction. Explanation: (Public & Private Ctrl) This is a simple one. Just be sure to know the concept of buffer zones and what kinds of situations would call for such a thing, such as safety issues and protection of property values.

On the settlement statement for a property closing on March 16th of the year, the proration of property taxes would appear as: (a) Credit seller, debit buyer (b) Debit seller, debit buyer (c) Credit seller, credit buyer (d) Debit seller, credit buyer

Debit seller, credit buyer Explanation: The seller owes taxes from 1/1 to 3/16. To the seller it is a debit. Think of debit=debt. While not true in accounting terms, it's a good memory aid for settlement statements. To the buyer (who will pay the taxes for the full year in November) it is a credit (think of "credit, you get it").

The difference between present value and reproduction cost is: (a) book value (b) depreciation (c) market value (d) appreciation

Depreciation Explanation: If the appraiser uses the cost approach to determine the value of the improvement if it was built now, that amount needs to be depreciated to the age of the subject property

A person who receives a gift of real property in a will is called the: (a) Mortgagor (b) Grantor (c) Testator (d) Devisee

Devisee

Which of the following terms is NOT applicable to an adjustable rate mortgage? (a) Index (b) Cap (c) Margin (d) Discount

Discount Explanation: Discount in relation to loans applies when an investor buys an existing loan for less than its face value.

You present an offer from a qualified, willing and able minority buyer. The seller refuses to sell because the individual is a minority. You can legally do all the following EXCEPT: (a) Make the buyers aware they could possibly sue the seller. (b) Inform HUD. (c) Tell the owners they are in violation of Fair Housing Laws. (d) Do not show this house to any other minorities

Do not show this house to any other minorities

The government took R's property for a highway and paid R fair market value. Which of the following gives the right for this type of action? (a) RESPA (b) Eminent Domain (c) Condemnation (d) Regulation Z

Eminent Domain

When a person builds an improvement that extends onto the property of a neighbor, it is considered a(n): (a) Injunction (b) Defeasance (c) Encroachment (d) Easment

Encroachment

When the buyer purchased the property using a Uniform Real Estate Contract, what is the interest of the buyer called? (a) Title (b) Equitable interest (c) Deed (d) Possession interest

Equitable interest Explanation: (Mortgage Law) Because, under this contract, the deed is not conveyed to the buyer until the loan is paid off, the title is divided into two parts: equitable and legal. The seller/lender holds legal title and the buyer/borrower has equitable title.

When the lease expired, Q, the lessee didn't leave as requested. Q kept giving excuses, saying a new residence was coming available soon. This creates: (a) Estate at will (b) Tenancy in common (c) Periodic tenancy (d) Estate at sufferance

Estate at sufferance Explanation: (Leases) If Q offered rent for staying the extra time and the lessor took it, this would be a periodic tenancy. Tenancy or Estate at will had no termination date, and tenancy in common is ownership.

Which of the following relates to a deed: (a) Lien (b) Tax assessment (c) Personal property (d) Exceptions and reservations

Exceptions and reservations Explanation: (Deeds & Transfer) Anything being held back and not getting conveyed with the deed is an exception or reservation and would be in the habendum clause.

The owner of a commercial property wants to sell. The seller wishes to allow many brokerages the opportunity to sell the property. The seller should: (a) Execute an Exclusive Agency Listing with each brokerage. (b) Execute an Open Listing with the brokerages he/she wishes to hire. (c) Sign an Exclusive Right to Sell Listing. (d) Sign a Net Listing.

Execute an Open Listing with the brokerages he/she wishes to hire.

Bob the buyer has made an offer on Sam the seller's property. That offer has been accepted. Bob is working on finalizing his loan for the purchase as part of the contingencies of the agreement. What kind of agreement exists between Bob and Sam? (a) Executed (b) Sale pending (c) Voidable (d) Executory

Executory Explanation: Because the contract is passed acceptance but not yet performed it is considered an Executory agreement. Though we may refer to these as 'sale pending' the proper terminology is executory.

Which kind of title insurance would provide the most protection for the buyer of the property? (a) Plain Language policy (b) ALTA Lender's policy (c) Standard policy (d) Extended Owner's policy

Extended Owner's policy Explanation: (Property Tax and TI) There are many types of insurance policies, some you may know of as their brand names. But of the choices given here, "extended" tells you it has the most coverage for the owner -- similar to the coverage in the lender's policy.

Which government agency would be the best resource for flood plain determination? (a) FHLMC (b) FNMA (c) FHA (d) FEMA

FEMA

Recording is the same as closing. (a) False (b) True

False Explanation: Recording is a step in the closing process and typically the last. Closing cannot happen without new ownership or new liens being recorded.

This ad appearerd in the newspaper. "Beautiful three bedroom home in Hispanic neighborhood. Owners moving to neighboring state. Purchase price $80,000, APR 6.5%." This ad would violate which of the following laws? (a) Federal Fair Housing (b) RESPA (c) Interstate Federal Full Disclosure Act. (d) Truth in Lending

Federal Fair Housing Explanation: You cannot advertise in a way that targets a specific protected class.

K has an agreement as a property manager for an owner. This would create which of the following relationships or positions? (a) Mortgagor (b) Fiduciary (c) Director (d) Trustee

Fiduciary

A particular house that was for sale had 60 amp service. The recommendation these days is for 100 amps. This is an example of: (a) Functional obsolescence (b) Economic obsolescence (c) Physical deterioration (d) Deferred maintenance

Functional obsolescence

Which arrangement may occur in a typical construction loan? (a) Funds are given after construction is completed. (b) Funds are paid in installments at various stages of construction. (c) The full loan is advanced before construction begins. (d) Interest on the total amount of the loan is charged from the beginning

Funds are paid in installments at various stages of construction.

Which of the following entities is only in the secondary mortgage market, and not in both primary and secondary? (a) Private individuals (b) Insurance companies (c) Banks (d) GNMA (Government National Mortgage Association)

GNMA (Government National Mortgage Association) Explanation: GNMA, FNMA, FHLMC only function in the secondary money market, buying loans already in place.

A lien on real property, documented by a signed mortgage contract gives the lender the right to: (a) Go to court and/or sell the property if the owner defaults any of the provisions of the mortgage (b) Collect a particular interest rate on the loan. (c) Sell the servicing rights to the loan to another investor. (d) Collect monthly payments for insurance and taxes and place them in an escrow account.

Go to court and/or sell the property if the owner defaults any of the provisions of the mortgage

What term best describes a situation where the lessor collects rents from the tenants and pays expenses out of those rents? (a) Gross lease (b) Net lease (c) License estate (d) Participation lease

Gross lease

We refer to an FHA insured loan and a VA ________ loan (a) gifted (b) no down payment (c) entitled (d) guaranteed

Guaranteed Explanation: (Application & Underwriting) The VA loan program provides a VA (federal government) guarantee for the first 25% of the loan amount for qualified veterans.

Which essential clause in a deed is a Latin term that translates as "to have and to hold?" (a) Habendum (b) Post granting (c) Ad Valorem (d) Quid pro quo

Habendum

Which best describes the first principle of appraising real property? (a) Conformity (b) Anticipation (c) Highest and best use (d) Neighborhood Cycle

Highest and best use

Which of the following falls into the category of appurtenances? (a) acceleration (b) personal property (c) privilege (d) improvement

Improvement Explanation: (Property) An appurtanence is anything attached to the land itself, such as improvements like a house, or rights in the deed. Both would transfer to a new owner.

The key difference between a lien theory state and a title theory state is: (a) In a title theory state, the property owner always holds title. (b) A title theory state will collect more transfer taxes because of the extra steps. (c) Only a lien theory state uses legal documents to convey property rights. (d) In a lien theory state, the property owner holds title but in a title theory state the lender or trustee holds title.

In a lien theory state, the property owner holds title but in a title theory state the lender or trustee holds title.

Which is not correct about PMI? (a) To request cancellation of PMI, you must be current on your loan. (b) For "high-risk loans" lenders are required to automatically remove PMI when the loan balance reaches 77% of the original purchase price. (c) In order to remove PMI, the lender must receive a request from the borrower. (d) You may request PMI removal when the current loan balance equals 80% of the original purchase price or current appraised value, whichever is less.

In order to remove PMI, the lender must receive a request from the borrower

The primary product sold by a credit bureau is: (a) Public records on all past criminal and civil hearings. (b) Pending judicial actions against the borrower. (c) Current income statistics on similar borrowers. (d) Information on the creditworthiness of an individual applicant.

Information on the creditworthiness of an individual applicant.

An agent contacted an owner to see if they might want to sell the property. The agent said, "I think I can get you $250,000," which surprised the owner. The owner said, "Ok, and anything over that can be your commission." This is: (a) A really good deal for the agent and the agent should jump on it! (b) Only legal if the agent ran comps and can justify the $250,000 number. (c) A perfectly good way for agents to market themselves and get listings. (d) Is a net listing and could be grounds for disciplinary action against the agent.

Is a net listing and could be grounds for disciplinary action against the agent

The best way to describe an appraisal is: (a) It is an independent, objective opinion of market value at the time of the appraisal. (b) It represents the minimum value in which a lender would fund a loan. (c) It represents the highest and best price a buyer should pay. (d) It is a scientifically determined and universally accepted resale value for sellers.

It is an independent, objective opinion of market value at the time of the appraisal.

A large benefit of using a credit report to process an application is: (a) It may be the only way to verify an applicant's assets. (b) It is factual record of history allowing a quick and objective decision. (c) The applicant can never determine what the loan decision was based on. (d) It provides a seasoned and expert opinion on the applicant's character.

It is factual record of history allowing a quick and objective decision

When the Federal Reserve increases the supply of money, it: (a) Lowers interest rates and gives more purchasing power to people. (b) Helps lower prices and places a restraint on inflation. (c) Almost always leads to higher demand for money, so the net effect is small. (d) Gives more purchasing power to people by raising the interest rates.

Lowers interest rates and gives more purchasing power to people.

A sales agent in Utah negotiated an offer on an old home which had problems with the electrical system. The agent did not make an inspection or suggest one be done. The seller says everything works. When the buyer asked, the agent said, "Everything's in good working order." The sales agent is guilty of: (a) Nothing, because of what the seller said (b) Making a substantial misrepresentation (c) Nothing, because of the fiduciary relationship to the seller (d) Nothing, because there was no intention of misrepresentation

Making a substantial misrepresentation Explanation: The agent's duty is to look out for the client's interest. This was an older home. The agent should have urged the buyer, as part of due diligence, to have a home inspection done and not just relied on what the seller said.

What method of appraising would be most effective when appraising a vacant parcel of land? (a) Market data approach (b) Cost replacement approach (c) Capitalization approach (d) Income approach

Market data approach

A property description that uses angles and degrees is referred to as: (a) Government survey (b) Metes and bounds (c) An informal description (d) Lot, block, and plat

Metes and bounds

The lender wanted a very thorough appraisal report for the shopping mall being considered for financing. Which type of appraisal report would accomplish that? (a) Check List (b) Letter Form (c) Narrative (d) Survey

Narrative

A lessee agreed to pay property tax and hazard insurance as well as rent. This lease is: (a) Gross lease (b) Proprietary lease (c) Percentage lease (d) Net lease

Net lease

In selling their home, the sellers are willing to let the buyers take over their existing loan. The lender agrees. But the sellers want to be sure they have no further liability for that loan amount. They could ensure the lack of liability with a(n): (a) Fiduciary agreement (b) Release of lien (c) Assignment (d) Novation

Novation Explanation: Novation is an assignment "with a twist." If A is assigning his/her position in a contract with B to X, the new contract is between X and B. If B agrees to this, it is a novation and A is relieved of all liability.

You can deduct loan interest in which of the following circumstances? (a) On your house and your motor home. (b) Points on a home equity loan incorporated into the loan. (c) Credit card debt used for improving your home. (d) The automobile used to travel to and from work.

On your house and your motor home. Explanation: You can deduct home loan interest on loans for up to two homes. You cannot deduct interest on personal debt.

Title insurance is paid: (a) monthly. (b) annually. (c) as a part of the mortgage payment. (d) only once, at closing.

Only once, at closing Explanation: That's it - once, at closing - memorize it!

Which of the following is NOT true about a sale and leaseback of a commercial property? (a) Seller frees up funds (b) Ownership does not actually transfer (c) Buyer can deduct depreciation from his taxes (d) Seller is able to deduct rent payments from his gross income

Ownership does not actually transfer

P, who is 25, did not realize Q was only 17, and entered into a contract with Q. P no longer wants to go through with the deal, but Q does. Which of the following statements apply? (a) P has no choice, but it is a voidable contract for Q. (b) The contract is valid and binding on both P and Q. (c) The contract is void if Q didn't have a co-signer. (d) This is definitely a voidable contract for P.

P has no choice, but it is a voidable contract for Q. Explanation: If you missed this, review the differences between valid, void, and voidable. In a voidable contract only one of the parties has the right to choose: either to affirm the contract or to walk away from it.

L agreed to carry a 2nd in the sale of the home. It was for $20,000, 9% interest, 30 years, payment of $160.92 per month. However, it had a five year call when the buyer would pay off the balance of $19,176. How would you describe this loan arrangement? (a) Fully amortized (b) Discounted (c) Wraparound (d) Partially amortized

Partially amortized

A loan is amortized as though for 25 years, but is due sooner and paid off in a balloon payment. This is known as a(n): (a) Partially amortized loan (b) Gap loan (c) ARM (d) Straight loan

Partially amortized loan

The agent presented an offer. On the contract, in the space for the buyer's name was written: "An undisclosed buyer." This would be an example of which type of principal? (a) Undisclosed (b) Partially disclosed (c) Fully disclosed (d) Illegal

Partially disclosed Explanation: Since the other party knows there IS a buyer, but not the identity of that buyer, that is partially disclosed. Undisclosed would be if the agent was representing that the agent was the buyer, rather than an agent for another party. Fully disclosed would be if the buyer was named.

Q is willing to seller finance the purchase of his home which he owns free and clear. Q would be considered the: (a) Leasee (b) Grantee (c) Payor (d) Payee

Payee Explanation: The borrower would be the payor making the payments to the payee who is the seller and holder of a promissory note.

At the beginning of each month the lessee gives, and the lessor takes the rent. This best describes: (a) Joint tenancy (b) Tenancy at will (c) Tenancy by the entirety (d) Periodic tenancy

Periodic tenancy Explanation: (Leases) Two of these "tenancies" describe ownership and two describe leasing situations. Joint tenancy and tenancy by the entirety are ownership. Tenancy at will is of uncertain duration and can be cancelled at will by either lessor or lessee.

The Y Co. needed a large parcel of land to relocate their business. They found two parcels next to each other priced at $80,000 and $95,000 and purchased them both. Subsequently they found a better site and sold the two parcels to one buyer for $205,000. This illustrates the concept of: (a) Neighborhood Cycle (b) Plottage (c) Assemblage (d) Situs

Plottage

Which of the following is NOT an approach to appraising? (a) Income (b) Cost (c) Comparison (d) Plottage

Plottage

73. When the buyer and seller agree to extend the closing date, the real estate agent should: (a) explain that time is of the essence and the closing date cannot be changed. (b) prepare an addendum and have both parties agree to the change in writing (c) write a whole new contract. (d) make sure the buyer and seller shake hands to confirm the change.

Prepare an addendum and have both parties agree to the change in writing

86. A house was listed for $180,000. The owners owe $130,000 on a first mortgage. The listing agent receives an offer for $120,000. The agent knows the closing costs will be $4,560 and attorney's fees $5,440. The agent should: (a) Present the offer to the sellers and tell them to reject the offer. (b) Tell buyers they should pay the closing costs. (c) Present the offer to the owner. (d) Refuse to present the offer to the owner because he knows it is less than the owner owes.

Present the offer to the owner

The key difference between a promissory note and a mortgage is: (a) A promissory note can be assumed by a new property owner. (b) A mortgage is signed by anyone obligated to repay the loan. (c) There are no personal guarantees on a promissory note. (d) Promissory notes are signed by people personally obligated to repay the loan.

Promissory notes are signed by people personally obligated to repay the loan. Explanation: (Mortgage Law) The Promissory Note represents a personal promise by every one who signs the Note to repay the loan. Every person who signs the Note individually promises to repay the entire amount regardless of how well the other signers meet their personal obligations.

All of the following are facts about flood insurance EXCEPT: (a) Properties in a flood zone identified by FEMA must carry flood insurance. (b) Flood insurance rates are fixed by the National Flood Insurance Program. (c) Floods can occur throughout the United States and are the number one natural hazard. (d) Homeowner's insurance does not cover loss from floods.

Properties in a flood zone identified by FEMA must carry flood insurance Explanation: Homes with mortgages from federally regulated or insured lenders in high-risk flood areas designated with the letters "A" or "V" are required to have flood insurance. Homeowner's insurance does not cover loss from floods - only flood insurance can. Floods are the number one natural hazard, and they occur in all 50 states. The federally-insured, National Flood Insurance Program (NFIP) provides flood insurance which can be purchased through most leading insurance companies. Rates are set and do not differ from company to company or agent to agent.

R wanted to buy Q's home, but being new on the job could not qualify. Q agreed that with $15,000 down, Q would carry a loan for the remainder of the purchase price, amortized over 30 years at 8% interest. This is a(n): (a) Wraparound loan (b) Double contract, and illegal (c) Discounted loan or note (d) Purchase money mortgage

Purchase money mortgage Explanation: Seller financing = purchase money mortgage. In this case it is not also a wraparound as the new loan does not incorporate an existing loan.

Zachary received a warranty deed after purchasing a property. He saw that his name had been misspelled. Which of the following documents would he execute to correct the title? (a) General Warranty Deed (b) Bargain and Sale Deed (c) Special Warranty Deed (d) Quit Claim Deed

Quit Claim Deed

What is Radioactive, colorless, odorless, tasteless noble gas, occurring naturally in our environment as the decay of radium? (a) Gas contained in lead paint (b) None of the above (c) Natural Gas used (d) RADON

RADON

Once the appraiser calculates the adjusted prices of all the comparables, the final step for developing a single estimate of market value is called: (a) Gather data and investigate. (b) Weighted substitution. (c) Highest and best use. (d) Reconciliation.

Reconciliation

What is the right of a mortgagor to regain clear title to the property upon full payment of the debt after the foreclosure sale? (a) Release (b) Redemption (c) Reversion (d) Reinvestment

Redemption

Which of the following is the best definition of the term "redlining?" (a) showing homes in a largely white area to people of color. (b) Spreading rumors of minorities moving into the development. (c) Refusing to rent to an unmarried couple who want to live together. (d) Refusing loans in certain areas because of its ethnic makeup.

Refusing loans in certain areas because of its ethnic makeup

A credit score: (a) Is a numerical estimate of borrower's ability to honor past obligations. (b) Represents Mr. Isaac's mathematical genius in predicting loan losses. (c) Is a statistical average of willingness to pay future obligations. (d) Represents the probability of a serious delinquency on an account over the next 24 months.

Represents the probability of a serious delinquency on an account over the next 24 months Explanation: (Foreclosure & Credit) A credit score expresses the probability that a consumer will have a serious delinquency on an account (at least 90 days past due) over the next two years.

Which of the following is NOT a means of regulating land? (a) Resolutions passed by the local Board of Realtors (b) Zoning (c) Building codes (d) Deed restrictions

Resolutions passed by the local Board of Realtors

S was three years into a five-year lease and wanted to move elsewhere. T was willing to sublet the property. Which is true? (a) S could increase the rent and make a profit. (b) S has no further liability for rents or damages. (c) T pays rent directly to the owner. (d) T is the only one who could be liable for damage to the property.

S could increase the rent and make a profit

Each of the following entities make loans in the primary mortgage lending market EXCEPT: (a) Big Time Federal Credit Union (b) Sallie Mae (c) Countywide Mortgage Lending Corporation (d) Hometown Savings Association

Sallie Mae Explanation: (Lending Markets) The primary mortgage lending market consists of commercial banks, savings associations, credit unions, mortgage bankers/lenders and mortgage brokers. Sallie Mae is not in the mortgage lending business.

People who execute a document are referred to as: (a) Executors (b) Notary Republics (c) Signatories (d) Testators

Signatories Explanation: To execute a document refers to the placing of signatures therefore puts the contract into effect. Executor is the person who carries out the will; "testator" wrote the will; a notary public verifies your signature. A person who signs any document is the signatory.

Which broker action is an example of blockbusting? (a) Directing people to an area based on race (b) Soliciting listings based on a fear of racial change in an area (c) Refusing to rent to families with children (d) Refusing to sell or rent to prospects because of race

Soliciting listings based on a fear of racial change in an area

A particular parcel was zoned residential, single family and was surrounded by others zoned the same. That parcel was rezoned commercial so a convenience store could be built. This is an example of: (a) Defeasible fee estate (b) Spot zoning (c) Legal non-conforming use (d) Variance

Spot zoning Explanation: Spot zoning will ONLY be a right answer if the question says that the zoning of that one parcel was changed to be different from that surrounding it.

In the list below, which item does NOT belong with foreclosure under a trust deed? (a) Statutory period of redemption (b) Three months (c) Special warranty deed (d) Equitable period of redemption

Statutory period of redemption

E borrowed money from a bank for personal reasons. It had a fixed interest rate for a five year term. Monthly payments were interest only, and at the end, E owed the lender the full amount borrowed. This is which kind of loan? (a) Purchase money (b) Participation loan (c) Partially amortized loan (d) Straight loan

Straight loan

When taking a listing, agent J had sellers who insisted their house was worth more than the one down the street for sale, even though both houses were basically the same. J explained that buyers won't pay any more than they have to in order to get what they desire. This is the principle of: (a) Contribution (b) Balance (c) Progression (d) Substitution

Substitution

Agent G was going to leave XYZ Real Estate and go to ABC Realty. G's great-aunt had listed her house and wanted G to still be her agent. Which of the following answers would accomplish this in accordance with the law? (a) The broker of XYZ agrees to cancel the listing. (b) The listing is assigned from XYZ to ABC (c) The listing has to stay with XYZ and the aunt will be term-16assigned a new agent. (d) Everything stays the same and G continues to service her aunt's listing.

The broker of XYZ agrees to cancel the listing.

Each of the following statements are true about a deed EXCEPT: (a) Grantor must be of legal age and sound mind but not the grantee. (b) Grantor must sign the deed. (c) The deed must use a legal description to identify the property. (d) The deed does not need to be in writing.

The deed does not need to be in writing Explanation: (Deeds) A deed is a legal document that transfers rights of ownership from the grantor to the grantee. The deed must be in writing (formal document). The deed must contain the signature of a competent grantor who is of legal age. However, the grantee need not sign, be competent or of legal age. It must have a legal description to identify the property and be delivered and accepted by the grantee.

An apartment building with 12 units has 6 covered parking spaces, all of which are assigned, a handicapped tenant moves in. Which of the following is true? (a) The owner must make provisions so the handicapped person can have a parking place. (b) Under no circumstances does a parking space have to be provided if the owner doesn't want to do it. (c) The handicapped person must be given a space as soon as one becomes available if it is necessary for his enjoyment of the property. (d) The owner must add additional space if one isn't available.

The handicapped person must be given a space as soon as one becomes available if it is necessary for his enjoyment of the property Explanation: In this kind of question, a key to watch for is the words, "full enjoyment of the premises." It does not say to take something away from another tenant for the new tenant.

22. Which is true regarding FHA loans? (a) There are no prepayment penalties. (b) FHA standards require a substantial amount as a down payment. (c) You will get an FHA loan regardless of your credit history. (d) FHA would be used to originate a conventional loan.

There are no prepayment penalties

Which of the following statements is true of both Truth in Lending and RESPA regulations? (a) APR must be used in advertising. (b) They cover single to four-family dwellings. (c) The booklet Settlement Costs & You must be given. (d) They cover loans to small businesses.

They cover single to four-family dwellings Explanation: Be sure you study carefully to know the specific requirements of each of these laws, and where they are the same. Their purpose is the same: disclosure to the public of the costs of borrowing money

When an apartment building is sold, how should the renters' security deposits be handled on the HUD 1 statement? (a) They will be a debit to the seller and a notation in the buyer's credit section. (b) They will appear as a debit to the seller and a credit to the buyer. (c) They will not be noted in the settlement statement. (d) They will be a debit to both since they belong to the renters.

They will be a debit to the seller and a notation in the buyer's credit section Explanation: They cannot be a credit in the buyer's financial column or the buyer would be using other people's money to purchase the property. They will be "noted" but will not be "computed."

What is the risk to a lender who accepts a deed in lieu of foreclosure? (a) They would accept the deed subject to any junior liens. (b) The original borrower may be represented by a lawyer. (c) A deed in lieu of foreclosure is considered illegal. (d) There must be a foreclosure to make the deed valid.

They would accept the deed subject to any junior liens Explanation: (Mortgage Law) This is a perfectly legal arrangement, but carries risks for the lender. It is sometimes called a "friendly foreclosure."

Z listed the property. When the buyers expressed interest in seeing it, Z disclosed they would have no representation and the buyers agreed in writing. When writing the offer, the buyers asked Z what they should offer. Z responded, "Oh 93% of the listed price would be good." Which most applies? (a) This is limited agency and legal. (b) This would be a good suggestion for the agent to make. (c) Z is properly representing the seller and obtaining an offer. (d) This is ostensible agency between Z and the buyers.

This is ostensible agency between Z and the buyers.

A deed of trust differs from a mortgage instrument in that a deed of trust allows the lender a more streamlined process to foreclose on a property and bypass the judicial process. (a) True (b) False

True

HUD oversees each of the following federal laws or programs EXCEPT: (a) GNMA (b) Real Estate Settlement Procedures Act (c) FHA (d) Truth-in-Lending

Truth-in-Lending

After an offer to purchase real property has been signed and presented, how long does the offeror have to withdraw the offer? (a) Once the offer has been signed, it cannot be withdrawn until the offeree accepts, rejects, counters or the stated time period for acceptance has elapsed. (b) Three days following the presentation. (c) Twenty-four hours following presentation. (d) Until the offer has been accepted.

Until the offer has been accepted.

In a graduated lease contract, which of the following would NOT be a means to determine future rent amounts? (a) Index (b) Reappraisal (c) Escalation clause (d) Use of an ARM

Use of an ARM Explanation: (Leases) An ARM is an adjustable rate mortgage. All the other answers can be used to calculate raises in the rent.

Any offer without an Earnest Money Deposit is considered which of the following? (a) Unenforceable (b) Unilateral (c) Implied (d) Valid

Valid Explanation: Earnest Money is not a requirement to have a valid offer. The confusion happens when we view the Earnest Money Deposit as the consideration in the contract. The consideration is the promise to pay the sales price not the Earnest Money Deposit.

Under an agreement of sale, the seller is considered the: (a) Mortgagor (b) Grantee (c) Vendor (d) Devisee

Vendor

Willful destruction or neglect of property which affects the rights of the remainderman is: (a) Succession (b) Sufferance (c) Vandalism (d) Waste

Waste Explanation: (Loan Types) Waste comes from two directions: a borrower who does not maintain the property, or a life estate holder who allows value (and therefore the interest of the remainderman) to depreciate.

The appraiser was determing the value of the property based on the cost approach. The outside dimensions of the home were 28' x 40' and the cost was $11.25 per square foot. His estimate of value was: (a) $12,600.00 (b) $765.00 (c) $126,000.00 (d) $1,530.00

$12,600.00

Which of the following is NOT part of an appraisal? (a) The date of the appraisal report (b) Appraiser's best estimate of value (c) A description of the neighborhood surrounding the property (d) The signature of the appraiser

A description of the neighborhood surrounding the property (Explanation: There are four parts to the appraisal. The one missing here is the date. On the URAR there is a place for neighborhood information, but it is not one of the four required parts to qualify as an appraisal)

D purchased a lot and subsequently built a house, planted a tree and built a garage/workshop separate from the house. Which term describes this process? (a) Hypothecation (b) Encroachment (c) Accession (d) Severance

Accession

The income capitalization approach for valuing real estate depends on each of the following elements EXCEPT: (a) Accurate depreciation information. (b) Recent sales data on similar properties. (c) Operating income data for similar properties. (d) A property that generates a verifiable stream of operating income.

Accurate depreciation information.

One of the more common methods for assessing property taxes is based on a percentage of the value of the property, also known as: (a) Market value taxes. (b) Assessed value taxes. (c) Ad Valorem taxes. (d) Proportionate contribution taxes.

Ad Valorem taxes.

Easements, rights of ingress and egress and other rights and privileges which pass with the title of real estate are called: (a) Licenses (b) Appurtenances (c) Emblements (d) Habendum

Appurtenances Explanation: (Property) Appurtenant means anything attached to the property, either physically (the house) of by deed (the easement). Habendum is a clause in a deed; emblements are crops nurtured in the year of the sale; and license is an interest in real property which is temporary and involves no ownership.

M starts a small business teaching people how to do unique types of quilting and stitchery and hires one person to help her. She finds an old house to rent cheaply. It only has one very small 1/2 bath, and five steps to get in the front door. In this case, ADA requirements: (a) are violated because a handicapped person would not have equal access. (b) do not apply since there's only one employee. (c) don't apply as it would be too costly for a small business to make major construction modifications. (d) only apply when there are more than 15 employees.

Are violated because a handicapped person would not have equal access. (Explanation: Since there aren't 15 employees it does not apply relevant to hiring practices. But the equal access issues to get in, and to have access to a bathroom do apply.)

The Real Estate Purchase Agreement states that the refrigerator is to go to Jack, the buyer. How should Jack be able to show he owns the refrigerator? (a) Bill of Sale (b) The deed (c) The statement on the purchase agreement (d) A certificate of sale

Bill of Sale

The buyers walked into a model home of a builder. The agent of the seller/builder had them sign an unrepresented buyer form. Which of the following applies? (a) Habendum (b) Pur autre' vie (c) Estoppel (d) Caveat emptor

Caveat emptor

Which of the following is NOT one of the fiduciary duties of a property manager, acting under a contract between the broker and the property owner? (a) Confidentiality (b) Obedience (c) Caveat emptor (d) Loyalty

Caveat emptor

In a listing contract, the seller agrees to: (a) fix any appliances that are broken. (b) sell the property. (c) sell only if a full priced offer comes in. (d) consider offers on the property.

Consider offers on the property.

A lessee had two years to go on a five-year lease. Which would release the tenant from further obligation to pay rent after they voluntarily moved out? (a) Constructive eviction (b) Habeus Corpus (c) Actual eviction (d) Habendum

Constructive eviction

All of the following actions terminate a listing EXCEPT: (a) Death of the principal (b) Death of the listing broker (c) Death of the listing salesperson (d) Abandonment by the broker

Death of the listing salesperson

R sells property to T with the restriction in the sales agreement that T can only use the property for farming purposes. This is an example of: (a) Fee remainder estate (b) Deed in lieu of . . . (c) Fee simple with a condition precedent (d) Fee simple defeasible

Fee simple defeasible

A uniform land contract could best be described as a: (a) Real Estate Purchase Contract (b) Installment Contract (c) Listing (d) Trust Deed and Note

Installment Contract (Explanation: [Mortgage Law] Its four names are: Uniform Land Sales Contract, Installment Sales Contract, Land Contract, and Contract for Deed. It is used in seller financing.)

A plat map is used in which type of legal description? (a) Lot and Block (b) Metes & Bounds (c) Rectangular survey (d) Government survey

Lot and Block

A new apartment building was constructed with an elevator. Under the Fair Housing Amendment Act of 1988, what would the owner have to do. (a) Not have a "No Pets" rule in case a blind person rented one unit. (b) Make all hallways and doorways extra wide. (c) Adapt all kitchens with sink, stove, etc. low enough for wheelchair use (d) Make sure thermostats in all rooms are reachable from a wheelchair.

Make sure thermostats in all rooms are reachable from a wheelchair. Explanation: The thermostat issue has to do with two things: 1) there is an elevator so all units are accessible; therefore, 2) thermostats and electrical outlets have to be placed for ease of access by someone in a wheelchair.

M and N own a property together as tenants by the entirety. Which of the following is true about their ownership? (a) Neither M nor N can mortgage the property without the consent of the other. (b) M can sell his/her share without the consent of N. (c) If N dies before M, N's interest can be willed to N's heirs. (d) If M sells his/her interest, the new owner would become a joint tenant with N.

Neither M nor N can mortgage the property without the consent of the other. (Explanation: Tenants by the entirety have survivorship, as joint tenants do. But there are two big differences. Under tenancy by the entirety, the parties must be married, and neither can sell nor encumber without permission of the other.)

What role does the federal government play in regards to FHA loans? (a) Pre-qualifies borrowers based on need (b) Operates an insurance program (c) Provides tax incentives for borrowers to make higher down payments (d) Guarantees the first 25% of the loan value

Operates an insurance program

When a listing is taken how does the agent confirm the amounts owed on the mortgages? (a) The listing agent should personally contact all lien holders and verify balances. (b) Order an Estoppel Certificate. (c) Have the title company verify balances. (d) The seller must list all lien amounts on the Seller's Proceeds Sheet.

Order an Estoppel Certificate. (Explanation: Estoppel Certificate is a formal term describing the document that the lender provides accounting for the total amounts owed. Agents should not be personally gathering this information. Agents should advise their clients to personally verify the amounts on the Estoppel Certificate.)

An up-front cost the lender charges to the borrower, usually a percent of the loan amount, that generates profit to the lender and factors in the lender's cost of getting money. (a) Document prep fee (b) Discount points (c) Title insurance fee (d) Origination fee

Origination fee

In a loan, an alienation clause: (a) Insures taxes will be paid (b) Insures that there will be no late payment of principal (c) Protects the mortgagee's position (d) Protects against illegal aliens obtaining valid ownership

Protects the mortgagee's position Explanation: (Loan Types) The alienation clause says the loan will be paid off if the property is sold. My son just got a loan for 4.5%. Time passes and rates go up to 15%. The lender wants protection that when the house is sold the new buyer will have to get a new loan at current rates, not keep the 4.5% going.

The main purpose of Title III of the Americans with Disabilities Act is to: (a) provide employment opportunities for the disabled. (b) make sure a handicapped person has a place to live. (c) provide equal access to goods and services. (d) provide adequate parking spaces for those with disabilities.

Provide equal access to goods and services.

Automated underwriting systems offer the following benefits EXCEPT: (a) Immediate feedback for correcting deficiencies (b) Speed and low operating cost (c) Objective-free of discrimination (d) Reduced closing cost to borrower

Reduced closing cost to borrower

Which of the following are NOT typically paid in arrears? (a) 11 months of property taxes (b) An agent's commission (c) Loan interest (d) Rent

Rent Explanation: Arrears is the opposite of paid in advance. Rent is most always paid in advance and agents are typically paid after their service is rendered. When you think of arrears, think "after the fact."

An appraisal may be considered complete without which of the following? (a) Date (b) Property description (c) Signature (d) Sales approach

Sales approach

What is the name of the principal base and meridian in the state of Utah? (a) Uintah (b) Utah (c) Salt Lake (d) Wasatch

Salt Lake

Truth in Lending or Reg. Z includes all the following requirements EXCEPT: (a) Use of APR (b) Settlement Costs & You (c) Disclosure of costs (d) Advertising restrictions

Settlement Costs & You (Explanation: "Settlement Costs & You" is a booklet required to be given to prospective borrowers under the Real Estate Settlement Procedures Act [RESPA], not Truth in Lending.)

Using the sales comparison method, the property adjustment for a comparable property that is viewed to be worth $10,000 more because it is newer would be: (a) Add $10,000 to the subject property. (b) Subtract $10,000 from the subject property. (c) Add $10,000 to the comparable property. (d) Subtract $10,000 from the comparable property.

Subtract $10,000 from the comparable property Explanation: A characteristic such as less wear and tear makes the comparable better so the value of that factor is subtracted from the comparable. Never adjust the price of a subject property.

A purchaser should obtain which one of the following to be sure there are no encroachments: (a) Declaration of offset (b) Survey (c) Title insurance (d) Encroachment protection policy

Survey Explanation: Title insurance basically covers things that would be found in the records. An encroachment would not be in the records. The best protection would be a survey, or one of the expanded title policies might cover encroachments.

G followed the steps of adverse possession, hoping to end up owning the property. Five years into it, he was transferred across the country. H picked up where he left off, completing the requirements to seven years. This is called: (a) Subrogation (b) Abandonment (c) Tacking (d) Severance

Tacking

Fair market value is primarily based on: (a) a cost of replacement. (b) the "willing buyer, willing seller" concept. (c) assessed value. (d) government price controls.

The "willing buyer, willing seller" concept.

In which of the following situations involving a 1031 would income taxes NOT have to be paid? (a) The exchange of two properties resulting in one owner owing $5,000 less than before on the property loan. (b) The exchange of a fourplex in the city for a small farm of equal value. (c) The exchange of a boat which can be a residence for a single family home. (d) Exchanging a duplex and a car for a triplex

The exchange of a fourplex in the city for a small farm of equal value. (Explanation: [Taxation] The 1031 applies to "like for like" or real property for real property. Personal property involved would be taxable and mortgage or debt relief is taxable.)

George Smith, who owns his property fee simple, grants a three-year lease to Tom Green. During the second year of the lease, George sells the property to Ned Gray. What happens to the lease when the sale closes? (a) The lease remains in effect with Mr. Gray and Mr. Green. (b) It must be negotiated between Gray and Mr. Green, the leasee. (c) Property cannot be sold and title transferred to a new owner when a lease is in effect. (d) It terminates.

The lease remains in effect with Mr. Gray and Mr. Green.

The main purpose of title insurance is: (a) To compensate the lender in the event of loss due to default on the loan. (b) To compensate the property owner if the seller does not have sufficient funds to clear all liens based on the discounted selling price. (c) To prove the seller has the right to sell the property. (d) To compensate the policy holder for any losses incurred from an unidentified defect in the title.

To compensate the policy holder for any losses incurred from an unidentified defect in the title.

Z went to a trust deed foreclosure sale on an investment property that looked like a good deal. There were other investors, but Z won the bid. Which of the following would Z expect to receive. (a) Trust Deed (b) Trustee's Deed (c) Deed of Trust (d) Sheriff's Deed

Trustee's Deed

A broker can be charged with violating the Sherman Antitrust Act if he/she says to a seller: (a) We can't possibly charge less than the rate establised through the multiple listing service. (b) Our company usually charges 6% for this type of listing. (c) We never discount the commission. (d) The commission is fully negotiable between the broker and the seller.

We can't possibly charge less than the rate establised through the multiple listing service. Explanation: There can be no "set" commission established between brokerages, such as would be the case in the answer mentioning the MLS.

An agent from a buyer brokerage represents the: (a) is a neutral facilitator (b) buyer (c) seller and buyer (d) seller

buyer

Q decides to rent a single family home. The agreement prohibits the tenant from assigning or subletting. Which right in the Bundle of Rights does the tenant NOT share in? (a) Use and Control (b) Quiet Enjoyment (c) Possession (d) Disposition

Disposition

Which of the following is NOT one of the essential elements of value? (a) Scarcity (b) Demand (c) Highest and best use (d) Transferability

Highest and best use

The three tools used by the Federal Reserve to reduce the supply of money are: (a) Sell securities in the open market, raise lending standards, raise the reserve requirement. (b) Increase the reserve requirement, raise the discount rate, sell securities in the open market. (c) Increase enforcement of Regulation Z, raise the reserve requirement, buy securities in the open market. (d) Increase the reserve requirement, lower the 10-Year Treasury bond rate, raise the discount rate.

Increase the reserve requirement, raise the discount rate, sell securities in the open market. Explanation: When the Federal Reserve wants to reduce the supply of money, it will sell securities in the open market, raise the discount rate and raise the reserve requirement.

The sales comparison approach to property valuation: (a) Has nothing to do with the buyer or seller, it is determined statistically by the appraiser. (b) Is based on the concept that a buyer is willing to pay only as much money as he/she would have to pay for another similar property. (c) Is based on how much more a buyer would pay to upgrade from his/her present home. (d) Is viewed to be the least accurate because it is based on buyer/seller emotion.

Is based on the concept that a buyer is willing to pay only as much money as he/she would have to pay for another similar property. (Explanation: The sales comparison approach is based on the principle of substitution which states that a buyer is willing to pay only as much money to purchase a property as they would have to pay for another similar property. It reflects what we all do everyday when we comparison shop... whenever we have a choice between two or more products that will serve our needs)

Which of the following statements is NOT applicable to a holographic will. (a) It cannot convey real property. (b) It can convey any kind of property. (c) It can designate who will raise the minor children.

It cannot convey real property.

What could happen if a property owner does not pay his/her property tax? (a) The home could be purchased by a third party who would be responsible first for the taxes due. (b) The property taxes will be paid once the property is sold, and only after when the other liens have been paid. (c) It may take several years but, the home could be sold at a county auction to recoup the taxes due. (d) Nothing. The local taxing authority would be forced to hold out indefinitely until the property owner was able to pay.

It may take several years but, the home could be sold at a county auction to recoup the taxes due.

Which of the following is most like the "or more" clause in a loan: (a) Index clause (b) Reappraisal clause (c) Prepayment privilege clause (d) Graduated payment clause

Prepayment privilege clause

The contract entered into between the principal broker of an office and the sales agents is usually which type of contract? (a) Defeasible (b) Qualified (c) Bilateral (d) Unilateral

Unilateral

Which of the following is an issue with trade fixtures? (a) Fits the decor theme (b) Physically attached (c) Vital to the business function (d) Historical significance

Vital to the business function Explanation: (Property) Trade fixtures may or may not be physically attached. They are "attached" to the business itself, not the real property.

M obtained a loan for $80,000 at 9 1/2% interest for thirty years. The payment is $672.68 including principal and interest. How much interest would M pay over the full term of the loan? (a) $242,266.01 (b) $162,164.80 (c) $228,000.00 (d) $308,000.00

$162,164.80 Explanation: P/I pmt. Of $672.68 times 360 payments = total payoff. Subtract the original loan and the rest is the interest.

The R's bought a home and obtained a loan for $128,000 at 7.25% interest per year, 30 year term. Their monthly P/I payment is $873.19. What is the total amount of interest they will pay over the full term of the loan? (a) $186,348.40 (b) $278,400.00 (c) $314,348.00 (d) $196,500.38

$186,348.40

A sporting goods store had a lease agreement to pay 1.75% on all income over $56,000 a month gross in addition to the base rent they paid of $2,000. Last year they paid $56,500 in rent. What was their total gross income? (a) $2,529,143 (b) $1,368,321 (c) $1,857,143 (d) $1,954,330

$2,529,143 Explanation: This is a percentage rent problem. Before doing the FRL, there's a preliminary step: Paid rent minus base rent. So, $56,500 paid minus $24,000 base = $32,500 extra rent. FIRST = extra income; RATE = 1.75%; LAST = extra rent ($32,500). Divide the one below the line by the one above and you get the extra income. Add that to the $56,000 base income to get gross income.

The Z family purchased their first home for $160,500. They got an 85% loan and paid two discount points. They had additional closing costs of $3,250. How much cash did they have to bring to settlement? (a) $25,450.25 (b) $28,617.00 (c) $30,053.50 (d) $25,000.10

$30,053.50

A residence had an appraised value of $338,245 and an assessed rate of 65%. The taxes were $3,720.70. What was the tax rate? (a) 0.02 (b) 0.2 (c) 0.01 (d) 0.017

0.017

Which of the following requirements must be met for a REIT (real estate investment trust) to be legal? (a) 1,000 members: 96% paid as profits (b) 1,000 members: all funds paid out as profits (c) Any number of members and 95% paid out as profits (d) 100 members: 90% paid as profits

100 members: 90% paid as profits

The Q's purchased some raw land for $35,000, thinking it would be worth a lot more in a few years. They sold it five years later for $42,000. What was their profit? (a) 20% (b) 25% (c) 15% (d) 35%

20%

M's back yard measured 56 feet deep by 82 feet wide. M is going to buy grass seed to plant a lawn. The package indicates how much is needed based on square yards. How many square yards are in M's back yard? (a) 510 (b) 170 (c) 4,592 (d) 765

510

The buyers insisted they were not interested in a property that was less than 1.75 acres in size. A house on a property that was 465 feet by 643 looked great. How many acres does it have? (a) 5.75 (b) 6.86 (c) 7.25 (d) 4.5

6.86

Filing documents such as deeds, easements, and mortgages in the public record is known as: (a) Right of disclosure. (b) Actual notice. (c) Filing an opinion of title. (d) Constructive notice or delivery.

Constructive notice or delivery.

The non-disturbance clause found in the loan comes into play when and protects whom? (a) default on loan: lessee (b) loan is paid off: lessee (c) eminent domain: lessor (d) default on lease: owner

Default on loan: lessee Explanation: (Leases) This concept is also mentioned in the Finance class as it is contained in the loan document between the owner of the property and the lender. If the loan contains the clause, it will also be mentioned in the lease between the owner and the tenant.

When a person dies leaving no will and no heirs, the government will get the property by the process of: (a) Quiet Title Action (b) Escheat (c) Police power (d) Eminent domain

Escheat

The Federal Housing Administration is a mortgage lender allowing home ownership with little down payment. (a) False (b) True

False Explanation: FHA does not loan money. Rather it partners with approved lenders to insure loan payments on higher LTV loans.

The survey helps establish all of the following EXCEPT: (a) True property lines. (b) Easements in relation to all permanent structures. (c) Placement of structures, consistent with setback requirements and other restrictions. (d) Property condition.

Property condition

The age of an improvement can be discussed from several viewpoints. Which would be considered to be the longest? (a) Physical life (b) Service life (c) Economic life (d) Effective life

Physical life Explanation: It might not be economically viable, yet is still standing: physical life.

M took a listing. Which of the following situations best describes the concept of designated agency? The contract states: (a) The broker and M will represent the seller. (b) The broker is a limited agent and M represents the seller. (c) The broker and all agents in the office will represent the seller. (d) All agents in the office will be designated as limited agents.

The broker and M will represent the seller.

When a lender confirms a specific loan amount and agrees to the interest rate, this process is referred to as a(n): (a) Lock (b) Disclosure (c) Interest insurance (d) Origination fee

Lock

A straight loan has monthly interest payments of $738.02. The interest rate is 7.67%. What is the amount of the principal? (a) $118,934.89 (b) $130,698.98 (c) $124,362.08 (d) $115,465.97

$115,465.97 Explanation: All loan problems: Loan is FIRST interest is RATE and interest payment is LAST. Just remember, interest % is annual so you may have to adjust the interest dollars to be annual because R equals L. So take the $738.02 monthly interest times 12 to annualize it. Then "divide the one below the line by the one above the line" or $8,856.24 divided by 7.67% = the principal (original loan or current balance).

Sam obtained an interest only loan on the property for 65% of its appraised value. The interest rate was 12.5%. The first semi-annual interest payment was $6,000. What was the appraised value? (a) $77,384.62 (b) $126,001.10 (c) $62,400.00 (d) $147,692.31

$147,692.31

Mrs. Brown has a contractual obligation to pay Ms. Larsen, her agent, a 6.5% brokerage fee for her services. Title costs are $1,300 and the seller is required to pay an extra $2,600 to cover carpet for the buyer. Assuming these are the only closing costs, what is the minimum selling price of the home if Mrs. Brown wants to net $150,000? (a) $153,900.00 (b) $164,327.80 (c) $164,598.93 (d) $2,367,692.30

$164,598.93 Explanation: Yet another question where you must work backwards. The seller needs to net $150,000. To this we need to add our closing costs first. Sales agents are commissioned on the selling price of the home and not the price of the home plus the closing costs. That is why we add the closing costs first in this equation. At this point, if there was no agent commission owed, the minimum selling price would merely be the net required by the seller ($150,000) plus the closing costs ($3,900). Giving us a total of $153,900. The next step is more tricky... A common mistake is dividing by 6.5% using this calculation will get you a ridiculous number. The trick to this question is to remember that we are wanting what is net to the seller. In this case, we are going to take 100%, minus the 6.5% commission, for 93.5% which is left over for the seller. Now we can use the $153,900 divide this figure by 93.5% and you have the minimum selling price of the home.

A single family investment property had a GRM of 92.68. The monthly gross rents were $1,800. What is the value of the property based on the GRM? (a) $152,320 (b) $148,500 (c) $135,850 (d) $166,824

$166,824

Phil paid $2,500 in discount fees on his new loan. If the discount fees were 1.50% and Phil received a 90% LTV loan, what was the appraised value of the property? (a) $149,999.99 (b) $186,186.17 (c) $185,185.17 (d) $150,000.00

$185,185.17 Explanation: Always have to go "bottom up" on this. Start with the $2,500 that Phil has paid. Divide by the 1.5% which gets you $166,666.66. Taking that answer and dividing by 90% will equal the appraised value. Hint: Writing the math steps going forward, will assist you in working backwards on these types of problems.

The loan on the property was for 85% of its appraised value. The interest on the loan was 9%. The interest in the first payment was $1,205 . What was the appraised value of the property? (a) $189,020 (b) $200,555 (c) $215,769 (d) $195,383

$189,020 Explanation: Whoa, this one throws a lot at you! Start at the end: we want the appraised value, but the loan was only 85% of that. So first we have to arrive at the loan. Remember: Loan is FIRST, the interest % is RATE, and the interest dollars are LAST (and must be annualized to match the rate). So, $1,205 x 12 = $14,460 annualized interest. Divide the one below the line by the one above (interest rate) and get $160,666.67 for the loan. Now 2nd FRL, appraised value came FIRST, 85% is the RATE, and the loan is LAST. "Divide the one below the line by the one above the line" or the loan by 85% to get the appraised value.

A lot was purchased as an investment for $10,500. It was sold a year later at a loss of 20%. What was the loss on the sale? (a) $1,260 (b) $8,400 (c) $3,150 (d) $2,100

$2,100 Explanation: FIRST = purchase price; RATE = loss; LAST = loss in dollars. Since you kow the two numbers above the line, multiply down for the answer.

If the assessed rate is 55%, the appraised value is $213,000, and the tax rate is 23 mills, how much are the property taxes? (a) $2,750.00 (b) $2,875.00 (c) $2,694.45 (d) $2,650.78

$2,694.45 Explanation: (Property Tax and TI) Remember the "full house" formula, straight down in a line A,A,A,T,T (aces and tens). From the top: Appraised Value, Assessed Rate, Assessed Value, Tax Rate, Taxes due. Just fill in the numbers where they go and multiply down or divide up. In this case, multiply down to the Assessed Value, then remember if the tax rate is in mills, move the decimal three to the left: .023.

Using the sales comparison method, if a subject property had an extra full bathroom ($6,000) that the comparable property did not, but was on a less desirable lot ($5,000), the proper adjustment would be: (a) Add $1,000 to the comparable property. (b) Add $1,000 to the subject property. (c) Add $11,000 to the comparable property. (d) No adjustment necessary.

Add $1,000 to the comparable property Explanation: A characteristic such as having an extra bathroom in the subject property is the same as saying the comparable is inferior so you would add $6,000 to the price of the comparable. Since the subject's lot is not as good as the comparable's lot, that means the comparable is better so you subtract $5,000 from the comparable's price. The net effect is to add $1,000 to the comparable.

A person lived on a property openly and notoriously under "color of title." This situation has to do with: (a) An owner who holds a quit claim deed (b) Easement by prescription (c) Fee simple defeasible (d) Adverse possession

Adverse possession

In which of the following situations is a special warranty deed most likely to be used? (a) A standard sale of an existing residence. (b) In a divorce the husband gives up his rights to the home. (c) After a death, the executor grants the property to the devisee. (d) A lease with an option to buy.

After a death, the executor grants the property to the devisee Explanation: (Deeds & Transfer) This deed has very limited warranties and only for the time the grantor owned or had responsibility for it. Bank owned properties, foreclosure sales and executor's sales use them.

The purpose of a document receipt is to verify that: (a) all parties have received fully signed copies of the Real Estate Purchase Contract. (b) both the buyer and seller received all appropriate documents at the closing. (c) all involved agents and brokers have signed the purchase agreement. (d) the buyer signed all documents involved with the loan.

All parties have received fully signed copies of the Real Estate Purchase Contract

Which of the following statements about deeds is FALSE? (a) All the grantors must sign the deed (b) Title is conveyed at the time the deed is delivered and voluntarily accepted (c) A notary is not required (d) All the grantees must sign the deed

All the grantees must sign the deed

A subordination clause in a loan would involve which of the following actions? (a) Abrogation (b) Abandonment by the borrower (c) Assignment to a new borrower (d) Alteration of priority

Alteration of priority Explanation: (Loan Types) To become subordinate is to have a lower position, thus altering priority of a previous lien. Abrogation is a term that applies to title insurance.

A written real estate contract is best described as which of the following? (a) Voidable (b) An Express Contract (c) Based on contingencies (d) Unilateral because the buyer can cancel

An Express Contract Written contracts are categorized as express contracts because they use words to create the agreement. Although the buyer has the rights to cancel based on certain potential contingencies that does not make the contract Unilateral. Unilateral contracts are those that only one party is bound to based on the performance of the other.

What does a VA loan have that an FHA loan does not? (a) Discount points (b) A right of reinstatement (c) No prepayment penalty (d) An LTVR of 100%

An LTVR of 100%

An easement by prescription can best be described as: (a) A right of way created for landlocked property (b) An easement created by eminent domain (c) An adverse use (d) An easement recommended by a doctor for a sick land owner

An adverse use

The seller S was agreeable to listing the house and paying a commission if a real estate agent found a buyer. However, S wanted to be able to avoid a commission if a neighbor bought the house. What would accomplish this for S? (a) An exclusive right-to-sell contract. (b) An exclusive agency contract. (c) A single party exclusive right-to-sell. (d) A limited agency agreement.

An exclusive agency contract.

Which of the following do not have the ability to enter a contract? (a) A deceased person (b) An Alien (c) An insane person (d) An illiterate person

An insane person

Each of the following are stated goals of the Federal Reserve System EXCEPT: (a) Ensure the safety and soundness of the nation's banking and financial system. (b) Balance consumer demand for low mortgage interest rates with the large foreign investor's desire for more profitable mortgage interest rates. (c) Manage national monetary policy to help achieve full employment and stable prices. (d) Protect credit rights of consumers.

Balance consumer demand for low mortgage interest rates with the large foreign investor's desire for more profitable mortgage interest rates Explanation: The Federal Reserve's responsibilities fall into four general areas: 1- conducting the nation's monetary policy by influencing money and credit conditions in the economy in pursuit of full employment and stable prices 2- supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers 3- maintaining the stability of the financial system and containing systemic risk that may arise in financial markets 4- providing certain financial services to the U.S. government, to the public, to financial institutions, and to foreign official institutions, including playing a major role in operating the nation's payments systems

An exercised option is called a: (a) Is not considered a contract (b) Express Contract (c) Bilateral Contract (d) Unilateral Contract

Bilateral Contract Explanation: An option is unilateral (a promise for a performance), as only the seller/optionor has made any promise. Once the option is excersized, it is now a purchase contract and is bilateral.

D wanted to buy a home from K, but wouldn't buy it unless the pool table came with it. D and K decide that the pool table is personal property. What contract would be the best tool for the pool table purchase? (a) Pinky swear (b) REPC (c) Bill of Sale (d) Handshake and one hug

Bill of Sale (Explanation: The pinky swear and handshake/hug might have worked in the past, but modern real estate agents will tell you the bill of sale is the way to go for the purchase of all personal property. If the purchase of real property is contingent on the acceptance of the bill of sale offer, it should be so noted on the REPC.)

An All-Inclusive Trust Deed is most closely related to all of the following EXCEPT: (a) Subject-To loan (b) A wraparound mortgage (c) A Uniform Real Estate Contract (d) Blanket mortgage

Blanket mortgage Explanation: Although the terms all inclusive and blanket sound similar, a blanket mortgage is used to purchase two or more parcels of land. The remaining options refer to the seller creating a new loan with a buyer while keeping the seller's original financing in place on a single property.

Which if the following requirements is specific to RESPA? (a) Borrower can see the HUD1 form 24 hours before closing. (b) A three-day right of rescission must be observed. (c) A historical example must be given if the loan is an ARM. (d) If a "trigger" term is used, all numbers must be used in advertising.

Borrower can see the HUD1 form 24 hours before closing. Explanation: It is easy to mix up the details of Truth in Lending and RESPA. The three wrong answers are all requirements of Truth in Lending.

Broker L lists a home and offers subagency through the MLS. Broker S takes a buyer to the house and then writes an offer to purchase. Broker L has never met the buyer. Broker S has never met the seller. Broker S does not have a written contract with the buyer. Which is true? (a) Broker L is the agent of the buyer. (b) Both Broker L and Broker S are agents of the seller. (c) Broker L is the subagent of the buyer. (d) Broker S is the agent for the buyer and seller.

Both Broker L and Broker S are agents of the seller Explanation: It helps a lot with these types of questions to diagram the players on paper. Utah says a licensee must represent one or both of the parties in a real estate transaction. Since it says S does not have a contract with the buyer, and it does say the listing was published across the MLS, both brokers represent the seller - L as agent, S as subagent. NOTE: It doesn't matter for the test that no one does it this way anymore. It is a legal concept and still can be done this way.

A short-term loan to help you buy the new house before the sale on the old one has closed would be most like a(n): (a) Purchase money loan (b) Bridge loan (c) Open-end loan (d) Wraparound loan

Bridge loan

In order to begin the process of obtaining a VA loan, the applicant must provide what document? (a) Certificate of Authenticity (b) Eligibility Waiver (c) Certificate of Reasonable Value (d) Certificate of Eligibility

Certificate of Eligibility

Which statement best describes the purpose of a mortgage document? (a) It places a lien on the property allowing the mortgagee to seize the property if the mortgagor fails to honor all obligations spelled out in the mortgage. (b) It provides legal proof of the various property rights of the borrower. (c) It allows the mortgagor to seize the personal assets of all mortgagees who sign the document. (d) It spells out the interest rate and all other terms of the loan.

It places a lien on the property allowing the mortgagee to seize the property if the mortgagor fails to honor all obligations spelled out in the mortgage. (Explanation: [Mortgage Law] The Mortgage contract is detailed and complex. Its primary purpose is to allow the lender to take back the property in the event of the property owners failing to honor all the obligations spelled out in the Mortgage.)

Two people buy a property together. If one dies, full ownership will automatically belong to the other. This is called: (a) Tenancy at sufferance (b) Community property (c) Tenancy in common (d) Joint tenancy

Joint tenancy

Rent control laws have what effect? (a) Landlords don't like them as they must carry the burden of inflation. (b) Tenants like them because it means the lease has no termination date. (c) They raise the general economy and everyone likes them. (d) They benefit lessors and lessees equally.

Landlords don't like them as they must carry the burden of inflation.

Which of these contain only the essential elements of a real estate contract? (a) in writing, capacity, acknowledgment (b) mutual consent, legality, consideration, recordation (c) legal purpose, capacity, mutual consent, in writing (d) in writing, consideration, notarization

Legal purpose, capacity, mutual consent, in writing Explanation: MCCL + In Writing.

Which of the following statements is FALSE about conventional loans? (a) Lenders may not establish their own underwriting standards (b) A non-conforming loan can be sold in the secondary market (c) Congress establishes the loan limits each year for 1-to-4-family structures (d) The GSE's dominate this market category

Lenders may not establish their own underwriting standards Explanation: (Loan Types & Leverage) Fannie Mae and Freddie Mac together routinely purchase more than two out of three of all residential mortgages in the nation. They are referred to as GSE's or government sponsored enterprises. The GSE's set underwriting guidelines for conforming loans on one- to four-units properties. The loan limits are set each year by Congress. Any loan exceeding the published loan limit for a one- to four-unit property cannot be purchased by Fannie Mae or Freddie Mac. These are called jumbo or non-conforming loans and are purchased by other secondary market investors.

A property manager, in fulfilling his/her duties to the principal, would want to make sure there was an insurance policy in place to cover: (a) Mortgage (b) E & O (c) Liability (d) Workers' Compensation

Liability Explanation: E & O insurance is for a brokerage; workers' compensation for employees; and mortgage insurance on a loan.

A lender, as security for a loan, has the right to force the sale of the property to recover the amount owed. But if more than the loan and costs amount is recovered, the excess goes back to the borrower. This is: (a) Title theory (b) Lien theory (c) Hypothecation theory (d) Mortgage theory

Lien theory

When a remainder estate is involved, what owner interest is involved? (a) Joint tenancy (b) Life Estate (c) Ownership in severalty (d) Community property

Life Estate Explanation: Severalty means one owner. Joint tenancy and community property are co-owners held as a fee estate. A life estate right ends with the person's life, and then it passes to the remainderman.

What does a mortgagor NOT have to pay? (a) Life insurance (b) Hazard insurance (c) Title insurance (d) Property taxes

Life insurance

Which of the following choices would NOT be considered to be valuable consideration, and, therefore, meet the requirement for a valid contract. (a) Performing a service (b) Promissory note (c) Lifelong friendship (d) A parcel of land with back taxes due

Lifelong friendship

Certain defaults, unfortunately, happen quite often and so they are planned for and consequences outlined in the contract. An example is the earnest money deposit. This is: (a) Liquidated damages (b) Pur autre' vie (c) Hypothecation (d) Subrogated damages

Liquidated damages Explanation: Subrogated damages is a made-up term. Pur autre' vie applies to life estates, and hypothecation is giving something as collateral without giving up possession. The damages are "liquid," meaning you can get to them quickly.

A buyer wants to assume a loan without taking on any personal liability for the loan. In the purchase offer, relative to the loan he should state he will: (a) Hypothecate and accelerate the loan (b) Take title on a "subject to" basis (c) Assume the loan and make the payments (d) Subordinate to the seller's interest

Take title on a "subject to" basis Explanation: (Loan Types) Anyone who has a loan has liability. By taking title to the property on a subject-to basis, the existing loan stays in the seller's name. A foreclosure or late payments wouldn't go against the buyer's name, but if the property gets foreclosed, it's the buyer's loss -- so there's no way out of that part of the liability.

The relationship between the lessor and the lessee could be defined as which of the following? (a) joint tenancy (b) life estate (c) tenants in common (d) tenancy for years

Tenancy for years

Which of the following best describes a fixture? (a) A crop nurtured in the year of the transfer. (b) Bolted down barber chair. (c) Physical items used in a business that may or may not be attached. (d) That which is attached without losing its identity.

That which is attached without losing its identity.

Which of the following statements about annual percentage rate (APR) is FALSE? (a) A change in the APR does not affect the monthly payment if the stated interest rate does not change (b) The APR represents the effective annual interest rate on the money borrowed after considering the various costs to obtain the loan (c) The purpose of the APR is to communicate to the borrower in simple terms the true annual cost of the loan (d) The APR cannot change from the initial TIL disclosure more than 1/4%

The APR cannot change from the initial TIL disclosure more than 1/4% Explanation: (TILA) The APR is a calculation of the interest the borrower pays each year after considering the costs to obtain the loan. The purpose of APR is to more easily communicate to the borrower his/her true annual cost of that proposed mortgage loan. The APR does NOT affect the monthly payment or the amount of interest paid - those amounts are calculated solely from the loan's STATED interest rate. An APR can change after the initial TIL disclosure with an additional disclosure within 3 business days of discovering any change in APR exceeding 1/8%.

K and N owned homes in the same subdivision, bought the same year and the same size lot and type of floor plan. K found out N's taxes were $480 less. Where would K appeal to get lower taxes? (a) The Board of Adjustment (b) The Division of Real Estate (c) The County Recorder's Office (d) The Board of Equalization

The Board of Equalization

A home was listed with the Speedy Seller brokerage. It was later put under contract by an agent who worked for Buyers R Us brokerage. Who could NOT be eligible to receive a commission check at closing? (a) The Buyers R Us agent who wrote up the purchase contract. (b) Speedy Seller's associate broker. (c) The Buyer's R Us office assistant who held the open house. (d) The Speedy Seller agent who listed the home.

The Buyer's R Us office assistant who held the open house Explanation: Office assistants must be paid a regular wage which cannot be influenced on a per sale basis. All other options could be eligible to receive a commission on the sale.

Which of the following modifications can an agent make in a Real Estate Purchase Contract? (a) The agent can make no changes (b) Terms of the loan (c) Closing dates (d) Written consideration

The agent can make no changes Explanation: The agent has no authority to make any changes. The agent may type or write the changes on the addendum, but they do not make any difference until both parties sign and date it. THEY make the changes.

All of the following are true about residential appraisals EXCEPT: (a) A successful closing can be highly dependent on the appraiser's opinion of value. (b) Since a borrower's available cash for closing is generally limited and the lending guidelines are rigid, the loan originator should carefully review the appraisal for any errors. (c) The appraiser's final estimated market value readily allows for an increase in settlement costs up to 10% before the closing. (d) A lender will generally limit the loan to a maximum percentage of the appraised value of the property.

The appraiser's final estimated market value readily allows for an increase in settlement costs up to 10% before the closing Explanation: The loan application process and decision to lend money is heavily dependent on the appraisal report. The majority of buyers face difficulty coming up with enough of their own cash at closing to complete the deal so they need every penny of the requested loan amount. A lender has strict guidelines on how much to lend and it's generally based on a maximum percentage of the market value of the property. Often, there is no margin for error; the full potential market value assumed in the loan application may be necessary to have a successful closing.

At a closing on a loan, the APR is higher than the interest rate because: (a) the borrower paid some extra costs to obtain the loan. (b) the lender paid some costs that contributed to the loan. (c) the interest rate is calculated on a 360 day calendar. (d) interest rates fluctuate between the application for the loan and the closing date.

The borrower paid some extra costs to obtain the loan Explanation: The APR is a math calculation that incorporates into the first year interest on the loan the other costs involved in originating the loan.

88. When the two parties agree in writing to have the agent act as a limited agent, most fiduciary duties still apply. But the principals are giving up something. Which best describes the change in fiduciary duties under limited agency? (a) Loyalty obligations now include both buyer and seller. (b) There are limitations on the duty of obedience required from the agent. (c) The loyalty duty for single agents is replaced with neutrality. (d) The full disclosure duty has been expanded to include both parties.

The loyalty duty for single agents is replaced with neutrality Explanation: Limited agents have been "zapped" with the neutrality gun. They must not reveal information which would give either party an advantage over the other.

Who gives the lender the mortgage and note? (a) The mortgagor (b) The mortgagee (c) The trustee (d) The fiduciary

The mortgagor

An assessor is trying to determine the square footage of a property. He measures: (a) the outside dimensions. (b) the inside rooms including the closets. (c) inside, useable area. (d) the home, excluding hallways.

The outside dimensions

J carried back a 2nd mortgage when his home was sold. Now he needs some ready cash and is going to sell it to a secondary lender for 60% of face value. This discounting of the loan does NOT have which of the following advantages? (a) It provides an increased yield for the secondary lender. (b) The person who bought the house and has the loan will now pay a higher interest rate. (c) The secondary lender has a secured investment at relatively high interest. (d) It gets a lump sum of cash immediately for J.

The person who bought the house and has the loan will now pay a higher interest rate.

The phrase "the primary evidence of a loan" best describes: (a) The defeasance clause (b) The trust deed (c) The promissory note (d) The mortgage document

The promissory note Explanation: (Mortgage Law) The promissory note is the evidence that a loan exists. The trust deed or mortgage is the security or collateral for that loan.

H gives a life estate to her mother's doctor, which states that the doctor will have the property for as long as "Mom" is alive. Mom is very healthy, but the doctor is now dead. What happens? (a) The property goes to the doctor's heirs (b) The property goes back to H. (c) Mom gets the property. (d) Mom's heirs get the property

The property goes to the doctor's heirs Explanation: This is a life estate Pur Autre' Vie (based on the life of another). The doctor (holder of the life estate) is dead, but what about Mom, upon whose life it is based? If she's still alive, the life estate is still alive and will go to the doctor's heirs.

Which thing on the list that follows would NOT be an item addressed in the property management contract between the broker and the owner? (a) The rents to be charged (b) The commission structure (c) The work schedule of the agents (d) The responsibilities of the agent

The rents to be charged Explanation: The rents charged to tenants will change from time to time, based on market conditions, supply and demand, and other considerations. Therefore, they will not be specified in the contract to establish the agency relationship between owner and principal broker.

The listing agent advertises his/her listing on the Multiple Listing Service as instructed by the seller at the agreed list price of $300,000. A buyer offers $300,000 in writing with an earnest money deposit of $3,000. Which of the following statements are true? (a) The listing broker must wait 72 hours before presenting the offer to give other buyers an opportunity to purchase the property. (b) The seller must pay a commission and accpt the offer. (c) The seller can either accept, reject or counter the offer. (d) Because the offer is full price, the seller is obligated to accept the offer.

The seller can either accept, reject or counter the offer.

Under the law of emblements, which of the following situations is true? (a) The seller deeds the property to the buyer but has rights to the crop. (b) The buyer gets the land, the seller gets the farm house. (c) The buyer gets everything, and after harvesting the crop, gets the profits from it. (d) Everything goes to the buyer and the seller has no further rights to anything on the property.

The seller deeds the property to the buyer but has rights to the crop.

Which of the following is NOT a true statement about the settlement statement? (a) It will note if monies were paid up front. (b) Buyer total closing cost appear on the back and front of the statement. (c) It is to account for all money involved in the transaction (d) The seller's loan payoff will be a debit to the seller, a credit to the buyer.

The seller's loan payoff will be a debit to the seller, a credit to the buyer.

A bulletin board was built into the wall in the kitchen of a personal residence. If a buyer wants it, he should realize that the bulletin board: (a) must be listed on the deed. (b) will automatically remain with the property at the time of conveyance since it is real property. (c) must be excluded from the personal property listed in the trust deed. (d) must be exempted in the listing by the seller.

Will automatically remain with the property at the time of conveyance since it is real property Explanation: (Property) The whole purpose of the REPC is to transfer ownership of the real property identified at the beginning of the contract. The built-in items are fixtures, therefore real property, therefore included in the sale.

A new Truth-in-Lending (TIL) disclosure must be provided: (a) At least 3 days prior to closing whether there has been a change in annual percentage rate or not. (b) Within 3 business days of discovering the annual percentage rate changed by more than 1/4% (c) Within 7 business days of discovering the annual percentage rate changed by more than 1/4%. (d) Within 3 business days of discovering the annual percentage rate changed by more than 1/8%.

Within 3 business days of discovering the annual percentage rate changed by more than 1/8% Explanation: (TILA) A new TIL disclosure must be provided within 3 business days of discovering the annual percentage rate (APR) has changed by more than 1/8%

If the court granted an action in your favor which of the following actions would best benefit you? (a) Attachment (b) Writ of Execution (c) Les Pendens (d) Judgment

Writ of Execution Explanation: In a Writ of Execution the court forces property to be sold to pay off the amount owed from a Judgment. Les Pendens are a notice to the public of a legal action, attachments are motion granted as security in case the plaintiff does win the judgment.

The buyers made an offer; the sellers accepted it by signing the sales contract. Then the buyers decided they wanted to extend closing a week later. What should the agent do? (a) X out the old date and write in the new date on the contract. Give eveveryone a copy. (b) Rewrite the contract with the new date and get everyone's signatures. (c) Write an addendum with the new date and have both parties sign. (d) Get the sellers permission, then notify the buyers of their agreement.

Write an addendum with the new date and have both parties sign Explanation: No whiteouts, no x-outs, no initials -- no matter how small the change, use an addendum.

A broker found a ready, willing, and able buyer to purchase seller Bond's house at the listing terms. Before agreeing to the sale, seller Bond introduced a new restriction stating that the sale could only be completed if the buyer agreed not to build a tennis court on the property. The buyer refused and withdrew from the negotiations. Is the broker entitled to a commission? (a) Yes, because the seller can change the terms in a listing agreement any time he wants. (b) No, because seller Bond never accepted the buyer's first offer. (c) No, because the buyer did not complete the purchase. (d) Yes, because the broker had fulfilled the listing contract and must be paid.

Yes, because the broker had fulfilled the listing contract and must be paid. Explanation: The contract says the commission is owed when the agent: 1) finds a ready, willing and able buyer, 2) at the seller's terms. The offer was at the seller's terms. The seller tried to change the terms AFTER the offer had been made.