chapter 21 and 22

when a realty transfer fee is involved, which of the following is responsible for the payment?

seller

evidence of title

substantiation that demonstrates that good and marketable title is being conveyed as part of a real estate transaction

realty transfer fee

tax due the State of New Jersey at closing

escrow closing

the deposit of documents and funds with a neutral third party along with instructions as to how to conduct the closing

The seller collected rent of $1,000, payable in advance, from the attic tenant on June 1. At the closing on June 15,

the seller owes the buyer $500

Under TRID rules, what is the time frame for the lender to provide the Closing Disclosure (CD) to the borrower/buyer?

three business days before closing

title insurance policy

title company's guarantee of clear title

The date and time a document was recorded establish which of the following? a. priority of rights b. chain of title c. subrogation d. marketable title

a. priority of rightd

Duncan Hunter's monthly mortgage payment for principal and interest is $628.12. His property taxes are $1,800 a year, and his annual insurance premium is $365. What is his total monthly payment of PITI (principal, interest, taxes, and insurance)? $808.54 $1,921.24 $778.12 None of the above

$1,800 ÷ 12 = $150 monthly property taxes$365 ÷ 12 = $30.42 monthly insurance premium $150 + $30.42 + $628.12 = $808.54 total monthly payment

Norbert Schelling is buying a home for $129,500. His lender requires a 20% down payment and 2 points at closing. In addition, Norbert has $750 in closing costs. What is the total amount he needs to close? $25,900 $28,490 $28,722 $29,240

$129,500 × 0.80 = $103,600 mortgage loan × 0.02 = $2,072 in points + $129,500 × 0.20 = $25,900 down payment + $750 closing costs = $28,722

Broker Sally Smith of Happy Valley Realty recently sold Adam and Jill Hawkins's home for $79,500. Smith charged the Hawkinses a 6½% commission and paid 30% of that amount to the listing salesperson and 25% to the selling salesperson. What amount of commission did the listing salesperson receive from the Hawkins sale? $5,167.50 $1,550.25 $3,617.25 $1,291.87

$1550.25 $79,500 sales price × 6½% commission = $79,500 × 0.065 = $5,167.50 Happy Valley's commission $5,167.50 × 30% or $5,167.50 × 0.30 = $1,550.25 listing salespersons commission

John Walton received a net amount of $168,000 from the sale of his house after paying $1,200 in legal and other fees and 6% sales commission. What was the selling price of the house? $180,000 $178,080 $179,200 $179,280

$168,000 + $1,200 = $169,200 sales price less commission $169,200 = 94% of sales price$ 169,200 ÷ 0.94 = $180,000 sales price

Aviva Shalom sells a home for $200,000 and receives a 5% earnest money deposit from the buyers. Ten days later the buyers give an additional $20,000 toward the purchase price. What is their balance due in cash at closing if they are securing an 80% loan-to-value mortgage? $5,000 $10,000 $20,000 $25,000

$200,000 × 0.05 = $10,000 earnest money + $20,000 = $30,000 total escrow $200,000 × 0.80 = $160,000 mortgage $200,000 purchase price - $160,000 mortgage $30,000 escrow = $10,000 balance due at closing

Riley's commission on a sale was $14,100, which was 6% of the sales price. What was the sales price? $235,000 $154,255.31 $846,000 $234,500

$235,000 $14,100 commission ÷ 6% commission rate = $14,100 ÷ 0.06 = $235,000 sales price

A house was listed for $249,999. The Smiths offered $225,000, the sellers countered with $235,000, and the Smiths accepted the counter-offer. They are making a down payment of 20% and financing the rest at 5.25% for 30 years. How much will their monthly principal and interest payment be? $1,039.64 $1,106.99 $1,244.50 $1,299.50

$235,000 purchase price × 80% or .80 (portion burrowed) = $188,000 mortgage amount 188 (thousands borrowed) × $5.53 (monthly payment per thousand) = $1,039.64 (see Table 14.2)

John Morgan receives a monthly salary of $500 plus 3% commission on all of his listings that sell and 2.5% on all his sales. None of the listings that Morgan took sold last month, but he received $3,675 in salary and commission. What was the value of the property Morgan sold? $147,000 $127,000 $122,500 $105,833

$3,675 - $500 salary = $3,175 commission on sales $3,175 ÷ 2.5% = $3,175 ÷ 0.025 = $127,000, value of property sold

Hal, Olive, Ron, and Marvin pooled their savings and purchased a vacation home for $125,000. If Hal invested $30,000 and Olive and Ron each contributed $35,000, what percentage of ownership was left for Marvin? 20% 24% 28% 30%

$30,000 Hal + $35,000 Olive + $35,000 Ron = $100,000 $125,000 - $100,000 = $25,000 Marvin's contribution part ÷ whole = percent $25,000 ÷ $125,000 = 0.20, or 20%

A building was purchased for $285,000, with 10% down and a loan for the balance. If the lender charged the buyer two discount points, how much cash did the buyer need to come up with at closing if the buyer incurred no other costs?

$33,630

A lending institution allows its borrowers to spend 25% of their income for housing expense. What is the maximum monthly payment allowed for a family with an annual income of $37,000 and no other debts? $9,250 $770.83 $925 None of the above

$37,000 ÷ 12 = $3,083.33 monthly income $3,083.33 × 0.25 = $770.83 permissible mortgage payment

Sally works on a 50/50 commission split with her broker. If she lists a house at $146,000 for 6% commission and sells it for $144,000, how much does Sally receive? $8,760 $4,380 $8,340 $4,320

$4,320 $144,000 × 0.06 = $8,640 total commission $8,640 × 0.50 = $4,320 Sally's share

Andrew McTavish leases the 13 apartments in the Overton Arms for a total monthly rental of $4,500. If this figure represents an 8% annual return on McTavish's investment, what was the original cost of the property? $675,000 $450,000 $54,000 $56,250

$4,500 × 12 = $54,000 annual rental $54,000 ÷ 8% or $54,000 ÷ 0.08 = $675,000 original cost of property

A buyer of a $150,000 home has paid $2,000 as earnest money and has a loan commitment for 70% of the purchase price. How much more cash does the buyer need?

$43,000

Samir bought a building lot for $45,000 and sold it two years later for a 15% profit. How much did it sell for? $51,750 $52,941 $54,450 $58,500

$45,000 + 15% of $45,000 = $51,750 (or $45,000 × 1.15 = $51,750)

A property closes on June 7. The annual taxes of $775 and a special assessment of $86 for the current calendar year had been paid in full on January 1. If these payments are prorated, what amount is returned to the seller? $373 $416 $488 $508

$775 taxes ÷ 360 days/year = $2.15 daily tax amount June 6 to December 30 = 204 days × $2.15 = $438.60 $86 ÷ 360 = $.24/day × 204 = $48.73

The Sterns receive two offers for their property at the same time. The Avilas offer $95,000 all cash. The Browns offer $100,000 subject to obtaining a conventional mortgage loan with 20% down payment and ask the Sterns to pay three points to their lending institution. The Sterns decide to accept the all-cash offer. If they had accepted the Browns' offer instead, they would have received $2,600 more at closing. $2,000 more at closing. $2,400 less at closing. $3,000 less at closing.

$80,000 × 3% = $80,000 × 0.03 = $2,400 payment for points $100,000 - $95,000 = $5,000 received with the higher offer $5,000 - $2,400 payment for points = $2,600 realized with the higher offer after payment of points

The DeHavilands' home on Dove Street is valued at $95,000. Property in their area is assessed at 60% of its value and the local tax rate is $2.85 per hundred. What is the amount of the DeHavilands' monthly taxes? $1,111.50 $926.30 $111.15 $135.38

$95,000 × 60% = $95,000 × 0.60 = $57,000, assessed value divide by 100 because tax rate is stated per hundred dollars $57,000 ÷ 100 = 570 570 × $2.85 = $1,624.50, annual taxes divide by 12 to get monthly taxes $1,624.50 ÷ 12 = $135.375

In a sale of residential property, real estate taxes for the current year amounted to $975 and have already been paid by the seller. The sale is to be closed on October 27. What is the amount of real estate proration to be credited the seller? $173.33 $162.50 $798.96 $83.96

$975 ÷ 12 months = $81.25/month property tax $81.25 ÷ 30 days = $2.708/day property tax $81.25 × 2 months = $162.50 $2.708 × 4 days = $10.832 $162.50 + $10.832 = $173.332 rounded to $173.33, prepaid unused tax

A house is valued at $98,000. It is to be insured for 80% of its cost. Insurance costs $0.60 per $100. What is the annual insurance premium? $470.40 $47.04 $588.00 $58.80

$98,000 × 80% = $98,000 × 0.80 = $78,400 insured value $78,400 ÷ 100 = 784 hundreds 784 × $0.60/hundred = $470.40

arrears

(n.,pl.) unpaid or overdue debts; an unfinished duty

actual notice

an assertion of real property interests that is open, continuous, and apparent to all who examine the property

A rectangular lot measures 60 feet wide and has an area of 1,200 square yards. What is the length of the lot? 20 feet 180 feet 20 yards 90 yards

1,200 square yards × 9 = 10,800 square feet area = length × width 10,800 = length × 60 10,800 ÷ 60 = 180 feet

A 100-acre farm is divided into house lots. The streets require one-eighth of the whole farm, and there are 140 lots. How many square feet are there in each lot? 35,004 31,114 27,225 43,560

100 acres × 43,560 square feet per acre = 4,356,000 total square feet 4,356,000 × ⅞ available for lots = 3,811,500 square feet 3,811,500 ÷ 140 lots = 27,225 square feet per lot

An FHA loan on a house priced between $50,000 and $100,000 requires a loan-to-value ratio of no more than 97.76%. If Heather is financing the purchase of a $95,000 house with an FHA loan, how much cash must she have for a down payment? $976.60 $2,128 $2,240 $9,766

100% price - 97.76% loan = 2.24% down payment $95,000 × 2.24% = $95,000 × 0.0224 = $2,128

Investor Al buys a small rental property on January 1 for $300,000, with the land accounting for 20% of its value. The IRS allows him to depreciate the building over a period of 27½ years. How much can Al charge on his tax return as an expense? $6,000 $8,727.27 $10,909.09 $24,000

100% value - 20% land = 80% building value $300,000 × 0.80 = $240,000 $240,000 ÷ $27.5 years = $8,727.27 depreciation per year

Edward Scruggs intends to put up a fence between his lot and his neighbor's. The fencing comes in six-foot sections. For a fence 120 feet long, how many fence posts are required? 19 20 21 22

120 feet ÷ 6 feet per section = 20 sections One fence post must be added to anchor the other end 20 + 1 = 21 fence posts

A lot measuring 120' × 200' is selling for $300 a front foot. What is its price? $720,000 $60,000 $36,000 $800,000

120 front feet × $300 = $36,000 sale price

If building requirements call for a 25' setback for a building, 10' on each side, and 15' from the rear property line, what is the buildable area in square feet for a lot that is 150' × 200'? 3,000 18,000 20,800 30,000

150' frontage - 20' for the side yards = 130' width 200' depth - 25' setback = 175' - 15' rear yard = 160' depth width × depth = buildable area 130' × 160' = 20,800 square feet

public records may be inspected by

anyone

Susan Silber signed an agreement to purchase a condominium apartment from Perry and Marie Morris. The contract stipulated that the Morrises replace the damaged bedroom carpet. The carpet Silber has chosen costs $16.95 per square yard plus $2.50 per square yard for installation. If the bedroom dimensions are as illustrated, how much will the Morrises have to pay for the job? $241.54 $189.20 $277.16 $2,494.46

2' × 9.5' = 114 square feet, area of rectangle ½ (3' × 9.5') = ½ (28.5) = 14.25 square feet, area of triangle 114 + 14.25 = 128.25 square feet To convert square feet to square yards, divide by 9: 128.25 ÷ 9 = 14.25 square yards $16.95 carpet + $2.50 installation = $19.45/square yard $19.45 × 14.25 square yards = $277.1625, rounds to $277.16

A 30-year fixed-rate amortized mortgage for $100,000 at 7% interest requires monthly payments of $665.30. What is the total amount of interest paid on this loan during the life of the mortgage? $139,508 $239,508 $258,106 $665,300

30 years × 12 months = 360 payments 360 payments × $665.30 = $239,508 total payments for principal and interest $239,508 total payments - $100,000 principal repayment = $139,508 interest

Harold Barlow is curious to know how much money his son and daughter-in-law still owe on their mortgage loan. He knows that the interest portion of their last monthly payment was $391.42. If the Barlows are paying interest at the rate of 7%, what was the outstanding balance of their loan before that last payment was made? $46,970.50 $67,100.57 $135,640.02 $273,994.00

391.42 × 12 months = $4,697.04 annual interest part ÷ percent = whole $4,697.04 ÷ 0.07 or $67,100.57

A five-acre lot has front footage of 300 feet. How long is it? 145.2 feet 726 feet 88 feet 160 feet

43,560 feet per acre × 5 = 217,800 square feet 217,800 ÷ 300 = 726 feet long

If the frontage of a half-acre lot is 75 feet, how deep is it? 189 feet 272 feet 290 feet 346 feet

43,560 ÷ 2 = 21,780 square feet in the lot 21,780 ÷ 75 (width) = 290 feet deep

suit to quiet title

A court action intended to establish or settle the title to a particular property, especially when there is a cloud on the title.

closing disclosure

A final closing disclosure to the consumer that must be received by the consumer 3 days before closing

chain of title

A history of the ownership affecting title to a parcel of land.

abstract of title

A history of the ownership of a parcel of land which lists transfers of title, rights, and liabilities.

Uniform Settlement Statement (HUD-1)

A special HUD form that itemizes all charges to be paid by a borrower and a seller in connection with the settlement. Also called the HUD-1 form.

attorney's opinion of title

A statement issued by an attorney after analyzing an abstract as to quality of title.

in New Jersey no deed may be recorded unless

It has been acknowledged, the transfer fee has been paid, full consideration is stated

in locations where the abstract system is used, an abstract is usually examined by the

Attorney of the purchaser

percentage lease calls for $460 a month rent, plus 4.5% of the annual gross over $100,000. If Janie's Jeans paid $7,780 last year, what was the gross income of the business? $110,170 $150,222 $262,207 $272,889

Base annual rent = $460 × 12 = $5,520 Total rent of $7,780 - $5,520 = $2,260 $2,260 ÷ 0.045 = $50,222, which represents the gross sales over $100,000 that rent was based on; total sales were $150,222

The year's town, county, and state taxes amount to $3,600 and have been paid ahead for the calendar year. If closing is set for June 15, which of the following is TRUE?

Credit seller $1,950; debit buyer $1,950

proration

Dividing property taxes, hazard insurance and other expenses or income between the buyer and seller, as of date of settlement.

marketable title

Good or clear title, reasonably free from the risk of litigation over possible defects.

The buyer is assuming the seller's mortgage with an interest rate of 5%. The unpaid balance after the most recent payment was $161,550. The seller made the payment due September 1 and the sale is to be closed on September 23. What is the amount of mortgage interest proration to be credited to the buyer at the closing? $113.08 $493.64 $807.75

None, the buyer owes the seller. $161,550 mortgage balance × .05 interest rate = $8,077.50 annual interest $8,077.50 divided 12 months = $673.13 this month's interest $673.13 divided by 30 days = $22.44 one day's interest $22.44 × 22 days = $493.64. That interest will be paid in the next month's payment, so seller owes it to the buyer.

constructive notice

Notice given to the world by recorded documents. All people are charged with knowledge of such documents and their contents, whether or not they have actually examined them. Possession of property is also considered constructive notice that the person in possession has an interest in the property.

Which of the following statements about RESPA is correct? Real estate agents must give borrowers the Toolkit booklet within three days of the loan application. Lenders must give borrowers a good-faith estimate of the closing costs within three days of the loan date. The closing agent must allow the purchaser to inspect the Closing Disclosure at least two business days before closing. RESPA prohibits kickbacks or unearned fees but does not include fee splitting between cooperating brokers.

RESPA prohibits kickbacks or unearned fees but does not include fee splitting between cooperating brokers.

Sally Keller is frantic because she cannot find her deed and now wants to sell the property. Sally

does not need the deed if it has been recorded.

affidavit

a sworn written statement

Real Estate Settlement Procedures Act (RESPA)

The federal law that requires certain disclosures to consumers about mortgage loan settlements. The law also prohibits the payment or receipt of kickbacks and certain kinds of referral fees.

The Duffys are buying a house for $120,000 and seek a fixed-rate loan of $90,000 for 25 years. One lender offers them a 10% loan with no points, monthly payments of $817.85. A second lender requires two points for a 9.5% loan, with monthly payments of $786.35. If the Duffys decide to pay the points and take the lower-interest loan, how long will it take before the savings on their lower payments have made up for that extra cost at closing? Two years, eight months Three years, two months Four years, nine months Seven years, four months

Two points on a $90,000 loan = $90,000 × 2% = $90,000 × 0.02 = $1,800 paid in points $817.85 - $786.35 = $31.50 saved each month with lower payment $1,800 ÷ $31.50 = 57.14 months to recoup the payment of points57.14 months = 4 years, 9 months

which of the following is NOT acceptable proof of ownership?

a deed signed by the seller

At the closing, the seller's attorney gave credit to the buyer for certain accrued items. These items were a. bills relating to the property that have already been paid by the seller. b. bills relating to the property that will have to be paid by the buyer. c. all the seller's real estate bills. d. all the buyer's real estate bills.

b.

The earnest money left on deposit with the seller's real estate broker is a a. credit to the seller. b. credit to the buyer. c. balancing factor. d. debit to the buyer.

b. credit to the buyer

security deposits should be listed on a closing statement as a credit to the

buyer

the principle of caveat emptor states that if the buyer buys into a title problem, the fault lies with the

buyer

If a property has encumbrances, it

can be sold if a buyer agrees to take it subject to the encumbrances

an instrument affecting title to a parcel of real estate gives constructive notice to the world when it is filed with the

county recorded

public records

county's collection of documents relating to real estate

An amount entered into a person's favor is referred to as a(n)

credit

an amount that one party owes to another and must pay at the closing is a

debit

a fee title insurance policy generally defends the property owner against problems arising from

forged documents

Mortgage title policies protect which parties against loss?

lenders

caveat emptor

let the buyer beware

flood insurance is required for mortgaging property if it is

on a flood-prone area on a special map

Proof of the kind of estate and liens against a parcel of real estate can usually be found through

one of the four evidences of title

The Salvatinis' residence has proved difficult to sell. Salesperson Martha Kelley suggests it might sell faster if they enclose a portion of the backyard with a privacy fence. If the area to be enclosed is as illustrated, how much would the fence cost at $6.95 per linear foot? $1,911.25 $1,654.10 $1,615.88 $955.63

two sides of 95' plus one side of 42'6" 95' × 2 = 190 feet 42'6" = 42.5 feet 190 + 42.5 = 232.5 linear feet 232.5 × $6.95 = $1,615.875