Course 1 study guide

A buyer has a 30-year, $400,000 loan with a 7% interest rate. How much of the first month's mortgage payment is interest?

$2,333.33

The daily property tax rate is $1.23 and closing is August 31. Assuming the buyer owns the property on closing day, and the seller hasn't made any payments, what will the seller owe at closing using the calendar year proration method? Round to the nearest whole dollar.

$298

Jeffrey has accepted an offer of $310,000 for his house. The buyer is making a $50,000 down payment, and the buyer's appraisal came in at $300,000. On what number will the buyer's lender base the loan-to-value ratio?

$300,000

A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. What's the total amount the borrower will pay back over the life of the loan?

$367,687.80

What's the minimum age requirement for a licensed trainee appraiser?

18 years

How many square feet are in an acre?

43,560 square feet

Client Bette asked licensee Frank about a home equity line of credit versus home equity loan. Which of the following offers an brief overview of what a home equity line of credit is?

A borrower borrows against the equity in the house and pays back the amount withdrawn plus interest.

What is a special flood hazard area?

A high-risk flood area

According to the standards of conduct, what disclosure must Minnesota licensees provide?

Agency relationships

Marcy is found guilty of price fixing. This means she must have ______.

Agreed with a competitor to charge a specific amount

Jeung gave her agent an earnest money check, and the seller accepted Jeung's offer. What will happen to the check now?

An escrow agent will hold the funds in a trust account until the agreement's terms are satisfied.

Which of the following individuals would be in violation of Minnesota license law if performing the activity for a fee?

An unlicensed individual selling his brother's home

Marshall is a Minnesota real estate broker. His listing agreement with Dolly included a six-month override clause. Which of the following people should NOT be included on the protective list Marshall provided?

Anne, a real estate licensee who regularly attends open houses in the area

When a borrower is completing a loan application, items of value the borrower owns are listed in the ______ section.

Assets

Todd and Susan are a married couple living in Minnesota. Susan purchased their homestead shortly before they married and only her name appears on the property's title. They are planning to sell this property and purchase a condo. Whose signatures are required to sell their current property?

Because this is a homestead property and Susan is married to Todd, both Susan and Todd's signatures are required.

Bubba holds a real estate salesperson license in Minnesota. He's currently associated with Arnold, but wants to end his business relationship with Arnold. What are his options?

Bubba needs to notify Arnold, then the broker must notify the commission of the termination within 10 days.

The ______ is usually responsible for ordering and reviewing the survey of the property.

Buyer

Which of the following situations entitles Gary to commission with a 30-day protection clause?

Buyers who viewed the property while listed with Gary make an accepted offer 10 days after the listing expires.

Jamal is a Minnesota homeowner. He's registering his land with the county court and has submitted an application. If all goes according to plan, what should Jamal have in his hand at the end of the process?

Certificate of title

Quinn is a licensed broker in Minnesota. She's getting ready to submit a salesperson licensing application for Rachel. Which pre-licensing courses must Rachel have completed to get to this point?

Completion of Courses 1, 2, and 3

Philip owns land in a state where growing marijuana is illegal. He wants to set up a small marijuana growing operation and export to states where marijuana has been legalized. He asks his attorney about the possibility. "No," his attorney explains. "It's not possible. Although you own the property outright, the right of ______ only allows you to manage the property in ways that are legal in this jurisdiction.

Control

A ______ is a method of conveying real property from one party to another.

Deed

Which of the following actions can a broker in Minnesota legally take?

Depositing personal funds in a trust account to pay account service fees

Margot doesn't really want to include Friend and Lend on the list of mortgage companies she gives to buyers because the owner is a Syrian immigrant and a Muslim. If she doesn't, what is she guilty of?

Discriminatory acts and agreements

Stephanie and Carter are married owners of a Minnesota property that they wish to claim as a homestead. Which of these statements is true?

Either Stephanie or Carter can claim the homestead. The exemption would apply to either or both of their debts.

Emilio wants out of his contract, because he doesn't believe his buyer agent is working hard enough to find him a property that meets his criteria. What must happen before the buyer agency agreement can be terminated?

Emilio and his agent must mutually agree in writing to terminate their agreement.

The doctrine of laches refers to the _______ of restrictive covenants/deed restrictions.

Enforcement

Which of the following tasks must licensees perform for seller clients?

Ensure the collection of the earnest money deposit from the buyer.

Which of the following best describes a marketable title?

Ensures the title to property is free and clear of liens and only subject to loan payoff and any taxes owed.

Elvin owns 150 acres of prime hunting land. Every year, he gets requests from private groups that would like to use his land for a day or two during hunting season. He sometimes grants these requests, but this year, he's decided to only use it himself with his friends. Which right in the bundle of rights says that he can say no to these requests?

Exclusion

What type of title insurance covers defects of an incorrect survey and boundary encroachments?

Extended title insurance

Leon and Beth own 1/13 of a timeshare estate. They own weeks 20 and 21, and also weeks 40 and 41. These weeks are inheritable. What type of ownership is this?

Fee simple

In general, a person in a position of loyalty and trust is a(n) ______.

Fiduciary

In Minnesota, what's the rescission period after a purchaser receives a copy of the subdivision sales contract?

Five days

Which method of involuntary alienation involves a lien holder forcing the sale of the owner's property in order to generate the funds with which to satisfy the lien?

Foreclosure

Leon and Beth own 1/13 of a timeshare estate. How many weeks each year do they get to use the timeshare unit?

Four

If a building is being converted from apartments to condominiums, Minnesota law requires that the building owner inform the current tenants about the conversion and ______.

Give tenants the option to buy their units or to continue as tenants for a specified period of time

Douglas is selling his home by a short sale. What likely happened recently in Douglas's life?

He lost his job.

Charles, a real estate professional, has just finished touring a property he'd like to list for sale. When talking with the owner about the property and comparing it to other properties recently sold in the area, he tells the owner he appraises the property at a value of $350,000. What, if anything, did Charles do wrong?

He referred to his opinion on the value of the property as an appraisal.

Harry dabbles in real estate in Minnesota by buying and selling several properties for himself throughout the year. He's unlicensed and isn't represented by a real estate licensee in these transactions. The real estate commission hasn't knocked on his door yet, so which of the following is most likely true about Harry?

He's the principal in four or fewer transactions during a 12-month period.

Anita is a new buyer. Luckily, ______ will help her before the sale and can reimburse her after the sale if a title issue arises.

Her title insurance

Juan has decided to invest his small inheritance in real estate. He is drawn to the fact that he can add a building where there wasn't one previously and immediately increase the value of his investment. Which economic characteristic of real property is this?

Improvements

Which physical characteristic of land addresses the concept that while improvements may deteriorate over time, the land itself cannot be destroyed?

Indestructibility

Bradley is acting as a finder for Emma. Which action can he perform?

Introduce Emma to the seller (or buyer)

What's NOT true of an easement appurtenant?

It's an encumbrance on the dominant property.

Jamie and Pat are interested in purchasing property near a lake. Which ownership type is NOT recognized in Minnesota?

Jamie and Pat owning the property as tenants by the entirety.

What's a typical reason that a seller might opt for a short sale?

Job loss or other financial problems

Carlton listed his property with an agreement end date of August 31. The property went under contract on May 12 and closed on July 2. When did Carlton's listing agreement officially terminate?

July 2

In which of these situations does the licensee have a disclosable ownership interest in the property?

Kennedy is representing his LLC in the purchase of a commercial building.

In Minnesota, what entity is primarily responsible for regulating coastal development and use policies?

Lake Superior Coastal Program

How does drinking water become contaminated by lead?

Lead water pipes

Why might a buyer get a great deal on a real estate owned property?

Lenders and their shareholders don't like to keep properties on their books longer than necessary.

Steven owns 114 acres of wooded, rural land. The abundance of wildlife on his property means that his friends are always asking for permission to hunt on it during various game seasons. If Steven gives a friend permission to hunt on his land, it can be said that he has given his friend a ______.

License

In any given property, the place with the highest radon levels will likely be the ______.

Lowest level of the house

Margie is selling her Minnesota home to Braden. What's her responsibility to disclose the presence of wells on the property to Braden?

Margie can't accept Braden's offer until she's disclosed the location and status of any known wells on the property.

Darrel loves working in the mortgage lending industry. On a daily basis, he works with multiple lenders to find and negotiate the best deals for his customers. What is Darrel's profession?

Mortgage broker

How do you determine the cost of purchasing land?

Multiply the land area by the cost per unit

Which of the following is an advantage of condominium ownership?

No yard work

Oscar is a buyer in Minnesota who provided a promissory note to his real estate agent as earnest payment. Did his agent violate license law by accepting this as earnest payment?

No, as long as the licensee deposited the item with an authorized escrow agent.

You're representing Abe and Ben in a dual agency situation. Abe tells you something that would give Ben a distinct advantage if he knew. Do you tell Ben?

No, because you can't share one client's confidential information with another client.

Your cousin Steve has asked you to use your expertise to help him market and advertise his house, even though you don't yet have your Minnesota real estate license. He'll pay you a 1% commission if you help him. Can you do this?

No, because you must have a license to provide real estate services for another person for compensation.

Five competing licensees in the same area agreed to cooperate in setting a standard commission rate for the area. This makes them guilty of a per se antitrust violation. What is a per se antitrust violation?

One in which no intent needs to be proven to establish a violation has occurred

Members of the NAR or local associations of REALTORS® must ______ to belong to the organization.

Pay an annual membership fee

Zack enters into a contract to buy Olivia's home. Per the terms of the contract, Zack must put down a $10,000 earnest money deposit and have the property inspected within five days. In reality, he puts down a $12,000 deposit and has the property inspected within two days. This is an example of ______.

Performance of the contract

Jacob is a developer who purchased 78 acres and had it subdivided into half-acre lots. He decided to install sewer and underground electric for the entire subdivision, because he thinks that he will easily recoup his initial infrastructure investment. This is an example of which economic characteristic of real property?

Permanence

Licensee Dionne pointed out to her buyer client the items in the house she was showing that would be considered real property. One of the key determinants, she explained, was whether the item were _______.

Permanently affixed to the property

Which local land use group has the dual focus of livability and quality of life?

Planning board

The government's authority to do what it can to ensure the health, safety, and welfare of its citizens is called ___________.

Police power

According to the Department of Justice, an agreement to eliminate discounts to all customers or certain types of customers is a type of which antitrust violation?

Price fixing

Genevieve performs real estate activities in Minnesota on behalf of Vern, a real estate broker. What type of license does she have?

Real estate salesperson

Licensees ______ clients and ______ customers.

Represent, assist

A person who performs real estate services in Minnesota under the supervision of a licensed broker and who may not work independently is a(n) ______.

Salesperson

Sally signed a lease for a unit in a new apartment building in Minneapolis. Her landlord, Jamal, deposited Sally's security deposit on August 4. When will the security deposit begin accruing interest?

September 1

Which of the following lists items that likely contain asbestos, if manufactured before 1970?

Soundproofing and decorative material, pipe and furnace insulation materials, shingles, and siding.

Brent and Kathy recently bought a property in a gated community. While doing some landscaping they noticed that their neighbor's shed seems to be over the lot line and on their property. What should they consult to determine if the shed is an encroachment?

Survey

In 2010, what agency banned Freon® as a refrigerant?

The EPA

Who closes on the cooperative brokerage agreement?

The agents for the buyer and seller

Candace and Phil Tolson listed their home for sale with Trent Richards, the broker for Richards Homes. Sadly, Trent became incapacitated due to a car accident. What's the status of the listing agreement?

The agreement terminates by operation of law.

Which of the following actions occurs prior to closing?

The buyer obtains a binder for insurance coverage on the new home.

Besides the appraisal, what's a common hurdle as transactions approach closing?

The buyer's financing falls through.

A consumer received payment from the Minnesota Real Estate Education, Research, and Recovery Fund to satisfy a judgment against a Minnesota licensee. Which statement best describes the consequences the licensee faces?

The license will be suspended until the licensee pays back double the amount disbursed, plus interest

Farquhar bought a house at a foreclosure auction. A few weeks later, he was notified that he couldn't take possession of or title to the property. What likely happened?

The previous owners redeemed the property by paying all mortgage payments and fees.

Who's responsible for paying for recording documents to clear all defects from the title?

The seller

In a buyer agency relationship, what relationship does the seller have to the licensee?

The seller is the licensee's customer.

A house in Minnesota is located near a registered sex offender's residence. In which of these transactions would the seller be required to disclose this information?

The seller isn't required to disclose that the property is located near a sex offender's residence, as long as written notice is given to the buyer telling them how to check this for themselves.

Elizabeth's property is encumbered by an easement in gross with which of these entities?

The utility company that needs to access the power line that crosses a corner of Elizabeth's land

What are the main ways that license laws ensure consumer protection?

They establish requirements, define activities, and set standards.

Sheila owns a timeshare that gives her ownership in the property for a certain number of weeks per year in perpetuity. What type of timeshare is this?

Timeshare estate

Which document provides the buyer with data about the property's title record, legal description, and other matters that may need to be acted upon in order to obtain a marketable title?

Title report

Minnesota brokers can use personal funds in trust accounts for which reason?

To pay administrative service fees

Regina closed on the sale of her house to Tom on Thursday, then went to a second closing on Friday and sold it to Martin. How could the title company in Martin's transaction have missed the fact that Tom had purchased the property?

Tom's title company didn't have time to record Tom's deed before Regina closed with Martin.

Harriet, an out-of-state licensee, is friends with Tonya, a licensee with Perfectly at Home. Harriet referred one of her buyer friends to Tonya, so Tonya plans to pay Harriet a referral fee. Which statement about this fee is true?

Tonya must pay the referral fee through her brokerage firm to Harriet's brokerage firm.

What's another name for an escrow account?

Trust account

Which of the following is price fixing?

Two brokerages determine a standard commission rate.

As a court-appointed guardian, Marion serves as which type of agent?

Universal

Martha is completing an addendum for her client. She should make sure that it's written ______.

Using standardized language

Aside from paint, where else might lead be found?

Water pipes

Appraisers in Minnesota must disclose which of the following before they perform any appraisal services?

Who requested the appraisal, and why

Christina purchased a house from Thomas. When did she officially gain ownership of the property?

With the transfer of deed from the seller to the buyer

Xavier deposited a $3,000 earnest money check into his personal account for safekeeping while he was on vacation. The balance in his account when he left on vacation was $4,200, and when he returned, it was $2,800. He withdrew enough funds from his savings account to cover the earnest money check and delivered the funds to the escrow agent. Which statement best represents Xavier's issue?

Xavier is guilty of commingling and conversion.