Exam Prep
Portion of the equity in a principal residence is protected from unsecured creditors in Illinois. This so called "homestead exemption" is: (rev 306)
$15,000 per owner
A home sold for $23,000. The buyers paid closing costs of 6% and taxes and insurance of $299. Upon what price was the commission rate computed?
$23,000
The largest monetary penalty, per transaction, for a license law violation in Illinois is:
$25,000
A buyer wanted to purchase a property from a seller and assume the FHA loan on the property. The buyer, however, did not have enough money to assume the loan and make the down payment on the property. The buyer agreed to make equal monthly payments to the seller for one year for the down payment. This type of financing would be called a:
Contract for deed
A purchase agreement was accepted with earnest money given as part of the contract. The broker deposited the earnest money in the broker's escrow account. How would the earnest money appear on the closing statement?
Credit buyer, no entry for seller
Which would be the best example of a buffer zone?
Garden apartments between a residential area and shopping center
A listing contract with a seller is about to expire. The broker has a buyer who is interested in the property but is not quite ready to make an offer. If the broker wants to be protected as far as earning commission if this buyer wants to purchase the property at a later date, the broker would need to do all of the following EXCEPT:
Give a notice in writing to the buyers that the buyers are on a protective period list
A seller of a property could NOT transfer marketable unencumbered title. What should the broker do with any earnest money involved in the transaction?
Give it to the buyer
A property did not abut a waterway. The owner established a beneficiary use through the state under prior appropriation. How could the owner gain access to the water?
Go to the neighbor and negotiate an easement
Fixture
Going from personal to real property; item that was once personal property but is now attached to the real estate.
A broker signs an exclusive right to sell listing with an owner. The next day, the owner talks to another broker about listing the same property. What should be the broker's response to the owner?
I cannot list the property while another broker has a current exclusive listing
A buyer who had insufficient funds for a down payment gave a note and mortgage to the seller for the difference. This is BEST referred to as:
Purchase money mortgage
The reason a lender charges discount points is to:
Increase the effective yield to the lender
A land contract is also reffered to as a
Installment Contract
Term Loan
Interest only
In Illinois, an agent who proposes to become a dual agent must have written agreement from both buyer and seller regarding this situation. The dual agency language:
Is specifically dictated in the license law
An elderly person has recently made the last payment on a mortgage. This person would like to supplement their retirement income. The loan most likely to help in this situation would be a:
Reverse annuity mortgage (RAM)
The Illinois Human Rights Act prohibits discrimination against the federally-protected classes, plus which of the following?
Marital status, age, current military status, unfavorable military discharge, ancestry, sexual orientation and order of protection
Which legal description would use the following verbiage; "Starting at the southernly side of Victoria Street, proceed 100 feet Easterly from the corner that was formed by the stone and tree stump...?
Metes and bounds
A mortgage is recorded to protect the
Mortgagee
In Illinois, a real estate agent:
Must have a written contract with their broker
A mortgage contingency usually includes all of the following items EXCEPT:
Name of the lending institution
A broker talks to a seller about listing the property for sale. The seller won't list just with this one broker, but tells the broker that if he finds a buyer for the property, the seller will pay a commission. This would be a(n):
Open Listing
A seller lists a property with Broker A. However, the listing provides that if any other broker sells the property, Broker A does NOT receive a commission. This type of listing would be called a(n):
Open Listing
A prospective buyer wanted to have the right to purchase a home at a set price within the next 90 days but did not want to be obligated to purchase it. Which of the following documents would allow the buyer to do this?
Option
Buffer Zone
Primarily to separate residential property from commercial properties
Sherman Anti-Trust Laws
Prohibit price fixing by groups of brokers
Which of the following would be exempt under the Federal Fair Housing Law of 1968?
An individual selling a personal residence who does NOT discriminate in advertising
The payment on a graduated payment mortgage usually has gradual increases:
And then levels out for the remainder of the term
A buyer purchased a seller's home and assumed the seller's loan. The seller does not want to remain liable for the loan. What should the seller do?
Arrange for the lender to give a release of liability to the seller
A condominium development with a long standing established homes association would be governed by the:
Association of unit owners
Broker L was the listing agent. Broker S was the selling agent. Both were members of a multiple listing service. L did not know the buyer and S did not have any contact with the seller. No buyer agency agreement existed. Which of the following is the MOST likely agency relationship?
S and L both represent the seller
What normally triggers an alienation clause?
Sale or assignment of the mortgaged property
Which of the following normally triggers an alienation clause?
Sale or assignment of the mortgaged property
Usury Laws
Set maximum interest a lender can change. They protect the borrower.
When a contract is signed between a buyer and a seller, the buyer is known to have received equitable title upon the happening of which of the following events?
Signing of the agreement by the buyer and seller
Subrugation
Signing over rights to an insurance company upon being paid for a claim. Not included in a mortgage
A salesperson, in doing a competitive market analysis (CMA) for a seller, should NOT tell the seller:
That this is a professional appraisal
When is a purchaser said to have equitable title?
At the signing of the sales contract by both buyer and seller
In Illinois, real estate taxes are a lien against:
The Property
A seller is always called a:
Vendor
A violation of the federal fair housing laws:
may be a criminal act
Subordination
Agreement to waive priority
A buyer was going to take over on a seller's existing loan as part of the real estate transaction. The lender, however, was going to change the interest rate on the buyer to the prevailing current rate. In order for the lender to do this, there must have been what type of clause in the mortgage?
Alienation
Y offers X $60,000 for X's property. Which of the following terms BEST describes the role of X?
Offeree
Steering
Directing buyers towards areas based on race, religion, etc
Agent A has two buyer-clients interested in the same property. Today they both leave messages that they wish to write offers. Agent A must:
Disclose and get consent from each buyer to proceed
Blockbusting
Trying to scare owners into selling by saying persons of a protected class are moving into the neighborhood
Rectangular survey system
Uses principal meridians and range and tier lines
Quitclaim Deed
Where the seller makes no promises whatsoever, this would protect the lender from future title claims
Which clauses makes the loan non-assumable?
Due on sale
Which of the following are principal meridians located in Illinois?
3rd and 4th only
Alienation Clause (Due on Sale Clause)
A mortgage clause where the lender can call a loan balance due and payable upon selling the property; makes the loan non-assumable.
Amortized mortgage
A mortgage in which the payments apply to both principal and interest is BEST referred to as:
Which of the following would be the BEST example of a buffer zone?
A park between a high-rise apartment building and an industrial area
The Equal Credit Opportunity Act prohibits discrimination based on:
A person being a senior citizen
Illinois licensees, who do NOT represent a potential buyer, must disclose which kind of defects?
Latent defects
Which of the following would be an example of an impossibility of performance regarding a sales contract?
A seller had signed the contract without the consent and knowledge of the other owners who were joint tenants
Under the federal fair housing laws, which of the following phrases would be illegal in advertising?
Adult building
Equal Credit Opportunity Act
Bans credit discrimination based on race, color, religion, national origin, sex, age, and marital status
A salesperson included a protective period clause in a listing agreement with a seller. To protect the salesperson under this clause, what must the salesperson do?
Before listing expires, give a list of all buyers who have seen the property to the seller
Broker A enters a listing in the multiple listing service under the rules of sub-agency. Broker B, a member of the multiple listing service, finds a buyer and shows the house under the rules of sub-agency. Which of the following statements best describes the relationships of the parties?
Broker B was an agent of Broker A
A seller lists with Broker X. Broker Y sells the property. To whom does the seller owe a commission?
Broker X
Which of the following constitutes illegal commingling by a licensee?
Broker deposits payroll funds into the trust account
A buyer writes a contract with a contingency that says if a certain thing does NOT happen, the buyer does NOT have to purchase the property. The contract does not close due to this contingency. Normally, any earnest money should be given to the:
Buyer
Redlining
Lenders refuse to make loans in questionable areas
Deficiency Judgment
Can be filed against the defaulting borrower for any debts not satisfied by the foreclosure sale
How would a loan origination fee normally show up on a closing statement?
Debit buyer - no entry to seller
How would prepaid taxes, with a midyear closing, show up on a closing statement?
Debit buyer, credit seller
An assumed loan in a real estate transaction would appear on the closing statement as a:
Debit to the seller, credit to the buyer
A borrower does not meet all the obligations of the mortgage agreement, this is usually referred to as being in:
Default
Amortized Loan
Each payment makes contributions towards principal and interest
Which of the following items would NOT always be part of a real estate purchase contract?
Earnest money
A builder owns a large piece of property. The builder decides to turn the property into a subdivision of homes but decides to keep the lake frontage on all the lots for himself. What would a buyer of one of the lots prefer to have?
Easement appurtenance
A neighbor had encroached on a property but the owner did not complain within the legally specified time period. The neighbor would obtain rights to the land by:
Easement by prescription
An Illinois homeowner dies without a will and without any traceable heirs. The real property in the estate will:
Escheat to the county
A seller lists a property with one broker but reserves the right to sell it herself without paying a commission. This is an example of a(n):
Exclusive Agency Listing
Which of the following activities could cause an Illinois licensee to be disciplined?
Failure to pay state income taxes
An integrated club refused to sell a property to a person because of that person's race. The person then sued the club. Is the club justified in its actions?
No, because there are no exceptions to the fair housing laws regarding race
A contract is not completed and binding until it is signed by the:
Offeree
S owns a property and lists the property for sale with a broker. The broker finds a buyer who makes an offer on the property. S is considered to be the:
Offeree
Which of the following acts would be permitted under the 1968 Federal Fair Housing Act?
Not renting a house to someone because they have a poor credit history
The CFPB
Oversees/administers provisions of the Real Estate Settlement procedures act (RESPA)
Contract for deed
Owner financing where the buyer makes payments directly to the seller
Which of the following transactions is EXEMPT from the requirements of the Federal Fair Housing Act?
Owner renting one room in an owner occupied residence
Which of the following mortgages uses both real and personal property as security?
Package
An exclusive right to sell listing is given by an owner to a broker. Which of the following would be required of the owner?
Pay the broker a commission upon completion of the sale of property
A legal description included Range 2 East and Tier 1 North of a principal meridian. This is an example of a:
Rectangular survey description
A blanket mortgage usually contains which of the following clauses?
Release
TILA-RESPA Integrated Disclosure Rule (TRID)
Requires disclosure of the initial estimate of buyers disclosure of the initial estimate of buyers closing costs within 3 days of receipt of the loan application.
A loan that is paid off either by the sale of property or death of the borrower is called a(n):
Reverse annuity mortgage (RAM)
The direct sales or market approach is based upon the principal of
Substitution
Some out-of-towners had inherited some property. They contacted a local broker to sell the property. The out of town owners wanted to list the property for $50,000. The broker knew that similar properties in that area were selling for $80,000. What should the broker do?
Suggest a market analysis for the seller to estimate the current value of the property
Competitive Market Analysis (CMA)
The best way to determine a list price for a residential property
What is an advantage for a borrower who chooses to pay private mortgage insurance (PMI) in receiving a loan?
The borrower can purchase with a lower down payment
Statutory Redemption
The borrowers right to buy the property back AFTER the sale from the purchase at foreclosure sale
Equitable Redemption
The borrowers right to stop foreclosure process by paying of the loan BEFORE the sale of the property
AAA Realty had a listing with a seller. BBT Realty sold the property as a sub-agent for the seller. Salesperson K was the salesperson for AAA Realty and salesperson R was the salesperson for BBT Realty. Who is the commission paid to?
The broker of AAA Realty
H had a property for sale for $129,000. B made an offer for $123,000. H made a counter-offer of $127,000. Which of the following statements is NOT true regarding this situation?
The counter-offer would be binding on B
In a life estate situation, what happens to ownership of the property when the life tenant dies?
The current title holder or heirs would get the property
Which of the following statements regarding Illinois real estate sale contracts is true?
The heading "Real Estate Sales Contract" must be in bold letters
Which of the following statements is true regarding security for a debt?
The mortgage secures the note
In foreclosure, after the mortgage and all other debts are paid to whom would the excess go?
The owner who was foreclosed upon
In which of the following cases might a broker still be owed a commission on an unexpired listing?
The principal terminates the listing agreement
The property management agreement is between the property manager and:
The property owner
From whom does a salesperson receive a commission?
The salesperson's own broker
Assessed Value
This is what the government uses in raising money for operations
A person owns a property in an improvement district. An assessment roll has been confirmed for that area. The owner is in the process of selling the property. A buyer should be informed that:
This property will be subject to a special assessment tax
What is the primary purpose of the Federal Housing Administration (FHA)?
To insure loans for lenders
Escheat
When the government takes ownership of property when a person dies with no will and no heirs
When does a sales contract become legally binding for the buyer?
When the seller's acceptance is communicated back to the buyer
A $55,000 mortgage and note are given by the buyer to the seller. The seller keeps the underlying $35,000 VA mortgage on the property. This is called a(n):
Wraparound mortgage
Which of the following items would NOT always be a part of a contract for the sale of personal property?
Written agreement
A right to buy a property for a definite sale price with a definite time period is referred to as a(n):
option contract