National Exam - Real Estate - CE Shop
Which of these is an example of agency coupled with interest?
An agent foregoes buyer agent commission, provided the purchasing developer gives the agent the listings on the developed lots.
Which of these situations might be addressed by a subject to clause or limitations in the deed Jane is using to convey property to Moira?
An easement runs across the property, permitting Jane's neighbors to access the neighborhood boat dock.
Even though the Federal Trade Commission is concerned with all ad claims, what sort of ads would most likely concern the commission?
Any ad that makes a health or safety claim or any claim that's difficult for the consumer to evaluate
What are improvements with regard to property?
Artificial attachments to land that include items such as fencing, buildings, and walkways
Which of these statements best represents what happens after a federal fair housing complaint is made?
A fair housing specialist will review the complaint.
Lamar closes on his new home next week. It's a 37-year-old split level, so his agent asked if he's interested in purchasing a home warranty. "Why would I need a warranty?" he wondered. "Didn't the home inspection identify all of the issues?" What's the agent's best response to Lamar's question?
A home warranty will cover things like appliances and major systems.
Which of the following may be considered a stigmatized property?
A home where a homicide, suicide, or haunting occurred
Which of the following statements about material facts is true?
A material fact may have more or less effect on a buyer based on the buyer's needs and values.
Which of the following statements about the promissory note is true?
A promissory note is a negotiable instrument and can be transferred to a secondary holder who has the right to enforce the note's terms.
The Simpsons are buying a five-acre lot that was part of a much larger tract of acreage. When the owners of the large acreage decided to subdivide it, they needed to have a legal description created for the five-acre lot. What was used as the starting point for creating that legal description?
A survey
Elaina and Allen just purchased a home using a deed of trust. Which of the following is most likely true about their home loan?
A trustee will hold title until the loan is paid.
Which of these is excluded on a title insurance policy on Martha's property because of the schedule of exceptions?
A verbal lease agreement Martha has with her neighbor who leases Martha's garage
Property ownership gives the title holder a bundle of rights. What's significant about the concept of a bundle of rights?
It describes the ability to separate one right from the others while leaving the rest of the bundle intact.
Why is proof of ownership required when transferring real property?
It provides evidence that the title is marketable.
When property changes hands, the deed is recorded and a fee is charged. What is the benefit to the grantee of having the deed recorded?
It puts the public on notice regarding ownership.
Virginia is finally living her dream—she bought a coffeehouse in a charming college town. After she closed on it, her attorney sat down with her to discuss various business licensing and legal requirements she'll have to meet. Virginia was surprised to learn that her five-table establishment is affected by the Americans with Disabilities Act. What must be true about the coffeehouse?
It's a commercial enterprise that's open to the public.
Which of these is NOT an example of price fixing?
Jake's firm agrees to charge all clients a listing commission of between 2% and 2.5%.
Which of these situations addresses the fiduciary duty of confidentiality?
Jeanette, a seller's agent, tells the buyer's agent that her client must sell his home because of an illness.
Jennifer plans to sell her rental property to Eliot, a buyer. What obligation, if any, do Jennifer and Eliot have to the tenants of the property?
Jennifer must notify the tenants of the change in ownership.
Which ownership type is defined by four unities: time, title, interest, and possession?
Joint tenancy
Stan and Emile are arguing over their shared lot line, since Stan thinks that Emile planted a privet hedge on Stan's property. Stan filed a civil legal action against Emile. Which of these would the court use to determine the actual lot line?
Legal descriptions of both properties
Which of the following strategies would help to make a "Choose Your Neighbor" marketing letter non-discriminatory in its effect?
Listing the property on the MLS
Which of the following scenarios best describes a net listing?
Maeve wants to get at least $350,000 when she sells her property and tells her listing agent, Stan, that he can keep anything above that amount.
Morty, a land surveyor, was called out to survey a property. After doing some research, he located the legal description for the property in question. Now, if he could just find the point of beginning located at the iron pin on the southerly line of state route 117, 30 feet east of the oak tree next to Bear Creek. What type of legal description is Morty working with?
Metes and bounds
The MARIA acronym helps to identify the five tests of a fixture. Which of the following tests refers to how and whether the item is attached to the property?
Method of annexation
In which of these situations has the licensee compromised the duties of loyalty and disclosure?
Nate didn't tell his client about a conflict of interest related to the sale of his client's property.
Ken, Dale, and James were brothers who owned more than 100 acres as tenants in common. The relationship between Ken and James disintegrated, and so James initiated a lawsuit. The end result was that the court gave each brother a designated set of acres to own. What did the court grant?
Partition
Leigh Ann is a licensee. Her cousin, Carly, is interested in buying a house. Leigh Ann shows Carly how to look for properties online and runs some CMAs for her. When Carly finds a property she likes and asks Leigh Ann to help her make the offer, Leigh Ann decides she should ratify the agreement with Carly. What are Leigh Ann's options for accepting an agency relationship after the fact?
Prepare an agency agreement or continue to assist Carly with the purchase.
Bill is joining his inspector Hank for an inspection of the property he hopes to purchase. Hank notices that the dirt on the exterior of the home slopes toward the house. He explains that it should slope away from the home. When it doesn't, what problem might this create?
Basement leaks
Which department typically decides which development projects require a permit or approval?
Building department
Subdivision regulations imposed by developers in an effort to maintain control of the development of the subdivision are an example of ______.
Private land use control
Morgan has agreed to sell his home to Dierks, and they've signed a contract. Which of these actions changes the contract from executory to executed?
Dierks' lender funded the loan, and closing took place.
Derrick just bought his first condo, and he's ready to crack the champagne. Which of the following will Derrick be able to deduct from his income for tax purposes?
Discount points
The Town of Petersville has just decided to restrict density in one area of town that previously allowed a higher density. This is known as ______.
Downzoning
Commander Halfback retires after 25 years of service in the Coast Guard. He is looking to buy a home. What type of loan should he use?
FHA, VA, or conventional
An unmarried couple have three young children. A seller's broker refuses to show them a house in a neighborhood where residents tend to be older, and no one else has children. Which protected class status applies?
Familial status
A farmer installed several pieces of farming equipment in and around the barn on the Fayetteville property he's leased for the past 12 years. Which of the following statements is true in this situation?
Farming equipment is considered an agricultural fixture. Once the farmer installed the equipment, it became real property, so it must remain with the property at the end of the lease.
The federal Fair Housing Act includes protections for people with disabilities. It requires multi-family buildings constructed for occupation after March 13, 1991 to have seven special features. Which of the following is one of those features?
Unit and internal doors that are usable by persons in wheelchairs
How long does the borrower have to pay private mortgage insurance?
Until the borrower reaches a 22% equity position
In contract law, undue influence differs from duress in that duress includes ______.
Use or threat of force
Damien and Sandy bought a lot with a condemned house. They want to tear it down and build a duplex, so that they can live on one side and rent out the other. Unfortunately, the property is zoned single-family residential. If they can make a case for economic hardship, what may they apply for and be granted?
Use variance
Which of the following terms means the price a property is worth to its owner as currently enjoyed?
Value in use
Sylvia, who's 15 years old, and her neighbor Marge, who's 24, sign an agreement that Sylvia will babysit Marge's toddler for the summer for $10 an hour. What type of contract is this?
Voidable
What's the relationship between TILA, RESPA, and TRID?
What's the relationship between TILA, RESPA, and TRID?
Which of these statements accurately describes finance- and housing-related legislation?
The Fair Housing Act of 1968 prohibited discrimination in the sale, rental, and financing of housing based on race, color, religion, or national origin.
Which of these is a TRUE statement regarding truth in advertising violation penalties?
The Federal Trade Commission determines the severity of the penalty based on the severity of the violation.
Tom and Martha live in a neighborhood where lawn ornaments are prohibited. They want to put up a nativity scene at Christmas and argue that the covenant doesn't apply to temporary decorations but only to permanent ones. Their homeowners association disagrees. Which entity enforces subdivision covenants?
The civil court system
Which one of these statements accurately represents one of the required elements in a deed?
The deed includes an act of conveyance.
Which of the following would NOT likely be a location issue of concern to buyers?
The house was built in 1985.
When a licensee is working with a property located near a Superfund site, what does that mean?
The licensee must disclose the existence of an environmental hazard in the area.
Shalonda is looking to purchase a home for $325,000 using a conventional loan. She has $49,000 to place as a down payment on the house. Which of the following statements is true?
The loan-to-value ratio exceeds 80%.
Which one of the following actions would result in the legal termination of an agency agreement?
The term specified in the agency agreement expired.
Two competing firms are found guilty of illegal market allocation. Which of the following scenarios must be true?
The two firms have agreed not to compete in one another's markets.
In order for her house to accommodate her inability to hear, Angela has made a request for the house to be equipped with a doorbell that also alerts occupants with a flashing light. Which statement is correct?
This is likely to be considered a reasonable accommodation, and Angela should be permitted to install it at her own expense.
When prices go down because there are too many homes on the market and too few buyers, what economic principle is at work?
Competition
Alice owned a double lot on the waterfront. She sold the lot to Ronesha and included a deed restriction prohibiting construction of any building taller than one story. Ronesha wants a three-story house. What should she do?
Conform to the deed restriction.
Which one of the following is true about ownership or title to a property?
Constructive notice to the public of real property ownership occurs when the deed is recorded.
Which of the following loans may require compliance with Appraiser Independence Requirements?
Conventional
Which one of these items around the fireplace could be a clue that there is a problem?
Cracked or sloping firebox or hearth
Josie sees a few blank fields on her loan document. Her lender tells her the document is okay to sign anyway. Josie should ________.
Cross through the blank fields
In a real estate transaction, which two parties are owed the same duties?
Customers and other parties
The Housing and Community Development Act of 1974 added which protected class to federal fair housing law?
Sex
Juan secures a fixed rate amortized 30-year loan for $295,000 at 4.25%. If his monthly P&I payment is $1,750, how much interest does he pay in the second month of the loan?
$1,042.29 (In the first month, Juan pays $1,044.79 in interest ([$295,000 x .0425] ÷ 12). His monthly payment (stated in the question) is $1,750, so that means he paid the principal down $705.21 ($1,750 - $1,044.79). His new principal balance is $294,294.79 ($295,000 - $705.21). We use the new principal balance amount to calculate interest for the next month. Juan pays $1,042.29 in interest ([$294,294.79 x .0425] ÷ 12).)
The Davises pay the annual property tax of $1,825 on their lake house every January. On a whim, they sell the lake house to the Bennets to buy a Winnebago and travel the country. Closing is set for July 31, and the buyers own the day of closing (pay prorated expenses through the day of closing). Using the calendar year proration method (assume that it's not a Leap year), how much of the pre-paid property tax was the Davises' responsibility?
$1,055 (The daily tax rate is $5 ($1,825 ÷ 365). The Davises owe taxes for January 1 through July 31 (212 days), minus the closing day (paid by buyers). Therefore, the Davises owe for 211 days, which is $1,055 ($5 x 211).)
Dale is purchasing a property that has an assessed value of $35,190. If the tax rate is 5%, what will he likely pay annually in property taxes?
$1,759.50
The Simpsons are buying the Martins' house for $415,000, and closing is set for March 15. The Martins have a loan balance of $230,000 at a rate of 4.7% and have prepaid property taxes ($2,506) and insurance ($1,400), and they also have mortgage interest to consider. Using a 365-day proration method, calculate the prorated amount the Simpsons will owe the Martins at closing. Assume February has 28 days this year. The sellers own the day of closing.
$1,997.62 (Calculate daily rates for taxes to be prorated: $2,506 ÷ 365 = $6.87. The Martins pay the first 74 days (January 1 through March 15): 74 x $6.87 = $508.38. $2,506 - $508.38 = $1,997.62 owed by the Simpsons. Homeowner's insurance isn't prorated between the buyer and seller. A homeowner's insurance policy is an agreement between the insurance company and the policyholder, so any refund due to the seller/homeowner will be handled between those two parties.)
Your client Faye is buying a condo downtown for $565,000 and financing 60% of the purchase. Her lender is charging a one-point loan origination fee and two discount points. Can you help Faye calculate the dollar amount for points she's going to pay on her loan?
$10,170 (A point is 1% of the loan amount. Faye's loan amount is 60% of the sales price, or $339,000 ($565,000 x 0.60). Her lender is charging three points total, or 3% of the loan amount. That comes out to $10,170 ($339,000 x 0.03).)
If Hal sold his client's listing for $230,000, but it appraised at $200,000 and the buyers agreed to put the extra $30,000 down, what will Hal's commission be if he charged 5%?
$11,500
A buyer with a 15-year, $250,000 loan at a fixed 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. What is the total amount of interest the borrower will pay over the course of the loan?
$117,687.80 (First, multiply the monthly payment ($2,042.71) by the total number of payments (180 = 12 payments/year for 15 years). The total paid back is $367,687.80. Then subtract the original loan value: $367,687.80 ‒ $250,000 = $117,687.80.)
Gabi owns one parcel measuring one square mile and another parcel measuring one mile by a half mile. She combined the parcels and sold them for $2.5 million. What price per acre did she receive for the land?
$2,604.17
Office space in a downtown high rise rents annually at $33.40 per square foot. Max's tenant client is interested in renting two adjacent suites: one is 7,152 s.f., and the second is 3,560 s.f. What's the monthly rental rate?
$29,815.07 (The combined monthly rental rate for the two suites is $29,815.07. The total square footage is 10,712 (7,152 + 3,560), so the annual rental amount is $357,780.80 (10,712 x $33.40). Divide that amount by 12 to get the monthly rental rate.)
Giant Industries has a $674,232 gross operating income, operating expenses of $329,129, and other expenses totaling $38,719. What is the net operating income?
$345,103 (The formula for finding net operating income is: gross income - operating expenses = net operating income. So, $674,232 - $329,129 = $345,103. Other expenses, like loan interest and debt repayment, aren't included in this calculation.)
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 (To find the total amount paid back, multiply the monthly payment ($2,042.71) by the total number of payments (180 = 12 payments/year x 15 years). The total paid back is $367,687.80.)
A borrower has a 30-year, $500,000 loan with an interest rate of 6.25%. His monthly principal and interest payment is $3,078.59. What's the total amount of interest he'll pay over the course of the loan?
$608,292.40
Phyllis bought a beach townhouse for $475,000 and put down $50,000 in earnest money. At closing, she paid $150,000, the balance of her intended down payment. The mortgage tax in the area is $.35 per $100 (or portion thereof). Calculate what Phyllis will pay for the mortgage tax.
$962.50 (A mortgage recording tax is based on the loan amount. Phyllis will pay a mortgage tax amount of $962.50 on her loan amount ($275,000 x .0035).)
The Smithwicks, your buyer clients, obtained a 90% loan on their new $400,000 home. At closing, they paid $6,150 for points at closing. How many points did they pay?
1.71
How many acres are in a parcel described as, "The S 1/2 NW 1/4 Section 3, Township 4N, Range 2W of the 6th PM"?
80 (This legal description defines half of a quarter section. A quarter section is 160 acres. Half of that is 80 acres. Alternatively, multiply the two fractions' denominators (2 × 4) and divide into 640 (640 ÷ 8 = 80).)
Margie needs to know the square footage for the first floor of the condo her client is interested in buying. The kitchen is 10 feet by 15 feet, the living/dining combo is 20 feet by 25 feet, and the office and bedroom are each 10 feet by 10 feet. What's the total square footage?
850 square feet
Jenna was surprised that the charming Tudor she was touring was still on the market. "I don't see anything bad on the disclosure," she told her agent, "and the price seems fine. Why do you think it hasn't sold?" Her agent Louise responded, "Well, I heard that UPS was opening a new air hub two miles away early next year." Why might this affect Jenna's or other buyers' interest in the property?
A UPS hub would mean many more flights overhead each day.
Your buyer, Billy, wants to make an offer on the craftsman house he saw today, but he wants the sellers to start the paperwork for a tax reassessment before closing. This isn't part of the standard sales contract in your area. What will you use to accomplish this request?
Addendum
Millie is a buyer who has given her agent an earnest money check for $10,000 with an offer to purchase. When will the check be deposited?
After the seller accepts the purchase offer
Li Meng purchased a property that had been owned by the same man for more than 40 years. The title search was clean. In the spring, she started seeing traffic on the path to her dock and discovered that the previous owner had always allowed the locals to use his path to get to the lake. What covenant may have been breached?
Against encumbrances
Marge is a licensee in a dual agency transaction with seller Steven and buyer Alda. In which of the following situations can Marge share what she knows with all parties without compromising her duty of loyalty?
Alda tells Marge that she's hired an inspector to perform a property inspection.
Johannes must obtain a permit for a construction project that is located right next to a wetlands. Which federal law or regulation requires him to get the permit?
Clean Water Act
Why did the implementation of TRID impact closing dates?
Certain financing changes may trigger a new three-day waiting period.
When appraisers look past how a property is being used to determine a more optimal function, what are they determining?
Highest and best use
Jason's having trouble paying his monthly rent. His landlord agrees to float him the rent for the next few months with 20% interest. The deal with his landlord is in violation of the state's usury law. Which of these statements must be true?
His state's personal loan interest rate cap is less than 20%.
Thad received multiple offers on his property and is reviewing them with his agent Nora. All of the offers have at least one contingency. Nora recommends that they reject the second offer, because it has a contingency that's generally the most risky. Which contingency is that?
Home sale
Identifying the purpose of the appraisal leads the appraiser to do what next?
Identify data needed.
Related to reasonable accommodation of being allowed to have an assistance animal, which statement is true?
If the disability for which the tenant is making the request is obvious, the landlord may not ask why it is needed.
Robert is the general contractor for a home being constructed in a new development. The foundation has been poured, and he's working with the homeowners to make some decisions that weren't identified in the blueprints he's working from. Which of the following details are guided by local building codes?
Number and type of electrical breakers
The Hendersons don't have enough money to make the full 20% down payment their institutional lender requires. To close the sale, the seller is willing to finance a loan for the amount between the home's list price and what the institutional lender is willing to loan. What's this type of financing called?
Purchase money mortgage
What's the best definition of real property?
Real estate, plus all of the interests, benefits, and rights included in ownership
Jayne was tired of waiting for her subcontractor to get his part of the deal done. The agreed-upon deadlines came and went, and Jayne lost money waiting for the subcontractor to come through. She decided that if the subcontractor weren't going to honor his commitments, neither was she, so Jayne consulted with her attorney and then terminated the contract. This is an example of ______.
Rescinding the contract unilaterally
Eleanor is moving from a starter home into something a little larger. Her agent has cautioned her against making the offer on the new place contingent on the sale of Eleanor's starter home. Why the caution?
Sellers would view an offer without that contingency as a stronger offer.
A buyer has received a Closing Disclosure from the lender. What's the purpose of this form?
To detail all costs the buyer will owe at closing
A buyer has signed an option agreement, which is an offer to purchase a specific piece of real estate without the obligation to buy it. Until the buyer exercises the option to buy, only the seller is bound by the option agreement; the seller may not sell the property to anyone else during the option period. What type of contract does this describe?
Unilateral
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.
Can a listing agreement be terminated without penalty?
Yes, with both the listing broker and the seller's agreement in writing
Kennedy tends to be rather informal about her real estate business. Her daughter's teacher, Matthew, tells Kennedy that he'd like her help selling his house. Kennedy agrees and tells Matthew she'll perform all the tasks she'd perform for any listing, though she has no written agency agreement with Matthew. Do Matthew and Kennedy have a legal agreement?
Yes. Express agreements may be verbal or written.