RE Exam 2
Which of the following is NOT essential to the validity of a deed? A. Name and signature of the grantor B. Signature of the grantee C. Words of conveyance D. Property description
CORRECT ANSWER IS: B A deed must include the following: the names of the parties; words of conveyance and a property description. The grantor (seller) MUST sign the deed, but the signature of the grantee, the person receiving the deed is NOT required.
Under the rules for traditional and Roth Individual Retirement Accounts, which of the following represents the most correct definition of a person eligible to make a "first time buyer´s" early withdrawal? A. A person who has never previously owned a personal residence. B. A person who has not owned a personal residence for the previous 2 years. C. A person who has not owned a personal residence for the previous 5 years. D. A person who has not owned a personal residence for the previous 10 years.
CORRECT ANSWER IS: B A person who has not owned a personal residence for the previous 2 years would be considered a "first time buyer" under the IRA rules.
Which of the following is the most common method of enforcing a restrictive covenant? A. Eminent domain B. Injunction C. Attachment D. Escheat
CORRECT ANSWER IS: B An injunction is a court order issued to restrain a person from doing a particular thing such as an act prohibited in a restrictive covenant of a deed. The court action is generally instigated by neighbors of the violator.
A buyer makes an offer to purchase a piece of property. The seller changes the date of occupancy by one day, and signs the contract. If the purchaser does not agree with this change, which of the following is true? A. The buyer only has 72 hours to accept a change of this type B. The purchaser has no further liability C. The seller and purchaser could both sue for specific performance D. The seller may keep the deposit as liquidated damages
CORRECT ANSWER IS: B Any change, regardless of how minor, must be approved by both parties. In this instance, the buyer would be relieved of any obligation.
An owner of a building in a historic preservation district has applied with the Historic Preservation Commission to remodel the exterior of the building. The Commission denies the request. The owner can appeal the decision to: A. The Zoning Appeals Board. B. The court system. C. Either the Zoning Appeals Board or the court system. D. Neither the Zoning Appeals Board nor the court system.
CORRECT ANSWER IS: B Appeals to a decision by a Historic Preservation Commission are made to the court system.
Mr. Foster signed a 60 day exclusive right-to-sell listing with broker Roy. One week later, Foster signed an exclusive agency listing with broker Gray who sold the home a few days later. Which of the following statements is correct? A. Foster may pay Roy only. B. Foster owes two full commissions. C. Foster must pay Roy only and Roy will split the fee with Gray. D. Foster should give one half the commission each to Roy and Gray.
CORRECT ANSWER IS: B By giving an exclusive type listing to two different brokers, Foster has promised each a commission if anyone, other than the owner (Foster) sells the property. Mr. Foster, therefore owes each a full commission.
Which statement is most correct regarding the compensation arrangements between a broker/agent and a client/principal? A. Compensation rates are set by state regulations. B. Compensation rates are negotiable between the client and the broker. C. Compensation rates may not vary between firms. D. Compensation rates are set by the local MLS.
CORRECT ANSWER IS: B By law, compensation rates are negotiable between the broker and the client.
Under New York law, the purchaser of a newly-constructed home would have a warranty of how long for protection against faulty installation of plumbing, electrical or HVAC components? A. One year. B. Two years. C. Six years. D. Ten years.
CORRECT ANSWER IS: B Faulty installation of plumbing, electrical or HVAC components is covered for two years.
There are three owners of a property. They own 10%, 20% and 70% respectively. What type of ownership do they have? A. Joint tenancy B. Tenancy in common C. Tenancy by the entireties D. Ownership in severalty
CORRECT ANSWER IS: B For joint tenancy, each tenant must have an identical interest in the property (unity of interest). Under tenancy in common, each owner may have a different percentage of interest. Tenancy by the entireties is reserved ONLY for husband and wife and severalty applies to only one person.
The market rent for a specific property is generally determined by: A. Examining the existing rental contracts. B. Conducting a rent survey. C. References to public records. D. Use of a gross rent multiplier.
CORRECT ANSWER IS: B Market (economic) rent is usually determined by doing a rent survey, which involves calling owners or managers of similar properties to determine what rental rates they are currently charging.
To qualify as an independent contractor under New York law, the individual licensee and the broker must have a written employment contract that was signed within the past: A. 12 months. B. 15 months. C. 18 months. D. 24 months.
CORRECT ANSWER IS: B New York law requires independent contractors to have a written employment contract that was signed within the past 15 months. There is a common practice of signing the contract every 12 months, but the law says at least 15 months.
The interest a unit-owner holds in a co-op is considered: A. Real property. B. Personal property only. C. Both real and personal property. D. Neither real nor personal property.
CORRECT ANSWER IS: B Owners of co-op units own share of stock in the corporation, which is personal property.
According to the Federal Fair Housing Act of 1968, as amended, which of the following is NOT considered to be handicapped? A. A person confined to a wheel chair B. A person addicted to a controlled substance C. Someone suffering from a mental illness D. A person who, by their actions, is believed to be insane
CORRECT ANSWER IS: B Past drug use is a disability, but current drug use is excluded.
Which of the following would be considered a general agent: A. A real estate licensee who has a listing to sell a property. B. A real estate licensee who has a contract to manage a property. C. A firm which is hired to represent a professional athlete. D. A conservator appointed by a court to represent a mentally incompetent person.
CORRECT ANSWER IS: B Property managers are usually considered general agents, since they have many responsibilities and duties with regard to the managed property.
Which of the following statements is correct regarding the basic STAR property tax exemption: A. It exempts the first $60,000 of assessed value for owner-occupied residences without regard to income. B. It exempts the first $30,000 of assessed value for owner-occupied residences whose owners earn less than $500,000. C. It exempts the first $60,000 of assessed value for owner-occupied residences whose owners earn less than $500,000. D. It exempts the first $30,000 of assessed value for owner-occupied residences whose owners earn less than $200,000.
CORRECT ANSWER IS: B The basic STAR property tax exemption exempts the first $30,000 of assessed value for owner-occupied residences whose owners earn less than $500,000.
If a mechanic's lien is not enforced within the statutory period of time, which of the following occurs? A. The lien is foreclosed B. The lien expires C. The lien is withdrawn D. The court will order attachment
CORRECT ANSWER IS: B The lien will expire. The statutory period for expiration varies from state to state.
An agreement between two or more firms to focus their marketing efforts in different areas so as not to compete with each other would be an example of: A. A strategic business alliance. B. A market allocation agreement. C. A tie-in arrangement. D. A group boycott.
CORRECT ANSWER IS: B The question describes the illegal practice of market allocation.
A broker decides to lower the prices of her listings after the properties have been on the market for 120 days. She finds that more buyers are now calling on these listings. Which of the following is true about such a practice? A. She can do this only with the local Association of REALTORS® approval. B. She can do this only with the owner´s approval. C. She can do this only after informing all previous prospective buyers. D. This is an excellent marketing technique.
CORRECT ANSWER IS: B This may or may not be a very good marketing technique, but only the owner of a property can authorize the broker to lower the price on a listed property.
Under the customary listing agreement, the broker, as the agent for the seller, can: A. Accept or reject offers for the seller. B. Place a "For Sale" sign on the property. C. Deposit earnest money in the broker's personal account. D. Advertise the property at a price lower than the listed price.
CORRECT ANSWER IS: B Under the usual listing agreement, the broker can place a 'For Sale' sign on the property. The other answer choices are beyond the authority granted to the broker in most listing agreements.
If capitalization rates increase, commercial property values will: A. Increase. B. Decrease. C. Be unaffected. D. Fluctuate randomly.
CORRECT ANSWER IS: B When capitalization rates increase, values decrease.
The Real Estate Settlement Procedures Act (RESPA) requires lending institutions to provide Loan Estimate: A. When the loan application is submitted. B. Within 3 business days of loan application. C. Three days prior to closing. D. Within 10 days of loan application.
CORRECT ANSWER IS: B While in practice the good faith estimate is often presented when the application is completed, the law requires that it be issued within 3 business days of receipt of the application.
What is the area of a lot that measures 120' by 164'? A. 196 sq. ft. B. 1,968 sq. ft. C. 19,680 sq. ft. D. 21,600 sq. ft.
CORRECT ANSWER IS: C 164' X 120' = 19,680 sq. ft.
Salesperson Sam has a listing on a home and is aware of the fact that the seller is not a U.S. citizen or resident. Nonetheless, he assists the seller in preparing a "Certificate of Non-Foreign Status" so as to help the seller avoid the withholding required under the Foreign Investment in Real Property Tax Act (FIRPTA). What penalty, if any, is Salesperson Sam subject to for this violation? A. None, since only the seller signs it. B. A $10,000 fine and up to five years in jail. C. A payment to the IRS for 10% of the purchase price of the property. D. A $1,000 fine and up to one year in jail.
CORRECT ANSWER IS: C A licensee who knowingly assists in circumventing FIRPTA may be required to pay 10% of the purchase price of the property to the IRS.
When a clause is included in a 1st mortgage, requiring it to assume a lower lien priority position, it is called: A. An estoppel clause B. An acceleration clause C. A subordination clause D. A participation clause
CORRECT ANSWER IS: C A subordination clause states the rights of the mortgagee shall be secondary (subordinate) to a subsequent mortgage.
All of the following would be considered an involuntary alienation of property EXCEPT: A. Foreclosure B. Eminent domain C. Devise D. Adverse possession
CORRECT ANSWER IS: C Alienation means to give up property. A devise is a gift of real property through a will, which is a voluntary act. Foreclosure, when the bank takes over the property and eminent domain, when the government takes over the property, are involuntary. Adverse possession can only come about WITHOUT the true owner's permission.
Casper is planning to sell his house and desires the broadest possible exposure. He gives Bert an exclusive right-to-sell listing, Gail an exclusive agency listing and Mark an open listing. Mark sells the house. Under these circumstances, which of the following statements is true? A. Mark must split his commission with Bert and Gail. B. Casper owes two commissions, one to Mark and one to Bert and Gail to be split between them. C. Casper owes 3 commissions. D. Mark is the only one who will receive a commission.
CORRECT ANSWER IS: C Bert's listing means that regardless of who sells the property, Bert will get a commission. Gail's listing means that if anyone, other than the owner, sells the property, she will get a commission. Mark's listing means that if he sells the property he gets a commission. Casper therefore, is obligated to pay 3 full commissions.
If an advertisement is found to be discriminatory, which of the following may be found to be in violation of the Fair Housing Act: A. The advertiser only. B. The publisher only. C. Both the advertiser and the publisher. D. Neither the advertiser nor the publisher.
CORRECT ANSWER IS: C Both publishers and advertisers can be found to be in violation of the advertising requirements of the Fair Housing Act.
Why is an investment in commercial property often called a tax shelter? A. Rental income is not considered taxable. B. Commercial properties always show a loss for tax purposes. C. Many commercial properties will generate a positive cash flow while showing a loss (or much lower taxable income) for tax purposes. D. No income is reported on commercial property until the property is sold.
CORRECT ANSWER IS: C Commercial properties are often considered a tax shelter because even while they may generate a positive cash flow they may still show a loss, or at least much lower taxable income.
When a mortgage loan is repaid, what document must the lender record to remove the lien on the property? A. Grant deed; B. Reconveyance deed; C. Satisfaction of mortgage; D. Mortgage release.
CORRECT ANSWER IS: C Once the loan is repaid, the lender will record a satisfaction of mortgage to release the lien on the property.
A property owner can purchase insurance which covers: A. Both static and dynamic risk. B. Dynamic risk only. C. Static risk only. D. Neither static nor dynamic risk.
CORRECT ANSWER IS: C Property owners can purchase casualty insurance to cover static risks, such as the risk of fire or vandalism, but not to cover dynamic risk, which would be losses caused by economic changes.
What type of tenant would be most likely to have a straight percentage lease, where there is no minimum rent required? A. Large appliance stores. B. Convenience stores. C. Anchor tenants in malls. D. Specialty stores.
CORRECT ANSWER IS: C Straight percentage leases are rare, but anchor tenants in malls can sometimes negotiate that provision with the owner.
A New York resident has both a real estate broker's license and an insurance license. The New York Department of State could suspend or revoke the broker's license in which of the following circumstances: A. Untrustworthy or incompetent conduct only in the real estate business. B. Untrustworthy or incompetent conduct only in the insurance business. C. Untrustworthy or incompetent conduct in either the real estate business or the insurance business. D. Untrustworthy or incompetent conduct in neither the real estate business nor the insurance business.
CORRECT ANSWER IS: C The DOS can revoke or suspend a real estate license if the licensee exhibits untrustworthy or incompetent conduct in any area of business practice, not just in the area of real estate practice. In some cases even personal behavior can have this result as well, such as when a licensee is convicted of a felony.
Which of the following statements regarding the qualifications required to become licensed as a mortgage banker in New York State is INCORRECT: A. The minimum net worth requirement is $250,000; B. Applicants must be able to show a line of credit of at least $1,000,000; C. The minimum surety bond required is $500,000 for new applicants; D. The applicant is generally expected to have at least 5 years of verifiable experience in the residential mortgage lending business.
CORRECT ANSWER IS: C The FALSE statement is that the minimum surety bond for a new applicant would be $500,000. The minimum surety bond required for a new mortgage banker application would be $50,000. Surety bond requirements can later become as high as $500,000 based on loan volume.
Which of the following clauses would prevent a mortgage from being assumed by a subsequent buyer? A. Condemnation clause; B. Defeasance clause; C. Due-on-sale clause; D. Right of first refusal clause.
CORRECT ANSWER IS: C The due-on-sale clause, legally referred to as the alienation clause, allows the lender to demand immediate payment of the entire debt if the title to the property is transferred (sold). This would prevent an assumption without lender approval.
What is subtracted from the potential gross income to arrive at the effective gross income? A. Collection losses only. B. Vacancy losses only. C. Both collection losses and vacancy losses. D. Collection losses, vacancy losses and operating expenses.
CORRECT ANSWER IS: C The effective gross income is the potential gross income less both the vacancy losses and collection losses.
Fred and Ethel are married and file joint tax returns. In the year 2000, they purchased a personal residence for $200,000. They lived in the home until 2007, when they sold the home for $700,000. What tax treatment did the gain on sale receive? A. It was taxed as ordinary income. B. There was $200,000 of taxable capital gains. C. There was no tax liability resulting from this sale. D. There was $500,000 of taxable capital gains.
CORRECT ANSWER IS: C The gain on sale was $500,000 ($700,000 less the cost of $200,000). Since Fred and Ethel are married and file a joint tax return, and they have lived in the house for 7 years, the entire capital gain is tax free.
The document that commits the board of directors to notify the lender of a default on the lease payments by the unit owner / shareholder is the: A. Alteration agreement. B. Cooperation agreement. C. Recognition agreement. D. Collateral agreement.
CORRECT ANSWER IS: C The recognition agreement is signed by the borrower, the lender and the board of directors. Among other things, it commits the board to disclose any defaults on the lease payments by the borrower to the lender.
Broker Bob creates the Real Estate Discount Broker firm. Instead of charging a percentage commission, the firm charges a low flat upfront fee which is non-refundable. The firm will assist the seller in preparing the paperwork, but will not show the property or conduct the price negotiations. Which of the following statements is correct about this firm and its practices? A. The flat fee is permissible, but it cannot be paid up front. B. The flat fee is permissible, but it cannot be non-refundable if the property is not sold. C. The flat fee is permissible, but there will be a percentage commission paid to cooperating brokers if the property is to be listed on the MLS. D. Flat fees are not permissible.
CORRECT ANSWER IS: C The upfront flat fee compensation arrangement is permissible. As a practical matter, broker cooperation through the MLS would only be possible if there was a percentage commission payable to cooperating brokers.
When an agent deals with a third party while representing the principal, the third party is considered a(n): A. Principal. B. Client. C. Customer. D. Consumer.
CORRECT ANSWER IS: C Third parties are considered customers.
Nate rents a vacant lot from Zach for 30 years. Nate plans to erect a building on the land at his own expense. This type of lease is a: A. Net lease B. Gross lease C. Ground lease D. Sale and lease back
CORRECT ANSWER IS: C This is a text book example of a ground lease. Nate will pay rent for the use of the land for the term of the lease (30 years). Any improvements made may be used by the tenant, but are the property of the landlord.
Prospective buyers discuss their housing needs with a sales agent. The agent discusses certain property, but avoids talking about houses located in a specific area. Such action is known as: A. Redlining B. Compromise C. Steering D. Blockbusting
CORRECT ANSWER IS: C This is steering. Directing people towards or away from specific areas of a community is steering.
To find the value of real property using the Income approach, which of the following would be divided by the capitalization rate? A. Gross income B. Effective gross income C. Net operating income D. Potential gross income
CORRECT ANSWER IS: C To find the value of the property, the appraiser would divide the net operating income by the capitalization rate.
Which of the following fiduciary obligations to a principal cannot be provided in a dual agency relationship? A. Duty to account. B. Confidentiality. C. Reasonable skill and care. D. Undivided loyalty.
CORRECT ANSWER IS: D A dual agent cannot provide undivided loyalty to both principals at the same time.
Which of the following would be classified as a fixture? A. Pond B. Pasture C. Diesel tractor D. Rail fence
CORRECT ANSWER IS: D A fixture is an item of real property that previously was personal property. The fence was personal property before erected and when set in the ground, became real property.
A person who owns a fee simple estate may be subject to which of the following controls? A. Zoning and building codes B. Restrictive covenants and subdivision restrictions C. Escheat D. All of the above
CORRECT ANSWER IS: D All of these are restrictions on private property. Zoning, building codes and escheat are rights of the government. Restrictive covenants and subdivision restrictions are usually private in nature. Even though you own the property in fee simple you are subject to all of the restrictions listed.
Under New York real estate law, an unlicensed assistant may be compensated in each of the following ways, EXCEPT: A. May be paid directly by the salesperson. B. May be paid directly by the broker. C. May be paid at an hourly or salaried rate. D. May be paid a stated amount for each transaction closed by the licensed salesperson.
CORRECT ANSWER IS: D An unlicensed assistant cannot receive compensation based on closed transactions (or gross commissions) unless the assistant is fully licensed
Which of the following types of developments can be structured as a condominium? A. Residential. B. Commercial. C. Industrial. D. Any of these choices.
CORRECT ANSWER IS: D Condominiums are usually residential properties, but commercial and industrial properties can also be condominiums.
Risk factors for exposure to asbestos vary according to: A. Dosage. B. Duration. C. Type of exposure. D. All of these choices.
CORRECT ANSWER IS: D Each of the listed choices is a risk factor that influences the likelihood of adverse impacts from the exposure to asbestos.
Which type of heating system often has both the lowest installation costs and the highest operational costs: A. Hydronic. B. Steam. C. Forced air. D. Electrical.
CORRECT ANSWER IS: D Electrical heating systems typically have the lowest installation costs and the highest operating costs.
A buyer is eligible for and applies for a VA loan to purchase a home. The buyer has offered $210,000 for the home, but the VA appraised value has come in at $200,000. Assuming the seller is not willing to reduce the price, how may the buyer proceed to purchase the home: A. Under no circumstances; B. Without restriction, since the appraised value is within the 5% tolerance factor; C. Without restriction, since the appraised value is within the 10% tolerance factor; D. Only if the buyer pays the $10,000 difference in cash.
CORRECT ANSWER IS: D If the purchase price exceeds the appraised value (the CRV), the buyer would have to pay the difference in cash. (There is no such thing as a tolerance factor for VA appraisals.)
Which of the following statements most accurately states the requirements to qualify for the capital gains exclusion treatment on the sale of a personal residence? A. The taxpayer(s) must have lived in the home for the past two years. B. The taxpayer(s) must have lived in the home for the past five years. C. The taxpayer(s) must never have been used as a rental property. D. The taxpayer(s) must have lived in the home for two of the previous five years.
CORRECT ANSWER IS: D In order to qualify for the $250,000/$500,000 exclusion from capital gains tax on the sale of a home, the taxpayer(s) must have lived in the home for two of the previous five years.
If an optionee does NOT exercise his option rights during the option period, which of the following would occur? A. The optionee can ask for a return of any consideration paid B. The optionee can be sued by the optionor C. The optionor can be sued by the optionee D. The optionee gives up the consideration paid for the option right
CORRECT ANSWER IS: D Of the above choices, only the loss of consideration (option fee) would occur if an option was not exercised.
Which type of retail development would be most likely to be located outside of major urban areas? A. Strip centers. B. Neighborhood centers. C. Shopping malls. D. Outlet centers.
CORRECT ANSWER IS: D Outlet centers are extra cost conscious and are often located outside of major urban areas.
Sally is a salesperson who works for Acme Real Estate, a licensed real estate broker. Sally is involved in collecting rents from several properties managed by Acme. What real estate license, if any, does Sally need. A. Sally needs a brokers license. B. Sally needs a property management license. C. Sally needs no license. D. Sally needs at least a salespersons license.
CORRECT ANSWER IS: D Sally needs a salespersons license.
What document should a qualified veteran get to document his or her ability to qualify for a VA loan: A. A Certificate of Occupancy; B. A Certificate of Honorable Discharge; C. A Certificate of Reasonable Value; D. A Certificate of Eligibility.
CORRECT ANSWER IS: D The Certificate of Eligibility will document the veteran's eligibility for a VA loan.
If the ORPTS issues a report that says the Residential Assessment Ratio for Anytown, New York is 0.75, what can you conclude from that information? A. Anytown has only assessed 75% of the residences in its jurisdiction. B. The typical market value of residential properties in Anytown is only 75% of the assessed value. C. Only 75% of the residences in Anytown are assessed for their full market value. D. Anytown's assessed values are likely to be about 75% of market value.
CORRECT ANSWER IS: D The RAR of 0.75 indicates that assessed values are running about 75% of market value.
The primary purpose of the Truth in Lending Act is to: A. Limit the cost of credit to consumers; B. Provide equal access to credit for all persons; C. Permit consumers to dispute information in their credit reports; D. Provide meaningful disclosure of the cost of credit, in percentage terms.
CORRECT ANSWER IS: D The Truth in Lending Act was designed to provide meaningful disclosure of the costs of credit in percentage terms, primarily through the disclosure of the Annual Percentage Rate (APR).
Which of the following statements about property tax rates in the State of New York is true: A. Property tax rates are uniform throughout New York State. B. Property tax rates are only adjusted once every decade. C. Property tax rates are set by the State Legislature. D. Municipalities and other government agencies, such as school districts, play a role in setting property tax rates.
CORRECT ANSWER IS: D The only true statements is that often municipalities share property tax revenues with other governmental agencies, such as school districts.
When computing a property´s potential gross income, what vacancy rate will be assumed? A. 10%. B. 5%. C. 2%. D. 0%.
CORRECT ANSWER IS: D The potential gross income represents the maximum income the property could possibly generate, so it would assume a 100% occupancy rate and a 0% vacancy rate.
When the city wishes to take title to property for public improvements, title may be acquired from an unwilling owner through the right of: A. Adverse possession B. Police power C. Dedication D. Eminent domain
CORRECT ANSWER IS: D The right of eminent domain applies here. It is one of the four rights that the government withholds from private owners. The others are police power, taxation and escheat.
Each of the following transactions would be exempt from the New York State Human Rights Law, EXCEPT: A. Rental of an apartment in an owner-occupied two-family house. B. Restrictions of all rooms in a housing accommodation to individuals of the same sex. C. Rental of a room by the occupant of a house or apartment. D. Sale of a single family residence by a person who owns only one such property.
CORRECT ANSWER IS: D There is no exception for the sale of a single family residence, such as there is under the Fair Housing Act of 1968.
Adeline, Brian, Chris, and David intend to buy some real property together as follows: Adeline contributes $11,000; Brian, $10,000; Chris, $5,000 and David, $6,000. Each desires to protect their heirs' rights of inheritance. How can they take title to the property? A. Joint tenancy B. Severalty C. Tenancy by the entireties D. Tenancy in common
CORRECT ANSWER IS: D This is not a matter of choice, they can ONLY take title as tenants in common. Joint tenancy requires that each owner hold the same percentage of interest. Obviously they cannot be husband and wife, so entireties is out and because there is more than one, severalty is not an option.
A simultaneous dual closing would be an example of: A. Flipping. B. Air loans. C. Steering. D. Intermediation.
CORRECT ANSWER IS: A A simultaneous dual closing would be where a person buys a property in one closing and sells it to someone else in a back-to-back closing. It is an extreme case of flipping.
What is the key factor in determining whether an operating expense is a fixed or variable expense? A. Whether the expense would be affected by varying vacancy or occupancy levels. B. Whether the expense is deductible for tax purposes. C. Whether the expense routinely exceeds 10% of effective gross income. D. Whether different levels of expenditures would be likely to affect the vacancy factor.
CORRECT ANSWER IS: A Fixed expenses will not vary according occupancy (or vacancy) levels. Fixed expenses include only the property taxes and the casualty insurance. The other operating expenses (management, maintenance and utilities) would vary according to occupancy levels.
If two commercial properties are appraised on the same day by the same appraiser, and the appraiser uses a higher capitalization rate for one property than another, what would most likely explain the reason for the different capitalization rates? A. Different risk factors. B. Different interest rates on the mortgage loans. C. Different rental rates for the properties. D. Appraiser bias.
CORRECT ANSWER IS: A If appraisals are done at the same time, interest rates would not explain the different cap rates. The difference would most likely be explained by different risk factors. (Mortgage costs are not considered for appraisal purposes, so the different mortgage rates would not affect the cap rates.)
The labor costs incurred when building a house are considered: A. Direct costs. B. Indirect costs. C. Incidental costs. D. Indeterminate costs.
CORRECT ANSWER IS: A Labor (and material) costs are considered direct costs of construction.
The use of leverage in an investment relates most closely to: A. The use of borrowed money. B. The use of political influence. C. The receipt of government subsidies. D. Construction techniques.
CORRECT ANSWER IS: A Leverage is the use of borrowed money in an investment.
Which of the following types of water piping is most commonly used in the interior of a house: A. Copper. B. Cast Iron. C. Brass. D. Steel.
CORRECT ANSWER IS: A Of the given choices, copper is the most common type of water piping.
Which of the following individuals could NOT file a mechanic's lien? A. A contractor supplying tools to a gas station B. A contractor supplying lumber to build a shopping center C. A laborer who digs the foundations for the construction of homes D. A plumbing supply company which furnishes sinks and toilets for an apartment house
CORRECT ANSWER IS: A Only those who furnish materials to improve real property or those who work to improve the real property belonging to another, may file mechanic's liens. Tools are personal property.
Carol has had her New York real estate salesperson´s license for almost two years. Several months ago, she completed the 45-hour course necessary for her to qualify for the broker´s examination, but she has not yet taken her broker's examination or applied for the broker´s license. If she were to renew her salesperson´s license, what affect might that 45-hour course have on her continuing education requirements for the renewal: A. She could use the 45-hour course to meet her renewal requirement for the current renewal, but not for future renewals. B. She could use the 45-hour course to meet this renewal and the next renewal of her salesperson´s license. C. There would be no effect. She would need to take the required continuing education courses in order to renew the license. D. She would be exempt from the continuing education requirements for the next three renewals.
CORRECT ANSWER IS: A Salespersons who take the 45 hour broker qualification course can use that course to meet their next renewal, but not for any subsequent renewals.
Which type of property insurance policy is the most basic type of policy: A. (HO)-1. B. (HO)-2. C. (HO)-3. D. (HO)-4.
CORRECT ANSWER IS: A The (HO)-1 policy is the most basic policy, but few insurance companies offer it any more.
Sally is an amateur photographer and has some expensive cameras which she keeps in her house. If she is concerned that her homeowner´s insurance policy would not cover the cost of all her cameras, she should consider the purchase of: A. A personal property floater. B. An (HO)-5 policy. C. A hobby addendum. D. An umbrella policy.
CORRECT ANSWER IS: A The best choice is to purchase a personal property floater, which is a separate policy to insure the personal property, which in this case is the camera equipment.
The sheet metal used in the valleys of a roof to prevent leaks is called: A. Flashing. B. Grating. C. Inhibitors. D. Gutters.
CORRECT ANSWER IS: A The question describes flashing.
A New York homeowner is delinquent on his property taxes and is facing a tax sale. The homeowner has the right to stop the sale by paying the back taxes and penalties at any time prior to the date of the sale. This right is called the: A. Equitable right of redemption. B. Statutory right of redemption. C. Mandatory right of redemption. D. Traditional right of redemption.
CORRECT ANSWER IS: A The question describes the equitable right of redemption, which exists prior to the date of the sale.
While there are many important facets of residential property management, probably the most important aspect is: A. The selection and screening of tenants. B. Proper maintenance procedures. C. Proper management reports. D. Market analysis.
CORRECT ANSWER IS: A The selection and screening of tenants is probably the most important facet of residential property management.