Real Estate - AYPO practice final exam

the current transfer tax rate in Michigan is...

$3.75 per $500 of the total property value

*a property was purchased for $350,000. Since then, the property has appreciated a total of $75,000 in value. the owner also built a $26,000 structure on the property. now the property is being sold and the seller owes transfer taxes. if the transfer tax rate is $10 for every $5,000 of the adjusted tax basis, how much does the seller owe in transfer taxes? (purchase price + improvement value + total accumulated appreciation adjusted tax basis)(adjusted tax basis x tax rate = transfer taxes)

$902

aside from race, ethnicity, religion, and national origin, the Elliot-Larsen civil rights act makes it illegal to discriminate against someone based on...

- age - weight - marital status

according to Michigan law, a licensed real estate agent who fails to respond to a citation issued by an employee of the department of licensing and regulations maybe be subject to...

- revocation of their license - denial of license renewal - censure

according to the Michigan landlord tenant relationship act, a tenant who, during the term of the lease, becomes incapable of living independently may terminate the lease by sending a 60-day notice to the landlord, so long as they have occupied the leased unit for at least...

13 months

*according to Michigan law, after receiving a complaint alleging a violation of the occupational code, within ___ the department of licensing and regulations will send a written acknowledgement that the complaint was received to the complainant

15 days

under normal circumstances, what is the maximum total-debt-income ratio that a borrower can have and still qualify for a FHA backed loan?

43%

according to Michigan law, how long is a pocket card be considered valid evidence that he is a licensed real estate salesperson?

45 days

*according to Michigan law, if a real estate broker is involved in the closing of a real estate transaction, they must provide the buyer and seller with...

a complete and detailed closing statement

discount points

a fee that reduces the interest rate on a mortgage loan

comprehensive long-range plan intended to guide growth and development of a community or region?

a master plan

a breach of contract that substantially lowers the value of the contract for the non-breaching party is considered to be...

a material breach

*what is a notice of Lis Pendens?

a notice alerts the public that the property is the subject of a lawsuit seeking foreclosure

the inclusion of what can limit the legal ambiguity regarding the amount of time each party has to meet the obligations of the contract?

a time is of the essence provision

what kind of contract is an option?

a unilateral contract

what must a veteran have in order to qualify for a home loan backed by the VA?

a valid certificate of eligibility

authority that has been knowingly conferred by a principal onto an agent is:

actual authority

property taxes are considered which type of taxes?

ad-valorem taxes

*according to Michigan law, a licensed real estate salesperson who is selling property they personally own in their own name is required to include what in the advertising they produce to promote the property?

affirmative indication that the person selling the property is a licensed real estate agent

*commissions paid to the brokerage must be taken out of the account

as soon as reasonably possible

in order for a deed to be legal, it must:

be recorded with the county clerk

*according to Michigan law, when two real estate salespersons who work for the same broker are operating as designated agents for both the seller and the buyer, when must the buyer and seller be informed that they are both being represented by the same real estate broker?

before an offer is made or presented

*a bilateral contract obligates _____ of the parties involved in a contract to carry out some kind of action

both

who reviews the form and content of the real estate exam?

both the department of licensing and regulations and the board of real estate brokers and salespersons

*if a real estate professional intentionally fails to disclose a conflict of interest to a party they are representing in a real estate transaction, the real estate professional could be accused of...

committing fraud

the legal processing involved in an eminent domain case is called:

condemnation

CC&Rs in real estate stands for:

covenants, conditions, and restrictions

*if the demand for a product remains relatively the same, what is the best way to increase the value of that product?

decrease the supply of that product

the federal act that forbids credit discrimination on the basis of race, color, nationality, sex, marital status, or use of public assistance is called the...

equal credit opportunity act

*a 72-hour clause is a specific kind of...

escape clause

a listing agreement that ensures the seller's broker will be paid for a sale regardless of how a buyer is procured would be know as:

exclusive right-to-sell

*a mortgage secured with a deed of trust is foreclosed upon through which process?

foreclosure by power of sale

*if the total cost of the loan is paid off in a set of scheduled payments across the term, the loan is...

fully amortized

*a property owner is considering "buying" discount points for a $65,000 second mortgage with a 30 year term. This will lower annual interest rates from 10.5% to 9.5%. Is the total cost of the second mortgage greater with the 10.5% annual interest rate or with the 9.5% rate and the added cost of the points?

greater total cost at 10.5% interest ($214,110)

*the major difference between an employee and an independent contractor is:

how much supervision the individual receives

*what does a jurisdiction clause do?

identify the state and county where any contract-related lawsuit will take place

the key factor in a the validity of an electronic signature is...

intent

*a ____ is a contractual agreement in which the buyer purchases property from a seller on an installment basis

land sale contract

*steps for creating a cooperative include all of the following except:

members file an "intent to form a cooperative" form with the county

*according to Michigan law, who should a real estate broker operating as a dual agent disclose all know information to?

neither the buyer or the seller

*does the real estate settlement procedures act allow the receiving of unearned fees for services not actually preformed?

no

*carol takes out a second mortgage on her house. what should the bank issuing the second mortgage do if they want to give their lien preferential weight over any other liens that may be imposed on carol's property?

perfect the lien from the second mortgage

material facts are:

pieces of information that a reasonable person would find important to a situation

multiple real estate brokerages est. an across-the-board 6% commission for their agents would be guilty of...

price fixing

*which type of easement allows access to another person's property, in addition to allowing the removal of material resources contained in the property?

profit

according to the regulations est. by the Michigan department of insurance and financial services in response to the passage of the Dodd-Frank and the SAFE act, in order to use a land contract to finance the purchase of a property, the person must be able to...

qualify for a traditional mortgage loan

equitable remedy

reformation

which of the following is NOT true about acceptance of a contract?

rejection of a counteroffer reinstates the previous offer

which right means that you own the land that borders a river?

riparian rights

what is the official legal term in Michigan for listing or buyer agency agreement that est. an agency relationship between a real estate broker and a client?

service provision agreement

*per the Americans with disabilities act, which is NOT a major life activity for determining whether an individual has a disability?

sitting

*for truth in advertising, the "reasonable basis" claim usually requires:

some kind of objective evidence

*what scope of authority foes a traditional real estate seller's agent have?

special authority

the federal law requiring that all real estate sales transactions be in writing is called the:

statute of frauds

*hazardous wastes general include such diverse materials as all of these except:

stormwater

*Olivia is a real estate agent. she is helping Vern sell a vacant building he owns. at one point Vern's building was used as a site for the production of illegal drugs. he has instructed Olivia to not talk about that situation. a few weeks after putting the property on the market, they meet with a potential buyer names Lloyd. during the meeting, Lloyd asks whether illegal drugs were produced in the building, what should Olivia do?

tell Lloyd she cannot talk about that

*when a commercial property owner hired a property manager to handle the businesses who rent space in the building, the property manager is acting as:

the agent for the owner

a fiduciary generally manages

the assets of another person

*what combines and replaces the final truth-in-lending disclosure and the HUD-1?

the closing disclosure

*which of the following is NOT a material fact related to the property's condition?

the existence of easements on the property

according to Michigan law, a property manager is required to maintain records of...

the funds that were deposited into and withdrawn from the property management accounts

*Paul is a real estate broker. one day he is trying to convince a potential client to hire hime to help her buy a house. despite his best efforts, she is still on the fence. to convince her, he tells her he has a deal with a local window company. if she hires him, he will get her a discount on new windows. convinced by this, she agrees to hire him. a few weeks later, during a conversation about the house search, she asks him what kind of discount she can expect on the windows. he tells her not to worry about that. he won't speak to the window company until after the complete the purchase of a house. what is wrong with this situation?

the offer Paul used to induce the client to hire him was deceptive

*an offer is only considered accepted if...

the party receiving the offer agrees to the exact terms stated in the offer

according to the Michigan real estate transfer tax act, who pays the transfer tax when a property is sold to a new owner?

the person who sold the property

*what is the purpose of a promissory note in a real estate mortgage agreement?

the promissory note is what requires the borrower to repay the loan

under an open listing agreement, who receives the commission payment from the seller?

the real estate agent who brings a buyer willing to purchase the property

*according to Michigan law, who can a real estate salesperson accept a commission payment from?

the real estate broker they work for

the truth-in-lending act grants an individual the right of rescission. what is the right of rescission?

the right to stop the loan est. process

how can a short sale be advantageous for a lender?

the short sale pays off some of the debt and avoids the extra costs associated with foreclosure processdings

*property taxes are collected by:

the state and local government

*a real estate agent walked through a client's house. he noted 4 things: side yard is not maintained, lock on back door doesn't effectively latch, support beams in the basement are discolored and has some cracks, and some of the linoleum tiles in the kitchen are loose. Which of these items should he suggest to be professionally inspected?

the support beams in the basement

under the triple net lease, who pays for the property insurance?

the tenant

what is the primary purpose of regular reconciliation on clients' trust accounts?

to catch problems when they are small

what is the purpose of a title search?

to discover clouds on the title

*what is the purpose of awarding expectation damages as a remedy for a breach of contract?

to provide the non-breaching party with monetary benefits that would have been received had the contract been fully preformed

what is the purpose of mortgage insurance

to reimburse a lender should a borrower default on a mortgage loan

*what is the ANSI term for areas that are not fit for year round use?

unfinished areas

*what is not a common defense against a claim of breach of contract?

unilateral mistake

what type of agency is likely in a power of attorney arrangement?

universal

what type of agent carries the broadest authority in a principal-agent relationship?

universal agent

if the performance of a contract is unlawful, the contract lacks...

valid legal purpose

a real estate contract with someone deemed by the courts to be mentally "incompetent", would be...

voidable

the main feature of a ____ is that the grantor guarantees that the title has no defects or clouds on it

warranty deed

*Fred decides to sell his property to his neighbor Carol. if the sale price is set at $726,000, should a state licensed appraiser be called in to do an official appraisal of the property?

yes

*is the sale of a housing unit in a two-family dwelling by the owner of that dwelling exempt from the provisions of the Elliot-Larsen civil rights act?

yes, if the housing unit was never listed or publicly advertised for sale

*in Michigan, is a real estate license required to negotiate for the construction of a building on a piece of real property?

yes, if the person doing the negotiating expects to be compensated for their efforts