Set #6

B) contractual relationship. Privity refers to the mutual interest in the same property.

"Privity" would most likely exist in A) taxation. B) contractual relationship. C) agency. D) torts.

45 days

A Change of Ownership Statement must be filed with the county recorder or county tax assessor at the time of recording, or if the transfer is not recorded, within _____ of the change of ownership.

C) the broker could be subject to disciplinary action by the Bureau of Real Estate.

A certain piece of property was sold through a licensed real estate broker. The seller and the broker were aware of a hidden defect in the property, but neither the broker not the seller disclosed this information to the buyer. After the buyer purchased the property, he suffered a financial loss resulting from the undisclosed defect. If the buyer were to take legal action for the loss A) the seller would be the only one liable since he was the only one that was obligated to disclose the defect. B) a standard form title insurance policy would protect the seller. C) the broker could be subject to disciplinary action by the Bureau of Real Estate. D) the courts would rule that the buyer was negligent as it was his responsibility to inspect the property and discover the defect.

D) high amount of equity.

A low loan-to-value ratio indicates a A) high-risk loan. B) government-insured loan. C) small amount of equity. D) high amount of equity.

B) liable for damages to the principal as a result.

A real estate broker, as an agent, must follow the lawful instructions of his principal in a real estate transaction. Failing to do so, the broker is A) subject to loss of license in a court of jurisdiction. B) liable for damages to the principal as a result. C) any of these. D) subject to a fine or imprisonment according to the law.

C) does not require conveyance of title within one year from date of formation of the contract.

A real property sales contract is defined as an agreement wherein one party agrees to convey title to another party upon the satisfaction of specified conditions set forth in the contract and that A) is not required to be in writing if contract period is for one year or less. B) must be recorded to be enforceable. C) does not require conveyance of title within one year from date of formation of the contract. D) must be acknowledged by both buyer and seller to be eligible for recording.

B) Lower his capital gains

A seller paid 7 points, which amounted to $1,400 to enable a buyer to purchase his or her home and secure new financing. How would this be treated for income tax purposes? A) This is a service charge and is not deductible. B) Lower his capital gains C) Deductible as an interest expense D) Same as a prepayment penalty

A) offset statement.

A statement provided by the payor on a promissory note that would list payments, term period of the note, principal balance, interest, et cetera is called A) offset statement. B) request for partial reconveyance. C) beneficiary statement. D) release clause.

A) 20 acres

A subdivider is developing a 70-lot subdivision in Illinois which he intends to sell through the mail over the entire United States. How large would each of the lots have to be before the sale would be exempt from control under the Interstate Land Sales Full Disclosure Act? A) 20 acres B) 4 acres C) 1 acre D) 2 acres

B) a leased fee, which is not subject to a mortgage indebtedness or other liens, has no involuntary encumbrances.

All of these statements concerning the lease of a home are correct EXCEPT A) without a written memorandum or lease, the rental is presumed to be on a month-to-month tenancy. B) a leased fee, which is not subject to a mortgage indebtedness or other liens, has no involuntary encumbrances. C) a written lease cannot be altered in its executory provisions by an oral agreement. D)a lease is a conveyance of an estate in land.

B) $95,800. All of these items would be added to the buyer's cost basis (book value).

An apartment was purchased by a buyer who gave a $30,000 cash down payment, assumed a $60,000 first trust deed, and agreed to pay $2,400 for delinquent real property taxes. The buyer also agreed to pay 50% of the broker's 5% commission and $1,150 for closing costs. For tax purposes, the buyer's basis will be most nearly A) none of these. B) $95,800. C) $92,400. D) $90,000.

C) not retain easement rights with the transfer of the parcel.

An appurtenant easement involves two parcels of land. The owner of the dominant tenement may A) transfer the interest independently of the land. B) have ingress and egress only. C) not retain easement rights with the transfer of the parcel. D) retain the benefits and the burdens of the easement.

C) misrepresentation. If the vacancies and management fees had been taken into account, the property would return less than 12%. Therefore, a false statement of fact, or misrepresentation, was made by the broker. (Misrepresentations may be either "fraudulent" or "negligent." Since the facts in the question are silent about any fraudulent intent, the act is presumed to be "negligent misrepresentation.")

An investor purchases an investment property. An appraisal of the property showed a 12% return. The broker gives the buyer a financial report on the property but fails to take into consideration vacancies and management fees. The broker is guilty of A) caveat emptor. B) false promises. C) misrepresentation. D) fraud.

25 days

Brokers compensation must be withdrawn from the trust account within _____ from the date of deposit when it is not reasonably practical to separate such funds.

B) needs to hold a broker's license.

Charles Smith offers to act as an agent in the sale of four promissory notes during the balance of this year for his business associate, Jane Jones. In order to do this Charles A) needs to have a license only if he sells real estate. B) needs to hold a broker's license. C) need not have a license. D) needs to have a license only if he handles seven or more notes.

B) Mortgage interest payments, prepayment penalties, real estate taxes fire insurance policy is not deductible.

For purposes of federal income tax, the taxpayer would be able to deduct which expenses for a personal residence? A) Mortgage payment, premium payments on a fire insurance policy, real estate taxes B) Mortgage interest payments, prepayment penalties, real estate taxes C) Mortgage payment, capital improvements, real estate tax D) Payment of broker's commission, late charges, mortgage interest

D) 180 days

If an apartment owner is converting the building to a condominium project, each tenant must receive advance notice of intention to convert. What is the notice time requirement for this phase of conversion? A) 120 days B) 90 days C) 30 days D) 180 days

C) Qualified

If the holder of a note wished to endorse the note and did not want to be liable for payment, she would use which of the following endorsements? A) Restrictive B) None of these C) Qualified D) In blank

A) recorded first.

In the absence of a special agreement to the contrary, a trust deed normally having highest priority is one that was A) recorded first. B) executed and delivered first. C) a construction mortgage. D) executed first.

A) 60 days.

In the absence of a written agreement to the contrary, a real estate broker who services loans secured either directly or indirectly by real property may retain the funds received according to the terms of the loan(s) for no longer than A) 60 days. B) 25 days. C) 14 days. D) 10 days.

C) Purpose of the appraisal The beginning or cover letter in a narrative form of appraisal sets forth the purpose of the appraisal and the final opinion of value.

In the narrative form of appraisal report, where would the property value be stated? A) Description of use B) Legal description of the property C) Purpose of the appraisal D) Description of the neighborhood

B) void because James was a minor.

James, an 11-year-old minor, owned a farm and asked his father to contract a broker to sell the farm. The father listed the property with a broker. The farm was sold and the deed was signed. James later changed his mind and wanted the farm. This transaction was A) valid because the father was acting for his son. B) void because James was a minor. C) rescinded simply because James changed his mind. D) void because the father arranged the sale through a broker.

A) loss of rental because of the vacancy of the two apartments. Depreciation, interest payments, and maintenance are always deductible on income property. Vacancies do not produce income.

John Paul purchased an 18-unit apartment building. Assuming he reports all of his income on a cash basis, he will be able to deduct all of the following on his next income tax return EXCEPT A) loss of rental because of the vacancy of the two apartments. B) depreciation of the property when its value has increased. C) the cost of redecorating two vacant apartments. D) interest payments on a second trust deed loan.

A) sales price of comparable sites.

Land value is estimated whenever possible on the basis of A) sales price of comparable sites. B) size, location, and utility. C) purchase price plus the cost of making on-site and offsite improvements. D) original cost plus the expense of making it usable.

d. specific performance

Legal consideration, no matter how small, is essential for a valid contract. However, the amount of consideration must be reasonable and sufficient in a contract for the sale of real property to sustain an action for A) damages. B) unlawful detainer. C) rescission. D) specific performance.

D) qualified individuals. Membership in the Institute of Real Estate Management is limited to individuals. The individual is the one who builds the reputation and is given the professional status. The firm may change ownership and no longer warrant this professional status.

Membership in the IREM is limited to A) corporations. B) partnerships. C) none of these. D) qualified individuals.

warehousing

Mortgage bankers who assemble loans and temporarily hold these portfolios until they can be sold to investors in the secondary mortgage market are said to be ______ loans.

C) Standard coverage

Most buyers elect which type of title insurance policies? A) Extended coverage B) ALTA C) Standard coverage D) bATA

A) could not list the mobile home if it had not been registered with the Department of Housing and Community Development.

Mr. Borg purchased a new mobile home two months ago and contacted broker Wilson to take a listing on it. With respect to this information, Wilson A) could not list the mobile home if it had not been registered with the Department of Housing and Community Development. B) could not take a listing and sell the mobile home unless it was installed on a foundation and properly registered with the county recorder. C) could take a listing anytime but could not sell the mobile home for one year. D) could not list the mobile home unless she was also licensed by the Department of Motor Vehicles as a Vehicle Dealer.

C) Hold the check but inform the seller before the seller makes his decision to accept the offer

On January 1, a broker accepted a $600 check from a prospective buyer, who instructed the broker not to give the check to the seller until January 30. What is the correct behavior of the broker? A) Give the check to the seller B) The broker can accept the check and send it to the escrow company, or place it in his trust account, and in either case, by the next business day C) Hold the check but inform the seller before the seller makes his decision to accept the offer D) The broker cannot accept the check

A) The manner in which they are treated depends on what they are being used for. Points paid for interest are not always deductible if paid for interest; an example of an exception is points paid by a seller.

Points paid in obtaining a loan are treated in what manner on the federal income tax return? A) The manner in which they are treated depends on what they are being used for. B) Points are deductible only if the loan is obtained through a state or federal bank. C) Points are always deductible if used for interest but not for specific services by a lender. D) Points are always deductible.

grantors

Quitclaim deeds are executed by _____ to clear up conflicting claims or deficiencies in titles, in favor of grantees.

Federal Reserve System

Regulation "B" of the Equal Credit Opportunity Act (ECOA) was issued by the ______.

100%; 2%

Since the passage of Proposition 13 in 1978, real property is assessed at _____ of full cash value as of a certain date, increased by an inflationary factor of not more than _____ per year.

A) voidable. It is voidable at the option of the lessor.

Some leases are written with covenants that do not allow the lessee to assign the lease without written permission. If the lessee should assign, the lease becomes A) voidable. B) void. C) forfeited. D) unenforceable.

C) taxes. Taxes are more directly related to net income than to the capitalization rate.

The capitalization rate in the valuation of income property would LEAST likely provide for A) return on investment. B) return of investment. C) taxes. D) depreciation.

B) intention of grantor

The effective delivery of a deed under law is dependent upon A) recordation. B) intention of grantor. C) acknowledgment by the grantor. D) grantee having knowledge of its existence.

C) straight line. Future depreciation for appraisal purposes can be estimated by the straight-line approach. Sum-of-the-year's digits may be used for income tax work but not appraisal. The observed condition and the curable/incurable approach are used for past depreciation, not future.

The method used by the appraiser in estimating past and future depreciation is the A) observed condition. B) curable and incurable. C) straight line. D) sum-of-the-year's digits. Explanation

B) is illegal.

The owner of an apartment building wished to rent to married couples only and planned to inquire on the rental application about the marital status of prospective tenants. The inclusion of this question on the application A) would be acceptable since there is no law prohibiting this. B) is illegal. C) is acceptable if the property is unencumbered. D) is acceptable if the loan on the property was given by a private investor.

purchase-money loans; business loans

The right of rescission under the federal Truth-in-Lending Act never applies to _____ and _____.

D) Mechanic's liens are created by statute Whereas mechanic's liens are created by statute, judgment liens are created by court decisions.

What is a difference between a mechanic's lien and a judgment lien? A) Mechanic's liens may take priority before the recording date B) Judgment liens are not effective until recorded C) Judgment liens are involuntary liens D) Mechanic's liens are created by statute

A) request for partial reconveyance. The lender must execute a request for a partial reconveyance from the trustee. The trustee will then issue a deed of reconveyance for the parcel released.

When lots are sold from within a subdivision that is subject to a blanket encumbrance, the beneficiary of the encumbrance will execute a A) request for partial reconveyance. B) deed of reconveyance. C) partial release from the blanket encumbrance. D) deed of partial reconveyance.

A) Finder's fee and similar charge

Which is NOT included in the total finance charge under the Truth-in-Lending Act? A) Finder's fee and similar charge B) Appraisal and credit report fees C) Points paid by the buyer on a FHA/VA loan D) Premium for mortgage guaranty or similar insurance Explanation

B) Low-interest, short-term financing Long-term financing is one of the keys to leverage.

Which of the following is the LEAST desirable feature to an investor who is interested in leverage? A) A low-interest, fully amortized mortgage B) Low-interest, short-term financing C) Continuity of a satisfactory income stream D) Stable business conditions

C) Recorded real property sales contract

Which of the following would MOST likely cause a cloud on the title to real property? A) Adverse zoning restrictions B) A recorded mortgage with a lock-in clause C) Recorded real property sales contract D) Public utility easement

B) Property lines accurately established by a survey Facts appearing in a correct survey would be one of many risks covered by an ALTA policy not covered in a CLTA policy.

Which would NOT be covered by a CLTA policy but would be covered by an ALTA policy? A) Mistakes in liens and documents of record B) Property lines accurately established by a survey C) Capacity of the grantee of a deed of reconveyance D) Discrepancies found in documents of record

C) Private restrictions in a deed Zoning is a legally imposed restriction on the use of the site. A site's highest and best use may not necessarily be any of the uses designated by a zoning ordinance, thereby causing the property to be more unmarketable than in the case of private deed restrictions.21vf3 \]a\ u8

Which would be LEAST likely to make the title of real property unmarketable? A) A lis pendens filed by the wife of the owner B) Public restrictions under zoning ordinances and building codes C) Private restrictions in a deed D) Cloud on title through adverse possession of the property

D) Homestead exemptions Homesteads will NOT protect the owners from property taxes and would have the least effect on them.

Which would have the LEAST effect on property taxes in a community? A) Zoning and private restrictions B) Compactness of the community C) Number of commercial buildings and high-priced homes D) Homestead exemptions

D) A limited partner's liability is limited to the debts of the partnership.

With regard to a limited partnership, which statement is NOT correct? A) A limited partner can lose all she invested in the partnership. B) It must consist of one or more limited partners and one or more general partners. C) A limited partner cannot make decisions affecting management policies. D) A limited partner's liability is limited to the debts of the partnership.

A) one of the co-tenants, due to the confidential relationship of the co-tenancy, can create an easement that would be binding on all co-tenants. One co-tenant cannot create an easement in the common estate against his co-tenants nor can he, when conveying his own interest in the property, create an easement by reservation over it for the benefit of his adjoining separately owned property.

With respect to title held by co-tenants, all of these statements are correct EXCEPT A) one of the co-tenants, due to the confidential relationship of the co-tenancy, can create an easement that would be binding on all co-tenants. B) a co-tenant's interest may be transferred by operation of law. C) co-tenants can partition a property into separate parcels by an agreement among themselves. D) tenancy in common is the way title would be held by co-tenants if not held in joint tenancy, community property, or partnership.