UNIT 3 - MANDATORY DISCLOSURES

There are statutory rescission rights for a number of transactions. Which of the following provides for rescission rights?

- A loan for consumer credit that is secured by a borrower's residence. - Selling his or her equity interest in a residence in foreclosure. - Purchase of a time-share.

A Transfer Disclosure Statement must be provided to the buyer when the sale involves:

a 3-unit residential building

The licensee who brings the buyer into the transaction is called the

selling agent

A dual agency is legal if

the buyer and seller consent to it.

Concerning the potential existence of lead-based paint in homes built prior to 1978,

the owner must deliver to prospective buyers the booklet entitled Environmental Hazards: A Guide for Homeowners, Buyers, Landlords, and Tenants.

Which of the following items/facts must be disclosed when seller financing is involved

- That the loan has or will have negative amortization, or that deferred interest ARMs could have negative amortization. - That the note, if not fully amortized, will have to be refinanced at maturity and that this might be difficult or impossible to accomplish in the marketplace. - The buyer's creditworthiness (credit report, job verification, etc.).

The earthquake safety disclosure statement:

- both applies to 1-4 residential units and must be signed by buyer and seller.

When inspecting for structural failure, agents should look for

- cracks in structural walls, beams, and columns, and foundations. - severe bulging in floors or structural walls. - doors that fail to close or that have been trimmed.

The Seller Financing Disclosure Statement provided to both buyer and seller provides:

- credit terms. - a warning as to balloon payments. - disclosure of deferred interest.

Compliance with environmental hazards disclosure requires:

- the buyer sign that they have received a booklet entitled Environmental Hazards: A Guide for Homeowners and Buyers.

The Real Estate Transfer Disclosure Statement (TDS) is NOT required when the transfer involves

- transfer of a unit in a subdivision when the buyer has been given a public report. - a transfer ordered by a probate court in administration of an estate. - transfers by foreclosure sale after default.

An agent's inspection under Easton vs. Strassburger (as codified by state statutes) applies to:

- visual inspections and known or should-have-known defects. - accessible areas only. - 1-4 residential units.

The Real Estate Settlement Procedures Act (RESPA) applies to

1-4 unit residential property.

What is a red flag?

A physical factor about a property that is a potential material fact and that may need further investigation.

A seller (or seller's agent) must give the buyer a separate Natural Hazard Disclosure Statement if the property lies within which of the following specified areas?

An earthquake fault zone.

An agent need not disclose to a buyer that:

Both a former owner had AIDS AND there was a death by murder or suicide on the property more than 3 years ago

In the course of taking a listing on a single-family dwelling, the owner informs you that his roommate died of AIDS on the property one year ago. Which of the following is correct regarding your disclosure requirements?

If the occupant's death was a result of AIDS, it does not have to be disclosed.

In an effort to help real estate agents fully disclose environmental hazard issues to prospective buyers, the Department of Real Estate and the Department of Health Services developed the

Residential Environmental Hazards Booklet

Creative financing and the complaints stemming from these questionable types of financing helped enact existing

seller financing disclosure requirements

A selling agent must comply with agency disclosures to the buyer:

before the buyer executes an offer

In addition to disclosing known material facts concerning the property, the listing agent also has a duty to disclose defects that can be discovered by

conducting a reasonably diligent visual inspection.

A public report is good for five years from the

date of issuance

In the correct order, which of the following lists the chain of events necessary to comply with the agency disclosure law?

disclose, elect, confirm

The proper order of the steps taken in agency disclosure is:

disclose, elect, confirm

When selling 1-4-unit residential properties built prior to January 1, 1960, the seller must disclose whether the dwelling has

earthquake weaknesses.

A fiduciary relationship applies to a real estate licensee and to:

his or her principal

The Real Estate Transfer Disclosure Statement (TDS) provides information regarding the

physical condition of the property.

Real estate disclosure laws apply:

primarily for 1-4 residential units.

A fact about a property is considered a "material fact" if

prior knowledge of the fact would have prevented the other party from entering into the contract.

When a developer intends to convert an apartment to a condominium, the developer must notify current tenants of their right to

purchase their unit

The agent does not disclose a Mello-Roos tax. After close of escrow the buyer may

rescind the contract within three days of receipt of the notice.