CE Shop Missed Questions

What phrase is or words are required on a deed and are considered an "act of conveyance?"

"Grant and convey"

Your seller client has accepted an offer on his home, and you're on your way to closing! Which of these is NOT a tax aspect that you'll explain to your client (in basic terms) related to the transfer of property?

"If you make a profit on the sale of this property, you'll have to pay a capital gains tax when you file your income taxes."

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.)

A seller client received $800,000 for a 5.5-acre rectangular parcel alongside a road frontage. If the property was 400' deep, what was the price per front foot of the property?

$1335.67 (Right! First, find the square footage (5.5 × 43,560 = 239,580). Then, 239,580 ÷ 400 feet = 598.95 front feet. To find the price per front foot, $800,000 ÷ 598.95 feet = $1,335.67 per front foot.)

What is the maximum amount that will be paid out of the Recovery Account per licensee?

$250,000

A buyer with a 30-year, $400,000 loan at a 7% interest rate has a monthly principal and interest payment totaling $2,661.21. If $2,333.33 is interest, how much is applied to principal?

$327.88

What is the effective gross income for a property that has a potential gross income of $50,000, a vacancy and collection loss of 10%, and pays 10% in additional taxes?

$45,000 (Taxes aren't part of this equation.)

Buyer Maria and seller Doug are closing on June 1. Maria's mortgage loan is $927.86, and $871.86 will go to interest in the first month. Maria will have to pre-pay interest for June using the 360-day proration method. If Doug owns the closing day, what Maria's prepaid interest cost be at closing?

$842.74 (Calculate the daily interest rate for 30 days ($871.86 ÷ 30 = $29.06). Because Doug owns the closing day, Maria will pre-pay interest for 29 days, June 2 - 30, so $842.74 ($29.06 x 29).)

What "quick and dirty" investment formula seeks to achieve a percentage of gross monthly rental income as compared to purchase price?

2%

Trust fund account records must be kept in line with general accounting principles and must include, at minimum, _______.

A cash ledger, a journal, and a beneficiary ledger

When selling a property within one mile of _________, sellers must include relevant disclosures.

A former military training ground

Erica is a California real estate licensee with an MLO endorsement. Which of the following properties falls under the definition of 'dwelling' and would therefore allow her to act as an MLO in a transaction?

A mobile home

What is a Superfund site?

A site identified by the EPA as requiring remediation of hazardous waste spills

After the closing, Donna ensures that her client has keys to the property and copies of all the transaction paperwork. Which fiduciary duty is Donna performing?

Accounting

Which term is defined as the build-up of land near water from the accumulation of sand, silt, or gravel deposits?

Accretion

Which term is defined as someone claiming property of another simply by using it for an extended period of time?

Adverse possession

What's true about the documentary transfer tax in California?

All counties in the state charge a documentary transfer tax of 55 cents per $500 of sales price, and some cities add an additional transfer tax.

To whom must a licensee, representing a buyer, disclose agency status?

All parties in the transaction

Which of the following is a true statement about FHA financing?

An FHA loan is usually more attractive to borrowers who have lower credit scores and down payments.

What's a quiet title action?

An action to locate and notify all who may have some claim on the title, and determine the validity of all claims

In the sales comparison approach, using comparables that are five and 15 years old when appraising a subject that is 10 years old is an example of what?

Bracketing

What types of real estate licenses are issued in California?

Broker and salesperson licenses

How can a homeowner identify asbestos?

By hiring a certified asbestos consultant

Christine listed her house with you. Licensee Tailleur represents the buyer, Rebecca. The seller's mother, Freida, is paying your commission. Which of these factors determines how legal agency is determined in this situation?

Christine listed the property with you.

John and Dale are married in San Francisco, and soon purchase a condo. They'll take title to it by default as ______ according to California law.

Community property

Joe's applying for a mortgage that meets all of the Fannie Mae/Freddie Mac criteria. Based on this, how would we classify this loan?

Conforming

Which of the following is defined as what it would take to recreate that property if it disappeared off the face of the earth today?

Cost

Danielle's friend, Joanna, is an agent. Danielle is considering listing her property and shares the details with Joanna. Joanna creates an MLS listing and places a sign in Danielle's yard. Danielle knows that Joanna will do a good job, so even though she hadn't actually agreed to let Joanna list the property, she permits her to start scheduling showings. Which of these is an example of ratification?

Danielle knows Joanna will do a good job, so she permits Joanna to start scheduling showings.

Jared is your client who is selling his four-bedroom home. When you ask him if he is aware of any physical defects with the property, he states that the property is "in fine shape." Yet you've noticed several issues with rotted doorsills, crumbling masonry, and a suspicious moisture stain on the ceiling. If Jared won't come clean about issues of property condition, what should you do?

Decline the listing

Shirley's lender discharged the mortgage lien on Shirley's property after processing her final payment. Which clause requires the lender to take this action?

Defeasance

Advance fee agreements in California need to be approved by which regulatory body?

Department of Real Estate

Malcolm purchased an old convenience store, and after renovations will open a small vegan grocery. He paid $517,000, of which $417,000 was for the building, and renovations cost him $107,000. What does the amount $524,000 represent?

Depreciable basis

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

Which of the following groups represents a niche?

Empty nesters

Which of the following is a true statement about buying one's own listing?

Even when it's legal, some brokerages won't allow their agents to do it.

What type of title insurance covers defects of an incorrect survey and boundary encroachments?

Extended title insurance

A form of depreciation or loss in value caused by defects in design defines which of the following terms?

Functional obsolescence

Which of these is an example of good consideration?

Gifting a house to a family member

The FHA loan program is designed for borrowers who ______.

Have a minimal down payment and less-than stellar credit

Bradley provided his clients with a dual agency disclosure. He obtained his clients' signatures and provided copies to his clients. What step did he miss?

He did not make sure his clients understood the form before signing it.

Jarod has obtained an FHA loan for which he pays an annual mortgage insurance premium. How will he likely make this payment?

He will pay 1/12 of it monthly with his mortgage payment.

What type of natural hazard area is designated by local agencies?

High fire hazard area

Which of the following tasks would require a real estate license in California?

Host an open house

Which physical characteristic of land addresses the concept that the geographic location of a piece of land is fixed and can never be changed?

Immobility

Broker Betsy is recording her receipt of funds from a client. She'll hold these funds until the vendor she hires to paint her client's house sends her an invoice. Where does she record the deposit?

In the trust account journal and the client's beneficiary ledger

With a straight mortgage, what type of payments are made up until the end of the loan term?

Interest

Max has a dog that bit his neighbor. The neighbor sued Max, which resulted in a judgment against him. Max refused to pay the neighbor according to the judgment. The neighbor placed a lien against Max. How is this lien classified?

Involuntary, general

You assisted the Juarez family with the purchase of a beautiful home in an established California neighborhood. The sellers had owned the home since 1980. What's true about the amount of property tax the Juarezes will pay for their new home?

It will be reassessed because of the transfer, and the Juarezes will be taxed at 1% of its current market value.

Eileen died intestate and without any living relatives. She owned 17 acres of pristine forest bordering a national park. What will happen to the property?

It will be taken by the state through escheat.

Sam and Bridget are cousins who jointly own property. They are both named on the deed, they received title at the same time, they have the right of survivorship, and they each have equal interest and undivided rights of possession. What type of ownership do they have?

Joint tenancy

Kandy was so excited to be buying her first home, a condo in a San Diego beach neighborhood. Thanks to an inheritance, she was able to pay for the property in cash! She gazed adoringly at her deed, admiring each of its elements that proclaimed her the sole owner of 1256 Voltaire Street, Unit 15. Which of these is NOT on Kandy's deed?

Kandy's signature

How is the Recovery Account funded?

License fees

To what type of estate does pur autre vie apply?

Life estate

Which of the following statements is true about usury laws in California?

Loans secured by real property and arranged for by a real estate broker are exempt from state usury laws.

Which of the following is the price a lender believes the property will bring at a foreclosure sale?

Mortgage value

If an agent lists a home for his sister and it sells, can the agent accept his commission directly from his sister?

No, the commission must go through the agent's broker.

Lendright Home Loans asked a trustee to begin foreclosure proceedings as permitted by the power-of-sale clause in the security instrument. This action does not need to involve the courts. What type of foreclosure process is being used?

Non-judicial foreclosure

Mary contracted to buy her mother's house when her mother moves to a senior living community, but now Mary has to move because of work and no longer wants to buy the house. With their mother's agreement, Mary's sister, Tina, steps in, releasing Mary from her obligation. They write up a new contract, with the only change being that Tina is now the party to the contract rather than Mary. What's happened here?

Novation

June specified in her will how title to her home would transfer. At her death, alternate conveyance occurred. What likely happened?

Operation of law

Generally, there are covenants between the borrower and the lender within a mortgage document. Which of the following is a mortgage covenant?

Pay any charges and assessments against the property.

Marcus bought two adjoining pieces of land that were zoned for commercial use. When he realized that combining the two parcels would dramatically increase the land's value, he jumped at the opportunity. What's this an example of?

Plottage

What is the term for an increase in property value caused by the joining of two neighboring parcels of land?

Plottage

Cory is applying for his contractor's license. He has met the educational and experience requirements, and has filed a Certificate of Self-Insurance with the Contractor's State License Board. What else must he do?

Post a cash deposit or bond with the state

What often comprises the sum total of a buyer's mortgage payment?

Principal, interest, taxes, and insurance

Tammy and Reginald bought a house with a gas line easement on the property. An easement like this one placed by the utility company is an example of a ______.

Private land control

The smallest property on the block is priced lower than any others, but the higher-priced properties that surround it help to drive the property's market value up. What economic principle is at work here?

Progression

Tom, the seller, is helping the buyer with financing. Tom will give this mortgage to the buyer, and the money will go toward the down payment. What kind of mortgage is this?

Purchase money mortgage

The right to access rivers, streams, and other flowing bodies of water adjacent to a property is called ______.

Riparian

Rhonda is considering what her niche should be. Which of the following would make the best niche for her to pursue?

She could focus on single-family properties that list between $300,000 and $500,000.

Licensee Erika is excited about her new listing, a small cottage near her town's center within walking distance of shops, pubs, and restaurants. What's more, the HOA fees cover all grounds maintenance. The cottage is perfect for active retirees, and she says so in all her marketing materials. Although likely unintentional, Erika can be held accountable for illegal ______.

Steering

Which type of ownership includes the unity of time, title, interest, possession, and marriage, and dissolves to a tenancy in common after a divorce?

Tenancy by the entirety

In which form of co-ownership is a person's ownership inheritable?

Tenancy in common

Which of these statements most accurately represents existing federal antitrust legislation?

The Clayton Act supports the Sherman Antitrust Act's purpose of prohibiting monopolies by prohibiting mergers or acquisitions that would create a monopoly.

This statute allows a public agency to issue bonds for the improvement of subdivision street surfaces.

The Improvement Bond Act of 1915

Bart is selling his home and has accepted an offer from a buyer, who's obtaining a VA loan. The sale price is agreed upon and is in the purchase contract. Then Bart receives a call from his agent, explaining that the buyer is hoping that Bart will lower the sale price because ______, and there is a risk the buyer will not be able to get the VA loan as a result.

The VA appraiser completed the CRV and it is less than the sale price

Data regarding Mello-Roos fees disclosed to a prospective buyer should include the amount of the fees as well as _______.

The assessment's purpose

Which of the following features is shared by the mortgage and the deed of trust?

The borrower is required to maintain the property and pay property taxes and insurance.

John and Michelle received a general warranty deed when they purchased their house from Ted. A couple of months after they moved in, their neighbor, Bryant, drove his four-wheeler across their property to access the lake front. John discovered that Ted and Bryant agreed to an easement over Ted's property several years earlier. Which general warranty deed covenant does this represent?

The covenant against encumbrances

Select the statement that correctly exemplifies the covenant term.

The covenant of quiet enjoyment promises that the grantee won't be disturbed by a title defect the grantor passes on.

How is an individual selected to act as Real Estate Commissioner?

The individual is appointed by the governor

What is the requirement for escrow instructions provided by principals to a transaction in California, regardless of the location within the state?

The instructions must be clear and unambiguous.

Marcy's offer on a home was accepted! Which party will be contacting her about arranging an appraisal?

The lender

If a party to a contract lacks legal capacity but enters into a contract anyway, which party may void the contract?

The party lacking legal capacity

What does the quick and dirty 70% formula mean to investors?

The purchase price shouldn't be more than 70% of the repaired value

Daisy is a buyer who made an offer for an older house on three acres. Daisy reviewed the seller disclosures and ordered a professional home inspection. Based on the results of the inspection, which showed a number of latent defects that made Daisy uncomfortable, she decided to exercise her contractual right to cancel the agreement. What's NOT true about this situation?

The seller is obligated to repair the defects identified in the inspection report before accepting any other offer.

When a deed of trust is used as a security instrument, who holds the deed and the note?

The trustee holds the deed, and the lender holds the note.

In what way, other than actual fire, does owning property in a designated forest fire hazard area affect home owners?

They may not receive fire protection services.

Your client just accepted an offer from a buyer for a property in northern California. What information will NOT be provided to the escrow agent as part of the escrow instructions?

Title insurance policy number

Lawrence is a buyer closing on a home purchase for which he's obtaining financing. He receives a Loan Estimate from his lender. What's the purpose of this document?

To detail the estimated closing costs for Lawrence's loan

Which category of appraiser must be supervised by a certified appraiser and can assist on any appraisals their supervisor can perform?

Trainee license

Which type of subdivision is defined as a property owned jointly by all purchasers, who are tenants in common with all other owners?

Undivided interest subdivision

Which act provides similar protections for consumers of business services and products as those provided by the California Fair Employment and Housing Act?

Unruh Act

The Richards family farm is located on a 10-acre parcel of land, which is very rare to come by in their area. However, the house is rundown and in need of many repairs. Most buyers in the area are looking for a move-in ready home, which means they would need to either look elsewhere or wait several months for the home to be renovated. Which factor is most negatively impacting the value of the Richards' property?

Utility

Which of the following types of consideration can be an exchange of money for a promise, an exchange of an item of value for money, or an agreement between the parties to do or not do something?

Valuable (Valuable consideration differs from "good" consideration, which may merely be consideration of affection, such as when a person gives a family house to their child, receiving love and good will in return.)

Which of the following terms means the price a property is worth to its owner as currently enjoyed?

Value in use

Marco is anxious to buy a home and is willing to waive the inspection contingency. Do you still need to provide him with a Buyer's Inspection Advisory?

Yes, because Marco should still be advised of the reasons inspections are needed.

Kamut met with Amy, a buyer, and showed her his new listing. If Amy is unrepresented, did Kamut err by not providing Amy with an agency disclosure?

Yes, because any time you meet with a buyer, you must provide agency disclosure

Sellers Matt and Kyle are fed up with their obnoxious neighbor, who insists on doing home construction work with power tools late at night, and having loud arguments with his family during the day. Does the TDS require them to disclose this type of nuisance?

Yes, they can record such issues in the seller's information section of the TDS

Jennifer is the owner of the single-family residence in which she resides. How long can she take to depreciate her property?

Zero years (personal residences cannot be depreciated)