Chapter 5

Keisha is buying John's house. The closing date (day belongs to seller) of the sale transaction is September 1 (day 244 of the year). Existing hazard insurance of $350 has been paid by John through December 31. Use the 365-day method for prorating. What is Keisha's share of the existing hazard insurance already paid in full? $116.03. $117.99. $232.01. $233.97.

$116.03.

A sale transaction closes on April 1, the ninety-first day of the tax year. The day of closing belongs to the seller. Real estate taxes for the year, not yet billed, are expected to be $2,190. According to the 365-day method, what is the seller's share of the tax bill? $1,364.66. $1,644.00. $546.00. $9530.

$546.00.

Oregon Real Estate License Law permits administrative action to be taken against a principal broker for failing to: notify the Real Estate Agency of the principal broker's change of address. supervise the brokers associated with the principal broker. 1 only 2 only Both 1 and 2 Neither 1 nor 2

1 Only

When advertising on the Internet, a licensee must identify the licensee, principal broker and/or brokerage in all advertising and communications get principal broker approval with respect to general page design and contents prior to use on all personal real estate web pages comply with all applicable federal, state and local laws back up and maintain all e-mail or other electronic communications with clients to comply with record retention requirements

1, 2, 3 and 4

Oregon Real Estate License Law permits administrative action to be taken against a principal broker for failing to: notify the Real Estate Agency of the principal broker's change of address. supervise the brokers associated with the principal broker.

1, 2, 3 and 4.

At the request of the owner of trust funds or the principals involved in a series of related transactions, the principal broker can place the trust funds in an interest-bearing account only if 1)the account is in the name of the principal broker as trustee. 2)the funds are deposited in a federally insured institution located within the State of Oregon. 3)the interest will go to the principal broker. 4)the funds are kept separate, distinct and apart from funds belonging to the principal broker or to any other person for whom the principal broker holds funds in trust.

1,2 and 4

Julie is buying Makya's house. The closing date (day belongs to seller) of the sale transaction is September 1 (day 244 of the year). The buyer's loan amount is $78,750 (90%; 30 years @ 8%). The monthly payment on this loan is $577.84, with $525 going to interest in the first month. At closing, Julie must pre-pay interest for the period of Sept. 2-Sept. 30. Use the 365-day method for prorating. What is Julie's prepaid interest amount? $507.50. $525.00. $543.10. $558.58.

507.50

A buyer will receive a water bill for an estimated $100 at the end of the month. At closing, the seller has used an estimated $43 in water. What should appear on the closing statement? A debit to the buyer and credit to the seller for $43. A debit to the seller and credit to the buyer for $43. A debit to the buyer and credit to the seller for $57. A debit to the seller and credit to the buyer for $57.

A debit to the seller and credit to the buyer for $43.

A seller received a rental payment of $900 in advance of closing. At closing, the seller is due only $320 of this rent and the balance will be paid to the buyer. What should appear on the closing statement? A debit to the seller for $320 and a credit to the buyer for $900. A debit to the seller for $580 and a credit to the buyer for $320. A debit to the seller and credit to the buyer for $320. A debit to the seller and credit to the buyer for $580.

A debit to the seller for $320 and a credit to the buyer for $900.

Which statement about a Federal Tax ID number (EIN) is TRUE? A corporation owned and operated by one individual without any employees does not need an EIN. All business types are required to have an EIN. A sole proprietor is never required to have an EIN. A sole proprietor must have an EIN when wages will be paid to one or more employees.

All business types are required to have an EIN.

A licensee affiliated with a principal broker under an independent contractor agreement is responsible for all income tax and other required gross income withholding liability. must conduct personal real estate transactions, other than the rental or lease of personal property, under the supervision and control of the principal broker. may enter into a written agreement with the principal broker to receive compensation through an LLC. All of the above

All of the above

According to Oregon real estate license law, a principal real estate broker: must maintain a definite place of business. is responsible for the actions of the brokers licensed under him and must supervise their professional real estate activity. must supervise and approve all advertising. All of the above

All of the above

Every deposit made into a brokerage's trust account shall be made on duplicate deposit slips identifying each offer or transaction by a written notation of the file number assigned to the offer or transaction. be noted in a ledger account and record of all funds received showing from whom the funds were received, the date of the receipt and place of deposit. identify the source of the funds. All of the above

All of the above

If a principal broker or property manager wants to conduct business in a name other than their legal name, the licensee must register that name with the Business Registry as an assumed business name register the business with the REA provide the REA with a statement from the Oregon Secretary of State that the name is not the same or deceptively similar to the name of any other real estate business in the state All of the above 14 When advertising on

All of the above

Principal brokers must supervise which of the following activities of a broker? Completion of an earnest money agreement. Completion of a listing agreement. Completion of a competitive market analysis. All of the above

All of the above

Which of the following are required by law to have a sign announcing the existence of a real estate business? A real estate main office A branch office A property management company A home office if the location is the business location of a principal broker or property manager. 1 and 2 only 1 only 1, 2 and 4 only All of the above

All of the above

Which of the following documents created by a broker must be reviewed and initialed by the principal broker? Advertisements to promote listings Trust account reconciliations Transaction addenda All of the above

All of the above

Which of the following must be deposited in a clients' trust account or neutral escrow? Earnest money deposits Money from a client to be used for future property advertisements Collected rents to be prorated at closing All of the above

All of the above

An unlicensed personal assistant to a real estate broker could legally do which of the following? Discuss the terms of a sale with a seller. Discuss information about property listed by a broker. Deliver documents to a buyer. Obtain verification of sewer connection for a listed house from the city public works office at the client's request.

Deliver documents to a buyer.

Registration as a branch office with the Oregon Real Estate Agency is necessary when using the location as a: model unit available for sale in a subdivision for promotion of interest in the development. temporary structure for circulating information about the subdivision. 1 only 2 only Both 1 and 2 Neither 1 nor 2

Neither 1 nor 2

A real estate broker can do which of the following activities without the supervision of their principal broker? Set up a property management business if the principal broker agrees. Rent or lease the broker's own real estate. Advertise listings. Lease-option the licensee's own real estate.

Rent or lease the broker's own real estate.

Which is NOT a duty of an escrow agent? Settle disputes between parties to a transaction. Obtain loan documents and instructions from the buyer's lender. Order a preliminary title report. Disburse all funds to the appropriate parties.

Settle disputes between parties to a transaction.

Which one of the following is NOT a real estate activity allowed under a real estate broker license? Tax advice regarding a 1031 Tax-Free Exchange. Real estate investment counseling. Property management. Real estate sales.

Tax advice regarding a 1031 Tax-Free Exchange.

Which two major financial statements show the recording and classification of transactions? The balance sheet and income statement. The sales forecast and balance sheet. The income statement and operating budget. The cash flow budget and operating budget.

The balance sheet and income statement.

Which one of the following is NOT correct about an accounting balance sheet? The balance sheet will list the assets and liabilities of a company. It shows the financial condition of a business as of a particular date. It is also known as a profit and loss statement. The balance sheet lists the owner's equity.

The balance sheet will list the assets and liabilities of a company.

A principal broker accepted an earnest money deposit check from a buyer for an accepted offer on one of the principal broker's listings and then endorsed it over to the associated broker who listed the property as a partial commission advance. Which statement is correct? The principal broker and the agent are guilty of price fixing. Nothing is wrong with this, provided this is done within three days from receiving the check. The broker has to keep the check uncashed until closing so it can be returned if the transaction falls through. The principal broker has illegally converted trust funds for business use.

The principal broker has illegally converted trust funds for business use.

A principal broker has hired some unlicensed part-time employees to pass out brochures, quote prices, and discuss the terms of the sale of houses for sale in a housing development. The principal broker does not allow any unlicensed employee to sign offer documents but has made sure that there is a licensed real estate broker on site. Which statement is true about this scenario? The principal broker is in violation of real estate law because the employees are not real estate licensees. The principal broker will not violate real estate law if the unlicensed employees are paid an hourly wage. It is not a violation of real estate law for an unlicensed employee of a licensee to quote prices and terms as long as they did not fill out the forms. The principal broker is not in violation of real estate law since unlicensed employees can do all of these things and a licensee is always on site.

The principal broker is in violation of real estate law because the employees are not real estate licensees.

Which statement is FALSE? Title insurance is required by law. Title insurance is not required by law. Title insurance protects against false impersonations. Title insurance is issued to insure the named party only.

Title insurance is not required by law.

Six investors purchase a shopping center. One of them manages the tenants and another manages the marketing and leasing. Two other investors manage accounting and finance, and the remaining two run the management office. The six investors spend equal time at their managment responsibilities for the shopping center. This example best matches an investment conduit. a limited partnership. a real estate investment trust. a general partnership.

a general partnership.

If a principal real estate broker or property manager deposits trust funds in an interest bearing clients' trust account, the interest automatically inures to the benefit of the licensee. the interest earned may not be kept by the principal broker or property manager. the interest must be paid to the person who tendered the funds. all parties having an interest in the funds must give their approvals.

all parties having an interest in the funds must give their approvals.

An item paid in arrears is normally paid at some time after the expense is incurred. only after it is billed. whenever it is incurred. on a monthly or yearly basis.

at some time after the expense is incurred.

A licensee renewing his/her Oregon real estate license for the first time must: send in the renewal fee and an affidavit that the licensee will complete 60 hours of continuing education prior to the next renewal period. complete the 27-hour Broker Advanced Practices course and 3-hour Law and Rule Required Course. complete 45 hours of continuing education at the election of the licensee. complete 35 hours of continuing education.

complete the 27-hour Broker Advanced Practices course and 3-hour Law and Rule Required Course.

On the closing documents, the seller's 2nd loan payoff would be entered as a credit to the seller. debit to the buyer. debit to the seller. credit to the buyer.

debit to the buyer.

If the license of a licensee under the supervision of a principal broker is suspended, the principal broker should limit the licensee to follow up responsibilities on existing transactions. ensure that all real estate activity by the suspended licensee be stopped immediately and prohibit any real estate activity until the license has been reinstated. impose the maximum fine allowed by law for the infraction for which the licensee was suspended. immediately fire the licensee.

ensure that all real estate activity by the suspended licensee be stopped immediately and prohibit any real estate activity until the license has been reinstated.

A property manager licensee affiliated with a principal broker may rent or lease personally owned properties without the supervision and control of the principal broker. may receive referral fees from the principal broker for referring properties he/she manages to be listed for sale. is not subject to principal broker supervision. may list a property he/she manages with the written consent and supervision of the principal broker

may list a property he/she manages with the written consent and supervision of the principal broker.

Rejected offers and expired listings must be retained for two years. for four years, but only if the listing was the subject of an offer to purchase. six years. four years.

six years

At the closing of a mortgage loan the borrower pays off the note and receives clear title. the parties complete all loan origination documents and the loan is funded. the borrower's loan application is complete and the file closed. the lender issues a firm loan commitment.

the borrower pays off the note and receives clear title.