Midterm Exam 2

A broker lists a property for sale at $100,000 with a 5% commission, and he later obtains an ORAL/VERBAL offer from a prospective buyer to purchase the property. The seller indicates to the broker that the offer would be acceptable if it were submitted in writing. Before it can be put in writing, the buyer backs out and revokes the oral offer. In this situation, the broker would be entitled to:

1. A commission of $5,000 2. Only a partial commission 3. No commission 4. The normal rate of commission

A person wants to ensure that the ownership of real property can be willed to her children. Which of the following forms of ownership would the person want?

1. A conventional life estate 2. A fee simple estate 3. A joint tenancy 4. A license

Which of the following about a condominium is INCORRECT?

1. A declaration must be filed before any units may be sold. 2. Each unit owner has a fractional undivided interest in the common elements. 3. Each owner receives a separate real estate tax statement. 4. Each owner has a proprietary lease with the association for his or her own unit.

The owner of a condominium unit learns that a neighbor has failed to pay his real estate taxes. If this neighbor does not pay the taxes:

1. A lien can be filed against the condominium, including all of the units. 2. A lien can be filed against the neighbor's unit and his percentage of the common elements. 3. A lien can be filed only against the common areas of the condominium. 4. The taxing authority can order the condominium to be dissolved.

Which of the following would be the best and most complete definition of the term "encumbrance?"

1. A limitation placed the rights of ownership 2. That which is attached to the land 3. A legalized lien judgement 4. The ability of any stranger to walk across your property even if you did not want him to

What best describes agency?

1. A place of business to meet and greet clients 2. Buying or selling bonds 3. The marketing and selling of properties 4. A special fiduciary relationship between agent and principal

On Monday the seller offers to sell his vacant lot to the buyer for $12,000. On Tuesday, the buyer counteroffers to buy for $10,500. On Friday the buyer withdraws the counteroffer and accepts the original offer of $12,000. Under these conditions there is:

1. A valid agreement because the buyer accepted the seller's offer exactly as it was made 2. Not a valid agreement because the buyer's counteroffer was a rejection of the seller's offer and, once it was rejected, it cannot be accepted later 3. A valid agreement because the buyer accepted before the seller advised the buyer that the offer is withdrawn 4. Not a valid agreement because the seller's offer was not accepted within 72 hrs

A written summary of the history of all conveyances and legal proceedings affecting a specific parcel of real estate is called a(n):

1. Affidavit of title. 2. Certificate of title. 3. Abstract of title. 4. Title insurance policy.

Three years ago Dr. and Mrs. Henderson moved from the house they had owned for 20 years, but did not sell it. They decided to travel and bought a mobile home to live in. They now sell the house. How much of their capital gain on the house will be taxable?

1. All of it, if it is over $500,000 2. None of it, if it is less than $500,000 3. 28%, depending on their tax bracket 4. 15%, depending on their tax bracket

The amount of a loan expressed as a percentage of the value of the real estate offered as collateral is the:

1. Amortization ratio 2. Loan-to-value ratio (L TV) 3. Debt-to-equity ratio 4. Capital-use ratio

When the homeowner purchases a kitchen cabinets at the local cabinet shop and hires a carpenter to install them in their new kitchen, we see what real estate process at work?

1. Attachment 2. Improving the land 3. Severance 4. Accretion

Which direction do the Baseline and Prime Meridian run?

1. Baseline is east-west and Meridian is north-south 2. Baseline is north-south and Meridian is east-west 3. Meridian is northeast-southwest and Baseline is southwest- northeast 4. Baseline is at the equator and Meridian runs on Greenwich mean time

Jamal, Morton, and Herb are joint tenants in a parcel of land. Herb conveys his interest to his long-time friend Tom. After the conveyance, Jamal and Morton:

1. Become tenants in common. 2. Continue to be joint tenants with Herb. 3. Become joint tenants with Tom. 4. Remain joint tenants owning a two-thirds interest.

A prudent lender would take into consideration which of the following before issuing a loan?

1. Borrower's ability to pay 2. The market value of property that is the security for the loan 3. Current economic trends 4. All of the above

If, upon the receipt of an offerto purchase his property subject to certain conditions, the seller makes a counteroffer, the prospective buyer is:

1. Bound by his original offer 2. Bound to accept the counteroffer 3. Bound by whichever offer is lower 4. Relieved of his original offer

All of the following are characteristics of buyer/clients with whom the licensee has an established agency EXCEPT which?

1. Buyers an agent works for 2. Buyers for whom an agent is an advocate. 3. Buyers to whom an agent owes fiduciary duties. 4. Buyers to whom an agent owes only fair and honest treatment.

When a claim is settled by a title insurance company, the company acquires all rights and claims of the insured against any other person who is responsible for the loss. This is known as:

1. Caveat emptor 2. Surety bonding 3. Subordination 4. Subrogation

In a personal property transaction, the document that is used in the same manner as a deed in a real estate transaction is the:

1. Chattel Mortgage 2. Bill of Sale 3. Financing Statement 4. Trust Deed

Who is the seller of flood insurance?

1. City and county 2. State 3. Federal Government 4. Large insurance companies

The rights of ownership of real property include all of the following EXCEPT the right of:

1. Control 2. Compatibility 3. Exclusion 4. Disposition

Broker Joan shows properties listed for sale with her company to prospect Karl. Karl has refused buyer representation. Karl is Joan's:

1. Customer 2. Principal 3. Client 4. Fiduciary

What is best proof of ownership?

1. Deed 2. Certificate of Title 3. HUD 1 4. Title Insurance

When a company furnishes materials for the construction of a house and is subsequently not paid, it may file a(n):

1. Deficiency judgment 2. Lis pendens 3. Estoppel certificate 4. Mechanic's lien

Which of the following is NOT a type of real property?

1. Developmental Land 2. Commercial 3. Residential 4. Agricultural

Which of the following does not directly influence Supply in the Supply and Demand model?

1. Easy credit 2. Availability of a labor force 3. Interest rates 4. Population

Documents affecting real estate are recorded or filed in the county in which the property is located to:

1. Enable interested parties to know where to look to discover the various interests of other parties to the transaction 2. Give actual notice of the grantee's interest in the property 3. Comply with the terms of the statute of frauds that all transfers for more than one year be in writing and signed 4. Prove the validity of the execution of the document

The type of real estate ownership that is most all- inclusive is a:

1. Fee simple estate. 2. Life estate. 3. Conditional fee estate. 4. Reversionary interest.

What does broad form homeowners Insurance cover that the regular homeowners insurance does not?

1. Fire and Hail 2. Damage from a flood 3. Damage from a hurricane 4. Flying and falling objects, water penetration and HVAC collapse

A broker enters into a listing agreement with a seller under which the seller will receive $22,000 from the sale of a lot and the broker will receive any sale proceeds over this amount. This type of listing is a(n)

1. Gross listing 2. Legal and ethical way to ensure that the broker is compensated 3. Exclusive agency 4. Net listing

Some property owners list their property for sale with a broker. During the listing negotiations, they tell the broker that they want $138,000 for the property, and anything above that amount the broker can keep as a commission. A listing with this type of provision is known as a:

1. Gross listing 2. Net listing 3. Open listing 4. Non-exclusive listing

What is the "Do-Not-Call Registry?"

1. It is a list of land lines 2. It is a list of cell phone numbers 3. The Do-Not-Call Registry is a list of phone numbers that, with some exception, do not authorize incoming calls from telemarketers 4. It is a list of unlisted phone numbers

Janeen held fee simple title to a vacant lot adjacent to Mercy Hospital. She was persuaded to make the lot available to Mercy Hospital. She had her attorney prepare a deed that conveyed ownership of the lot to the hospital ." ..so long as it is used for medical purposes." After the completion of the gift, the hospital will own a:

1. Life estate 2. Tenancy for years 3. Determinable fee estate 4. Periodic tenancy

Which of the following is an example of a special agent?

1. Listing agent 2. Attorney in Fact 3. Executor of Estate 4. Trustee

Homeowners may deduct all of the following expenses when preparing their income tax return EXCEPT:

1. Mortgage interest on a third home 2. Mortgage interest on a first home 3. Mortgage interest on a second home 4. Real estate taxes

The numbering of sections in a township begins in the section in the:

1. Northeast corner and then runs easterly 2. Northwest corner and then runs easterly 3. Northeast corner and then runs westerly 4. Northwest corner and then runs westerly

Broker Janna was accused of violating antitrust laws. Of the following, she was most likely accused of:

1. Not having an equal housing opportunity sign in her office window 2. Undisclosed dual agencies 3. Price fixing 4. Dealing in unlicensed exchange services

All of the following are essential to the formation of a contract EXCEPT:

1. Offer 2. Acceptance 3. Consideration 4. Performance

The essential elements of a contract include all of the following EXCEPT:

1. Offer and acceptance 2. Signatures of the parties 3. Competent parties 4. Consideration

A listing contract in which payment of the commission is contingent on the broker's being able to produce a buyer before the property is sold by the owner or another broker is called a(n):

1. Open listing 2. Net listing 3. Exclusive-right-to-sell listing 4. Exclusive-agency listing

When the supply of a commodity decreases while demand remains the same we say:

1. Price tends to rise 2. Price tends to drop 3. Demand tends to drop 4. Demand tends to rise

Federal income tax regulations allow homeowners to reduce their taxable income by amounts paid for:

1. Principal and interest. 2. Repairs and maintenance. 3. Hazard insurance premiums. 4. Real estate taxes.

Salesperson Norman wants to be classified as a qualified real estate agent the equivalent of holding independent contractor status. All of the following are requirements for him to meet EXCEPT:

1. Receive substantially all of his income from the brokerage based on production, not time worked 2. Be free from supervision by his broker and office manager and have a contract stating he is an independent contractor for Income Tax Purposes 3. Hold a current real estate license 4. Do not have a written agreement with his broker

Homeowner Jessica acquired ownership of land that was deposited by a river running through his property by:

1. Reliction. 2. Succession. 3. Avulsion. 4. Accretion.

The part of the title insurance policy that sets forth all of the encumbrances and defects that will NOT be insured against is called the:

1. Schedule of defects. 2. Citation clause. 3. Non-exclusionary clause. 4. Exclusions

Real property can become personal property by:

1. Severance 2. Attachment 3. Hypothecation 4. Purchase

Land is considered to be:

1. Subject to personal property rights 2. A wasting asset 3. Immune to the forces of supply and demand 4. Indestructible

An article in the newspaper announces the population of the State has increased 12% in the past decade. What professional conclusion would draw with respect to supply and demand?

1. Supply of new homes would decrease 2. Demand for new homes would increase 3. Supply of new homes would increase 4. Demand for new homes would decrease

If a commercial tenant installs fixtures in a permanent manner. These are not trade fixtures. If the fixtures are not removed, who owns the fixtures at the end of the lease?

1. Tenant 2. Landlord 3. Property Manager 4. Next tenant

Which of the following is true of an assignment?

1. The contract is void if assigned 2. The assignor remains responsible for the contract even though it is assigned to the assignee 3. If assignment is not prohibited in the contract, the assignment still requires consent of the seller 4. Assignment is illegal in Hawaii

In an ethics case, the contract included the clause that the agent's responsibility to present offers ends with the acceptance of a contract. What conclusion did the hearing panel draw?

1. The licensee violated the terms of the contract and was held responsible for damages 2. The hearing panel declined to hear the case 3. The licensee was obligated to pay the difference of the two offers 4. The offer received after escrow opened was not presented but it did not constitute a violation of Article 1 of the Code of Ethics

Unless some other written agreement has been made, broker Hugo will usually receive his brokerage commission when:

1. The purchaser takes possession of the property 2. The seller lists the property with the broker 3. The transaction is closed 4. An offer, procured from a ready, willing, and able buyer, has been accepted by the seller

Which of the following best defines the law of agency?

1. The rules and regulations of the State's licensing agency 2. The rules of law that apply to the responsibilities of a person who acts as agent for another 3. The selling of another's property by a properly licensed brokerage company 4. The principles that govern one's conduct in business

Tenancy with survivorship means:

1. The tenancy interest will be inherited. 2. The tenancy interest will pass to the surviving tenants upon the death of one. 3. The tenant's heirs are survivors. 4. This is not a legal tenancy.

Fixtures are:

1. Treated as real property 2. Removable by a tenant before the expiration of the lease 3. Considered to be chattels 4. Removable by a tenant after the expiration of the lease

Which of the following lists correctly identifies the five types of real property?

1. Unimproved land, agriculture, arenas, residential and commercial 2. Residential; commercial, industrial, special purpose and agricultural 3. Developmental, special use, agriculture; conservation; urban and rural 4. Apartments, condos, townhomes, duplexes, single family homes and farms

Which of the following describes the conscious charging by a private lender of more than the maximum amount of interest allowed by law?

1. Usury 2. Penury 3. Assemblage 4. Leverage

When properly recorded in the county where the real estate of the defendant is located, a judgment becomes a(n):

1. Voluntary lien 2. Involuntary lien 3. Specific lien 4. Statutory lien

A testament is a:

1. Will 2. Sandwich lease 3. Pledge 4. Negotiable instrument

If the market value of a property is $184,500 and the assessment ratio is 35 percent, what are the monthly taxes if the tax rate is 30 mills?

A. $1,937.25 B. $179.37 C. $161.44 D. $1,614.38

The current market value of a property is $255,000, and it is assessed at 35% of its current market value with an equalization factor of 1.25. What is the amount of real estate tax due if the tax rate is $3.50 per $100 of assessed value?

A. $2,756.25 B. $3,445.31 C. $3,904.69 D. $4,880.26

When real estate taxes on a parcel are $2,400 a year, the assessment rate is 20%, and the tax rate 120 mills, what is the value of the property?

A. $200,000 B. $80,000 C. $40,000 D. $100,000

How many square miles are in a Township and how many acres are in a Section?

A. 1 sq. mile and 36 sq. miles B. 36 sq. miles and 640 acres C. 16 sq, miles and 40 acres D. 36 sq miles and 1 sq. mile

Under some loans covered under the Federal Truth-in-Lending Law, the borrower has a right to rescind the loan. The time allowed for the right to rescind is:

A. 3 days B. 5 days C. 10 days D. 14 days

The first month's loan payment included $412.50 interest on a $60,000 loan balance. What is the annual rate of interest?

A. 7.5% B. 7.75% C. 8.25% D. 8.5%

[Need Assistance] Randall listed a property in the center of town. The property was close to the parks, shopping, bus stops, schools and hospitals. Andrea, a prospective buyer, meets Randall at an open house and asks a number of listing type questions, such as the proximity of a particular grade school, the location of the nearest bus stop and how to use the bus to get to the nearest hospital. Andrea explains she relies on the bus for transportation of the needs of her daughter and herself. Weeks later and after a long list of questions, Andrea.....

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