NATIONAL EXAM (Part 1 :)

"Beginning at the corner of State Route 61 and Hallowell Road, north for 314 feet, then southwest for 193 feet." In this description, what does "North for 314 feet, then southwest for 193 feet."

Metes involve distances and directions

Sandra is purchasing a home for $200,000 and provides a $3,000 earnest money check to the seller. Her closing costs and down payment total $7,000. Assuming that Sandra is financing the purchase, how much should she bring to the closing?

Sandra brings to closing the total amount of her down payment and closing costs ($7,000), less the earnest money provided when the contract was signed ($3,000), or $4,000.

Replacement Cost

The cost to repair or replace property using new materials of like kind and quality with no deduction for depreciation.

Plottage

The increase in value or utility resulting from the consolidation (assemblage) of two or more adjacent lots into one larger lot.

Habendum Clause

clause in a deed that defines or limits the type of interest being conveyed

Part Purchase Money

mortgage given as part of the buyer's cash for the purchase of real property, and delivered at the same time that the real property is transferred.

Reconveyance Deed

used by a trustee to return title to the trustor

What does a balloon payment represent at the end of a loan term?

A balloon payment is due at the end of a balloon loan, because the loan has only been partially amortized, which means that some of the principal remains at the end of the loan term.

operating budget

A budget that states how managers intend to use organizational resources to achieve organizational goals.

Cognovit Clause

A clause in a legal document that allows an attorney to plead guilty on behalf of a party without further notice. This is usually used if a party fails to pay contractual compensation, such as a tenant failing to pay rent.

land sale contract

A land contract is between the buyer and the seller of real property, in which the seller provides the buyer financing in the purchase, and the buyer repays the resulting loan in installments.

Straight Term Loan

A loan in which only interest is paid during the term of the loan, with the entire principal amount due with the final interest payment.

Metes and Bounds

A method of land description which involves identifying distances and directions and makes use of both the physical boundaries and measurements of the land.

Assumable Mortgage

A mortgage that can be assumed by the buyer when a home is sold. Usually, the borrower must "qualify" in order to assume the loan.

Tyra owns a nail salon that's located in a strip mall. Her rent every month includes $1,800 base rent and 10% of her gross sales. What kind of lease does Tyra have?

A percentage lease is one in which a tenant pays a base rent plus a percentage of gross sales. This is most common with retail tenants.

Easement in Gross

A personal right to use the land of another.

Covenant of Warranty

A promise that the grantor will DEFEND the grantee against any claim of superior title

promissory note

A promissory note is a negotiable instrument and can be transferred to a secondary holder who has the right to enforce the note's terms.

When a licensee is working with a property located near a Superfund site, what does that mean?

A property with a known Superfund site in the vicinity requires disclosure, as this is a material fact.

Land Contract

A real estate installment agreement where a buyer makes payment to a seller in exchange for the right to occupy and use property, but no deed or title transfers until all, or a specified portion of, payments have been made. e.g. Charles is selling his property to Seth. Charles is financing part of the transaction for Seth, who will make payments to Charles while Charles retains the property title. What is this an example of?

section

A square normally 1 mile on a side. The Land Ordinance of 1785 divided townships in the United States into 36 sections.

subordination agreement

A written agreement between holders of liens on a property that changes the priority of mortgage, judgment, and other liens under certain circumstances.

Exclusive Agency

An agency in which a principal grants an agent an exclusive territory and does not allow another agent to compete in that territory.

Shannon doesn't understand why her agent wants her to add a contingency to her purchase offer. Her agent, Scott, explains that the property is in a transitional neighborhood, and it might be overpriced. What type of contingency is Scott recommending?

An appraisal contingency gives the buyer the opportunity to renegotiate the price if the appraisal comes in less than the agreed-upon purchase price. This is an important contingency in an area where values are shifting.

Easment Appurtenant

An easement that runs with the land - whoever owns the land owns the easement

Freehold Estate

An estate in real property which continues for an indefinite period of time.

Fee Simple Defeasible

An estate which may be lost on the occurrence or nonoccurrence of a specified event.

Fee Simple Determinable

An ownership in which the estate is held " so long as" or "during the period" a condition or limitation is maintained.

Easement by Implication

An unexpressed, but legally binding understanding regarding a right of way between the parties, created by their actions.

Your buyer client, Percy, wants to start searching for his dream house and knows he needs to obtain financing to accomplish that. What's his first step?

Before Percy even begins looking for properties, he should get pre-qualified. He may also consider getting pre-approved.

When considering loan risk, which two items will lenders consider in equal measure?

Borrower and property The property's value (as underlying collateral) and the borrower's ability to repay the loan will be equal considerations for the lender.

"Beginning at the corner of State Route 61 and Hallowell Road, north for 314 feet, then southwest for 193 feet." In this description, what does "Beginning at the corner of State Route 61 and Hallowell Road" represent?

Bounds are physical features that define boundaries of a property.

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?

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) = $842.74

Myra is preparing a monthly report pursuant to the terms of a property management agreement. This report details actual income received from rent and other fees, along with actual expenses paid. What report is she preparing?

Cash flow - created monthly & shows the current financial status of a property. It accounts for income received (such as rent, late fees, etc.) and expenses (such as utilities, personnel, repairs, etc.) paid.

Which option is true if a deed is not recorded after closing?

Challenge. If a deed isn't recorded after closing, the property's legal ownership can be challenged. Recording isn't required, but it's difficult for a property owner to prove ownership without public recordation of the deed

Quentin brought an application before city council to build a shopping mall on 17 acres south of town that currently don't have a zoning designation. The council referred him to the planning commission, which will review the application in light of the city's ________.

Comprehensive Plan

Which of the following is an example of constructive eviction?

Constructive eviction occurs when a tenant moves out due to the landlord failing to meet certain building requirements. e.g. a tenant moves out of the apartment after repeated unsuccessful requests to the landlord to repair the broken water heater.

Easement by Prescription

Created through continual use over a certain period of time. It must be continual, visible, & w/o approval. Example - a private road becomes public.

Darren and Natalie are first-time buyers who have decided to purchase a newly built townhouse. Their agent, Jenner, tells them that the builder must provide a one-year home warranty. Which of the following conditions is most likely true?

Darren and Natalie are using an FHA-insured loan.

Kurt bought a vacant lot in a development that was 85% completed. When he started working with the builder to lay out where the house and driveway would lie, it was determined that he would need an easement because his driveway would spill over onto the adjacent lot by a few feet. What type of easement is this?

Easement appurtenant

Tiers in the rectangular government survey system are formed by

East-west lines of a survey, which are parallel to the baseline, are called township lines. Township lines form strips of land known as tiers, and townships fall within these tiers.

Elaine owns a home on a flag lot behind James. Her easement for a common driveway runs through James's property. What kind of ownership rights does Elaine have of the driveway that runs through James's property?

Elaine has non-possessory rights to the portion of the driveway that runs through James's property.

Thad received multiple offers on his property and is reviewing them with his agent Nora. All of the offers have at least one contingency. Nora recommends that they reject the second offer, because it has a contingency that's generally the most risky. Which contingency is that?

Financing

Covenant of Seisin

Gives the assurance that the grantor has the exact estate in the quantity and quality which is being conveyed. "I own and I have the right to sell it."

Wendell just listed Barb's home. Barb told him that there weren't any easements on the property, and Wendell hasn't seen a copy of the survey. What is Wendell's responsibility relative to the disclosure of any easements?

He only needs to disclose easements if they're known.

Juan has finalized his comparables and is ready to determine a property's appraised value. How does he do this?

He reviews his process and places more weight on the most similar comparables that he believes to be the most valid.

Related to reasonable accommodation of being allowed to have an assistance animal, which statement is true?

If the disability for which the tenant is making the request is obvious, the landlord may not ask why it is needed. Housing providers may inquire as to the nature of the disability if it's not apparent, and they must permit assistance animals for tenants with documented disabilities without charging an additional pet deposit.

Your client submits an application to rent a condo unit. He has excellent credit and has had the same job for a long time. He uses a cane to help with his mobility. When his application is rejected, he feels it's due to his disability. He is protected under what federal law?

In 1988, the Fair Housing Amendments Act provided consumers with remedies if they became victims of discrimination in housing and also added familial status and disability to the list of protected classes.

Juan secures a fixed rate amortized 30-year loan for $295,000 at 4.25%. If his monthly P&I payment is $1,750, how much interest does he pay in the second month of the loan?

In the first month, Juan pays $1,044.79 in interest ([$295,000 x .0425] ÷ 12). His monthly payment (stated in the question) is $1,750, so that means he paid the principal down $705.21 ($1,750 - $1,044.79). His new principal balance is $294,294.79 ($295,000 - $705.21). We use the new principal balance amount to calculate interest for the next month. Juan pays $1,042.29 in interest ([$294,294.79 x .0425] ÷ 12).

What might the government do if property owners fail to pay taxes on their property?

Lien on it

Local authorities lack police power over which of the following?

Local authorities have police power over budgeting, zoning, and subdivision development, but they lack police power over federal government construction projects.

Margo's accountant tells her that she's eligible to deduct the property taxes she paid last year. Select the statement about this deduction that's true.

Margo is in the ownership stage of the property ownership lifecycle.

Meg is considering a move to a foreign country and wants to deed her property to her son, Christian, who's 16. Which of these must occur to make this transfer legal?

Meg must sign the deed and have her signature acknowledged.

Sunshine Surveyors Inc. created a lot and block survey for a new residential development, Happy Acres. The first thing the surveyor did when he surveyed the new neighborhood was to reference what type of description?

Metes and bounds

Which of these landlord actions would NOT be considered a reasonable accommodation?

Moving disabled tenants to units near an elevator

Gregory is a widower who subsequently remarried. The couple lives in a large house Gregory owns in severalty. When they decide to downsize, Gregory grants an ordinary life estate in the property to his daughter from his first marriage, Giselle. He names Giselle's son Will as remainderman. When will the property revert to Gregory's current wife, Dora?

Never... Since Gregory didn't keep a right of reversion, the property won't revert to him, and it certainly won't revert to Dora. The life estate will terminate upon Giselle's death, and fee simple ownership will transfer to the remainderman, identified as her son Will.

Bo's real estate ad states: "Custom homes for sale with scenic mountain views. Easy financing and low down payments." What else must be included in the ad in order for it to comply with TILA?

Nothing... Under TILA, ads that mention general financing terms, such as "low down payment" or "easy financing," do not require additional disclosure. If Bo had gotten more specific (e.g., "10-year loan with 0% down") he would need to include more information.

Eileen is preparing a quarterly report pursuant to the terms of a property management agreement. This report shows the property owner whether this property operated at a surplus or deficit during the reporting period. What report is she preparing?

Profit and Loss Statement

Desk Cost

Profitability measure calculated by dividing the total operating expenses of the firm by the number of licensed sales associates.

Which of these is NOT one of the ways in which an agency relationship may be terminated without penalty for either the agent or the principal?

R U N G E

Property managers must recognize the federally protected classes under ADA and the federal Fair Housing Act. Which list most accurately lists these classes?

Race, color, religion, national origin, sex, familial status, or disability.

When property changes hands, the deed is recorded. There's a fee for recording. What is the benefit to the grantee of having the deed recorded?

Recording and possession give the public constructive notice that ownership has changed hands.

What classification of water rights includes the two smaller sub-classifications of navigable and non-navigable waterways?

Riparian water rights may apply to one of two sub-classifications: navigable or non-navigable waterways.

Brownfields Legislation

SMITHS!!!! encourages development of abandoned properties by shielding innocent developers from liability for toxic wastes that existed at a site prior to purchase.

If Hal sold his client's listing for $230,000, but it appraised at $200,000 and the buyers agreed to put the extra $30,000 down, what will Hal's commission be if he charged 5%?

Sales price x commission rate = commission. $230,000 × 5% = $11,500.

Which statement best describes the criteria that would permit Tristan to legally engage in dual agency?

State & firm

Open agency

The buyer may work with an unlimited number of brokers, and must compensate the broker who locates the property

While conducting a property valuation site visit, Todd realizes that nearly half of the property has no improvements on it. There's no apparent reason why the land would be unusable, which indicates that it is _____.

The correct term to use for unused land that could be separated and sold is "excess."

Law of Agency

The law that governs the relationship between a principal and his or her agent.

Phoebe's gross monthly income is $4,200, and she has $360 in monthly non-housing debt payments. The lender's qualifying ratios are 28% for the housing ratio and 36% for the total DTI ratio. What's the maximum housing payment she can afford?

The maximum house payment is the lesser of the amounts calculated using both ratios. DTI: $4,200 x .36 = $1,512. $1,512 - $360 = $1,152. Housing ratio: $4,200 x .28 = $1,176. Phoebe's maximum payment is $1,152.

Fee Simple Absolute

The maximum possible estate or right of ownership of real property, continuing forever.

Real estate professionals handle many documents related to real estate transactions. Which one of the items listed below is one of the most important in detecting mortgage fraud?

The original sales agreement and any addenda

Which option is true if a deed is not recorded after closing?

The property's legal ownership can be challenged.

With the cost approach to value, what is the replacement cost?

The replacement cost reflects the cost to build a functionally equivalent improvement, as opposed to the reproduction cost, which is the cost to build an exact replica of the subject, with the same materials and deficiencies.

The daily property tax rate is $1.23 and closing is August 31. Assuming the buyer owns the property on closing day, and the seller hasn't made any payments, what will the seller owe at closing using the calendar year proration method? Round to the nearest whole dollar.

The seller owes $298. The seller owns the property for 242 days of the year, and 242 days × $1.23 = $297.66, or $298 if rounded to the nearest whole dollar.

Jerry and Simon signed a contract so that Jerry could purchase all of Simon's restaurant equipment for one price after Simon closes his restaurant next month. The contract contains a provision that states Jerry has one year from the purchase date to file a suit relative to the purchase. After the year is up, Jerry forfeits the right. What kind of contract clause is this?

The statute of limitations states the time frame in which a party can file a lawsuit relative to the contract.

Taxes, insurance, and maintenance are property expenses that are sometimes covered in a tenant's lease payment. These are collectively referred to as the _______.

These three items together are known as the nets—or you can use the acronym TIM for taxes, insurance, and maintenance.

Municipality XYZ created a document that regulates the permitted land uses and zoning classifications within the town boundaries, and does so while staying within the parameters of the comprehensive plan. Municipality XYZ has created _______.

This is a description of a zoning ordinance.

Sophie received title to her grandmother's farm last spring. For almost 100 years, Sophie's family has kept cows and goats on the 120-acre property. The deed came with a caveat: Sophie is never to raise pigs on the farm. If she does, then the property is transferred to her brother. What did Sophie's grandmother create?

This situation describes a deed condition, which is a qualification or requirement placed on property ownership. If the owner doesn't comply with the condition, ownership is lost.

Which statement correctly identifies a federal fair housing law and what it addresses?

Title VIII of the Civil Rights Act of 1968 (aka the Fair Housing Act) prohibits housing discrimination based on race, color, national origin, and religion.

Which of the following protects the owner against financial loss if the real estate title has defects?

Title insurance

A seller wants to net $10,000 after the broker's commission of 6% and a loan balance of $250,000 are paid. For how much does the property need to sell?

To calculate this, start with 100% minus a 6% commission, which is 94% or .94. Take $250,000 plus $10,000 and divide this amount by .94.

Area Variance

Undesirable or a detriment to the nearby properties Achieved by any other means Substantial Detrimental to the physical or environmental conditions in the neighborhood

Clay is interested in purchasing a condo about a mile from the city center. He went to the city records office to review everything that was filed by the condo developer. In the condominium declaration, he sees how ownership of the common areas is shared among the ________.

Unit Owners

When you use a comparative market analysis to calculate a suggested listing price range for a particular property, which of the following actions will you take?

Use adjusted prices from comparables and refine a range using active listings, expired listings, and possibly pending listings.

When calculating loan-to-value ratios, which of the following will be used by the lender?

When calculating loan-to-value ratios, which of the following will be used by the lender?

Ease by necessity

Without this easement—usually involving access to a road—the owner requiring the right of passage would be landlocked.

Exclusive right to sell

a listing that gives the broker the right to collect a commission no matter who sells the property during the listing period.

Wraparound Mortgage

a mortgage that includes a first and second mortgage instead of having two different ones

Title Insurance

a type of insurance that protects the buyer if problems with the title are found later

board foot

a wood measurement of 144 cubic inches

open agency agreement

buyer allowed to use unlimited number of brokers, and must compensate the broker who locates the property.

Acceleration Clause

entire loan due immediately if you miss a payment

Nearby industrial odor is an example of which type of depreciation?

external depreciation

Zoning

the practice of classifying areas for different types of development and land use