National Practice Exam Wrong Questions (4)

Recently retired Admiral Bongo and his wife, Lucy, contact you. They want you to help them purchase their dream house now that he's retired, but one that has the necessary accommodations for the admiral's disability. They also confide in you that they don't have a lot of money saved up for a down payment. Which type of financing may work best for them?

-A VA loan, which requires no downpayment Current and former members of the military may be eligible for a VA loan. Although the FHA 203K loan allows for renovation financing, VA loans require no down payment.

Saul was unhappy after he and Janelle liquidated their business. Janelle sold some items for less than he'd initially agreed to and he wanted the full price to be included in the profit split. He wanted to sue, but he was required to pursue other options. What contract clause kept Saul from being able to sue?

-Arbitration An arbitration clause in a contract specifies that any contract disputes will be settled through arbitration, rather than through the court system.

Bankruptcy of the ___________ (not the agent) or the _________ terminates an agency agreement by force of law.

-Broker -Principal

Why would someone receive an acceleration letter from their mortgage lender?

-They may be 2 or 3 months in default Before filing a foreclosure against a homeowner, a lender must send an acceleration letter. Lenders can do this immediately when a borrower falls behind, but they usually don't until the borrower is two to three months in default.

Which type of agent is an escrow officer?

-They work in a limited capacity to serve the parties, therefore they are limited agents

_________________ titles carry a higher standard of assurance than a _________________ title.

1) Marketable 2) Insurable

What is a superfund site?

A Superfund site is a site identified by the EPA as requiring clean-up of hazardous waste under CERCLA.

CAN-SPAM Act

A federal law that placed guidelines on mass commercial emails.

How can asbestos can cause cancer?

Asbestos fibers decay, and the particles in the air can damage the lungs when inhaled.

When Gillian looked at the legal description of the property she was interested in purchasing, she read the following: "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

What are Bounds?

Bounds are physical features that define the boundaries of the property. Combined with directions and distances (metes), these form the basis of a metes and bounds legal description.

The Hendersons were hoping to list their home for $400,000; however, four other comparable homes in the neighborhood just went up for sale, and they now must list their property at $380,000 to sell quickly. Which economic principle is at work here?

Competition If there are many similar properties on the market, competition is high and that drives prices down

In an amortized loan, the interest portion of the mortgage payment generally ______ over the life of the loan.

Decreases

A borrower has a 30-year, $500,000 loan with an interest rate of 6.25%. His monthly principal and interest payment is $3,078.59. What's the total amount of interest he'll pay over the course of the loan?

First, multiply the monthly payment by the total number of payments. Then subtract the original loan value: $3,078.59 x 360 = $1,108,292.40 ‒ $500,000 = $608,292.40.

Government loans?

Government loans are insured by the FHA, guaranteed by the VA, or provided by the USDA, all of which are government agencies.

What happens if a chain of title is broken?

If a link in the chain of title is broken, the attorney performing the search will branch out from public records to try to mend the link. State laws dictate how far back the chain must be unbroken for a title to be marketable.

Jordan works as a property manager for several residential property owners. When she receives security deposits from tenants, how long does she have to deposit them into an escrow account?

It depends on her states requirements

Lenore makes a 95% offer on a townhouse that's listed at $285,000 and includes an earnest money deposit for 10% of her offer, which the seller accepts. She brings to closing a cashier's check for $35,025 comprising the balance of her 20% down payment and closing costs. What's the amount of her total down payment?

Lenore's offer is $270,750 which is 95% of the list price ($285,000 x .95 = $270,750 ). Her total down payment is 20% of her accepted offer of $270,750, which is $54,150 (or $270,750 x .2).

Who controls budgeting, site-plan review, and building codes?

Local governments and their planning boards control

Gabi owns one parcel measuring one square mile and another parcel measuring one mile x half a mile. She combined the parcels and sold them for $2.5 million. What price per acre did she receive for the land?

One square mile is 640 acres. The area of the second parcel is 5,280' x 2,640' = 13,939,200 sq. ft. Divide that by 43,560 (sq. ft. in an acre) to get 320 acres. 640 + 320 = 960 acres. $2.5 million divided by 960 acres = $2,604.17 per acre.

Ordinary Life Estate

Ordinary life estates are granted for the lifetime of the grantee. When the life estate holder dies, remaining interest is either returned to the original owner (reversion) or is granted to a third party (the remainderman).

How are fines assessed for violations of the CAN-SPAM Act?

Per violation, which can be a single email

What does permeance of investment mean?

Permanence of investment means that some improvements will remain stable long term, with stable returns over time.

Jacob is a developer who purchased 78 acres and had it subdivided into half-acre lots. He decided to install sewer and underground electric for the entire subdivision, because he thinks that he will easily recoup his initial infrastructure investment. This is an example of which economic characteristic of real property?

Permeance

Sheila is unable to use her designated timeshare week this year. What will happen?

She can exchange the week for another Timeshares allow the exchange of your designated week for another.

Jean is a licensee for At Home Realty. She chooses her own schedule, sets her own sales goals, and is compensated based on commission. She must complete three training courses each quarter and the required number of CE hours to maintain her license. She must belong to the local REALTORS® association. The firm doesn't pay for employment taxes for Jean. She receives no insurance or other benefits. Which of these factors might cause the IRS to classify Jean as an employee instead of an IC?

She must take three training classes through the firm.

Which fiduciary duty may continue even after the transaction closes?

The duty of accounting continues even after the transaction closes. For instance, any money the agent holds after a transaction closes must be accounted for until it's delivered to the appropriate party.

Aidan accepted a contract for the sale of his home. The home inspection report reveals that certain aspects of the house don't meet the current building code. What's the most likely result?

The house is probably not required to meet the current code.

A mortgage is a legally binding document that creates a lien on a piece of property and gives the lender the right to foreclose on the property if the borrower defaults. Who or what is the mortgagee?

The lender has the mortgage on the property, so the lender is the mortgagee.

What is the overarching theme addressed by statutory duties in most states?

The overarching theme of statutory duties is that licensees can't take any action that would adversely impact the client's legal interests.

Jorge accepted a seller's offer of insurable title. The transaction hasn't reached closing, and a previously unknown title defect has been revealed. What happens now?

The seller may not be required to clear the defect before closing; depending on the type of defect (e.g., an easement) it may not impact closing. Other types of defects may require action before closing.

Ashton, an appraiser, is estimating value using the sales comparison approach. He applies more weight to two comparables over several others he used. What process is he utilizing?

Through a correlation process, the most weight may be given to one or two comparables, or equal weight may be given to all. The term reconciliation is often synonymous with correlation.

Items that run with the land continue to be in effect when the property changes hands. A lease agreement is one of these items. Water bills are another. (T/F)

True

What factors does the underwriter consider in reviewing a mortgage loan application?

Underwriters review the borrowers: -credit score and history -capacity to repay the loan -and collateral.

Habendum Clause

describes the type of conveyance. It's typically used if title being conveyed is less than fee simple.

UETA supports the use of ___________________ and allows the parties involved to decide whether or not to use an electronic medium.

electronic records

The statute of frauds in most states requires that lease agreements for __________________________ be in writing.

periods of more than one year

What does the lot and block system use to develop a property's legal description?

plat referecnes