Principles and Practices Maryland mid course exam

Which is a claim against a person and all of his property?

general lien

Why does discrimination still occur, even when it's illegal?

Discrimination is often not visible to the public.

In Maryland, how many hours of approved real estate courses must an individual complete before taking the real estate salesperson exam?

60 hours

Which of the following is a true statement about loan types?

A graduated payment is one where loan payments ratchet up at predetermined intervals.

What's an involuntary lien?

A lien created without a property owner's consent

Which of the following is true of agency agreements?

A listing agreement is an express agreement. An express agreement is committed to writing. You can't list someone's property to sell without the seller's express written agreement.

Which of these examples describes a pre-payment penalty?

A monetary penalty imposed on a borrower for paying off a loan before its intended time

What type of buyer is most likely to be involved in an assignment of contract?

A wholesaler Wholesalers often write a contract to purchase a property and include an assignment clause. The wholesaler then finds another buyer who pays more than the wholesaler agreed to pay originally, thus earning the wholesaler a profit.

How can an easement be terminated?

Abandonment

Which mortgage clause gives the lender the right to make all monies owed due immediately if the borrower defaults?

Acceleration The acceleration clause gives the lender this right. It accelerates all monies owed if a borrower defaults.

Kenneth enters a contract to sell his home to Valerie, who puts down a $5,000 earnest money deposit. At the last minute, Valerie backs out of the deal. Kenneth keeps the earnest deposit. This is an example of ______.

Accepting liquidated damages

Which of the following is an example of price fixing?

An agreement between competitors to make all listing contracts for six months An agreement between competitors to make all listing contracts for six months is price fixing, which isn't always related to commission.

A trust involves a special relationship called a fiduciary relationship. Which of the following statements is true regarding trusts?

Any asset may be held in a trust. Trusts are very flexible and accommodating. Any asset may be held in a trust.

What are improvements with regard to property?

Artificial attachments to land that include items such as fencing, buildings, and walkways

You should ______ before you affiliate with a broker.

Ask lots of questions

Clark works for Acme Bank and asks for your assistance. He wants you to look at a property that's about to go into foreclosure and provide him with a report on its current marketability and a price for his bank. What's Clark most likely asking you to provide?

BPO

Consuela is a real estate licensee, and she has three other licensees working under her supervision. What type of license does Consuela hold?

Broker

Which type of analysis is a broad estimate of price in case the lender must take over the property and sell it to an investor or on the market?

Brokers price opinion

Which department decides which development projects require a permit or approval?

Building department

One area of town has maximum building height requirements and setbacks for the front, side, and rear yards. These requirements are all indicative of ______.

Bulk zoning These requirements are all indicative of bulk zoning, which may be seen in both commercial and residential areas, and which decreases density.

With a purchase money mortgage, who retains the title to the property?

Buyer

Which antitrust act of 1914 was a supplement to the Sherman Antitrust Act?

Clayton Act

Property with ownership by more than one person is known as ______.

Co-ownership

In the sales comparison approach, which of these are selected and evaluated both quantitatively and qualitatively against the subject property?

Comparables

Under a land trust, the owner directs a ______ to hold title to the real estate.

Corporate fiduciary

Which type of lender is a member-based cooperative that provides credit for auto loans and home loans, takes deposits, and offers savings vehicles and money markets?

Credit union

The Truth in Lending Act requires lenders to make certain ______ to consumers.

Disclosures

Which of the following is a right to use the land that doesn't necessarily involve an adjoining property?

Easement in gross

Which one of the following tasks must a licensee perform for her buyer client?

Ensure that the buyer receives copies of all signed paperwork.

Non-lawful possession after the expiration of a lease is called ______.

Estate at sufferance

In which of the following types of contract is one or more of the contract's terms yet to be completed?

Executory contract

A buyer client asks you to do something that would violate fair housing laws, but that will earn you an amazing commission. What should you do?

Explain that you cannot do it, because it's a fair housing violation, and you could both get into trouble for doing what she's asked.

What should determine agency in any given real estate transaction?

Express agreement

If individuals experienced housing discrimination, they could file a complaint based on the provisions of which act?

Federal Fair Housing Act of 1968

To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which element is applied first?

Financing terms and cash equivalency When using the sales comparison approach, appraisers consider elements in a specific order: financing terms and cash equivalency, conditions of sale, market conditions at the time of contract and closing, location, and physical characteristics.

Which type of mortgage has an interest rate that remains constant over the life of the loan?

Fixed rate

Another term for a valuation is ______.

Formal appraisal Another term for a valuation is a formal appraisal. This is a professional appraiser's unbiased opinion of value.

A form of depreciation or loss in value caused by defects in design is called ______.

Functional obsolescence

What type of real estate agency relationship usually exists when a licensee has the broad responsibility of handling all of the details of a specific transaction?

General A general agent has the responsibility of handling all details of a specific transaction. Property managers often serve as general agents.

Several brokerages in a certain area agree to stop running advertisements in a local publication. What type of antitrust violation is this?

Group boycotting

Kevin is having an appraisal performed on a piece of property he's interested in buying. He's especially interested in hearing about the estimated rate of return the property could pull. What type of value is he interested in?

Investment value

Karen's house was recently foreclosed on to pay off a lien on her home. What happens to any extra money after the lien and expenses of the sale are paid?

It goes to Karen. Once all liens and sale expenses have been covered, any extra funds from a foreclosure sale are given to the former owner.

James is a real estate licensee in Maryland. A complaint has been brought against James by the Civil Rights Commission for a fair housing violation. Which of the following is true?

James could be sanctioned by both the Civil Rights Commission and the Real Estate Commission. James could be sanctioned by both the Civil Rights Commission and the Real Estate Commission. Depending on the outcome of the investigation, the Civil Rights Commission could bring a civil action against James, as well as fine him. Only the Real Estate Commission can revoke his license, though.

Janet is a twenty-something salesperson at a small country brokerage. She enjoys her job but longs for the city life. She would like to change brokerages. Which of the following is true?

Janet will need to submit a transfer application to the commission.

In which of these scenarios would the consumer need a real estate license?

Jessie is searching for a new home for a friend moving into town. Upon completion of the transaction, Jessie will be compensated 2% of the sale price for her time and effort.

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?

Lender

Who does the subprime market cater to?

Less creditworthy borrowers

Linda is the sponsoring broker at Gardner Homes. Which of the following best describes what happens with her license?

Linda displays her license at Gardner Homes.

Which type of legal description do courts prefer?

Lot and block Courts prefer the lot and block system for providing a description of a property.

Which of the following describes a function of a planning board?

Maps out zones and specifies allowed use within the zones The planning board's function is to map out zones and to specify allowed use within the zones.

A couple of licensees you know from different firms are tired of competing with one another for the same listings. You overhear them saying, "You take the north side of town and I'll take the south, so we aren't stepping on each other's toes." You stop their conversation to tell them they're committing an antitrust violation. Which one is it?

Market allocation

Which term describes the temporary halting of new property development with the community's best interests in mind?

Moratorium

Sara has defaulted on her home loan. Her ______ gives the lender the right to sell the property.

Mortgage The mortgage gives the lender the right to sell the property if the borrower defaults.

Which of these policies is an example of discrimination based on familial status?

Mortgage The mortgage gives the lender the right to sell the property if the borrower defaults.

Your buddy in the next county gave you a referral fee. The check came to your office in your name. You deposit it. Is this okay?

No, because all compensation must come through your broker.

Parker enters into a contract with seller Derrick to buy his home. Before finalizing the sale, Parker has a change of heart and decides to renounce all worldly possessions. He no longer wants to buy Derrick's home, but his brother, Tom, agrees to take Parker's place as the buyer in the purchase contract. This is an example of ______.

Novation

Which occupancy type is eligible for a VA loan?

Owner-occupied

To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which of these elements is applied last?

Physical characteristics The elements considered in the sales comparison approach are applied in a specific order: financing terms and cash equivalency, conditions of sale, market conditions at the time of contract and closing, location, and physical characteristics.

If a community isn't growing in an orderly fashion, which local land use group would most likely be at fault?

Planning board

Which decision stated that separate facilities for blacks and whites were constitutional as long as they were "equal"?

Plessy vs. Ferguson The U.S. Supreme Court's 1896 decision in Plessy vs. Ferguson was the first to establish the 'separate but equal' doctrine of legalized racial segregation..

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

Plottage

Mortgages may still, but only rarely, contain which of the following clauses?

Prepayment penalty clause

Your neighbors build a high-quality addition to their home, increasing its value compared to your own home's value. Because of this, you notice a bump in your property value. Which economic principle is at work here?

Progression

What's inverse condemnation in regard to zoning?

Property values decrease because adjacent property was rezoned. With regard to zoning, inverse condemnation is related to a loss of value due to downzoning of adjacent property.

Which legal description method is regulated by the U.S. Department of the Interior's Bureau of Land Management?

Rectangular government survey The U.S. Department of the Interior's Bureau of Land Management regulates the rectangular survey system.

Benjamin is interested in a piece of property but is curious about its exact boundaries. What's one of the best ways to find this information?

Reference a prior deed for the property.

What is a sketch that shows the location, size, and shape of any improvements on a property being surveyed?

Spot Survey

Mavis is a buyer's agent working with Blaine, an unrepresented seller. Mavis's buyer, Cintra, makes an offer on Blaine's property. Mavis assists Blaine with the paperwork. What's Mavis's relationship to the parties?

She's an agent to Cintra, and the seller is her customer.

Which antitrust act of 1890 prohibits activities, agreements, and conspiracies that result in an unreasonable restraint of trade?

Sherman Antitrust Act

Which of the following is an example of a unilateral contract?

Sherry promises to give Brent a ride home from work, and flakes. A promise is a unilateral contract if there's no reciprocal promise. Breaching a contract in which one party performs isn't a unilateral contract.

If the private individual owner doesn't own more than three single-family homes at one time, which exemption from the Fair Housing Act could apply?

Single-family housing sold or rented without the use of a broker Single-family housing sold or rented without the use of a broker is exempt, provided the owner doesn't own more than three single-family homes at one time.

Which economic characteristic of land contains the concept that a property's value is impacted by where it's located?

Situs Situs could well be thought of by three words: location, location, location.

Which of these is the most ethical reason to comply with fair housing laws?

Societal strength in diversity There are many reasons to comply with fair housing laws, and societal strength in diversity is one of the most ethical.

Early in its history, the Federal Housing Administration officially supported keeping "incompatible" racial groups out of the newly developed white suburbs. This practice is known as ______.

Steering Real estate agents could legally steer all of the whites to the white areas and all of the blacks to the black areas. This practice, called steering, is now illegal.

Loans made to high-risk borrowers, at higher interest rates and with higher fees, are ______.

Subprime loans

In a buyer agency relationship, who does the licensee represent?

The buyer

What's a promissory note?

The borrower's promise to repay a certain sum of money to another party (the lender or holder of the note) under specified terms

Which of the following is a true statement about antitrust penalties?

The maximum fine may be increased to twice the gain or loss involved.

Some first-time homebuyers tap into the bank of mom and dad. In what circumstance would the parents' contribution be acceptable for loan qualification?

The money is given as a gift with no expectation of repayment.

What is used to secure a home loan in Maryland?

The property

Randy, a licensee, is in a seller agency relationship with Brent, a seller. The buyer is Tim. Who's Randy's client?

The seller (Brent)

Which of the following is a true statement about loan assumptions?

They may trigger a due on sale clause, making the seller have to pay the entire loan balance.

Which of the following describes community property rights?

They're a requirement in some states for married couples to acquire title to real estate as community property. Community property rights are a requirement in some states for married couples to own equally property that's purchased during the marriage, regardless of which spouse's name is on the title.

What's one of the ways that bulk zoning achieves its objectives?

Through setbacks

Which type of antitrust violation occurs when the providing of one service is made dependent on the customer or client obtaining another recommended service?

Tie-in arrangement

Misti and Nick own a piece of real estate in which they can spend a designated week each year on the property. During other weeks, other owners use the property. What type of property is this?

Time-share

The purpose of a CMA is ______.

To determine an appropriate listing price range

Why might a lender charge a prepayment penalty?

To recoup interest not received

When using the sales comparison approach to value a property, all of these are categories of adjustments except ______.

Types of obsolescence Categories of adjustment include financing terms and cash equivalency, conditions of sale, market conditions at time of contract and closing, location, and physical characteristics.

Physical characteristics of land include its immobility, indestructibility, and ______.

Uniqueness (nonhomogeneity)

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

Value in use Here is an example: A wheat farm near a thriving metropolis is valued in its present use as $2,000 per acre. But as a subdivision, it might be worth $40,000 per acre.

There are a lot more sellers than buyers in the current market. How will this demand influence value?

Value will be pushed downward.

A salesperson or associate broker may perform real estate brokerage activities under what circumstances?

While associated with and supervised by a broker

If someone wants to make a change to a zoning ordinance, they must submit a request for a variance or special use permit to which of the following groups?

Zoning board of appeals

Only contracts that contain words such as ______ after the assignor's name are assignable without prior consent of the parties.

and/or assigns

What's a CMA?

comparative market analysis

Joint tenancy requires unities of time, title, ______, and possession.

interest

A property has been listed on the market for four months with no offers. Finally, a buyer makes an offer that is 18% less than the list price. How was this property likely priced when it first hit the market?

overpriced

Betty hires a contractor to replace her gutters. Within days, the gutters leak and flood her basement. She complains to the contractor, who replaces the gutters again. The next time it rains, the gutters leak and flood Betty's basement a second time. Frustrated, Betty decides to file a lawsuit against the contractor in an attempt to recover the money she's lost. This is an example of ______.

suing for damages

How long does the borrower have to rescind or cancel a new mortgage obtained for an already owned property?

three days