Principles and Practices of Real Estate
The Equal Credit Opportunity Act became law in which year?
1990
For how many months must a lender keep the applicants records on file?
25
Under RESPA, how many days does the borrower have to review the Closing Disclosure?
3 business days
All ADA compliant doors must be at least...... inches wide
32
Which of the following is not a prohibited act under the ECOA?
Asking a woman if she is divorced or widowed?
Which of the following is not considered a prohibited act?
Denying a housing opportunity to someone based on income
Who loans conventional mortgages?
Financial institutions and banks
The seller mails a late disclosure to the buyer. How long does the buyer have to terminate the contract according to the Virginia Residential Property Disclosure Act?
Five days after the postmark
______ misrepresentation is the result of intentionally hiding a property flaw just to make a sale
Fraudulent
When the federal reserve reduces interest rates, it impacts the real estate market. How so?
Home buyers may qualify for lower rates, impacting the number of people who want to buy and the amount they can afford to spend on a home
If Bob just got a job, could he qualify for a home loan
In some cases, if he has a down payment and a good credit score
When property is owned by a partnership in Virginia, how does the property title vest?
In the partnership itself
Lenders may ask about alimony payment in which of the following scenarios?
Lender has provided notice that the applicant is not required to provide this information
What acronym can be used to determine if something is a fixture or moveable property?
MARIA
Will Dick need to pay closing costs on his BA loan
Maybe, but these are often paid by the seller and are typically lower
Are real estate terms listed in promissory notes?
No, it lists the loan terms only
Are mortgage payments deducted from net income when using the capitalization approach?
No, they are not included
What's the most common cause of default by homeowners?
Not making on time payments
When can a contract terminate by the passage of time?
Operation of law through statute of limitations
Building codes establish guidelines for maximum occupancy....?
Per floor and per use
The buyers of a brand-new house like the fact that it's airtight which cuts down on heating and cooling costs. They figure that by keeping it closed, they will not allow radon to enter the house. The real estate agent explains
Radon commonly enters the house through the soil and newer homes with their airtight construction can have increased levels because the radon gets trapped
Which title under the ADA addresses real estate?
Title III
When do damages usually occur in a real estate closing?
When the real estate contract is breached
If a contract does not contain a time is of the essence clause, when should the parties perform?
Within a reasonable time
Does the Virginia Residential Property Disclosure Act require a seller to disclose that a property is in a tourism activity zone?
Yes
Janet gave Rocky power of attorney to buy a house on her behalf. Is Janet required to hire a real estate broker or salesperson to allow Rocky to complete the transaction?
Yes, a power of attorney has no affect in a real estate transaction
Must a deed be in writing?
Yes, always
Dan is a real estate salesperson working under the supervision of Sally, a licensed real estate broker, Dan took $1,000 from the company escrow account for his own use, a violation of the law. Sally is required to monitor the escrow account. Is Sally liable for Dan's conduct?
Yes, because Sally should have known about Dan's misconduct
Can an interest rate change during underwriting?
Yes, especially if not locked in
How are deeds and other real estate records maintained?
Deeds are catalogued by book and page based on their order of recording by the country real estate records clerk
What should be the goal of your real estate newsletter?
Demonstrating that you are engaged with the local community, keep in touch with contacts and establish your reputation as a real estate expert
Who is responsible for administering the Virginia Housing Trust Fund?
Department of Housing and Community Development and the Virginia Housing Development Authority
If a person feels that a lender has discriminated against them in the loan process, they can file a claim with which organization?
Department of Housing and Urban Development
What is the habendum clause?
Describes the interest conveyed by the deed, for example, fee simple or life estate
Rebekah is a real estate broker preselling tracts in a subdivision. She has a client who wants to buy an improved lot to establish an assisted living home that will accommodate four live-in-resident clients. Which subdivision regulations does Rebekah review with her client before making a formal offer?
Developer restrictions and local zoning ordinances
If you see a map that has grid lines and the land is cut into squares, this would be...?
an example of a government survey
If a seller would like an agent's sales help, but wants to avoid paying a commission if the seller finds the buyer, what kind of listing agreement should the seller avoid?
an exclusive right to sell listing
Sasha asks a real estate agent to help her sell her house. Sasha ends up finding a buyer for the house. At the closing, no agent receives a commission. What type of listing agreement did Sasha make?
an exclusive right to sell listing
Freon was created by the DuPont Company and it has been used
as a refrigerant in air conditioners, some freezers and dehumidifiers as well as aerosol cans
Just before settlement, a local official calls the seller to tell him his house violates the building code. Under the Virginia Residential Property Disclosure Act, what must the seller do?
Disclose the violation
Property management positions with large firms often require a ______ degree because completing the four year plan ensures graduates have a thorough knowledge of general accounting principles, financial reporting and basic knowledge about day to day duties of operating a business
business administration
Real estate agents work with
buyers and sellers, or just buyers or just sellers
How do title searchers usually search a title?
by consulting an index of the land records to find relevant documents
The principal is also known as the
client
A seller may be held liable for damages if he/she fails to do which of the following?
disclose material facts about the property
Which term is not an example of how an agency relationship can be created in real estate?
double agency
________ fields can be blocked or hampered by buildings or other obstructions, but _______ fields penetrate people, animals, buildings and other materials
Electric; magnetic
The riparian rights doctrine says water rights for moving water belong...?
equally to all property owners whose land borders the water
Which of the following is used to determine the maximum allowed buildable square footage on a property?
floor area ratio
Which of the following is a form of involuntary alienation?
foreclosure
Radon is_______ than air
heavier
The following types of properties are exempt from the ADA
historical sites
Why is land a permanent commodity?
it cannot be used up or destroyed
Equitable liens are also called
judgment liens
When specific improvement provisions are included in a lease, giving the tenant the right to improve the property, they are sometimes referred to as...?
leasehold improvements
That portion of a zoning lot, which when viewed from above, is covered by a building, is known as
lot coverage
Sally wants to do whatever it takes to avoid foreclosure. What can you tell her?
Ensure you are well qualified for the loan before entering into it
The poster HUD requires all brokerages to display is referred to as the
Equal Housing Opportunity Poster
When a person owns land, what does that include?
Everything from the surface to "heaven" and down to the center of the Earth
Which of these is required for a valid contract?
meeting of the minds
What are ways in which an agency relationship can be terminated?
mutual agreement of the parties, completion of the transaction and expiration of the listing contract
How much can a security deposit be?
no more than two months rent
Fraud may be active or ....?
passive
A life state based on someone else's lifetime is called a...?
per autre vie life estate
On the closing disclosure, property taxes, water assessment, homeowner's association fees, and prepaid interest are all amounts that might be subject to what?
pro-ration
RESPA is short for
real estate settlement procedures act
The right of a surviving tenant or tenants to succeed to the entire interest of the deceased tenant is known as
right of survivorship
When a new property owner acquires land subject to an easement, they will also acquire the rights or limitations of that easement. The phrase that describes this best is: Easements....?
run with the land
a broker who acts in their own self interests may be guilty of
self-dealing
What type of lien means that the lien is attached to a piece of real estate?
specific lien
A Realtor is pledged to....?
standards of practice and a code of ethics and receives continuing education and professional development
Which of these is an emblement?
strawberries
Which of the following is not something a lease automatically gives a tenant the right to do?
sublease the property
Student dorms, nursing homes and on-campus fraternity houses are considered
temporary housing
Which of the following is not a prohibited act under the FHA?
testing
The seller's agent owes certain duties to the buyer as a customer. These do not include:
the full fiduciary duties of a licensee to their client
Laurel buys a home with a deed of trust. What does she use as collateral?
the home is the collateral backing the loan
From the point of view of the buyer and the seller, what may prove to be the most useful document on the closing table?
the settlement statement
There are 12 buyers looking for homes in the same neighborhood. There are only 8 homes in the neighborhood. What happens to the property value?
the value of the properties are higher because of demand
Which is not an underlying reason for the statute of frauds?
to keep town clerks employed
In most cases; encroachments are
unintentional
What is an arms length transaction?
when the buyer and seller are unrelated
VA homeowners under the age of 65 can protect up $..... of real estate under the homestead exemption while those age 65 and older can protect up to $.... from creditors
$5,000; $10,000
Lauren has just acted as the real estate salesperson for the seller on successfully selling a $450,000 with a 6% commission. The buyer's broker on the sale had agreed to a 50/50 split and Lauren has a 50/50 split with her own broker. How much money will Lauren receive from this
$6750
How many categories of public accommodations are included under the ADA?
12
The Fair Housing Board has how many members?
12
How long does a consumer have from the date of entry of the judgment to make a claim on the Recovery Fund?
12 months
In what cases is cost approach to appraisal used?
FNMA manufactured housing loans, special use buildings, property in the process of being built, or property to be rebuilt
If you're only going to use one social media platform, which should it be?
In order to be exempt from the FHA a single family homeowner can sell or rent one home in how many years?
2 years
How long does a prospective purchaser have to review a property owners' association disclosure packet and to cancel a purchase contract without penalty
3 days
How long are disclosure statements required to be kept on file?
3 years
There are how many elements required to be considered a violation under Section 8 of RESPA?
4
What is the maximum allowed buildable square footage on a property if the property measures 10,000 square feet and the maximum permitted floor area ratio is 4.0?
40,000
How many different types of loans are covered by TILA?
5
Amalia wants to borrow money to buy a home. She has gathered four loan estimates from four lenders. The loan estimate provide TIPs of 63.5%, 87.2%, 53.4% and 60.5%. Assuming all the other loan terms are equal, which loan should she choose?
53.4%
Under the Virginia Fair Housing Law, elderliness is defined as a person of what age?
55+
Which of the following ownership splits could indicate property is owned as tenants in common?
90/10, 50/50, 75/25
For which of the following lease terms might you find in a ground lease?
99 year lease
In certain circumstances, the government may delegate eminent domain authority to a private company or individual. Which of the following could not exercise eminent domain authority under this power?
A casino magnate building a new casino
What might happen if a contract does not contain a completion date?
A court could construe the contract as requiring performance within a reasonable time, the parties could argue over performance issues or a court could invalidate the contract entirely
Javier buyers Tina's house for $325,000. How would we characterize the $325,000 payment from each person's point of view?
A debit for Javier and a credit for Tina
What can cause a holdup with a loan application for Julio?
A lack of personal information, debts, income or other qualifying factors
What's a usury law?
A law that limits how much interest banks can charge
Which of the following statements regarding the duty of disclosure is FALSE?
A licensee is not required to keep information secret no matter what the client requests
Which of the following could potentially be exempt from the Fair Housing Act?
A private club offering housing to its members
Which of the following properties should NOT be used as a comparable property in a CMA?
A property sold as a short sale, a property sold at a foreclosure auction, or a property sold at a price much higher than the target property
Which item would not ordinarily be mentioned in a lease?
A purchase price
True or false: according to the Virginia Residential Property Disclosure Act, the seller must give the buyer a written list of the 12 categories the buyer should investigate
False, the disclosures can be oral
Which email does the CAN-SPAM act not apply to?
A real estate salesperson sends an email to his old college roommate wishing him a happy birthday
What is a mortgage interest deduction?
A reduction in income for property owners for money paid towards mortgage interest
What happens when interest rates increase?
Fewer people are eligible for mortgages and property values decrease
If the escrow agent cannot determine who gets the earnest money, what can he do?
File an interpleader case in court and let a judge decide
Which of the following improvements will most likely increase a home's value?
Adding a bedroom to the house, adding solar panels to the property or adding a garage in the rear yard
When is the mortgage recorded?
After all documents are signed at closing and the title company transfers the title
Roger is selling his home and has $50,000 in equity. What happens to this value?
After the home loan is paid off, the remaining sale value is paid to Roger
_______ occurs when one person hires another to represent them for a lawful transaction involving a third person, the customer
Agency
Brenda is buying a house. She loves the furniture and the decorations in the house. How should she write the contract?
All fixtures stay with the house
If you have a client who has a service dog, you should show her which of the following properties?
All properties available in her price range
A general lien covers what property?
All real estate owned by the debtor in that county
Tenants with disabilities are authorized to make reasonable accommodations to leased property to make the premises handicapped-accessible. This is authorized under the?
Americans with Disabilities Act
The ADA refers to the
Americans with Disabilities Act
What is the difference between an agent and a subagent?
An agent is authorized by a principal to represent them; a subagent is authorized by an agent to represent the principal the agent represents
Which phrase is most likely to describe a real estate sales contract?
An express, bilateral contract
_______ is when a court orders a person to do or not do a certain action
An injunction
Tim lost his home in a foreclosure and received a deficiency judgment. What is it?
An obligation to pay the remaining owed debt after the home is sold but is sold for less than the loan owed
Which of the following is enforceable under the statute of frauds?
An oral contract to lease an apartment for 11 months
After tests were done and asbestos was confirmed, the inspector suggested the remediation would not be very complicated. When the buyer asked why, the inspector explained that the condition of the asbestos made a difference in how extensive the solution needed to be. He explained that
Asbestos fibers that were friable could be made nonfriable through treatment
Terry had questions for her real estate agent, Ted. She didn't know very much about asbestos and homes, so she wanted to know more. During their conversation, Ted wanted to reassure her with facts, so he told as much as he knew, including....
Asbestos was used most often in homes that were built before 1980 because people didn't know the risks
What is the term that describes a sudden and perceptible loss of land by action of the water that borders it?
Avulsion
Cathy wants to sell her house located outside the city limits. Buyers may want to have the well tested because?
Bacteria, viruses and other contaminates can pollute well water, the EPA does not monitor private wells, and radon occurs naturally and may infiltrate ground water
Bailey is a real estate salesperson working with Lenore who wants to buy a home and who has signed a buyer's agreement with Bailey's office. Bailey shows Lenore a house which her office has the exclusive listing on, but it will expire in less than a week. Lenore says its not exactly what she's looking for but maybe she should just put an offer on it. Bailey saw a new listing on MLS that morning that sounds like it is exactly what Lenore was looking for. Which is true?
Bailey should tell Lenore about the new listing
Charles is a successful real estate agent in a neighborhood and hosts popular open houses nearly every weekend. There's a local woman named Janet who comes to nearly every open house that Charles hosts. Charles knows that Janet has lived in the same house for two decades and has no immediate plans to move. She's what people in the industry call a looky-loo. What is the best approach for Charles to take with Janet?
Be just as friendly to Janet as any other person, and ask if he can include her on his newsletter and mailing list. She might not be in the market now, but eventually she's likely to sell her house and she'll probably want to list it with Charles
Tom's buyers are looking for a home that is located in a very popular area and they are hoping to find a deal. In order to keep their expectations realistic, Tom needs to explain to them the principles of supply and demand and how it relates to their search and the housing prices in that area. That means-
Because the area is in high demand, the prices will also be high
When do damages usually occur in a real estate closing?
Before the real estate contract is signed
Stan sold his real property to Bella by Warranty Day. A day later, Stan sold his real property against to Len. Who owns the property?
Bella
If Sally sells her real estate to Ben on August 15, but the electric bill does not come until August 30, how can this be handled in the real estate contract?
Ben can pay 1/2 of the electric bill to Sally and she can pay the whole thing
Which of the following is NOT a major way to discharge a contract?
Benign neglect
An agent wants to gain more listings in a particular neighborhood. The agent encourages owners to sell quickly saying that the home values in the area will decrease due to a particular ethnic group moving into the neighborhood. The agent has engaged in which prohibited act?
Blockbusting
Bill is buying Sue's house for $250,000. When they arrive at closing, Bill doesn't have the money and Sue doesn't have a deed. Who breached the contract?
Both of them
Boyd is buying a house from Stella. They sign a contract for the purchase and sale of real estate. They write into the contract that Stella's piano, something that can easily be moved on its wheels, is part of the scale and staying with the house when Stella leaves. After closing, what happens to the piano?
Boyd keeps the piano in his new house
Bret is the buyer on a real estate contract. He's obligated to pay $100,000 to buy a new home. However, for other reasons, Bret goes into bankruptcy. What will likely happen to the contract?
Bret will be forced to complete the contract
An exclusive __________ is expected to prepare themselves through education and to competently stand up for the buyer at all times. Please fill in the blank with the best answer based on the definition given.
Buyer's agent
How can a tenant in common transfer his or her share of real property?
By executing a deed of transfer or leaving the property to someone else in a will or another testamentary device
How is the amount of earnest money set?
By negotiation of parties
What is constructive notice?
By recording a deed in the public land records, everyone is deemed to have notice of the recording of the deed, even if they physically don't see it
An owner of a property who is not exempt from the FHA can place which of the following signs?
For rent by owner
Under what circumstances can the government exercise eminent domain?
For the public good, after paying the owner fair value
Sam is buying a house that has been remodeled and he's concerned about possible formaldehyde presence. His real estate agent told him
Formaldehyde is no longer used in any materials that go into residential homes, so there's no worry
Sally enters into a contract with Brad to sell her real estate. The purchase price is $100,000. But Brad pays only $50,000 and promises to pay the other $50,000 ten days after closing. Sally conveys the property but Brad does not make the payment. What kind of damages is she entitled to?
Compensatory damages for the balance of the purchase price
What are the components of the Virginia Housing Trust Fund?
Competitive Loan Pool, Homelessness Reduction Grant Program and Vibrant Community Initiative
Hector is buying a house from Rita with a closing in May. The settlement agent learns that water charges have accrued but have not yet been paid. How should Samantha treat the water charges on the Closing Disclosure?
Credit the buyer and debit the seller for water charges prorated to the date of closing
Jane is buying a house. She asked her attorney Tamara to conduct a title search. Tamara issued an opinion of title concluding the seller has and can convey marketable title. Jane believes Tamara was thorough, but she is concerned about potential unrecorded transfers. What can she do to address her concerns?
Get an owner's title insurance policy
What statement is true about homeowners and insurance coverage in the United States?
Many US homeowners are underinsured
Marie Sanchez is a real estate agent. Her neighbor Ayako Aki asks Marie to put her house on the market. Marie prepares the listing agreement but she cannot sign it. Who is the legal owner of the relationship with the seller (and must sign the contract)?
Marie's broker
Ellen has a good income, but has missed payments on her credit report. What impacts her credit score more?
Missed payments will hurt the borrower more than any other factor
Sally is looking for a unique commercial building for a planned children's museum. Her agent may show her properties in areas zoned for?
Mixed use or commercial activity
What is an example of a voluntary lien?
Mortgage
What is recorded by the county in a real estate transaction?
Mortgages and title transfers are documented but promissory notes are not
Bob the buyer, Sally the seller and Morty the mortgage lender are at the closing on a house sale. No one else is present or expected to come. Who is most likely to be responsible for filing Form 1099-S?
Morty
Technically, RESPA applies to all federally related mortgage loans. As a practical matter, to what does RESPA apply?
Most sales of one to four family residences
The exemption under the FHA that applies to buildings with four or fewer units in which the owner lives in one of the units is often referred to as the _______ exemption
Mrs. Murphy's
What information is found on a lien?
Name of lien holder, name of debtor, and the amount of the lien
What is the formula used when using the income capitalization approach?
Net operating income/capitalization rate = market value
Eliza Campbell is a listing broker for the Wallace Family. Eliza fails to procure a buyer within the time of the listing contract. one year later, the home is sold. Is eliza entitled to a commission?
No
Which of the following is not considered a trigger phrase under the TILA guidelines?
No down payment
Is the income capitalization approach to appraisals the most accurate?
No it is not always the most accurate
Palmer is 80 years old. He gives Maxwell a contract that reads, "In consideration of the love and affection Maxwell has shown and will show me, I agree to give Maxwell $500 a year for the next 10 years." Do they have a contract?
No there is no consideration
Jed is the broker for Adam, his client. Jed receives an offer for Adam's property, but thinks its too low and fails to tell Adam about the offer. Is this permitted?
No, a broker is required to present all offers to his or her client
After a broker or salesperson is licensed, are they done with their education?
No, a licensee must complete post-licensure courses within a year and then continuing education every two years
Sam's rental company manages an apartment complex. The company drafts rental agreements for their tenants. Must the company hire a broker?
No, a rental property management company can draft agreements for its own property and tenants
If a person makes an offer in jest, does an acceptance create a valid contract?
No, an offer must be made with an intent to create a legally binding contract
Is it necessary to have a lease agreement to determine occupancy of a commercial property?
No, appraisers can determine whether a property will remain occupied based on average occupancy of similar properties
A builder purchases land for $30,000. It costs him $50,000 for materials to build a home. The cost of labor is $30,000, loan costs came up to $10,000 and fees and taxes were $10,000. If he sells the home for $150,000 will he make a profit?
No, he will break even
Hubert says to Melvin, "I will sell you my car for $500." Melvin says, "That sounds interesting." Hubert says, "If I don't hear back from you I'll assume you accept. I'll meet you here next Tuesday." Hubert does not hear from Melvin. He arrives at the meeting place of Tuesday morning. Do Hubert and Melvin have a contract?
No, silence cannot be accepted
Glen wrote a deed to convey his property that says, "Gary sells the property to whoever he gives this deed to." Gary signed the deed and put all of the other required terms into the deed. Gary hands the deed to Sam. Is this a valid real estate transaction?
No, the grantee must be named
Bill wrote a deed for real estate, conveying all of his title and interest to Susan. But Bill does not own that property. Is this a valid real estate transaction?
No, the grantor must have capacity and be the owner of the real estate
Courtney can't pay her mortgage. Her friend can just take over on the payments, right?
No, the lender must approve the reassigning of the loan debt to another person
Cal obtains a judgment for fraud and misrepresentation against Ellen, a licensed real estate salesperson for $1 million. Can Cal recover the full amount from the Recovery Fund?
No, the limit for a single claim is $20,000
Kevin just bought a home from you and is moving in. He receives a notice in the mail that his loan servicers have changed. Does that mean that Kevin now has a new mortgage?
No, the loan was likely sold on the secondary mortgage market to a buyer. His terms remain the same
The appraiser finds three properties in one neighborhood where the property is for sale. All three were sold in the last six months. He does not like the home. Three properties across town are much nicer, can he use the three properties across town?
No, the properties in the same neighborhood should be used
A buyer and a seller sign a real estate contract. The buyer pays the purchase price and the seller conveys the property to the buyer by deed. Three weeks after the closing, there is a tornado that destroys the real estate. The buyer is claiming that the seller made partial performance because he does not have the property anymore. Will this claim succeed?
No, there was full performance and the seller is no longer liable under the contract
Brad offers Seth $150,000 for his real estate. Seth writes back that he'll take $160,000. Have they formed a binding contract?
No, there was no meeting of the minds
Ben held himself out to the public as a licensed real estate broker, but he was not actually licensed. A consumer sues Ben for fraud and breach of contract. The consumer gets the judgment. Can the consumer make a claim against the recovery fund?
No. The recovery fund is only available to consumers who have a judgment against a licensed real estate broker or salesperson
Stan is selling his real estate to Brian pursuant to a real estate contract. Brian's attorney examines the title and finds that there is an easement on the property that will not allow it to be sold and used for the purpose that Brian needs. The contract allows Brian to back out of the contract if there is a significant title problem. What remedy is available to the seller?
None. The contract will be cancelled for impossibility and contingency
A buyer and seller enter into a real estate contract for the purchase and sale of 123 Maple Street. However the seller does not own 123 Maple Street. The seller cancels the closings. What remedy does the buyer have?
None. This a situation of impossibility of performance
Juan is executor of his mother's estate. He needs to transfer his mother's house to himself and his siblings. What must he do under the Virginia Residential Property Disclosure Act?
Nothing. The transfer is excluded
How much does Jessie need to have for a down payment on a VA loan?
Nothing. These loans are available at 100 percent financing
What is the most likely contributing factor to the length of the average real estate purchase agreement?
Numerous lawsuits over the years about each issue
Which statement is true of PMI?
PMI is usually only required on conventional loans with a down payment less than 20%, or if the buyer wants to refinance a home with less than 20% equity built up
An agent who works from home may use which of the following for mailing purposes?
PO Box
What does an agent need to do before hosting an open house?
Place announcements in open houses online and in local papers where prospective buyers are likely to see it, put a sign up sheet and business cards out, so they can stay in touch with everyone who comes to the open house and discuss having an open house with the homeowner, including choosing what time to have it
Which term below goes with the following definition? The seller or buyer of real property who benefits from a fiduciary relationship with a real estate agent or broker
Principal
How does a judgment lien cause involuntary alienation?
Property is sold by judgment creditors to pay off debt
What types of properties are appraised using the income capitalization approach?
Property that is expected to generate income for the owner
When the real estate agent is representing the buyer, regarding the question of lead, they need to
Provide the buyer with an EPA pamphlet called Protect Your Family From Lead in Your Home
How does an appraiser identify properties when using the sales comparison approach?
Public records such as the clerk in the county and MLS services
Which of the these deeds offers the least amount of protection for the buyer?
Quitclaim deed
What is the relationship between RESPA and the closing disclosure?
RESPA requires that lenders use the Closing Dislcosure at closings
Who is part of the VHDA partnership?
Realtors, developers, community service organizations, mortgage lenders, others
How does an appraiser account for reserve fees?
Reserve fees are based on amenities offered by the building owner
Your client, Rick, wants to avoid foreclosure in a non-judicial situation. Can he do so?
Rick can work with the trustee to catch up debts and follow all requirements set by the trustee
Robin has been having a record year as a salesperson but feels she could be doing even better if she hired an assistant to help her organize her paperwork, listings and advertisements. Which is true?
Robin is allowed to hire an assistant
Sally wants to buy a home and has a job, but the lender says she's too risky. What does that mean?
Sally's financial history indicates she's a high risk borrower
Jillian and Terence are married. They are selling their house. At closing, Sam the settlement agent prepares a 1099-S that shows gross proceeds of $467,000. Must Sam file the 1099-S?
Sam must file the 1099-S because Jillian and Terence owe taxes on the sale
Peggy does not have any savings other than $126,000 in a 401k. What IRS rule(s) will affect whether she can use any or all of her retirement fund to purchase a home?
She can use 401k savings for a down payment or to buy down points, she can withdraw up to $50,000 to spend on a home purchase, and she will avoid taxes and fees as long as she makes all payments on time, including interest
Carol is a property manager who works closely with investors who have residential portfolios in a college town. When establishing length of service terms, she understands that
She should establish terms that correspond to semester length even if renting to non students
Cristina is discussing having an open house with Matteo who has just listed his house with her. Matteo tells Cristina that he read an article saying open houses rarely lead to offers, and he doesn't really want to waste time on it, or have strangers in the house. Which response is best for Cristina to make?
She should tell Matteo that while it is true that open houses don't immediately lead to an offer, they are one of the best ways to announce to the world that a house is for sale
In her real estate business, Leah discovers she likes working with first-time buyers and wants to make it her specialty. That means....?
She will become an expert in this niche and build her reputation around it
Sydney's brother Lawrence is a real estate salesperson in a prestigious brokerage that is a member of several active MLS services. Sydney wants to sell her condo, and she wants to negotiate a listing agreement with her broker that will allow him to make 100% of the commission. Which statement is true?
Sydney should negotiate a listing agreement with Lawrence's sponsoring broker. Its very unlikely that she'll be able to get 100% for Lawrence but she may be able to negotiate a listing agreement that gives Lawrence significant split of any commission as a subagent
If the home for sale has more bathrooms or additional bedrooms than the homes sold, what does the appraiser do?
Takes the cost of construction of new bathrooms and bedrooms and add to the value
Joe is buying a house that currently uses an underground storage tank to hold heating oil and he wants to know what rules and regulations apply, according to the EPA
Tanks holding heating oil for a residence have to be inspected every three years and certified according to federal rules
Dougie owns a 16 unit rental building and goes into a real estate brokerage that has been recommended to him. He speaks to the broker, Tara and explains what services he would like from the brokerage. He wants someone who will choose new tenants, set the rental rates based on market value and relevant laws, and sign all leases on his behalf, as well as hiring anyone needed to conduct maintenance and repairs. Basically Dougie is moving to Florida and doesn't want to have to worry about the rental property anymore. Which response of Tara's makes the most sense?
Tara will happily provide that service as her office offers property management. In that capacity, she will be a general agent to Dougie for that property, she will bill him a set fee for this service every month
Jim and Evan enter into a real estate contract. The contract allows Evan to get a mortgage at 5% interest. But after due diligence, Evan can only get a mortgage at 8% interest. What will happen to the real estate contract?
Termination by contingency
Which of the following must the seller tell the buyer regarding the 12 basic categories of disclosure?
That the buyer should exercise due diligence with respect to them, that the buyer should conduct due diligence to the extent the buyer deems necessary, and that the seller makes representations with respect to these items
Which EPA regulation covers water sources like lakes, rivers, springs, streams, and underground wells?
The Safe Water Drinking Act
Don is a real estate agent working with a retired Marine who plans to purchase her first home. His client admits she doesn't have a large nest egg for a down payment, but has an exceptional credit history and earns an above average salary in a civilian job. Why would Don recommend a VA loan over an FHA loan?
The VA loan offers 100% financing
Which statement accurately describes the role of a subagent?
The agent authorizes the subagent to represent the interests of the principal
If all the homes sold recently have finished basements and the appraised property has an unfinished basement, what happens?
The appraiser takes the cost of finishing and deducts from the value
What is contained in a letter of intent?
The basic terms of the real estate contract
What is the principal of anticipation?
The benefits the property may offer the buyer
The building code governs window sizes to ensure which of the following objects are met?
The building has adequate light and ventilation
Which is an example of termination by contingency?
The buyer is unable to obtain a mortgage as stated in the contract and the contract is cancelled
The county wants to seize (take) the first four feet of Orion's front yard to build a sidewalk. They're offering several thousand dollars to Orion as compensation, based on an appraisal from a certified appraiser. Orion is against it and takes the county to court. who wins?
The county, a county has the power of eminent domain to take private property for a government purpose with due compensation
Jim is selling his real estate to Wayne. The contract allows Wayne to have a 30 day inspection period to include physical inspection of the real estate. Jim will not let Wayne go onto the real estate but demands that Wayne complete the closing and pay anyway. Wayne files a lawsuit against Jim. What is most likely the result?
The court will cancel the contract by operation of law
What is necessary to create rights of survivorship in joint tenancy property in Virginia?
The deed must specifically include the words with rights of survivorship
Under termination, what happens to the earnest money?
The earnest money goes back to the buyer
How can an easement be terminated?
The easement owner abandons the easement, the dominant and servient estates are combined, or the easement is released in writing
Interest rates are the cost to borrow money to buy a home. What is the percentage?
The fee charged by the lender to borrow funds
How is the Virginia Housing Development Authority (VHDA) funded?
The funds are raised by the VHDA
What is the principal of competition?
The higher the demand, the higher the value. The lower the demand, the lower the value
What is the benefit of mortgage-backed securities to a home buyer?
The home buyer benefits from low interest rates and better terms because of these investment opportunities
First time buyers are reviewing their paperwork, which includes the sales contract, mortgage documents, deed and the title information. They ask their real estate agent about the legal description and she tells them
The legal description should be exactly the same on each of these documents
Steve is struggling to remember to make real estate tax payments. How can the lender help?
The lender can collect taxes and insurance and hold them in escrow for payment
Who is the typical first priority lien holder on a mortgage?
The lender is generally the first priority and is repaid first out of the sale price
Which of the following statements is false regarding the role of a real estate licensee (broker or sales associate)?
The licensee can charge a separate fee to prepare the contracts
If a client refuses to sign the consent form for dual agency then which of the following statements is False?
The licensee does not have the right to revoke their representation of the client in that transaction
What generally gives a lien highest priority?
The lien recorded first has highest priority, unless a state law says otherwise
What occurs when a subdivision built 10 years ago suddenly has a brand new home added?
The newer home will have a lower value because the other homes are not as new or modern
What is the purpose of a notary seal on a deed?
The notary makes sure that the person signing the deed as the grantor is actually the person listed as the grantor
Who is the grantee on the deed?
The person or entity taking title to the property, usually the buyer
Jim bought real property from Dale. Long before Dale owned the property, the Local Power Company purchased an easement from an earlier owner to run power lines underneath the land. The easement is recorded in the real estate records. Jim decides that he doesn't like the power company using his land and files a lawsuit to kick them off and remove the powerlines. Who wins?
The power company, because the easement is a matter of records and Jim bought the property with the easement rights
A builder buys all the lots of a street abutting a neighborhood and builds luxury homes. Property values in the neighborhood increase; what principal applies?
The principal of progression applies
What usually comes first in the real estate contract negotiation process?
The real estate agent sets the price based on their market research
What is the most common cause for breaching a lease?
The rent isn't paid as agreed
When a real estae agent is representing a seller, the disclosure process requires?
The seller and the agent must comply with the real estate notification and disclosure rule
Which of the following is not a feature of an exclusive agency contract?
The seller cannot be a real estate agent
In the case of impossibility of performance, what remedy is available to the seller?
The seller sues for specific performance forcing the sale
If there has been full performance of a real estate contract, what is the end result?
The seller will have the purchase price and the buyer will have title to the real estate
Angela wants to buy a home with an existing tax lien. What should she do?
The tax lien must be settled first, and in some cases the buyer will pay these off to clear the title
What happens in a lease-purchase option?
The tenant lives in the property and pays the seller and owns the property after a certain amount of time
Tristan is defaulting on his loan. Who handles the process in a deed of trust?
The trustee
What will happen to a homeowner in the event of a non-judicial foreclosure?
The trustee involved will sell te home at an auction. The home may revert back to the lender if no buyer is found
You've learned your buyer's underwriter is questioning the value of the home. What does that mean?
The underwriter needs better verification of the homes worth as collateral
if a property owner doesn't pay their property taxes, what will happen?
There may be a forced sale of the property, a lien may be placed on the property, the property may be foreclosed on
If three properties in a neighborhood were sold to the original owner's cousins and siblings, can they be used for a sales comparison?
These are not arms length transactions and the values may not be accurate
Kitchen cabinets are likely to be considered fixtures because...?
They are attached to the wall
A neighborhood in a city has suddenly become very popular. There were two well established local real estate agencies in that neighborhood that previously served all the real estate needs for that area. However, due to the surge in popularity, many new real estate agencies have begun to try and do business in that neighborhood. The two established real estate agencies have agreed to only share listings with each other and not with any of the newer agencies that have come to the neighborhood. Which below statement is true of these two real estate agencies?
They are guilty of group boycotts
Recently agents in a town have noticed that the commissions they have been able to negotiate with potential sellers have gotten lower and lower. A 6% commission has become impossible to negotiate and many are resorting to going below 3% to get listings. The three largest agencies in the town agree to not take any listings for below 4% so that they can bring the average commission back up. Which statement is true?
They are guilty of price fixing
What are the key benefits of VA loans?
They are less expensive and easier to obtain for qualified buyers
Steve wants to buy a home that's in pretty bad need of repairs. Are conventional loans a good option?
They can be because other loans have high restrictions imposed by the backers
How long does an easement last?
They run with the land so they transfer with the property
A buyer asks you if a particular neighborhood is safe, you should tell them?
They should contact the local police department
How does an appraiser get vacancy and missed payments data?
They use information from similar recent sales
a builder has bought a large lot of land. He places single level, two bedroom homes on the land and a community center. Who can he attract for buyers?
This is likely a senior housing development and will attract seniors
Julie lost her home in foreclosure. Who has priority over the value of her home?
This is outlined in the priority of lines component of the mortgage and recording
Another clause that is good to include in your listing agreement places constraints on the sale of the home to anyone the listing agent has shown it to. The seller will not be able to sell the home to these prospects within 6 months to one year after the contract ends. Choose the best answer regarding this statement
This protects the listing agent in a listing contract
Kevin receives notice of an auction on his home. Can the trustee sell the home this fast?
Though most give at least 30 days of notice, a trustee can list the home for sale as soon as one missed payment
Public transport handicapped accessibility is addressed under which title of the ADA?
Title II
Why does RESPA require the loan estimate to follow a specific format?
To allow borrowers to compare loans easily
What was the primary EPA objective in establishing the Clean Water State Revolving Fund?
To empower states to proactively manage water quality
Nancy's buyers are moving from another state and they don't know anything about radon, but as their real estate agent she advises them
To have a radon inspection requirement included in the home inspection contingency
What is the closing attorney looking for in the abstract of title?
To make sure that the property is passed in order from buyer to seller without any breaks
Which of the following did Congress not intend in enacting RESPA?
To prevent service providers from charging unearned fees
The purpose of preventing group boycotts is...?
To stop a group of agencies from joining forces to prevent competition
Which of the following is an example of express agency?
Tory is a real estate broker who has just signed an exclusive listing agreement with Jon to sell his house
True or false? According to the Virginia Residential Property Disclosure Act, each seller is responsible for drafting the necessary disclosures for the buyer
True, but the seller may use the forms provided by the Real Estate board
True or false; If a lease does not specify any restrictions, the tenant can use the leased space for any lawful purpose
True, if no restrictions are specified, the tenant can use the property for any unlawful purpose
Half of the residents are employed by a large employer in a nearby city and the employer shutters their doors. What happens to the property in the area?
Typically lowers prices because people are moving out
Can all property be valued using the sales comparison approach?
Typically, this approach is used for residential property
Violating an antitrust law could mean which of the following?
Up to three years in jail, up to a $1,000,000 fine for a business, and up to a $100,000 for an individual
If Christine is moving and has someone who can take over her VA loan, will the VA loan it?
VA loans are assumable but the lender must approve it
Which of these deeds conveys the most rights?
Warranty deed
What is novation?
When a contract is replaced with another between the parties or the contract is materially changed
When might a court issue an equitable lien?
When property is held by a third party for a judgment debtor
What is impossibility of performance?
When the contract cannot be performed because of an event beyond the control of the parties
Which information can you usually find on the fourth page of the closing disclosure?
Whether the monthly payments will be too low to reduce the principal amount of the loan, whether the lender will allow someone else to assume the mortgage, and early repayment policies
What disclosures do landlords need to make?
Who to contact, when a tenant will be displaced, and who to discuss concerns with
Which of the following requirements are included in the zoning ordinances?
Yard setback requirements, floor area ratio requirements, maximum building height requirements
Buyer and seller enter into a real estate contract. Seller has paid off all liens, buyer has paid the purchase price, seller has signed the deed and handed over the deed to the buyer. Has there been full performance?
Yes
Mary is the sales agent on a home that was built before 1978. It's likely there is lead present in the house somewhere. The sellers have no knowledge of any lead and they are very healthy. Should Mary suggest the buyers get the home tested?
Yes because pre-1978 homes are known to have lead and its a good way to protect all parties
Billy Jo is 13 years old. Ernest, his elderly next door neighbor, asks him if he would like to mow Ernest's lawn once a week throughout the summer for $25 a week. Billy Jo agrees. Do they have a contract?
Yes but the contract is voidable by Billy Jo
In theory, can a real estate contract be written on a napkin?
Yes if all required terms are there
Jimmy and Clyde enter into a contract for $100,000 of car parts by handshake. Is this a valid, enforceable contract?
Yes, because it is movable property
Oswald wants to sell his house. In September, he puts a hand-lettered sign in front of his house that reads, "I, Oswald, will sell this house to the first person who gives me $100,000 before the end of the year". Theodore brings Oswald $100,000 in small unmarked bills on December 29th. Does Oswald have to sell?
Yes, theodore's performance makes Oswald's unilateral contract enforceable
Are conventional loans risky to lenders?
Yes, they carry more risk than federally-backed programs
Does the lender care about home insurance and taxes?
Yes, they ensure this is affordable to the borrower
Can a buyer fill out a loan application online?
Yes, this has become a common first step for homeowners
Does the home buyer need to report stocks and bonds or other investments on home loan applications?
Yes, this is a source of income or debt and needs to be considered
Can the underwriter deny a loan?
Yes, which can happen if the borrower's credit changes or for some other reasons
Can a real estate attorney draft a real estate contract?
Yes. Attorneys can draft any type of contract
Your buyer wants to list a home as a short sale. What is your obligation?
You can list it, but recognize that the lender must approve the process
Is a real estate agent able to direct financial questions from buyers to lenders?
You can make recommendations, but may not want to provide financial advice
Which is NOT an essential element of a contract?
a conditional clause
What is a collateral contract?
a contract for real estate
_______ is required if a buyer wants to buy a property listed by the same brokerage firm
a disclosure of dual agency
Which of the following interests found in a title search is most likely to affect the marketability of title for a property?
a federal tax lien
If jessica wants a stable monthly payment, what should she look for in a loan?
a fixed interest rate loan
What is a trade fixture?
a fixture used in commercial property for business or industry
Serving tasty snacks at an open house is
a great idea
Which contract usually does not mention a purchase price?
a lease
Bob is a first time homebuyer asking about foreclosure. What is it?
a legal action taken by the lender to force the sale of a home due to nonpayment or breach of contract
The most accurate way to officially identify real estate is
a legal description
cheryl is preparing a management agreement for a new client. What information can she use in the property description?
a legal description from the recorded property deed
A real estate salesperson must have their license sponsored at all times by whom?
a licensed real estate broker
Wilbert and Holly have a construction contract that provides, "in the event an act of god prevents Wilbert from completing construction of the planned structure, the parties agree that Wilbert should pay Holly $10,000 dollars in damages. Such a provision is called
a liquidated damages provision
What is the primary thing a closing disclosure provides?
a listing of the parties respective contractual obligations
What is an FHA loan?
a loan backed by the federal housing administration with easier qualifications
First time home buyers want to buy a house they can afford. They have no idea what they might qualify for and their agent said they should get pre-qualified before they begin looking at houses. They need to see
a mortgage broker or banker
What is "Your Home Loan Toolkit: A Step-by-Step Guide?"
a pamphlet explaining the loan and closing process that a lender must provide to a borrower
Joe is a salesperson working under his sponsoring broker, Clara. Which form of payment does the IRS allow Clara to make?
a percentage of commission received from successful transactions which Joe has worked on
Which of the following should not be included on a lender's advertisement?
a picture of a group of latinos
Which document or documents provide a visual layout of a proposed subdivision that shows individual tracts, total subdivision acreage, approximate size of each lot and designated public use areas?
a plat
James is a real estate investor who is looking to build a speculative home. Which location would most likely yield the highest value?
a popular residential neighborhood with good schools and transportation
Which is NOT an essential term of a real estate sales contract?
a provision specifying the broker's commission
A realtor is
a real estate agent who is a member of National Association of Realtors (NAR)
What is a contingency?
a term in the contract that is required to happen before there can be a closing
Pam hires Will to acquire and deliver a shipment of doodlebugs within two weeks, with time being of the essence. Will receives the shipment of doodlebugs but Tony offers Will more money for the doodlebugs than Pam offered. Will does not expect to receive any more doodlebugs before his delivery date for Pam. Will decides to deliver the doodlebugs to Tony and collect the larger payment. Will's choice is an example of
a violation of the duty to perform in good faith
A contract between a minor and an adult is?
a voidable contract
A contract for an illegal purpose can be called
a voidable contract
When the lessee (tenant) signs the lease, what contract element is satisfied?
acceptance
When land rights are increased through natural forces, the water rights on those land decreases. This is called
accretion
Who qualifies for a VA loan?
active duty and retired veterans of the United States Armed Forces
Intentional misrepresentation is also known as
active fraud
_____ happens when a real estate licensee makes a claim that they know is false
active fraud
Your client added a pool, central air and skylights that can increase the value of the property. This is an improvement in which category of a CMA analysis?
additions and upgrades
Which of the following should notify law enforcement if there is a break in at a real estate office?
alarm system
Patty is working with a commercial real estate investor. While touring an older manufacturing property, the client mentions much of the equipment will have to be updated in a few years because it is fast becoming obsolete. Which depreciation method did Patty most likely bring up during this discussion because it depreciates assets based on wear and tear, obsolescence and damage?
alternative depreciation system
When emailing contacts, what statement is true?
always ask permission the first time you email someone to add them to your mailing list
Real estate is being sold, and the parties agree that some of the personal property will remain in the premises, but some of it will not. What is the best way to handle this situation?
an addendum listing the personal property
What type of tax statement includes assessments from a variety of agencies such as school taxes, water district taxes, road and bridge fees and both city and county property taxes?
an annual combined appraisal district tax statement
Wheat growing on land is considered?
an emblement
Melinda and Sasha enter into a written sales contract for Melinda's home. Two weeks before closing, Sasha works on finalizing her loan documents and schedules a home inspection for three days before closing. melinda works on some agreed repairs and hires a lawyer to write her deed. at this point, melinda and sasha's contract is
an executory contract
Which of the following is eligible to file a Virginia Mechanic's Lien (assume all examples have not been paid for the work and have not been able to collect the money owed)?
an independent contractor electrician who has installed $500 of lighting for $100 of labor, under the direction of a building contractor, a college kid mowing homeowner's lawns all summer and is currently unpaid, and a water company that has done thousands of dollars of work to a neighborhood's privately owned communal water line
Who can own property in severalty?
an individual, a business entity or a trust
Sick-building syndrome is
an industrial or commercial building that has indoor air quality issues but no specific cause or identifiable contaminant has been found
Frank was told he needs to pay private mortgage insurance. What's that?
an insurance fee he must pay if he pays less than 20% down on the loan
Tom walks up to Teresa and says, "Would you like to buy my house for $250,000 with a closing to occur on the first Friday of next month?" This is an example of
an invitation to treat
Tom walks up to Teresa and says, "Would you like to buy my house?" This is an example of
an offer
Olivia asks several real estate agents to help her sell her house. A buyer is found. At the closing, no agent receives a commission. What type of listing agreement did Olivia make?
an open listing
What is Ginnie Mae?
an organization that's government owned and managed through HUD offering mortgage security guarantees
mall managers may offer special pricing and incentives to _____ because they attract more consumers with brand recognition
anchor stores
A recent test on a house came back with a high level of radon and both the buyer and seller are worried. The inspector is not, however, because
any house with a high level of radon can be fixed, and its one of the easiest environmental risks to correct
The monetary gain resulting from the increase in the market value of an investment, excluding additions of capital is known as?
appreciation
How many pages is a closing disclosure?
as many pages as it needs to be
When a building fully complies with the local zoning ordinances, it is referred to as...?
as-of-right
What value is used for establishing taxes?
assessed value
When a tenant signs over their rights and responsibilities to someone else, effectively terminating their own involvement in the lease, they have?
assigned the lease
What are the people who will inherit property and other assets held in trust called?
beneficiaries
cooperatives are usually managed by
board of directors
Which of the following is not a ground for voiding a contract?
breach
Horace is searching a title for a property belonging to Jones. He has found deeds from Trainer to Eastwood, from Eastwood to Dillinger, from Cuthbert to Trainer, from Smith to Kensington and from Kensington to Jones. How is the chain of title?
broken
In a designated dual agency scenario, it is the job of the _____ to ensure that each agent is fully representing each client and to resolve any issues or questions that arise before the closing
broker
Which phrase best describes Virginia's approach to real estate sale disclosures?
buyer beware
Which phrase best describes Virginia's approach to real estate sales disclosures?
buyer beware
Brenda has lived in her home for ten years. Her job is transferring her to another state and she can't decide whether to convert her home to a rental property or sell it outright. Her real estate agent reminds her that if she sells her property, she can deduct mortgage origination points when reporting what on her federal taxes?
capital gains or losses
Which of the following is typically not covered under liability insurance?
causing bodily harm, fraudulent conduct, robbery
Each of these could be considered an encroachment except
cement patio that extends up to the property line
What is the principal of change?
changing market conditions such as supply and demand, interest rates and property conditions
The demographic most threatened by lead poisoning is
children between one and five years of age
Gloria is interested in buying a business and she needs to find someone who is familiar with sales of retail stores, restaurants or offices. This person should have a good understanding of the business side of property ownership, such as leases, rentals and maintenance. What she's looking for is a real estate agent or broker who works with....?
commercial property
Hospitals, jails, libraries and public schools are all considered _________ in the comprehensive plan
community facilities
Which of the following properties should be used in a CMA?
comparable properties
What does CMA stand for relative to real estate?
comparative market analysis
What is an analysis of the competition in the marketplace that a property will face upon sale attempts?
comparative market analysis
Eddie bought real estate from Gil. Eddie did an inspection of the property and Gil provided a list of disclosures. But a week after closing when Eddie moved into the property, he found that under a carpet was a huge crack in the floor. What type of damages can Eddie claim?
compensatory damages
What is performance of a real estate contract?
completing the undertaking and conveyance contemplated by the contract
What insurance requirements are in place for settlement agents?
comprehensive business insurance
A buyer's agent owes which of the following fiduciary duties to their client?
confidentiality, reasonable skill and care, and obedience
There are many consequences from a leaking tank but one of the worst is....
contaminated groundwater, because groundwater is the primary source of drinking water for nearly 50% of Americans
Chronic toxicity from lead is a result of?
continued exposure even to small quantities
Which of the following is a requirement to create an easement by prescription?
continuous, hostile or open use of the servient estate
When does the statute of frauds apply?
contracts for an interest in real property
Megan's Law makes information regarding who available to the public?
convicted sex offenders
When property is devisable, it means the property owner has the right to...?
create a will or other document transferring ownership at death
Title to a condominium is transferred using a
deed
Under the Virginia Residential Property Disclosure Act, which is not one of the 12 categories about which the seller must warn the buyer to exercise due diligence?
defective drywall
What does the acronym DUST stand for?
demand, utility, scarcity and transferability
Lender may ask applicants about which of the following?
dependent care costs
This word means that a fee simple estate is inheritable
descendible
Preliminary plans are.....?
developer plans that have not been platted and recorded
Developers must provide certain information to prospective buyers before they sign a contract. Which item in the list below is not a requirement?
developers credit score and business rating
Surveying land depends on three basic things
distance, elevation and angles
What types of fees are condo owners with mortgages generally responsible for paying in addition to their mortgage payments and utility costs
dues to pay maintenance and upkeep
the closing disclosure sometimes includes a figure representing mortgage interest for the period from the date of closing to the end of the month. What do we call this figure?
earned interest
What prevents the buyer from backing out of a real estate contract?
earnest money
When two property owners join together to create a written agreement transferring an easement to another party, what is this easement called?
easement by grant
When improvements to real property intrude, unlawfully, onto another's adjacent property, what has occurred?
encroachment
What is the word that describes a situation where property reverts to the state because there are no identifiable heirs capable of assuming ownership of it?
escheat
What type of leasehold estate exists when occupation is for an undefined period of time and can be terminated by the landlord or the tenant?
estate at will
What is the parol evidence rule?
evidence offered by the seller
Under a/an..... one broker acts as the sole agent of the seller and has exclusive rights to represent the property while the contract is in effect
exclusive right to sell
If the parties still have obligations to perform under their contract, then their contract is
executory
Which of the following can a court award while enforcing a contract?
expectation damages
What type of ownership gives the owner the highest possible ownership rights over real property?
fee simple estate
A _______ can speak for the client in real estate transactions
fiduciary
What role refers to the responsibility you have to act as an agent, or champion for your client?
fiduciary
The government survey system uses baselines and principal meridians to?
find and describe the location of private or public property and establish township boundaries
What document establishes the guidelines for the agency relationship between a property manager and the property owners?
formal management agreement
There are three kinds of misrepresentations in real estate. These include?
fraudulent, negligent and innocent
The way 36 sections are numbered is
from right to left then left to right in alternating lines of 6 squares
What is the most common way for contracts to discharge?
full performance
Which of the following factors impacts the value of a home?
general condition of the home
A lien that is not tied to a specific piece of real estate is called a
general lien
When a commercial property owner sells his building, display cases for jewelry that are not nailed down generally
go out with the seller as trade fixtures
The Interstate Federal Land Sales Full Disclosure Act requires developers to provide certain disclosures to....?
government agencies and private buyers
Because of the potential dangers of UFFI the government
has banned the sale and use of UFFI in any application or any reason
Does the settlement agent handle money?
he or she collects and disburses funds based on the contract signed by both parties
What is usually not a seller's primary concern at closing?
helping the buyer understand the loan
What is another term for an estate at sufferance?
holdover tenancy
TILA was enacted to offer protection to
home buyers
Who benefits from working with VHDA?
homebuyers, veterans, members of the us military, homeowners, renters and VHDA business partners
Deed restrictions can be created by
homeowner's association, builder or township
If an agent is hurt at a client's home, the client's _______ insurance may cover the damages
homeowners
condominiums are usually managed by a
homeowners association
Under what circumstances could a seller be entitled to compensatory damages?
if the buyer causes damage to his property
Real estate is considered a/an _____ asset?
illilquid
Otto is considering building a house on his raw land. What will the house do to the value of the property?
increase the value
Single-family homes experience ___________ in sales prices based on normal inflation, fluctuations in demand, comps for similar homes and as a significant change in the economy
increases or decreases
Which of the following is not considered an adverse credit action?
increasing the fee for cash advances of all accounts
land is considered?
indestructible
Factories are considered what kind of properties?
industrial
Discount points allow buyers to prepay ________ in exchange for a lower interest rate on a mortgage loan
interest
The duty to perform in good faith
is mutually binding on both parties
Asbestos is dangerous because
it has microscopic particles that infiltrate the lungs
How much is a real estate commission?
it is always negotiable
When an owner of property held as joint tenants with rights of survivorship dies, what happens to the deceased owners share?
it passes automatically to the remaining joint owners
When a landfill is closed
it will be monitored, and the groundwater around it will be monitored for decades to ensure there are no leaks or contamination
Real estate includes
land and buildings
If a party has ______ it means they are an adult and understand the consequences of entering a contract
legal capacity
Section 10 of RESPA covers what part of the loan process?
lender escrow requirement
What is another term for the landlord in a leasehold estate?
lessor
A group of developers purchased a quarter-quarter section, which is 40 acres, and they want to subdivide it into smaller residential lots with appropriate streets, easements and access. In order to have a plan laid out of their new subdivision, they need to hire
licensed surveyor who will lay out the details of the subdivision using blocks
The person who retains the life estate interest is called the
life tenant
Which of the following is a common reason for establishing a trust?
limit federal and state estate taxes, avoiding probate, or planning for blended families
In real estate, which type of contract is the most common way to establish agency relationships?
listing contract
The closing disclosure contains similarities to what other document?
loan estimate
The Sponsoring Partnerships and Revitalizing Communities (SPARC) offers loans to:
loans are non-recourse and are made to developers, or those purchasing multifamily homes in need of rehabilitation
The Interstate Federal Land Sales Full Disclosure Act regulates all of the following except
local transactions between residents of the same county
a _____ is a group of independent businesses under one roof
mall
Which of the following best describes operational duties that include collecting, depositing and disbursing rent and detailing expenses on operating statements?
manager accounting responsibilities
Kenneth applied for a job as an assistant manager at a local apartment community. The interviewer told him he lacked knowledge about some of the regulations that govern leasing commercial and residential property. Kenneth argues that he knew every local law related to property leasing. The interviewer reminded him that
managing rental property requires a working knowledge of local state and federal laws
Which of the following is the desired price of the seller, which should reflect a realistic amount a buyer would be willing to pay?
market value
Proposed developments must follow standards in the established municipal or county master plan; however...?
master plans may be modified under some circumstances
Any fact that may have a significant and reasonable impact on the market value of the property is called a
material defect
What does an extended coverage title insurance policy cover?
matters not found in a search of the written title records
Under the Virginia Residential Property Disclosure Act, the seller must warn the buyer to exercise due diligence with respect to all of the following except:
military noise zone
What does time value of money mean?
money in hand is better than money earned in the future
Housing inventory has reached a ten year low, primarily because a new plant in a nearby town brought in hundreds of workers from other parts of the state. City leaders are considering an application for a new subdivision development that would increase housing options. This is an example of...... triggering change to the master plan.
net migration
Under which of the following circumstances can a landlord be absolved of their responsibility to provide a habitable dwelling unit?
never
Is land destructible?
no
When property is owned in joint tenancy, can one owner have a greater share than another?
no
is a landlord required to update properties routinely
no, but they need to be kept safe and without the need of repairs
Is real estate a risky investment?
no, long term investing is rather low risk
Are commercial banks a good bet for your buyer who wants to sit down and talk to an agent?
no, they could be located nationwide and typically don't have actual branches
Cameron believes a non judicial foreclosure is best for her as a homeowner. Is that the case?
non judicial foreclosures favor the lender because of how inexpensive and fast they are
What kind of agreement means two parties agree that services will be performed but more than one party may be contracted to perform the same services?
non-exclusive agreement
Which of the following will most likely be covered under an agent's liability insurance?
non-intentional acts
Discriminatory actions by an agent are covered under what type of insurance?
none of the above
Lots and blocks describe properties that have been plotted and they include the...?
number, lot and block in a particular subdivision
Your client falls in love with a vacation home that is priced $20,000 over market price. Your client lives overseas and wants to close as soon as possible. They are paying cash, so financing is not an issue. After advising them of the market value and the unlikelihood of getting back their original investment upon resale, your job is to follow your client's instructions and make an offer at the exorbitant asking price. Your client tells you privately that they spend thousands on hotels whenever they come to the area for business and so to them the investment pays off in the end. This is an example of....?
obedience
Which of the following property types are valued using a capitalization rate?
office building
The income capitalization approach is primarily used to value which of the following properties?
office buildings
Which of the following should be strictly monitored?
office keys
People who are exposed to radon
often show no symptoms but might have respiratory issues
Mike wants to lower the interest rate on his mortgage. He wants to pay 1 point in interest. How much is this?
one point is one percent of the borrowed amount
If a Virginia property owner dies leaving a spouse and children from a previous marriage, but didn't leave a will, how will title to real estate and other assets pass according to state law?
one third to the spouse and two thirds to the children
If a person feels a violation of Section 8 of RESPA has occurred, how much time do they have to make a claim?
one year
To make a claim of housing discrimination, one must make the compliant within how many years of the act?
one year
In this agreement, the seller employs a broker as the sole agent for the seller of real property. In this role, the broker will receive a commission if the property is sold through another broker, but the broker receives no commission if the sale is negotiated by the owner without the services of an agent?
open listing
the best way to grow a successful property management business is to create a business plan that ensures
owners earn the highest ROI on every property
If the buyer pays the seller the purchase price for real estate pursuant to a real estate contract, but the seller does not give the buyer a deed to the property, what is this considered?
partial performance
When a salesperson is considered an employee of a brokerage, the IRS requires the broker to do which of the following as the employer?
pay social security taxes, withhold taxes, and provide health insurance
Meghan is negotiating a deal to buy an abandoned property as is from a mortgage company. Her agent advises her to ask the seller to remove some old metal drums with an unknown liquid in, which have been stored in a shed. Her reasoning is?
people who transport substances on EPA's National Priorities List may be subject to penalties and fines
For an executed contract, all the obligations of the parties under the contract have been
performed
What type of leasehold estate specifies a rental period but no pre-defined end date for the lease?
periodic estate
What is chattel?
personal property
Out of these options, which is the best choice to directly reach people who are searching for real estate over the internet?
placing listings on real estate blogs, like Zillow and Trulia
What gives city or municipal inspectors the right to enforce building code standards?
police power
When someone contracts with a property owner to lease real estate from them, one of the benefits they are getting is the right to possess the unit or parcel being leased. This is know as the right of?
possession
Over the last 5 years the average price for a home in Bellevue has been over $200,000 but recently the market has been in a slump, and the average sale price of the last 12 months has dropped to below $150,000. A group of real estate brokers get together and decide that none of them will sell a home for less than $200,000. They are engaging in
price fixing
When the supply is limited and the demand is high.....?
prices escalate
What is a federally backed loan program?
programs like FHA and VA loans, which help borrower avoid default and help them get into low-interest loans
What is a contingency?
promises made by the seller about the condition of the real estate and its title
What are the warranties in a deed?
promises regarding ownership and title to the property made by the owner
An investor who bought a rental house needs someone to take care of the property, screen prospective renters, coordinate repairs, handle maintenance and tenant concerns, and evictions if necessary. He's looking for a
property manager
Who is responsible for making sure local ordinances about occupancy controls are met when a property owner leases space to a tenant?
property owner and landlord
In addition to rent, which of these expenses is the tenant responsible for paying in a double net lease?
property taxes and property insurance
What happens to property values if lenders freeze lending?
property values drop because of lack of capital
Zoning ordinances, at their essence, were implemented to....?
protect the health and safety of the population
A developer of a subdivision may impose easements for which of the following reasons?
provide access to a lot
Describing a house as the best of the block is an example of?
puffing
Eddie bought real estate from Gil. Eddie did an inspection of the property and Gil provided a list of disclosures. But a week after closing when Eddie moved into the property, he found that under a carpet was a huge crack in the floor. What type of damages can Eddie claim?
punitive damages
The capitalization rate is equal to the net operating income divided by the______?
purchase price
Which of the following is not a type of net lease?
quadruple net lease
Which of the following cannot be used as a factor for making a credit decision?
race, religion or national origin
Five acres of land with a house, barn and 2 acres of crops is best described as....?
real estate
Who usually negotiates real estate contracts?
real estate agents
A _______ is a person or business that is a limited liability company, partnership, corporation or association who receives compensation for real estate transactions
real estate broker
The three day right of rescission applies to which of the following transactions?
refinancing
Tanya says to Gina, Would you like to buy my house for $300,000? Gina says, "I can't afford that, would you take $260,000?" Tanya says, Okay. This is an example of
rejection and counteroffer, offer and acceptance and bargaining
The individuals who have the right to the property at the end of the measuring lifetime are called the
remainderman
Single family homes and single family lots are always considered
residential property
Which of the following is a type of zoning district found commonly in a municipality?
residential, industrial and commercial
Subdivision regulations are generally created and enforced by local, state and federal agencies. However, developers may choose to add........ that influence landscaping and architectural design, choices, as well as limit certain activities within the community borders to shape the tone and appearance of the subdivision.
restrictive covenants
Which of the following is not a type of deed restriction
reversion
Which of the following is not one of the three prongs that must be present to create a fee simple estate?
reversionary
Why might someone want to create a land trust to hold real estate?
safeguard the owner's privacy
What is set in the listing contract and is the price at which the seller agrees to accept an offer from a willing and able buyer?
sales price
The limited amount of useful land in the world is the characteristic of
scarcity
Real estate offices should include which of the following?
security cameras
_______ involves an agent or broker who acts in his own best interest in a real estate transaction
self-dealing
When a court is faced with different contract interpretations by the buyer and seller, and the contract language could go either way, who do the courts generally favor?
seller
Jane is buying a house. Big Bank Company is lending her the money. At the closing, Jane will sign a mortgage deed granting Big Bank Company the right to foreclose on her property and sell it from under her if she defaults on her loan payments. Why would Jane agree to this provision?
she needs the loan to buy the house
Why type of lease does a tenant have if they pay rent plus property taxes?
single net lease
The EPA was originally established to
stem the escalating negative impact on human health and the natural environment
A method of depreciation under which improvements are depreciated at a constant rate throughout the estimated useful life of the improvement is known as
straight line depreciation
Which is an example of an assignment?
subletting an apartment, selling a mortgage loan, selling someone a subway token
While there are several factors that affect the real estate market, they are all related in some way to
supply and demand
Mark is a local real estate developer who is looking to create a subdivision. What is the first step Mark must take in the subdivision process?
survey the land
This refers to the trade or exchange of one real property for another without the need to pay income taxes on the gain at the time of trade?
tax deferred exchange
When a married couple in virginia owns property together in this manner, neither spouse can unilaterally sever ownership, transfer or mortgage the property without the consent of the other?
tenancy by entirety
Which of the following types of ownership is more common than the others when siblings own property together or when business partners purchase real estate together?
tenancy in common
What is the name of the process when a contract is cancelled by both parties?
termination by mutual agreement
Which of the following is not considered a prohibited act?
testing
Which of the following acts on behalf of the broker...?
the agent
What's the primary factor for determining whether a contract can be assigned?
the contract
What is the result when a contract is terminated?
the contract is void and has no legal affect
What is the lender's cost to borrow money?
the cost the lender pays to borrow money to fund a loan from other banks
What does a judicial foreclosure involve?
the court system
When a landlord leases space to a tenant, the landlord is expected to take whatever action is necessary, at the landlord's expense, to provide a habitable dwelling unit. This is also known as...?
the covenant of habitability
The tank and its piping are visible because only part of it is underground, however this is still considered a UST because
the definition of a UST includes the tank and the underground piping connected to the tank, when 10% or more of the combined volume is underground
What happens if the dominant and servient estates with an existing easement are combined?
the easement is terminated
If a contract contains a force majeure provision, and an accident destroys the object of the contract, which of the following is most likely to govern the discharge of the contract?
the force majeure provision
How do we know from a deed what property was transferred?
the legal description
In most closings, who usually provides the money that makes the closing possible?
the lender
Who holds the title in a non-judicial foreclosure up until the auction?
the lender
Who is the mortgagee in a mortgage contract?
the lender
Pat receives an Acceleration Clause document. What does it mean?
the lender is requiring the owed principal to be paid fully by the date listed
If a life tenant wants to sell the property subject to a life estate, who must sign the deed transferring ownership?
the life tenant and remaindermen
What is the principle of conformity?
the more unique new homes are, the lower the value
What happens when the buyer cancels the contract without cause?
the seller gets to keep the earnest money
From the seller's point of view, which is the most important document on the closing table?
the settlement statement
The most common type of depreciation is the_______. You calculate the annual depreciation by dividing the value of the home by______
the straight line method; 27.5
A tenant has an infestation and doesn't say anything. Who is responsible?
the tenant is required to report immediately to the landlord
When a salesperson participates in a successful real estate transaction who pays them?
their sponsoring broker
What is the shortest time period for an estate for years?
there is no minimum time period
Pat's buyers have found property in a great area, but they want a corner lot. Corner lots in this particular subdivision are in high demand because there are long streets and few corners. When they find the house they want on a corner lot, they should expect...?
they might have to pay more because of supply and demand
Under RESPA, how many days does the lender have to provide the borrower with a loan estimate?
three days
How are leasehold estates typically created?
through leases
The most common way radon gets into homes is?
through soil, but it can also be in well water that's used in the house with showers and cooking
A _____ warns parties that failure to meet contract deadlines may cause breach
time is of the essence clause
Joe's buyers received a copy of the title and land description of the property they are buying and they noticed the street address was different than what was in the sales agreement. Joe told them?
to check the legal description because that's the most accurate way of identifying the property
What is the purpose of the Real Estate Transaction Recovery Fund?
to compensate consumers victimized by licensees who do not have the money to pay judgments against them
What is the buyer's primary interest at closing?
to get a signed deed and marketable title
The buyers have decided to get the property they are purchasing inspected for EMFs. They ask their real estate agent who they should get to do the inspection and she tells them
to get an expert who is trained in the detection of EMF and radio frequency to do the inspection
What is the primary purpose for RESPA?
to help buyers with closing details and to understand and compare loans
What is the purpose of earnest money?
to make sure the buyer does not back out of the contract for no reason
What is the lender's primary interest at closing?
to protect its security interest in the property
When land is divided into 36 tracts, with each of them being a mile square section, the six mile by six mile squares are called?
townships
Who is the person who holds nominal title of assets held inside of a trust?
trustor
How long can a party wait to sue for breach of contract?
up until the statute of limitations
The real estate broker has earned their commission when....?
upon finding a ready, willing and able buyer
A federal employee contacted John, a local real estate broker, asking for information about vacant homes in a declining neighborhood. The government may consider investing in...?
urban renewal to prevent further blight
When lead safe certified renovators work on lead remediation, they
use approved work practices such as containing the work area, using HEPA vacuum attachments and disposing of the waste correctly
Who holds the earnest money?
usually the closing attorney
Municipal building code enforcement regulates buildings and other structures to protect the health, safety and
welfare of the general public
in what circumstance will a sheriff's deed be issued?
when a court orders real property to be sold and the sheriff conducts the sale
What is proration?
when part of an expense related to the property is divided by the buyer and seller based on the closing date
A real estate salesperson is a licensed agent who negotiates and arranges real estate sales. Agents must...
work under a real estate broker
sales contracts in real estate are...?
written
Lionel is a real estate broker who signs a listing agreement with Rachel to sell her house. The listing agreement contains the marketing plan, the listing price, the listing expiration and the commission as well as other pertinent information. Before showing any prospective buyers the house, he always gives the customer a consumer notice that states that he represents the seller of the house as the principal and does not represent the customers. Which two things are true about Lionel's relationship with Rachel?
He is a special agent and a single agent
Francisco does not have an agency relationship with a customer that he has been showing different co-ops for sale. Which of the following statements is false?
He is not required to disclose that there have been bed bugs found in the building when the client asks and he knows that the building has had bed bugs. Which of the following statements is false?
Jacob is ready to buy a home. How does he know what type of loan he should obtain?
He should meet with a mortgage lender to see what type of loan he is best suited for
Mark is trying to decide if he should rent or own a home. His job requires that he travel frequently, sometimes even for long periods of time. As Mark's real estate agent, what should you suggest to Mark?
He should rent a home, as it offers more flexibility
What is an indication your home buyer is serious about buying?
He's pre-approved for a loan
The difference between high-frequency EMFs and low-to-mid frequency EMFs is....?
High frequency EMFs can damage DNA or cells, while low-to-mid frequency EMFs have not been proven to cause direct damage
Which would be an acceptable exercise of the right of use?
Hosting a casual dinner party with family members
Which of the following is FALSE regarding Virginia "Liability not be Imputed" laws?
If a client had certain knowledge it should be assumed that the licensee knew about it
Andrew is a real estate agent representing the seller. What will he want in the earnest money clause to improve the position of his client?
If there is any cancellation by the buyer, seller would get the earnest money
When will Shawn have to leave his home after an auction from default.
Immediately. There's little time afforded to the defaulted buyer
A buyer and seller enter into a real estate contract. Three days before closing the house burns down. What is this called?
Impossibility of performance
Newer USTs are better today because?
Improved design incorporates leak detection, spill and overfill controls and stricter technical specifications that aim to minimize leakage
Which of the following is false regarding compensation and broker relationship laws in Virginia?
In Virginia, compensation alone does imply a brokerage relationship between a licensee and another party
Carbon monoxide is a poisonous gas that can be found...?
In basements, seeping through cracks in the walls
Which is true about an agency relationship?
It can be created in writing, verbally or by implication
Why is dual agency problematic?
It can occur without the agent realizing it, it makes it difficult for an agent to uphold their fiduciary responsibility to both principals, if both parties are not made aware of it being in effect, then it is always illegal
Lou borrowed money to buy furniture for a new home. Will this impact his approval for a VA loan?
It could significantly reduce his credit score
What role does the Federal Reserve play in the real estate mortgage industry?
It creates rules to govern the industry
What is in the loan commitment letter?
It identifies the borrower, conditions of the loan, interest rates and financial terms
Which of the following is true of a sales contract signed by the licensee and seller?
It is legally binding
Jason worked as an office intern at a real estate brokerage firm all through high school. He just graduated and wants to pursue a career in property management in a village about 100 miles from his current home. His boss tells him that
It is possible to get an entry level job with just a diploma and a few years experience, the highest paying jobs go to licensed agents with some advanced college courses and this is a competitive field, and property managers must possess accounting, HR, marketing and general construction skills
Which statement is true about real estate commissions?
It is spelled out in the listing agreement, the seller's broker might have to split their commission with the buyer's broker, and it is usually calculated as a percentage of the sale price, but can also be a flat rate
How will Sally's lender know about her personal loan through a lender not on her credit report?
It may not know, but it will inquire about payments being made to third parties
Which of the following is true about independent contractor agreements?
It should carefully lay out how much of a commission a salesperson will receive from all successful transactions on which they work
Your buyer has an FHA loan pre-approval. What concerns do you have about the home he is purchasing?
It will need to meet safety standards set by FHA and those homes without this could be hard to get approval for
If home seller Sandra and buyer Amy agree to owner financing in order to close the transaction, how does that impact you, the real estate agent?
It won't, you still earn a commission
Which statement is true about Facebook Ads?
It's a great way for small businesses to create ads and listings that you can tailor to reach specific target audiences
In simplistic terms, what is a deed of trust?
It's a home loan
Jamie hasn't secured home insurance yet and closing is approaching. is this a problem?
It's likely to be a condition to closing the loan
Susan is a real estate broker and believes that she owes every person she works with the same benefits of an agency relationship. Why is she incorrect?
It's not possible to put two competing interests first, but that is what an agency relationship requires
Tom has popcorn ceilings in his home, which he suspects could contain asbestos. He is a do-it-yourself guy, so he spends the weekend scraping the ceilings and repainting. When Jeff, the buyer asks about it, Tom assures him there is no further need for testing because he's removed the problem. As the real estate agent for the buyer, Sam suggests
Jeff should have a professional test the rooms since fibers could now be loose and create issues
Julie is a real estate salesperson who has been trying to sell a home for their brokerage's client for 6 months. Her very good friend Jenny, mentions she's looking to buy and Julie thinks the house will be a great match for her friend. her friend does love the house and wants to put an offer in at asking price. Which statement is true?
Julie should very carefully explain that she represents the seller's interests in all things related to this transaction
What is the meaning of liability knowledge not be imputed?
Just because a licensee had certain knowledge, it can't be assumed that the client knew about it and vice versa
Lenny leased a house from Owen. Lenny is trying to sell the house. What will happen?
Lenny cannot sell the house. He does not have the right
Alex and Miller enter into a contract for Miller to buy Alex's house. The contract allows for Miller to obtain a mortgage at 5% interest. However, after due effort, Miller can only get a mortgage at 6% interest. He backs out of the contract. Does Alex have a claim for damages against Miller?
Likely not, this is a mortgage contingency
What is LTV?
Loan to value ratio; used to determine the risk of the borrower
What is the simplest way to determine the owner of real estate?
Look for the last grantee in the chain of title
One of the neighborhoods in Julie's community has suffered a downturn. There are not many jobs nearby, some homes have been abandoned and the population has been transient. This means that the prices for the homes that are for sale there should be....?
Lower than average because the demand is low
Remy Pascal is a broker representing seller Carl Smith. Remy decides that the property is a great candidate for a quick flip and makes an offer on the home. Immediately after purchasing the home, Remy resells it for a profit. In this case, Remy has not acted appropriately to safeguard Carl's interest above his own. Which fiduciary duty has Remy violated?
Loyalty
Frank has a properly phrased judgment against Gary, a licensed real estate salesperson. He wants to collect from the Recovery Fund, what must he do first?
Make every effort to collect the judgment from Gary first