Questions I got wrong (ALL exams)

What phrase do many real estate contracts contain that reminds the parties to avoid unnecessary delays to the transaction, and to adhere to all contract dates?

"Time is of the essence" means that specific timeframes must be adhered to. If one party misses a deadline, that party is in breach of contract.

How many years of experience must a licensed sales associate in Florida have before applying for a broker license?

2 or 5??

Jane is purchasing a property for $310,000 and plans to finance $250,000. What is the loan-to-value ratio? (Round to the nearest percentage.)

81%

What must a broker do if escrow funds are deposited into an attorney or title company's escrow account?

A broker must request verification of deposit within 10 days of the deadline stated in the sale agreement and notify the seller of the response.

On the closing statement, what's the term for an amount that shows up in the party's favor?

A credit is an amount that shows up on the closing statement in a party's favor.

Your clients Earnestine and Sammie Griffin are financing $180,970 for a $500,000 home. The Griffin's lender will approve an interest rate of 4.5% if they pay two discount points at closing. How much is this?

A discount point is 1% of the loan amount. Earnestine and Sammie are paying two points (or 2%) of $180,970, which is $3,619.40.

What is the maximum penalty for a first-degree misdemeanor in Florida?

A first-degree misdemeanor—such as failing to provide accurate rental information for a fee—has a maximum penalty of $1,000 per violation and up to one year in jail.

What is a tax certificate?

A legal document issued for a property with delinquent property taxes.

Your clients, the Schwans, are financing their home purchase. They want to obtain a conventional loan directly from a bank and to put down at least 20% of the home price. They will most likely get their loan from ______.

A primary lender The primary market is comprised of lending institutions that lend directly to the consumer. They generate the loans, then they package them and sell them on the secondary market. Primary loans are either conventional or government loans. FHA and VA loans are examples of government loans.

What's a trio?

A report that shows the parcel map, owner of record, and property profile

Louellen is about to take out a mortgage loan from her credit union. The contract includes the following information: Louellen is offering her house as consideration, and the credit union is offering $350,000; and Louellen will pay the loan back over a certain number of months at a certain rate. Both Louellen's signature and the credit union representative signed it. What, if anything, is this contract missing in order for it to be legally binding, according to the statute of frauds?

All elements are present for this contract to be legally binding under the statute of frauds.

Which one of the following could apply to closing costs for an investment property?

Amortized over the life of the loan Closing costs are added to the cost basis, are sometimes deductible in the year paid, and are often amortized over the life of the loan.

Which of the following items would be considered a truth in advertising violation according to FTC guidelines?

An MLS listing shows a property as available even though the parties closed on the transaction three weeks ago.

Eloise is interested in buying a bungalow on the outskirts of the city. Her agent is reviewing the property details and informs her that there are several easements on the property. In particular, the gas company has a right of way because the natural gas line for the neighborhood runs through the back of the lot. What type of easement would this be?

An easement in gross is granted to a specific individual or company—in this case, the gas utility company.

Broker Amanda hires Jake to be an assistant at her firm in Sarasota. She would like to compensate Jake on a completed-transaction basis. For this to be permissible, Jake must ______.

Basing compensation on closed transactions would be compensating an unlicensed person for activities requiring a license, and it would be illegal.

Which of these is usually a brass marker that is used to mark a datum?

Benchmarks are permanent markers used for marking datums.

The difference between what an investor plans to make and spend and what actually happens is known as ______ risk.

Business

Sally has just purchased a condominium. She is curious about whether she can plant hydrangeas next to her porch. Which condominium document could she consult for the answer?

Bylaws The bylaws contain the rules condo owners must follow.

Charley's loan amount is $212,000, his appraised value is $275,000, and his interest rate is 4.375%. What is his annual interest?

Calculate the annual interest owed by multiplying the total loan amount by the interest rate. In this case, $212,000 x .04375 = $9,275.

Which substance when it's absorbed into the body prevents blood's ability to transport oxygen?

Carbon Monoxide

The amount of money that remains after debt service is subtracted from net operating income equals what?

Cash Flow

Which agency administers the Interstate Land Sales Full Disclosure Act?

Consumer Financial Protection Bureau, It may help to remember that the Interstate Land Sales Full Disclosure Act is designed to protect consumers from the fraudulent sale of property sight unseen through the regulation of land sales across state lines.

Which type of legal description do courts prefer?

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

Ben has been paying his $750 mortgage payment every month for five years on a level payment plan. Each month, the amount he pays toward interest ____________ and the amount he pays toward the principal ___________.

Decreases; increases Although Ben pays the same amount every month, he pays a little bit less toward interest each month and a little more toward the principal, because his mortgage is amortized.

Investors may be allowed to deduct operating expenses, real estate taxes, mortgage interest, and what else?

Depreciation

The rate at which a bank can obtain a loan from its Federal Reserve bank when using commercial paper as collateral is called the ______ rate.

Discount

Which of the following scenarios is an example of novation?

Doug is buying Norm's farm, but has a serious accident and no longer wants to own a farm, so his daughter Linda decides to buy the property. Norm agrees to the substitution of Linda for Doug in the purchase contract, effectively creating a new contract. Novation creates a new contract by substituting one or more parties to the contract, which releases the original party from liability.

Bridget has an investment portfolio that includes an equity REIT. Which of these is most likely to be part of the REIT's investment?

Equity REITs invest in income-producing property, such as a retail shopping center. Undeveloped land isn't likely to produce income, and equity REITs don't invest in mortgage debt. That's the role of mortgage REITs.

What type of title insurance covers defects of an incorrect survey and boundary encroachments?

Extended title insurance covers additional defects, such as incorrect survey or boundary encroachments, unrecorded liens, and pre-existing zoning violations.

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

External depreciation

Cooperative shareholders under a condop structure have ______.

Flexibility in selling and subletting, similar to that of condominium owners. Condops are a sort of hybrid between a co-op and a condominium. They allow flexibility in selling and subletting, similar to that enjoyed by condominium owners.

How many of the seven members of the FREC must hold active real estate licenses?

Four of the members must have had active real estate licenses for five years before appointment and another one member must have had an active license for at least two years before appointment.

Which of the following loan transactions would be exempt from TILA disclosure requirements?

Grocery store, with personal funds used as collateral Loans for commercial purposes don't require TILA disclosure. Loans for personal purposes do, even when the collateral used is a business.

If a minor enters into a contract with an adult, which of the following is true?

If a minor enters into a contract with an adult, the minor may legally hold the adult to the contract, but the adult cannot legally hold the minor to the contract.

How can lenders offer mortgage loans with down payments as low as 3.5%?

If the loan is FHA-approved, the lender is protected by mortgage insurance, paid by the borrower.

Rhonda and Oliver bought an old schoolhouse with the hope of transforming it into a residence. They owned the property as joint tenants. After Oliver died, how did Rhonda own the building?

In severalty

Clay and Myra just bought a home. Based on where they are in the property ownership life cycle, which one of the following tax-related items is likely to be of the most interest to them?

In the acquisition stage of property ownership, owners are typically most concerned with the deductibility of points they paid.

There is one opening on the commission. The current Commission has: 3 Brokers/1 Sales Associate/2 Consumers. Which individual is qualified to join?

In this scenario, the committee needs a broker with at least five years of experience to meet the requirement.

Joe Bob is the grantor of a deed, and is in the final stages of transferring a deed to the new owner, Frank. What must Joe Bob do in order to satisfy delivery and acceptance of the deed to Frank?

Joe Bob has to deliver the deed to Frank, his agent or attorney, or the title company issuing the title and acceptance is presumed.

Alec just received his Florida broker license. Assuming the Real Estate Recovery Fund balance is at $400,000, how much of his license fee went into the fund?

License fees are imposed when the Real Estate Recovery Fund drops below $500,000. The amount taken from each broker's new (and renewal) license fee is $3.50.

Which valuation method estimates the proceeds that can be generated as a result of selling all assets and inventory and paying off short-term liabilities?

Liquidation analysis

Local health departments are responsible for testing which water sources?

Neither community nor private wells Residents who get their drinking water from an individual well are responsible for maintaining it. In fact, anyone with a private water source like a well or spring needs to take care of it and keep sources of pollutants away. When it comes to community wells, one person should be placed in charge of testing.

How much post-licensing education must sales associates complete before their first license renewal?

New sales associates in Florida must complete a 45-hour post-licensing course within 18-24 months of obtaining a license.

Parker entered into a contract with seller Derrick to buy Derrick's home. Before finalizing the sale, Parker had a change of heart and decided to renounce all worldly possessions. He no longer wanted to buy Derrick's home. With Derrick's approval, Parker is released and Parker's brother, Tom, takes Parker's place as the buyer in the purchase contract. Of what is this an example?

Novation involves substituting one party (or both parties) with another party on an existing contract, releasing the original party from all liability.

How many acres are in a square mile?

One square mile is equal to 640 acres, which is the size of one section in the rectangular survey system, one method of a legal description of land.

The terms of a person's will are subject to ______.

Operation of law trumps any terms specified in a will.

Brandon has a right-to-use timeshare. What can he NOT do with this type of timeshare?

Pass the timeshare on to an heir.

A new development is going up just outside city limits where the population is expected to grow significantly in the next decade. The development will consist of commercial properties in one quadrant near a main road. The other areas are designated residential and will include single-family residences and multi-family townhomes. A small number of the single-family homes will border a golf course that is at the center of the development. What type of zoning is this an example of?

Planned unit development Planned unit developments are planned and built as a single unit, with the type and location of uses and buildings fixed throughout the entire project.

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

Plessy vs Ferguson

Which of the following is a piece of general data an appraiser may gather?

Population size, General data is related to the area where the property is located, not the property itself.

What type of IRS deduction can be taken for a vacation home?

Property Tax

Conrad just closed on the house he's buying to fix up. Why should he follow up to be sure the deed has been recorded?

Recording provides constructive notice that he owns the property.

Which one of these situations represents the illegal practice of redlining?

Redlining is the practice of selecting geographical areas in which no mortgage loans will be written (based on demographics instead of creditworthiness). Based on the neighborhood's demographics, Hunter, a mortgage broker, refused to underwrite mortgage applications from applicants who want to buy in specific neighborhoods.

Scott is a sales associate who works under the supervision of a broker. Which of the following is true?

Sales associates must work under the supervision of a broker, but they can be employees or independent contractors.

The Housing and Community Development Act of 1974 added which protected class to federal fair housing law?

Sex

Blane owns a barbershop. He polls his customers and learns that they tend to come from less than a mile away. That's probably because Blane's store is in which type of location?

Strip malls tend to offer goods and services for a very local area of one mile or less.

The Johnsons are shopping for a mortgage loan and are attracted to the below-market interest rate offered for the first year of an adjustable-rate mortgage (ARM). They notice that the rate increases sharply after the first adjustment period. What's another term for this type of interest rate?

Teaser

What type of ownership has the right of survivorship and requires that the co-owners be married when they take title?

Tenancy by entirety usually applies to married people and involves right of survivorship.

Which federal act protects consumers from unwanted email solicitations?

The CAN-SPAM Act of 2003 protects consumers against unwanted email solicitations.

What agency/act is designed to regulate pollutants, such as oil and other hazardous substances, discharged into U.S. waters?

The Clean Water Act regulates pollutants, such as oil and other hazardous substances, discharged into U.S. waters.

If you move, you'll need to update your mailing address and email address with the DBPR within _______ days or you may receive a citation and a $500 fine.

The DBPR requires notification within 10 days of any changes to your mailing or email address or your place of practice.

What is the total dollar amount that a borrower can borrow with an FHA-insured loan?

The FHA sets a limit on the amount that can be borrowed based on the average housing cost in the area as well as the property type (one, two, three, or four units, owner occupied).

Which amendment to CERCLA says that "innocent landowners" aren't responsible for the cleanup of hazardous contamination?

The Superfund Amendments and Reauthorization Act, or SARA, says that innocent landowners aren't responsible for cleanup of hazardous contamination.

Leo would like to sell his membership share in a cooperative to Mariah. Which of the following statements is true?

The cooperative board must approve Mariah's application before Leo can sell his membership share to her.

John and Michelle received a general warranty deed when they purchased their house from Ted. A couple of months after they moved in, their neighbor, Bryant, drove his four-wheeler across their property to access the lake front. John discovered that Ted and Bryant agreed to an easement over Ted's property several years earlier. Which general warranty deed covenant does this represent?

The covenant against encumbrances assures the grantee that no encumbrances exist other than those that are publicly recorded or noted in the deed.

Which condo document must be created before beginning development

The declaration of condominium is created first. It contains legal descriptions of the property itself and the units, how voting rights are established, and many other things.

To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which one of these elements listed has the highest priority?

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

The power to regulate and enforce license law falls under the FREC's ___________________ responsibility.

The executive power to regulate and enforce license law has been granted to the FREC by the legislature.

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

The lot and block system uses plat references to develop a property's legal description.

The ______ is some, but not all, of something.

The part is some, but not all, of something. "Part" is a math term, and it's one of the few that makes perfect sense!

The mortgage industry is made up of the primary and secondary markets. What's the role of the primary mortgage market?

The primary mortgage market is made up of lenders that originate and fund mortgage loans to consumers.

Which of the following describes the discount rate?

The rate at which a bank can obtain a loan from its Federal Reserve bank when using commercial paper as collateral

How many years of experience must a licensed sales associate in Florida have before applying for a broker license?

The sales associate licensee must have two years of real estate experience. The applicant must next complete the broker pre-licensing education requirements and submit the broker license application.

What describes the different symbols that are used in a survey sketch?

The survey legend describes different symbols that are used for the various elements on the land, such as corners, water, streets, vegetation, and more.

Hernando, a real estate attorney, is preparing an option contract for his client, Wilma. Hernando asks Wilma what she and the seller have agreed upon for the option period. Wilma said the seller was leaving that up to her, and she wanted to get Hernando's opinion. What should Hernando put into the contract for the option period?

The typical option period is often six months. Option periods cannot be "forever," or even extended indefinitely. A definite period of time should be stated.

What type of ownership requires that all co-owners have the same percentage of ownership?

This is joint tenancy. It also includes the right of survivorship. It might help you to remember that joint tenancy is a joining of two or more equal parts.

"A party to a transaction and the person for whom the agent acts" is the definition of ________.

This is the definition of a principal. This is the person for whom the agent acts.

To comply with the statute of frauds, an option contract must be ______.

To comply with the statute of frauds, an option contract must be in writing and signed by the optionor (seller).

Which one of the following can be depreciated by an investor?

Tools and equipment can be depreciated. Expenses and water costs can be deducted, but not depreciated. Land isn't depreciable.

A qualified mortgage may not include interest-only payments and balloon payments, or lender fees and points that total more than 3% of the loan because these are considered ______ in relation to the qualified mortgage.

Toxic loan features

Which statement best describes traditional planning?

Under traditional planning, specialists with different areas of expertise worked separately and focused on designing "their" areas. This created pockets of developed space and isolated space.

You receive an offer in the mail that says you're eligible to win a cash prize if you place some stickers on a form and return it to the sender. What type of contract is this?

Unilateral contract A sweepstakes entry is a unilateral contract because only the sweepstakes administrator is obligated to perform any action; the recipient of the offer is not contractually bound to enter the contest.

Hank leases 150 acres from Sara and Jesse. He has an option contract attached to his lease, with an option to purchase that can be exercised within the next two years. What type of contract is this?

Unilateral. With an option contract, before the option is exercised, only the optionor (seller) is bound by the contractual obligations. It's essentially a unilateral contract.

Which one of the following is a substance found in air fresheners, cleansers, paint, and building materials that at high levels can make indoor air quality toxic?

VOCs

Krening Realty has been found guilty of running deceptive ads. Which of these statements about the potential penalty is NOT true?

Violations of a cease-and-desist order may result in penalties of up to $43,792 for each day a deceptive ad runs; civil penalties may be in the millions, depending on the violation. Violators may be required to run corrective or informational ads.

What legal document must be delivered to the sheriff before a tenant may be forcibly removed from a rental?

When a tenant refuses to vacate the premises after being lawfully evicted, the judge may issue a writ of possession, which the landlord must then deliver to the sheriff.

What is the most likely effect when the Fed sells securities on the open market?

When the Fed sells securities, it takes money out of the market. This decreases the supply of money in the market and potentially slows down the economy.

The process in which the government actually takes someone's property through the power of eminent domain is called __________.

When the government actually takes someone's property and offers the owner just compensation for the property's value, it's called condemnation.

Marissa, a new licensee, has some questions. Which of the following questions can the association of REALTORS® in her state help her answer?

Where can I go to find marketing data on my area so I can advertise more effectively?

Which of the following is an example of a ground lease?

With a ground lease, the landowner leases the land to the tenant, who builds on the property. Ground leases are written for long periods so the tenant can recoup expenses, because when the lease is up, the landowner gets the land back, plus improvements.

Bernie represented Oscar in the sale of Oscar's home. They signed an exclusive right-to sell-listing agreement. If Oscar were able to find his own buyer, would he owe Bernie a commission?

Yes, because "exclusive right to sell" means Bernie gets paid no matter who finds the buyer. With exclusive agency, the seller retains the right to find a buyer and avoid paying the commission.

Ricky is working for Matt, a buyer client, who is interested in a property at which the listing agent offers compensation to cooperating agents. The listing agent has offered Ricky or any cooperating agent additional compensation if the transaction closes within 40 days. Is this ethical?

Yes, but only if all of the involved parties have full knowledge and provide consent.