RE National Practice Exam Wrong Answers
what do contracts state?
- defined purchase price - the property being sold/purchased - buyer and seller names
Elements in the sales comparison approach in order
1. Financing terms and cash equivalency 2. Conditions of sale 3. Market conditions 4. Location 5. Physical Characteristics
Over how many years is a residential income-producing property depreciated?
27.5 years
How many feet are in a mile?
5,280 feet
A seller received $800,000 for a 5.5 acre rectangular parcel alongside a road frontage. The property is 400 feet deep. What was the price per front foot of the property?
5.5 x 43,560 = 239,580 239,580 / 400 = 598.95 price per front foot $800,000 / 598.95 = $1,335.67 per front foot
Township
A 36 square mile square formed using the rectangular survey system
arbitration clause
A clause in a contract that provides that, in the event of a dispute, the parties will submit the dispute to arbitration rather than litigate the dispute in court.
prior appropriation
A concept of water ownership in which the landowner's right to use available water is based on a government-administered permit system.
Executed Contract
A contract that has been completely performed by both parties.
Valid Contract
A contract that results when elements necessary for contract formation (agreement, consideration, legal purpose, and contractual capacity) are present.
General Warranty Deed
A deed in which the grantor fully warrants good, clear title to the premises. Used in most real estate deed transfers, a general warranty deed offers the greatest protection of any deed.
Deed of Trust
A deed of trust is an agreement between a home buyer and a lender at the closing of a property. The agreement states that the home buyer will repay the home loan and the mortgage lender will hold the property's legal title until the loan is paid in full.
Addendums
A document ADDED to an original document to clarify a point.
what happens after a federal fair housing complaint is made?
A fair housing specialist will review the complaint.
Statute of Limitations
A federal or state statute setting the maximum time period during which a certain action can be brought or certain rights enforced.
Buydown
A financing technique used to reduce the monthly payments for the first few years of a loan. Funds in the form of discount points are given to the lender by the builder or seller to buy down or lower the effective interest rate paid by the buyer, thus reducing the monthly payments for a set time.
Related to the legal description of land, what is a monument?
A permanent land marker sometimes used in legal descriptions
Non-conforming use
A permissible use under former rules that is now prohibited - automatically granted when zoning regulations change
special use permit
A permit that allows for a specific exemption to zoning regulations for a particular piece of land in a location that has a particular zoning characteristic. Local zoning authorities grant special-use permits.
Blockbusting
A process by which real estate agents convince white property owners to sell their houses at low prices because of fear that persons of color will soon move into the neighborhood
what is a way property taxes could impact your clients?
A sale can prompt a reassessment, resulting in higher property taxes.
What is a survey?
A survey is used to create, verify, or correct a legal description. It's a professional on-site measurement of the lot lines and dimensions of a property.
What is a transfer tax?
A tax that's applied to the transfer of property from one person to another
Alluvion describes new deposits of land that are the result of what natural process?
Accretion
what 3 stages of homeownership can be affected by income taxes?
Acquisition, ownership, and reversion
agency coupled with an interest
An agency, created for the benefit of the agent, in which the agent has some legal right (interest) in the property that is the subject of the agency.
Easement by Prescription
An easement acquired by continuous, open, and hostile use of the property for the period of time prescribed by state law.
periodic estate
An interest in leased property that continues from period to period—week to week, month to month, or year to year.
Equity Skimming
An investor receives title to a property— often by using a straw buyer—doesn't make the mortgage payments, and usually rents out the home until foreclosure occurs.
Which economic principle states that the value of property today is impacted by the current value of the total expected future benefits?
Anticipation
Why did the implementation of TRID impact closing dates?
Certain financing changes may trigger a new three-day waiting period.
A deed states, "For love and affection, the receipt and sufficiency of which is hereby acknowledged." What does this statement represent in the deed?
Consideration
What are the two types of physical depreciation?
Curable and incurable
signs of a previous fire
Discoloration in the attic or around windows and doors
What are the two categories of comparison when evaluating comparables to a subject property in the market comparison approach?
Elements and units
Regarding restrictive covenants/deed restrictions, to what does the doctrine of laches refer?
Enforcement
"Buyer to beat all competing offers by $1,000 up to a price of $700,000. Seller to provide copies of competing offer to buyer on acceptance." What type of offer is this?
Escalator
What type of deed conveys real property from a decedent's estate to a buyer?
Executor's deed
Which entity services rural development loans?
FSA The Farm Service Agency, an agency of the USDA, administers this program.
Which act states that communities and facilities that meet certain criteria for providing housing to older persons are legally exempt from familial status discrimination?
Housing for Older Persons Act of 1995
What does it mean when a broker tells a potential buyer that the "lease on the property runs with the land?"
If property ownership changes, the new owner must abide by the lease terms
How does the insurance company determine the replacement value of a home?
Insurance companies reimburse based on a property's replacement cost, or what it would cost to recreate that property if it had to be completely rebuilt.
Encroachment
Intrusion on a person's territory, rights, etc.
In what way is a townhome similar to a condominium?
Like condominiums, townhomes are single-family homes, and they both often have a homeowners association to which owners must pay dues.
What type of agent is an escrow officer?
Limited agent
who handles community planning?
Local governments and planning boards
What does PITI stand for?
Principal, Interest, Taxes, Insurance
Progression vs Regression
Progression -> property value increases Regression -> property value decreases
What may be a result to property values by inverse condemnation?
Property values decrease because adjacent property was rezoned.
Providing the APR in an ad
Providing the APR in an ad makes the ad in compliance with TILA bc the APR doesn't trigger the required disclosure of all credit terms.
Which legal description method is regulated by the U.S. Department of the Interior's Bureau of Land Management?
Rectangular government survey
The Housing and Community Development Act of 1974 added which protected class to federal fair housing law?
Sex
How is net operating income calculated?
Subtract operating expenses from effective gross income.
What is TRID?
TILA-RESPA Integrated Disclosures
For a deceptive ad, the FTC might require what as a penalty?
Take out new ads correcting the misinformation in their original ad.
Triple Net Lease (think of TIM)
Taxes, insurance, maintenance
What describes a contract signed by minors?
The contract is VOIDABLE.
To meet the requirements of the statute of frauds, an agreement must clearly identify...
The contract's subject matter, present the contract's essential terms and conditions, and identify the contracting parties to be enforceable.
Property tax is calculated from what?
The home's ASSESSED value.
How can a property manager use rent rolls?
The property manager can use information about the type of unit and current rent or lease amount to help set future rent or lease rates.
Easement in Gross
The right to use land for a specific, limited purpose unrelated to any adjacent parcel.
Tenant remedy
The tenant suing their landlord for damages, while continuing to pay rent. Ex: The tenant informed the landlord of the problem, and it's still not fixed more than 30 days later.
What's the purpose of a buyer representation agreement?
To establish an exclusive agent/buyer relationship
What's the purpose of a Loan Estimate for a buyer?
To provide the estimating closing costs for the buyer's loan.
Regarding documentation, which of the following actions can help a licensee avoid being accused of unauthorized practice of law?
Using approved fill-in-the-blank forms
Acceptance vs binding acceptance
When all parties have signed a contract vs. when the seller's acceptance is delivered to the buyer
Loan Flipping
When lenders encourage frequent refinancing in order to generate fees; an example of predatory lending
what documents does the escrow agent need to prepare at closing?
Working with the lender, she'll prepare the settlement statement, which details the costs the buyer and seller will have at closing.
If a seller found their own buyer in an exclusive right-to-sell agreement, would the seller still owe the agent a commission?
Yes, "exclusive right-to-sell" means the agent gets paid no matter who found the buyer.
when is an appraisal required?
a federally related transaction
Conformity
a home is more likely to increase in value when it conforms to other houses in the neighborhood.
Actual notice vs constructive
actual - legal term that suggests that there is some form of notice that a person has been made aware of something. constructive - an acknowledgment that a person should be aware of something, even though no verbal or written notice takes place.
Bridge Loan
allows the homeowner the ability to pay for two homes simultaneously
Once a contract is signed, the document to use to alter the terms is a contract _______________.
amendment
when does a buyer have to pay the transfer tax?
at closing
With dual agency, a firm represents _____________.
both the buyer and seller
What loans are exempt from RESPA?
business and commercial loans
Partition
divided portion of property that's created as part of a co-ownership termination
preliminary report
document used to give a buyer an overview of the title history and information about what is or isn't covered in an insurance policy
With single agency, a firm represents _____________.
either the buyer or seller
If a property can't be easily transferred, its value _________.
falls
after purchasing a property, what can the buyer do to clear a possible future claim on the property's title?
file a suit to quiet title
what could occur if there are unpaid liens on a property after you buy it?
foreclosure on your property
Ordinary Life Estate
granted for the lifetime of the grantee. When the life estate holder dies, remaining interest is either returned to the original owner (reversion) or is granted to a third party (the remainderman).
The statute of frauds in most states requires that lease agreements for periods of more than _____________ be in writing.
one year
pre-qualification letter vs loan application
pre-qual - provides minimal info to lender and typically takes place before finding a home loan application - lengthier and more complex, mostly occurs after applicant finds a property
Title VIII of Civil Rights Act of 1968 (Federal Fair Housing Act)
prohibits housing discrimination based on race, color, national origin, and religion
Covenant of Quiet Enjoyment
promises that the grantee won't have his enjoyment of the property hampered by claims against the title.
title insurance
protects property buyers from financial loss due to title defects. However, it covers only those items included in the policy.
Purpose of PMI
protects the lender if the borrower stops making loan payments
Bulk Zoning
regulates density by mandating setbacks as well as limits on building heights and lot widths.
Purchase Money Mortgage
seller financing that's typically used to bridge the gap between the home's list price and the institutional loan, though it can also be used to finance the entire purchase price.
Amortized mortgage
the monthly payment is the same each month. principal increases, interest decreases
why should a business owner avoid a absolute net lease?
the owner has no legal recourse with an absolute net lease. the owner will still be on the line of payment, even if the building is damaged or destroyed through no fault of their own.
Gross Lease
the owner pays all the property taxes, insurance costs, and maintenance (TIM)
what happens to a property when the owner dies and the owner had title to his property in severalty, as a fee simple absolute estate?
the owner's heirs, as described in his will or the state law of descent, will get the property.
What happens when a foreclosed property goes to auction and doesn't sell?
title goes back to the lender, and the property is considered real estate-owned by that lender
purpose of a closing disclosure from lender
to detail all costs the buyer owes at closing
Indemnification Clause
transfer the liability of one party's action away from the other
Loft lease
usually for a large open space that may have few amenities.
