RE Practice test 3 74%

Camila, a broker, has approval to work at another brokerage while maintaining her own broker firm. What is this called? Dual agency Licensure by reciprocity Multi-licensure Multiple licensure

Working at multiple brokerages like this requires multiple licensure.

Breeja sold her investment property for $330,000. Her adjusted basis in the property was $253,000. The difference between this sale price and the adjusted basis is ______. A capital gain After-tax cash flow A rate of return The finance rate

A capital gain

A cooperative is a(n) _____. limited partnership LLC not-for-profit corporation sole proprietorship

A cooperative is a joint venture with its shareholders, formed for their benefit and governed by them. It's a not-for-profit corporation.

Which one of the following statements about the designated sales associate method of representation is true? A designated sales associate acts as a single agent. Agricultural transactions cannot use the designated sales associate method of representation. In the request for designated sales associate representation, the buyer or seller fills in the name of the sales associate they are requesting. The designated sales associate method of representation may only be used when the buyer and seller's combined assets equal $1 million.

A designated sales associate acts as a single agent. The broker serves as a neutral intermediary between the two representing agents.

What is a tax certificate? A document stating that the property has been redeemed from delinquency. A legal document issued for a property with delinquent property taxes. A tax document showing the amount of taxes paid. Proof that a property will be auctioned for delinquent taxes.

A legal document issued for a property with delinquent property taxes. A tax certificate is issued when property taxes aren't paid, and can be sold if taxes aren't paid by the date of the sale.

Who or what is a licensee's sphere of influence? A list of contacts, both personal and professional, who already know and trust the licensee Coworkers who work for the same brokerage as the licensee Family and friends to whom a licensee listens regarding business matters The code of ethics published by the National Association of REALTORS®

A licensee's sphere of influence includes those people with whom the licensee has already established a trusting relationship, either personal or professional.

How many acres are in a quarter section in a rectangular survey? 160 450 640 One

A section in the rectangular survey system is one square mile or 640 acres. A quarter section is 640 acres divided by four (160 acres).

Brandon is interested in purchasing a piece of property, but before doing so, he'd like to verify the accuracy of the legal description. Which of these options will accomplish this? Having a home inspection performed Having an appraisal performed Having a survey conducted Looking up the property on Google

A survey is a professional, on-site measurement of the lot lines and dimensions of a property, including the location of any improvements, encroachments, and easements of public record.

A ______ is a piece of real estate owned by multiple unrelated individuals who, in addition to their ownership rights, each hold the right to occupy the dwelling unit based on the specific terms of a timeshare agreement, usually in one- to two-week intervals during the year. Campground membership Timeshare estate Timeshare use Vacation ownership

A timeshare estate is a piece of real estate owned by multiple, unrelated individuals who, in addition to their ownership rights, each hold the right to occupy the dwelling unit in one- to two-week intervals during the year.

What percentage of profit would the seller make if he paid $18,000 for a vacant lot, built a home on the lot that cost $145,000, and then sold the property for $200,599? Round your answer to the nearest percent. 138% 16% 23% 293%

Add the costs of the lot and the house together to get the total cost ($163,000). Next, subtract the sales price from the total cost to get the amount of profit ($37,599). Finally, divide the total cost by the profit amount ($37,599 ÷ $163,000).

What's the purpose of an assessor's parcel number? To identify a property for tax purposes To identify the assessor assigned to a particular property To identify the number of parcels an assessor has revalued To provide a numeric rating related to a parcel's size Assessor parcel numbers are used to identify properties for tax purposes. They appear on many legal documents.

Assessor parcel numbers are used to identify properties for tax purposes. They appear on many legal documents. To identify a property for tax purposes

How many members on a probable cause panel must be consumer members of the FREC? Half of the total number of panel members One Three Two

At least one panel member must be a current or former FREC commissioner.

Seller Martin is looking at his Closing Disclosure. Which one of the following items is he likely to see? Debits Listing price Seller net amount Title liens

Debits, Credits and debits appear on the closing disclosure.

John sells his single-family home and purchases a new home for his family to reside in. Marcus owns a single-family home, but rents it out to a co-worker while he is on an extended two-year military tour overseas. Donald sells an apartment complex and purchases a new complex in a different part of the city. Which of these consumers is most likely to take advantage of a 1031 tax-deferred exchange? Donald John John and Donald Marcus

Donald Remember, the property must be held for investment or business purposes. Single-family homes don't qualify.

Mike's been friends with Tim since college. They often work together: Mike flips houses and Tim's an appraiser that he uses frequently. It works out great for both friends and Mike definitely gets a better appraised value on the flips Tim handles. For every appraisal Tim handles for him, Mike gives him a $100 gift card. In what illegal practice does it sound like they're engaging? Equity skimming Falsely inflating appraisals Under-valuing the homes Violating fair housing laws

Falsely inflating appraisals An inflated appraisal occurs when an appraiser intentionally submits a misleading report to a lender that indicates an inflated property value. Inflated appraisals are illegal and can get both of these guys in trouble.

What institution was established in 1938 to purchase FHA-insured loans from individual lenders, group the loans together, and sell them as mortgage-backed securities to investors? Fannie Mae (FNMA) Farmer Mac Freddie Mac (FHLMC) Ginnie Mae (GNMA)

Fannie Mae (FNMA or the Federal National Mortgage Association) was created in 1938 and purchases individual loans and sells them as mortgage-backed securities.

In which of these situations does Florida licensee Marie have to present her client with an energy efficiency brochure? Her buyer client Millie says she only wants to look at "green" houses. Her buyer clients, the Henries, are about to sign a sales contract on a house. Her client Thom wants to have the state rate his condo as energy efficient before he sells it. Her landlord client is having major renovations done to 20 of his rental units.

Florida requires that buyers receive a brochure, before or during the execution of a sales contract, that explains the option of getting an energy efficiency rating on the property they're purchasing.

ohn just sold the home where he's lived for eight years and made a nice profit. Which of these statements about the profit he made is FALSE? He can include depreciation costs in the adjusted basis he uses to calculate the amount of his capital gains. He'll be allowed to exclude some or all of the amount of his capital gains from his income tax liability. If he made any improvements to the property, the cost of those improvements is included in his adjusted basis. In order to determine the amount of his capital gains for tax purposes, he needs to first know his adjusted basis.

He can include depreciation costs in the adjusted basis he uses to calculate the amount of his capital gains. Depreciation costs are factored in only when the property is for investment. Since John sold his personal residence, he calculates capital gain by subtracting his adjusted basis (acquisition costs plus the cost of capital improvements) from the sale price. As a single taxpayer, he can exclude as much as $250,000 of his profit from taxable capital gains.

Jose is an investor who found and closed on an investment property, then decided to sell a property other than the one originally marked for the exchange. What is this an example of? A buy and hold A fickle investor A fix and flip A reverse tax-deferred exchange

If your client finds and closes on an investment property and then decides to sell a property other than the one originally marked for the exchange, they can do a tax deferral "backward." This is called a reverse exchange.

Sondra, a buyer, signs all the required mortgage documentation, promising to make all payments to her lender. Unfortunately, Sondra falls on hard times and misses multiple payments, and the bank indicates that it's going to foreclose on her. The foreclosure proceedings are more difficult for the lender because Sondra holds the deed to the land. What kind of state does Sondra live in? A deed of trust theory state A lien theory state An intermediary theory state A title theory state

In a lien theory state, the mortgage becomes a lien on the property, but deed remains with the buyer. Foreclosure proceedings in a lien theory state may be more difficult for the lender.

What can tax losses be used to offset? Active income only Both passive and active income Earned income only Passive income only

Income shelters that are available to investors include tax losses that investors can use to offset both passive and active income.

What must be done for a fee to be considered acceptable under RESPA? It can only be split 10% with the settlement service provider. It must adhere to the 80/20 rule. It must be disclosed to the client. It must only be between affiliated businesses.

It must be disclosed to the client. According to RESPA, all acceptable fees must be disclosed to the client. They must be for actual services, they can't be for nominal services, and they must not be excessive.

Lenders often look at the appraised value of a property compared to the amount of the loan when considering how much a borrower must provide as down payment. What is this value called? Credit score Debt-to-income ratio Loan-to-value ratio Net worth

Loan-to-value (LTV) ratios look at the mortgage loan amount compared to the property value. When considering loans, many lenders look for an LTV around 80%, but this varies by lender.

Which type of retail space has an anchor store and commonly has approximately three miles of trade space, often has service businesses, such as dry cleaners, hair salons, and convenience stores? Factory outlet Mall Neighborhood center Strip mall

Neighborhood centers often include these types of businesses.

Three brokers meet and agree that all of their listing contracts will have one-year terms. Of which type of antitrust violation is this an example? Group boycotting Market allocation Price fixing Tie-in arrangement

Price fixing Besides commissions and discounts, price fixing may also apply to contract terms.

Local health departments are responsible for testing which water sources? Bottled water Community and private wells Neither community nor private wells Private wells only

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.

What is the name of the process of substituting one party to an existing contract with a new party, releasing the original party from all contractual obligations and rights? Assignment Execution Novation Re-contracting

Novation is the substitution of one or more of the parties to a contract, creating a new contract.

A taxpayer can claim a capital gains exclusion _______. Every year, provided a transfer of real property has occurred Once every five years Once every two years On every type of real estate sale

Once every two years

When a buyer breaches the real estate sale contract, the seller may file a lawsuit for compensatory damages. Which of the following best describes compensatory damages? A specified monetary amount agreed upon by the buyer to pay the seller, if the buyer breaches the contract. A specified monetary amount the seller agrees to pay the buyer, if the seller breaches the contract. Compensation for actual loss based on the contract's value.

Payment in excess of the contract's value. Compensatory damages compensate a party for actual loss based on the contract's value.

Which of these types of tenants most often uses a percentage lease? Manufacturing Residential Retail Triple net

Percentage leases are used most often with retail tenants. Tenants pays a percentage of their income realized from retail activities to offset lower rent.

Over which of the following areas do local authorities have no police power? Budgeting Deed restrictions Subdivision development Zoning .

Police power is a form of public land use control. Deed restrictions are private land use controls

If a Florida property owner has a lien on their property for property taxes, what does it mean? A public auction will be held to collect the taxes. The state can file a tax deed application. The taxes are delinquent. The taxes have not been paid yet. .

Property taxes automatically become liens on the properties for which they are assessed, but this doesn't mean they are delinquent, just that they haven't been paid yet

Property taxes generate approximately ______ of local government revenue. Half One quarter One tenth One third

Property taxes paid contribute about a third of local government revenue.

Tina has fee simple ownership of her timeshare unit. Which of these is NOT an example of the type of ownership she may have? Interval ownership Right-to-use Tenancy in common Timeshare estate

Right-to-use Fee simple ownership of a timeshare (aka timeshare estate) unit means that the owner may share tenancy in common with other timeshare owners or may have an interval ownership. A right-to-use timeshare is a lease agreement, not an ownership interest.

Which of the following scenarios is considered a violation of FTC advertising rules? Marcy just listed the Brown property with the following description: "2,000 square feet of living space for a total of 2,800, including two outbuildings and an unfinished garage." Sarah just started her career as a solo agent and decided to try a new marketing campaign slogan: "Come let our team of hard-working agents find you the home of your dreams!" Shelia just closed on the Martin property yesterday. She's taken down all the signs and online listings for it. Vickey just posted an MLS listing for the Kennedy property without her principal broker's approval.

Sarah just started her career as a solo agent and decided to try a new marketing campaign slogan: "Come let our team of hard-working agents find you the home of your dreams!" While it may seem innocent enough, claiming to be a part of a team when you aren't is misleading and deceptive advertising.

When a mortgage holder is released from liability for a mortgage, it's also called ______________. Clear title Release clause reformation Satisfaction of mortgage Subordination

Satisfaction of mortgage This legal term means the loan term is satisfied.

Which of these situations represents a unilateral contract? Cain sells Trenton his bike. Maurice promises Shelton $100 if Shelton will sell his painting. Shelton agrees, but Maurice doesn't pay Shelton. Nathan and Sue exchange vows at their wedding. Sherry promises to give Brent a ride home from work, and then doesn't show up.

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

A planning commission has final authority over which of these options? Community goals Comprehensive plan Site plan Zoning ordinances

Site plan The planning commission has final authority over three things: subdivision plat approval, site plans, and sign control.

If a property's income value is $200,000 and it's earning a net operating income of $40,000, what is the cap rate? 20% 25% 40% 5%

The cap rate is 20%. To calculate cap rate, divide the income by the property value. The formula for this is rate = income ÷ value.

Betty hired a contractor to replace her gutters. Within days, the gutters leaked and flooded her basement. She complained to the contractor, who replaced the gutters again. The next time it rained, the gutters leaked and flooded Betty's basement a second time. Frustrated, Betty decided to file a lawsuit against the contractor in an attempt to recover the money she lost. This is an example of ______. Accepting partial performance Rescinding the contract unilaterally Suing for damages and breach of contract Suing for specific performance

Suing for damages and breach of contract In this example, Betty sued for damages as a means of remedying the breach of contract caused by the contractor's failure to adequately address the repairs.

Which one of the following types of ownership termination allows each tenant to have a specific, divided portion (partition) of the property exclusively? Termination by division Termination of co-ownership by partition Termination of estate in severalty Termination of joint tenancies

Termination of tenancy in common by partition allows each tenant to have a specific, divided portion of the property exclusively. If the property can't be divided, the court may rule that the property be sold, and the proceeds divided by the tenants.

Gregory has been bombarded with emails from a local real estate licensee. He keeps opting out of these emails, but they just keep coming. What federal law is the licensee possibly violating? Anti-Spam Act of 2000 CAN-SPAM Act of 2003 Do Not Spam Act of 2003 Junk Email Prevention Act of 2005

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

Which act simplifies, clarifies, and modernizes consumer protection laws and makes them more consistent with federal trade laws? Fair Housing Act Federal Duplicate Law Condensation Act Federal Trade Commission Act Florida Deceptive and Unfair Trade Practices Act The Florida Deceptive and Unfair Trade Practices Act is the act that simplifies, clarifies, and modernizes consumer protection laws and makes them more consistent with federal trade laws.

The Florida Deceptive and Unfair Trade Practices Act is the act that simplifies, clarifies, and modernizes consumer protection laws and makes them more consistent with federal trade laws.

Individuals who experience housing discrimination are provided the opportunity to file a complaint based on the provisions of which act? Americans with Disabilities Act of 1990 Civil Rights of 1866 Fair Housing Act of 1968 Fair Housing Amendments Act of 1988

The Office of Fair Housing and Equal Opportunity, which handles complaints, was created by the federal Fair Housing Act of 1968.

Which one of the following statements is true regarding a partially performed sales contract that otherwise contains all of the essential elements? The contract can't close. The contract is unenforceable in court. The contract is void. The contract is voidable.

The contract is voidable. If a party to a contract does some but not all of what the party has agreed to do, it's considered partial performance. The wronged party can agree to the partial performance or can choose to terminate the contract.

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 The covenant of further assurances The covenant of quiet enjoyment The covenant of seisin

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

Which of the following is NOT a characteristic of intentional misrepresentation? The fact that the person who falsely represented the material fact was aware of its falsity The false statement or representation of a material fact The person who falsely represented the material fact did it innocently

The person who falsely represented the material fact did it innocently Misrepresentation can be done without confirmed knowledge. It may be something a licensee should have had knowledge of and investigated.

Which of these principles of value is related to how a change to a portion of a property impacts the value as a whole? Contribution Impact on value Plottage Progression

The principle of contribution says that a change to a portion of a property impacts the overall value. For example, adding a swimming pool could add to the value for some buyers and detract from the value for others.

Ad valorem taxes are based on what? The property's assessed value The property's market value The property's mortgage value The property's square footage

The property's assessed value Ad valorem taxes are based on the property's assessed value. To calculate ad valorem property tax, you multiply the property's tax-assessed value by the jurisdiction's tax rate.

Simi is a buyer's agent, and she'll receive a split of the commission paid from the sale of Tanner's listing. The property sold for $425,000. The total commission paid from the sale is 6% split evenly between the buyer's and seller's brokerages. Simi has an agreement to give her broker 20% of the commission she receives. How much will Simi be paid from this sale? $10,200 $12,750 $20,400 $25,500

The total commission paid is $25,500 ($425,000 × .06). Half of this is paid to Simi's brokerage ($12,750). Of that, Simi gets 80% ($10,200).

What is the 95% rule as it relates to tax-deferred exchanges? The combined fair market value of the property (or properties) being exchanged into cannot be more than 95% of the relinquished property. The fair market value of the relinquished property must be 95% more than the property (or properties) being exchanged. The total value of the property being sold is at least 95% of the value of the profit to be made on the property (or properties) being exchanged. The total value of the property (or properties) being exchanged is at least 95% of the value of the property being sold.

The total value of the property (or properties) being exchanged is at least 95% of the value of the property being sold.

Which of the following is true about net listings? The listing agent is guaranteed at least some commission. They don't include compensation for the buyer's agent. They often involve a conflict of interest. They're legal in all 50 states.

They often involve a conflict of interest. Net listings are prohibited in several states, and there's no guarantee of commission. The conflict could occur if the listing agent didn't present offers that left little for a commission, even though the offers met the seller's needs.

What's one purpose of a BPO? To assist buyers in determining an offer amount or sellers in determining a listing price To assist insurers in determining the amount of liability insurance to place on a property To assist lenders in determining the marketability and potential sales price for distressed properties To ensure that the value of a property is sufficient as collateral for a mortgage loan

To assist lenders in determining the marketability and potential sales price for distressed properties BPOs are used mostly to assist lenders who have loans on homes in short sale, pre-foreclosure, or foreclosure status. Banks and investors also use BPOs to value real estate portfolios.

Under what type of police power is a property owner compensated for the loss of property? Eminent domain Escheat Riparian Taxation

Under eminent domain, a property owner is compensated for the loss of property.

Samuel and Yoshi have worked at the same firm for a few months and get along well. Samuel mentions he has a credit score in the low 800s. Yoshi, who's just starting out, persuades Samuel to sign for a loan to help Yoshi buy a property, since his credit isn't good enough. Yoshi promises to make the mortgage payments, but two months after the deal closes, Yoshi moves across the country. Samuel's now stuck with a $400,000 mortgage. What type of scheme is this? Equity skimming Inflated appraisal Silent second Straw buyer

Unfortunately, Samuel was a straw buyer. His credit was used to purchase a property and secure financing, so when Yoshi skipped town, Samuel was left with the responsibility of paying the mortgage.

Which of the following is a true statement about U.S. Department of Veterans Affairs loans? All properties are eligible. All veterans are eligible. The VA will guarantee a loan based on the sales price or the certificate of reasonable value (CRV). VA loans can be used for investment properties.

When granted, the loan guarantee amount is limited by either the CRV or the sales price, whichever is lower.