Real Estate Practice

Title free from major defects

Marketable title

Legal presumption that information may be obtained

Constructive notice

A buyer is granted a 90% loan of $340,500. How much will her monthly principal and interest payment be, using a loan payment factor of $7.16 per $1,000 of loan? A) $2,194.18 B) $4,755.59 C) $3,064.50 D) $2,437.98

D

What percentage of profit would you make if you paid $10,500 for a lot, built a home on the lot that cost $93,000, and then sold the lot and house together for $134,550? A) 45% B) 13% C) 23% D) 30%

D

Earnest Money

a portion of the price of a home that the buyer deposits as evidence of good faith to indicate a serious purchase offer

addendum

a thing that is added; an appendix or addition to a book or written document

Specific liens

Specific liens are secured by specific property and affect only that particular property. Specific liens on real estate include mechanics' liens, mortgage liens, real estate tax liens, and liens for special assessments and utilities. Specific liens can also secure personal property, as when a lien is placed on a car to secure payment of a car loan.

Corporation Franchise Tax Liens

State governments generally levy a corporation franchise tax on corporations as a condition of allowing them to do business in the state. Such a tax is a general, statutory, involuntary lien on all real and personal property owned by the corporation.

How many square feet are in an acre?

43,560 square feet

A buyer pays $2,500 each for four parcels of land. He subdivides them into six parcels and sells each of the six parcels for $1,950. What was the buyer's percentage of profit? A) 17% B) 78% C) 14.5% D) 52%

A

The buyer has agreed to pay $175,000 in sales price, 2.5 loan discount points, and a 1% origination fee. If the buyer receives a 90% loan-to-value ratio, how much will the buyer owe at closing for points and the origination fee? A) $5,512.50 B) $6,125.00 C) $1,575.00 D) $3,937.50

A

Two sponsoring brokers evenly split the 6% commission on a $73,000 home. The selling broker was paid 70% of his sponsoring broker's share. The listing broker was paid 30% of her sponsoring broker's share. How much did the listing broker receive? A) $657 B) $1,314 C) $4,380 D) $1,533

A

What would you pay for a building producing $11,250 annual net income and showing a minimum rate of return of 9%? A) $125,000 B) $101,250 C) $123,626 D) $122,625

A

implied contract

A contract formed in whole or in part from the conduct of the parties.

express contract

A contract in which the terms of the agreement are fully and explicitly stated in words, oral or written.

executed contract

A contract that has been completely performed by both parties.

Datum

A datum is a point, line, or surface from which elevations are measured or indicated. A surveyor would use a datum in determining the height of a structure or establishing the grade of a street.

Trustee's Deed

A deed executed by a trustee conveying land held in a trust.

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.

Special Warranty Deed

A deed in which the grantor warrants, or guarantees, the title only against defects arising during the period of his or her tenure and ownership of the property and not against defects existing before that time, generally using the language, "by, through, or under the grantor but not otherwise."

Bargain and Sale Deed

A deed that carries with it no warranties against liens or other encumbrances but that does imply that the grantor has the right to convey title. The grantor may add warranties to the deed at his or her discretion

Deed of Trust

A deed to real property, which serves the same purpose as a mortgage, involving three parties instead of two. The third party holds naked title for the benefit of the lender. Beneficiary (Lender), Trustor (Borrower), Trustee (Third Party)

Quitclaim Deed

A deed to relinquish any interest in property which the grantor may have, without any warranty of title or interest.

Federal Tax Liens

A federal tax lien (also called an IRS tax lien) results from a person's failure to pay any portion of federal taxes, such as income and withholding taxes. A federal tax lien is a general, statutory, involuntary lien on all real and personal property held by the delinquent taxpayer. Its priority, however, is based on the date of filing or recording; it does not supersede previously recorded liens.

Judgments

A judgment is an order issued by a court that settles and defines the rights and obligations of the parties to a lawsuit. When the judgment establishes the amount a debtor owes and provides for money to be awarded, it is called a money judgment. A judgment is a general, involuntary, equitable lien on both real and personal property owned by the debtor.

specific performance

A legal action to compel a party to carry out the terms of a contract.

What does a licensed surveyor do?

A licensed surveyor is trained and authorized to locate and determine the legal description of any parcel of land. The surveyor does this by preparing two documents: a survey and a survey sketch. The surveystates the property's legal description. The survey sketch shows the location and dimensions of the parcel. When a survey also shows the location, size, and shape of buildings on the lot, it is called a spot survey.

lien

A lien is a charge or claim against property that is made to enforce the payment of money. Whenever someone borrows money, the lender generally requires some form of security. Security (also called collateral) is something of value that the borrower promises to give the lender if the borrower fails to repay the debt. When the lender's security is in the form of real estate, the security is called a lien.

Lot-and-Block System

A method of describing real property that identifies a parcel of land by reference to lot and block numbers within a subdivision, as specified on a recorded subdivision plat. Also called the recorded plat system.

contingencies

A provision in a contract that requires a certain act to be done or a certain event to occur before the contract becomes binding.

Bail Bond Liens

A real estate owner who is charged with a crime for which he or she must face trial may post bail in the form of real estate rather than cash. The execution and recording of such a bail bond creates a specific, statutory, voluntary lien against the owner's real estate. If the accused fails to appear in court, the lien may be enforced by the court.

bilateral contract

A type of contract that arises when a promise is given in exchange for a return promise.

History of all documents affecting title

Abstract of title

Declaration that signature is voluntary and genuine

Acknowledgment

Acquiring title to real estate by using the property without the owner's consent

Adverse possession

Liquidated Damages

An amount, stipulated in the contract, that the parties to a contract believe to be a reasonable estimation of the damages that will occur in the event of a breach.

encumbrance

An encumbrance is any charge or claim that attaches to real property and lessens its value or impairs its use. An encumbrance does not necessarily prevent the transfer or conveyance of the property, but because it is "attached" to the property, it transfers along with it. Liens differ from other encumbrances; however, because they are financial or monetary in nature and attach to the property because of a debt.

Special assessments (also called improvement taxes)

Are taxes levied on real estate to fund public improvements to the property. Property owners living nearest to the improvements are required to pay for them because their properties benefit directly from the improvements. Examples of improvements include the installation of paved streets, curbs, gutters, sidewalks, storm sewers, or street lighting. The owners, in effect, reimburse the levying authority.

Math Concepts: Calculating Real Estate Taxes Equation?

Assessed value × equalization factor - exemptions × tax rate = annual tax

When a property owner fails to pay taxes on real estate in Illinois, the property ultimately may be sold in one of the following three ways

At an annual tax sale At a forfeiture sale At a scavenger sale

Calculate eight months' interest on a $5,000 interest-only loan at 9.5%. A) $39.58 B) $316.67 C) $475.00 D) $237.50

B

A listing of all conveyances from owner to owner

Chain of title

A man earns $20,000 per year and can qualify for a monthly PITI payment equal to 25% of his monthly salary. If the annual tax and insurance is $678.24, what loan amount will he will qualify for if the monthly PI payment factor is $10.29 per $1,000 of loan amount? A) $66,000 B) $35,000 C) $43,000 D) $40,500

B.

BenchMarks

Benchmarks are permanent reference points that have been established throughout the United States. They are usually embossed brass markers set into solid concrete or asphalt bases. While used to some degree for surface measurements, their principal use is for marking datums.

woman earns an annual income of $60,000, and her husband earns $2,400 per month. How much can the couple pay monthly for their total housing payment if the lender uses a 28% qualifying ratio? A) $2,352 B) $1,400 C) $2,072 D) $672

C.

Your monthly rent is $525. What is your rent as a percentage of an annual income of $21,000? A) 33% B) 40% C) 30% D) 25%

C. 30%

If the savings and loan gives you a 90% loan on a house valued at $88,500, how much additional cash must you produce as a down payment if you have already paid $4,500 in earnest money? A) $3,500 B) $4,000 C) $4,350 D) $8,850

C. 4,000

Find the number of square feet in a lot with a frontage of 75 feet 6 inches and a depth of 140 feet 9 inches. A) 216.25 B) 10,652.04 C) 25,510.81 D) 10,626.63

D.

You attempt to appraise a 28-unit apartment house, employing the income approach. Each unit rents for $775 per month, an amount that seems consistent with similar rental units in the vicinity. For the past five years, the annual expenses of operation have averaged $82,460. The complex has maintained a consistent vacancy rate of 5%. A potential investor is only interested if the return is 9.5%. What value would you arrive at using these variables? A) $868,000 B) $1,873,100 C) $2,741,100 D) $1,736,000

D.

A 100-foot-by-125-foot lot sold for $125,000. What was the price per front foot? A) $10 B) $556 C) $1,000 D) $1,250

D. The answer is $1,250. $125,000 sales price ÷ 100 front feet = $1,250 per front foot.

An office building produces $68,580 annual net operating income. What price would you pay for this property to show a minimum return of 12% on your investment? A) $768,096 B) $685,800 C) $489,857 D) $571,500

D. 571,500

Document by which an owner transfers ownership in real estate to someone else

Deed

An option is a contract by which an optionee (generally an owner) gives an optionor (a prospective purchaser or lessee) the right to buy or lease the owner's property at a fixed price within a certain period.

False

General liens

General liens affect all the property, both real and personal, of a debtor. This includes judgments, estate and inheritance taxes, decedent's debts, corporate franchise taxes, and Internal Revenue Service taxes. A lien on real estate differs from a lien on personal property. A lien attaches to real property at the moment it is filed. In contrast, a lien does not attach to personal property until the personal property actually is levied on or seized by the sheriff.

General real estate taxes

General real estate taxes (also called ad valorem taxes) are based on the value of the property being taxed (ad valorem is Latin for "according to value"). They are specific, involuntary, statutory liens. They are charged by various government agencies and municipalities, including

States grantor's intention to convey the property

Granting clause

The following are the minimum requirements for a valid deed in Illinois:

Grantor, who has the legal capacity to execute (sign) the deed Grantee named with reasonable certainty to be identified Recital of consideration Granting clause (words of conveyance, together with any words of limitation) Accurate legal description of the property conveyed Any relevant exceptions or reservations Signature of the grantor, sometimes with a seal, witness, or acknowledgment Delivery of the deed and acceptance by the grantee to pass title

Scavenger Sale

If the taxes have not been paid on a property for two years or more, the property may be sold at a scavenger sale. The county must go through the same court process as for a tax sale and receive an order of sale. The property is sold to the highest bidder. The buyer is not required to pay the tax lien but must pay current taxes. In this case, former owners may not bid on their delinquent properties, either in person or through an agent, nor may individuals who are delinquent on their taxes by two or more years.

Annual Sale

If the taxes on a property have not been paid by the due date of the second installment, the county collector can enforce the tax lien and request that the circuit court order a tax sale. The county has notification requirements that are prescribed by statute. The court order allows only the sale of the tax lien, not the property itself.

Forfeiture Sale

If there are no bids on a property at the annual tax sale, the property is forfeited to the state; although title does not really change. The owner still may redeem the property after forfeiture by paying delinquencies, publication costs, and interest. On the other hand, anyone who wants to purchase the property for the outstanding taxes may make application to the county.

commingling

Illegally mixing deposits or monies, collected from a client, with one's personal or business account. Taking money out too soon or putting it into escrow too late (10 banking days).

Monuments

Monuments traditionally are used to mark surface measurements between points. A monument could be a marker set in concrete, a piece of steel-reinforcing bar (rebar), a metal pipe driven into the soil, or simply a wooden stake stuck in the dirt.

Liens for Municipal Utilities

Municipalities often have the right to impose a specific, equitable, involuntary lien on the property of an owner who refuses to pay bills for municipal utility services.

Judicial process that distributes assets of an estate

Probate

What is the Real Estate tax rate equation?

Proposed expense ÷ total assessed property values = tax rate

A judicial action to remove clouds on the title

Quiet title suit

A fund established to cover claims of aggrieved parties who have suffered monetary damage through the actions of a real estate licensee.

Real Estate Recovery Fund

Novation

Substitution of a new contract for an existing contract is called novation.

A property contains 10 acres. How many lots of not less than 50 feet by 100 feet can be subdivided from the property if 26,000 square feet are dedicated for roads?

The answer is 81. 10 × 43,560 - 26,000 ÷ 5,000 = 81.92, rounded to 81.

Common zoning classifications include A) "A" for agricultural, "C" for comprehensive, and "S" for subdivided. B) "P" for planned, "B" for buffer-zoned, and "C" for commercial. C) "C" for commercial, "R" for residential, and "A" for agricultural. D) "R" for residential, "D" for density zoned, and "A" for agricultural.

The answer is "C" for commercial, "R" for residential, and "A" for agricultural. Land is divided into zones identified by a coding system that outlines how the land may be used according to the code. Common zoning classifications include "C" for commercial, "R" for residential, and "A" for agricultural.

Which provision could legally be placed in an Illinois installment contract? A) "Seller will retain legal title." B) "Buyer will forfeit $1,000 for recording." C) "Buyer may not record this contract." D) "Recording does not constitute notice."

The answer is "Seller will retain legal title." A real estate sale can be made by a land contract, also called an installment contract. Under a typical land contract, the seller (or vendor) retains legal title.

What is the annual real estate tax on a property valued at $135,000 and assessed for tax purposes at $47,250, with an equalization factor of 125%, when the tax rate is 2.5%? A) $1,477 B) $1,181 C) $945 D) $1,418

The answer is $1,477. $47,250 × 1.25 × 0.025 = $1,477.

A building was purchased five years ago for $240,000. It currently has an estimated remaining useful life of 60 years. What is the property's total depreciation to date? A) $54,000 B) $18,462 C) $14,364 D) $20,000

The answer is $18,462. $240,000 ÷ 65 × 5 = $18,462.

A commercial lease calls for a minimum rent of $1,200 per month plus 4% of the annual gross business exceeding $150,000. If the total rent paid at the end of one year was $19,200, how much business did the tenant do during the year? A) $250,200 B) $159,800 C) $270,000 D) $279,200

The answer is $270,000. $1,200 × 12 = $14,400; $19,200 - 14,400 = 4,800 ÷ 0.04 = $120,000; $120,000 + 150,000 = $270,000.

A specific parcel of real estate has a market value of $160,000 and is assessed for tax purposes at 75% of market value. The tax rate for the county in which the property is located is 4%. The tax bill will be A) $6,400. B) $5,000. C) $5,200. D) $4,800.

The answer is $4,800. $160,000 × 0.75 × 0.04 = $4,800

If the annual real estate taxes on a property were $2,129 last year, what would be the per diem amount for prorations this year using the actual-number-of-days method? A) $4.90 B) $5.98 C) $5.86 D) $5.83

The answer is $5.83. $2,129 ÷ 365 = $5.83.

A woman purchased 4.5 acres of land for $78,400. A man who owns adjoining property wants to purchase a strip of the woman's land measuring 150 feet by 100 feet. What should this strip cost the man if the woman sells it for the same price per square foot she originally paid for the property?

The answer is $6,000. 4.5 × 43,560 = 196,020; $78,400 ÷ 196,020 = 0.40; 150 × 100 = 15,000; 0.40 × 15,000 = $6,000.

A buyer of a $300,000 home has paid $22,000 as earnest money and has a loan commitment for 70% of the purchase price. How much more cash does the buyer need to bring to the closing, provided the buyer has no closing costs? A) $68,000 B) $61,600 C) $58,000 D) $30,000

The answer is $68,000. $300,000 × 0.30 = $90,000; $90,000 - $22,000 = $68,000.

A buyer purchased a one-acre parcel for $2.15 per square foot. What is the selling price of the parcel?

The answer is $93,654. 43,560 × $2.15 = $93,654.

Which of these formulas BEST expresses the statutory month variation method of calculating a daily prorated charge for an annual prepaid expense? A) (Total charge ÷ 365 = y) (y ÷ 12) × actual days in closing month = daily prorated charge B) (Total charge ÷ 360) × 12 = daily prorated charge C) (Total charge ÷ 360) × actual days in month of closing = daily prorated charge D) (Total charge ÷ 12) ÷ actual days in month of closing = daily prorated charge

The answer is (Total charge ÷ 12) ÷ actual days in month of closing = daily prorated charge. In the statutory month variation, the yearly charge is divided by 12 to determine a monthly amount. The monthly charge then is divided by the actual number of days in the month in which the closing occurs. This final number is the daily charge for that month.

The effective gross annual income from a property is $112,000. Total expenses for this year are $53,700. What capitalization rate was used to obtain a valuation of $542,325? A) 9.75% B) 10.25% C) 10.5% D) 10.75%

The answer is 10.75%. $112,000 ‒ $53,700 ÷ $542,000 = 10.75%.

How many acres are in the NE¼ of the SW¼ and the W½ of the SW¼ of Section 20?

The answer is 120. (640 / 4 / 4 = 40) + (640 / 2 / 4 = 80) 40 + 80 = 120

A parcel of land is 400 feet by 640 feet. The parcel is cut in half diagonally by a stream. How many acres are there in each half of the parcel?

The answer is 2.94. 400 × 640 ÷ 2 = 128,000 ÷ 43,560 = 2.94.

In Illinois, how many years are required to acquire title by adverse possession? A) 30 B) 5 C) 20 D) 7

The answer is 20. The period of uninterrupted possession required to claim title by adverse possession is 20 years.

To keep the principal meridian and range lines as near to six miles apart as possible, a correction called a government check is made. How large is a government check?

The answer is 24 miles square. A government check is the irregular area created by correction lines; such an area is about 24 miles square.

How many days' advance notice is required to terminate a month-to-month tenancy in Illinois? A) 5 B) 15 C) 60 D) 30

The answer is 30. In any periodic estate having a term of less than year to year but greater than week to week, 30 days' written notice is required.

How many lots have easements

The answer is 4. Lots 1, 14, and 15 in Block A and Lot 15 in block B all have utility easements that run across those lots.

What is the acreage for the shaded parcel?

The answer is 60. (640 / 4 / 4 = 4 = 40) + (640 / 4 / 4 / 2 = 20) 40 + 20 = 60

If a property's annual net income is $24,000 and it is valued at $300,000, what is its capitalization rate? A) 10.5% B) 8% C) 15% D) 12.5%

The answer is 8%. $24,000 ÷ $300,000 = 0.08 or 8%.

The unauthorized practice of law was dealt with in which Illinois Supreme Court case? A) Attorney Registration and Disciplinary Commission v. Illinois State Department of Professional Regulation B) Quinlan Associates, Inc. v. Illinois Real Estate Commission C) Chicago Bar Association, et al. v. Quinlan and Tyson, Inc. D) Illinois State Bar Association v. Illinois Board of REALTORS®

The answer is Chicago Bar Association, et al. v. Quinlan and Tyson, Inc. The Illinois Supreme Court decision in the case of Chicago Bar Association, et al. v. Quinlan and Tyson, Inc. placed certain limitations on real estate licensees in drafting a contract of sale. The court ruled that licensees are authorized only to fill in blanks on printed form contracts that are customarily used in the real estate community.

If a seller refuses to sell her home to a buyer on the basis of that buyer's race, what law is violated? A) Fair Housing Act B) Fair Advertising Act C) Fair Steering Act D) ADA

The answer is Fair Housing Act. The Fair Housing Act prohibits discrimination based on race, color, religion, sex, national origin, disability, and familial status.

The agency primarily responsible for protecting Illinois's natural resources against pollution and other hazards is the A) Pollution Control Board of Illinois (PCB). B) Illinois Environmental Protection Agency (IEPA). C) Illinois Department of Environmental Regulation (IDER). D) Illinois Department of Environmental Affairs (IDEA).

The answer is Illinois Environmental Protection Agency (IEPA). The Illinois Environmental Protection Agency (IEPA) is charged with maintaining and enhancing the state's air, land, and water quality through education, inspection, regulation, enforcement, recycling, and prevention activities.

The first installment of the tax bill for all counties except Cook is due on A) the first business day in March. B) June 1. C) the day after the actual amount of the current year's tax is determined. D) September 1.

The answer is June 1. General real estate taxes are payable in two equal installments in the year after they are levied: one-half by June 1 and the second half by September 1. In Cook County, the due date for the first installment of real estate taxes is the first business day in March.

The document that provides borrowers with general information about their loan is the A) Loan Estimate. B) closing statement. C) Good Faith Estimate (GFE). D) mortgage disclosure statement.

The answer is Loan Estimate. This document includes the finance rate and other loan information

Mary sold her home to Lynn. Lynn moved into the home but did not record the deed. A few weeks later, Mary died. Her heirs in another city were unaware that she had sold the home. The heirs conveyed title to David, who actually recorded the deed. Who owns the property? A) Mary's heirs B) Both Lynn and David C) Lynn D) David

The answer is Lynn. Proof of ownership is evidence that title is marketable. A deed by itself is not considered sufficient evidence of ownership in Illinois. Even though a warranty deed conveys the grantor's interest, it contains no proof of the condition of the grantor's title at the time of the conveyance. The grantee needs some assurance that he actually is acquiring ownership and that the title is marketable. A certificate of title, title insurance, or a Torrens certificate is commonly used to prove ownership.

A property manager's total compensation consists of a monthly salary, a 12% commission based on annual rental for each vacant unit the property manager fills, and the free use of one of the apartments as the property manager's personal primary residence. Based on these facts, is the property manager required by Illinois law to obtain a real estate broker or managing broker license? A) No. Property managers are not required to have real estate licenses in Illinois. B) No. Persons acting as resident managers, who live in the managed property, are specifically exempt from the general licensing requirements. C) Yes. Because the property manager's compensation is based in part on recruiting new tenants rather than simply collecting rents, the property manager must have a broker or managing broker license. D) Yes. Any person who is compensated for performing real estate activities for a commission must have a broker or managing broker license, regardless of any other form of compensation.

The answer is No. Persons acting as resident managers, who live in the managed property, are specifically exempt from the general licensing requirements. Property managers must be licensed real estate brokers or managing brokers. Resident managers are exempt under certain circumstances.

What is the proper description of this shaded area of a section?

The answer is N½ of the NE¼ of the SW¼ and the SE¼ of the NW¼. Sections are divided into halves (320 acres) and quarters (160 acres). In turn, each of those parts may be further divided into halves and quarters.

A landowner who wants to use property in a manner prohibited by a local zoning ordinance but which would benefit the community can apply for A) an occupancy permit. B) a property dedication. C) a prescriptive easement. D) a conditional-use permit.

The answer is a conditional-use permit. A conditional-use permit (or special-use permit) is usually granted to a property owner to allow a special use of property, defined as an allowable conditional use, within that zone, such as a day care center in a residential district.

A restriction in a seller's deed may be enforced by A) the state legislature. B) the zoning board of appeal. C) a court injunction. D) the city building commission.

The answer is a court injunction. Private restrictions can be enforced in court when one lot owner applies to the court for an injunction to prevent a neighboring lot owner from violating the recorded restrictions. The court injunction will direct the violator to stop or remove the violation.

Which of these BEST defines the term planned unit development (PUD)? A) A development established entirely by condemnation B) A planned area where a nonconforming use is never allowed C) A development where land is set aside for mixed-use purposes, such as residential, commercial, and public areas D) A development registered with the U.S. Department of Housing and Urban Development

The answer is a development where land is set aside for mixed-use purposes, such as residential, commercial, and public areas. A planned unit development (PUD) is a development where land is set aside for mixed-use purposes, such as residential, commercial, and public areas. Zoning regulations may be modified for PUDs.

The gift of real property by will is called A) a testate. B) a descent. C) an implied estate. D) a devise.

The answer is a devise. A person who receives property by will is called a devisee. The gift of personal property by will is called a bequest

Which of these is NOT exempt from disclosure regulations of the Residential Lead-Based Paint Hazard Reduction Act? A) Senior-citizen housing B) Residences for the disabled C) Studio apartments where the living area is not separated from the sleeping area D) A duplex built before 1978

The answer is a duplex built before 1978. LBPHRA applies to housing built before 1978 with some exceptions such as units with no bedrooms or with no separation between sleeping and living areas and housing for the elderly or disabled if children under the age of six are not expected to live there.

What is the major difference between a general warranty deed and a quitclaim deed? A) A general warranty deed creates an indefeasible title; a quitclaim deed creates a defeasible title. B) A general warranty deed can be used only in foreclosure sales; a quitclaim deed is used only in residential sales. C) A general warranty deed provides the most protection for the buyer; a quitclaim deed provides the least protection for the buyer. D) A general warranty deed provides the least protection for the buyer; a quitclaim deed provides the most protection for the buyer.

The answer is a general warranty deed provides the most protection for the buyer; a quitclaim deed provides the least protection for the buyer. A general warranty deed provides the greatest protection of any deed. It is called a general warranty deed because the grantor is legally bound by certain covenants or warranties (promises). A quitclaim deed provides the grantee with the least protection of any deed. It carries no covenants or warranties and generally conveys only whatever interest the grantor may have when the deed is delivered.

A net lease is A) a lease-purchase agreement in which the landlord agrees to apply part of the monthly rent toward the ultimate purchase price of the property. B) a lease in which the tenant pays rent plus maintenance and property charges. C) a lease in which the tenant pays the landlord a percentage of the monthly profits derived from the tenant's commercial use of the property. D) an agreement in which the tenant pays a fixed rent and the landlord pays all taxes, insurance, and other charges on the property.

The answer is a lease in which the tenant pays rent plus maintenance and property charges. In a net lease, the tenant pays all or some of the operating expenses in addition to the rent. In a triple-net lease, the tenant pays all operating and other expenses in addition to rent. These expenses include taxes, assessments, insurance, maintenance, utilities, and other charges related to the premises.

A seller delivered a deed to a buyer at the closing. A title search disclosed no serious defects, and the title did not appear to be based on doubtful questions of law or fact nor did it appear to expose the buyer to possible litigation. The seller's title did not appear to present a threat to the buyer's quiet enjoyment, and the title policy was sufficient to convince a reasonably well-informed person that the property could be resold. The title conveyed would commonly be called A) a certificate of title. B) an attorney's opinion of title. C) an abstract of title. D) a marketable title.

The answer is a marketable title. To be marketable, a title must disclose no serious defects and not depend on doubtful questions of law or fact to prove its validity; must not expose a purchaser to the hazard of litigation or threaten the quiet enjoyment of the property; and must convince a reasonably well-informed and prudent purchaser, acting on business principles and with knowledge of the facts and their legal significance, that he could sell or mortgage the property at a later time.

In Illinois, which of these needs to hold a real estate license? A) A partnership selling a building owned by the partners B) A person who employs fewer than three apartment residential leasing agents C) A resident apartment manager working for an owner, if the manager's primary residence is the apartment building being managed D) A licensed attorney acting under a power of attorney to convey real estate

The answer is a person who employs fewer than three apartment residential leasing agents. It is illegal for anyone to act as a broker, managing broker, or residential leasing agent without a real estate license issued by IDFPR. A real estate license is not required for: any person, partnership, or corporation that as owner or lessor performs any of the acts described in the definition of a broker; an attorney-in-fact acting under a duly executed and recorded power of attorney to convey real estate from the owner or lessor; or any person acting as a resident manager for the owner when the resident manager resides on the premises.

A husband who works for an international corporation has already moved out of the country. To authorize his wife to act on his behalf in his absence, he signed A) an acknowledgment. B) a release deed. C) a quitclaim deed. D) a power of attorney.

The answer is a power of attorney. Most states permit an attorney-in-fact to sign for a grantor. The attorney-in-fact must act under a power of attorney—the specific written authority to execute and sign one or more legal instruments for another person.

The legal description "the NW¼ of the SW¼ of Section 6, Township 4 North, Range 7 West" is defective because there is no reference to

The answer is a principal meridian. Each township is given a legal description. The township's description should include designation of the township tier in which the township is located, designation of the range strip, and name or number of the principal meridian for that area.

Chain of title refers to A) a record of a property's ownership. B) a report of the contents of the public record regarding a particular property. C) an instrument or document that protects the insured parties (subject to specific exceptions) against defects in the examination of the record and hidden risks such as forgeries, undisclosed heirs, and errors in the public records. D) a summary or history of all documents and legal proceedings affecting a specific parcel of land.

The answer is a record of a property's ownership. A chain of title is the record of a property's ownership. Beginning with the earliest owner, title may pass to many individuals. Each owner is linked to the next so that a chain is formed.

A subdivision declaration reads, "No property within this subdivision may be further subdivided for sale or otherwise, and no property may be used for any purpose other than single-family housing." This is an example of A) an illegal reverter clause. B) R-1 zoning. C) a conditional-use clause. D) a restrictive covenant.

The answer is a restrictive covenant. Restrictive covenants are limitations to the use of property imposed by a past owner or the current owner and are binding on future grantees.

Which lien affects all real and personal property of a debtor? A) Specific B) General C) Voluntary D) Statutory

The answer is general. General liens affect all the property, both real and personal, of a debtor. This includes judgments, estate and inheritance taxes, decedent's debts, corporate franchise taxes, and Internal Revenue Service taxes.

Before entering into a service relationship with a prospective tenant, a rental-finding service must provide the prospective tenant with a written contract that discloses what information? A) A copy of the brokerage agreement between the owner and the rental-finding service B) A statement that the contract will be invalid if information about a rental unit is provided when the unit has been unavailable for more than five days C) The total amount to be paid over the lease term D) A statement that information about rental units may be up to two days old

The answer is a statement that information about rental units may be up to two days old. Rental-finding services are required to enter into written contracts with the parties for whom their services are to be performed. The contract must clearly disclose a statement that the contract will be void, and all fees paid in advance will be refunded, if the information provided regarding possible rental units available is not current or accurate (that is, if a rental unit is listed that has not been available for more than two days).

A man owns a large tract of land. After an adequate study of all the relevant facts, the man legally divides the land into 30 lots suitable for the construction of residences. In this situation, the man is acting as A) a developer. B) a subdivider. C) an urban planner. D) a land planner

The answer is a subdivider. A subdivider is a person who buys undeveloped acreage and divides it into smaller lots for sale to individuals or developers or for the subdivider's own use.

A tenant still has five months remaining on a one-year apartment lease. When the tenant moves to another city, she transfers possession of the apartment to a friend for the entire remaining term of the lease. The friend pays rent directly to the tenant. In this situation, the original tenant has become A) an assignor. B) a lessor. C) a sublessee. D) a sublessor.

The answer is a sublessor. When a tenant transfers less than all the leasehold interests by leasing them to a new tenant, the original tenant has subleased (or sublet) the property. The original tenant (sublessor) remains responsible for rent being paid by the new tenant and for any damage done to the rental during the lease term.

A property manager hires a full-time maintenance person. While repairing a faucet in one of the apartments, the maintenance person steals a television set, and the tenant sues the owner. The property manager could protect the owner against this type of loss by purchasing A) a surety bond. B) liability insurance. C) workers' compensation insurance. D) casualty insurance.

The answer is a surety bond. Surety bonds cover an owner against financial losses resulting from an employee's criminal acts or negligence while performing assigned duties.

Which of these statements correctly describes the requirements for recording a tax deed? A) A tax deed must be recorded within 30 days after expiration of the redemption period. B) Tax deeds are specifically exempted from recording deadlines and are effective regardless of whether or not they have been recorded. C) A tax deed must be recorded within one year after expiration of the redemption period or it will become null and void. D) A tax deed may be recorded at any time before or after the redemption period.

The answer is a tax deed must be recorded within one year after expiration of the redemption period or it will become null and void. Tax deeds, by law, must be recorded within one year after the redemption period expires. A tax deed that is not recorded or filed within one year becomes null and void.

A legally enforceable agreement under which two parties agree to do something for each other is called A) a legal promise. B) an escrow agreement. C) a valid contract. D) an option agreement.

The answer is a valid contract. A valid contract meets all the essential elements that make it legally sufficient or enforceable, and it is binding in a court of law.

Under the negotiated terms of a particular residential lease, the landlord is required to maintain the water heater. If a tenant is unable to get hot water because of a faulty water heater that the landlord has failed to repair after repeated notification, which remedy would be available to the tenant? A) Abandoning the premises under constructive eviction B) Suing the landlord for damages C) Being refunded back rent by the landlord D) Assigning the lease agreement

The answer is abandoning the premises under constructive eviction. If the leased premises become unusable for the purpose stated in the lease, the tenant may have the right to abandon the premises. This action, called constructive eviction, terminates the lease agreement.

In Illinois, what is used as evidence of title and is an opinion of title status? A) Certificate of title B) Abstract and attorney's opinion of title C) Title deed D) Title insurance

The answer is abstract and attorney's opinion of title. An abstract and attorney's opinion of title are used in some areas, including Illinois, as evidence of title. This is an opinion of title status based on a review of the abstract by an attorney.

For appraisal purposes, depreciation is NOT caused by A) accelerated capitalization. B) functional obsolescence. C) physical deterioration. D) external obsolescence.

The answer is accelerated capitalization. For appraisal purposes, depreciation is divided into three classes, according to its cause: physical deterioration, functional obsolescence, and external obsolescence.

Certain figures must be determined by an appraiser before value can be computed by the income approach. Which of these is NOT used by an appraiser applying the income approach to value? A) Annual gross income B) Annual net operating income C) Accrued depreciation D) Capitalization rate

The answer is accrued depreciation. The income approach is based on the present value of the right to future income and uses annual potential gross income, vacancy and rent loss, annual net operating income, and capitalization rate to arrive at value.

A woman signed a deed transferring ownership of her property to a man. To provide evidence that the woman's signature was genuine, she executed a declaration before a notary. This declaration is called an A) affidavit. B) affirmation. C) estoppel. D) acknowledgment.

The answer is acknowledgment. An acknowledgment (also called a notarization) is a formal declaration that the person who signs a written document does so voluntarily and that her signature is genuine. The declaration is made before a notary public or some other person as prescribed by state law.

The purpose of TRID is to A) establish standard escrow and appraisal procedures. B) make real estate licensees more responsive to buyers' needs. C) give more transparency to the loan process. D) make sure buyers do not borrow more than they can repay.

The answer is give more transparency to the loan process. It is mean to simplify information for borrowers.

General real estate taxes levied for the operation of the government are called A) ad valorem taxes. B) assessment taxes. C) improvement taxes. D) special taxes.

The answer is ad valorem taxes. General real estate taxes (also called ad valorem taxes) are based on the value of the property being taxed (ad valorem is Latin for "according to value"). They are specific, involuntary, statutory liens. They are charged by various government agencies and municipalities.

A woman bought acreage in a distant county, never went to see the acreage, and did not use the land. A man moved his mobile home onto the land, had a well drilled for water, and lived there for 22 years. The man may become the owner of the land if he has complied with the state law regarding A) voluntary alienation. B) avulsion. C) requirements for a valid conveyance. D) adverse possession.

The answer is adverse possession. Adverse possession (also called squatter's rights) is another means of involuntary transfer. The law recognizes that the use of land is an important function of its ownership. As such, an individual who makes a claim to certain property, takes possession of it, and uses it may take title away from an owner who fails to use or inspect the property for a period of years. The period of uninterrupted possession required to claim title by adverse possession is 20 years.

The federal Fair Housing Act prohibits discrimination in housing based on A) race, color, religion, or national origin. B) sex. C) disability or familial status. D) all of these.

The answer is all of these. The Fair Housing Act prohibits discrimination based on race, color, religion, sex, national origin, disability, and familial status.

Which of the following is TRUE about contract negotiation? A) All of these. B) Licensees should avoid delays in responding because "time is of the essence." C) Licensees should keep good records throughout the process. D) Changes made in negotiation must be reflected in the final contract.

The answer is all of these. These are basic steps to follow, even though there are a variety of approaches to presenting and negotiating offers.

A contract is said to be bilateral if A) only one party to the agreement is bound to act. B) all parties to the contract are bound to act. C) one of the parties is a minor. D) the contract has yet to be fully performed.

The answer is all parties to the contract are bound to act. In a bilateral contract, both parties promise to do something; one promise is given in exchange for another.

Which of these constitutes acceptable proof of ownership? A) Physical possession B) An abstract and attorney's opinion C) A deed signed by the last seller D) A subrogation agreement

The answer is an abstract and attorney's opinion. An abstract and attorney's opinion of title are used in some areas, including Illinois, as evidence of title. This is an opinion of title status based on a review of the abstract by an attorney.

A tenant's lease has expired. The tenant has neither vacated the premises nor negotiated a renewal lease, and the landlord has declared that she does not want the tenant to remain in the building. This form of possession is called A) an estate for years. B) an estate at will. C) a periodic estate. D) an estate at sufferance.

The answer is an estate at sufferance. An estate at sufferance arises when a tenant who lawfully possessed real property continues in possession of the premises without the landlord's consent after the rights expire.

The market value of a parcel of real estate is A) the amount of money paid for the property. B) its value without improvements. C) an estimate of its future benefits. D) an estimate of the most probable price it should bring.

The answer is an estimate of the most probable price it should bring. The market value of real estate is the most probable price that a property should bring in a fair sale

A broker has found a buyer for a seller's home. The buyer has indicated in writing his willingness to buy the property for $1,000 less than the asking price and has deposited $5,000 in earnest money with the broker. The seller is out of town for the weekend, and the broker has been unable to inform him of the signed document. At this point, the buyer has signed A) an offer. B) a voidable contract. C) an executory agreement. D) an implied contract.

The answer is an offer. An offer is a promise made by one party, requesting something in exchange for that promise. The offer is made with the intention that the offeror will be bound to the terms if the offer is accepted. It is customary (although not legally required) for a purchaser to provide a deposit when making an offer to purchase real estate

The term reconciliation refers to A) analyzing the results obtained by the different approaches to value to determine a final estimate of value. B) the process by which an appraiser determines the highest and best use for a parcel of land. C) loss of value due to any cause. D) separating the value of the land from the total value of the property to compute depreciation.

The answer is analyzing the results obtained by the different approaches to value to determine a final estimate of value. When the three approaches to value are applied to the same property, they normally produce three separate indications of value. Reconciliation is the act of analyzing and effectively weighing the findings from the three approaches.

A title search in the public records may be conducted by A) attorneys and abstractors only. B) anyone who obtains a court order under the Freedom of Information Act. C) attorneys, abstractors, and real estate licensees only. D) anyone.

The answer is anyone. Public records are just that: open to the public. This means that anyone interested in a particular property can review the records to learn about the documents, claims, and other issues that affect its ownership.

Which of these environmental hazards poses a risk due to particles or fibers in the air? A) Radon B) Carbon monoxide C) UFFI D) Asbestos

The answer is asbestos. Asbestos is highly friable, meaning that as it ages, asbestos fibers break down easily into tiny filaments and particles. This makes asbestos especially harmful when it is disturbed or exposed and becomes airborne, as often occurs during renovation or remodeling. Those who inhale asbestos fibers often develop serious and deadly respiratory diseases decades later.

Which of these types of deeds merely implies, but does not specifically warrant, that the grantor holds good title to the property? A) Special warranty B) Trustee's C) Quitclaim D) Bargain and sale

The answer is bargain and sale. In some states, a bargain and sale deed contains no express warranties against encumbrances. It does, however, imply that the grantor holds title and possession of the property.

As an office policy, a sponsoring broker requires that sponsored licensees show prospective buyers from racial or ethnic minority groups only properties that are in certain areas of town where few members of their groups currently live. The sponsoring broker prepares a map illustrating the appropriate neighborhoods for each racial or ethnic group. Through this policy, the sponsoring broker hopes to achieve racial balance in residential housing. Which of these statements is TRUE regarding the sponsoring broker's policy? A) Because the effect of the sponsoring broker's policy is discriminatory, it constitutes illegal steering regardless of his intentions. B) While the sponsoring broker's policy may appear to constitute blockbusting, application of the effects test proves its legality. C) The sponsoring broker's policy clearly shows the intent to discriminate. D) While the sponsoring broker's policy may appear to constitute steering, application of the intent test proves its legality.

The answer is because the effect of the sponsoring broker's policy is discriminatory, it constitutes illegal steering regardless of his intentions. A licensee should never assume that prospective buyers expect to be directed to certain neighborhoods or properties. Steering anyone is illegal, and any licensees who engage in steering subject themselves (and the brokerage firm) to a civil lawsuit.

A real estate licensee showed a pre-World War I house to a prospective buyer. The buyer has two toddlers and is worried about potential health hazards. Which of these is TRUE? A) The licensee is authorized to inspect for lead and remove any lead risks. B) Removal of lead-based paint and asbestos hazards is covered by standard title insurance policies. C) Because the house was built before 1978, lead-based paint is likely present. D) There is a risk that urea-foam insulation was used in the original construction.

The answer is because the house was built before 1978, lead-based paint is likely present. The federal government estimates that lead is present in about 75% of all private housing built before 1978. Children younger than six are the most vulnerable to damage from excessive lead levels.

An individual wants to be an appraiser in the northwest suburbs of Chicago. While she is willing to appraise residential properties, her real interest is in appraising commercial properties. If she wants to be qualified to conduct appraisals under FIRREA, this individual must A) become an associate real estate trainee appraiser. B) become a certified general real estate appraiser. C) do nothing because individuals who wish to conduct appraisals under FIRREA must receive federal appraisal certification rather than state licensing. D) become a certified residential real estate appraiser.

The answer is become a certified general real estate appraiser. Title XI of the federal Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) requires that most appraisals used in connection with a federally related transaction be performed by someone licensed or certified by law. A certified general real estate appraiser is qualified to appraise all types of real property without restrictions as to the scope of practice subject to USPAP requirements.

At the closing of a real estate transaction, the person performing the settlement gave the buyer a credit for certain accrued items. These items were A) bills relating to the property that will have to be paid by the buyer. B) all the seller's real estate bills. C) bills relating to the property that have already been paid by the seller. D) all the buyer's real estate bills.

The answer is bills relating to the property that will have to be paid by the buyer. Accrued items, such as water bills, Illinois real estate taxes, and interest on an assumed mortgage that is paid in arrears, are expenses to be prorated that are owed by the seller but later will be paid by the buyer. The seller therefore pays for these items by giving the buyer credits for them at closing.

Mold and mildew found in the home fall into which category of pollutants? A) Pesticides B) Hazardous waste C) Formaldehyde D) Biological

The answer is biological. Mold can be found almost anywhere and can grow on almost any organic substance, so long as moisture, oxygen, and an organic food source are present.

Encouraging people to sell or rent their homes by claiming that entry of a protected class of people into the neighborhood will have a negative impact on property values constitutes A) blockbusting. B) a violation of the ADA. C) steering. D) redlining.

The answer is blockbusting. Blockbusting (also called panic selling) is the act of encouraging people to sell or rent their homes by claiming that the entry of a protected class of people into the neighborhood will have some sort of negative impact on property values. Any message, however subtle or accidental, that property should be sold or rented because the neighborhood is "undergoing changes" is considered blockbusting.

When a manager develops an operating budget, which of these is considered a variable expense? A) Basic operating costs B) Employee wages C) Utilities D) Building repairs

The answer is building repairs. Variable expenses may be recurring or nonrecurring and can include capital improvements, building repairs, and landscaping.

Security deposits are listed on a closing statement as a credit to the A) seller. B) lender. C) broker. D) buyer.

The answer is buyer. Security deposits made by tenants to cover the last month's rent of the lease or to cover the cost of repairing damage caused by the tenant generally are transferred by the seller to the buyer and therefore showing a credit to the buyer.

Zoning powers are conferred on municipal governments A) by state enabling acts. B) through city charters. C) through the master plan. D) by popular local vote.

The answer is by state enabling acts. No nationwide or statewide zoning ordinances exist. Rather, zoning powers are conferred on municipal governments by state enabling acts.

The segment of the population most likely to obtain lead poisoning from paint is A) all of these. B) the elderly. C) teenagers. D) children.

The answer is children. Children younger than six are the most vulnerable to damage from excessive lead levels.

Permitted land uses, housing projections, transportation issues, and objectives for implementing future controlled development would all be found in a community's A) zoning ordinance. B) enabling act. C) comprehensive plan. D) land-control law.

The answer is comprehensive plan. Local governments, municipalities, and counties establish development goals by creating a comprehensive plan. The comprehensive plan (also called the master plan) is not a regulatory document but rather a guide to planning for change rather than reacting to proposals.

In Illinois, the state transfer tax is A) assessed at the rate of $1 per $1,000 of sales price. B) customarily paid by the buyer. C) not required if the actual total consideration is less than $500. D) computed on the sales price less the amount of any existing mortgage to which the property remains subject.

The answer is computed on the sales price less the amount of any existing mortgage to which the property remains subject. The Illinois Real Estate Transfer Tax Law (35 ILCS 200) imposes a tax on conveying title to real estate in the amount of $0.50 per $500, and in all Illinois counties, there is an additional transfer tax of $0.25 per $500. Total transfer tax to state and county combined is $0.75 per $500 or fraction thereof. The seller generally pays the state and county transfer tax.

A highrise apartment building burns to the ground. What type of insurance covers the landlord against the resulting loss of rent? A) Casualty B) Consequential loss, use, and occupancy C) Liability D) Fire and hazard

The answer is consequential loss, use, and occupancy. Consequential loss insurance covers the results, or consequences, of a disaster. Consequential loss can include the loss of rent or revenue to a business that occurs if the business's property cannot be used.

What is rent? A) All monies paid by the lessor to the lessee B) Contractual consideration to a third party C) Consideration for the use of real property D) Total balance owed under the terms of a lease

The answer is consideration for the use of real property. Rent is the normal consideration given for the right to occupy the leased premises.

The legal presumption that information can be obtained through diligent inquiry is called A) subrogation. B) actual notice. C) constructive notice. D) priority.

The answer is constructive notice. Constructive notice is the legal presumption that information may be obtained by an individual through due diligence.

The sales contract says a man will purchase only if his wife approves the sale by the following Saturday. His wife's approval is a A) warranty. B) consideration. C) reservation. D) contingency.

The answer is contingency. Additional conditions that must be satisfied before a sales contract is fully enforceable are called contingencies.

A mechanic's lien would be available to a A) buyer's real estate agent. B) contractor. C) seller's real estate agent. D) taxing authority.

The answer is contractor. A mechanic's lien is a specific, involuntary lien that gives security to persons or companies that perform labor or furnish material to improve real property. A mechanic's lien is available to contractors, subcontractors, architects, equipment lessors, surveyors, laborers, and other providers.

A man and a woman sign a contract under which the man will convey his property to the woman. The man changes his mind, and the woman sues for specific performance. What is the woman seeking in this lawsuit? A) New contract B) Money damages C) Conveyance of the property D) Deficiency judgment

The answer is conveyance of the property. If the seller breaches a real estate sales contract, the buyer may sue for specific performance unless the contract specifically states otherwise. In a suit for specific performance, the buyer asks the court to force the seller to go through with the sale and convey the property as previously agreed.

The equalization factor used in Illinois taxation is designed to A) correct discrepancies between the assessed values of similar parcels of land in various counties. B) decrease taxes for the poor and unemployed. C) correct inequities in taxes for senior citizens and disabled persons. D) increase the tax revenues of the state.

The answer is correct discrepancies between the assessed values of similar parcels of land in various counties. In some jurisdictions, when it is necessary to correct inequalities in statewide tax assessments, an equalization factor is used to achieve uniformity. An equalization factor may be applied to raise or lower assessments in a particular district or county.

A property manager repairs a malfunctioning boiler in the building. This is classified as which type of maintenance? A) Preventive B) Routine C) Construction D) Corrective

The answer is corrective. Corrective maintenance involves the actual repairs that keep the building's equipment, utilities, and amenities functioning. Repairing a boiler, fixing a leaky faucet, or mending a broken air-conditioning unit are acts of corrective maintenance.

The earnest money left on deposit with the seller's real estate broker is a A) credit to the buyer. B) debit to the buyer. C) balancing factor. D) credit to the seller.

The answer is credit to the buyer. The buyer's credits include the earnest money (already paid), the balance of the loan the buyer obtains or assumes, and the seller's share of any prorated items the buyer will pay in the future.

The principal amount of a purchaser's new mortgage loan is a A) credit to the buyer. B) debit to the buyer. C) debit to the seller. D) credit to the seller.

The answer is credit to the buyer. The buyer's credits include the earnest money (already paid), the balance of the loan the buyer obtains or assumes, and the seller's share of any prorated items the buyer will pay in the future.

Asbestos is MOST dangerous when it A) is used as insulation. B) is wrapped around heating and water pipes. C) gets wet. D) crumbles and becomes airborne.

The answer is crumbles and becomes airborne. Asbestos is highly friable, meaning that as it ages, asbestos fibers break down easily into tiny filaments and particles. This makes asbestos especially harmful when it is disturbed or exposed and becomes airborne.

Which factor is important in comparing properties under the sales comparison approach to value? A) Active listings B) Depreciation C) Date of sale D) Property rent roll

The answer is date of sale. In the sales comparison approach, an estimate of value is obtained by comparing the property being appraised (the subject property) with recently sold comparable properties. The comparables should have recent sale dates.

At closing, the listing broker's commission usually is shown as a A) credit to the buyer. B) debit to the seller. C) debit to the buyer. D) credit to the seller.

The answer is debit to the seller. If the broker is the agent for the seller, the seller normally is responsible for paying the commission.

Which deed requires the Illinois transfer tax? A) A deed conveying a property owned by a government body B) Deeds for property valued at less than $100 C) A deed conveying a property owned by a charitable institution D) Deeds between relatives

The answer is deeds between relatives. Deeds such as those conveying real estate from or between any governmental bodies and those held by charitable, religious, or educational institutions are exempted from the transfer tax. When the actual consideration for conveyance is less than $100, the transfer is considered a gift and is exempt from tax.

A homeowner wants to sell her property but cannot find her deed. In this situation, she A) does not need the deed to sell if it was recorded. B) may need a suit to quiet title. C) should execute a replacement deed to herself. D) must buy title insurance.

The answer is does not need the deed to sell if it was recorded. Actual notice (also called direct knowledge) means not only that the information is available but also that someone has been given the information and actually knows it. An individual who has searched the public records and inspected the property has actual notice. If it can be proved that an individual has had actual notice of information, that person cannot use a lack of constructive notice (such as an unrecorded deed) to justify a claim.

Which of these has NOT been proven to pose health hazards? A) Electromagnetic fields B) Asbestos fibers C) Lead-based paint D) Carbon monoxide

The answer is electromagnetic fields. Asbestos insulation can create airborne contaminants that may result in respiratory diseases. Lead from paint or other sources can result in damage to the brain, nervous system, kidneys, and blood. Children younger than six are particularly vulnerable. Carbon monoxide is a by-product of fuel combustion that may result in death in poorly ventilated areas.

A method of sealing off disintegrating asbestos is called A) encapsulation. B) containment. C) contamination closure. D) capping.

The answer is encapsulation. Encapsulation, or the sealing off of disintegrating asbestos, is an alternate method of asbestos control that may be preferable to removal in certain circumstances.

The purpose of a building permit is to A) maintain municipal control over property values. B) ensure compliance with municipal regulations. C) show compliance with restrictive covenants. D) assert a deed's restrictive covenant.

The answer is ensure compliance with municipal regulations. A property owner who wants to build a structure or alter or repair an existing building usually must obtain a building permit. Through the permit requirement, municipal officials are made aware of new construction or alterations and can verify compliance with building codes and zoning ordinances.

A buyer makes an offer on a seller's house, and the seller accepts. Both parties sign the sales contract. At this point, the buyer has what type of title to the property? A) Escrow B) Equitable C) Voidable D) Contract

The answer is equitable. After both buyer and seller have executed a sales contract, the buyer acquires an interest in the land. This interest is called equitable title. Equitable title may give the buyer an insurable interest in the property.

Capitalization is the process by which annual net operating income is used to A) estimate value. B) determine cost. C) establish depreciation. D) determine potential tax value.

The answer is estimate value. The capitalization rate is determined by comparing the relationship of net operating income to the sales prices of similar properties that have sold in the current market. Apply the capitalization rate to the property's annual net operating income to arrive at the estimate of the property's value.

During the period of time after a real estate sales contract is signed but before title actually passes, the status of the contract is A) executory. B) voidable. C) unilateral. D) implied.

The answer is executory. An executory contract exists when one or both parties still have an act to perform. A sales contract is an executory contract from the time it is signed until closing; ownership has not yet changed hands, and the seller has not received the sales price.

After a broker takes a listing of a residence, the owners specify that they will not sell their home to any Asian family. The broker should A) explain to the owner that the instruction violates federal law and that the broker cannot comply with it. B) abide by the principal's directions despite the fact that they conflict with the fair housing laws. C) require that the owner sign a separate legal document stating the additional instruction as an amendment to the listing agreement. D) advertise the property exclusively in Asian-language newspapers.

The answer is explain to the owner that the instruction violates federal law and that the broker cannot comply with it. A licensee is prohibited from taking any listing or participating in any transaction in which the property owner seeks to discriminate based on race, color, ancestry, religion, national origin, sex, handicap, or familial status. Breaking fair housing laws in Illinois is a criminal act and grounds for discipline.

In preparing a sales contract, an Illinois licensee may A) draft riders to alter a preprinted contract to fit the transaction. B) advise a buyer or a seller of the legal significance of certain parts of the contract. C) fill in factual and business details in the blank spaces of a customary preprinted form. D) fill out and sign an offer to purchase for the customer.

The answer is fill in factual and business details in the blank spaces of a customary preprinted form. Brokers and managing brokers may only fill in blanks on preprinted contract forms that are customarily used in the real estate industry. They may not write addendums or qualifying clauses.

A person has a one-year leasehold interest in a house. The interest automatically renews itself at the end of each year. The person's interest is called a tenancy A) at will. B) at sufferance. C) from period to period. D) for years.

The answer is from period to period. Such a tenancy is created for a specific payment period—for example, month to month, week to week, or year to year—but continues indefinitely until proper notice of termination is given.

The appraised value of a residence with four bedrooms and one bathroom would probably be reduced because of A) functional obsolescence. B) curable physical deterioration. C) external obsolescence. D) incurable physical deterioration.

The answer is functional obsolescence. Functional obsolescence means a loss in value from the market's response to the item. Outmoded or unacceptable physical or design features that are no longer considered desirable by purchasers are considered curable. Such features could be replaced or redesigned at a cost that would be offset by the anticipated increase in ultimate value.

Fractional sections in the rectangular survey system along the northern or western borders of a check that are less than a quarter-section in area are called

The answer is government lots. Undersized or oversized sections are called fractional sections. Fractional sections may occur for a number of reasons. Areas smaller than full quarter-sections were numbered and designated as government lots by surveyors.

A tenant signs a lease that includes a schedule of rent increases on specific dates over the course of the lease term. What type of lease has the tenant signed? A) Percentage B) Index C) Graduated D) Net

The answer is graduated. Several types of leases allow for increases in the rental charges during the lease period. One of these is the graduated lease, which provides for specified rent increases at set future dates.

Every deed must be signed by the A) devisee. B) grantee. C) grantor and grantee. D) grantor.

The answer is grantor. To be valid, a deed must be signed by all grantors named in the deed. Some states also require witnesses to the grantor's signature.

In one city, developers are limited by law to constructing no more than an average of three houses per acre in any subdivision. What does this restriction regulate? A) Out-lots B) Covenants C) Clustering D) Gross density

The answer is gross density. Regardless of lot size or number of units, the subdivider will be consistent with the ordinance as long as the average number of units in the development remains at or below the maximum density. This average is called gross density.

Under the covenant of quiet enjoyment, the grantor A) promises to obtain and deliver any instrument needed to make the title good. B) guarantees that the title will be good against the title claims of third parties. C) warrants that she is the owner and has the right to convey title to the property. D) guarantees that if the title fails in the future, she will compensate the grantee.

The answer is guarantees that the title will be good against the title claims of third parties. The grantor guarantees that the grantee's title will be good against third parties who might bring court actions to establish superior title to the property. If the grantee's title is found to be inferior, the grantor is liable for damages.

In a standard sales contract, several words were crossed out and others were inserted. To eliminate future controversy as to whether the changes were made before or after the contract was signed, the usual procedure is to A) have each party write a letter to the other approving the changes. B) write a letter to each party listing the changes. C) have both parties initial or sign in the margin, along with date, near each change. D) redraw the entire contract.

The answer is have both parties initial or sign in the margin, along with date, near each change. An amendment is a change to an existing contract. Anytime words or provisions are added to or deleted from the body of the contract, the contract has been amended. Amendments must be signed or initialed by all parties.

For Illinois courts to recognize a will, the will must A) be modified by codicil. B) be handwritten. C) have no amendments. D) have two witnesses.

The answer is have two witnesses. A will must be in writing and signed and declared by the maker (the testator) in the presence of two or more witnesses to be her last will and testament.

Which of these might indicate that rents are too low? A) Many For Lease signs in the area B) High building occupancy C) A poorly maintained building D) High tenant turnover rates

The answer is high building occupancy. A high occupancy rate may mean that rental rates are too low. Whenever the occupancy level of an apartment or office building exceeds 95%, the property manager should investigate the rental market to determine whether a rent increase is warranted.

A buyer and a seller agree to the purchase of a house for $200,000. The contract states that closing will occur on April 30, 2014, and contains a clause stating that "time is of the essence." Which of these statements is TRUE? A) If the specified April 30, 2014, closing date passes and no closing takes place, the contract may have been breached. B) A "time is of the essence" clause is not binding on either party. C) The closing must occur within three business days of execution of the contract. D) The closing date cannot be stated as a particular calendar date.

The answer is if the specified April 30, 2014, closing date passes and no closing takes place, the contract may have been breached. Many contracts call for a specific time by which the agreed-on acts must be completely performed. Many contracts provide that time is of the essence, meaning that the contract must be performed within the time limit specified. A party who fails to perform on time is liable for breach of contract.

A Lithuanian American real estate broker offers a special discount to Lithuanian American clients. This practice is A) an example of steering. B) legal but ill-advised. C) illegal. D) legal in certain circumstances.

The answer is illegal. Under the Illinois Human Rights Act, it is a civil rights violation for any licensee to alter the terms, conditions, or privileges of a real estate transaction based on discriminatory actions.

Which of these are traditionally covered by a standard title insurance policy? A) Unrecorded liens not known of by the policyholder B) Changes in land use due to zoning ordinances C) Unrecorded rights of persons in possession D) Improperly delivered deeds

The answer is improperly delivered deeds. Title insurance is a contract under which the policyholder is protected from losses arising from defects in the title. Title insurance is considered the best defense of title; the title insurance company will defend any lawsuit based on an insurable defect and pay claims if the title proves to be defective.

On Tuesday, a sponsoring broker received $1,750 in earnest money from a buyer. The seller accepted the offer on Thursday. Where and when must the sponsoring broker deposit the buyer's money? A) In a special non-interest-bearing trust account by the end of business on Friday B) In the sponsoring broker's personal checking account by Wednesday C) In a special non-interest-bearing trust account by Wednesday D) In a special trust account no later than midnight on Thursday

The answer is in a special non-interest-bearing trust account by Friday. All funds must be deposited to a special trust account (also called escrow account) no later than the end of the next business day following the acceptance of the real estate contract or lease agreement, unless the contract specifies a different time frame.

Under the statute of frauds, all contracts for the sale of real estate must be A) on preprinted forms. B) originated by a real estate broker. C) accompanied by earnest money deposits. D) in writing to be enforceable.

The answer is in writing to be enforceable. Under the statute of frauds, certain types of contracts (including those for the sale of real property) must be in writing to be enforceable in a court of law (enforceable means that the parties may be forced to comply with the contract's terms and conditions).

An appraiser who is asked to determine the value of an existing strip shopping center would probably give the MOST weight to which approach to value? A) Cost approach B) Index method C) Income approach D) Sales comparison approach

The answer is income approach. The income approach is used for valuation of income-producing properties such as apartment buildings, office buildings, and shopping centers.

Which of these appraisal methods uses a rate of investment return? A) Gross income multiplier method B) Cost approach C) Income approach D) Sales comparison approach

The answer is income approach. The income approach to value is based on the present value of the rights to future income. One of the steps in estimating value is to estimate the price a typical investor would pay for the income produced by this particular type and class of property. This is done by estimating the rate of return (or yield) that an investor will demand for the investment of capital in this type of building.

A landlord rented an apartment to a person with a disability, and the tenant wants to make certain changes to the unit to accommodate her disability. Which of these does NOT constitute a reasonable modification? A) Widen the doorways B) Lower the kitchen cabinets C) Lower the light switches D) Install a dog run for service animals in the lobby

The answer is install a dog run for service animals in the lobby. Persons with disabilities must be permitted to make reasonable modifications to the premises at their own expense. Such modifications might include lowering door handles or installing bath rails for a person in a wheelchair

In Illinois, when a person dies without a valid will and with no heirs, what happens to the property? A) It escheats to the Illinois county it lies in. B) It is sold at auction. C) It escheats to the state. D) It is foreclosed.

The answer is it escheats to the Illinois county it lies in. Escheatment is a process by which the state may acquire privately owned real or personal property. In Illinois, a property will escheat to the county in which it is located rather than to the state.

Which of these is TRUE pursuant to the Illinois Human Rights Act? A) It is not a civil rights violation to discriminate against a person who is blind. B) It is not a civil rights violation to discriminate against a person who is hearing impaired. C) Tenants can never be held liable for any damages to the premises caused by a service animal. D) It is a civil rights violation to refuse to sell or rent because the prospective buyer or tenant has a service animal.

The answer is it is a civil rights violation to refuse to sell or rent because the prospective buyer or tenant has a service animal. It is a civil rights violation in Illinois to discriminate against any person who is blind, hearing impaired, or physically disabled in the terms, conditions, or privileges of sale or rental property. Similarly, it is a civil rights violation to refuse to sell or rent to a prospective buyer or tenant because he has a service animal.

Which of these is FALSE about underground water contamination? A) Protective state and federal laws concerning water supply have been enacted. B) Any contamination of underground water can threaten the supply of pure, clean water from private wells and public water systems. C) Real estate licensees need to be aware of potential contamination sources. D) It is a minor problem in the United States.

The answer is it is a minor problem in the United States. When the earth's natural filtering systems are inadequate to ensure the availability of pure water, any contamination of underground water threatens the supply of pure, clean water for private wells or public water systems. Numerous state and federal laws have been enacted to preserve and protect the water supply, led by the Safe Drinking Water Act (SDWA). Licensees should always recommend testing the water supply when it is not part of a municipal source.

Which of these statements is TRUE with respect to an earnest money deposit? A) It is generally provided with the closing or settlement instructions. B) It is evidence of the buyer's intention to carry out the terms of the contract in good faith. C) It may never exceed $25,000. D) It is always required if the contract provides that "time is of the essence."

The answer is it is evidence of the buyer's intention to carry out the terms of the contract in good faith. It is customary (although not legally required) for a purchaser to provide a deposit when making an offer to purchase real estate. This earnest money deposit is evidence of the buyer's intention to carry out the terms of the contract in good faith.

Which of these is classified as a general lien? A) Judgment B) Mechanic's lien C) Bail bond lien D) Real estate taxes

The answer is judgment. A judgment is a general, involuntary, equitable lien on both real and personal property owned by the debtor.

In regulations regarding lead-based paint, HUD requires that A) paint be removed from surfaces before selling. B) homeowners test for its presence. C) known paint hazards be disclosed. D) only licensed contractors deal with its removal.

The answer is known paint hazards be disclosed. As a result of the federal Lead-Based Paint Hazard Reduction Act of 1992 (LBPHRA), HUD requires disclosure of the presence of any known lead-based paint hazards to potential buyers or renters.

A man and a woman enter into a real estate sales contract. Under the contract's terms, the man will pay the woman $500 a month for 10 years. The woman will continue to hold legal title to the property. The man will live on the property and pay all real estate taxes, insurance premiums, and regular upkeep costs. What kind of contract do these two people have? A) Unilateral contract B) Contract for mortgage C) Land or installment contract D) Option contract

The answer is land or installment contract. Under a typical land contract, the seller (or vendor) retains legal title. The buyer (or vendee) takes possession and gets equitable title to the property. Although the buyer obtains possession under the initial land contract, the seller is not obligated to execute and deliver a deed to the buyer until the terms of the contract have been satisfied.

When a tenant holds possession of a landlord's property without a current lease agreement and without the landlord's approval, the A) landlord may be subject to a constructive eviction. B) landlord can file suit for possession. C) tenant is maintaining a gross lease. D) tenant has no obligation to pay rent.

The answer is landlord can file suit for possession. When a tenant breaches a lease or improperly retains leased premises, the landlord may regain possession through a legal process called actual eviction.

Which of these is TRUE pursuant to the Fair Housing Act? A) Good intentions are always a defense to allegations of a Fair Housing Act violation. B) Steering is not illegal if it is based on the licensee's reasonable expectations. C) A landlord may unilaterally increase her customarily required security deposit if the tenant is disabled. D) Landlords must make reasonable accommodations to existing policies or practices to permit disabled persons to have equal enjoyment of the premises.

The answer is landlords must make reasonable accommodations to existing policies or practices to permit disabled persons to have equal enjoyment of the premises. It is unlawful to discriminate against prospective buyers or tenants on the basis of disability. Landlords must make reasonable accommodations to existing policies, practices, or services to permit persons with disabilities to have equal enjoyment of the premises. The landlord may not increase the customarily required security deposit for persons with disabilities.

In two weeks, a general contractor will file a suit against a homeowner for nonpayment. The contractor just learned that the homeowner has listed the property for sale with a real estate broker. In this situation, which of the following will the contractor's attorney use to protect the contractor's interest? A) Buyer's lien B) Assessment C) Lis pendens D) Seller's lien

The answer is lis pendens. A lis pendens is not itself a lien but rather notice of a possible future lien. Recording a lis pendens notifies prospective purchasers and lenders that there is a potential claim against the property.

A ground lease is usually A) a gross lease. B) for 100 years or longer. C) short term. D) long term.

The answer is long term. Ground leases usually involve separate ownership of the land and buildings. These leases must be for a long enough term to make the transaction desirable to the tenant investing in the building, and often run for terms of 50 to 99 years.

From the reproduction or replacement cost of a building, the appraiser deducts depreciation. Depreciation represents A) loss of value due to any cause. B) the remaining economic life of the building. C) remodeling costs to increase rentals. D) costs to modernize the building.

The answer is loss of value due to any cause. In a real estate appraisal, depreciation is a loss in value due to any cause compared with today's cost of replacement.

The amount of money a property commands in the marketplace is its A) book value. B) subjective value. C) intrinsic value. D) market value.

The answer is market value. The market value of real estate is the most probable price that a property should bring in a fair sale.

The term encapsulation refers to the A) process of sealing a landfill with three to four feet of topsoil. B) way in which asbestos becomes airborne. C) way in which asbestos insulation is applied to pipes and wiring systems. D) method of sealing disintegrating asbestos.

The answer is method of sealing disintegrating asbestos. Encapsulation, or the sealing off of disintegrating asbestos, is an alternate method of asbestos control that may be preferable to removal in certain circumstances.

Which of these is a voluntary, specific lien? A) Special assessment B) Mechanic's lien C) IRS tax lien D) Mortgage lien

The answer is mortgage lien. A mortgage lien (also called a deed of trust lien) is a voluntary lien on real estate given to a lender by a borrower as security for a real estate loan.

Lender's title policies protect which parties from loss? A) Sellers B) Buyers C) Buyers and lenders D) Mortgagees

The answer is mortgagees. A lender's policy is issued for the benefit of the mortgage company. This policy is usually paid for by the buyer at the closing. The amount of the coverage depends on the amount of the mortgage loan. As the loan balance is reduced, the coverage decreases.

Which of these BEST describes the water table? A) Natural level at which the ground is saturated B) Level at which underground storage tanks may be safely buried C) Measuring device used by specialists to measure groundwater contamination D) Always underground

The answer is natural level at which the ground is saturated. Groundwater is the water that exists under the earth's surface within the tiny spaces or crevices in geological formations. Groundwater forms the water table, the natural level at which the ground is saturated.

Which of these is legal? A) Negotiating with a person with a disability to establish an escrow account for the cost to restore a property after it has been modified B) Picturing only white people in a brochure as the "happy residents" in a housing community C) Refusing to sell a house to a person who has a history of mental illness D) Charging a family with children a higher security deposit than those with no children

The answer is negotiating with a person with a disability to establish an escrow account for the cost to restore a property after it has been modified. Where it is necessary in order to ensure with reasonable certainty that funds will be available to pay for the restorations at the end of the tenancy, the landlord may negotiate as part of such a restoration agreement a provision requiring that the tenant pay into an interest-bearing escrow account.

A woman owns two multiunit apartment buildings: a two-flat on Oak Street and a 12-unit building on Main Street. She lives in an apartment in the Main Street property. Which of her properties, if any, is exempt from the Illinois Human Rights Act? A) The Main Street property only B) Neither property C) Both properties D) The Oak Street property only

The answer is neither property. Certain individuals, property types, and transactions are exempt from the anti-discriminatory provisions of the Illinois Human Rights Act such as an owner-occupied apartment building of five units or less.

In MOST market areas, rents are determined by A) HUD's annually published rental guidelines. B) supply-and-demand factors. C) a tenants' union. D) the local apartment owners' association.

The answer is supply-and-demand factors. Rental rates are influenced primarily by supply and demand. The property manager should conduct a detailed survey of the competitive space available in the neighborhood, emphasizing similar properties.

A town enacts a new zoning code. Under the new code, commercial buildings are not permitted within 1,000 feet of the lake. A commercial building that is permitted to continue in its former use even though it is built on the lakeshore is an example of a. nonconforming use. b. variance. c. special use. d. adverse possession.

The answer is nonconforming use. Frequently, a lot or an improvement does not conform to the zoning law because it existed before the enactment or amendment of the zoning ordinance. Such a nonconforming use may be allowed to continue legally as long as it complies with the regulations governing nonconformities.

A buyer signs a contract allowing her to purchase the property for $230,000 anytime in the next three months. The buyer pays the owner $5,000 at the time the contract is signed. Which of these BEST describes this contract? A) Installment B) Sales C) Option D) Contingency

The answer is option. An option is a contract by which an optionor (generally an owner) gives an optionee (a prospective purchaser or lessee) the right to buy or lease the owner's property at a fixed price within a certain period. The optionee pays a fee (agreed-on consideration) for this option right.

Priority of liens refers to the A) order in which liens will be paid if property is sold to satisfy a debt. B) fact that specific liens have greater priority than general liens. C) dates liens are filed for record. D) order in which a debtor assumes responsibility for payment of obligations.

The answer is order in which liens will be paid if property is sold to satisfy a debt. Priority of liens refers to the order in which claims against the property will be satisfied. In general, the rule for priority of liens is "first to record, first in right"—liens take priority from the date they are recorded in the public records of the county in which the property is located.

A tenant enters into a commercial lease that requires a monthly rent based on a minimum set amount plus an additional amount determined by the tenant's gross receipts exceeding $5,000. This type of lease is called a A) gross lease. B) net lease. C) standard lease. D) percentage lease.

The answer is percentage lease. In a percentage lease, the rent is based on a minimum fixed rental fee plus a percentage of the gross income generated by the tenant doing business on the leased property. This type of lease is usually used for retail businesses and restaurants.

A man wants the city zoned to prohibit all fast food restaurants. Which of these is his BEST course of action? A) Persuade the town government to change the local zoning laws B) File suit to force the city to conform with existing Illinois zoning laws C) Petition the Illinois legislature to amend the state zoning laws D) Ask HUD to force the city to zone against fast food restaurants under its Fifth Amendment powers

The answer is persuade the town government to change the local zoning laws. Zoning hearing boards (also called zoning boards of appeal) have been established in most communities to hear complaints about the effects a zoning ordinance may have on specific parcels of property. Petitions for variances or exceptions to the zoning law may be presented to these boards.

A map illustrating the sizes and locations of streets and lots in a subdivision is called a A) gridiron plan. B) property report. C) plat. D) survey.

The answer is plat. A plat map is a detailed map that illustrates the geographic boundaries of individual lots. It shows the blocks, sections, streets, public easements, and monuments in the prospective subdivision.

Two adjacent vacant lots are each worth $50,000. However, if they are sold as a single lot, the combined parcel is worth $120,000. What principle does this illustrate? A) Progression B) Plottage C) Regression D) Substitution

The answer is plottage. The principle of plottage holds that merging or consolidating adjacent lots into a single, larger one produces a greater total land value than the sum of the two sites valued separately.

The date and time a document was recorded establishes A) marketable title. B) priority. C) subrogation. D) abstract of title.

The answer is priority. The act of recording generally gives legal priority to those interests recorded first—the first in time, first in right or first come, first served principle.

Under the federal law designed to protect the public from fraudulent interstate land sales, a developer involved in interstate land sales of 100 or more lots must A) allow a 30-day cancellation period. B) provide preferential financing. C) pay the prospective buyer's expenses to see the property involved. D) provide each purchaser with a printed report disclosing details of the property.

The answer is provide each purchaser with a printed report disclosing details of the property. The U.S. Congress created the federal Interstate Land Sales Full Disclosure Act of 1968 which requires land developers to register subdivisions of 100 or more nonexempt lots with HUD and to provide each purchaser with a disclosure document called a property report.

Which of these liens would usually be given highest priority in disbursing funds from a foreclosure sale? A) Mortgage dated last year B) Real estate taxes due C) Mechanic's lien for work started before the mortgage was made D) Judgment rendered yesterday

The answer is real estate taxes due. Real estate taxes and special assessments generally take priority over all other liens, regardless of the order in which the liens are recorded. This means that outstanding real estate taxes and special assessments are paid from the proceeds of a court-ordered sale first.

Which of these taxes targets homeowners in particular? A) Personal property tax B) Real property tax C) Sales tax D) Luxury tax

The answer is real property tax. The ownership of real estate is subject to certain obligations imposed by governmental powers, usually in the form of taxes.

Which of these is the act of analyzing and effectively weighing the findings from the three approaches to appraisal? A) Appraisal analysis B) Reintegration C) Reconciliation D) Benefit analysis

The answer is reconciliation. When the three approaches to value are applied to the same property, they normally produce three separate indications of value. Reconciliation is the act of analyzing and effectively weighing the findings from the three approaches.

In Illinois, a landlord must give a tenant at least 60 days' written notice to terminate which of these tenancies? A) Tenancy from year to year B) Tenancy at sufferance C) Tenancy for years D) Tenancy at will

The answer is tenancy from year to year. In a tenancy from year to year, at least 60 days' written notice is required at any time within the four-month period before the last 60 days of the lease period.

A homeowner decided to add a family room onto his house. An electrician was hired to wire the room but has not been paid. The electrician has the right to A) record a notice of the mechanic's lien. B) have personal property of the owner sold to satisfy the lien. C) tear out his work. D) record a notice of the mechanic's lien and file a court suit within the time required by state law.

The answer is record a notice of the mechanic's lien and file a court suit within the time required by state law. A mechanic's lien is a specific, involuntary lien that gives security to persons or companies that perform labor or furnish material to improve real property.

A Chicago resident purchases farmland in southern Illinois as an investment. The deed to the Chicago resident should be recorded in the A) recorder's office of the county in which the farmland is located. B) county recorder's office of Cook County, where the individual's permanent residence is located. C) tax records of the city of Chicago. D) statewide land registry located in Springfield.

The answer is recorder's office of the county in which the farmland is located. The specific rules for recording documents are a matter of state law. However, although the details may vary, recording essentially provides that any written document that affects any estate, right, title, or interest in land must be recorded in the county where the land is located to serve as public notice.

Which of these statements BEST explains why instruments affecting real estate are recorded? A) Failing to record will void the transfer. B) Recording gives constructive notice to the world of the rights and interests of a party in a particular parcel of real estate. C) The instruments must be recorded to comply with the terms of the statute of frauds. D) Recording proves the execution of the instrument.

The answer is recording gives constructive notice to the world of the rights and interests of a party in a particular parcel of real estate. Properly recording documents in the public record serves as constructive notice to the world of an individual's rights or interest, as does the physical possession of a property.

A lender's refusal to lend money to potential homeowners attempting to purchase properties located in predominantly African-American neighborhoods is called A) redlining. B) steering. C) prequalifying. D) blockbusting.

The answer is redlining. Redlining is the practice of refusing to make mortgage loans or issue insurance policies in specific areas for reasons other than the applicant's financial qualifications. Redlining is often based on racial grounds rather than on any real objection to an applicant's creditworthiness.

A homeowner constructs an eight-bedroom brick house with a tennis court, greenhouse, and indoor pool in a neighborhood of modest two- and three-bedroom frame houses on narrow lots. The value of this house is likely to be affected by what principle? A) Regression B) Progression C) Assemblage D) Change

The answer is regression. In general, the worth of a better-quality property is adversely affected by the presence of a lesser-quality property; this is called the principle of regression.

From a management point of view, apartment building occupancy that reaches as high as 98% would tend to indicate that A) the building is poorly managed. B) the building is a desirable place to live. C) the building has reached its maximum potential. D) rent could be raised.

The answer is rent could be raised. Whenever the occupancy level of an apartment or office building exceeds 95%, the property manager should investigate the rental market to determine whether a rent increase is warranted.

The Residential Lead-Based Paint Hazard Reduction Act establishes procedures for disclosing the presence of lead in A) new residential construction only. B) all residential properties offered for sale. C) residential properties built before 1990. D) residential properties built before 1978.

The answer is residential properties built before 1978. The federal Lead-Based Paint Hazard Reduction Act of 1992 (LBPHRA) requires disclosure of the presence of any known lead-based paint hazards to potential buyers or renters of residential dwellings built before 1978.

The Closing Disclosure (CD) may be used to illustrate all settlement charges for A) transactions financed by VA and FHA loans only. B) residential transactions financed by federally related mortgage loans. C) every real estate transaction. D) all transactions involving commercial property.

The answer is residential transactions financed by federally related mortgage loans. The TILA-RESPA Integrated Disclosure rule (TRID) requires lenders to provide the Closing Disclosure, which is a full accounting of funds at closing and additional information regarding the mortgage.

Under the Fair Housing Act, which action is legally permitted? A) Restricting occupancy in an apartment complex to senior citizens, if qualified and registered as housing for seniors B) Refusing to rent an apartment to an individual because of his physical disability C) Altering the terms of a loan to discriminate against a member of a minority group D) Telling a minority individual that an apartment has been rented when in fact it has not

The answer is restricting occupancy in an apartment complex to senior citizens, if qualified and registered as housing for seniors. The Fair Housing Act prohibits discrimination based on race, color, religion, sex, national origin, disability, and familial status. While the Fair Housing Act protects families with children, certain properties can be restricted to occupancy by elderly persons.

What is NOT included in public land-use controls? A) Environmental protection laws B) Comprehensive plan specifications C) Subdivision regulations D) Restrictive covenants

The answer is restrictive covenants. Restrictive covenants are limitations to the use of private property imposed by a past owner or the current owner and are binding on future grantees.

A property manager is offered a choice of three insurance policies with different deductibles. If the property manager selects the policy with the highest deductible, which risk management technique is being used? A) Avoiding risk B) Retaining risk C) Transferring risk D) Controlling risk

The answer is retaining risk. Retain risk by deciding that the chances of the event occurring are too small to justify the expense of any other response (an alternative might be to take out an insurance policy with a large deductible, which is usually considerably less expensive).

The characteristics of value include A) scarcity. B) balance. C) progression. D) anticipation.

The answer is scarcity. To have value in the real estate market, a property must have the following four characteristics: demand, utility, scarcity, and transferability. Remember the acronym "DUST."

The person who prepares an abstract of title for a parcel of real estate A) insures the condition of the title. B) searches the public records and then summarizes the events and proceedings that affect title. C) inspects the property. D) issues a certificate of title.

The answer is searches the public records and then summarizes the events and proceedings that affect title. An abstract of title is a summary report of what the title search found in the public record. The person who prepares this report is called an abstractor. The abstractor searches all the public records and then summarizes the various events and proceedings that affected the title throughout its history.

If a seller collected rent of $1,400 payable in advance, from an attic tenant on April 1, which of these is TRUE at the closing on April 15? A) Buyer owes seller $1,400. B) Buyer owes seller $700. C) Seller owes buyer $700. D) Seller owes buyer $1,400.

The answer is seller owes buyer $700. Most closings involve the division of financial responsibility between the buyer and the seller for such items as loan interest, taxes, rents, fuel, and utility bills. These allowances are called prorations. Prorations are necessary to ensure that expenses are divided fairly between the seller and the buyer.

In Illinois, which party customarily prepares the closing statement? A) Buyer's attorney B) Seller's lender C) Seller's attorney D) Listing broker

The answer is seller's attorney. In Illinois, the closing statement is customarily prepared by the seller's attorney.

All encumbrances and liens shown on the report of title (other than those waived or agreed to by the purchaser and listed in the contract) must be removed so that the title can be delivered free and clear. The removal of such encumbrances is the duty of the A) buyer. B) title company. C) broker. D) seller.

The answer is seller. Both buyers and their lenders must be sure that the seller can deliver the title that was promised in the purchase agreement and that the property is now in essentially the same condition it was in when the buyers and the sellers agreed to the sale. This includes any documents demonstrating the removal of undesired liens and encumbrances.

In Illinois, which party usually pays the state and county transfer taxes? A) Whichever party is specified in the local ordinance B) Buyer pays state taxes; seller pays county and municipal taxes C) Buyer D) Seller

The answer is seller. Most states require some form of transfer tax, conveyance fee, or tax stamps on real estate conveyances. This expense is most often borne by the seller; however, customs may vary.

A tenant has a one-year lease on an apartment. If the tenant fails to pay his rent when it is due, the landlord may A) serve notice on the tenant to pay the delinquent rent within five days. B) hire a moving company to remove the tenant's furniture and personal property from the premises. C) serve notice on the tenant to pay the rent within five days and proceed with a suit for possession regardless of whether or not the tenant pays the past-due rent. D) terminate the tenant's lease without notice when the rent is more than 10 days past due.

The answer is serve notice on the tenant to pay the delinquent rent within five days. If a tenant defaults on the payment of rent, the landlord may elect to serve the tenant with five days' written notice, demanding payment of the delinquent rent within five days after the notice is received.

Which of these statements is TRUE of the successful bidder on property offered at an annual tax sale? A) She receives a tax deed at the time of the sale. B) She may obtain a tax deed if the property is not redeemed within the redemption period. C) She bids the highest percentage of interest she will accept if the property is redeemed. D) She owns the property after paying the outstanding taxes.

The answer is she may obtain a tax deed if the property is not redeemed within the redemption period. If competitive bidding results, the bid is for the lowest rate of interest that will be accepted by the bidder in case of redemption during the first six months of the redemption period. Upon payment, the purchaser receives a certificate of purchase. The certificate will ripen into a tax deed if no redemption is made within the statutorily prescribed period.

Which of these is a lien on real estate made to secure payment for a specific municipal improvement project? A) Ad valorem B) Utility lien C) Special assessment D) Mechanic's lien

The answer is special assessment. Special assessments (also called improvement taxes) are taxes levied on real estate to fund public improvements to the property.

The basic requirements for a valid conveyance are governed by A) state law. B) the law of descent. C) local custom. D) national law.

The answer is state law. The formal requirements for a deed are established by state law and vary from state to state.

Step 1: A man decided to convey his property to a woman. Step 2: The man signed a deed transferring title to the woman. Step 3: The man gave the signed deed to the woman, who accepted it. Step 4: The woman took the deed to the county recorder's office and had it recorded. At which step did title to the property actually transfer or pass to the woman? A) Step 3 B) Step 2 C) Step 4 D) Step 1

The answer is step 3. A title is not considered transferred until the deed is actually delivered to and accepted by the grantee.

Liability under CERCLA is A) limited to the owner of record. B) voluntary. C) strict, joint and several, and retroactive. D) joint and several and retroactive, but not strict.

The answer is strict, joint and several, and retroactive. Liability under CERCLA is considered strict, joint and several, and retroactive. Strict liability means that the owner is responsible to the injured party without excuse. Joint and several liability means that each of the individual owners is personally responsible for the total damages. Retroactive liability means that the liability is not limited to the current owner but includes people who have owned the site in the past.

Environmental regulations in Illinois are A) substantially equivalent to federal regulations. B) not subject to federal regulations. C) all more stringent than federal regulations. D) less restrictive than federal regulations.

The answer is substantially equivalent to federal regulations. Most Illinois environmental regulations are required by statute to be identical in substance to environmental protection regulations established by the U.S. Environmental Protection Agency (EPA).

If a tenant moved out of a rented store building because access to the building was blocked as a result of the landlord's negligence, the A) landlord would have to provide substitute space. B) tenant would have no legal recourse against the landlord. C) landlord would be liable for the rent until the expiration date of the lease. D) tenant would be entitled to recover damages from the landlord.

The answer is tenant would be entitled to recover damages from the landlord. If a landlord breaches any clause of a lease agreement, the tenant has the right to sue and recover damages against the landlord. If the leased premises become unusable for the purpose stated in the lease, the tenant may have the right to abandon the premises.

Under the Americans with Disabilities Act (ADA), which of these is TRUE? A) The ADA does not apply to public buildings. B) The ADA requires that employers make reasonable accommodations that enable a person with a disability to perform essential job functions. C) The provisions of the ADA do not apply to employers with fewer than 50 employees. D) Business and commercial real estate are exempt from the ADA

The answer is the ADA requires that employers make reasonable accommodations that enable a person with a disability to perform essential job functions. Title I of the ADA requires that employers make reasonable accommodations that enable an individual with a disability to perform essential job functions. The provisions of ADA apply to any employer with 15 or more employees.

The following ad appeared in the newspaper: "For sale: 4 BR brick home; Redwood School District; excellent Elm Street location; next door to St. John's Church and right on the bus line. Move-in condition; priced to sell." Which of these statements is TRUE? A) The ad should state that the property is available to families with children. B) Fair housing laws do not apply to newspaper advertising. C) The ad is appropriate. D) The ad should not mention St. John's Church.

The answer is the ad should not mention St. John's Church. Advertising any discriminatory preference or limitation in housing or making any inquiry or reference that is discriminatory in nature is prohibited by the Fair Housing Act.

Which of these is NOT a legal deed restriction? A) The minimum size of buildings to be constructed B) The activities that are not to be conducted at the site C) The allowable ethnic origins of purchasers D) The types of buildings that may be constructed

The answer is the allowable ethnic origins of purchasers. Covenants, conditions, and restrictions (CC&Rs) typically govern the type, height, and size of buildings that individual owners can erect, as well as land use, architectural style, construction methods, setbacks, and square footage.

A buyer makes an offer in writing to purchase a house for $220,000, including its draperies, with the offer set to expire on Saturday at noon. The seller replies in writing on Thursday, accepting the $220,000 offer, but excluding the draperies. On Friday while the buyer considers this counteroffer, the seller decides to accept the original offer, draperies included, and states that in writing. At this point, which of these statements is TRUE? A) The buyer must buy the house but may deduct the value of the draperies from the $220,000. B) The buyer is legally bound to buy the house; although the buyer has the right to insist that the draperies be included. C) The buyer must buy the house and is not entitled to the draperies. D) The buyer is not bound to buy.

The answer is the buyer is not bound to buy. Proposing any deviation from the terms of the offer constitutes a rejection of the original offer and creates a new offer. The original offer ceases to exist because the seller has rejected it.

The population of Outlet County is 54,000. In Outlet County, the recorder of deeds A) is the county clerk. B) must be elected. C) is appointed by the secretary of state. D) is the county treasurer.

The answer is the county clerk. In Illinois, a recorder of deeds must be elected in each county with a population of 60,000 or more. In counties with a population of fewer than 60,000, the county clerk serves as the recorder of deeds.

What is necessary for a deed to be recorded in Illinois? A) The full address of the grantee B) An escrow exemption statement C) The names of the grantor and grantee typed or printed below their signatures D) Permanent tax index number

The answer is the full address of the grantee. The original document must be filed with the county recorder of deeds and must meet specific requirements (in addition to the nine requirements of a valid deed) including the grantor's name typed or printed below his or her signature, full address of the grantee, and permanent tax index number only in some counties.

A tenant rents an apartment in a 100-unit highrise in a Chicago suburb for $900 per month. The tenant decides to move when she learns that her rent will be raised by 25% at the expiration of her one-year lease. When she moved in, the tenant deposited $1,200 as a security deposit. How will the interest paid on the tenant's deposit be determined? A) The interest paid should be based on the prime rate as of December 31 of the calendar year preceding the rental agreement. B) The interest rate should be computed at a rate equal to that paid on a minimum deposit passbook savings account at the state's largest commercial bank. C) The interest paid should be 5% per year, from the date of deposit. D) Under these facts, the tenant is not entitled to receive interest on her security deposit.

The answer is the interest rate should be computed at a rate equal to that paid on a minimum deposit passbook savings account at the state's largest commercial bank. Illinois lessees are entitled to receive annual interest on their security deposits. Landlords who receive security deposits on residential leases, on deposits held for more than six months, are required to pay interest from the date of the deposit at a rate equal to the interest paid on a minimum deposit passbook savings account of the state's largest commercial bank.

A person owns a primary residence and two apartment buildings. She pays property taxes on two of the three properties. The delinquent taxes will result in a lien on A) all three properties. B) the property on which she has not paid the taxes. C) all real and personal property that she owns. D) only her primary residence.

The answer is the property on which she has not paid the taxes. Generally, one tax bill that incorporates all real estate taxes levied by the various taxing districts is prepared for each property. General real estate taxes are levied annually for the calendar year and become a prior first lien, superior to all other liens on January 1 of that tax year. However, they are not due and payable until the following year.

A man owns a condominium town house in Cook County and a weekend retreat in Sangamon County, both in Illinois. He also owns investment property in Montana. If one of his creditors sues him in a Cook County court and a judgment is issued against him and is recorded in both Cook and Sangamon counties, which of these is TRUE? A) The judgment becomes a lien on all of the man's real and personal property, wherever located. B) The judgment becomes a lien on the weekend retreat, the man's speedboat, and all other items of real and personal property in Sangamon County. C) The judgment becomes a lien on the Cook County town house only. D) The judgment becomes a lien on the property located in both Cook and Sangamon counties.

The answer is the judgment becomes a lien on the property located in both Cook and Sangamon counties. A judgment becomes a general lien on all the defendant's real property in a county at the time the judgment is recorded in the county recorder's office. For the lien to be effective in another county, a memorandum of judgment must be recorded in that county. A judgment does not become a lien against personal property (as opposed to real property) of a debtor until the creditor orders the sheriff to levy the property and the levy actually is made.

When a landlord rented an apartment in his six-unit building to a young couple, he didn't notice that the woman was pregnant. After the baby was born, the landlord canceled their lease, citing the lease's no-children clause. Which of these statements is TRUE? A) The landlord is acting legally under an exemption to the Illinois Human Rights Act. B) The landlord must give the tenants 60 days in which to find a new apartment. C) The landlord may refuse to rent to families with children only if he lives in the building. D) The landlord is violating the Illinois Human Rights Act regarding the exclusion of children.

The answer is the landlord is violating the Illinois Human Rights Act regarding the exclusion of children. The familial status reference in the act protects families with children. The term includes a woman who is pregnant. Unless a property qualifies as housing for older persons, all properties must be made available to families with children under the same terms and conditions as anyone else.

A landlord who owns a 20-unit apartment building in Decatur, Illinois, has held a tenant's security deposit for three months. The tenant, who is on a month-to-month lease, informs the landlord that he will be vacating the apartment in 30 days. Based on these facts, which of these statements is TRUE? A) The tenant is entitled to three months' interest on the security deposit. B) The landlord owes the tenant no interest on the security deposit. C) If the tenant vacates the premises in these circumstances, the landlord is entitled to retain the security deposit as statutory damages. D) The landlord must pay the tenant four months' interest on the security deposit.

The answer is the landlord owes the tenant no interest on the security deposit. Illinois lessees in properties of 25 or more units are entitled to receive annual interest on their security deposits.

In Illinois, which of these statements is TRUE regarding a lease for more than one year? A) The lease must include a provision for interest to be paid on all security deposits. B) The lease may be terminated only by written notice to the tenant, even if it contains a definite expiration date. C) The lease must be recorded to give actual notice of the resident tenant's right of possession. D) The lease must be in writing and signed to be enforceable in court.

The answer is the lease must be in writing and signed to be enforceable in court. The statute of frauds in Illinois requires that lease agreements be in writing to be enforceable if they are for more than one year. Written leases should be signed by both lessor and lessee.

A real estate licensee tells a single man with two small children that homes for sale in a condominium complex are available only to married couples with no children. Which statement is TRUE? A) Because a single-parent family can be disruptive if the parent provides little supervision of the children, the condominium is permitted to discriminate against the family under the principle of rational basis. B) Condominium complexes are exempt from the fair housing laws and can therefore restrict children. C) Restrictive covenants in a condominium take precedence over the fair housing laws. D) The man may file a complaint alleging discrimination on the basis of familial status.

The answer is the man may file a complaint alleging discrimination on the basis of familial status. Familial status refers to the presence of one or more individuals who have not reached the age of 18 and who live with either a parent or a guardian. Unless a property qualifies as housing for older persons, all properties must be made available to families with children under the same terms and conditions as anyone else.

Which statement is TRUE regarding the lender's title insurance? A) The mortgagee's policy covers only the mortgagee. B) The mortgagee's premium is paid monthly with the mortgage payment. C) The lender's protection increases with each principal payment that is made. D) The seller is usually required to purchase the lender's policy.

The answer is the mortgagee's policy covers only the mortgagee. A lender's policy is issued for the benefit of the mortgage company.

Under its zoning authority, what may a town legally regulate? A) The number of buildings B) Enabling acts C) Building ownership D) Business ownership

The answer is the number of buildings. Zoning is a regulatory tool that helps communities regulate and control how land is used. Zoning ordinances typically establish special density zoning ordinances for certain subdivisions, which restrict the average maximum number of houses per acre that may be built within a particular subdivision.

Which of these is NOT permitted under the federal Fair Housing Act? A) The owner of a 20-unit residential apartment building rents to white men only. B) An owner refuses to rent the other side of her duplex to a family with children. C) An expensive club in Chicago rents rooms only to members who are graduates of a particular university. D) A Catholic convent refuses to furnish housing for a Jewish man.

The answer is the owner of a 20-unit residential apartment building rents to white men only. The Fair Housing Act prohibits discrimination based on race, color, religion, sex, national origin, disability, and familial status. The Fair Housing Act exempts owner-occupied buildings with no more than four units, single-family housing sold or rented without the use of a real state licensee, and housing operated by organizations and private clubs that limit occupancy to members.

Which of these is TRUE regarding asbestos? A) The level of asbestos in a building is affected by weather conditions. B) Asbestos causes health problems only when it is eaten. C) HUD requires all asbestos-containing materials to be removed from all residential buildings. D) The removal of asbestos can cause further contamination of a building.

The answer is the removal of asbestos can cause further contamination of a building. Because improper removal of asbestos may further contaminate the air within the structure, asbestos removal requires state-licensed technicians and specially sealed environments.

A purchaser went to the county building to check the recorder's records. She found that the seller was the grantee in the last recorded deed, and no mortgage was on record against the property. The purchaser may assume that A) the seller has good title. B) all taxes are paid, and no judgments are outstanding. C) no one else is occupying the property. D) the seller did not mortgage the property.

The answer is the seller did not mortgage the property. The real estate recording system includes written documents that affect title, such as deeds and mortgages.

A tenant's tenancy for years will expire in two weeks. The tenant plans to move to a larger apartment across town when the current tenancy expires. What must the tenant do to terminate this agreement? A) The tenant must give the landlord one week's prior notice. B) The agreement will terminate only after the tenant signs a lease for the new apartment. C) The tenant must give the landlord two weeks' prior notice. D) The tenant needs to do nothing; the agreement will terminate automatically.

The answer is the tenant needs to do nothing; the agreement will terminate automatically. No notice is required to terminate the tenancy for years (estate for years) because the lease agreement states a specific expiration date. When the expiration date comes, the lease expires, and the tenant's rights are extinguished.

A zoning law passed by a village conflicts with an existing county zoning law. Both the village and the county are home-rule units of government. In this situation, which of these statements is TRUE? A) The Illinois constitution provides that a conflict between the laws of two home-rule units must be resolved in the appropriate circuit court. B) Whichever law is most restrictive will prevail, unless the issue involves a constitutional question, in which case the law least restrictive of private property rights will supersede the more restrictive law. C) The village's law will prevail because municipal ordinances supersede county ordinances under the Illinois constitution. D) Under the Illinois constitution, the county law will prevail because its zoning laws affect a larger geographic area.

The answer is the village's law will prevail because municipal ordinances supersede county ordinances under the Illinois constitution. If any ordinance of a home rule county conflicts with any ordinance of a home rule municipality, the municipal ordinance prevails.

Which of these statements is TRUE regarding the execution of a valid will in Illinois? A) The testator must be at least 21 years old and of sound mind. B) The will must be witnessed by three people. C) The will must be notarized. D) The will must be in writing, signed, and witnessed by two people.

The answer is the will must be in writing, signed, and witnessed by two people. A will must be in writing and signed and declared by the maker (the testator) in the presence of two or more witnesses to be her last will and testament.

What do the terms condemnation and escheat have in common? A) They are examples of voluntary alienation. B) They are examples of involuntary alienation. C) They are methods of transferring title by descent. D) They are processes used in adverse possession claims.

The answer is they are examples of involuntary alienation. Title to property may be transferred without the owner's consent by involuntary alienation. Involuntary transfers are usually carried out by operation of law—such as by condemnation or a sale to satisfy delinquent tax or mortgage liens. When a person dies intestate and leaves no heirs, the title to the real estate passes to the county (in Illinois) by the state's power of escheatment.

Which of these statements BEST describes enabling statutes in Illinois? A) They require all Illinois counties, cities, and villages to adopt the requirements of the federal municipal planning commission. B) They grant counties, cities, and villages the power to make and enforce local zoning ordinances. C) They make all counties, cities, and villages subject to Illinois state zoning laws. D) They set environmental controls on current land use.

The answer is they grant counties, cities, and villages the power to make and enforce local zoning ordinances. State enabling acts allow the power to enact laws authorized by the state's police power to be passed down to municipalities and other local governing authorities.

Which of these statements BEST describes special assessment liens? A) They cannot be prepaid in full without penalty. B) They are general liens. C) They take priority over mechanics' liens. D) They are paid on a monthly basis.

The answer is they take priority over mechanics' liens. Special assessments are always specific and statutory and usually are due in equal annual installments, plus interest, over a period of 5 to 10 years, with the first installment usually due during the year following the public authority's approval of the assessment. Property owners have the right to prepay any or all installments to avoid future interest charges.

Consummation may occur how many days after the issuance of the Closing Disclosure? A) Seven business days B) Three business days before consummation C) Three business days D) Three business days after closing

The answer is three business days. Certain items can trigger a new three-day period.

Under TRID, if the APR increases by .125 percent, how many business days does the lender have to reissue another LE? A) Five B) Four C) Two D) Three

The answer is three. A new three-day period is triggered for such an increase in APR.

The documents called title evidence include A) warranty deeds. B) title insurance. C) a deed. D) security agreements. Explanation

The answer is title insurance. A deed by itself is not considered sufficient evidence of ownership in Illinois. Even though a warranty deed conveys the grantor's interest, it contains no proof of the condition of the grantor's title at the time of the conveyance. The grantee needs some assurance that he actually is acquiring ownership and that the title is marketable. A certificate of title, title insurance, or a Torrens certificate is commonly used to prove ownership.

equitable title

The interest held by a vendee under a contract for deed or an installment contract; the equitable right to obtain absolute ownership to property when legal title is held in another's name.

The documents called title evidence include A) warranty deeds. B) title insurance. C) a deed. D) security agreements. Explanation The answer is title insurance. A deed by itself is not considered sufficient evidence of ownership in Illinois. Even though a warranty deed conveys the grantor's interest, it contains no proof of the condition of the grantor's title at the time of the conveyance. The grantee needs some assurance that he actually is acquiring ownership and that the title is marketable. A certificate of title, title insurance, or a Torrens certificate is commonly used to prove ownership.

The answer is title insurance. A deed by itself is not considered sufficient evidence of ownership in Illinois. Even though a warranty deed conveys the grantor's interest, it contains no proof of the condition of the grantor's title at the time of the conveyance. The grantee needs some assurance that he actually is acquiring ownership and that the title is marketable. A certificate of title, title insurance, or a Torrens certificate is commonly used to prove ownership.

Which of these would a lender generally require at the time of closing? A) Title insurance B) Credit report C) Application D) Market value appraisal

The answer is title insurance. In order to ensure that the buyer takes good and marketable title at closing, lenders generally require a mortgagee's title insurance policy.

Which are exempt from radon disclosure under the Illinois Radon Awareness Act? A) Properties with six or more units B) Transfers between co-owners C) Transfers between neighbors D) Residential rentals, if radon has been detected and remediated in the past

The answer is transfers between co-owners. The Illinois Radon Awareness Act requires a separate disclosure document for radon to be included in most residential real estate transactions with one of the exceptions being transfers from one co-owner to one or more other co-owners.

Radon poses the greatest potential health risk to humans when it is A) emitted by malfunctioning or inadequately ventilated appliances. B) trapped and concentrates in inadequately ventilated areas. C) contained in insulation material used in residential properties during the 1970s. D) found in high concentrations in unimproved land.

The answer is trapped and concentrates in inadequately ventilated areas. The potential for developing lung cancer from radon exposure is a function of the extent and length of that exposure. Mitigation consists of removing the radon before it seeps into the house. A fan is installed in a pipe running from the basement to the attic to draw the radon up and out.

A buyer approaches a seller and says, "I'd like to buy your house." The seller says, "Sure," and they agree on a price. What kind of contract is this? A) None of these B) Unenforceable C) Implied D) Void

The answer is unenforceable. An unenforceable contract may seem on the surface to be valid; however, neither party can sue the other to force performance. A contract may be unenforceable because it is not in writing, as may be required under the statute of frauds.

Which of these creates a lien on real estate? A) Easement running with the land B) Unpaid mortgage loan C) License D) Encroachment

The answer is unpaid mortgage loan. A mortgage lien (also called a deed of trust lien) is a voluntary lien on real estate given to a lender by a borrower as security for a real estate loan.

A 15-year-old boy inherited many parcels of real estate from his late father and decided to sell one of the parcels. If the boy enters into a deed conveying his interest in the property to a purchaser, such a conveyance will be A) invalid. B) voidable. C) valid. D) void.

The answer is voidable. A grantor must be of lawful age, at least 18 years old. A deed executed by a minor is usually voidable.

A deed contains a guarantee that the grantor will compensate the grantee for any loss resulting from the title's failure in the future. This is an example of A) further assurance. B) warranty forever. C) quiet enjoyment. D) seisin.

The answer is warranty forever. The grantor promises to compensate the grantee for the loss sustained if the title fails at any time in the future.

Which of these describes the process of creating a landfill site? A) Waste is buried in an underground concrete vault. B) Waste is liquefied, treated, and pumped through pipes to "tombs" under the water table. C) Waste is compacted and sealed into a container and then placed in a "tomb" designed to last several thousand years. D) Waste and topsoil are layered in a pit, mounded up, and then covered with dirt and plants.

The answer is waste and topsoil are layered in a pit, mounded up, and then covered with dirt and plants. A landfill is an enormous hole, either excavated for the purpose of waste disposal or left over from surface mining operations. A layer of topsoil is compacted onto the waste. The layering procedure is repeated until the landfill is full, with the layers mounded up.

Legal title passes from seller to buyer A) when the closing statement has been signed. B) on the date of execution of the deed. C) when the deed is placed in escrow. D) when the deed is delivered and accepted.

The answer is when the deed is delivered and accepted. When the parties are satisfied that everything is in order, the exchange is made. The seller delivers the signed deed to the buyer, who accepts it.

Which of these documents transfers title to real estate at the death of the owner? A) Trustee's deed B) Will C) Warranty deed D) Special warranty deed

The answer is will. A will is an instrument made by an owner to convey title to real or personal property after the owner's death. A will is a testamentary instrument; that is, it takes effect only after death.

During a listing presentation, a real estate licensee said to the seller, who owned two residential properties, "I hear a family of those people are moving in, and you'd better put your house on the market before values drop!" Has the licensee violated any fair housing law? A) Yes, the licensee is guilty of steering. B) Yes, the licensee is guilty of blockbusting. C) No because the seller owns fewer than three houses. D) No because the licensee does not intend to publicly advertise the property.

The answer is yes, the licensee is guilty of blockbusting. Any message, however subtle or accidental, that property should be sold or rented because the neighborhood is "undergoing changes" is considered blockbusting. It is illegal to suggest that the presence of certain persons will cause property values to decline, crime or antisocial behavior to increase, or the quality of schools to suffer.

A licensee entered into a buyer agency agreement with Japanese man. The licensee showed him only properties where it was obvious that other Japanese people lived. Has the licensee violated any fair housing law? A) No because as a buyer agent, it is the licensee's responsibility to make decisions for the buyer. B) No because a Japanese buyer would want to live in a Japanese neighborhood. C) Yes, the licensee is guilty of steering. D) Yes, the licensee is guilty of blockbusting.

The answer is yes, the licensee is guilty of steering. Steering is the channeling of homeseekers to particular neighborhoods. It also includes discouraging potential buyers or renters from considering certain areas. In either case, it is an illegal limitation of a purchaser's options.

To determine whether a location can be put to future use as a retail store, one would examine the A) building code. B) zoning ordinance. C) list of permitted nonconforming uses. D) housing code.

The answer is zoning ordinance. Zoning ordinances are local laws that implement the comprehensive plan and regulate and control the use of land and structures within designated land-use districts.

The formula for calculating real estate taxes is assessed value × tax rate - exemptions = annual tax. True or False??

The statement is false. The correct formula for calculating real estate taxes is assessed value × equalization factor - exemptions × tax rate = annual tax.

An equalization factor may be applied to raise or lower assessments in a particular district or county. True or False?

The statement is true. The basic assessed value of each property in the area is multiplied by the equalization factor to acquire an equalized assessment. Then, any exemptions are subtracted, and lastly, the tax rate is applied.

Voluntary Alienation

The transfer of title by a deed.

conversion.

The wrongful appropriation of property belonging to another (i.e. earnest money); also, the process of changing a property's status from rental to condominium.

voluntary, involuntary, statutory, equitable LEINS....

There are many different types of liens. One way that liens are classified is by how they are created. A voluntary lien is created intentionally by the property owner's action, such as when someone takes out a mortgage loan. An involuntary lien, on the other hand, is not a matter of choice; it is created by law or a court. It may be either statutory or equitable. A statutory lienis created by statute. A real estate tax lien, then, is an involuntary, statutory lien. It is created by statute without the property owner taking it on voluntarily. An equitable lien is created by a court to ensure the payment of a judgment as well as by agreement.

A contract that protects against losses from title defects

Title insurance

Examination of the public records

Title search

An instrument used to dispose of real or personal property upon the owner's death.

Will

Estate and Inheritance Tax Liens

are general, statutory, involuntary liens that encumber a deceased person's real and personal property. These are normally paid or cleared in probate court proceedings.

executory contract

contract not fully performed on both sides

In describing real estate, the system that uses feet, degrees, and natural and artificial markers as monuments is

metes and bounds.

The most common deed forms are

general warranty deed, special warranty deed, bargain and sale deed, quitclaim deed, deed in trust, trustee's deed, and deed executed pursuant to a court order.

dying without a will

intestate

Assignment

is a transfer of rights or duties under a contract. Rights may be assigned to a third party (called the assignee) unless the contract forbids it. Obligations also may be assigned (or delegated), but the original party remains primarily liable unless specifically released.

Mortgage lien foreclosure

is a voluntary lien on real estate given to a lender by a borrower as security for a real estate loan.

A unilateral contract

promise in exchange for an act

The four major funds administered through IDFPR are

the Real Estate License Administration Fund, to which license fees and other funds initially go; the Real Estate Research and Education Fund, for research and scholarships; the Real Estate Recovery Fund, a consumer-oriented fund for compensating consumers harmed by licensees' actions; and the Real Estate Audit Fund, for conducting audits of special accounts.

When surveying land, a surveyor refers to the principal meridian that is

within the rectangular survey system area in which the land being surveyed is located.