Real estate principals test #3

You've just purchased a rural property, and the attorney at the closing tells you, "You have a dominant estate." What does that mean to you?

You'll be using an easement across your neighbor Jim's property. The dominant estate or dominant tenement is the property that benefits from the easement.

Which of the following actions likely requires a variance?

An addition which alters the setback

If a landlord wants to increase the rent on a unit that's regulated by the Tenant Protection Act of 2019, what's the maximum allowed as an annual increase?

5% plus the cost of living

One mile contains ______ feet.

5,280

What is vicarious liability as it applies to real estate?

A broker is held responsible for the actions or omissions of the broker's licensees.

Which of the following statements best describes a sole proprietor?

A brokerage owned by a single person

Which of the following is typically used for purposes other than a prospective listing or sale?

BPO

This is the legal agreement between a buyer and a broker hired to represent the buyer's interest.

Buyer representation agreement

When you're putting together a listing presentation, which of these is a key point to address?

Buyers won't pay more for a home than the market dictates.

The ______ has held that protections under the Unruh Act are applicable to anyone exhibiting characteristics of the protected groups named in the act.

California Supreme Court

Under a land trust, the owner directs a ______ to hold title to the real estate.

Corporate fiduciary

With the cost approach to value, what is the replacement cost?

Cost to build a functionally equivalent improvement

With the cost approach to value, what is the reproduction cost?

Cost to build an exact replica of the subject, with the same materials and deficiencies

The Town of Petersville has just decided to restrict density in one area of town that previously allowed a higher density. This is known as ______.

Downzoning

The three companies that track credit for lenders are TransUnion, Equifax, and Experian. Which of the following is a true statement?

Each company a uses a slightly different scoring system

A part of your property is used by the local utility company to maintain its power lines. What's this an example of?

Easement

Rancher Ross was thrilled to learn he could sell his property's mineral rights to a company that's looking for oil. He didn't realize he'd also created an ______, allowing them to bring drilling equipment onto his land.

Easement by implication

To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which element is applied first?

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

What is the longest time (with extensions) a developer can have to file a final map after receiving tentative map approval?

Five years

What primary benefit does a living trust have over a will?

It avoids probate.

What must you do to convert a percentage to a decimal number?

Move the decimal point two places to the left and remove the percent symbol.

Which activity can you perform without a license in California?

Negotiate rent of an office building for the nonprofit where you work.

What is the purpose of a termiticide?

Prevents pest damage

Who is responsible for providing maps of earthquake fault zones in California?

State geologist

Which of these statements about the Unruh Civil Rights Act is true?

The act provides for a variety of remedies, including court-ordered damages up to three times the victim's actual damages.

How does the "break-even point" relate to percentage leases

The landlord doesn't charge a percentage of sales until the tenant's sales exceed a break-even point.

Loans for ______ purposes don't require TILA disclosure.

business

Regarding restrictive covenants/deed restrictions, to what does the doctrine of laches refer?

enforcement

The first step in the subdivision development process is the market study. This step includes ______.

feasibility study

This is a loss of money or anything of value, due to failure to perform.

forfeiture

Which type of lease is one in which the tenant pays the rent and some expenses related to the property (e.g., maintenance) separately?

net lease

Which of these types of tenants most often uses a percentage lease?

retail

A seller wants to break even after the broker's commission of 5% and loan balance of $300,000 are paid. At what price must the house sell?

$315,789

Jason, your client, is developing a subdivision of 140 houses. He may place deed restrictions on as many as ______ properties.

140 (100%)

George has $625 in monthly debt obligations, and his anticipated mortgage payment is $1,828. His gross income is $9,869, and his net income is $7,895. What's his housing ratio?

18.52% The housing ratio doesn't include debt obligations and is calculated using housing expenses divided by gross income

According to the PMI Act of 1998, at what percentage of equity position does personal mortgage insurance automatically cancel for homeowners?

22%

Traditionally, lenders' qualifying mortgage rules use a range of percentages to qualify for both the housing debt-to-income ratio and the total debt-to-income ratio. What are those ratio ranges?

25% to 28% for housing; 33% to 36% for total debt

Josie has signed a lease agreement for a furnished apartment for $2,000 and the required security deposit is equal to the highest amount the landlord could ask for. How much is her security deposit?

3 months $6000

Bradley is acting as a finder for Emma. He's introducing her to Rachel, the other party in the transaction. Which fiduciary duties does Bradley owe Emma?

A finder doesn't owe any fiduciary duties.

Which of these actions is legal?

A man advertises for a roommate to share his two-bedroom apartment and specifies that he prefers female roommates.

What is a section?

A one-square-mile square formed in the use of the rectangular government survey system

Related to the legal description of land, what is a monument?

A permanent land marker sometimes used in legal descriptions

What is a bound?

A physical feature that defines the boundaries of the land

Which of the following properties is exempt from the FIRREA federal appraisal guidelines?

A refinance of a property valued at $375,000

Elaina and Allen just purchased a home using a deed of trust. Which of the following is most likely true about their home loan?

A trustee will hold title until the loan is paid.

What's a quiet title action?

An action to locate and notify all who may have some claim on the title, and determine the validity of all claims

What's a discount point?

An upfront charge to make up for the difference between the rate the borrower is receiving and the rate the lender normally requires

The value principle of ______ is the basis of the income approach to appraisal.

Anticipation Income approaches to appraisal are based on defining the present value of future income.

Clark works for Acme Bank and asks for your assistance. He wants you to look at a property that's about to go into foreclosure and provide him with a report on its current marketability and an approximate market value. What's Clark most likely asking you to provide?

BPO Broker's price opinions are estimates of price in case the lender must take over the property and sell it to an investor or on the market.

Which category of appraiser can appraise any real property without any limitations related to value or complexity?

Certified general appraisers They can appraise residential and non-residential properties of any value and any complexity. This appraiser category has the greatest amount of education and experience.

When prices go down because there are too many homes on the market and too few buyers, what economic principle is at work?

Competition Competition is related to supply and demand. Multiple similar properties on the market create competition, causing a decrease in value (lower prices) because the supply exceeds demand. Fewer homes on the market means less competition, increasing demand and driving prices upward.

Lisa took out a conventional 30-year mortgage at a 6% interest rate when she bought her home 15 years ago. Her payments today are the same as they were when she made her first payment. What's this an example of?

Constant payment method

What are emblements in real estate?

Cultivated crops

What acronym can be used to remember factors that influence real property value?

DUST DUST is an acronym used to remember the four significant factors influencing real property value: demand, utility, scarcity, and transferability.

A ______ is a point, surface, or line used as a reference for measuring elevation.

Datum

Terry represents seller Farrah, and Michael represents Troy, the buyer. Who is (or are) the principal(s) in this transaction?

Farrah and Troy

Leases with a term of one year or more are required to be in writing according to the California statute of ______.

Frauds

What does the parol evidence rule state?

In most cases, a written agreement is the final and comprehensive expression of the parties' agreement. It generally prohibits introducing oral or written evidence that contradicts that agreement.

The Johnsons have owned a small restaurant for more than 20 years. It's open for lunch and dinner six days a week, and 80% of its weekday revenue comes from the happy hour drink and appetizer specials. The town in which their restaurant is located recently constructed a new middle school and stripped the liquor license from the Johnsons' restaurant, because it no longer complies with the ordinance to be 500 feet from a school property. The Johnsons have accused the town of _____.

Inverse condemnation

A buyer is purchasing a home for $400,000 and is financing $300,000. What is the loan-to-value ratio?

It's 75%. We get this by dividing $300,000 by $400,000 and multiplying by 100.

Widget Corporation just bought land on which it plans to build a new manufacturing facility. How is the land owned

It's owned as an estate in severalty.

Camille has a listing for a townhome, and appoints Ivy as her sub-agent. Ivy brings a buyer customer to the transaction, and the buyer purchases Camille's listing. What's true about the agency relationships in this situation?

Ivy is Camille's sub-agent and owes loyalty to the seller.

Which of these situations is an example of designated (appointed) agency?

Jacob, a broker, acts as the dual agent and appoints Mark to represent the buyer and Todd to represent the seller in the same transaction.

The doctrine of "use it or lose it" is known as the doctrine of ______.

Laches The doctrine of "use it or lose it" is laches. You can remember it by the phrase "use it or get latched out!"

This round steel column is filled with concrete and rests on a base plate called the column footing pad.

Lally column

Which one of the following statements is true about land trusts?

Land trusts generally continue for a specified term, such as 10, 20, or 30 years.

When lead is present, what rule covers remodeling of the property?

Lead Renovation, Repair, and Painting (RRP) Rule

If an item is permanently attached to a property, a court would most likely consider it a fixture if it passes which of the following tests?

Method of annexation

Consumers may use Roth IRA funds to obtain the down payment for their home purchase. Which of the following scenarios is allowed?

Nevil, who has held his Roth IRA for five years, withdraws $8,000 to go toward a down payment on his first home.

Mary contracted to buy her mother's house when her mother moves to a senior living community, but now Mary has to move because of work and no longer wants to buy the house. With their mother's agreement, Mary's sister, Tina, steps in, releasing Mary from her obligation. They write up a new contract, with the only change being that Tina is now the party to the contract rather than Mary. What's happened here?

Novation Novation of a contract is the substitution of one party for another, with the full and complete release of the original party from any obligations under the terms of the contract.

Which type of property is exempt from the Fair Housing Act

Owner-occupied with no more than four units

An agreed-upon amount that the buyer will pay the seller if the buyer breaches the contract

Payments in excess of any compensatory damages

What's the best definition of real property?

Real estate, plus all of the interests, benefits, and rights included in ownership

Which type of survey system is also known as the public land survey system (PLSS)?

Rectangular survey

A homeowner has converted two rooms in his home to a rental unit. What does the "Mrs. Murphy" exemption permit him to do?

Refuse to rent to a female tenant. The "Mrs. Murphy" exemption applies to owner-occupied buildings with no more than four units. The owner may choose to rent only to a like-sex tenant but may not discriminate on any other basis.

What act requires sellers, landlords, and their agents to disclose any known lead hazards in the home?

Residential Lead-Based Paint Hazard Reduction Act

What types of transactions in California may require agency disclosure?

Residential and non-residential sales and leases

The EPA has special requirements for contractors performing lead abatement or remodeling in "target" dwellings. These requirements relate to what?

Safety precautions to protect occupants and workers from lead dust

Janey hasn't been able to use her toilet for a week because the sewer pipe is blocked by tree roots, and her landlord is not responding to her calls. Upon reviewing her lease, she notices she signed an agreement not to sue the landlord for any cause. What can she do?

She can still sue because the lease provision is void.

Madeline works for a single-agency firm. If she wants to represent both the buyer and seller in a transaction, what must she do?

She can't do this at her firm.

The DRE investigated Sheila and has imposed a license suspension. What does this mean for Sheila?

She's not allowed to practice real estate during the term of the suspension, but after that time she can continue performing licensed activities.

Lewis and Elliot started a real estate investment business together. After much discussion with their attorney, they decided to incorporate, but in such a way that they are treated like a partnership and don't have to pay corporate taxes. What form of business do they have?

Subchapter S corporation

A site identified by the EPA as requiring remediation of hazardous waste spills

Superfund site

Which of these means "to formally offer"?

Tender means "to offer." Its use is becoming obsolete for this meaning, but it may still be on your exam, so if it helps, think of "buyers tend to offer."

Which of these statements about terminating a lease is true?

Termination of a lease differs from rescission of a lease.

Commercial lease escalation clauses typically do not take effect until after what period of time?

The "base year," or first year

Sam and Monique knew that the old industrial site that they purchased needed some environmental cleanup, but they don't have the cash and put cleanup on hold. The EPA hired its own crew to deal with groundwater issues because of industrial solvents and billed Sam and Monique $164,000 when the job was complete. If Sam and Monique don't pay the bill, which one of the following could happen?

The EPA can seek damages in court for up to three times the actual cleanup costs.

The Siegels are purchasing a commercial investment property and plan to use straight-line depreciation on their financial statements and tax calculations. Which of the following would NOT be included in the Siegels' depreciation basis calculations?

The loan origination and lender fees that they paid at closing

Which of the following is true about easements appurtenant?

They can be terminated if dominant and servient lands are merged into one parcel.

Which of the following is true about special purpose landfills?

They contain hazardous waste.

What is the purpose of the fair lending notice?

To notify mortgagors that it is illegal for financial institutions to discriminate on the basis of a protected class or on the basis of the characteristics of the neighborhood.

Why might a licensee want to make two visits to the property as part of a listing presentation?

To use information from a tour to prepare the CMA

Which of the following are possible effects of an incorrect legal description?

Unintentional encroachment, title and legal issues

How long does a homeowner have to pay off outstanding liens against his property?

Until the foreclosure sale is held

If a seller fails to install a smoke detector and also fails to provide a smoke detector disclosure to the buyer, what damages may apply?

Up to $100, plus court costs

Which factor that influences value considers the property's function?

Utility - Utility looks at the property's use or function.

What's the capitalization formula used in the income approach?

Value = net operating income divided by cap rate

Which of the following is a type of loose-fill insulation?

Vermiculite

Evelyn's mortgage payments fluctuate. The amount applied toward principal each payment remains the same, but the interest amount varies. What type of amortization is this?

With a straight loan (or straight-line amortization), the amount applied toward principal remains the same, but the interest amount varies according to the outstanding loan balance.

Shari's clients want her to post that there are "no showings on weekends" on the MLS. Shari knows that will significantly cut down on their market exposure. Her duty of reasonable skill and care is in conflict with her duty of ______.

obedience