CE Shop National
You're working as a buyer's agent for Neil and Sharon, who just found the home of their dreams. When they ask you about adding contingencies to their offer, what do you tell them? "In order to avoid lawsuits down the line, let's add as many contingencies as possible to protect our interests." "Pick the three contingencies that mean the most to you, and let's go with those." "We want the strongest offer possible, so let's remove all of the contingencies." "You definitely want to protect your interests, but let's make it as easy for the seller as possible to choose your offer."
"You definitely want to protect your interests, but let's make it as easy for the seller as possible to choose your offer." Recommending a specific number of contingencies, either many or few, never makes sense. An inspection contingency is nearly always a good idea to protect the buyers, but contingencies should reflect the market and the buyer's risk tolerance.
Dale is purchasing a property that has an assessed value of $35,190. If the tax rate is 5%, what will he likely pay annually in property taxes? $17,595 $1,759.50 $17.60 $35.19
$1,759.50 To find the tax amount, multiply the assessed value by the tax rate ($35,190 x 0.05).
Lorena and Julio purchased a home for $205,950. Their loan amount was $164,760, and the assessed value is now $201,500. Their tax rate is 0.63%. How much will their monthly taxes be?
$105.79 Monthly taxes are calculated by multiplying the assessed value by the tax rate and dividing by 12. ($201,500 x .63%) = $1,269.45 ÷ 12 = $105.79
If Hal sold his client's listing for $230,000, but it appraised at $200,000 and the buyers agreed to put the extra $30,000 down, what will Hal's commission be if he charged 5%?
$11,500 Sales price x commission rate = commission. $230,000 x 5% = $11,500.
An appraiser used the cost approach to estimate a property's value at $220,000. The site value was $50,000 and the total depreciation estimate was $4,000. What was the estimated cost of improvements?
$174,000 To estimate value, an appraiser adds the site value to the estimated cost to replace improvements then subtracts the estimated depreciation. So $50,000 + cost of improvements ‒ $4,000 = $220,000. Cost of improvements = $220,000 ‒ $50,000 + $4,000.
If an appraiser has found the value of a property to be $250,000 using a cap rate of 10%, what was the property's net operating income?
$25,000 The formula for determining value using the income approach is value = income/rate, which means that income = rate x value. When you multiply a percentage by a number, you're finding the percentage of that number, so 10% of $250,000 is $25,000.
Which of these statements best represents what happens after a federal fair housing complaint is made?
A fair housing specialist will review the complaint. After an initial complaint is made, a fair housing specialist will review it to determine if a violation has occurred. If there's a potential violation, the specialist will help the consumer file an official complaint.
Lamar closes on his new home next week. It's a 37-year-old split level, so his agent asked if he's interested in purchasing a home warranty. "Why would I need a warranty?" he wondered. "Didn't the home inspection identify all of the issues?" What's the agent's best response to Lamar's question?
A home warranty covers things the inspection didn't address, like appliances, as well as structural issues that occur within the first year.
What's a monument? - 43,560 square feet - A permanent land marker sometimes used in legal descriptions - A point from which elevations are measured - The subdivision of air above the land
A permanent land marker sometimes used in legal descriptions
Which of these statements about the promissory note is true?
A promissory note is a negotiable instrument and can be transferred to a secondary holder who has the right to enforce the note's terms.
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. Their transaction is secured with a mortgage as well. The lender will hold the mortgage, while a trustee will hold the deed of trust until their loan is paid off. The lender will hold the title until the loan is paid off.
A trustee will hold title until the loan is paid. When a deed of trust secures a loan, a trustee holds the title until the loan is paid. Because the right to sell in the event of a default is part of the deed of trust's language, a non-judicial foreclosure may be used.
Eric didn't have direct access to the small lake in his subdivision; he had an easement arranged with his neighbor. Ten months ago, the developer built a public access road to the lake, so Eric stopped using the easement. What type of easement termination is this?
Abandonment Easement abandonment is when the dominant estate owner takes action that shows a clear intent to stop using the easement.
The town planning and zoning board is considering some new zoning regulations to ensure that one of the neighborhoods maintains its designation on the National Register of Historic Places. What type of zoning are they likely to enact?
Aesthetic zoning
Li Meng purchased a property that had been owned by the same man for more than 40 years. The title search was clean. In the spring, she started seeing traffic on the path to her dock and discovered that the previous owner had always allowed the locals to use his path to get to the lake. What covenant may have been breached?
Against encumbrances The previous property owner failed to disclose to Li Meng that there was an easement (which is an encumbrance) across the property.
The property management ______ cements the agency relationship between the property manager and the owner.
Agreement
Which of these is NOT a likely features of a bridge loan?
Amortized loan paid back over a period of no more than five years A bridge loan is usually a temporary, short-term interest-only loan secured by the borrower's existing home.
The economic principle known as ______ means that the value of property today is impacted by the current value of the total expected future benefits.
Anticipation Anticipation says that the value of property today is impacted by the current value of the total anticipated future benefits.
Will was sued for damages related to a car accident in which he was involved last year. As part of the proceedings, the court placed a lien against his primary residence. What type of lien is this?
Attachment An attachment lien is when the courts place on encumbrance on the property of a defendant in a lawsuit for monetary damages.
Which of the following is most likely to establish workmanship standards when someone is building an addition to their property?
Building Code
Jackson Elementary School is undergoing some major renovations during the summer while school is out of session. The renovation crew has a detailed list of requirements for the disposal and drainage of wastewater and sewage. These requirements are likely part of the ________ with which the renovators must comply.
Building Code Building codes specify construction standards to ensure the health and safety of those using the buildings. Sanitary drainage and disposal is a common building code standard.
Which department typically decides which development projects require a permit or approval?
Building Department
Johannes must obtain a permit for a construction project that he is doing right next to a wetlands. Which federal law or regulation requires him to get the permit? Army Corps Construction Regulations Clean Water Act Coastal Zone Management Act Rivers and Harbors Act
Clean Water Act The Clean Water Act protects wetlands in addition to other waterways. The CZMA only covers coastal zones, and the Rivers and Harbors Act addresses navigable waters.
Which of these is an example of listing agreement termination by completion/performance?
Dean lists his property on August 1. After just a few showings, he accepts an offer on August 12. The closing takes place on September 22.
Private mortgage insurance protects the lender in case the borrower ______.
Defaults on the loan PMI protects the lender in case the borrower defaults on the loan. Should default occur, the insurance kicks in and covers the amount of the loan over 80% LTVR.
The Nettles have accepted the Briars' purchase offer, and both parties have signed the sales contract. What type of contract do the Nettles and the Briars have?
Executory The Nettles and Briars have a valid contract that's in the process of being completed. Because one or more terms of the contract must still be completed, they have an executory contract.
What information does the Loan Estimate NOT provide to buyers under required disclosures law?
Finale closing costs
Brittany has a small office in a professional building. She has a set monthly lease payment that has been calculated to include maintenance of the common areas in the building, such as the restroom and small kitchen, and all nets, utilities, and janitorial charges for her space. The payment also includes taxes and insurance. The landlord takes these payments and pays the individual expenses himself. What type of lease does Brittany have?
Gross Lease
Prior to the ______, there was no legal protection for women who endured sexual harassment from landlords and sellers when they attempted to obtain housing.
Housing and Community Development Act of 1974
Which of these is the amount a lender charges for use of its money?
Interest
Joan and Martha are entering into an 18-month lease with landlord Roger. Which of these statements is true? - All lease agreements must be in writing to be enforceable. - An 18-month oral lease is enforceable. - It's illegal for leases to cover terms of more than one year. - Leases for periods of more than one year must be in writing.
Leases for periods of more than one year must be in writing.
Four brokerage firms operate in the same small city as Jackson's firm. All the firms charge approximately the same listing commission and pay approximately the same cooperating commission to the selling broker. The commission splits within each firm are also similar. Is this an antitrust violation? Why or why not?
No. The fact that the firms' commission rates and splits are similar doesn't necessarily mean they agreed to fix those values.
James, a seller, signed a listing agreement that allows him to contract with multiple agents but only pay a commission to the agent who locates a buyer. This type of listing agreement is called ______.
Open Think of an open listing agreement as a free-for-all. Only the licensee who locates the buyer will be paid. If the seller locates the buyer, no commission is owed.
Ken, Dale, and James are brothers who own more than 100 acres as tenants in common. The relationship between Ken and James disintegrated, and so James initiated a lawsuit. The end result is that the court gave each brother a designated set of acres to own. What was granted by the court?
Partition Partition is the term used to describe a specific, divided portion of property that's created as part of a co-ownership termination.
Which group ensures that community growth is controlled and orderly?
Planning board The planning board ensures that community growth is controlled and orderly. It is also responsible for developing the master plan, which includes budgeting for long-term projects.
Whose role is it to develop the comprehensive master plan?
Planning board members
Who is responsible for ensuring accessibility requirements for a commercial property are met?
Property owners and property managers
The Hendersons don't have enough money to make the full 20% down payment their lender requires. To close the sale, the seller is willing to finance a loan for the gap between the home's list price and the amount the institutional lender is willing to loan. What's this type of financing called? - Equity mortgage - Purchase agreement - Purchase money mortgage - Seller-insured loan
Purchase Money Mortgage A purchase money mortgage is the term for seller financing typically used to bridge the gap between the home's list price and the institutional loan, though it can also be used to finance the entire purchase price.
In full seller disclosure states, whose responsibility is it to fully disclose all items on a seller disclosure form and any known material defects not listed on the form? - Appraiser - Buyer - Lender - Seller
Seller
Elizabeth is financing a new home. She submitted her loan application on Monday, August 3. She's set to close on Thursday, September 21. By what date must her lender provide the Closing Disclosure?
September 18 Lenders must provide the Closing Disclosure three days before closing (September 18).
Evan bought into a housing cooperative that's focused on cultural exchange. Each month the co-op residents have dinner meetings and share food and culture from their respective regions. When Evan made his purchase, he received a proprietary lease for his unit. What else did he receive? - Contract of mortgage - Deed - Plat maps - Shares in the cooperative corporation
Shares in the cooperative corporation Purchasing a co-op is not purchasing real property. Co-op owners hold shares in the cooperative corporation, which becomes personal property. They also receive a proprietary lease that allows them to use the property.
Which of the following could be a clue that a property was formerly a waste disposal site? - Birds constantly on the property - Pipe or vent sticking out of the ground - Plate covering an oil fill area - Soft spots, mounds, and discolored soil
Soft spots, mounds, and discolored soil
What does the "T" in PITI stand for?
Taxes PITI stands for principal, interest, taxes and insurance.
The ______ is the federal act dealing with telephone solicitation. Bitphone Telecommunication Device Act of 2003 Telecommunications Information Act Telephone Consumer Protection Act
Telephone Consumer Protection Act
This act added familial status and disability (both physical and mental) to the existing federally protected classes.
The Fair Housing Amendment Act
Which of these guarantees is offered by a general warranty deed but not a special warranty deed?
The seller will defend against all claims against the property's title. With a general warranty deed, the seller will defend against all claims on title; with a special warranty deed, the seller warrants only those claims that stem from when he owned the property.
Which of these actions is a violation of the Residential Lead-Based Paint Hazard Reduction Act when a property constructed before 1978 is being marketed by a licensee? - The buyer is given more than 10 days to complete a lead inspection of the property. - The buyer's agent fails to complete the lead-based paint disclosure form. - The seller refuses to perform lead abatement work requested in buyer's offer. - The seller's agent fails to provide the pamphlet, "Protect Your Family From Lead in Your Home" to prospective buyers.
The seller's agent fails to provide the pamphlet, "Protect Your Family From Lead in Your Home" to prospective buyers.
Picture a drawing of a section of land. Where is Township 16 located?
Third row, third from left
What forms the boundaries of a township? Baselines and township lines Principal meridians and baselines Tiers and range lines Township lines and range lines
Township lines and range lines The boundaries of townships are township lines, which run parallel to baselines meridian, and range lines, which run parallel to principal meridians.
Physical characteristics of land include its immobility, indestructibility, and ______. - Location - Permanence of investment - Scarcity - Uniqueness (nonhomogeneity)
Uniqueness (non homogeneity) Nonhomogeneity is a unique characteristic of land. Even within a single subdivision, two identically sized parcels will have their own unique characteristics: views, access, proximity to other amenities, etc.
You have a new listing: an older home with wooden beams throughout. You notice a lot of small holes burrowed in the beams. This could indicate the existence of ______.
Wood-boring beetles
Gus has applied for a home equity line of credit from his federally insured bank so that he can make some renovations to his kitchen. The same bank is his lender for his home mortgage. Will this loan be subject to Real Estate Settlement Procedures Act requirements?
Yes, because RESPA applies to any residential loan transaction from a federally insured financial institution, including equity lines of credit.
Which of these is an example of legal single license dual agency? - You represent both the buyer and seller in a single transaction with appropriate consent from both. - You represent the buyer and a colleague from your firm represents the seller. - You represent the seller and a colleague from another firm represents the buyer. - You represent the seller and a colleague from your firm represents the buyer.
You represent both the buyer and seller in a single transaction with appropriate consent from both.
You're representing Crystal in the purchase of a house. Crystal has a trust fund and can more than afford the house on which she's made an offer. Which of these statements is true?
Your duty of confidentiality to your client dictates that you not disclose your client's financial situation to the seller.
Zach wants to purchase a property that's subject to an existing lease agreement, which includes the tenant's right to renew the lease. What is Zach's obligation, if any, to uphold the terms of the lease agreement? - As the new owner and landlord, Zach can disregard the renewal option. - As the new owner and landlord, Zach can terminate the existing lease. - Zach is under no obligation to uphold any part of the existing lease agreement. - Zach must honor that right and allow the tenant to renew at the end of the term.
Zach must honor that right and allow the tenant to renew at the end of the term.
Jenner purchased his first home, to which he'll have access forever, as far as he knows. Jenner owns a(n) ______. - Estate for years - Freehold estate - Leasehold estate - Ownership estate
Freehold estate
Nico is buying a home for $625,000. His earnest money deposit is 8%. He wants to avoid private mortgage insurance (PMI) on his conventional loan, and he owes 5% in closing costs. How much money should he bring to closing?
$106,250 Conventional loans often require 20% down to avoid PMI ($125,000), and Nico has paid a $50,000 deposit ($625,000 x .08). Closing costs are $31,250 ($625,000 x .05). He needs $106,250 to close ([$125,000 - $50,000] + $31,250).
Helen is purchasing a home for $150,000 and provides a $2,500 earnest money check to the seller. She's financing the transaction, and her closing costs and down payment total $4,800. How much should Helen bring to the closing?
$2,300 Helen must bring $2,300 to closing to pay the total amount due. She owed a total of $4,800 minus the earnest money she provided when the contract was signed, $2,500, which left the amount still owed of $2,300.
Your clients are purchasing a $160,000 home. If they have a down payment of 25% and the bank charges two points at closing, how much are they paying in points?
$2,400 $160,000 x .75 = $120,000 (the loan amount after their 25% down payment). Take $120,000 ÷ 1 (point) = $1,200. 2 points then would be $1,200 x 2 = $2,400.
Using the capitalization formula, what is the value if the net operating income is $20,000 and the rate of capitalization is 10%?
$200,000 The formula is value = income divided by rate of capitalization or $20,000 / .10 = $200,000.
Seller Adelaide and buyer Colin close on a transaction for two rental condos on March 15. They live in a state where the seller is considered the owner of the property on the day of closing. The combined rental income per month is $4,000. How much rental income can Colin expect to earn in March?
$2064.48 In many states, the seller is considered the property owner on closing date. Divide the monthly income by the days in March ($4,000 ÷ 31 = $129.03) for daily rent, then multiply that by the 16 days Colin will own the property for the total of $2064.48.
A seller wants to net $10,000 after the broker's commission of 6% and a loan balance of $250,000 are paid. For how much does the property need to sell?
$276,596 To calculate this, start with 100% minus a 6% commission, which is 94% or .94. Take $250,000 plus $10,000 and divide this amount by .94.
A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. What's the total amount the borrower will pay back over the life of the loan?
$367,687.80 To find the total amount paid back, multiply the monthly payment ($2,042.71) by the total number of payments (180 = 12 payments/year x 15 years). The total paid back is $367,687.80.
Juan purchased a property for $420,000, financing $336,000 of it. The assessed value of the property is $387,000. The property appraisal came in at $432,000. Which of these amounts is used in calculating the property tax?
$387,000 The property tax will be calculated on the assessed value of the home ($387,000).
How much would a lot that is 400 feet wide by 500 feet long cost at $900 per acre?
$4,132 The lot would cost approximately $4,132. Find the area of the lot by multiplying 400 by 500 (this equals 200,000 sq feet). Convert the area to acres by dividing 200,000 by 43,560 (the number of sq feet in an acre). Multiply this number by $900 per acre.
Esme buys Steve's beach townhouse for $475,000. The transfer tax in the area is $2.00 for the first $1,000 and $0.10 for each additional $100. Calculate what Steve will pay for the transfer tax at closing.
$476 The first $1,000 is $2.00. The transfer tax for the remaining $474,000 will multiplied by .001 ($0.10 for each additional $100). So the total transfer tax will be $476 ([$474,000 x .001] + $2).
A borrower has a 30-year, $500,000 loan with an interest rate of 6.25%. His monthly principal and interest payment is $3,078.59. What's the total amount of interest he'll pay over the course of the loan?
$608,292.40 First, multiply the monthly payment by the total number of payments. Then subtract the original loan value: (30x12 months) =360 total number of payments $3,078.59 x 360 = $1,108,292.40 ‒ $500,000 = $608,292.40.
You're working with a buyer who's purchasing a home appraised at $80,000. The buyer is obtaining a 90% loan, and the lender will charge a one point origination fee at closing. How much will the loan origination fee be? - $712 - $720 - $728 - $800
$720 $80,000 x .9 = $72,000 (loan amount), and 1% of $72,000 = $720
A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. If $1,145.83 is interest, how much is applied to principal?
$896.88 If $1,145.83 of the total payment is interest, that leaves $896.88 to be applied to the principal. ($2,042.71 - $1,145.83 = 896.88)
The Smithwicks, your buyer clients, obtained a 90% loan on their new $400,000 home. At closing, they paid $6,150 for points at closing. How many points did they pay? .017 .02 1.7 1.71
1.71 A point is 1% of the loan amount. The Smithwicks' loan is $360,000 ($400,000 x .90), and they paid $6,150 for points at closing. Divide the cost in points by the loan amount to get the number of points they paid: ($6,150 ÷ 360,000 = 0.0170833, or 1.71).
Margie needs to know the square footage for the first floor of the condo her client wants to make an offer on. The kitchen is 10 feet by 15 feet, the living/dining combo is 20 feet by 25 feet, and the office and sunroom are each 10 feet by 10 feet. What's the total square footage? - 2,200 square feet - 3,000 square feet - 750 square feet - 850 square feet
850 square feet Area = length x width. Find the area of each room to get its square footage, then add the square footage of all four rooms. Kitchen = 150 sq ft; living/dining = 500 sq ft; office = 100 sq ft; and sunroom = 100 sq ft. = 850 square feet.
Related to title insurance, what is "subrogation"? - A covered party grants permission to the title company to pursue the party who caused a claim or loss. - The act of conveyance when the seller turns over all property rights to the buyer with a clear, marketable title. - The process by which the lender receives coverage under a title insurance policy the borrower has purchased. - The process by which the title policy pays out any claims to the buyer or lender.
A covered party grants permission to the title company to pursue the party who caused a claim or loss.
What's interest, as related to a mortgage loan payment? - A fee paid to lenders for the use of their money - A fee to keep other borrowers from taking interest in your property and buying it out from under you - Extra money paid to cover any unexpected bank fees - Random charges
A fee paid to lenders for the use of their money
What's it called when all parties sign a contract, but before the seller's acceptance is delivered to the buyer?
Acceptance Acceptance occurs when all parties have signed a given contract. Binding acceptance occurs when the accepted offer is delivered.
Ray purchased a new home and soon discovered an issue with one of the windows. He filed a claim with the warranty provider, but it was denied. After mediation, the issue still remains unresolved. What is the most common next step? - Arbitration - A second round of mediation - Condemnation - Litigation
Arbitration Warranties will detail the course of action if a claim is disputed. Most often, mediation occurs first, then arbitration. The arbitration decision is generally binding and final. The disputed claim process seeks to avoid or limit litigation.
Mary has agreed to buy her mother's house when her mother is finally ready to move to a senior living community. They sign a purchase agreement, but when Mary has to move because of work, Mary signs her rights in the contract over to her sister Tina. Mary may still owe money if Tina can't come up with the agreed-upon funds. What's happening in this scenario?
Assignment Assignment of a contract is the substitution of one party for another, with the original party still being obligated under the terms of the contract.
Margot is looking for a 10-year loan with regular affordable monthly payments. In eight years, she'll inherit a good chunk of money from her grandmother and be able to pay off the remaining loan amount. What kind of loan might be best for Margot?
Balloon loan A balloon loan allows borrowers to make lower payments, then make a "balloon," or lump sum, payment at the maturity date (the end of the loan term). A lender can amortize the loan over a 30-year period with a balloon payment at the end of 10 years.
Jerry's home has been in his family for nearly 75 years and sits smack dab in the middle of where a public university wants to expand. A government authority has made a fair offer for seizing Jerry's home as part of the process of taking someone's property called ______. Condemnation Escheat Foreclosure Non-conforming use
Condemnation Condemnation is the process of the government taking someone's property, but paying a fair price for it.
Which of the following is an example of a universal agent?
Conservator A universal agent has broad authority to act on behalf of the principal, such as a person with a power of attorney or a conservator.
Which of the following is true about ownership or title to a property?
Constructive notice to the public of real property ownership occurs when the deed is recorded.
Which covenant requires the grantor to execute any necessary legal documents (within his power) necessary to fix title defects discovered after closing?
Covenant of Further Assurances
State usury laws are typically not applicable to what type of lending?
Credit Cards Credit cards, retail installment contracts, and consumer leases are typically exempt from usury laws.
Sue is selling her house for $265,000. Closing is set for June 19, and Sue owns the day of closing. She has a loan balance of $78,000 at a 4.2% rate, and she's current on her payments. She prepaid the property taxes ($1,350) and insurance ($925). Using a calendar-year proration method for calculations, how will these amounts appear on Sue's closing statement?
Credit of $721.50 Tax daily rate: ($1,350 ÷ 365 = $3.70) 195 days (days from closing until year end) = a $721.50 seller credit. Any prepaid seller's homeowners insurance will be refunded to the seller outside closing, so this doesn't appear on the closing statements.
A real estate transaction has a closing date of May 20. The seller, who's responsible for closing costs up to but not including the day of settlement, has already paid annual property taxes of $1,949. Using calendar year proration, the seller will be ______ on the closing statement.
Credited $1,207 The seller will be credited $1,207, because $1,949 ÷ 365 = $5.34, and $5.34 × 226 days = $1,206.84. That's $1,207 if rounded to the nearest whole dollar.
Which of the following is a common chimney or fireplace problem? - Creosote - Damage around the fascia - Holes in the soffit - None of these
Creosote The presence of creosote outside a chimney can be a common problem.
You represent the buyer, and another licensee from your brokerage represents the seller in the same transaction. What type of agency relationship do you and the other licensee have with your clients?
Dual-license dual agency You and the other licensee from your firm are in a dual-licensee dual agency relationship. The broker is the dual agent and has designated you to represent the buyer and the other licensee to represent the seller.
The doctrine of laches refers to the ______ of restrictive covenants/deed restrictions.
Enforcement The doctrine of laches refers to the enforcement of restrictive covenants. If property owners don't protect their rights to enforce these covenants, they can lose them.
What's the most common indicator of illegal property flipping? - Falsely inflated appraisal - Underwriting hassles - Unrepresented seller - Violation of fair housing laws
Falsely inflated appraisal
Jarod bought a home in which he has all the rights of ownership, including the right to sell and to convey the property to heirs at his death. What type of fee simple estate is this?
Fee Simple Absolute A fee simple absolute estate provides complete ownership without any limitations or conditions.
The Crows gave their son, Gibson, the family property, so long as he doesn't join his friend's rock band. If he joins the band, the property goes back to them. What type of estate is this?
Fee simple determinable With fee simple determinable, the property holder owns the property subject to a condition. If the condition is breached, then the property will go back to the original owner.
Brenda represents Tina in a real estate transaction. She therefore owes Tina ______ duties, such as confidentiality, obedience, and reasonable skill and care.
Fiduciary Fiduciary duties include obedience, loyalty, disclosure, confidentiality, accounting, and reasonable skill and care.
Which of these would most likely be an implied contractual condition in a real estate sales contract? - Buyer and seller names - Freedom from fraud and misrepresentation - Property location or description - Purchase price
Freedom from fraud and misrepresentation Contracts should specifically define the purchase price, the property being sold/purchased, and buyer and seller names. It likely won't spell out that the contract should be free from fraud or misrepresentation as this is implied under contract law.
Jackie was sued in civil court by one of her creditors. As a result of the judgment against her, her house, car, and art collection are all subject to sale in order to pay the creditor. What type of lien is this? General Special assessment Vendor's Voluntary
General A general lien is placed against all of an individual's or a business's real and personal property, not just a specific property. General liens include judgment liens—such as in this case—income tax liens, and decedent's debts.
Which of these describes a bridge loan? Frieda is leasing a property from Thomas, and has the first right to purchase the property if Thomas decides to sell it. Gina is moving across the country to be closer to her family. Her existing home hasn't sold, but she is ready to purchase her new home. Rhonda is purchasing land from Kenneth on which she hopes to build a tiny home. Kenneth carries the mortgage note. Terry and Carla take out a home equity loan to make the down payment on a vacation home in Mexico.
Gina is moving across the country to be closer to her family. Her existing home hasn't sold, but she is ready to purchase her new home.
Gerald practices real estate in a state that recognizes sub-agency. Which of these is true of Gerald's authority to appoint a sub-agent?
He must seek the principal's permission, in writing, to appoint a sub-agent. Any delegation of a licensee's agency-related tasks should be in writing and must be approved by the principal.
Marta and Kim are so excited—Marta received a prestigious fellowship, and she'll be studying in Spain for a year! Kim is taking a leave of absence from her job to come with her. They don't want their home in a gated community to sit empty, so they'd like to rent it out for the year. What might prohibit them from doing so?
Homeowner regulations
Identifying the purpose of the appraisal leads the appraiser to do what next?
Identify data needed The first step is to state the problem so the appraiser can then identify what data is needed.
Which one of the following tasks must a licensee perform for seller clients?
Inform sellers of their responsibility to make all required property condition disclosures. The licensee is responsible for assisting the seller in marketing the property; earnest money isn't deposited into a personal checking account, and licensees don't set list prices--they recommend a range of prices to sellers.
Ashish is purchasing a bank-owned property. His real estate agent tells him the bank is offering insurable, not marketable, title. What does this mean to Ashish?
Insurable title is one that may have known defects but is still insurable. Ashish should carefully review the title policy. An insurable title may be acceptable to a buyer, depending on any known defects that are outlined in the policy.
The Johnsons have owned a small restaurant for more than 20 years. They're open for lunch and dinner six days a week, and 80% of their weekday revenue comes from the happy hour drink and appetizer specials they offer. 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 _____. - Condemnation - Eminent domain - Escheat - Inverse condemnation
Inverse condemnation Inverse condemnation occurs when a property's value is negatively affected by government regulation but the owner is not offered just compensation according to the requirements of the Taking Clause.
What does a balloon payment represent at the end of a loan term?
It means that some principal remains at the end of the loan term. A balloon payment is due at the end of a balloon loan, because the loan has only been partially amortized, which means that some of the principal remains at the end of the loan term.
Which of these statements about a deed's habendum clause is true?
It's a description of the act of conveyance.
You've just signed a listing with a new seller client. What's true about electronic delivery of written notice or contract forms to your seller? - It's allowed if the seller consented to it in the listing contract. - It's allowed with special permission from the commission. - It's illegal in Colorado. - It's legal as long as it's subsequent to physical hard copy delivery.
It's allowed if the seller consented to it in the listing contract.
Contrary to federal fair housing laws, the state where Katrina lives includes age as a protected class. Which of these statements about this conflict is true?
Katrina must follow the more restrictive of federal or state law.
Charles is selling his property to Seth. Charles is financing part of the transaction for Seth, who will make payments to Charles while Charles retains the property title. What's this an example of?
Land Contract With a land contract, the seller agrees to provide credit to the buyer for a portion (or sometimes all) of the funds required to close the transaction. The buyer makes payments directly to the seller.
Steven owns 114 acres of wooded, rural land. The abundance of wildlife on his property means that his friends are always asking for permission to hunt on it during various game seasons. If Steven gives a friend permission to hunt on his land, it can be said that he has given his friend a ______.
License A license is permission to do something on another's land without actually possessing any interest or ownership in the land.
A couple of licensees you know from different firms are tired of competing with one another for the same listings. You overhear them saying, "You take the north side of town and I'll take the south, so we aren't stepping on each other's toes." You stop their conversation to tell them they're committing an antitrust violation. Which one is it?
Market allocation
Which type of antitrust violation occurs when real estate firms agree to divide their market so they don't compete with one another? - Group boycotting - Market allocation - Price fixing - Tie-in arrangements
Market allocation An agreement to segment the market between competing firms is market allocation. Antitrust violations like this unfairly limit options for consumers.
Natasha is preparing to sell her home. She wants to be prepared, so she thinks she should test for radon. Which of these about radon testing is true? - Natasha can hire a professional to perform the test, or she can buy a test kit and submit it to a lab for analysis. - Natasha is required to test for radon and perform any necessary mitigation before placing her property on the market. - Natasha must hire a certified testing company to perform the radon test and interpret the results. - The buyer must perform the radon test.
Natasha can hire a professional to perform the test, or she can buy a test kit and submit it to a lab for analysis. Test kits are available for purchase but must be sent to a lab for analysis. A radon technician can also place the test, pick it up, and send it in for testing. Licensees should advise all buyers to have homes tested for radon, regardless of location.
Select the situation that correctly represents a true conflict of fiduciary duties.
Nikki's seller client has instructed her not to present offers that are less than the listing price. This is a conflict of Nikki's duty of disclosure, which requires her to present all offers, and her duty of obedience.
What are the main benefits to veterans of the VA-guaranteed loan program? A VA guarantee of the property condition Lower interest rates than are available on the open market No down payment, no mortgage insurance, and no prepayment penalty Reduced homeowner's insurance requirements
No down payment, no mortgage insurance, and no prepayment penalty
When market conditions indicate top-of-the-market pricing, is it always in your client's best interest to price it there?
No, it still has to appraise
Jacob's family has operated a neighborhood grocery store in the community since before the land was zoned residential. Jacob continues to operate the store legally. What would you call this?
Non-conforming use Legal, non-conforming use of land occurs when a structure or business was legally established according to zoning ordinances at the time, but does not meet current zoning and building regulations. This is called being "grandfathered."
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 ______. - Accounting - Disclosure - Loyalty - Obedience
Obedience Frequently, obedience will conflict with reasonable skill and care. When it does, it's time to have a chat with your clients. In the end, you must obey their wishes, or if the matter is serious enough, refuse to work with them.
A closing agent has several duties to perform both before and after the closing. Which of the following is a task the closing agent must complete after the closing?
Pay the existing loan off The title search, closing statement preparation, and title insurance purchase must all be completed prior to closing. After closing, the closing agent makes arrangements to pay off the seller's existing loan with the proceeds from the buyer. "We're recorded and funded" is music to a licensee's ears.
______ is an increase in property value caused by the joining of two neighboring parcels of land.
Plottage Plottage is an increase in property value caused by the joining of two neighboring parcels of land. It's usually more than the sum total of its parts (where 1+1 = 3, 4, or even 10).
According to the U.S. Department of Justice, which type of antitrust violation is an agreement between competitors to set contract terms for a certain length of time?
Price fixing Besides commissions and discounts, price fixing may also apply to contract terms.
While Martha's paying off her loan, her lender is holding on to something that includes her name, property address, the interest rate on her loan, what the late charge amount would be, and the amount and term of the loan. When her loan is paid off, the lender returns it to Mary, marked paid in full. What is this item?
Promissory Note
In property management, what's the legal and binding contract that spells out the duties for both the property manager and property owner? - Power of attorney - Property management agreement - Property management proposal - Service contract
Property management agreement The property management agreement details both the property manager's and the property owner's duties.
Richard is interested in purchasing some rural land and included outbuildings. When reviewing the legal description, he sees the name of a principal meridian. What type of legal description is this?
Rectangular Government Survey
Many market conditions impact housing prices. Which of the following is a true statement? - High unemployment rates mean there are more available buyers in the market. - Inflation increases buying power. - Low unemployment rates mean there are fewer available buyers in the market. - Reduced consumer confidence makes new buyers wary of purchasing, and homeowners hesitant to trade up.
Reduced consumer confidence makes new buyers wary of purchasing, and homeowners hesitant to trade up.
Margaret is meeting with James and Cindy, potential buyers of a property listed by one of Margaret's colleagues. They're in Margaret's office preparing their offer when James says, "The only thing that bothers me are those black spots on the bathroom ceiling. Do you think that could be the bad kind of mold? It's not dangerous, is it?" What should Margaret do? - Refer James and Cindy to a qualified mold professional. - Tell them that she will personally clean it up. - Tell them they could probably clean it up with a little bleach. - Tell them to not worry about it.
Refer James and Cindy to a qualified mold professional.
Regina purchases a farm with 80 acres and owns her property in severalty. What does this mean for the company that purchased the mineral rights from the previous owner?
Regina didn't purchase the mineral rights, which have been severed from the property by the previous owner. Since the previous owner severed the mineral rights from the property, they aren't included in her purchase. This doesn't affect her ownership of the property in fee simple absolute or her ability to hold title in severalty.
Which of the following is a buyer's agent's task or duty?
Representing the buyer's interests
For farmers and others who live in rural communities, a ______ loan may be available. One benefit of these loans is the option for a longer payback period.
Rural development
Travis has made the final payment on his loan according to the loan terms. What must the note holder do to acknowledge that the debt has been repaid?
Sign the note, mark it "Paid in Full," and return it to Travis. When the note has been paid off, the holder must sign the note, mark it as paid in full, and return it to the maker. The satisfaction of mortgage is recorded with the county land office, removing the associated lien from the property.
The appraisal report submitted to Jenkins, the lender, notes that the property is being conveyed with all property rights intact. Which step in the appraisal process does this represent?
State the problem. The first step in the appraisal process is to state the problem. This includes a description of the rights associated with the property.
Which of these regarding the impact of the Brownfields Law is true?
The Smiths have discovered chemical contamination on the property deed to them by their late parents. The Brownfields Law may provide funds to help them clean up the site. The Brownfields Law provides direct funding, typically in the form of grants, to property owners to assist in the assessment and cleanup of contaminated sites.
Jenson signed a seller's agency agreement with Susan. A few weeks after that, right before closing, a hurricane destroyed the property. What happens to Jenson and Susan's agreement?
The agreement terminates by force of law.
Tom and Martha live in a neighborhood where lawn ornaments are prohibited. They want to put up a nativity scene at Christmas and argue that the covenant doesn't apply to temporary decorations but only to permanent ones. Their homeowner's association disagrees. Which entity enforces subdivision covenants?
The civil court system
In which of these listing agreement terminations is there LEAST likely to be a penalty for terminating the agreement?
The client and agent mutually agree to terminate the listing.
In a residential real estate sale involving a federally related loan, who's required to provide Real Estate Settlement Procedures Act disclosures to the consumer?
The consumer's lender
John and Michelle received a general warranty deed when they purchased their house from Ted. A couple of months after they moved in, their neighbor, Bryant, drove his four-wheeler across their property to access the lake front. John discovered that Ted and Bryant agreed to an easement over Ted's property several years earlier. Which general warranty deed covenant does this represent?
The covenant against encumbrances The covenant against encumbrances assures the grantee that no encumbrances exist other than those that are publicly recorded or noted in the deed.
Antje's clients closed on their property yesterday, but Antje still has some paperwork that she needs to deliver to them as soon as possible. Under which fiduciary duty is Antje acting?
The duty of accounting The duty of accounting may continue even after the transaction closes. The agent must account for any documents or money belonging to the client until it is delivered to the appropriate party.
Simone can't believe that her client won't let her put a lockbox on the property. How does he expect other agents to be able to show the home? Oh well, it's not as if he's asking her to do something illegal. The client's wish is her command. What fiduciary duty is this an example of?
The duty of obedience
Carly's closing on an REO property was suddenly delayed due to an internal audit. What does this mean?
The lender has requested a title audit to ensure that the foreclosure was properly handled.
Jacqueline found a ready, willing, and able buyer for her client's condo, with a sales price of $20,000 more than the asking price. However, the appraisal came in just under the asking price. Which number will the lender use to calculate the loan-to-value ratio?
The smaller number Lenders use the lesser of the sales price and appraised value.
What would happen if you bought a house and later found out that there were unpaid liens against the property?
The unpaid liens could trigger a foreclosure on your property.
Charlie rented a single-family residence from Hal and Mary. The lease specifies that Charlie can't conduct any type of business out of the property. Which clause includes this prohibition? - The additional provisions clause - The demising clause - The prohibitions clause - The use clause
The use clause The use clause in a lease outlines how a tenant may use the leased property and what activities are prohibited or allowed.
Which of the following is true about net listings?
They often involve a conflict of interest. Net listings are prohibited in several states, and there's no guarantee of commission. The conflict could occur if the listing agent didn't present offers that left little for a commission, even though the offers met the seller's needs.
What's the purpose of the Fixed/Adjustable Rate Note?
To convert the interest rate from fixed to adjustable
What's the purpose of a chain of title?
To establish history of past ownership
What is the primary purpose of the Superfund Amendments and Reauthorization Act (SARA)? - To prohibit companies from depositing hazardous substances in commercial neighborhoods - To prohibit companies from depositing hazardous substances in residential neighborhoods - To release homeowners from the responsibility of cleaning up hazardous substances if the homeowner didn't know they existed - To require homeowners to clean up hazardous substances within one year of learning they exist
To release homeowners from the responsibility of cleaning up hazardous substances if the homeowner didn't know they existed
Which of the following is a typical accrued adjustment?
Unpaid real estate taxes
Bernie is representing Oscar in the sale of Oscar's home. They have signed an exclusive right-to-sell listing agreement. If Oscar finds his own buyer, does he owe Bernie a commission?
Yes, because exclusive right to sell means Bernie gets paid no matter who finds the buyer
The Shores are in the process of buying a beautiful 3,000-square-foot home from the Bishops. They've completed all the required paperwork on their loan application. Mary's analyzing the package to determine their ability to repay the loan. She examines the property's value, the property type, and the loan-to-value ratio, among other things. Her recommendation is that the Shores' loan application be approved. What is Mary's role?
the underwriter
