Chapter 13-14
A sale is closing August 31. Real estate taxes, calculated on a calendar year basis, have not been paid for the current year. The tax is estimated to be $1,800. What amount of proration will be credited to the buyer (paid by the seller)? $1,100 $1,200 $1,485 $1,500
$1,200 - 1800/12 x 8 = 1200
If an apartment rents for $750 per month and the manager receives a 12% commission on all new tenants, how much will the manager receive when renting an apartment, assuming that this commission is calculated in the usual way? $90 $750 $1080 $1800
$1080 - 750 x 12 x .12 = 1080
The land on which a house was built is worth $50,000. The house was constructed in 1990 at a cost of $265,000 and was expected to last 50 years. Using the straight line method, determine how much the house has depreciated by 2014. $28,600 $96,600 $127,700 $145,200
$127,700 - 2014-1990 = 24 265,000 / 50 = 5300 5300 x 24 = 127,200 The cost of the land has no bearing on this question
Using a 30 day month, closing is July 31st. What amount is the buyer debited for real estate taxes. Taxes are $350 paid in full for the year. $145.83 $146.71 $202.19 $203.30
$145.83 - 350 / 12 = 29.17 x 5 (Aug-Dec) = 145.83
What amount is the seller debited for the broker's commission? Sale price was $25,000 $750 $1,650 $1,750 $2,500
$1750 - 25000 x .07
A mortgage company charges borrowers a 1.5% loan origination fee. A man buys a house for $210,000 and pays $50,000 in cash. He applies for a mortgage to cover the balance. What will the mortgage company charge as a fee if the asking price of the house was $235,000? $2400 $3150 $3525 $3750
$2,400 - 210,000 - 50,000 = 160,000 x .015 = 2400
A property is listed for sale at $235,000. A buyer's offer of $220,000 is rejected by the seller. Six months later, the seller reduces the price to $225,000. Another buyer offers $210,000, and the seller accepts because the seller has found another house to buy and needs to close quickly. The property is subsequently appraised at $215,000. Which of these figures MOST accurately represents the property's market value? $210,000 $215,000 $225,000 $235,000
$215,000
What amount is the buyer debited for the water bill? Water bill $90 (paid in advance through Sept 15) $10.00 $15.00 $17.50 $22.50
$22.50 - 90/6 x 1.5 = 22.50
It costs approximately $350,000 to build a house and its various improvements on a parcel of property. if the property was vacant, undeveloped land, it would be worth about $100,000. As it currently exists, the property's physical deterioration equals about $60,000. If an appraiser were to apply the cost approach, what would be the value of this property? $250,000 $390,000 $450,000 $480,000
$390,000 - 350,000 - 60,000 = 290,000 + 100,000 = 390,000
A house is listed for $250,000. A man buys it for $230,000, with a 20% down payment. He borrows the balance on a fixed rate mortgage at 6%. The lender charges four points.If there are no other closing costs involved, how much money does the man need at closing? $7,360 $26,000 $46,000 $53,360
$53,360 - 230,000 x .20 = 46,000: 230,000 - 46,000 x .04 = 7360 + 46,000 = 53,360
A house had a sale price of $240,000. The buyer obtained a loan for $220,000. If the lender charges three points, how much will the buyer pay in points? $5,335 $6,600 $6,950 $7,540
$6,600 - 220,000 x .03 = 6600
The market value of an undeveloped parcel is $40,000. Its assessed value is 40% of market value, and properties in its country are subject to an equalization factor of 1.50. If the tax rate is $4 per $100, what is the amount of the tax owed on the property? $480 $960 $1080 $1800
$960 - 40,000 x .40 x 1.5 / 100 x 4 = 960
What is the GRM for a residential duplex with a selling price of $234,000 if the monthly rent for each unit is $925? 1.054 10.54 126.5 252.9
126.5 - 925 x 2 (duplex, each unit) = 1850 234,000 / 1850 = 126.48 = 126.5
The millage breakout for ad valorem taxes are library: 0.5; school: 1; school debt service: 0.5; community college: 1; vocational school: 0.5; and all others: 5. If the property is assessed at $165,000, how much is the tax bill? $1200.25 $1402.50 $1405.75 $1800.50
1402.50 - Add all together 165000 x .0085 = $1402.50
A two unit apartment building is being appraised. In this neighborhood, the accepted gross rent multiplies is 144. The annual income on the building is $16,800 (both units rented). The monthly expense are $300. Based on this income approach, what is the estimated market value of the apartment building? $210,600 $224,800 $232,500 $258,600
18,800 / 12 = 1400 monthly rent x GRM (144) = 201,600 - The monthly expenses have no bearing on the answer
To qualify for most conventional loans, the borrower's monthly housing expenses, including PITI, cannot exceed what percent of the total gross monthly income? 28% 36% 41% 45%
36%
How many feet in a acre?
43560
A woman bought a home. The asking price for the home was $585,000; the woman offered $565,000 and the seller accepted. The appraised value of the home is $560,000. The woman plans to pay $94,600 in cash and take out a mortgage for the remainder. What is the LTV for this property? 82% 83% 84% 85%
84% - 565000-94,600 = 470,400 / 560,000 = 84
A man owns a 2,000 acre tract of undeveloped woodland surrounding a scenic lake. He has divided the tract into 106 individual lots, ranging in size from 15 acres to 100 acres. he has also hired telemarketers to sell the lots to residents of the state and the three state with which it shares a common border. Based on these facts, how does the Interstate Land Sales Full Disclosure Act apply to the project? a. the man must file a disclosure statement with HUD b. because the man's project is not fraudulent, it is exempt from the requirements of the law c. this development project is exempt from the law because of the lot size exemption d. the man's project is exempt from the law because it is not being marketed outside a contiguous multistate region
A
A man owns an apartment building that generated $60,000 in rental income, $15,000 in expenses, and $35,000 in debt service last year. Also, the property appreciated about $10,000 last year. What was the amount of cash flow on the man's apartment building last year? a. $10,000 b. $15,000 c. $20,000 d. $25,000
A
A package loan includes a. real and personal property b. private mortgage insurance c. multiple parcels or lots d. cash for the construction of improvement on real estate
A
A security deposit held by a landlord a. compensates the landlord in the event of rent default or premises damage b. functions as the last month's rent on the lease c. acts as an investment option for the tenant d. does all these
A
A wraparound loan enables a borrower a. with an existing mortgage loan to obtain additional financing from a second lender without paying off the first loan b. to avoid prepayment penalties c. to take "draws" to pay for construction work d. to take advantage of the equity built up in a home
A
According to the FHA, what is steering a. channeling or protected class members to certain buildings or neighborhoods b. encouraging people to rent or sell by claiming that certain protected classes of people will have a negative impact on property values c. an appropriate method to manage risks associated with rental property ownership d. a method of providing reasonable accommodation for people with disabilities
A
All of these are principal responsibilities of the property manager EXCEPT a. forcibly removing tenants for nonpayment of rent b. generating income for the owners c. preserving and/or increasing the value of the property d. achieving the objectives of the owners
A
All of these could be included in a zoning ordinance EXCEPT a. objectives for future development of the area b. permissible height and style of new construction c. style and appearance of structures d. the maximum allowable ratio of land area to structural area
A
At least how much of a tank must be underground for it to be considered an underground storage tank? a. 10% b. 15% c. 25% d. 35%
A
Before granting a zoning variance, a zoning board of appeals must a. hold a public hearing where neighbors of a proposed use may voice their opinions b. conduct a door to door opinion survey of property owners adjacent to the proposed use c. check whether the landowner has been granted previous variances d. determine whether the proposed use will result in higher property taxes
A
How can property owners help avoid carbon monoxide exposure? a. have fuel burning heating systems checked and maintained annually b. have their basements tested for carbon monoxide seeping in from the soil c. encapsulate sources of carbon monoxide emissions d. install attic vents
A
How does an acceleration clause help lenders? a. without the acceleration clause, lenders would have to sue the borrower for every overdue payment b. lenders would rather foreclose on property than hold a long term loan c. it results in a deed in lieu of foreclosure rather than the default process d. it sets out the provisions for the impound account
A
If the lender wants to call the entire note due and payable if the borrower stops making payments, the security instrument must include an acceleration clause a defeasance clause an alienation clause a prepayment clause
A
In August, a tenant signs a one year lease in an apartment complex. Rent payments are due on the 15th of each month. On December 12, the apartment complex is sold to a new owner. On March 14, the building burns. Which of these statements accurately describes the tenant's obligations? a. the tenant is not required to continue paying rent after March 14 because the premises have been destroyed b. The tenant is not required to continue paying rent after December 12 because the sale voids the preexisting lease c. the tenant is required to continue paying rent for the full lease term because a tenancy for years cannot be terminated by the destruction of the premises d. the tenant is required to continue paying rent, but the residential lease is converted by law into a ground lease
A
Lead based paint is found in abut 75% of all private housing built before a. 1978 b. 1985 c. 1992 d. 1996
A
Regulation Z generally applies to a. a credit transaction secured by a residence b. business loans c. commercial loans d. agricultural loans of more than $25,000
A
Sealing off asbestos instead of removing it is called a. encapsulation b. capping c. irresponsible remediation d. extended liability
A
Some tenants want to buy the house they are renting. However, they do not have enough money for the down payment. The landlord agreed to put part of the tenants' rent toward the purchase price. The landlord and tenants have agreed to a. lease purchase b. sale leaseback c. ground lease d. an option
A
Touching up peeling paint is an example of curing a. physical deterioration b. functional obsolescence c. external obsolescence d. straight line depreciation
A
What is a major disadvantage to lenders of accepting a deed in lieu of foreclosure? a. the lender takes the real estate subject to all junior liens b. the lender gains rights to private mortgage insurance c. the process is lengthy and involves a lawsuit d. it is an adverse element in the borrower's credit history
A
What is an advantage of investing in real estate? a. tax credits for certain types of projects b. not highly liquid in the short term c. investment of large amounts of capital d. need for active management
A
What is the process for creating a broker's price opinion (BPO)? a. The broker drives by the property, takes a picture, and fills out the BPO form b. The broker engages a certified appraiser to perform an appraisal c. The broker prepares a report compiled from research of comparable properties d. The attorney engages a broker to perform a comparative market analysis.
A
Which of the following describes straight line depreciation? a. depreciation is taken periodically in equal amounts over an asset's useful life b. depreciation is taken periodically in equal amounts over a maximum of 10 years c. the amount of depreciation increases each year until the asset is sold or devalued d. the amount of depreciation decreases each year until the asset is sold or devalued
A
Which of these is responsible for administering the Superfund a. EPA b. PRP c. CERCLA d. HUD
A
Which of these reports would a salesperson MOST likely research and deliver to a prospective seller? a. comparative market analysis b. appraisal c. letter of intent d. cost benefit analysis
A
The characteristics of value include a. demand, utility, scarcity, and transferability b. demand, utility, price, and transferability c. popularity, location, price, and transferability d. demand, scarcity, price, and popularity
A - DUST
A basic form homeowners insurance policy provides property coverage against a. floods b. fire, lightning, and smoke damage c. damage due to the weight of ice, snow, or sleet d. falling objects
B
A buyer is purchasing property from a seller. The seller bought the property on December 20, 1999, with an FHA loan and has lived there ever since. Because of its favorable terms, the buyer would like to assume the seller's mortgage. Is this possible? a. Yes, there are no restrictions on the assumption of this mortgage b. Yes, but the buyer will have to undergo the complete buyer qualification process c. Yes, but the buyer will have to undergo a creditworthiness review only d. No, this FHA loan is not assumable`
B
A buyer purchases property from a seller for $45,000 in cash and assumes the seller's outstanding mortgage balance of $98,500. The lender executes a real for the seller. The buyer fails to make any mortgage payments, and the lender forecloses. At the foreclosure sale, the property is sold for $75,000. Based on these facts, who is liable, and for what amount? a. the seller is solely liable for $23,500 b. the buyer is solely liable for $23,500 c. the buyer and the seller are equally liable for $23,500 d. the buyer is solely liable for $30,000
B
A developer has included a playground and running trails between the commercial properties facing a busy street and the houses further back in the subdivision. The recreational area is considered a. aesthetic zoning b. a buffer zone c. a taking d. a nonconforming use
B
A house sits on the corner of a busy intersection. Two of the corners are occupied by gas stations, and directly across from the house is a fast food restaurant. The house's owners have been told that the property would be worth more if the lot were vacant. This is an example of a. progression b. highest and best use c. regression d. conservation
B
A lease that provides for specified rent increases at set future dates is called a. adjustable lease b. graduated lease c. percentage lease d. interval lease
B
A lender who collects payments, processes them, and follows up on loan delinquencies is said to a. increase the yield to the lender b. service the loan c. insure loan payments d. underwrite the loans
B
A man operates a small store in a shopping center. Under the terms of the lease, the landlord pays all operating expenses. The man pays a base rent of $1,000 per month, plus 15% of monthly gross profits over $10,000. The man has a a. gross lease b. percentage lease c. a net lease d. variable lease
B
A new structure has been completed to the satisfaction of the inspecting city engineer. What documentation must be issued before anyone can move in? a. appraisal report b. certificate of occupancy c. certificate of reasonable value d. conditional use permit
B
A plat map is BEST described as a. a detailed map that illustrates aesthetic preferences b. a detailed map that illustrates the geographic boundaries of individual lots c. a detailed map that illustrates where a variance might be allowed d. none of these
B
A real estate broker has a computerized loan origination (CLO) terminal in her office. Because there are more than a dozen lending institutions in the city, the broker has found that the CLO greatly streamlines the application process for her clients. She sits down at the terminal with a homebuyer and these three events take place: 1. The broker explains that there is a fee for using the terminal of 1/2 point, based on the loan amount, and that the homebuyer may choose to finance the fee 2. the broker explains only the different kinds of services offered by the two local lenders who pay her a monthly screen fee to be included on the CLO system 3. The broker helps the homeowner answer the on screen qualification questions. Which of these events is an improper use of a CLO system? a. 1 only, b. 2 only, c. 2 and 3, d. 1 and 3
B
A tenant pays for his own utilities and makes one payment each month to the landlord who pays the taxes, insurance on the building, and maintenance. What type of lease arrangement is this? a. Net b. Gross c. Percentage d. Graduated
B
A woman defaults on her mortgage, and the lender forecloses. the lender's foreclosure suit is filed on March 15, and the sale is to be held on May 10. If the woman attempts to redeem the property on May 1, which of these statements applies? a. the woman is exercising her statutory right of redemption b. the woman is exercising her equitable right of redemption c. the woman's attempt to redeem the property is too early; by stature, she must wait until after the sale d. the woman cannot redeem the property after a foreclosure suit is filed
B
A woman wanted to rent an apartment from a man. Because of a physical disability, it would be necessary for the woman to have all the doorknobs replaced with the lever type handles. In this case, which of these statements is TRUE? a. The FHA requires that the man make the accommodation for the woman at the man;s expense; no additional rent may be charged for the woman's modified unit b. the man is legally obligated to permit the modifications to be made at the woman's expense c. because the modifications demanded by the woman are not reasonable, the man is not legally required to permit them d. because the proposed modifications would interfere with a future tenant's use of the premises, the man may refuse to permit them
B
All of these are common tests of a valid zoning ordinance EXCEPT a. clear and specific provisions b. anticipation of future housing needs c. a nondiscriminatory effect d. all property owners being affected in a similar manner
B
An investor adds the cost of any physical improvements to the initial cost of the property and then subtracts the amount of any depreciation claimed as a tax deduction. This is the method for calculating the a. basis b. adjusted basis c. leverage d. cash flow
B
Assuming that all of the transactions are federally related, which of these properties would NOT have to be appraised by a state licensed or certified appraiser? a. the commercial property valued at $350,000 b. the condominium unit with a sale price of $67,850 c. the residential property valued at $262,500 d. the commercial property valued over $1 million in a refinance
B
Harry stores toxic chemical waste in a large steel tank that has only 15% of its volume underground. Jena lives in the wilderness and has her own gas pump connected to a 1,500 gallon tank of gasoline buried ten feet underground near her garage. Lars keeps three large tanks filled with formaldehyde and battery acid in his basement. Which of these people are covered by the federal regulations regarding USTs? a. Harry and Lars b. Harry and Jena only c. Lars only d. Jena only
B
If a potentially responsible party (PRP) refuses to pay the expenses of cleaning up a toxic site, the EPA may a. bring a criminal action and have the PRP jailed for up to ten years b. bring a civil action and be awarded three times the actual cost of the cleanup c. bring an administrative action and be awarded the actual cost of the cleanup, plus court costs d. have no legal recourse
B
If a tenant remains in possession of leased property after the expiration of the lease term, without paying rent and without the landlord's consent, what is the tenant's status? a. tenant at will b. trespasser c. periodic tenant d. freehold tenant
B
In terms of real estate investment, another name for depreciation is a. leverage b. cost recovery c. liquidity d. intrinsic value
B
Parties to lending agreements are referred to by different terms. Which of these refers to the same party? a. borrower = beneficiary b. borrower = mortgagor c. trustee = borrower d. trustor = mortgagee
B
The Homeowner's Protection Act of 1998 (HPA) requires that the lender automatically a. lower the interest rate on a mortgage b. terminate the private mortgage insurance payment if the borrower has accrued at least 22% equity in the home c. provide for a home equity line of credit d. allow for refinancing terms if requested by the borrower
B
The principle of value that is the interaction of supply and demand is called a. anticipation b. competition c. conformity d. contribution
B
What causes mold problems in buildings? a. insects b. chronic moisture problems c. fiberglass building materials d. air pollution
B
What is the purpose of an operating budget for a property manager? a. it documents the month's actual income and expenses b. it is a guide for the property's financial performance in the future c. it presents the current cash flows in a standardized format d. it lists the assets, liabilities, and equity of the investment property
B
When an area was rezoned as residential, a store was grandfathered in and allowed to continue business. This is an example of a. a variance b. nonconforming use c. a conditional use permit d. an amendment
B
Which of these approaches is given the greatest weight in reconciling the appraised value of a two bedroom, owner-occupied home? a. income approach b. sales comparison approach c. cost approach d. market value approach
B
Why is mold a serious environmental problem in buildings? a. it causes stains and a fuzzy growth on walls b. it destroys material it grows on and causes health problems for occupants c. it has an unpleasant odor d. it produces spores that can spoil food
B
What will be the amount of commission paid to the cooperating broker? Sell price was $360,000 at 6% split 50/50 a. $8750 b. $10,500 c. $17,500 d. $21,000
B $10,500 - 360000 x .06
What are the prorated real estate taxes to be charged to the buyer? Closing is Oct 15th. Taxes prepaid 2900 a. $604.20 b. $611.78 c. $690.67 d. $728.30
B $611.78 - 2900/365 x 77 days
An apartment building has $65,000 in potential gross annual income. The vacancy rate is estimated at 5%, total operating expenses are $29,000, and the capitalization rate is 9%. Using the income approach, what is the value of the building? a. $324,773 b. $363,889 c. $372,895 d. $392,367
B. Gross income - vacancy and rent losses - operating expenses = net operating income 65,000 x 5% = 3250; 65,000 -3250-29,000 = 32,750 32750 / 9% = 363,889
A 16 year old female applied for a conventional loan in order to purchase a condominium. The lender denied the application, citing the applicant's age as the reason for the denial. Which of these is TRUE? a. The lender violated the ECOA because the applicant is female and sex cannot be a lending consideration b. The lender violated the ECOA because lending decisions cannot be based on age c. the lender lawfully denied the application because the applicant was under 18 and therefore was too young to legally sign a contract d. none of these are true
C
A company was moving from one part of the city to another. During the move, a truck carrying computer equipment worth more than $250,000 accidentally ended up in a river, and the equipment was destroyed. Fortunately, the company was insured under several policies. The policy that would most likely cover the computer equipment during the move from one facility to another is a a. consequential loss, use, and occupancy policy b. casualty policy c. contents and personal property policy d. liability policy
C
A house has been on the market for several months because most buyers do not want to walk through the master bedroom to reach another bedroom in the back. This floor plan is an example of a. regression b. economic obsolescence c. functional obsolescence d. physical deterioration
C
A landlord comes to a tenant's apartment on a daily basis "to make sure everything is okay" or to "make repairs". The apartment, however, is not in need of any repairs. The landlord generally lets himself into the apartment with his spare key. Which of these is TRUE? a. the landlord has the right to enter property that he owns b. the landlord may only enter a tenant's apartment if the tenant is behind on paying rent c. the landlord is violating the covenant of quiet enjoyment d. the landlord is creating a tenancy at sufferance
C
A man goes all over the country buying large tracts of vacant land, splitting them into smaller parcels, and building identical communities of single family ranch style homes surrounding a central shopping center. He sells the homes to residents and leases space in the shopping center to merchants. The man is a. a developer only b. a subdivider only c. both a developer and subdivider d. an assembler
C
A man owns a fully occupied rental apartment building. If he sells the apartment building to a woman, how will the tenants' security deposits be treated at closing? a. credit man, debit woman b. debit both man and woman c. credit woman, debit man d. none of these
C
A man rented a house from a landlord. During the lease term, the man moved out of the state without telling the landlord. The man assigned the lease to a woman, who failed to make any rental payments. In this situation, which of these statements is TRUE? a. The man has no obligation to the landlord because the lease was assigned, not sublet b. the woman has no obligation to the landlord because her lease agreement is with the man c. the man is still liable to the landlord for the outstanding rent because the landlord did not release the man when the lease was assigned to the woman d. the man is still liable to the landlord because his arrangement with the woman as described is a sublease, not an assignment
C
A man rents an apartment under a two year written lease from a landlord. Three months after signing for lease, the man is transferred to another country for a year. During this period, he leases the apartment to a woman. The woman mails monthly rent checks to the man, who continues to make monthly rental payments to the landlord. In this situation, the woman has a a. lease b. tenancy at will c. sublease d. periodic tenancy
C
A property manager's first responsibility to the owner should be to a. keep the building's occupancy rate at 100% b. report all day to day financial and operating decisions to the owner on a regular basis c. realize the highest return possible consistent with the owner's instructions d. ensure that the rental rates are below market average
C
A seller accepts an offer on her home, which was built in 1892. Which of these statements about lead based paint is FALSE? a. the seller must attach a lead based paint disclosure statement to the sales contract b. if the seller is aware of any lead based paint on the premises, she must disclose that fact to the buyer c. if the buyer requests a lead based paint inspection, the seller has ten days in which to obtain one at her own expense d. the buyer is entitled to receive a pamphlet that describes the hazards posed by lead based paint
C
A subdivision built in 1980 covenants, conditions, and restrictions (CC&Rs) in the deeds for all properties. One covenant bans "all outdoor structures designed for the storage of equipment or as habitations for any animals". In 2008, a resident built a tool shed and a dog house. The neighbors took no action for six years, but in 2014 they want the shed and doghouse destroyed. Do the neighbors have any recourse? a. yes, they can go to court and sue for monetary damages for violating the covenant b. yes, they can go to court and be awarded injunctive relief c. no, under the doctrine of laches, the neighbors lost the right to enforce the restriction due to their delay in asserting it d. no, covenants such as this are usually considered to be unenforceable restrictions on the free transfer of property
C
A woman signs a lease to rent an apartment. Her lease runs from Oct 1 until Nov 1 of the following year. A man signs a two year lease to rent an apartment in a new building that will be ready for occupancy in 15 months. Which of these factors must be in writing to satisfy the statute of frauds? a. the woman's only b. the man's only c. both the man's and the woman's d. neither the man's nor the woman's
C
A woman was the owner of a parcel of property. When she defaulted on her loan, the trustee immediately sold the property to recover the debt. The trustee acted under the terms of the security instrument. Based on these facts, which of these statements is TRUE? a. the exercise of this power of sale clause is an example of strict foreclosure b. the trustee's sale of the property was illegal unless the woman's state permits a so-called friendly foreclosure c. the exercise of this power of sale clause is an example of nonjudicial foreclosure d. the woman could have exercised her statutory right of redemption at any time prior to the trustee's sale of the property
C
A woman would like to operate a business in her home, but she lives in an area zoned for residential use only. What should she do? a. request that the zoning board declare her home to be a nonconforming use b. ask a court to grant an injunction agaisnt the zoning board c. see a conditional use permit from the zoning board, if it is defined as allowable d. apply to the zoning board for a variance
C
Air pollution from increased automobile traffic near a building with ornate exterior decoration has dissolved much of the intricate detail work. The cost of restoring the front of the building is roughly five times the building's present value. These facts describe a. curable external obsolescence b. incurable functional obsolescence c. incurable physical deterioration d. curable external deterioration
C
All of these items are usually prorated at closing EXCEPT a. prepaid general real estate taxes b. interest on an assumed loan c. appraisal fees d. rents collected in advance
C
All of these should be included in a written management agreement EXCEPT a. a list of the manager's duties and responsibilities b. statement of the owner's purpose c. a statement identifying the manager's creditors d. an allocation of costs
C
Any additional capital or personal property included with a real property transaction to even out the value of a property exchange is called a. cost recovery b. a REIT c. boot d. equity build up
C
Homeowners may deduct which of these from their gross income? a. interest paid on overdue real estate taxes b. balloon payments c. loan discount points and loan prepayment penalties d. IRA penalties
C
How can tenants insure their personal belongings in apartments they rent? a. pay an extra fee so they are added to their landlord's commercial insurance b. obtain a surety bond c. obtain HO-4 or renter's insurance d. obtain errors and omission (E&O) insurance
C
How is earnest money treated if the buyer does not default and shows up for closing? a. credit seller b. debit buyer c. credit buyer d. debit seller
C
In 1967, a man served for six months on active duty in Vietnam. In 1998, he was killed in a skiing accident. His widow wishes to use the man's life insurance money to make a down payment on a condominium and believes she is entitled to a VA guaranteed loan. Is she correct? a. Yes, the unremarried spouse of a qualified veteran is entitled to a VA guaranteed loan b. Yes, whether or not she remarried, the man's widow is entitled to the same VA benefits c. No, the man's death was not service related d. No, the man did not meet the time in service criteria for qualified veterans
C
Individuals have suffered all of these health problems due to exposure to formaldehyde EXCEPT a. asthma b. eye irritations c. mold infections d. a burning sensation in the throat
C
Lenders charge a loan origination fee to a. guard against charges of usury b. cover the losses involved if the borrower repays the loan before the end of the loan term c. cover the expenses involved in generating the loan d. guard against losses in the event of a short sale
C
One afternoon, a client calls a real estate broker. "My lender just told me that my note and mortgage is a negotiable instrument," says the client. "What does that mean?" Which of these would be the broker's BEST response? a. That's great! It means the lender is willing to negotiate on the interest rate b. Oh no! That means the mortgage can't be assumed by the next person you sell to c. Don't worry. That means the mortgage can be sold by the lender, but you're not affected d. Uh oh! That means we have to go back to the sellers and ask them to pay the points
C
One objective of investing in income property is to generate spendable income, also called a. appreciation b. basis c. cash flow d. pyramiding
C
One state is a lien theory state. A buyer purchases property from a seller and gives him a mortgage as part of the purchase price. Therefore, the buyer is the borrower, and the seller is the lender. Which of these statements is FALSE? a. The buyer retains equitable title to the property b. if the buyer defaults on the loan, the seller must undergo a formal foreclosure proceeding to recover the security c. the buyer has given legal title to the seller d. the seller has only a lien interest in the property
C
One way a borrower can obtain a conventional mortgage loan with a lower down payment than 20% of the purchase price is by a. obtaining a package loan b. obtaining a blanket loan c. obtaining private mortgage insurance d. obtaining permission from the FDIC
C
The Closing Disclosure must be provided to the consumer how many business days before the loan is closed? a. one day b. two day c. three day d. five day
C
The Federal Deposit Insurance Corporation (FDIC) does which of these? a. Administers Freddie Mac and Ginnie Mae b. Administers Freddie Mac only c. Insures deposits in insured institutions up to $250,000 per depositor, per account d. services loans
C
The decision whether to buy or rent should involve consideration of a. whether or not the property is located in a title theory state b. the terms of the security agreement c. housing affordability and current mortgage interest rates d. the availability of a reverse mortgage
C
The expiration date of a one year lease is Sept. 30. On July 1, the house is sold to a family that wants to live in the rental property. Assuming the lease does not include a sale clause, how soon can they move in? a. July 1, present year b. July 1, next year c. October 1, present year d. December 31, present year
C
The real estate financing market is comprised of a. the primary and secondary mortgage markets b. Fannie Mae and Ginnie Mae c. the primary and secondary mortgage markets, plus government influences such as the Federal Reserve system d. non of these
C
What does private mortgage insurance cover? a. pays the lender inf the borrower dies b. reimburses the cosigner if the borrower defaults c. protects the top 20 to 30% of the loan against borrower default d. pays the borrower if the borrower loses the house to a title claim
C
When a landowner leases unimproved land to a tenant, who agrees to erect a building on the land, the lease is usually called. a. a lease purchase b. a gross lease c. a ground lease d. an improvement lease
C
Where in the United States does radon occur? a. mostly in the western states b. mostly in the warm southern and south-western regions c. in every state in the US d. only in large urban areas
C
Which of these BEST defines density zoning? a. the mandatory use of clustering b. the average number of units in a development c. a restriction on the average number of houses per acre d. a restriction on the average number of acres per parcel
C
Which of these concepts applies to every appraisal? a. diminishing returns b. plottage c. highest and best use d. assemblage
C
Which of these is a source of polychlorinated biphenyls (PCBs)? a. plywood and particle board b. small home appliances, such as hair dryers or food processors c. caulking compounds d. computers
C
Which of these is an advantage of investing in a real estate investment trust (REIT)? a. direct ownership of real estate b. at least 90% of the income must come from real estate c. access to the same tax benefits as mutual fund investors d. income taxed at corporate rates
C
Which of these is an example of corrective maintenance? a. seasonal recharge of refrigerant in an air conditioning unit b. picking up litter in common areas c. repairing a leaking water heater d. moving a partition wall to make a larger office
C
Which of these may lawfully be used as part of a loan application evaluation process? a. the applicant's religious beliefs b. the fact that the borrower is over 40 years old c. a credit score d. none of these
C
Which of these would disqualify someone from claiming innocent landowner immunity under the Superfund Amendments and Reauthorization Act (SARA)? a. the pollution was caused by a third party b. a landowner exercised due care when the property was purchaed c. a landowner had only constructive knowledge of the damage d. a landowner took reasonable precautions in the exercise of ownership rights
C
Which of these formulas is incorrect for the income approach? a. income/value = rate b. income/rate = value c. value/rate = income d. value x rate = income
C - triangle - Income on top, rate to left, value to right
A buyer is purchasing a house from a seller. The single family home is subject to an existing 30 yr mortgage of $286,500 at a fixed rate of 6%. Under the terms of the sales contract, the buyer will assume the seller's mortgage at 6% interest and pay the federally insured lender's assumption fee of $100. In addition, the seller will assist the buyer by taking back a purchase money mortgage in the amount of $25,000 at 8% interest. Is this transaction subject to RESPA? a. No, because this transaction involves a purchase money mortgage taken back by the seller b. No, because the terms of the assumed loan were not changed c. Yes, because the seller is taking back a purchase money mortgage at an interest rate higher than that charged for the assumed loan d. Yes, because the lender's fee on the assumed loan is more than $50
D
A city passed a zoning ordinance that prohibits all commercial structures over 30 feet high. A man wants to build an office building that will be 45 feet high. In order to obtain permission for the building, the man may apply for a a. nonconforming use permit b. zoning permit c. conditional use permit d. variance or zoning change
D
A man considered having a new garage built and talked about the project with a contractor. In April, while the man was on vacation, the contractor began building the garage according to the main's specifications. Work was complete by the end of May. In June, the man returned from vacation and refused to pay for the garage. The contractor decided to file a mechanic's lien in July. Is the contractor entitled to a lien? a. Yes, because the garage was constructed according to the man's specifications b. Yes, because the garage is not a part of an owner occupied residence c. No, because notice of the lien should have been filed in May, when the work was completed d. No, because there was no express or implied contract between the man and the contractor
D
A seller would be responsible for providing all of these items EXCEPT a. documents necessary to clear any clouds on the title b. affidavits of title c. the deed d. preparation of mortgage and note
D
A state delegates zoning powers to a municipality through a. the Interstate Land Sales Full Disclosure Act b. eminent domain c. a comprehensive plan d. an enabling act
D
A tenant lives in an apartment building owned by a landlord. Vandals break into the building and destroy the central AC system. The tenant's apartment becomes uncomfortably warm. The next day, the tenant sues the landlord for constructive eviction. In this situation, will the tenant win? a. Yes, if the tenant's lease promises that the apartment will be air conditioned b. Yes, to claim constructive eviction, it is not necessary that the condition be the result of the landlord's personal actions c. No, to claim constructive eviction, the tenant must prove that the premises are uninhabitable d. No, the premises are not unusable, the condition was not due to the landlord's conscious neglect, and the tenant has not abandoned the apartment
D
A tenant signed a 1 year lease with a landlord on April 10. On the following March 1, the landlord asked the tenant whether the lease would be renewed. The tenant did not respond but was still in the apartment on April 11. What can the landlord do? a. the landlord must initiate eviction proceedings within the first one month rental period b. The landlord cannot evict the tenant; because the tenant remained in possession of the premises, the lease has been automatically renewed for an additional year c. if the tenant offers a rent check, the landlord must accept it and the tenant is entitled to a renewal of the one year lease d. the landlord may either evict the holdover tenant or accept a rent check, creating a holdover or periodic tenancy
D
A woman rents an apartment from a man under a one year written lease. The expiration date of the lease is May 1. How much notice must the man give the woman to recover possession when the lease expires? a. one week b. 30 days c. 60 days d. none
D
After a foreclosure sale, what responsibility does the purchaser have for the mortgage and any junior liens? a. the purchaser pays off the mortgage after the sale, but the junior lienholders receive nothing b. the mortgage holder receives funds from the sale, but the purchaser must pay off the junior lienholders to obtain title c. the purchaser must pay off both the mortgage and junior lienholders after the sale d. the purchaser has no responsibility because the purchaser receives the property title without the mortgage and junior liens
D
All of these are roles of the Federal Reserve System EXCEPT a. help counteract inflationary trends b. create a favorable economic climate c. maintain sound credit conditions d. make a direct loans to buyers
D
All of these reflect basic principles of value EXCEPT a. anticipation and conformity b. competition and plottage c. change d. financing concessions
D
An empty lot is located in a neighborhood of single family homes. It is the only empty lot in this well maintained neighborhood. A busy street with many stores is located three blocks away. An industrial area is about six blocks away. What is the probable highest and best use of this lot? a. store b. factory c. parking lot d single family home
D
An increase in the amount of money in circulation is called a. stagflation b. intrinsic value c. adjusted cash flow d. inflation
D
An owner is considering installing a below ground swimming pool, which may cost many thousands of dollars to build. Before he starts, he should consider the concept of a. change b. competition with the neighbors c. conformity within the neighborhood d. contribution
D
For a REMIC, the asset test means a. funds to buy into the REMIC must come from a previous real estate investment b. investors' interests in the REMIC may consist of only one class of regular interests c. investors are not allowed to hold residual interests in a REMIC d. almost all assets in the REMIC must be qualified mortgages and permitted investments
D
In February, a homeowner contracted with a general contractor to have his billiard room converted to a sauna, but he never paid for the work. The homeowner stopped making mortgage payments to his mortgage company in June. The owner is two years delinquent in property taxes to the country. The state gives mechanics' liens priority. If all of these creditors obtain judgments against the owner in November, what will be the priority of their liens (first to last)? a. contractor - mortgage company - county b. county - mortgage company - contractor c. contractor - county - mortgage company d. county - contractor - mortgage company
D
Lead is commonly found in all of these EXCEPT a. soldered water pipes b. aklyd oil based paints c. soil around industrial sites d. insulating material
D
Of these, a high vacancy rate MOST likely indicates a. rental rates are too low b. the property is attractive c. building management is effective and responsive d. an undesirable property
D
On which type of loan can the borrower prepay without penalty? a. loans sold to Fannie Mae and Freddie Mac b. FHA loans c. VA loans d. All of these
D
One way that property managers meet the goals of ECOA is by a. disqualifying tenant applicants on the basis of receiving welfare payments b. not evaluating certain tenant applicants through the use of credit reports c. establishing that certain buildings do not allow children as residents d. making sure to use the same lease application for every applicant
D
Since 2002, a real estate broker has had an understanding with two of the five mortgage lenders in town. She recommends only those two lenders to her clients and doesn't tell clients about any other lenders. In return, the recommended lenders pay for the vacations the broker offers her salespeople as rewards for high performance. Based on these facts, which of these statements is TRUE? a. The broker is not doing anything illegal b. because this arrangement has been in existence for more than 10 years, it is exempt from RESPA c. This is a permissible controlled business arrangement under RESPA because the broker is not paid a fee for the recommendations d. the broker's arrangement with the lenders is an illegal kickback under RESPA
D
The property manager's relationship with the owner is most similar to that of a a. tenant with a landlord b. cashier with the owner of a store c. stockholder with the board of directors of a corporation d. salesperson with his or her broker
D
Two years ago, a woman rented a parcel of property to a man. The agreement stated only that the man agreed to pay the woman $500 per month. What type of tenancy does the man have? a. holdover b. at sufferance c. for years d. periodic
D
Under the ADA, existing barriers MUST be removed a. in all public buildings by the end of 2015 b. only on request from a person with a disability c. even though reasonable alternative accommodation is more practical d. when removal may be accomplished in a readily achievable manner
D
What is the purpose of the Brownfields Law enacted in 2002? a. it restores wilderness and agricultural areas damaged by toxic waste b. it is specifically dedicated to cleaning up PCB spills and dumps c. it establishes incinerators to destroy UFFI, DDT, and other persistent chemicals d. it distributes funds to clean up polluted industrial sites so they can be restored to productive use
D
What must a landlord do before commencing a lawsuit for actual eviction? a. notify the sheriff b. contract with a company to forcibly remove the tenant and possessions c. obtain a judgement from the court d. serve notice on the tenant
D
Which of these has been proven to pose a health hazard? a. asbestos b. lead based paint c. radon d. all of these
D
Which of these is NOT an essential assumption in determining market value? a. The buyer and seller must be unrelated b. the payment must be in cash or its equivalent c. the buyer and seller must be acting without excessive pressure d. the property must be on the market for at least three months
D
Which of these is the byproduct of fuel combustion that my result in death if such equipment is not properly vented? a. radon b. lead c. urea formaldehyde foam insulation d. carbon monoxide
D
Zoning ordinances affect all of these EXCEPT a. lot sizes b. building heights c. style and appearance of buildings d. racial composition of neighborhood
D
What is the annual rent per square foot for a 30 ft x 40 ft property that rents for $2950 per month? a. $1.20 b. $2.46 c. $24.65 d. $29.50
D - 2950 x 12 =35400 30 x 40 = 1200 35400/1200 = 29.5
What amount of the escrow fee will the buyer pay? Escrow fee was $168 $56 $84 $160 $168
Escrow is split - $84
Which of these makes direct loans to qualified borrowers? VA FSA Fannie Mae FHA
FSA
Lenders that make conventional loans to sell in the secondary mortgage market follow the standardized forms and guidelines issued by Fannie Mae and the FSA the FHA Ginnie Mae Freddie Mac
Freddie Mac
To give notice of a potential claim against the property and to establish priority, a creditor may file a lis pendens an attachment a general lien a specific lien
a lis pendens
A man and a woman are married, 65 years old, and retired. They have almost $800,000 in equity in their home, but they don't have enough cash to travel as they have always dreamed of doing. The couple should consider which of these financing alternatives? novation an adjustable rate mortgage a reverse mortgage a growing equity mortgage
a reverse mortgage
The Equal Credit Opportunity Act prohibits discrimination in the lending process based on race religion marital status all of these
all of these
A mortgage document contains the clause: "In the event of Borrower's default under the terms of this Agreement, Lender may declare the entire unpaid balance of the debt due and payable immediately." This clause is called a hypothecation clause an acceleration clause a defeasance clause a release clause
an acceleration clause
A woman plans to build a large house in a neighborhood of smaller homes, so she purchases three neighboring lots from their three owners. What is the term for the woman's activity? substitution plottage progression assemblage
assemblage
What type of plan does a property manager implement to manage renters who do NOT pay their rent in a timely way? eviction plan collection plan foreclosure plan cash flow plan
collection plan
The principle that maximum value is realized when land use is in harmony with surrounding standards is contribution conformity highest and best use competition
conformity
In which approach to value are the square foot method, the unit in place method and the quantity survey method used? sales comparison approach cost approach income approach reconciliation approach
cost approach
When appraising a new home in which no one has ever lived, an appraiser will likely use the sales comparison approach income approach cost approach GRM
cost approach
The primary mortgage market lenders that have most recently branched out into making mortgage loans are credit unions endowment funds insurance companies savings associations
credit unions
A borrower defaulted on his mortgage loan, leaving an unpaid balance of $95,000. After receiving only $85,000 from the sale of the property, the lender filed for a lis pendens release deed satisfaction piece deficiency judgment
deficiency judgment
The difference between the interest rate that the lender charges and what the investor demands can be made up by charging discount points loan origination fees satisfaction fees underwriting fees
discount points
An appraiser's role is to set price average value determine value estimate value
estimate value
Which of these is a general, statutory, and involuntary lien on both real and personal property? federal tax lien mechanic's lien special assessment consumer loan lien
federal tax lien
When a deed of trust is the security instrument, which party usually chooses the trustee? borrower lender devisee county government
lender
Who owns the building that is erected on land that has a ground lease? testator lessor lessee trustee
lessee
All of these are liens against real property EXCEPT mortgage real estate taxes lis pendens home improvement loan of a deceased property owner
lis pendens
All of these are lenders in the primary mortgage market EXCEPT endowment funds mortgage brokers insurance companies credit unions
mortgage brokers
Which of these is an example of specific, voluntary lien? decedent's debts IRS lens mortgage liens corporate franchise liens
mortgage liens
A deed of trust involves all of these terms EXCEPT lender borrower trustee mortgagor
mortgagor
A woman is purchasing a fully furnished condominium unit. In this situation, the woman would be MOST likely to use a package loan blanket loan wraparound loan buydown
package loan
The Equal Credit Opportunity Act prohibits lenders from discrimination against credit applicants on the basis of all these factors EXCEPT religion past credit history income from public assistance marital status
past credit history
What helps lenders reduce the risk on a conventional mortgage loan with a high LTV? private mortgage insurance flood insurance sale and leaseback arrangement home equity
private mortgage insurance
A woman buys a small house in a highly desirable neighborhood consisting of large homes and pays $390,000. A man buys a nearly identical house in a neighborhood of similarly sized homes and pays $290,000. What economic principle BEST describes the reason why the woman paid more than the man? plottage substitution regression progression
progression
A document that indicates that a loan has been made is called a promissory note mortgage deed deed of trust satisfaction
promissory note
All of these liens must be recorded to be effective EXCEPT money judgment mechanic's lien real estate tax lien voluntary lien
real estate tax lien
Generally, in a court ordered sale, which of these is paid first? first mortgage mechanics liens child support liens real estate taxes
real estate taxes
Which appraisal approach would be BEST to appraise a 25 year old owner occupied house in a 30 year year old neighborhood? sales comparison income approach cost approach GRM
sales comparison
The month, a man made the last payment on a mortgage loan secured by a woman. The man's lender must execute a release deed promissory note possessory note satisfaction of mortgage
satisfaction of mortgage
A town wants to construct new concrete curbs in a residential neighborhood. How will the town most likely raise the money necessary for the improvement? ad valorem tax special assessment equalized assessment utility lien
special assessment
Which of these characteristics apply to a real estate tax lien? specific, involuntary lien specific, voluntary lien general, involuntary lien general, voluntary lien
specific, involuntary lien
Who is responsible for paying the broker or the broker's salesperson when one of them uses a computerized loan origination system to take the loan application from a borrower? the lender the borrower the seller bother the lender and the borrower
the borrower
What is the term that refers to a lender charging an interest rate that is higher than that permitted by law? alienation usury hypothecation defeasance
usury
Which of these would permit a law enforcement officer to seize and sell a debtor's property? lis pendes satisfaction of judgment writ of execution writ of attachment
writ of execution
