Colibri Practice Test

Brokers can keep $xk in a sales escrow account but keep $xk in a property management escrow account.

$1k and $5k

A homestead exemption in Florida is available to those who qualify and file documents making the Florida home a primary residence. The base homestead exemption is:

$25,000 The base homestead exemption is $25,000. There is an additional $25,000 available for qualified property owners; however, the additional $25,000 does NOT apply to school taxes.

If John borrows $620,000 for his mortgage at 4.5% interest, what amount of interest will John pay in the first year of the loan?

$27,900

A property was purchased two years ago for $300,000; the investor just sold the property for $379,000. What was the percentage of profit in relation to the cost?

$379,000/$300,000 = 1.263 tells you the value increase percentage. 1.263 is a 126.3% increase. The 1 in 1.263 represents the original cost. Subtract one, and the remaining profit is .263 or 26.3%

An investor is looking at a four-plex that is priced at $500,000 and has a 7% cap rate. The investor told the sales associate to write up the offer using a 9% cap rate. To the nearest dollar, what is the investor willing to pay?

$388,889 $500,000 X .07 = $35,000. NOI = rate X value. To find the value use NOI divided by the desired Cap rate. $35,000/.09 =$388,889.

A licensee is working with an investor who is interested in purchasing a small apartment complex. The property has six units rented at $1100 per month. If the cap rate is 7% and Net Operating Income (NOI) is $38,500 - what is the price of the property?

$550,000

A buyer is closing with a purchase price of $232,000 and a down payment of 10%. He will pay the doc stamps on the note and the intangible tax on the mortgage. What are the transfer tax charges to the buyer?

$731 for the note; $417.60 for the mortgage Florida transfer taxes at closing are 70 cents per 100 or fraction thereof. The note is $232,000 less 10% = $208,800/100 = 2088 one hundreds X .70 = $730.80. This is rounded to $731 (fraction thereof). The intangible tax on the mortgage is: $208,800 X .002 = $417.60.

The Government Rectangular Survey Method numbers sections within a township from:

1-36 beginning in the upper NE corner of the township and continuing in a snake-like pattern.

John is a sales associate who has complaints against him for making false statements about the property and for giving advice about the purchase contract. This is the third time these same violations have been investigated. If John is found guilty of violating these two practices at the formal hearing, the maximum fine John can face is:

10,000 For second and subsequent violations, $2500 to $5000 fine and suspension for up to six years or revocation. The fine is $5000 maximum for each offense.

If the only active broker of a brokerage corporation dies how soon should the vacancy be filled?

14 days

According to Florida law, if the landlord does NOT intend to keep any of the tenant's security deposit, the landlord must return the security deposit to the tenant within:

15 days.

According to Florida law, if the landlord does NOT intend to keep any of the tenant's security deposit, the landlord must return the security deposit to the tenant within:

15 days. When the tenant vacates, and the occupancy has terminated, the landlord has 15 days to return the deposits unless the landlord wishes to make a claim on the money, then he has 30 days to make a claim after the tenant vacates the property.

Recovery fund will cover up to

150k

A licensee has been notified that there is a formal complaint against him as a result of findings by the probable cause panel. How long does the licensee have to answer the complaint?

20 days The licensee must answer the complaint and has the choice between a formal or informal hearing. The answer must be filed within 20 days of receipt of the notice.

FREC administrative penalties must be paid in X days

30

How long does a prospective tenant have to request a refund from a rental list and how much of a refund is available?

30 days and a 75% refund

The NW 1/4 of section 16 and the NE 1/4 of section 17 contain how many acres?

320

A broker must retain one legible copy of a rescinded or cancelled contract and any brokerage relationship disclosures ( Chapter 475 FS) for how many years?

5

The max amount of prison time issued in 2nd degree misdemeanor violation of law 475

60 days

How many steps are involved in response to complaints against license law

7

In all Florida counties except Miami-Dade, the tax rate imposed on documents subject to tax is Reference: Section 201.02(1)(a), Florida Statutes (F.S.)

70 cents on each $100 or portion thereof of the total consideration.

The amount of time to complete mediation on matters of an EDO claim

90 days

A broker's records must be available for inspection during business hours. Who inspects the records?

A DBPR employee or authorized representative All business records must be available for inspection during business hours; inspections are done by the DBPR investigator or an authorized representative.

Which appraisal approach to value would be most suitable for a waterfront home with a high-end remodel on a lot that cannot be duplicated, in an area with many other remodels and sales?

A market data or sales comparison approach The market data approach compares like property and makes adjustments based on the date of sale, physical features, and location. The income approach evaluates income and expenses. Where the cost approach is used for properties where costs to duplicate can be calculated, and there are no comparables. In this case, there are like properties.

Gross Income Multiplier (GIM)

A method of appraising income-producing property based on a multiple of the annual gross income; also called a gross rent multiplier. Formula - Sale price / Income

Which phrase below describes the meaning of the word "contract" expressed in simple terms?

A promise to do or not to do something An agreement between two parties, basically one promise in exchange for another. This is sometimes described as "offer and acceptance."

8 functions of real estate: ABARSALE

Advertise, Buy, Appraise, Rent, Sell, Auction, Lease, Exchange

The broker as teh escrow agent must account to whom?

All interested parties, attorney in fact, seller, buyer, finance company, closing agent etc.

Which of the statements listed below regarding the earnest money deposit (EMD) is correct?

An earnest money deposit is NOT required to create a valid contract A contract is an exchange of promises - a real estate contract must have competent parties, offer acceptance, consideration, have a legal purpose, and be in writing and signed. Earnest money is not a requirement, nor does it make the agreement valid.

Which of the following estate has a definite ending date?

An estate for years In an estate for years, property is conveyed by lease for a definite period of time. Both lessor and less know when payment is due and when the lease terminates.

To be a part of the FREC

Appointed by the governor, confirmed by the senate - 2 consumers with no license - licensed 4 brokers active licenses of at least 5 years - licensed 1 sales associate for at least 2 years - 1 of the 7 must be 60 or older

F455

DBPR portion of the law

Property is located next to a busy freeway; semi-trucks use the freeway all night long. After two years on the market, the seller reduced his price by 25%. Which loss of value has occurred?

Economic or external obsolescence Economic or external obsolescence is a loss of value outside of the perimeter boundary of the property, beyond the owner's control, and almost always incurable.

Joint Tenants

Equal possession interests, title taken at the same time, right of survivorship

Transaction Broker

Exercises limited confidentiality. Limited confidentiality must be waived in writing for the transaction broker to share anything. Limited confidentiality will prevent the broker from disclosing any information about the buyer or seller.

475.25 (1)(d)

Failure to account and deliver

A property owner conveys a life estate to her uncle and names her son as remainderman. On death of the uncle, the son will have what type of estate?

Fee simple absolute estate. The son holds a remainder interest in the property and will have a fee simple absolute estate upon the death of the life tenant.

Which items listed below determine if the payment will go up or down on an adjustable-rate mortgage?

Index and Margin An adjustable-rate mortgage is tied to an index (an economic indicator); when the index moves, the payment can change to protect the lender in a decreasing market. The lender is also allowed to add a profit margin to the index.

If an unlicensed person sells something and receives a commission, what action can the DBPR take?

Issue a an injunction or writ of mandamus that demands the unlicensed activity stop at once

John is a real estate licensee in Georgia (A state that has mutual Recognition with Florida), whereby he wishes to obtain a Florida real estate license. As long as John remains a Georgia resident, which of the following is an option for John when acquiring a Florida license?

John can pass a 40-question law exam and obtain the license The FREC enters into license recognition agreements with other states where licensing and education are similar. FREC will recognize the license from the other state and grant a Florida license if a 40 question law exam is passed. This agreement is called Mutual Recognition.

General Partnership requires

May be written, oral, or implied; however an intent to associate of 2 or more persons to conduct business is required.

Open Listing Gives

More than 1 broker an opportunity to bring a buyer even if the listing is signed. Other conditions must be present and fulfilled.

A broker may be licensed under how many trade names?

No more than 1 trade name.

Taxes and insurance are often prepaid at closing to establish the escrow account. On which page of the Closing Disclosure form will the buyer see an accounting of the escrow account set up?

Page two, under other costs On page two of the form, other costs are itemized for buyers and sellers. Taxes, prepaids, and initial escrow payment at closing - usually two months' worth, are paid by the buyer and shown on page 2.

Which of the items listed below is NOT a tax advantage of real estate ownership?

Property can depreciate Property can also go down in value which may leave the homeowner owing more than he borrowed. Property taxes and interest are deductible, and the capital gain exclusion benefits most homeowners when the primary residence is sold.

National Do Not Call Registry

Real estate associates may not call for sale by owner even if the sign in the yard contains the number if their number is on the registry. Real estate associates may contact customers with whom the've had an established relationship within 18 months after a transaction was concluded.

An individual who does not intend to engage actively in the real estate business, such as an officer of a real estate corporation does what?

Registers this information with the DBPR so that the information can be entered into the DRE's records

F475

Sales associates may never pay a comission to anyone (among many other things)

Buyer is not informed to title check or buy a title policy and an unsatisfied mortgage surfaces. The buyer can...

Sue the seller File a FREC Complaint Sue the broker for the loss

A title search for a property under contract has revealed several outstanding liens against the property. Which of the following liens has highest priority?

Tax liens have priority over previously recorded liens and over a special assessment which will also take priority over previously recorded liens. The priority of the other liens will be based on the dates they were recorded. Liens recorded first will have the first right to payment or priority.

Telephone consumer protection act of 1991

Telemarketers may not block their number and must state their name. Must call between 8am and 9 pm. And if a person who received a telephone solicitation asks not to be called again the name and number must be removed from all lists.

2 friends were deeded a property by name with no further explanation. What is their title status?

Tenants in common - when joint tenancy is not clearly stated in the deed, grantees take title as tenants in common to avoid the results of accidental joint tenancy. Tenants by entirety and community property owners are only available for married couples.

A mortgage is a legal contract with terms that benefit both the lender and the borrower. Which clause is a benefit to the borrower and NOT to the lender?

The Defeasance clause If the borrower defaults, the lender can call the balance due; the maintenance clause required the borrower to keep the property in good condition, and the alienation clause prevents the sale to another borrower. The defeasance clause requires the lender to record a document when the loan is paid - killing the lien.

Which clause in a deed defines the ownership taken by the grantee and clarifies the purpose of the deed?

The Habendum Clause Also known as the "to have and to hold" the Habendum Clause. This is the clause that describes the rights being transferred. Exceptions and reservations are included in this clause.

A buyer pruchased a property but did NOT record the deed.

The buyer's interest is not fully protected against third parties.

A sales associate is selling her own property "by owner".

The licensee should disclose the fact taht she holds a real state license at the first point of meaningful negotiations.

General Agency

The relationship to be assumed in florida. Possesses limited power.

How is the sales price reflected on the closing form for the buyer and the seller?

The sales price is a debit to the buyer and a credit to the seller The seller receives the sales price less adjustment at closings or debit. The buyer pays the sales price less adjustment for deposit and loans.

How is the sales price reflected on the closing form for the buyer and the seller?

The sales price is a debit to the buyer and a credit to the seller The sales price is a debit to the buyer and a credit to the seller

Jim, a licensee in Florida, moved to Georgia and retired. Before leaving Florida, Jim placed his real estate license on inactive status. What will happen if Jim doesn't renew the license after two years?

The status will change from voluntarily inactive to involuntarily inactive George must complete the requirements and renew the license, or his status will switch from voluntarily inactive to involuntarily inactive.

A licensed real estate sales associate and broker wish to open a new real estate brokerage firm as general partners

They may not do so. A sales associate or broker associate may not be a general partner in a partnership registered as a real estate broker.

If a sales associate wants to be an active licensee...

They must be registered from and work out of an office maintained and registered in the name of the broker-employer.

Corporation sole

Usually headed by a credible official who is empowered by an ecclesiastical organization. Title to property owned by a corporation sole descends to the successor in office and not to the heirs of the previous office holder.

Ostensible Partnership

When there is no intention to act as partners but the general impression of being partners exists. EX: Two Sole Proprietor brokers working in the same office not officially working together but appearing to be.

A mechanic's lien is a _____ type of lien

a specific lien as it affects a specific property and only that particular property.

A member of the US armed forces and their spouse is exempt from...

all renewal activity while on active duty and 6 months after

Nonconforming use permits

allow buildings/uses existing before zoning restrictions to continue

A deed and a real estate purchase agreement would not be considered valid without:

an adequate legal description. The property must be accurately described in any purchase agreement and deed, so there is no question about what is being transferred. In a deed, the legal description is in the premises clause.

A reversionary state exsists when

an estate reverts back to the owner upon the death of the life estate owner

The two voluntary forms of title transfer are:

by will and by deed. Voluntary alienation is a transfer willingly. There are only two ways: during the lifetime of the grantor, a deed is used; and if the owner is deceased, a will is used.

Licenses who have been inactive for more than 12 months but less than 24 are required to

complete 28 hours of commission prescribed education course

Single agency

contains term principle. Where the sales associate's loyalty is to the seller.

A closing is March 5 for a rental property with an annual tax bill of $2800. Calculate and show the debit and credits for the tax proration between the buyer and seller using the 365-day method, the day of closing belongs to the buyer.

debit seller $483.29; credit buyer $483.29 The purpose of proration is to assign the amount owed to the responsible party. The taxes will be paid by the buyer at the end of the year. The buyer needs money from the seller for the days that the seller owned. $2800/365 = $7.67 per day. Jan = 31 days, Feb. = 28 days and March = 4 day total 63 X $7.67 = $483.21 that the seller owes for the time he owned. NOTE: The amount taken from the seller is given to the buyer - it is the same amount. Use 3 decimal places and don't clear the calculator between steps.

bill of interpleader

escrow dispute remedy of interpleader (one of two dispute options). The Broker can deposit the funds in the court registry. The broker is then excused from the case and the disputing party is left to argue in court.

When one owns a condo, the type of ownership that exists is a:

fee simple interest with an undivided interest in common elements. A condominium is a hybrid form of ownership of multi-unit residential or commercial properties. It combines ownership of a fee simple interest in the airspace within a unit with ownership of an undivided share, as a tenant in common, of the entire property's common

If a broker decides to close a location and open a new location they are required to

file the closing with the DBPR. File a new application for the new location with the DBPR and pay the appropriate fee.

A title insurance policy protects against title defects ...

found after closing. The title commitment lists any defects found before closing and exclude them from coverage. Only defects after closing are covered.

The physical characteristics of real estate may be described as:

indestructible, unique, and immobile.

The physical characteristics of real estate may be described as:

indestructible, unique, and immobile. In theory, land does not move (immobile), no two pieces of property are alike (unique), and it is permanent (indestructible). Each property has only one legal description.

Trade name

legal name other than the person doing business

A mortgagee is a

lender

A real estate licesnsee found guilty of violating 475.42

may be a defendant in a civil action suite for damages and may have administrative penalties imposed upon him by the commission

A general partnership of 5 brokers

must be registered with the DBPR, and since all partners will be actively performing real esate, all partners must be licensed as active brokers

Full disclosure

owed by a single agent but not a transaction broker

The purpose of the owner's title policy is to protect the:

owner from forgery in the record and claims that may not have surfaced prior to closing. The owner's title policy is for the buyer and protects the buyer from unknown claims that may not have surfaced as of closing or from false items in the record.

475 and rule 61 (j) (2)

practicing beyond the scope of a sales associate is a violation of license law

When a cap rate used with income capitalization is high, the following relationship with sales price exists:

risk and cap rate are higher, the sales price is usually lower. Cap rate is likened to the risk factor when purchasing an investment property - a high cap rate indicates high risk, and often the sales price is lower.

475.42

speaks about the requirements of licensing before practicing for brokers and agents. Also receiving commissions without licenses.

a real estate broker is typically authorized by a principal to act as a

special agent to handle only a specific business transaction or to perform only a specific act

A farm owned by a married couple with right of survivorship is ....

tenancy by the entirety - community property and tenancy in common do not hold the right of survivorship

Broker Joe has a listing for a distressed seller. He finds a buyer for the property who enters into a contract for purchase. Ten-days prior to closing, the seller calls Joe to share that he has had to file for bankruptcy. This filing may:

terminate the contract. Bankruptcy is a court action - or operation of law that has the power to terminate existing contracts.

When a complaint is investigated by DBPR, it must be legally sufficient. Legally sufficient means:

that an alleged violation of a Florida Statute, FREC, or DBPR rule been submitted in writing. While anyone can file a complaint - the investigation will occur if it appears that a violation of chapter 475, a FREC rule, or a DBPR rule has occured.

Acceptance of post dated checks always requires

the consent of the principle.

Title is not considered transfered until

the deed is given to the purchaser

When a homeowner is delinquent on property taxes, the first step taken by the government in correcting the late payment is:

the delinquent taxpayer names are published in the local paper. Property taxes are delinquent on April first of the year following non-payment. A list of delinquent payers is published in a local county wide-newspaper.

possession prior to closing may only be given by

the seller or their attorney in fact

The secretary of the DBPR can issue a summary suspension if

they uncover something that confirm a broker is endangering the public during an investigation

John bought a waterfront lot with a setback requirement of 50 feet from the street. The lot is only 100 feet deep and drops off sharply at the water edge. John's architect tells him that they can build the dream house on the property if the setback were 35 feet. John applies to the city for a:

variance. For example, an owner mistakenly violates a setback requirement by 2 feet. His house is already constructed, and complying with the full setback now would be extremely expensive, if not impossible. The zoning board grants a variance on the grounds that compliance would cause an unreasonable hardship.