Comprehensive Review of Chapters 29 - 33

Which of the following would be fair and legal inducement?

A) A broker offering another broker a portion of the commission to sell a property B) A broker influencing an appraiser for a higher appraisal value C) A broker who is recruiting students on school grounds for employment with the broker D) A broker letting a friend use the broker's name to provide plumbing services for a discounted price Answer is.... A - A broker offering another broker a portion of the commission to sell a property

Which of the following is required to be disclosed in Indiana?

A) A client's motivation to sell a property B) All material facts about a property C) Property condition D) All material facts about the client Answer is... C - Property Condition

Which of the following statements is true?

A) A credit is available to all taxpayers based on their mortgage interest. B) Credits based on mortgage interest can be considered additional income. C) The higher the mortgage loan, the higher the mortgage interest credit rate. D) The maximum mortgage interest credit that can be claimed each year is $3,000. Answer is.... B - Credits based on mortgage interest can be considered additional income.

Which of the following is true?

A) A newly licensed broker is randomly assigned to a broker company by the Indiana Real Estate Commission. B) If a newly licensed broker chooses to be unassigned to a broker company, the broker must become a sole proprietorship. C) If a newly licensed broker transfers from one brokerage to another, the managing broker at the first brokerage is responsible for signing the reassignment application. D) The affiliated managing broker may deny any broker's transfer request. Answer is.... D - The affiliated managing broker may deny any broker's transfer request.

Which of the following statements is true?

A) A property condition disclosure is a good substitute for a property inspection. B) A property seller must submit the disclosure form to the buyer prior to accepting the buyer's offer to purchase. C) The buyer must receive and sign the property disclosure form prior to submitting an offer to purchase. D) A seller's failure to provide the buyer with a copy of the disclosure form after closing invalidates the transaction. Answer is... B

Which of the following statements is true?

A) A property owner is not required to disclose property defects that may impact the buyer's decision to purchase the property. B) A property owner is required to disclose if a former occupant had HIV. C) A property owner is not required to disclose mechanical system defects because the buyer should have a property inspection performed to find those. D) A property owner is required to disclose if an airport is near the property. Answer is.... A property owner is required to disclose if an airport is near the property.

Which of the following constitutes incompetent practice?

A) Accepting and disclosing a rebate for obtaining a listing B) Disclosing that the broker is acting as both broker and client in a transaction C) Guaranteeing future profits from the resale of a property D) Accepting and disclosing a direct profit on transaction expenditures Answer is... C - Guaranteeing future profits from the resale of a property

Which of the following statements is true?

A) Indiana licensure law requires managing brokers to develop an office policy and procedures manual. B) A policy and procedures manual must require employees to sign a written acknowledgement that they will follow the ethical standards of the company. C) A policy and procedures manual should cover all required meeting schedules for independent contractors. D) A policy and procedures manual could include the requirement for brokers to carry Errors and Omissions insurance. Answer is.... D - A policy and procedures manual could include the requirement for brokers to carry Errors and Omissions insurance.

Which of the following is FALSE regarding an employment agreement?

A) Only independent contractors need written employment agreements. B) The agreement must include how it is to be terminated. C) The agreement must cover the relationship status and level of supervision. D) The contract needs to be approved by an attorney. Answer is.... A - Only independent contractors need written employment agreements.

Which of the following is legal advertising?

A) Small apartment available to singles only B) Newly remodeled home near public park and shopping C) Cute house near Catholic church and school D) Condo for rent in Jewish neighborhood Answer is... B - Newly remodeled home near public park and shopping

Which of the following statements is true?

A) The Statements on Appraisal Standards show how appraisal standards are applied in specific situations. B) There are 10 current, active Standards included in USPAP. C) USPAP requires appraisers to act as advocates for homeowners obtaining an appraisal. D) Indiana will reject any new edition of USPAP if rule-making provisions of the law were not followed. Answer is... D - Indiana will reject any new edition of USPAP if rulemaking provisions of the law were not followed.

Which of the following statements is true?

A) The broker's license is designated as Managing Broker after completion of the managing broker education courses. B) The broker automatically becomes a managing broker once the broker's license has been designated as Managing Broker Eligible. C) To become a managing broker, a broker must be designated to the Commission as the managing broker responsible for the company and its brokers. D) To be a managing broker, a broker must have both the Managing Broker Eligible license designation and be designated to the Commission as the company's managing broker. Answer is.... D

The Taxpayer Relief Act reduced federal taxes in which of the following situations?

A) The top rate on capital gains was reduced for assets held at least 24 months. B) Exemptions were allowed related to the number of dependents claimed by the taxpayer. C) The annual limit for IRA contributions was increased. D) IRA earnings became tax free after 3 years. Answer is.... C - The annual limit for IRA contributions was increased.

A measurement of the purchase price plus the cost of capital improvements, minus expulsions, credits, or other amounts received is called?

Adjusted Basis

When Indiana adopted USPAP under Title 876, which of the following happened?

All references to standards 6 through 10 were deleted by Title 876.

Something negative or positive that helps bring about an action of a desired result is called...?

An inducement.

Indiana prohibits unlicensed assistants from...?

Canvassing for listings

When a homeowner sells his home for more than the original purchase price, the difference between the two prices is...?

Capital Gain

A property is considered psychologically affected if, on the property...?

Cocaine has been sold.

What agency was created by Dodd - Frank?

Consumer Financial Protection Bureau

Where does Indiana law require that evidence of a broker's current licensure be retained?

Displayed at the office where the broker conducts business.

If a managing broker dies...?

Each broker associated with the deceased managing broker becomes a managing broker until associated with another managing broker.

A policy and procedures manual should include only general employee or contractor responsibilities rather than detailed expectation because...?

Each employee and contractor will have an employee agreement that includes those details.

Under financial reform, what is a golden parachute?

Exorbitant benefits given to executives forced to leave the company.

Indiana law requires that all listing agreements include...?

Expiration date for the agreement.

Which of the following would prevent an individual from becoming licensed or certified as an appraiser in Indiana?

Failure to pay property taxes in full

In addition to regulating telemarketing calls, the TCPA also regulates the use of...?

Fax machines.

Depending on a home's location, a mortgage lender may require the borrow to carry...?

Flood Insurance

A closing statement must be retained by the brokerage...?

For at least 5 years.

To be a managing broker, the individual must...?

Have passed at least 24 hours of broker management education courses.

Which of the following is a true statement about the "80% rule" for homeowner's policies?

If insured for less than 80% of replacement cost, a home's coverage will include a deduction for depreciation.

the tax bracket into which an individual falls is based on...?

Income Level

A tax credit...?

Is subtracted from the tax owed.

Why should a brokerage provide initial training to a new broker?

It will be quicker and easier for the broker to adjust to the company.

John is selling his property through agent Tim. John's mother died in the home 2 years ago, and Tim knows this. Sue now wants to buy the home through her agent Connie. Neither Sue nor Connie know about John's mother's death in the home. If Sue finds out about the death in the home, she will not want to buy it. Who can be held liable for not telling Sue about the death?

John, if Sue asks about deaths in the house.

Which of the following is typically covered under a home warranty?

Major systems repairs

Indiana law requires ___________________ to maintain trust accounts to keep all funds belonging to others that have been provided in relation to a real estate transaction.

Managing Brokers

An unlicensed assistant may...?

Monitor Personnel Files

If it is determined that an affiliated broker is an employee of the managing broker rather than an independent contractor, the managing broker...?

Must withhold income and social security taxes from the employee's compensation.

Who is liable if a property owner fails to disclose a property defect the owner should have known about but did not?

No One

To qualify for the capital gain exclusion on a primary residence, the tax payer must...?

Not have used the exclusion on another home within the last 2 years.

A broker's responsibilities to a managing broker include...?

Obtaining and maintaining required insurance coverage.

Which of the following would not be handled by an Independent Insurance Agent?

Offering coverage from a company who only employs its own agents

If a homeowner wanted coverage for his home and all structures on the property as coverage in case a visitor is injured on his property, what type of policy should he buy?

Package

When must a closing statement be created?

Prior to closing

Which of the following laws requires that an individual's incorrect information be changed or removed?

Privacy Act

BPOs for federally regulated institutions require what type of license?

Real Estate Appraiser

A referral service company refers...?

Sellers to brokers

When a termite inspector is looking for indications of termites, which of the following would not be one of those indications?

Spider Webs

When a listing pays a portion of the earned commission to the broker who actually sells the property, this is called...?

Splitting the commission

A distressed property is one...?

That is under foreclosure.

Combining federally required mortgage disclosures into a single form to make costs and risks of the loan clear was a responsibility of what agency?

The Consumer Financial Protection Bureau

Which homeowners policy covers condominiums

The HO-6 policy is specific to condominiums and cooperatives. This policy does not cover the structure itself but does cover semi-permanent structures such as cabinets, carpeting, wallpaper, etc. It also covers personal property. The condominium association or cooperative would carry coverage for the actual structure.

Which homeowners policy covers older homes with replacement costs higher than the home's market value?

The HO-8 policy is for older homes with replacement costs higher than the home's market value. This policy pays to repair or replace damaged property with cheaper common construction materials and methods, referred to as functional replacement.

If an unlicensed assistant negotiates a commission on behalf of the broker and the broker knew about it...?

The broker is liable for the violation and can be penalized.

If the transaction does not close...?

The broker may disburse escrow funds in conjunction with notification to the involved parties.

The only person who can compensate a broker is...?

The broker's managing broker.

According to NAR, Internet advertising for real property or real estate services must include...?

The broker's name and affiliated brokerage.

One requirement of the "safe harbor" test that indicates that a broker is an independent contractor rather than an employee is...?

The individual's compensation is based on production, not hours worked.

If a broker transfers from one branch office to another within the same company...?

The managing broker must notify the Indiana Real Estate Commission of the transfer.

What will likely happen if a homeowner lets his or her homeowners insurance coverage lapse?

The mortgage lender will place coverage on the home.

How does a property inspector calculate the value of a property?

The property inspector does not calculate the property value.

A short sale is one where...?

The property sells for less than the outstanding loan balance.

What needs to happen to a property where illegal drug manufacturing is suspected?

The property should be investigated.

If more than one broker company is located at the same address...?

The same managing broker may manage all of the companies.

The standard deduction is not allowed in which of the following situations?

The taxpayer is filing an allowable short tax year return.

When a lender forecloses on a property, what typically is the lender's first step?

To auction the property

Which of the following is a responsibility of a managing broker?

To develop and enforce a written office policy that details allowable agency relationships.

What is the purpose of a property inspection?

To help the buyer make an informed decision about purchasing the property.

Which of the following was NOT a stated aim of the Dodd - Frank Act legislation?

To protect families by decreasing property foreclosures

What is the main purpose of a property survey?

To show property lines.

The profit that will be received if and when an investment sells is...?

Unrealized capital gain.

What does the CAN SPAM Act specifically prohibit?

Unwanted commercial emails to wireless devic

Indiana law includes the following advertising regulation.?

Use of only a telephone number in an advertisement is prohibited.

For how long must a broker retain records related to cooperative agreement with an out - of - state commercial broker?

5 years

If the attorney general takes possession of abandoned records, when can the records be destroyed?

3 years after the records were obtained by the attorney general

If Tom buys a home for $200,000 and his credit rate is 35%, how much tax credit can he claim if he paid $13,000 in mortgage interest?

$13,000.00 X 35% =$4,550.00 However the maximum credit allowed a year is $2,000.00 therefor he can only claim the $2,000.00 Answer is $2,000.00

The capital gain exclusion allowed for a married couple filing separately is...?

$250,000 for one of the taxpayers.

Sarah lists a property for sale with a commission rate of 7% of the selling price, which ends up being $280,000. Sarah's employment agreement with Justin states that Sarah will be paid 50% of the commission for any sale that Sarah makes. What is Justin's split on this transaction?

$280,000.00 X 7% = $19,600.00 $19,600.00 X 50% = $9,800.00

Sarah lists a property for $280,000 with a 7% commission rate and an employment agreement with Justin for 50% commission on properties Sarah lists and sells. However, a cooperating broker named Tim with a co-brokerage commission split agreement of 50% sells this property. What is Sarah's split on this transaction?

$280,000.00 X 7% = $19,600.00 $19,600.00 X 50% = $9,800.00 $9,800.00 X 50% = $4,900.00

Which of the following is not considered good funds?

$5,000.00 personal check

How many hours of residential appraisal experience must a CRA (Certified Residential Appraiser) applicant have?

1000

Homes built after what year are most likely free of Lead - Based paint?

1978

When a real estate transaction goes into escrow, the listing has ________ to deposit any funds received from the buyer...?

2 banking days after the final offer is accepted by both parties

If a taxpayer sells one home and claims a capital gain exclusion, how long must the taxpayer wait until selling a second home and claiming a capital gain exclusion on the second home?

2 years

How many members of the Indiana Real Estate Appraiser Certification Board must be certified appraisers?

3

What is an escrow closing?

When a third party conducts the closing without the buyer or seller in attendance

When does asbestos become harmful?

When it deteriorates.

When is a listing and selling broker allowed to skip closing?

When the client or the client's representative does not attend.

The offer to purchase becomes a legally binding contract...?

When the seller accepts the offer and notifies the buyer.

One feature that distinguishes an independent contractor from an employee is...?

Whether the managing broker controls how the individual performs assigned tasks.

When is a property condition disclosure required?

With a lease with the option to buy a single family home.

Once an appraiser license applicant passes the appropriate examination, when must the applicant obtain his or her license?

Within 1 year