Exam study guide

A property sells for $350,000. The transfer tax will be split 50/50 between buyer and seller. The transfer tax rate is 2%. How much will each party pay for the transfer tax at closing?

$350,000 x 0.02 = $7,000. Half of $7,000 is $3,500

The purpose of RESPA is to

- help consnumers become better shoppers for settlement (closing) services -eliminate kickbacks and referral fees that unnecessarily increase the costs of certain settlement services.

In general, disclosure of licensed status and interest in a property is required when:

-A licensee is the seller/landlord or buyer/tenant in a transaction -Licensees represent a family member in a transaction -A licensee has an interest in the property listed (ownership, partnership, stocks)

RESPA prohibits:

-Kickbacks for referrals of settlement services -Requiring the buyer to use title insurance from a specific company -Excessive account deposits for items the lender will hold in escrow (taxes and homeowners insurance)

If a consumer wants assistance with a transaction but doesn't want the licensee to act as an agent...

-The Consumer and licensee can have a non-agency form of brokerage relationship -The licensee can operate as a transaction broker (facilitator) -The licensee performs ministerial acts and operates as an intermediary

The property tax rate is 3% of the assessed value. What is the annual tax owed on a property assessed at $200,000?

0.03 x 200,000 = 6,000

1 point =

1% of the loan

A mill rate is __________ of a dollar.

1/1000. This means that, if the tax rate is expressed in a mill, the tax due is $1 for every $1,000 of assessed value.

Which of these licensees must disclose a potential conflict of interest? A. Margie, who is making an offer to buy 40 acres adjacent to her current farm. B. Jackie, who is representing Fran, an old college roommate, in the sale of Fran's home. C. Lenny, who is representing a former business partner in the purchase of property. D. Burt, who represents the seller of a property his family once owned.

A

A property management agreement in Georgia MUST have what element?

A statement of the broker's commission and when it will be paid

___ items are expenses for the property owed at the time of closing that will be paid by the buyer at a future date

Accrued

Type of mortgage loan constructed to allow a variable interest rate over the term of the loan

Adjustable-rate mortgages

Type of loan where the borrower pays the same amount each month for the term of the loan

Amortized loans

Which entity conducts a contested hearing against a real estate licensee if an investigation finds apparent violations of license law?

An Administrative Law judge

Material Fact

Any condition that could influence a buyer's decision to purchase or a seller's decision to enter into a sales contract

The amount an owner owes as property tax is determined by

Applying a tax rate to the assessed value

Short-term loans designed to bridge the gap when a borrower buys a new house and needs to sell the old one

Bridge loans

For accrued items, the prorated amount is shown as a credit to the ___ and a debit to the ___

Buyer Seller

The property tax of $1,500 is prepaid annually for the period January 1 through December 31. The closing takes place on March 15. For this example, we'll say the seller owns the day of closing, and we'll use a statutory year method of calculation.

Calculate the daily charge for the annual amount of 1500: 1500/360 = 4.166 Calculate number of days the buyer will owe the seller: March 15 - Dec 31 = 9 x 30 = 270 270 + 16 (days in march paid) = 286 days Multiply the number of days with the daily charge 286 x 4.166 = $1,191.65

Personal property is also known as

Chattel

Type of loans that are issued by commercial lenders and typically have an LTV of at least 80%

Conventional loans

The property that benefits from the easement

Dominant tenement

When two licensees from the same brokerage represent the opposing sides in a transaction

Dual-license dual agency

A neighborhood uses a special assessment tax to pay for water and sewer improvements. The total cost of the project is $6 million. Each property owner in the neighborhood will pay 1% of the amount owed over the next ten years. How much does this add to each property owner's quarterly tax bill?

Each owner's obligation is 1% of $6 million, or 0.01 x 6,000,000 = 60,000. The 60,000 is paid over 10 years in quarterly installments, making 10 x 4 = 40 payments. 60,000 / 40 = 1500

Type of easement that exists only between adjoining properties

Easement appurtenant

Occurs when the owner of a property grants another party or entity the official right to use a portion of their property

Easement by grant

Easement created from the conduct of the parties. For example, if a landowner sells mineral rights to a company, that company has an easement by _____ to go onto the property to do mining

Easement by implication

Created by a court order when a property owner doesn't have direct access to the property from a road and needs to cross an adjacent property to get access to theirs

Easement by necessity

Occurs when someone uses another's property without the owner's permission for a legally prescribed length of time

Easement by prescription

The right to use the land of another without the requirement that the holder of the right own adjoining land. Commonly used by utility companies

Easement in gross

Crops or any type of seasonal/annual plantings that are classified as personal property

Emblements

The right of a public entity to take private property in exchange for a fair price when the reason for the taking is for the good of the public

Eminent domain

Some form of limitation or restriction on the ownership of a property. Typically reduces the value of the property

Encumbrance

An anti-discrimination law that applies to creditors, including mortgage lenders. It creates protections for borrowers belonging to protected classes. Creditors are prohibited from offering different terms or making different approval requirements based on an individual's protected class.

Equal Credit Opportunity Act

The government's right to acquire title to real estate when the deceased party has no will and no heirs can be located

Escheat

An ____ contract is one that has been performed according to its terms

Executed

An ___ contract is one that's been signed but the parties are still in the process of performing their obligations

Executory

An agency relationship may terminate through

Expiration Completion/performance Termination by law Destruction of property Death of principal Mutual Agreement Breach of Contract

Type of freehold estate that provides the most complete form of ownership. The owner is entitled to the entire bundle of rights.

Fee simple absolute

What type of freehold estate is it if a property may be granted to a school on the condition that the property continued to be used as a school

Fee simple defeasible

Type of freehold estate that is an ownership interest that entitles the owner to the entire bundle of rights but is limited in the deed by a condition or event that must be met

Fee simple defeasible aka qualified fee estate

The property tax rate is 30 mill. What is the quarterly tax rate for a property assessed at $200,000?

First calculate how many thousands in 200,000 which is 200 Then apply the mill rate of 30: $30 x 200 = 6,000 annual tax 6,000 / 4 = $1,500 quarterly tax owed

Personal property that has been permanently attached to the land or improvements and becomes part of the real property

Fixture

An ownership interest in the land that continues for a length of time that can't be determined

Freehold estates

A property manager is a ___ agent

General

Authorizes the agent to make legal decisions and act for the principal in a variety of matters that are related to a specific business

General agency

When the owner of a fee simple absolute dies, the estate passes to

Heirs or distributees

A seller's broker will perform which of these activities for the transaction? I. Ensure that all contractual obligations of the parties are completed in a timely manner. II. Disburse funds to the appropriate parties at closing. III. Inform the client what to bring to closing. IV. Provide an opinion of title.

I and III

Which of the following items must be included in a sales contract prepared by a licensee? I. The brokerage license number. II. The brokerage business address. III. The license numbers of all licensees participating in the transaction. IV. The brokerage email or telephone number.

I and III

A licensee has been found guilty of handling trust funds improperly. Which of the following forms of discipline might GREC impose? I. License revocation. II. Fines up to $10,000 per violation. III. License suspension. IV. An order to file accounting reports on trust funds.

I, III, and IV

Jenna won a judgment against licensee Rhea. Unfortunately Rhea has no license, no job, and no way to pay. What must Jenna do to receive payment from the Real Estate Education, Research, and Recovery Fund? I. File a lawsuit against GREC. II. Make application to the fund. III. Make all reasonable effort to get payment from Rhea. IV. Prove a loss of at least $25,000 in the transaction.

II and III

Which of the following activities may be performed by an unlicensed assistant? I. Show a listing to a consumer at the direction of a licensee. II. Place signs on real estate. III. Record and deposit earnest money, security deposits, and rents. IV. Explain a contract to a client.

II and III

The Georgia Real Estate Commission will discipline a licensee for which of the following actions? I. Working as a disclosed dual agent in a transaction. II. Guaranteeing future profits from the sale of a property. III. Accepting an open agency listing. IV. Persuading a party to an existing listing contract to break that contract and list with the licensee.

II and IV

Which of the following statements about the Georgia Real Estate Commission are TRUE? I. It's composed entirely of real estate licensees with at least five years of experience. II. It has six members. III. Members are elected by vote from all current active licensees. IV. Each member serves a term of five years.

II and IV

Licensee Lulu was ordered to pay a judgment to a former client after Lulu was found guilty of violating license law. The Real Estate Education, Research, and Recovery Fund paid the judgment on Lulu's behalf. What happens to Lulu's license?

It is automatically revoked

A form of co-ownership by two or more persons each of whom has an undivided interest with the right of survivorship

Joint tenancy

Type of freehold estate that gives the owner the entire bundle of rights, but the estate ends with the owner's life or the life of another person as established in the deed

Life estate

TRID requires mortgage lenders to make these two disclosures

Loan estimate Closing disclosure

The monthly payment for principal and interest is $1,500. The annual taxes are $1,200, and the annual insurance is $600. What is the PITI each month?

Monthly taxes = 1200 / 12 = 100 per month Monthly insurance = 600/12 = 50 per month 1500 + 100 + 50 = 1650

Can a salesperson accept a commission payment directly from a client?

No

Does tenancy in common have a right of survivorship

No, the interest goes to the decedent's heirs as determined by the will or state law

Essential elements of a contract

Offer and Acceptance Consideration Competent parties Consent Legal purpose

Latent Defect

One that is hidden and not readily discoverable by inspection

What must the closing agent do before the deed can be recorded?

Pay the transfer tax

Examples of fixtures

Plumbing, heating systems, cabinetry, carpets, built-in shelving

The right of public entities to establish regulations regarding the use of the land

Police power

Zoning and building departments are examples of

Police power

PITI =

Principal, interest, taxes, insurance

If the lender approves a loan with an LTV higher than 80%, it will require the borrower to pay

Private mortgage insurance (PMI)

Pay for programs that may be local or state-wide

Property taxes

Broker Paul enters into a property management agreement with property owners Erica and Alex. Which of the following is Paul required to do immediately?

Provide Erica and Alex with a copy of the signed agreement

A loan from the seller to the buyer that's secured by a mortgage or deed of trust, similar to a conventional mortgage

Purchase money mortgage

TILA is also known as

Regulation Z

When a life estate ends, the ownership __

Reverts to the original owner or to the person established in the deed as the remainderman

What instrument do GA lenders typically use to secure a home buyer's loan?

Security Deed

Proration is shown as a credit to the ___ and a debit to the ___

Seller Buyer

The property that must allow access to an easement

Servient tenement

Sandy has bought and sold several homes on her own, so she feels qualified to start helping others do so for compensation. Since she's not licensed, what's NOT true about what the Georgia Real Estate Commission can do?

Since she's not licensed, GREC has no authority over her actions and can only refer the matter to the state Attorney General's office

When one licensee represents both parties in a transaction, this is called

Single-license dual agency

For real estate sales, the agent is typically a

Special agent

This form of agency gives the agent limited authority to represent the client in one particular transaction. The agent has no authority to make legal decisions for the client or to act for the client outside the transaction

Special agent

Used to pay for improvements in a specific area and are assessed only against the property owners who benefit from the improvement

Special assessment taxes

Calculation for PITI

Step one: Find the correct factor in the table using the total term of the loan and the interest rate Step two: Determine the number of thousands in the loan amount (350,500/1000=350.5) Step three: Multiply the factor with the number with the number found in step two. The result is the monthly principal and interest payment Step four: Taxes and insurance are divided by 12 for each monthly installment

A federal law designated to promote the informed use of consumer credit. It does so by requiring creditors to make disclosures to consumers about credit terms and costs

TILA

Formula for tax rate

Tax rate x assessed value

Form of co-ownership that is limited to married couples

Tenancy by the entirety

Form of co-ownership by two or more persons, each of whom have an undivided interest in the property

Tenancy in common

Which form of co-ownership does not have to have equal interest in the property

Tenancy in common

Trigger terms for TILA

The amount of a finance charge The amount of a down payment The length of the loan The amount of payments

Buyer Sean will pay the quarterly fuel tank rental on April 1. The bill covers the period of January 1 through March 31. The closing takes place on February 2. If the bill is for $50, how is the proration reflected on the closing statement? The seller will own the day of closing. Use the calendar method of calculation.

The number of days covered by the quarterly charge is 90. The daily rate is $50 / 90 = $0.5556. The seller is responsible for January 1 through February 2, or 33 days. 33 x $0.5556 = $18.3348. Rounding up, this appears on the closing statement as a debit to the seller for $18.33, and a credit to the buyer for $18.33.

Horizontal and vertical lines that divide the land into squares

Townships

T/F: A VA loan program gives the lender a guarantee that equates to a loan with a 75% LTV

True

Has complete authority to act on behalf of the principal. This is often created with a power of attorney that gives the agent the power to make any decisions that the principal could make on his or her own behalf

Universal agent

A contract is ___ when it is missing an essential element

Void

A contract is ___ when it appears to have all the essential evidence, but some circumstances interferes with the validity, giving one of the parties the right to void it

Voidable

Gwen has a broker-level license. She's associated with broker Dan. This is an example of

an associate broker

The only specific item that may be stated in an advertisement without making a full disclosure is the

annual percentage rate

Interest amount =

loan balance x interest rate

Origination fees are also expressed as

points

Tax rates are determined by

the local government