Missed and guessed Q's from Principles of RE II

In which form of price determination does the real estate professional often just drive by the property and take photos, then complete paperwork for the lender?

BPO

Which entity typically owns foreclosed properties?

Banks

Which deed type may come with or without covenants of warranty?

Bargain and sale

Which of the following could an investor who sells an apartment house buy using a 1031 exchange?

Duplex, office building, or warehouse

Rebecca has granted power of attorney to her partner, Emily. The POA states that if Rebecca becomes incapacitated, Emily can continue to act on her behalf. What type of POA is in place?

Durable

Which one of the following options provides three valid examples of a private land use control?

Easement, lien, deed restriction

How many floors could a mid-rise office building have?

Eight

Glenda's lender is requesting __________________ to the standard coverage on her title insurance policy to cover any additional risks that may appear down the road.

Endorsements

Rob purchased a property five years ago for $200,000. He put down $50,000 and financed $150,000. Today, the property is valued at $250,000. What is this an example of?

Equity build-up

The increase a property's value beyond what the investor originally invested as a down payment is called _______.

Equity build-up

Which term is defined as occurring when land is washed away gradually, which results in decreasing property size?

Erosion

In Texas, which type of leasehold lasts for a defined time period and automatically terminates when that period ends?

Estate for years

Lauren obtained a loan that's insured and that only required a down payment of 3.5%. Which of these is most likely the type of loan Lauren has?

FHA

Which act requires a property manager to send an adverse action letter to the rejected applicant if the decision to reject were based in whole or in part on the applicant's credit score?

Fair Credit Reporting Act (FCRA)

The Arbor Heights community passed a zoning ordinance that requires group homes designated for disabled citizens to be situated outside of city limits. This is a violation of the ______.

Fair Housing Act

What institution was established in 1938 to purchase FHA-insured loans from individual lenders, group the loans together, and sell them as mortgage-backed securities to investors?

Fannie Mae

What does the Financial Institutions Reform, Recovery, and Enforcement Act require?

Federally related appraisals must be conducted by an appraiser who's either licensed or certified by the state.

What information does the Loan Estimate NOT provide to buyers under required disclosures law?

Final closing costs

Which of the following is the best example of investment leverage?

Financing most of an investment and putting very little cash in

How many decimal places should be displayed on your calculator?

Five

Which type of mortgage has an interest rate that remains constant over the life of the loan?

Fixed-rate

Why might a business owner opt to lease a building rather than purchase it?

Flexibility in moving

In Texas, as part of the actual eviction process, a landlord will file a suit for possession in the local justice of peace court. What is another name for this type of suit?

Forcible detainer suit

Which of the following statements related to 1031 tax-deferred exchanges is true?

Foreign investors may participate

If you have the right ______, most real estate calculations are simple arithmetic.

Formula

Which payment plan consists of the borrower paying a constant amount made up of principal and interest on a periodic basis (usually monthly)?

Fully amortized loan payment plan

Which payment plan consists of the borrower paying a constant amount made up of principal and interest on a periodic basis (usually monthly)?

Fully amortized payment plan

Which covenant term promises that the grantor will provide any additional assurances that the grantee reasonably requires and perform any acts necessary to correct any defect in the title being conveyed?

Further assurances

What two types of data does an appraiser gather?

General and specific

With this type of commercial lease, any improvement made to the property by the tenant belongs to the landowner when the lease expires.

Ground lease

When the pre-qualification letter is provided, the buyer ___________.

Has some assurance of being able to qualify for a loan

Bryant is a professional who spends his days drafting plans for new communities. He must consider what these newly developed areas of town will require, including streets and open areas like parks. In what profession does Bryant specialize?

He's a planner

What must be done to obtain title to property after meeting all of the requirements of adverse possession?

Obtain a court action to quiet title.

Where do live auctions typically take place?

On the steps of the local courthouse

How often can the capital gains exclusion be claimed?

Once every two years

Jacob wants to give a written termination notice to his month-to-month tenant. How much notice must he give the tenant?

One month

What is a wrap-around mortgage?

One that may involve seller financing A wrap-around mortgage is one where the buyer's new loan wraps around the seller's existing financing. The seller uses a portion of the buyer's payments to the seller to pay on the original loan.

In a sublease situation in Texas, who has the right to evict the sublessee?

Only the original tenant

Cluster zoning would include single-family homes, townhomes, apartments, and condominiums on a single parcel, provided that the developer leaves a portion ________.

Open for a playground, a park, and a walking path

What kind of budget serves two primary purposes: to help property managers maximize profitability and to avoid unforeseen major expenses?

Operating

Randa is trying to lower the vacancy rates for the commercial property she manages because her revenue targets have increased by 8% over the next year. What type of budget contains this revenue detail?

Operating budget

Which of the following is a characteristic of an abstract of title?

Provides an attorney's opinion of the title

Tom, the seller, is helping the buyer with financing. Tom will give this mortgage to the buyer, and the money will go toward the down payment. What kind of mortgage is this?

Purchase money mortgage

Olivia purchased a property five years ago for $200,000. She put down $50,000 and financed $150,000. Today, the property is valued at $250,000. She'd like to purchase another property, so she refinanced her current property and used the equity to purchase a new property. Of what is this an example?

Pyramiding

Which of the following is a mortgage where the consumer cannot later claim that the lender did not comply with the ability to repay requirements?

Qualified mortgage with a safe harbor status

What type of real estate investment must distribute 95% of its income to beneficiaries?

REIT

Conrad just closed on the house he's buying to fix up. Why should he follow up to be sure the deed has been recorded?

Recording provides constructive notice that he owns the property.

Which term is defined as the increase in the amount of land by the permanent and gradual withdrawal of water?

Reliction

Liz is assisting a client who's looking for a commercial space to lease. Which of the following duties will Liz be expected to perform on her client's behalf?

Represent her client's interest in all negotiations and transactions regarding the lease of the property.

As a(n) ______ property manager, you know there's a lot more turnover in your area of expertise.

Residential

Timeshare properties are also referred to as _________________.

Resort properties

Bridget has an investment portfolio that includes an equity REIT. Which of these is most likely to be part of the REIT's investment?

Retail shopping centers

Which of these is the lender's attorney's responsibility at the closing?

Reviewing the appraisal, survey, and inspection reports

The legal description of the project, easements that run with the land, and street and traffic patterns are all under consideration when a local planning board ______.

Reviews a developer's project plat

In a lease agreement, what consideration does the landlord give to the tenant?

Right to occupy the property

In Texas, whose responsibility is it to determine the validity of a will as part of the probate process?

The court

John and Michelle received a general warranty deed when they purchased their house from Ted. A couple of months after they moved in, their neighbor, Bryant, drove his four-wheeler across their property to access the lake front. John discovered that Ted and Bryant agreed to an easement over Ted's property several years earlier. Which general warranty deed covenant does this represent?

The covenant against encumbrances

What title guarantees will Jody have if her property is deeded to her after a foreclosure?

The covenant of seisin

Colleen and Judy purchased a dilapidated townhome in an estate sale. Due to their fix-up work and the current economy, the property value has skyrocketed. They decide to sell it to get their equity out of it. After they list it, a woman comes forward, saying she is an heir to the previous owner and lays claim to the property. Which general warranty deed covenant protects Colleen and Judy?

The covenant of warranty The covenant of warranty assures that the grantor will warrant and defend the title against the lawful claims of others.

The Bensons are looking at buying a $650,000 property with a 30-year loan at a 3.125% interest rate. How much would their monthly principal and interest amount be? Use 4.80738 as the factor for a 30-year loan at a 3.125% interest rate.

The estimated payment is $3,124.78. Remember that $650,000 ÷ 1,000 = 650. Then multiply the factor for a 30-year loan at a 3.125% interest rate (which is 4.80738) by 650.

Cyril passed away unexpectedly, leaving no will. His wife and two kids were very distraught, and at the funeral, the family got together with his only other living relative—a cousin—and friends for the first time in years. Now that Cyril's "bought the farm," his wife is wondering who will get the farm that she and her children live on but that Cyril inherited before he married her. According to the laws of intestacy, can you figure out who will get the land?

The wife and the children

Qualified mortgages require debt-to-income ratios of no more than ______.

43%

John wants to do a 1031 tax exchange with a property he just sold. How many days does he have to identify a new property for the exchange?

45 Under 1031 exchange rules, you have 45 days to IDENTIFY a new property, 180 days to CLOSE

Jared has a 70/30 split with his brokerage firm, and his firm has a 50/50 split with cooperating brokerages. Last month, he was paid $12,239.50 in commissions from his home sales, which totaled $538,000. What is Jared's brokerage's commission rate?

6.5% Jared was paid $12,239.50, which is 70% of the amount paid to his broker as commission. That makes his firm's commission $12,239.50 ÷ .70 = $17,485. Multiply that by two for the total commission the firm grossed, since it's shared 50/50 with a cooperating brokerage (the brokerage that brings the buyer to the sale), giving you $34,970. Then divide by the total sales amount for the brokerage's commission rate: $34,970 ÷ $538,000 = 0.065, or 6.5%.

Nina and Rob prepaid some of their interest to their lender when financing their new home. This is called _____________.

A buydown

Based on their credit rating and stated income, a lender pre-qualified Sam and Lisa for a loan. Which statement is true?

As long as they've told the truth about their income, Sam and Lisa have a good chance of getting the loan.

Joe has been given the power of attorney to sign legal instruments for his son, Kent. In this situation, Joe is known as the ________.

Attorney-in-fact

What is the calculation used to determine the estimated monthly interest amount a borrow will pay on a loan?

(Loan balance x interest rate) ÷ 12

The GRM for Sunny Hills is 147. If a three-bedroom, one-bath house in Sunny Hills rents for $820 monthly and sold for $125,000, what is the suggested value of a house that leases for $1,000 monthly based on the GRM?

$147,000 This question asks you to find the value of a house based on the GRM of 147. The value of the home that rents for $820 monthly isn't relevant to your calculation, which is 147 x $1,000 = $147,000. Remember that GRM is just an estimate of value.

Jimmy is a real estate investor who owns several rental properties in the area. After the economy took a turn, he was relying on TRA 86 to be able to deduct some of his losses. He is active in the management of the properties and his taxable income is $90,000. What is the maximum deduction Jimmy can claim on his taxes to make up for his losses on those rental properties?

$25,000

Morgan is a single taxpayer and real estate investor. She buys homes for cheap, fixes them up while living in them, and sells them for a profit. How much can she exclude if she realizes a gain from the sale of her current property (assuming she meets all the criteria to exclude the gain)?

$250,000

Rachel just sold her home and paid $18,427 in closing costs. Her brokerage fee, which is included in that figure, was 6%. She netted $230,063. What were her non-brokerage fee-related closing costs? Round to the nearest dollar.

$3,518 $230,063 + $18,427 = $248,490, her sales price. Multiply her brokerage fee by her sales price: $248,490 × .06 = $14,909; $18,427 - $14,909 = $3,518.

Jim and Crystal bought their rundown little "shack" 15 years ago. Over the years, they've made structural improvements, built additions, and remodeled nearly every square inch of the property. They're ready for their next adventure and have sold their property for a capital gain of $300,000. Assuming they meet all the criteria to qualify for the capital gain exclusion (and are married filing jointly), how much of this gain can they exclude?

$300,000

Giant Industries has a $674,232 gross operating income, operating expenses of $329,129, and other expenses totaling $38,719. What is the net operating income?

$345,103 The formula for finding net operating income is: gross income - operating expenses = net operating income. So, $674,232 - $329,129 = $345,103. Other expenses like loan interest and debt repayment aren't included in this calculation.

When prorating annual HOA fees of $1,500 using the statutory calendar, what's the daily rate, rounded to the nearest cent?

$4.17 Statutory year means you dive by 360, not 365

What phrase or words are required on a deed and are considered an "act of conveyance"?

"Grant and convey"

What is the purchase agreement phrase that wholesalers rely on for their investment strategy?

"Or assigns" The wholesaler doesn't own investment properties, but finds deals and resells them (assigns them) to other investors for a fee.

You're on a planning board that's discussing how to keep the city more livable by reducing building density. The subject of bulk zoning comes up. What is your response?

"That's a great way to meet our objectives."

Your client hates the fact that out of her $1,027 monthly payment, more than $900 is going toward interest. What do you tell her?

"That's amortization for you."

Anita's property appraised at $370,000. It is assessed at 40% of appraised value, and the tax rate is 80 mills. What are Anita's semi-annual property taxes?

$5,920 Divide mills by 1,000 (80 ÷ 1,000 = .08). Assessed value is 40% of appraised value, so multiply .4 by $370,000 = $148,000. Multiply this by the mill rate (.08) to get annual taxes of $11,840. Divide this by two to get semi-annual property taxes of $5,920.

Anita's property appraised at $370,000. It is assessed at 40% of appraised value, and the tax rate is 80 mills. What are Anita's semi-annual property taxes?

$5,920 This is easy, just don't forget to divide by two because it's semi-annual!

When prorating annual property taxes of $2,400 using the statutory calendar, what's the daily rate, rounded to the nearest cent?

$6.65 Statutory year means you divide by 360, not 365

Which type of RD loan program helps low- and very low-income applicants obtain decent, safe, and sanitary housing in eligible rural areas?

Single Family Housing Direct Home Loans

Which type of RD loan program provides eligible applicants with the option to build, rehab, improve, or even relocate a dwelling in an eligible rural area?

Single Family Housing Guaranteed Loan Program

What's the first step an appraiser will perform when conducting an appraisal?

State the problem

Brandon recently purchased an old warehouse building. This building will serve as a hub for local deliveries of fruits and vegetables within the state. During its first week in operation, one of the delivery drivers was involved in an accident that spilled coconuts all over the road and shut down the interstate for hours. What type of risk is this?

Static

Blane owns a barbershop. He polls his customers and learns that they tend to come from less than a mile away. That's probably because Blane's store is in which type of location?

Strip mall

Information shown in this area of the Uniform Residential Appraisal Report contains the property address, taxes, borrower, seller, and occupant.

Subject

The economic principle of ______ says that when there are two houses in the same neighborhood with the same size, appeal, and utility, the lower-priced one will tend to sell first.

Substitution

An affidavit of title is a ______.

Sworn statement by the seller that no unpaid bills remain for repairs or improvements to the property

Which of the following statements about the Texas Apartment Association is true?

TAA provides its members with association-prepared lease forms.

Taxes that are set aside for redevelopment and that stem from public financing when there is little help from the government are called what?

TIF (Tax Investment Financing)

Which term describes the legal regulation of a property to the detriment of the owner, and must include reimbursement for the property owner?

Taking

In investments, there are two types of depreciation, and each is defined by a particular event. Which of the following most accurately pairs the depreciation type with the event it is tied to?

Tax depreciation and cost recovery

With a triple net lease, the tenant pays _______ separately from the base rent.

Taxes, Insurance, and Maintenance (TIM)

In Texas, in what type of leasehold is the duration of the lease unknown at the time it is created?

Tenancy at will

Which of the following laws requires the registration of securities that are sold in Texas?

Texas Securities Act

To compute a monthly principal and interest payment, which of the following pieces of information do you need to know?

Mortgage loan value, annual percentage rate, loan term, and payment frequency

Information about which of the following is included in the Uniform Residential Loan Application?

Mortgage type Also included in the URLA are closing costs and purchase price

Which of the following is the price a lender believes the property will bring at a foreclosure sale?

Mortgage value

Which of the following is an example of a leisure property?

Motel

What are the two programs available through the TDHCA that help very low-income to moderate-income families afford housing?

My First Texas Home and Texas Bootstrap Loan Program

How many rental units are managed by members of the Texas Apartment Association?

Nearly 2 million

All the following reports may be your responsibility as a property manager EXCEPT ______.

Neighborhood sales

Which entity insures VA loans?

No entity, because they are guaranteed by the U.S. Department of Veterans Affairs

Which of the following is a true statement about U.S. Department of Veterans Affairs loans?

The loan that's guaranteed will be based on either 100% of the sales price or 100% of the CRV, whichever is less.

Marsha's title insurance policy was issued on closing day, June 18. The policy lists the standard exclusions as well as requirements for the company to issue the policy, such as paying off existing recorded liens. Which of these will NOT be addressed in the schedule of exceptions?

The local cable company's easement through the property for underground wiring. Marsha disclosed this to the title company. Title insurance typically covers events or claims filed on the public record before the title insurance policy's effective date but excludes disclosed and undisclosed easements.

Which of the following information in a report would NOT help your owner assess whether your rental rates are competitive?

The number of occupants in each of your units

How is reasonable belief defined in adverse possession?

The possessor must reasonably believe in the right to possess the property.

How do the primary and secondary mortgage markets work together?

The primary market packages loans to sell to the secondary market.

When a deed of trust is used as a security instrument, who holds the deed and the note?

The trustee holds the deed, and the lender holds the note

Can police power ever be used in a way that restricts citizens' freedom?

Yes, if it's for the public good.

An adjustable rate mortgage has an interest rate of 5% and a lifetime cap of 6%. What's the maximum rate that may be charged at any point during the life of the loan?

11% You add the interest rate and the lifetime cap

ENERGY STAR®-qualified homes are rated ______ more energy efficient when compared to homes built before 2004.

15%

John wants to do a 1031 tax exchange. He just sold his property. How many days does he have to close on a new property?

180

What acronym can be used to remember factors that influence real property value?

DUST Demand Utility Scarcity Transferability

Richard gave his town six acres adjacent to his property for use as a public park. This type of property transfer is called a ______.

Dedication by deed

Shemar owns a starter home a few miles outside of the city center, and he wants to deed it to his grandson, Tyler. According to the paperwork Shemar had drawn up, Tyler will own the property as long as he continues to pay the property taxes on time. After the second missed property tax payment, ownership would revert to Shemar. What did Shemar place on the deed?

Deed condition

Joe Bob is the grantor of a deed, and is in the final stages of transferring a deed to the new owner, Frank. What must Joe Bob do in order to satisfy delivery and acceptance of the deed to Frank?

Deliver the deed to Frank, his agent or attorney, or the title company issuing the title

Which of these terms describes the actions that are required to effect a transfer of title by deed?

Delivery and acceptance

The Richards family farm is located on a 10-acre parcel of land, which is very rare to come by in their area. However, the house is rundown and in need of many repairs. Buyers in the area looking for a move-in ready home would need to either look elsewhere or wait several months for the home to be renovated. Which factor is most negatively impacting the value of the Richards' property?

Demand

Mario lives in a state that requires an abstract of title for property conveyance. The chain of title is broken approximately 50 years prior to the current date. Which of these properly identifies the status of Mario's title?

Depending on his state's laws, Mario may have marketable title.

The property management proposal includes information such as ______.

Details about the property manager's qualifications

Which form must be used to disclose payments received from resident service companies?

Disclosure of Relationship with Residential Service Company

You want to become a planned unit development (PUD) property manager. What is an area of responsibility that you will undertake?

Managing maintenance, landscaping, security issues, and concerns, and enforcing the regulations

Why is it important for tenants and owner/landlords to review the insurance section of a commercial lease?

Many times, the amount of insurance specified in the lease is higher than the amount a tenant actually carries, and higher than the amount the landlord actually requires.

What's it called when a number of percentage points is added to the index to determine the rate for an adjustable rate mortgage?

Margin

Which of the following numbers represents a calculator with the appropriate decimal place set up to eliminate most rounding errors?

10.56789

What maximum percentage of a VA loan is guaranteed?

25% The VA guarantees a maximum of 25% of the home loan amount up to $104,250. This would equal a mortgage amount of $417,000 with no down payment.

Which of Texas's adverse possession statutes is the absolute bar against the claims of others?

25-year limitations period Generally it's 10 years, but "absolute bar" means 25 years

Tyrell and Barb bought a commercial investment property in 2009 during the real estate market downturn. Through what year will they be able to depreciate the investment?

39 39 years of non-residential commercial property depreciation is fully permissible

The sales price is _______.

A credit to the seller and a debit to the buyer

Sherman gave Alexi a two-acre parcel for free. This transfer of property is known by what term?

A deed of gift

Select the statement that accurately reflects the type of deed used for the transfer.

A deed of trust conveys real estate to a trustee for the beneficiary named in the deed.

What's a purchase money mortgage?

A form of seller financing in which the seller gives the buyer a mortgage toward the purchase price.

Charles is selling his property to Seth. Charles is financing part of the transaction for Seth, who will make payments to Charles while Charles retains the property title. What is this an example of?

A land contract

Rhonda and her husband filed for bankruptcy five years ago. They want to purchase a new house but don't have the best credit score. They've decided to buy the home using an FHA loan. Which of these is a true statement?

A minimum down payment of 3.5% is required.

What happens if a tenant under a lease stays beyond the lease's terms, and the landlord continues to accept rent from that tenant?

A month-to-month tenancy is automatically created.

Joanie sees herself as a mover and shaker, a leader, someone who jumps in and gets things done. She likes to be involved and in charge. When she decides to start investing in real estate, which of these choices is she most likely to select as her investment vehicle?

A multi-family residential income property

What is a government sponsored enterprise (GSE)?

A privately held financial services company with a public purpose.

Jose is an investor who found and closed on an investment property, then decided to sell a property other than the one originally marked for the exchange. What is this an example of?

A reverse tax-deferred exchange

Which of the following statements is true regarding a tenant's indemnity?

A tenant's indemnity is usually limited to issues on the leased premises and doesn't include claims or losses that arise from the landlord's or the landlord's agents' negligence or willful misconduct.

Besides the federal rules, which Texas entity or entities sets forth the state rules surrounding kickbacks?

Both TREC and the TDI

What's the term for a notice given directly to and received by a person?

Actual notice

FAR, or floor-to-area ratio, includes ______.

All of the habitable structures on a lot

What is the term used for the land mass that is built up by accretion?

Alluvion Accretion is the process, alluvion is the resulting land mass

Which of the following options describes principal as it relates to loans?

Amount of payment that will be applied to the loan balance

Noah owns an LLC that buys and sells stocks on the NASDAQ 100. He needs some additional financing. To which type of lending institution might he prefer to go?

An investment group

What is a reverse exchange?

An investor finds and closes on an investment property and then decides to immediately sell another investment property.

The value principle of ______ is the basis of the income approach to appraisal.

Anticipation

What is another name used for the sales contract?

Blueprint to the transaction

When considering loan risk, which two items will lenders consider in equal measure?

Borrower and property

Your new home listing has some minor condition issues, most of which the seller Barry disclosed properly when filling out the disclosure form. However, you noticed that he didn't disclose the test results that showed E. coli bacteria in his well water. You don't say anything, since it's not your role to fill out the disclosure form. If the buyer discovers issues with the well after closing, who is legally liable for this omission?

Both you and Barry

Who is responsible for providing IRS form 1099-S to the seller if the lender does not?

Broker

Dynamic and static risk are considered ________ risks.

Business

Loans for ______ purposes don't require TILA disclosure.

Business

What type of insurance protects the business if it is unable to produce income due to a covered event?

Business interruption

Which of the following features is most likely to be the cause of an adjustment to a comparable when preparing a CMA?

Busy street

The ______ is responsible for paying appraisal and credit report fees.

Buyer

How can a foreclosure process be temporarily stalled?

By filing for Chapter 7 bankruptcy

Breeja sold her investment property for $330,000. Her adjusted basis in the property was $253,000. The difference between this sale price and the adjusted basis is a(n) ______.

Capital gain

What does "after tax cash flow" mean?

Cash flow after considering income taxes

With the cost approach to value, what is the reproduction cost?

Cost to build an exact replica of the subject, with the same materials and deficiencies Remember, replacement cost is the functionally equivalent improvement - reproduction is an exact replica.

The amount covered by the new loan is a ______.

Credit to the buyer

Related to depreciation, what are the two types of physical deterioration?

Curable and incurable

Citytown officials know that they have an abandoned factory site that has been identified for cleanup under CERCLA. When city officials tried to trace the ownership of the property, they found several shell corporations but can't determine which individual or corporate entity actually owns the property. What is a likely outcome of this situation?

Citytown will apply to the CERCLA trust fund for cleanup costs.

When the buyer and seller both have costs to pay, which form shows who pays what?

Closing Disclosure

FACTA requires anyone with access to consumers' credit reports to ______.

Comply with the records disposal rule

Which agency administers the Interstate Land Sales Full Disclosure Act?

Consumer Financial Protection Bureau

A tenant who continues to occupy property after lawful authority has expired is known as a _______.

Holdover tenant

The Druid Hills neighborhood sits firmly within a single-family residential zoning area. Most of the lots are one-third of an acre or larger. A 20-acre parcel on the edge of the neighborhood sold recently. The buyer wants to build condominium flats since multi-family housing is in short supply in the area. The town is considering rezoning that parcel to allow this development because the developer plans to also include a public park and a walking trail. What kind of zoning is this?

Incentive zoning

______ determines who the heir or heirs will be if a person dies without a will.

Intestate succession

Which of the following describes a deed restriction?

It can be placed on a single property, an entire subdivision, or a neighborhood.

What are prepaid expense items?

Items to be divided proportionately between the buyer and seller that the seller hasn't fully used "Hasn't fully used" makes it prepaid, "owes" would mean accrued

Your client, Eric, is interested in purchasing an industrial property to start a new business. You've recommended that soil, air, and water testing be done, but Eric is on a tight budget and doesn't feel these tests are necessary. What should you do?

Keep records of your recommendations and a written response from Eric.

The doctrine of "use it or lose it" is known as the doctrine of ______.

Laches

What do the letters in LEED certification represent?

Leadership in Energy and Environmental Design

The Doctrine of Relation Back is a/n _______.

Legal assumption that states that something done today will be treated as if it were done earlier

Maud has left a gift of personal property in her will to her granddaughter, Emily. Maud is the ________________________ and Emily is the ______________.

Legator, legattee The key word is PERSONAL property

Which of the following options describes a loan's beginning balance?

Loan balance before the monthly payment is applied

Damien was representing a commercial property owner. Which one of the following duties can the owner expect Damien to perform on the property owner's behalf?

Locate and qualify potential tenants.

What type of breach of lease remedy is being used when a Texas landlord changes their tenant's locks in attempt to collect rent?

Lockout

What attracts borrowers to adjustable rate mortgages?

Lower initial interest rate

The mortgage broker is the _____ when working with clients who are obtaining a mortgage.

Middleperson (Between the underwriter and the client)

Which of the following is one benefit to business owners for leasing instead of buying real estate for their business?

Monthly rent is a tax deduction as a business expense.

What are the two types of real estate investment trusts?

Mortgage and equity

Craig is a Texas tenant with a written estate-for-years tenancy. How much notice must he give his landlord if he wants to terminate his lease upon expiration of the lease term?

None

What covenants and warranties can be enforced by the grantee when property is gifted without consideration using a warranty deed?

None, because it is a deed of gift

A _____________ is the term used for an estate that conveys possession and control, but not title.

Nonfreehold estate

Nonny is purchasing a rental property where the tenants pay month-to-month rent. Which of the following is the most likely way for the rent to be prorated?

Nonny will receive prorated rents beginning the day of closing.

Investor Igor made $120,000 last year, but had $25,000 in losses from his rental properties. Can Igor take the full $25,000 deduction on his taxes, assuming he is actively involved in the management and operation of his rental properties?

No. Igor's $25,000 deduction will be decreased by 50 cents for every dollar he makes over $100,000. If an investor's income exceeds $100,000, they will lose 50 cents for every dollar over $100,000. Igor's deduction would be reduced by $10,000, because Igor lost 50 cents on the dollar for the extra $20,000 he earned (over the $100,000 mark).

You've just learned that your buyer, Kirk, can't obtain a qualified mortgage for his dream home because his debt-to-income ratio would be above the threshold. What is Kirk's best option?

Pay off his other debt and/or increase monthly income.

Which of the following types of tenancy comes with an automatic renewal clause?

Periodic estate

What describes both the type of the development and the regulatory process that allows the developer to meet the community's goals for land use and density without being restricted by existing zoning requirements?

Planned unit development

Which of the following loan types involves a type of graduated payment?

Pledged account

Which of the following is a piece of general data an appraiser may gather?

Population size

The right to use the property and to live or work there is known as _____________.

Possession

You are in the middle of a house sale with someone claiming power of attorney for the property owner. What must be done before the deed can be executed?

Power of attorney must be filed on record in the county where the property is located.

Mortgages may still, but only rarely, contain which of the following clauses?

Prepayment penalty clause The prepayment penalty clause is still allowed, but under very limited circumstances and only with full disclosure to the consumer that there are loans available without the penalty.

What's the amount of money you have now called?

Present value

In which market do lenders that originate real estate loans operate?

Primary mortgage market Originate in primary, sold in secondary

In an interest-only loan, what does the lump sum payment include?

Principal only

Tammy and Reginald bought a house with a gas line easement on the property. An easement like this one placed by the utility company is an example of a ______.

Private land control

Which of these provides some protection to lenders in the event that the borrower obtaining a conventional loan does not have a down payment of 20 to 25%?

Private mortgage insurance

Jasmine has a tenancy-at-will lease agreement with her landlord. How much notice must she give her landlord when she's ready to terminate the lease?

Proper advance notice

Like other agency agreements, the property management agreement details the terms of "employment" between the _______ (agent) and the _______ (client).

Property manager; owner

What are two ways in which an investor's approach to strategy might be categorized?

Property type and investment strategy

What information about the property is included in the Uniform Residential Loan Application?

Property value (And property address, number of units, loan purpose, and property value)

A ______ is a ratio that compares two quantities.

Rate

Which of the following calculators would best be used for performing computations of monthly payments, maximum loan amount, and remaining balance on a loan?

Real estate

What does a mortgage real estate investment trust invest in?

Real estate debt

What type of real estate investment is similar to collateralized mortgage obligations (CMOs)?

Real estate mortgage investment conduit

What type of real estate investment may meet the definition of being a security and must adhere to the rules and regulations of the Securities and Exchange Commission?

Real estate syndicate

Which type of FSA loan program is serviced by the FSA, but uses government money?

Single Family Housing Direct Home Loans

In Texas, how many days after a tenant moves in does a landlord have to re-key and test all key-operated devices?

Seven

Jillian grew up visiting her grandmother, who owned five acres of forested land and a pond that the two of them swam in frequently. When Jillian's grandmother left her the property, Jillian moved in and put a fence around the forest and pond. When her neighbor went to sell his property, he discovered via survey that the pond was actually on his property. Jillian wants to claim adverse possession and keep the pond, but she's only lived there for three years. What, if anything, can she to do valid

She can use the principle of tacking. Jillian can use the principle of tacking, meaning that she can "tack" her grandmother's usage onto her own to get to the seven years that are required. She can then claim adverse possession that way.

Which organization issues the LEED certification?

The U.S. Green Building Council

A fire destroyed Meredith's house. Meredith contacted her insurance company, and she was shocked to learn her insurance policy didn't fully cover what she paid for the property. How does the insurance company determine the replacement value of her home?

The amount it would cost to completely replace her home

Which one of the following is a description of economic depreciation?

The asset is worth less because the economy took a downturn.

How long does the borrower have to rescind or cancel a new mortgage obtained for an already owned property?

The borrower has three days after loan application to rescind or cancel.

Who is responsible for obtaining an appraisal?

The buyer

Who is responsible for reviewing the Closing Disclosure before closing?

The buyer and the seller

Which of the following closing activities occurs prior to closing?

The buyer obtains a binder for homeowners insurance coverage on the new home.

Just before closing, your buyer applies for a credit card. What could be the advantage or disadvantage at closing?

The buyer's loan could be denied.

Which entity enforces subdivision covenants?

The civil court system

The owner's covenants section of the property management agreement between manager Fred Baines and owner Lilian James contains three key pieces of information. First, Fred is named as the person responsible for managing the building. Secondly, Lillian is identified as the property's legal owner. What's the third key piece of information?

The fact that the owner is not facing foreclosure

As part of an acknowledgment who must state the deed signing is voluntary?

The grantor

How does the "break-even point" relate to percentage leases?

The landlord doesn't charge a percentage of sales until the tenant's sales exceed a break-even point.

Under Texas law, which of the following occurs if a tenant dies during the term of lease?

The lease does not terminate and becomes the responsibility of the tenant's heirs.

When a mortgage is used as a security instrument, who holds the mortgage and the promissory note?

The lender holds the mortgage and the note. Because it's being used as a security instrument

Who reviews transactional documents for accuracy prior to or at closing and requires the property to be free and clear of defects before approving the buyer's loan application?

The lender's attorney

How are creditors or lien holders paid during a foreclosure process?

The property is sold at auction and lien holders are paid from the proceeds of the sale.

Who is ultimately responsible for ensuring that any hazardous waste produced at an apartment complex is properly disposed of?

The property owner or manager

Which of the following would be considered a seller credit on the closing statement?

The purchase price

In addition to the property address, the lease agreement start and end dates, and the monthly rent and deposit amounts, which of the following pieces of information should all commercial leases contain?

The purpose for which the space is being rented

Who is responsible for providing the title insurance company with an affidavit of title?

The seller

In a typical transaction, which of these title defects is unlikely to cause a problem for the buyer?

The seller's existing mortgage

How are mortgage interest, taxes, insurance, and other similar expenses prorated?

These are usually prorated based on a 360-day calendar year (30 days x 12 months).

Which one of the following characteristics makes property taxes a reliable target for taxation?

They have a high compliance rate

An office property manager has responsibility for which area?

Thinking about how much build out or change to the design, floor plan, and power requirements a tenant will require

The Loan Estimate must be provided to the consumer within ______ days after they apply for a loan.

Three

How many parties does a deed of trust involve?

Three: borrower, lender, and trustee

What's one of the ways that bulk zoning achieves its objectives?

Through setbacks

Jennings has received a Closing Disclosure from his lender. What's the purpose of this form?

To detail all costs Jennings will owe at closing

Why does a lender require title insurance from the borrower for a mortgage?

To ensure the collateral for the loan is secure and free of encumbrances

Why do lenders require a borrower to establish and maintain a reserve fund?

To pay any property taxes in case the borrower misses a payment

Considering where pipelines and utilities can be located and their impact on the overall look in the subdivision are factors of ______.

Topography

In the real estate business, which professional's primary role is to finance mortgage loans, while also funding development/construction projects if the risk is not too great?

Traditional lenders

How many parties does a mortgage involve?

Two: borrower and lender

Issuing a pre-approval letter means that borrowers have completed the loan application and provided their debt, total income, and savings information, and the _______ has verified this information.

Underwriter

The mortgagee's title insurance policy provides for reimbursement ______________________.

Up to the current outstanding loan balance

Cindy has gotten title insurance for the home she just purchased. She was able to put a small down payment on the home. What amount will the title insurance reimburse?

Up to the full amount of the purchase price

What's the capitalization formula used in the income approach?

Value = net operating income divided by cap rate

Julian is glad that the property owner at the townhouse community he manages established a substantial capital reserve budget for unexpected expenses, like the new roofs needed after a hail storm. What are these types of expenses called?

Variable

Which veteran loan program in Texas offers qualified veterans help with the purchase of their primary home?

Veterans Housing Assistance Program

Which veteran loan program offers qualified veterans help with the purchase of land in Texas?

Veterans Land Program

Victor bought a property from Yolanda for $200,000. Under the terms of a land contract, Victor agreed to pay Yolanda in monthly installments of $4,000 over the course of 50 months. Until Victor pays Yolanda the $200,000, who retains the title?

Yolanda

The financial reports you've prepared over the past several months indicate a gradual increase in the number and cost of maintenance calls. What does this most likely indicate to your owner?

You may need to step up preventive maintenance tasks.

Steve is preparing a market analysis for the Joneses and has selected three comparable properties. What's the maximum number of adjustments Steve should make to the Joneses' property?

Zero (You adjust the price, not the property)

Jennifer is the owner of the single-family residence in which she resides. How long can she take to depreciate her property?

Zero years

Your seller wants to net $100,000 after the 5% commission is paid. Assuming no closing costs, at what price does the home need to sell for the seller to net this amount?

$105,263.16 The seller's percentage of a sale is 100% - 5% commission = 95% (or .95). Take the amount the seller wants to net and divide it by that amount ($100,000 ÷ .95 = $105,263.16). Conversely, for a sales price of $105,263.16: $105,263.16 × .95 = $100,00

The Smithwicks, your buyer clients, obtained a 90% loan on their new $400,000 home. At closing, they paid $6,150 for points at closing. How many points did they pay?

1.71 A point is 1% of the loan amount. The Smithwicks' loan is $360,000 ($400,000 x .90), and they paid $6,150 for points at closing. Divide the cost in points by the loan amount to get the number of points they paid: ($6,150 ÷ 360,000 = 0.0170833, or 1.71).

A strip mall valued at $850,000 has a $67,500 annual net operating income. What is the capitalization rate for the strip mall?

7.9% Cap rate = Income/Value

What happens after a lien foreclosure sale if not enough money were made from the auctioning of the property to pay off the lien holders?

A deficiency judgment against the property owner for the outstanding balance to the lien holders is issued.

Which statement best describes an adjustable-rate mortgage?

A loan with a rate that fluctuates based on the economic index to which it is tied.

What type of professional must an investor use to conduct a tax-deferred exchange?

A qualified intermediary

With which type of mortgage does the interest rate vary according to a specified index?

Adjustable rate

Which of the following is true about adverse possession?

After meeting all of the criteria for adverse possession, an individual automatically owns the property and can obtain a title.

Which board determines the national rules for creating an appraisal and reporting its results?

Appraisal Standards Board

When are apartment owners and property managers required to screen against a specific list of specially designated nationals and blocked persons?

As a routine part of the tenant screening process

The sales price, acquisition costs, and capital improvement costs (such as renovations or additions) of a property combine to make up what?

Basis

A ______ is often used in commercial applications when two or more properties are pledged as security for repayment of the loan.

Blanket mortgage

The ______ is responsible for paying any tax reserves required to pay property taxes.

Buyer

Jason is planning to invest in a new commercial development. He'd like to invest $400,000 and secure another $100,000 through financing. After shopping around, Jason could not find financing at an affordable rate. Of what type of risk is Jason the victim?

Capital risk

With the cost approach to value, what is the replacement cost?

Cost to build a functionally equivalent improvement

Earnest money on deposit is a ______.

Credit to the buyer

Malcolm purchased an old convenience store, and after renovations will open a small vegan grocery. He paid $517,000, of which $417,000 was for the building, and renovations cost him $107,000. What does the amount $524,000 represent?

Depreciable basis

Gloria has left a gift of real property in her will to her great-grandson, Tony. This gift is known as a ______________.

Devise. A legacy is personal property only.

Which type of deed conveys real property from a decedent's estate to a buyer?

Executor's deed

To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which element is applied first?

Financing terms and cash equivalency

In Texas, a suit for possession breach of lease remedy is also referred to as a _______.

Forcible detainer notification

Which type of FSA loan program is serviced by commercial lenders?

Guaranteed loans

In the case of adverse possession, possession and use of a property must be open and notorious. What else must it be?

Hostile

Which one of these would NOT be an element of comparison an appraiser would use when applying the sales comparison approach to a property valuation?

Income generated

In the real estate business, which professional's primary role is to fund high risk land development/construction projects?

Investor

Which one of the following statements about investors and tax depreciation is true?

Investors can depreciate an appreciating asset

Which of the following statements is true about using utilities interruption as a means of collecting rent?

It is illegal.

What does a balloon payment represent at the end of a loan term?

It means that some principal remains at the end of the loan term.

In a title theory state, which of the following is a true statement?

It's generally much easier for a lender to foreclose on a property.

What are accrued expense items?

Items to be divided proportionately between the buyer and seller that the seller owes

Which of the following is a type of zoning action?

Moratorium

Mick focuses on originating mortgage loans at a company that has in-house loan processors and underwriters. The options he offers consumers are limited to the products his company offers. What's Mick's position?

Mortgage banker

Darrel loves working in the mortgage lending industry. On a daily basis, he works with multiple lenders to find and negotiate the best deals for his customers. What is Darrel's profession?

Mortgage broker

Although a valid deed in Texas doesn't require a grantee's signature, a signature is required if the deed is used to settle property claims in the event of a death or divorce. This type of deed is known as a(n) ______ deed.

Owelty

With this type of loan, personal property is included with the real property in the sale. It's commonly seen in commercial real estate, but you may also see this in the sale of furnished condominiums.

Package mortgage

Which payment plan consists of the borrower making payments of interest and principal on a periodic basis, with a large amount due at the end of the loan term?

Partially amortized payment plan The large sum due at the end of the loan term is known as the balloon payment

To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which one of these elements listed is applied last?

Physical characteristics Correct order: financing terms and cash equivalency, conditions of sale, market conditions at the time of contract and closing, location, and physical characteristics.

Which of these properties are exempt from the FIRREA federal appraisal guidelines?

Properties valued at $400,000 or less

Information shown in this area of the Uniform Residential Appraisal Report includes the conditions of the appraisal, the numbers for all of the values developed, and the final value decision made by the appraiser.

Reconciliation

What type of investment strategy is most similar to a 1031 tax-deferred exchange?

Rolling over funds from one IRA into another

Ari owned acreage in a rural area. He sold a small portion of it to a neighbor in an informal transaction but made no record of the sale or change of ownership. A developer offered Ari several million dollars for the entire acreage, and Ari eagerly accepted the offer. What covenant is Ari in danger of violating?

Seisin

Which of the following requires property managers and landlords to protect any sensitive personal information that they collect or maintain about their tenants from unlawful use or disclosure?

Texas's Identity Theft Enforcement and Protection Act

Which of the following states that anyone who requires an individual to provide their Social Security number before obtaining goods or services from a business, or before entering into a business transaction, must have a privacy policy in place?

Texas's Privacy Policy law

In the world of appraisals, what does TAF stand for?

The Appraiser Foundation

Grady Gumble had a durable power of attorney in place when he died while rock climbing. His attorney-in-fact is Gail Fife. Given the situation, which of the following statements is true?

The POA terminated upon Grady's death.

Who is responsible for obtaining evidence of title and title insurance?

The buyer

Who's responsible for any tax reserves required to pay property taxes?

The buyer

What is the 200% rule as it relates to tax-deferred exchanges?

The combined fair market value of the property (or properties) being exchanged into cannot be more than 200% of the relinquished property.

Select the statement that correctly exemplifies the covenant term.

The covenant of quiet enjoyment promises that the grantee won't be disturbed by a title defect the grantor passes on.

According to the Doctrine of Relation Back, once the conditions of the escrow agreement have been met, what must occur for the transfer of property to happen?

The deed must be delivered to the escrow agent

Commercial leases may contain an automatic renewal clause. If this is the case, what happens after the lease's original term has come to an end?

The lease continues on a month-to-month basis.

Marcy's offer on a home was accepted! Which party will be contacting her about arranging an appraisal?

The lender

Which party at closing requires the property to be free and clear of encumbrances and requires title insurance and hazard insurance?

The lender

Who or what entity requires the property to be free and clear of encumbrances and requires that title insurance and hazard insurance be provided at closing?

The lender

The Siegels are purchasing a commercial investment property and plan to use straight-line depreciation on their financial statements and tax calculations. Which of the following would NOT be included in the Siegels' depreciation basis calculations?

The loan origination and lender fees that they paid at closing

According to custom, who pays the costs on the day of closing for property taxes, utilities, etc.?

The seller

Which of the following would be considered a seller debit in the closing statement?

The seller's current mortgage payoff

Seller Jamison is closing on his property with buyer Conrad. Jamison paid the current year's property taxes already. Is this a prepaid or accrued expense, and how will it be represented on the settlement statement?

The taxes are a prepaid expense, and will appear as a buyer debit and a seller credit.

The tenants in 13C are late with the rent again. They are now officially two months behind. Landon Carson, the landlord, is done playing games and is going to start playing hardball. He's going to give the tenants ______ advance written notice and then he's going to change the locks.

Three to five days'

The best way to start comparative market analysis data collection is to use properties that sold in the last ______.

Three to six months

Which of the following will be issued only if title is acceptable and an attorney provides a certificate of title opinion?

Title insurance policy

Who delivers the evidence of a clear title at the closing?

Title insurance representative

Which of the following is true about a variance?

To obtain it, the owner must show hardship

When a buyer assumes the seller's current loan, what is the purpose of an estoppel certificate?

To show the balance due on the loan

Which of the following is the process the lender uses to evaluate whether to make the loan?

Underwriting

What standards do appraisers follow?

Uniform Standards of Professional Appraisal Practice

If the responsible parties refuse to clean up hazardous contamination, the EPA can hire its own contractors and seek damages in court for ______.

Up to three times the actual clean-up costs

When does power of attorney terminate?

Upon the death of the grantor

When are mortgage brokers and/or lenders required to provide buyers with the Loan Estimate form?

When buyers submit a loan application, or within three business days after submitting a loan application